Morning, everyone, and good evening for those that may be joining this session from Australia. And thank you to everyone that's been able to make it today. I understand there's a train strike over the next couple of days. Nothing like a challenge logistically, so appreciate those that have all made it, and for those that haven't, very welcome to have you here remotely. I'm very delighted to be able to share with a whole bunch of Origin investors and stakeholders a little bit more about the Octopus Energy story, an extraordinary story, and I'm very pleased to be joined today by Greg Jackson and Stuart Jackson. And you'll meet the founders through the course of this morning. So I'm gonna ask Greg in a moment to come up, and he'll present.
We've got two hours here, probably presenting for just over the first half, and then we'll join for questions. Stuart will be up and presenting as well, and you'll get an opportunity to ask plenty of questions at the end. We have got questions, so we'll go to the room initially. We'll then go to people that are joining, our analyst community, and then investors. Thanks very much for joining us.
Before I do hand over to Greg and Stuart, just want to say just how extraordinary the Octopus Energy story has been, and we've been privileged to be part of that as an investor and also as a customer for the last, you know, probably we've known each other for about five or six years, but certainly, I'm an investor for the last four years, and I think you're gonna find what you hear today incredibly exciting, not only by the track record from today, but just also the huge potential as they take this business forward. So thanks very much, and I'm now gonna ask Greg to come up, and he's going to spend some time talking to you. We look forward to hearing your questions later. Okay, over to you, Greg.
Thanks, Frank. And Stuart, as well. I want to say, first of all, thank you, all for making the journey here, and welcome to, Octopus Energy's, HQ. This is the space we hold our fabled family dinner every Friday night, where since day one, we've got every single member of staff together around the world, they don't all make it here, some join by Zoom, to, maintain not only our culture, but also to relentlessly drive the business forward. So this to us is a special space. Those who, know, Stuart and I are the co-founders, Stuart's the CFO. We've both got the same surname. If any were any doubt, you now know we're not related. So let me, without further ado, kick off.
We're also going to be joined later by James Eddison, third co-founder, CTO, and the architect behind Kraken. But I just want to start off with a couple of big picture observations. According to the energy regulator in the UK, Ofgem, Octopus is now, by some distance, the largest electricity supplier in the UK, with about 22% market share against the next highest, British Gas, at 6%, at 20%. In gas, British Gas is still ahead, but we think on overall household revenue, supply to households across both fuels, we're probably ahead as well. I think we're almost unique. I can't think of another market in which a challenger has overtaken all of the incumbents in a regulated market, in this short space of time.
So often, we'll hear about exciting fintech stories, some great neobanks, but actually, Octopus's story here in the UK is something I'm incredibly proud of because I think it's unparalleled. And behind this lies Octopus's outstanding difference in customer service and the reputation that's built. When we first started the company, people said customer service in energy was, you know, about how fast you answer the phones. But the reality is, it's so much deeper than that. We relentlessly think about the role our company has in customers' lives. They're using energy all day, every day, and it's not just... You know, no one ever phones us up to talk about kilowatts.
They phone us up to talk about money, they phone us to talk about affordability, they phone us up to talk about comfort, about confusion. We've got an astonishing team, and in Kraken, an astonishing platform, to be able to deal with those kind of questions far better than anyone else and spend our time preempting what's next. We're seeing similar strength behind the Octopus brand in other markets. As we started to launch Octopus into other countries, I think we had a question, which was, for example, you know, Octopus is a very anglicized word, so when we launch in Germany or France, should we use their name for Octopus? Should we spell it in their ways?
But we learned from the greatest brands in the world, McDonald's, KFC, Coca-Cola, Google, Amazon, that the strength of a world-leading proposition is stronger if we're exactly the same everywhere. So I'm incredibly proud that Octopus is as appealing in Japan as it is here in the UK. That's because fundamentally, the desires, wants, and needs of consumers for comfort, control, and confidence in energy are the same everywhere. We're not just an energy supplier in our energy business. Not only do we, through our fund management business, manage billions of dollars of renewable generation, we increasingly provide customers with everything they need for the energy transition. We'll talk more about that later. All of this is underpinned by Kraken. I'm sure you've all heard of Kraken.
Kraken is the technology platform, which we founded at exactly the same time as Octopus Energy. In fact, very briefly, our origin story is that, James and I previously co-founded a business which built enterprise software. Our largest client was SAP. We were the only company in the world other than SAP themselves and Google, that were allowed to put our servers in their data centers. We are hardcore technologists. We actually spoke to energy companies about the opportunity to build a platform in energy, and we were not lucky enough to meet the visionaries of Origin, but other energy companies said: "This sounds good, but someone's got to do it first." And that was when we realized we had to build Octopus Energy as the demo client for Kraken.
But today, Kraken stands head and shoulders above the rest of the field in transforming energy through technology. One of the many benefits of Kraken is the lower cost to serve. So you see here data provided by a third party looking at segmental analysis and comparing Octopus' cost to serve with rivals. It is kind of a no-brainer that if you run your business on 21st century technology built in the cloud for the job, it is a lot more efficient than companies running on software stacks that are built of decades worth of legacy software, where it is hard to meet your daily needs, and it is impossible to change. And a couple of quotes about Kraken. Some people here are from Origin, so I'll let them talk about that later. But...
For example, EDF, it provides a step-change improvement on their cost base. In terms of Kraken growth, today, you can see that Kraken is accelerating away from its founding customer, Octopus, and now has around 54 million accounts licensed, globally across around a dozen clients in almost as many countries. We're privileged enough to see a pipeline that means we're... I've got to be very careful about forward statements, but if I was a betting man, which I'm not by the way, I'd bet we'll be at a 100 million account target by 2027. So that was a quick overview of the business. If we jump into a bit more detail, fundamentally, for us, Octopus is a long-term play in the energy transition.
So look, this morning, I heard on the radio in the UK, discussions about BP's results and Shell's. Now, those companies are grappling with, you know, their strategy during the energy transition, and the challenge they have balancing between their legacy business and what the future might look like, and we're unashamedly a future business. Today, we've barely started in our mission to build a future energy major designed for and to drive the transition to clean energy. First thing we need to be clear about is just like fintech, there's a digital revolution in energy. Customers need to engage in different ways. As soon as you've got solar panels and a battery, you're no longer just a consumer of energy at whatever price the grid is giving you at that time or your supplier is giving you.
You really care about the fact that, for example, if your battery is dumping electricity to the grid at an expensive time, you'll make money. If it's dumping at a cheap time, you'll lose money. Immediately, you need a degree of engagement and understanding or at least of trust and transparency that energy companies are not traditionally used to. If you've got an EV, and we'll talk more about this later, you need to know how it's charging to give you the best possible value based around variable grid prices.
And by the way, when you've got several of these bits of technology all together, all of a sudden, you know, your household is just a big data optimization challenge, and how a company can engage with you to both trust them and create value for you is a, it's a world that Octopus has been living in since we've started, and other companies are only just beginning to think about. Just one way of illustrating it, you know, typically, I don't know, energy companies might get a meter reading a month, I mean, some of them once a quarter. Obviously, with a smart meter, it might be, you know, several a day, often batched.
But, you know, with, for example, smart charging of EVs and so on, we get 400x more data, and that's just from one product in one consumer's home. Today, for example, we get 3 billion items a day per day just for the smart charging of EVs. All of that data goes into Kraken. It's all run through, machine learning and AI for optimization, and that data is intimately related to a customer's lifestyle and habits. You can't just stick it in a silo. It has to be fundamental to how you have the relationship with that customer and your financial relationship with them. The world of technology is changing enormously. We'll talk with James more about Kraken, but very briefly, I mean, look, AI is everywhere, in the news at least, but it's also everywhere in our business.
So not only is it doing the optimization on EVs, but for example, answering customer queries and so on. Kraken is the only platform that was built from the beginning to be able to deploy AI quickly at scale. You may have heard of continuous integration and deployment. Look, if you think about a typical software platform like SAP, maybe get a one release per quarter. I know some people on modern software might get one a month. Kraken does 200 a day. That's 200 total software releases of Kraken every day. Now, that's not just enabling us to accelerate change at a pace that others can't imagine.
You know, if you work in marketing and you want to make a tweak to a website, in a traditional environment, we've got to wait a quarter or a month or a quarter, and by the way, if you miss that, you've got to wait longer. You know, Kraken, it can be out same day. But also, think about security releases. The world of cyber is so critical. Today, AI can exploit a newly discovered release same day, next day. With Kraken's ability to be deployed within 10 or 15 minutes, you don't wait long for a patch. So in every way, this kind of modernization of technology is revolutionizing enterprise software.... And of course, we've got the energy transition.
I've already mentioned it, but one of the reasons I talk about this long-term play is we're in the world of continuous, continuously changing cost curves. The technologies of renewables are getting relentlessly cheaper. Of course, we saw a blip in offshore wind last year, although I would note that was driven by inflation and interest rates, which themselves were a consequence of the fossil fuel crisis. So, for us, you know, the energy transition is unstoppable. You only have to look at China today to see the forces, the pressure on the dam that is building against the existing energy system. And renewables can no longer be seen as just an add-on. The system that we're building, not just Octopus, but society, but certainly the system Octopus is building, is one that's renewables first.
Designed to answer the question, like, people will always say: Well, what about intermittency in renewables? Well, we say: What about abundance? You know, if we capitalize on abundance to provide our customers with more electricity at the times it's cheapest, we've got the opportunity to make more money while saving them money, and that's how we make the energy transition a win-win for them and for the planet. We've got the same with battery technologies. You know, battery prices relentlessly coming down. And this is even before we see continuous breakthroughs in new battery technologies. This is just through continuous optimization scale of existing technologies.
