VNET Group, Inc. (NASDAQ:VNET) Q2 2022 Earnings Conference Call August 30, 2022 9:00 PM ET Company Participants Xinyuan Liu - Investor Relations Director Samuel Shen - Chief Executive Officer & Executive Chairman of Retail IDC Tim Chen - Chief Financial Officer Conference Call Participants Ethan Zhang - Nomura Edison Lee - Jefferies Sara Wang - UBS Albert Hung - JPMorgan Clive Cheung - Credit Suisse Hongjie Li - CICC Operator Hello, ladies and gentlemen. Thank you for standing by for the Second Quarter 2022 ...

VNET Group, Inc. (NASDAQ:VNET) Q1 2022 Earnings Conference Call May 24, 2022 9:00 PM ET Company Participants Xinyuan Liu - IR Director Samuel Shen - CEO & Executive Chairman of Retail IDC Tim Chen - CFO Conference Call Participants Yang Liu - Morgan Stanley Edison Lee - Jefferies Hongjie Li - CICC Albert Hung - JPMorgan Clive Cheung - Credit Suisse Sara Wang - UBS Ethan Zhang - Nomura Securities Guohan Wang - Daiwa Securities Operator Hello, ladies and gentlemen. Thank you for standing by for the Firs ...

VNET First Quarter 2022 Financial Report [Performance Highlights](index=1&type=section&id=Performance%20Highlights) The company reported solid Q1 2022 growth in revenue and adjusted EBITDA alongside an expansion in cabinet capacity Q1 2022 Financial Highlights (YoY) | Metric | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | RMB 1.65 billion | RMB 1.39 billion | +18.6% | | Adjusted Cash Gross Profit (non-GAAP) | RMB 684.8 million | RMB 605.3 million | +13.1% | | Adjusted EBITDA (non-GAAP) | RMB 506.2 million | RMB 415.1 million | +21.9% | | Adjusted EBITDA Margin (non-GAAP) | 30.8% | 29.9% | +0.9 p.p. | Q1 2022 Operational Highlights | Metric | As of Mar 31, 2022 | As of Mar 31, 2021 | Q1 2022 Change | | :--- | :--- | :--- | :--- | | Total Cabinets Under Management | 78,964 | 55,926 | +424 (QoQ) | | Utilized Cabinets | 43,032 | 33,582 | +1,329 (QoQ) | | Overall Utilization Rate | 54.5% | 60.0% | -5.5 p.p. (YoY) | | Retail IDC MRR per Cabinet | RMB 9,236 | RMB 9,144 | +1.0% (YoY) | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributed strong Q1 results to its dual-core strategy, despite adverse impacts from a COVID-19 resurgence - The CEO emphasized that the **dual-core strategy** (wholesale and retail IDC) drove solid operational and financial results, bolstered by the digital economy and favorable policies[4](index=4&type=chunk) - Key business achievements in Q1 include signing wholesale contracts for **~16MW of capacity** and steady order growth in the retail business from new and existing customers[4](index=4&type=chunk) - The CFO noted that revenue and adjusted EBITDA growth were in line with expectations, despite seasonal factors and adverse effects from the **COVID-19 resurgence** in several tier-1 cities[4](index=4&type=chunk) [Detailed Financial Results](index=1&type=section&id=First%20Quarter%202022%20Financial%20Results) The company achieved a significant net profit turnaround driven by fair value gains, despite a slight decrease in gross margin Q1 2022 Profit & Loss Summary (YoY) | Metric | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | RMB 1.65 billion | RMB 1.39 billion | +18.6% | | Gross Profit | RMB 355.5 million | RMB 323.3 million | +10.0% | | Gross Margin | 21.6% | 23.3% | -1.7 p.p. | | Net Profit/(Loss) Attributable to Shareholders | RMB 90.7 million | (RMB 84.7 million) | Turnaround to Profit | | Diluted Profit/(Loss) per ADS | RMB 0.18 | (RMB 0.60) | Turnaround to Profit | - The **turnaround to net profit** was mainly contributed by gains from fair value changes of convertible promissory notes and other operating income[9](index=9&type=chunk) - As of March 31, 2022, the company's cash, cash equivalents, restricted cash, and short-term investments totaled **RMB 3.36 billion** (US$530.8 million)[10](index=10&type=chunk) - Net cash generated from operating activities increased significantly to **RMB 482.6 million** from RMB 274.5 million in the same period of 2021[10](index=10&type=chunk) [Business Outlook](index=2&type=section&id=Business%20Outlook) VNET reaffirmed its full-year 2022 guidance for net revenues and adjusted EBITDA, noting the forecast is preliminary Full Year 2022 Guidance | Metric | Guidance Range (RMB) | | :--- | :--- | | Net Revenues | 7,450 million - 7,750 million | | Adjusted EBITDA | 1,975 million - 2,125 million | - The provided outlook remains unchanged from previous estimates and does not account for potential future impacts from the ongoing **COVID-19 pandemic**[11](index=11&type=chunk)[12](index=12&type=chunk) Financial Statements and Supplementary Information [Consolidated Balance Sheets](index=5&type=section&id=VNET%20GROUP%2C%20INC.