Operator: To OVHcloud FY 2026 results. Today's speakers will be Octave Klaba, Founder, Chairman, and CEO of OVHcloud, and Julien Rabette, Interim CFO. I now hand over to OVH management to begin today's conference. Thank you.
Octave Klaba: Hello, everybody. I am Octave Klaba, Chairman and CEO of OVHcloud, and I am here with Julien Rabette, Interim CFO. We published just today our results of FY 2026 this morning, and thank you for everybody to be here with us to have more details about what we have done last year and what we will do the next year. Maybe we can go to the next page. On the delivering of our commitment. We are in this world where we have the assets. OVH has an industrial background. As you know, we have Datacenters, 250 megawatts of the energy. Roughly, we own our Datacenters, a lot of them. And now we are ready to accelerate based on this Datacenter. Also, we have network, we have our supply chain.
Octave Klaba: On the software part of our business, we will focus on the Cloud, of course, but also on the AI native cloud, the AI native cloud to operate AI. This is why we need them both. We need in the one side Cloud, and the another side you have the AI. On the second point in the FY 2026 and 2027, we have the execution. What is really interesting that this first year when I came back and to start delivering the results, we started to fix the different things that didn't work in OVH, and we started to have the positive outcome in FY 2026 in the Q3, Q4. Then we started to have the acceleration, as you can see in Q3 and Q4 on the different Public Cloud products that I will go back soon very quickly with the details.
Octave Klaba: Execution discipline, having the real understanding about what the customer wants, really go back to the fundamentals of the company. The purpose is really to have the growth, going back to growth into having the company that is growing to double digits with positive free cash flow, generating the value for our investors, and of course, continuing being on the debt in the right leverage. This is how we executed this fiscal year. Now on the next page on the key highlights. We had a growth that was a little bit more than we had in the guideline, 7.2%. We had a 42% of EBITDA sales. If you make the math, 70% of growth went to the EBITDA. It is really exceptional. Do not take that as a guideline because we will see what will happen in FY 2027.
Octave Klaba: But in this 2026, we are really, really focused on the right execution on the OpEx, on the CapEx, and to deliver the right results. CapEx is a little bit less that we had in the guidelines. On the free cash flow, we generated almost EUR 25 million on the free cash flow net. On the operational milestone, we really focus on the acquisition of the customers. We will go back to this. There were a lot of challenges on the CapEx, and we make it. We front-loaded some of them, but also managing the CapEx in the right way. We increase a little bit prices on our customers to generate additional cash to be able to continue to invest in FY2027. We started to finish the strategy and started to execute of the AI strategy. We will go back to this.
Octave Klaba: Then you have, of course, on the strict discipline, the financial discipline on the EBITDA, on the CapEx, on the hard work, and the free cash flow and the ratio. If we go to the next page. Let us talk a little bit about the assets. What we have, we have Datacenters, 250 megawatts of Datacenters. You have about 140 that is already connected. Then you have about 110 that we still have available. This is what we will use to accelerate our growth. When you take this ratio, about 15 to 20 million per megawatt, you have the really good understanding what we can do with this energy in the Datacenters.
Octave Klaba: On the servers, of course, we manage the really strict way the stock of the components, so you can go deeply in the numbers to see what exactly does it mean. But it is really interesting from the cash perspective. We had a very good relationship with our suppliers on the RAM, hard disk, but also CPU, GPUs, et cetera. So we have the continuity of the supply chain. We do not have the issues to deliver our growth in FY 2027. Also, we increase a little bit prices. It was moderated way and mutualized way. So we have additional cash. So we can continue to invest in FY 2027 and deliver the service to our customers. If we go to the next page, let us talk a little bit about execution. What does it mean on our side? We have different segments of customers, as we said last year.
Octave Klaba: We are thinking about the Digital Starters, Digital Scalers, and Corporate. Digital Starters is all the customers less than EUR 2K per month, EUR 25K yearly. Digital Scalers, it is more than EUR 25K yearly. Then you have the Corporate that you know, the companies with RFP, with the long timeline to selling. We have different focus on the different go-to-market, and this is why we created all this go-to-market. We focused a lot on the acquisition of the customers in Digital Starters, and it worked. We had a real increase. We have more than double of the volume on even three times more volume on the domain names. We have very strong volume on the VPS, and even a lot of increase of the revenue. On the bare metal entry level, we are really, really good. We have a lot of new customers, and it is really massive, okay?
Octave Klaba: We are really happy what we have done on the acquisition last year. We see the results that all of this H2 acceleration is higher and it is faster than it was on the H1. We had 4% more growth in H2 than H1. On the Digital Scalers, we are more focused on the verticals because all the customers they are not the same. Some of them, they are in blockchain, some of them in the storage, some of them in the AI, in the different way to sell them different products. They are not looking for exactly the same things. On the Corporate, we had the biggest growth on the last quarter with the new contract that we signed, and we know how to having the strong upsell of the current base of our customers.
