Ovh Groupe

Hello and welcome to the full year OVHcloud 2023 annual results. My name is George. I'll be your coordinator for today's event. For the duration of the call, your lines will be in listen-only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star 1 on your telephone keypad to register your question at any time. If at any point you require assistance, please press star 0 and you will be connected to an operator. Please note, this conference is being recorded. Today's speakers will be Mr. Michel Polin, CEO, and Ms. Stephanie Disney, CFO. And I have a call over to the OVH team to begin today's conference. Thank you.

Hello. Good morning, everyone. I am Michel Polin, CEO of OVHcloud. Thank you very much for being with us today for OVHcloud 2023 Annual Resource Education. As you can see, we delivered a sustainable growth in 2023 with a total revenue that reached 897 million euros and a like-for-like revenue growth of 13.4% in line with our targets. we reached an adjusted EBITDA of 325 million euros and a margin of 36.3%, also in line with our targets of a margin above 36%. In terms of value creation, we are able to give you a strong proof point of strength of our model with a generation of 25 million euros on elaborate free cash flow in the second half of 2023. Regarding CAPEX, we invested 24% of our revenues in gross CAPEX, mostly new data centers, new R&D of new products, and we invested 16% of our revenue in recurring CAPEX, the CAPEX needed to maintain on revenue unchanged compared to the previous year. On the next slide, let's have a quick focus on the very strong last quarters we had. As you can see, we had a strong Q4 with a plus 14.5% like-for-like revenue growth, market with a very strong quarter for the cloud businesses, with public cloud growing at 22.8% and private cloud growing at 16.4%, driven by market share gains in particular. The trends we have driving this performance are, among others, a continuous acceleration in Europe after an already strong first nine months. growing demand for sovereign solutions quarter after quarter a continued ramp up our newly developed past platform as a service solutions and a confirmed high customer loyalty with limited customer churn and strong outback growth in this fourth quarter and the second half overall we have kept our cost discipline and change which led to an improving margin in H2 compared to H1, up to 37.1%. For the next slide, we are really giving the key differentiator to deliver growth and create value. OVHcloud is very well positioned on the market, structurally poised for strong long-term growth. The migration to cloud is still early stage with the trends of hybrid and multi-cloud, and we keep seeing new usages emerging such as, of course, artificial intelligence, for instance, which will be a new growth engine. We are very well positioned on this market and have strong key differentiators. We are the only European cloud provider with best-in-class technological offering that can help our customers make a difference when they develop their applications. We are the data sovereignty champion. With OVHcloud, your data are safe, while protected and immune to any extraterritorial load. We have the best value for money offering with highly performing products at very competitive, transparent, and predictable prices. And thanks to our unique, fully integrated industrial model enables we are world leaders in terms of energy and water consumptions. and our customers can benefit from one of the lowest carbon footprint in the industry and monitor their own carbon footprint thanks to our recently launched carbon calculator in the manager. The next slide shows the long-term investment strategy starting to bear fruit. As you know, we have key differentiators to succeed on the coin market along with a clear long-term strategy to gain market shares and to continue to expand. This strategy was presented during the IPU two years ago, and it starts to bear fruit despite the complex macro situation. We target new segments of customers, we address a larger market, and we continue to expand geographically. We have been delivering on three axes. On the left, on the key customer segments, we have strengthened our customer mix with larger accounts between 20 2021 and 2023, we have doubled the number of customers that spent more than 1 million euros at OVHcloud. We had almost 30% ARPAC growth during the period, highlighting our capacity to grow with larger customers. And we have developed a large and successful indirect channel with a network of more than 1,200 partners that are selling OVHcloud products and offering. In the middle, on the larger addressable market, We have made significant investment on products since 2021 by reaching 40 new path services in 2023 in all four seven pillars. We continue to develop the offering as the roadmap is not yet finished, but it already bears fruits and we are in the right direction to target the larger addressable market and start gaining market shares. On the right, then on the geographical expansion, we have also significantly investment in new infrastructure since 2021 as we will be present in 19 collection location by 2024 in 9 countries as we open in India this year and we have 45 data centers in 2024. We are focusing on increasing the occupation rate of all these new infrastructure and the recent acquisition of Griskell will give us more flexibility to open with much more lower capex, new small locations. But I will come back on that later. The next slide is about the example of container as a central piece to move toward cloud native application. On this slide, we want to do a quick deep dive on some products. The first one is Kubernetes, our best performing path today. which very quickly managed Kubernetes enables customers to manage their applications much more easily and to scale in a seamless way with very few constraints related to the infrastructure. Also, it gives the possibility to customers to upgrade only a part of their application without impacting their other services. Kubernetes was not one of the first paths to be rolled out. The ramp-up phase was longer than we observed with new paths as we have improved our overall customer experience for those products and our customers are more and more aware and educated on the products we have. We continue to strengthen the enablers products that ease the possibility to make products work together and improves the cross-sell rates. On the right-hand side of the slide, we show that the ramp-up in terms of revenues versus capex