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

Ladies and gentlemen, welcome to OVHcloud Full Year 2024 Results Conference Call. Today's speakers will be Benjamin Revcolevschi, CEO; and Stephanie Besnier, CFO. My name is Alan, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand over to OVH team to begin today's conference.

Hello, everyone. I am Benjamin Revcolevschi, the new CEO of OVHcloud. So thank you very much for being with us today for our FY '24 annual results conference call. So let's start with Slide 3 for the key highlights. In a nutshell, we delivered solid results in FY '24, in line with our guidance, and I'm very glad to step in as CEO, taking over from Michel. I'm thrilled to lead OVHcloud while we enter a new phase of development for the company with more predictable growth and higher cash flow generation. Our FY '25 guidance focuses on a solid growth and a significant margin improvement with like-for-like revenue growth between 9% and 11% and adjusted EBITDA margin circa 40%, recurring CapEx between 11% and 13% and growth CapEx between 19% and 21% and growing unlevered free cash flow in FY '25 versus FY '24. And as we enter this new phase for OVHcloud, we wanted to offer our shareholders the opportunity to continue with this new management story or to cash in part of their investment through a proposed public share buyback offer, OPRA, for a total amount of EUR 350 million at EUR 9 per share. And finally, we confirm our target of generation of positive levered free cash flow as soon as FY 2026, even after the new debt raised for the share buyback offer. On the next slide, we review more precisely our FY '24 figures. As said in the introduction, we published solid FY '24 results in line with our guidance. Indeed, in 2024, our revenue reached EUR 993 million, and we delivered a sustainable like-for-like revenue growth of 10.3%, above our 9% to 10% target. At the same time, our profitability substantially increased with an adjusted EBITDA raising to EUR 381 million or a margin of 38.4%, better than our target of a margin above 37%. We also, as you see, generated a strong unlevered free cash flow at EUR 25 million, significantly improving compared to last year, which was driven by a reduced capital intensity with recurring CapEx reaching 13% and growth CapEx 22%, both in the middle of our guidance. And finally, our net revenue retention rate remained at a high level at 107%. Moving to the next page. I'm delighted to step in as new CEO of OVHcloud. I joined the company 6 months ago as Deputy CEO in May, and I had the opportunity to work very closely with Michel Paulin, who has decided to step down. OVHcloud has grown strongly under Michel's leadership, and I want to thank him for that and for having onboarded smoothly myself to the CEO position in the past months. I look forward to building a clear path towards cash flow generative growth with all the teams and will present detailed initiatives in the coming months to support this trajectory. And as you can see on the right hand of this slide, I already have identified some levers and initiatives to further improve the overall execution and profitability. Let's move to Slide 6 to have a deep dive on these levers. Firstly, regarding top line. So we target like-for-like growth between 9% and 11% in FY '25 based on solid growth trends that we have factored in for our FY '25 guidance. First, a stabilized environment in Europe, even not yet improving; second, a strong demand in the U.S. market; and third, successfully adapted hosted private cloud offering with limited churn despite all the price increases that were announced by Broadcom last year. Then on the right of the slide, when we look beyond 2025, we will consolidate our leadership in private cloud, we'll strengthen our public cloud offering and commercial setup, and we'll also leverage our leading positions in domain and web hosting. Secondly, on the next page, you see, looking at the profitability, we target an adjusted EBITDA margin of circa 40% in FY '25. And this is based on clear levers that we have factored in for our FY '25 guidance. As you see for FY '25, COGS and G&A optimization with a continuing decrease in percentages of revenues of direct costs such as licenses costs for web cloud, but also in G&A, we will maintain a strict cost policy while benefiting from operating leverage. Second, gains on electricity costs as they have been hedged at a better price per megawatt per hour than in FY '24. On the right of the slide, when we look beyond 