Origin Energy Limited ($ORG)

Good morning, everyone, and thank you for joining us, both here in the room and also online for the Kraken Investor Briefing. I know many of you, but my name is Tony Lucas. I'm the CFO at Origin. And I'd like to start by acknowledging the traditional custodians on the land which we gather here in Barangaroo, the Gadigal people from the Eora Nation, and pay my respects to their elders past, present and emerging. So the format of today is a presentation from the Kraken team that will go for about an hour. Then we'll have 30 to 45 minutes of Q&A, which we'll moderate here. That will be microphones in the room and webcast for online participants. Before we get into the Kraken presentation, I'd just like to touch on yesterday where we reissued fin year '26 guidance for Octopus Energy. That revision was driven by regulatory changes and also trading outcomes in the U.K. retail business. It didn't change the Kraken story. The earnings outlook for Kraken is unchanged from what we told you and shared with you in February. The team and I are happy to talk through those changes either later today or off-line. So to the substance of today. So about a decade ago, Origin identified that the energy transition would change the way in which energy businesses operate, the way that the market clears, the way that customers will play an increasing role in helping balance the energy demand and the products that they would need would change. Technology, data and energy were all going to play a significant role in the transition and Origin needed to become as good as it is with energy trading with data and technology. For Energy Utilities, the technology stack underpinning this sector is holding it back. It's old. Most large energy businesses still run on dozens of disconnected platforms, billing, metering, CRM, compliance comms, none of which were designed to talk to each other and they're all becoming expensive to maintain. This is the problem Kraken set out to solve and why we got involved. Origin has been a customer and a shareholder of Kraken for more than 6 years. In that time, we've been consistently impressed with the product and the people behind it. What attracted us to Kraken and to Octopus at the time was a shared vision on what the energy transition and the convergence of data and energy would look like in the future. And this, combined with the well governed, scalable architecture would be critical to the future of the energy system. Kraken has delivered that future for us. It's given us the foundation to serve customers better, to run our operations more efficiently, respond faster to change -- to regulatory change and to innovate and more recently to deploy AI to help us reduce our cost to serve. This briefing comes at a genuinely interesting point. We're aiming for separation still on target this calendar year, middle of this calendar year and the broader technology landscape, AI, in particular, is moving fast. The opportunities in front of Kraken are real, and we're delighted the team is here today to share some of their perspectives with you. And with that, it's my pleasure to welcome the Kraken technology team. We've got Amir Orad, Tim Wan, James Eddison and other colleagues from Kraken here today. With that, I'll hand over to Amir -- Tim to start.

Okay. Thank you. Good morning, everyone. Thank you for coming. Let me just do the customary disclaimer that's necessary. My name is Tim Wan. I'm the CFO at Kraken, and I'm excited to kick off our Investor Day presentation. Now our purpose at Kraken is straightforward. We are the operating system for utilities. The value we unlock for utilities is quantifiable and immediate. Our clients achieve 100% migration success, a critical advantage in this industry, along with material business improvements. This includes 40% efficiency gains, a 3x increase in customer delight, and the agility to innovate faster. This value is translating to strong business momentum. We're a mission-critical platform. We're managing over 90 million accounts globally, supported by over 99% gross retention rate. Financially, we are well over $500 million in contracted ARR, which grew 10x over the last 5 years. Operationally, we're processing 15 billion data points per day and managing more than 15 gigawatts of Flex Power, demonstrating our proving solution for utilities at scale. Amir will share exactly how we do this, what we've achieved and the opportunity ahead. And I'll be joining him afterwards for Q&A. So with that, let me bring up Amir.

