OVHcloud Achieves Positive Cash Flow, Targets 2027 Growth

French Cloud Computing company OVHcloud has reported its first positive levered free cash flow since its 2021 stock market listing, marking a significant milestone in its efforts to strengthen financial performance and fund its operations. The company also recorded annual revenue growth of 7.2% to €1.15 billion for the financial year ended in August and expects growth to accelerate in fiscal 2027.

OVHcloud forecast revenue growth of more than 10% in fiscal 2027, alongside continued positive cash flow. The outlook reflects the company’s focus on financial discipline, improved operating performance and expansion in its cloud computing businesses, particularly its rapidly growing Digital Scalers segment.

The latest results indicate that OVHcloud is making progress in managing the substantial investment required to operate and expand its cloud infrastructure. After five years of negative cash generation, the company is now generating enough cash from its operations to cover its capital spending, according to the reported figures.

OVHcloud Achieves Positive Free Cash Flow After Five Years

OVHcloud reported levered free cash flow of €24.7 million for the financial year, compared with an outflow of €27 million a year earlier. The improvement marks the company’s first positive result on this measure since its initial public offering in 2021.

Levered free cash flow measures the cash a company generates after operating expenses, capital expenditure and relevant financing costs, including interest payments. It helps investors assess whether a business can fund its investments and meet financial obligations without relying as heavily on external borrowing or additional capital.

For cloud infrastructure providers, generating positive cash flow can be challenging because data centres, servers, networking equipment and related systems require substantial upfront investment. Companies must often spend heavily to expand computing capacity before receiving the full financial benefits of that investment.

OVHcloud’s return to positive cash flow suggests that its operating performance and investment management have improved sufficiently to support its infrastructure spending. Maintaining this position will be important as the company continues investing in cloud services and seeks to increase revenue over the coming financial year.

The milestone also provides a potential measure of financial flexibility. Sustained positive cash generation could help OVHcloud fund future projects, manage debt and respond to changing demand without placing as much pressure on external financing.

Revenue Reaches €1.15 Billion as Growth Accelerates

OVHcloud’s revenue increased by 7.2% to €1.15 billion in the financial year through August. While the company continued to expand its business, management expects the pace of growth to accelerate in fiscal 2027, with revenue projected to increase by more than 10%.

The forecast represents an improvement on the growth rate recorded in the latest financial year. Achieving that target will depend on the company’s ability to attract new customers, expand existing accounts and maintain demand for its cloud computing services.

Chief Executive Officer Octave Klaba told Reuters that acceleration in fourth-quarter growth was led by the Digital Scalers segment. The improvement followed a reorganisation of the company’s offering after Klaba returned to the leadership role approximately a year earlier.

Klaba described the year as one of discipline and said OVHcloud had returned to its fundamentals. The approach highlights the company’s emphasis on its core business activities, operational execution and financial performance as it seeks to deliver more consistent growth.

Although the latest results show progress, the revenue target for 2027 remains a forecast rather than a guaranteed outcome. Competition in the cloud computing market, customer spending patterns and the cost of expanding infrastructure will all influence whether the company achieves its growth ambitions.

Digital Scalers Becomes a Key Growth Driver

Digital Scalers was the fastest-growing segment of OVHcloud’s business during the reported financial year. The division serves customers spending more than €2,000 per month and recorded comparable revenue growth of 12.4% to €359.1 million.

The segment accounted for approximately 31% of the company’s total sales, making it a significant contributor to overall revenue. Its growth rate also exceeded OVHcloud’s group-wide increase of 7.2%, underlining its importance to the company’s expansion strategy.

Customers in this segment may have substantial or specialised cloud computing requirements, making them an important market for infrastructure providers seeking to expand their business relationships and service offerings.

OVHcloud’s focus on Digital Scalers appears to be part of a broader effort to sharpen its commercial strategy following the reorganisation of its offering. Strong performance in this division helped accelerate growth during the fourth quarter, according to Klaba.

Continued expansion in Digital Scalers could support the company’s revenue ambitions for fiscal 2027. However, the contribution will depend on whether the division can sustain its growth rate and whether other parts of the business also improve their performance.

Public Cloud Revenue Increases 18.9%

Public cloud revenue rose 18.9% to €255.1 million during the financial year, making it another important area of growth for OVHcloud.

Public cloud services allow businesses to access computing resources, storage and other Technology services through cloud platforms rather than relying entirely on infrastructure operated on their own premises. These services can help organisations adjust computing capacity according to their needs and manage technology resources more flexibly.

The segment’s growth rate was considerably higher than the company’s overall revenue increase, indicating that public cloud services are contributing to the changing composition of OVHcloud’s business.

