Ovh Groupe

Hello and welcome to the OVH Cloud H1 for your 2023 results call. My name is Caroline and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star one on your telephone keypad to register your questions at any time. If at any point you require assistance, please press star zero and you will be connected to an operator. Please note, this conference is being recorded. Today's speaker will be Michel Paulin, the CEO, and Stephanie Vesnia, the CFO. I now hand over to OVH team to begin today's conference. Thank you.

Hello, everyone. Good morning. This is Michel Paulin, the CEO of OVHcloud. Thank you for joining us today for H1 2022 results. This first semester has been a period of growth acceleration. Our revenue reached 439 million euros at 15% as reported and 12.8% like for like. With the Q2 growing at plus 13.9% after a Q1 at 11.7%, we had a strong growth acceleration. Our H1 adjusted EBITDA reached 156 million, leading to a margin of 35.4%. Higher than expected energy costs in Germany and the timing of our sizing of our price increases meant the EBITDA was modestly below our initial expectation. We continue to monitor our investment level with discipline. Our capex is lower than last year with recurring capex of 17% of our revenue and gross capex of 27% of our revenues. We are pleased to see that revenue accelerated in Q2 with gross reaching 13.9% up from 11.7% in Q1. So let me give you an update on the guidance for this year. Overall, H1 was encouraging, but in March and so far in April, we have seen signs that some clients are taking longer to conclude contracts. We are still confident our offering in quality and price will remain competitive and attractive. Nevertheless, we think it's prudent to temper our full-year revenue guidance to take into account this. We now anticipate our full-year 2023 revenue growth, to be between 13% to 14% like-for-like, and we were previously at 14% to 16%. It's still a very strong growth level and represents an acceleration compared to last year and in H2 over H1. Given the operational gearing of the business, the lower level of revenue growth is impacting EBITDA, where we now look for a full year 23 margin of at least 36%. We had previously looked for 29. The new target still implies a stronger second half margin with increase driven by the effect of volume growth, price increases, and the front end loading of costs, and of course, continued strong cost discipline. We expect our capex to be in the lower range of our guidance, recurring capex between 16 to 20, and gross capex between 28 and 32. We have a clear focus on financial discipline and flexibility. We continue to invest selectively for future growth in new products, new data centers, especially new infrastructures, and remain agile as we were positioned on a fast-growing market long-term and remain focused on delivering profitable growth. The next slide is about OVHcloud, which operates in a fast-growing market with an expected five years of more than 20%, as you can see on the left-hand side of this slide. The cloud market is driven by cloud adoption from all customer segments, as it is mission critical to their operations. Everyone is moving to the cloud. Data usage is growing fast, and we keep seeing new usage, new edits, many new opportunities for growth. Multi-cloud and hybrid cloud trends accelerate the momentum more and more organizations deploy multiple cloud solutions to finally address their digital transformation needs. In this market, as European cloud leader, we are recognized by IDC as a major player in the cloud industry, and we are ideally positioned to continue to capture opportunity in this fast-growing market. OVHcloud is the European leader in data sovereignty and current regulation evolution is a very strong tailwind for us. The global legal framework is increasingly favorable to VxCloud. In Europe, with the Data Act, European institutions are reinforcing freedom of choice for cloud users. This is even resonating in the UK. British authorities are undetermined, are determined, sorry, are determined to ensure fair competition and are currently preparing an investigation on the cloud market practices. We continue to see a strong traction for our sovereign solutions. Our second cloud offering is doubling every quarter. It shows attraction for the highest level of security and trust. Data sovereignty is a strong driver now for business, as shown by our recent wins as APHP in the health and also with Dalet in the media industry for the Olympic Games. We are working on several aspects, including the extension of the certification to public cloud and barometer solutions beyond our current private cloud offering. These extensions will be driving business momentum, as we also are expanding our existing certification in Germany to also expand in new market opportunities in these locations. OVHcloud's leading position for a sustainable cloud is recognized by analysts and customers. We are very proud to have reached a score of 71 over 100 at S&P Global Ratings, which is a five-point improvement compared to 2021. With this high score, we are above the average of technology companies in all geographies. Also, we are in the top 15% of the software and service companies in 2022 in Sustainalytics ranking with a low risk ESG profile. These new rankings are a clear confirmation of our leading position. More importantly, our continued work to improve our carbon footprint, energy and water efficiency is driving business momentum as our customers and clients are looking to optimize their environmental footprint. Let me give you a few points regarding our growth acceleration strategy. We had in H1 a continued growth acceleration with a very strong Q2. In public cloud, we reached 74 million euros of revenues in H1 with a like-for-like growth of 18% in Q1 and 22.8% in Q2. In private cloud, our revenue reached 273 million euros in H1 with, again, a like-for-like growth of 12.8% in Q1 and 16.6% in Q2. In WebCloud, our revenue reached 92 million euros with a like-to-like growth of plus 2.5 in the semester. At group level, our growth accelerated from 11.7% to 13.9% in Q2. This growth acceleration is fueled by our key long-term differentiators, data sovereignty, sustainability, open and reversible cloud, predictable and transparent pricing, best performance price ratio, which are, in this period, key competitive advantage. It has been a strong first half, and it's come with both existing customers and new customers' wins. Our existing customers show a high level of loyalty, as you can see on the revenue retention rate reaching 111% in Q2. Capitalizing on this high level of trust, we are delighted to register good upselling and cross-selling dynamics within our customer base. In addition, we have seen and continue to see good momentum with