Octave Klaba: Now we have to be better on acquisition, and we will see how we will do that. On the next page, let us talk a little bit about growth and how AI will help us in the growth. We have on the bottom, we have all our fundamentals of OVHcloud. We have Private Cloud, Public Cloud, Web Cloud, everything that is needed, and we call cloud. On top of that, we will start to add additional product, additional services that there is more AI. You have four kind different services. The first of all is GPUs in the Datacenters. Of course, we need the GPUs if you want to have the AI. The second level is that this is great to have the GPUs, but you have to manage that at the large scale.
Octave Klaba: We need the different technologies, and the good news that we already have them, but also we acquire some companies to help us to accelerate in this area. The third part is token-as-a-service. We already have that, but we want to have more token-as-a-service, more services in our AI Endpoints services. This is why we made the acquisition of Gladia for the STT specific needs, speech-to-text. Then we started to build what we call the PaaS for AI. It is really interesting, very exciting area. Maybe we will have more time to dig inside. It is really a path for the agentic AI, where the agent has the freedom, let us say, to take the cloud resources and to solve very complex tasks for the users.
Octave Klaba: The last part is AI for SaaS, and this is where we started to develop. We shared on the Viva Technology, and we will share on the OVHcloud Summit in the end of November, OVHai Workspace, where we have this platform for AI, and you have the agents that operate the SaaS services. Whatever the SaaS is, we will be able to operate that. We are going in this direction on the AI to have additional growth in OVHcloud. Now I will just hand to Julien to give you more financial details about what we have done in the future.
Julien Rabette: Thank you very much, Octave. Let me start with the shape of the year because it tells the whole story. On the left, our like-for-like growth by quarter. Growth bottomed out in Q2 at 5.1%. It then picked up to 6.9% in Q3 and reached 10.5% in Q4. This is our strongest quarter in almost 2 years, and importantly, already at the base of our FY 2027 guidance. This turnaround coincides with Octave's comeback as CEO and action plans launched at the start of the fiscal year. On the right, what mattered most to us, the numbers of customers and the clear ramp-up. Outside the US, our customer base grew by 0.7% month-over-month at the start of the year. By August 2026, it was growing by 2% per month, while price adjustment did not have any churn effect. The main takeaway is volume.
Julien Rabette: More customers every month compared to the prior one. In short, the engine is back in shape and the momentum is building up. Let's move to the quarterly sequential acceleration by go-to-market segments. This slide shows the momentum through our three go-to-market segments. Our group revenue rose every quarter from EUR 275 million in Q1 to more than EUR 300 million in Q4, reaching two key milestones: EUR 300 million in quarterly revenue and EUR 100 million in monthly revenue in August and July. Digital Starters, our historical base, grew 5.4% year-on-year, with a clear acceleration in H2 to more than 7% per quarter. Even in a segment often seen as mature, we added close to EUR 30 million of revenue driven by customer acquisition. Digital Scalers are our first growth engine.
Julien Rabette: That was up 12.4% over the year, when it doubled its growth every single quarter and representing more than half of the group's growth. Lastly, Corporate grew 2.7% over the year, and Q4 reached +7.8%, the segment's highest quarterly revenue in the 3 years, and the inflection point is behind us. As a first takeaway, I want to say we enter FY 2027 with all three segments growing and revenue base rising every quarter. Let's now move to the Private Cloud performance. Private Cloud is our largest business with EUR 690 million. That's 60% of group revenue, up 4.5% like for like. The key point here is the trajectory. Q4 grew 7.2%, and the chart shows our monthly recurring revenue ramp-up. After a flat FY 2025, MRR rose significantly over FY 2026. In August, Private Cloud was thus growing at around 9%, three times the pace over a year earlier.
Julien Rabette: That was underpinned by two drivers. First, Datacenter is rebounding. Repositioning our entry-level and mid-range servers brought in new customers, and this consolidates our European leadership in Datacenter. Second, business stepping up in our key markets, France, and our largest market in Northern Europe. Let's move to Public Cloud. Public Cloud is clearly the group growth engine. EUR 255 million, that's 22% of revenue, up 18.9% full year like-for-like, and back above 20% in Q4 at +24.3%. That was driven by three factors. First, the depth of our portfolio. With more than 80 products, customers come for one service and upgrade into the full catalog. In a nutshell, upselling works. Second, our three AZ regions are winning clients, especially since Paris is ramping up. Corporate Public Cloud grew 28%, early scalers at 21%, and starters at 17%. Third, new contracts with well-known institutions such as the European Space Agency.
