VNET - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, ladies and gentlemen. Thank you for standing by for the First Quarter 2022 Earnings Conference Call for VNET Group Inc. At this time, all participants are in a listen-only mode. After the management’s prepared remarks, there will be a question-and-answer session. Participants from our management will include Mr. Officer Chairman Executive Mr. Retail Chief Shen, and of Executive IDC; Samuel Chen, Mr. and Financial Tim Officer; Chief Xinyuan Relations Liu, Investor Director of company. the that note today's call is Please being conference recorded. speaker conference like to turn now Liu. the I'd the to first today, Xinyuan over Please go ahead.

Xinyuan Liu

to Hello, conference XXXX welcome first quarter Thank you, and our operator. everyone, earnings call.

made today. contain was that Act the on find Newswire Securities under Please you note a forward-looking as copy of earnings release Private And website as Our on discussion of well will today the statements distributed earlier provisions U.S. harbor can our IR safe XXXX. services. the Reform Litigation

Forward-looking differ uncertainties materially and statements that to current our actual expectations. results to are from subject may risks cause

disclosure and not discussions VNET's the SEC. earnings GAAP risks For GAAP release of financial release Please other conference as and a financial required any refer undertake earnings this that and to filed these the to includes laws. matters applicable with as press non-GAAP measures. as of non-GAAP to also statements, reconciliation VNET’s VNET except please financial note forward-looking of the update annual contains measures press measures. under unaudited any does detailed uncertainties, documents unaudited well unaudited obligation report unaudited the our call latest

As a recorded. reminder, this conference is being

call a turn the now will also addition, to Investor this be CEO, at conference Samuel. webcast I ir.vnet.com. Relations will call In of available website on our our over

Samuel Shen

and Good you, first Thank right. everyone. morning, XXXX Xinyuan. evening, call. quarter for Thank conference All our good you earnings joining

quarter first increased approximately off in Cabinets XX,XXX of a with wholesale core cabinets we to are IDC by XX,XXX the a macro of approximately reach customers XX,XXX continue grow retail approximately compared to delivering XX,XXX the comparable our Total management and to report amid and period fiscal to at our got environment. utilized quarter last with quarter. in complex pleased dual year. healthy year. standpoint, approximately we in under From to the increased we growth end start strategy a performance financial operational executing solid first compared XXXX, As another solid growth market, in last

Our period in to grew XXXX. the with same retail the cabinet RMBX,XXX first quarter of RMBX,XXX compared MRR per in

quarter, our a XX.X% rise year-over-year, our of business and as line business favorable booster segments. first our with landscape revenue year-over-year our grew expectations. a phenomenal our strategy both the continued policy all XX.X% For digital proven each EBITDA have to grew our and economy adjusted well to across The of execute ability as momentum in

further government China's cloud, infrastructure deploy for considerable technology, national month, China's recent next-generation most across technology are more of policy development transformation positive and its Central meeting, continued sector and all, extended the of First supercomputers, held central platforms, the Economic number digital include the role Commission Affairs networks. initiative Aiming paving Financial outlook development. to At and broadband supportive and information logistics last in the way progress, modernize for IT reinforcing IDC the a to backbone facilities, and the which infra other AI of industries.

major are regulatory healthier of favorable one benefit we fast-growing support well As environment. the providers to more and in the this from service a demand to initiative, positioned

Computing power across the initiative, computing was infrastructure nation. as data, year center the data advancement Eastern to Additionally, national Western earlier significant boost released this

even the approach. and for We continue more business effective our to see expansion the with efficient of core great potential

our customers' of progress impacted of to our its business have projects impact our these the to moving key on our detail, segments discuss operations. locations and resurgence and about I'd COVID-XX I and related Shanghai, in travel Before imposed lockdowns cities several that some some in rates new the and areas. in our Beijing respect province with Hebei of The in more restrictions certain like were in speak construction

keep Our have in on-site the smoothly. appreciate areas efforts and each of data to lockdowns, throughout our running we employees' truly to centers uninterruptedly operate things continued the affected

We risk will monitor together our continue to closely mitigate for measures pandemic operations. do developments with and our to

Now and our of performance latest at development business. the first look let's quarter wholesale

is As across and place edges. customers, their gain Internet frontier efforts TMP storage their inactively service more especially providers, trends cloud taking competitive keep to up digitalization sectors with geographies, technology enhance processing and data expand and to players, capacities

appeal Our of industry to technology and know-how, service in-depth capabilities offerings enhance continually compelling teams proposition resource rooted operation leading players. our in extensive value well-seasoned wholesale the