All right. First, thank you for being here today, and thank you for the Kraken team that flew from many different countries here, including James Eddison, the founder of the company hiding here at the back, who actually thought about all of this a long time ago. What I want to do is spend 30, 40 minutes going through a spectrum of what we do, what are the benefits, the underlying platform, talk about AI, which is always a hot topic these days and really talk about the momentum we're having. And then we'll have time for questions. First, the mission of the company is very simple. And actually, the introduction almost defined the mission. We are here to create a technology that redefines utilities, to unlock the new energy systems that are required for the future. The way the grid operates today is unsustainable given the changes -- fundamental changes that have not been going on for the last 100 years, all of them are recent and fresh. We actually have another metric we are thinking about, which is not a financial metric, but we would like to improve the lives of 1 billion humans within a decade, and we think we can do that. All of you are aware of what's happening in the energy markets. But it's really important to look at it in 1 place to understand the magnitude of change. That change in just a few years is literally more than the entire 80, 90 years before that. Energy is becoming two-directional from 1 way to 2 way, which changes fundamentally how you do things, how you balance the grid, how you bill for people to come and distribute it, the amount of energy points grew by 500x, not percent, 500x in the last 15 years. We have the fact it's intermittent, with renewables, and it's much more volatile. And on the flip side, we all know about data centers, AI, increased loads, electrification, et cetera, et cetera. All of these events, issues, challenges are hitting our clients in each and every country. This is not unique to Australia or the U.K. or France or the U.S. Each and every country is dealing with all of these challenges, at the same time, difference pace, kind of different criticality but they're all happening all over the world. And the problem is that the underlying infrastructure of utilities, which has been static and powerful and effective for so many years is not fit for purpose anymore. In the U.S., the average CIS, customer information system, the average is 29 years old. Imagine the 50% above average, 29 years old. They have dozens of those systems that are hotchpotched together, stitched together to provide valuable service. And just the maintenance cost in the last 5 years, 6 years, has doubled on these systems, and this is all public information. And when we try to change those systems, over 50% of the projects per Gartner, over 50% of those projects fail if you look by time line, business impact, or cost, over 50%. It's a very strong, rigid but difficult to change infrastructure, which was really, really good and effective before all the changes that are happening these days. And that's driving the need for someone like Kraken. The quote above is actually from a CEO in Australia that I've met last time I was here and our core team, he said, "My technology stack is limiting my ability and my team's ability to dream," really interesting quote. We believe there's another way to address this challenge. We believe there is a fundamentally different way to deal with this challenge. And I couldn't ask for a better quote than Mike Lewis. This is from E.ON U.K. about the products we've done with them. So what do we do? Why do we win? I'll start with a very strong statement, which I usually keep for my wife, that Kraken is the most loved operating system or technology for utilities. And I'll show you that's backed by multiple third-party research projects. There are 4 dimensions that drive why we win and why people prefer Kraken. The first one is we approach the challenge as an operating system that replaces numerous technologies at once. We do not believe that the future can be reached or achieved by replacing one system after the other after the other after the other. It's too risky, too painful. And if you do all of that, you'll still not reach the end game. So an end-to-end singular operating system that replaces all this fragmented foundation. Number two, what's critical in this markets, like other enterprise market, that's even more given the mission criticality. We have a 100% migration track record, 100%, and is a result of a combination of a system and a unique technology, and I'll share how we work. We'll go through each one in a minute. And we unlock meaningful quantifiable business results. And again, from day one. And all of that allows us and our customers to thrive even more in the AI era. When Kraken started, the focus was being data-driven and machine-learning driven. Now we call it AI. But this company, this technology, was born with intelligence at the heart of it. So let's zoom in one by one. First, I mentioned an operating system versus just a cluster of fragmented solutions. An operating system means we have an underlying data model underneath what we do with a singular AI foundation that is built into the operating system covering all the events and activities in it and an extremely agile code base. If you have an operating system, covering so many areas in the business, you have to be very dynamic. The technologies we replace get refreshed every 6, 12, 18, 24 months. We update the system 200 times a day. We are on version 230,000 right now. And probably in 10 minutes, by the time I finish this presentation, we will have a different version. And it is built in a sovereign secure cloud instance, which means we are allowed and able to deploy it in countries and environment, which requires the highest level of scrutiny for such mission-critical systems. For example, we just announced Saudi Arabia, the other week, strong sovereign secure environment to run the entire electric system. This operating system sits on an underlying interpobability layer, which means we bring out of the box, the connectivity and the built-in technology to connect to your different trading systems, distribution networks, various assets, physical assets from generators to EVs and even your local regulatory requirements. And it's a fully open system. When Kraken started with the first client, Octopus, it was very much built for that client. And the client told us you're not flexible enough. Over the last 5 years, we built a lot of technology to make it fully open. We went to the other extreme, where today, we have hundreds of APIs, MCP servers for AI queries, no-code flows where you can build using business logic, new business applications and even a marketplace for third parties to put capabilities on top of Kraken. So this is the operating system. And when we come into a utility, we come into a retail utility, distribution one, a water one, all of them start in the same place. Dozens, we just didn't have room on the slide, literally dozens of legacy systems, some of them are 30-, 40-, 50-year old. Some of them were not being updated at all at this point. It's old code, no one is touching. Some of them are so hard-coded, if you have a new regulation, you can literally not meet that regulatory requirement. And if you want to modernize something, let's say, offer a new energy product, all you have to do is change this system, this system, this system, this one, this one, this one. It's a nightmare. And people in the market would acknowledge the pain of doing that. And instead, we move it all to 1 system, aligning all the data in 1 place with all the functionality. The content of our platform -- of our operating system is really divided into 5 layers. And they're very important to understand because we believe the future of energy requires all 5 layers to be combined. You cannot treat each one separately. The first one is humans. We provide the technology that engages directly with the end users and helps shape their behavior. If you give them the right incentives, written communication, right financial products or energy products, you're able to change their behavior in order to balance the grid. That includes technologies from CRM to AI agents to dynamic tariffs and I can go on and on what's under that. That is one layer. So for example, when you come in to a customer, in this area, our CRM system, let's say, Salesforce will be removed and Kraken will replace that. That's one example of the dozens of items we replace. Then there's the business operation we come into. And at the same time, this is not optional. At the same time, we go in and replace how you run the majority of your business operations from billing the most fundamental ones to payments, debt management, compliance and each and every business model, you can imagine to run a large B2B or B2C utility or distribution company. It's very similar. And that's what we deploy, so you'll see later, both co-pilot and full autonomous agents to help those business processes. Thirdly, the physical layer. It's great that we can serve the humans, the customers, but more and more, people are deploying smart physical assets. It's solar panels, smart homes, thermostats, large grid-scale batteries. And all of them, if they're not managed in real time, create a sub-optimal environment on a good day, where actually the opposite is literally a challenge on the grid. So we are physically today, right now, connecting dispatching, optimizing over 800,000 assets in real time every day to balance the grid. And when you can shape the human behavior and shape the physical behavior of assets and all the business workflow in the middle, magic starts to happen. Now, all