(News Bulletin 247) – The European specialist in dematerialized IT services has published an increase in its revenues in line with expectations over the first three months of its 2023-2024 financial year, with an increase of 12% year-on-year on a comparable basis. The company will hold an investor day in London next week.

The European cloud champion has hardly won any medals on the stock market. Arriving on the Parisian stock market in October 2021, with an introductory price of 18.5 euros, OVHcloud has since seen its price divided by more than two.

A combination of elements has penalized the stock for two and a half years. The rise in electricity costs, in a very energy-intensive industry, weighed on its accounts and led, in April, the group to lower its objectives for the financial year ending in August 2023. Fears about the macroeconomy and the recovery interest rates, major factors in the technology sector, also weighed. Sales of shares in the KKR and TowerBrook Capital funds, two long-term shareholders of the company, also hurt market sentiment on the stock, creating a threat of additional stock sales.

It remains to be seen whether the company may be able to turn things around this year. OVHcloud in any case delivered its activity this Thursday for the first quarter of its 2023-2024 financial year, i.e. from September to November 2023.

Revenues totaled 240 million euros, up 11% on a published basis and 12% on a comparable basis, a figure generally in line with expectations, with the consensus counting on 241 million euros. euros, according to Stifel.

>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio

Contract win in Germany

OVHcloud benefited from good momentum in Europe excluding France, a region which represents approximately 29% of its revenues, and where growth amounted to 16.3% on a comparable basis.

“Germany, notably with a major contract won in healthcare at the end of the quarter, and Eastern Europe continued to be the engines of growth in the region,” explained the company. The contract win in Germany bodes well as OVHcloud customers tend to stay in its portfolio for around fifteen years, according to Stifel, consuming more and more resources.

By product segment, public cloud (where infrastructure is shared) delivered like-for-like growth of 18.9% while private cloud recorded growth of 14.9%.

Turnover was penalized by the decline in the “Web Cloud and other” segment of 1.4%. “The connectivity and telephony sub-segments, historical activities of the group, continued to see an erosion of their activity, which weighs on the growth of the complete segment which reached 2.5% on a comparable basis excluding these two activities”, a explained the company.

OVHcloud has also confirmed its objectives for the entire current financial year, in particular a like-for-like growth in its revenues of between 11% and 13% and a gross operating margin (Ebitda) of more than 37%.

See you in a week in London

On the Paris Stock Exchange, the market was initially enthusiastic before very quickly taking its gains. The stock advanced 0.7% around 10:30 a.m. after gaining nearly 3% at the start of the session.

The market may be somewhat wait-and-see, as the group will hold a day dedicated to investors in London next week, on January 17. This event will be “an opportunity for the group to project itself into 2026 (…) and to show that its competitive advantage derived from its integrated model allows it to generate margins at least in line with those of its competitors”, underlines Stifel.

“Thus, the group should demonstrate that with good control of its fixed costs, the operating result for 2026 could exceed the expectations of the current consensus and ours,” continues the research office. Stifel expects an operating profit of 67 million euros for the financial year ending in August 2026, and the Bloomberg consensus on 65 million euros.