Ovh Groupe

Ladies and gentlemen, welcome to OVHcloud Q3 FY2025 Revenue Conference Call. Today's speakers will be Benjamin Revkolevski, CEO, and Stéphanie Bisnier, CFO. I will now hand over to OVH Management to begin today's conference. Thank you.

Hello, everyone. I am Benjamin Revkolevski, CEO of OVHcloud, and I'm very glad to be with you today. for our Q3 FY25 revenue conference call. So let's start with slide three for the key highlights of this quarter. So our performance in Q3 was resilient. We generated 271.9 million euros in revenue and the like-for-like growth of 9.3%. meaning that on a nine month basis we generated 807.9 million euros and grew by 9.9% like for like. We have demonstrated quarter after quarter the stickiness of our customers and even in this context we had a net revenue retention rate of 104% in 2003 which was underpinned by a solid customer acquisition and also a well-performing FY25 Court of recently acquired customers. Also during this quarter, we had a strong confirmation that demand for sovereign alternatives has never been more vivid, with an acceleration of inquiries for sovereign solutions from customers. So we have an unchanged discipline on costs, a sustained focus on profitability, and cash levers. And finally, we confirm all our FY25 guidance. So let's move now to slide four and our strategic pillars. Indeed, in this rapidly evolving geopolitical environment where we see that public entities and private companies are looking to preserve their strategic autonomy, I would like to remind you of our vision at OVH Clouds and how we answer to our customer needs. Indeed, OVHLAB has succeeded in building up strong core business fundamentals, and we will continue to leverage them to deliver our two priorities. First, we are focusing on operational efficiency of our fundamentals to grow our revenue and leverage productivity. This will help us to deliver more predictable and profitable growth. Our second focus is to improve structurally our cash generation. And this is truly critical to our long-term success as it ensures our capacity to continue to invest, but also to innovate. Then on the right of this slide, you can see that we are also strengthening two of our future revenue growth upsides. First, we'll continue to reinforce our position as leader in data sovereignty solutions. Strategic autonomy in key sectors such as cloud is becoming critical in Europe and our customers are looking for alternatives and we're committed to provide them with trusted cloud solutions. Our second upside is about enhancing our public cloud product offering to answer customers' growing needs. As an example, we continue to strengthen our artificial intelligence solution and also to roll out new product in our three AZ regions. These two core business fundamentals on the left and these two growth upsides on the right are the pillars of our vision for OBS Cloud to deliver our ambition and our financial targets. So let's move now to the next slide to highlight the business achievements of Q3. First you see On the product side, we keep running out of new products, especially in AI. We launched Data Platform, which is a powerful unified solution to manage data and to facilitate our customers' data projects. We also released AI Endpoints, which is a unique API to connect our customers' apps to the best in-class generated AI models. And we have more than 40 LLMs, large language models, that are available today to be directly and easily connected and consumed by our customers. In the middle, you can see that this quarter was also highly dynamic in signing new deals that will ramp up progressively in the coming quarters. For instance, ARCUS in the defense sector is a strong illustration of the dynamism in the public sector defense vertical, particularly for sovereign offers. Looking at Visma, which is a leading provider of mission-critical business software, it's also a good highlight of our capacity to serve larger customers and software editors on our public cloud offerings. And finally, on the right, you can see that we continue to work on adding new data centers, and we will officially launch our first Italian data center in Milan, with offerings available for our customers in the very next week, after a year of work in the building. And we have rolled out our public cloud offerings also in our Paris 380 region, which was long awaited by our customers. But let's now have a look at our performance by segment, starting on slide six with private cloud. So when we look at Private Cloud, which includes, as you know, BarMetal Cloud and hosted Private Cloud, in Q3, we delivered 169.3 million euros in revenue, which represents 62.3% of the group's total revenue, and we achieved a lifeline growth of 8.6%. On a nine-month basis, we generated 503.5 million euros in revenue, and grew by plus 9.8% like for life. During the quarter in Barmetal, our customers responded to overall macroeconomic deterioration and uncertainty by looking for more entry-range servers. And thanks to the strategic repositioning that we have done on these type of servers, we have had a very successful customer acquisition dynamic up by plus 25% compared to Q3 last year. And when we look at hosted private clouds, which represent circa 20% of the private cloud segment, we had a continuous strong demand for sovereign offerings and for our most advanced certification, the SECNUM cloud certification, and which reached an ARR, annual recurring revenue, of 20 million euros in Q3, growing by more than 50% year on year. And as you know, we successfully passed through price increases to our customers with a limited churn from large accounts. In revenue terms, this was, however, partly offset by the ongoing optimization on the entry-range servers. But we've acted. We've launched a new offering, BCS as a service, to help our customers who are looking for entry-range options on VMware solutions. So all our action plans will bear fruit, and we target an improvement for this segment in the midterm. Let's move now to the next slide about public cloud. In Q3 FY25, the public cloud segment reached 53.6 million euros in revenue, representing 19.7% of the group's total revenue, and achieved a life-for-life growth of 17.2%. On a nine-month basis, we delivered 157.4 million euros in revenue, and we achieved a life-or-life growth of plus 17.3%. As you know, in recent years, we have been investing in our product offering, and there's a strong demand for our existing public cloud products, driven by artificial intelligence in particular, such as compute, but also storage and containers, databases. So we continue to grow strongly. And thanks to an improved customer experience and simplified billing, increased availability of these products in all our data centers, we have been able to accelerate customer acquisition by plus 12% versus Q3 last year. And this growth will continue as we continue to work on new features and new regions. We just released data platform and AI endpoints and we just launched our Paris 3AZ region that will be replicated in other cities with Milan, Italy to be the first next open. Now moving to the web cloud segment on slide eight. In Q3 of 2025, the web cloud segment reached 49 million euros in revenue representing 18% of the group's revenue and grew by plus 3.8% like for like. On the first nine month basis, The segment reached 147 million euros and grew by plus 3.2% like for like. In Q3, if we take just our web presence offers, meaning excluding our telephony and connectivity legacy sub-segment, growth trend is almost twice as much, up plus 6.8%. So growth is mostly driven by strong performance in domain names, driven by market share gains in several European countries. Our action plans and other sub-segments are being implemented to boost demand. And I'll now hand over to Stéphanie Besnier for a deep dive on the financials.