2025, we are going to first focus on our sales and marketing initiatives by better addressing promising products and customer segments, also improve our efficiency of marketing campaigns. And then we'll further enhance, beyond FY '25, our COGS, G&A and improve the efficiency of our industrial operations. So let's now look on the next page, how it translates into cash generation. So thanks to this stronger EBITDA generation that I just talked about, combined with a reduction in capital intensity and stock management improvement, we target to improve our FY '25 unlevered free cash flow compared with the EUR 25 million that we have generated in FY '24. In the medium term, beyond FY '25, we'll increase cash flow generation, thanks to 3 main levers. First, further EBITDA improvement, as just explained in the previous slide; second, working capital initiatives and additional purchasing savings plan; and third, optimization of our infrastructure utilization rates and improved data center design and densification. Then coming back to FY '25, we would like to give now more granularity on short-term CapEx investment strategy. So moving to Slide 9. For FY '25, we have a selective investment plan, which is focused on the revenue-generating hardware CapEx, while also optimizing our infrastructure. And as you can see on the left-hand side of this slide, we target a reduction in capital intensity, both in growth and in recurring CapEx. So as you can see on the right, this CapEx strategy supports our 9% to 11% revenue growth. First, by focusing on servers, which are generating immediate revenue growth; second, optimization of our infra CapEx as major data center investments are behind us in the past years as detailed on the next slide; and also stabilized teams in product development; and fourth, end of nonrecurring programs such as the Hyper Resilience program in our data centers. So moving to Slide 10. You can see that over the last few years, we have expanded our global footprint to meet the regional demand of our customers. We now have 43 data centers in 9 countries, and we have a large network with 44 points of presence. And during FY '24, as you can see on the top right, we opened 7 data centers in France, in Canada, in Singapore and Australia, and we plan to open one more in FY '25 in Italy. We continue also to open local zones, which are small data centers in colocation mode to grow public cloud with a lower capital intensity. So as you can see here, the major infrastructure investments are behind us. And now we are focusing on leveraging them. So moving to Slide 11. Our vision for OVHcloud after this period of significant investments is with the midterm levers mentioned previously, that with this new leadership, we will focus on delivering, first, a more predictable growth, so circa 10%, also an adjusted EBITDA margin structurally above 40% and a positive levered free cash flow in FY '26 and growing afterwards. On next slide, with this new phase of development and the new management, we wanted to offer an option to our shareholders. And this share buyback offer, this offer that I mentioned, allows shareholders to stay with us for this new story or to partially monetize. And here, I want to reiterate our confidence in the fundamentals of OVHcloud and that we, as management, will focus on delivering a more profitable, sustainable and cash-generative growth with a confirmed long-term support of the Klaba family. And before moving to the financial section, I would like to share with you our main achievements of the year. So over FY '24, we delivered a sustainable like-for-like revenue growth of 10.3% with a total revenue that reached EUR 993 million. And during this FY '24, we -- our customers remained highly loyal, as you see, with a 107% retention rate and with a limited and stable revenue churn around 2%. Now let's deep dive in this slide in each segment performance over the year, on the right. So firstly, the Private Cloud segment. We registered a revenue of EUR 624 million in FY 2024, up 11.8% like-for-like. And this performance is the result of substantial growth in Private Cloud ARPAC, fueled in particular by strong demand for high-end-range type of servers. And in terms of growth initiatives, we are pursuing the rollout of our sovereign offerings and also the upgrade of our midrange servers with the last-generation hardware. Second, in the middle of the slide, you can see our performance for Public Cloud. So our revenue reached EUR 183 million in FY 2024, up 14.2%, like-for-like. And