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

Thank you very much for joining us today. I'm Benjamin Mennesson, Head of Investor Relations at OVHcloud. And we are very glad to be here with you today for our first Investor Day since our IPO in 2021. Before starting the presentation, I'd like to remind you to spend a minute on Slide 2 with a disclaimer as there will be some forward-looking statements in the presentation. Thank you. Let me present you today's speakers. So we have Octave Klaba, Founder and Chairman of OVHcloud; Michel Paulin, CEO; Stephanie Besnier, CFO; Sylvain Rouri, our Chief Sales Officer; and Thierry Souche, Chief Technology Officer. Together for the next two hours, they will go through the following agenda. First, Octave will give you his high-level vision on OVHcloud, the leading European cloud provider. Then Michel Paulin will give you an update on our strategy with Shaping the Future. We'll have, after Thierry will develop on our product strategy, which is developed for customers. Then Sylvain Rouri will update you on our customer-centric sales strategy. And finally, we'll have Stephanie for the business model, which is cash generative. Thank you very much. And I now hand over to Octave for his introduction remarks.

To start this Investor Day, I would like to take a moment to insist on three major trends that are shaping, not only cloud businesses, but all companies globally. The omnipresence of data which is the foundation on everything created today, the ongoing tech revolutions such as AI, quantum, geopolitical tensions and facing the critical term of data solvency. These trends represent massive tailwinds for OVH. First, data. Data is everywhere. Data it's not just a commodity, it's a backbone of innovation. Every aspect of our lives from business operations to personal interactions is data. Organizations are building their strategies, processes and even business models based on the insights delivered from data. The ability to manage, control, interpret data is becoming the pivotal factor for success. Those who fail to adapt for sure will lose competitiveness, advantage and business standing. And this is widely illustrated for the second trend. We are currently witnessing revolutions for two cutting-edge fields, AI and quantum. AI is transforming the way we approach the problems, make decisions and automate task, but it also requires absolute control over data. On the other hand, quantum holds the promise of solving complex problems at exceptional speed versus traditional computers. We are here to assist our customers in navigating and succeeding in these revolutions. And third, for the past few years, geopolitical tensions has been on the rise. This has significantly contributed to the emerge of data sovereignty. Countries, organizations are becoming in slightly vigilant about where the data resists, who has the access to this and which extra territorial loss they are subject to. This shift is prompting organizations to reassess how they handle data, ensuring compliance with local regulations while keeping full control over their data. They understand that the data, it's new oil, data is who you are and what you do. Data is most -- it's one of the most valuable asset. I would like to also focus into OVHcloud operational approach, highlighting its strategic framework, structured around 5 years investment cycle and how it influenced the trajectory of the company over the past two decades. When I started OVH, the company in '99, the imperative was immediate cash positivity given absence of external funding. The company's long-term vision is and has always been around the 5 years investment plan. The first free cycle, 15 years, dedicated -- were dedicated to build the infrastructure while generating cash. We have to be innovative, to be frugal by design. Since '99, we have built a large European infrastructure, and we continue -- that we continue to leverage today. Then in 2016, we saw a great opportunity to accelerate our global expansion, resulting in substantial investment during our fourth cycle, opening several new data centers globally. And then in 2021, we made a strategic decision to invest significantly in the product for our fifth plan. And this is why we are developing 14 new products to address our large market, the past market. We are currently in the middle of fifth plan and are already planning the sixth plan, which will be cash flow positive and customer-centric, but this will be maybe a good topic for the next Investor Day. The current plan, we will see to continuing to invest, but also garnering the fruits of our investments in market positions and products. We will once again be cash flow positive. It's in our DNA. It's how I build this company, delivering the growth in the same time, delivering positive cash flow. The road map will be presented in details by the team in the slides today. And now I will hand over to Michel and the team for the presentation, and I will look forward for the Q&A session at the end. Thank you.

