OVHcloud reveals 2026 financial targets and future data centre plans
Wed 24 Jan 2024
OVHcloud has set its 2026 financial targets and announced future data centre developments as part of its ‘Shaping the Future’ strategic plan.
The plan focuses of four pillars, including being the data sovereignty reference, innovating for the next tech revolutions, delivering sustainable and profitable growth, and maximising cash generation.
This plan is underpinned by three core growth drivers: expanding its range of PaaS products, targeting specific customer verticals like the public sector and healthcare, and improving occupancy rates in existing data centres while deploying new ones with lower capital intensity.
Since announcing this plan, its shares increased by 7%.
Pillars of the Strategic Plan
“The transformations taking place in the digital sector, for example in artificial intelligence and quantum mechanics, are immense. At OVHcloud, we believe that there can be no digital transformation without trust,” said Octave Klaba, Founder and Chairman of OVHcloud.
- Be the Data Sovereignty Reference: Leveraging its position away from extraterritorial laws, OVHcloud plans to extend its range of certified products, including extending SecNumCloud certification in France, and developing services for specific sectors like public sector and healthcare.
- Innovate for Next Tech Revolutions: OVHcloud will continue to invest in AI and prepare for quantum computing. The company aims to develop AI solutions that ensure data confidentiality and sovereignty and stay ahead in the quantum computing field.
- Deliver Sustainable and Profitable Growth: The strategy includes structuring a sales organisation by sector, boosting new customer acquisition, enhancing PaaS and Public Cloud offerings, and managing costs to leverage operating margins.
- Maximise Cash Generation: OVHcloud will optimise data centre utilisation rates, expecting to reach nearly 64% in 2024. The focus will be on reducing Capex intensity and one-off investments, targeting positive free cash-flow in FY2026.
Financial Targets and ESG Objectives
The 2026 financial targets set by OVHcloud centre on cash generation, aiming for an average annual organic revenue growth of 11% to 13% between FY2024 and FY2026.
OVHcloud is targeting an adjusted EBITDA margin close to 39% and a recurring Capex within 12% to 14% of Group revenue for FY2026.
In line with its sustainability commitments, OVHcloud aims to contribute to Net Zero on scopes 1 and 2 by 2025 and scopes 1, 2, and 3 by 2030, achieve 100% low-carbon energy by 2025, and eliminate waste to landfill by the same year.
“Against an uncertain macroeconomic backdrop, the OVHcloud model is particularly attractive, thanks to growing demand for data sovereignty and an optimal performance-price ratio,” said Michel Paulin, Chief Executive Officer of OVHcloud.
Outlook for FY2024 and Beyond
For FY2024, OVHcloud expects organic revenue growth of 11% to 13%, an adjusted EBITDA margin over 37%, and Capex representing 16% to 24% of revenue. The company also plans to generate unlevered free cash-flow in the second half of FY2024, with full-year unlevered free cash-flow from FY2025.
Looking into FY2025, OVHcloud anticipates improved organic revenue growth and adjusted EBITDA margin compared to FY2024, with Capex as a percentage of revenue slightly lower than FY2024. The Group expects to generate unlevered free cash-flow for the full year.
OVHcloud’s Growth and Expansion Post-IPO
Since its IPO in 2021, OVHcloud has seen significant growth and expansion, aligning with its strategic roadmap.
OVHcloud doubled the number of key account customers spending over €1 million annually between 2021 and 2023.
The company has significantly expanded its geographical footprint, opening more than 12 new data centres in the past three years. By the end of 2024, OVHcloud aims to operate 45 data centres globally. This expansion includes a new data centre in India, increasing the number of countries with an OVHcloud data centre to nine.
Investments in internal development and external growth have been substantial, with nearly €700 million in cumulative Capex from 2021 to 2023. This investment has been complemented by the recruitment of over 270 new technology employees.
The expanding data sovereignty market, particularly crucial in sectors like public services and healthcare, underscores the importance of customers having control over their data.
OVHcloud’s positioning in this market is strengthened by its compliance with European data sovereignty standards, a market worth almost €13 billion in 2023 and expected to grow significantly in the coming years.