And of course, you know, we'll all read about the sort of potential faltering or backlash in the EV market, but the long-term trend is clear, and you only again have to look at China, where BYD in the last few months have released their first sub-$10,000 high-quality electric vehicle. And if you haven't seen a BYD vehicle, honestly, they're as good as a European car, and their battery power cars are increasingly cheaper than the fossil fuel-powered cars that you'll get from European countries. BYD, by the way, so ambitious, they bought their own ro-ro ships to... They bought one last year. They got 7 under construction to be exporting these vehicles.
This new energy system that we're building, EVs are not an add-on, they're a core feature. It means that everyone's driveway will have a battery that holds a few days' worth of power for the house. So when you're asking these questions about intermittency, the products that we're delivering to people already, and it will soon be truly mass market, answer the question. So we operate across four segments as an energy company. If we just quickly look at some of the numbers behind it, Stuart?
Yes, so in our retail energy business globally, we have 8 million customers, that's household customers, across 8 different countries, including the UK. As Greg already mentioned, that's supported by Kraken, of course, which now has 50 million accounts contracted to the platform. And through our Kraken KrakenFlex platform, 43 GW of energy assets contracted. And just to put that into context, in the UK, we're building a very large nuclear power station, which is just over 3 GW intended. So it's an extraordinary amount of power that is managed through the KrakenFlex system. We have through the Octopus Energy Generation portfolio, GBP 7 billion of assets that we're managing.
And then in services, we're installing an increasing amount of low-carbon tech products, solar panels, batteries, EV chargers, heat pumps, in the UK and across most of the countries in which we're operating now.
Cool. By the way, super clear, I should also be able to jump out on the notepads. When we say we're building, we don't mean Octopus is building a 3 GW nuclear power station. That's the UK government. Right. Today, Stuart, do you want to talk about the separation?
Yes. So we've made very large strides in separating Kraken as a business from the Octopus Energy Retail in particular. It enables Kraken to operate freely and transact with other retail clients in countries in which we operate and beyond. Operationally, they're very separate businesses now, and that journey will continue. So we're across the group operating in 27 countries, in 5 continents, and that's a mix of where we have generating assets and teams, where we're operating Kraken and KrakenFlex, and then, of course, the retail businesses themselves. So to dive into the UK retail business, we've managed to build a business that has delivered superior customer satisfaction and low churn. And then, if you flip over, Greg. Thank you.
We're also, and we'll talk a bit more about it, operate, have built an operating cost advantage as well. So we've managed to do both, grow, deliver low operating cost, and superior customer experience.
And look, only Octopus has got super fans, I think. Not many people wanted to be an energy boss during the UK or the European energy crisis, when we were forced to double and more customers' energy prices because of the cost of fossil fuels on the global market. Yet throughout that, we built our brand. And so we just got a selection of tweets, and all the sentiment analysis says this is unique to Octopus, but legit, is there a company better with their whole offering than Octopus Energy? Website's so intuitive, mobile version easy to use. Called customer service earlier with a query, she emailed me to confirm the advice. The business model should be replicated by everyone.
We frequently see, by the way, people from other sectors approaching us to know how to do it. When customers post that, you just get more and more customers jumping in and agreeing. Customers who voluntarily post all the things they love about the company, and going well beyond the soft stuff to really understanding, you know, some of the detail of the relationship that we can get right because of the technology. It goes beyond sort of just that unusual relationship with customers. Those who don't know Victoria Coren Mitchell, she's a UK celebrity, and she got a celebrity husband, so she's part of a celebrity couple. You might call them the Posh and Becks of radio comedy.
But Victoria's got 750,000 followers on Twitter, and she tweeted about another energy company. It got nearly 1 million views for that tweet. And then she said... And, and by the way, look, I can tell you, it's very, very nerve-wracking when people post things like this, because you don't know what's going to happen. She said, "No company could possibly be worse than the other one, who, quite apart from the money they've wrongly taken, have driven me personally to despair." And by the way, look, this is how somebody in her position feels, and she can afford her energy bills. What this means to people who are struggling when they get bad service, that's what we set out to tackle.
But she said, "Octopus Energy are trustworthy and communicative, and so please do this poll and/or tell me which provider you found good." So, yeah, when someone posts a poll like that, we're just in the lap of the gods, or at least actually, we're in the lap of our customers and the experience they've had with us. Twitter, or X as it now is, is not known to be a hotbed of positivity and love. But 87% of people answered, "I find Octopus good," and only 4.7% were unhappy with Octopus. Now, we all know that people are more likely to complain than to praise, so to see results like that by a spontaneous poll triggered by a celebrity, genuinely, mind-blowing. And you can see that, Victoria, was really impressed with it.
And again, by the way, customer after customer joined in the threads. This isn't just validation, by the way. It's also the way in which Octopus has built a brand that goes beyond the normal very, very quickly. So YouGov run a tracker of what they call brand health, and they summarize a whole load of data they look at. So how well-known a brand is, how high the quality of the customer service is, the value it provides customers, rated by customers, and customer satisfaction, whether customers recommend it and what their reputation is. And you can see that everyone took a dip during the energy crisis, although even then, Octopus stayed positive and has continued to not only grow, but accelerate away from other energy companies.
In fact, Octopus is number one across a whole pile of the companies they look at in services, utilities, and associated sectors. This is from Bain, the management consultants, who ran a survey of 200 large companies in the UK. Octopus has the biggest gap versus rivals of any company in any sector measured by Bain. So that 45-point difference between the next best company and Octopus is standout. Also from YouGov trust surveys. Look, governments have got a tough job, and so it's not a surprise government's less trusted than energy companies on the whole. But you can see, for example, even the regulator, Octopus, its trust far exceeds that of the regulator because of the transparency with which we look after customers.
All of this, by the way, means, for example, Octopus is able to build a brand that is not only building long-term brand value, not only growing our customer base, but it does so with lower marketing spend than the vast majority of rivals, dramatically lower. That's the smaller charts on the left, by the way. This is from Kantar, marketing spend analysis, and it excludes a whole load of other marketing spend, for example, agencies, and Octopus don't even use agencies. And that complete picture enables us to, for example, Which? is the most important consumer organization in the UK, it's the, It's, its analysis is the most independent and trusted, and for seven years in a row, Octopus have won the Which? Award, for Which? Recommended.
By the way, I can say, look, there are certain things that make you nervous in, in your job. This one makes me nervous in mine because I just don't know how we can do it yet again. So every year, it's terrifying. And so if it doesn't happen again, honestly, seven years has just been an amazing run. Better than Manchester City, probably. Actually, I don't know much about football. And the Institute of Customer Service. So across all sectors in the UK, Octopus is ranked number 17. Across all sectors, and dominated by companies that be, you know, maybe 100 years old, sort of Marks & Spencer or John Lewis. And we've done that in 8 years, and it's the only energy company ever to have got in the top 50.
Stuart, do you want to talk about customer service?
Yeah, so I referenced this earlier. So we, using just the segmental analysis that's published every year by Ofgem, we are able to see that the Octopus Energy Retail operating cost in the UK is nearly GBP 40 lower per customer per year than our closest, largest, large rivals. Yeah. But part of that, or an increasing part of our story, is that we're able to use artificial intelligence. About 50% of responses now that go to consumers are generated by AI. They're managed by a human, but the text can be prepared by artificial intelligence. And we call that Magic Ink.
I notice there's not a label on the bottom axis, they're months, so I'm assuming the rightmost is roughly now. It's a real feature of Kraken we'll talk about with James later, that we were able to deploy AI at such scale so successfully.
The amazing thing about it is, not only are we reducing the time that our energy specialists need to spend on responding to consumers, but we're also delivering better levels of customer happiness through that combination of the human and the generative AI. So we're also expanding. We have expanded over the last couple of years our product offering. So the three things listed here are meaningfully different from traditional commodity energy supply. So Saving Sessions are where we engage with consumers, asking them to turn up or turn down for periods of time, and sometimes those can be fairly short periods of time at fairly short notice, with a great deal of success.
Octopus Electroverse is our is a network with over 700,000 public charge points that we're able to handle for which we're able to handle payment and bill customers through the Octopus Energy platform. And then Zero Bills is a concept where house builders are if they build a property to the appropriate standard with solar panels, battery, heat pump, we're able to guarantee to the consumers that live there, for a period of time, that there will be zero bill to pay.
And by the way, I mean, just to put scales on these, right? Saving Sessions, 1.5 million households signed up. It was 45% of everyone that had an appropriate smart meter. These are insanely popular programs. With Electroverse, we were able to work with charge point owners to run special offers when it's windy, when it's sunny, and when the grid's cheap, to drive utilization. We saw a 40% increase in utilization on charge points when we started doing variable pricing. And the Zero Bills homes, house builders report that, when they've got a mixed development, the Zero Bills sell first, fastest, and at the best prices because people really want to live in a house with no energy bills? Who wouldn't want to live in a house with no energy bills?
By the way, the economics of a Zero Bills home are superior for us compared to the economics of a normal home. It's a great example of the win-win delivered by the combination of technology and energy transition. Stuart.
So in combination, what we're delivering in our retail business on the Kraken platform is huge scale. We've grown, as you've seen, to be the largest domestic energy supplier in the UK, and we're growing fast in other territories. We're building a very significant ability to engage customers in other products which are important to the energy transition. And that's possible because of the extent of the brand loyalty that we've built, because these are much more complex relationships with customers when we're charging their cars and heating their homes, controlling their heat pump. We've built, as that penetration of those assets grows, the foundation for wider electrification through our ability to control demand and contribute to the balancing of the grid in the context of a growing level of volatility from renewable generation.
For us, in economic terms, this delivers a materially higher customer lifetime value and a path to materially better, sustainable profitability, unit profitability.