Thank you very much, Octave. Hi, everyone. Happy New Year. I am Michel Paulin, I'm the CEO of OVHcloud. And as Octave just said, OVHcloud is a leading European cloud player and we have been growing significantly since the creation in 1999. Here are a few facts about where we stand today. In 2023, we have reached a revenue of close to EUR 900 million, which is a revenue CAGR of 12.4% between 2022 and 2023. Our customers are highly loyal with a net revenue retention rate of 110% in 2023. In terms of profitability, last year, we had an EBITDA of EUR 325 million with a margin of 36%. We have a global footprint with 40 data centers that host 450,000 servers and we have 1.6 million customers in 140 countries. This strong positioning leads me to our 6 key investment highlights. These are the 6 key investment highlights. First, OVHcloud is positioned in the large and rapidly growing cloud market, which is fueled by structural mega trends, such as digitalization of the economy and innovation such as, as we see now, AI. Second, Octave's visionary leadership, coupled with our operational excellence place us today as a sole European player with a global footprint in the cloud market. Our commitment goes beyond cloud market dynamism, and that's the third point. We are proud to be the data sovereignty champion, ensuring our customers that their data remains secure, compliant with all national regulation and immune to any extraterritorial laws. Welcome. This is extremely important for corporation and [indiscernible] [ bodies ] to protect sensitive data and we have to protect ourselves for the entry. But anyway, we have a comprehensive suite of solutions tailored to meet customer needs. The fourth distinctive investment highlight, we have the best price performance ratio, unmatched among leading cloud providers, ensuring customers to get the maximum value for every investment in our solutions. This is made possible, thanks to our cost-efficient integrated model. And this is the fifth highlight. Our integrated model is not just cost efficient, but it's also driving cash generation by providing long-term stability and capacity to keep investing in future growth. Sixth, in addition to our integrated model is sustainable by design. Thanks to unique innovation that we have progressively implemented for the last 20 years, in particular, the water cooling, the component refurbishing. So let's have a look on what we have already achieved since our IPO two years ago. We have built a very strong track record of execution since IPO 2 years ago on our key growth layers, customer, products and geographies. First, about the customer. Over the last two years, we have been successfully focusing on key customers and have doubled, for example, the number of customers spending more than EUR 1 million per year. At group level, we have increased the average revenue per customer by 29% over the same period. And Sylvain will describe our sales strategy with more details in a few minutes and our go-to-market strategy. About the product. As Octave has mentioned, we have invested significantly in product development since 2021. And we have now 40 public cloud products for our customers, PaaS in particular. And these products are progressively ramping up. Third, in terms of geographical expansion. We have expanded our footprint with 19 locations and now 45 data center by the end of 2024. And finally, we have been investing for the future growth. In product development, with close to 300 new tech employees, reaching now a total of 900 tech employees in OVHcloud, a gross CapEx of EUR 700 million since 2021 and the acquisition of three companies to accelerate our product road map and develop new capabilities. Like the last acquisition, gridscale, a German company to open lower -- sorry, geographical footprint with lower CapEx. On the next slide, we have a zoom on key financials to see how it translated into figures at group level. We have been delivering strong organic revenue growth since the IPO. For fiscal year '24, we expect revenue growth to be between 11% and 13% like-for-like, which takes into account short-term headwinds in the cloud market. Our adjusted EBITDA margin was 36.3% in 2023, and it will be above 37% in 2024 and we will continue to improve it in the coming years. In terms of CapEx, we have been significantly investing in growth, and we will be reaping the fruits of our investment in the coming years with a lower capital intensity. Our recent growth outperformed our peers in public cloud market and private cloud market. As you can see on the left for the public cloud, we have an energy trends indicating a recent market slowdown with a gray curve. Some of these market headwinds are tailwinds for us. We have been showing strong resilience and have been outperforming our peers, thanks to a continued focus on our key differentiators such as price performance and price predictability, which is really very important in this moment. And if you look at the right-hand side of the slide, you can see that a similar industry slowdown for Private Cloud and a similar outperformance form of OVHcloud. We have been gaining market share in the private cloud market. In a market with a lot of uncertainties, our performance is a proof of our stability and commitment. It underlines our relevant, our value proposal -- for proposition and proposal for our customers is important and efficient, even more so in a difficult macro environment. We have been delivering growth. And as you can see on the next slide, we are also focusing on cash. We are improving our free cash flow generation. With the ramp-up of recently launched products, the increase of data center utilization rate, the stabilization of product development CapEx and reduction of exceptional CapEx, we will be soon to generate free cash flow. We expect the first year of positive free cash flow to be in 2026. In this landscape of uncertainties, being able to generate free cash flow while maintaining significant growth investments is a key message of resilience, long-term approach and how sustainable our business model is. Let's now have a more detailed look at our long-term growth market. The cloud market is fueled by robust structural long-term drivers. The exponential generation of data, as Octave has mentioned, is driving major changes for our customers. Our goal is not just to help them to navigate through this digitalization, but to enable them to reshape their businesses in this data-driven new world. And the cloud technology is at the center of this opportunity. Also, data sovereignty becomes more and more critical. It's a commitment to secure our customers' data and give them the full control of a rig. We don't touch customer data with absolute no compromise. Businesses are continuously moving to the cloud for scalability and flexibility. Customers are also building multi-cloud and hybrid cloud models and we can offer them tailor made solutions that fit their needs, thanks to our large cloud offering. Artificial intelligence. Artificial intelligence is a revolution on all aspects of our customer businesses. And the cloud is making possible this highly demanding revolution in terms of compute and storage for all. So even if there are all these long-term structural drivers, customers have been recently optimizing their cloud spending. You've seen with a slide about the decrease of some of the peers, and OVHcloud is well positioned in the context of cloud customers optimizing their spendings. The cloud market growth has recently slowed with optimization from customers and downsize and delayed projects due to the global macroeconomic slowdown and with some customers looking for contracts renegotiations. Our highly differentiated positioning with performance price and price predictability is key in this context, and as you can even better answer customer needs in key areas of value to customers. Also, cloud optimization has been impacted the market growth over the past year. All the structural long-term drivers remain intact. On the next slide, we have a long-term view on the growth outlook for the market. As you know, OVHcloud is positioned on three main markets: the Private Cloud, the Public Cloud and the Webcloud. Private Cloud, which represents 62% of our business, the global market on the left, the global market is between EUR 16 billion and EUR 19 billion. And the 2023-2027 CAGR is expected to be around 10%. We are positioned as the European leader with a strong growth and a large product offering, and we are gaining market share. Public Cloud, which is -- which we started only 6 years ago, actually, and represent already 18% of our business. It has two subsegments: Infrastructure. Infrastructure as a Service, IaaS, and Platform as a Service, PaaS. Both segments are expected to grow above 20%. And together, they represent between EUR 230 billion and EUR 250 billion. On Public Cloud, as I said, we started 6 years ago, we will continue to enrich our product offering and reinforce our sales strategy to expand. It's a key area of opportunity for growth for OVHcloud. Finally, Webcloud, our historical business, which represent 20% of our revenue, and is expected to grow at 5% in the next four years. We have a strong positioning in Europe, and we'll continue to leverage our customer base for up-sell and cross-sell to the other cloud segment. So OVHcloud is well positioned on large and expanding cloud markets, but also in terms of geographies. Our main market is Europe, which represent around 20% of the global cloud market of EUR 50 billion in 2023. We generate 73% of our revenue in this region in 2023. and we are the leader. For the rest of the world, which is more than EUR 200 billion, we have generated 27% of our business there, and this is a huge opportunity for OVHcloud, thanks to the fact that we have a global presence with data center and operation everywhere. Let me deep dive on the open market. As you see on the bottom, we give the size of the market. The biggest market is U.K. with 23% of the total market, European market, Germany, second and France weighing in the top 3. That's really a very important and that's where we are continuing to invest. On the next slide, we have identified the addressable market of the open data sovereignty by key verticals, which is central for us because data sovereignty is now a key concern for all the market -- for the market. This is really a confirmed demand for data sovereignty in Europe. The market represents between 20% and 25% of the total European market and is expected to grow with a CAGR close to 30% between '22 and '27 and this is IDC data, which is very interesting is that some sectors are much more concerned over the vital nature of data sovereignty and others. For instance, the two largest sector for data sovereignty are the public sector, of course, but also the healthcare businesses. And we are organizing OVHcloud to address precisely these needs with dedicated solutions, but also dedicated sales and presales teams. Data sovereignty demand is fueled by two key drivers. The first one, regulations on data protection, especially on some specific vertical, as we said, public quantities, healthcare, but also finance sector. The second driver is protection of intellectual properties and also of sensitive data, even more with the AI revolutions, which are creating a lot of interrogations about what's next. Data sovereignty is one of our key differentiator. Let me give you a little bit more details on what that does mean practically and as our competitors have been doing a lot of noise, a lot of noise on it recently, but with no proof. Data sovereignty is a rising concern, and it goes beyond data security, which is, of course, also key. Data sovereignty can be defined as a capacity for self determination by nations, organizations and individuals. It can be defined by the capacity to give data owners total control of the how and where the data is managed, stored and processed by cloud providers. OVHcloud as a European company, is not subject to any extraterritorial laws. While all the U.S. and Chinese cloud providers are subject to this kind of laws, even if the data is located outside the U.S. and China. And you see -- I've seen recently the VISA extension, which has been signed the President Biden. And this is, of course, a European concern, but not only -- now it's becoming a worldwide concern in India, in Japan, in Singapore, and OVHcloud is the largest cloud provider able to guarantee that our customers' data are immune to any type of extraterritorial laws. No foreign governments can access your data when they are storing an OVHcloud data center. This is not simply the case for a cloud provider based in the U.S. or Southeast Asia. Let's have a focus on each segment dynamic and how we answer customer needs. In the Public Cloud first, which is a multi-tenant infrastructure. Customers are only managing in a way their software layer. They run capabilities and it is a cloud provider's responsibility to manage their infrastructure, including hardware and the PaaS. Consumers are looking for high scalability, flexibility, easiness to deploy innovations and the full flexibility on their consumption. We started our public cloud offering only 6 years ago. OVHcloud is benefiting from the strong tailwinds of this market and is the first European player and only one European in the top 10 worldwide. The second is the Private Cloud, which is our main segment. It's about offering dedicated servers to customers who operate and manage all the layers. These customers are looking for a high level of performance in secure environment with a full control over the server and the infrastructure. They typically look for similar experience as on-premise while taking advantage of the cloud. Today, OVHcloud is a leading private cloud provider in Europe. And as I've mentioned already, is gaining market share worldwide. Finally, the Webcloud. We mainly sell domain names, .com or .fr or .uk and web hosting on shared infrastructure. Customers are looking to build our reinforced online presence like launching a first business, they can also be looking to protect their brands of some -- for some SMBs, digitalize their processes and businesses. OVHcloud is the second European player in terms of number of websites, and we have a strong position in Europe with very high market share in France, Spain, Italy and Poland. Moving to the next part, I would like to spend more time on our key differentiators that are the decision factor of why customers are choosing OVHcloud and why we are confident in our future growth. We have a unique positioning with our strong 5 key differentiators. First, predictable and transparent pricing, performance price ratio; third, data sovereignty, a high flexible model and sustainability. So let's start with the first one. OVHcloud offers predictable and transparent pricing. It has been really a major to pick recently in the cloud industry, where sometimes the cost of this cloud is not understandable by the customers. And at OVHcloud, we know that -- what will be your invoice at the end of the month because it's predictable. While for the most of the other cloud providers, it's a nightmare. You need an artificial intelligence solution to be able to forecast and of course, always more expensive than budgeted. In addition to be predictable, OVHcloud offers one of the best performance, price ratio of the industry. Customers can have unparallel performance for a great price. And it's even more important today when we see some customers struggling with our cloud cost, as I mentioned. It's a strong key differentiator that is driving significant business. OVHcloud is data sovereignty champion, with a global footprint. Our customers are more and more careful about the data, how they are processes stored by cloud providers, and we have a clear positioning as data sovereignty champion. We also have a unique integrated model, which enabled us to propose wide customization possibilities to our customers. And this cost-efficient model is also driving operational efficiency that gives us the ability to offer this best performance price ratio. However, it's not flexible and cost efficient. It's also sustainable by design with best-in-class environmental KPIs made possible, thanks to our water cooling technology at scale in all our data centers. All these key differentiators are key decision drivers for our customers. And so let's have a deep dive in each of them now. When it comes to price, our positioning is clear for our customers. We are predictable, transparent and we offer the best performance price ratio. We can give many, many examples of this on VPS, on Private Cloud and Public Cloud. Here is just one, a recent one. As you can see on the left of the slide with a benchmark of sort of commodity easy to compare, the A100 NVIDIA chipset GPU instances. Our model gives us the possibility to be less expensive for the same price -- for the same, sorry, performance as our peers. On the right side, hand side, you can see that we are really differentiated. We are transparent with no hidden cost as egress fees, and there is a lot of first of that, but there is no at all egress fees. And clearly, we are predictable and we have no variable costs depending on customer volumes, time of frequency of access, which are impossible to understand. We are simple. Our network costs are included in the public prices. It's not coming as an additional unpredictable cost. These differentiators are even more resonating to our customer today with the macro uncertainties and our major business drivers for OVHcloud. And it is not only us saying it, but our customer directly. Just pick one example. Credit Agricole, one of our large customer in finance vertical has chosen us exactly for these reasons. We are able to offer these best prices, thanks to our integrated model that is cost efficient. The second differentiator, OVHcloud is the data sovereignty champion. It's key for our customers to give them a total control of how the data is managed, is stored, is processed by cloud providers. But in addition, our customers, especially in some verticals, are looking for national and international certification. This certification can bring them additional business opportunities for themselves, and we are very well positioned. In fact, we are the only one in the world to have such certifications. OVHcloud has the highest standards and certifications. They are very hard to achieve and there are not some of them available to some U.S. or Chinese cloud providers. One of these key certification is a French SecNumCloud, which is the most secure workload -- is for most secure workload that must be immune to extraterritorial laws. And we are leading in this certification. We have already more than 80 customers for only one type of range of solution. We are working and expanding our product with SecNumCloud certification, and Thierry will give you more details on that in a few minutes and to expand that to our whole 40 cloud solutions. Coupled with our data sovereignty leadership, OVHcloud is the only European cloud provider with a global presence. We can serve our customers globally. We have 40 data centers today. We have 5 more opening plan in 2024. We are in 9 countries, and we have a large network with 44 points of presence. We recently acquired, as I said, gridscale, a German company that will help us to open new geographies much faster with lower capital intensity and we will be able to open 14 new public locations in 2024. OVHcloud model is flexible and enable broad customization possibilities for customers. We design and assemble our servers in our factories. We rack them in our data centers. We manage our network and we directly sell our cloud technology to customers. Thanks to this integration, we have been unique -- we have unique flexibility and propose numerous customization possibilities to our customers with a reduced time to market. It's also efficient with lower operating costs, thanks to our water cooling technology. We don't have any intermediaries for servers, co-location cost or network. It also brings sustainability advantages. We have less carbon footprint with fewer components in our servers and reduce price impact. We can also have a longer lifetime value, thanks to the retrofit of our servers and components. I'd like to quickly look at the sustainable by design of our integrated model. As I said, our model enable us to have lower operating costs and drive a clear advantage in terms of environmental footprint. We control our value chain, and it allows us to integrate our water cooling technology and to recycle most of our servers and components. Knowing that 80% of a data center carbon footprint is linked to server components and server construction, being able to recycle and reuse them is highly differentiating. It results to best-in-class environmental KPIs for power usage effectiveness and also water usage effectiveness, we use 20x less water than our peers. We use 30% to 50% less electricity to our peers that we are far below industry average. This higher environmental performance offered by OVHcloud is helping our customers to reduce their carbon impact of their own IT, how they have their application in an OVHcloud data center. OVHcloud offers a sustainable cloud by design. OVHcloud has the largest offering for any open cloud provider. OVHcloud is recognized as a major player in the public cloud market by the leading consulting and consultancy firms. In Europe, on the left side of the screen. You can see that market analysts, credit OVHcloud, as one of the best performers with a combination of one of the strongest strategic positions aligned with a prominent existing market position. This is reinforced on the right-hand side of the slide, where in 2022, public cloud MarketScape by IDC, OVHcloud is the only European company listed among the top global player. It also shows the scale of the improvement in market positioning and position since the IPO. It is important success for OVHcloud as we showcase consistent improvement in this rankings. This recognition is not just nice to have. They play a crucial role in attracting business. Customer often relies on these analysis to make informed decision when choosing a cloud service provider, and we are very proud to have these credits. OVHcloud is on a large and fast-growing market. We have a key differentiator that give us confidence in our ability to keep gaining customers and market shares. In addition to these strong fundamentals, we have a plan to shape OVHcloud future. Shaping OVHcloud future is built upon -- around 4 strategic objectives. The first one is to be the unrivaled reference for data sovereignty. Our customers and prospects are asking for more and more control over their data, and this will continue, and we will continue to develop a large offering for data sovereignty. The second one is innovation. We will continue to innovate to prepare and lead next tech revolutions. We are currently at the beginning of the AI revolution, and we are preparing for the next wave. But all that will come. Quantum, we mentioned and Octave mentioned it, but we will continue to innovate for the next. The third objective is to deliver sustainable and profitable growth. We are organizing our sales and marketing strategy and cost structure for long-term profitable growth. This last objective is to maximize cash generation. We have been investing a lot recently and we will continue to invest, but we will also focus on maximizing cash generation with ramp-up of products, increase of utilization rate of data centers and overall improvement of our models. Our growth strategy relies on three main levers that you already know: products, customers and geographies. We are expanding our number of products and services available, and we will keep expanding our total addressable market by developing these new products. It's a new opportunity for us, especially PaaS, Platform as a Service, for which we have accelerated development since 2021. And that now will ramp up in terms of revenues. In terms of products, we are also focusing on the new use cases for our customers, such as AI. But we do it in a way that respects data privacy. It's a key differentiator and respect also intellectual property, which is a rising concern from customers. The second one is customer in the middle of the slide. We're expanding our addressable market. We started with the tech companies a few years ago. And now we will target specific verticals by reinforcing our partners channel. And of course, we'll continue to expand by fueling our digital acquisitions with some marketing actions around SEO, SEA, brand awareness campaigns in where we are. The third one, geographies on the right. We have been expanding a lot recently and we will now increase the occupation rate of our existing data centers that we have on the globe. In addition, we have recently acquired gridscale as I mentioned, that will enable us to moderate the opening of new large data center and open new local zones with much less upfront CapEx and a greater flexibility. Our strategy is supported by the teams. Our teams are highly committed to shape the future of OVHcloud. Our 2,900 employees are highly involved in the success of the company with 98% of employee will became shareholders during the IPO, worldwide, a loyalty rate of 79%, and an engagement rate, which is higher with 7.2%. And we are able to attract and retain the best talents with dedicated training program. And this commitment can be translated into targets, and you will see them. We have also very clear sustainability targets. We will contribute to the net zero on Scope 1 and Scope 2 by 2025. But as I said, 80% of carbon footprint are the servers, which are built in data center, so Scope 3 is the most important in our industry. And that's why we are committed to be Scope 1, 2 and 3 neutral by 2030. We will be 100% low carbon energy by 2025, and we will have 0 waste to landfill by '25. Our sustainability approach is already recognized with high ranking in Standard and Poor global ratings and considered as low risk by Sustainalytics. But also we have financial targets. We will shape the future of OVHcloud with sustainable and profitable growth while maximizing cash generation. We target a revenue CAGR between 11% and 13% between fiscal year '24 and '26. This guidance takes into account a cautious outlook in terms of macro trends. We anticipate slightly where our growth in Private Cloud compared to previous years, but it's still above market growth. For Public Cloud, we expect strong growth over the period and Webcloud, which is a more uncertain market. And as usual, we have taken a conservative view on how the growth outlook for this segment. Fiscal year '26 adjusted EBITDA margin will be around 39%, with significant improvement in gross margin. That will be a mixed of increased investment in sales and marketing as a percentage of revenue, offset by operating leverage in general administration. Our fiscal year '26 recurring CapEx will be between 12% and 14% of our revenue, and our fiscal year '26 growth CapEx will be between 16% and 18% of our revenue. We will reduce -- we will continue, and we'll be very focused to reduce our capital intensity with focus on utilization rates, higher range of servers and continued improvement in our operating model. And this will lead us to the free cash flow positive, including interest as soon as fiscal year '26. So we will deliver growth with cash generation. Now, I propose that we hand over to Thierry for a focus on our products.

