VNET(US:VNET)2021-08-23 16:00Financial & Operational Highlights In Q2 2021, 21Vianet achieved strong YoY growth in net revenues and adjusted EBITDA, expanding capacity to 62,876 cabinets while improving mature IDC utilization to 76.3% Q2 2021 Financial Highlights (YoY Growth) | Metric | Q2 2021 (RMB) | Q2 2020 (RMB) | YoY Growth | | :--- | :--- | :--- | :--- | | Net Revenues | 1.50 billion | 1.14 billion | 30.8% | | Adjusted Cash Gross Profit (non-GAAP) | 640.2 million | 467.6 million | 36.9% | | Adjusted EBITDA (non-GAAP) | 425.1 million | 306.4 million | 38.7% | Q2 2021 Operational Highlights | Metric | Q2 2021 | Q1 2021 | Q2 2020 | | :--- | :--- | :--- | :--- | | Total Cabinets Under Management | 62,876 | 55,926 | 44,050 | | Retail IDC MRR per Cabinet | RMB 9,015 | RMB 9,144 | RMB 8,953 | | Compound Utilization Rate | 59.9% | 61.7% | N/A | | Mature IDCs Utilization Rate | 76.3% | 73.9% | N/A | Management Commentary Management expressed confidence in robust organic growth driven by a dual-core strategy, with Q2 financial results surpassing guidance and strengthening market leadership - CEO Samuel Shen credited the company's dual-core growth engine, diversified customer base, and strong IDC market demand for fueling organic growth in cabinet deliveries4 - CFO Tim Chen noted that Q2 net revenues and adjusted EBITDA grew by 30.8% and 38.7% YoY respectively, surpassing the company's guidance4 Second Quarter 2021 Financial Results Analysis Q2 2021 saw significant YoY revenue and profit growth, with net revenue reaching RMB 1.50 billion and a net profit of RMB 455.9 million, largely due to a fair value gain on convertible notes Revenue and Gross Profit Net revenues grew 30.8% YoY to RMB 1.50 billion, driven by IDC and cloud demand, with gross profit rising 32.0% YoY to RMB 359.5 million and gross margin improving to 24.0% Revenue Performance | Period | Net Revenues (RMB) | YoY Growth | QoQ Growth | | :--- | :--- | :--- | :--- | | Q2 2021 | 1.50 billion | 30.8% | 7.9% | | Q2 2020 | 1.14 billion | - | - | | Q1 2021 | 1.39 billion | - | - | Gross Profit and Margin | Metric | Q2 2021 (RMB) | Q2 2020 (RMB) | Q1 2021 (RMB) | | :--- | :--- | :--- | :--- | | Gross Profit | 359.5 million | 272.3 million | 323.3 million | | Gross Margin | 24.0% | 23.8% | 23.3% | | Adjusted Cash Gross Profit | 640.2 million | 467.6 million | 605.3 million | | Adjusted Cash Gross Margin | 42.8% | 40.9% | 43.6% | Operating Expenses Total operating expenses were RMB 262.5 million or 17.5% of net revenues, with adjusted operating expenses at 15.7% of net revenues, showing slight improvement YoY Operating Expenses Breakdown (Q2 2021) | Expense Category | Amount (RMB) | | :--- | :--- | | Sales and marketing | 59.6 million | | Research and development | 38.3 million | | General and administrative | 154.2 million | | Total Operating Expenses | 262.5 million | - Adjusted operating expenses as a percentage of net revenues were 15.7% in Q2 2021, compared to 15.9% in Q2 2020 and 15.3% in Q1 20219 Profitability Adjusted EBITDA increased 38.7% YoY to RMB 425.1 million with margin expansion, and the company achieved a net profit of RMB 455.9 million, largely due to a fair value gain on convertible notes Adjusted EBITDA Performance | Metric | Q2 2021 (RMB) | Q2 2020 (RMB) | Q1 2021 (RMB) | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | 425.1 million | 306.4 million | 415.1 million | | Adjusted EBITDA Margin | 28.4% | 26.8% | 29.9% | - The company recorded a net profit of RMB 455.9 million, compared to a net loss of RMB 2.12 billion in Q2 2020. The profit included a fair value gain of RMB 424.1 million on convertible promissory notes11 Earnings Per Share (EPS) / ADS | Metric | Q2 2021 (RMB) | Q2 2021 (US$) | | :--- | :--- | :--- | | Basic EPS | 0.52 | 0.08 | | Diluted EPS | 0.04 | 0.01 | | Basic ADS | 3.12 | 0.48 | | Diluted