OVHcloud cuts sales growth target citing economic conditions

French cloud services provider OVHcloud trimmed its forecast for full-year revenue growth, citing the macroeconomic context and delays in certain projects.

The company now sees organic revenue growth between 13% and 14% in 2023, against a previous outlook of growth in range of 14%-16%.

The new revenue forecast “includes… recent developments in demand which in the short term reflect a delay in certain migration projects to the cloud or the extension of existing infrastructures,” the company said in a statement.

Cloud companies have been seeing signs of slowing demand, and have faced higher costs, notably energy bills, as their data centres use large amounts of electricity.

Societe Generale analyst Derric Marcon earlier this week pointed to an interview this month where Amazon‘s CEO suggested a continued slowdown in AWS, the U.S. company’s cloud services arm. Tech companies, including Amazon, have been laying off employees, citing economic uncertainties.

“Inevitably, investors … will wonder if a challenger or niche Player like OVH can continue to grow as much as they said in a context where others say it’s slowing down,” Marcon had said.

OVHcloud updated its adjusted core profit (EBITDA) margin target for full-year 2023, forecasting that it will be above 36%, against a previous forecast for it to be in line with the 39.0% posted in 2022.

The group also flagged higher personnel and operating costs, particularly the impact of higher spot electricity prices in Germany.

OVHcloud said that it expects electricity costs to “normalise” over the next few quarters, while its price increases will take full effect from the fourth quarter of fiscal 2023.

It reported half-year sales of 439 million euros ($481.41 million), broadly in line with the 437.3 million expected on average in a company-provided poll.

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French cloud services provider OVHcloud trimmed its forecast for full-year revenue growth, citing the macroeconomic context and delays in certain projects.

The company now sees organic revenue growth between 13% and 14% in 2023, against a previous outlook of growth in range of 14%-16%.

The new revenue forecast “includes… recent developments in demand which in the short term reflect a delay in certain migration projects to the cloud or the extension of existing infrastructures,” the company said in a statement.

Cloud companies have been seeing signs of slowing demand, and have faced higher costs, notably energy bills, as their data centres use large amounts of electricity.

Societe Generale analyst Derric Marcon earlier this week pointed to an interview this month where Amazon‘s CEO suggested a continued slowdown in AWS, the U.S. company’s cloud services arm. Tech companies, including Amazon, have been laying off employees, citing economic uncertainties.

“Inevitably, investors … will wonder if a challenger or niche Player like OVH can continue to grow as much as they said in a context where others say it’s slowing down,” Marcon had said.

OVHcloud updated its adjusted core profit (EBITDA) margin target for full-year 2023, forecasting that it will be above 36%, against a previous forecast for it to be in line with the 39.0% posted in 2022.

The group also flagged higher personnel and operating costs, particularly the impact of higher spot electricity prices in Germany.

OVHcloud said that it expects electricity costs to “normalise” over the next few quarters, while its price increases will take full effect from the fourth quarter of fiscal 2023.

It reported half-year sales of 439 million euros ($481.41 million), broadly in line with the 437.3 million expected on average in a company-provided poll.

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