VNET Group, Inc. · NASDAQ:VNET
VNET — Q3 2024 Earnings Presentation
34 slides from VNET's earnings presentation, Nov 21, 2024
Slide 1: Earnings Presentation for 3Q2024
VNET Group, Inc. Earnings Presentation for 3Q2024 November 21, 2024
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by VNET Group, Inc. (the “Company”) solely for informational purposes and has not been independently verified. No representations, warranties or undertakings, express or implied, are made by the Company or any of its affiliates, advisers or representati
Slide 3: Gavin Shen, Rotating President of VNET
Gavin Shen Rotating President of VNET 3
Slide 4: 3Q 2024 Highlights
3Q 2024 Highlights Financials (in RMB) Liquidity (in RMB) Revenue: 2,121 million (+12.4% YoY) Unused Credit Line: 1,491 million - Wholesale IDC Business: 523 million (+86.4% YoY) Adjusted EBITDA: 595 million (+20.2% YoY (1)) Cash Position (2): 2,098 million Wholesale IDC Business Updates Retail IDC
Slide 5: Largest IDC Customer Order Wins
Largest IDC Customer Order Wins Capacity Contracted Signing Time of Region IDC Code Customer Sector Project Type / Under MoU (MW) Contract / MoU 19 3Q24 IT Services Wholesale N-OR Campus 01 (1) 16 3Q24 IT Services Wholesale Greater Beijing Area N-HB Campus 01 32 3Q24 Internet Wholesale N-HB03 14 3Q2
Slide 6: Differentiated Business Model with Comprehensive Offerings
Differentiated Business Model with Comprehensive Offerings Managed Hosting Services Cloud Services VPN Services (1) (IDC) • Co-location • Multi-protocol Label Switching (MPLS) & • Interconnectivity Software-defined Wide Area Network (SD-WAN) • Hybrid IT Services • Internet Access & Network Security
Slide 7: Dual-Core Growth Strategy of IDC Business
Dual-Core Growth Strategy of IDC Business Wholesale Retail Hyperscale IDC Interconnectivity Services Retail Colocation Full-stack Services Targeting hyperscalers which require huge amount of space and power to Covering large and loyalty customer base across verticals including: financial services, s
Slide 8: AI Demand and Capability
AI Demand and Capability 98% of High Power Density 90% of AI demand Orders 30kW per Air Cooling Cabinet Capacity Matching Rate 120kW per Liquid Cooling Cabinet n Over 98% of our wholesale capacity in n During the past year, we have won around n Our advanced power modules and service is capable of me
Slide 9: Huailai Campus Project
Huailai Campus Project Efficiently meeting high-performance computing power needs of clients on the integration of training and inference for LLM models as well as model fine-tuning IT power of approximately 500MW, and planning to be built into a Gigawatt-Scale computing cluster Recently won a 32MW
Slide 10: Data Centers by Region
Data Centers by Region Wholesale Capacity In Service (358MW) Region % Yangtze River Delta 55.7% Greater Beijing Area 44.3% Total 100.0% Wholesale Capacity Under Construction (297MW) Ulanqab Region % Yangtze River Delta 37.7% BTH Greater Beijing Greater Beijing Area 62.3% Area Total 100.0% Xi‘an Whol
Slide 11: Wholesale Data Centers at a Glance - New Growth Driver
