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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-
16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the Month of August 2024

 

Commission File Number: 001-35126

 

 

 

VNET Group, Inc.

 

 

 

Guanjie Building, Southeast 1st Floor

10# Jiuxianqiao East Road

Chaoyang District

Beijing 100016

The People’s Republic of China

(Address of principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x   Form 40-F ¨

 

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  VNET Group, Inc.
     
  By: /s/ Qiyu Wang
  Name: Qiyu Wang
  Title: Chief Financial Officer
     
Date: August 27, 2024    

 

 

 

 

EXHIBIT INDEX

 

Exhibit   Description
     
99.1   Press release tilted “VNET Reports Unaudited Second Quarter 2024 Financial Results”

 

 

 

 

Exhibit 99.1

 

 

 

VNET Reports Unaudited Second Quarter 2024 Financial Results

 

BEIJING, August 27, 2024 /PRNewswire/ -- VNET Group, Inc. (Nasdaq: VNET) (“VNET” or the “Company”), a leading carrier- and cloud-neutral internet data center services provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2024.

 

“We delivered another solid quarter through continued strong execution of our effective dual-core development strategy,” said Josh Sheng Chen, Founder, Executive Chairperson and interim Chief Executive Officer of VNET. “The wholesale IDC business remained our key growth driver, highlighted by three new orders totaling 235MW for our Ulanqab IDC Campus in the Greater Beijing Area. Climbing utilization rates and a high pre-commitment rate for capacity under construction demonstrate our reliable, high-quality IDC services’ enduring customer appeal in the competitive market. Furthermore, we advanced our AI data center development with steady progress on our green, high-tech Ulanqab IDC Campus, enabling us to seamlessly meet the increasing AI-driven demand. Going forward, we will continue to strengthen our innovative service offerings, vast high-power density resources and diverse AI-related capabilities to drive our healthy development and create value for all of our stakeholders.”

 

Qiyu Wang, Chief Financial Officer of VNET, commented, “In the second quarter, we remained focused on high-quality revenue businesses while enhancing efficiency and profitability, tactics that continued to yield positive outcomes. Our total net revenues increased by 9.4% year over year to RMB1.99 billion, mainly driven by wholesale revenue growth of 81% year over year, while operating expenses decreased by 7.7% year over year and 36.8% quarter over quarter. Our adjusted EBITDA also grew by 7.3% year over year to RMB573.8 million. In addition, we recorded a net income of RMB71.8 million in the second quarter, a significant improvement from the net loss of RMB159.0 million in the first quarter of 2024, representing a quarter over quarter increase of RMB230.9 million, thanks to our consistent operational improvements. Supported by our robust business fundamentals and healthy cash position, we will continue to invest in our core capabilities and AI-driven opportunities, propelling high-quality, sustainable growth.”

 

Second Quarter 2024 Financial Highlights

 

·Total net revenues increased by 9.4% to RMB1.99 billion (US$274.4 million) from RMB1.82 billion in the same period of 2023.

 

·Net revenues from the IDC business1 increased by 12.1% to RMB1.37 billion (US$188.1 million) from RMB1.22 billion in the same period of 2023.

 

·Net revenues from the wholesale IDC business (“wholesale revenues”) increased by 81.0% to RMB402.0 million (US$55.3 million) from RMB222.1 million in the same period of 2023.

 

·Net revenues from the retail IDC business (“retail revenues”) decreased by 3.2% to RMB964.8 million (US$132.8 million) from RMB996.6 million in the same period of 2023.

 

·Net revenues from the non-IDC business2 increased by 4.0% to RMB627.0 million (US$86.3 million) from RMB603.1 million in the same period of 2023.

 

·Adjusted cash gross profit (non-GAAP) increased by 6.0% to RMB787.3 million (US$108.3 million) from RMB742.9 million in the same period of 2023. Adjusted cash gross margin (non-GAAP) was 39.5%, compared with 40.8% in the same period of 2023.

 

·Adjusted EBITDA (non-GAAP) increased by 7.3% to RMB573.8 million (US$79.0 million) from RMB535.0 million in the same period of 2023. Adjusted EBITDA margin (non-GAAP) was 28.8%, compared with 29.4% in the same period of 2023.

