[Management Commentary & Strategy](index=1&type=section&id=Management%20Commentary%20%26%20Strategy) Management highlighted a successful dual-core growth strategy, securing significant new wholesale (45MW) and retail (7MW) contracts, driving 9.9% YoY adjusted EBITDA growth and a 29.4% margin expansion - The company is seeing emerging demand for IDC services driven by new AI application scenarios in China and remains poised to capture this growth with its high-performance data center resources[2](index=2&type=chunk) - VNET continues to build sales momentum, securing an extended **45MW wholesale contract** with an internet giant and a new **7MW retail contract** with a local service sector customer[3](index=3&type=chunk) - Management's focus on high-quality revenue and enhanced operating efficiency drove a **9.9% YoY increase** in adjusted EBITDA to **RMB535.0 million** and expanded the adjusted EBITDA margin to **29.4%**[4](index=4&type=chunk) [Q2 2023 Financial & Operational Highlights](index=1&type=section&id=Q2%202023%20Financial%20%26%20Operational%20Highlights) VNET reported solid Q2 2023 growth with a 5.6% YoY revenue increase, 9.9% adjusted EBITDA rise, and improved cabinet utilization to 59.0% [Financial Highlights](index=1&type=section&id=Second%20Quarter%202023%20Financial%20Highlights) Q2 2023 Key Financial Metrics (YoY) | Metric | Q2 2023 (RMB) | Q2 2022 (RMB) | Change | Margin | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | 1.82 billion | 1.72 billion | +5.6% | N/A | | Adjusted Cash Gross Profit | 742.9 million | 713.7 million | +4.1% | 40.8% | | Adjusted EBITDA | 535.0 million | 486.9 million | +9.9% | 29.4% | [Operational Highlights](index=1&type=section&id=Second%20Quarter%202023%20Operational%20Highlights) Key Operational Metrics Comparison | Metric | June 30, 2023 | March 31, 2023 | June 30, 2022 | | :--- | :--- | :--- | :--- | | Total Cabinets Under Management | 86,927 | 87,310 | 80,831 | | Cabinets Utilized by Customers | 51,316 | 49,316 | 44,500 | | Overall Utilization Rate | 59.0% | 56.5% | 55.1% | | Retail IDC MRR per Cabinet (RMB) | 9,530 | 9,486 | 9,186 | [Detailed Financial Results (Q2 2023)](index=3&type=section&id=Detailed%20Financial%20Results%20%28Q2%202023%29) VNET's Q2 2023 net revenues grew 5.6% YoY to RMB 1.82 billion, with gross margin declining to 18.8%, but strong cost control narrowed net loss to RMB 232.9 million from RMB 377.2 million YoY Q2 2023 Income Statement Summary (YoY) | Metric | Q2 2023 (RMB) | Q2 2022 (RMB) | Change | | :--- | :--- | :--- | :--- | | Net Revenues | 1.82 billion | 1.72 billion | +5.6% | | Gross Profit | 342.7 million | 357.8 million | -4.2% | | Total Operating Expenses | 249.5 million | 321.7 million | -22.4% | | Net Loss Attributable to VNET | (232.9 million) | (377.2 million) | Loss Narrowed | - As of June 30, 2023, the company's cash, cash equivalents, restricted cash, and short-term investments totaled **RMB 2.76 billion**[11](index=11&type=chunk) - Net cash generated from operating activities was **RMB 423.5 million**, a decrease from **RMB 942.7 million** in the same period of 2022[12](index=12&type=chunk) [Business Outlook](index=4&type=section&id=Business%20Outlook) VNET reaffirms full-year 2023 financial guidance, projecting continued growth in both revenue and adjusted EBITDA Full Year 2023 Guidance | Metric | 2023 Forecast Range (RMB) | YoY Growth | | :--- | :--- | :--- | | Net Revenues | 7,600 million - 7,900 million | 7.6% - 11.8% | | Adjusted EBITDA | 2,025 million - 2,125 million | 8.1% - 13.5% | - The provided business outlook remains unchanged from previous estimates[13](index=13&type=chunk) [Appendix: Financial Statements](index=6&type=section&id=Appendix%3A%20Financial%20Statements) This appendix presents the unaudited condensed consolidated financial statements for Q2 2023, including Balance Sheets, Statements of Operations, GAAP to Non-GAAP Reconciliations, and Cash Flows [Consolidated Balance Sheets](index=6&type=section&id=VNET%20GROUP%2C%20INC.%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) [Consolidated Statements of Operations](index=7&type=section&id=VNET%20GROUP%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) [Reconciliations of GAAP and Non-GAAP Results](index=8&type=section&id=VNET%20GROUP%2C%20INC.%20RECONCILIATIONS%20OF%20GAAP%20AND%20NON-GAAP%20RESULTS) [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=VNET%20GROUP%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS)

