OVHcloud: First Half-Year 2022 Results

Revenue of €382 million and adjusted EBITDA margin of 40.1%
Acceleration trajectory confirmed with FY22 revenue growth guidance raised

  • Acceleration confirmed in the first half-year, with revenue of €382 million, +14.3% as reported and +13.3% like-for-like1
  • Strong growth confirmed throughout the half-year in Public Cloud +24.4% and Private Cloud +15.8% on a reported basis
  • International momentum remains strong, particularly in the digital channel in the United States and Asia, at +106.2% and +63.7% respectively on a reported basis
  • Adjusted EBITDA2 of €153 million, i.e. a margin of 40.1%, +11.0% on a reported basis
  • Acceleration trajectory confirmed for FY22, with the revenue growth guidance raised to 15-17% from 12.5%-15% and the adjusted EBITDA margin guidance maintained at around 40%

ROUBAIX, France--()--Regulatory News:

OVHcloud (Paris:OVH) today announces its earnings for the six months ended February 28, 2022. This press release relates to the OVH Groupe condensed half-year consolidated financial statements.

OVHcloud CEO Michel Paulin said:

“The first half-year results demonstrate OVHcloud’s ability to deliver a robust, sustainable and profitable growth acceleration strategy. These results have been achieved thanks to the commitment of all Group employees, contributing to the continued success in each of the growth pillars, particularly internationally where our development has continued at a steady pace.

Building on this performance, we are entering the second half of the year with confidence. The reinforcement of our teams and ecosystem, combined with the rapid enrichment of our portfolio of PaaS solutions and increased demand for sovereign cloud offerings are all strengths that lead us to raise our revenue growth target to a range of 15% to 17% in FY2022.”

Key figures

(millions of euros)

 

First half-year
2021

 

First half-year
2022

 

Change (%)

 

Change (%)
like-for-like(3)

Revenue

 

334

 

382

 

14.3%

 

13.3%

Current EBITDA

 

135

 

128

 

(5.2%)

 

(4.8%)

Current EBITDA margin

 

40.5%

 

33.6%

   

Adjusted EBITDA

 

138

 

153

 

11.0%

 

11.1%

Adjusted EBITDA margin

 

41.3%

 

40.1%

   

Cash flow from operations

 

137

 

127

   

Recurring Capex

 

(70)

 

(69)

   

Growth Capex

 

(86)

 

(156)

   

First half-year 2022 revenue of €382 million, up 13.3% like-for-like3

OVHcloud consolidated revenue reached €382 million in the first half of 2022, up 14.3% compared to the first half of 2021 on a reported basis and up 13.3% on a like-for-like basis, at constant exchange rates and perimeter and excluding the direct impacts of the Strasbourg incident. The first half-year performance confirms the Group’s acceleration trajectory. Growth is driven by continuous improvement in ARPAC and a limited customer portfolio erosion. OVHcloud’s ability to grow with its customers results in a net revenue retention rate of 112% in the first half-year of 2022. On a like-for-like basis the rate reaches 111%, reflecting a steady improvement since last year.

This first half of 2022 demonstrates the success of the strategy implemented by OVHcloud, driven by the continued solid commercial momentum (major companies, ministries and public entities, fintechs, etc.), a sovereign offer showing positive results, continued sustained international demand, as well as continuous strengthening of the Group’s ecosystem. OVHcloud recorded double-digit growth in sales with its more than 850 global and local partners. The success of this ecosystem is also confirmed with start-ups, with more than 300 new start-ups integrated into the programme during the first half of the year.

The positive momentum of this first half-year is also reflected in the shift of the business mix towards Public Cloud and Private Cloud, and in the growing share of international business in the Group’s revenue, reaching 50.3% over the first six months of the year.

With 71 IaaS and PaaS solutions in the first half-year of 2022 and a target of more than 80 solutions by the end of FY22, OVHcloud continues to enrich its portfolio of solutions in close interaction with its customers in order to offer them the solutions that best meet their needs.

Situation in Ukraine

In the deteriorated geopolitical context between Russia and Ukraine, the Group is constantly monitoring its activities in Russia, Belarus and Ukraine.

