OVHcloud
Recurring subscription/usage cloud infrastructure; vertically integrated (designs and assembles own servers, owns ~40 datacenters, custom water-cooling) to undercut hyperscaler unit costs; three segments: Private Cloud, Public Cloud, Web Cloud & Other
Earnings, margins, COGS & capex
FY2025 was an inflection year: revenue crossed EUR 1bn (+9.3% LFL), adjusted EBITDA margin expanded ~2pts to 40.4% (EUR 437.8m), net income turned positive at EUR 0.4m, and unlevered FCF nearly doubled to EUR 57.6m. H1 FY2026 pushed EBITDA margin to a post-IPO record 40.9%, but revenue growth is decelerating to mid-single-digits and the business remains highly capital-intensive with 2.7x net leverage. The bottom line is razor-thin despite strong EBITDA because of ~33% capex and rising D&A. Founder Octave Klaba was reappointed Chairman & CEO in Oct 2025, reuniting the roles and launching a 'Step Ahead' 2026-2030 strategic plan.
Income statement — where each revenue dollar goes
% of revenueOf every $1 of revenue, ~60¢ is cost of goods and ~40¢ operating expense, leaving ~0¢ of operating profit (~0¢ net).
Revenue trend
Margins
up ~2.0pts YoY
record since IPO
returned to profit from FY2024 loss of EUR 10.3m
up EUR 32.5m YoY (nearly doubled)
COGS structure
Not broken out as a standalone gross-profit line. Cost base is dominated by depreciation of self-built servers and owned datacenters, energy/electricity for cooling and power, hardware components (CPUs, GPUs, memory, storage), datacenter lease/property, and third-party software licensing (notably VMware/Broadcom for the Private Cloud segment). Vertical integration (in-house server assembly in Croix, France; custom water-cooling) is the structural lever that keeps unit costs below hyperscaler resale economics.
Capex
EUR 361.4m ex-acquisitions in FY2025 (33.3% of revenue), split EUR 128.9m recurring (11.9%) and EUR 232.5m growth (21.4%); FY2026 guided to 30-32% of revenue. Growth capex funds new datacenter capacity, GPU/AI compute, and geographic expansion (US, APAC). High and sustained capex is the core reason free cash flow lags EBITDA sharply.
Latest earnings
In line with guidance; EBITDA margin ahead at a post-IPO record 40.9%, revenue growth in the mid-single-digit guided band; cash flow pressured by capex
FY2026: LFL revenue growth +5-7%; adjusted EBITDA margin above FY2025 (40.4%); capex 30-32% of revenue; positive levered free cash flow
- H1 FY26 revenue
- EUR 555.3m (+5.5% LFL)
- H1 FY26 adj. EBITDA
- EUR 227.2m (40.9% margin)
- H1 FY26 Public Cloud
- EUR 118.6m (+15.1% LFL)
- H1 FY26 Private Cloud
- EUR 336.6m (+3.4% LFL)
- H1 FY26 Web Cloud & Other
- EUR 100.1m (+2.4% LFL)
- H1 FY26 unlevered FCF
- EUR 32.3m
- Net revenue retention
- ~104% LFL
Growth drivers
- Public Cloud (IaaS/PaaS) the fastest segment (EUR 219.2m FY2025, +17.5% LFL; the IaaS/PaaS sub-line crossed EUR 100m) — mix shift toward higher-value products
- European data-sovereignty demand (SecNumCloud, non-US-CLOUD-Act positioning) — inbound from defense ministries and public sector
- Cloud repatriation / de-risking from US hyperscalers driving bare-metal and private-cloud wins (e.g. Alchemy Web3 infrastructure scaled on OVHcloud Advance Bare Metal)
- US and APAC geographic expansion — US revenue surpassed EUR 100m; Corporate segment exceeded EUR 200m
- AI/GPU compute build-out and net revenue retention at ~104% LFL
Bull & bear
A structurally advantaged, cash-generative European sovereign-cloud champion at a low valuation, re-rating as sovereignty demand, margin expansion, and a free-cash-flow inflection all land at once.
- Sovereignty is becoming a purchasing requirement, not a preference — EU regulation (NIS2/DORA), geopolitical de-risking from US vendors, and direct defense-ministry engagement create durable, price-insensitive demand OVHcloud is uniquely certified for
- Vertical integration underpins a 40%+ EBITDA margin at just ~EUR 1bn revenue and expanding — operating leverage as revenue scales
- Free-cash-flow inflection: unlevered FCF nearly doubled to EUR 57.6m and FY26 is guided to positive levered FCF, the point where the leverage story flips from risk to de-risking
- Public Cloud growing 15%+ and cloud repatriation plus VMware-refugee workloads (Alchemy on Advance Bare Metal) validate the bare-metal/private demand
- Cheap: ~3x EV/sales and ~8x EV/EBITDA versus hyperscaler and European-SaaS multiples, with the stock still below its IPO price — asymmetric if the sovereignty re-rating happens
A capital-intensive, leveraged, sub-scale regional player whose growth is decelerating and whose core segment is squeezed — a value trap kept cheap by founder control and structural disadvantage against hyperscalers.
