OVH Groupe S.A. (OVH) Earnings Call Transcript & Summary

Hello, and welcome to the OVHcloud H1 for year 2023 Results Call. My name is Caroline, and I will be your coordinator for today's event. [Operator Instructions] Please note, this conference is being recorded. Today's speaker will be Michel Paulin, the CEO; and Stephanie Besnier, the CFO. I now hand over to OVH team to begin today's conference. Thank you.

Hello, everyone. Good morning. This is Michel Paulin, the CEO of OVHcloud. Thank you for joining us today for our H1 2023 results. This first semester has been a period of growth acceleration. Our revenue reached EUR 439 million at 15% as reported and 12.8% like-for-like, with the Q2 growing at plus 13.9% after a Q1 at 11.7%. We had a strong growth acceleration. Our H1 adjusted EBITDA reached EUR 156 million, leading to a margin of 35.4%. Higher-than-expected energy costs in Germany and the timing of outsizing of our price increases meant the EBITDA was modestly below our initial expectation. We continue to monitor our investment level with discipline. Our CapEx is lower than last year, with recurring CapEx of 17% of our revenue and gross CapEx of 27% of our revenues. We are pleased to see that revenue accelerated in Q2 with growth reaching 13.9%, up from 11.7% in Q1. So let me give you an update on our guidance for this year. Overall, H1 was encouraging that in March and so far in April, we have seen signs that some clients are taking longer to conclude contracts. We are still confident our offering in quality and price will remain competitive and attractive. Nevertheless, we think it's prudent to temper our full year revenue guidance to take into account this. We now anticipate our full year 2023 revenue growth to be between 13% to 14% like-for-like, and we were previously at 14% to 16%. It's still a very strong growth level and represents an acceleration compared to last year and in H2 over H1. Given the operational gearing of the business, the lower level of revenue growth is impacting EBITDA, where we now look for a full year '23 margin of at least 36%. We had previously looked for 29%. The new target still imply a stronger single half margin with the increase driven by the effect of volume growth, price increases and the front-end loading of costs and, of course, continued strong cost discipline. We expect our CapEx to be in the lower range of our guidance, recurring CapEx between 16% to 20% and growth CapEx between 28% and 32%. We have a clear focus on financial discipline and flexibility. We continue to invest selectively for future growth in new products, new data centers, especially in new infrastructures and remain agile as we were positioned on a fast-growing market long term and remain focused on delivering profitable growth. The next slide is about OVHcloud, which operates in a fast-growing market with an expected 5 years CAGR of more than 20%, as you can see on the left-hand side of this slide. The cloud market is driven by cloud adoption [ph] from all customer segments and it is mission-critical to their operations. Everyone is moving to the cloud. Data usage is growing fast, and we keep seeing new usage, new edits, many new opportunities for growth. Multi cloud and hybrid cloud trends accelerate the momentum, more and more organizations deploy multiple cloud solutions to finally address their digital transformation needs. In this market, as the European cloud leader, we are recognized by IDC as a major player in the cloud industry, and we are ideally positioned to continue to capture opportunity in this fast-growing market. OVHcloud is the European leader in data sovereignty and current regulation evolution is a very strong tailwind for us. The global legal framework is increasing favorable to OVHcloud. In Europe, with the Data Act, European institutions are reinforcing freedom of choice for cloud users. This is even resonating in the U.K. British authorities are determined to ensure fair competition and are currently preparing an investigation on the cloud market practices. We continue to see a strong traction for our sovereign solutions. Our SecNumCloud offering is doubling every quarter. It shows the traction for the highest level of security and trust. Data sovereignty is a strong driver now for business, as shown by our recent wins as [inaudible 0:05:51]and also with Dalets in the media industry for the Olympic games. We are working on several aspects, including the extension of the certification to Public Cloud and Baremetal solutions beyond our current private cloud offering. This extension will be driving business momentum as we also are expanding our existing certification in Germany to also expand in new market opportunities in these locations. OVHcloud's leading position for our sustainable [ph] cloud is recognized by analysts and customers. We are very proud to have reached a score of 71 over 100 at S&P Global Ratings, which is a 5-point improvement compared to 2021. With this ice [ph] core we are above the average of technology companies in no geographies. Also, we are in the top 15% of the software and service companies in 2022 in Sustainalytics ranking with a low-risk ESG profile. These new rankings are a clear confirmation of our leading position. More importantly, our continued work to improve our carbon footprint, energy and water efficiency is driving business momentum that our customers and clients are looking to optimize our environmental footprint. Let me give you a few points regarding our growth acceleration strategy. We had in H1 a continued growth acceleration with a very strong Q2. In Public Cloud, we reached EUR 74 million of revenues in H1 with a like-for-like growth of 18% in Q1 and 22.8% in Q2. In Private Cloud, our revenue reached EUR 273 million in H1, with again, a like-for-like growth of 12.8% in Q1 and 16.6% in Q2. In Web Cloud, our revenue reached EUR 92 million with a like-for-like growth of plus 2.5% in the semester. At group label, our growth accelerated from 11.7% to 13.9% in Q2. This growth acceleration is fueled by our key long-term differentiators, data certainty, sustainability, open and reversible cloud, predictable and transparent pricing, best performance price ratio which are in this period, key competitive advantage. It has been a strong first half, and it's come with both existing customers and new customers wins. Our existing customers show a high level of loyalty, as you can see on the revenue retention rate reaching 111% in Q2. Capitalizing on this high level of trust, we are delighted to register good upselling and cross-selling dynamics within our customer base. In addition, we have seen and continue to see good momentum with new client wins. As you can see on the right-hand side, we continue to win