Thank you, Michel. Hello, everyone. I'm Thierry Souche, I'm the Chief Technology Officer at OVHcloud. I'm very happy to be with you. And it's not that often that a CTO can say that, but today, we will mostly speak about customers. Yes, customers because that's how all our products are designed. We design them to solve pain points which were identified by listening to the customers. So let's dive into what we do. Sylvain a bit later will elaborate on the complex customer demand, but to put it in a simple way, we are selling cloud for a solutions on Infrastructure-as-a-Service market, IaaS, and platform-as-a-service market, PaaS. Our cloud solutions rely on 7 to 8 bricks, compute, storage and network to cover for the main infrastructure demands, database, AI, big data, took over the whole data journey and across the board, security and observability, to make sure that you have a consistent understanding and usage. We combine these components in order to shape the Public or Private Cloud services and the customer really have the ability to manage and secure the services end to end. On the right side of the slide, you can see quantum. It's a revolution in itself. So we'll speak about it later. These cloud solutions are here to help our customers manage, develop, reinforce their applications. And it seems simple, they like that. But our customers can have hundreds or thousands of applications running in their company. And having all that maintained with the last innovation and a high level of security is complex, trust me. And that's why we help our customers with our cloud solutions. We help them spend their time and money on their business and not on the systems. That's our job. So helping our customers focus on their business is what we do by selling cloud solutions, but not only. We also offer them data sovereignty. And Michel insisted on that because we consider at the core of our offer. We will be the reference in data sovereignty. I'll explain you how it translates in terms of product. Today, we are the largest provider for SecNumCloud, the top-level national security certification in France. We now have 3 data centers certified. And we also are working to have our bare metal and public cloud services certified in '24 and '25. We're also working on two specific verticals, healthcare and public sector, which don't need always a SecNumCloud environment, but nevertheless, they always must comply with very stringent regulations and certifications. So we will release bundled offerings to answer these needs. So how does that translate in terms of product road map? Let's start with bare metal, which is the main segment of Private Cloud. Some of our customers are looking for new generation of hardware with always more compute power and network bundles. As you can see, in the bottom middle of the slide, we will roll out brand new range of servers with the last generation of CPUs and GPUs in what we call scale or high-grade service, covering more use cases such as grid computing, for instance. On the bottom right of the slide, you see all new server ranges, including the mid-range advanced server and all these new ranges will be connected to our latest generation of network as of March. A network, which offers full resilience and unparalleled power. Some of our customers are looking for the best price performance ratio, not only performance. And as Michel explained, we do leverage our fully integrated industrial model to offer Eco service, entry-range services, which you can see at the bottom left of the slide, and we now enrich them with more network features. They are extremely competitive and powerful. When it comes to Hosted Private Cloud, the second segment of our Private Cloud, our customers are looking for the same experience as on-premise. And it's exactly what we bring them. They can have their VMware workload lifted on our cloud. They can have their whole SAP or Nutanix services on our cloud. They can host their most critical business application on our cloud with no compromise on security and sovereignty. And also, they can be certified SecNumCloud. Looking at public cloud, it's really a huge energy and full speed in terms of road map. Starting from the bottom left of the slide, we will roll out new IaaS services because our customers need ever stronger performance. We refresh most centralized cloud services, new compute range with a third generation, new storage, new database offers and we make these services evermore secure and simple to use with network and security services natively integrated in our public cloud. As a customer also often ask for less latency, we will deploy local zone public cloud, thanks to the gridscale technology. This will enable us to offer our public cloud offering in a lot of locations, much faster and with a lower CapEx, closer to our customers' business because then they can call for low latency, data residency use cases. And then, of course, at the bottom right of the slide, you can see AI services. Yes, obviously, we are offering the most recent NVIDIA GPUs. But I will elaborate on what we do a bit more precisely in a few minutes. Our last segment is Webcloud. Our customers want it to be easy, fast, at the best price and with flexibility. As you can see from left to right of the bottom of the slide, we conduct multiple simplifications for the domain names, and we are boosting up and cross-selling. We also have improved our offerings in web hosting recently. Our customers get more CPU, storage, database for the same money. And as we are renovating the underlying infrastructure, we will also strongly improve, actually up to triple, the performance of their web hosting in the coming months. And finally, we are working on the collaboration tools to better serve our SMBs, enabling fully sovereign e-mail solutions and virtualizing completely the Voice over IP services. I told you at the beginning that we are helping customers focus on their business and not on how the infrastructure and the platform runs. Kubernetes is a very good example of such a product developed to ease our customers' life when they update their legacy applications to a cloud-native application. As you can see on the right side of the slide, Kubernetes was rolled out at OVHcloud as of 2019. The ramp-up phase took a few years. As our customers were not fully aware of this offering, but also it took time for us to roll out a version that fits perfectly the needs. And as you can see on the chart, we had some upfront development CapEx before the product generated revenues. And then only when usage grew, we had hardware CapEx related to the infrastructure on which customers run their Kubernetes. This example illustrates very well the business model of all our cloud product. For the same amount of CapEx, we generate significantly more revenues from managed services like Kubernetes than from selling bare servers. And for all products in Public Cloud, we deliver a significant scale effect once our revenue ramp up. Over the last 2 to 3 years, we focused on developing new products and this trend will persist as these products will feed a robust embedded growth in the coming years. We spoke about data, data sovereignty, road map, et cetera. Well, all of this is about innovation. Innovation for Freedom. This is our core value, and it's actually meaning something to us. It means that we want to help our customers succeed, but we will not lock them into our cloud. On the one hand, we innovate to deliver the best performance, leveraging the latest tech, but also the best price performance ratio with a very strong vertical integration of all these technologies. On the other hand, we make the tech revolution accessible to all customers, making them so simple to use, that no company will be prevented from serving this stake well, but which tech revolutions? Well, the first revolution is, of course, AI. Everyone talks about AI. We already offer a full range of last generation CPUs to train AI model. We already offer a full range of PaaS services, AI training, deploy, notebook to enable data scientists create value from their data and algorithms. But today, even with these first-class services, only a fraction of the companies in the world really master the technical know-how and can afford the cost required to deploy their AI solutions in their organization. So our goal is to democratize AI, make it available to every company while enforcing the strictest respect of data privacy. To achieve this goal, we are developing applications to make AI easy to use in 1 click. I'll show an example on the next slide. The second revolution we're working on is Quantum. Quantum supremacy will happen soon in 2 to 3 years. And our customers, all companies must be prepared for that. That's why we already gave them today the possibility to understand control, train their people and test on real use cases. We are the leading quantum cloud provider in Europe. We have one quantum emulator, a physical machine in our DC. We run 5 software emulators on our notebook services. We installed the first quantum computer in our DC, and it will soon be accessible to our customers. Corporate must prepare themselves to face this new disruption, and we are already ready to help them. So let me come back on analytics and AI. Everything is about AI nowadays, and we are answering our customer needs on this one, but let's dive. Today, our customers want to use AI, but most of them don't know how. That's why we're developing cutting edge yet simplistic AI solutions. These new solutions represent a high cross-sell opportunity to all our customers that have database or storage at OVHcloud today because the data is already there. Thanks to our recent acquisition, we leverage our brand-new data platform to deliver a complete data management solution with local UI for an easy implementation. Our customers can store, transform, process, analyze and visualize their data easily within this simple environment. They can also use generative AI model in this very same environment where the data are already stored. And because it's simple to do so in our data platform, we have developed AI App Builder, which can deploy a generative AI application train on their private data set and strictly enforcing data privacy in 6 clicks. Okay, but enough with slides, let me show you. Now imagine that you are the CEO of a company and you hear about, hey, generative AI as a tool to boost the productivity of our support team. So let me show you how you will create your own business application, leveraging on our technology. You log in our data platform, where you will create your first digital assistant in four steps. Select the best element from [indiscernible] for your needs or you take money in the pre-installed collection, upload your private data set onto the platform, deploy your AI assistant so that it is available in production and then create an app, which will connect to this assistant. So let's start. Here you go. We're starting with a chatbot, here we want to boost the agent services. You will get much more later, code generator, whatsoever. You give it a name, put a description, and now you choose the foundational model. Could use LLaMa 2, but, hey, look, you have Mistral 7 Billion. Let's go for Mistral. Now you will need to tell the AI App Builder that you need to use private data, your own business data so that when it will answer questions, it will be relevant to your personal context. You can get it from your depot, you can get it from everywhere. Here in the demo, we're using a database, which is filled with OVHcloud documentation so that when you will answer questions on the company, you will get OVHcloud relevant answers. We have set the starting prompt by default, but we help you also with additional setup. So you can tune the prompt engineering, and you can have preset answers so that the answers will be sharper on how we deploy. There, see, it is deployed. So you can test it. You have a soundbox. You just ask a question, the first question. You can test it. You will just ping directly into the assistant you have triggered. And as you can see, it is giving answers which are enriched with OVHcloud knowledge base. But it could be your company's knowledge base. Now moving from this, you have a code snippet. You can take that code, copy paste in any application, here you go. You embed it in a chatbot because that's what we wanted. So we take a chatbot, we tell him where to go and find the assistant. Super easy. Click. This is it. You have a support chatbot. Now in 6 clicks, you have implemented a full, relevant business solution, which will boost the performance and productivity of your support systems, but also you have the total assurance that your data are not wandering around. You have a complete enforcement of data privacy. This is the future of what we think will be digital assistance. And this is something we want to completely democratize. So about customers. Let me hand over to Sylvain for a focus on our sales strategy.

