Ladies and gentlemen, welcome to OVHcloud FY 2025 results. Today's speakers will be Octave Klaba, Chairman and CEO of OVHcloud, and Stéphanie Besnier, CFO. I now hand over to OVHcloud management to begin today's conference. Thank you.
Hello, I'm Octave Klaba, I'm Chairman and CEO of OVHcloud. I'm really glad to be here with you to share with you the financial results FY 2025 with Stéphanie, we can start on. OVHcloud relies on three pillars. The first that we are in the vast and rapidly growing cloud market. The second that it's scale growing globally, we want to scale worldwide. The third one is that we just are launching our next strategic plan FY 2026-FY 2030. On the key highlights of the FY 2025, we delivered our guidelines that we announced one year ago. 9.3% organic revenue growth, more than 40% adjusted EBITDA, unlevered free cash flow that doubled from last year, and the CapEx about 33% of revenue. We also achieved significant milestones, more than EUR 1 billion revenue. Also in the corporate market, corporate customers, we generated more than EUR 200 million revenue.
In public cloud, more than EUR 100 million revenue. Also to give you the overall highlight about U.S., United States, we generated more than EUR 100 million revenue. Also, we improved significantly all our key financial numbers. Yesterday, board decided to unify the role of Chairman and CEO and I've been appointed as the CEO with the main objective to shape, drive our FY 2030 plan. For this new plan, we need tight governance and bold execution, really unify vision, strategy, and execution to make that fully aligned. I would like to thank a lot Benjamin for the work on the last 12 months. Our focus will be on restoring growth momentum, boosting free cash flow, and improving ROCE. We have the five years to plan an investment and also last 10 years we invested heavily. It's time really to have the money back on all this investment.
This is my mindset for the next five years. Just to give you also the upside that we have. I've been talking about the EUR 200 million in corporate. Yes, but it's just in France because we have 80% of this revenue is in France. Our takeaway of that is that we have playbook for the corporate market and now it's time to upgrade in France because we have new opportunities to go after the new kind of customer, bigger customers, but also to deploy this playbook that we had in France, in Italy and Germany. This is what we will do in the next quarters, years. The second significant upside is in public cloud. As you see, we just generate 20% of our revenue public cloud based on PaaS, usually you should have 50%. We still have a lot of upside.
It's really just beginning of the story on the public cloud. Last one, it's U.S. We generated more than EUR 100 million in U.S. So we have a success in U.S. It's rare for a European company to have a success in U.S. This is our case. What you can see is that our EUR 100 million revenue, it's mostly private cloud. We didn't even start our story of public cloud in the U.S. This is also what we will do in the next quarters and years. Let's see about the financial result of financial key numbers about adjusted EBITDA. You see the cycle of five years investment. We increased adjusted EBITDA over the last five years. Also, what you see is that, you see this percentage of adjusted EBITDA, it's now growing. We just restored the minimum level and we continue to grow on this adjusted EBITDA.
You can see that also on the 11th free cash flow that is just positive this year and it's just one step ahead that we will go back to you next year announcing that we are free cash flow, unlevered free cash flow and then we continue to generate cash for the next years. This is the first time that we would like to share with you ROCE since IPO. We restored average ROCE in OVH. Keep in mind that ROCE is based on the two different activities. The first activity is investment in the hardware in infrastructure and the second is investment in software. This is average ROCE that we have in OVH. If you come to our investor day we will show you, we'll split that and we show you how it will evolve in the next years.
Let's have a look on what we call go to market and this is a new way of showing you our activity. Of course we have universes of product but we have also in the mind that all these products they are going to the market in a different way. The first way is digital startups. It's all small customers, let's say less than EUR 25,000 annual revenue. Here we have less than 5% of revenue of growth. I will not tell you that it is fantastic and we probably go back to that. The second is digital scalers and here you can see how well what is our growth. It's more than 20%. We totally succeed and growing helping our customers, digital customers, still digital customers growing with OVH, upselling the product, having different geographies. We have the playbook and we know how to do that in the next years.
The last one is corporate. It's totally new, let's say it was totally new five, six years ago to go on this new market. Corporate big companies, banks, pharma, governments. Here also you see that we are growing more than 12% and generating more than EUR 200 million. If now I'm looking just on some numbers, we have more than 1,200 customers that generate more than EUR 100,000 ARR and it's growing, it's going. We will show you every year how it's growing from this perspective. I think we should spend a little time on the digital starters because less than 5% of growth is not good, especially when it represents more than 50% of our revenue. Let's have the small going zoom on that and see what's inside. On the digital starters we have three different kind of products.
Public Cloud is 60%, Private Cloud is 40% and Web Cloud is 90%. What we will do on that in next years, of course those the issues that on support that we need to solve. This is our feedback on our customers and we will do that. We already started work on the AI work on the new experience of the support. You probably have seen that on my Twitter. We want to have improved the price performance on the private cloud and public cloud products. Also you probably have seen the last weeks that we launched VPS new range and we started to announce the new product that it's better price performance on this range of product. There was another topic that we because of the sovereignty market and the business isolation between the U.S., Europe etc. We totally cut access to the Web Cloud from U.S. customers.
