Bulb gains 800k customers, with growth coming at a cost of £129m

In 2018/19 85% of challenger brand energy suppliers were unable to make a profit - the wholesale market was particularly challenging in the latter half of 2018 with wholesale electricity prices reaching almost £70MWh in September.

Wholesale costs reduced going into 2019, but a combination of “pricing for growth” and challenging hedging decisions meant that on average Portfolio Gross Margins were less than 8% across the board for Challenger suppliers.

In the domestic market, portfolio gross margins of less than 10% will typically result in a loss for the majority of suppliers.

Out with Bulb's 1% GM and Customer Acquisition Costs, Operating Costs per Customer are low and Customers Served per FTE are high - which in a market with normalised gross margin should provide a route to profit.

With switching forecast to grow year on year, challengers are focusing ever more on digital excellence - with a focus on low acquisition costs and great service, whilst combining positive unit economics, with a reasonable return on invested capital over the short to medium term.