Thank you very much, Thierry. So we have a fantastic road map with us. And now the big question is, how do we make those products available to the customer. Actually, our main goal and really what is driving us is really to provide and deliver the sustainable and profitable growth over years. And we are running on three main strategies. The first one, is about what we call grow key customer. Within the past few years, we have identified some verticals, some industries, some profile customers that are particularly attracted to our business promise. We want to obviously maximize this segment. We do that in parallel with increasing our network of partners. The results that we have achieved and the sustainable growth that we have achieved is also relying on this strategy that has proven to be the right one. The second one is that we will continue to reinforce our customer acquisition trend. We will have more awareness brand campaigns as we need to raise the spontaneous or assisted awareness in various geographies. So we have more volumes that are coming at the top of our funnel, more visits that are clicking and showing interest in the business value of OVHcloud. Obviously, this will go in pair with a more targeted SEO work as well as more targeted SCA, a specific campaign of acquisition, making the best of our -- that assets that are showing us what are the profile of companies that are the most likely to start quickly with OVHcloud. And finally, this is a word that has been repeated by Thierry that is extremely important to keep in mind. Cloud is for everybody. Cloud is used by everybody. The key factor of success beyond product availability is the easy to use and it's not coming only from the setup of our product, but it's also extremely important that in the commercial funnel, we continue the journey of easy to use. We help people understand, onboard, use, maximize benefit from the product. Those are the three main strategies that we are going to leverage. Our sales organization, our commercial organization is really set to maximize the satisfaction of our customers. We have two main venues. The first one, and you can see them on the left-hand side of the slide, what we call the enterprise segment and what we call the digital segment. You can see the way they are winning and their annual performance. Let me clarify those two avenues, and let me start with the enterprise on the right-hand side. We distinguish two categories. One of them was mentioned earlier. This is the legacy targeted audience of OVHcloud, what we call the tech company, those cloud-native digital native companies, those who were born with this technology. We are focusing on them, and we are having a singular organization to match their expectation. It is extremely important business-wise. And let me just give you one clear explanation for that. The growth of the cloud market is, first and foremost, coming from the growth of usage of users, whether at the professional level at the individual level. You -- we are more using SaaS solution. We are more using applications. The more you have those providers as your customer, the more you are fueling your economic performance at the top line. So you need to have a dedicated approach to them because their need is very specific. The second type of enterprise segment is what we call the corporate and the partner. They go hand in hand. The corporate, actually, they are to migrate to the cloud. They come from a different legacy, different perspective, their expectations in the way they will onboard the cloud journey, needs more support, more handholding, more services. You cannot achieve that alone. You need to partner with companies that are going to help you do that. And we are partnering with those companies around the world. And finally, the second avenue, this is the digital aspect. This is the one that is really the historical business model of the cloud services. No human touch, so to speak, 100% digital journey. Obviously, here, the efficiency of the product is extremely important by the efficiency of the funnel as well is super important. Hopefully, this is only good news, this alarm. So this approach now that we have is something that has demonstrated to work pretty well, and I wanted to take just a moment to brag and to kind of show the muscle at some point. We are very proud to display some of our logos that our customer at OVHcloud. I'm just going to talk about three of them. Okay. On the left-hand side, you have ITSC. ITSC is a company that is in charge of the applications of insurance, healthcare data in Germany. They recently or recently a year ago, launched a large RFP with all the competitors, including the hyperscalers because they needed to migrate from their on-prem facilities to cloud facilities, but they were anticipating also a very important need of security and compliance for the data of the final users. We are very proud that we won this RFP. And since then, it is opening many doors in Germany. Another one that is interesting to understand that is also demonstrating that our strategy and approach is working well, and moving forward, we'll continue to reinforce that is the number of contracts that we have signed with the French government. You can see the logos pretty easily recognizable with the flag. This is also what is fueling the performance of our Private Cloud. You remember the slides that we were displaying, the performance versus the rest of the market of our Private Cloud, the first migration to the cloud of those institutions is going on the Private Cloud, and we were pioneering this business, and we are leading the way on that front. On the right-hand side, the tech segment, those companies that were born with the cloud, digital native, cloud native, call them the way you want. They are valuing more responsiveness. They are valuing a more technical approach as well. So the profile of the team that are servicing them are aligned to that. And let me talk about Brevo. Brevo is an ad tech company, French-based. They decided to migrate away from Google Cloud to join OVHcloud and two main drivers here. The first one is economical, not capable of keeping pace with the way the bill was moving up. The second one is really to regain the independency of their technical stack. They wanted to go to OVHcloud to some of the Private Cloud and Public Cloud instances to be in full control in a full transparent manner. So those successes are encouraging us to continue our journey with those two segments. Now if we talk and focus on this corporate segment, I told you that it's going hand in hand with the partners. It is extremely important that here we are trained to mirror the way people buy, okay? Product is obviously focusing on the need, right? We focus on the way people buy, so we maximize success at onboarding and usage afterwards. So our focus here is to create a dedicated team that are working with partners in order to serve the expectations of those customers. This dedicated team are also a form of specialist of vertical. We are setting up teams that are specialists in healthcare. We have a dedicated team for the public sectors. The people speak their language, it makes it easier for them to foresee themselves in our environment. And we doubled this with our partners. You have to understand that an organization, the Fortune 500 that is delivering IT services, they have legacies of IT technologies. So the most important thing is not so much of how am I crafting the plan of migrating to cloud. The most important thing is to how am I going to orchestrate the change. And I need people that know my legacy as much as I need people that I'm going -- that are going to provide me the future of my IT system. So this partnership approach is mandatory and has proven to be extremely, extremely successful. Two examples of two key customers that I mentioned earlier that are particularly attracted to the business promise of OVHcloud. The public sector on the left-hand side, healthcare on the right-hand side. with public sector, Thierry explained that we are very much on par with the expectations of this vertical, thanks to our ability to capture the certifications that are required. Most of those certifications are coming hand-in-hand with the private cloud approach. Again, here, you understand how we are leading the way with this product on our business. So we facilitate a lot the public sector cloud transformations, not only in France. I mentioned the German examples, but we have acquired also solid certifications in Italy and Spain. On the healthcare segment, 30% of the data available roughly is coming from healthcare. And everybody can understand how sensitive and dedicated it is. Therefore, it is extremely important that you are working in a safe environment. Here again, the business promise of OVHcloud is prevailing. We are deploying specialized team that are speaking the language of the researchers, speaking the language of the healthcare data, which make it more easy for customers to project themselves with OVHcloud. Now talking about the tech companies. Those segments are extremely precious because they are driving the growth of usage of cloud around the world. Their expectation is different. They need less handholding. They need responsiveness. They need an engagement with dedicated interlocutor, but more technical than commercial. We have created those teams over the years. And those teams are deployed in all our commercial offices and are interacting with those digital native. What they value is the price performance, the availability and the easy-to-scale process whenever they are having disruptions in their usage of the cloud. Again, here, we are mirroring the way they want to source by adopting the right team to them. An example of what is the tech classic customer. Taking here one moinAI, moinAI is German originated ad tech company, and they had to kind of shift their business in a way. The ad tech is very much challenged nowadays because of the way you track and collect data. And therefore, they wanted to change their model and also start to promote a different picture about their business by working with a more sovereign and trusted cloud. The second thing to keep in mind is that they can't make any compromise on the ability to support the most advanced services like AI. And the third piece that is not from them, but just for me because it wouldn't be me not to mention, they are coming from the start-up program of AWS. So they were born and raised with AWS technology. And very quickly, they understood that moving forward, they need to take back into control of things. They can't go on with non-sovereign solution plus they can deploy in something where they will have more the control of their stack. So our value prop did work very well with them. And since then, they are deploying, obviously the core of our services, but it's interesting to now know that they are using more than 8 products with us. So it's just not one single product that will just migrate the, what we call the under cloud, it's all the usage that are migrating to us. This is a typical trend of tech companies. And the more customer they gain, the more we gain. So digital focus is something that has always been very important at OVHcloud, and we will continue and we are continuing at reinforcing it. It is extremely important for the acquisition purpose. This is really the seat at the top of the funnel of the commercial organization. And we have a lot of persona that are extremely important to this funnel, people that value what is quick to buy, simple to buy, cheap and fast to deploy. If you respect those rules, you are extremely successful on this front. We are continuously deploying resources to improve our digital efficiency. A lot of initiatives around SEO, specific actions on the most mature market with SEA, and we are always deploying additional geographies that we are starting to inspect and prospect via the digital funnel. So this level is not only an end because it is delivering result for a specific persona that is after a quick transaction, but it's also a mean to penetrate more valuable markets. So obviously, we want to deliver this profitable and sustainable growth, but we are doing it on a proven track record. And you can see on the left-hand side, the proven track record of the growing ARPAC of our main products. And I mentioned that the performance of Private Cloud is extremely interesting, driven by some specific industry that are in the need and the expectation of this kind of product because this is coming with the right level of security and certification. But similarly, with public cloud. You have several factors that are actually encouraging and actually driving this. We can see over time that those customers that are rolling on private cloud over time and as their business is maturing and growing, they are upgrading the profile of the machine that they are working with. This is driving our ARPAC up in parallel with their loyalty. What's interesting also in the Public Cloud is the ability of customers to start small, but then scale and expand to different type of product. And that's something that is very interesting as well, and this is what is driving. So the -- once you have the acquisition of the right profile, the way you nurture and farm is delivering also very interesting numbers. And finally, for me, what's the most important proof at some point of our model capabilities, we multiply it by two, the number of customers that are spending more than EUR 1 million with us. And again, those customers are not coming, starting with EUR 1 million, but they get there because we understand the funnel of adoptions and the funnel of nurturing. What it means in terms of acquisition? And here, we have a look at the geographies. So you saw previously, I think it was in Michel's slides the way the business is weighted between France, rest of Europe and rest of the world. What's interesting here is also to look at the ARPAC by geography. It is an information by itself. But out of this information, you can see that there is a huge opportunity, actually. And France and rest of Europe ARPAC being lower than rest of the world, mainly driven by the blend of Webcloud's still there as legacy business. It is a big opportunity because it shows that with the maturity and the awareness that is greater in those areas, actually, we can capture more corporate business, which is going to drive up again the ARPAC. To do that, we are going to continue to invest into the customer experience. We are going to really increase the staff again at the onboarding and the customer success level. So again, the experience of OVHcloud right from the beginning is delivered. Finally, especially in France, we are going to improve the SEAs. So we have a clear understanding about which profile of companies can really onboard with OVHcloud sooner than later. And we are going to focus on those with specific campaign. The rest of Europe needs more brand awareness. We are launching a brand awareness campaign. And hopefully, you will witness those in the coming weeks across Europe. This is to drive spontaneous, assisted awareness, which is the key factor of success to initiate a top of the funnel that will be more qualified than the one that we see solely with the digital arm. So that's a big initiative for us, which is going to obviously accelerate our business in Europe. This is going to be reinforced also by the product development that we have, thanks to gridscale acquisitions. We are going to deploy new local zone to be very concrete and specific on that. We have a lot of customers in Spain. We don't have a physical presence of data center in Spain, but we are launching our local zone in Madrid, which will give a real bounce to our business in Spain, attracting greater value-based tech companies to our business. In the rest of the world, we will continue the digital coverage. What's important here is that we will continue to reinforce the sales organizations and the customer support organizations to enrich the experience of the customers coming from the digital funnel. Here again, we will leverage the implementations of local zones in order to give a bounce to the awareness of OVHcloud locally. What's very important, when you build up business, you have to build up on something that is solid. What we are very proud of is that the loyalty of our customers is fantastic. And this enables us to build up and not to rebuild the foundations year after year. The churn rates being held at 2% is a very good, very good results. We have a few things that we have deployed that we'll continue to reinforce. The first one is that the customer support has improved drastically and is continuously improving. The NPS report that we are monitoring on a monthly basis are demonstrating greater satisfaction of our customers. The implementation of additional services for which customers are ready to pay. If you think about it, a tech company that is solely relying on the cloud provider for its entire business, just -- you can't go with just one standard support. You did a specific dedicated support. You need your support in cloud to be on par with the business promise you have on the market. By deploying this level of support, we have increased loyalty. We have increased satisfaction, which in return is driving growth of our installed base. We have also a key business team that is particularly good as detecting signals, signals of behaviors, patterns of behaviors that are likely to drive churn. We preempt those events by proactively engaging with them, preventing churn at some point. And finally, what's interesting and something that we are starting, but that has already started to deliver very good results, and for the time being, I don't see any limit to these capabilities. The cloud industry and the cloud business is made of pattern of usage. Within the product, the way customers are using the product, you can detect pattern that are enabling you to automatically offer what should come next, not before they think about it, but rightly at the time they think about it, and that makes a huge difference because if you think about the ability of the company to grow existing base with digital automation, then you focus the rest of your people to value-based transactions that are longer-term sales cycle. That's why I'm feeling very confident about the plan ahead, relying on what we have already achieved. Now I will hand over for the financial part to Stephanie. Thank you.