- Scale is destiny in cloud: ~EUR 1.1bn revenue and ~EUR 360m capex cannot match hyperscalers spending >$80bn/yr — OVHcloud is structurally locked out of frontier AI infrastructure
- Growth is decelerating (FY26 guide +5-7% LFL vs +9.3% LFL in FY25) while capex stays at ~33% of revenue, leaving net income at a token EUR 0.4m
- EUR 1.1bn net debt at 2.7x leverage in a higher-rate world constrains flexibility; levered FCF is only just turning positive
- Private Cloud (62% of revenue) grew only 3.4% LFL in H1 FY26 and is exposed to Broadcom/VMware licensing inflation eroding its margin
- Founder Klaba family owns ~81% of capital / ~82% of voting rights with only ~17% free float — minority holders have little influence, liquidity is thin, past family share placements have pressured the stock, and it has never recovered its EUR 18.50 IPO price
- Hyperscalers' own EU sovereign-cloud offerings directly erode the one differentiator the bull case rests on
What it is worth
EV/sales and EV/EBITDA relative, cross-checked against the sovereignty/FCF-inflection narrative. Market cap ~EUR 2.4bn (~$2.8bn) + net debt ~EUR 1.1bn ~ EUR 3.5bn EV -> ~3.2x FY25 EV/sales and ~8.0x EV/EBITDA — a steep discount to hyperscaler and European-SaaS multiples, reflecting sub-scale growth, capital intensity, leverage, and a founder-control/liquidity discount.
Growth stalls toward low-single-digits, VMware/Broadcom cost squeeze and energy/rate pressure compress FCF, sovereignty premium erodes as hyperscalers ship EU sovereign regions -> roughly EUR 10-12/share
Mid-single-digit growth, stable ~40-41% EBITDA margin, gradually improving FCF; multiple holds ~8x EV/EBITDA -> roughly EUR 15-18/share, near current levels
Sovereignty demand accelerates, EBITDA margin pushes toward mid-40s, levered FCF turns solidly positive, and the market re-rates to ~10-12x EV/EBITDA -> roughly EUR 20-24/share
Cheap on EBITDA but the discount is earned: mid-single-digit growth, ~33% capex, and 2.7x leverage keep net income and levered FCF thin. Re-rating hinges on sovereignty demand compounding and levered FCF turning durably positive.
SWOT
Strengths
- Vertical integration (own server assembly, owned datacenters, proprietary water-cooling) gives a genuine unit-cost advantage over hyperscaler resale — enables 40%+ EBITDA margin at only ~EUR 1bn revenue
- Clear European data-sovereignty positioning (SecNumCloud certification, immune to US CLOUD Act) — a structural differentiator hyperscalers cannot fully replicate
- Leading independent European cloud/bare-metal provider with ~40 datacenters and a large SMB/developer installed base; net retention ~104%
- Margin and FCF inflection — EBITDA margin expanding, unlevered FCF nearly doubled, FY26 guided to positive levered FCF
Weaknesses
- Sub-scale vs hyperscalers — ~EUR 1.1bn revenue against AWS/Azure/GCP that each run tens of billions and spend >$80bn/yr on capex; cannot compete on AI-scale infrastructure
- Very high capital intensity (~33% of revenue) plus EUR 1.1bn net debt (2.7x leverage) leaves razor-thin bottom line (EUR 0.4m net income)
- Private Cloud (~62% of revenue) is exposed to VMware/Broadcom licensing cost inflation
- Founder-controlled with only ~17% free float — low liquidity, weak minority influence, and a stock still below its 2021 IPO price
Opportunities
- EU digital-sovereignty and defense/government demand accelerating (multiple European defense ministries engaged; GAIA-X, NIS2, DORA tailwinds)
- VMware/Broadcom price shock pushing enterprises to seek alternatives — OVHcloud can capture both VMware-migrating and VMware-alternative workloads
- Cloud repatriation trend favoring predictable-cost, bare-metal and private infrastructure
- US/APAC expansion and higher-value Public Cloud/PaaS mix shift lifting blended margins
Threats
- Hyperscalers building EU sovereign regions (AWS European Sovereign Cloud, Microsoft, Google) directly attacking OVHcloud's core differentiator
- AI/GPU compute arms race dominated by players with vastly larger capex budgets
- European energy-cost volatility hitting datacenter operating costs
- Broadcom licensing terms squeezing the largest segment — rising rates increasing the cost of its leveraged balance sheet
Moats, dependencies & bottlenecks
Moats
In-house server design and assembly, owned datacenters, and proprietary water-cooling yield a real unit-cost edge and a 40%+ EBITDA margin at modest scale — hard for a reseller-model rival to copy
Strong but contestable SecNumCloud certification and CLOUD-Act immunity are a genuine differentiator, but hyperscalers are building EU sovereign regions to neutralize it
Long-standing brand and installed base among European SMBs and developers; switching friction is real but the segment is commoditizing
Weak (regional only) Meaningful within Europe but negligible globally against hyperscalers whose capex dwarfs OVHcloud's entire revenue
Dependencies