 

·Net income increased by RMB309.4 million and RMB230.9 million to RMB71.8 million (US$9.9 million) in the second quarter, compared with a net loss of RMB237.6 million in the same period of 2023 and a net loss of RMB159.0 million in the first quarter of 2024, respectively.

 

 

1 IDC business refers to managed hosting services, consisting of the wholesale IDC business and the retail IDC business. Beginning in the first quarter of 2024, our IDC business was subdivided into wholesale IDC business and retail IDC business according to the nature and scale of our data center projects. Prior to 2024, the subdivision was based on customer contract types.

2 Non-IDC business consists of cloud services and VPN services.

 

 

 

 

 

 

Second Quarter 2024 Operational Highlights

 

Wholesale IDC Business3

 

·Capacity in service was 332MW as of June 30, 2024, compared with 332MW as of March 31, 2024, and 224MW as of June 30, 2023. Capacity under construction was 279MW as of June 30, 2024.

 

·Capacity utilized by customers reached 252MW as of June 30, 2024, compared with 236MW as of March 31, 2024, and 142MW as of June 30, 2023. The sequential increase during the second quarter of 2024 was 16MW, which was mainly contributed by E-JS Campus 02 C data center.

 

·Utilization rate4 of wholesale capacity was 75.9% as of June 30, 2024, compared with 71.0% as of March 31, 2024, and 63.4% as of June 30, 2023.

 

·Utilization rate of mature wholesale capacity5 was 94.9% as of June 30, 2024, compared with 94.6% as of March 31, 2024, and 94.2% as of June 30, 2023.

 

·Utilization rate of ramp-up wholesale capacity6 was 45.7% as of June 30, 2024, compared with 33.6% as of March 31, 2024, and 39.9% as of June 30, 2023.

 

·Total capacity committed7 was 326MW as of June 30, 2024, compared with 326MW as of March 31, 2024, and 194MW as of June 30, 2023.

 

·Commitment rate8 for capacity in service was 98.1% as of June 30, 2024, compared with 98.1% as of March 31, 2024 and 86.7% as of June 30, 2023.

 

·Total capacity pre-committed9 was 238MW and pre-commitment rate10 for capacity under construction was 85.5% as of June 30, 2024.

 

Retail IDC Business11

 

·Capacity in service was 52,177 cabinets as of June 30, 2024, compared with 52,068 cabinets as of March 31, 2024, and 53,702 cabinets as of June 30, 2023.

 

·Capacity utilized by customers reached 33,253 cabinets as of June 30, 2024, compared with 33,312 cabinets as of March 31, 2024, and 33,320 cabinets as of June 30, 2023.

 

·Utilization rate of retail capacity was 63.7% as of June 30, 2024, compared with 64.0% as of March 31, 2024, and 62.0% as of June 30, 2023.

 

·Utilization rate of mature retail capacity12 was 72.5% as of June 30, 2024, compared with 72.8% as of March 31, 2024, and 73.5% as of June 30, 2023.

 

·Utilization rate of ramp-up retail capacity13 was 12.7% as of June 30, 2024, compared with 13.0% as of March 31, 2024, and 16.3% as of June 30, 2023.

 

 

3 For wholesale IDC business, certain projects hosted in our E-JS02 data center with an aggregate of 27MW capacity were excluded and are expected to be continuously excluded from in-service wholesale due to pending commercial discussion with the client. Such projects were included as in-service wholesale from the first quarter of 2021 to the fourth quarter of 2023, given that such projects had been delivered to the client based on the terms of the MOU.

4 Utilization rate is calculated by dividing capacity utilized by customers by the capacity in service.

5 Mature wholesale capacity refers to wholesale data centers in which utilization rate is at or above 80%.

6 Ramp-up wholesale capacity refers to wholesale data centers in which utilization rate is below 80%.

7 Total capacity committed is the capacity committed to customers pursuant to customer agreements remaining in effect.

8 Commitment rate is calculated by total capacity committed divided by total capacity in service.

9 Total capacity pre-committed is the capacity under construction which is pre-committed to customers pursuant to customer agreements remaining in effect.