So we've covered the
Yeah
... scale of Octopus taking market leadership in the UK. But, you know, one way of looking at that is this session's a couple of hours long. During this session, 100-200 customers will join us from other energy companies, largely without any CPA-based acquisition, largely based off the back of brand and customer recommendations. And indeed, in the time we've been speaking, I guess what? That's about 10 will have joined us from British Gas, 6 from E.ON. Anyway, this relentless winning of customers from other companies, driven by brand, creates value, which, you know, we had to build the company to prove, but is now a juggernaut. We haven't just grown through the acquisition of companies like Bulb, and Shell Energy Retail.
Although, by the way, the fact that we've proven we can make acquisitions quickly and smoothly, not only in the UK, but now we're doing the same in other markets, demonstrates the pace at which Kraken can absorb customers and deliver the same brand relationship and loyalty, whether we've acquired them organically or through acquisition. But also, you know, in the last year, around 800,000 customers switched to Octopus from other energy companies. So it's both organic and inorganic. We talk about the clean energy product family, right? A lot of companies talk about cross-sell. Cross-sell in retail, banking, retail energy, and so on, is so often a sort of hit and hope. Companies have got a very large customer list, and they think they can cross-market to them.
But it's often a lot less successful if you haven't built this deep relationship with your customers. And also, a lot of the products are often kind of unrelated to the core relationship, or it's tangential. But energy transition and Octopus' approach to branding customer relationships has created something very different. I mean, first of all, customers want to buy energy transition products from us. You know, we get customers reaching out, asking us to sell them these products 'cause they trust us, and you know, say, with solar PV, 41% of our customers would consider purchasing or leasing from us. But even down to electric cars, I don't know how many energy companies have ever thought about selling cars. And yet today, we do, and there's tremendous demand from customers for it. And I think it's a bit like Apple.
Those of you who've got an iPhone, which is probably most of you, but those who've got an iPhone, if you have any form of earphones, headphones, they'll probably be Apple ones. And that's because they work together better. Your iPhone and your earbuds work together better. The same if you, you know, if you've got the chance to have a Mac as a laptop, it'll work better with your phone than a PC would. And, yeah, I'm wearing my Apple Watch now. It just works better together. And we talked earlier about the importance of this kind of incredible amount of digital data as we put more and more technology in people's homes. And Zero Bills Home is the best example of the way things work well together.
Because if we've got control of your home battery, and of your heat pump, and your hot water heater, and of your energy tariff, we can be optimizing this based against our weather forecast for your house, which tells us what you're gonna generate and what you're gonna consume. And we can optimize it to meet your needs at the lowest possible cost, but it only works if we're controlling all that equipment. You have to trust us, we're doing it in your interest. But if we're controlling that equipment, we can literally get to the point of no energy bill, and we make money while you save. But for any combination of products, they work better if they're controlled by Octopus using Kraken's astonishing machine learning.
And so we end up with this product family where, the more of it you have, the better it works. If you've got an EV from us, and you get a smart charger from us, and it integrates with our smart charging, then you'll have cheaper driving. If you've got solar panels from us as well, then, hey, we're gonna be trying-- you optimize it to use as much of your solar at the right time to charge your car. But we'll also optimize it to dump your solar onto the grid at the right times. No one else, no one else has got that kind of joined-up capabilities at scale. And it's gone as far as, for example, building our own heat pumps, the Octopus Cosy. It's got Kraken built in.
So the Cosy, like, if you look at the UK, where we've got notoriously badly insulated homes, a home will still hold heat for three or four hours. So the Octopus Cosy learns how long your home holds heat, knows what temperature you want, and then can preempt peak grid times by preheating your home and using almost no electricity during peak times. Not only is that great for you 'cause it's cheaper, it's also great for the grid because it means instead of heat pumps adding to the load, they spread the load. I talked about Zero Bills homes, although, by the way, I would say they are beautiful as well. I mean, we've got brochures if anyone wants one. There's some not far from London.
There's currently 1,000 under construction, by the way, 10,000 in the developer pipeline, and we've got agreements signed with 3 of the biggest 10 housing developers in the UK. That's a product that's just 18 months old. The momentum is incredible. Stuart talked about Electroverse. If you've ever had an electric car, you'll know that one challenge is, unless it's a Tesla, you've got to find chargers that are compatible, that are available, that are reliable. Electroverse integrates with 1.2 million globally, 700,000 of those you can pay at through your Octopus account. One in 3 UK electric vehicle drivers is a member of Electroverse.
We get the joined-up data and provide the joined-up experience for an EV driver at home, in public, and now we're also offering fleet solutions as well. Stuart, do you want to talk, do you want control?
Sure. So, today, we're operating, as it says, the largest virtual power plant in Europe. We've just passed a gigawatt of power that is within this system, obviously largely driven by electric vehicles. Thank you. Oh, there we go. So yeah, a gigawatt of dispatchable capacity in total. The rate of growth has been phenomenal. It's growing at about 20% month-over-month. Yeah, I... So not only is the penetration of electric vehicles growing within the vehicle stock, but our own penetration of electric vehicles is growing as well.
So, to put it in perspective, a customer using Intelligent Octopus, all they do, they connect their Octopus account to their EV charger or to their EV itself. It's as simple as when you, you know, connect Facebook to WhatsApp or whatever on your phone. It's a couple of clicks, and then we optimize that charging. Every car gets a different schedule every day, optimized against 29 variables. But as a result, customers can drive 100 miles for GBP 2.30. With a diesel car, that would be, I don't know, GBP 16-GBP 18. So the cost of driving an EV is seven times cheaper than a fossil fuel car. And we're now adding in heating systems. I mentioned heat pumps. In the U.S., we've got air conditioners in it, and home batteries.
So, Intelligent Octopus balances all of that demand, and the scale is quite remarkable. If I just flip back a sec, actually. You can imagine that about a year ago, you know, if we brought National Grid in, they'd look at a very small number. Now when we're bringing them in, they're looking at this huge number. This is what we mean when we say this isn't an add-on to the energy system, it really is becoming the energy system.
Forgive me, I said 20% month-over-month, that's evidently not right. I was remembering the quarterly figure, but it is growing incredibly fast, and the compounded rate annually is extremely high.
And so, you know, if we forecast where we might be by 2030, where we might be. So yeah, today, Intelligent Octopus has just hit a gigawatt, noting that it's four times higher than it was a year ago. But if we look at the capacity in the UK for additional devices, you know, you could end up with 10 GW-20 GW or 10 GW -18 GW of controllable demand here. And this is a very large part of that equation about how do you balance the energy system in a world of renewables? You know, that's up to half a dozen of the biggest nuclear power stations. Although, by the way, nuclear power station that, yeah, I mean, it's meant to take what, five, 10 years to build, it's taking 10 years or 20 year.
Meant to be a certain price, has come in rather higher. Okay, and all of this is enabling us to build dramatically higher lifetime value through these technologies. Stuart?
Yeah, so the retail lifetime value, obviously, we have advantage through our operating cost, but on top of that core lifetime value, we're generating additional income that can be quite material through flexibility, through all the, no pun intended, the vehicles we've just described. Then on top of that, there is material value in selling energy services through the heat pumps, the electric vehicles, and solar arrays and batteries. Obviously, the extent of the value increment is a function of the penetration of those things, which we expect to grow significantly over time.
Sure.
So we talked a lot about the UK. Outside of the UK, we're also growing very fast and delivering superior customer experience as we have done in the UK. We're doing that in tandem with growing fast, and in total, we have more than 1 million customers outside of the UK, and we expect that to grow very significantly over the coming year and beyond.
I think that million was 400,000 just at the beginning of 2023.
Yes, but it grew by roughly three times during this last financial year. It's very interesting to track the rate of growth by country against what the UK did, and what we see here is actually, we're able to grow faster than we did in the UK. And as I referenced earlier, we're also starting to sell and install low carbon technology in most of those countries. Yeah, like I said, speaks for itself.
It was an amazing experience recently when we were in the management meeting on a Monday morning, and in the pack, it said, "We just launched Intelligent Octopus, this super smart tariff in Germany." And I said: How similar is it to the UK? And, "Oh, it's exactly the same." And I was like: Okay, how long did it take to deploy in Germany? He was like, "Well, we just turned it on." And I think this idea that, when we started building Octopus as a global brand, backed by Kraken as a global platform, people said, "But look, energy is regulated differently in every market." But it's just like Uber. I mean, there's no market that is more finely regulated than, you know, cabs.
Every city's got different regulation, but Uber's built a global platform that provides the same products, the same user experience everywhere, and I bet we all benefit from that when we travel. And Octopus is similarly being able to use Kraken and the power of our brand and customer insights to rapidly take any learning we get in the world and deploy it anywhere else. So, shall I talk about Kraken? James, do you want to join us? So James is a co-founder, Chief Technology Officer, and the chief architect of Kraken. So, James, do you want to describe in what way we mean Kraken as an operating system?
I think a little bit like your iPhone, you buy a phone, you've got an operating system on it, and it's got the apps you need to do a wide range of tasks. For Kraken, when we talk about the Kraken Customer application, it's kind of like saying, well, you can deploy that, and it's got the functionality you need to operate a retail energy business. But it's got extensibility as well. When we set up the business, I remember our first investor pitch, we sort of said we wanted to manage data, we wanted to create efficiency, and we wanted to be able to differentiate ourselves in the market. And I think you can see from what you were saying, how we achieved those.
When we get to licensing Kraken, we need to be able to offer the same advantages to companies licensing it. The operating system analogy really plays to that ability to allow our customers to differentiate themselves in the market, to benefit from management of data and operational efficiencies in the way that Octopus has. There's three sort of quite separate applications within Kraken now. Kraken Customer is one that was mentioned, basically, to support a retail energy company. Kraken Flex is the one managing assets and controlling that flexibility, and powering things like Intelligent Octopus and that big fleet of vehicles.