Financial Data and Key Metrics Changes - First quarter revenue reached RMB 1.81 billion, representing a year-over-year increase of 9.7% [6][14] - Adjusted EBITDA grew about 10% year-over-year to RMB 756.2 million, indicating stable growth amid China's post-pandemic recovery [6][14] - Gross profit was RMB 352.4 million, a decrease of 0.9% from the same period in 2022, with a gross margin of 19.5% [14][15] - Net income attributable to ordinary shareholders was RMB 82.3 million, down from RMB 90.7 million in the same period of 2022 [16] Business Line Data and Key Metrics Changes - The company ended the quarter with 1,300 utilized cabinets, increasing the overall utilization rate to 56.5% from 55% in the previous quarter [5] - Retail MRR per cabinet reached a record high of RMB 9,486, up from RMB 9,371 in the previous quarter [5] - The majority of new utilized cabinets added in the first quarter came from the wholesale business, driven by large Internet companies [27][29] Market Data and Key Metrics Changes - China's GDP grew 4.5% year-over-year in the first quarter, indicating a clear post-pandemic recovery path [6] - The digital economy is expected to be a key growth driver for China, supported by government initiatives [6][7] Company Strategy and Development Direction - The company is committed to a dual core growth strategy focusing on both wholesale and retail IDC markets [7][12] - The company aims to leverage its strategic position in the IDC space to provide improved services and capitalize on favorable policy landscapes [7][12] - The introduction of Microsoft Teams in China is expected to enhance the company's service offerings and customer engagement [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the domestic IDC service industry's growth prospects, driven by digital transformation demands [12] - The company is focused on delivering sustainable value to stakeholders while navigating the evolving market landscape [18] Other Important Information - The company released its third annual ESG report, highlighting initiatives such as a green power purchase agreement and increased female representation in management [10][11] - The outlook for 2023 remains unchanged, with net revenues expected to be between RMB 7,600 million and RMB 7,900 million [17] Q&A Session Summary Question: Will customer demand continue to improve in the second quarter? - Management noted that while there are positive signals from the market, patience is required for full recovery [21] Question: How does management view recent price cuts by public cloud vendors? - Management indicated that there is no direct competition with cloud service players and that pricing has already been determined in contracts [22] Question: What is the outlook for the Microsoft business and VPN business? - The non-IDC business is expected to continue growing, particularly with new Microsoft product launches [28] Question: What is driving the increase in retail MRR? - The increase is attributed to additional value-added services from existing customers and the addition of higher MRR cabinets [35] Question: What is the outlook for EBITDA margins going forward? - Management expects some fluctuations in margins due to seasonality and cost management efforts [42]

Exhibit 99.1 VNET Reports Unaudited First Quarter 2023 Financial Results BEIJING, May 24, 2023 /PRNewswire/ -- VNET Group, Inc. (Nasdaq: VNET) ("VNET" or the "Company"), a leading carrier- and cloud-neutral internet data center services provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2023. "We were pleased to kick off 2023 with a solid first quarter, thanks to our effective dual-core growth strategy and competitive service offerings," said Jeff Dong, ...