10 Pre-commitment rate is calculated by total capacity pre-committed divided by total capacity under construction.

11 For retail IDC business, since the first quarter of 2024, we have excluded a certain number of reserved cabinets from the capacity in service. Reserved cabinets refer to those that have not been utilized on a large scale, those that are planned to be closed, or those that are planned to be further upgraded. As of June 30, 2023, March 31, 2024, and June 30, 2024, 4,426, 4,426, and 4,150 reserved cabinets, respectively, were excluded from the calculation of utilization rate of retail IDC business capacity.

12 Mature retail capacity refers to retail data centers that came into service prior to the past 24 months.

13 Ramp-up retail capacity refers to retail data centers that came into service within the past 24 months, or mature retail data centers that have undergone improvements within the past 24 months.

 

 

 

 

 

 

·Monthly recurring revenue (MRR) per retail cabinet was RMB8,753 in the second quarter of 2024, compared with RMB8,742 in the first quarter of 2024 and RMB8,931 in the second quarter of 2023.

 

Second Quarter 2024 Financial Results

 

TOTAL NET REVENUES: Total net revenues in the second quarter of 2024 were RMB1.99 billion (US$274.4 million), representing an increase of 9.4% from RMB1.82 billion in the same period of 2023. The year-over-year increase was mainly driven by the continued growth of our wholesale IDC business.

 

Net revenues from IDC business increased by 12.1% to RMB1.37 billion (US$188.1 million) from RMB1.22 billion in the same period of 2023. The year-over-year increase was mainly driven by an increase in wholesale revenues and partially offset by a decrease in retail revenues.

 

·Wholesale revenues increased by 81.0% to RMB402.0 million (US$55.3 million) from RMB222.1 million in the same period of 2023.

 

·Retail revenues decreased to RMB964.8 million (US$132.8 million) from RMB996.6 million in the same period of 2023.

 

Net revenues from non-IDC business increased by 4.0% to RMB627.0 million (US$86.3 million) from RMB603.1 million in the same period of 2023. The year-over-year increase was driven by cloud and VPN businesses.

 

GROSS PROFIT: Gross profit in the second quarter of 2024 was RMB424.9 million (US$58.5 million), representing an increase of 24.0% from RMB342.7 million in the same period of 2023. Gross margin in the second quarter of 2024 was 21.3%, compared with 18.8% in the same period of 2023. The year-over-year increase was primarily attributable to a reduction in depreciation expense due to the change in the estimated useful lives of property and equipment starting from January 1, 2024.

 

ADJUSTED CASH GROSS PROFIT (non-GAAP), which excludes depreciation, amortization, and share-based compensation expenses, was RMB787.3 million (US$108.3 million) in the second quarter of 2024, compared with RMB742.9 million in the same period of 2023. Adjusted cash gross margin (non-GAAP) in the second quarter of 2024 was 39.5%, compared with 40.8% in the same period of 2023.

 

OPERATING EXPENSES: Total operating expenses in the second quarter of 2024 were RMB230.3 million (US$31.7 million), compared with RMB249.5 million in the same period of 2023. The decrease in operating expenses was primarily due to a decrease in professional service fees and personnel costs.

 

Sales and marketing expenses were RMB58.2 million (US$8.0 million) in the second quarter of 2024, compared with RMB63.1 million in the same period of 2023.

 

Research and development expenses were RMB62.0 million (US$8.5 million) in the second quarter of 2024, compared with RMB81.1 million in the same period of 2023.

 

General and administrative expenses were RMB107.3 million (US$14.8 million) in the second quarter of 2024, compared with RMB128.0 million in the same period of 2023.

 

ADJUSTED OPERATING EXPENSES (non-GAAP), which exclude share-based compensation expenses, were RMB243.2 million (US$33.5 million) in the second quarter of 2024, compared with RMB241.5 million in the same period of 2023. As a percentage of total net revenues, adjusted operating expenses (non-GAAP) in the second quarter of 2024 were 12.2%, compared with 13.3% in the same period of 2023.

 

ADJUSTED EBITDA (non-GAAP): Adjusted EBITDA in the second quarter of 2024 was RMB573.8 million (US$79.0 million), representing an increase of 7.3% from RMB535.0 million in the same period of 2023. Adjusted EBITDA margin (non-GAAP) in the second quarter of 2024 was 28.8%, compared with 29.4% in the same period of 2023.