During from of generating including order an we the leading total capacity, under existing and providers XX customers XX in platform Southwestern signed and one four three state-owned contracts quarter, two social in multi cloud first orders megawatts region. a approximately megawatts pre-committed contracts extended service a China of operator approximately with

We segment. the about increase from see continue wholesale optimistic future in in this and demand to prospects quite business, our our we're

offerings, existing our both from the Moving our growth to our customers, and fuel on of service first our orders retail ongoing the and our advance in business. value-added quarter, efforts effectiveness execution. reaffirming of steady to efficiency strategy In increasing new

business our includes in-house different provide to new services multi-cloud SD-WAN service solutions primarily e-commerce a a We energy solution access an our areas intelligent to spanning and continue services. a we backbone for of from services, network. colocation application-aware their in cutting-edge additional catering our launched innovative enhance array hybrid also and service Internet enable just to continually interconnectivity players, customers is metal network service that connection New innovation Also, e-commerce, spectrum enterprise cross-border interconnectivity, cloud procure addition the marketplaces capabilities It from contracts providers built technology and visualization. to sectors. large added number of local driven aims services developed very existing by players, networks routing and bare including and hybrid on services. all-in-one wide upgrade expand service wide or to digital service services, the to growing driver Technological providers, a our and of features as platforms online financial of crucial customer demand development was offerings, enrich financial expansion automotive one-stop and

corporate full-stack native private engineering run transformation services digital customers powerful facilitating Stack hybrid streams. cloud to addition, enrich This revenue in and represent In build additional and cloud public, a publication rolled [ph] new just empower our developers scale initiatives. to capabilities we to also values product our portfolios, out to customer-oriented and launches Neo our diversify service deliver

exclusive Daily opportunities In with partnership People enterprises in and addition Recently, platform government customers explore will an leveraging the and media meeting. authoritative People on healthy cognitive Data to colocation, as across platform, Data, interconnectivity, we to workloads states cloud technology agreement, serving People’s relationship. a SOE services, China. needs this subsidiary partner for more role jointly and verticals, with various solutions. its aptitude industry-specific we agreement an the corporate our for by serving exclusive cloud local cloud of Under dCloud government including continue operate platform partner, in regard, will all-round customers' and signed uphold we to VNET In Online, build People of provide Cloud, to

of maintenance support XXXX, data On service to power actively our the we been of reason business Microsoft. different and More in digital offer QX Blue business industries Huaneng and Cloud encouragingly, largest China's expertise in companies. the with front, we cloud system vertical exclusive services electric to began partnership operations long through opportunities Power, exploring operation one have leveraging business

O&M core first-class been systems visibility for array XX/X feedback deliver We secure a well as we business relevant continuity. across as architecture services a our The of have received remarkable. has wide business from high initial will customers

effectively trouble-free, to services also Our needs, run while enable but only not better systems efficiency their costs. solutions customer and their to reducing operating and performance meet business optimize

this advantage. capabilities performance grow operating semis efficiency, As the business stronger, overall competitive enhancement also in customers' which system their turn, overall improve our management

commitments our I'd to upholding Last like market we our other for but and reiterate operate, solution which society in-specific central industry. further to in Environment least, expand a and responsibilities sectors. in our highly is ongoing expect to success. to We that long-term dynamic not

force world As green embrace for operations management, towards positive the world to society. center are as -- a betterment comes the building our committed the enterprise to sustainable industry we becomes VNET of shifts and data

the For and integrating in April our into been demonstrates two of initiatives ESG sustainability operations. to report wide XXXX decades, aspect ESG advancing our of committed more communities to serve, initiatives every a these showcases published our stakeholder than we commitment within have range we

the Some and we highlights center service average disclose include carbon the the our our data first industry fact neutrality target PUE that XXXX. third-party of Lower carbon by China in than to inventory results. verification are providers

by player, will we and As lead to in domestic continue a global this aspect. example prominent a industry enterprise

core will ahead, our dedicated strategy. Looking to while core to strengths remain utilizing growth on we our dual focus continuing

will the Tim? Thank our to outlook. now greater capture across digital We over demand financial you, call the With progresses. that, the everyone. and our I quarter fulfill as transformation CFO, opportunities performance expect business wide-ranging our more and growing to for turn Tim discuss to digital verticals

