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Neither inferno, nor price hikes quell OVHcloud, as EU sovereignty focus drives business

Analysts expecting European cloud provider OVHcloud to haemorrhage customers in the wake of a devastating 2021 data centre fire or recent price hikes look away: The company reported a net revenue retention rate of 114% for its fiscal 2022 and has now clinched a €200 million credit facility from the European Investment Bank.

It’s using the latter to help underpin an aggressive expansion plan – 36% of its own revenues are also allocated to growth capex – and is touting impressive efficiency figures as it grows: The EIB notes that OVHcloud achieves the cloud industry’s best ratios in energy efficiency (PUE between 1.1 and 1.3, compared to an industry average of 1.57) and water consumption (average WUE of 0.26 l/kWh, compared to an industry average of 1.8)

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OVHcloud wants to open 15 new data centres by the end of 2024. It signed Alstom, Arianespace, Fencecore MasterCard (in Canada), EQS Group (in Germany) and Efalia (in France) as customers in Q4 of 2022 alone.

The company reported revenues of €788 million in 2022, up 18.8% on 2021.

“This funding demonstrates the EIB's desire to actively support European digital players, and is in line with the European Union’s priority of strategic autonomy in new technologies” the EIB said in a release this week.

Liberté, égalité, sovereign cloudité

How OVHcloud sees its tailwinds. Credit, OVHcloud's 2022 annual report.

“OVHcloud is positioning itself as the champion of users’ data sovereignty in an open, reversible, transparent and federated cloud ecosystem” said the EIB – indeed the Roubaix, France-headquartered firm’s earnings call in October saw executives emphasising that “sovereignty solutions, is really today, a strong driver in Europe”

OVHcloud provides dedicated Servers, VMware-based Hosted Private Cloud, and OpenStack-based Public Cloud to over 1.4 million customers. Like industry peers it has been hiking prices – a 10% rise effective on 01 November 2022 on public cloud and on 01 December 2022 on bare metal – to seemingly sympathetic clients.

The €200 million credit facility for expansion roughly doubles its own capex.

That’s still a mighty low figure – some 0.6% of Amazon’s annual capex, for example – and given the average data centre costs in the region of $10 million per megawatt to build, doesn’t go hugely far; we’ve asked OVHcloud for more details on its expansion plans and their financing and will update this when we get them.

CEO Michel Paulin meanwhile told analysts last month: “One of our key positioning [sic] is that we do not use customer data. We have absolutely no conflict of interest with our customers. This is a rising focus and concern for customers of cloud provider today all around the world… [Our] sovereign products, especially with large corporation for our SecNumCloud (a French cloud security initiative) products [secured] more than 30 new corporate clients in 2023, the first full year of commercial activity for this SecNumCloud certified product."

A UK sovereign cloud provider, UKCloud, did not get the same support nor meet with the same passion from policy makers for “sovereign” cloud capabilities and was forced into administration this year.

UKCloud liquidation became inevitable when AWS won the spooks