of this is underpinned by the intelligence layer. This will bring all the data of your company into a singular place, accessible in AI machine learning infrastructure and a technology that has the mission criticality, the security, the agility that you need for 2030 versus 1980 to the last wave innovation in this space. Now what that does has allowed us to migrate extremely well because of the technology, because of what we do. Most migrations, if you think about what I mentioned before, most migrations -- if you want to modernize, you're a CEO of a large utility and you want to modernize your infrastructure, you would have a project to upgrade your CRM, you'll spend 3, 4, 5 years doing it. And then you have a project to change your call center and maybe your smart meter data, right? Each one will be a project. And each one will be obsolete by now. You will spend a few years documenting what you need to do, then do the upgrade, then go to next project and to the next one. If you think about it, even at 95% success rate, 98% if you do it one after the other after the other, you can do the math, 98 to the power of 10, 20, 30 systems, you're going to see why these projects almost always fail. Instead, Kraken comes in and we have an end-to-end system that we can turn on, on day 1 and establish your new digital entity next to the old one. And obviously, it allows us to leapfrog and kind of move away from a lot of technical debt people have. And then what we do: we don't move the entire company over, that would be crazy. It's high risk. What we do is move a single customer to the new platform, a single customer to the new digital platform we set up, which is end-to-end. So it gets all the functionality for that person. And guess what, if there's an issue, because we update 200 times a day, we update it. The day after we find more. And then 2, 5, 10, we get to do 10,000 a day, 50,000 a day, 100,000 a day, and we start to really accelerate as things get more complex, accelerate, accelerate, and at the end, slow down to finish the project. This allows us to finish an average utility migration of dozens of systems within 1 to 2 years. Some less than 1, a couple of more than 2, but 1 to 2 years on average. You cannot do that. I mean it sounds great, everyone should do that, right? You cannot do that without 2 fundamental technical capabilities: number one, an end-to-end solution. You cannot move a customer, even once, to a new system that only does bills. What about all the other stuff? And you cannot do that if you don't have the ability to change all the time because if you cannot change all the time, then you'll be stuck every day and you have to wait months for the upgrade of that technology. So this is fundamentally a different architecture, approach, and methodology. But when you can do that, it really unleashes a totally different experience, which is why we're so proud of the track record and why if you look at the market, almost any other technology company in enterprise software in general and in this space specifically, has such a high failure rate or slow, slow, slow, long process to make a change. And the results speak for themselves. I won't go through each one. You can see the success rate. We've done with more than 40 times. This is not once or twice or 1 country or another. And you can see the speed of migration. This is all based on public data. Kraken can do just in a unit of time, much more migration much more movement because of the approach we're taking. Okay. Now, it's not enough to have great technology, and it's not even enough to have a great migration. It's all about what happens on the other side of the migration. Now obviously, we picked and choose. So we don't have a single client that all of this happened in one client that we have in each and every client, a subset of this happening, and I'll go one by one. The first one is the consolidation, which is obvious, but much more important, the efficiency gain. We have customers that reached 40% higher or lower cost to serve or efficiency and much at the same time, so less spend per service cost and much happier end customers, which is really, really important because in the new age, if they're happier and trust you more, they'll let you manage their assets, move to new pricing plans, et cetera. EDF, for example, told us publicly on the record, they did in 1 year, 30x more changes to their business than we did with another very old -- shall not be named technology company. So the innovation is much faster because all the systems are connected. It's one operating system. Employees are happier, not only the end users, employees are happier and when you let us control the physical assets we're now in aggregate, dispatching 15 gigawatt hours a day. That's enough power to keep the lights on for 1 million homes, for context. That's like multiple nuclear reactors. So the ability to shape human behavior and shape assets and choose when to use them allows us to shift the energy, which obviously allows us to reduce the classic Duck curve and the max capacity, which is always a bottleneck in the energy systems. So I mentioned AI as the last point. These days, everyone likes to ask questions bout AI. So let's zoom in for 5 minutes and talk about what we're doing there and how the market at it as well. First, I mentioned we built this technology foundationally to think about AI -- sorry, think about data and machine learning at the bottom. We didn't call it AI or LLM, we called it machine learning and data. But that, because it was built in recent times and built for that from the ground up, we have the foundation for all your AI and data needs of today and the future. And it's really important. Let's go one by one. First, the infrastructure, having the unified data model or running on a modern database that is accessible in real-time to machine learning models means that can be the starting point for your needs. It is verticalized. All we do is energy and utilities and energy is 95% plus of that. So it's verticalizing domain specific and codified to the energy needs and provides the context for your models down the road. Out of the box, and I'll show you examples, we have in the product, numerous productivity tools which are running on various technologies within the AI family, the LLMs, prediction models and the like and tools to manage and optimize your assets. You can configure those tools yourself, you don't rely on Kraken or some SI to come in and make changes. That's what we provide. And as important, we are big believers that vendor lock-in is an evil thing, okay? You should not be forced to use our AI models. You can use your own AI models. So it's all open and you can plug your own models on top of Kraken on the data embedded in the Kraken apps in various ways. You can actually run inside the Kraken window a third-party application in that. So fully open. And I mentioned data. To understand the magnitude of data today, right now, every day, we process already more than 15, 1-5, 15 billion new data points. Some of them in such high speed that we're talking about 20 times a second. We have telemetry of generation assets, batteries, solar panels, market data. We have the device data. Almost 1 million devices we connect to all the time. And all the information about them, literally, your cars, batteries, starters and its fatigue, so you don't turn it on and off all the time and impact your car's battery, if you have an EV. And customer data for what is already contracted to be over 90 million accounts in homes. All the information in 1 place from the meter data, all the way to your debt situation to what you said last night to the agent in the call center and the bill you got home. All of that is connected. All of that is combined from the beginning, and AI loves data and context and that provides it. We provide technologies from the 3 layers of different AI use cases. We started already 5, 6 years ago with massive amounts of machine learning predictive models, massive amounts to optimize the grid, which we use every day. We then added 2 years ago, co-pilot technologies. Co-pilots are where we provide LLM-based technologies, large language models to amplify the behavior of an agent. It does not replace the person. It amplifies the person. I'll show you a live information in production, it's running worldwide what it does. But think of from real-time summaries of the phone call that came in to what you should tell the person before they ask the next question to suggest an e-mail response, et cetera, et cetera. And we've recently launched full agentic autonomous agents that can replace humans. So imagine, it's middle of the night, there's some outage somewhere, everyone is calling in. We don't have enough people on the call center, the machines, the AI can answer fully autonomously within the limits and boundaries of the regulations you let it act upon by itself. So all 3 are real production working systems, some of them 5 years old, some 2 years old. I mentioned the co-pilot production results from 2 years of information. Number one, and this is classic for Kraken. You'll see both efficiency and higher satisfaction. Usually, they come at the expense of each other, right? If you are more efficient, people are less happy, more efficient and more happy. 