France’s OVH to ride thriving cloud market wave after sales beat

OVHcloud (OVH.PA), a French cloud services provider, said on Wednesday that it intends to profit from the global cloud market’s exponential expansion. The company’s first-quarter revenues exceeded market forecasts thanks to robust customer growth.

Recent signings of new customers such as EDF Renewables (EDF.PA) and HarfangLab reinforced the business’s relevance as a “trusted alternative” in the industry, according to the group, which made its market debut in October in one of Paris’ biggest new listings of 2021.

As the emphasis on data security and privacy rises, analysts see OVHcloud’s positioning as increasingly pertinent to tap into demand for data sovereignty cloud solutions.

The competitive landscape, however, remains dynamic, with U.S. giants Amazon Web Services, Google Cloud Platform (GOOGL.O), and Microsoft’s Azure (MSFT.O) making modifications to their operations to comply with European regulations.

“There is a new momentum for new regulations,” chief executive Michel Paulin said in a call. “OVHcloud is uniquely well-positioned to propose alternative solutions against most of the hyperscalers.”

The group reported a 13.9% rise in its first-quarter revenue to 187.2 million euros ($212.9 million), ahead of analysts’ average estimate in a company-compiled consensus, according to J.P. Morgan.

The report’s highlight, according to the brokerage, was OVHcloud’s greater client retention, with a revenue retention rate (NRR) of 112 percent for the quarter, compared to 100 percent for the fiscal year ending August 2021.

The business, which was admitted to the SBF 120 index (.SBF120) less than two months after its initial public offering, kept its 2022 goals, with sales growth forecast to be in the upper half of its initial target range of 10% to 15% and a core profit margin of around 40%.

J.P. Morgan stated, “We believe the business has allowed itself room to increase its outlook if NRR indicators hold at, or continue to improve from, current levels.” After climbing as high as 7.4% in early trade, OVHcloud shares were up 4.7 percent at lunchtime.