new client wins. As you can see on the right-hand side, we continue to win significantly clients this quarter in various sectors such as finance, insurance, media, software editors, marketplace, or gaming. And I would like to share with you three flagship names that we won this quarter. All three of these wins are of the type that have significant medium-term potential. The first one is Allianz, where we will host a workload of one of their affiliates on the hosted private cloud. The second is in the health sector with APHP, the public hospital system in France in Ile-de-France. This is a very interesting new opportunity. We will build with them a new health data hub to develop a sovereign health platform with open source data. It will grant health large corporates, hospitals, clinics, laboratories, public entities, or researchers to access to significant amount of health data. It will accelerate their progress on various projects such as AI for expenses. Finally, we are very proud to have been selected by Dalet to manage and store the very significant amount of media data that will be generated during the Parry Olympics game of 2024. This will build their infrastructure on our public cloud and path offering. All these customers underline our data sovereignty, price performance, product performance of the product, and price predictability are important for them. These are key differentiating strengths for VHcloud and drive strong new business momentum. We have a steady dynamic in our go-to-market performance with a continued strong traction both for the digital and the enterprise channel. The success of our partner program is key for us. We now have more than 1,250 partners worldwide, mostly IT integrators, such as Big Name, Accenture, Capgemini, Soprasteria, that can integrate OVHcloud on their own offering. It enables them to offer to their customers their expertise coupled with our unique cloud offering. First, it increases our total addressable market as large corporates can be addressed without partners. Secondly, in a period where some customers are looking to optimize costs, our strong relationship with partners is a key asset to understand what our customers want and how we can best address their cloud needs in the short and long term. We will continue to increase our work with partners. It is clearly successful and very appreciated by existing and future customers. As we know, we started our price increase mid-Q2. The customer response has been encouraging. There were no changes to our commercial dynamic with continued strong new customer additions and double-digit impact growth. among existing customers. It confirms that our value proposal is robust and our pricing power potential is very strong. We had a very good first half, especially in Public Cloud, where we saw a significant increase in brand awareness. The performance of our product is recognized. We booked 10,000 new customers in Public Cloud in H1 compared to the same period of last year. It also enabled us at group level to continue to grow with the existing clients. The more they use OVHcloud, the more they understand and perceive the value and performance we can bring them. RPAC has increased by around 10%. In terms of churn, as the chart shows, the dynamic is unchanged and very encouraging. We closely monitor all operation KPIs that we have and we didn't see any change in our monthly revenue chart compared to historical trend as the price increase rolled out. We have limited monthly volatility with 0.5 maximum of variation between the maximum and the minimum for the more than two years. We will continue to strictly monitor these KPIs and to adapt all the time our action plans. We have been developing and improving our PaaS offering for the last two years. PaaS enables users to develop easily cloud-based applications. Demand for these kind of solutions continue to be very strong. We have now thousands of customers for our different solutions such as our database as a service, storage, or containers. In Q2, PaaS represents 8% of our public cloud revenue, after a very significant growth since the beginning of the year. We expect our past offering to continue to be a significant growth driver, accelerating and expanding our customer base. Looking at geographies, we are pleased to report double-digit growth in all regions with a growth saturation in Q2. We had a continued double-digit growth in public and private cloud in France. Despite lower growth in Web Cloud as anticipated, we grew at 12.4% Light4Light in PO2 and 12.8% Light4Light in H1. We had a strong growth acceleration in Europe, driven by very good performance in Germany and Eastern Europe in all segments. In the rest of the world, it's a strong performance as we are again growing at a double-digit growth pace despite high comparison basins in the U.S., and the continued deceleration in Russia. We announced a new data center in India a few quarters ago, and we are very happy to have officially launched the commercial Go Live early March. We had a very good traction as soon as we launched it, and we were rapidly, unfortunately, sold out for the first wave of servers, which confirmed the high growth potential of this region. The Indian cloud market is expected to grow by more than 30% in the next five years, and thanks to these new data centers, we're strengthening our presence in this fast-growing region, which is also concerned with data sovereignty. This is a rising demand in India for data sovereignty and for the highest level of data protection, which fits perfectly what we are offering to our customers. We operate in a very fast-growing market, and we are investing selectively to boost our future growth. We are focused on financial discipline. Our model is highly flexible, and we can see in the capex evolution versus last year. The capex need for the servers is 20% lower than last year, and we have been using stocks that we have decided to increase last year because of the supply tensions. We continue to invest in infrastructure CapEx to expand our capacity, especially in new regions and new data centers. The roadmap of opening we planned at the start of the year remains on track with nine new data centers in the next year. We also have invested in hyper-resilient CapEx related to the new security standards we have implemented in our data centers. Finally, we continue to invest in the development of the new technology and software such as PaaS, We have introduced new solutions recently, such as long-term archive storage, node AI solutions, and new initiatives will be also launched very soon in security and data management. We have a highly agile model and can reduce or accelerate our production and investment in anticipation of market trends. So now, let's now move to financial parts with Stephanie.