this segment saw an increase in the number of new customers resulting from the acquisition strategy we have deployed in FY 2024. And we are focusing on increasing geographical availability and improving the products while deploying our new 3 Availability Zone, 3-AZ, public cloud offering, which provides higher resilience and lower latency to our customers. Third, on the right side of the slide, for the Web Cloud & Others, we posted a revenue of EUR 187 million for FY 2024, up 2.1% like-for-like, compared to the previous year. And this performance is mainly supported by domain names and the launch of our new web hosting offerings, and we plan to continue to increase our customer experience in these 2 segments. Next slide, in private cloud, we have successfully managed VMware-Broadcom changes. As you are well aware, Broadcom bought VMware and decided to increase the price of VMware licenses in May 2024. And these price increases were one of the main uncertainties for us in H2 FY '24, impacting our hosted private cloud business, which mainly uses our VMware licenses. However, the current trends are positively reassuring. As one of Broadcom's few Pinnacle partners, we are able to provide our customers with the best possible support over this new period, thanks to our adapted offerings. And therefore, we experienced limited churn after the increase was passed on to customers. And since May 2024 and the first price increase, we have had EUR 4 million positive price impact on our FY '24 revenue. Plus, as you can see on the right of the slide, the medium to long term, we are targeting new business opportunities. So we plan to launch new offerings with dedicated resources on a shared cluster to optimize existing small customer invoices and also to target on-prem VMware customers, which are fully hit by the price increases. Now on the next slide on public cloud. In September, OVHcloud has been recognized again as a major player in the public cloud market by IDC, a leading consultancy firm. Indeed, on the left side of the slide, you can see that in the IDC European Public Cloud Infrastructure as a Service 2024 by IDC, OVHcloud is best ranked company within the major players category. And it's an important success for OVHcloud, for our teams, as we showcase consistent improvement in its rankings. And really, I want to praise our teams for these great results. And on the right hand of the slide, you can see that we were named as a major player by IDC, thanks to our key differentiators. First, our price transparency and predictability; second, our digital sovereignty positioning; and third, our sustainability initiatives. And these recognitions are not just nice to have, they play a crucial role in attracting business because our customers or prospects often rely on these reports to make informed decisions when they choose their cloud service provider. On the next slide, finally, I want to show in FY '24 that we also continue to enhance our data sovereignty and public cloud offering. So first, on the left of the slide, data sovereignty. We are the data sovereignty reference as the only major cloud player being immune to extra territorial laws. Today, we have 3 data centers, which are SecNumCloud certified, which is the top level national security certification in France. And we launched our Bare Metal Pod offering in Q4 FY '24. And this offering is a sovereign ultra-secure solution with a certification that is expected early FY '25. And Bare Metal Pod has already raised interest with some customers such as the AIFE, Agence pour l'Informatique Financiere de l'Etat, which is attached to the French Ministry of the Economy and Finance. And in FY '25, we plan to get the SecNumCloud certification for our public cloud products that are eagerly awaited by our customers. Secondly, on the right of the slide, our focus is on rolling out public cloud products. Our offering is already extensive with more than 40 public cloud products available and with particularly strong traction on compute products such as Kubernetes, storage products such as Object Storage S3, our databases such as Aiven. And we are working on increasing the geographical availability of these existing products and also on the rollout of these public cloud products that are not yet in general availability. And by doing so, we aim to facilitate the next wave of customer adoption and drive revenue growth for these public cloud products. So after this update on our FY '24 achievements, I now hand over to Stephanie for the FY '24 financials.