%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets and liabilities grew, driven by increases in cash and cash equivalents and convertible promissory notes, respectively Key Balance Sheet Items (in thousands RMB) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | 3,042,359 | 1,372,481 | | Total Current Assets | 7,416,385 | 5,324,123 | | Total Assets | 25,515,209 | 23,095,039 | | Total Current Liabilities | 5,312,962 | 5,179,995 | | Total Liabilities | 17,817,780 | 15,494,038 | | Total Shareholders' Equity | 7,697,429 | 7,601,001 | [Consolidated Statements of Operations](index=7&type=section&id=VNET%20GROUP%2C%20INC.%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company reported net revenues of RMB 1.65 billion and achieved a net profit of RMB 90.7 million for the quarter Q1 2022 vs Q1 2021 Income Statement (in thousands RMB) | Account | Q1 2022 (Unaudited) | Q1 2021 (Unaudited) | | :--- | :--- | :--- | | Net revenues | 1,645,486 | 1,386,923 | | Gross profit | 355,521 | 323,312 | | Operating profit (loss) | 96,058 | 80,132 | | Net (loss) profit attributable to shareholders | 90,706 | (84,659) | [Reconciliations of GAAP and Non-GAAP Results](index=8&type=section&id=VNET%20GROUP%2C%20INC.%20RECONCILIATIONS%20OF%20GAAP%20AND%20NON-GAAP%20RESULTS) This section provides reconciliations from GAAP metrics to non-GAAP measures, detailing adjustments for items like depreciation and amortization Reconciliation to Adjusted Cash Gross Profit (Q1 2022, in thousands RMB) | Item | Amount | | :--- | :--- | | Gross profit (GAAP) | 355,521 | | Plus: depreciation and amortization | 327,393 | | Plus: share-based compensation expenses | 1,860 | | **Adjusted cash gross profit (Non-GAAP)** | **684,774** | Reconciliation to Adjusted EBITDA (Q1 2022, in thousands RMB) | Item | Amount | | :--- | :--- | | Operating profit (GAAP) | 96,058 | | Plus: depreciation and amortization | 349,609 | | Plus: share-based compensation expenses | 43,245 | | Plus: compensation for postcombination employment | 17,260 | | **Adjusted EBITDA (Non-GAAP)** | **506,172** | [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=VNET%20GROUP%2C%20INC.%20CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) Strong cash from operations and financing activities offset investing outflows, resulting in a net increase in cash of RMB 1.66 billion Cash Flow Summary (Q1 2022, in thousands RMB) | Activity | Amount | | :--- | :--- | | Net cash generated from operating activities | 482,599 | | Net cash used in investing activities | (1,032,758) | | Net cash generated from financing activities | 2,213,904 | | **Net increase in cash and cash equivalents** | **1,656,417** | Other Information [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) The company provided details for its Q1 2022 earnings conference call, including webcast and dial-in information - An earnings conference call was scheduled for May 24, 2022 (US) / May 25, 2022 (Beijing) to discuss the results[14](index=14&type=chunk) - Registration and dial-in information were provided for participants, and a live and archived webcast is available on the company's investor relations website[13](index=13&type=chunk)[14](index=14&type=chunk) [Notes and Disclaimers](index=3&type=section&id=Notes%20and%20Disclaimers) This section clarifies the use of non-GAAP measures, the RMB to USD exchange rate, and contains forward-looking statement disclaimers - The company uses **non-GAAP measures** like adjusted EBITDA and adjusted cash gross profit to supplement its U.S. GAAP results and help investors assess operating performance[15](index=15&type=chunk)[16](index=16&type=chunk) - All translations from RMB to USD were made at a rate of **RMB6.3393 to US$1.00**, the rate in effect on March 31, 2022[17](index=17&type=chunk) - The financial information is **unaudited and preliminary**, subject to potential adjustments, and the report contains forward-looking statements[18](index=18&type=chunk)[20](index=20&type=chunk)

VNET Group, Inc. (NASDAQ:VNET) Q4 2021, Earnings Conference Call March 30, 2022 9:00 PM ET Company Participants Samuel Shen – Chief Executive Officer and Executive Chairman of Retail IDC Tim Chen – Chief Financial Officer Xinyuan Liu – Director of Investor Relations Conference Call Participants Yang Liu – Morgan Stanley Edison Lee – Jefferies Cong Sherry – CICC Sarah Wang – UBS Clive Cheung – Credit Suisse Ethan Zhang – Nomura Securities Albert Hung – JP Morgan Guohan Wang – Daiwa Operator Good morning and ...