[indiscernible] Thank you. Thank you, Sylvain. Hello, everyone. I am Stephanie Besnier, CFO of OVHcloud. And together, we'll go through our model of delivering growth with cash generation. So as you understood, we have a very unique, fully integrated model. And this industrial model is a central piece to our development, and I will show you why. So as shown by Michel, our model is to broad customization options for our customer and is sustainable by design. But it also has strong competitive and economic advantage. First, it gives us full flexibility on our investments, which are mostly gradual and demand based. Second, we have lower operating costs, thanks to our water cooling technology, and as we have no intermediaries. And last, our servers have a longer lifetime value. So first, I will start with the flexibility. Our main -- first main advantage in our industrial model is the fact that we have mostly gradual and demand-based CapEx. When you look at the investment cycle of a data center from land acquisition to reaching full capacity, we first start with upfront CapEx, meaning the building and the first connection to the grid, so it's point 1 and 2 on this slide, and this represents 5% to 10% of the total CapEx. Then we turn to point 3 on this slide. This is a remaining internal infrastructure work like the water cooling piping, the internal electricity network or the last measures of the network, and this represents an additional 10% to 15%. So all in infrastructure CapEx is between 15% and 25%. What's left? It's most of the CapEx, 75% to 85%. It's point 4 and 5 on this slide. And this is a server, servers and racks. This is demand based. With the time to market of around 2 to 4 weeks, we assemble our servers only when there is a demand. And this approach gives us the full flexibility on our CapEx. Second, economic advantage, it's the fact that we have lower operating costs. And this translates into a reduced total cost of ownership in our model compared to the classical co-location model. And the difference is significant. On this slide, we are showing the example of an entry range server and our total cost of ownership is 35%, 35% lower than in a co-location model. So if you look on the left hand of the slide, we present a detailed comparison of financial range server assembled by OVH and operated in an OVH data center. At the bottom, you have a server from an OEM with the exact same features and operating in a co-location. We've done the analysis on a 5-year basis, which is roughly the average lifetime of a server in a co-location and we've applied a cost of capital of 9%. So what you can see on this slide, is that even though we have higher upfront CapEx and that is the light blue bar that you see on the top, our operating expenses are much lower during the lifetime of the server. And it is mostly linked to the fact that we are consuming less electricity, and we don't have to pay for intermediaries. Now I add the revenue curve on this slide. And that is also very interesting because we are now talking about profitability. While the profitability of a natural range server turns negative in the co-location model, with our own model, we can be profitable for a much longer duration on this type of server. And that's precisely how we can have a much longer average lifetime in our server, 8 to 9 years, which you will see on the next slide. The last thing I want to mention on this slide is that we are also building through our proprietary data centers, a network of strategic assets, and that will secure our market positioning in the future and secure our future growth as well. So now turning to the third economic advantage. As I mentioned, our servers have a longer lifetime between 8 to 9 years in average. They undergo several life phases, as you can see on the chart on the left. We follow an active waterfall strategy. So on the left, we take the example of a Hosted Private Cloud. During the initial 3 years of its life, it's sold as such, and then we can transition it into either a Public Cloud server or it can also be sold as a new generation of Hosted Private Cloud. And for that, we have only commercial evolution to do. There is minimal actions to be done on the servers. Then for a minimal additional investments like we need to change on spare parts or to do some upgrade on the server, we can keep it and sell it for the third life. And on some occasions, we even do it for a fourth life. And again, this ability to achieve such an extended lifetime is primarily facilitated by the fact that we have lower OpEx in our own model. So again, this integrated model is a central piece to our development and the control we have over it gives us confidence to achieve our main financial objectives: first, deliver sustainable and profitable growth; and second, maximize our cash generation. So as Sylvain demonstrated, we will deliver sustainable and profitable growth. First, of course, we will continue to evolve towards the cloud universe such as public and private cloud. In terms of profitability, as explained, we will increase our sales and marketing investments, but at the same time, we will improve our operating leverage on gross margin and on G&A. And this operating leverage will be driven by the product ramp-up on one side, enhanced by the productivity gains on the other side. And by closely managing all our costs, we aim to increase the EBITDA margin and also maximize our cash flow generation. Now let's have a quick look at our evolution towards the cloud universe. So for the last three years, our growth has been driven by public and private cloud. As demonstrated by Michel, we outperformed our underlying markets, especially in private cloud where we gained market shares. And in public cloud, we've been able to maintain a high level of growth in a decelerated market. We're now #1 in Europe in private cloud, and we're the largest European player in public cloud. Now looking at our business mix in '26. The growth trends will continue, and we expect the revenue share of private cloud to remain broadly unchanged around 60% of our business mix. Public cloud now, it will mechanically increase by around 5 points in our business mix due to the higher growth rate. And for the same reason, due to the lower growth rate, web cloud will decrease to between 16% and 18% in our business mix. Our growth will be driven by high-end servers and public cloud, mostly, and this will have a positive impact on our profitability and on our capital intensity, and I will go through that in the next slide. So we have a clear trajectory of improving the profitability of the group. Despite achieving a track record of high level of gross margin and EBITDA margin, over the last 2 years, we've been impacted by inflation, particularly on electricity costs due to the energy crisis. But let me provide you with a few key elements regarding our '26 outlook. First, concerning the gross margin, the COGS, the cost of goods sold is expected to improve by 150 basis points. Why? Because our COGS are mostly driven by our web cloud business. We have to purchase domain name. We have some costs related to telephony and the increased share of our cloud businesses will mechanically have a positive impact on the weight of our COGS as a percentage of revenue. We also have some license cost, but the decrease of the web cloud licenses cost will be compensated by the increased share of the cloud businesses licenses. In terms of operating costs, we forecast an improvement of 50 basis points. When we open a new data centers, we have to set up a new team. We have to hire a plant manager. We have to hire the first technician in the team. But when we're in the filling phase of those data centers, we have lower OpEx increase as an important part of the team is already in place. So we'll have a progressive ramp-up of productivity over the next years, thanks to the fact that we have recently opened a number of new data centers. And that is going to be the same for the product teams. Their products are ramping up and will have a higher revenue per head count in '26 than in the previous period where we were first building the teams and then developing the products, notably the PaaS product. For energy cost, we anticipate them to remain rather stable as a percentage of revenue. We have an unchanged hedging strategy, and we have also initiated some corporate purchase price agreement. But at the same time, we remain cautious with regard the forecast of the spot market. So all in, stable as a percentage of revenue. So turning to the EBITDA margin outlook for '26. We expect our SG&A to improve by 100 basis points. We'll have an improved -- this improvement will be attributed to, first, on one side, an increase in the sales and marketing expenses, but that will be compensated by scale effect on our G&A as our teams have been significantly reinforced since the IPO. So quickly looking at how our operating leverage will translate into -- in terms of EBITDA margin. We anticipate a margin of around 39% in '26 with, again, 150 basis points improvement on COGS, 50 basis points on operating costs and 100 basis points in SG&A, as I explained in the previous slides. Now moving to our second financial objective, maximizing our cash generation. We will achieve this through 4 main drivers. First, the optimization of our infrastructure by leveraging the recently opened data centers. Second, we'll have a less capital-intensive mix of servers. Third, we will stabilize the product development CapEx we've built the team. And fourth, we forecast a reduction of our exceptional CapEx. So let's have a closer look at those drivers. First, on our infrastructure. In the last 3 years, we've opened numerous data centers. And by the end of '24, we aim to reach a total of 45 data center versus 33 in '21. It's been a major driver of the high level of our growth CapEx in the recent years. Our primary focus is now to optimize the utilization rate of those data centers. In the data center industry, we measure utilization in U, a rack unit. A rack unit is basically the space between the shelves in the rack. And usually, 1 server is equivalent to 1 unit. Sometimes it's alpha unit, sometimes it's 2 units, but it's a good proxy, 1 unit, 1 server. By the end of '24, our total capacity will be 720,000 U at full utilization across our data centers with a utilization rate estimated at 64%. This rate has decreased compared to recent years because we've opened new data centers. And again, our primary focus now is on increasing this utilization rate. And this increase will drive lower capital intensity on infrastructure costs. As I showed you before, we've incurred the upfront CapEx to open the data center. That was point 1 and 2. And now we invest mostly in the urbanization of those data center, that was the point 3. And on servers, that was point 4 and 5 of the previous slides. And that is going to answer our customer demand. So that is going to be gradual and demand based. Another driver we have is that revenue growth will be driven more by high-end and public cloud servers, which have lower capital intensity due to the high revenue per U. When we look at the ratio between the lifetime revenue and total CapEx of a server, that's on the left of the slide. Total CapEx means infrastructure, network, hardware and software. We observed significantly lower capital intensity for higher range and public cloud servers, 5.5x for public cloud servers, 4.5x for high-end servers and only 3.0x for entry-range servers. So it doesn't imply that we'll drop entry-range servers, no. They play a crucial role in our model. They drive customer acquisition and they help us absorb our structural costs due to the high volume. And additionally, it's a segment with high barrier to entry because I demonstrated at the beginning that this type of server is profitable only in an integrated model, not in a co-location model. So how does it translate in terms of guidance? First, our recurring CapEx includes servers and infrastructure investments that are needed to maintain our revenue at prior year's level. Looking at the average over the last 4 years, our recurring CapEx were composed at 70% by servers and 30% by infra & network. So the higher mix of less capital servers, the reduced infrastructure CapEx and the additional revenues from products will drive a decrease in our recurring CapEx as a percentage of our revenues. We expect those recurring CapEx to range between 12% and 14% in '26 compared to an average of 18.4% in the last 4 years and a target of 16% in '24. Moving to growth CapEx, which are the CapEx we do for short-term growth but also to fuel future growth. We can categorize them in the following ways. First, there's a CapEx we allocate to expand in new assets, like opening new data centers or develop new products. The time between the 1st euro of CapEx and the 1st euro of revenues is between 24 and 36 months, and we make this investment for longer-term growth. On the other side, there is the investment we make on existing assets, and this primarily involves server CapEx and short-term infrastructure work, again, point 3, 4 and 5. We have a demand planning organization that overseas production and investments, and these are demand-based CapEx required to fuel our short-term growth. So how does it translate in terms of midterm guidance for our growth CapEx? In total, we anticipate our gross CapEx to be between 16% and 18% of our '26 revenue. So the focus on investing in existing data centers, which we recently opened by increasing the utilization rates, plus the stabilization of our product development expenses and the reduction of the exceptional CapEx, all this will lead to this lower growth CapEx intensity. So we guided for a positive unlevered free cash flow in H2 '24, a positive unlevered free cash flow for '25, and now '26 will be the breakeven year. We will be free cash flow positive over the full year '26. Looking at the detailed trajectory for free cash flow generation. We will improve our operating leverage to reach 39% adjusted EBITDA margin in '26. Then we take the midpoint of our CapEx guidance around 30% in total. This leads to 8.5% of unlevered free cash flow yield with the main items below being IFRS 16, and you see that the slight increase is related to the launch of our new local zones and then 2.5% of financial interest and in financial interest, we factor for the increase of the interest rates. All in all, as a breakeven year, '26 should generate 2% of free cash flow yield and we will keep improving cash generation after, '26 is only a first step. And the balance sheet now. We have a very sound debt profile. We have no major repayment before our fiscal year '27, and we're very confident in our outlook. We have a lot of available liquidity. And we're already working on all our options to prepare for our refinancing. One of our objectives will be to spread the maturity of our debt. All in all, we have a leverage of around 2x, and we confirm our objective to remain below 3x. Quickly on our capital allocation in '26. We will continue to invest in hardware, in infrastructure and in product development to deliver sustainable and profitable growth with a lower capital intensity. We will be able to start deleveraging. And even though we've not factored M&A in our trajectory, we will be opportunistic on M&A. And before handing over to Octave and Michel, a few words on our M&A strategy. We've already done several deals in the last years. We have mostly bought tech or product companies to accelerate our road maps in database, in storage, in security and data analytics. And more recently, we've acquired gridscale, a new technology to open our new local zones with lower CapEx. And we will continue to be opportunistic on M&A. We will also look at customer and geographies based deals, including customer portfolio or data centers carve out. So as a word of conclusion, let me reconfirm with confidence our '24 and '25 guidance and remind you of our new '26 targets. Thank you, and I now hand over to Octave and Michel for the conclusion.