The Group also clarifies that:

  • revenue generated in Russia, Belarus and Ukraine represented approximately 1.5% of Group revenue for the six months ended 28 February 2022; the Group has no employees in any of these countries;
  • the Group has no service providers (individuals) based in Ukraine;
  • it does not have any infrastructures in those three countries;
  • it does not at this stage identify any material recovery risk of the receivables due as at 28 February
  • its indirect exposure is limited, both on energy costs, which are almost fully hedged at fixed price for calendar year 2022 and partly for 2023, and on the potential supply chain tension, mitigated by OVHcloud’s vertically integrated model.

Revenue by product segment

(millions of euros)

 

First half-year
2021

 

First half-year
2022

 

Change (%)

 

Change (%)
like-for-like

Private Cloud

 

201

 

233

 

15.8%

 

14.7%

Public Cloud

 

48

 

60

 

24.4%

 

21.0%

Web Cloud & Other

 

86

 

90

 

4.9%

 

5.3%

Total Revenue

 

334

 

382

 

14.3%

 

13.3%

Private Cloud, which includes Bare Metal and Hosted Private Cloud, achieved revenue of €233 million in the first half-year, representing growth of +15.8% on a reported basis and +14.7% on a like-for-like basis after a second quarter up +17.0% on a reported basis and +15.0% like-for-like, confirming the momentum of the start of the year. The strong growth in the segment over the half-year reflects a continuous increase in ARPAC as well as good performance in the United States and Asia, particularly in the “Digital” customer channel. On a reported basis for the half-year, revenue includes an impact of €1.7 million in respect of commercial gestures relating to the Strasbourg incident.

Public Cloud continued its strong growth throughout the half-year, achieving revenue of €60 million over the period, reflecting growth of +24.4% on a reported basis and +21.0% on a like-for-like basis. In the second quarter, growth was +23.9% on a reported basis and +20.0% on a like-for-like basis. Public Cloud benefited from strong growth in ARPAC, reflecting the success of the upsell and cross-sell efforts. Both beta and recently released (General Availability) PaaS services continue to show encouraging signs of adoption by our customers. The strengthening of the offer, with 71 IaaS and PaaS services at the end of February, gives OVHcloud customers access to comprehensive services, as close as possible to their needs. On a reported basis for the half-year, revenue includes an impact of €0.9 million in respect of commercial gestures relating to the Strasbourg incident.

Over the first six months of the year, Web Cloud & Other segment grew by +4.9% on a reported basis and +5.3% on a like-for-like basis compared to the previous year. In the second quarter, growth was +3.6% on a reported basis and +3.9% on a like-for-like basis. This performance includes double-digit growth in the Enterprise segment, which includes partners and resellers. On a reported basis for the half-year, revenue includes an impact of €0.3 million in respect of commercial gestures relating to the Strasbourg incident.

Revenue by geographic region

(millions of euros)

 

First half-year
2021

 

First half-year
2022

 

Change (%)

 

Change (%)
like-for-like

France

 

176

 

190

 

7.9%

 

8.8%

Europe (excluding France)

 

98

 

109

 

11.6%

 

11.6%

Rest of the world

 

60

 

83

 

37.4%

 

27.9%

Total Revenue

 

334

 

382

 

14.3%

 

13.3%

Revenue growth in France includes double-digit growth in Private Cloud and Public Cloud, notably thanks to the Enterprise channel, which includes sales made with our partners. The Enterprise channel also performed well in the Web Cloud & Other segment. Revenue growth also reflects the significant relative weight of this last segment, as well as the impact of the Strasbourg fire, to which France had a greater exposure than the other regions. On a like-for-like basis, revenue growth in France was +8.8%.

In Europe (excluding France), revenue growth from Private Cloud and Public Cloud was largely the result of the same trends as those observed in France and benefited from the impact of the implementation of dedicated regional sales teams.

In the Rest of the world, the United States and Asia continued to grow with respectively +84.0% and +36.9% on a reported basis and +75.9% and +30.5% on a like-for-like basis. The “digital” customer channel continued its excellent performance with growth in the United States of +106.2% on a reported basis and +96.9% on a like-for-like basis. This performance was also reflected in Asia, with growth of +63.7% on a reported basis and +56.6% like-for-like. This sustained growth illustrates the success of OVHcloud’s expansion strategy in these two regions.