We need to restore that and we will work on that. We've been talking about this hosted private in VMware that was bought by Broadcom last year and we have some impact on this entry level of private cloud of hosted private cloud. This is why we launch it public VCF. It's not enough. We will launch the new version with the additional features in January and we'll continue to help this part of the customers that they want more managed services to host a very small, small scale of the cloud and of course AI. Our customers also you can see that Web Cloud market environment barometer market, private cloud and public cloud is impacted with AI. We need innovate, we need to bring on market the new solutions we already started. In the next quarters we will launch a new product specifically on this AI solution.
It's not just that. I just highlighted five small topics that we started to execute and we have more ideas how to restore this growth in this digital starters go to market for each. On the next page, just to explain why we unified leadership and vision, strategy and execution. It's not enough to have a good vision and good strategy if the execution is not aligned with the vision and the strategy. The main focus, why I was a pontiff, is that we want to be really sure that the vision and the strategy that is decided in board, it's really executed in the small details everywhere and not just on the part of the business. This is why I'm here and this is I have both jobs to align board and align execution and to bring to OVH the better performance growth in the next years.
We started to work on this five years strategic plan FY 2026, FY 2030 to really explain to our customers, to our teams, to you, to our partners, financial partners where we want to be in five years, what is our direction, what OVH looks like in five years. Also explaining the way, the path that we will use to go over and to execute all the strategies step by step, year per year, quarter per quarter and to deliver that in the free cash flow positive way of thinking. This is what I've done for 16 years before 2000, 2018. This knowledge about having really focusing on the growth but having focusing on the free cash flow, it's something that is now mandatory for us after this 10 years on the heavy investment first in the data center and then in software.
This is why we announced in upcoming investor day early in 2026. We want to also to explain you in the details what does it mean in the numbers, financial numbers, what does it mean on the growth, what does it mean on the margin, what does it mean EBITDA, what does it mean on CapEx, what does it mean on free cash flow. Also ROCE. ROCE is something really important that we are focusing on but also it's too global. I would like to explain, go deeper and to show you what does it mean on the infra, what does it mean on software and how we will improve these financial numbers. Let's talk about the FY 2026 guidelines. This is what we announced on the growth 5% - 7%. This is what we wanted to announce.
Of course, we are not happy with that and we're working hardly on that adjusted EBITDA. It will be more that FY 2026. Surely depends on the growth. It will be easier to deliver more once we have more growth, but at least we will deliver more than FY 2025 CapEx 32 and of course leveraging free cash flow positive. It's not just a little positive, it will not be EUR 1 million, it will be more. Thank you very much. I will now let Stéphanie to present the details about the financials of this year. Thank you very much.
Thank you, Octave. We can already feel the energy today. Thank you all for being with us. I'm Stéphanie Besnier, CFO of OVHcloud, and I will begin with the FY 2025 result. To start, we look at our performance by product segment in Q4. First, Web Cloud: we posted revenue of EUR 46.8 million for Q4, up 5.8% like-for-like compared to previous year. The performance is mainly supported by domain names growing year- on- year at double digits thanks to the successful rollout of our new offer, the multi-year renewal in several geographies. As Octave said previously, we plan to boost the other segments of this business of Web Cloud with AI and to expand it abroad. Second, Public Cloud: our revenue reached EUR 61.9 million in Q4, up 18.11% like-for-like. We had a strong APA growth, and this was also supported by solid increase, yes, and PaaS offering including AI.
On the right side, private cloud segment registered revenue of EUR 168 million in Q4, up 4.8% like-for-like. Our performance suffered here from a high comparison basis in Q4 2024. You'll remember that it was boosted by the price increase of VMware licenses. On the flip side, this new pricing policy impacted significantly our digital starters, on which we plan to focus in the short term. Now let's have a look at our results with our key financial figures for the full year 2025 on the next slide. You can see that we achieved all our financial targets, and we deliver the profitable and cash-generating growth with an organic revenue growth of 9.3%. Second, an adjusted EBITDA margin of 40.4% at a strong 200 basis points compared with FY 2024. Third, our adjusted EBITDA in million euros reached EUR 435.8 million compared to EUR 381.5 million in 2024.
Fourth, our CapEx was 33.3% of our revenues, down 120 basis points compared with FY 2024. In absolute value, we invested more than last year with EUR 361.4 million in FY 2025. Last, an unlevered free cash flow of EUR 57.6 million, which has more than doubled compared to FY 2024, 2.3 times exactly. Now let's take a closer look at our P&L on the next slide. In FY 2025, our profitability significantly improved with a 15% increase of our adjusted EBITDA and a margin of 40.4%. We had a significant improvement in our EBITDA margin, 200 basis points. This comes from, first, reduced electricity costs as a percentage of revenue compared with FY 2024. We are at around 5% of our revenue this year; it was 6% in FY 2024. We have also a strong operating leverage thanks to a higher volume of service produced which contains operating costs.