Tim Chen

morning, very much, you good everyone. Thank Good Samuel. evening, and

start our we discussion will the measures note Before that detailed today. we please non-GAAP financials, present of

exclude of tables press all note may in reconciliation present terms. details earnings our in first included otherwise also are these results unless expenses found that today non-GAAP renminbi which The quarter the financials our expenses, certain of not Our operations. are we stated, part core noncash release. the the of be for in XXXX Please

to sequential for Year. in to pleased decrease and first expectations. revenue period strong adjusted our Chinese EBITDA on mainly our of our because line the a due in solid top-line is quarter seasonality business given we're first typically that quarter, results have First, The the was in achieved with not New

also addition, was our move-in In impacted lockdowns. rate by

further service our offerings, of performance to customer financial capabilities. a macro invest continued our robust backdrop and our against diversify expand core fluctuation Our efforts our reflects in base

both walk are the was XX% same growth representing increase Adjusted for period XXXX. same XXXX, quarter RMBXXX.X of cloud demand the was you depreciation, period increase Adjusted first million In of of the wholesale same amortization compared RMBXXX.X same to due the million in revenue cloud-neutral cash customer carrier and the compared the an XX.X% of rates first compensation by the XX.X% scalable the and the first our quarter, XXXX. RMBXXX.X the XX.X% our of increased will and our compensation net quarter million results. same was IDC financial gross from quarter last for cash period of an the I X.X% profit specified, year, to to be a in a from of growth as RMBX.XX representing Adjusted combination Gross on to billion was first Unless period margin from quarter mainly XX.X% well of IDC acquisition as in me in let solutions in first the operating XX.X% XX.X% from same expenses in expenses, reviewing in first which as XXXX. customers Gross Next, our compensation the share-based excludes increased continued XXXX. basis. business. retail expenses decrease the XXXX highly margin XXXX otherwise excludes an XXXX in of all year-over-year of through was of the which from profit, XXXX period share-based period of of XXXX. and of employment quarter quarter gross first

in operating period XX.X% of compensation period in RMBXX.X of XXXX. same As compared EBITDA XXXX a first same revenues, XX.X% an XXXX. to net EBITDA XXXX of XX.X% the RMBXXX.X million XX.X% Adjusted in first of from quarter quarter XXXX. in of excluded in adjusted to Adjusted the share-based increase the first XXXX EBITDA of of compared first of million. was same of expenses XX.X% quarter was the quarter in Adjusted XXXX percentage was the representing margin the of expenses period the

per Each loss ordinary in the RMBXX.X Our same first net attributable RMBXX.X Basic in of Class of million ADS six and was represents XXXX profit profit RMBX.XX ordinary shareholders to the respectively. compared share, and was and RMBX.XX shares. RMBX.X period and RMBX.X million XXXX. per ordinary of net respectively, a A quarter to diluted ADS,

first aggregate RMBX.XX March quarter As the for of was to billion. period generated compared and in of million and net XXXX our of in cash XX, activities million was sheet, investments the cash from RMBXXX.X RMBXXX.X Meanwhile, balance operating of equivalents, amount short-term as the the XXXX. cash same XXXX, cash company's restricted

Our quarter first CapEx of billion. in was XXXX RMBX the

to into the diversification capabilities economy long-term spectrum ahead, growth development Looking core broaden strategy, increased tap in digital our our services, the committed we our customer dual-core remain to in potential the and investing of China. of advance

outlook. to Moving

its We RMBX,XXX and estimates. and are of For This market to future for today. of to remains to adjusted reflects year the subject the impacts take to on views forecast full XXXX, anticipate remarks provided pandemic RMBX,XXX concludes now from range outlook our range factor the Operator, any our conditions, preliminary million million RMBX,XXX operational are and million. which you. This unchanged current the to of previously million company's to the be prepared revenues change. net and by not RMBX,XXX questions. be the in potential in caused do ready Thank COVID-XX we EBITDA

Operator

Thank you.