Adjusted EBITDA of €153 million, up 11.0% giving a margin of 40.1%

(millions of euros)

 

First half-year
2021

 

First half-year
2022

 

Change (%)

 

Change (%)
like-for-like

Private Cloud

 

82

 

76

 

(6.3%)

 

(6.4%)

Public Cloud

 

25

 

26

 

6.1%

 

6.8%

Web Cloud & Other

 

29

 

25

 

(11.9%)

 

(10.8%)

Total Current EBITDA

 

135

 

128

 

(5.2%)

 

(4.8%)

Private Cloud

 

83

 

92

 

10.2%

 

9.8%

Public Cloud

 

25

 

30

 

19.9%

 

20.3%

Web Cloud & Others

 

29

 

31

 

5.6%

 

6.7%

Total Adjusted EBITDA

 

138

 

153

 

11.0%

 

11.1%

Current EBITDA for the first half of FY22 was €128 million, while adjusted EBITDA4, the Group’s primary alternative performance indicator, came to €153 million, up 11.1% like-for-like, giving an adjusted EBITDA margin of 40.1%.

Operating income

The Group posted an operating loss of €21 million for first half of 2022, compared to operating income of €20 million for the first half of 2021. The impact of the IPO, recent acquisition earn-outs and the Strasbourg fire amounted to €41 million in the first half of FY22, including €21 million share-based payments, €8 million IPO fees, €4 million earn-out payment, €3 million from Strasbourg incident-related commercial gestures, €3 million accelerated depreciation of damaged servers in Strasbourg and €2 million from insurance premium.

Net income

OVHcloud recorded a net loss of €26 million, compared to a net loss of €7 million in H1 FY21, also reflecting the above impacts.

Cash flow

(millions of euros)

 

First half-year
2021

 

First half-year
2022

Cash flow from operations

 

137

 

127

Change in operating working capital requirement

 

0

 

26

Tax paid

 

(2)

 

(7)

Net cash flows from operating activities

 

135

 

146

Recurring Capex5

 

(70)

 

(69)

Growth Capex6

 

(86)

 

(156)

M&A and other

 

0

 

0

Net cash flows used in investing activities

 

(157)

 

(226)

Net cash flows from financing activities

 

(43)

 

124

Cash flow from operations totalled €127 million in H1 FY22 compared to €137 million in H1 FY21.

Cash flows from operating activities totalled €146 million in the first half of 2022. Change in working capital includes the vendor-related impact of components build-up early in the semester as a precaution, a one-off €58 million lump-sum insurance payment received in September 2021 for damage caused by the Strasbourg fire, plus €6 million in charges related to share-based payments.

Capital expenditure (purchases of property, plant and equipment and intangible assets net of disposals) amounted to €226 million in the first half of 2022, compared to €157 million the previous year. Those amounts include:

  • €69 million in recurring capex, representing 18% of H1 FY22 revenue;
  • €156 million in growth capex, representing 41% of H1 FY22 revenue. The increase versus H1 FY21 is mainly due to the acquisition of additional IPv4 addresses (€17 million) and to the build-up of additional precautionary components inventories7 to offset possible shortages.

Net debt and leverage

As of February 28, 2022, OVHcloud net financial debt stood at €446 million, including €46 million in IFRS 16 lease liabilities. The ratio of net financial debt to adjusted LTM8 EBITDA was 1.46x.

Following the successful IPO and the related capital increase in October 2021, the Group posted shareholders’ equity of €458 million as of February 28, 2022, bringing gearing down at 1.0x.

On September 24, 2021, OVHcloud entered into a new debt facility agreement with a pool of banks for a €920 million unsecured refinancing package. The facilities include a €500 million term loan and a €420 million revolving credit facility.

The €500 million term loan was used to repay in full the amounts outstanding under the pre-existing Senior Facilities Agreement (term loan and revolving credit facility) and the remaining Euro Private Placement (Euro PP) bonds on October 25, 2021. As of today, the new RCF is undrawn.

