OVHcloud: Record Margin Since IPO, But Free Cash Flow Contracts
OVHcloud confirmed an adjusted EBITDA margin increase to 40.9% in the first half of 2026, the highest level since its IPO, supported by an organic growth of 5.5%. However, the company has heavily anticipated its investments in components to secure supplies against inflation, raising its investment expenditures to 42.9% of its revenue and compressing its free cash flow generation to 32.3 million euros.
Financial Performance in the First Half of 2026
In the first half of the fiscal year 2026, OVHcloud recorded a revenue of 555.3 million euros, up by 5.5% on a like-for-like basis. The adjusted EBITDA reached 227.2 million euros, reflecting a margin of 40.9%, the highest level since the company's IPO. This margin increase is attributed to increasing operational leverage and direct cost control, according to the group. Revenue growth remains primarily driven by the public cloud, which expanded by 15.1% on a like-for-like basis and accounts for 21.4% of the total. The private cloud, dominating at 60.6% of revenue, showed a growth of 3.4%. The net revenue retention rate reached 104%, indicating that existing customer consumption has increased beyond customer losses. The operating profit (EBIT) stood at 35.4 million euros, with a margin of 6.4%, remaining broadly stable. The net result amounted to 5.9 million euros after a financial impact of 28.7 million euros.
Strategic Anticipation of Investment Compresses Cash Flow
Despite the increase in operational margin, the free-flow cash generation was compressed by a strategic anticipation of hardware investments. The group proactively advanced capital expenditures to secure supplies against the exceptional inflation of memory and disk components. The capex amounted to 238.5 million euros for the semester, representing 42.9% of the revenue, a significant increase compared to previous years. This acceleration of investments resulted in an Unlevered Free Cash-Flow of only 32.3 million euros. However, the group realized approximately 10 million euros in savings through this anticipation, partially offsetting the inflationary impact. Additionally, OVHcloud has built up an additional stock of 50 million euros in components with no risk of obsolescence, intended for consumption in 2027, financed by a dedicated exceptional financing mechanism included in the Levered Free Cash-Flow.
Adjusted Capex Guidance for 2026 and Strategic Initiatives
OVHcloud has revised its adjusted capex guidance for the fiscal year 2026 to 33-35% of revenue, up from 30-32% previously. This revision reflects the impact of the exceptional component inflation, estimated at about 3 percentage points. The group remains confident about its core objective: a positive Levered Free Cash-Flow in 2026. The net financial debt stood at 1,125 million euros as of February 28, 2026, compared to 1,103 million euros at the end of August 2025, with a debt leverage of 2.6x, down by 10 basis points. OVHcloud has 236 million euros in available liquidity. Concurrently, the group has initiated its transformation plan with three initiatives: the creation of a Defense vertical aimed at supporting the transformation of European ministries, refocusing the sales force on acquiring entry-level and mid-size contract customers, and launching an AI Lab initiated by the acquisition of Dragon LLM to offer services based on specialized language models.
