Energy tech spin-outs: Why Kraken’s $8.65bn valuation matters for software stocks
On 29-30 December 2025 Octopus Energy sold a minority stake in its software arm, Kraken Technologies, valuing the unit at *$8.65 billion*. The deal raised about *$1 billion* from investors led by D1 Capital Partners, with participation from Fidelity International, Ontario Teachers’ Pension Plan and others. Of that $1 billion, roughly *$150 million* went into Kraken and *$850 million* flowed to Octopus Energy, leaving Octopus with about *13.7%* ownership of Kraken after the transaction. Origin Energy also invested *$140 million* and will hold a roughly *22.7%* stake in Kraken post-deal. These facts make Kraken one of the largest pure energy-software valuations to date.
*The raw numbers that change the conversation*
Kraken already supports *over 70 million customer accounts* across utilities, and it reports *committed annual revenues of more than $500 million* from licensing and services. Using those public figures, Kraken’s *implied EV / revenue multiple* at $8.65 billion is about *17.3x* on $500 million of revenue, a very high multiple compared with median software multiples in 2025. For context, public SaaS medians in 2025 trade around *~6x EV / revenue*, while upper-quartile SaaS deals and private top transactions can range into *8-16x* or higher depending on growth and margin profiles. Kraken’s multiple is therefore clearly at the premium end, showing investor willingness to pay up for specialised, mission-critical platforms in the energy transition.
*Why investors are paying a premium*
* Scale of addressable market: Kraken is selling software to utilities and large energy groups globally, not just to small customers. Serving millions of meters means recurring licence revenues have big scale potential.
* Proven commercial traction: Over $500 million of committed revenue and big name customers like EDF, E.ON and National Grid reduce execution risk compared with early AI or platform startups.
* Strategic importance: Energy transition needs software for billing, EV charging, storage and grid flexibility, so buyers see Kraken as a long-term systems supplier, not a narrow app.
*What this premium implies for software stocks and valuations*
* Higher comps for vertical SaaS: Buyers will reference Kraken when valuing other industry-specific platforms for utilities, smart grids and energy management.
* Wider valuation dispersion: Public SaaS companies with strong growth, high retention and vertical moats may trade at 8-12x revenue, while commodity software may remain near the 3-6x median. Kraken confirms the premium is paid for scale plus strategic importance.
* M&A rerating potential: Listed software names that show similar attributes, such as 40%+ revenue growth, net revenue retention above 120% and enterprise contracts, could see re-rating if strategic buyers compete.
*Concrete investor checklist*
* ARR and growth rate: Higher growth justifies higher multiples, aim for 30%+ in fast sectors.
* Net Revenue Retention (NRR): 120%+ signals good upsell and stickiness.
* Gross margin: Vertical SaaS typically posts 70-85% gross margins, higher margins support higher EV/Revenue.
* Rule of 40: Growth rate plus free cash flow margin >40% is a commonly used premium indicator.
* Contracted revenue: Kraken’s $500m of committed revenue is the single biggest reason for its high multiple.
*Near-term market effects and risks*
* Re-rating pressure: Some software stocks may rerate higher on comparable M&A comps, but re-rating is selective and tied to measurable metrics.
* Execution risk: Conversion of contracted revenue into profitable cash flow matters, if Kraken or any acquirer fails to show margin expansion, multiples can compress.
* Regulatory and integration risk: Separate governance, cross-border issues and data rules can reduce the near-term upside for acquirers and targets.
*Conclusion*
Kraken’s $8.65 billion valuation on 29-30 December 2025 matters because it sets a clear market reference point, showing that investors will pay *well above median SaaS multiples* for software that combines scale, recurring revenue and strategic importance in a fast-growing sector. For Indian and global software investors, the practical takeaway is simple, chase companies with *real ARR, high retention, margin expansion and clear enterprise footprints*, not just flashy tech. Kraken’s numbers, including *70m accounts, $500m committed revenue, $1bn raise and a 17x implied revenue multiple*, make that guidance tangible, measurable and actionable.
The image added is for representation purposes only