look like for Kubernetes. This was the first PaaS we launched, and it is a good illustration of how it works for our older PaaS solutions. As you can see on the chart, we have some development CapEx in front before the product generates revenue, and then only have variable hardware CapEx related to the infrastructure on which customers use Kubernetes. The business model of all our PaaS is very interesting for additional revenue we make on the same amount of CapEx, and that we have only because we are selling infrastructure. Let's talk about, as we said last quarter, the AI wave represents an incredible opportunity. It's a lot of questions on the use case and the business model. To any company, the tech companies or usual companies that want to deploy a solution, you need four things. You need powerful, I mean, you need really powerful compute and storage capacity. You need data and clean data and private data. You need software and LLM. and you need also expertise. And OVHcloud allow affordable access to all of them. And that's why at OVHcloud we have built a clear offering based on these four pillars to serve our customers on use cases that have been notified. Because you need all of them to be successful in the AI deployment. The first pillar about compute on which we offer one of the best technological offering is computer storage and network. We have been rolling out our new best-in-class GPU from NVIDIA, one of our partners, and we will continue with H100 very soon. Network and storage are also key for AI workloads, and we are very proud of having one of the best technological offerings in these two aspects. The second one, data, data set. How to provide tools to create private, clean data sets which really allow all the elements after to grow on AI and to model and to train models. And OVHcloud has an existing offering that enables customers to efficiently, with full transparency, to have these private data sets. The third pillar, of course, of the AI product layer is the software and the LLM, the data platform, the algorithm. And we have already rolled out some of our products and we continue to develop others internally. for us and we will give our customers the state-of-the-art products to build their AI use cases on our products and that will drive consumption of infrastructure. The last but very important pillar is expertise and we have really improved our customer assistance and our ability to better serve customers. Moreover, we have introduced printer services to help our customers to introduce AI technology within their own workloads. All these initiatives are part of our selective investment plan and have clear business models behind. Moving on the next slide, I will give you some highlights on our business performance. So let's now have a look with more details at 2023 business performance. First of all, the growth in the cloud business has been very strong at 16.3% like for like, driven by the public cloud with a growth of 21% reaching €155 million in absolute terms. The private cloud has been growing significantly, also at 15.1%, reaching a total of €560 million. The web cloud had a more muted year with a growth of 3.1% for a total revenue of €183 million. On the next slide, we have more details on the last quarter performance. First of all, Q4 has been the strongest quarter of the year with a 14.5% organic growth. If we look at each segment, we see that we had a sustained business dynamic in the cloud segment with a like-for-like growth of 22.8% in public cloud with a continued acquisition of new customers and an unchanged good trend of ramp-up with existing customers. We have reached €16 million of annual revenue rate in September 2023 in PATH, which is also contributing to the good quarter. In Pride Cloud, with 16.4% like-for-like growth, we are definitely growing faster than the market and gaining market share. The BarMetal Cloud registered a strong quarter driven by France and Europe. Hosted Pride Cloud delivered a double-G growth supported by new offerings. and this segment has also been fueled by the continued growth in ARPAC and we have reached €8 million of annual revenue rate with our Secnim Cloud offering in France. Finally, in Web Cloud, we grew single digit with a good enterprise channel. Overall, the legacy sub-segment telephony and connectivity are waiting on the segment growth as we will be growing at plus 6% life for life without these sub-segments. The next slide is about the cloud business increasing contribution for fast-growing PaaS and sovereign products. As you can see on this slide, the cloud business has been highly resilient with a sustainable growth of 17.7% in Q4, and this high growth trend has been confirmed quarter after quarter since already two years. The cloud businesses have been fueled by two new offerings, the PaaS and the Technium Cloud. On PaaS revenues, Revenue has doubled in one year, and we have reached 10,000 customers, and we continue to work on improving the cross-sell and the number of paths used by our customers. The other new offering is Technicode, which is quite recent. It has been growing strongly thanks to our partners and to our indirect and direct sales teams. It has been multiplied by four in one year and reached €8 million of revenue in RRR in September 2023. The next slide is about customer loyalty and ARPA growth. As I have been saying previously, as you can see on the left-hand side of the slide 15, we have a continued high customer loyalty. with a net revenue retention rate at 110% in 2023 and an exchange low churn compared to previous years. As we keep growing with our existing customers and with larger customers, as we add another year of double-digit RPAC in full fiscal year 2023. Finally, the acquisition of customers also has a good trend, especially in the cloud business, with 21,000 new customers in public and private clouds. On the next slide, we'll go through our recent acquisitions, GridScale. So GridScale is a German company specialized in edge computing. The acquisition has been closed early fiscal 2024. GridScale team will bring us a unique expertise for deploying public cloud regions with very limited upfront investment, as their public cloud environment runs on a very light infrastructure. we will be able to leverage very quickly our existing point of presence to create new areas of availability for all our products. So thanks to Gridscale, we will accelerate our time to market while reducing our infrastructure capex. But now, let me now hand over to Stéphanie for the financial details.