Julien Rabette: Lastly, growth is broad. France and Benelux leads, Southern Europe, Central Europe, and the US are all accelerating. Let's look at Web Cloud now. Web Cloud generates EUR 200 million. That's 17% of group revenue, up 3.2% like-for-like, and it accelerated to +6% in Q4. Two points to flag about this ongoing improvement in growth. First, a competitive model with an affordable entry price. We have reviewed our web hosting model to make entry price even more accessible, and we launched new products such as Web Hosting 2027, Managed Hosting for WordPress, and OVHcloud Video Center. Second, with domain names. The chart shows monthly volume year-on-year evolution. They rose by almost 60% over the year and nearly doubled in July and August. Worth noting that AI is a real driver here. With vibe coding, more people create websites and applications, and every project starts with a domain name.
Julien Rabette: To conclude about the business line, Web Cloud is also our first door into the group for hundreds of thousands of small customers, and importantly, it keeps a very strong cash conversion. Let's look at the financial now. Revenue reached EUR 1,145 million, up 5.6% reported and 7.2% like-for-like, above our 5% to 7% guidance. Second, this slide says one thing: our growth is profitable, but increasingly so. As highlighted at the right-hand column, the further down the P&L you go, the faster we grow, with revenue up 5.6%, gross margin up 8.6%, adjusted EBITDA up 9.7%, and EBIT up 12.1%. EBITDA margin reached 42%. That's 160 basis points, and worth noting that more than 70% of incremental revenue converted into EBITDA this year. That level is nevertheless exceptional. Working further down the P&L, EBIT rose 12% to EUR 77.8 million. Depreciation increased by EUR 24 million, reflecting new capacity.
Julien Rabette: The financial results improved by EUR 8 million thanks to FX gain, and net income reached EUR 9.4 million, compared with EUR 0.4 million last year. The key takeaway, growth converts into margin. Let's look at the margin in detail now. This bridge focused on efficiency shows our 160 basis points of margin improvement. Every cost line improved, and the price adjustment made this year support all of these ratios. Cost of goods sold improved by 0.4 points thanks to a more favorable product mix with less connectivity and fewer licenses now direct cost. Operating costs improved by 0.4 points, with electricity costs falling thanks to price effects, particularly in France, and workforce productivity. Sales and marketing improved by 0.7 points. Our biggest gain, that's underpinned with two drivers: better revenue per FTE and lower bad debt provision, which we book in sales and marketing thanks to a strengthened cash collection performance.
Julien Rabette: G&A improved by 0.4 points thanks to workforce productivity. On the other side, FX cost us -0.2 points and profit sharing another -0.2 points. In short, FY 2026 highlights a margin gain built on productivity at every level, where we keep investing in our talent and in AI. Let me show you how the EBITDA improvement translates into cash flow now. The bridge show our EBITDA converts into cash. We start from EUR 480.5 million of adjusted EBITDA. Working capital contributed EUR 15 million, and cash taxes were EUR 8.5 million. Other items added EUR 1.6 million. These other items cover cash settle share-based compensation and earn-outs, non-recurring items, provisions, realized FX, and other financing activities. CapEx reached EUR 422 million. It includes the EUR 49.5 million of components we bought in advance for FY 2027 to secure our supply and protect our cost.
Julien Rabette: This specific purchase is financed by a dedicated facility, and in line with our definition of levered free cash flow, is neutralized, as you can see on the chart. After EUR 52 million of financial interest paid and EUR 39 million of lease repayments, our levered free cash flow is now positive at EUR 24.7 million, compared with -EUR 27 million last year. This is important to mention. It is the first time since our IPO five years ago. Let's look at the CapEx now. Excluding the FY 2027 component purchase, CapEx reached EUR 373 million, or 32.6% of revenue, below our 33% to 35% guidance, and even below last year at 33%. When including the on-stock CapEx, reported CapEx are EUR 422 million, or 36.9% of revenue. Hardware accounts for EUR 242 million, 21% of revenue, broadly stable. Two effects offset each other. First, a volume tailwind. We assembled fewer server. Second, a price headwind.
Julien Rabette: Each server costing more because of component inflation. The strict CapEx discipline was possible thanks to our integrated model, maximizing existing assets and the front-loading of the CapEx. Now, infrastructure network with EUR 53 million are stable. Product and software with EUR 72 million are also stable and are reflecting the capitalized development work of our teams. Looking ahead, we intend to keep the same discipline. We do not expect our capital intensity to drift. That is the spirit of our CapEx strategy. Our balance sheet is strong, and our financing is secured. Net debt, excluding leases, stands at EUR 1,157 million. The all debt is hedged at an average cost of 4.4%, including margin and fees. If we add EUR 144 million of leases, net debt with IFRS 16 lease is at EUR 1,301 million. Liquidity amounts EUR 255 million.