OUTLOOK

The first half-year demonstrates the Group’s ability to implement its strategic plan and confirms its growth acceleration trajectory.

FY22 outlook

On the basis of the growth recorded in the first half-year and sustained commercial momentum, OVHcloud is raising its revenue growth target and now anticipates growth between 15% and 17%, compared to the range of 12.5 to 15% reported in the first quarter.

The Group is maintaining its other targets, namely:

  • adjusted EBITDA margin9 of around 40%
  • recurring capex between 16% and 20% of revenue and growth capex between 30% and 34%10 of revenue

These objectives assume minimal revenue in Ukraine, Russia and Belarus in the second half of FY22.

Q3 current trading is consistent with FY22 annual guidance.

Medium-term outlook confirmed

The Group reiterates its medium-term financial guidance and aims to achieve the following by 2025:

  • organic revenue growth accelerating toward mid-twenties by FY25 driven by a shift in business mix, the deployment of the “Move to PaaS” strategy, international expansion, the market shift to hybrid- and multi-cloud and the focus on data sovereignty
  • adjusted EBITDA margin in line with FY20 by partly reinvesting economies of scale savings mainly achieved through better absorption of fixed costs over the period
  • similarly, growth capital expenditure as a percentage of revenue is expected to remain between 30% and 34%, while recurring capital expenditure as a percentage of revenue should decrease to 14-16% in line with productivity improvements

**************

On April 13, 2022, the OVHcloud Board of Directors reviewed and approved the Group consolidated financial statements for the six months ended February 28, 2022. Audit procedures are completed, and audit reports are available in the half-year financial report. The consolidated financial statements may be viewed on the corporate.ovhcloud.com website in the Investor Relations section.

CALENDAR

June 30, 2022: third-quarter FY22 revenue

About OVHcloud

OVHcloud is a global player and Europe’s leading cloud provider operating over 400,000 servers within 33 data centres across four continents. For over 20 years, the Group has relied on an integrated model that provides complete control of its value chain: from the design of its servers, to the construction and management of its data centres, including the orchestration of its fibre-optic network. This unique approach allows it to independently cover all the uses of its 1.6 million customers in more than 140 countries. OVHcloud now offers latest generation solutions combining performance, price predictability and total sovereignty over their data to support their growth in complete freedom.

DISCLAIMERS

This press release contains forward-looking statements that involve risks and uncertainties, including references, concerning the Group’s expected growth and profitability in the future which may significantly impact the expected performance indicated in the forward-looking statements. These risks and uncertainties are linked to factors out of the control of the Company and not precisely estimated, such as market conditions or competitors’ behaviours. Any forward-looking statements made in this press release are statements about OVHcloud’s beliefs and expectations and should be evaluated as such.

Forward-looking statements include statements that may relate to OVHcloud’s plans, objectives, strategies, goals, future events, future revenues or performance, and other information that is not historical information. Actual events or results may differ from those described in this press release due to a number of risks and uncertainties that are described within the 2021 Universal Registration Document, filed with the French Financial Markets Authority (Autorité des marchés financiers – AMF) on December 16, 2021 under the number R.21-067.

All amounts are presented in € million without decimal. This may in certain circumstances lead to non-material differences between the sum of the figures and the subtotals that appear in the tables. OVHcloud does not undertake, and specifically disclaims, any obligation or responsibility to update or amend any of the information above except as otherwise required by law.

This press release is disseminated for information purposes only and does not constitute an offer to purchase or sell, or a solicitation of an offer to sell or to purchase, any securities.

APPENDIX

Glossary

Like-for-like is calculated at constant exchange rates, constant perimeter and excluding Strasbourg direct impacts. Perimeter adjustments correspond to M&A.

The net revenue retention rate for any period is equal to the percentage calculated by dividing (i) the revenue generated in such period from customers that were present during the same period of the previous year, by (ii) the revenue generated from all customers in that previous year period. When the revenue retention rate exceeds 100%, it means that revenues from the relevant customers increased from the relevant period in the previous year to the same period in the current year, in excess of the revenue lost due to churn.

