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Octopus Energy has delivered its first annual profit since launching in 2015 following several years of rapid growth that has made it the UK’s second-largest household energy supplier.
The London-based company made a £283mn pre-tax profit in the year ending on April 30, 2023 following a £165.7mn loss in 2022.
The profit was built on a tripling of revenues that rose to £12.5bn due to higher gas and electricity prices and a growth in customer numbers.
As well as its retail arm, the private company owns and develops wind farms and solar farms. It also licences its Kraken technology to rivals, which use it to manage customer accounts.
Greg Jackson, founder and chief executive, said the company had “continued to build momentum this year” and he was “proud of the way our team has tirelessly supported customers”.
Turning a profit is a milestone for Octopus, which is among several firms that set up in the UK over the past decade to challenge dominant suppliers such as British Gas and EDF.
Octopus consolidated its position during the energy crisis starting in late 2021, scooping up customers from rivals that collapsed under the strain of surging wholesale gas prices.
Those included 1.5mn customers left behind by one its largest competitors, Bulb, which the company took on under a government process that has triggered accusations of unfairness from rivals.
Octopus now has 7.7mn customers compared with 3.4mn in the year to the end of April 2022. Roughly 900,000 of those are outside of the UK, while its Kraken platform is contracted to serve 54mn accounts globally.
Jackson told the Financial Times in October it was a “choice for us when we choose to deliver a profit”, and the company would be “investing in growth for a long time to come”.
“We are on track for what really matters to us, which is building a global business in electrification,” he said at the time.
UK energy retailers finances are under tougher scrutiny from Ofgem, the energy regulator, which plans to impose new capital buffer requirements from March 2025 to prevent a repeat of the market disruption in 2021 and 2022.
In December, Octopus raised $800mn from its investors, including Canada Pension Plan Investment Board, in a fundraising round valuing the company at almost $8bn, up from $4.6bn in 2021.
Chris Jackson, the company’s finance chief, said the group was “financially robust” and could “continue to invest in lower prices, international growth, and critical innovation”.