Thank you, Michel. Good morning, everyone. I am Stéphanie Bessonnier and I am delighted to be with you today to present you our key financials for the first half of the year. I am thrilled to join OVHcloud as a CFO after more than 20 years of investment in strategic areas. I am convinced about the strategy and outlook of the European cloud leader. I'm honored to join an outstanding management team and I'm looking forward to meeting you soon in person. As Richard said at the beginning, we registered in the first half of the year a strong revenue growth of plus 12.8% life-for-life and plus 15% as reported. Growth in Q2 accelerated compared to Q1 and reached 13.9% life-for-life. This growth is fueled by a strong acceleration in private and public clouds Generating a favorable with evolution as shown in the next slide On this slide we can see that the mix continues to evolve to work more public cloud which is the most dynamic market and Private cloud with a continued strong growth in this segment thanks to the success of our go-to-market strategies Public cloud now represents 17% of our revenue at one point versus last year, and private cloud represents 63% at 1.5 points. The strong performance of our cloud businesses is driven by a robust customer acquisition, especially in public cloud, a continued RPAX growth, and a steady ramp-up of our batch solutions. and the profitability side, H123 adjusted EBITDA is at 156 million euros, representing a margin of 35.4%. In terms of cost, spot electricity prices in Germany were higher than expected. Germany is the only country where it was not possible to fully edge our consumption. In addition, our continuous efforts to invest in our talent base, particularly early 2023, led to personal costs that were higher than anticipated. Looking forward, H2 margins should increase significantly. We've taken action. First, we are deploying a company-wide cost reduction plan, including extra discipline on hiring. We also expect to have the full effect of price increases in the coming quarters, And finally, we continue to have an active hedging strategy and electricity costs. Bottom line, we expect these actions to bear fruit as early as H2 and support margin increase in H2. Looking at our full P&L, operating income increased at minus 7 million euros compared to minus 21 last year. It includes share-based compensation for 4 million, depreciation of outdated or damaged servers for 5 million euros and a premium in insurance fees for 2 million euros. We continue to benefit from a very attractive cost of debt thanks to the package negotiated during the IPO, the opportunity financing from EIB in 2022 and an active strategy of hedging our debt. Now, moving on to cash flows, we improved in H1 are operating free cash flow after investments at minus 53 million euros versus minus 18 million euros last year, reaping the benefits of increased adjusted EBITDA and financial discipline. We continue to invest selectively in infrastructure and network CapEx, as explained by Michel, with a great flexibility and a clear focus on execution to maximize our future value creation. we focus on improving our capex efficiency. The recent reduction in hardware capex with stock consumption and production control demonstrates the flexibility of our industrial model. Moving on to the next slide, I want to insist on the strength of the balance sheet. At the end of the year, our net debt to EBITDA ratio is at two times, and I'm glad to share that good financial decisions of 2022 are paying off. 75% of the debt is held at fixed rates, and current average interest costs is 3.2% all in as we speak. Also, with more than 500 million euros of available liquidity, OVHcloud's growth acceleration plan is fully financed until the end of the year 2022. Ending on this good note, I would like now to hand over to Michel for the outlook and key takeaways.

