OVHcloud Q3 revenue rises 9.3% on public cloud growth, global demand

OVHcloud reported Q3 FY25 revenue of €271.9 million, a 9.3% like-for-like increase, driven by strong Public Cloud performance and growth in the United States and Asia-Pacific. The company reaffirmed its full-year organic revenue growth guidance of 9-11% and an adjusted EBITDA margin around 40%, with the CEO confident in exceeding €1 billion in annual revenue. This consistent performance, coupled with strategic emphasis on sovereign cloud solutions and expanded AI offerings, highlights OVHcloud's stable growth trajectory and positive outlook.

Analysis

OVHcloud demonstrated solid operational performance in its third-quarter fiscal 2025 results, with like-for-like revenue increasing 9.3% to €271.9 million, keeping it on track to meet its reaffirmed full-year organic growth guidance of 9% to 11%. Growth was notably propelled by the Public Cloud segment, which expanded 17.2% like-for-like, fueled by a 12% rise in new customer acquisition and strategic investments in AI and data analytics offerings. The largest segment, Private Cloud, grew 8.6% and showed strong momentum in its repositioned Bare Metal Cloud offering, which saw new customer numbers jump over 25%. This growth helped offset headwinds from increased license costs impacting the Hosted Private Cloud sub-segment. The company's strategy is further validated by a 104% net revenue retention rate, strong international growth of 15.6% in the Rest of the World, and key contract wins like Arquus and Visma, which underscore a rising demand for sovereign cloud solutions—a trend the CEO identifies as a "structural change." OVHcloud's financial discipline is evident in its reaffirmed guidance for an adjusted EBITDA margin around 40% and projected unlevered free cash flow exceeding €25 million, despite significant planned capital expenditures of 30-34% of revenue.

Key Decisions for Investors

• The consistent execution, reaffirmation of full-year guidance for both growth and profitability, and positive free cash flow outlook provide a solid foundation for a constructive view on the company.
• Investors should monitor the Public Cloud segment's growth trajectory and the adoption of its new AI offerings, as this high-growth division is critical to the company's overall performance and valuation premium.
• Key risks to watch include the effectiveness of new offers designed to mitigate license cost pressures in the Hosted Private Cloud segment and the company's ability to maintain its targeted adjusted EBITDA margin while funding significant international and infrastructure expansion.