VNET(US:VNET)2020-03-05 06:00Financial Data and Key Metrics Changes - In Q4 2019, the company reported revenues of RMB1.05 billion, a 16.2% increase from RMB901.9 million in Q4 2018 [13] - Adjusted EBITDA for the same quarter grew by 3.3% to RMB263.8 million from RMB255.3 million in Q4 2018 [15] - Adjusted cash gross profit in Q4 was RMB425.9 million, compared to RMB409.2 million in the same period of 2018, with a gross margin of 40.6% [14] - Net loss attributable to ordinary shares in Q4 was RMB16.4 million, with basic and diluted losses of RMB0.02 per ordinary share and RMB0.12 per ADS respectively [15] Business Line Data and Key Metrics Changes - The company expanded its total cabinet capacity to 36,291 by the end of Q4 2019, including 32,047 self-built cabinets [5] - Hosting MRR per cabinet improved to RMB8,822 from RMB8,457 in Q4 2018 [13] - The overall utilization rate in Q4 was 65.6%, with a higher rate of 71.8% when excluding newly added cabinets [13] Market Data and Key Metrics Changes - The company noted a mixed impact from COVID-19, with increased demand in sectors like online education and entertainment, while other sectors like retail and hospitality faced declines [10] - The company expects to see a surge in demand for certain industries due to the ongoing digital transformation [8] Company Strategy and Development Direction - The company established a dual-core strategy targeting both wholesale and retail IDC markets, adapting cabinet delivery to meet diverse customer needs [6] - Plans for 2020 include delivering 15,000 cabinets and achieving over 20% year-over-year revenue growth [9] - The company aims to enhance its cloud services and partnerships to support digital transformation for enterprise customers [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth potential despite short-term uncertainties due to COVID-19 [11] - The company anticipates a favorable banking environment and increased long-term contracts with well-known customers [16] - For Q1 2020, net revenue is expected to be between RMB1.07 billion and RMB1.09 billion, with adjusted EBITDA between RMB245 million and RMB265 million [17] Other Important Information - The company plans to maintain a healthy balance sheet to maximize growth opportunities, with CapEx projected between RMB2.4 billion and RMB2.8 billion for 2020 [16] - A private placement of $200 million in convertible notes was announced to support capacity expansion plans [16] Q&A Session Summary Question: Government support for data center construction - Management views the central government's support for data center construction as a positive policy that will encourage growth in the industry [20] Question: COVID-19 impact on construction - Construction has resumed outside of Beijing, with efforts to work closely with local authorities to resume projects in Beijing [22] Question: CapEx breakdown - Approximately RMB2.1 billion to RMB2.2 billion of the CapEx will be for the 15,000 cabinets to be delivered in 2020, with the remainder for future projects [23] Question: Wholesale segment demand - Demand from major customers, especially in the cloud sector, remains strong despite some delays [26] Question: MOU details and revenue recognition - The MOU signed in Q4 is expected to start contributing revenue in the first half of 2020 [30] Question: Impairment of receivables - The impairment was a one-off expense and is not expected to recur in 2020 [45]