Kraken Field is really to helping manage engineers in the field and bringing those services, they, they're supporting that low-carbon technology, and extending the customer experience right to the experience of customers, getting an engineer into their house to have that really sort of potentially intrusive experience, and making sure we deliver great customer experience end to end. And, you know, our vision is very much to be providing Kraken as not only as a technology for an energy retailer, but a technology for the entire energy system, so spanning from generation through to the domestic consumption or industry consumption. Our offer to customers, dramatically, as in clients licensing Kraken, dramatically takes risk out of the process of a major system and organizational change.
Because of the breadth of Kraken, instead of saying to clients that you've got a multitude of different technologies which you're trying to stitch together, and then you've got SIs working to try to coordinate that change. Because of the breadth of what we can offer, we can sort of take much more responsibility for the outcome, and give them much greater assurances for a very complicated transition.
It's worth saying that, our model on the left is deeply simplified. I mean, when E.ON took on Kraken, they replaced 17 platforms. They literally turned 17 off at the end of their migration. So you can imagine the incredibly complex web of both, human and data relationships within that stack, that were just simplified into one stack with Kraken.
So, first of all, the differentiating factors for Kraken. First of all, the end-to-end breadth of what we can offer. I don't think any other platform comes close in terms of that. As I mentioned, we designed it with a single data model. To be fair, at the time, we were trying to say: How can we bring all of the information to the user in order to drive efficiency? In the world of AI, that now means that we've got a real head start in terms of providing the context to AI. And it's very easy with AI to do a very impressive-looking demo.
It's actually really difficult when you start putting real-world data through it, to get sensible and high-quality results time after time. And because of the scale we're able to operate at, and because of the data model that we've already got sort of pre-assembled for humans, that puts us in a really great position to be benefiting from that. Cloud Native, well, we're fortunate we started writing this eight years ago, nine years ago now. And, you know, there really is a difference between designing systems for running in the cloud, or just thinking about the cloud as a different way to host pre-existing systems. But that helps us drive lower costs and greater efficiency, and fundamentally, think about problems in a different way.
Such as, I mean, I remember we had a visitor to the office, who once asked, "How long does it take to do a billing run or to..." I sort of said, "I almost don't understand the question." And they said, "Well, say you wanted to produce, like, 50,000 bills, how long would that take?" That question comes from a world in which people are sort of constrained, and they have to batch process things, and they're constrained by sort of infrastructure on site or the size of particular applications. And with Kraken, we wouldn't even ever think of that question because we'd think: How long do we want it to take?
And how can we balance that, the production of that run with other operations in order that we're getting a sensible sort of throughput of contact to the team, to the operations team, and maximizing customer experience? The layered architecture, Kraken is a single application, but it is operating in 12 different countries. And countries like Australia, we might treat as one country, but, I mean, that's almost another, I mean, it's almost 12 different markets by the time you take all the different state regulations and the different networks and the different types of supply, et cetera. So we have to accommodate that diversity of requirement.
But we've architected Kraken in order to make it that most of Kraken is core, and it's deployed globally, simultaneously, and those market adaptations are kept as small as possible. The continuous innovation, this is the thing which actually you know shocks a lot of visitors who are coming from a traditional enterprise applications in which the deployments might happen once every three months, and it's a massive exercise. And we deploy updates to Kraken about 200x a day, and we do that to now 22 production instances of Kraken worldwide. That means, as Greg mentioned earlier, things like deploying innovations or even responding to security threats or such like, can just happen very, very rapidly. We've had to develop methodologies to make it safe and robust.
Each one of those deployments runs in excess of 200,000 automated tests as well. And I mentioned earlier, you know, the ability that we've got to use AI, not only in terms of doing some of the math, some of the maths and analysis in terms of controlling load and managing assets, but also now in terms of, yeah, assisting agents, to focus on really on the people side of the jobs, and helping on the sort of technical answers that we can give to agents is developing very rapidly.
It's worth saying that the pace of change in AI, right? I think we all became aware of it in November 2022, when people started mucking around with ChatGPT. By January of 2023, Kraken was already deploying AI to test answering customer queries, and by May, it was at full scale, heading to that 45% of all customer queries answered by AI. But we don't just answer them. Because we've had this huge head start, and because Kraken's got a data set that covers everything from financial data, to metering data, to statements and communications histories, Kraken also increasingly now carries out the action. So if you email in and say, "Look, I'm looking for a refund," Kraken will write an answer saying that we'll give you GBP 230. It will also carry out that action.
Now, a human will sign it off, but now the machine really can not only do the language, but also do the jobs. We talked a lot about Kraken's kind of unique capability to do this, but I think you'll often see now third-party platforms providing AI services to existing enterprises. That just adds to the stack of complexity. So you've got 17 platforms, you now got 18, and your AI is trying to read into all these legacy platforms that don't work well together already, never mind with an additional layer on top. So where Kraken's absolutely unique, is it provided the context and the capability for AI to act at scale, and it's really effective for clients.
Like E.ON, the second or third largest electricity company in the UK, migrated 8.5 million customers onto Kraken in 2 years. And by the way, the day that migration started was the day, in fact, the day it was signed, the contract was signed, was the day the UK went into lockdown, and we didn't negotiate a single extra day. So people didn't know how they're going to run their businesses and how they're going to look after their teams. We started the migration on that day and still delivered it on time. Not only did we deliver it on time, by the way, but E.ON made 5 acquisitions during that because of the energy crisis, and Kraken absorbed every one of those acquisitions without extending the deadline. It quotes here a GBP 100 million earnings jump.
I think, E.ON saw a EUR 300 million impact, positive impact in year one, according to the press. And, their customer service went from about 2 out of 5 to 4 out of 5. A truly remarkable transformation. Similarly, by the way, EDF. James?
I mean, EDF have a migration which started at the end of April last year, and will finish in the next couple of months. Another astonishing transformation, not only of the technology and reducing the complexity of their technological landscape, but also a really strong increase in their sort of staff happiness, their customer happiness, and their operating efficiency.
I think, between these two migrations and Octopus plus other clients, obviously, Kraken now runs more than half of UK energy retail. That's not just good for Kraken, by the way, it's good for the UK because it enables all these dynamic products and services to create a cheaper transition to renewables. And so I think the ability for Kraken to go beyond just helping the company, but being significant at system level, is now proven. I don't know whether you, you know, Frost & Sullivan, the software analysts, but they analyze software on behalf of enterprise clients, and it's fair to say that Kraken is in a class of its own. So this is a service used by large enterprises to decide what platforms to assess.
You can see there, Kraken is just absolute standout. According to McKinsey, BCG, and so on, are all writing case studies on here, but the key here is managing all this complex data to transform businesses. Stuart, do you want to talk about Kraken's economics?
Yeah. So, over through to the year ended FY 2023 to year ended April 2023, Kraken generated GBP 127 million in annually recurring revenue. 60% up within the year. We managed to do that with a 95% gross profit margin and a 75% EBITDA margin. It's... yeah, it again, it's both growing and significantly profitable. A lot of investors we talk to are very interested in the Rule of 40, which recognizes that a lot of scale and scaling software businesses need to grow very fast to capture opportunity.
To be able to do so and generate margin at the same time, or sufficient margin to offset the growth, is important, and they describe the Rule of 40, where if the sum of your growth, revenue growth, plus your EBITDA margin, or your margin, is in excess of 40, then that is a very superior business by historical standards, statistical standards. And, again, Kraken is achieving levels that are off the scale, compared to other comparables that we look at. Well, we talked about this, but we're doing that while growing very fast. The pipeline is extremely strong, both in the UK, where we've also now started migrations for water businesses and telco, as well as in other regions around the world.
So we are in late stage discussions in other parts of Europe with large energy retailers and in the Middle East. There's significant activity in North America and obviously within Asia Pacific as well. Similarly with Kraken Flex, we have a variety of types of customer also again right around the world. We're working with energy traders as well as retailers who have a more vertically integrated system. We are also in discussions with system operators and asset owners also. We think the total addressable market for Kraken is an enormous 1.6 billion meter points. So today on the Kraken platform, we have 54 million customers contracted.
In the markets that we are present in today, there are about 345 million meter points, so there's still a lot more to go after there. But actually, in the other markets that we are not yet participating in, there's a further 675 million meter points. And then we actually think there's opportunities to go much further than that in more heavily regulated markets as well.
So, I guess, that was our view of our business and where it hopefully has some sort of standout features that may not always be obvious. But we'd love to chat. Any questions?
Okay. We might just, we might just get the, we've got the people just orchestrating because we've got questions coming in digitally and everything, so we might just wait for that announcement. That'll set out the process, if that's okay.
Yeah, of course, Frank. Great. So do we just sit and wait for it?
I'm just waiting, yeah.
Yeah, there's a couple of guys hidden in there, by the way.
Yeah
... in disguise.
This is live television, guys.
Not many women, actually.
That's exactly right.
No, genuinely.
In fact, not many women here or here.
Genuinely. In fact, you-
You need to bring-
Might be the only one.
More generally-
Our company is the only one, only UK unicorn with a negative gender pay gap. Octopus and Kraken women earn 4% more than men, and more than half of the executive team and the group CEOs, group business leaders are women. Unfortunately, though, it just looks like the finance industry, and maybe, journalism hasn't caught up.
All right. You ready to go?
Absolutely not. All right, we might kick off questions here, and then we'll take live questions, then we'll actually go to people remotely. So any questions? Have to go with you first now, Esther Rosa.
