Ovh Groupe Sas U/Adr

Ladies and gentlemen, welcome to OVHcloud FY2026 results. Today's speakers will be Octave Klaba, Founder, Chairman and CEO of OVHcloud and Julien Rabette, Interim CFO. I now hand over to OVH Management to begin today's conference. Thank you.

Hello everybody. I'm Octave Klaba, Chairman and CEO of OVHcloud and I'm here with Julien Rabette, Entering the CFO. We published just today our results of FY26 this morning and thank you for everybody to be here with us to have more details about what we have done last year and what we will do the next year. So, maybe we can go to the next page. So, on the delivering of our commitment. You know, we are in this world where we have the assets. OPH has an industrial background. As you know, we have data centers, 250 megawatts of the energy. Roughly, we own our data center, a lot of them, and now we are ready to accelerate based on this data center. Also, we have network, we have our supply chain, but also on the software part of our business, We will focus on the cloud of course, but also on the AI. You need cloud, you need cloud to operate AI. And this is why we need them both. We need in the one side cloud and in the another side you have the AI. So on the second point in the FY26 and FY27, We have the execution and what is really interesting that this first year when I came back and to start delivering the results, we started to fix the different things that didn't work in the OVH and we started to have the positive outcome in FY26 and the Q3, Q4 and then we started to to have the acceleration as you can see in Q3 and Q4 on the different public products that I will go back soon very quickly with the details. So execution, discipline, having the real understanding about What the customer wants, really go back to the fundamentals of the company. And of course, the purpose is really to have the growth. Going back to the growth and to having the company that is growing to double digits with positive free cash flow, generating the value for our investors. and of course continuing being on the depth in the right leverage. So this is how we executed this fiscal year. So now on the next page, on the key highlight. So we had the growth that it was a little bit more than we had in the guideline, 7.2%. and we had 42% of ABDs. So if you make the math, 70% of growth went to the ABD. It's really exceptional. Don't take that as the guidelines, okay, because we will see what will happen in the FY27. But in this 26, we are really, really focused on the right execution, on the OPEX, on the CAPEX, and to deliver the right results. So CAPEX is a little bit less that we have in the guidelines. And then on the free cash flow, we generated almost 25 million on the free cash flow net. So the operational milestone, we really focus on the acquisition of the customers. We'll go back to this. We had a lot of challenges on the CAPEX and we made it. We upfronted some of them, but also managing the CAPEX in the right way. We increased a little bit the prices on our customers to generate additional cash to be able to continue to invest in FY27. We started to finish the strategy and started to execute the AI strategy. We'll go back to this. And then you have, of course, on the strict discipline, the financial discipline, on the EBITDA, on the CAPEX, on the hardware, and the free cash flow and the roadshed. So if we go to the next page, Let's talk a little bit about the assets. So what we have, we have data centers, 250 megawatts of data centers. You have about 140 that is already connected. And then you have about 110 that we still have available. So this is what we will use to accelerate our growth. And when you take this ratio about 15-20 million per megawatt, you have the really good understanding what we can do with this energy and the data centers. And on the servers, of course, you have, you know, we manage the really strict way the stock of the component. So we can, you can go deeply in the numbers to see what exactly does it mean. But it's really interesting from the cash perspective. We had a very good relationship with our suppliers on the RAM, hard disk, but also CPU, GPUs, et cetera. So we have the continuity of the supply chain. So we don't have the issues to deliver our growth in FY27. And also, we increased a little bit prices. It was moderated way and mutualized way. So we have additional cash, so we can continue to invest in FY27 and deliver the service to our customers. So if we go to the next page, let's talk a little bit about execution, what does it mean on our side. So we have different segments of customers, as we said last year. We are thinking about the digital starters, digital scalers, and corporate digital starters. It's all the customers listed at 2K. Digital Scalers is more than 25k yearly and then you have the corporate that you know companies with RFP with the long timeline to setting so we have a different focus on the different GoToMarket and this is why we created all this GoToMarket. So we focused a lot on the acquisition of the customers in digital startups and it worked. We had a really increased, we have more than double of the volume, even three times more volume on the domain names. We have very strong volume on the VPS and even lots and lots of increase of the revenue. On the barometer entry level, we are really, really good. We have a lot of new customers and it's really massive. Okay, so we are really happy what we have done on the acquisition last year. And we see the results that all of this H2, on the H2 acceleration is higher and it's faster than it was on the H1. We had 4% growth on the, 4% more growth in H2 than H1. On the digital scalers, We are more focused on the verticals because all the customers, they are not the same. Some of them, they are in blockchain, some of them in the storage, some of them in the AI, in the different way to sell them different products. They are not looking for exactly the same things. And on the corporate, we had this growth on the last quarter. with the new contract that we signed and we know how to having the strong upsell of the current base of our customers. So now we have to be better on the acquisition and we see how we will do that. So on the next page, we have the, let's talk a little bit about growth and how AI will help us in the growth. So we have on the bottom, you have all our fundamentals of OVH cloud. You have private cloud, public cloud, web cloud, everything that is needed and we call cloud. On top of that, we will start to add additional products, additional services that there's more AI and you have a full The first of all is GPUs in the data centers. Of course, we need the GPUs if you want to have the AI. The second level is that this is great to have the GPUs, but you have to manage that at the large scale. So we need the different technologies and the good news that we already have them, but also we acquire some companies to help us to accelerate in this area. The third part is token as a service. We already have that, but we want to have more token as a service, more services in our AI endpoint services. So this is why we made acquisition of Gladia for the STT specific needs, speech to text. Then we started to build what we call the Pass for AI. It is really interesting, very exciting area. Maybe we'll have more time To dig inside, it's really a path for the agent-specific AI where the agent has the freedom, let's say, to take the club, the resources, and to solve very complex tasks for the users. And the last part is AI for SAS, and this is where we started to develop and we shared on the VivaTech and we shared on the OVH Summit in the end of the November, OVH AI Workspace. where we have this platform for AI and you have the agents that operate the SAS services, whatever the SAS is, we will be able to operate that. Okay, so we are going in this direction on the AI to have additional growth in OVH. So now I will just hand to Julien to give you more financial details about what we have done in the future.