Our We at Liu will [Operator session. now first go Stanley. ahead. Morgan begin question Please will Instructions] from the Yang question-and-answer come

Yang Liu

follow Xinyuan here. questions Liu. up Thanks, Two major

CapEx of for whether some And The whether for given management growing also data both of of the -- first this the maybe your quarter Beijing update new impact. lockdown new moving, first Could delivery, on one will will what than lower have second the and on expect COVID and that as well? long in percentage even lockdown delay the savings bring quarter is some Shanghai the terms issue ongoing construction, issue? And capacity in year. and of terms centers should we course, also the us the capacity

So that cabinet. for question. question monitoring. is the demand at what a management the We profile? current what increase And I of is the impact a think the expected the new based And is in market XXXX second on the end is overall And disclose growth that is COVID-impact is or Could on utilized is that saw -- the number year? last disclosure year metric pretty demand. line full the important expected one

Samuel Shen

Yang. This Thank Samuel. you, is

me the take the with crack first regard have impact. that question of the to Let lockdown you

projects. restriction supply being imposed were and in seeing to progress That expansion Shanghai their recently related some first cities the move and customers are also some think in And down to working auto. operation. upon to impact the seen said, getting loosen a to issues. new respect we're going industry also for we the with separately, risk that measures out we in on in construction see their definitely seen the better. the for to also like Basically, with partners so continue stages our far and will figure what and hope the plant lockdowns and different cities to and restrictions province some and monitor have way Shanghai, customers potential of incrementally the what see of based appropriate Beijing Hebei the business slowing in to coming and a of way situation, of also chain in assumption I rates several they we mitigate our have to travel like we is business all, individuals, of And in months our due

QX any do expect possible and to getting said low-single Tim, to to we're to do grow the we so maybe And digits, single once probably going But team our to is grow you going revenue have? that, add better. having and EBITDA also situation you mid-teens year-over-year. want on accelerate year-over-year every comments

Tim Chen

Yeah, sure.

end of about point back the deliveries tackle the in the original year. also whole the the Actually, me delivery. plans, Let in were our capacity

the the best back side have So eased, up. will And original construction are have we second the was very plan of I in again, the to measures to think control do that it the ended. our catch half year once

So greater there I to place for for a at think then chance is least that that. take

second, questions The about of question, cabinets. the the guess, had I you part of number Yang,

actually cabinets, we over of XXXX And the end is the around XX,XXX XX,XXX quarter, just were so fourth at cabinets.

number calculate of can And quarter-on-quarter so sort cabinets. you obviously, increase of the in

just the the up As this to more, speak about. of the full due are middle in was little year, we sort COVID as a appreciate, to that talking Samuel can slow but you of ramp point, can measures we the still bit at

through ramp-up going are it quickly there of that but constraint moment, this there the up. four physical ramp when then also our or Obviously, to pent-up at eases. three be going how going probably are is terms to heads in are people different So scenarios there's of demand

we've customers quickly the we So just that and of those when requests can terms on of ramp-up to say need that to up happen. the basis were optimistic I would remain that year accommodate ramp sort make sure full in it seen

long a matter area. on of in Beijing really call I these in that place the how is a of will measures Shanghai, be it So think now some

Yang Liu

Thank you.

Operator

Jefferies. will ahead. question from come go at next Please Our Edison Lee

Edison Lee

hi, is And Number on you. management. Thank side. financial more the one

the end think for did XQ imagine more XQ elaborate commented than of XQ May, XQ, VPN than already on on lower have we Because 'XX are do may that be bit So revenue to why at with that? business the I And you I maybe that worse XQ. it you will the So then or right? the because 'XX? Can you a little cloud business.

mean second the based official guys the able it any to that on it. that has catch-up whether on confident you offer the question is comments remain be that privatization So last now? catch is you because does your not Group’s right assessment Hina will up? And very And half on realistic company made

it possible privatization terms thinking of you So you. some offer? been about Board maybe for to what that color Thank and the of in share is

Tim Chen

Sure.

I'll Samuel well. revenue Let first me bracket and you have to customers quarter, to is quarter that the do have in compared side events revenues events an With take it in on have we from that doesn't additional color repeat increased fourth to of one-off a quarter. situation lead per quarter. the where and in a as regards a And side, add annual e-commerce lot and the first there typically, their those fourth requirements

that that of is difference. the so driver sort primary of And

thirds customers right see are two and do looking you where if I that would at the quarter But the through quarter their the look not that ramping to say just of customers up, ability headwinds at still. now, ramp up you remain. quarter terms second we're second second In the for

take much similar is was year, the second a taken the also market, as gauge told half, the in right what are are board been appropriate. to And And now, any the as good is to eased be the through have better decisions not the offer. which there we has it's that go obviously, earlier on to how this demand measures when able half first so on the place. that we've of on market. so we we pent-up we we Yang terms Last have At answering question now again, have moment, to can going updates disclose would by visibility I that quickly and

when we've already provide nothing to will the to else appropriate, what released as Sam, that? further we to So updates from add but and market. anything

Samuel Shen

Probably deliver. only enterprise Tim tends a call of because which the seasonality. about customers. heavier the just last at acquired also Tencent business to is platforms a It to few solution what of top company the things is to Cloud, add be called native type on the and company more half have second providing to Their year, mentioned we --

And projects business the the of online besides one-off part the to so type the retail due driven. retail of

some also to We have more tend bottom of happy. be the business

So that's additional color.