ARPAC (Average revenues per active customer) represents the revenues recorded in a given period from a given customer group, divided by the average number of customers from that group in that period (the average number of customers is determined on the same basis as in determining net customer acquisitions). ARPAC increases as customers in a given group spend more on OVHcloud services. It can also increase due to a change in mix, as an increase (or decrease) in the proportion of high-spending customers would increase (or decrease) ARPAC, irrespective of whether total revenues from the relevant customer group increase.

Current EBITDA is equal to revenues less the sum of personnel costs and other operating expenses (and excluding depreciation and amortisation charges, as well as items that are classified as “other non-current operating income and expenses”).

Adjusted EBITDA is equal to current EBITDA excluding share-based compensation and expenses resulting from the payment of earn-outs from its adjusted EBITDA.

Recurring Capital Expenditures (Capex) reflects the capital expenditures needed to maintain the revenues generated during a given period for the following period.

Growth Capital Expenditures (Capex) represents all capital expenditures other than recurring capital expenditures.

Revenue by Segment and Geography

In € million – by segment

 

Q1 FY21

 

Q2 FY21

 

H1 FY21

 

Q1 FY22

 

Q2 FY22

 

H1 FY22

Private Cloud

 

98.8

 

102.0

 

200.8

 

113.3

 

119.3

 

232.6

Public Cloud

 

23.2

 

24.7

 

47.9

 

29.0

 

30.6

 

59.6

Web Cloud & Other

 

42.3

 

43.3

 

85.6

 

44.9

 

44.9

 

89.8

Total Revenue

 

164.3

 

170.0

 

334.3

 

187.2

 

194.8

 

382.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth by segment (%)

 

Q1 FY22
like-for-like

 

Q2 FY22
like-for-like

 

H1 FY22
like-for-like

 

Q1 FY22
reported

 

Q2 FY22
reported

 

H1 FY22
reported

Private Cloud

 

+14.3%

 

+15.0%

 

+14.7%

 

+14.6%

 

+17.0%

 

+15.8%

Public Cloud

 

+22.4%

 

+20.0%

 

+21.0%

 

+24.9%

 

+23.9%

 

+24.4%

Web Cloud & Other

 

+6.6%

 

+3.9%

 

+5.3%

 

+6.1%

 

+3.6%

 

+4.9%

Total Revenue

 

+13.5%

 

+13.0%

 

+13.3%

 

+13.9%

 

+14.6%

 

+14.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

In € million – by geography

 

Q1 FY21

 

Q2 FY21

 

H1 FY21

 

Q1 FY22

 

Q2 FY22

 

H1 FY22

France

 

86.8

 

89.3

 

176.0

 

93.2

 

96.6

 

189.8

Europe (excluding France)

 

47.8

 

50.2

 

98.0

 

53.5

 

55.9

 

109.4

Rest of the world

 

29.7

 

30.6

 

60.3

 

40.5

 

42.3

 

82.8

Total Revenue

 

164.3

 

170.0

 

334.3

 

187.2

 

194.8

 

382.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Growth by geography (%)

 

Q1 FY22
like-for-like

 

Q2 FY22
like-for-like

 

H1 FY22
like-for-like

 

Q1 FY22
reported

 

Q2 FY22
reported

 

H1 FY22
reported

France

 

+8.7%

 

+8.8%

 

+8.8%

 

+7.4%

 

+8.3%

 

+7.9%

Europe (excluding France)

 

+12.7%

 

+10.7%

 

+11.6%

 

+11.9%

 

+11.3%

 

+11.6%

Rest of the world

 

+28.2%

 

+27.7%

 

+27.9%

 

+36.2%

 

+38.5%

 

+37.4%

Total Revenue

 

+13.5%

 

+13.0%

 

+13.3%

 

+13.9%

 

+14.6%

 

+14.3%

Reconciliation of like-for-like and reported growth

In € million – by segments

 

H1 2021
reported

 

Exchange rate
impacts

 

Impacts of
perimeter

 

H1 2021
like-for-like

Private Cloud

 

201

 

3

 

0

 

204

Public Cloud

 

48

 

0

 

2

 

50

Web Cloud & Other

 

86

 

0

 

0

 

86

Total Revenue

 

334

 

4

 

2

 

340

Private Cloud

 

82

 

2

 

0

 

83

Public Cloud

 