This strong cost discipline led to a clear improvement in EBIT, which increased to EUR 69.4 million. It represents a margin of 6.4%, up 380 basis points compared to FY 2024, which is almost twice as much as our EBITDA margin increase. Year- on- year our EBIT increased by 2.7 times. This demonstrates management focus on driving profitability through the business. Now, below our EBIT, the financial result reached EUR 65.1 million and it includes the fees related to the previous debt for EUR 10.1 million, an increase in our interest rates over the period and a higher net debt. After including a tax expense of EUR 3.9 million, we recorded a positive net profit of EUR 0.4 million, a significant improvement compared with a net loss of EUR 10.3 million for FY 2024. For the first year, a positive net profit. Let's now look at how this increase in profitability translates into cash generation.
This strong growth in our profitability is also reflected in our gross cash flow from operating activities, which was from EUR 378 million in FY 2024 to EUR 422 million in FY 2025. After a strong H1 boosted by a phasing effect, as you remember from our discussion in April, the change in operating working capital requirements has now normalized and is slightly positive, amounting to EUR 1 million for the full year FY 2025. Our CapEx now amounted to EUR 361 million, representing 33.3% of our revenue. We invested 21.4% of our revenue in gross CapEx and we invested 11.9% of our revenue in recurring CapEx . All in all, we are generating a non-levered free cash flow of EUR 57.6 million in FY 2025, 2.3 times, like I said, our FY 2024 level.
Now our levered free cash flow amounted to - EUR 67 million and I can reconfirm to you today that our target for FY 2026 is to deliver a positive levered free cash flow. Let me give you on the next slide a reminder of how flexible our model is with the split of our CapEx . During FY 2025 we reduced the capital intensity of our infrastructure CapEx and we significantly optimized the component inventory management to increase at the end of the day the availability of our assembled servers in our data centers. To achieve a positive level of free cash flow in FY 2026 we will continue our efforts to optimize inventory management. In FY 2025 our hardware CapEx represented 21% of our revenue, so it's 5 points higher than FY 2024. Why?
This is linked to the proactive push on assembled server and to reduce the time to delivery of our servers but also to prepare the growth for FY 2026 and we focus by the way on the entry range servers that we mentioned. Also for the digital starters, as planned we reduced infrastructure and network CapEx which are 3 points below last year. We focus on the data center occupation rate that was at 66% at the end of FY 2025. We continue the usual infrastructure and network work to prepare for the next phases of growth. We have currently around 250 megawatts of installable power capacity which is a strategic asset for future growth. As planned, our product and software development CapEx stabilized in absolute value and it represented 7% of our revenue. We continue obviously to develop and enhance our products, particularly in our public cloud offerings and new surrender.
Finally, the other CapEx declined in FY 2025 compared to last year. It includes mainly the cost to open new local zones, compliance costs, and the proceeds of a sale of a legacy data center in Paris in H1. On the next slide, let me remind you in detail of financial structure. As you know in 2025 we successfully refinanced with an inaugural bond issuance and the implementation of the first EU Taxonomy aligned Green loan by a European cloud player. We have a solid debt profile with a net debt of just over EUR 1 billion, available liquidity of EUR 242 million, and a controlled leverage ratio of 2.7 times in line with the group's debt policy. At the end of August 2025, all the group's debt is hedged and we have an average interest rate of 4.3% over the year 2025.
The refinancing was also marked by a diversification of our funding sources. As you can see on the right, we have no major debt repayment before our fiscal year 2030. Our main sources of financing are now: first, EUR 500 million in senior unsecured bonds at a fixed rate of 4.75% maturing in fiscal year 2031. This inaugural bond has refinanced part of the group's existing debt. It's been rated BB- by S&P and Ba3 by Moody's. Second, we have a EUR 450 million green bank loan maturing in fiscal year 2030. Third, a multipurpose drawable credit facility for EUR 200 million. It's not drawn at all as of today and it will mature in fiscal year 2030 with an extension option of 1,1. Finally, we have a loan of EUR 200 million from the European Investment Bank. I will now hand over to Octave to talk about our outlook. Thank you.
Perfect. Thank you very much, Stéphanie. Just to tease you a little bit for the investor day, we would like to talk about the different topics. The first is go to market. You just had the overview of the free go to market, but I think there was a topic to go deeper and to really understand how it works, how different it is, what its experience can customers, the countries, the products. We will go deeper inside. The second is public cloud and AI. Of course, public cloud because this is what we started to invest in 2021. Now we have all products. There were also questions about AI, what we can do, what we do for our customers who are going the market. Investment, not investment. CapEx, lot of questions. I would like to highlight the answers from OVH perspective.
Of course, sovereignty market, lot of opportunities, and there was a lot of truth to tell you about this market. If you need specific part of the market, of course, because we make the CapEx, we would like to highlight data centers, where we are, what we are doing, how we use our assets, and how it will work in the next years. ROCE as the results of the investment and also because we will be free cash flow positive for the next five years. What will be, what is our, what we have in mind for the capital allocation. This is the six topics that we would like to highlight in early 2026, and I hope that you will come and spend a little time with us to have this deeper understanding of what we are doing. Now, Stéphanie, we can answer your questions if you have some.
