VNET - Earnings call 3 2023 | VNET Group, Inc.

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 Third Quarter 2023 Earnings Conference Call for VNET Group, Inc. [Operator Instructions] Participants from our management include Mr. Jeff Dong, Chief Executive Officer; Mr. Qiyu Wang, Chief Financial Officer; Mr. Officer; Strategy Chief Chen, and Ms. Tim Investor Liu, Relations Director company. the of Xinyuan speaker note is call turn first call today's over Ms. recorded. I'd the Please conference to being that now like to today, the ahead. Xinyuan Liu, please go

Xinyuan Liu

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

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

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

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

recorded. reminder, is a conference being this As

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

Jeff Dong

of joining Thank you, overview Xinyuan. quarter today. third call our for like everyone. and I'd start good you Good the our morning performance. Thank to with evening,

and grown driving increased cabinets a The focus management high-quality are the cabinet in smoothly. to of RMB XX%. adjusted compared of revenues total dedicated retail generating net progressing remain year year-over-year X% quarter, Our XX,XXX our we high million. in the wholesale quarter the EBITDA increasing utilization end in the high-quality both X,XXX overall to solid RMB revenues ending third deliveries XX,XXX X.XX MRR market to by XX,XXX RMB our our utilized Cabinet retail number our stayed by the quarter, third rate approx under to growth business and growing By third X,XXX. the opportunities. Furthermore, XX.X% our total in cabinets solid ago. during approx reflects with billion had per on by the to at with We quarter the growth continued quarter, IDC XXX.X to

for AI of With pace computing unveiled power and governing the recently productive computing language becoming development for To China's plan have power, training is infrastructure need a application high-quality rapid model nationwide. power the meet authorities large the of force. growing new computing action an deployments,

player, customers and As we ride demand for the clear industry leading premium are who choice a remain for digital of transformation. services, wave seeing the increasing we IDC

closer at our Now let's look take third business update. a quarter

IDC First, power demand AI computing for increasing and services. is driving

our to continue excel increasing center we data wholesale large by driven Our traffic-growing AI meet powering and in training business. high-power for demand Internet customer Equipped deployment with platforms. model the capabilities density language

support are [ spending customers to sustain development needs. evolving and ] capabilities business and Our our to core us enable competencies, who execution resources

in Internet been call, competitive the appeal extended XX an our August, which from we megawatts giant deployment landscape. Moreover, last order As our execution company existing offerings amidst won our we to mentioned on service wholesale speaks has an superior customer, of stellar.

one During in density Yangtze wholesale the over customer. another for northern quality, customer options third us are to high-power tailored we region process, reliability requirements. the a earned Throughout Delta which China delivery satisfaction. offering to execution and cabinets a customization and strict quality cabinets delivered to River the standards, is we reputation This timely customer commitment top-notch testament to maintain in XXX quarter, wholesale density we delivery high-power the approx X,XXX our successfully and has of customer to region

to in continue we Building retail particularly demand like as on to from rise, expect in this solutions. momentum, customers local and attract Our care customers. existing for implementing and power which distinctive well and promptly driving density and as address AI as wider This highlight designing retail also AI VR. industries engineering needs. to I'd a density customers from customers' our proficiency our high-power existing from diverse services, AI-driven existing such to such cabinets, of industries expertise autonomous more capability health as the customers' range cabinets upgrades growing to well us allows equipment our is by demand our supported retail computing high-power and meet experience

quarter, various our industries, existing and electronic customer, third attracting addition, in of financial customer including megawatts new a won retail order diversified a from securing base new existing further worth In contracts noting, mobility. and services, also we IoT, It's expanded consumer customers the an tech extended from recently brand. we and in X.X customer world-leading gaming

value-add to our services. Now turning

which third specific full the resources our of customers, We metaverse contract based unicorn industry. growth won meet peak business. during our computing VR of Metal flexible demand solution quarter, During continued is new pioneering its hours, power a can rapidly rapid customer's Bare on the this stack one business as-a-service to in gain that the one-stop underpinning

for to business Our looking potential future diverse VNET current IDC IT offerings support services needs. and trusted infrastructure, development outstanding management their services customers and making impressive solid for an partner and include cost-efficient a operations premium a solutions, choice

results wholesale EV by backed ability also robust have backhaul. This in compelling can and retail center quarter latency data needs and with and for and timely address capabilities. In proposition reaffirms advanced customer our centers both customer business a their low store our The interconnectivity our transmit throughout data services value robust leading effectively Chinese attracted to resources IDC interconnectivity services strong data adjacent network business automaker We nationwide. execution. showcase summary, third our and our

industries, computing Looking accelerate will of China. infrastructure and and ahead, development is across the in government AI's supportive emerging prevalence the adoption power policies

I application the call and driven [ look this for will AI performance to everyone. As further industry to by wave a growth long-term dedicated turn Qiyu forward our leader, newest our of unleashing financial now this ] to we potential. Thank you, discuss quarter. meeting demand

