OVH Groupe (OVHFF) (FY 2024) Earnings Call Highlights: Strong Revenue Growth and Strategic ...

GuruFocus News
4 min read

In This Article:

  • Revenue: EUR993 million in FY24, with a like-for-like growth of 10.3%.

  • Adjusted EBITDA: EUR381 million, representing a margin of 38.4%.

  • Unlevered Free Cash Flow: EUR25 million in FY24.

  • Net Revenue Retention Rate: 107%.

  • Private Cloud Revenue: EUR624 million, up 11.8% like-for-like.

  • Public Cloud Revenue: EUR183 million, up 14.2% like-for-like.

  • Web Cloud & Others Revenue: EUR187 million, up 2.1% like-for-like.

  • CapEx: EUR343 million, representing 35% of sales.

  • Leverage: 1.8 times as of August '24.

  • Share Buyback Offer: EUR350 million at EUR9 per share.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • OVH Groupe (OVHFF) delivered solid FY24 results with revenue reaching EUR993 million, exceeding their target with a 10.3% like-for-like growth.

  • The company achieved an adjusted EBITDA margin of 38.4%, surpassing their goal of above 37%.

  • OVH Groupe (OVHFF) generated a strong unlevered free cash flow of EUR25 million, showing significant improvement from the previous year.

  • The company maintained a high net revenue retention rate of 107%, indicating strong customer loyalty.

  • OVH Groupe (OVHFF) plans to offer a public share buyback of EUR350 million, providing shareholders an opportunity to monetize their investment.

Negative Points

  • The macroeconomic environment in Europe remains challenging, impacting growth and leading to contract renegotiations.

  • The ARPAC growth in the public cloud segment was weaker than expected due to delayed projects and optimized workloads by customers.

  • The company is focusing more on margin improvement and cash generation rather than aggressive sales growth, which may limit expansion in a competitive sector.

  • OVH Groupe (OVHFF) has a current data center utilization rate above 60%, indicating underutilized capacity.

  • The share buyback offer price of EUR9 per share, while offering a premium, may not fully satisfy all shareholders given recent share price fluctuations.

Q & A Highlights

Q: Why has OVHcloud decided to focus more on margins and cash generation instead of sales growth? Is this strategy premature given the company's size in a competitive sector? A: Benjamin Revcolevschi, CEO, explained that OVHcloud has been investing significantly over the past decade, and the current macro environment is challenging. The strategy to focus on cash generation and margin improvement is to ensure long-term sustainability and profitability. The company aims to leverage its leadership in private cloud and domains while maintaining a conservative approach to growth, which is aligned with market position and capabilities.

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