OVH Groupe S.A.

OVHcloud reported H1 FY26 revenue of EUR 555 million, EBITDA of EUR 227 million, adjusted EBITDA margin of 40.9%, and unlevered free cash flow of EUR 32.3 million. Revenue grew 5.5% like-for-like; management also said adjusted EBITDA margin was up 90 basis points versus H1 FY25. By segment, private cloud grew 3.4% like-for-like in H1, public cloud grew 15.1%, and Web Cloud grew 2.4%. EBIT was EUR 35.4 million, net profit EUR 5.9 million, and net debt was EUR 1.125 billion with leverage at 2.6x EBITDA. Full-year FY26 guidance was reaffirmed for like-for-like revenue growth of 5% to 7%, adjusted EBITDA margin above FY25, adjusted CapEx of 33% to 35% of revenue, and positive levered free cash flow.

Octave Klaba sounded constructive and agenda-driven, framing H1 as proof that OVHcloud’s strategy is working while emphasizing there is still more to do on customer acquisition and product execution. He highlighted three strategic pushes: building a defense vertical, increasing focus on acquiring Starters and Scalers, and launching AI labs through the Dragon LLM acquisition. He also said the company is actively reshaping Web Cloud pricing and offers, and expects the new approach to show results later in the fiscal year.

Stephanie Besnier focused on profitability, cash generation, and the supply-chain-driven CapEx shift. She said adjusted EBITDA margin improved to 40.9%, up 90 bps, helped by mix, lower electricity costs, and operating leverage, while unlevered free cash flow was EUR 32.3 million despite CapEx at roughly 43% of revenue. She explained that the CapEx increase was driven by a deliberate hardware build, including EUR 187 million of hardware CapEx, and that full-year CapEx guidance moved from 30%-32% to 33%-35% because of memory and disk inflation. She also noted net debt of EUR 1.125 billion, liquidity of EUR 236 million, all-in debt cost of 4.4%, and no major debt repayment before FY30.

Analysts pressed on whether higher recurring CapEx, beyond hardware, reflected inflation and on how much price increases could offset the component cost spike. Management said recurring CapEx rose partly because inflation started to hit in Q2, and that price increases began April 1 but were targeted to new configurations, new customers, and lower-elasticity products; they said it was too early to quantify the impact and reaffirmed FY26 guidance. Questions also focused on the levered free cash flow outlook and whether the EUR 50 million of locked-in stock for FY27 was included; management said the stock build and an offsetting exceptional financing facility are both included and netted out, leaving FY26 levered free cash flow positive. On AI, management said the current contribution is still small, around 1 point, but it is seeing better GPU economics and is ready to invest more materially.