Wholesale Data Centers at a Glance - New Growth Driver Total Capacity in Service & Capacity Utilized (MW) Utilization Rate (1) 358 78.0% 332 332 332 75.9% 71.0% 65.8% 290 55.4% 279 252 236 219 09/30/2023 12/31/2023 03/31/2024 06/30/2024 09/30/2024 161 Mature & Ramp-up Capacity Contribution & Utiliza
Slide 12: Wholesale Data Centers – Backlog Growth
Wholesale Data Centers – Backlog Growth (MW) 1,139 1,145 1,028 -111 297 Company’s Expansion Pipeline to Support Long-term Growth Held for Future Development (Long-term) +61 408 347 Held for Future Development Robust Infrastructure and Operational Capabilities Enabling (Short-term) +72 192 Rapid Capa
Slide 13: Retail Data Centers at a Glance - Solid Foundation
Retail Data Centers at a Glance - Solid Foundation Total Capacity in Service (Cabinet) Utilization Rate (1) 52,200 52,233 52,068 52,177 52,250 3,814 3,740 3,565 3,661 3,734 64.8% 64.0% 64.0% 63.7% 63.1% 48,386 48,493 48,503 48,516 48,516 09/30/2023 12/31/2023 03/31/2024 06/30/2024 09/30/2024 09/30/2
Slide 14: Resource Pipeline for the Next 12 Months
Resource Pipeline for the Next 12 Months 9M24 Capacity 4Q24E-1Q25E Capacity 2Q25E-3Q25E Capacity Next 12M Total Region IDC Code Tenure Status (MW) (MW) (MW) (MW) E-JS Campus 02 D Owned In Service 26 - - - E-JS Campus 02 E Owned Under Construction - 65 - 65 Yangtze River Delta E-JS Campus 03 Owned Un
Slide 15: Qiyu Wang, Chief Financial Officer of VNET
Qiyu Wang Chief Financial Officer of VNET 15
Slide 16: 3Q24 Financial Highlights
3Q24 Financial Highlights RMB MM 3Q23 (After Retroactive Adjustment) 2Q24 3Q24 YoY QoQ Net revenues 1,887 1,994 2,121 12.4% 6.4% Gross profit 306 425 492 60.4% 15.7% Adjusted cash gross profit (1) 738 787 861 16.6% 9.3% Adjusted cash gross margin 39.1% 39.5% 40.6% 1.5 pps. 1.1 pps. Adjusted EBITDA (
Slide 17: Total Net Revenues Breakdown
Total Net Revenues Breakdown (RMB MM) 2,121 1,994 1,887 1,898 1,898 622 627 621 628 613 975 965 985 975 924 523 295 361 402 281 3Q23 4Q23 1Q24 2Q24 3Q24 (1) Wholesale IDC Business Retail IDC Business (1) Non-IDC Business (2) Source: Company data as of September 30, 2024 Notes: (1) IDC business refer
Slide 18: Healthy Margins through Efficiency Enhancement
Healthy Margins through Efficiency Enhancement Adjusted Cash Gross Profit & Margin (1) Adjusted EBITDA & Margin (2) (RMB MM) (RMB MM) 39.1% 39.1% 40.3% 39.5% 40.6% 26.2% 21.5% 28.2% 28.8% 28.0% 861 787 574 595 766 536 738 742 495 408 3Q23 4Q23 1Q24 2Q24 3Q24 3Q23 (3) 4Q23 (3) 1Q24 (3) 2Q24 3Q24 Adju
Slide 19: Strong Liquidity Position
Strong Liquidity Position Net Operating Cash Flow Cash Position (1) (RMB MM) (RMB MM) 2,440 357 US$600 million 407 2,063 Convertible Credit line availability: Senior RMB 1,491 MM unused Notes Repurchase 731 2,989 1,388 1,433 5,099 2,098 664 2,033 1,708 (2) 16 1,433 2,989 1,333 (2) 2,082 1,708 ~1,800
Slide 20: Well Laddered Debt Profile
Well Laddered Debt Profile Total Debt & Net Debt / TTM Adj. EBITDA (1) Debt Breakdown by Maturity (RMB MM) 6.4x 5.9x 1,862 5.6x 4.6x 3.9x 5.3x 4.9x 2,948 4.5x 3.9x 2,160 1,682 183 1,620 4,274 174 455 161 1.8x 1,978 36 1,446 1,105 419 2020 2021 2022 2023 3Q24 4Q24 2025 end 2026 end 2027 end 2028 and
Slide 21: Capex Paid by Year