I guess it's an obvious question, and I'm not 100% sure how to form it, but I'll try it. You obviously have a system which you are selling Kraken to customers. The question is, you have Octopus, which uses Kraken, and then you are selling Kraken to other customers who are really competitors. How do you make sure or, you know, how do you make sure that there's no cannibalization, let's say, between your customers and yourself? I think that's the question.
Yeah, I mean, there are two, three components to our thoughts here. I mean, the first is, look, we had the idea for Kraken probably just before the idea for Octopus. We had to build Octopus as a demo client just to demonstrate to the world what the technology could do, transforming customer relationships and the way people use energy, and the operating efficiency of companies. And so in many ways, you know, the more successful Octopus is, the better we are at selling Kraken. And we should think of it that way around. So it's not the cannibalization, it's actually the success of building our scale across both businesses. But then within that...
Look, I've worked in technology for at least 20 years, and the thing that you learn is your only sustainable competitive advantage is speed. Once a company's done something in technology, it demonstrates that it's possible, and others that might not previously have invested in trying, now know it's worthwhile. And so we see copycat attempts on Kraken. So far, none of them look particularly credible, but, you know, I could be wrong, and complacency is a terrible thing. So, what we're aware of is, at the end of the day, once Kraken has demonstrated the extent to which Octopus can behave and achieve different things, sooner or later, other technology platforms would emerge offering the same to clients. Well, I'd much rather they bought from us than from those rivals.
So our collective value is far greater by operating in this way. And, you know, every now and then, there was an Olympic athlete who designed his own bike. He was a cyclist, I should say. And he backed himself to such an extent, he was confident selling copies of the bike to other people to fund his training. And I think it's the same here, which is look, no one's had the head start that Octopus, and indeed our early licensees have had, on how to use Kraken, and they can keep accelerating away. And so, you know, how we use it really matters. And James used that analogy of the operating system.
On your phone, you know, if it's an iPhone or an Android, you've got the same operating system as everyone else who's got a phone, but you have different apps, and every client gets different apps. I think Octopus' unique capability in understanding customers and building a culture will give it a sustained competitive advantage. I'm excited when I see, you know, when I see E.ON launching new products that I had no idea were coming and that are highly innovative. I'm really excited to see it because it just demonstrates this ability for Kraken to provide a wide range of new business models in this new world.
Good on you. Okay, there were hands that went up, I think. Over to you.
I wondered if, Frank, maybe you can talk about the experience you've had implementing Kraken, how the deployment process was and the sort of benefits you've seen since it's been rolled out across the retail base?
Yeah. So firstly, demonstrable benefits all the way through, and just to put James's point into context, Australia's got four or five different regulatory regions, so it's four or five, at least five or six different combinations in there. Through a time where we had a bid, we grew customer base by several hundred thousand accounts, 300,000 accounts through that period of time, had a bid on the company, continued to operate, have customer happiness up, have the cost of running the software down. And where we are right now is actually just in benefit realization. Our customer happiness is, I think, over 70%, Jon, today. Employee happiness is sitting at something like 8 out of 10 or close to that number. So we are seeing all of that play out right now.
We're right at the front, though, of the curve of the AI implementation because we've had so much come in, and we are still getting the productivity benefits, really, of our frontline agents. So they're the two areas, but in terms of us running a business through an implementation, and I went through, and so did Jon and the team, went through an SAP implementation. I have to say to you, there is no comparison. So very, very confident and in fact, more excited by what we can actually do now in terms of releasing products to the market. Okay, next question. Was there... Okay, just back there.
It's an interesting question. Interesting that you showed the, the gap in the cost to serve. It was, I think, GBP 40 lower. When you're doing licensing, without giving trade secrets away, how do you discuss those sorts of savings, and how do you collect that, you know, the right rent?
It's a great question. And obviously, I'm conscious that we love our clients, and some of them may be listening. So, yeah, genuine, in all seriousness, the-
I'm one of them.
You're a tough negotiator, Frank.
Thanks.
But... Look, the reality on this is that, first of all, the delivery of those benefits is down to how the client runs their business. Anyone can buy a Ferrari, but, you know, you need to know how to drive it to get more out of that than you would out of a Ford Focus. And in fact, you know, it really does require a shift in the company. Now, of course, Octopus started off built to be able to make the maximum advantage of Kraken. We built around those capabilities. Now, what we see with clients, and we saw it with E.ON, was they carry out an incredible transformation program with the implementation of Kraken. They literally built a new organization.
So they had legacy E.ON here and legacy npower, by the way, and then they started off with an empty business called E.ON Next, powered by Kraken, and they moved their people, and they changed all the processes. I mean, you know, I think across the business, it's roughly a 70% headcount reduction. So they saw those savings through doing it that way. But, you know, not every client will want to or will necessarily go through those processes. For some of them, they'll just want the increased agility and the ability to deliver happier products to their happy customers, new products and services. And so I don't think we see it's our right to enjoy, you know, kind of a rent over those savings.
A bit like, by the way, you know, as you replace clerks and bookkeepers with spreadsheets, you know, you didn't spend the same on a spreadsheet as you used to spend on a wage. So I think, look, we are proud. We've got incredible economics in Kraken, but actually, our main job is to help clients get that benefit rather than trying to extract it. The economics are incredible, right? I mean, you saw that Rule of 40 slide. You know, the reality is that in several decades, there hasn't been a credible alternative to the traditional ERP providers for utilities. And now, at scale, Kraken is proven, and it's not only credible, but it's a step change. You know, truly cloud-based, absolutely built around a single data model, and huge amounts of data with AI and machine learning.
It's the same kind of transformation, genuinely, as going from clerks and bookkeepers to spreadsheets.
Okay, we might take another question. Yep. Thanks.
Can I ask about the approach to the generation assets? Because there are obvious advantages to having an integrated model, but you don't wanna have to have the capital intensity of that, and I'd be interested to expand upon your, yeah, the approach you've taken, the ways you're trying to be innovative, and how you think about that going forwards.
Yeah. Today, the vast majority of our generation assets are managed through the fund management model. It was an acquisition we made, but we've roughly doubled the business since we acquired it and continue to invest in growth and innovation. The first thing it's done, though, is given us a proprietary understanding of generation. We get vastly more data to understand how different technologies are operating, and how they operate in different regions. And in our big, you know, if you like, in our big model of the energy transition, the more we can get proprietary data, whether or not we actually own the asset, the more we can match supply and demand in real time at a location.
That means you need less transmission, you need to pay for less transmission, it means you're putting investment in the right places, you're thinking correctly about the balance between consumption, consumption shift, and storage. All of which should give us long-term proprietary cost advantages on the commodity side. And look, I mean, Stuart put it brilliantly. We were having a discussion with one of the leading oil major CEOs in Europe, and Stuart's observation at dinner was, "Look, you guys make a huge chunk of your money trading a commodity that moves at 30 miles an hour." Through Kraken and our customers, we make money trading a commodity that moves at the speed of light. By the way, if anyone's done physics, it's not quite speed of light, but it's a lot faster than oil tankers.
And Stuart, I don't know whether you've got anything to add to that.
I think the other thing to say is we are increasingly contracting with assets in the portfolio, so we see end-to-end. We see the economics end to end, even if we're not in all cases directly benefiting from generating upside when it's in that part of the cycle.
Just-
So you had Kraken on that 40, the Rule of 40 slide. How would Octopus look if you stripped out Kraken on that slide?
Yeah, I think Rule of 40 is definitely, it's used for technology companies. We wouldn't even think about Octopus in the same world.
Okay.
Yeah.
But then you had the financial slide for Kraken, but if you think about Octopus separately, do you have any numbers that you can share in terms of the Octopus business?
Obviously, the rest of the group has the retail energy by revenue as the largest part, would be the big driver of growth. Margins in retail energy are obviously much lower than in the software business, as you'd expect, and particularly so as we've been investing in growth and brand, and driving that growth still in the UK and in other countries. Then in the other businesses within the rest of the group, the low carbon tech and services businesses are very much in growth phase, and we're investing very heavily in those, and we'll continue to do so.
But just to be clear, Octopus Energy Retail UK is a reasonable degree of profit, and we expect that to continue.
Yes, that's right. But I guess the point was the relative, compared to software, the margin is very different, as you'd expect, although the rates of growth in the retail business continue to be strong. But it is. The UK retail business is profitable and cash generative, and important for funding growth in other parts of the group.
Okay. Yep, just one more here, and then we'll go to the lines if... We'll just see how we go here.
You had a slide in there showing the pipeline for Kraken, and it was a little bit slim in the U.S. and Canada. Is there a particular reason for that? Is it complexities there that are just more difficult, or has it just not been a focus of attention so far?
Yeah, I mean, first of all, if you look across the Kraken family, Kraken Flex is huge already in North America. Kraken Customer, we went to North America later because it's a non-competitive market. Kraken is first of all proven in competitive retail markets, like where customers can switch. In the US, outside Texas, they run a sort of communistic model where customers have to use whoever's appointed by the local regulator. As such, companies there were looking for different benefits, but you know, the pipeline now is increasingly looking pretty strong. I've also got to say, like, you know, I mean, it's quite remarkable, Kraken, we've been licensing for, I don't know what, around four years? and I...
It's hard to overstate the degree of commitment that we ask of a client when they license Kraken Core, 'cause they're moving the entirety of their business onto a new platform. Now look, there's that old phrase that no one will get fired for buying IBM, but it's certainly not true of most ERP systems. CEOs have traditionally resisted and kicked the can down the road on any migration or transformation project that involved a new ERP system because of their history of going badly wrong. We architected Kraken to make migration and transformation BAU, and have increasingly delivered, I think, there's probably about 36 significant-ish migrations, 12 globally significant migrations. They've de-risked it for companies. In competitive retail markets, where we started, it was CEOs had more of a need to change because they have to deliver customer delight.