 

 

 

 

 

 

NET INCOME/LOSS ATTRIBUTABLE TO VNET GROUP, INC.: Net income attributable to VNET Group, Inc. in the second quarter of 2024 was RMB63.7 million (US$8.8 million), compared with a net loss attributable to VNET Group, Inc. of RMB232.9 million in the same period of 2023. The year-over-year increase was mainly due to our consistent operational improvement and decreases in sales and marketing expenses, research and development expenses, general and administrative expenses and foreign exchange loss.

 

EARNINGS PER SHARE: Basic and diluted earnings per share in the second quarter of 2024 were both RMB0.04 (US$0.01), equivalent to both RMB0.24 (US$0.06) per American depositary share (“ADS”). Each ADS represents six Class A ordinary shares. Diluted earnings per share is calculated using adjusted net income attributable to ordinary shareholders divided by the weighted average number of diluted shares outstanding.

 

LIQUIDITY: As of June 30, 2024, the aggregate amount of the Company’s cash and cash equivalents, restricted cash and short-term investments was RMB2.22 billion (US$306.0 million).

 

Total short-term debt consisting of short-term bank borrowings and the current portion of long-term borrowings was RMB1.67 billion (US$230.1 million). Total long-term debt was RMB8.45 billion (US$1.16 billion), comprised of long-term borrowings of RMB6.67 billion (US$917.7 million) and convertible promissory notes of RMB1.78 billion (US$245.1 million).

 

Net cash generated from operating activities in the second quarter of 2024 was RMB405.2 million (US$55.8 million), compared with RMB423.5 million in the same period of 2023. During the second quarter of 2024, the Company obtained new debt financing, refinancing facilities and other financings of RMB1.45 billion (US$199.3 million).

 

Business Outlook

 

The Company expects total net revenues for 2024 to be between RMB7,800 million to RMB8,000 million, representing year-over-year growth of 5.2% to 7.9%, and adjusted EBITDA (non-GAAP) to be in the range of RMB2,220 million to RMB2,280 million, representing year-over-year growth of 8.9% to 11.8%. The above outlook remains unchanged from the previously provided estimates.

 

The forecast reflects the Company’s current and preliminary views on the market and its operational conditions and is subject to change.

 

Conference Call

 

The Company's management will host an earnings conference call at 9:00 PM U.S. Eastern Time on Tuesday, August 27, 2024, or 9:00 AM Beijing Time on Wednesday, August 28, 2024.

 

For participants who wish to join the call, please access the links provided below to complete the online registration process.

 

English line:

https://s1.c-conf.com/diamondpass/10041484-y4obcl.html

 

Chinese line (listen-only mode):

https://s1.c-conf.com/diamondpass/10041485-qdkvjp.html

 

Participants can choose between the English and Chinese options for pre-registration above. Please note that the Chinese option will be in listen-only mode. Upon registration, each participant will receive an email containing details for the conference call, including dial-in numbers, a conference call passcode and a unique access PIN, which will be used to join the conference call.

 

 

 

 

 

 

Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.vnet.com.

 

A replay of the conference call will be accessible through September 4, 2024, by dialing the following numbers:

 

US/Canada: 1 855 883 1031
Mainland China: 400 1209 216
Hong Kong, China: 800 930 639
International: +61 7 3107 6325
Replay PIN (English line): 10041484
Replay PIN (Chinese line): 10041485

 

Non-GAAP Disclosure

 

In evaluating its business, VNET considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission as a supplemental measure to review and assess its operating performance: adjusted cash gross profit, adjusted cash gross margin, adjusted operating expenses, adjusted EBITDA and adjusted EBITDA margin. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this press release.

 

The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors’ overall understanding of the Company’s current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company’s calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.

 

Exchange Rate

 

This announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB7.2672 to US$1.00, the noon buying rate in effect on June 28, 2024, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

 

Statement Regarding Unaudited Condensed Financial Information

 

The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information.

 

About VNET

 

VNET Group, Inc. is a leading carrier- and cloud-neutral internet data center services provider in China. VNET provides hosting and related services, including IDC services, cloud services, and business VPN services to improve the reliability, security, and speed of its customers’ internet infrastructure. Customers may locate their servers and equipment in VNET’s data centers and connect to China’s internet backbone. VNET operates in more than 30 cities throughout China, servicing a diversified and loyal base of over 7,500 hosting and related enterprise customers that span numerous industries ranging from internet companies to government entities and blue-chip enterprises to small- to mid-sized enterprises.