30% productivity gains to the agents that are guided by the copilot. They save time per call, and the customers on the other side of the phone call or e-mail are happier. And the number on the top left, 89% is the one stat I like the most. This means that when AI recommended an answer or behavior to the agent, 89% of the time, they say, yes, do exactly what it commended. So if you write an email today in Gmail and it offers some suggestions, it's like saying, your email is good enough, keep it as is and send it. So 89% accuracy rate, if you like, where we just let the AI do its thing, live data and multiple customers all over the globe. The other question I get asked a lot, this is not our slide. So the other question I get asked a lot when I meet investors is around, yes, but AI is coming out and some kid can just tell AI to write your entire product and everything will change. So I met Ernst & Young, and they built this really smart framework, which is, they call it the SaaS battleground and feasibility. It's a long name but it is a really smart thing. They analyze the entire SaaS universe and divide it into those 4, 7, 9 dimensions based on functionality and criticality and they have company names for each one as a sample. And they said, look, if you're on the right-hand side, good luck, right? It's not going to be fun because if you are a point solution automation software, single purpose, no network effect, no switching costs, you're screwed. That's one extreme. And the more we go to the left side, you're getting to deep vertical SaaS, companies like Epic in the health care space, domain system authority. That's where the actual information is kept where you have the data ownership, high switching costs, you have the complexity of the domain expertise, compliance, things like Okta, regulatory expertise. We actually call it liability transfer value, which is another way to say an infrastructure, real mission-critical. So it's a very interesting framework. And zooming in on the left, we were really smart, we're really strategic or really lucky, but we very objectively, if you read the description, there cannot be a more extreme example than Kraken sitting in that bull's eye because if you look at infrastructure software, we are literally the real-time system managing those assets in real time. Just for context, take money. We're moving around tens of billions of dollars a year just in the money going through the mission-critical systems reading those smart meters multiple times a second or over a few minutes as mission-critical as it gets. Governance, we both provide the tools to adhere to endless regulatory requirements and tools to monitor the regulatory reality at scale. And you can go on and on. When we come in, people remove SAP and Oracle, which are the examples here. They actually turn them off. And we become the system of record, that's the official name or system of authority. That information set does not exist elsewhere. We are that repository for all that information. And obviously, the deep vertical expertise, which comes with the compliance and the necessary things. But it's not just about defensibility, we actually see something more exciting happening. The more AI is capable, the more we thrive with it, which is really interesting. And I'm not talking about internal efficiencies. I am talking about the actual business value of the technology. AI needs rich data and rich context to be effective. If you go to the utility today, you'll find that, that context and data is locked in multiple spaghetti systems. So the AI cannot latch onto, cannot tap into all of that information. So the more people want to deploy modern AI tools, they come to Kraken to be that layer that removes this old spaghetti and they put AI on top. And they need to connect to a modern MCP service, real-time technology, agile AI models change literally every day. You have to keep up with that. Trying to change your 30-year-old system every day doesn't work. And obviously, what we see in many countries: AI driving energy usage, which requires grid modernization and flexibility to balance the grid load. And if you think about the future, when AI gets even stronger, you can think of the future where the entire grid is agentic and you can optimize at any moment all the human behavior, all the assets and really get maximum efficiency, which today is really hard to achieve or impossible to achieve. Too many moving pieces, too many rigid technologies. So if you fast forward it, you can imagine a much more efficient grid and everyone benefits, including our planet. Everyone benefits from it. So to start to close, I mentioned we're the most loved utility, and I promised you to show you the numbers. These are 3 objective third-party sources. First, we had one of the top 3 consulting firms do as part of the demerger from Octopus and the round we had. They went and interviewed not people we recommended, they went and interviewed people they found in the entire industry, Kraken customers, other vendors, everyone. Kraken Net Promoter Score came back at 84. 84. That's more than the Apple, Zoom, I don't know, pick the company you like the most, Slack, 84. The legacy vendors came at 21 and there was a subset that was actually negative. We chose not write here who we are, but 21 was second, and there's actually a worse subset. That is our customer base. In the U.K., The Times just released a few months ago, the list of the top companies to work for in the U.K., in the main newspaper. And they went after the biggest companies. So 2,000 and above employees, which are huge companies, right, hospitality chains, et cetera, travel. And for the first time, we had 3 energy companies in the top 10 companies to work for. All 3 are Kraken clients. The employees of those companies are much happier than ever before. And it makes sense. You hired good people that really want to do their job and you give them lousy tools. They don't like it. You give them better tools to do their job. You empower them. They actually like it. It's that they have 1 screen versus 22 every day. They like it. And lastly, the end users, the customers, the homeowners that we service through the Kraken Technology are on average as measured by Trustpilot, which is like an industry score 3x happier after Kraken than before and the happiest in a comparative set. We are very proud of that because you can achieve 1 of those 3, usually at the expense of the other 2. To achieve all 3 together, we believe, says a lot. So I shared what we offer, why it's important, the technology behind it. Let's talk about business momentum. We have just crossed a few months ago, the 90, 9-0, 90 million accounts on the platform, not all of them in production, but signed and being delivered 90 million. The recent addition, which we announced last week, 2 weeks ago, time flies was in Saudi Arabia. It's a classic example that the national electricity company chose to move its entire infrastructure on top of Kraken, kind of country level decision, if you like. And these are the types of big partnerships we're looking at as we continue to grow. I mentioned customers love us, but put the love aside. It's very nice, but what's the business translation of that love? The length of a contract today we do is very long, 5 to 10 years and there's a lot that ask us even for more, but we are doing 5 to 10 years. Our gross retention rate is over 99%. We mentioned the Net Promoter Score, 75%, this is new. This is from the last 18 months. 75% of our customers now use more than 1 Kraken product. So one of the ways to really measure if someone enjoys working with you, do they buy other products? They do. 75% now have purchased more than 1 product, and that drives business momentum and unit economics. It's a very large market. We can go now and debate the exact figure in each dimension here. What's really important is it's a large market to begin with just in energy, power and utilities. And if you add other utilities like telcos, it's even larger, but it's large enough either way. And what's important to understand is even as is, in this market, because of the energy transition, many companies are switching. So it's a large market, even before the growth of demand within that market with a major transition from the 29-year-old systems to modern ones. And then the market is growing very fast because of those smart assets, energy optimization, grid optimization needs that are coming into play. There's more EVs every day, more solar panels every day, more batteries every day, almost exponentially. So that is driving the growth of the market. So we have both a large market that is changing also generational shift, and it's growing due to those new technologies that no one thought about 10 years ago. We like this slide. I don't think we can say a lot about it. 10x in 5 years, you can reach your own conclusion. And Kraken is officially this year, becoming fully separate from Octopus. I've been in the role for 3 years. We have built and evolved our leadership team over those 2 years because we're already running completely separate from Octopus for the last 2 years in every operational way. It's just the legal holding that is now the last step removed that is happening in the next few months. And we built the leadership team. This is extremely experienced, but it brings a combination of enterprise software, SaaS, scale and energy expertise all together. It's a very unique blend because our maniacal focus on one domain, a super important domain. And to sum it up, it's just the beginning. If you think about the opportunity, if you think about the needs, if you think about the dramatic change in landscape, if you think about the exponential adoption of those technologies. If you think about the win-win-win, employees are happier, end users are happier and your P&L is better, we believe there's a massive opportunity to build the company here and one that lasts for many, many years to come. So with that, we'll stop here. Tim and I will be happy to take your questions. Hopefully, this was a good foundation for the next 30 minutes.