Thank you, Stephanie. Now turning to our guidance for the year, I explained at the beginning of the call we expect a like-for-like revenue growth between 13% to 14%. This guidance takes into account our strong start to the year, the expected acceleration in H2 on the back of growing customer volume and price increases, but also anticipates that the recent indicators of customer caution in the face of a tricky economy continue. We remain confident in the mid- and long-growth-term trends of the cloud industry, and we see new usage of AI definitely ramping up. We think that our new product initiative, our differentiated services, and our value-for-money proposition are even more relevant in this sort of environment. In terms of margin, we expect to be above 36% on a full year basis with the H2 margin well above H1. The revenue volume effect will have a positive impact on our margin in H2 as we size our cost base early in the year. Nevertheless, we have also implemented cost-free strength plans that will also begin to bear fruit in H2. Finally, regarding CapEx, we expect to be an in the lower end of the guidance range, again reflecting our focus on financial discipline. As takeaways, we had a strong growth acceleration in H1. Our revenue reached €439 million, with a reported growth of plus 15%, and a like-for-like growth of plus 12.8%. Revenue retention reached 111%, confirming our capacity to grow with our existing customers. We have a clear strategy of growth acceleration with all levers confirmed, even more in this current environment. We updated 2023 financial targets for our revenue and adjusted EBITDA margin as we think it is prudent to temper our full year guidance to take into account the recent trends we have seen. Finally, we confirm that our capex will be in the lower range of the annual target, again reflecting our focus on financial discipline. We can now open the conference to the Q&A session.

Sure, thank you. As a reminder, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. We will take the first question from line Toby from J.P. Morgan. The line is open now. Please go ahead.

yes hey good morning and thanks for the question um i just wanted to ask around um the the sort of the delays that you've been seeing um could you just give a little bit more detail around uh which of the cloud segments specifically you're seeing those um delays as most pronounced and and also just looking at it from a regional perspective as well are there any specific countries Where you're seeing that that weakness is more pronounced in March and in April.

Thank you Yeah, maybe I will do that by regions by customers and by customer segments and also by products what we see today that clearly the corporate are very cautious and they are really investigating with a very strong presence the investments to be sure that it has a strong cost control and return investment. That's why we have seen in this corporate segment some delays. For the most SMEs and tech companies, we see that the delays is more a question of reorganization of their operations to make sure that they control actively their costs. In terms of geographies, it's clear that today we've seen that the American market, the Canadian market, and the UK market, which are still the more mature market, are mainly affected with the recent environment that we see. In terms of products, we have clearly for the SMEs, the web cloud market, which is impacted by the delays. And for the corporate, it's mainly on the private cloud. We don't see today, for the moment, as OVH Cloud, for the public cloud, such delays, and that's the reason why we are very confident that today we have the right strategy by introducing new products in the public cloud with new initiatives and to introduce that to foster our growth.

Great, thank you.