significantly clients this quarter in various sectors such as finance, insurance, media, software editors, marketplace or gaming. And I would like to share with you 3 flagship names that we won this quarter. All 3 of these wins are of the type that have significant medium-term potential. The first one is alliance, where we will host a workload of one other affiliate on the hosted prior cloud. The second is in the health sector with [indiscernible], the public hospital system in France in middle France. This is a very interesting new opportunity. We will build with them a new health data to develop a sovereign health platform is open-source data. It will brand health, large corporate, hospital, clinics, laboratories, public entities or researchers to access to significant amount of health data. It will accelerate their progress on various projects such as AI for instances. Finally, we are very proud to have been selected by Dalet to manage and store the very significant amount of media data that will be generated during the Paris Olympics game of 2024. This will build their infrastructure on our Public Cloud and PaaS offering. All these customers underline how data sovereignty, price performance, product performance of the product and price predictability are important for them. They are the key -- these are key differentiating strengths for OVHcloud and drive strong new business momentum. We have a steady dynamic in our go-to-market performance with a continued strong traction both for the digital and the enterprise channel. The success of our partner program is key for us. We now have more than 1,250 partners worldwide, mostly IT integrators, such as big name, Accenture, Capgemini, Sopra Steria that can integrate to OVHcloud on their own offering. It enables them to offer to their customers, their expertise, coupled with our unique cloud offering. First, it's increased our total addressable market as large corporates can be addressed with our partners. Secondly, in the period where some customers are looking to optimize costs, our strong relationship with partners is a key asset to understand what our customers want and how we can best address their cloud needs in the short and long term. We will continue to increase our work with partners that is clearly successful and very appreciated by existing and future customers. As we know, we started our price increase mid Q2. The customer response has been encouraging. There were no change to our commercial dynamic with continued strong new customerizations and double-digit ARPAC growth among existing customers. We confirm that our value proposal is robust, and our pricing power potential is very strong. We had a very good first half, especially in Public Cloud, where we serve a significant increase in brand awareness. The performance of our product is recognized. We booked 10,000 new customers in Public Cloud in H1 compared to the same period of last year. It also enables us at group level to continue to grow with existing clients, the more they use OVHcloud, the more they understand and proceed the value and performance we can bring them. ARPAC has increased by around 10%. In terms of churn, as the chart shows, dynamic is unchanged and very encouraging. We closely monitor all operation KPIs that we have, and we didn't see any change in our monthly revenue churn compared to historical trend and the price increase rolled out. We have limited monthly volatility with 0.5% maximum of variation between the maximum and the minimum for the more than 2 years. We will continue to strictly monitor these KPIs and to adapt all the time our action plans. We have been developing and improving our PaaS offering for the last 2 years, PaaS enables users to develop easily cloud-based applications. We demand for these, kind of, solutions continue to be very strong. We have now thousands of customers for our different solutions to database as a service, storage or containers. In Q2, PaaS represents 8% of our Public Cloud revenue after a very significant growth since the beginning of the year. We expect our PaaS offering to continue to be a significant growth driver, accelerating and expanding our customer base. Looking at geographies, we are pleased to report double-digit growth in all regions with a growth saturation in Q2. We had a continued double-digit growth in Public and Private Cloud in France. Despite lower growth in Web cloud, as anticipated, we grew at 12.4% like-for-like in Q2 and 12.8% like-for-like in H1. We had a strong growth acceleration in Europe, driven by very good performance in Germany and Eastern Europe in all segments. In the Rest of the World, it's a strong performance as we again -- we are again growing at a double-digit growth pace despite high comparison basis in the U.S. and the continued deceleration in Russia. We announced a new data center in India with a few quarters ago, and we are very happy to have officially launched the commercial go-live early March. We had a very good traction as soon as we launch it, and we were rapidly unfortunately, sold out for the first wave of service, which confirms the high growth potential of this region. The Indian cloud market is expected to grow by more than 30% in the next 5 years. And thanks to these new data centers, we are strengthening our presence in this fast-growing region, which is also concerned with data sovereignty. This is a rising demand in India for data sovereignty and for the highest level of data protection, which fits perfectly what our offering -- what we are offering to our customers. We operate in a very fast-growing market, and we are investing selectively to boost our future growth. We are focused on financial discipline. Our model is highly flexible, and we can see in the CapEx evolution versus last year. The CapEx need for the servers is 20% lower than last year, and we have been using stocks that we have decided to increase last year because of the supply tension. We continue to invest in infrastructure CapEx to expand our capacity, especially in new regions and new data centers. The road map of opening we plan at the start of the year remain on track with 9 new data centers next year. We also have invested in hyper-resilience CapEx related to the new security standards we have implemented in our data centers. Finally, we continue to invest in the development of the new technology and software such as PaaS. We have introduced new solutions recently, such as long-term archive storage, not AI solutions, and new initiatives will be also launched very soon in security and data management. We have a highly agile model and can reduce our accelerator production and investment in anticipation of market trends. So now let's now move to financial parts with Stephanie.