Thanks, Michel, and hello, everyone. I'm Stéphanie Desnis, CFO of EVH Club. Thanks for being with us. So let's have a look to our revenue by geographies first. We've been growing double digits in all geographies in 2023. In France, revenue growth in Q4 was close to 20% life-for-life in public and private clouds. In Europe, excluding France, we had another strong factor, particularly in Central Europe. In the rest of the world, the Indian DC started to contribute and it continues to have an optimization of workloads from customers in North America. On the next slide, as Michel said at the beginning, we registered in Q4 our strongest quarter of the year and reached on a full year basis a life-long growth of 13.4%. This growth was fueled by continued strong growth from the cloud businesses and by twice increases implemented progressively throughout the year, which contributed 2.7% to the growth figure. Moving to the next slide, we have a detailed view on our EBDA. And as you can see, with a margin of 13.1% in H2, we had almost a 200 basis points improvement in our EBDA margin between H1 and H2, thanks to our persistent cut discipline in H2. We will keep this discipline unchanged in full year 24. All in all, we reached an EBITDA of €325 million, a margin of 36.3%. Let's do a deep dive on two of our main costs on the next slide, personnel and electricity costs. So, as we said previously, we kept a strong cost discipline in H2 that bear fruit. If we look at personal costs, hiring were concentrated in H1 and we worked on improving productivity of our teams in H2. Our focus on product development remains unchanged by further strengthening our tech teams. For 2024, we will maintain our selective approach in hiring. Keep in mind that the integration of Gridscale will wait on group margin by a few basis points. On the right-hand side of the slide, we have a deep dive on electricity costs. We had a reinforced visibility with our active engineering strategy. In 2023, electricity costs have increased significantly compared to 2022 and reached 7% of our revenue, of which 2% came from price effects. For 2024, we are edged at 94%, with the remaining 6% coming from Germany. The price at which we are hedged is comparable to 2023 average price. We are currently hedging for 25 and continue to work on long-term corporate CPA as we want to sign in France and Germany to increase our long-term visibility and to secure low carbon power. If we now have a look at our operating income, we've improved by 8 million euros to reach minus 12 million on a full-year basis. It includes some non-recurring expenses related to Strasbourg and some fees related to acquisition. In our DNA, on top of activity growth, we have a ramp-up in capitalized projects and right-of-use amortization that drove in total the increase of 39 million euros. Below EBIT, we have interest related to loans that reached €17 million. We will have a more detailed look on that later, and some Forex impacts of €6 million. Let's move to the next slide on the cash flow statements now. So as you can see, with the normalization of our growth capex, continued improvement and efficiency and stock consumption, We've generated 25 million euros of unlevered free cash flow in H2. Let me give you on the next slide a bigger picture on what we've been doing and what we mean by normalization of gross capex. In essence, we are now entering a phase of normalization of our gross capex and we're paving the way to cash flow generation. Since 2021, we've consistently expanded our infrastructure network and server capabilities. As Michel previously mentioned, we're on track to reach 45 data centers by the end of 2024, positioning ourselves to capture a significant share of the cloud market's growth. However, it was nothing that was also incurred in 2021 and 2022 exceptional capex related to stressful incidents post-COVID supply chain management and product development initiatives that have yet to yield revenue. Now that we have achieved substantial market coverage and have navigated past these one-off challenges, we are reaping the benefits of our investments and optimizing the data center occupancy. Consequently, our cash flow generation is improving without compromising the growth. On the next slide, we have a detailed view of our growth capex. And as I previously said, we're normalizing our growth capex. We had exceptional capex on servers in 21 and 22, but it's been normalizing in 23, and it will continue in 24. You can also see that in the last year, we've been investing around 10% of our revenue in both infrastructure and product development. We will continue to invest, especially in product development, where we look at it as an investment stable in absolute terms, but with a weight in percentage of revenues decreasing going forward. Overall, our model is structurally efficient and flexible, and we keep working to improve it and progress on our trajectory to generate sustainable free cash flow as we did historically. Moving on to the next slide, I want to insist on the strength of the balance sheet with positive trends on cash generation and our investment plan being more than fully financed until end of 2026, when part of our debt will mature. At the end of the year, our net debt to EBITDA ratio is slightly below two times, stable to our first hours at this low level. Our debt is hedged at 75%, and our current average interest rate is at a low 3.7% all in. We have more than 500 million of available liquidity, which gives us a strong visibility on our financing as our investment plan is more than fully financed. And on this good note, I would now like to hand over to Michel for the outlook and key takeaways.