Thank you. We will take the next question from line Ben Castillo from BNP Paribas. The line is open now. Please go ahead.

Good morning. Yeah, thanks for taking my question, too, if I can. Firstly, on the new growth outlook for this year, what are you assuming there in H2 in terms of customer trends? Are you assuming that the same recent trends you've seen in the last month or two continue? Are you assuming some improvements? in the timing of projects going ahead, or are you assuming some further deterioration? So just some sensitivity around that would be great, you know, to get a sense of how de-risked that guidance is. Second question, just clarifications in detail, please. In the press release, it seems to suggest that you're containing the increase of the cost base, whereas in the presentation on slide 21, it seemed to be talking about actively reducing stripping costs out. So perhaps could you just clarify what that is and then detail on where you're finding these cost efficiencies.

Thank you. As we already mentioned today, what we see that customers are delaying some decisions. However, we do believe that the fundamentals of the market are still absolutely valid. That there is a strong demand for growing dynamic cloud. this is part of the evolution of the digitalization of the industry and that's why we are absolutely confident that mid and long term the growth of the cloud market will remain strong because it's imperative and this transition is something which is mid term and long term absolutely mandatory for the customer moreover we really do believe that OVHcloud in this perspective with the fact that we have very strong competitive advantage which are distinctive in terms of price performance, price predictability, sustainability, the fact that we propose data sovereignty, and also that we are open, reversible, which allow to have the flexibility for our customers are really key advantage in this period. So we don't see today that there is slowdown in customer acquisitions. We don't see today that we are not able to propose innovative solutions to all the markets. About the cost, I propose, Stéphanie, that... Yeah, sure.

So the rationale behind the revision of the guidance is that, first, we had some one-offs on the cost side because we had higher than anticipated electricity spot prices in Germany, and we invested also early in 2023 in our key talent space, And now what we are seeing going forward is that we have a slight softening of our growth acceleration. But we are still expecting to grow strongly. So what we are going to do is we are going to have a strict control on our cost base going forward. And we expect our EBD margin to relaunch sharply in H2. Mechanically, because we will have the full impact of our price increases, we still have the strong volume growth. we have softening of the electricity prices, and again, we have launched a strict plan on cost control. So all in, we expect an improvement in H2 over H1.

Okay, thanks. So Michelle, can I just follow up, please, on that question? My question was specifically on the H2 this year. So I understand the mid- and long-term drivers are still intact, but in terms of your full-year guidance this year, are you assuming the current trends current uncertainty continues into h2 and you're still confident of reaching the 13 to 14 percent growth if things continue or just the things need to improve for you to get to that fiscal year 23 guidance uh we we are confident uh that we will keep accelerating through h2 uh

It will be mechanical first because we have a strong momentum in public cloud which is increasing and the share is increasing. And we will have also a full impact of the price increases because we are increasing the prices starting mid of Q2. We have price increases in Q3 and also in Q4. And also because thanks to our investment we've done for two years, we have the ramp up of our PaaS solutions which is really at the proper moment to boost growth. So that's why we are maintaining a high level of growth in H2, and it's a good basis for 2024.

Okay, thanks.

Thank you. We will take the next question from line one. The line is open now. Please go ahead.

Hi everyone. Thanks for taking my questions. I have three questions, please. I will go one by one if I may. First, could you remind us why you need to keep such an aggressive pricing policy with prices on average much lower than your competitors, including smaller ones? I mean, in theory, it would be enough to be only a few percentage points below your competitors to make your offer more attractive for the same level of services but your charts in previous presentations and feedbacks from some of your customers or even from competitors seems indicating that you are very significantly cheaper. Isn't it value destroying to keep this kind of policy?

I think just a few elements about that. We believe today this is our positioning and today we believe that we should maintain a value proposal which is in phase with the market and with the expectation of our customers. Moreover, as you know, and this is something I mentioned in the presentation, there are some practices today on the market done by suppliers where in fact they are using some tricks, I mean, multi-year type of commitment where in fact they have also aggressive pricing but they love their customers. So our positioning there is to maintain an aggressive, when I say aggressive, I would say a price forward capability to adapt and to propose really innovative solutions. And we believe this is one of the reasons why today we are very strong positions where customers are maybe more cautious and clearly our capacity to maintain good price predictability and good pricing power is something which is a key element of differentiator and also long-term to confirm that we have the capacity to grow. Moreover, and I just want to say that we have decided to make price increases which demonstrate that we have this capacity and we didn't see any churn increase in terms of customers, you've seen the slide. That's why we are confident that today we can really monitor very tightly this price, I mean, predictability and performance, but at the same time to be also to manage the price level to maintain high level of valuable growth.