Edison Lee

up Can is the still I So the privatization that. understand discussing I quickly follow offer? on Okay. board

bit can little bidder? you is there all the color share? discussing more for any a or is the board considering with color that board waiting can actually to bidder is information what the more from share as board So you the the the more for alternatives Is

Tim Chen

so we There's when market something promptly. do offer can will no there we you at Edison. color to additional the that moment, is But this can disclose, again,

Edison Lee

Okay. Thank you. That’s great.

Operator

go Our next ahead. Li Hongjie CICC. Please question from comes from

Hongjie Li

two I questions. management. have Hi,

is one launch the because about People Cloud, has participated. first Cloud also recently, the The People net

to question the So on the company is quarter think because such ratio what expense in statistically I increased on business. R&D X%. was slightly And the around second first curious the was about

your current So could expenses? R&D -- just Thank you. share share management

Samuel Shen

second and that take one cover then I the about you how the Hongjie first has. Tim, question can

the strategic that the partnership In Cloud, terms Data. with People partnership it true exclusive agreement just signed People we of is with an

of Daily Daily in Daily is For Data authoritative better media They're actually those Data. the online. People's media People's an of platform China. authoritative of leading you People online People’s a who People platforms. probably the is the subsidiary one know than

is VNET will Cloud trying as customers platform So their local exclusive as People to to the and SOE cloud in role agreement uphold serving the computing. jointly under operate specific need an targeting partner for build Cloud. the government People its VNET and cloud

to regulate of most on last the they you services, and protect has the way in pass the to personal law I can will that because is effectively a and that The first early Omnibus People services Data dedicated is honor new X native personal is partnership China serve bare customers from round the comprehensive law, to cloud workloads PIPL still year, in that and to data earlier, So cloud called November so of spatial agenda stack designed we regard, making some information solutions platform forth. protection platforms the industry-specific in of from enterprise all And top on the online very probably full AKA China's happened all the PIPL one provide way information. sure in provide countries stage. law the and that colocation, is as way what know, to the the other said so interconnectivity, privacy a in a the metal latest

together, or partner good forth. to our indicator showcase the I one are map think two a enterprise. it's with said, leading to relationship on to of So so and and working out so demonstrate state ability our That the product being and figuring road government parties

the time hopefully, some happy report when gives but colors, So comes. that to of the the progress

Tim Chen

Thank you, Samuel. Okay.

on question costs. R&D the Let the me take

about you Samuel but think links investment this products press release on, the what around, also new what I presentation new back of is sort on a what solutions. to question mentioned which his in or was around is and focused part So in had of the earlier and our

be a not customers. offer but at to mainly SD-WAN say, we our stay will or And part products Whether is of these would yes, them. it new solution R&D the the enterprise actually recategorization. levels, would retail interconnectivity through are these one the So I of that

departments, as other recategorized costs now which in R&D. were we've Some of now the

looking going as a categorization So but of are terms at are overall, in now we rather not what R&D. costs up,

So I hopefully think you questions answers had. that the

Hongjie Li

you. Thank

Operator

at comes ahead. go Our from Hung JPMorgan. next Please question Albert

Albert Hung

If Yeah. if Thank about is the year you want full sequential half. X% be I there you, quarter commentary suggest quarter it's still guidance, look achieve you the like seasonality in second half. than to heard if right, management team. understand high-teens. need growth growth. mid second -- I And My you second first question should some second at second probably more to trend, in XX% just historical of half only I the

And the the the my since orders new all -- are last question between the headwinds as and And is I in any any on moving ask the demand you second with we difference macro customer? mentioned So on is And enterprise wholesale quarter leading spending rate the could customer? discussion may indicators you. half the slowed down your, and in I Is why customer new say, you Or know any new first lot bullish outlook? new there a for how the there share wins one? existing may feedback it's pricing such the second with quarter. so of new Thank outlook booking?