To read out, the conclusion is to be the data sovereignty reference, continue to invest in the tech currently, the 4G product, but also the new generations of the innovation that our customers they need is to deliver sustainable and profitable growth. And of course maximize our cash generation for the next year. This is mainly 4 goals that we have.

Okay. Before -- finally, yes. Before we start with the Q&A, I would like to say that we're fully committed as a team to accomplish and to continue the adventure of OVHcloud. And this is what today are our main key elements for the future. I just want to repeat them because Stephanie has mentioned the rationale behind that. You've seen the product. You've seen the sales and marketing and the dynamic of a very focused strategy, but also a very focused execution model. And that's why we're very committed to be able to continue to have a double-digit growth with, I mean 11% to 13% like-for-like revenue CAGR, increase the EBITDA level of fiscal year '26 up to 39% from 37% to 39%. The CapEx will be controlled with -- to the recurring CapEx, 12% and 14%, the growth CapEx, 16% and 18%. And after being second half of semester in '24, I mean, unleveraged free cash flow positive in '25, the full year unleveraged CapEx of free cash flow capacity, we'll be in '26 free cash flow positive, including all the financial costs. Thank you very much again.

Thank you, Michel. Thank you, Octave. It's now time for Q&A. As we have a hybrid format, we'll start with a question in the room, then we will take the question online, and I will read some questions we might have in the chat. Thank you, and we're open to your questions.

George Webb from Morgan Stanley. I've got 3 or 4 to kick off with, please. Firstly, maybe one for you, Michel or Octave on the -- I guess, on the big picture on data sovereignty. We saw the EU and U.S. come to a new data privacy framework last year. To what extent in your eyes does that impact the ability of private companies to now abide by GDPR whilst using the U.S. hyperscalers? Secondly, I guess, shifting over more to the CapEx side of things. We discussed on the slides growth CapEx declining from FY '26, the time lag from cost to revenue on some of that CapEx being anywhere from 1 month to 36 months, maybe more skewed to 6 to 12. To what extent does that decline in growth CapEx in FY '26 impact, how you think about growth from FY '27 onwards? A little bit tied to that. You've talked about that shift to higher-end servers being one of the reasons why you can drive down that intensity. I guess why was that not so much a focus previously? Or what's the trade-off you're making as a business when you decide to focus more CapEx on to those higher-end servers? And then just lastly on brand awareness, can you put any numbers around what that campaign will cost and maybe some of the countries that we focused on?

So I propose, I will take the first one about the data sovereignty. Stephanie, you take the second one and maybe Octave, you take the last one. Okay. About data sovereignty, I think what you mentioned is data privacy framework, which has been signed between Europe and the U.S. As you know, there is a little bit of skepticism about the CapEx that is really legal. And I will not enter into discussion because I'm not a legal specialist, but some people are already saying that there is a promising Schrems III because I think there is a complete incompatibility between FISA and Cloud Act with GDPR. And so I mean, I'm more and more -- even so I'm not a legal expert, I'm really absolutely convinced that at the end -- but nevertheless, let's say, regulation standpoint, I think I just want to mention that there is a market for data sovereignty in Europe, but also outside of Europe. And for me, the proofs are very clear. First, some players are trying to do the same, and it shows there is a demand. And we see today everywhere in Europe, but also outside of Europe, that there is a demand from customers. And we're the #1. We started first. And so we have a very strong and very focused strategy to maintain this leadership. And thanks to our offering to enhance our sales capacity and also so to our positioning, which is we don't touch customers data, we don't use any data of the customers. And this is very clear. Our solutions are open, reversible, transparent. So I think we have a complete set of marketing, sales, product and values, which fit this market and we're ahead. And thanks to the investment we'll do, we'll continue. So yes, there is a market, and we will continue to lead this market. Stephanie?