If you wish to ask a question, please dial on your telephone keypad or press the blue hand icon. The next question comes from George Webb from Morgan Stanley. Please go ahead.
Hi, morning Octave and Stéphanie. Thanks for taking my questions. I've got a few if I can. Firstly, Octave, maybe two for you as you kind of step into the CEO seat as well. I presume you're looking at areas around, as you mentioned, product and maybe customer experience that you can sharpen within the business, you can improve the execution around. How confident are you that those things can be achieved without needing incremental margin investment and that you can continue to take up adjusted EBITDA margins? Secondly, you talked about maybe having a public cloud journey in the U.S. I guess over there you don't have the data sovereignty differentiation. When you think about the potential value proposition you could go to customers with in the U.S.
around public cloud, would that be predominantly price versus performance or are there other differentiators you can use to perhaps win against competitors? Maybe one for you, Stéphanie, with regards to the outlook for 2026, the 5 %- 7% organic growth range is below where you exited Q4 at 7.5%. There is a further slowdown implied. Can you give any color around how you think about the shape of the organic growth we should be thinking about for the year ahead? Actually, maybe one very last one, maybe back to you, Octave. Not to preempt the investor day and the 2030 potential targets, but you've talked about restoring growth momentum, so I guess it's fair to say that your expectation would be that 2026 can represent a trough in growth and that maybe you can start to accelerate back towards double digits at least at some point thereafter.
Thank you.
Thank you. Maybe I will start on the last question. Of course we are not happy about our guidelines and this is why also and part of the why I'm here today to lead, to execute the strategy. What we see is that for the last years the company was really focusing on the digital scalers and corporate and didn't invest in the right moment, didn't innovate in the right way in all these digital starters segment of customers. Of course we have seen that and you see that because we didn't deliver across the different years the guidelines, we had the different profit warnings. This was the part of this, of the story that you didn't have why now you have why, because it's clearly explained that.
This is also why talking with Ward, we decided to appoint me because of this experience also across the first years of OVH, that we created OVH from nothing, accrue until EUR 400 million, EUR 500 million. All this experience of the digital, all experience about the acquisition, all the experience about growing the customers, freemium strategies, going to different geographies, going to different countries and trying to help the customers starting the journey in OVH. This part is really important. Even if it's very small customers, this part of journey is really key because a lot of customers, even corporate, even the very big digital scalers, actually they start testing us being digital starters in the beginning. All this experience, all this journey in the beginning, this three months, six months, maybe sometimes it's more than one year before they started to trust us and to starting to grow with OVH.
It's all part of this digital starter market. This is where we will focus. There were few products that we identified that we are focusing right now because we just have seen that the revenue about this product just decreased significantly over the last five years. One of my goals is really go back to these few products and to trying to restore the growth that we should have today. It's not the only part. I think the market changed. There were new opportunities, there was AI with a new way also to be consumed by the customers, the product, new customers. Also the way that we can use AI to go faster on the market. This is also part of the story. We will take the time during the investor day to have the highlights about what we are doing internally also with AI.
Maybe answering your question about public cloud in the U.S., yes, the playbook, the why our customers will use us in the U.S. is not the same as Europe. You're right. We have a lot of customers that actually love to mix the products between them. They love to use hosted private cloud at the same time as public cloud, and to do being smart between using something that is, for example, bare metal for the deployment of the platforms, but having at the same time public cloud so they can make it cheaper. Some parts they're cheaper or they can go faster with the additional forty products of managed product. This is the flexibilities, the range of products that they are looking for. The playbook is as usual, it's not just sovereign, it's not just public cloud.
It's the mix of what we have on the table and what we offer to our customers. It's all the portfolio that our customers, they love to consume for what is the best for them: bare metal, hosted private cloud, and public cloud. What is the best for which part is the best, and mixing that, this is where the value is using OVH versus cloud providers where they have just public cloud. If you want a barometer, a lot of bare metal, a cheaper one with a lot of bandwidth with deploying specific software, actually you cannot do that in the hyperscaler. This is where we see playbook for OVH in the U.S. It means that, of course, we have two data centers. We see what does it mean having the public cloud in the U.S. specifically.
When we think about all this playbook of public cloud, what it is, it's a region, region on three data centers. This is what we have in Paris and we started, we will start in the next weeks in Milano in Italy, and then we have plan to go to Germany but also in the U.S. to offer this setup for public cloud and both will make this growth that we hope that we'll have in the next years in the U.S. specifically. Maybe did I answer those questions on the seasonality.
Thank you George for your question. What we do see right now is a tougher H1. We expect also to benefit in our H2 from a more favorable comparable basis. Plus all the work that is currently launched on the hosted private cloud. For example, to answer to the concerns of our small customers, digital starters that are facing the high price increases by Broadcom and generally speaking in all the different product range. As of today, tougher H1 and improving in H2.
That's great. Thank you, guys.
Maybe another question.
The next question comes from Hugo Paternoster from Kepler Cheuvreux. Please go ahead.
