TL;DR: Octopus Energy's £255m Loss is a Strategic Learning Moment Amid Growth
Octopus Energy reported a £255m loss in 2025, driven by one-time acquisition costs and reduced energy demand during an unusually warm UK spring, despite achieving £13.7bn in revenue. Key learnings for entrepreneurs include budgeting for unforeseen growth costs, prioritizing resource management, and preparing for market volatility. The company plans to rebound by spinning off Kraken Technologies in 2026, unlocking new opportunities and stabilizing finances.
• Prepare for hidden costs during acquisitions and scaling to avoid financial strain.
• Account for market unpredictability, such as weather or consumer behavior shifts, in forecasts.
• Embrace innovation (e.g., technology solutions like Octopus’s Kraken) to create long-term value.
Setbacks don’t define a business, resilience does. For deeper insights into thriving amidst challenges, read the full analysis here.
Octopus Energy’s £255m Loss: A Temporary Setback or Strategic Recalibration?
As a serial entrepreneur, I have often stressed that chasing growth comes with its own set of intricacies. Octopus Energy, the poster child of customer-focused, tech-enabled renewable energy, has reminded us of that profound reality. Despite two impressive years of profitability, 2025 saw the UK-based energy company report a net loss of £255m. At first glance, this might seem alarming, particularly in a capital-intensive industry like energy, but let’s peel back the layers and see what it reveals about the challenges and triumphs of scaling a modern tech-oriented utility business.
The story isn’t just about a return to losses, it’s about navigating acquisitions, record-breaking environmental conditions, and a shifting market landscape. Let’s explore what founders and business owners can learn from Octopus Energy’s trajectory, and what this tells us about building resilience during periods of rapid expansion.
Why Did Octopus Energy Post a £255m Loss Despite Growing Revenues?
Octopus Energy achieved a 10% revenue growth in 2025, hitting £13.7bn, up from £12.4bn the year before. Yet staggering top-line growth wasn’t enough to prevent the company from slipping back into the red. The primary reasons lie in expensive, one-off costs and the unpredictable nature of fuel consumption. The leadership openly cited two main issues:
- Acquisition Costs: The 2022 purchase of Bulb Energy, a failed UK energy startup, left lingering financial liabilities. These final costs contributed £144m to the loss, a severe drag on profitability.
- Climate Impacts: The UK experienced its hottest spring on record, which drastically reduced gas usage. This warmer-than-usual season shaved off an estimated £103m in revenue from decreased customer energy demand.
Additionally, the company increased headcount by 34%, expanding its workforce to 11,400 employees to support its global scaling efforts. While this adds long-term value, such rapid expansion often creates significant short-term financial strain.
What Can Entrepreneurs Learn from This Setback?
Octopus Energy’s situation highlights a vital point: growth-driven setbacks don’t equate to failure. If anything, they underscore the complexity of scaling strategies. Here are some key takeaways for founders managing growth stressors in their own companies:
- Plan for Acquisition Costs: Acquisitions, while exciting, come with hidden costs that can linger long beyond the initial purchase. Founders must account for potential post-merger expenses in their financial forecasts.
- Resource Management Is Everything: Rapid hiring might be necessary during growth stages, but effective onboarding and strategic hiring decisions are essential to ensure that new human capital generates a near-immediate return.
- Market Volatility Cannot Be Ignored: Variables like weather patterns, global events, or shifts in consumer behavior should be modeled into forecasting. This allows businesses to build adaptive strategies.
- Long-Term Vision Is Key: In Octopus Energy’s case, the transformation towards tech innovation (via their Kraken platform) helped cushion the impact of short-term losses. Offering SaaS solutions is a scalable revenue stream they can capitalize on independent of external market stressors.
How Does Octopus Energy Plan to Stabilize?
CFO Stuart Jackson has emphasized that the £255m figure includes one-off costs, ensuring stakeholders that the company’s underlying performance remains “robust.” When the non-recurring expenses are excluded, the company reported an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of £90m, although still a 31% drop from 2024’s £290m.
An important milestone on their roadmap is the 2026 spin-off of their tech arm Kraken Technologies. This move, made possible through a $1bn funding round, positions Kraken at an $8.65bn valuation. The separation will allow Octopus to focus on its core energy business while monetizing its technology solutions. Additionally, the funds from Kraken’s spin-off will more than double Octopus Energy’s balance sheet, creating room for new opportunities and revitalization.
What Are the Risks of Scaling Without Backup Plans?
