Ovh Groupe

Ladies and gentlemen, welcome to OVHcloud FY 2025 results. Today's speakers will be Oktav Klaba, Chairman and CEO of OVHcloud and Stephanie Begna CFO. I now hand over to OVH Management to begin today's conference. Thank you.

Hello, I'm Oktav Klaba. I'm the Chairman and CEO of OVHcloud and I'm really glad to be here with you today. to review the financial results with Stephanie. We can start on OVH. OVH Cloud relies on three pillars. The first is that we are in the vast and rapidly growing cloud market. The second is that it's scaled globally. We want to scale worldwide. And the third one is that we just are launching our next strategic plan FY26-30. So on the key highlights of the FY25, we delivered our guidelines that we announced one year ago. 9.3% of revenue, a growth of the revenue, more than 40% of EB day, adjusted EB day, and they've had a free cash flow that's doubled from the last year and the capex about 33% of revenue. We also achieved significant milestones, more than 1 billion revenue. Also in the corporate market, corporate customers, we generated more than 200 million revenue. In public cloud, more than 100 million revenue and also to give you the overall highlight about the US, United States. We generated more than 100 million revenue. Also, we improved significantly all our key financial numbers. Yesterday, board decided to unify the role of chairman and CEO And I've been appointed as the CEO with the main objective to shape, drive our FY30 plan. For this new plan, we need tight governance and the bold execution. Really unify vision, strategy, and execution to make that fully aligned. I would like to thank a lot Benjamin for the work on the last 12 months. Our focus will be on the restoring growth marathon, boosting free cash flow and improving growth share. We have the five years plan investment and also, you know, last 10 years we invested heavily. It's time really to have the money back on all this investment. This is my mindset for the next five years. So just to give you also the the app site that we have. So I've been talking about the 200 million in corporate. Yes, but it's just in France because we have 80% of this revenue is in France. So our, let's say, our takeaway of that is that we have playbook for the corporate market. And now it's time to upgrade in France because we have new opportunities to go after the new kind of customers, bigger customers. but also to deploy this playbook that we had in France, in Italy and Germany. So this is what we will do in the next quarters, years. The second significant upside is in public cloud. As you see, we just generated 20% of our revenue in public cloud based on PaaS. Usually, you should have 50%. We still have a lot of upsets. It's really just beginning of the story on the public cloud. Last one, it's US. We generated more than 100 million in US. So we have a success in US. It's rare for a European company to have a success in US. This is our case. But what you can see that our 100 million revenue, it's mostly private cloud. So we didn't even start our story of public cloud in the US. So this is also what we will do in the next quarters and years. Let's see about the financial results, the financial key numbers. About adjusted EBITDA, you see the cycle of five years investment. we increased adjusted EBITDA over the last five years, but also what you see, that you see this percentage of adjusted EBITDA, it's now growing. We just restored the minimum level, and we continue to grow on this adjusted EBITDA. And you can see that also on the elevated free cash flow, that it's just positive this year, and it's just one step ahead that we will go back to you next year announcing that we are free cash flow and then we continue to generate cash for the next years. This is the first time that we would like to share with you Roche since IPO so we start average Roche in OVH. Keep in mind that Roche is based on the two different activities. The first activity is investment in the hardware and infrastructure. And the second is investment in the software. So this is average Roche that we have in OVH. And if you come to our investor day, we will show you, we'll split that and we'll show you how it's really involved in the next years. So let's have a look on what we call go-to market. And this is a new way of showing you our activity. Of course, we have to keep universes of product, but we have also in the mind that all these products, they are going to the market in a different way. So the first way is digital startups. It's all small customers that say, less than 25k annual revenue. Here we have less than 5% of revenue of Groupe. I will not tell you that it is fantastic and we probably go back to that. The second is digital scalers and here you can see what is our growth. It's more than 20%. We totally succeed in the growing, helping our customers, digital customers, still digital customers growing with OVH. Upselling the product, having different geographies. So we have a playbook and we know how to do that in the next years. And the last one is corporate. It's totally new, let's say. It was totally new five, six years ago. to go on this new market, corporate, big companies, banks, pharma, governments. And here also you see that we are growing more than 12, and generating more than 200 million. So if now I'm looking just at some numbers, we have more than 1,200 customers that generate more than 100K RRR and it's growing. It's going to show you every year how it's growing from this perspective also. I think we should spend a little time on the digital starters because less than 5% of growth is not good, especially when it represents more than 50% of our revenue. So let's have the small going zoom on that and to see what's inside. So on the digital starters, we have three different kind of product. Update cloud is 60%, private cloud is 40%, and web cloud is 