Financial Liabilities and Borrowings - Long-term borrowings (current portions) had an outstanding balance of RMB484.0 million (US$70.2 million), and long-term borrowings (excluding current portions) had an outstanding balance of RMB3,049.9 million (US$442.2 million) as of December 31, 2022[471] - The long-term borrowings bore a weighted-average interest rate of 5.11% per annum, and a hypothetical 1% decrease in interest rates would have resulted in a decrease of approximately RMB40.8 million (US$5.9 million) in interest expense for the year ended December 31, 2022[471] - Long-term borrowings increased from RMB2,215,015 in 2021 to RMB3,049,856 in 2022, up by 37.7%[520] - Convertible promissory notes rose from RMB4,266,951 in 2021 to RMB5,859,259 in 2022, a growth of 37.3%[520] - US$300 million 7.875% Senior Notes due 2021 issued on April 15, 2019[495] - US$600 million 0.00% Convertible Senior Notes due 2026 issued on January 26, 2021[495] Foreign Exchange and Currency Impact - The Renminbi depreciated by 2.3% against the U.S. dollar in 2021 and then appreciated 9.2% in 2022[472] - A hypothetical 10% increase in the exchange rate of the U.S. dollar against the RMB would have resulted in an increase of RMB70.0 million (US$10.1 million) in the value of the company's U.S. dollar-denominated financial assets at December 31, 2022[472] - The RMB depreciated by 9.2% against the USD in the year ended December 31, 2022[635] Cash and Cash Equivalents - As of December 31, 2022, the company had total U.S. dollar-denominated cash and cash equivalents, restricted cash, and short-term investments amounting to US$101.5 million[472] - Cash and cash equivalents rose to RMB 2,661,321 thousand (US$ 385,855 thousand) in 2022 from RMB 1,372,481 thousand in 2021[516] - Restricted cash decreased to RMB 327,673 thousand (US$ 47,508 thousand) in 2022 from RMB 327,767 thousand in 2021[516] - Cash and cash equivalents and restricted cash at the end of 2022 stood at RMB 2,989,494 thousand (US$ 433,435 thousand), up from RMB 1,708,473 thousand in 2021[530] - As of December 31, 2022, the company held RMB2,677,823 (US$388,248) in cash and cash equivalents and restricted cash at major financial institutions in the PRC, and US$45,187 (RMB311,671) outside the PRC[629] Financial Performance and Metrics - Net revenues from hosting and related services increased to RMB 7,065,232 thousand (USD 1,024,362 thousand) in 2022, up 14.1% from RMB 6,189,801 thousand in 2021[524] - Gross profit for 2022 was RMB 1,358,256 thousand (USD 196,928 thousand), a decrease of 5.5% compared to RMB 1,438,030 thousand in 2021[524] - Operating income for 2022 was RMB 60,013 thousand (USD 8,701 thousand), compared to no operating income in 2021[524] - Net loss attributable to VNET Group, Inc. was RMB 775,952 thousand (USD 112,504 thousand) in 2022, compared to a net income of RMB 500,098 thousand in 2021[524] - Basic loss per share was RMB 0.87 (USD 0.13) in 2022, compared to earnings per share of RMB 0.57 in 2021[524] - Comprehensive loss attributable to VNET Group, Inc. was RMB 674,487 thousand (USD 97,793 thousand) in 2022, compared to a comprehensive income of RMB 465,190 thousand in 2021[526] - The company reported a net loss of RMB 66,764 thousand in 2022, compared to a net profit of RMB 92,594 thousand in 2021[568] Assets and Liabilities - Total assets increased to RMB 26,948,405 thousand (US$ 3,907,153 thousand) as of December 31, 2022, compared to RMB 23,095,039 thousand in 2021[516] - Accounts and notes receivable increased to RMB 1,763,693 thousand (US$ 255,711 thousand) in 2022, up from RMB 1,405,997 thousand in 2021[516] - Property and equipment, net, grew to RMB 11,964,498 thousand (US$ 1,734,689 thousand) in 2022 from RMB 10,092,419 thousand in 2021[516] - Intangible assets, net, increased to RMB 1,497,131 thousand (US$ 217,064 thousand) in 2022 from RMB 900,335 thousand in 2021[516] - Goodwill remained stable at RMB 1,364,191 thousand (US$ 197,789 thousand) in 2022, slightly up from RMB 1,339,657 thousand in 2021[516] - Operating lease right-of-use assets, net, rose to RMB 3,503,925 thousand (US$ 508,021 thousand) in 2022 from RMB 2,869,338 thousand in 2021[516] - Long-term investments, net, increased to RMB 242,194 thousand (US$ 35,115 thousand) in 2022 from RMB 