Tim Chen

that, take guess, as if you the in well. Albert, to I let me part first of jump want Samuel, and

I or and have up measures the to looking the second ramp into have think that then data place In half, half allow government, for you're a them move by we don't actually the customers actually terms the indicators, leading second a our from the second leading desire of do again, right centers. And are put feedback to and quarter in the I been ramp into mean which now up. the really, constraint if

number high So time period customers short a I in demand, very up that think our to ramp very pent-up very, we've of a of again, numbers. seen

if as are that and year measures. what And we perhaps measures will summers quite But well. of on ahead that depend had happened predicted. these it even sort eased and of confident up be the when This again, these ramp will quickly quite we to so are able last

what look that if terms quarter, in then to we'll third continue obviously, means full look, and quarter indefinitely, year. of Now the see obviously on measures then fourth these

MOUs? was on Sorry, -- progress Your second question, or…? I new the asking was guess, the what you're

Albert Hung

difference difference existing there moving and between rate orders one? Is pricing new or the any the

Tim Chen

They mirrored are actually more No. contracts these with our to customers. existing

generally slower no same. then pricing So and the is

Albert Hung

other question Understood. in in understand see may any on did regions because potential I Shanghai, in Beijing area. And But there moving rate. my be are moving other of separation afraid follow-up some the lockdown? customers probably constraint you rate

Tim Chen

you color on Samuel, that? do have any

Samuel Shen

look If of the would impact That being some customers restriction does move as in do create in Shanghai earlier, I rates. stated I Yeah. lockdown say back, I it the the have the I region travel lockdown, said, that's would areas, be that look center Today, say, at the region, Chongqing the Xian negative impact. and have, impact. But example, data [ph] to not going a long-term. we're when not we West we that of for seeing impact, type

I impact from customers, point a the customer the the the the people be probably do do sales and transformation If reason has say, want are the while think be COVID policy, digital better that's we country, major COVID-XX the zero a of COVID, are optimistic. cautiously, we to their lot As from dynamic I having and been keep societal of a the of city to whole I will -- headwinds, would fact, mean the so view, getting and a accelerated, matter then impacted regular with upon customers want we Beijing conversation lockdown I have to accelerated. customers. key about in months, accelerate going to the created also situation I zero make though then a month that from after working coming once a even -- based to were be I but and home, the conversation our have but channel, going is two right And have the with And over. customers, is sure

say, is after keep all, would of But top nothing priority. agenda going change I first country's to the the that. So

period a be going a given going to positive in to like of opinion. it's my time. But It's an overall, still hiccup So be impact. for

Albert Hung

Thank the you. in I’ll come back you. queue. Thank

Operator

Our Cheung Suisse. comes ahead. Please Clive from next Credit go at question

Clive Cheung

demand, is Hi, first my My question. a taking you guess Thank on management. question I question. wholesale for follow-up

number in we question slowdown say, particularly is cloud last half COVID expect outlook, orders our some wholesale seen second we on. this reported, My take one how business, over seeing kind we question we the the new the impact As in my potential wholesale so That's post one impact? have are two or should customers customers, recently government-related we margin as SOE second my to VAT the in question. pricing of as is or on impact traditional the quarters, have

at And our profile impact so this margin all? Thank you. would any of

Samuel Shen

I'm to with Samuel. in is This Tim chime happy additional Okay. welcome color. take to questions and on your

I companies, think its point of big in from data past, so on store segment to the and those forth. the data view, for especially providers, of focus tend to type requires the own giants service video on cloud a Internet name Internet center we wholesale

So the about of times, really this government might Internet support lot of be the worried analysts sectors. a

me that on let do So kind one. quick spin of a very

I think general, the supportive is Chinese government the in sectors. of Internet very

sector's probably it to does the that past of economy step the that for know contributed in fact regulatory important risk XX innovation has the growth years, past the some the the up yet months in verticals. the equally Internet Given recently, to is of country's XX

some plan their to impact, of partnering accordingly. some social have profit-making off-campus see, also the or growth live with to with are customers for tutoring. policy can to online in tailwinds. headwinds media even impact, the gaming agile for but we definitely business our while There streaming the you services Therefore, antitrust As law stay cope government

the the the we not In that you being competition pricing terms about, a That or seeing asked COVID-XX material have difference for pressure, of past sensitive retail. or what we're quarter. the Therefore, from seen the given customers because said, the in pricing cost even pandemic the online prudent to more outbreak, market impact is entertainment of most local moving life, the or conditions. that's forward assume would to be pricing it verticals

So said, be have that we're customers empathy the not impact, material being seeing the but short, in cost-sensitive. a to understand could we

question. not to whether color So want hopefully, add? you have you I'm that additional sure your Tim, address

Tim Chen

cloud? question, for on question -- Not impact the you margin had that second on the was part. state a But about

Clive Cheung

Yeah, that's correct.

