VNET(VNET) - 2023 Q2 - Quarterly Report

Management Commentary & Strategy 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] - 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] - 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] Q2 2023 Financial & Operational Highlights 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 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 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) 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] - 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] Business Outlook 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] Appendix: Financial Statements 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 Consolidated Statements of Operations Reconciliations of GAAP and Non-GAAP Results Condensed Consolidated Statement of Cash Flows