(News Bulletin 247) – The French specialist in cloud computing published disappointing growth in the last quarter of its financial year ending in August and delivered cautious outlooks on its revenues. OVHcloud has thanked its general manager and named Octave Klaba CEO. The latter will present a strategic plan in the spring.

Since its IPO in October 2021, OVHcloud’s stock market journey has looked more like a path of the cross than a ‘success story’. The French specialist in cloud computing services and products has increased its profit warnings and quarters of disappointing growth.

Its stock is currently trading at around 9.18 euros, half its introductory price. And again, the stock would probably move much lower without the outbreak of fever that surrounded the company last April.

The action then soared by 50% in a few sessions, driven by speculation on strong actions by European states. Due to tensions linked to American customs duties and declarations on a hypothetical taxation of the digital services of American giants, the market began to hope for measures favorable to OVHcloud. The idea being that Europeans defend their sovereignty against Gafam, via, for example, the creation of a European cloud.

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Slowing growth

Hopes that seem like chimeras. Morgan Stanley warned in April that investors had moved too quickly, and that it was unlikely that Europeans would manage to free themselves from “hyperscalers”, that is to say Azure (Microsoft), Amazon Web Services or Google Cloud. Ultimately, the hopes linked to the issues of European sovereignty have still not been translated into “the topline (turnover, Editor’s note)” of the company, points out Oddo BHF.

And OVHcloud’s growth, although high in absolute terms, still remains light years behind that of “hyperscalers”.

The company’s results for the 2024-2025 financial year (ended last August), published this Tuesday, October 21, illustrate this once again.

In the fourth quarter, OVHcloud recorded an increase in revenue of 7.5% on a comparable basis, a clear slowdown compared to the third quarter (+9.3%). Analysts expected better, the consensus (their average forecast) standing at 8.7% according to Stifel.

We are also far from the growth of Azure (39% in the last quarter) or even AWS (17.5%).

Stifel points to the weakness of the private cloud (when the environment is dedicated to a single client) to explain this performance below expectations. This segment experienced a severe slowdown, with growth of 4.8% in the third quarter, approximately half as much as in the previous three quarters. TP ICAP Midcap notes that the private cloud has particularly suffered from “delay in the repositioning of entry-level offers”.

Over its entire financial year, OVHcloud generated adjusted gross operating income (Ebitda) up 14.8%, for a corresponding margin of 40.4% compared to 38.4% for the previous financial year. The group delivered a net result narrowly in the green compared to a loss of 10 million euros a year earlier. The “unlevered free cash flow”, that is to say the cash flow from activity less investments (capex), was multiplied by more than two to 57.3 million euros.

Stifel notes that Ebitda is in line with expectations and that the net result is positive for the first time since the IPO.

Disappointing growth forecast

For the current financial year, OVHcloud has indicated that it is counting on frankly modest growth in its revenues, anticipating an increase of between 5 and 7% on a comparable basis. Stifel notes that this target turns out to be “disappointing”, since the consensus was hoping for a rate of 10%.

The company expects to generate a gross operating margin higher than that of the previous financial year as well as a positive cash flow.

“This publication underlines the continued efforts to recover results but also a new problematic slowdown in growth,” concludes Oddo BHF.

On the Paris Stock Exchange, the stock plunged once again, losing 19.6% this Tuesday mid-afternoon.

Faced with the loss of momentum, OVHcloud clearly decided that an electric shock was necessary. The company dismissed the general director, Benjamin Revcolevschi, and decided to merge his position with that of the chairman of the board of directors, Octave Klavba, the founder of the group, who therefore becomes CEO.

TP ICAP Midcap notes in passing that Benjamin Revcolevschi will only have remained at the head of the company for one year.

“The geopolitical context, the growth of the cloud and AI market require us to develop more quickly in order to stay one step ahead. This is why the Board of Directors decided to bring together vision, strategy and execution by appointing me president and CEO,” Octave Klaba said in a press release.

“In the coming months, I will present our 2026-2030 ‘Step Ahead’ strategic plan to guide the teams and support our clients, while generating value for our shareholders,” he added.

The main lines of this plan are to restore growth dynamics, accelerate cash generation and improve return on capital employed (ROCE), with the objective of making OVH the champion of the sovereign and open cloud, lists TP ICAP Midcap.

“We consider the refocusing of the majority shareholder (the Klaba family, editor’s note) on operations as a positive development,” says Stifel.