Thank you Benjamin, and hello everyone. I am Stéphanie Besnier, CFO of OVHcloud. Thanks for being with us this morning. So as Benjamin said at the beginning, During the third quarter, we managed to deliver the sound and resilient growth of 9.3% like-for-like. This was driven by, first, for the private cloud, 8.6% like-for-like growth, and this was supported until April by a positive pricing effect, following Broadcom's new licensing model for VMware. Second, we had a dynamic public cloud segment, up 17.2%, like for like, almost equivalent to our first nine months growth. And third, a solid web cloud and others performance up 3.8%, like for like, showing an improvement growth rate of 250 bps compared to Q2. Now moving to the next slide, we look at the business dynamics by region. So in France, Revenue grew by 7.2% life-for-life in Q3. We had a public cloud that delivered a strong life-for-life growth of 16.9%, driven by a good customer acquisition in Q3. Private cloud increased by 6.6% life-for-life, impacted by macroeconomic uncertainties weighing on tech customers. And representing 29% of the region's business, WebCloud and others delivered a slight growth driven by a good domain name dynamics. Let's now look at our international sales, which account for 15% of our revenue. So in the rest of Europe, Europe excluding France, growth reached 8.1% like for like in Q3. In this region, Central and Northern Europe are the most dynamic regions, as shown by the recent signing of a contract with the Nordic company Visma, a leading specialist in accounting, payroll, invoicing, and human resources software. Southern Europe on the other side faced a slowdown, but the momentum should be sustained by the opening of our new data center in Italy, in Milan. In the rest of the world, the growth kept being strong, with Q3 life-alike growth of 15.6%. We witnessed accelerating traction in public cloud, fueled by the recent rollout of products in the region. And in private cloud, we continued to deliver strong double-digit growth in the United States and in APAC, thanks to our development strategy focused on tech companies. So I will now hand over to Benjamin to look about our outlook.