And how would our of if be compared orders, Just that that long terms in impact contract wholesale potentially would wondering of private say, different? kind to, meaningfully terms term?

Tim Chen

getting there's still Samuel earlier customers sort we're range us trend. Cloud. that mean partnership we think as to with that we services about see the But first offer products. orders are likely I to it's explaining have engage early. now the of These the of our overall just across going probably a on an was Peoples or if I

sort So material I a margin at don't there be of expect for to moment impact. the

I hope priced And other accordingly. be are requirements. will helps. they have those I think they customers, that requirements like

Clive Cheung

you. great. Thanks. Tim. Thank Okay. Thank that’s you, Yeah,

Operator

ahead. Sara Our next UBS. Wang come question will at go Please from

Sara Wang

ask for you Thank questions. opportunity Hi. to

I questions. two So have

First is demand. still on

quick a previous demand. the on question on Just follow-up

side? et that So then retail we is it say seeing the on from wholesale are see the right Internet about how the Do sector? And change to side, we still orders say in faster on might any talk question the verticals mix, is industries new grow about then than the certain orders? Cloud. customer cetera, our the of we People other, when second And

services? Thank IDC providers IDC choose why other SOE Telco VNET or People you. So over Data third-party

Samuel Shen

Okay. questions. Thank Sara, you, for the

all, look IT services, going financial the of from forth. remains this first if top retail momentum, carriers, same, the to the and at and still life, local be services, our year, verticals five quarter entertainment, so first on you so So

point or double from That's pretty we view, a particularly momentum demand. to digits, changed. year-over-year And nothing the resources that's one appropriate seen also for customers' strong sure meet question. the So we've not a of whether have

The looking services. second we're and more thing customers stack seeing is for the more full

They find to throat to very single So would other that's choke. colocation, enterprise, want than the typical mentality. a I a say,

has So a to be player, and a partner their making able can credential needs. long-term support is credible partner sure with the they who

forth. were Shanghai we're the nothing we're for the in and think so And months. our months, sure like a services and customers' and good a data area, our little view, the so lockdown talking from receive two though in about center by appreciation support. on city point customer for of recent engineers, and even are example, stopped because a impacted and two lockdown we much over we services I even making And very showcase feedback it's pretty O&M

a testimonial to a up. great retail that's a reason supposed thing, a that's that. I then keep good so kind it momentum. And view, think of a We're very I -- point So for good think from of

with forth. private can the have People's a and of From the have of Customers And reason data higher Data. study mainstream. have given well view, in they technical control, went view, very privacy. people what to been have today, world, access about from it's private such demand their We've on the The point point sovereignty Data, as in cloud users. as new cloud we partners. up In and They cloud China, rest or the their pay also disadvantages new Public can that's regulation. of happened disadvantages, cloud Therefore, policy, because is question less a the point customization. and limited highly unlikely attention so so services second keep dynamic what players, from they obvious diligence, the be of a probably extra and Your their record, China, capabilities, be data their because economy, through probably VNET exclusive has limited is industry advantages only the unpredictable tend due cost, track telling to customer mobile so even the the disadvantages. been but customers going the a regulated given People's the cloud there's will up the the cost. on typical because finally believe that public stack pick dedicated for full view

point that with to then pretty happy time, then at the we're that stage. great hopefully, being for share with And said, all partner we'll have to early still in that, progress. But it So this. honored see the opportunity to is public. And so some

Sara Wang

Got it. you. Thank

Samuel Shen

you. Thank

Operator

go ahead. next Please from Zhang Nomura. Our comes question Ethan at

Ethan Zhang

Good have team and questions. I morning, two Samuel.

was margin one the quarter is adjusted margin X% EBITDA I saw regarding proved The first that first the trend. XQ. by to compared around

this China? the one, what's margin driver in and Cloud. second People follow-on on what's lockdown half wonder question trend is COVID-XX Just quarter the and the second And a the in second main current behind

hyper we wonder, understand to what SOE I that So just cloud customers. provide could the or be the private

between People as the Thank So and what's Cloud well wholesale customers? margin? comparison previous as level retail price -- size the contract comparison you. example, For our our and is the

Tim Chen

follow-on the the has Let me Peoples any first answers question to if Cloud question. Samuel see take and

earnings we if In as release quarter or provided terms as driven the look the margins, you cost high. of first release, was at not the that control well in mainly, breakdowns by the it's press as top-line obviously,