 

 

 

 

 

 

Safe Harbor Statement

 

This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "target," "believes," "estimates" and similar statements. Among other things, quotations from management in this announcement as well as VNET's strategic and operational plans contain forward-looking statements. VNET may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about VNET's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: VNET's goals and strategies; VNET's liquidity conditions; VNET's expansion plans; the expected growth of the data center services market; expectations regarding demand for, and market acceptance of, VNET's services; VNET's expectations regarding keeping and strengthening its relationships with customers; VNET's plans to invest in research and development to enhance its solution and service offerings; and general economic and business conditions in the regions where VNET provides solutions and services. Further information regarding these and other risks is included in VNET's reports filed with, or furnished to, the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and VNET undertakes no duty to update such information, except as required under applicable law.

 

Investor Relations Contact:

 

Xinyuan Liu

Tel: +86 10 8456 2121

Email: ir@vnet.com

 

 

 

 

VNET GROUP, INC.

CONSOLIDATED BALANCE SHEETS

 (Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))

 

   As of   As of 
   December 31, 2023   June 30, 2024 
   RMB   RMB   US$ 
Assets             
Current assets:               
Cash and cash equivalents   2,243,537    1,796,105    247,152 
Restricted cash   2,854,568    338,846    46,627 
Accounts and notes receivable, net   1,715,975    1,802,572    248,042 
Short-term Investments   356,820    87,871    12,091 
Prepaid expenses and other current assets   2,375,341    2,673,585    367,898 
Amounts due from related parties   277,237    345,408    47,530 
Total current assets   9,823,478    7,044,387    969,340 
                
Non-current assets:               
Property and equipment, net   13,024,393    14,281,580    1,965,211 
Intangible assets, net   1,383,406    1,340,625    184,476 
Land use rights, net   602,503    593,309    81,642 
Operating lease right-of-use assets, net   4,012,329    4,384,000    603,258 
Restricted cash   882    882    121 
Deferred tax assets, net   247,644    285,199    39,245 
Long-term investments, net   757,949    816,423    112,344 
Other non-current assets   533,319    372,144    51,209 
Total non-current assets   20,562,425    22,074,162    3,037,506 
Total assets   30,385,903    29,118,549    4,006,846 
                
Liabilities and Shareholders' Equity               
Current liabilities:               
Short-term bank borrowings   30,000    562,270    77,371 
Accounts and notes payable   696,177    726,827    100,015 
Accrued expenses and other payables   2,783,102    2,717,898    373,995
Advances from customers   1,605,247    1,530,852    210,652 
Deferred revenue   95,477    87,103    11,986 
Income taxes payable   35,197    61,930    8,522 
Amounts due to related parties   356,080    379,070    52,162 
Current portion of long-term borrowings   723,325    1,110,202    152,769 
Current portion of finance lease liabilities   115,806    95,687    13,167 
Current portion of deferred government grants   8,062    10,311    1,419 
Current portion of operating lease liabilities   780,164    860,446    118,401 
Convertible promissory notes   4,208,495    -    - 
Total current liabilities   11,437,132    8,142,596    1,120,459 
                
Non-current liabilities:               
Long-term borrowings   5,113,521    6,668,842    917,663 
Convertible promissory notes   1,769,946    1,781,082    245,085 
Non-current portion of finance lease liabilities   1,159,525    1,142,194    157,171 
Unrecognized tax benefits   98,457    98,457    13,548 
Deferred tax liabilities   688,362    698,162    96,070 
Deferred government grants   145,112    260,876    35,898 
Non-current portion of operating lease liabilities   3,270,759    3,596,438    494,886 
Derivative liability   188,706    185,297    25,498 
Total non-current liabilities   12,434,388    14,431,348    1,985,819 
                
Shareholders' equity               
Ordinary shares   107    109    15 
Additional paid-in capital   17,291,312    17,260,924    2,375,182 
Accumulated other comprehensive loss   (14,343)   (20,084)   (2,764)
Statutory reserves   80,615    80,615    11,093 
Accumulated deficit   (11,016,323)   (11,139,653)   (1,532,867)
Treasury stock   (326,953)   (173,427)   (23,864)
Total VNET Group, Inc. shareholders’ equity   6,014,415    6,008,484    826,795 
Noncontrolling interest   499,968    536,121    73,773 
Total shareholders' equity   6,514,383    6,544,605    900,568 
Total liabilities and shareholders' equity   30,385,903    29,118,549    4,006,846 