But what we're now seeing is real demand in the U.S., where energy utilities have been under pressure from regulators on a combination of carbon and customer satisfaction. And so I think we've kind of held off on the U.S., but now there's sort of some pressure building on the dam, actually, and yeah, I think we're gonna be doing some exciting stuff there pretty soon.
All right. We might go to the line, the phone lines there. We've got a question?
Yes, we do. Our third question comes from the line of Rob Koh from Morgan Stanley. Please ask your question, Rob.
Yes, hello, can you hear me?
Can hear you, Rob. Yep, loud and clear.
Great. Good morning, everybody. Thank you very much for the presentation. Maybe a question for the founders in the room. I'd like to get a sense of how you allocate your time to Octopus Kraken and Octopus Investments and whatever else is out there, some kind of Octopus space or something. And then secondly, along that journey, what are your eventual exit strategies, or in Australia, we like to say, how do you end up retired on a private island? Which is sincerely what I hope if it hasn't sold for you. But that would certainly be very helpful. Thank you.
I love the Australian vernacular. Thank you. Hey, look, there are two main companies that we think of in the group. There's Energy and there's Kraken. Within Energy, we've got Octopus in retail, generation, electric vehicles, services. We'll each speak to this separately, but I personally spend a third of my time on Energy, a third on Kraken, and then a third doing external ambassadorial work across the two, typically talking about helping drive the energy transition in a whole range of countries and economies.
I'm overwhelmingly focused on Kraken, both the future of the product and working with current and future clients. Within that, I can also put sort of like a chunk of time I spend working with Octopus as a client, much in the same way as I do spend... I'm working with Origin and E.ON and EDF. So yeah, I'm pretty much Kraken.
I, you would perhaps be unsurprised to know, I tend to weigh my time more towards areas where there is more risk, more complexity, and more capital deployment, which necessarily puts more of my time into the retail businesses and increasingly the international or non-UK businesses, as well as the services businesses.
By the way, for those who are listening, the chief executive spoke first, Greg, then CTO, James, and then CFO, Stuart. And then the second question about exiting a private island. I mean, look, honestly, I've got the best job in the world. I care passionately about the energy transition. I've always cared passionately about technology, hence previous businesses. You know, Octopus is pretty big in the UK, and we're just becoming known in some European countries and Japan, but we've got so much runway. And Kraken, look, today, Kraken's got 54 million licenses. The pipeline, the visible pipeline, probably takes it over 100, assuming we get a reasonable degree of close rate on those sales. But SAP's got 690 million licenses in utilities.
Oracle's got 600 million, and so we know the scale we need to be going after. There's a lot of work to do.
Can I add on the private islands one? You know, we, we're incredibly mission-focused on trying to change the world from destroying itself with burning fossil fuels and to move to a renewable future. Unless we're successful in that, your island's gonna be underwater soon. So,
I slightly recoiled at the thought of being incarcerated on an island when there's just so much interesting stuff, fascinating things we work on here. I couldn't imagine anything else I'd rather be doing.
Okay, thanks very much, Rob. Okay, next question on the line.
Thank you. Our next question comes from the line of Tom Allen from UBS. Please ask your question, Tom.
Good morning, Greg, Stuart, and James. I was interested to hear what unique opportunity set you see for energy retail product evolution that Kraken could support in Australia. Given Origin has an exclusive license to Kraken in Australia, can you please comment on the competitive advantage that you think Kraken might be able to sustain over other platforms that are applied in Australia?
... So James, you've just come back from Australia. I think you landed last Friday, so yeah.
Yep. So I didn't quite...
What competitive advantages can Kraken bring?
To retail-
To Australia?
To us, yeah.
Especially given the exclusivity with Origin.
Yeah.
Although noting there are a couple of others.
Yes, there are a couple of others licensed. I think yeah, it plays to those fundamentals we set out to deliver with Kraken: management of data, operational efficiency, and the ability to differentiate yourself. And as Greg said, it's, you know, these are enablers, they're not necessarily the full solution. It really takes a partnership with, you know, with the client, with Origin in this case, to be making the most of those things. And, you know, Origin, when we started with Origin, it was about the same time we started with E.ON, and within E.ON, there's a UK retailer called npower. Npower was a basket case of a company. And so it wasn't-
Not language you usually hear in one of these calls, I imagine.
Yes. No, so in a way, you know, some of those achievements weren't that hard to be getting. Origin, on the other hand, was a well-run company before they engaged with us, so that was a lot more challenging, you know, for us to take on and to say: Can we take something which is already well run, and can we make it better? And it does take a partnership. I think we can provide the technology, we can operate the technology, but it's also taking a lot of work from Origin to, you know, in terms of data analysis, in terms of thinking about what products and services they want.
Now they've got the capability to launch those, what they want to do, and how can they realize those benefits.
I'll probably just add, Tom, on... You probably saw the product evolution that's gone on in the retail market in the UK. I think that flexibility and the ability to provide innovative products, particularly as EVs and batteries increase penetration in the Australian market, I think you can see that's a focus area that you'll find is probably the first area where I think you'll see that we'll scale. And I think we can see what Octopus have done in the UK on a number of those areas that we will draw experience from. Thanks very much, Tom. Another question in the line?
Yep. Next question comes from the line of Ian Myles from Macquarie. Please go ahead with your question, Ian.
Hi, I think that's me.
Yes, that's you, Ian.
Um-
Yeah.
Sorry, she broke up.
Okay.
Well, a couple of things. Just really interesting, you point out EDF and E.ON, and it's curious to see that you're still winning customers from them despite them implementing Kraken, and I'm interested to understand maybe a bit more of that. And also, in the context, particularly of E.ON, where you've done a great job in lifting their UK performance, why do you think that they are unwilling to sort of put that into their major, in their major markets like Germany? Are you finding there's this desire for customers to, or potentially some of these larger people to own part of their own customer base, they don't want to give up control of that, the EDF system?
Yeah, it's a great question. So I think the-
Yeah, it-
Oh, sorry.
Sorry.
Did you have a bit more?
No, no, that's all.
Okay, cool. Yeah, so look, I think I mentioned earlier the extent to which making an ERP system change is a phenomenal commitment from a CEO. And it's why you've seen so few over the years. But now that Kraken is providing this kind of largely de-risked opportunity to do so, there's a lot of demand for us. I think for the European majors, first of all, seeing Octopus's success on Kraken in the UK meant that they felt the UK was a good, safe market for a transition onto Kraken. I think what we're now seeing, for example, the license agreement we had with Plenitude, that's the retail arm of Italian company, Eni, taking Kraken across a whole pile of European countries.
They felt that was de-risked because Octopus is now operating itself in France, Italy, Germany, Spain, successfully. And I think now what we're seeing is major European utilities are getting more and more confident that, again, Kraken provides the safest alternative, to the... In fact, it's just often gonna be lower risk than carrying on with what they've got. And so I think you'll see, more, more wins in those countries from larger utilities, you know, pretty soon. Of course, we never know. I mean, it's, you know, it's a business development, but certainly the conversations we're having suggest there's a, a lot of, a lot of demand for Kraken. And we've got to remember, I think, often, I've compared ERP system changes to being chased by a bear to a motorway.
You kind of, you know, your legacy platform is gonna kill you one day, but you've got to cross a busy motorway to escape it. You know, so the companies have been terrified of this for so long. Now, Kraken really is offering this kind of much safer approach. So we finally put a sort of level crossing or a pedestrian bridge over the motorway, and people are enjoying it.
... Is that okay, Ian? You've got that?
Yeah, it can, so should we actually assume that while she's still working on capping out, Plenitude is a really good example. They've given it to you in all the other regions other than Italy, but you do have an instance in Italy. Is it like a trial, get it right, and then we'll consider Italy?
Yes, so, Ian, you cracked up a bit there, but broadly speaking, the strategy we always took with Kraken is the best marketing is successful migrations. And so, we've been absolutely focused on success. I think the Kraken biz dev team globally is three or four people. Now, if you compare that, I mean, there's no software as service business with revenues like Kraken's, with such a small team. Because, you know, honestly, we don't need to sell it hard. What we need to do is work closely with clients when they're ready to deliver success. And, you know, that's a phenomenal commitment from us.
Now, if we look at, you know, every territory we've been in, the UK, Octopus was the demo client, but the first licensee was a small client, Good Energy, before we did a big one in E.ON. In Australia, the first client was a small client, it was Hanwha, before Origin. If we look at Europe, we launched Kraken first with our own small retail entities. We acquired small businesses and then Krakenized them before the first big deal of Plenitude. And you'll see, like in the US, you know, we made a small acquisition there, put it on Kraken, and now, you know, to the discussion earlier, I hope we've got a pretty good pipeline there. So everywhere we go, we de-risk at our own, our own risk.
We de-risk for clients, and then we work with large clients.
Yeah. Okay, that, that sounds great. Can I just ask one more, just on Octopus Energy itself. You talk about the whole of client lifetime value, and, you know, I sort of very simplistically understand the Octopus customer. Can you give a bit more color how you make revenue out of the Flex side of the business? 'Cause Kraken we can see is on licensing, but how does the Flex go, and is it more about you reducing hedges, and you actually better managing what your hedge profile is, you can create more risk and, and more value through that, or is it some other means?
Yeah, so there are actually a number of ways in which we can monetize that. Firstly, there are agreements that we have with the distributors and with the grid operator in the UK National Grid, which provides revenue directly back to us in response for the services we can provide to the networks and to the grid. Similarly, we've also deployed flexibility into the Capacity Market, and in time, it's obviously gonna be beneficial for us in intraday trading as well, to have-- It creates optionality that's valuable for the business.
So when you think of the CLV, core retail, 'cause I think the first explanation Stuart gave there was the flex as a, let's call it as a software, but also a service that's actually provided to third party, but for your own customers, which is coming through Intelligent Octopus.