Thank you very much, Stéphanie. What can we expect for next year? Our financial equation is converting towards generation on unleveraged free cash flow, expected to be positive in H2. The projected trends for the upcoming year in terms of top line growth align closely with what we observed in fiscal year 2023 and confirm the unchanged long-term appetite for enterprise to move to cloud. This includes a sustained robust growth in ARCPAC and a cautious outlook on customer acquisition given the current market conditions. We anticipate a like-for-like revenue growth of 11 to 13 in fiscal year 24, similar to fiscal year 23. Pricing impact is expected to be slightly lower at 1 to 2% in fiscal year 2024 compared to 2.7% in fiscal year 2023. It's important to note that a significant portion of these pricing adjustments will affect the beginning of 2024. In terms of EBITDA margin, we anticipate continued improvement with 37% plus EBITDA margin in fiscal year 24. This improvement will be driven by both revenue growth and the discipline control over operating expenses. Our capex should remain at a level consistent with fiscal year 23, under control in terms of percentage of revenue. with 24% for gross capex and 16% for recurring capex, paving the way for positive and leverage free cash flow as early as fiscal year 2025, a subject we will discuss in more details on the next slide. The midterm, what we can expect. 2025 will fully reflect the quick adaptation of our model to generate free cash flow on a recurring basis. We expect unlevered pre-cash flow to be positive on a full year basis from 2025 onwards. On the back of the tremendous shift to the microeconomic environment and increasing cost of capital, we are managing our operating model to be more efficient, more sustainable, and more cash-generating in the short term and in the longer term. a steadfast belief that the cloud transition is still in its early stages and will continue to unfold over the coming years. This trajectory will propel substantial growth within the overall market and notably for OVHcloud. So key expectations for 2025 are as follows. Organic growth is expected to be improving compared to fiscal year 24. EBITDA margins are projected to increase compared to fiscal year 24. CapEx are anticipated to be slightly lower than the levels seen in 2024. Most undoubtedly, we expect to generate positive and leveraged free cash flow on an annual basis for the first time since IPO, but as we used to do historically. We will be able to provide more color on the longer term during our investor day. And so we are very happy to invite you all to our Investor Day in London. It will take place on January 17th in Canary Wharf, so that is convenient for most of you. Our executive team will be pleased to share more color on our differentiating strengths, strategy, and outlook, and it will be an opportunity to reconnect with you all in person. And now, we can now open the floor to your questions with Q&A.

Thank you very much, Mr. Poirot. Ladies and gentlemen, as a reminder, if you have any questions, please press star 1 on your telephone keypad. Our very first question is coming from Emmanuel Matteau of Odoo. Please go ahead. Your hand is open.