Julien Rabette: That is EUR 55 million of cash, and our EUR 200 million multipurpose facility, which is undrawn. There is no major maturity before FY 2030, and our debt is built on three pillars. First, the EUR 450 million green term loan maturing in FY 2030. Second, the EUR 500 million bond maturing in FY 2031. Third, the EIB facility, which amortizes gradually. The EUR 49.5 million drawn to finance the FY 2027 component is a short-term facility repaid after year-end close. We are rated BB- by S&P and Ba3 by Moody's. Lastly, our leverage ratio stands at 2.7x, down from 2.9x in FY 2025. This is now calculated on an IFRS 16 basis, including lease liabilities. It is one of our North Star ratios. Let me start my presentation with our ability to create value. Our second North Star ratio is return on capital employed.
Julien Rabette: ROCE reached 7.7% in FY 2026, up 60 basis points from 7.1%, and more than double the 3.3% of FY 2024. Investments are paying off. The capacity we built is now generating revenue, and our investment discipline keeps capital employed under control, and we have room to grow without new heavy investment. ROCE increasingly frames every decision we take, from growth CapEx and acquisition to how we finance our equipment. Every euro we invest must improve our return on capital. With that, I hand over to Octave for our FY 2027 outlook.
Octave Klaba: Perfect. Thank you, Julien. Just to give you the guidance for the FY 2027, we changed a little bit. I think you will have questions about that. We wanted to give you on the five instead of four components. The first, it's growth like for like, it's more than 10%, double digits, let's say. We know that it will be a little bit more than 10%, but we want to be cautious when we start this fiscal year. We want to deliver our FY 2027 not overpromise about the different numbers that maybe we could not deliver. On the growth, it's 10% more, and we'll see how it will grow in the year quarter by quarter. On the adjusted EBITDA, we know that it will be more than last year, and we put 42.5.
Octave Klaba: We have a good understanding about how much it could be more, but we want to, again, we really be cautious about what kind of margin we can deliver and to having something that we don't overpromise. Free cash flow, of course, positive. There was no question about that. You saw that we delivered EUR 25 million. I don't know yet how it will evolve because we will want to accelerate as much as we can, and if we see more free cash flow in our numbers, we will probably investing more to accelerate even more our growth. This is the dynamic of how we are thinking about the growth. Now we remove the CapEx. Why we remove CapEx, because there was a few things that we didn't like about the CapEx. There was no revolution about the way that we make the CapEx.
Octave Klaba: We continue the discipline, and you know how much here you have the numbers about this 42.5%. Also last year, in the beginning of the year, we started with this guidelines about the 30% to 32%, and then we changed to the 33% to 35%, and then we finished the year with 32.5%. Honestly, it means nothing. It means a lot of things, but it moved over the year, and we don't like this guideline just moving over the year, trying to understand how we work on the CapEx. Also another thing that we will start using more IFRS 16 that will also be used in the same time that the CapEx. So, there was two complexity to share the things about the CapEx. We wanted to add additional two guidelines just to secure and to say we don't do the nasty things about our numbers.
Octave Klaba: The first, ROCE has to grow, and it will be more than 9%. It is something that is really important. We need to create the value, and we need to continuously think about how the investment creates value for our investors. This is the first process. The second, we want to commit on the leverage ratio. Usage of the IFRS 16 is not just the way to just to hide the CapEx. We want to be cautious about also this ratio, and we make the choice about 2.7x between the EBITDA and the debt of the company. This is the way that we want to guide you and to give you overview of the FY 2027. If we can just make the key takeaways. On the foundation, we have been working on the acquisition of the customers.
Octave Klaba: We wanted to be sure that we can deliver FY27, so the full continuously supply continuity. AI strategy is clear, and we will start working more on that, on the execution. There was also the FY26 fully delivered all the guidelines. We have a really high flow through EBITDA, but do not take that as the guidelines. It was really exceptional. We will see what we will deliver in the FY27. First free cash flow positive since IPO. I made before 2016, free cash flow positive, so this is where, let us say, I am at home. I like this company when they deliver free cash flow because it is a freedom that we need to go in the right directions to make this company even bigger. Free cash flow is really, really important for me. On the FY27, it is revenue more than 10%, leverage positive free cash flow.
Octave Klaba: On the ROCE, more than 9% for the FY27. Now we are open to answer all your questions if you have any.
Operator: If you wish to ask a question, please dial #5 on your telephone keypad or press the blue hand icon. The next question comes from Ines Mao from BNP Paribas Exane. Please go ahead.
Inès Mao: Hi. Thank you. This is Ines from BNP. I have 2 questions. First, earlier this year, the message was that you lacked GPUs, particularly latest-gen GPUs. What has changed exactly? Is it because you actually have secured thanks to last year's front-loaded CapEx, and that is only for full year 2027 expected demand, or is this enough to actually meet demand in the more longer term? The second question is, 10% organic growth is your floor for next year. How much contribution from the repricing of servers do we expect to be on this 10% organic growth guidance? Thank you.