So we'll do some questions in the room. But for those online, type your questions into the chat, and we'll ask them on your behalf. So thanks very much.

It's Dale Koenders from Barrenjoey. Really exciting sort of outlook. There's a lot of focus on sort of what you've delivered so far. Are you able to help us with sort of what's your BHAG or what does success look like in the next 3 or 5 years? Or what are the next targets that you're thinking about?

So from a business point of view, we would like to be at the forefront of that energy modernization and each and every company that is looking to transform. We'd like to do that with them. And that is the focus of the business, that requires global presence. That requires us to continue to add capabilities to this end-to-end platform. It requires continuing the track record because trust is really important here and to keep providing value to the existing clients, right, continuously to innovate. Almost all our expense is on technology innovation. Most people, most spend, everything goes to more APIs, more capabilities to continue that flywheel.

You set targets for customer numbers and annual recurring revenues that you already achieved.

He sets all the targets, not me.

So an amazing success story. When do you think we will be in a place to set the next set of targets?

Yes. Can you hear me? Okay. Yes, we're not sharing any new numbers today, but I would say if you look at the -- if you step back and look at the business that we're still very early penetrated just in the existing TAM, that we really have a long runway for compounding the growth over time. We have -- the way we think about the business over the long term, we'll have world-class operating margins. We'll have -- we'll continue to have a strong growth rate. We're in investment mode right now, and we'll continue to -- our focus is really grow the business and win share.

Ian Myles from Macquarie. Really interested in U.S. You went very well in the U.S. market, but it hasn't probably been as -- or doesn't appear to have been as successful in terms of getting that conversion rate like in the U.K. or in Europe. I just need to understand what the resistance has been in that market when you tell us that they're running on 29-year systems, which really I'm surprised this don't work.

So I think I would debate the question. The U.S. focus of the company started in earnest in the last 2 years. 2 years ago, we had no executive in the U.S. We had maybe a dozen employees. We had a couple of tiny clients just to demonstrate the technology. Since then, we have landed, and publicly were able to share that because that's not always the case one of the largest utilities in the U.S., National Grid. For context, that's only New York and Massachusetts, right? And for someone living in New York, that's where energy is quite complex. There's too much snow. So snow and energy don't like each other. So that has been announced this year. And I can tell you that I'll be on the stage with the CEO of National Grid next week, and she will share progress of the project, and it's way faster and more impressive than people are used to in the U.S. Now, the U.S. is 50 countries almost and each one will make a decision in its own pace. It will take time, but I expect us to announce every few quarters, another big name in the U.S. So I don't see any unique challenge besides the fact we started later, and we're getting the initial wins and expect to continue growing there.

And should we see momentum that when you get the first customer converted, the pace to get a second customer, it takes 2 years to do the first customer, it should take you 12 months through the second because the problems are sort of the same between the different customers?

Yes. In general, if you look at Kraken, your mental model should be that there's a flywheel. In every country, it's not unique to the U.S. It was in U.K., then Australia, then Japan, Germany, France, Italy, Spain and so on and so on. The first customer takes more time than the second one for 2 reasons: the sales process. Everyone to say, yes, but you're working in this other country, and they're so different, and you have to show them that you can do it in their country, in their distribution network, in their trading environment, et cetera, and then to get the actual delivery and deployment in that country. The second client benefits from both. You know that country already, and you have a local reference they trust way more. So 100% you should expect that once you are in a country, the first one leads to second one. Third one will be faster. It will not be at the end of 1 day per deal, but it's definitely going to be faster than the initial entrance to the country. And by the way, the same is around margins, et cetera. The first deployment in a country or a market takes more energy than the second than the tenth, and that's why the flywheel is quite economical over time.

Just one final question. Your deal with Saudi Arabia is sort of slightly different in that there was a joint venture arrangement. Are we going to see more of that style because of, I guess, security concerns or other issues out there in the marketplace?

Yes. So let's talk about the deal in Saudi Arabia because we just announced it, and it's very exciting. There are actually 3 deals in Saudi Arabia, all wrapped under one relationship. The first one is they picked Kraken after a long due diligence process to be their partner for the next few dozen years to transform the grid. Period. End of story. Number two, because as you can guess, we have exactly 0 employees in the Gulf. They said, "hey, guys, you need to have people in the region," and we asked them to help us set up a site there and we decided to build a JV that helps deploying Kraken in the region for them and future clients. So that's the second one. It's a very specific JV for delivery so we can leverage local talent and expertise versus pretend to know everything about it. And thirdly, they said, we are such big believers in the company, we would like to enjoy a part of your growth so they invested in the company. And we told them we are very happy to do that as long as there is no impact on decision-making, then we're more than happy for them to join the company and we did, in a smaller minority position. So 3 deals, I think it shows the power of the partnership. The actual licensing deal is classic. The JV, I think we'll see more in countries where we have no presence and lesser cultural access, if you like. For another country in Europe, it's not as needed, but there will be some continents we know less. And the investment, if somebody is excited to invest at the company value, it's all good.