Thank you, Benjamin, and hello, everyone. I am Stephanie Besnier, CFO of OVHcloud. Thanks for being with us. Looking at our Q4, we delivered a solid like-for-like growth of 10.6%, improving compared to last quarter with a total revenue that reached EUR 256 million. In a stabilized environment in Europe, we registered a double-digit growth in both our cloud businesses, thanks to a continued strong growth in the U.S. with a focus on our tech companies and successful price increase of our VMware products with limited churn. Within the public cloud, we keep on benefiting from AI business. The AI business, which includes NVIDIA GPUs and solutions such as AI notebooks, AI training or AI deploy, contributed by 2 points to the growth of the Public Cloud segment again this quarter. We see a strong demand, especially for H100 and A100 GPUs that have a high utilization rate. In web cloud & others, we delivered a growth of 1.3%, knowing that excluding telephony and connectivity, the segment is growing at plus 6% over this Q4. Despite the stabilized environment in Europe, we recently managed to win several new logos. As for example, our hosted private cloud solution is now offered in the portfolio of Bouygues Telecom Entreprises and MySpace, and [indiscernible] subsidiary, has chosen our SNC solution to host its sensitive data. So now let's have a look to our revenue by geographies on the next slide. So we experienced a continued acceleration in rest of the world, particularly into the U.S., whereas at the same time, European macro conditions were difficult over the year and as you know, Europe represents a significant part of our revenues. After a good start of the year, we faced a softening of the momentum in this region with some contract renegotiations by our customers and a lower-than-expected value of our new contracts. However, in France, we managed to maintain a double-digit growth in both our cloud segments due to a solid momentum in hosted private cloud and public cloud with an acceleration in Q4 compared to the last 2 quarters. This was offset by the Web Cloud segment and in particular, the historical telephony and connectivity subsegments, which brought the overall Q4 growth rate in France to 9.5% and the FY '24 growth rate to 9.4%. In rest of Europe, Germany, Poland and the United Kingdom were the region's main growth drivers, which stood at 9.7% in the last quarter. In a still complex and challenging environment, Private Cloud segment showed its resilience and public cloud performed well in Central and Northern Europe. In rest of the World, we saw like-for-like growth accelerate to 14.2%, whereas it was at 11.4% for FY '24. Momentum gathered pace in the last few quarters, driven by ongoing sustained demand in the United States, particularly in the Private Cloud segment for bare metal cloud products. So moving to the next slide on our profitability. So as you can see, in FY '24, our profitability significantly increased with an adjusted EBITDA of EUR 381 million and a margin of 38.4%. The significant 210 basis points improvement in our EBITDA margin is coming from a strong operating leverage with a decrease in percentage of revenues of direct costs such as license costs from Web Cloud; second, contained operating costs in our data centers; third, reduced electricity costs as a percentage of revenue compared to FY '24 at 6% of our revenue; and fourth, increased productivity of our administrative and sales and marketing teams with lower fees. H2 margin stood at 39%, 1.1 points up compared with H1 due in particular to a seasonal effect with notably lower fees and marketing event costs because of the summer, more savings effects than expected, particularly in electricity and the final commercial agreement with Broadcom, coupled with a good traction of our products that turned out to have a slight margin contribution. So this cost discipline led to a strong improvement in net operating income, which turned positive in FY '24 at EUR 25.7 million, EUR 37.7 million above last year. Net operating income includes a contained increase in G&A expenses of EUR 23.9 million, down by more than 1 point in relation to revenue. In our D&A, we have a ramp-up in capitalized projects and right of use from leased data center amortization, combined with one-offs linked to depreciation of internal software and legacy COVID stock. It also includes some nonrecurring expenses such as acquisition costs and temporary insurance premium. Below EBIT, interest related to loans reached EUR [ 13 ] million due to the increase into debt volume and interest rates over the period. Let's now have a look at how this increase in profitability translates into cash generation. So the strong growth in our profitability is reflected in our gross cash flow from operating activities, which rose to EUR 378 million in FY '24 from EUR 310 million 1 year earlier. Our CapEx, excluding M&A amounted to EUR 343 million in FY '24 compared to EUR 358 million last year. It has been significantly optimized and represented 35% of sales in FY '24 versus 40% in FY '23. In line with our guidance, we invested 22% of our revenues in growth CapEx, mostly in new servers and infrastructures, and we invested 13% of our revenue in recurring CapEx. With the optimization of our CapEx linked to a reduced capital intensity and tighter monitoring of other investments, we have generated EUR 25 million of unlevered free cash flow in FY '24. So let me give you, on the next slide, a bigger picture of what we mean by optimization of CapEx and a reminder of how flexible our model is. So thanks to our integrated industrial model, we have a significant flexibility in our CapEx. For servers CapEx, which amount to 16% of our revenue, 2 points below FY '23, we have reduced capital intensity of our newly produced servers. If we look at infrastructure CapEx, which are 3 points below last year, we have the last phase of our significant data center opening program as well as limited new openings, and we continue some usual infrastructure work to prepare for the next phases of growth. Then looking at product and software development. As announced, we are stable in absolute value and slightly decreasing in percentage of revenue. We continue to develop and enhance our products, notably our private cloud -- public cloud offering and to improve our internal tools. Finally, we had exceptional CapEx on Others this year, which are set to decline. For example, EUR 28 million is linked to Hyper Resilience program, which is expected to end early '25. Now I'd like to share with you the evolution of our financing structure. So first, as of August '24, we continued our deleveraging trajectory, and we reached a leverage of 1.8x. When we look at the pro forma of our financial structure as of August '24, post refinancing, we land with a refinanced bank debt with EUR 450 million of term loan and EUR 200 million of undrawn multipurpose credit line. both with 5 years maturities and a new senior note of EUR 470 million, which will be issued in the coming months. All in, the average interest rate should be between 5% and 5.5%. Finally, as of August '24 pro forma, we would be at a leverage of 2.8x as per our current financial documentation, in line with our financial policy of remaining below 3x. On the next slide, let me give you the details on the share buyback offer. So the total amount is EUR 350 million or a little bit below 39 million shares, representing 20.4% of total outstanding shares. The offer price is EUR 9 per share, representing a 14.6% premium compared to yesterday's share price. The offer period will be between December 10 and December 30. The Klaba family will only partially participate to the buyback offer and their stake in OVHcloud will increase from 68% to a maximum of 81%. Thank you. And I now hand over to Benjamin for the outlook.