Qiyu Wang

Thank good morning Good you, everyone. Jeff. and evening,

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

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

solid our growth high-quality the be otherwise reviewing third through on basis. with revenues. focus our Now year-over-year In quarter let financial on I deliver we continued all you me specified, will rates a quarter, walk results. third Unless the are results to

quarter third was revenue CNY same XXX.X billion the driven post-combination continued net the to to mainly increased Adjusted XXXX. the the cash X% in CNY to of was main third gross in same compensation of of compensation of Gross in margin compared XXXX. of from XXX.X the XXXX of XX.X% by CNY of by our in the X.X% the third amortization Our million XXXX, XXXX operating the from which excludes and share-based same quarter from the XX.X% third the XXXX, of XX% in X.X% the business. Gross quarter the third was excludes profit, increase XXX.X million to period XXXX. Adjusted of was XXXX. compared compared same margin period expenses, million XX.X% of employment an year, in a compensation quarter in expenses, of the period were expenses XXXX same gross in CNY share-based profit X.XX depreciation, period of XXXX. acquisition, in decrease period representing of million CNY which the quarter and same the growth the period for Adjusted last cash XXX.X

expenses XX.X% XXXX. of of in XXXX. period excludes Adjusted percentage million, same third XX.X% the third compared to EBITDA of XXXX EBITDA the XX% of CNY period XX.X% in a XX.X% margin increase in XXXX. of quarter EBITDA of third the revenue, in of quarter share-based third was of were compared adjusted to XXXX was As X.X the XXX.X in of the Adjusted quarter representing the XXXX an from of same period expenses quarter same net in operating million. Adjusted XXXX CNY compensation the the

XX.X of Class share in and CNY same a attributable Basic ADS. CNY million the and third loss per X.XX of in net to XXX.X shares. was net ordinary diluted Our both XXXX. loss Group of quarter per X.XX to the period VNET X compared million CNY represents loss XXXX CNY ADS A both were Each ordinary

our balance to Turning sheet.

period and in compared the in X.XX equivalents September to company's third the amount operating from XXX.X cash was net CNY CNY CNY was cash activities quarter billion. the of restricted generated of XXXX. same cash, XX, As XXXX cash million million of of XXXX, aggregate XXX.X the Meanwhile,

million. the in quarter third expenditure was capital XXXX of XXX.X CNY Our

provide to year like I'd outlook on financial conclude, update I XXXX. full our Before an for

CNY the and adjusted to CNY expects total to and the of our year-over-year current X,XXX stated. The sustainability the XXXX, The expected preliminary net year-over-year continuous due and CNY EBITDA our market X,XXX million, be a CNY million, its million revenues as total This conditions with mainly revenue of views million to outlook X,XXX the million reflects company's currently For operations. to year million and update X.X% focus is CNY representing XX%. maintain and range in X,XXX to and X,XXX on is representing between to growth between of X,XXX adjusted on of X.X%, EBITDA and and full X,XXX CNY million be change. long-term to high-quality CNY of million to a focus net CNY between the operational company subject previously the X,XXX compares growth revenue X.X%

will transformation services we broader growth stay high-quality digital to forward, promoting focused premium of Moving a swath industries. empower our our on IDC across strategy,

stakeholders. This questions. sustainable are remarks As to now prepared all ready Operator, growth we to concludes for committed we remain take our always, our for today. create

Operator

Stanley. Instructions] of Morgan the from comes [Operator first question Yang Our from Liu line

Yang Liu

repayment? what update of February year. and potential can convertible monetization I would been whatever has [ bond for is et repayment the in Both now. asset income an also to have issuance the the share ] of REIT of next sell you to Or -- upcoming existing stakes current in projects, the company's done? for What progress like the the terms cetera, prepare minority

Qiyu Wang

took the this Yes. my been since us. for liability priority Thank CFO I management top since position. task you. important issue has I the -- I know most question Taking the is

ways NASDAQ major One X We on new rules. resolve we need are new write to follow for debt and investment working equity because the from is funding busy issue. the

There right -- forward. So pursuing we creditors are just the continue with also activity positive present this public all in the some make asset also engaging funding then, any our other there's to but time be our CB investors the we both will and and progress closing and C-REITs. best way find if some progress. Also -- management sell to Also including new OpEx best share to need concrete to the say, raising, to will also have we it's dedicated the minority try progress, time, announcement significant you deal.

we CBs. will so yes, our will So to -- incoming leverage this we best try

and and external we internal [ So firm leveraging resources. to Yes. are the both put are a plan you. on ] Thank

Yang Liu

another more it weakness come I business For downward May EBITDA wholesale on retail from more and revenue the do traditional the the update? from? the with business? Is follow the up see guidance, of from where business question or the revision you