Rob Koh from Morgan Stanley. Just a question on some of the other horizontal and verticals that you're looking at. Can you talk to how your roots in utilities helps you with, like, water and telco a little bit? And then related to this question, I guess, there's a possibility in the NEM that more than half of the subs end up on the Kraken system depending on how your sales processes go. Is there a natural limit in the market to how much you can do?

It's a really good question. So let's divide it into two. First, not horizontals, it's verticals. We are in energy. We did find that there's 2 utilities, let's go one by one. Water is extremely, extremely similar to energy utilities, especially in vertically integrated regulated markets like the U.S., for example, or asset rich, vertically integrated. So we generate the water, if you can define as generation, distribute the water and then sell it and bring it to your home. They send your bill, you call them up when you have an issue, a leak, et cetera. So very similar and some companies actually do water and energy combined. Essential Energy here in Australia using Kraken, both have water services and distribution services. So not only it's very similar, it's actually in some locations under the same entity. So we found that to be a very high proximity and we started service. By now, we have 20% of the U.K. water is running on Kraken enabled platforms. We have already at the beginning here in the region, and we expect to see more. It is, I would say, a slower market than the energy companies, if that's possible. But it is a mission-critical important market. Telcos are different. More competitive, more modern. But there's multiple energy companies that provide telecommunication services like broadband. So we do see, again, some similarities. And we have already a couple of impressive Telco clients, and we expect to see more. But to be very clear, the focus today is 100%, the focus is energy because of the energy transition, the momentum and the need of the market.

Okay. I guess the second part of my question was, is there a natural limit within the market?

So our view is if you look at the market share of Microsoft in its time, SAP today in the market, Oracle in some markets, once you become really good at it, usually, you have a large market share. But it's very natural in this market, and there's a lot of precedents not unique to us.

Okay. Maybe just one last question for me. I was curious to see that you include a nonfinancial part of your mission statement to improve the lives of more than 1 billion people, if I'm not mistaken. Can you share how you're thinking about that. Do you actually have internal targets or you -- yes, just what kind of metrics you're looking at?

I'll show you something. So I carry this on me. There's no way you can see what's on it, but if we had the camera. And it says, literally, it says on one side, Kraken's big green dent in universe. That's this side. It's called a challenge coin. And the other side is 1 billion people. Okay. And I carry it on me and some people carry it on them also. We do believe in the positive impact of the company, the green impact and the impact it has on people. And we have a metric. We even defined a time frame. We said within a decade. We didn't say this decade, but within a decade. And if you think about it, a household is X humans, right? The vehicle, a factory, but we believe we are doing something good, and we want to remember every day that there is a direct impact on people's lives and a positive one. Preventing water leakage. We're not talking about just keeping the lights on, just think about not having water. So the things we touch are really important systems. It's not a financial metric, but it is one our people are really passionate about. Anything to add?

Yes. I mean it's 10x kind of where we are today. And as we continue to make progress, I would hope that we would be in a position to reset that from $1 billion to maybe $2 billion. But let's get to the first $1 billion first.

Olivia Sioud from Skip Capital. I'd love to understand the migration process a little bit more. I know you mentioned it takes 1 to 2 years. to get fully migrated. But I'd love to understand is that window of time where your clients end up seeing ROI on their investment. And then how do you kind of go about the migrations?

So, the second question, I can spend a lot of time. So someone here needs to stop me at some point. I'll start with the first one, because of the unique way we do the migration, you see local value immediately because the customers get better service, you can start innovating for those customers. The employees, I just got a report from our CEO that I'm on the exec quarterly review with. And they have started the migration a few months ago, and she sent me highest EPS, highest employee satisfaction in the company, the team that is working on Kraken. So you see the business metrics really quickly, unlike the traditional approach where you wait years writing documents, praying this system will work. Now if you look at the total ROI, obviously, it takes more time than on day 1. So the measurement I defined -- I gave you is when we get all accounts live in production, there is immediate unit level business benefits from day 1. We have customers that innovated new products literally after 1 month using Kraken. Those products were only eligible for the people benefiting from Kraken versus the entire org. When is the total ROI? It depends how you look at it and do you capitalize it, et cetera. So it's a very open-ended question, but no one is doing Kraken out of their goodwill. There's direct business benefits in the product. And then how we go about our migration is extremely open ended. So if you have a specific question, we can chat after that, if you like, much more.

Yes. I guess I'm just curious to understand for best-case customer, when and how you're able to, I guess, achieve success on being able to see your return on the OpEx reduction side, and so just trying to understand like that particular part of the process versus all the benefits in employees?

I'm not evading you. It's really client-by-client. E.ON U.K., public information, let go 7,000 people as part of the Kraken project. And saw massive instant savings, hundreds of millions of operational pounds a year. Other organizations have a very different culture. They're not letting go any one, very strong unions. They're not letting go anyone, but they're giving better service and starting to cross-sell as part of the relationship and using natural kind of movement of talent as part of that. So it's a question -- it's very different by client. We give them the platform to totally transform their culture. Client-by-client, they choose different mechanisms to leverage that but the outcome at the end, in each and every case, it's quite amazing how repetitive it is. Happier employees, happier end users, lower cost, higher innovation, better regulatory stance, better energy transition momentum.

Amit Kanwatia from Jefferies. Maybe just a question around your pipeline and in terms of -- I mean, you've said 1 billion lives that you'd need to touch 10x growth in customers over the last few years, 5 years, well done on that. But if you can speak to in terms of pipeline, where you're spending most of the time in which markets, geographies? Obviously, you've seen customers like -- I mean, you've got EDF and E.ON in the U.K. market. They've got presence in their home markets as well. If you can touch base on that. And then in terms of the competitive response, which is in terms of SAP, Oracle, I think they are developing their own kind of modern tech platforms as well as some of the other players investing into this space?