Good morning. Emmanuel Matteau speaking from Odoo. Several questions for me, please. First, you made lots of progress in terms of capex. Do you think you can still do better in the future moving significantly below 40% of revenue and still delivering at the same time double digit sales growth? Second question, why do you have cautious forecast on customer acquisition for next year. Third question, you do not target any more 25% of organic sales growth in fiscal year 25. Is that just due to the negative microenvironment or are there any issues specific to OVH? And my last question, if I may, Do you consider that competition is becoming more fair from hyperscalers? Do you see improvement on that side? Or you consider there is still abuse of dominant position from some of them? Thank you very much.

Thank you very much for your question. Maybe I will start with the last one and I will go after to the other one because it's a general question. We really believe and we are not the only one to believe that today the cloud market is under unfair practices and this is not only us we are telling that as you know we have made some complaints on the European Commission but it's now well-known, the Autorité de la Conquérance en France, Ofcom in the UK, but also New Zealand, Netherlands, has opened some investigations about wrong practices done by some players to lock the market and to create de facto monopoly to avoid a fair market. And also it's at the expense of the customer and the market. So today we believe the situation is still on progress and that we hope that the regulators and the, I mean, anti-concurrence will really make everything to adopt and to also to fulfill with the current regulations to have a fair market. So I think the problem is now known but has to be addressed. About the 25% sales, Clearly, we believe that since the IPO, the world has changed. And clearly, we believe that we have to reassess our perspective. Clearly, the world is changing considerably. Inflation, interest rates, Ukraine, and also all the tension, geopolitical tension. And so we have been investing as part of our long-term plan and started to bear fruit, as you see in the presentation. So we do believe that the most reason, most important reason is a micro environment. And we believe today that OVHcloud still has the strong pillars to continue to grow efficiently long-term with a profitable growth. To discuss about the cautious forecast, We anticipate the like-for-like revenue growth of 11 to 13% in fiscal year 24. Our expectations for fiscal year 24 point to a level of growth almost similar to fiscal year 23, characterized by the sustained, robust growth in ARPAC and clearly more cautious about deposits and customer acquisition given the fact that the current market condition, and you certainly have seen the results of some of our peers, today is clearly uncertain, as we see customers optimizing their cloud consumption and still delaying some moves to the cloud projects, but we are convinced that these moves to cloud projects will happen at some point. The main contrast lies in pricing also, with the reduced impact of expected fiscal year 2024 projected at 1.2, as I mentioned already, compared to a 2.7 price contribution last year. and so it will have certainly also an impact on the forecast of next year. On the CAPEX, we are absolutely, and Stephanie will elaborate a little bit on that, convinced that today we are much better on CAPEX because of the tight control of our model and the fact also that we have some inventory effects You remember that we said that during 21 and 22, we decided not to stop the growth to make some inventories to be able to continue to fulfill the customer demand. So our ambition is to maintain the right level of CapEx to continue to have the long-term capacity of double-digit growth. And this is really today what we do, which is the right balance between the right level of investment, CapEx, R&D, product development, international expansion, but we're now jeopardizing the long-term growth. Moreover, we want to have the discipline to have unleveraged free cash flow for the full year beginning of 2025.

To add to Misha's point on the CAPEX, so you saw it. First, we are starting to enter into the normalization phase of our CAPEX in 23. We had exceptional CAPEX in 21 and 22, and that is over. Second, we still have some hyper-resilient CAPEX, and that will be the case again in 2024, and we expect this program to end early 2025, so this will decrease in the mid-term. And last, we've made investments to build our future growth in the development team and the R&D on the infrastructure. And whereas, for example, on the product development and R&D, we expect the amount to remain stable because we keep investing in the growth, in percentage of revenue, it will decrease. So all in, in the mid-term, yes, we're still working on the CAPEX and to contain the percentage of revenue that we are spending.

Thank you. That's very useful. Thank you.

Thank you very much, Sarah. We'll now move to Mr. George Webb of Morgan Stanley. Please go ahead.

Morning, Michelle and Stephanie. I have two questions, please. Firstly, Michelle, I'd like your latest kind of take on data sovereignty. I know this is a recurring topic, but I guess we've also seen that the US and EU have come to some agreement, at least for now. So there's that angle, but also just today, AWS have put out a press release talking about how they're launching their own European sovereign cloud offering. So your latest thoughts around this topic would be helpful. And then secondly, on the topic of AI, how should we be squaring your intention to invest in the AI opportunity against cutting that growth capex? Many of the other players in this space have been ramping capex to target this space, given the need to go and buy NVIDIA GPUs or the like. So anything around that would be helpful. Thank you.