90%. So what we will do on that in next years Of course, there was the issues that on support that we need to solve. This is our feedback on our customers. And we will do that. We already started work on the AI, work on the new experience of the support. You probably have seen that on my Twitter. We want to have improved the price performance on the private cloud and public cloud products. So also you probably have seen the last weeks that we launched VPS new range when we started to announce the new product that it's better price performance on this range of product. There was another topic that we, because of the sovereignty market and the business isolation between the U.S., Europe, et cetera, we totally cut access to the web cloud from U.S. customers. So we need to restore that, and we will work on that also. We've been talking about this hosted private cloud in VMware that was bought by Broadcott last year. and we have some impact on this entry level of private cloud, of hosted private cloud. This is why we launched public VCF, but it's not enough. We will launch the new version with the additional features in January and we'll continue to help this part of the customers that they want more managed services to host very small, small scale of cloud. And of course, AI. Okay, now our customers also, you can see that web cloud market, bar metal market, private cloud and public cloud is impacted with AI. We need to innovate. We need to bring to market the new solutions. We already started. And in the next quarter, we will launch a new product specifically on this AI solution. And it's not just that. I just highlighted five small topics that we started to execute. And we have more ideas how to restore this growth in this digital start-up go-to-market for OVH. So on the next page, just to explain why we unified leadership and vision strategy and execution. So it's not enough to have a good vision and good strategy if the execution is not aligned with the vision and the strategy. And the main focus why I was appointed is that we want to be really sure that the vision and the strategy that is decided in board, it's really executed in the small details everywhere and not just on the part of the business. This is why I'm here and I have both jobs to align board and align execution and to bring to OVH the better performance growth in the next year. So also we started to work on this five-year strategic plan, FY26, FY30, to really to explain to our customers, to our teams, to you, to our partners, financial partners, where we want to be in five years. What is our direction? What OVH looks like in five years? And then also explaining the way, the path. that we will use to go over and to execute all the strategies step by step, year by year, quarter by quarter, and to deliver that in the free cash flow positive way of thinking. This is what I've done for 16 years before 2018. This knowledge about having really focusing on the growth, but having focusing on the free cash flow. It's something that is now mandatory for us after this 10 years on the Havia investment, first in the data center, and then in software. And this is why we announced in upcoming investor day, early in 26, we want to also to explain to you in the details what does it mean in the numbers, financial numbers. What does it mean on the growth? What does it mean on the margin? What does it mean on EBITDA? What does it mean on CAPEX? What does it mean on free cash flow? And also, Roche. Roche is something really important that we are focusing on. But also, it's too global. I would like to explain, go deeper, and to show you what does it mean on the infra, what does it mean on software, and how we will improve these financial numbers. Let's talk about the FY26 guidelines. So this is what we announced on the growth, 5% to 7%. This is what we wanted to announce. Of course, we are not happy with that, and we will work on that. Adjusted EBITDA, it will be more than FY26, so it depends on the growth. It will be easier to deliver more once we have more growth. but at least we will deliver more than we had before in 2025. CapEx, 30th of June, too. And of course, leveraged free cash flow positive. And it's not just a little positive. It will not be one million. It will be more. So thank you very much. I will now let Stephanie to present the details about the financial of this year. Thank you very much.

Thank you, Octave. We can already feel the energy today. Thank you all for being with us. I'm Stéphanie Besnier, CFO of OVHcloud. And I will begin with the FY25 results. And to start, we'll look at our performance by product segments in Q4. So first, Web Cloud. We posted revenue of 46.8 million for Q4, up 5.8% life online compared to previous year. The performance is mainly supported by domain names, growing year on year at double digit thanks to the successful rollout of our new offer, the multi-year renewal in several geographies. And as I've said previously, we plan to boost the other segments of this business of web cloud with AI and to expand it abroad. Second, Public Cloud. Our revenue reached 61.9 million in Q4, up 18.1% like for like. We had a strong ARPA growth, and this was also supported by a solid increase in YAS and PaaS offering, including AI. And then on the right side, Private Cloud segment registered revenue of 168 million in Q4, up 4.8% life-alike. Our performance suffered here from a high comparison basis in Q4-24. You'll remember that it was boosted by the price increase of VMware licenses. Now, on the flip side, this new pricing policy impacted significantly our digital starters, on which we plan to focus in the short term. So now, let's have a look at our results. with our key financial figures for the full year 25. On the next slide. So what you can see is that we achieved all our financial targets and we delivered a profitable and cash-generated growth