This was once again a record quarter for Otovo for installations as the run rate grew to thirteen thousand installed units per year.
“With another set of record installation numbers and more revenue per customer, good things came together this quarter for all time high revenues. With barriers removed in installations and value chains, and a seeming start to a rebound in sales, our view is rather hopeful for the autumn”, says Otovo founder and CEO, Andreas Thorsheim.
UK general manager Jina Kwon comments: “In the UK, Otovo has just had one of our best periods for sales. Hardware, labour, and cost per watt are all down versus this time three years ago – to the benefit of consumers, as these savings are passed directly onto them. Consumers will continue to benefit from these cost reductions, which will not just save money on the installation itself, but then create a bigger saving in the long run.”
Q2 was also a strong quarter in terms of margin, with a substantial improvement to IFRS reported margins, back up to 21%. Gross margin generated, that also accounts for the value creation in the subscription segment, came in at 24%.
Otovo also experienced its highest ever addition to the subscription portfolio, with total portfolio value having more than three-folded in a year.
Otovo builds European Tech-hub in Madrid
This quarter, Otovo centralised its operations and marketing resources in Madrid in order to harness the pan-European position built over the last few years, leveraging a flexible, cost-effective, and highly skilled central team. Being active in 13 different European markets with varying customer acquisition costs enables Otovo to grow where it is most cost-effective and value accretive. Madrid serves as a thriving talent hub, being a European metropolis with excellent access to highly educated international talent. Centralising the staff in one pool grants Otovo the flexibility to allocate resources effectively in response to changes in the workload across different countries.
“The added focus on shared resources in Madrid, which complements our capital light marketplace model gives us a lot of flexibility. This strategy gives us a cost advantage over competitors with more resource-intensive models, strengthening our competitive position”, Thorsheim comments.
Outlook on hardware cost and installation speed
With Otovo’s exposure across Europe, currency was a major topic this quarter as the NOK weakened relative to all other currencies in the markets. This had a strong positive effect on reported revenues, ticket sizes, gross profits, as well as portfolio value.
“Moreover, throughout the quarter, the cost of solar hardware continued to fall, rendering solar more affordable for consumers, as did installer labour. I see this trend continuing in the near future and substantially benefiting our unit economics and ultimately our ability to compete and create demand”, says Thorsheim.
In addition, Otovo managed to significantly reduce installation time for consumers in the second quarter. While the situation in the overall solar market was tense due to the skyrocketing demand for solar energy in 2022, Otovo succeeded in reducing installation times to an average of 2.6 months across all 13 markets (in 2022 this was over 7 months at peak times).
See slide 8 in Otovo’s Q2 2023 presentation (link)
Key figures
(1) All-time high installation pace:
• 3,214 installations versus 1,745 same quarter last year, up 84%
• 2,215 unit sales versus 2,398 same quarter last year, down 8%, sequentially up 13% from Q1 , accelerating the pickup from the previous quarter
• IFRS Revenues up 2x versus last year, helped by higher ticket sizes
• Gross margin at 21%; Gross margin generated at 24%
(2) Strong quarter for subscription portfolio
• Substantial capital deployed: NOK 133m Subscription SPV Capex versus NOK 31m same quarter last year, up 4.2x
• Strong uptick in IRR, at 12.4% for projects installed this quarter v.s. 9.7% same quarter last year
(3) Opex and efficiency improving as business scales
• Created a shared service centre in Madrid, reducing cost, improving flexibility and enhancing access to international talent
(4) Set up for high speeds and improved profitability into 2024 – 2H of 2023 expected to look similar on installations as 1H with expected improvement in sales
About Otovo
For homeowners, Otovo is the easiest way to get solar panels on the roof, and batteries in the home. Otovo is a marketplace that organises hundreds of local, high quality and qualified energy installers. The
company uses its proprietary technology to analyse the potential of any home and finds the best price and installer for customers based on an automatic bidding process between available installers.