98,243 thousand in 2021[516] - Deferred tax assets, net, grew to RMB 196,098 thousand (US$ 28,432 thousand) in 2022 from RMB 168,002 thousand in 2021[516] - Current liabilities increased from RMB5,179,995 in 2021 to RMB6,332,085 in 2022, a growth of 22.2%[518] - Non-current liabilities rose from RMB10,314,043 in 2021 to RMB13,634,464 in 2022, an increase of 32.2%[520] - Total liabilities grew from RMB15,494,038 in 2021 to RMB19,966,549 in 2022, up by 28.9%[520] - Shareholders' equity decreased from RMB7,601,001 in 2021 to RMB6,981,856 in 2022, a decline of 8.1%[522] - Accumulated deficit widened from RMB7,590,382 in 2021 to RMB8,369,868 in 2022, an increase of 10.3%[522] - Total liabilities and shareholders' equity increased from RMB23,095,039 in 2021 to RMB26,948,405 in 2022, up by 16.7%[522] Cash Flow and Financing Activities - Net cash generated from operating activities increased by 75.8% to RMB 2,440,214 thousand (USD 353,797 thousand) in 2022 from RMB 1,387,922 thousand in 2021[528] - Depreciation and amortization expenses rose to RMB 1,595,942 thousand (USD 231,390 thousand) in 2022, up 25.9% from RMB 1,267,578 thousand in 2021[528] - Foreign exchange loss, net was RMB 523,235 thousand (USD 75,862 thousand) in 2022, compared to a gain of RMB 110,036 thousand in 2021[528] - Net cash used in investing activities decreased from RMB 3,889,174 thousand in 2020 to RMB 3,559,252 thousand in 2022, reflecting a reduction in investment outflows[530] - Proceeds from issuance of 2027 Convertible Notes, net of issuance cost, amounted to RMB 1,592,627 thousand (US$ 230,910 thousand) in 2022[530] - Net cash generated from financing activities increased significantly from RMB 967,577 thousand in 2021 to RMB 2,298,080 thousand (US$ 333,191 thousand) in 2022[530] - Income taxes paid increased from RMB 82,995 thousand in 2021 to RMB 159,784 thousand (US$ 23,167 thousand) in 2022[532] - Right-of-use assets obtained in exchange for new operating lease liabilities totaled RMB 944,148 thousand (US$ 136,889 thousand) in 2022[532] Acquisitions and Investments - The company acquired 100% equity interest in Dermot Entities on August 10, 2014[548] - The company acquired 100% equity interest in SH Shuzhong on June 30, 2020[548] - The company acquired 100% equity interest in Shulifang on July 21, 2020[548] - The company acquired 100% equity interest in LF Huahai on September 11, 2020[548] - The company acquired 100% equity interest in BJ JHC and BJ ST on November 17, 2020[548] - The company acquired 100% equity interest in BJ TenxCloud on July 15, 2021[548] - The company acquired 100% equity interest in Zhongke Zijing and Gu'an Junhui on August 16, 2021[548] - On August 5, 2022, the company acquired 100% equity interests in KS Kunhui for RMB50,000, resulting in goodwill of RMB24,534 (US$3,557)[639][640] - On August 1, 2022, the company acquired 100% equity interests in BJ JiangHeCloud for a total cash consideration of RMB847,438, with RMB57,500 being refundable[643][644] - BJ TenxCloud acquisition total consideration was RMB414,743, consisting of RMB199,790 in cash and RMB214,953 in share-settled liabilities as of July 15, 2021[645] - BJ TenxCloud's revenue and net profit since acquisition were RMB91,038 and RMB9,351, respectively, for the year ended December 31, 2021[649] - Goodwill from BJ TenxCloud acquisition was RMB344,664, primarily due to expected synergies[649] - Zhongke Zijing acquisition total cash consideration was RMB151,884, aimed at establishing a data center[649] - SH Hesheng acquisition total cash consideration was RMB137,557[654] Internal Control and Auditing - The company's management concluded that its internal control over financial reporting was effective as of December 31, 2022, based on the criteria established within the Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission[483] - The independent registered public accounting firm, KPMG Huazhen LLP, issued an attestation report confirming the company's effective internal control over financial reporting as of December 31, 2022[486] - Audit fees increased from $1.215 million in 2021 to $2.275 million in 2022, representing an 87.2% increase[489] - Audit-related fees were $600,000 in 2021 but were not reported for 2022[489] - Other fees increased significantly from $27,000 in 2021 to $240,000 in 2022, a 788.9% increase[489] - The company changed its independent registered public accounting firm from Ernst & Young Hua Ming LLP to KPMG Huazhen LLP on September 7, 2022[491] Regulatory and Compliance - The company was identified as a Commission-Identified Issuer under the HFCA Act on May 26, 2022, but expects to be removed from the list after filing the annual report[492] - The company adopted ASU 2021-10 from January 1, 2022, which requires disclosure of government assistance, with no material impact on its consolidated financial statements[626] Subsidiaries and Corporate Structure - The company changed its name from 21Vianet Group, Inc. to VNET Group, Inc. on October 8, 2021 to promote brand awareness[541] - VNET Group Limited (VNET HK) is a wholly-owned subsidiary established on May 25, 2007, in Hong Kong, primarily engaged in investment holding[542] - VNET Data Center Co., Ltd. (VNET China) was incorporated on June 12, 2000, in the PRC, providing technical and consultation services and rental of long-lived assets[542] - VNET (Foshan) Technology Co., Ltd. (FS Technology) was established on December 20, 2011, in the PRC, focusing on trading network equipment and providing technical and internet data center services[542] - VNET Anhui Suzhou Technology Co., Ltd. (SZ Technology) was incorporated on November 16, 2011, in the PRC, offering technical and internet data center services and trading network equipment[542] - VNET Hangzhou Information Technology Co., Ltd. (HZ Technology) was established on March 4, 2013, in the PRC, providing internet data center services[542] - iJoy Holding Limited (iJoy BVI) was incorporated on April 30, 2013, in the British Virgin Islands, primarily engaged in investment holding[542] - VNET Mobile Limited (VNET Mobile) was established on April 30, 2013, in Hong Kong, focusing on investment holding and provision of telecommunication services[542] - WiFire Group Inc. (WiFire Group) was incorporated on March 7, 2014, in the British Virgin Islands, primarily engaged in investment holding[542] - Joytone Infotech Co., Ltd. (SZ Zhuoaiyi) was established on April 30, 2013, in the PRC, providing technical and consultation services[542] - VNET Ventures Limited (Ventures) was incorporated on March 6, 2014, in Hong Kong, primarily engaged in investment holding[542] - SH Blue Cloud was incorporated on March 21, 2013, providing Office 365 and Windows Azure platform services[548] - SH Edge Network was established on January 7, 2021, offering internet data center services[548] - SZ DYX, held 20% by the company, provides virtual private network services and was incorporated on August 10, 2014[548] Revenue Recognition and Deferred Revenue - The company provides hosting services, VPN services, and public cloud services through a strategic partnership with Microsoft[603] - Revenue is recognized when the company satisfies a performance obligation and the customer obtains control of the promised goods or services[603] - The company's deferred revenue amounted to RMB55,695 and RMB95,078 (US$13,785) as of December 31, 2021 and 2022, respectively[607] - Revenue recognized from opening deferred revenue balance was RMB39,374 (US$5,709) for the year ended December 31, 2022[607] Interest and Financing Costs - Total interest costs for the years ended December 31, 2020, 2021, and 2022 were RMB412,285, RMB388,370, and RMB334,766 (US$48,537), respectively[612] - Interest expense and amortization cost of 2025, 2026, and 2027 Convertible Notes were RMB18,880, RMB25,919, and RMB58,350 (US$8,460) for the years ended December 31, 2020, 2021, and 2022, respectively[612] - Interest expense on bank and other borrowings were RMB39,424, RMB103,925, and RMB172,328 (US$24,986) for the years ended December 31, 2020, 2021, and 2022, respectively[612] - Interest expense on finance leases were RMB130,196, RMB124,567, and RMB104,088 (US$15,091) for the years ended December 31, 2020, 2021, and 2022, respectively[612] - Total interest costs capitalized during the period were RMB31,676, RMB53,420, and RMB61,461 (US$8,911) for the years ended December 31, 2020, 2021, and 2022, respectively[612] Shareholder Equity and Compensation - Total shareholders' equity as of December 31, 2020, was RMB 6,897,480 