Yes. So on the growth CapEx, what we have explained is that basically, we've recently opened a number of data centers. And you're right, it takes between 24 and 36 months to build new assets. But in our trajectory, we've factored from some new openings that we may have to do to prepare our future growth. The thing is we will not open as many data center as we've done recently because we have a lot of capacity now, and we're able to face some years of growth. Plus, I mean, we're stabilizing the product development teams. I mean, we're not reducing. We have just built those teams. We've reached a level where we're equipped to prepare our future growth. We have the end of the exceptional CapEx that were linked to the COVID, for example. And we have also a shift toward the high-end servers and the public cloud server, which you saw generate more revenue for lower amount of CapEx. So all in, that is a trend that you will see. We have not sacrificed any kind of growth potential. It's just the mechanics and the way the model works that implies this new guidance.

On the question 3, why we sell -- we want to sell more high-end servers that we sold before. It's all the work that we have done 3, 4 years ago to change all the infrastructure in the data center and to be ready for the AI in the very high-end server. So we changed a lot of things 3, 4 years ago with the network, power the place in the different technologies in the data center to be ready to cool bigger servers and to be ready for the high-end GPUs, for example. It's also was the strategy to prepare all this movement to PaaS because we know that the PaaS, it's working well where use servers they're bigger. And you can reduce the cost of the sharing of the 1 core or 1 giga of the RAM. If you're putting very big servers, you're sharing the cost in the better way. So we've been working in the last 3, 4 years, where it was hard to make this movement. And now we will have -- we see -- we already see that we're deploying more and more of these high-end servers, not only for us because of the PaaS strategy of the software, let's say, they're available, new 40 products that they're available. But also for our customers because they see that they can have the same bare metal, not the same bigger bare metal and it costs less per unit of the power of the RAM of the storage.

I think there was the last question around the brand awareness campaign. So it is the first on our side. We decided to invest mainly to broadcast and display our brand and business promise, targeting the main countries that we have highlighted at the biggest potential. So starting with the U.K. and Germany. I'm not sure we can disclose the amount that we have to spend on this campaign, but it is the first and believe me, during the budget exercise, it was a massive number on my end. And that's something new, but we believe it's now time, and we're ready for it.

Hope you can hear me well. Emmanuel Matot from ODDO BHF. Four questions from me. First, do you expect authorities in Europe to be more supportive to make the competition less unfair from hyperscalers? Second, don't you think you should allocate all your resources to be a pure player in private cloud? That's where you have very strong positions in Europe. Third, in terms of pricing, you increased pricing last year due to inflation, notably of energy, electricity. Do you want to remain cheap in the industry? Or do you plan to further increase prices? Notably, I think in data sovereignty, for your data sovereignty solutions as it is a key element of differentiation. And maybe my last question about M&A. Do you exclude any significant acquisition in your fiscal year '26 plan or it could make sense? If there is, I don't know any opportunities.

I will take the first one and part of the second one, I will let Stephanie and after I will return. About the European authorities, I think there is a -- was a big shift of the authorities after the COVID and the Ukrainian crisis, where you see that many things have changed and the perception has changed. Now the perspective is that you need to protect Europe in a way. And data is as important as energy. That's the reason why we've seen that there are some -- a few things which are today like the Data Act, which are -- have been implemented to regulate some practices of de facto monopoly. And this is a rising concern that the European authorities have. And however, Europe is sometimes slow, so it takes time. But we're absolutely convinced that midterm, we will have the benefit of more and more cautiousness by Europe. But the fact that some practices are not acceptable. They're not good for the market and they're not good for the customers. And it's not what I'm saying. It's the people who are saying that are Gartner, IDC are all the analysts. I just want to give the example of egress fee, which is something which has made a little bit of debate beginning of this week with the announcement of 1-year hyperscaler, which is not an announcement because, in fact, the case of non-egress fee are so marginal that in fact, there is still egress fee on all the hyperscalers, which will be forbidden by the Data Act. So I'm absolutely convinced that things will change. And that today, we have a strong, I would say, emphasis. I just want to -- after to -- let to Stephanie about the price increase, which is the second question. Pricing today is something that due to the crisis and admittedly for the energy has changed and has been done last year, where we've made massive pricing changes. However, we have a dynamic pricing independently of everything that is happening, if there is an energy crisis. So we have a very, very flexible and very dynamic model of pricing. We want not to be cheap. We want to be price performance leader. We're not cheap. We have the best performance for the best price. And this is our positioning. And if you take VPS, for example, there are some benchmark in the U.S. We're ranked on #1. On GPUs, we're ranked on #1. So this is really our positioning. And we want to maintain that because we believe this is first very important argument in this current situation of the economy, where customers are more and more cautious about their cost and the fact they do not control cost -- cloud cost. This is a very, very big concern. And as you know, there were some practices called the commit, which has been by the hyperscalers. We do not do commit and we know that we've gained and Sylvain has mentioned a few cases of some customers, who have moved from hyperscalers to OVHcloud because one of the reason is to take control of their cost, so that's our positioning. And we will continue, and we have a very, very, I would say, solid and strict and Stephanie can give a few things about the fact that in the future, the pricing model of all our new services will be dynamically, but always with the best price performance positioning. Stephanie, do you want to add something?

Yes. No. Exactly, Michel. I mean we've communicated specifically on the pricing last year because we launched very specific campaign to answer the shock that we saw on the inflation. So we changed the pricing of existing products. What we do usually is that whenever we launch a new product, and this happens each week, each month, very often. We look at the pricing in terms of market positioning and in terms of return for us. So that's how we have this very dynamic pricing. And our positioning has been efficient. I mean, you remember this slide, Michel showed at the beginning, where you see the graph of the growth of our competitors in gray plus our own growth. I mean, in private cloud, clearly we gained market share. We have been very efficient. We've been able to grab new customers, thanks to this positioning. And in public cloud, we've been able to stabilize and even slightly increase our growth rate. When you look at the performance of the peers, they have been decelerating. So clearly, our positioning, best value for the price is working, and we want to keep it in the future.

We just add one information that we have -- to calculate the prices, we have a model that we follow for every product. And this model, the goal is to have 40% EBITDA, okay? So this is how we calculate all the prices. So we don't expect to change this model in the next years.

M&A. As we said, and after I would let Octave to -- we have been very selective in the M&A. And we have made 1 M&A in the U.S. to be able to expand, and in fact, to start mainly our operation in the U.S. just before I arrived. And since I arrived, we made 4 M&As, mainly specifically, to really fit with our strategic cycle, which was to develop new offerings and new products. And that's the reason why we've made these 4 acquisitions. And we're -- we'll be very pragmatic, very opportunistic. And if there is any opportunity with the right level of price because we're very cautious about the price and we want to stay frugal. Of course, why not? So the answer is, if there is any opportunity to maintain high profile of profitability and growth, we will capture these opportunities.

Ben Castillo from BNP Paribas. Three from me. Firstly, just coming back to the sovereign cloud opportunity. You mentioned competitors making noise, perhaps without demonstrating proof of meeting requirements. Perhaps I'll assume it's a coincidence that Bleu announced their go-live commercially in the last week. But what is your perspective then on what they're able to sell with that? And maybe what's the risk that it gathers momentum in industries, perhaps outside the most hypersensitive markets like health care, public sectors, or outside of those and then ends up enterprises can perhaps force to handle, put more pressure on European regulators to ease their approach on the market? So that's my first question on sovereign cloud. Second question was just around public cloud, sustaining at least the market sort of multiyear growth rate. I guess it's fair to say that growth perhaps has been a bit mixed there so far. So what gives you confidence in that assumption from here? And then finally, just in terms of the number of data centers, you obviously mentioned about investing a lot to grow that out and that should moderate. Can you give us a ballpark on where that needs to be on number of data centers to deliver on your plan through 2026?

So maybe I will answer on the first question on the data sovereignty. In the data sovereignty market, there was 2 verticals that we're following. The first is public sector and the second is health care. If you see, health care is the vertical that's already -- it's the biggest market where you have the most -- more data. It is -- and this is where data is growing faster. So everything that is going to the health care, this is already the biggest market if you talk about the storage. And this is where you generate the more and more data. We will need to work on this data as society to reduce the cost of the health care and to be ready to -- because we will live longer, and we need to reduce the cost of the -- to going to hospital, et cetera, et cetera. So we will anticipate the things because of this data with DNA, with the different biologic analysis, et cetera, et cetera. So this market, it's not need this regulation in the data sovereignty because data are sensitive. We need to extract this data and you will not be able to extract this data if you don't have this contract of the trust with the patients that if they don't trust that they can share their data with not cloud providers, but with the SaaS companies to help reduce the cost, it will never happen. So the trust for the -- to use all this data, it's a contract. In Europe, we see that a lot of patients, they're concerned, they don't give the consent to use their data. And this is roughly the challenge that every hospital, the insurances they have. They -- we need to build this foundation of trust with all the society to have access in the certain conditions to do the things on that, but do the things in the right way. So we think that we can provide this kind of cloud and all the technologies to dig inside of this data and to extract the value to anticipate the different things in the future. So roughly, this is what we see. And when you -- on the opposite, where you see what happens in the U.S., you see that it's totally opposite. You don't control any data companies. They buy them different hospitals. They have access and because this is how U.S. is built. In Europe, it's -- I think it's a totally different approach, and we're more protected. We're more protecting this data, more protecting the people. And I think we're the answer, one of the answers to help the health care market to raise this data and to create the value from that. On the public sector, it's all mainly to the states, to the countries. When you have some -- in France, for example, you have some areas that you will never go to the hyperscalers because it's too sensitive, okay? And we see these areas going in upgrading. You have more and more areas like that, where the ministers, they want specific data solvency cloud, so we're going after 2 markets. There was another market, it's financial market. Also, it's a big market for the -- with the regulation, but we don't see yet this moment in the financial -- in the banking insurances. It's coming, but it's more -- it's slower. That health care is really now and public sectors are really now, this is where we're going with the all technologies. This is why we have the certifications, all the certification for the public sector, but also health care. And this is why we're investing in 40 products, but not only with, let's say, the mainstream regulation, but also with SecNumCloud and the health care regulation, specifically for this market.

