OVHcloud 2023 results: Growth overall and a strong fourth quarter
The reseller is reporting revenue growth of 13 per cent with a fourth quarter revenue of 14.5 per cent like-for-like growth
OVHcloud has reported revenue growth of 13 per cent to €897.3m in FY2023, with a fourth quarter revenue of €230.1m, representing 14.5 per cent like-for-like growth.
Amid continued macroeconomic conditions the Pan-European cloud provider had downgraded its full-year outlook in its H1 results.
The reseller continued to attract new customers in FY2023, reporting more than 21,000 new private and public cloud customers during the year.
Ongoing revenue acceleration in Europe in the fourth quarter, and the ramp-up of PaaS and SecNumCloud offerings led the way to growth for the company in the fourth quarter.
In addition, OVHcloud increased its prices in FY2023 to reflect inflation, which contributed 2.7 per cent to growth for the year.
OVHcloud CEO Michel Paulin commented on the results: "We delivered a strong set of results in FY2023, highlighting OVHcloud's capacity to achieve robust and sustainable growth.
"This success is underpinned by the strong momentum in our cloud businesses, which now account for over 80 per cent of our business, and OVHcloud's distinctive, successful offerings.
"Notably, in FY2023, we achieved a significant milestone by generating positive unlevered free cash-flow in the second half of the year.
"This was made possible by the improved efficiency of growth-related capital expenditure - marking a shift away from two years of non-recurring capex tied to post-COVID supply chain disruptions and the development of PaaS solutions - all while maintaining a disciplined approach to operating costs."
He continued that the company's midterm objectives are rooted in the same overarching commitment of delivering positive unlevered free cash-flow as from 2025 while maintaining future growth prospects.
"We intend to achieve this by maintaining selectivity in our investments while capitalising on the dynamic cloud market's momentum, which will continue to thrive driven by the prevailing trend of cloud adoption and usage and the ongoing innovations in fields such as artificial intelligence and Data."
Adjusted EBITDA rose by €17.9m compared to FY2022, coming in at €325.5m in FY2023 and giving a margin of 36.3 per cent.
The year-on-year increase reflects the positive effects of the €109.3m revenue rise and a €22.4m reduction in retention plan costs and earn-outs, less the negative impacts of increases in direct costs (€53.3m), S&M costs (€11.4m) and G&A costs (€4.3m).
The breakdown
The Private Cloud segment, which includes the bare metal cloud and hosted private cloud businesses, posted revenue of €560.1m in FY2023, representing growth of 15.5 per cent as reported.
In the fourth quarter, growth came to 14.1 per cent as reported, a sales momentum that allowed OVHcloud to win market share, in the fourth quarter in particular.
The segment's fourth-quarter performance particularly reflects robust growth for the bare metal cloud business in Europe and France, the effect of past price increases during the year, and double-digit growth for Hosted Private Cloud at Group level - a business driven by sovereign offerings such as SecNumCloud.
These performances offset more modest growth in the USA and Canada, with certain industries, particularly technology, continuing to optimise their cloud spending in recent months.
The public cloud segment continued its growth throughout FY2023, achieving revenue of €154.6m, representing year-on-year increases of 22.4 per cent as reported.
The web cloud & other segment delivered year-on-year revenue increases of 3.4 per cent as reported and in the fourth quarter, this growth came in at 2.9 per cent as reported.
Revenue in France came to €442.5m, accounting for 49 per cent of the reseller's overall revenue, with almost 20 per cent growth for the private cloud and public cloud segments in the fourth quarter.
In other European countries, revenue growth for the cloud businesses remained strong throughout FY2023, with Germany and Eastern Europe once again the main drivers.
A look ahead
For FY2024, OVHcloud is targeting organic revenue growth of between 11 per cent and 13 per cent, an adjusted EBITDA margin of over 37 per cent and recurring and growth capex representing approximately 16 and 24 per cent 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.
The outlook for FY2024 is based on assumptions of an ongoing upward trend in ARPAC, prudent new customer acquisitions, a price effect of between 1 and 2 per cent over the year, mainly in the first quarter, and strict operating cost discipline.