Thank you, Stephanie. As a word of conclusion, so let me precise here on this slide our FY 2025 financial targets and remind you our new phase of development guidelines. So for FY '25, we expect revenue growth between 9% to 11%; our adjusted EBITDA margin of circa 40%; recurring CapEx between 11% to 13%; and our growth CapEx between 19% and 21%; and also improving our unlevered free cash flow compared to FY '24. And in the longer term, the company will leverage its leading positioning in private cloud and focus on delivering more predictable growth around 10%; and EBITDA margin structurally above 40%; and positive unlevered free cash flow in FY '26 and increasing afterwards. We can now open the floor to your questions.

[Operator Instructions] We will take our first question from Emmanuel Matot, ODDO BHF.

Emmanuel Matot from ODDO. I hope you can hear me well.

Yes.

Three questions from me. First, why have you decided to implement a strategy even more focused on margins and cash generation instead of sales growth? Isn't this premature, given your limited size in this ultra-competitive sector? Second, artificial intelligence dived by 2 points, the growth of public cloud in Q4, if I understand well. It's great, but not massive. Do you expect an acceleration in fiscal year '25 or it's too early as you are only positioned on the inference segment and not on the model training segment? And last question, I understand you don't want to open many more data centers in the future, you want to leverage your current infrastructure you have. What is this utilization rate currently of your data centers? And how long will it take to reach, I would say, a great loading according to you?

Okay. So I'll take the 2 first questions, and Stephanie will answer the third. So the strategy of margin improvement and free cash flow generation, indeed, we have been -- as you said, we have been investing significantly for the past 10 years. And what we see is that the macro environment was indeed much more challenging. And today -- in the CMD that we had early this year, we already informed that our business strategy was to refocus on cash generation. Today, we reaffirm this trajectory and emphasize this because we want to put the emphasis on the sustainability and the profitability of our integrated model for the long term. And with this new leadership, we want to reinforce this focus on cash flow generation and higher margin because we think that we can leverage our leadership position today that we have on private cloud, that we have on domains. And while we remain focused on improving our public cloud offering, we prefer to adopt also a conservative approach. And we -- our plan today is also fully in line with our market, to your question about growth. Our growth trajectory is in line with our position in the market. It's also in line with our strengths, our capabilities. So for us, the growth here that we project is solid, it's realistic. And we think that it's time for us to -- thanks to our positioning, to leverage all the operational levers to improve the margin and the cash flow generation. On your second question on AI, indeed, we are targeting the inference market, as you know, because this is where we think that the most potential here is for customers that are looking for already trained models and be able to upload their data on the offerings that we propose and develop the use cases that they need to accelerate their business. So indeed, it's correlated to the growth of the public cloud markets. We see that we have implemented in our data centers, the GPUs, the graphic cards that our customers are needing. And we are confident that these dynamics around inference will continue and will generate the growth and profitability that we expect on AI. Now on the question on data centers?

Yes. So on the infrastructure utilization rate, we are above 60%, more or less in line with what we announced at the Capital Markets Day. Clearly, I mean, we invested quite a lot, and we opened a number of data centers over the last years. We are still opening selectively new data centers. For example, we opened Toronto this year. We acquired a new data center in Milan. But we know that we have now capacity in the different regions of the world, in Asia, in Canada, in the U.S., in Europe also. And what we do basically is that when we anticipate that we will reach a total capacity or total utilization rate of around 90%, then [ 18 months ] or 2 years in advance, we start to expand or acquire new capacity in the specific regions. So that's how we think in terms of new capacities, but with being slightly above 60%, clearly, the focus is on filling in and optimizing the cash generated by our infrastructure.

We will take our next question from Ines Mao, BNP.

I have 2 questions. The first one is, are the midterm targets that you disclosed at the Investor Day still valid following the full year '25 new guidance?

Ines, I can't hear you very well. Can you start again louder?

Is it any better?

Yes.