You mentioned Bleu, which has been announced this week. I just want to say 2 things. The first one, today, if you go to their website, they have nothing to sell. So it's been that we still have [indiscernible] to continue now to sell our products, which are certified. And they announced that they will be ready 2 years ago, 1 year ago. And after, as they mentioned, that they will be ready in December 2023, still not products. So I just want to mention this point about the fact that we're in the reality, we have offering. We're making investments. We're ready, and we're leading the way. Second, and it's more broader about this type of model where it's a joint venture, and you certainly have seen also what has been put by the Netherlands authorities, which has a little bit challenge to say that maybe it's not completely immunity against the extraterritorial laws, especially when you see what is on the paper today with the FISA. FISA is even more powerful than the Cloud Act. I don't know if you're familiar with the FISA, which has expanded in December by the President, Joe Biden for few months, which will be even more -- I mean, intrusive within that. And there is a little doubt that today, this model will, in fact, legally guarantee immunity. So I think today, the chance that we have, again, is against this type of model, which has been implemented in France, but also in Italy and Germany because there are some announcements being made, which have no products yet, no certification. We have to continue to invest and to lead the way. I just remind, and it's also to get about the public cloud question that you asked. I didn't answer about the fact why we do not focus on only a private cloud because the market now is hybrid cloud. The market is hybrid-cloud, especially if you're in the corporate segment, the customers are asking to have sometimes private cloud and sometimes public cloud. And you need to give them the ability from a technical standpoint to be navigate seamless less between these private model and this public model, which is multi-tenant. And by the way, also it's a much bigger market for us. We believe that with our key differentiators, which are always the same, on the public cloud, too, we will have, I mean, a way to maintain on a much bigger market because it's a 5x bigger market for us. It's new because we started only 6 years ago, but it's a huge opportunity and we believe today that the hybrid cloud, like the multi-cloud is the future of the cloud. And it's not only me or Octave saying that, it's also all the analysts of the industry. On the public cloud, maybe to explain the fact that today, we will continue to grow, and we hope to maintain really with a very strong focus, our ambition on the public cloud....

Yes. Maybe one thing we should insist on is the fact that when you start investing into developing a public cloud, it's not just adding one product next to the other, and Octave and Michel mentioned the 40 products. It's all about making sure that you can intertwine between products and that the customer can very easily with no management burden, et cetera, go and consume our product from another. So they should be intertwined with one single layer for them to be able to manage the whole stack. That is happening step by step. So if you combine the fact, if you remember the curve in the chart we showed on Kubernetes, the fact that those products are getting into more and more maturity, each of them getting momentum, plus the fact that now with a seamless security and observability layer that we're putting in place across the board, we're enabling cumulative effect that each of those products are accelerating, but also the ability for our customers to simply use those, not just public, but public and private in a seamless way makes such an acceleration possible. So we're absolutely confident that we see everything happening in the last year, just going stronger. And the teams have been doing a great job at making those services not just available but simple to use. And that's the key.

And another element of proof is that today, we see in the corporate segment that hybrid cloud for us is a reality. And therefore, it means that the public cloud increasing in the corporate and enterprise market will continue to be a major -- I mean, a way of growing. That's why we maintain this hybrid cloud model because this is a demand of the customers, especially in the corporate and enterprise market.

We want to extend that also -- we didn't talk about that, but also will be ready to deploy our technologies in the data -- customers data center. Because of the technology of the great scale that we're able to deliver in new locations very easily, we will also be able to go to the customers data center and deliver all our stack of software wherever they want, not only in our data centers, but also somewhere. So it's going step by step, and this is what we call really the hybrid cloud. It's fully wherever you want, what you want, how you want.

The hybrid cloud model for us, it means that the customer will decide if you want, on-prem, edge, private, public and it's seamless for them.

Last question was just on the data centers.

Sorry, can you -- yes?

Just the last question was just that the ballpark of the number of data centers that you think you might need for that 2026 plan?

The -- but the what, sorry?

The number of data center?

So we gave the number of data center.

We gave the number of data centers by the end of '24. The idea is that we plan to have some extension because in some specific geographies, we will be close to full utilization, and we want to prepare [indiscernible] '26. But the indication I can give you is that we're not going to open 12 data centers every 2 to 3 years like we did in the past, it will be much, much lower number. Plus we have also this new deployment model with the local zone and which will help also answer some very specific geographical needs in the coming years.

Just to be very factful because in the local zone, we will have 14 local zones open before the end of the summer. In new location, the first 2 will be Madrid and Brazil. We're today in alpha. So we're testing with some customers in these places. We'll extend in new locations in the U.S., but also in other countries in Europe. And the beauty of the model of gridscale is that, as I said, it was sort of edge computing. It means that you can start very small. So it reduce drastically the starting point of a data center. So we can open now new countries, new location with a very marginal minimum level of CapEx and after we can hope to grow and we're committed to grow. And maybe migrate to another model where, in this case, the profitability of the big data center is highly improved because of the number of servers that you have is already high, and therefore, the profitability of the investment is much faster than that. So we really do believe it also will change our capacity to have a better, I would say, return on CapEx that we're doing, thanks to these new technologies that we're implementing, and we're starting with a new customer. Our ambition is to have 14 new locations before end of August.

For the next question, maybe can we check online if we have someone on the conference call, who wants to ask a question.

Sure. We'll now take our question from Derric Marcon, at Societe Generale.

I hope you can hear me well.

Oh yes. Yes. I can hear you very, very well.

Okay. So I've got only 3 questions, if I may. The first one is on your EBITDA margin. What makes your previous target, so 42% that was displayed at the 2021 IPO, no longer achievable? That's my first question. And the follow-up on that. I was just surprised -- I was surprised to see that the energy cost in percentage of sales by 2026 should be similar to today, so let's say, high single digit. Does it mean that the price strategy that was designed last year was not enough to offset the actual energy cost increase? That's my first question. My second question is related to CapEx. And especially or particularly the administration and production system CapEx close to EUR 50 million per year. And I was wondering if this number will reduce in the coming year. Is it taken in your assumption of growth CapEx for 2026? And my last question, it's about the utilization rate of your data center. So you said 64% today, a decrease compared to previous year. And I was just wondering what is the target for 2026 and how this target compared to historical levels, i.e., when you had 42% EBITDA margin in 2020 -- fiscal year 2020? Was the utilization rate of data center much higher than, I don't know, 60% or 70%?

Stephanie?

Yes. So I will start with your first question. When we set up the ambition in '21, it was a completely different environment. Now we factored for also the inflation. We had the energy crisis. And we built this new plan. And clearly, we see the operating leverage I described on the industry team, on the product teams, on our G&A teams, but we want also to invest in sales and marketing. And that's probably going to be the focus of our next plan like Octave mentioned at the beginning of the presentation. So all in, we plan to be at 39%. We don't guide beyond, but we're mobilized, obviously, to keep improving our cost management and on our margin. In terms of electricity costs. Clearly, we don't anticipate a decrease as a percentage of revenue. We want to remain cautious. We know that there are also some tax shields that will disappear over the coming years, including in France. So that's what we have factored also in our forecast. Now we're still able to improve our margin over the plan. So our pricing strategy is working. And again, we're precise that we want to remain on the same positioning of best price performance. And so that's clearly the strategy we will keep on implementing moving forward. I'm not sure I got properly your point on the CapEx. Your second question?

Yes. In the annual report, you give the breakdown of CapEx per, let's say, type of CapEx. And within that, you've got a line dedicated to administration and production system like the SAP deployment or HR systems, which seems to me a little bit costly, EUR 50 million per year. And I was wondering if you assume in your 2026 target a decrease of this number? And is this EUR 50 million per year counted in the growth CapEx line?

Yes. So as lots of other companies, we have some transformation ongoing within the group to improve our performance on HR, clearly and on other topics. That is including in the R&D CapEx. And for that, we plan those CapEx to remain stable in absolute terms and to decrease as a percentage of revenue.

And the last one was on utilization rates.

Utilization rates of data centers?

Oh, utilization rate. No, we don't guide above 20%. I mean, the number we gave about 64%.

Okay. So can I just make a follow-up on -- you did not talk a lot about your strategy around data center as a service, as you used to do in the past. Does it mean that this strategy did not bring the expected success?

No. I think we didn't mention that because I think we had a question of timing always. So we're very cautious. Octave mentioned a little bit about just before in one of the questions. Today, data center as a service is dedicated to a very, very small segment of customers, which have on-prem data centers, and we see there are a lot of interest. That's why we have now all the pieces technically to allow what we call the disconnected model, which allow the customer to have access to the hardware and software stack completely independently. And as there is more and more, I would say, concern about data protection, cybersecurity, the fact that some customers want to keep some sensitive data very close to their own operations, we're absolutely convinced that what we have -- I mean, we're the first to announce this type of model, disconnected model is definitely something which still is completely valid. And we're maintaining contacts, and we have some -- I mean, good, I would say, discussion with some large customers about such deals. But it's not -- we didn't offset that. It's more a question about focus about the announcement we made.

Maybe I will just add one information. All the development based on the SecNumCloud, everything that we're developing for the SecNumCloud and really this cloud, let's say, military cloud, it's the same team that was working on the data center as a service. So for us, it's the same line of the product that we're able to deliver in our data centers and wherever the customer wants, okay? So for us, it's the same kind of the product that we're developing, specifically for this higher reglementation, isolation, a lot of encryptions, segregation of the network, et cetera, it's all really, let's say, military way of thinking. And we deployed -- we're able to deploy that in our data center, but also we're deploying that in some customers with very sensitive data right now.

The next question, which will be the last question comes from the chat and it's about data sovereignty. If you could elaborate on the trend that moving your data to U.S. hyperscalers, but using data encryption?

Oh that's certainly the -- what is some answers that some hyperscalers are using to say, okay, no problem. You can go to the hyperscalers and you just have to encrypt. But of course, the details and the details are in the details. It's not because it's encrypted, that is protected. It's one way of protected. It's not because someone has a safe that cannot be stolen. So -- and moreover, I don't know if you know about that, but there are some discussions about, on the, I would say, Senate, U.S. Senate that it would be mandatory to have the keys available by the security agencies in the U.S. So this is only an argument, which might be for the first level interesting, but cannot be for the sensitive data, really very important. However, moreover, it does not protect to any type of AI type of algorithm because you decrypt, you use AI and you will encrypt. So everything which is done to use today, AI to train the models. In fact, sometimes it's a way to steal your intellectual property, and this is not what we're doing. So we're absolutely convinced that the only way to implement data sovereignty is to have the certifications such as SecNumCloud, which guarantee data set, private data set, the full encryption, but also the location and the legal sovereignty, plus all the technical attributes of cyber, but also private data set to really protect your sensitive data. And the arguments you have only an encryption, unfortunately, it's not the solution and can be...

And there was quantum that is coming...

Which will decrypt. It's the other way....

You never know. Okay. You never know what you can do with the encrypted data once you have it. So for some -- for example, if you have a conversation with your mother, your family, if it's encrypted, and you can encrypt -- decrypt that 10 years after, it doesn't matter what you told to your mother or father or family. But for some sensitive data of the states, et cetera, you can en-decrypt 5 years and 10 years from now, maybe there's inside something that should not go to this set of hands. So never know.

Thank you very much. It's the end of our Investor Day. So again, thank you for being here with us today, and we're available for those who are in the room for some questions. Thank you very much.

Thank you.

Thank you very much.