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OVHcloud is targeting faster growth in 2027 after reporting its first positive levered free cash flow since going public, marking a significant milestone in chief executive Octave Klaba’s efforts to strengthen the French cloud group’s financial performance.
The company reported revenue of €1.15 billion for the financial year ending August 31, an increase of 7.2% on a comparable basis.
OVHcloud now expects revenue growth to exceed 10% in fiscal 2027 while continuing to generate positive cash flow.
Investors responded positively to the results, sending OVHcloud shares more than 10% higher. The company’s stock has more than doubled since the beginning of 2026.
The improvement comes after founder Klaba returned as chief executive and began reorganising the company’s commercial operations.
Klaba said accelerating growth during the fourth quarter had been driven by OVHcloud’s Digital Scalers segment following changes to the company’s offering.
Digital Scalers, which serves customers spending more than €2,000 a month, generated €359.1 million in revenue during the year, representing comparable growth of 12.4%.
The division accounted for 31% of OVHcloud’s total sales.
Public Cloud delivered even stronger growth, with revenue increasing 18.9% to €255.1 million.
OVHcloud’s financial performance also improved substantially.
Levered free cash flow reached €24.7 million, compared with an outflow of €27 million a year earlier.
It was the company’s first positive levered free cash flow since its 2021 stock market listing, an important milestone after several years in which heavy investment weighed on cash generation.
Adjusted EBITDA increased 9.7% to €480.5 million, giving the company a margin of 42%.
OVHcloud is targeting an adjusted EBITDA margin above 42.5% in fiscal 2027 while maintaining positive levered free cash flow.
Klaba described fiscal 2026 as a year of discipline, with the company closely controlling inventory, capital expenditure and operating costs.
The group has also reorganised its sales operation around three customer segments: Digital Starters, Digital Scalers and Corporate.
Those changes have coincided with an acceleration in growth.
Comparable revenue growth increased from 6% in the first quarter to 10.5% during the fourth quarter, when quarterly revenue exceeded €300 million for the first time.
OVHcloud enters its next financial year with €1.16 billion of net debt, equivalent to 2.7 times adjusted EBITDA, down from 2.9 times a year earlier.
The company also has €255 million of available liquidity and no significant debt repayments due before fiscal 2030.
The improved balance between growth and cash generation gives management greater flexibility as OVHcloud competes with much larger cloud providers including Amazon Web Services, Microsoft Azure and Google Cloud.
Artificial intelligence is expected to become another part of that strategy.
Klaba said OVHcloud plans to launch its first AI model in early 2027 alongside new AI services for customers.
The company also has substantial infrastructure capacity available to support further expansion.
OVHcloud currently has 250 megawatts of connected cloud capacity, of which 140 MW is in operation. The remaining 110 MW provides capacity to accommodate additional customer demand without immediately requiring equivalent new infrastructure.
That could become increasingly important as demand for computing power rises alongside greater adoption of artificial intelligence.
For Klaba, however, the immediate challenge is balancing that growth opportunity with the financial discipline introduced since his return as chief executive.
OVHcloud’s first positive levered free cash flow since its IPO suggests progress on one side of that equation. Fourth-quarter growth of 10.5% provides early evidence of acceleration on the other.
Management must now demonstrate that it can deliver both simultaneously.
OVHcloud’s target of more than 10% revenue growth in fiscal 2027, alongside positive cash generation and an EBITDA margin above 42.5%, sets a clear test for the next stage of Klaba’s turnaround.