Perfect. So I'm interested whether the midterm targets that you disclosed at your Investor Day in January are still valid following the full year '25 new guidance, and notably, if you see the 11% to 13% CAGR target at whether the low or the high end? And my second question is on the ARPAC in public cloud, which you say has been weaker in full year '24 in your press release because of new customer acquisition. Do you have any sense of the timing for an uptick in the ARPAC in full year '25?

Thank you, Ines, for your questions. So you saw our guidance for '25. We are communicating a growth between 9% and 11%, a very solid adjusted EBITDA margin of around 40%. And we still expect to improve our unlevered free cash flow in '25. For '26, we have reiterated our objective to be free cash flow positive as soon as FY '26, including the impact of the OPRA. And we improved our adjusted EBITDA guidance to be close to 40% then as soon as FY '25 and with further improvement after, so starting in FY '26. So we are 1 point better than our former FY '26 guidance. And as regard the further updates to our '26 guidance, including on the growth, we will make them in due time.

As for your second question on the customer acquisition. So on public cloud, indeed, ARPAC and customer acquisition, they are both growing in public cloud. The customer acquisition is growing strongly, thanks to the acquisition strategy that we launched last year in FY '24. The ARPAC growth in public cloud is a bit weaker than expected. That's mostly due to a still challenging macro environment in Europe, where we see our customers have delayed some of their projects or some of them have optimized their workloads, leading to lower consumption. And so we are focusing on increasing the geographical availability and also improving the products to fuel cross-sell, upsell opportunities with this -- with newly acquired customers and then to increase the ARPAC and plus the deployment of our new 3-AZ public cloud offering, which higher resilience and lower latency will help us also grow the ARPAC.

We will take our next question from Adam Megyeri, Bank of America.

I've got 2 questions on the refinancing. First, can you give us any more commercial details on what the new facilities and the new notes will look like? I think you mentioned 5% to 5.5% interest. Could you just affirm that on the bank facility as well and whether there are any amortizations scheduled within that 5-year time horizon? And the second question would be if you could give some more details on timing. I mean you said you signed the new facility, I believe, yesterday. You expect it to keep the existing capital structure outstanding until the share repurchase? Or is this all going to get drawn down and repaid, refinanced kind of ASAP into the year-end? And similarly, on the new notes issue, right, I understand there's sort of a bridge component of the new bank facility. When do you expect to issue those new notes to take that out?

Okay. Thank you, Adam, for your questions. So basically, as of today, we have one tranche from the EIB of EUR 200 million that is fully drawn, and we will keep this line. It will start to amortize in '27. Then for the rest of the refinancing, so we will have a term loan of EUR 550 million, 5-year maturity bullet. And we will -- we have actually, yes, a bridge, which is of a maturity of up to 2 years for EUR 470 million. The plan is to refinance with the bond. And in terms of timing, it could be at the soonest at the end of the year or beginning of next year. And for the cost of the debt, obviously, it's an estimate. We will have a better view after the launch and the issuance of the bond, but between 5% and 5.5% is a good estimate, average.

Okay. And just one quick follow-up on that. On the 500 -- sorry, the 5-year bullet that you mentioned, so we should think of that as being effectively kind of effective almost as of today, right? So the interest rate should step up and replace the old facility as of today effectively?

Yes. Actually, we have a new facility of EUR 500 million. So we will have a refinancing of EUR 450 million of term loan. And then the bridge, that will make up for the rest of the EUR 50 million and the cost of the operation.

[Operator Instructions] We will take our next question from Yann de Peyrelongue, Gilbert Dupont.

I have 3 questions, please. The first one is on utilization rate of data center. Can you give us the number at the end of 2024? And then on PaaS, could you give us the amount of IRR that you have now? I guess it was EUR 19 million in Q3. And then maybe on the OPRA, the share buyback, do you have any idea of what [indiscernible] are going to do?

Thank you, Yann. So as for the utilization rate, it's above 60%, and it's in line with the target that we gave at the CMD around 64%. So I don't have the precise number, but it's really in line with this estimate. For the PaaS, we have an [ ARR ] of EUR 23 million for this quarter. And then for the OPRA, I will let Benjamin comment. Okay. So for the fund, the fund will participate to the OPRA. We had their intention yesterday, and they will tender all the shares to the offer.

Okay. Great. And maybe, yes, how did you find the EUR 9 target because it's only the price of the beginning of the year. So it's good compared to the low we saw in the summer, but...

