The French-based cloud services company already dampened analyst expectations last October, suggesting 11-13% growth in 2024 fiscal year
Cloud services provider OVHcloud managed €240 million, up 12% on a like-for-like basis and up 11% as reported in Q1 2024. The company said the result confirmed its ability to increase revenue from its customer portfolio through double-digit growth in average revenues per active customer (ARPAC).
Last October the company warned it would see lower organic growth this fiscal year citing uncertain macroeconomic conditions and suggesting it would see its revenue in the 2024 fiscal year to rise by 11-13%, while analysts in a company-compiled poll expect full-year revenue growth of 14.7% on average, according to Reuters.
The company, which generates more than 80% of revenue from cloud operations, said its growth drivers – public cloud and PaaS, sovereign offerings and private cloud – continue to drive the group’s expansion. At the end of Q1, SecNumCloud offerings and PaaS offerings represented €9 million and €17 million of annual recurring revenue (ARR), respectively.
“In an uncertain economic environment, where customers are optimizing their spending, our performance-price ratio is particularly attractive,” said OVHcloud CEO Michel Paulin. “Simultaneously, our trusted cloud offering continues to meet the growing demand for solutions that ensure data sovereignty. Our current priority is to continue executing our strategy successfully and rigorously, delivering profitable topline growth and sustainable cash generation.”
The Private Cloud segment, which includes the Bare Metal Cloud and Hosted Private Cloud businesses, posted revenue of €149.6 million in Q1 2024, accounting for 63% of the group’s overall revenue and growth of 12.5% as reported and 14.9% like for like. The company claimed it has taken market share as a result and has seen the rest of world segment accelerate in Bare Metal Cloud as countries scramble for sovereign solutions. However, there was a slight slowdown in Europe and France.
OVHcloud’s Public Cloud segment posted revenue of €43.5 million, representing 18% of the group’s total revenue. There was “robust growth” in Europe and France, even if slightly below the last quarter of 2023, as customers continued to be cautious in their cloud spending. PaaS services generated an ARR of €17 million at the end of November 2023. OVHcloud is also continuing to develop new offerings around artificial intelligence. The company’s Web Cloud & Other segment generated revenue of €46.7 million, or 19% of the Group’s overall revenue, and reported negative growth of 1.4% year-on-year.
Revenue in France came in at €116.7 million, accounting for 49% of the group’s overall revenue, with double-digit growth for the Private Cloud and Public Cloud segments, although Web Cloud and legacy services dampened the numbers.
In other European countries, which account for 29% of the group’s overall revenue, growth in cloud businesses revenue remained strong throughout the first quarter of the 2024 financial year, in line with FY2023. Germany, with a significant contract win in healthcare in the end of the quarter and Eastern Europe were once again the main drivers, according to the company.
In the Rest of the World, which accounts for 22% of the Group’s overall revenue, growth also remained strong, particularly in the Private Cloud segment, in the first quarter of 2024, in line with FY2023. The company said this was achieved “despite an economic climate that continued to weigh on performance in North America, particularly in the Public Cloud segment.”
Confirmed targets for FY2024
OVHcloud said it is is targeting organic revenue growth of between 11% and 13%, an adjusted EBITDA margin of over 37% and recurring and growth capex representing approximately 16% and 24% of revenue respectively. OVHcloud is also aiming to generate “unlevered free cash-flow” in the second half of FY2024, with a view to generating full-year “unlevered free cash-flow” as from FY2025.
For FY2025 the company expects to see improved organic revenue growth and adjusted EBITDA versus FY2024 plus lower capex.