Octave Klaba: So, if I understand well, it is why we start to investing in the AI now and not before, and what is the fundamentals of that. You have different things. You have the first thing that we didn't think that there was a lot of demands of this for the GPUs 3, 4 years ago. Because we saw some competitors that invested in the GPUs, and they didn't sell them in Europe. I was a little bit cautious about the usage of the CapEx in the last years. This is the first, and we think that right now the demand is there, but I want to have the proofs. We are still cautious about investing in the GPUs and seeing how it can grow, how many customers are there. There was a pressure on the prices, et cetera.
Octave Klaba: We are in this period of time that we are testing the market on that. This is the first. The second is that the old GPUs, the H100, they didn't have a lot of performance. When you have this new generation of the GPUs, B300 and R200, we are talking about something different, really magnitude of the performance more. That makes sense for the customers. Also we saw that it makes sense for us, for the inference, for the training, because the reduction of the cost and the productivity, let's say that, of the CapEx, it is huge. You reduce more than 20 times the cost of the same performance over just 3, 4 years. When you invested 20 4 years ago, for the same performance today, you can just invest 1.
Octave Klaba: The productivity of the hardware, of the software that you have on the market is really huge. This is why we want to start investing in that and to see how the market reacts. The second question?
Julien Rabette: On the repricing.
Octave Klaba: On the repricing, we will not communicate a lot about this repricing, about the part of the revenue, because there are three parts that you will see in the growth. The first part is cloud. We have growth of cloud, as you saw on the Public Cloud. In the last quarter, we had more than close to 25% of growth, so it is really cool. We wanted to continue to having this kind of growth, maybe even more, in the Public Cloud in FY27. We will see how it will react. You are right, we have the repricing, but it is temporary. There was one part of that we do not know yet, because of course, with the increase of prices, you can have churn.
Octave Klaba: The real increase of prices we had in the beginning of this month, one part, and there will be still in November, still in December, over the 2, 3 months. We do not know yet how much it will be from the repricing. We are not sure, let us say that. We know how it could be, but we do not have the real numbers right now, and I want to wait before I communicate any numbers about that. There was third part that will accelerate our growth, it is AI with the investment in these GPUs, but not only. Keeping the mind that reselling the GPUs, it is a really competitive activity because you buy the same hardware, you deploy that in a little bit different Datacenters, and then you go on the market. So how different you can be selling the same GPUs over the different Datacenters worldwide.
Octave Klaba: We need to be cautious about that, of saying how much revenue we can make on the GPUs. This is why we want to invest in the software, in the AI, and not just GPUs in the hardware. This is why we are talking about the inference, about the token-as-a-service, about PaaS for AI, and the AI for SaaS. It is not just one product that we want to go on the market. We want to reduce the risk on the investment in the AI over five different kind of services and see which one can have the good traction. Then growing on that, maybe it will be just two of them, maybe three of them, maybe five of them. That would be great.
Octave Klaba: But we don't want to just put every bet on just GPUs in our Datacenter and saying, "That's it." This is why also on this revenue about more than 10%, we are cautious about we need this first quarter and maybe even the second quarter to see how exactly it's growing, and then go back to you with maybe the adjustment of the guidelines for FY2027. Any other question?
Operator: The next question comes from Emmanuel Matot from Oddo BHF. Please go ahead. The next question comes from Richard Bishop from Tresidor. Please unmute your microphone.
Richard Bishop: Hi. Thank you for the presentation. I have two questions. The first one, how do you expect CapEx to develop next year? And the second one,
Octave Klaba: There's a-
Richard Bishop: it looks like you drew about EUR 72 million of debt in H2 and repaid about 23. What does that relate to? Thanks a lot.
Octave Klaba: On the CapEx, we will not give you the soft guidelines or the hard guidelines because, as I said, there was something that we control in the right way. You can see how we were cautious about that in the FY2026. Also, we changed the percentage, the guidelines last year, so it was not really good way to guide you. But also, on top of this CapEx that we could invest directly with our cash, we will use the IFRS 16. That will also generate additional cash directly in the year. So it is something that will be faster to transform to the free cash flow. So all in all, how much CapEx? We will see, because as I said, we have room, a little bit, about should we accelerate or should we slow down investment in the AI.
Octave Klaba: Because of that, we do not want to really guide you on the CapEx, because it will probably involve in the year if it is going faster and we have new customers, and this business, we like them, we like this business, but we will put more resources, more GPUs into our Datacenters. If it is not going in the right direction, there is a lot of pressure on the prices, we will slow down the investment in that. So giving you the CapEx, it will be something that we will not be able to really gauge, because it will change over the year. But in all in all, you have ROCE and you have leverage ratio that we will respect. So we will not go on top of that in any case.