Yes. So as you see in terms of premium, it's 14.6% compared to yesterday share price. It's 32% compared to the [ VWAP ] for 1 month. As you know, it's a very regulated process, we have an independent expert that has been appointed by the Board upon the recommendation of another committee, and it delivered a report stating that the OPRA price is fair from a financial standpoint. And our Board issued a reason opinion ruling also that the offer was in the interest of the company, its shareholders and its employees, all the stakeholders. So yes, as you know, this is a very calibrated process in terms of pricing.

[Operator Instructions] We will take our next question from Ines Mao, BNP.

I hope you can hear me well. Just one follow-up question from me. You did mention in results the increased geographical availability of public cloud products. I'm just curious, are you planning to expand the sovereign cloud offering in new geographies or not?

So our sovereign cloud offerings today are [ interested ] first when we deliver in France, also for customers in different geographies, right, that we see. We have, for example, German customers that are accessing to these offers. By nature, as you know, for many years, OVHcloud offerings are sovereign by design. And we have many more certifications in -- all across Europe, in Germany, in Spain, C5 in Germany, in Italy, also in the U.K. So we are definitely leveraging the needs of our customers for sovereign offerings, and we see this demand growing. We see it as a global trend for customers. It's interesting to see, by the way, that it's not just only public customers that are developing and purchasing and growing on these offerings. It's also lots of private sector customers in health, in defense, in cyber, which are currently buying, and we see this offering as the fastest-growing offering on our portfolio.

We will take our next question from George Webb, Morgan Stanley.

Benjamin, maybe one for you to start with and then one separate question on financials. So on that side, look, we've talked about, I guess, some of the cost savings you think you can squeeze out of the business model over the next few years. I'm sure within the mix, and you've highlighted some of them, there's going to be areas to invest in. I'm kind of wondering how you think about OVHcloud as a brand and whether you think you need to elevate that in your ex-France markets over the midterm to have a kind of stronger market position. And then the second question on the financial side. When we think about the margin improvement in FY '25, could you split that up between how much of that maybe 160 bps comes from the electricity side versus operating leverage?

So on the -- on your first question, I think the -- well, joining OVHcloud for the past 6 months, I can see that the brand is strong, it's strong in many geographies, and the fact that we have doubled the size of the company in the past 6 years that we are a global cloud player, doing 51% of our revenue internationally with half of our data centers internationally. And definitely, the -- we now need to leverage this brand and communicate clearly also our differentiators because we are leading in terms of price versus price performance ratio for our customers. We're leading in the sovereignty era and also on sustainability. And when you say elevate, for me, it's indeed to leverage on these assets on the scale of the company today, its global reach. As you saw on IDC, we are a major player in the market, just behind the hyperscalers. And definitely, I think we have the potential to leverage the brand and grow stronger, both geographically and all our segments. On your second question?

Yes. So on the margin for FY '25, first comment is, as you see, I mentioned it, we have an H2 margin that is already pretty good at 39%. So we are starting '25 with this exit margin. Then indeed, we expect an improvement from the electricity cost that we calibrate between 0.5% and 1% of impact on our margin, closer to 0.5% actually. And for the rest, it will come indeed from the operating leverage, also the decrease of the COGS, given the mix of -- the evolution of the mix in our portfolio and then the efforts that we are doing and Benjamin has a plan to improve this further in terms of efficiency of our teams in the data centers, of our sales and marketing spend and also the savings and the leverage on our fixed cost from the G&A.

There are no further questions on the line. So I will now hand you back to Benjamin for closing remarks.

So thank you for your questions, and thank you for attending our FY '24 annual results call. So as a wrap-up, we have delivered FY '24 results in line with our guidance. We reached EUR 993 million revenue, an EBITDA margin of 38.4% and an unlevered free cash flow of EUR 25 million. For '25 -- for FY '25, we target revenue growth between 9% to 11%, an adjusted EBITDA margin of circa 40%, recurring CapEx between 11% to 13%, growth CapEx between 19% and 21% and a growing unlevered free cash flow compared to FY '24. And finally, as you have understood, OVHcloud is entering in a new phase of development with a new leadership, and we are launching a share buyback offer. I really want to thank you a lot for attending our FY '24 results call, and I look forward meeting you in the next months.

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