Okay. So you asked a few questions, and you kick me when I say too much. First, where we focus. We are very, very focused, but it's in multiple geographies. Our focus is on the large utilities. I think of it as a few top 100 energy companies. We're not targeting the small ones with 100,000 accounts here and there, not yet anyway. And we do that in most Western markets. So we don't do it in China, but we do it other parts of Asia. We do it in North America. We do it across all of Europe and then some parts of MENA, Middle East and Africa. And I can tell you that our pipeline today is bigger than the pipeline it was a few months ago, which is bigger than it was a few months before that. So the movement of the pipeline is in one direction, the right direction. And then in terms of what you mentioned, we do have some clients that started made a decision company-wide. So multi-country -- I should agree with multiple states on day 1. We have others, especially early on the picked one country. As you can see, we're quite happy. So you can imagine that the direction of travel that we expect to have more countries and more decisions, positive decisions over time from those clients. It depends on the way they do decision-making, centralized versus local. Maybe we just did a project within a local country a year ago, so we want to wait a bit before we go through another one. So the time line can be a bit different. We have multiple real examples we're not public companies in Europe that started in 1 country, another, and another and another. And we think that's a direct response to delivering good value in real service -- high-quality service to them. Then SAP and Oracle, look, those have been great companies. I started my career in tech 26, 27 years ago, and they were still great companies back then. They are on a very different strategy, different topology, different architecture and different focus. They are not end-to-end operating systems. There are a bunch of tools we bought, acquired, built or do not have. They are not focused on utilities. If at all, some of them are letting go of people that they feel that were focused on utilities. They are not born in the AI data cloud era. They bolted it on at various levels of success. And some of them make way more money than we do, building big data centers. God bless them. That's okay. It's not what we do. So I respect them. They have been very successful. Objectively, there are big differences in how we think, build and go to market than they are. And over time, I think we'll see the results of that.

Maybe just another question on the pricing structure. I mean you've said the contract length in terms of 5 to 10 years, a very high retention rate, close to 100%, over 99%, yes. So if I think about the pricing structure, I mean, given the value that you add to the customers in terms of their cost to serve, if you can provide a bit more color how does pricing move? Is it by multiple products, suite of products? Is it growing in line with inflation? Or have you got any partnership in terms of targets, cost to serve benefits that the customers derive?

So let me take a few and I'm sure Tim will add more. Number one, we don't do risk sharing business kind of partnership on outcomes. I've found it's better for our relationships with customers to have a very simple, predictable price, pay us per asset we service, be it a human meter, EV, what have you, and we'll deliver a lot of value. And if you don't want us to deliver value, then don't migrate that asset to the platform. It's quite simple. Number two, our prices or the unit, the ASP, if you like, over the last few years, went up. So as we showed more demonstrated more value, more success added more capabilities to the platform, we're getting it more on a per unit basis. We do have adjustment to inflation and other objective, kind of, indexes to ensure that we don't wake up 1 day after 20 years with a weird relationship. It has to be healthy for both sides. So definitely, we have that alignment. You had a bunch of questions there on pricing? What did I miss?

No, I think you got them. I think we do all those things.

He approves.

Yes. Useful. And just a final one for me. Just on the capability. I mean if I think about the business in terms of migration, if you can provide a comment on I mean how many customers can you migrate how the business -- I mean, how capable in terms of the manpower partnership approach with the SIs and things like that?

I will make it very short because we're monopolizing the time here. Number one, we are not -- we will not be taking deals if we didn't think we can deliver them. Number two, we've been growing our footprint on the delivery side internally, but more importantly, externally. So by now, we have a few very strong strategic partnerships all the way to the top of the firm. So if you think about name a couple Accenture or Ernst & Young, I met John at the CEO fairs in young, and we make sure we're very aligned. They see benefits our clients see benefits, we see benefits. So their percentage of involvement in our delivery efforts has been growing year-over-year, which I think is a very important sign. And then in terms of the technology, we are seeing acceleration of migration efforts with stronger AI tools because migration is a mix of human industry expertise and technology and AI is actually a good tool to blend those 3 dimensions together to get some lift. Not massive, but the trend is clearly making it more efficient.

James from TDM Growth. Just interested in your conversations with customers existing or new, particularly since Christmas, what people would term core Christmas. There seems to be a step-changing functionality. So I appreciate a lot of what you talked about in AI, and I agree with a lot of it. But just in terms of customers' willingness to commit to long-term contracts to pay subscriptions, has there been a change in either length of sales cycle sentiment from customers? Has there been anything that's substantially changed since Christmas, and that could be positive or negative?

From a business point of view, 0 change, 0, none, from a content point of view, we're asking more questions how they can deploy AI capabilities with Kraken and thanks to Kraken. So I would say, a year ago, we did not ask that. And that's exciting because it happens to be what we do. When we spoke about it a year ago, we kind of glazed over and said that also the next slide. That's the only change. 0 impact on all the other stuff you mentioned.

And then I think you touched on it briefly, but just internally, adopting AI tooling, have you noticed as a leader of the organization, culturally, is it sweeping through the organization in terms of how quickly you can deploy things? The 200 releases, is that increasing? Have you noticed any substantial changes in internal operating cadence or cultural impact on your staff?

2 years ago, we didn't have those tools, right, 2 years ago and a couple of months. So obviously, relative to that, it's totally different. We've seen in the last 12 months, material increase in internal interest, experimentation, tooling. We've made available more tools and people's usage has been growing. Is it the end of the journey? No, it's a journey. And we are in a very delicate space. We want to make sure people use it responsibly, not just for defiance and to do something crazy, but the trend is one-directional.

I think if you talk to other CFOs, they would tell you AI tools and AI enablement investments are probably becoming a bigger part of their IT budget than any other part. So it's probably the fastest-growing part of our budget as well.

Amir, we might just go online to Tom Allen from UBS who asked...

I thought you had a question.

No. I'll ask you later on. So Amir, could you please comment on how Kraken thinks about the value of each customer and quantify the upside on value per customer when customers adopt multiple products within the Kraken product suite? For example, what does orchestration of customers' distributed assets mean for realized value per customer?