Yes, good morning. I hope you are hearing well. Great, great. Thank you for the presentation. I will have three questions. The first one is on the public cloud momentum that you had. I guess part of the growth is fueled by AI related workload. I just wonder if you could perhaps provide us more color on the AI demand that you may see, how it participate to your growth, and how are you seeing it grow going forward as well in terms of product development internally. It will be my first question.
Okay. On the public cloud, we have more than 20% average growth over the last three years. On the AI specifically, we are very opportunistic on the AI. Let me give you two minutes just to overlay that you have training and you have inference, another part. We are not part of this training market. There were less than 10 potential customers, a lot of CapEx. There was a lot of uncertainty about the return on the capital. We decided not to play in this part. Okay, so this on the training, this is my answer. On the inference, this is where we play and we have plans, we play. I will explain to you on the different levels. First, on the GPU levels, we don't use just NVIDIA, we use some other GPUs. Why?
Because we found that the answer for the speed, for the price, for the performance, for the different agilities, we found some other solutions that are not NVIDIA. Of course, we have the NVIDIA, but on our side internally and for our customers, in the product that we call Endpoint AI, we don't use NVIDIA only. This is one part of this inference. Another part of this inference is just offering to our customers the GPUs. We have seen the evolution of the demands where, let's say, one year ago it was the smaller GPUs and now we have the bigger systems. This is where we play, offering to our customers not just the cards, not just GPUs, but the systems, huge systems, for example, the 8 GPUs, 16 GPUs, etc. It is specifically for this market of the sovereign market.
That's where the customers want something that is totally isolated, totally secure because their data is very, very, very isolated, very sensitive. We play in the three different locations in this area. We play in our data centers, of course, mainstream offers. You can list the GPUs. We will start very soon on the SecNumC loud. It is a sovereign, let's say, sovereign part of the market where we will offer this product early in 2026. We are just finishing the platform for the SecNumC loud of the public cloud. Then there is a new, totally new market that we have now. The customers, the product, and the customer are asking us to deploy that on-prem. Thanks to our OPCP offers, on-prem cloud platform, we are able now to bring the software on the hardware and to deploy that wherever the customer wants.
We're playing on these three different go to markets, let's say on the AI, the growth on the percentage there was a part, there was one person 1.52% of growth, but still keep in mind that we are not pushy on the CapEx for GPUs in the AI market. Why? Because we don't have the proofs that we can make money on that on the long term, the life cycle of the GPUs, it's so fast, the prices, they are so low that we are not sure that allocating the CapEx on the high lot of money on that will bring us ROCE, will bring us IRR, will probably grow revenue, will grow EBITDA, but it will not be generating cash. We are investing in that because our customers, they ask us to do and this is where we have the growth because they want to work specifically with us.
It's really opportunistically done to not to lose the customers. It's not used to win the customers to have the new customers. We are very defensive on that because of the cycle of life and the CapEx intensity with the ROCE generation. Something doesn't work in my mind so I prefer to go in the very opportunistic way in this market.
Okay, okay, very clear. Thank you. I will have a follow up question on the guidance. I've understood that you expect a tough H1. Could you be more specific? I would say in terms of segmentation, what should we expect for H1 and potentially for the full year in terms of private, public, and web cloud?
We don't disclose in detail the guidance by segment. What we can say is that for public cloud, I mean we have a strong growth like you can see and we expect this to keep the momentum on the public cloud. What was particularly strong this year was the impact of the Broadcom increase. We benefited from it until May 25th. Right now what we do see is the impact on the digital starter customers. We have a decrease of volume and we're working on it with the launch of a dedicated offer. On the web cloud, you know that we have also a different kind of market and dynamic on this web cloud. We have benefited from a strong dynamic in domain names so far.
It will probably be a bit tougher in H1 again and it should also improve at the end of the year with the work that is also done on the portfolio and support, etc.
Okay, got it. The last one on the CapEx allocation. Just wonder if you could provide us a little bit of color on the data center strategy. How do you think about the average size of your data center going forward? Will you potentially put more phases on regional data centers, small data center and potentially staying. Will you stay on a proprietary basis for those data center? How should we think about it?
Yeah, okay. It's a very, very good question because you know, in 2016 I raised EUR 250 million to invest in the data center. It was 10 years ago and 10 years ago we invested just for EUR 250 million. We created a large asset of data centers. This is what we are talking about. The visionary decisions and the strategy to having the step ahead into trying to imagine what would be the future and what are the good move today. We invested all these assets and we have them. If we would like to have this investment today, probably we would pay 10 times more for the same, exactly the same asset, but just 10 years after. This is the reality of the market because AI, power consumption and all the complexities that you have today to build the data center.
We have these data centers and it was a very good move from OVH perspective to invest this money in the data center. Now once I said that we can use these data centers, existing data centers in a better way, this is what we started to do last year, FY 2025. If you see our numbers, you can see that our CapEx of hardware, the percentage of this investment is much higher than the investment in the infrastructure. The amount of money that we invested in the infrastructure was really lower if you compare to the hardware investment. Why? Because we started to optimize our data center resources and we find a way to host more servers without spending more CapEx in the infrastructure. This is also the way that we started to change our investment in not just hardware but also in the data center.