Okay. Second question, if I may please. I would like to know what is the price effect embedded in Euro 2023 revenue growth target and maybe a bit more color on the recent development in demand as well as the recent churn level and its expected development in the coming months.

For the price increase?

Yes. So as you know, we started to increase our prices in December 2022. So we have one month of price increase in our Q2 numbers. We've decided to progressively increase our prices throughout the year. We have also some customers that are committed over the medium term. So all in, we think that the contribution of price increases will have a full effect in Q4. And in total, for H1, we are looking at a slight more of one point of contribution from our price increases, and we expect this impact to be two to three points over the full year.

Thank you. And maybe last one. Could you please tell us the amount of electrical power needed to supply your data center in megawatts, please?

We do not disclose this number.

Okay. Sorry. Okay. Thank you. Thank you for your answers.

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. We will take the next question from line George Webb from Morgan Stanley. The line is open now. Please go ahead.

Hi, morning, Michelle and Stephanie. Thank you for taking my questions. Just a few. Firstly, just on the lower margin guidance again, I mean, look, the spot German electricity price factor sounds more transitory. Some of those factors around labor and the like sound more sticky. Given you were around 39% now above 36%, how quickly do you think you can recover some of that loss margin? And I guess as we go into 2024, you haven't changed your 25 target to 42%. So should we be expecting just a much bigger uplift than we perhaps were previously? Secondly, on pricing strategy, if electricity prices across Europe were to continue to subside, that's over a 12 to 24 month view, would you look to pass those savings back to customers in lower pricing or would you retain that incremental margin? And then just finally, I appreciate that server capex is pretty short lead time, but does the slightly lower capex for this year start to impact your 2024 growth aspirations at all? Thank you.

So on your first question, yes, you're right. I mean, we have a temporary effect on our margin. due to the situation of the spot price during the winter in Germany. And as we mentioned, we have also started to build our cost base early in 2023. Now, with the volume growth and the growth that we're expecting on our revenue, we will benefit from an operating leverage. As in the meantime, we are now under a strict discipline with regard of cost increase. So yes, we are building a further margin improvement going forward.

The second question was about the pricing strategy. We do not anticipate to reduce prices. We will maintain. Even so, the electricity cost might, and the volatility is very high, so I will not predict. Even so, the electricity cost will reduce. We will have no intention for the moment to decrease our overall pricing strategy for our install base.

So we will retain margin.

Very clear. And that's on the lower capex impact on 24, if there is any?

Yeah. On the capex, no. In fact, if you look at the structure of a capex, we have maintained the infrastructure capex and the maintenance capex to be able to be sure that we will have the infrastructure with opening new data centers such as India, but also we are going to open new data centers in France, close to Paris, in Canada, and also in Europe, also in Asia, in Singapore, and Sydney. So we are making this investment to prepare the growth of the future. So no, we were able now more and more to control more heavily and to have a better return on investment of all we are doing in the CAPEX. But today we do not try to jeopardize the growth by reducing the CAPEX. The second effect which is very important is the stock. You remember last year that we have increased on purpose the stock due to some supply constraints and we decided on purpose to be sure that we will be able to continue to to deploy our customers and now reducing, I mean, month after month, our stock level. That also gives a benefit to reduce our capex, but we will not, of course, jeopardize our growth potential by reducing stupidly our capex level.

Okay, very clear. Thank you.

Thank you.

It appears no further question at this time. We have one more question. Are we good to take?

Okay. No questions? Anyway, thank you very much for you. Sorry. Go ahead.

Pardon the interruption. We have one more question in the line. Are we good to take?

Yeah. Okay. Okay.

I'll open up the line from Derek Marcon from Associate General. The line is open now. Please go ahead.