And combined that two so resulted things those in a higher -- margin.

top that looking we will in that still at once lockdown or or unexpected into some There as of be looking the incremental forward would actually expected. would are some at to start year the be sort say out But the then data expect, again, the revenues were in. the costs margins to had centers. up ramp costs year, factored Going the you've I to full relation that full line, also, the also we're customers to pointed we

will color to So there's yes, other want be the margins if People's of would by bit driven earlier give terms But factors, want say are you combination little that probably a a any you on. both. Cloud? about two talked of you I Samuel, just higher see the in those to what

Samuel Shen

Sure.

hybrid reiterate. a one could world, the think norm I stated So I one possibly is the multi-cloud unlike two think think rest earlier, of Ethan, I other messages. other in is about China, than that's of the key Number new what key I points

one would cloud public it's -- addressed you advantages to and if I the have also cloud. a question cloud, compare made the among be private just the previous for dedicated and great cloud. The -- endorsement second disadvantages you a for regarding dedicated

that partnership with dedicated have you. importance the a think here Data great Thank the People's is in China. clouds I endorsement we for

Ethan Zhang

Thank you.

Operator

Daiwa. from ahead. question comes Guohan next Please at go Our Wang

Guohan Wang

Markets. for It's from Guohan Thanks management. Daiwa Capital

So your my first pipeline. question is regarding

quarter. to compared material in change is think no there I our current last pipeline

the but also low -- a of create So more just sorry, end approximately which is rent, XX,XXX. wonder we

on market any question. second one diversification. So So -- inject situation dynamics, my such your what's to current is that's deciding KPI the on second as capacity And pre-commitment depending do what's in have customer real in the your the our rate depending demand need we half? first we the

which you subsidiary a talking are about questions is the So People People's of two Data, Daily. regarding

sector. think have we So progress and a certain finance I in achieved non-Internet

sectors. term? for the the about SOEs new Thanks from penetration a talking We with can factors share the about in energy other Could into and in lot offset future the more so to you color much. near Internet other sectors negative the strategy are impact about and us

Tim Chen

Samuel. we've sort I are original asking guess of the at the are question customer pipeline, at these been terms a of There looking progress in Samuel, the take about question Guohan, -- pipeline saying of Again, I'll the you're no crack you're our try and leave pipeline plan. -- let me you, second to back then They sort one on construction in the changes. there's projects. the of talked delays. ended first

as being plan see the teams able this now, to that teams per be as engineering year. told catch -- still So we'll But within have we're how much can up. of to will complete they

on ramp number. we've customer and given where XXXX. is the reason where into when and Those provided, on side. the of up can a the dependent are the for progress that's range on we projects so they demand some really One twofold. There is projects actually range that is that push are may feedback And also construction but there the

the that's place. that first in why so range And have you

So we point quarter, from view, progress will as And update customer each into things not. or construction into well point 'XX will when whether continue or monitor. to we a view demand closely have of a not we more shift from we or on of visibility

Samuel Shen

Okay.

The about second of enterprise. People's question you asked talked also the Data, Guohan, the you about state and

last China. being carrier, enterprise. customers And created like the here So provide a Tencent traditional say, in of this on the acquired to platform one Cloud it not some government said, services year, on technical list. Ten our then states synergies of happened services, financial we of course, leading revenue industry. coming institution major cloud-native SOE IT of of That support because for the type the top of financial They would past, also Cloud, past, happen local of be the live the lot if what including XX-XX, XX% services, key I enterprises in What as correctly, from entertainment, the in I VNET's question industry, understand the happened sectors your was well.

People's So f customers partnership the the enterprise. of which online people's happen -- to the with we states-owned that major is their of one Daily be data, have they subsidiary

I workload the top scenarios public and But of focused there. on look because which great And from laser from tend customer be for stack their providers, a leverage you view what is good services if at generic. platforms. a to and a of workloads native of mean to in view, offerings cloud point great technical their the so certain services point it's be and a tend past, also verticals, a happened all over cloud synergy being the

partnership. update the to of from customer point from I'm think point it view, synergy touch said a down So once have some happy the also is We're Like a to road. progress having great technical good I in definitely I a and milestones. impact moving positive of a before, hitting we looking the forward

Guohan Wang

Thanks, it. Samuel. Got Okay.

Operator

for Ladies Thank today. you you. Thank conclude does conference and for our that participating. gentlemen,

lines. your may You now disconnect

VNET (VNET) 25 May 222022 Q1 Earnings call transcript