Thank you very much Octave. Let me start with the shape of the year because here is the whole story. On the left, our life online growth by quarter. Growth bottomed out in the second quarter at 5.1%. It then picked up to 6.9% in Q3 and reached 10.5% in Q4. This is our strongest quarter in almost two years and importantly already at the pace of our FY27 guidance. This turnaround coincides with Octave's comeback as CEO and action plans launched at the start of the fiscal year. On the right, what matters most to us, the numbers of customers and the clear ramp-up. Outside the US, our customer base grew by 0.7% most of the month at the start of the year. By August 2026, it was growing by 2% per month, while price adjustments did not have any turn effect. The main takeaway is volume. More customers every month compared to the prior one. In short, the engine is back in shape and the momentum is building up. Let's move to the quarterly sequential acceleration by go-to-market segments. This slide shows the momentum through our three go-to-market segments. Our group revenue rose every quarter from €275 million in Q1 to more than €300 million in Q4, reaching two key milestones. 300 million euros in quarterly revenue and 100 million euros in monthly revenue in August and July. Digital starters, our historical base, grew 5.4% year-on-year, with a clear acceleration in the second half to more than 7% per quarter. Even in a segment often seen as mature, we added close to 13 million euros of revenue driven by customer acquisition. Digital scalars are our first growth engine that was up 12.4% over the year. We have doubled growth every single quarter and representing more than half of the group's growth. Lastly, corporates grew 2.7% over the year and Q4 reached plus 7.8% the segment's highest quarterly revenue in the three years and the inflection point is behind us. As a first takeaway, I want to say we enter FY27 with all three segments growing and a revenue base rising every quarter. Let's now move to the private cloud performance. Private Cloud is our largest business with 690 million euros, that's 60% of group revenue, up 4.5% light for light. The key point here is the trajectory. Q4 grew 7.2% and the chart shows our monthly recurring revenue ramp up. After a flat FY25, MRR rose significantly over FY26. In August, Private Cloud was thus growing at around 9%, three times the pace of a year earlier. That was underpinned by two drivers. First, BareMetal is rebounding. Repositioning our entry-level and mid-range servers, brought in new customers, and this consolidates our European leadership in BareMetal. Second, business is stepping up in our key markets, France, and our largest market in Northern Europe. Let's move to Public Cloud. Public Cloud is clearly the group growth engine. 255 million euros. That was driven by three factors. First, the depth of our portfolio. With more than 80 products, customers come for one service and upgrade into the full catalog. In a nutshell, upselling works. Second, our three easy regions. Our winning clients. especially since Paris is ramping up. Corporate public cloud grew then 28%, heard of scalers at 21% and starters at 17%. Third, new contrasts with well-known institutions such as the European Space Agency. Lastly, growth is broad. France and Benelux leads, Southern Europe, Central Europe, and the US are all accelerating. Let's look at Web Cloud now. WebCloud generates 200 million euros, that's 17% of group revenue, up 3.2% like for like, and it accelerated to plus 6% in Q4. Two points to flag about this ongoing improvement in growth. First, a competitive model with an affordable entry price. We have reviewed our web hosting model to make entry price even more accessible, and we launched new products such as Web Hosting 2027, Managed Hosting for WordPress, and OVHcloud Video Center. Second, with domain mates. The chart shows monthly volume year-on-year evolution. They rose by almost 60% over the year and nearly doubled in July and August. Worth noting that AI is a real driver here. With vibe coding, more people create websites and applications, and every project starts with a domain mate. To conclude about the business line with cloud is also are first door into the group for hundreds of thousands of small customers. And importantly, it keeps a very strong cash conversion. Let's look at the financial now. So revenue reach 1,145 million euro at 5.6% reported and 7.2 like for like, above our 5 to 7% guidance. And second, this slide says one thing. Our growth is profitable, but increasingly so. As highlighted at the right-hand column, the further down the P&L you grow, the faster we grow, with revenue up 5.6%, growth margin up 8.6%, adjusted EBITDA up 9.7%, and EBIT up 12.1%. EBITDA margin reached 42%, up 160 business points, and worth noting that more than 70% of incremental revenue converted into EBITDA this year. That level is nevertheless exceptional. Working further