thousand, with noncontrolling interest contributing RMB 332,546 thousand[534] - Share-based compensation in 2020 amounted to RMB 139,641 thousand, contributing to the increase in additional paid-in capital[534] - Total shareholders' equity as of December 31, 2021 was RMB 7,601,001 thousand, with noncontrolling interest contributing RMB 358,772 thousand[536] - Consolidated net income for 2021 was RMB 500,098 thousand, with a contribution of RMB 15,003 thousand from noncontrolling interest[536] - Total shareholders' equity as of December 31, 2022 decreased to RMB 6,981,856 thousand, with noncontrolling interest at RMB 372,243 thousand[538] - Consolidated net loss for 2022 was RMB 775,952 thousand, partially offset by a foreign exchange difference gain of RMB 101,465 thousand[538] - Share-based compensation in 2022 amounted to RMB 41,871 thousand[538] - Accumulated deficit increased from RMB 7,590,382 thousand in 2021 to RMB 8,369,868 thousand in 2022[538] - Additional paid-in capital grew from RMB 15,198,055 thousand in 2021 to RMB 15,239,926 thousand in 2022[538] - Statutory reserves increased from RMB 74,462 thousand in 2021 to RMB 77,996 thousand in 2022[538] - Total shareholders' equity in USD terms as of December 31, 2022 was USD 1,012,275 thousand[538] Depreciation and Amortization - Property and equipment are depreciated using the straight-line method over estimated useful lives, with motor vehicles depreciated over 2-8 years[585] - The company capitalized internal-use software development costs amounting to RMB8

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of April 2023 Commission File Number: 001-35126 VNET Group, Inc. Guanjie Building, Southeast 1st Floor 10# Jiuxianqiao East Road Chaoyang District Beijing 100016 The People's Republic of China (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual rep ...

单击此处编辑母版标题样式 VNET Group, Inc. Investor Presentation D单isc击laim此er处编辑母版标题样式 This presentation includes “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, including statements regarding expected future events, business prospectus or financial results. The words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “would”, “project”, “should”, “believe”, “plan”, “intend”, “future”, “aim” and similar expression ...

VNET Group, Inc. (NASDAQ:VNET) Q4 2022 Earnings Conference Call March 21, 2023 9:00 PM ET Company Participants Xinyuan Liu - Investor Relations Jeff Dong - Chief Executive Officer Tim Chen - Chief Financial Officer Conference Call Participants Yang Liu - Morgan Stanley Sara Wang - UBS Edison Lee - Jefferies Operator Hello, ladies and gentlemen. Thank you for standing by for the Fourth Quarter and Full Year 2022 Earnings Conference Call for VNET Group Inc. [Operator Instructions] Participants from our manage ...

Financial Data and Key Metrics Changes - The company's net revenues for Q3 2022 increased by 16.3% year-over-year to RMB 1.814 billion, driven by higher customer demand for scalable IDC solutions [6][16] - Adjusted EBITDA reached RMB 455 million, reflecting a 1.1% increase from the same period in 2021 [18] - Gross profit was RMB 316.6 million, a decrease of 15.6% from Q3 2021, with a gross margin of 17.5% compared to 24% in the same period last year [16][18] - The net loss attributable to ordinary shareholders was RMB 425.2 million, compared to a net profit of RMB 156.2 million in Q3 2021 [18] Business Line Data and Key Metrics Changes - The total cabinet count grew to 82,660 from approximately 65,300 a year ago, with customer-utilized cabinets increasing to approximately 45,530 from 38,300 [5][6] - Retail MRR increased to RMB 9,287 in Q3 2022 from RMB 9,186 in the previous quarter [5] - The wholesale business signed a new contract for approximately 15 megawatts with a leading cloud service provider and extended a contract with a major social platform for an additional 33 megawatts [8][9] Market Data and Key Metrics Changes - The company noted strong long-term demand for cloud and digital transformation services despite short-term macroeconomic challenges [7][14] - The joint venture with Changzhou Hi-tech Holding Group aims to acquire and develop IDC projects across major city clusters in China, enhancing the company's market presence [13][23] Company Strategy and Development