Thank you for your question. About data sovereignty, first one, the announcement by AWS proves that data sovereignty is a real concern. So for me, it's a proof. I remember a few years ago when we were discussing about this point, it was a little bit of laughs about the fact it was not a point. Now, all the hyperscalers have announced that they were pseudo-sovereign, and I will not disclose what I think about this sovereignty, but if it's only the nationality of the employees which is a sovereign cloud, I think it is missing a target. So we are absolutely convinced today that data sovereignty is still a very hot topic in Europe, but also everywhere in the world. Clearly, in France, we see that some, and the last law, for example, that we have, Fren Law, has demonstrated that this is a rising concern with the fact that now CICNIM Cloud certifications include requests for immunity from extraterritorial laws. And therefore, we believe that OVHcloud, and we demonstrate in the results that we have in Q4, is today the champion of data sovereignty in France. It's clear that today in Europe, it's not completely developed yet as soon. It's definitely something which is moving in the right direction. the regulations and the certifications are moving with the new UECS and we believe that it will also control the fact that Europe will create the de facto I would say certifications which will guarantee the specific needs of data sovereignty and OVHcloud as we are developing the product globally will have the same standard of sovereignty everywhere in each region which will allow us to address Indian market, Singapore market, European market, and also even North American market. So really for us, it's really very important. And we believe this is definitely, even so sometimes the regulations are slow and to be honest, we believe it's too slow, but still we believe it's a long run advantage that OVHcloud is offering to the market. On AI, as you said, access to compute, as I said, you need four things to deploy AI in any type of companies. Access to compute today is a challenge in the sense that it's very CapEx intensive, and moreover, there is a supply constraint. That's why we believe OVHcloud is offering all the attributes to offer to any type of tech companies or end user the capacity to have affordable with a capacity of GPU instances that you can rent per hour and to allow the access The chance we have is that today we have a long-term partnership with NVIDIA and you certainly seen the press release we've made a few weeks ago and we are going to continue to announce that we will invest in the, we have already invested in the A100 GPU and it's available today and we will announce in the next few days the availability of the H100 which will allow these customers to use very powerful GPU But on top of it, we have developed, and it will be announced during a summit the 28th of November, a full set of new tools which allow the customers to manage your data, to clean the data, to be able also to have the data analytics which allow them to track the model and allow them also to take the benefit of all the new type of models, including generative LLM, which is the last version of the AI solutions. We have strong partnerships with hardware vendors such as NVIDIA. We have strong partnerships with software vendors, which are masters like Lighten, Gladia, Diplomatics, and companies which are using the last generation of LLMs generative solutions and we believe that we will be able to provide affordable AI solutions. We guarantee the data privacy and the private data set for all customers.

That's helpful. Can I ask one more? Do you have any early view on If server economics change when you're trying to help with some of these AI workloads, I guess if I think back to cryptocurrency mining, as much as it was a growth area for some companies in this space, many weren't happy to do it because it would rapidly depreciate the server life. Have you got any early thoughts on what AI looks like in terms of those factors?

um i i i don't think we have really uh today the detail the time to give all the details of that clearly for us it's an opportunity uh and uh we are really uh are sure and what i propose is that uh during our investor day we'll give you all the kpis all the elements to demonstrate that today this is an opportunity of vh cloud and we are today really key distinctive element which provide already good momentum already in our AI perspective and in growth perspective.

Thank you.

Thank you very much, sir. We'll move now to Daria Iona, CIPOS of JP Morgan. Please go ahead.

Hi, thank you for taking my question. Just around the FY24 guidance, can you give us a little bit more color on how we should think about the phasing of the growth through the year? I know you mentioned something on pricing being stronger in Q1, but anything else to consider on there? And then similar question on the adjusted EBITDA margin and phasing through the year that we should bear in mind. Thank you.