 

 

 

 

VNET GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)

 

   Three months ended   Six months ended 
   June 30, 2023   March 31, 2024   June 30, 2024   June 30, 2023   June 30, 2024 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Net revenues   1,821,744    1,898,126    1,993,760    274,351    3,627,526    3,891,886    535,541 
Cost of revenues   (1,478,995)   (1,487,405)   (1,568,865)   (215,883)   (2,932,397)   (3,056,270)   (420,557)
Gross profit   342,749    410,721    424,895    58,468    695,129    835,616    114,984 
                                    
Operating income (expenses)                                   
Operating income   13,895    3,949    -    -    47,274    3,949    543 
Sales and marketing expenses   (63,068)   (71,743)   (58,225)   (8,012)   (128,844)   (129,968)   (17,884)
Research and development expenses   (81,126)   (75,389)   (61,998)   (8,531)   (160,876)   (137,387)   (18,905)
General and administrative expenses   (128,017)   (226,297)   (107,297)   (14,765)   (255,464)   (333,594)   (45,904)
Reversal of (allowance for) doubtful debt   8,833    5,175    (2,753)   (379)   11,282    2,422    333 
Total operating expenses   (249,483)   (364,305)   (230,273)   (31,687)   (486,628)   (594,578)   (81,817)
                                    
Operating profit   93,266    46,416    194,622    26,781    208,501    241,038    33,167 
Interest income   10,038    12,129    5,449    750    15,719    17,578    2,419 
Interest expense   (71,709)   (137,682)   (92,172)   (12,683)   (141,495)   (229,854)   (31,629)
Other income   14,192    4,814    30,475    4,193    15,356    35,289    4,856 
Other expenses   (320)   (1,422)   (6,900)   (949)   (3,912)   (8,322)   (1,145)
Changes in the fair value of financial liabilities   154    3,858    712    98    21,452    4,570    629 
Foreign exchange loss   (271,630)   (28,361)   (4,387)   (604)   (192,997)   (32,748)   (4,506)
(Loss) income before income taxes and gain from equity method investments   (226,009)   (100,248)   127,799    17,586    (77,376)   27,551    3,791 
Income tax expenses   (12,545)   (61,384)   (59,149)   (8,139)   (57,431)   (120,533)   (16,586)
Gain from equity method investments   983    2,606    3,199    440    809    5,805    799 
Net (loss) income   (237,571)   (159,026)   71,849    9,887    (133,998)   (87,177)   (11,996)
Net loss (income) attributable to noncontrolling interest   4,692    (27,979)   (8,174)   (1,125)   (16,588)   (36,153)   (4,975)
Net (loss) income attributable to the VNET Group, Inc.   (232,879)   (187,005)   63,675    8,762    (150,586)   (123,330)   (16,971)
                                    
(Loss) earnings per share                                   
Basic   (0.26)   (0.12)   0.04    0.01    (0.17)   (0.08)   (0.01)
Diluted   (0.26)   (0.12)   0.04    0.01    (0.19)   (0.08)   (0.01)
Shares used in (loss) earnings per share computation                                   
Basic*   888,705,981    1,568,300,360    1,594,662,099    1,594,662,099    888,555,145    1,581,481,229    1,581,481,229 
Diluted*   888,705,981    1,568,300,360    1,595,517,338    1,595,517,338    905,386,636    1,581,481,229    1,581,481,229 
                                    
(Loss) earnings per ADS (6 ordinary shares equal to 1 ADS)                                   
Basic   (1.56)   (0.72)   0.24    0.06    (1.02)   (0.48)   (0.06)
Diluted   (1.56)   (0.72)   0.24    0.06    (1.14)   (0.48)   (0.06)

 

* Shares used in (loss) earnings per share/ADS computation were computed under weighted average method.

 

 

 

 

VNET GROUP, INC.

RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))

 

   Three months ended   Six months ended 
   June 30, 2023   March 31, 2024   June 30, 2024   June 30, 2023   June 30, 2024 
   RMB   RMB   RMB   US$   RMB   RMB   US$ 
Gross profit   342,749    410,721    424,895    58,468    695,129    835,616    114,985 
Plus: depreciation and amortization   400,173    352,604    364,616    50,173    802,050    717,220    98,693 
Plus: share-based compensation expenses   -    2,190    (2,190)   (301)   -    -    - 
Adjusted cash gross profit   742,922    765,515    787,321    108,340    1,497,179    1,552,836    213,678 
Adjusted cash gross margin   40.8%   40.3%   39.5%   39.5%   41.3%   39.9%   39.9%
                                    
Operating expenses   (249,483)   (364,305)   (230,273)   (31,687)   (486,628)   (594,578)   (81,817)
Plus: share-based compensation expenses   8,006    111,681    (12,962)   (1,784)   16,342    98,719    13,584 
Adjusted operating expenses   (241,477)   (252,624)   (243,235)   (33,471)   (470,286)   (495,859)   (68,233)
                                    
Operating profit   93,266    46,416    194,622    26,781    208,501    241,038    33,168 
Plus: depreciation and amortization   433,735    379,551    394,334    54,262    866,364    773,885    106,490 
Plus: share-based compensation expenses   8,006    113,871    (15,152)   (2,085)   16,342    98,719    13,584 
Adjusted EBITDA   535,007    539,838    573,804    78,958    1,091,207    1,113,642    153,242 
Adjusted EBITDA margin   29.4%   28.4%   28.8%   28.8%   30.1%   28.6%   28.6%

 

 

 

 

VNET GROUP, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))

 

   Three months ended 
   June 30, 2023   March 31, 2024   June 30, 2024 
   RMB   RMB   RMB   US$ 
CASH FLOWS FROM OPERATING ACTIVITIES                    
Net (loss) income   (237,571)   (159,026)   71,849    9,887 
Adjustments to reconcile net (loss) income to net cash generated from operating activities:                    
Depreciation and amortization   433,015    377,086    388,711    53,488 
Share-based compensation expenses   8,006    113,871    (15,152)   (2,085)
Others   357,787    137,297    101,890    14,021 
Changes in operating assets and liabilities                    
Accounts and notes receivable   8,388    (226,973)   142,469    19,604 
Prepaid expenses and other current assets   70,627    (44,104)   (79,893)   (10,993)
Accounts and notes payable   33,434    77,668    (47,018)   (6,470)
Accrued expenses and other payables   (5,950)   56,105    (61,463)   (8,458)
Deferred revenue   (35,743)   5,626    (14,000)   (1,926)
Advances from customers   (114,977)   (11,090)   (63,305)   (8,711)
Others   (93,540)   (58,873)   (18,884)   (2,599)
Net cash generated from operating activities   423,476    267,587    405,204    55,758 
                     
CASH FLOWS FROM INVESTING ACTIVITIES                    
Purchases of property and equipment   (394,812)   (1,005,368)   (998,489)   (137,397)
Purchases of intangible assets   (10,178)   (5,965)   (7,594)   (1,045)
(Payments for) proceeds from investments   (655,815)   359,239    (138,224)   (19,020)
Proceeds from other investing activities   9,295    1,154    117,209    16,128 
Net cash used in investing activities   (1,051,510)   (650,940)   (1,027,098)   (141,334)
                     
CASH FLOWS FROM FINANCING ACTIVITIES                    
Proceeds from bank borrowings   169,204    1,156,279    690,848    95,064 
Repayments of bank borrowings   (55,865)   (51,441)   (533,324)   (73,388)
Repurchase of 2025 Convertible Notes   (380,333)   -    -    - 
Repurchase of 2026 Convertible Notes   -    (4,262,340)   -    - 
Payments for finance leases   (67,172)   (39,602)   (9,586)   (1,319)
Proceeds from other financing activities   285,013    591,446    516,493    71,072 
Net cash (used in) generated from financing activities   (49,153)   (2,605,658)   664,431    91,429 
                    
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash   51,314    (20,050)   3,370    464 
Net (decrease) increase in cash, cash equivalents and restricted cash   (625,873)   (3,009,061)   45,907    6,317 
Cash, cash equivalents and restricted cash at beginning of period   3,242,842    5,098,987    2,089,926    287,583 
Cash, cash equivalents and restricted cash at end of period   2,616,969    2,089,926    2,135,833    293,900