Qiyu Wang

business focus we to share our XX be greater market business and to we What short industry our margin close want towards where of to years Yes, will change with IDC profit navigating do I or we midterm. some insights, experience in guidance. is

to year, profit such margin. AI-driven clearly, this have example, where wholesale and booming line, IDC resources market more areas allocating For of promote the business the we our the

to focus business. close profit this we we some high and try business, So then low-profit

see, if minor, guidance, only guidance, can you the very around revenue X%. EBITDA you So and decreased EBITDA the compare we

financial So to demand value as do AI-driven nature this governance to the reflect of business, the we're for within and business. example, so in ongoing the planning better statement could year, wholesale certain focus And and the we transmission then additional, practice core business. our continue our high-profit

Operator

line question comes from from Jefferies. next Charlie the Bai Our of

Tianyu Bai

question MRR. and both MRR. first I My utilization the is third behind saw about Bai a rate Charlie This reason it? on Jefferies. I know quarter-on-quarter decline quarter is from what's May retail

Jeff Dong

at which from some say quite with terms and In still in is might quarter-to-quarter, expectation. high There line I of QX, be level MRR, would for normal. is fluctuations say our a

sectors, those of we in UR and So again. also of utilization rates, expect end QX growth, we video year, And short on of par in the it's of faster believe XXXX. utilization especially come XXXX of Particularly the estimate the the at level be our a customers. will terms in the with up for rate our a end wholesale by XXXX higher

Tianyu Bai

I of the up in and color some CapEx May on I XXXX? this outlook with May year the plan follow question? have another

Qiyu Wang

This The CNY about the CapEx increase around -- is is due business year growing for than faster. a and is be AI-driven Yes. more will full of to main billion, be growth to year, is XX% business the that reason the in And center increased mainly wholesale which data full next the X.X expected demand the our and high significant year year, wholesale CapEx, rate demand. there guidance.

we will So in announced figure the the early guidance year. year CapEx specific full next

Operator

Zhao comes Goldman question next line Our from from Sachs. of Timothy the

Timothy Zhao

to about this for your I more Sure. understand year. guidance want updated

to And for business. reduce going mentioned believe the down you the more wholesale those those for Just like bit segment? IDC, the low-margin wondering, you terms I little turn your lower-margin more also full And non-IDC you revenue exactly on and exposure, business? business? could in more to retail I the include you reduce how what share do think, expect you elaborate IDC those to Could this of exposure that year a retail in are breakdown guidance or the the much business. are

Qiyu Wang

and -- so faster, demand Yes. increase the is the we try more find Because because now to wholesale AI-driven resources.

the customer. retail data supplied in example, for traditional then retail some and and For closed space we business to down move we center, AI customer the power the and shut some

minor. impact reason impact is on very revenue way, this this And the see you'll the guidance. So same main is the reduced our EBITDA EBITDA --

is business before. is the So than positive -- I margin down. our business the and that the is It's not EBITDA this speed way, the our of other is low -- is this the think is then on more signal EBITDA

Operator

from Our next America line of Bank Daley the Li Securities. comes question from

Huiqun Li

Just one space. on the AI

like density demand Do please how the do more from your much share into AI deployment we for breakdown, mentioned business? wholesale AI? the center. And the business? our or data for for any data how AI for year, next driven Could You by high-power trend retail demand looking you view have we center the demand

Jeff Dong

Okay.

In the year. players this terms verticals are are of of rapid sectors actually the language modeling launched different still trained, generic models the early whether the by we specific are already since since in dominated of giants, AIGC led popular the in China. of have them large AI, being which actually and by Many Internet very leading industries. growth year, Dozens this across seen is has been

say And this demand Some customers cabinets steadily IDC health on we Notably, fintech. exploring are during into tech as video mainly such the well also, demand in the actually X the as economy short start-ups quarter retail And customers from wholesale searched we announced the VR. customers, from density X,XXX are wholesale wholesale Internet demand to industries, customers, all AI AI-driven e-commerce the giants. Back some new cabinets. quarter, aside the the further and which of impact local by the industries our demand. giant retail especially we to from from I terms side, side, business. are delivered, would high-power of as Internet services, as from care across increasing such receiving various are around

We terms dialogue -- from those Beijing of cabinets, density with are Delta in Area. in River Greater in Yangtze cabinets also them. And Bay the and Area, locate locate high-power Greater actually, VNET

for about see size, from wholesale the kilowatts retail. XX the up of to we obviously terms the XX an over In kilowatts to and

received And a area. coming quarter from delivered, from have about would high-power all density over so XX%, I say we far, -- we this it's

Operator

you. Thank

for ladies of our We that that, the gentlemen, conference participating. session. and you And Thank today. end for concludes have question-and-answer reached the with

good day. now You lines. your disconnect Have a may

VNET (VNET) 16 Nov 232023 Q3 Earnings call transcript