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France's OVHcloud tops Q3 sales forecast on US growth, shares jump

FILE PHOTO: The logo of French cloud computing company OVHcloud is seen on a data-center building in Strasbourg

By Nathan Vifflin and Anna Peverieri

(Reuters) -French cloud services provider OVHcloud reported third quarter revenue ahead of market expectations on Thursday, driven by strong demand from U.S. tech companies.

WHY IT'S IMPORTANT

OVHcloud seeks to gain global market share by offering a better price-to-performance ratio than larger, U.S.-based hyperscalers such as Amazon Web Services and Oracle. It has been facing setbacks in its European home market as the persistently challenging economic environment weighs on customers' cloud spending.

MARKET REACTION

The OVH shares jumped as much as 15.9% in early trading, and were up 11.4% at 0947 GMT, on track for their biggest daily rise on record if gains hold.

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KEY QUOTES

"In the United States, the sharp upturn in the Private Cloud segment was confirmed, supported in particular by strong demand from tech companies for high-performance Bare Metal servers," OVH said in a statement.

On Public Cloud, it said: "Monthly Average Revenue per Active Customer growth, particularly in Europe, was impacted by the postponement of projects by businesses and a more gradual than expected ramp-up of certain customers."

CONTEXT

In April, OVHcloud cut its 2024 targets citing weaker demand in its main European market, particularly in France and Germany, as public cloud customers were buying fewer or only entry-level products.

BY THE NUMBERS

Revenue grew 10.1% from a year earlier to 251 million euros ($268.32 million), topping a consensus estimate of 246.6 million euros compiled by the company. For the first nine months of the fiscal year, revenue reached 737 million euros.

OVH confirmed its annual and medium-term outlook.

($1 = 0.9355 euros)

(Reporting by Nathan Vifflin and Anna Peverieri in Gdansk; editing by Milla Nissi)