Thank you, Michel. Good morning, everyone. I am Stephanie Besnier, and I am delighted to be with you today to present you our key financials for the first half of the year. I am thrilled to join OVHcloud as a CFO after more than 12 years of investments in strategic areas. I am convinced about the strategy and outlook of the European cloud leader. I'm honored to join an outstanding management team, and I'm looking forward to meeting new students [ph] in person. As I shall say at the beginning, we registered in the first half of the year, a strong revenue growth of plus 12.8% like-for-like and plus 15% as reported. Both in Q2 accelerations compared to Q1 and reached 13.9% like-for-like. This growth is fueled by a strong acceleration in Private and Public Cloud, generating a favorable mix evolution as shown in the next slide. On this slide, we can see that the mix continues to evolve towards more Public Cloud, which is a most dynamic market and Private Cloud with a continued strong growth in this segment, thanks to the success of our go-to-market strategy. Public Cloud now represents 17% of our revenue at 1 point versus last year, and Private Cloud represents 63% at 1.5 points. The strong performance of our cloud businesses is driven by a rather customer acquisition, especially in Public Cloud, a continued ARPAC growth and a steady ramp-up of our PaaS solutions. On the profitability side, H1 '23 adjusted EBITDA is at EUR 156 million, representing a margin of 35.4%. In terms of costs, spot electricity prices in Germany were higher than expected. Germany is the only country where it was not possible to fully hedge our consumption. In addition, our continuous efforts to invest in our talent base, particularly early '23, led to personnel costs that were higher than anticipated. Looking forward, H2 margin should increase significantly. We've taken actions. First, we are deploying a company-wide cost reduction plan, including extra discipline on hiring. We also expect to have the full impact of price increases in the coming quarters. And finally, we continue to have an active hedging strategy and electricity costs. Bottom line, we expect these actions to bear fruit as early as H2 and [indiscernible] margin increase in H2. Looking at our full P&L. Operating income increased at minus EUR 7 million compared to EUR 21 million last year. It includes share-based compensation for EUR 4 million, depreciation of outdated of damaged servers of EUR 5 million and a premium in insurance fees of EUR 2 million. We continue to benefit from a very attractive cost of debt, thanks to the package negotiated during the IPO, the opportune financing from EIB in 2022 and an active strategy of hedging our debt. Now moving on to cash flow. We improved in H1 our operating free cash flow after investment at minus EUR 53 million versus minus EUR 80 million last year, reaping the benefits of increased adjusted EBITDA and financial discipline. We continued to invest selectively in infrastructure and network CapEx, as explained by Michel, with a great flexibility and a clear focus on execution to maximize our future value creation. We focus on improving our CapEx efficiency. The recent reduction in hardware CapEx will start consumption and production controls demonstrate the flexibility of our industrial model. Moving on to the next slide. I want to insist on the strength of the balance sheet. At the end of the year, our net debt-to-EBITDA ratio is at 2x, and I'm glad to share that good financial decisions of 2022 are paying up. 75% of the debt is hedged at fixed rates and [indiscernible] average interest cost is 3.2% all-in as we speak. Also, with more than EUR 500 million of available liquidity, OVHcloud's growth acceleration plan is fully financed until the end of the year 2023. Ending on this good note, I would like now to hand over to Michel for the outlook and key takeaways.