Many founders underestimate the breakpoints a company hits as it scales. While Octopus’s woes are temporary, they point to larger risks for startups entering similar challenges:
- Overexpansion: Growing too quickly without ensuring sustainable resources can lead to financial strain.
- Underestimating Costs: Neglecting to forecast one-off costs, such as acquisitions or infrastructure investments, can derail bottom lines.
- Insufficient Financial Resilience: Octopus Energy’s setback also underscores the importance of financial cushions, reserves can help weather sudden downturns.
What Should Founders Do When Facing a Financial Loss?
The way you manage downturns as a founder determines how well your company rebounds. Here’s what I would recommend:
- Assess the damage critically, what were predictable challenges, and which could have been mitigated?
- Reprioritize spending. Focus on initiatives contributing to medium-term survival and long-term advantages.
- Communicate openly with stakeholders. Octopus Energy’s transparency with investors about the “non-recurring” nature of the losses was key to maintaining confidence.
- Identify new revenue streams or pivot points. Take inspiration from how Octopus leveraged Kraken.
- Learn from mistakes and document every challenge for iterative fixes.
Remember, setbacks don’t define the success of a company; resilience does.
Closing Thoughts
Octopus Energy’s journey serves as a lesson for every founder: scaling a business is not just about revenue growth but navigating complex, multifaceted challenges. For aspiring entrepreneurs and seasoned business leaders alike, the message is clear, prepare for the unexpected, embrace adaptability, and lean on innovation when the road gets bumpy. Keep an eye on opportunities that might stem from immediate downturns.
For more insights on handling business adversity and strategic growth, check out the detailed analysis from Sifted’s report on Octopus Energy.
FAQ: Octopus Energy’s £255m Loss: Key Insights and Lessons for Entrepreneurs
Why did Octopus Energy incur a £255m loss despite revenue growth in 2025?
In 2025, Octopus Energy marked a £255m net loss, returning to the red after two profitable years. This was despite a revenue increase of 10%, reaching £13.7bn. The loss was mainly attributed to two significant one-off costs: £144m related to the acquisition of the collapsed UK startup Bulb Energy and settlements for the Energy Price Guarantee (EPG). Additionally, the UK's warmest spring on record reduced gas usage, leading to a £103m decline in revenue. The company also invested heavily in hiring, increasing its workforce by 34% to 11,400 globally. These factors highlight how one-off expenses and environmental conditions can severely impact a business. Read more about Octopus’s annual results.
How has Octopus Energy evolved as a company over the years?
Since its founding, Octopus Energy has become one of the UK’s largest renewable energy companies. By 2025, it served nearly 10 million customers globally, with 7.6 million households in the UK alone, capturing 24% of the UK energy retail market. The company's focus on renewable energy and its Kraken software platform to innovate energy management have distinguished it from traditional energy providers. Moreover, contracts with other energy companies to use Kraken's SaaS capabilities have led to a substantial increase in recurring revenue streams.
What led to the decrease in energy demand in 2025?
One significant factor contributing to Octopus Energy’s financial loss in 2025 was the UK's warmest spring since 1885. This unseasonable weather resulted in a sharp decline in gas consumption, 11% lower than average in March and a 25% drop in April. The reduced demand led to a £103m impact on the company's revenue. This highlights the significant impact unexpected climate changes can have on energy consumption and revenue, underlining the importance of adapting forecasts to include environmental variables. Learn more about Octopus Energy and climate impacts.
How is Octopus Energy addressing these challenges?
Octopus Energy’s management has assured stakeholders that the recorded losses are non-recurring and that the company continues to maintain robust underlying performance. They posted a £90m EBITDA (earnings before interest, taxes, depreciation, and amortization) after accounting for one-off costs. A critical strategic move is the planned 2026 spin-off of Kraken Technologies, valued at $8.65bn, after a $1bn funding round. This spin-off is expected to generate substantial cash flow for the parent company, strengthening its balance sheet and creating future growth opportunities. Check out Octopus's Kraken spin-off plans.
What lessons can entrepreneurs learn from Octopus Energy’s experience?
Octopus Energy's recent challenges offer several lessons for business leaders:
- Anticipate and plan for non-recurring expenses when making acquisitions to avoid disruptions to profitability.
- Factor in external variables, such as climate changes and market volatility, in projections.
- Aggressive expansion requires strong onboarding processes to ensure the immediate value of new staff.
- Diversification, such as Octopus's Kraken platform, can serve as a fallback revenue stream during challenging periods. Explore Octopus Energy’s growth strategies.
What is Kraken Technologies, and how does it impact Octopus Energy’s business?