25

 

0

 

0

 

26

Web Cloud & Other

 

29

 

0

 

0

 

29

Total Current EBITDA

 

135

 

2

 

0

 

138

Private Cloud

 

83

 

2

 

0

 

85

Public Cloud

 

25

 

0

 

0

 

26

Web Cloud & Other

 

29

 

0

 

0

 

29

Total Adjusted EBITDA

 

138

 

2

 

0

 

141

 

 

 

 

 

 

 

 

In € million – by segments

 

H1 2022
reported

 

Impacts of
perimeter

 

Strasbourg
impacts

 

H1 2022
like-for-like

Private Cloud

 

233

 

0

 

2

 

234

Public Cloud

 

60

 

0

 

1

 

61

Web Cloud & Other

 

90

 

0

 

0

 

90

Total Revenue

 

382

 

0

 

3

 

385

Private Cloud

 

76

 

0

 

2

 

78

Public Cloud

 

26

 

0

 

1

 

27

Web Cloud & Other

 

25

 

0

 

0

 

26

Total Current EBITDA

 

128

 

0

 

3

 

131

Private Cloud

 

92

 

0

 

2

 

93

Public Cloud

 

30

 

0

 

1

 

31

Web Cloud & Other

 

31

 

0

 

0

 

31

Total Adjusted EBITDA

 

153

 

0

 

3

 

156

In € million – by geographies

 

H1 2021
reported

 

Exchange rate
impacts

 

Impacts of
perimeter

 

H1 2021
like-for-like

France

 

176

 

0

 

0

 

176

Europe (excluding France)

 

98

 

1

 

0

 

99

Rest of the world

 

60

 

3

 

2

 

65

Total Revenue

 

334

 

4

 

2

 

340

 

 

 

 

 

 

 

 

In € million – by geographies

 

H1 2022
reported

 

Impacts of
perimeter

 

Strasbourg
impacts

 

H1 2022
like-for-like

France

 

190

 

0

 

2

 

191

Europe (excluding France)

 

109

 

0

 

1

 

110

Rest of the world

 

83

 

0

 

0

 

83

Total Revenue

 

382

 

0

 

3

 

385

Consolidated statement of income

Object omitted.

(1) The current EBITDA indicator corresponds to operating income before depreciation, amortisation and other non-current operating income and expenses.

Reconciliation between Current EBITDA and Adjusted EBITDA

Object omitted.

Consolidated statement of financial position

Object omitted.

Consolidated statement of cash flows

Object omitted.

_____________________
1 Like-for-like (LFL): at constant FX, constant perimeter and excluding direct impacts related to the Strasbourg incident vs FY2021.
2 Adjusted EBITDA is equal to current EBITDA excluding share-based compensation and expenses arising from earn-out payments.
3 Like-for-like (LFL): at constant FX, constant scope of consolidation and excluding direct impacts related to the Strasbourg incident vs FY2021.
4 Adjusted EBITDA is equal to current EBITDA excluding share-based compensation and expenses arising from earn-out payments.
5 Recurring Capital Expenditures (Capex) reflects the capital expenditures needed to maintain the revenues generated during a given period for the following period.
6 Growth Capital Expenditures (Capex) represents all capital expenditures other than recurring capital expenditures.
7 Components intended for the installation in servers that the Group builds are recorded as fixed assets in progress, in accordance with IFRS.
8 Last Twelve Months: adjusted EBITDA over the past 12 consecutive months
9 Adjusted EBITDA is equal to current EBITDA excluding share-based compensation and expenses arising from earn-out payments.
10 Excluding the acquisition of additional IPv4 addresses.

Contacts

Media relations
Marie Vaillaud
Communications and PR Manager
media@ovhcloud.com
+33 (0)6 49 32 74 02

Investor relations
Marisa Baldo
Head of Financial Communications
investor.relations@ovhcloud.com
+33 (0)6 62 75 63 04

Contacts

Media relations
Marie Vaillaud
Communications and PR Manager
media@ovhcloud.com
+33 (0)6 49 32 74 02

Investor relations
Marisa Baldo
Head of Financial Communications
investor.relations@ovhcloud.com
+33 (0)6 62 75 63 04