As we said, the perspective is to be above the fiscal year 2024-2025 and it will be a cautious vision of customer acquisition plus the capacity today to, as we have demonstrated, to have a high level of loyalty for our customers plus the fact that we are, thanks to the fact that we are investing in new products, we are able to increase the RPAC of the customer. Why? Because as we are providing more and more PATH solutions to each customer, the revenue per customer is increasing month after month. Moreover, we are convinced that the R&D effort and the take-off of the PATH will help us to continue to have a high level of growth and this is why we believe that the cloud activity will generate the major part of the growth and especially the public cloud. The public cloud today, as you see, is very important for OVHcloud. We are growing at more than percent this year, we will continue to invest and PaaS will contribute to accelerate this growth in the public cloud. So this is really how we believe we are continuing for the long term to acquire new customers, even so the economical environment, we are cautious, but to be able to have more and more, especially in the cloud and the public cloud, thanks to the R&D we've done, the evolution of growing double digits.

With regard to margin, keep in mind that we have some seasonality because we have some specific investment in marketing, for example, and we have a higher cost base in terms of personnel in H1. So H1 will be lower than H2, but that is the current seasonality of our margin.

Thank you.

Thank you, Delia. Ladies and gentlemen, once again, if you have any questions, please press star 1 at this time. We'll now go to Valentin Paul-Gann of Stéphane. Please go ahead.

Good morning, Paul. My questions have been answered in previous discussions, but maybe a quick one. For H2-23, compared with H1-23, I understand that growth margin improved sharply on the web cloud side but deteriorated sharply in the public cloud side. Same applies to H1BDA if my understanding is correct. So could you please comment on this and give more color maybe on the usual seasonality of public cloud earnings between H1 and H2?

Thanks. The margin of H1BDA was improving in H2 compared to H1. We have improved by 1.7% in H2. So today, as Stephanie mentioned, we have a slight seasonality effect between H1 and H2, mainly driven by cost, not only by revenue, in the sense that the public cloud revenue trends increase month after month. So today, we are very confident to maintain in all the product segments the capability to increase profitable growth with a high level of growth. And this is what we see. And we have seen in H2 unleveled pre-cash flow, thanks to the fact that we have above 37% of EBITDA in the second half.

OK. Does that answer your question, sir?

No, so thanks, Matt. Thanks.

Thank you very much, sir. We'll now move to Yann de Derrelang of Joubert-Dupont. Please go ahead, sir.

Hi, my question is on your full year 2025 targets. So you stopped your IPO guidance and you said you improved versus full year 2024, you adjusted the BTA margin. What does it mean for us? Does it mean that We should not target the 42% you targeted before 2026, maybe, or after. I'd like to know more about it.

No, I will reiterate what I said. I mean, today we have a guideline for 2025, which is improved, I mean, of the adjusted EBITDA, improved also the like-for-like revenue growth, and we will maintain this analysis. And we are working, I mean, and we are having plans to have a positive on full-year basis and leverage pre-slash-through.

And we will announce a new medium-term guidance at our investor day in January. But you can already see the teams of this next phase of growth. from our presentation. We talked about the continued substantial market opportunity and OVH Cloud is now focused on this profitable and sustainable growth. We've emphasized that our period of heavy investments the last three years is now starting to bear fruit and we are normalizing the capex. We say and stress that we are and we remain diligent on costs while continuing to pursue the growth And lastly, we say that our business is returning in the next phase to generate cash, just as it was before, the most recent phase of investment for the long term. So you might expect to see the medium-term plan anticipate first growth in this long-term growth market, good margins, controlled capex, and an ability for the business to fund itself. But we'll provide more detail early January.

Okay. Thank you.

Thank you much, sir. Ladies and gentlemen, as a final reminder, please press star one for questions.

We do not appear to have any further questions at this time.

I'm going to turn the call back over to your organizers for any additional closing remarks. Thank you.

So thank you very much for your questions. As a takeaway, we had a sustainable growth in fiscal year 23 with 897 million of euros of revenues, which is 13.4% like for like growth. We reached 325 million euros of adjusted EBITDA and generated 25 million of unleveraged free cash flow in H2. We have a plan and we will continue to address the larger markets. We have strengthened our customer mix with larger customers. We have enhanced our product portfolio, and we have expanded our geographic footprint. And for fiscal year 24, as we target a balanced growth with between 11% and 13% like-for-like revenue growth and adjusted EBITDA margin above 37, growth and recurring capex around 24% and 16% of our revenue, and we will generate underrate free cash flow in H2 fiscal year 24 and on a full year basis in fiscal year 25. Thank you very much for your attendance and have a very nice day.