Thank you, Stephanie. Now turning to our guidance for the year. I explained at the beginning of the call, we expect your like-for-like revenue growth between 13% to 14%. This guidance takes into account our strong start to the year, the expected acceleration in H2 on the back of growing customer volume and price increases, but also anticipate that the recent indicators of customer caution in the face of a tricky economy continue. We remain confident in the mid- and long growth-term trends to the cloud industry, and we see new as the interest rise [ph] AI definitely ramping up. We think that our new product initiatives, our differentiated services and our value from learning proposition are even more relevant in this sort of environment. In terms of margin, we expect to be above 36% on a full year basis with the H2 margin well above H1. The revenue volume effect will have a positive impact on our margin in H2 as we signed our cost base early in the year. Nevertheless, we have also implemented cost restraint plans that will also begin to bear fruit in H2. Finally, regarding CapEx, we expect to be in the lower end of the guidance range, again reflecting our focus on financial discipline -- sorry, as takeaways, we had a strong growth acceleration in H1. Our revenue reached EUR 439 million with a reported growth of plus 15% [ph] and the like-for-like growth of plus 12.8%. Revenue retention reached 111% confirming our capacity to grow with our existing customers. We have a clear strategy of growth acceleration with all levers confirmed even more in this current environment. We updated 2023 financial targets for our revenue and adjusted EBITDA margin as we think it is prudent to temper our full year guidance to take into account the recent trends we have seen. Finally, we confirm that our CapEx will be in the lower range of the annual target, again reflecting our focus on financial discipline. We can now open the conference to the Q&A session.

[Operator Instructions] We will take the first question from line Toby Ogg from JPMorgan.

I just wanted to ask around the sort of the delays that you've been seeing. Could you just give a little bit more detail around which of the cloud segments, specifically you're seeing those delays as most pronounced? And also, just looking at it from a regional perspective as well. Are there any specific countries where you're seeing that weakness is more pronounced in March and in April?

Yes. Maybe I will do that by regions, by customers and by consumer segments and also by products. What we see today is that, clearly, the corporates are very cautious, and they are really investigating with a very strong presence, the investments to be sure that it has a strong cost control and return investment. That's why we have seen in these corporate segments, some delays. For the most SMEs and tech companies, we see that the delays is more a prostration [ph] of reorganization of their operations to make sure that they control actively their cost. In terms of geographies, it's clear that today, we've seen that the American market, the Canadian market and the U.K. market, which are maybe where still the more mature markets are mainly affected with the recent environment that we see. In terms of products, we have clearly for the SMEs, the Web Cloud market, which is impacted by the delays. And for the corporate, it's mainly on the Private Cloud. We don't see today for the moment as OVHcloud for the Public Cloud, such delays, and that's the reason why we are very confident that today, we have the right strategy by introducing new products in the Public Cloud with new initiatives and to reduce that to foster our growth.