ADS | 0.24 | 0.06 | Financial Position and Cash Flow As of June 30, 2021, 21Vianet maintained strong liquidity with RMB 5.03 billion in cash and generated RMB 314.8 million in net cash from operating activities - As of June 30, 2021, the company's cash, cash equivalents, restricted cash, and short-term investments totaled RMB 5.03 billion (US$779.7 million)12 - Net cash generated from operating activities in Q2 2021 was RMB 314.8 million, compared to RMB 161.8 million in Q2 2020 and RMB 274.5 million in Q1 20211232 Business Outlook The company forecasts continued growth for Q3 and raised full-year 2021 guidance, expecting net revenues to grow by 28.4% and adjusted EBITDA by 30.7% at midpoints Q3 2021 Guidance | Metric | Guidance Range (RMB) | | :--- | :--- | | Net Revenues | 1.53 billion to 1.55 billion | | Adjusted EBITDA | 420 million to 440 million | Full Year 2021 Guidance | Metric | Guidance Range (RMB) | Implied YoY Growth (Midpoint) | | :--- | :--- | :--- | | Net Revenues | 6.10 billion to 6.30 billion | 28.4% | | Adjusted EBITDA | 1.68 billion to 1.78 billion | 30.7% | Appendix: Consolidated Financial Statements The appendix provides unaudited consolidated financial statements for Q2 2021, including Balance Sheets, Statements of Operations, Cash Flows, and GAAP to non-GAAP reconciliations Consolidated Balance Sheets As of June 30, 2021, total assets increased to RMB 21.88 billion, supported by cash and property, while total liabilities rose to RMB 14.60 billion, primarily from convertible notes and borrowings Key Balance Sheet Items (in thousands RMB) | Account | June 30, 2021 (in thousands RMB) | Dec 31, 2020 (in thousands RMB) | | :--- | :--- | :--- | | Total Assets | 21,883,985 | 19,373,755 | | Cash and cash equivalents | 4,603,653 | 2,710,349 | | Property and equipment, net | 8,473,036 | 8,106,425 | | Total Liabilities | 14,600,822 | 12,476,275 | | Convertible promissory notes | 4,732,739 | 3,014,057 | | Total Shareholders' Equity | 7,283,163 | 6,897,480 | Consolidated Statements of Operations For Q2 2021, net revenues were RMB 1.50 billion, leading to a net profit of RMB 460.5 million, a significant improvement from the prior year's loss, driven by a fair value gain on convertible notes Q2 2021 Statement of Operations Summary (in thousands RMB) | Line Item | Q2 2021 (in thousands RMB) | Q2 2020 (in thousands RMB) | | :--- | :--- | :--- | | Net revenues | 1,496,978 | 1,144,061 | | Gross profit | 359,515 | 272,332 | | Operating profit | 97,044 | 78,859 | | Changes in fair value of convertible notes | 424,107 | (1,612,054) | | Net profit (loss) | 460,472 | (1,648,777) | | Net profit (loss) attributable to Company | 455,852 | (1,652,350) | Reconciliations of GAAP and Non-GAAP Results This section details the calculation of non-GAAP metrics, showing Adjusted Cash Gross Profit of RMB 640.2 million and Adjusted EBITDA of RMB 425.1 million by adjusting GAAP figures Reconciliation to Adjusted EBITDA for Q2 2021 (in thousands RMB) | Line Item | Amount (in thousands RMB) | | :--- | :--- | | Operating profit | 97,044 | | Plus: depreciation and amortization | 297,738 | | Plus: share-based compensation expenses | 27,507 | | Plus: impairment of loan receivable | 2,816 | | Adjusted EBITDA | 425,105 | Condensed Consolidated Statement of Cash Flows In Q2 2021, the company generated RMB 314.8 million from operations, used RMB 522.3 million in investing, and had a net cash outflow of RMB 1.89 billion from financing, ending with RMB 5.02 billion in cash Q2 2021 Cash Flow Summary (in thousands RMB) | Cash Flow Category | Amount (in thousands RMB) | | :--- | :--- | | Net cash generated from operating activities | 314,806 | | Net cash used in investing activities | (522,340) | | Net cash used in financing activities | (1,887,775) | | Net decrease in cash and equivalents | (2,156,214) |