Bonjour, Michelle. Sorry to be late in the queue. I've got two questions. The first one is about the growth acceleration that you expect in H2-23. If you take into account the increase from price increase, it seems that volume growth in H2 is not stagnant. or let's say will be less than what we saw in H1. Do you share this view? And the second question is about the investment that you plan for H2. So you said cost control. Does it mean that the net staff hiring or let's say the headcounts, average headcount in H2 should not increase much compared to what was the number at the end of H1? Because I saw that in H1, It's more than 200 full-time equivalent increase that you made. So should we expect this number to reduce significantly in H2? And if it's the case, when will you decide to relaunch, let's say, a more aggressive hiring campaign? Should you wait the end of fiscal year 2023 or... later in the fiscal year 2024 to take such decision. Thank you.

Yeah, just to, I will answer to the second one very quickly because it's very straightforward. Yes, we anticipate to have a slowdown in the hiring rhythm for H2, clearly, because we have the, as you've seen, the outlook is to increase sharply our profitability in H2. And we will, of course, completely control the hiring rhythm to maintain this high level of profitability in the next few years. About the first one, about the gross acceleration and the volume and the price. Today, we do not anticipate a reduction in volume in terms of customer acquisitions. we believe that today we still have a strong go-to market and strong appetite from the market for OVHcloud solutions and clearly it's something that we anticipate. What we said is that the delay on some projects make that maybe on some domain and subsome domain the ARPAC is not growing as fast as was anticipated but clearly we are still very confident that this is only a short-term vision and that long-term the need for such solutions are really still very valid so that's why we are convinced that we will at the same time continue to acquire new customers you've seen in the public cost for example that we have acquired more than 10,000 new customers more than last year in H1. And we see for the moment that we have a strong I would say capacity to continue to acquire new customers.

And Michel, just a quick follow-up on the price increase. So you said 2% to 3%, a range of 2% to 3% for the year. So a message that is perfectly in line with what you said six months ago. When will you be able to narrow this range and why you've got such a range? What's the difference between the low end and the high end of this range? Because on the six-month period, it starts to be a meaningful number, the difference between the low end and the high end.

Just to explain what... As you know, the price increase is not... is not, I mean, for all our customers. We have different type of commerce. First, in the corporate sector, we have large customers with contracts where the price increase is under some contracts terms. And so that's the reason why we are discussing with our customers, of course, to negotiate or sometimes renegotiate. That's why we are present about the impact on the corporate segment. The second is that we have some customers, we have commitments to two years, three years, four years for business. And some customers are asking to have commitments for long term. And these commitments do not imply the capacity to increase the prices. However, they stay longer. So that's why we have been always very cautious in the implementation of the price increase to make sure, and you've seen in the results which is the case, that it will not affect the churn level because we believe that these surveys should and will continue to remain and will increase. And that's why we are present and sometimes maybe not as clear about the impact of the price increase because we monitor that nearly week after week to be sure that we have the appropriate level between price increase and the capacity to continue to maintain a very strong momentum in growth. However, what we see is very promising in the sense that our pricing power is confirmed, that also the reaction of the customers is to be very loyal. We've seen that we have the highest retention rate that we had since we've made the IPO. That's why we are at the same time cautious, but at the same time very, very focused to maintain this capacity to increase the prices step by step. without impacting our install base and our capacity to have gross momentum in the future.

Thank you very much.

Thank you. There's no further question at this time, so I'll hand it back over to your host to conclude today's conference.

So, thank you very much. Thank you for all your questions. Before we close the call, really, I want to reiterate that it was a pleasure to speak with you again for our H1 results. These results are robust with a strong growth acceleration in Q2. Moreover, in this context, we believe that our key differentiators, such as data sovereignty, price predictability, transparency, sustainability, the fact that we have an open and reversible cloud, and the best performance price ratio, are more than ever valid in the current environment to maintain a high level of growth and accelerate our mean growth with a profitable growth. The prod market is a fast-growing market, and it will stay a fast-growing market, and we are so well positioned to continue to expand. Thank you very much for listening to us, and have a very good day.

Thank you for joining today's call. You may now disconnect.