Financial Data and Key Metrics Changes - The company achieved net revenues of RMB1.56 billion in Q3 2021, a 25.3% increase from RMB1.25 billion in Q3 2020, driven by increased customer demand for scalable IDC solutions [16][15] - Adjusted EBITDA rose by 22.2% to RMB450.4 million, with an adjusted EBITDA margin of 28.9%, compared to 29.6% in the same period of 2020 [18][15] - Gross profit increased by 36.4% to RMB375.2 million, with a gross margin of 24%, up from 22.1% year-over-year [16][15] Business Line Data and Key Metrics Changes - The wholesale business saw healthy momentum, with increased cabinet utilization from internet and cloud service customers [9] - The retail business expanded its client base, securing new relationships with companies like China Chengxin Credit Rating Group and Real AI, while also receiving add-on orders from existing customers [10] - The cloud business is generating additional interest, particularly from partnerships beyond Microsoft, indicating growth potential in this segment [11] Market Data and Key Metrics Changes - The company added 2,388 cabinets on a net basis during Q3 2021, with a utilization rate for newly-built cabinets increasing by 5.5 percentage points to 34.7% [8] - The compound utilization rate remained stable at around 60%, with expectations to achieve a full-year target of 25,000 standard cabinets [8] Company Strategy and Development Direction - The company is executing a dual-core growth engine strategy, focusing on both wholesale and retail IDC services to capitalize on digitalization trends [6][7] - Plans to deepen market penetration, diversify sector coverage, and broaden the customer base are in place to capture growth opportunities from digital transformation [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand in the coming quarters despite regulatory uncertainties, citing trends in data generation and cloud adoption [24][26] - The company is cautiously optimistic about the impact of potential regulatory changes and power tariffs, expecting limited effects on margins due to pass-through mechanisms in contracts [27][28] Other Important Information - The company received recognition for its ESG initiatives, with several data centers awarded for their environmental sustainability performance [12] - The company anticipates net revenues for Q4 2021 to be in the range of RMB1.75 billion to RMB1.77 billion, with full-year revenues expected between RMB6.19 billion and RMB6.21 billion [20] Q&A Session All Questions and Answers Question: Customer demand outlook and wholesale sales momentum - Management noted that datasets are doubling every 18 months and that COVID-19 has accelerated digital transformation, leading to bullish demand outlook [24] - Regarding margin risks from utility costs, management indicated that any potential tariff increases would have limited impact due to pass-through clauses in contracts [27][28] Question: CapEx guidance and retail MRR trends - Management explained the reduction in CapEx guidance from RMB5.5 billion to RMB1.8 billion due to fewer opportunities for securing future resources and lack of M&A activity [30][32] - Retail MRR growth is attributed to value-added services and hybrid multi-cloud offerings, with expectations for continued upward trends [34][36] Question: Cabinet addition guidance and margin outlook - Management confirmed the guidance of adding 25,000 cabinets annually, with 80% of resources secured for the next year [39] - The expected reduction in EBITDA margin for Q4 is due to increased costs associated with cabinet deliveries, which will stabilize over time [40] Question: Impact of power restrictions and green power utilization - Management stated that power control measures had limited impact on operations, with expectations for easing of restrictions [44] - The company is exploring partnerships to increase green power utilization, currently constrained by grid purchasing limitations [45][46] Question: Power quota challenges and future growth strategies - Management acknowledged challenges in obtaining power quotas but expressed confidence in securing necessary resources due to long-standing industry presence [69] - The company is prepared to adjust its CapEx strategy based on customer demand and market conditions [80]