down the P&L, EBIT rose 12% to 77.8 million, depreciation increased by 24 million, reflecting new capacity. The financial results improved by 8 million euros thanks to FX gain and net income reached 9.4 million euros compared with 0.4 million last year. A key takeaway Growth Converts into Margin Let's look at the margin in detail now. This bridge focused on efficiency shows our 160 business points of margin improvement, every cost line improved, and the price adjustment made this year support all of these ratios. Cost of goods sold improved by 0.4 points thanks to a more favorable product mix with less connectivity and fewer licenses in our director. Operating costs improved by 0.4 points with electricity costs falling thanks to price effects, particularly in France, and workforce productivity. Sales and marketing improved by 0.7 points, our biggest gain. That's underpinned waste to driver, better revenue per FTE, and lower bad debt provision, which we book in sales and marketing thanks to a strengthened cash collection performance. G&A improved by 0.4 points thanks to workforce productivity, On the other side, FX cost us minus 0.2 points and profit sharing another minus 0.2 points. In short, FY2026 highlights a margin gain built on productivity at every level, where we keep investing in our talent and in AI. Let me show you how the EBITDA improvement translates into cash flow now. The bridge shows how EBITDA converts into cash. We start from €480.5 million of adjusted EBITDA Working capital contributed 15 million and cash taxes were 8.5 million. Other items added 1.6 million. These other items cover cash settled share-based compensation and earn-outs, non-recurring items, provisions, realized effects, and other financing activities. CAPEX reached 422 million euros. It includes the 49.5 million euros of components we bought in advance for FY27 to secure our supply and protect our costs. This specific purchase is financed by a dedicated facility and in line with our definition of level 3 cash flow is neutralized as you can see on the chart. After 52 million euros of financial interest paid and 39 million euros of lease repayment, our level 3 cash flow is now positive at 24.7 million euros compared with minus 27 million last year. This is important to mention. It is the first time since our IPO five years ago. Let's look at the CAPEX now. Excluding the FY27 components purchased, CAPEX reached 373 million euros or 32.6% of revenue, below our 33 to 35% guidance and even below last year at 33%. When including the anticipation CAPEX, reported CAPEX are 422 million euros or 36.9% of revenue. The model accounts for €242 million, 21% of revenue, broadly stable. Two effects offset each other. First, a volume tailwind, we have assembled fewer servers. Second, a price headwind, each server costing more because of component inflation. The strict CAPEX discipline was possible thanks to our integrated model, maximizing existing assets and the forecloding of the CAPEX. Now, infrastructure and network with 53 million euros are stable. Product and software with 72 million euros are also stable and are reflecting the capitalized development work of our teams. Looking ahead, we intend to keep the same discipline. We do not expect our capital intensity to drift. That is the spirit of our CAPEX strategy. Our balance sheet is strong and our financing is secured. Net debt, excluding leases, stands at 1,157 million euros. All debt is hedged at an average cost of 4.4%, including margin and fees. If we add 144 million of leases, the net debt with IFRS 16 lease is at 1,301 million euros. Liquidity amount 255 million euro that is 55 million euro of cash and our 200 million euro multi-purpose facility which is un-drawn. There is no matter maturity before FY20, FY30 and our debt is built on three pillars. First, the 450 million euro green term loan maturing in FY20, in FY30. The 500 million euro bond maturing in FY31 and third, the EIB facility which amortizes gradually. The 49.5 million euro drawn to finance the FY27 component is a short-term facility, repaid after year-end close. We are rated PB- by S&P and BA- by Moody's. Lastly, our leverage ratio stands at 2.7x down from 2.9x in FY25. This is now calculated on an IFRS 16 basis, including lease liabilities. It is one of our North Star Ratio. Let me start my presentation with our ability to create value. Our second North Star Ratio is Return on Capital Employed. Roche reached 7.7% in FY26, 60 business points from 7.1 and more than double the 3.3 of FY24. Investments are paying off. The capacity we build is now generating revenue and our investment discipline keeps capital employed under control. And we have room to grow without new heavy investments. Roche increasingly frames every decision we take, from gross capex and acquisition to how we finance our equipment. Every euro we invest must improve our return on capital. With that, I hand over to Octave for our FY27 outlook.