(BFM Bourse) – The cloud computing specialist has delivered its medium-term ambitions to the market, counting on less intense investment spending as well as positive free cash flow from the financial year ending at the end of August 2026 .
OVHcloud is emerging from the prevailing market gloom. The European champion of cloud computing rose 7.4% around 2:45 p.m., while the SBF 120 lost 1.3% at the same time. A performance all the more remarkable given that the company founded by Octave Klaba had already gained 6.3% the day before, which has also allowed it to gain 17% since January 1st.
The market appreciates the ambitions for the 2025-2026 financial year (which will therefore close at the end of August 2026), which the company delivered this Wednesday during a day dedicated to investors in London.
OVHcloud has therefore unveiled its strategy, with three areas of growth. In terms of products, the company intends to expand its market by further developing its range of PaaS (“platform as a service”) products, application development platforms in the cloud, with all the execution architecture offered by the service provider) and offer artificial intelligence solutions.
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Maximize cash generation
At the level of its customers, OVHcloud intends to “expand (its) customer base, in particular by targeting specific verticals (public sector or health), strengthen the sales channel via partners and encourage the acquisition of new customers with marketing investments “, explains the company.
The company also plans to improve the occupancy rate of data centers already open around the world and deploy new locations “with reduced capital intensity”. The company is expected to have 45 data centers by the end of 2024 and recently expanded into India, its ninth country.
These areas of growth should enable the group to achieve an average increase in turnover of between 11% and 13% on a comparable basis, between the financial year ending in August 2024 and that ending in the same month of 2026. Adjusted gross operating margin (Ebitda) is expected to be around 39% for the 2025-2026 financial year, compared to 36.3% for the 2022-2023 financial year.
Important point: OVHcloud has stated that it wants to maximize its cash generation. Which leads him to announce in particular that investment spending will be less intense in the future.
“For the coming years, OVHcloud plans to optimize the utilization rate of its data centers, which will reach nearly 64% in 2024. The product mix will be favorable to a reduction in capital intensity, with investments in new products stabilized in absolute value around 80 million euros per year”, explains the company.
A “paradigm shift”
As a result, “capex” (investment expenditure) will be less heavy. Growth capex will represent between 16% and 18% of revenues for the 2025-2026 financial year and “recurring” capex between 12% and 14%, compared to respective rates of 24% and 16% expected for the 2023-2023 financial year. 2024. This will allow OVHcloud to forecast positive free cash flow for the 2025-2026 financial year.
According to Invest Securities, the objectives revealed by OVHcloud are relatively in line with expectations but a little below in terms of growth. According to the research office, the consensus expected average annual growth of 12.9% between the 2023-2024 financial year and the 2025-2026 financial year, i.e. the top of the range indicated by the French group, as well as only on an adjusted Ebitda margin of 38.4% against, therefore, 39% targeted by the company.
“Growth and margin are more or less in line with expectations. But the real paradigm shift is the drop in the investment/turnover ratio which results in the free cash flow target being in the green on the “financial year ending in August 2026”, assesses an analyst.
Julien Marion – ©2024 BFM Bourse
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