Yeah.
That's through both Capacity Markets and wholesale. It's really what are the sources of value within that-
Yeah
... that block, yeah.
Yes, and not just... It's actually, we have bilateral agreements with distributors as well.
Right. So you get the benefit of that through the Octopus side as well. Is that right?
Yes, correct.
Okay.
Yes.
So it'll be network benefit, it will be Capacity Markets benefit, and it will be really cost of energy savings. Is that right?
That's right. Yeah.
James, I think it's right for that point.
I think the UK market is more complex. It's got more avenues in terms of the demand response markets and such like than the Australian market.
Mm.
So, there's probably... I don't know where the question is from, but there's more opportunities currently in the UK, but as you know, we expect that other markets around the world will become increasingly sophisticated, too.
Do you wanna give an example of that?
And by the way, I mean, so the long-term picture here as well, the direction of travel is only one way. Governments around the world are conscious that, you know, they can't achieve their renewables targets through existing subsidy schemes and, for example, subsidizing storage at huge scale. The only way they're gonna get through, get there is through increasing amounts of dynamic pricing, localized pricing, and flexibility at every stage of the energy system. So, you know, from our perspective, what we're investing in here is not only something that works very, very well today, but something that's gonna be dramatically more important. I mean, you look at the UK, today, renewables are what? 40%-45% of electricity, but electricity is only 20% of primary energy.
Forecasts suggest electricity is becoming 60% of primary energy, and it becomes 80% or 90% or 95% renewable. Now, how much dynamism is that gonna offer for those of us who can, like, lead the way on flexibility?
Yeah.
Did you want to give an example of what those markets are?
Stuart might be better.
The markets in the UK, which may not exist elsewhere in terms of flexibility, do you-
Yep. Well, there's several ancillary markets, as we call them. So the Balancing Market, where we can offer up,
... load to National Grid as the system operator. We're also, you know, these are, I guess, important income for us-
Yeah
would be through the bilateral contracts.
Yeah.
So these aren't publicly traded markets, but we have agreements with most, if not all now, of the network operators and with National Grid, where they can call upon load from us, and we're paid for that, for provision of that capacity and that load.
And then you've got temporary ones, like the Demand Flexibility Service for National Grid this winter.
Yeah.
You know, Octopus was around 50% of all of the demand shift. 29 companies participated. One of them, Octopus, was 50% of that market. Then you've got consumer-facing markets, for example, the Smart Export Guarantee, which is a government mandate that we pay customers for solar export. Octopus, a superior customer experience, means we've got a 66% share of that market. So what we find is that we're-Octopus, because of its superior customer relationships, just owns a disproportionately high share of market, of the capability here, which means that, you know, when it comes to those bilaterals, as an example, it is more worthwhile companies, operators spending time with us to negotiate these than with others.
Great. Thanks very much, Ian. We've got another question on the line.
Thank you. Next question comes from Dale Koenders, from Barrenjoey. Please ask your question, Dale.
Good morning, and thank you. Just wondering if you'd had any thoughts on the evolution of your business model as you move forward over the next couple of years. Does it make sense at some point to pull back investment or discounting in UK retail, or maybe exit UK retail altogether to avoid direct competition with Kraken customers? And then how you balance sort of those possible changes with requirements of further rounds of equity raising and funding growth?
So I'll give a quick overall comment and then hand over to Stuart. Look, I mean, the last thing we'd do is exit retail. I mean, we've smashed it. We've created a brand that is remarkable and enables us to build phenomenal value with customers. Now, in the UK, where we have market leadership in electricity, and we're rapidly growing in gas, and we have market leadership in many of the subsegments, like almost every form of flexibility and of new consumption, like EVs. The opportunity to create extraordinary value through the transition, I think, you know, we've still got a tremendous runway.
So in the UK, our job is really to consolidate and keep growing our leadership position, maintain our brand preference for customers, and then be bringing them a wide array of products and services that are better together, as I talked about the product family earlier, to not only generate proprietary value for us, but also much higher lifetime values. This is a—I mean, this is a once in a generation, a unique opportunity as people change the way that they drive, the way they heat their homes, and the way that they receive their power, and we've built this position to be at the front of it. So I really think we're... Honestly, we've got so much room to grow in the UK.
Outside the UK, we've just got to get big fast, because what we're finding is, the same products and services appeal equally in non-UK markets, and we need to make sure that we're benefiting from everything we're learning, rather than the people that stand to copy us. Stuart?
Yeah, I think I start from... We've referenced several times the lifetime value of a customer, of a retail customer, depending on obviously the penetration of different forms of low carbon tech assets into those, into that customer base. We think a very reasonable view is that the lifetime value should be about three times bigger as per the chart we showed you.
So, increasingly, the ecosystem that we're building works together synergistically, albeit on the Kraken platform, but actually, in the retail energy or in the energy transition side of the business, we're also building a lot of know-how about how customers interact with different devices, the apps that we're building that interface between those two, how to make offers, how to trade, and hedge different kinds of positions. The models that we're creating are different as we're moving into smarter products. So there's a lot of technology actually that's being built, using technology in the loosest sense, being built outside of Kraken. And actually, that's a very important synergy between all of those businesses within our energy businesses. So yeah, I think they work together powerfully.
So sorry, the second part of that question, with such exciting growth ahead of you, how are you thinking about the equity call, and does that get in the way of growth or not?
So funding the growth.
Yeah. Well, so we've, we've recently just completed, as you'll know, a GBP 630 million primary equity raise. In combination with the cash that's generated from the UK retail business now, we, we are and can be self-funding. The equity that we've just raised is primarily earmarked for driving, accelerating growth in retail businesses outside of the UK and the investments that we're making into
... the supply chain and the delivery installation capacity for low carbon tech businesses. So we don't need to go back for new equity.
Thanks.
Thanks, Dale. Now, we've got some other questions coming through another source here, so we'll just get them voiced by our compere over there.
Thank you, Frank. Greg, so this is a couple of questions in relation to UK regulation and approach there. So Ofgem has released a discussion paper regarding the future of the price cap. So just questions around your approach to engaging with Ofgem and regulators in the UK, what changes you'll be asking for as part of the price cap review, and how you see these changes benefiting Octopus as well as the broader market?
Yeah. So look, I mean, first of all, I should say in terms of regulatory relationships, I think we've got a good relationship with the regulator, very good. Largely what we set out to do is so well aligned with so much of their mission, which is putting customers first while driving towards clean energy, and I think that gives us a natural synergy with what they're after. Of course, doesn't mean we share everything in common with them, but we do have good relations. First of all, Octopus' desire to be natural leaders meant that we were pushing for the energy price cap, from the beginning.
We could see how, first of all, look, for consumers, a market in which, unless you're, relentlessly on your toes, the default model of companies is to rip you off, is not a market that's functioning well. I'm a capitalist. I believe capitalism, delivers, a better economy and better outcomes for citizens, but it needs markets to function effectively to do so. Otherwise, people lose faith in the system. Because energy pricing was not understood, the market was not working in consumers' interests. The price cap essentially forced companies to get more efficient and, in order to, make money, rather than to find new ways of hoodwinking customers. That drive to efficiency is the right thing, is what markets should do.
Now, of course, it also happened that that meant that, Octopus was well-placed because, driven by Kraken, we were more efficient, and, and it's certainly been helpful in our growth, but it came from doing the right thing for customers. Of course, we were founded to do the right thing for customers, so there, there's a sort of synergy there. Now, something else in Octopus leadership, Octopus has led the way on dynamic tariffs. We're the first company to introduce them in any meaningful way. We, by far, you know, 50% of, maybe more of all of the customer dynamic tariffs are with Octopus, and we have by far the widest range of customer-facing, innovation in tariff design. The regulators noticed that, and they've noticed that it delivers a more efficient, better system and better outcome for customers.
You know, it's far better to give customers lower prices when it's windy and sunny than it is to curtail energy and pay for nothing. So Octopus's leadership means the regulator is now thinking about how do you regulate in a world where you're gonna have a more efficient system through dynamic pricing? And I think we've got unique data to help them think that through, because we've got hundreds and thousands of customers who've experienced it. And so, our job here is gonna be making sure that we bring real data to the table rather than, you know, kind of what you tend to get in energy before, which is people waving their arms or running kind of speculative surveys.
So we're very supportive, and, you know, we know that because we've invested in doing the right thing through Kraken and Octopus, we should be very well placed at what comes out of it. Was there a question beyond the price cap one there?
Just direct, the, yeah.
No, cool.
No, no, that's good. Go.
So there's been quite a few questions around funding, which I think, Stuart, you've answered well. A question around, so strategy with Octopus' enormous success in energy and your unique technology, other sectors you may be looking at disrupting, and if I kind of build on that, could you please expand on the telco opportunity, including how high a priority it is compared to other opportunities, and how you go about addressing those markets?
Yeah. So, look, if you think about what Kraken's remarkably good at, it's remarkably good at running very high volume service businesses, where you have typically, you know, some sort of billing frequency, monthly, weekly, quarterly, whatever, some sort of metering or even unmetered products. So for example, water is often unmetered or broadband. And managing the customer relationships behind potentially quite complex product sets that applies in energy, but, you know, a broadband account looks very much like a telco account, looks very much like an energy account. From the very beginning, Kraken documentation included examples for how it would be used for telco. So we kind of always planned on this coming. I talked earlier about the de-risk strategy as we entered new markets with Kraken, it's the same with telco.