Software/licensing supplier Hosted Private Cloud (largest segment) depends on VMware licensing; Broadcom's post-acquisition price hikes threaten segment margins and cost predictability
Hardware/silicon supplier CPUs/GPUs for self-assembled servers; GPU allocation constrains AI compute ambitions and pricing
Datacenter power and cooling are a major cost; European energy-price volatility hits margins directly
Regulatory tailwind Demand thesis leans on NIS2/DORA/SecNumCloud and geopolitical de-risking; a policy or political reversal would blunt the core growth driver
~81% ownership / ~82% voting; founder Octave Klaba reappointed Chairman & CEO in Oct 2025 (roles reunited, ending Benjamin Revcolevschi's term); family share placements have historically pressured the stock, and minority governance rights are limited
Advantages
- Lowest-cost independent structure via vertical integration — margin resilience competitors lack
- Certified sovereign-cloud credentials at a time sovereignty is becoming mandatory in EU public/regulated sectors
- Predictable, flat-rate bare-metal pricing attractive for cloud-repatriation and cost-conscious workloads
- Profitable and free-cash-flow-positive (unlevered) — unusual among sub-scale cloud challengers
- Full-stack ownership (network, datacenter, hardware, software) enabling data-residency guarantees
Weaknesses
- Structurally sub-scale against AWS/Azure/GCP; cannot win the AI-infrastructure race
- Decelerating revenue growth into the mid-single-digits
- High capital intensity and leveraged balance sheet producing near-zero net income
- Largest segment (Private Cloud) is low-growth and VMware-cost-exposed
- Governance/liquidity overhang from ~81% family ownership; stock below IPO price since 2021
Bottlenecks
- Capex ceiling — ~33% of revenue spend still cannot fund frontier AI-scale infrastructure, capping the addressable high-growth GPU-cloud market
- Balance sheet — 2.7x net leverage and EUR 1.1bn net debt limit how fast it can invest without diluting or stretching credit
- VMware/Broadcom cost pass-through in the largest, slowest-growing segment
- Thin free float and founder control depress liquidity, index weight, and the investor base
- Geographic concentration in Europe limits TAM versus globally-distributed hyperscalers
Top signals & trends
Top signals
Mix shift toward higher-value, stickier products
Operating leverage and cost discipline landing
Sovereignty and repatriation demand converting to signed business
Growth decelerating even as margins improve
Capital intensity and leverage cap the bottom line
Founder re-engagement and clearer strategy, but further consolidates control and reduces board independence
mildly bullish · Improved liquidity/visibility, though free float stays thin
Trends
Regulation (NIS2, DORA) and geopolitics push regulated and public-sector workloads toward certified European providers — OVHcloud's core thesis
Enterprises pulling predictable workloads off hyperscalers favor flat-rate bare-metal/private, OVHcloud's strength
Raises OVHcloud's Private Cloud costs but also drives VMware-refugee enterprises to seek alternatives it can host
Expands TAM but is dominated by hyperscaler capex OVHcloud cannot match; niche GPU/sovereign-AI plays only
Power is a major cost line; its water-cooling efficiency is a partial hedge
Ecosystem & competitor graph
Suppliers feed the company; customers pull from it. Line thickness shows the strength of each tie (supply-chain dependency, customer earnings contribution). Hover to isolate a tie.
Server CPUs for self-assembled machines
EPYC CPUs and GPUs for compute and AI instances
GPUs for AI/ML and GPU-cloud offerings; allocation is a constraint
VMware virtualization licensing underpinning Hosted Private Cloud — a critical and rising-cost dependency
DRAM and NAND memory/storage components
Core installed base for web hosting, bare-metal, and public cloud
Sovereignty-driven demand; multiple defense ministries engaged
Web3 infrastructure firm — scaled its global multi-chain platform on OVHcloud Advance Bare Metal (reported ~50% cost cut, lower latency)
NIS2/DORA/data-residency-driven private and sovereign cloud buyers
Dominant global hyperscaler; launching AWS European Sovereign Cloud to attack OVHcloud's differentiator
#2 hyperscaler with deep enterprise/EU government relationships and sovereign-cloud initiatives
Fast-growing hyperscaler; partnering with European players on sovereignty
Aggressive IaaS pricing and EU sovereign regions; enterprise install base
Hybrid/regulated-industry cloud and Red Hat; overlaps in European enterprise
Developer/SMB cloud — direct overlap in OVHcloud's SMB and Public Cloud base
Linode/edge compute competes for developer and alternative-cloud workloads
Private German bare-metal/hosting rival — closest European cost competitor
Private French sovereign-cloud rival competing on the same sovereignty pitch
German sovereign-cloud provider (incl. Google/Schwarz partnerships) targeting the same regulated demand