It's not the end of story. There will be few additional moves that we will deliver next year to continue to improve our ratio between CapEx in the hardware and the CapEx in the infrastructure. This will be a part, there will be a lot of improvement in this part, in this specific ratio. Now if we talk about the future, where is our future in the data center. Today we have what we call campuses. That means that we have somewhere few buildings and that they work together. This is what we call campuses. We have Gravelines, we have Limburg, we have Vint Hill in Montreal, we have the U.S. etc. We see that it's a very cheap way to deliver the data center resources for our customers.
Because you have a big amount of servers, you can reduce your OpEx and the CapEx per server because of the volume, because of the fixed investment, fixed OpEx, and it was very good, the way to really start into having the business for over 25 years. Now we see that the next move for us will be regions, region in three data centers. We started with Paris, and because we don't know yet what should be the scale of these data centers. Should it be small, I would say 1 MW, middle range, 10 MW or should it be bigger, 40 MW, 50 MW each? We don't have answers for that because our journey in public cloud just started. We just 18 months ago finished all range of products, and we started just to sell that in Paris, now in Milano.
This is why we leased the data centers in Paris. This is why in Italy we just bought one data center and leased two of them. This is why in Germany, in Berlin, it will be probably the same strategy. It will be the same probably in Ashburn, where we already have one data center and probably lease two others. The goal is really to understand what should be our scale. Once we know what is the right scale, because we want to spend, we want to allocate the CapEx in the right way and have the good return, then we will be able to decide what is this move. Should we continue to lease? Should we invest? What size of the data center if you want to invest? We don't have all answers for that.
This is why for the moment we are going in this direction, and I hope in the 18 months, two years, we'll have the clearer overview about what is the step about the data centers if we talk about this region. Waiting this moment, also we started to deploy what we call local zone. It's really the first right in the leasing to start a new market and to see if there was any potential growth that we can have in Madrid, in Oslo, in Denver, in Vietnam, etc. We wanted also to invest very little money to different markets and to see where we can have very easy and very smooth growth without any risk about the CapEx allocation in the hardware or the network in the different locations.
Okay, thank you very much. Very clear. Thanks a lot for your answer.
Another question, the next question comes from Daniel Schafei from Citigroup. Please go ahead.
Hi, good morning. I just wanted to come back to the Broadcom issue. You mentioned that customers are kind of leaving due to the higher Broadcom price increase that happened earlier. What kind of churn do you see there in the moment? Was that significantly higher than you initially expected? Now that you're kind of offering those OPCP offerings, what success do you see there? Are these significantly more margin dilutive to the business itself? Also, on the second note to the guidance for 26.5-27% growth, just wondering what is your expectation within that on European growth specifically? Maybe also just to follow up on U.S. accelerating.
So, t his part of the business is continuing to perform very well. Just wondering how are you seeing the competitor landscape progressing there, like the likes of Akamai or Rackspace? Do you fare well in comparison to them, or are they trying to be also more competitive? Also, do you see a risk of other players entering the space as well? Thank you very much.
Thank you. I will take the first broadcast OPCP. Stefan, if you can, about the outlook and so on the broadcast, the way that we see broadcast is that we have, let's say, two ranges of product. The first is entry level and then you have the corporate customers. On the entry level, it was really the beginning of the story 15 years ago with VMware. We found new customers for VMware because we had this large market of bare metal and we offer our customers, instead of managing bare metal, offering them very good prices about VMware and products, but that they are fully automated. What is the issue from the last year? The last year the licensing conditions changed, that the minimum cores is very, very technical stuff.
That is the way that VMware sells the licensing or server, that you need a minimum number of the CPU cores in the CPU that they will bill you if you have very small servers. In fact, you have a minimum to pay that is quite more than the customers they had today. The increase of the price, it was unjustified from the customer's perspective. I just give you the, if they had eight, even they had to pay 16. Okay, why 16? Because it's a minimum of contract that VMware, they said this is the minimum that you have to pay. It is very technical, but it's impacted all this entry level of customers. What was our answer? Our answer was we can build a product that the customer, they don't have dedicated servers in VMware anymore, but they will be shared across 5, 10, 20 different customers.
This is what we call public VCF. Our product that we started to work, it was about 12 months ago and now it went live and we have an additional version and it's coming on the January. My point on that is that this is what I call a visionary strategic in execution alignment. We knew two years ago that it will happen. We could have developed all these products two years ago and be ahead on the market. This is what I want to bring to OVHcloud. Having this anticipation of the issues, having this step ahead about the opportunities and to work today about what the customers will want tomorrow. We started to see the things and the small weak signals that bring us additional information. I will give you another example. This is what you asked about OPCP. OPCP, we didn't talk about OPCP to you guys.
We haven't talked at all. I think we didn't announce anything. We started to work on that five years ago. Specifically, two years ago we started to work on this product with 30 guys. Now we have 100 guys working on that. We are still going free cash flow positive. It's totally financing with all our cash that we generate. What we bring on the market, we bring on the market a new product that allows us to deploy cloud, public cloud, wherever the customer wants us to deploy. We have a new range totally of customers because of this liberation day and also of the VMware broadcast shockwave that you have on prem. A lot of issues, customers that we didn't have before, they have a lot of issues because there was no more VMware available for them.