So we've signed our first telco license with a small telco provider in the UK, Cuckoo. But we have conversations underway with very large ones. And so I think, you know, what Kraken uniquely brings and, and certainly what—when their management come and see how we operate Octopus, great demo client, they can see that Kraken provides a single customer view, with all of the data enhanced already heavily by AI, that will be as helpful to a telco customer as it would be to an energy customer. And, by the way, same in water. So we had our first water licenses with a couple of small water companies, and then, you know, announced a large one with Severn Trent and 4.7 million customers.
They are similarly looking for the ability to have all this joined-up data between the customer relationships, customer finances, customer billing, and so on. So, you know, I can't say how far this goes, but, you know, today, Kraken processes 1% or 2% of UK. GDP very seamlessly, managing millions of accounts with, you know, sometimes incredible staff to customer ratios and outstanding customer success. You might want to think about what other markets might like that as well.
So Greg, would you think beyond Kraken as it relates to those other markets, or is it largely through the Kraken lens that you think about them?
Yeah, look, I mean, every week, we have multiple visits from companies usually from utilities, but increasingly other sectors from around the world, from governments, looking at how the Kraken model allows transformation of organizations. I think you can be pretty. Look, we never want to move too fast with Kraken, 'cause success is what matters, client success is what matters. But the range of uses to which it can be put, certainly people stretch our thinking.
Good. Okay.
Thank you. A couple of questions on partnerships and approach to partnerships. So generally, okay, general and specific. So general approach to partnerships, how you think about that across the landscape in both retail and energy transition and technology. And then more specifically, curious about your partnership with Enphase. And if the question asker has understood it correctly, Enphase products come with their own software. How does their software solution play with yours?
Oh, great. So first of all, on partnerships generally, look, you've got partnerships like Kraken licensees, you know, true partners where their success is critical to ours. But, look, I learned at the knees of a UK entrepreneurial giant, a guy called Richard Harpin that ran HomeServe. HomeServe, recently acquired by Brookfield, actually, but built his business through partnerships with utilities, largely to sell insurance to customers. And the vast majority of that business was done through partnerships. And I learned a tremendous amount from Richard about the importance of that. So if you look at where the energy transition is, it's creating partnerships that no one had imagined before.
Partnerships between energy companies and car companies, or with Zero Bills homes, deep partnership with home builders, where literally we specify the kit that's gonna go on a home in order that we can optimize it through our technology. Like, it's this integration of, you know, the most expensive thing that most households will ever buy with the services and technology we provide. No one would have imagined that a couple of years ago. And so we've got a great partnerships team that are relentlessly working on win-win approaches. I think when it comes to Enphase, you know, and it's a very recently signed partnership, and, you know, a lot of companies got their own software. Part of the magic of Kraken...
In fact, look, Octopus, I think, is still the only energy company, certainly in the UK, I think, I don't know of a single one globally that publishes its APIs. So for those who don't know, an API is a key that lets you connect one platform with another. It's how you connect WhatsApp to email or whatever on your phone. They're all joined up by APIs, and Octopus publishes APIs for customers. There are about 450 different data items. Now, Kraken uses those data items, but it also enables us to connect with equipment manufacturers. And because we publish the keys, equipment manufacturers can integrate with Kraken, integrate with Octopus, without even talking to us.
What this is enabling us to do is learn how this kind of equipment works in real-world scenarios far faster than the companies that have spent months and months and months negotiating that relationship. So I think, you know, if you look at where we are with Enphase, of course, they've got software, but what really matters is how their software works with ours to deliver superior outcomes for customers, to make it the favored choice, and then to deliver the CLVs we've been talking about earlier. In these early days, the amount we're learning is honestly like one of the competitive advantages. James, Stuart, anything?
I don't think I can really add much more to that.
Yeah, we ran an event last year, and Tim Berners-Lee—Greg was interviewing Tim Berners-Lee, and he gave an answer about the invention of the World Wide Web. And he said, what was amazing is they designed it so it could be used for anything, and the result was, it was used for everything. And I think the provision of APIs and that sort of the preparedness to be open and interconnected, especially when we're on the cusp of huge need for innovation and change, is at the heart of our approach.
Good answer.
I'll move back to Kraken now, and there's quite a few questions that I think you've really looked to cover in terms of differentiation, but I'll cover them off just for completeness. So really, that differentiating point of Kraken relative to competitors, specifically a question here around why would you, an energy provider, choose Kraken over Gentrack? And then in response to an article, which is in the Australian newspapers yesterday around AGL's decision to go with Kaluza. How do you think about Kaluza and that whole competitive landscape? And again, back to the differentiating points of Kraken.
Yeah, I mean, first of all, we've got huge respect for companies, but Kraken is unique in that we started building it eight or nine years ago on the most modern technology. If you compare it to most, I mean, one of the two solutions you talked about there is much, much older. But it was built by technologists that, you know, architected from the beginning to be globally scalable, to be standardized, and to be maintainable over time. One interesting thing is, utilities have got terrible software, right? They really have. By the way, as do other regulated sectors, banks. Like banks still running on COBOL, right? Now, why is this, right?
It's, it's often because in a regulated sector, first of all, you're terrified of changing anything, because if you change something, it goes wrong, then the regulator will be down on you like a ton of bricks. It's also because the regulators are always changing the rules. Within a normal organization, you know, the operations function may speak to technology and say, "Hey, look, we'd really like to start using barcodes to shift these products around faster. How long is that gonna take?" And, you know, they work together to get a solution. But in a regulated sector, you know, regulators and politicians awake up in the morning, and they'll declare a new thing that you have to do. And so, the only way you evolve the software is by continually jumping from one unanticipated change to another.
And when you're doing that on traditional software, it's huge amounts of workarounds, and fudges, and manual processes, which in themselves create both the inability to be more efficient going forward, because everything you do now is a pile of spaghetti. And to be efficient, because you've got armies of people doing tasks that you didn't have time to get written properly in software. And so, there's a curious thing that the act of regulating in its current format, in almost every sector, creates bad technology solutions. We architected Kraken as a monolithic platform from the beginning. That is, it does everything. Because then we can provide a unique approach to transformation, which is, you start off with your existing business, like E.ON, E.ON and npower over here, and we create an empty Kraken.
Unlike any other platform, that Kraken contains every business process you need to run the business, and you can move a customer over and test that customer end to end, and move 10 customers over, and move 100, move 1,000, move 10,000, move 100,000, move 250,000 a day. At every point, you're able to verify, validate, that it's working, and every customer only lives either in the old world or the new world. So you're not doing the very painful, difficult job of trying to integrate your new software into a whole pile of legacy kludges that are already disastrous. Now, no platform that you described there fits that format, and that's why, for example, look, when, when Octopus acquired Shell Energy Retail this year, it migrated 2 million accounts in 51 days seamlessly.
During that process, customer satisfaction went up to 4.9 out of 5, during the migration. And by the way, I mean, very sadly, you know, the headcount was reduced from around 2,000 to 200. No one else has got that proven record. And the real challenge for anyone in this world is, not only can you make a migration work, but then how do you keep up with regulation that's always changing in a way that enables elegant software to be maintained? And Kraken's 200 releases a day is unique, 'cause what that lets us do is, if we've got to get some... The UK introduced some new regulation to help support customers' energy bills through the energy crisis. Kraken implemented it in how many days, James?
It was about 6, because it was tied up with the death of the late Queen, and that meant the government was in lockdown and during the official mourning, weren't able to announce any details of the scheme. But the date for the price cap change, et cetera, was fixed, so we had to do it in under a week.
And that was done elegantly. We know that other companies essentially took many, many months to do it, and therefore, had manual workarounds and processes. They would try to backfill manually afterwards, whereas it was just built into Kraken seamlessly and carried on. And I don't think any other platform's got a record of that. And James, that's my quick observation. Anything else from you?
Yeah, I mean, back to the Kaluza question, as you say, I think the record of transformation that Kraken has delivered. But also, the slide we had about the sort of old world architecture and the benefit of going with Kraken because of its breadth. You know, I understand that Kaluza's also announced partnerships with Salesforce and with Gentrack, and I don't know with whom else. So, you know, they are on that left-hand side of multiple parties needing it, needing integration. And, you know, on the technical side, Kaluza have been public at sort of advertising about their sort of distributed architecture.
We've been public about sort of the elegance of that consolidated data model. But it does mean that, you know, the migration approach is a lot more straightforward for Kraken clients. And I also know things like the tenure that we have of the software engineers and such like, the consistency we've had from the outset, which I think are really strong advantages for Kraken. So, we weren't obviously able to make the case to AGL, and they probably wouldn't have wanted to talk to us, given the Origin association anyway. But it's gonna be very interesting to see how that one pans out over the coming years.
Thanks.
Could you please comment on how you think about pricing models adopted by Kraken relative to other technology companies, and the extent to which we should think about revenue growth as always being linked to subscriber growth?
Yeah, so, Kraken's chosen a SaaS pricing model. That is, we typically charge, a migration fee per customer, and then a per customer fee per, you know, per month. SaaS model enables customers to, know exactly what their unit economics are gonna be. So from their perspective, they've got certainty they often don't have in a world where they have to pay, you know, lump sums, without knowing what, what that'll be, against. And from our perspective, it generates the certainty of, strong ARRs. So I think it's a really powerful pricing model, obviously chosen by many other modern software companies, 'cause it serves as a win-win for Kraken and for its customers.
Okay. All right. If there are any last-minute questions in the room before... Okay, I wanna thank particularly Greg, Stuart, and James, and all of you for coming today. We look forward to meeting with our investors over the next several days. I hope you've really, and I think you should have, really learned a lot more about Octopus as a business, how they think about the opportunities before it, how it thinks about new markets, and also how it thinks about creating value for its shareholders, but also for its customers and partners. So, thanks very much, everyone, for joining today, and join me in thanking the three founders. Thanks very much.
Thank you.
Thank you.
Thank you.
Well done. Thank you.