We will take the next question from Ben Bernaus from BNP Paribas.

Two, if I can. Firstly, on the new growth outlook for this year, what are you assuming there in H2 in terms of customer trends? Are you assuming that the same recent trends you've seen in the last month or 2 continue? Are you assuming some improvement in the timing of projects going ahead or are you assuming some further deterioration. So just some sensitivity around that would be great to get a sense of how to derisk that guidance is? Second question, just a clarification and detail, please. In the press release, it seems to suggest that you're containing the increase of the cost base, whereas in the presentation on Slide 21, it seemed to be talking about actively reducing stripping costs out. Perhaps could you just clarify what that is and then detail on where you're finding these cost efficiencies?

As we already mentioned today, what we see that customers are delaying some decisions. However, we do believe that the fundamentals of the market are still absolutely valid, that there is a strong demand for growing Public Cloud. This is part of the evolution of the digitalization of the industry. And that's why we are actually confident that mid and long term, the growth of the cloud market will remain strong because it's imperative, and this transition is something which is midterm and long-term absolutely mandatory for the customer. Moreover, we really do believe that OVHcloud, in this perspective, with the fact that we have very strong competitive advantage, which are distinctive in terms of price performance, price predictability, sustainability, the fact that we propose data sovereignty and also that we are open, reversible, which allow to have the flexibility for our customers, are really key advantage in this period. So we don't see today that there is a slowdown in customer acquisitions. We don't see today that we are not able to propose innovative solutions to all the markets. About the cost, the cost I propose Stephanie that…

Yes. Sure. So the rationale between -- behind the revision of the guidance is us. First, we had some one-offs on the cost side because we had higher-than-anticipated electricity spot prices in Germany. And we invested also early in '23 in our key talent space. And now what we are seeing going forward is that we have a slight softening of our growth acceleration. But we are still expecting to grow strongly. So what we are going to do is we are going to have a strict control on our cost base going forward, and we expect our EBITDA margin to relaunch sharply in H2 mechanically, because we will have the full impact of our price increases. We still have the strong volume growth. We have a softening of the electricity pricing. And again, we have launched a strict plan and cost control. So all in, we expect an improvement in H2 over H1.

Okay. So Michel, can I just follow up, please, on that question. My question was specifically on the H2 this year. So I understand the mid long-term drivers are still intact. But in terms of your full year guidance this year, are you assuming the current trends, the current uncertainty continues into H2 and you're still confident of reaching the 13% to 14% growth if things continue or does the things need to improve for you to get to that fiscal year '23 guidance?

We are confident that we will keep accelerating through H2. It will be mechanical first because we have a strong momentum in Public Cloud, which is increasing and the share is increasing. And we will have also a full impact of the price increases because we are increasing the prices starting mid of Q2. We have price increases in Q3 and also in Q4. And also, because thanks to our investment we've done as for 2 years, we have the ramp-up of our PaaS solutions, which is really at the proper moment to boost growth. So that's why we are maintaining a high level of growth in H2, and it's a good basis for in 2024.

We will take the next question from line Valentin Jahan from Stifel.

So yes, Valentin-Paul from Stifel. I have 3 questions, please. I will go one by one, if I may, please. First, could you remind us, why you need to keep such an aggressive pricing policy with prices on average, much lower than your competitors, including smaller ones. I mean in [indiscernible] it would be enough to be only a few percentage points below your competitors to make your offer more attractive for the same level of services, but your charts in previous presentations and feedbacks from some of your customers or even from competitors, seems indicating that you are very significantly cheaper. Isn't it value destroying to keep this kind of policy?