They see that having the dependencies on the technology, it's a risk for them. This is why they started to talk, a lot of them started to talk with us about, hey, I want this product in my data center. It's just right now, it started a few months ago, two months ago, three months ago, five. We started to work on that two years ago. This is what I call step ahead. This is what I call vision, strategy, and execution alignment. To be really on the market before the market is creating. We want to create the markets and not just to be part of the existing market. This is one example of the OPCP and I feel that OPCP will be multi hundred million revenue in the next years. We see that this is where our customers' potential discussions that we have.
We are talking about EUR 10 million, EUR 20 million per contract. We have a lot of discussions, okay, when it will come, give us a little different quarters because it's very big contract, a lot of contracts, telco. Every telco in Europe, they had the issue, every telco in Europe talks with us and this is just one example. This big issue, now we have products to address. We need to transform that to the signature, contract, deployment, relationship, and the revenue, and it will come, just not in the next quarter. We see that it will come in the next few quarters and this will be massive. This is one part, one example of a product that we just started to develop in the right moment. This is what I want more for OVHcloud and this is why I'm here. Stéphanie, maybe on the.
Yes. On the balance between Europe and U.S., we expect a higher growth from the U.S. compared to Europe. There are different explanations, mostly related to the mix. In Europe, most of our web cloud business, and you know that it's a single-digit growing market, most of our web cloud business is in Europe. Clearly, you have a mix effect. Here in the U.S., we have almost only private cloud. Still, this being said, you have almost half of our U.S. business that is done with what we call the digital scalers. You have a huge market in the U.S. of this kind of customers. We have a very good relationship with this profile of customers. Here you have also a market that is growing at a higher pace than in Europe. In the U.S., on top, we intend to expand the portfolio of product. Octave mentioned it.
We are still at the beginning of the story for public cloud. That will be one of the focus areas that we will have for the U.S. development. We want also to expand in corporate. That will be another lever for growth in the U.S. You have different growth drivers plus a very strong local dynamic that will support the growth in the U.S. for FY 2026 and after.
Perfect. That was 11 initial questions.
Other question.
Perfect.
Maybe the next question comes from Ines Mao from BNPP Exane. Please go ahead.
Can you hear me?
Yes.
Perfect. Thanks for this update. I have a few follow-up questions. I understand there's been a substantial change in, let's say, paradigm in H2 for priority cloud growth. What has changed exactly in the environment? I assume you expect this to persist next year given the soft indication for H1 2026. I have another question on the go-to-market strategy. From here I understand there's a core focus on revitalizing momentum with digital starters customers. From a strategic perspective, why are you focusing on them? I know they're quite big currently, but why not on enterprises given that we're assumed the largest, with the largest contracts as well? Are you seeing some kind of bottleneck in terms of competition in the enterprise market? Is it easier for you to actually revitalize digital starters instead? Just one last question. There's a big focus on increasing levered free cash flow next year.
What's a satisfactory level in your eyes? I know Octave, you mentioned not a low single digit, but what could be a blue sky scenario typically. Thank you.
Okay, so on the private cloud deceleration, the digital starters represent around 40% of our private cloud revenue. We mention it, we have suffered from the workload optimization in the last quarters. We do not benefit anymore from the positive impact of the price increase from Broadcom. On the flip side, like we said, we do see the decrease in the volume. What we are going to do, and clearly that's also one of our focus to reboot the growth, first we will reposition our entry range products in web cloud, in private cloud, in public cloud, but clearly in private cloud as well. We have the refresh of the usual tailored offerings and the work that we've done with a public VCF to offer attractive products after this impact from VMware repricing. We remain very focused to our price performance ratio.
All the work that we are doing on the cost will help us in offering very attractive pricing for this kind of products. We will obviously improve also the support with the AI-powered solutions and improve the customer experience on that topic as well. Finally, on the digital experience, globally speaking, from the onboarding of the customer till the viewing, we have a plan to improve again the journey of the customers, which again for digital represent 40% of our private cloud revenue. Your second question, Ines, on private cloud, do you mind repeating, we didn't get it.
Yeah, sure. The second was more, why are you actually targeting digital starters from a surgical perspective? Is it because, I mean, I assume enterprises, that where there is the largest ARPU upside, the largest contracts as well. Is it because the competition is kind of like too high? The third question was about levered free cash flow, the blue sky horizon scenario for next year. What's a satisfactory level in your eyes.
On the levered it's really positive. It will not be EUR 1 million +, just EUR 1 million, it will be higher. We don't want to give you yet the numbers because it's really a lot of uncertainties on the execution. It really depends on the growth. Today we see this growth of between 5% and 7% but if we fix yearly faster the issues on the digital stack sources of course will grow faster. Because of this, let's say OpEx, really focusing on OpEx, we should deliver more but I don't want yet to give you any numbers, it's too early and we still have 10 months to.