Octave Klaba: It has to generate the value first, and the second, the ratio has not to be more than to the 7 end of the FY2027. Because we want to protect also the cash flow and having this free cash flow. So we have the constraints, free cash flow, ROCE, leverage ratio. In all these constraints, then let us play and let us see what we can capture as the faster growth, as the higher EBITDA, and respect all this three ratios that we give you on the left on the free cash flow, ROCE, and the leverage ratio of that.
Operator: The next question comes from Victor Lamari from Euroland. Please unmute your microphone.
Victor Lamarre: Yes. Hi. Could you give us a little more detail on the ROCE improvement expected in 2027, and specifically how much of it comes from the better yield on the revenue generation you mentioned earlier, and how much from something else. I find it hard to see how the picture is generally positive in an environment of elevated hardware prices with only limited repricing. Thank you.
Octave Klaba: So maybe Julien?
Julien Rabette: Yeah, sure. We are going to be, as Octave said, managing strongly our OpEx and our CapEx discipline, which means that our revenue is going to flow into EBITDA. We are showing in our guidance that we want to improve. Therefore, ROCE is going to be improving naturally as we are having a stable and a strong balance sheet, so capital employed.
Octave Klaba: And at least it will be 9%.
Julien Rabette: Exactly.
Operator: The next question comes from Derric Marcon from Bernstein. Please go ahead.
Derric Marcon: Yeah. Good morning, gentlemen. Three questions on my side. Coming back on the price increase, I understand that you do not want to comment that much the impact on the top-line growth and the guidance for 2027, but could you help us to understand what is the underlying assumption you have taken in the current guidance? So at least 10%, does it take into account an impact from price increase or not at all, and you are waiting 1 or 2 quarters more to understand what could be the churn rate or what should be changed compared to the initial scenario you have taken? So i.e., what is today included in the guidance for 2027? I think it is important to understand that. On ROCE, can you help us to understand what would be the best case scenario?
Derric Marcon: So 9% is of course better than the level we have seen over the past 3 years, but what would be the ideal scenario if you look forward? Is it 10%? Is it 15%? What is the, let us say, ideal threshold that you see on this new KPI that we should live with now? And the last point on the revenue opportunity by type of AI services. So the 5 new AI services you were mentioning in your slide, can you help us to understand the revenue opportunity attached to each of them, and how fast can they materialize into incremental revenue for OVHcloud? Thank you.
Octave Klaba: Thank you for your question. I understand your question about how much we are pricing. We put a little bit inside of these guidelines. We had a very good growth in the last quarter, and we have been working so much on the volume. So we also expect to have a good transformation of this volume on the upselling into going with the new customers that they will consume more our services, specifically in Public Cloud. So we put a little bit of repricing inside, but we are really cautious because the market, the customers, how they are seeing what kind of services they can move from us to another competitor, another service. There was not so many options for them, what we saw, because everybody started to increase.
Octave Klaba: You can have the just phasing and you can have this. Sometimes someone can increase the price a little bit later. We are still, even if with the increase of prices, if you take the Public Cloud prices, we are still half of the price of AWS. Okay, so we were three times less expensive. Now we are just two times less expensive from AWS perspective, and we will see what AWS will do. As you know probably, Azure announced two, three weeks ago that they will increase the prices in Europe by 11% to 17% on the compute and also the high percentage of the storage. So it is all that involving. All that is involving. We are confident, we have the good fundamentals.
Octave Klaba: But look, guys, there are so many moving parts right now, and I do not want to give you the guidelines that I will not be able to deliver. I know the 10% we can make so much, and we have the plans, we will see. But for the moment, Q1, we just increase the prices, and we will see how all this working. If it is working well, yes, it will be more than 10%. If it is not working well, we will have at least 10%, and we will not deliver you the guidelines that we will not be able to deliver. Also on AI.
Derric Marcon: Octave, just pause 1 minute here. I understand that, but in the at least 10%, what is the scenario included in this guidance? Is it a price increase impact equal to what you had in 2025? What is the base case? We understand that it is a base case, but what is implied in this base case? Is it 2 percentage points? Is it 3 percentage points? Is it less than 2026? It is important to us to understand what is the starting point and what could be the potential upside, even if it is not reflected in the guidance. You see my point?
Octave Klaba: Yeah, I see your point, but I will not be able to give you more details about that. We need to go through this quarter. I wanted already to tell you that it will be more than 10%, okay? Because it does not give you the specific percentage of that. They are just saying, "Hey, guys, it will be more than 10% for sure." Okay? This is what I will be able to deliver. We did not take this 10% double-digit guidelines as what is inside of that. We are just saying we will make this more than 10% for sure. Now, we will have to, this first quarter, just to see where we will land and how it will improve. Then we will be able to go back to you. But in this specific 10%, there was no specifically, we did not take this and this and percentage of that.