I think just a few elements about that. We believe today this is our position. And this is today, we believe that we should maintain a value proposal, which is in place with the market and with the expansion of our customers. Moreover, as you know, and this is something I mentioned in the presentation, there are some practices today on the market done by the players [ph], where, in fact, they are using some tricks. I mean the multi newer type of commitment where, in fact, they have also aggressive pricing, but they loved our customers. So our positioning there is to maintain an aggressive on expletive, I will say, price power capability to adapt and to propose really innovative solutions. And we believe this is one of the reason, why today we are very strong positions where customers are maybe more, I mean cost cautious. And clearly, our capacity to maintain good price predictability and a good pricing power is something which is a key element of a differentiator and also long-term to confirm that we have the capacity to grow. Moreover, and I just want to say that we have decided to make price increases. We demonstrate that we have this capacity, and we didn't see any churn increase in terms of customers. You've seen the slide. That's why we are confident that today, we can really monitor very tightly this price, I mean, predictability and performance, but at the same time, to be also to manage the price level to maintain high level of valuable growth.

Okay. Second question, if I may, please. I would like to know what is the price effect embedded in our 2023 revenue growth target? And maybe a bit more color on the recent development in demand as well as the recent churn level and its expected development in the coming months?

For the brand price increase?

Yes. So as you know, we started to increase our prices in December '22. So we have 1 month of price increase in our Q2 numbers. We've decided to progressively increase prices throughout the year. We have also some customers that are committed over the medium term. So all in, we think that the contribution of price increases we had a full impact in Q4. And in total for H1, we are looking at slightly more of 1 point of contribution from our price increases, and we expect this impact to be to 3 points over the full year.

And maybe last one. Could you please tell us the amount of electrical power needed to supply your data center in megawatts, please?

We do not disclose this number.

Okay.

[Operator Instructions] We will take the next question from George Webb from Morgan Stanley.

Just a few. Firstly, just on the lower margin guidance again. I mean the spot German electricity price factor sounds more transitory, some of those factors around labor and the like sound more sticky. Given you were around 39% now above 36%, how quickly do you think, you can recover some of that lost margin? And I guess as we go into 2024, you haven't changed your 25% target to 42%. So should we be expecting just a much bigger uplift than we perhaps were previously? Secondly, on pricing strategy, if electricity prices across Europe were to continue to subside, let's say over a 12 to 24 month view, would you look to pass those savings back to customers in lower pricing or would you retain that incremental margin? And then just finally, I appreciate that serve CapEx is pretty short lead time, but there's a slightly lower CapEx for this year start to impact your 2024 growth aspirations at all?

So on your first question, yes, you're right. I mean we have a temporary effect on our margin due to the situation of the spot price during the winter in Germany. And as we mentioned, we have also started to build our cost base early in '23. Now with the volume growth and the growth that we're expecting on our revenue, we will benefit from an operating leverage and in the meantime, we are now under a straight discipline with regard of cost increase. So yes, we are building a further margin improvement going forward.

Your second question was about the pricing strategy. We do not anticipate to reduce prices. We will maintain even so the electricity cost might -- and the volatility is very high. So I don't know we will not predict. Even so the electricity costs will reduce, we will have no intention for the moment to decrease our overall pricing strategy for our installed base. So we will retain margins.

Very clear. Let's on the lower CapEx impact from '24, if there is any?

Yes. On the CapEx, no. In fact, if you look at the structure of our CapEx, we have maintained the infrastructure CapEx and the maintenance CapEx to a lever to be able to be sure that we will have the infrastructure with the opening new data centers such as India, but also we are going to open new data centers in France, close to Paris, in Canada and also in Europe, also in Asia, in Singapore and Sydney. So we are making this investment to prepare the growth of the future. So no, we don't -- we were able now normal to control more heavily and to have a better return on investment of all we are doing in the CapEx. But today, we do not try to jeopardize the growth by reducing the CapEx. The second effect, which is very important, is the stock. You remember last year that we have increased our purpose the stock due to some supply constraints, and we decided on purpose to be sure that we will be able to continue to deploy our customers and now reducing I mean, a month after month, our stock level, that's also give a benefit to reduce our CapEx. And -- but we will not, of course, jeopardize our growth potential by reducing stupidly our CapEx level.

It appears no further question at this time. We have one more question, are we good to take?

Okay. No questions? Anyway, thank you very much for you. Sorry, go ahead.

Pardon the interruption. We have one more question in the line. Are we good to take?

Yes. Really... Okay.

So open up the line from Derric Marcon from Societe Generale.