Direction - The company is focused on a dual-core growth strategy, emphasizing both wholesale and retail business segments [6][33] - Plans to adopt a more prudent approach to capital expenditure in response to macroeconomic headwinds, revising the 2022 delivery plan to a range of 8,000 to 9,000 cabinets [7][19] - The company aims to leverage its expertise in IDC technology and cloud services to explore industry-specific opportunities, particularly in the automotive sector [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for IDC services in China, despite current macroeconomic turbulence [14] - The company is strategically positioned to navigate near-term challenges and capitalize on future demand prospects [14] - Management highlighted the importance of digital transformation as a key driver for growth in the data center sector [6][14] Other Important Information - The company reported cash, cash equivalents, and restricted cash of RMB 3.76 billion as of September 30, 2022 [19] - CapEx for Q3 2022 was RMB 580.5 million, with net cash generated from operating activities amounting to RMB 607.4 million [19] Q&A Session Summary Question: Future CapEx plan and JV stakes - Management confirmed that VNET will hold a 35% equity interest in the joint venture with Changzhou, which aims to acquire and develop IDC projects [22][23] Question: Near-term objectives and long-term vision under new CEO - The CEO emphasized the continuation of the dual-core growth strategy, operational improvements, and diversification of the customer base as key short-term objectives [33] Question: Cabinet delivery budget for this year and next year - The revised cabinet delivery plan for 2022 is set at 8,000 to 9,000, with expectations for similar or slightly improved delivery in 2023 [40] Question: Timeline for achieving positive free cash flow - Management targets 2024 for achieving positive cash flow, with ongoing efforts to control costs and moderate CapEx [42] Question: Breakdown of factors affecting EBITDA margin - Management noted that cost controls have been implemented to manage rising utility costs, with expectations for margin compression to flatten out in the future [45]

[VNET Third Quarter 2022 Earnings Release](index=1&type=section&id=VNET%20Third%20Quarter%202022%20Earnings%20Release) This report details VNET's Q3 2022 financial performance, operational metrics, and full-year outlook [Management Commentary and Business Overview](index=1&type=section&id=Management%20Commentary%20and%20Business%20Overview) Management highlights steady growth from its dual-core strategy, securing key contracts despite macroeconomic challenges - The company is executing a **'dual-core' growth strategy**, focusing on wholesale momentum and retail expansion[2](index=2&type=chunk) - VNET secured a new wholesale contract for **approximately 15MW** and extended another for **approximately 33MW** of new capacity[2](index=2&type=chunk) - Management remains confident in long-term growth driven by **strong demand from digital transformation**[2](index=2&type=chunk) [Q3 2022 Financial & Operational Highlights](index=1&type=section&id=Q3%202022%20Financial%20%26%20Operational%20Highlights) The company shows solid revenue growth but faces margin pressure, alongside continued operational capacity expansion [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Q3 2022 Key Financial Metrics (YoY) | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | **Net Revenues** | RMB 1.81 billion | RMB 1.56 billion | +16.3% | | **Adjusted Cash Gross Profit (non-GAAP)** | RMB 707.7 million | RMB 674.5 million | +4.9% | | **Adjusted EBITDA (non-GAAP)** | RMB 455.3 million | RMB 450.4 million | +1.1% | | **Adjusted Cash Gross Margin (non-GAAP)** | 39.0% | 43.2% | -4.2 p.p. | | **Adjusted EBITDA Margin (non-GAAP)** | 25.1% | 28.9% | -3.8 p.p. | [Operational Highlights](index=1&type=section&id=Operational%20Highlights) Q3 2022 Key Operational Metrics | Metric | As of Sep 30, 2022 | As of Jun 30, 2022 | As of Sep 30, 2021 | | :--- | :--- | :--- | :--- | | **Total Cabinets Under Management** | 82,660 | 80,831 | 65,264 | | **Cabinets Utilized** | 45,527 | 44,500 | 38,325 | | **Overall Utilization Rate** | 55.1% | 55.1% | 58.7% | | **Retail IDC MRR per Cabinet** | RMB 9,287 | RMB 9,186 | RMB 9,296 | [Detailed Financial Performance Analysis](index=1&type=section&id=Detailed%20Financial%20Performance%20Analysis) Revenue grew 16.3% YoY, but profitability declined due to lower gross margin and a significant foreign exchange loss - Net revenues increased by **16.3% YoY to RMB 1.81 billion**, driven by IDC, cloud, and VPN services[5](index=5&type=chunk) - Gross margin declined significantly to **17.5% from 24.0% YoY**, with gross profit decreasing to RMB 316.6 million[7](index=7&type=chunk) - Total operating expenses rose to **RMB 310.2 million**, driven by higher sales and marketing expenses[7](index=7&type=chunk)[8](index=8&type=chunk) - The company reported a **net loss of RMB 425.2 million**, a sharp reversal from a net profit of RMB 156.2 million YoY, impacted by a **RMB 317.2 million foreign exchange loss**[9](index=9&type=chunk) - Basic and diluted loss per ADS were both **RMB 2.88 (US$0.42)**[10](index=10&type=chunk) [Financial Position and Cash Flow](index=2&type=section&id=Financial%20Position%20and%20Cash%20Flow) The company maintains a solid liquidity position and demonstrates strong growth in cash from operating activities - Cash, cash equivalents, and restricted cash totaled **RMB 3.76 billion (US$528.0 million)** as of September 30, 2022[10](index=10&type=chunk) - Net cash from operating activities increased substantially to **RMB 607.4 million** from RMB 134.7 million in Q3 2021[10](index=10&type=chunk) [Business Outlook](index=2&type=section&id=Business%20Outlook) The company provides its full-year 2022 guidance for net revenues and adjusted EBITDA Full Year 2022 Guidance | Metric | Guidance Range (RMB) | | :--- | :--- | | **Net Revenues** | 7,250 million - 7,550 million | | **Adjusted EBITDA** | 1,800 million - 1,950 million | - The forecast is preliminary and subject to change, not including potential impacts from the COVID-19 pandemic[12](index=12&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) Unaudited statements show asset and liability growth, a net loss, and strong operating cash flow funding investments [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Balance Sheet Summary (as of Sep 30, 2022 vs Dec 31, 2021) | Account | Sep 30, 2022 (RMB '000) | Dec 31, 2021 (RMB '000) | | :--- | :--- | :--- | | **Total Assets** | 27,639,949 | 23,095,039 | | **Total Liabilities** | 20,601,175 | 15,494,038 | | **Total Shareholders' Equity** | 7,038,774 | 7,601,001 | | **Cash, cash equivalents and restricted cash** | 3,756,073 | 1,708,473 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Q3 2022 Income Statement Highlights (Unaudited, RMB '000) | Line Item | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | **Net Revenues** | 1,814,210 | 1,560,460 | | **Gross Profit** | 316,583 | 375,235 | | **Operating Profit** | 6,411 | 113,902 | | **Net (Loss) Profit Attributable to Shareholders** | (425,211) | 156,183 | [Reconciliations of GAAP and Non-GAAP Results](index=8&type=section&id=Reconciliations%20of%20GAAP%20and%20Non-GAAP%20Results) - **Adjusted EBITDA for Q3 2022 was RMB 455.3 million**, reconciled from operating profit by adding back items like depreciation and share-based compensation[27](index=27&type=chunk) - **Adjusted cash gross profit for Q3 2022 was RMB 707.7 million**, reconciled from GAAP gross profit by adding back non-cash items[27](index=27&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) Q3 2022 Cash Flow Summary (Unaudited, RMB '000) | Cash Flow Activity | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 607,417 | 134,672 | | **Net Cash used in Investing Activities** | (614,482) | (1,492,614) | | **Net Cash from Financing Activities** | 72,765 | 256,400 | [Supplementary Information](index=3&type=section&id=Supplementary%20Information) This section provides context on non-GAAP measures, currency translation, and forward-looking statements - The company uses non-GAAP measures like **adjusted EBITDA** to help investors assess operating performance[14](index=14&type=chunk)[15](index=15&type=chunk) - Financial figures are translated from RMB to USD at a rate of **RMB 7.1135 to US$1.00** for convenience[16](index=16&type=chunk) - The financial information presented is **unaudited and preliminary**, subject to year-end audit adjustments[17](index=17&type=chunk)