For OVHcloud, expanding public cloud revenue provides an opportunity to increase its presence in a market where customers seek scalable computing resources and digital infrastructure. The company will need to maintain service reliability, manage infrastructure costs and continue developing its offering to sustain momentum.

However, higher revenue does not automatically translate into stronger profitability. Cloud providers must balance customer growth with spending on data centres, servers, energy and network capacity. OVHcloud’s ability to convert its expanding revenue base into sustainable cash flow and earnings will therefore remain an important measure of performance.

Adjusted EBITDA Rises as Profitability Improves

OVHcloud’s adjusted earnings before interest, taxes, depreciation and amortisation, or EBITDA, increased by 9.7% to €480.5 million. The company reported an adjusted EBITDA margin of 42.0% for the financial year.

EBITDA is commonly used to assess operating performance before financing costs, taxes and certain non-cash expenses. The adjusted measure excludes items that a company considers outside its underlying operating performance, although the precise adjustments should be considered when comparing results across businesses.

The increase in adjusted EBITDA exceeded the company’s 7.2% revenue growth rate, while the reported margin demonstrates its ability to generate substantial adjusted operating earnings relative to sales.

OVHcloud aims to increase its adjusted EBITDA margin to more than 42.5% in fiscal 2027. Reaching that target would require the company to improve profitability relative to revenue as it continues expanding its cloud services.

Potential factors affecting the margin include pricing, customer demand, operating efficiency and the cost of running and expanding infrastructure. The company’s ability to maintain spending discipline while investing in future growth will be central to achieving its profitability target.

Debt Position Improves as Leverage Declines

OVHcloud reported net debt of €1.16 billion at the end of the financial year. Its net debt stood at 2.7 times adjusted EBITDA, compared with 2.9 times at the end of the previous financial year.

The decline in the leverage ratio indicates an improvement in the relationship between the company’s net debt and its adjusted operating earnings. A lower ratio can provide greater financial flexibility, although the overall debt burden must also be assessed against cash flow, interest costs and future investment requirements.

The company also reported €255 million in available liquidity and said it had no significant debt repayment due before fiscal 2030.

Available liquidity can help a business meet near-term financial needs and manage fluctuations in cash flow. The absence of significant debt repayments before fiscal 2030 may also give OVHcloud more time to focus on its operating strategy and investment plans, although it does not remove the need to manage debt and financing costs.

For a capital-intensive cloud operator, maintaining a sustainable balance between investment, debt and cash generation is particularly important. Data centre expansion and technology upgrades can require significant spending, making reliable cash flow an important factor in managing financial risk.

What OVHcloud’s 2027 Outlook Means for Its Strategy

OVHcloud’s forecast of more than 10% revenue growth in fiscal 2027 signals an expectation that its commercial strategy and recent operating changes will support faster expansion.

The Digital Scalers segment and public cloud business are likely to remain important contributors to this ambition, given their reported growth rates. The company’s challenge will be to maintain that momentum while ensuring that additional sales translate into sustainable earnings and positive cash generation.

Management’s target of an adjusted EBITDA margin above 42.5% also indicates that profitability remains a priority alongside revenue growth. Achieving both objectives would require OVHcloud to expand its customer base while continuing to control operating costs and infrastructure investment.

The company must also navigate a competitive cloud market in which providers invest heavily in technology, capacity and service development. Demand for cloud services can create growth opportunities, but expansion requires careful capital allocation and the ability to respond to changing customer requirements.

OVHcloud’s latest results provide evidence of progress on cash generation, earnings and debt leverage. Whether these improvements continue will depend on execution over the next financial year and the company’s ability to balance growth with financial discipline.

Outlook: Positive Cash Flow Marks a Turning Point for OVHcloud

OVHcloud’s first positive levered free cash flow since its 2021 listing represents a significant development in its financial performance. Revenue rose to €1.15 billion, adjusted EBITDA increased to €480.5 million and net leverage declined to 2.7 times adjusted EBITDA.

The company’s outlook for fiscal 2027 points to faster revenue growth of more than 10%, continued positive cash flow and an adjusted EBITDA margin above 42.5%. Growth in Digital Scalers and public cloud services will be important to achieving those targets.

Nevertheless, the targets remain dependent on market conditions, customer demand, cost management and the capital required to expand cloud infrastructure. Investors will be watching whether OVHcloud can sustain positive cash generation while delivering the growth and profitability improvements outlined by management.

For now, the results indicate that OVHcloud is moving toward a financial model in which operating cash generation can support its investment requirements. Maintaining that progress could strengthen its ability to pursue expansion while managing debt and preserving financial flexibility.