Michel, sorry to be late in the queue. I've got 2 questions. The first one is about the growth acceleration that you expect in H2 '23. If you take into account the uplift from price increase, it seems that volume growth in H2 is not -- let's say, will be less than what we saw in H1. Do you share this view? And the second question is about the investment that you plan for H2. So you said cost control, does it mean that the net staff hiring or, let's say, the head counts, average headcount in H2 should not increase much compared to what was the number at the end of H1 because I saw that in H1, it's more than 200 full-time equivalent increase that you made. So should we expect this number to reduce significantly in H2?

I would answer very -- sorry.

And if it's the case, when will you decide to relaunch, let's say, a more aggressive hiring campaign, should you wait at the end of fiscal year 2023 or later in the fiscal year 2024 to take such decisions?

Yes. I will answer to the second one very quickly. And because it's very straightforward. Yes, we anticipate to have, I mean, a slowdown in the hiring rhythm for H2, clearly, because we have the -- as you've seen, the outlook is to increase sharply our profitability in H2. And we will, of course, completely control the hiring rhythm to maintain this high level of profitability in the next few years. About the first one about your growth acceleration and the volume and the price. Today, we do not anticipate a reduction in volume in terms of customer acquisitions. We believe that today, we still have a strong go-to-market and strong advertise from the market for OVHcloud solutions. And clearly, it's something that we anticipate. What we said is that the delay on some projects make that maybe on some domain and some domain, the ARPAC is not growing as fast it was anticipated. But clearly, we are still very confident that this is only a short-term vision and that long term, the need for such solutions are really still very valid. So that's why we are convinced that we will, at the same time, continue to acquire new customers. You've seen in the public cost, for example, that we have acquired more than 10,000 new customers in the -- more than next year in H1. And we see for the moment that we have a strong I will say capacity to continue to, I mean, acquire new customers.

And Michel, just a quick follow-up on the price increase. So you said 2% to 3% to a range of 2% to 3% for the year. So a message that is perfectly in line with what you said 6 months ago. When will you be able to narrow this range and why you've got such a range? What's the difference between the low end and the high end of this range because on the 6-month period, it starts to be a meaningful number difference between the low end and the high end.

Just to explain what I mean we -- as you know, the price increase is not -- I mean, for all our customers. We have a different type of commerce [ph]. First, in the corporate sector, we have large customers with contracts where the price increase is under some contract terms. And so that's the reason why we are discussing with our customers, of course, to negotiate or sometimes renegotiate. That's why we are present about the impact on the corporate segment. The second is that we have some customers, we have commitments 2 years, 3 years, 4 years commitments. And some customers are asking to have, I mean, commitments for long-term. And these commitments do not imply the capacity to increase the prices. However, they stay longer. So that's why we have been always very cautious in the implementation of the price increase to make sure, and you've seen in the results, which is the case, that it will not affect the churn level because we believe that the installed base should and will continue to remain and will increase, and that's why we are prudent and sometimes maybe not as clear about the impact of the price increase because we monitor that nearly week after week to be sure that we have the appropriate level between price increase and the capacity to continue to maintain a very strong momentum in growth. However, what we see is very promising in the sense that our pricing power is concerned, that also the reaction of the customers is to be very loyal. We've seen that we have the highest retention rate that we had since -- and then we've made the IPO. That's why we are, at the same time cautious but at the same time very, very focused to maintain this capacity to increase the prices step-by-step without impacting our installed base and our capacity to have growth momentum in the future.

There's no further questions at this time. So I'll hand it back over to your host to conclude today's conference.

So thank you very much. Thank you for all your questions. Before we close the call, really, I want to reiterate that it was a pleasure to speak with you again for our H1 results, these results are robust with a strong growth acceleration in Q2. Moreover, in this context, we believe that our key differentiators, such as data serenity, price predictability, transparency, sustainability, the fact that we have an open and reversible cloud and the best performance price ratio are more than ever valid in the current environment to maintain a high level of growth and accelerate our, I mean growth with a profitable growth. The cloud market is a fast-growing market, and it will stay the fast-growing market, and we are so well-positioned to continue to expand. So thank you very much for listening to us, and have a very good day.

Thank you for joining today's call. You may now disconnect.