OVHcloud：CEO对未来充满信心，信心源于何处？

Richard Nguyen+33 1 42 13 54 22richard.nguyen@bernsteinsg.com Specialist Sales Price Target Kiran Shah, CFA+44 20 3547 1533kiran.shah@bernsteinsg.com OVH.FP OVHcloud: a CEO who is very confident about the future—what ishe basing this on? On 2 July, we organized a meeting with a group of investors during which OVHcloud founderand CEO Octave Klaba had the opportunity to give us a recap of his vision for the group’sfuture. The open, wide-ranging discussion touched on topics such as the frustration caused bythe group’s minimal financial disclosure on its FY27 outlook as part of the 3Q25/26 revenuerelease (link). The group plans to wait until its budget for the coming year is finalized beforecommunicating or discussing specific figures. We think this is a pity but understandable giventhe many moving parts the group has to factor in. Despite this, a number of interesting avenueswere discussed. Every cloud has a silver lining. At a particularly pivotal moment in the industry, the groupenjoys a certain excess stock of equipment. Although it is difficult for us to quantify exactly,the excess capex relative to revenue growth it posted in FY24 and FY25 points to itsprobable existence. Needless to say, possessing components at costs well below currentmarket rates, in a segment where competitors’ prices have already skyrocketed, confersan undeniable competitive advantage and opens up strategic options to capitalize on thisinflationary environment. A dream market situation. While GPU supplies are not currently affected by the sameproduction capacity constraints as DRAM, the real challenge for clients looking to deploy AIprojects at scale (requiring 500–800 GPUs per client) is mainly securing deployment capacityin data centers that already exist, because installation capacity of this scale for GPUs is virtuallyunavailable on the market today. This presents a major opportunity for OVHcloud, as it alreadypossesses the necessary deployment capacity—including available data center space andpower—and is set to take delivery of previously ordered GPUs in September. Positive FCF - a main target. The CEO appears to be exerting the necessary pressure on histeam to adopt frugal spending habits and make selective choices—where required—to keepcapital expenditure aligned with a target of positive FCF. Continued on next page ... … continued from previous page He said that, for many years, the company had been managed to generate positive FCF, and he sees no reason why the groupshould not return to this sound practice. This will entail making trade-offs, but while this approach complicates the budgetingprocess, it does not strike him as being beyond reach. Back to basics.The group plans to continue expanding its presence among large enterprises and government institutions. This isan area where it has performed well over the past three years, albeit falling slightly short of our expectations. Elsewhere, however, itis now rolling up its sleeves to regain better momentum with two key client segments: "digital scalers" (28% of revenue) and "digitalstarters" (53% of revenue). These two segments have historically been strengths for the group, but reduced focus in these areasled to inefficiencies that must now be rectified. In our view, returning to areas where the group has historically enjoyed success isprobably the best idea Octave Klaba could bring back to the group since resuming the role of CEO. Alongside this, OVHcloud can ofcourse continue to benefit from tailwinds in other market segments like corporate where decision-making remains slower though. INVESTMENT IMPLICATIONS Outperform rating and PT unchanged. BERNSTEIN TICKER TABLE I. REQUIRED DISCLOSURES References to "Bernstein" or the “Firm” in these disclosures relate to the following entities: Bernstein Institutional Services LLC(April 1, 2024 onwards), Sanford C. Bernstein & Co., LLC (pre April 1, 2024), Bernstein Autonomous LLP, BSG France S.A. (April 1,2024 onwards), Sanford C. Bernstein (Hong Kong) Limited盛博香港有限公司,Sanford C. Bernstein (Canada) Limited, SanfordC. Bernstein (India) Private Limited (SEBI registration no. INH000006378), Sanford C. Bernstein (Singapore) Private Limited,Sanford C. Bernstein Japan KK(サンフォード・C・バーンスタイン株式会社)and analysts employed by Société GénéraleAfrica Technologies & Services to produce Bernstein research under a Global Services Agreement in place between Bernsteinand Société Générale. Bernstein is part of a joint venture between Société Générale (SG) and AllianceBernstein, L.P. (AB). Unless specifically notedotherwise, for purposes of these disclosures, references to Bernstein’s “affiliates” relate to both SG and AB and their respectiveaffiliates. VALUATION METHODOLOGY OVHcloud Our PT of €19 is based on a DCF (with an 10% WACC, +10% medium-term sales growth, a 43% medium-term EBITDA margin,and a 5.5x EV/EBITDA exit multiple) weighted at 80% and a FCF yield target at 3% (weighted 20%). RISKS OVHcloud Downside risks: global GDP