Octave Klaba: We are just saying, "Okay, let's gauge that it will be more than 10%." Okay?
Derric Marcon: Okay. Understood.
Octave Klaba: The second on the AI, on the GPUs, you have different constraints. That is really interesting part. You have the constraints, of course, of the capacities in the Datacenters that we do not really have, but we have some of them because we need to, let's say, to add additional UPS, additional generators, et cetera. So it is very small level of the CapEx, but it takes a little time, a few weeks, few months to have them in the Datacenters. But you have another thing that in the GPUs, you have the wait list of when you put the orders in the NVIDIA, and you have to just wait when you will be delivered. We have the good news of this delivering of this GPUs. So I think on this one part of the increase of the prices will come definitely from the GPUs.
Octave Klaba: I cannot tell you how many GPUs we order because, again, it will probably involve in the year. But then also, we are just in the beginning of journey of the level 2, 3, 4, 5. The feedback that we will have on our OVHcloud Summit with OVHcloud AI Workspace, that will go to the GA probably January, February, will be really interesting. Because in the beginning, it will be the freemium. Everybody will be able to create an account and use this product. We think that there will be lot of customers that will transform this freemium that will not cost so much money because everything is internal, and we manage all this cost in the right way. But then when they transform to the paid subscription, it can generate a lot of money.
Octave Klaba: We do not know yet, and this is also the way that we started to guide in the beginning of 2027. I am really sorry that it is uncomfortable for you guys, but we have so many moving parts. It is going well. It is going in the right direction. But I want to see what are the real numbers first, and then go back to you saying, "We see these numbers. These numbers will be confirmed, and then we will deliver these guidelines, these kind of numbers." Because we are going in this different direction, different investments into trying to de-risk the investment in AI, I do not have all the answers today in October.
Derric Marcon: Yeah. The question on ROCE, the return on capital employed, what would be the ideal level for you? 9% is it just the starting point, or what is the maximum you are targeting here?
Julien Rabette: Hey, Derric. Julien speaking. I think what matters is the trend on ROCE. As you can see, we have been managing that very carefully over the last few years. We are going to be improving the ROCE, and we are really expecting to improve. That is our goal.
Octave Klaba: Yeah. It will be more than 9% also, hopefully. Now keeping in mind that if, for example, we do not see a lot of businesses in GPUs and the market is closed, we stop investing in that, so of course our ROCE will grow. If we have the opportunity to invest in the GPUs and to going after the market and to going even faster on the revenue in EBITDA, the ROCE will be a little bit less. But all in all, it will be more than 9%. All this is why we are not so specific about our numbers in the beginning of the fiscal year, because there was a lot of opportunities, and we want to capture that and still respect all our guidelines.
Octave Klaba: It is also why it is not just we do not know everything, it is also there was a reaction of our customers, reaction of the market, and to see where it is going, who is ordering, how fast we are ordering, what is the answer. For example, you did not see any announcement from our side about the GPUs for the moment, but we started to sell them. So we are doing that in another way to see where the market is and how deep this market is. All that is also keeping in mind that we give you a lot of information, and we realized last year that lots of all this information were used by our competition. That is good. That is good we have some kind of the transparency about our business model, about our secret sauce, about the different things.
Octave Klaba: But we realized also that we gave too much, and they use our secret sauce to go after us or trying to be even more competitive with us. So we also want to have this ability to go fast on the market without announcement a lot of things, but just capturing the market. Then when the market is captured, we go back and saying, "We did it.
Derric Marcon: Yeah, understood. Can I add just a follow-up? On the Corporate segment, could you explain why the growth was so weak, why you mentioned stronger selling? Any specific one-off or headwinds here that will not repeat in the coming years?
Octave Klaba: You were right saying that the first three quarters were weak on the corporate. This is also why I came back and changed the organization of the go-to-market and specifically on the corporate. On the corporate, you saw that our announcement of the hiring of the key people. We hired the head of the Germany for corporate. We hired the head of the Italy. We changed the organization of the corporate in France last quarter of Q4. Now we are going back after the market to accelerate the growth. We were really focused on the big businesses. ESA, for example, that we announced the signing of the contract. It is not a small contract. It is a really, really big contract.
Octave Klaba: To having the impact from when you generate so much revenue, having the impact, you have to work on the volume, of course, but also being focused on the big deals and not the small deals that will take time to deliver. For example, the European Commission, it will be something that will grow. It will be nice, but it will be over 12, 24 months. We were focused on something that is quicker, faster, that we can see the results over the months, over the quarters and not the years. This is also how we focused more our sales force on the corporate to build the relationship and to go after the additional businesses that we can actually realize that we make them and we see the revenue.