Kraken Technologies is the technological arm of Octopus Energy, underpinning its operations and offering SaaS solutions to other energy companies. The platform helps optimize energy management and customer experiences for businesses worldwide. Kraken's recurring revenues doubled in 2025, reaching £422m. As part of Octopus Energy’s strategy, Kraken will spin off as a separate entity valued at $8.65bn in 2026. The spin-off will offer significant liquidity for Octopus, enabling it to refocus on its core energy business. Check out Kraken’s upcoming spin-off.
How has customer growth affected Octopus Energy?
Octopus Energy’s customer base expanded significantly in 2025, growing to nearly 10 million customers globally. In the UK, they achieved a 24% market share, surpassing British Gas to become the leading energy supplier. However, rapid growth led to increased operational costs, including a 34% increase in headcount, contributing to short-term financial strain. Managing resource allocation effectively is critical for businesses experiencing similar rapid expansion.
What risks do companies face when scaling rapidly, as seen with Octopus Energy?
Rapid scaling, such as the one experienced by Octopus Energy, presents unique challenges, including financial strains from overexpansion, unestimated one-off costs, and operational inefficiencies due to rushed hiring. If companies don’t anticipate market volatility, such as the impact of unexpected events like extreme weather, it can exacerbate financial losses. Octopus Energy’s 2025 story emphasizes the importance of meticulous financial planning and building a robust financial cushion for unexpected costs.
Are shorter-term losses a sign of failure for growing companies?
Short-term losses, like those reported by Octopus Energy in 2025, do not necessarily indicate failure. In fact, they can be a reflection of strategic choices, such as acquisitions or investments in technology, that are expected to pay off in the long run. Transparent communication, as Octopus demonstrated with its stakeholders, helps maintain confidence, even during financially challenging periods. Founders should see setbacks as opportunities to refocus strategy, cut non-essential expenses, and explore new revenue streams.
What future opportunities does Octopus Energy see despite these setbacks?
Despite reporting losses in 2025, Octopus Energy's underlying performance and strategic maneuvers show optimism for the future. The 2026 spin-off of Kraken Technologies is a major focus, intended to unlock significant value and financial flexibility. Additionally, Octopus’s growing foothold in international markets sets the stage for sustainable long-term growth. Entrepreneurs should see this as an example of how to pivot focus during temporary setbacks while maintaining a long-term vision. Read more about Octopus Energy’s future plans.
About the Author
Violetta Bonenkamp, also known as MeanCEO, is an experienced startup founder with an impressive educational background including an MBA and four other higher education degrees. She has over 20 years of work experience across multiple countries, including 5 years as a solopreneur and serial entrepreneur. Throughout her startup experience she has applied for multiple startup grants at the EU level, in the Netherlands and Malta, and her startups received quite a few of those. She’s been living, studying and working in many countries around the globe and her extensive multicultural experience has influenced her immensely.
Violetta is a true multiple specialist who has built expertise in Linguistics, Education, Business Management, Blockchain, Entrepreneurship, Intellectual Property, Game Design, AI, SEO, Digital Marketing, cyber security and zero code automations. Her extensive educational journey includes a Master of Arts in Linguistics and Education, an Advanced Master in Linguistics from Belgium (2006-2007), an MBA from Blekinge Institute of Technology in Sweden (2006-2008), and an Erasmus Mundus joint program European Master of Higher Education from universities in Norway, Finland, and Portugal (2009).
She is the founder of Fe/male Switch, a startup game that encourages women to enter STEM fields, and also leads CADChain, and multiple other projects like the Directory of 1,000 Startup Cities with a proprietary MeanCEO Index that ranks cities for female entrepreneurs. Violetta created the “gamepreneurship” methodology, which forms the scientific basis of her startup game. She also builds a lot of SEO tools for startups. Her achievements include being named one of the top 100 women in Europe by EU Startups in 2022 and being nominated for Impact Person of the year at the Dutch Blockchain Week. She is an author with Sifted and a speaker at different Universities. Recently she published a book on Startup Idea Validation the right way: from zero to first customers and beyond, launched a Directory of 1,500+ websites for startups to list themselves in order to gain traction and build backlinks and is building MELA AI to help local restaurants in Malta get more visibility online.
For the past several years Violetta has been living between the Netherlands and Malta, while also regularly traveling to different destinations around the globe, usually due to her entrepreneurial activities. This has led her to start writing about different locations and amenities from the point of view of an entrepreneur. Here’s her recent article about the best hotels in Italy to work from.