with an organic revenue growth of 9.3%. Second, an adjusted EBITDA margin of 40.4%, up a strong 200 basis points compared with FY24. Third, our adjusted EBDA in million euros reached 435.8 million compared to 301.5 million in 24. Fourth, our capex was 33.3% of our revenue, down 120 base points compared with FY24. And in absolute value, we invested more than last year with 361.4 million euros in FY25. And last, an unlevered free cash flow of 57.6 million euros, which has more than doubled compared to FY24, 2.3 times exactly. So now let's take a closer look at our P&L on the next slide. So in FY25, our profitability significantly improved with a 15% increase of our adjusted EBITDA and a margin of 40.4%. So we had a significant improvement in our EBITDA margin, 200 basis points. And this comes from, first, reduced electricity costs as a percentage of revenue compared with FY24. We are at around 5% of our revenue this year. It was 6% in FY24. And we have also a strong operating leverage, thanks to a higher volume of service produced with contained operating costs. So this strong cost discipline led to a clear improvement in EBIT, which increased to 69.4 million. It represents a margin of 6.4%. at 380 basis points compared to FY24, which is almost twice as much as our EBITDA margin increase. Year-on-year, our EBIT increased by 2.7 times. This demonstrates management focus on driving profitability through the business. Now, below our EBIT, the financial results reached 65.1 million euros. and it includes the fees related to the previous debt for 10.1 million, an increase in our interest rates over the period, and a higher net debt. After including a tax expense of 3.9 million, we recorded a positive net profit of 0.4 million, a significant improvement compared with a net loss of 10.3 million for FY24. So for the first year, a positive net profit. Let's now look at how this increase in profitability translates into cash generation. So, this strong growth in our profitability is also reflected in our gross cash flow from operating activities, which rose from 378 million in FY24 to 422 million in FY25. So after a strong H1 boosted by a failing effect, as you will remember from our discussion in April. The change in operating working capital requirements has now normalized and is slightly positive, amounting to $1 million for the full year FY25. Our CAPEX now amounted to $361 million, so again representing 33.3% of our revenue. We invested 21.4% of our revenue in growth capex, and we invested 11.9% of our revenue in recurring capex. All in all, we are generating a non-level free cash flow of 57.6 million in FY25, 2.3 times, like I said, our FY24 level. Now, our level free cash flow amounted to minus 67 billion, and I can reconfirm to you today that our target for FY26 is to deliver a positive level free cash flow. Let me give you on the next slide a reminder of how flexible our model is with the split of our capex. So during FY25, we reduced the capital intensity of our infrastructure capex, and we significantly optimized the component inventory management. to increase, at the end of the day, the availability of our assembled servers in our data centers. So to achieve a positive level of free cash flow in FY26, we will continue our efforts to optimize inventory management. In FY25, our hardware capex represented 21% of our revenue. So it's five points higher than FY24. Why so? This is linked to the proactive push on the assembled server and to reduce the time to delivery of our servers, but also to prepare the growth for FY26. And we focused, by the way, on the entry-range servers that we mentioned also for the digital starters. As planned, we reduced infrastructure and network capex, which are three points below last year. We focused on the data center occupation rate. That was a 66% at the end of FY25. We continue the usual infrastructure and network work to prepare for the next phases of growth. We have currently around 250 megawatts of installable power capacity, which is a strategic asset for future growth. Then, as planned, our product and software development capex stabilized in absolute value, and it represented 7% of our revenue. We continue, obviously, to develop and enhance our products, particularly in our public cloud offerings and new sovereigns offers. Finally, the other CAPEX declined in FY25 compared to last year. It includes mainly the cost to open new local zones, compliance costs, and the proceeds of a sale of a legacy data center in Paris in H1. On the next slide, let me remind you in details of financial structure. So as you know, in 25, We successfully refinanced with an inaugural bond issuance and the implementation of the first EU taxonomy-aligned green loan by a European cloud player. So we have a solid debt profile with a net debt of just over 1 billion, available liquidity of 242 million, and a controlled leverage ratio of 2.7 times in line with the group's debt policies. At the end of August 24, 25, all the group's debt is edged, and we have an average interest rate of 4.3% over the year 25. So the refinancing was also marked by a diversification of our funding sources. So as you can see on the right, we have no major debt repayment before our fiscal year 2030. And our main sources of financing are now First, 500 million in senior unsecured bonds at a fixed rate of 4.75%, maturing in fiscal year 31. And this inaugural bond has refinanced part of the group's existing debt. It's been rating BB- by S&P and BA3 by Moodle. Second, we have a 450 million green bank loan maturing in fiscal year 2030. a multi-purpose drivable credit facility for 200 million. It's not drawn at all as of today. And it will mature in fiscal year 2030 with an extension option of 1 plus 1. Finally, we have a loan of 200 million euros from the European Investment Bank. I will now hand over to Oktar to talk about our outlook. Thank you.