And when you say customers, you mean our clients or the end customers?

I think he mean clients.

Okay. So I'll give the nonnumeric and then Tim can add a numeric lens. First, we'll have all our clients, and we truly partner with them. Those are big strategic long-term decisions. There is a flywheel in Kraken. The more clients we have, the more plans we will have. The more we enter a new country, the more clients in that country, we will see per the question here about that effect. The innovation because we have a single code base that grows every few minutes, if we get an innovation from National Grid, the single supplier of choice only in the Northeast of the U.S. But once we do it with them, one day we'll see it in Portugal and we'll be able to use it. So there's a flywheel of capabilities across clients. When it comes to flexibility, when we connect to EVs, every client we work with has a different mix of physical assets. So as we integrate with them and master the operation, the next client will find it easier. And there is some, I would say network effect, very gently, because it's not a physical node. There's a network cofactor of knowledge and experience and best practices of doing that as you connect to more devices, more assets, et cetera. From a business model point of view, how do you think about it?

Yes. I mean I think we shared today kind of our gross retention rate, and you can kind of imply that means our expansion rate is actually higher than that. So the terminal value of every customer is incredibly high just given the contract value and a contract length. So that's one. Two, because the contract value is high, the sales and marketing is relatively low for our business. The payback for our sales and marketing cost required is in months, which is unlike many, many horizontal SaaS companies that you see. So at scale, this business will generate an incredible amount of, I would say, very high operating margin. Now the business model, in a way, is tricky because the more successful we are in the short term, meaning the more customers we sign, the more investments we actually make on delivery upfront. So in the beginning, generally a customer will have some negative margin. But within a 12- to 24-month period, that quickly turns and accelerates and it's an investment that we're making now. So to the degree that we're more successful, there's a little bit of gross margin compression, but we think it's definitely worth the investment.

By the way, the history of this space, and some of you, I believe, known this market for many years, it works also the other way which means if you're a new technology company with only 1 client, and you've signed a second one and you don't deliver well, that has a negative flyway effect on your reference ability. You'll probably get 1 more, if you also don't deliver them well, it's very hard to continue. This is a marketable of trust, really complex, really mission-critical. So the positive flywheel is literally a reverse image and some vendors in this space years ago have been through the opposite approach. So you have to be very professional about it, deliver extremely well, which is why it's so important and you get a positive flywheel. If you're doing the opposite, you get exact negative effect.

It's [ Gus ] from [ Planet Asset Management ]. I just had a question on a comment you made earlier on agents. What does it look like letting agents plug into your system for customers and end users? And how do you protect your own data? How far do you let them plug in and take advantage of your system?

Yes. So the first thing I would say is we need to separate technology from business and regulatory decisions. Each client we work with has -- and to your question about AI, there's an extreme spread these days at the level of comfort level by country, by regulator and by customer in how much they want to let AI be involved in decision-making. Some are saying never, like we don't want any. We're curious technically over time, but at this point, don't touch it. Others are saying, we want tomorrow morning to plug some AI agents who built for internal efficiencies. And there's a last group that says they're ready to have the end users talk to a machine before it talks to a human. We built our technology in such a way you can define guardrails by agent, by client. So that provides the ability to have very different kind of behaviors. When will a third-party agent or code, just application, connect to Kraken is within a set of SDKs, APIs and commercial agreement such as we cannot just go and with all the data, et cetera. And lastly, lastly, lastly, we are not a front-end company. So you take Salesforce. They used to charge, we changed it last week, I think, used to charge per seat. And if an agent replaced the human, they lost the seat and it was not good. We get priced by the assets we process and do all of this with. So if there's a human at the front end our agent, a third-party agent, a third-party tool, great, the more value to the client, the better because we are the underlying operating system that connects to the physical assets to meter data, the business process. Hence, I would say our relationship with those front-end type agents is a bit more positive than some companies that make me controlling front end and are terrified of agents replacing the front end. So hopefully, that answers some of that. It's a wide topic.

Michael Evans from Quest Asset Partners. Can I ask about at the end of last year, you were talking about a possible IPO in 2026. Is that still in the plans? And has the recent change in valuations challenged the $8.65 billion, which I presume the Saudis paid?

So I never spoke about an IPO in '26. He would literally slap me if I did.

No. Yes, I won't slap you. No. I mean I think we're really just focused on building the business and winning share at this point. And just our experience is when you build a great business for the long term, that will create different paths to liquidity. So I would say we're building the infrastructure to operate at scale and we're making the investments necessary to operate as if we can one day be a public company, but no decisions have been made.

And the Saudi investment at that price, has that been challenged by the change in valuations of SaaS companies?

Well, I mean, we're not I would leave valuation to the professionals in this room in terms of what's fair or not. But certainly, there's been no change to any of the round; everybody -- Saudis, we've already funded already, so nothing's changed.

Can I ask another question about data. And if you've got any data monetization strategies. I know you've got a Kraken software marketplace. I guess there's probably lots of wholesale traders out there who would love to get their hands on some of the flow data and orchestration data that you have. Just how you think about that, please?

No. The data is of our customers'. We are a custodian. We're not going to use it for anything. The one thing we do extremely different than I would say, 99% of software companies, we give our customers full access to their own data, which is a crazy concept, but most of the companies try to like a hug and lock and make it very difficult for a customer to access their own data. And I think that's an excellent business strategy for a very short-term relationship, but a really bad one for the future. We're the opposite, as I showed here, which is why we are such a good partner for AI because they can actually access their data on a modern stack. But it's their data, their rights, 100%.

You probably get the sense to me that I can keep talking forever on this. But just the last couple of questions if there's any questions online as well, if there's any last questions, please send them through. Good way to stop there.

Thank you. No questions? All right.

All right. Thank you, everyone.

Just finally, I would like to thank, obviously, Amir and Tim and the team for traveling such a long way to be here with us today. It's been a wonderful partnership we've had over many years, and we're very excited about the future prospects of Kraken. Obviously, you heard it here today. But thank you again, and thank you all very much for coming.

Thank you.