Octave Klaba: We had some issues Q1, Q3, Q4, but now it is restarted with the new deal, and hopefully it will grow faster in FY2027. Keeping in mind also that we have been talking about in FY2025, even seven, that we lost two big customers. I think it was 25. But it took four quarters just to clean up that. You could see that in this Q1, Q3, Q2, Q3. Now it is cleaned up, and again everybody is back to the work. I hope that we will restart signing the contract from the corporate perspective.
Derric Marcon: Thank you very much. I pass the line.
Operator: The next question comes from Emmanuel Matot from Oddo BHF. Please go ahead.
Emmanuel Matot: Good morning. Sorry, I am back, but this time my mic is on. I hope you can hear me well now. Three questions for you.
Octave Klaba: Yes
Emmanuel Matot: First, Octave, is it correct that you are about to offer an alternative to the Microsoft 365 and Google Workspace Office suites? Was this a request from customers in the context of sovereignty in Europe? What will be the model behind this offer? Could it be free to start with? Second question. Do you see any risk related to the macroeconomic and geopolitical environments, particularly in France, where you are still doing half of your revenues? Last question. Are you planning to make any further advance purchases of memory components in fiscal year 2027 for use in fiscal year 2028 with financing by dedicated debt? Thank you very much.
Octave Klaba: Thank you for your question, Emmanuel. On the OVHai Workspace, you could say that, but I would not say that. Because if you see the old world, the old way of the productivity, yes, at some point we will have some SaaS services that you can have the email, video conferencing, drive, and messaging, editing the documents. But with AI, all the services have no value. It is really easy to develop all these services and then add it to our customers. I would not tell you that we are building Office 365. I would tell you that we are building the platform AI that will operate SaaS services for the customers. By the way, we will have Office 365 in the platform.
Octave Klaba: We'll have the digital business, we'll have the custom agent, and it will be a lot of additional software inside because it's so easy to develop additional software and to build that in the platform. But the main thing is how you operate all the SaaS, and we think that the way to operate that is changed totally. You probably use a Claude or you probably use a ChatGPT, and I think this will be the way to send tomorrow the emails to explore your drive, to having the summarization of your video conferencing, to making the business on the web, and to also to building your next generation, next application, a small application for your job if you're in financial, legal on the HR vertical.
Octave Klaba: It's something that it's really new, really innovative, and the way that we build that, you don't see that for the moment for the market. I didn't. Okay. So maybe there was someone that has developed that or is developing, but it's something that will be really new. And on Summit we will show that because we didn't for the moment, exactly for the same reason that I told you just before, because our competition, and I don't want to share the good ideas, the smart ideas, the way to how to grow. This is why also we were a little bit less transparent about what the OVHai Workspace is. This is the first answer for the first question. The second question, you're right, in France, it's tough. Okay. We see that lot of customers, they wonder what's next.
Octave Klaba: They are waiting for the elections, and there was lot of questions about what will happen after. The hope, it's not on the right level, and you feel that on the business. You feel that on the business. This is why also all our, let's say, acquisition actions are working so well because we started to do what we know how to do that in the best way. Very competitive offers that doesn't cost us so much to deliver and help our customers to make the business. Then we are waiting with them to have this time that they have more money, they have more means, they can grow faster, but at least they are with us. We acquire a lot of customers, it's 100,000 customers. More than it's 100,000 customers that we acquired last month. So it's massive. It's not small, it's massive.
Octave Klaba: We will work with them to help them to grow in the right way in this world that has lot of uncertainty. Having this brand, OVH, that can bring this kind of the value, the way of working to trying to protect the customers, it's something that customers definitely they like that. On the last question, it's a good question. I don't have the answer for that because I don't know the prices for the FY28. I don't know how it will evolve. Honestly, I don't know. It really will depend on the prices, about the strategy of what will be our investment in FY28 in the hardware. There was lot of things in that we will work probably in H2 to see what will be the best scenario. Maybe it will be the good scenario, maybe not.
Octave Klaba: I do not know yet if it is something that we will activate again. Hopefully not. That would say that we are going back to some, let us say, fundamentals of some normal world, regular world. But I do not know today. I do not have the answer for that.
Operator: Thank you for your question.
Octave Klaba: Okay. Thank you very much.
Operator: I hand the conference back to the OVHcloud management for any closing comments.
Octave Klaba: Okay. Thank you for the time that you spent and for the questions that you spent. As you saw that we closed this year as a good year. I am very happy what we delivered, and I am very happy how ready we are for FY27. The company is really in another shape. A lot of excitement, a lot of people that they are working hard to deliver the performance, and I am really, really happy what we have right now. We will work on this growth on FY27 with the profitability, with the free cash flow target that we have, and of course, improvement of our value creation. It is something that we have as the North Star, and we are thinking about that every morning, every night, about how to invest in the right way the money and to generate the growth and the value.
Octave Klaba: Thank you very much, and see you on the world.