Execute and on the digital starters go to market. I think it's not new. We did address it and saw it through the product clearly. I mean again it's 90% of our customers from the Web Cloud, which is structurally growing at a lower pace than the rest of the products. It impacted, we had this impact from Broadcom and in private cloud, and the reason why we are looking at it a bit differently is that we've decided also to address this segment from the customer perspective and to tackle with the product offering but also with the whole customer experience, trying to rework the website, have dedicated actions on the support, and at the end of the day we want to be even closer to those customers that have been the historical customer profile of OVHcloud. Okay, thank you.
Maybe the last question.
The next question comes from Derric Marco n from Bernstein. Please go ahead.
Yep. Good morning Octave, Stéphanie. Octave, one question for you because I take your points on product roadmap and the fact that it would be great for your company to come in the market with right products at the right time. However, I'm really wondering. I'll try to understand what couldn't be corrected in time by the two previous CEOs because product roadmap is a long, let's say, length, time frame and so Michel Paulin and Benjamin Revcolevschi were there. What couldn't they correct at the right time? On that topic, was it too difficult to adapt the product roadmap on time? I'm really struggling to understand if everything was known before like you said, why didn't you adapt yourself to this market reality? That's the first point or the first question. The second question is about the CapEx.
I see on slide 18 the reduction in CapEx linked to infrastructure and network, but when you look to the CapEx linked to hardware, you see a significant increase in fiscal year 2025 compared to fiscal year 2024, + 40% I think, something like that. You said that you were accelerating the production of hardware or the assembly of hardware in fiscal year 2025 to prepare 2026. Look, you don't adapt CapEx to the current reality of your top line growth. I'm really here challenging you about your motto that is doing more with what you have already built. We don't see that in the figures, at least for, let's say, for 2026 outlook. Why isn't it more visible? Thank you.
Thank you for the question, a very good question about why we act so late about digital starters. Let's answer directly. Because we are public company, okay?
We have the governance and its governance. It's not like a private company. You cannot decide the things just because you feel these things. You have to make the decisions based on the real figures. This is what I also call to name a vision. I executed the strategies with vision. That means that because you feel the things, because you have the weak signals, you can make the decisions. Once you're a public company, you have the governance, you have board, you have all the discussions, you have the quarters, you have the half years, you have the fiscal years and you have to work with that. This is what has slowed us down to make the right decisions about this issue that we have seen.
We've seen, we felt, I felt few years ago, at some point I want to take my responsibilities and to deliver because I feel that we can fix all these issues and not to have the excuses that why we didn't do that. This is also why I'm here. I'm not here to tell you what, why, when happen. I want to tell you about how we will fix the issues. This is my goal. This is where we are. I cannot change the past. What I can change, I can change the future. This is what I will do. On the capex, you write that the capex should be lower this year because of this growth. You're totally right.
What if tomorrow we find what is the issue and we have double digit growth when we will be able to deliver this growth because of the servers, supply chain, tensions in the supply chains, because of the AI, etc. We are ready to deliver the growth, more growth that we have today. In the guidelines, it depends just on our capacity to fix the issue, the small issues, the issues that we have. If we think that very quickly we'll deliver more growth because we have every stuff, everything that customers will want. We are looking, we are fixing why they don't want it anymore. Let's keep that the very simple way. Okay?
We have servers in the data centers that we are ready to sell. You can see that there were no complaints coming from the customers this year. From September, about the time that we need to deliver the bare metal, for example. If you compare 12 months ago, we had a lot for September, October, November, December, until I fix the issues with the teams. From January, no more issues about the delivery. We deliver everything and then something happened in April. We are looking at what it is, why, what changed, why the perception. They did different things and we want to fix that. Once we fix that, we will go back to you with the different guidelines. Today, I don't want to deliver you the dreams that we are not able to deliver. Okay?
I'm here to deliver the expectations that we give you. This is what we see today. If we see something different, if we see more and we can see more, we will deliver more because we have all these errors. This is why we decided to invest this capex that will fuel revenue FY 2026 in FY 2025. This is what you have seen, that the capex on the FY 2025, they are a little bit higher. Why? This is the root cause, because we have decided to invest in the servers in our data centers to be ready to deliver the growth. Now we are working how to make this growth. Where was the issue, where it's failed, what was broken and what is broken, and how to fix that and then go back to this 10% more growth.
In board, we thought that I'm probably the better guy to find this as fast as possible and to deliver the growth. You are right. We are here to grow. It's not just to deliver these guidelines that we have today. I don't want to over promise.
Understood. Thanks for your transparency and [crosstalk]
Thank you very much. Maybe we will close this Q & A just with the takeaways. Three things: we deliver FY 2025, all the EUR 1 million revenue significant milestones with the different areas and major improvement in key financial unified leadership, CEO Chairman, we've been talking about that, and the last one, guidelines for the moment, we see 5-7% adjusted EBITDA, will be more than FY 2025 at least, CapEx maximum 30, and 30 is true, and of course, elaborate free cash flow positive. Thank you very much for your time. We appreciate all your questions and we are here to deliver.
Thank you.
Thank you very much.