Capex Paid by Year Capital Expenditure (1) Highlights (RMB MM) FY2024 Revised Guidance: 5,000 - 5,500 4,060 3,991 n Within the RMB3.35 billion capex for the first 9 months of 2024, 3,352 3,578 3,346 RMB2.30 billion was used for wholesale business expansion. n Our 2024 full-year capex guidance is RMB
Slide 22: Guidance
Guidance FY2024 Original FY2024 Revised RMB MM FY2023 Actual Implied YoY Implied YoY Guidance Guidance Revenues 7,413 7,800 - 8,000 5.2% - 7.9% 8,000 - 8,100 7.9% - 9.3% Adjusted EBITDA (1) 1,959 (2) 2,220 - 2,280 13.3% - 16.4% 2,280 - 2,300 16.4% - 17.4% Capex 3,578 5,000 - 5,500 39.7% - 53.7% Unch
Slide 23: Pre-REITs Project Updates
Pre-REITs Project Updates We plan to sign a definitive agreement by the end of 2024 for a pre-REITs fund with one of China’s leading insurance companies, which marks the first direct investment by a major Chinese insurance company in mature data center assets in China. • Estimated Value of IDC Asset
Slide 24: ESG Initiatives – Commitment to Sustainability
ESG Initiatives – Commitment to Sustainability Commitment to achieve both targets of operational carbon neutrality and 100% renewable energy usage by 2030 Received A rating by MSCI, representing the highest ranking to-date in China’s Internet Services & Infrastructure industry Scored 53 by the S&P C
Slide 25: Appendix
tec GH VNET Appendix
Slide 26: Wholesale Capacity in Service – Yangtze River Delta
Wholesale Capacity in Service – Yangtze River Delta Capacity in Service Capacity Utilized Total Capacity Region IDC Code Tenure Utilization Rate (2) Commitment Rate (3) (MW) (MW) Committed (1) (MW) E-JS Campus 01 Phase 1 Owned 28 26 28 91.1% 99.7% E-JS Campus 01 Phase 2 Owned 16 8 12 48.6% 75.2% E-J
Slide 27: Wholesale Capacity in Service – Greater Beijing Area
Wholesale Capacity in Service – Greater Beijing Area Capacity in Service Capacity Utilized Total Capacity Region IDC Code Tenure Utilization Rate (2) Commitment Rate (3) (MW) (MW) Committed (1) (MW) BJ15 Owned 9 3 7 36.7% 77.7% N-HB02 Phase 1 Owned 28 28 28 98.2% 99.3% N-HB02 Phase 2 Leased 19 14 19
Slide 28: Wholesale Capacity Under Construction & Held for Future Development
Wholesale Capacity Under Construction & Held for Future Development Under Construction Capacity Under Total Capacity Region IDC Code Tenure Pre-commitment rate (2) Ready for Service Construction (MW) Pre-committed (MW) (1) E-JS Campus 02 E Owned 65 65 100.0% 2H24 Yangtze River Delta E-JS Campus 03 O
Slide 29: Key P&L Items
Key P&L Items Three months ended Amount in thousands September 30, 2023 June 30, 2024 September 30, 2024 RMB RMB RMB US$ Net revenues 1,886,924 1,993,760 2,120,794 302,211 Cost of revenues (1,580,446) (1,568,865) (1,629,111) (232,146) Gross profit 306,478 424,895 491,683 70,065 Sales and marketing e
Slide 30: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Three months ended Amount in thousands September 30, 2023 June 31, 2024 September 30, 2024 RMB RMB RMB US$ Gross profit 306,478 424,895 491,683 70,065 Plus: depreciation and amortization 431,933 364,616 368,764 52,548 Plus: share-based compensation expenses - (2,190)
Slide 31: Key Balance Sheet Items
Key Balance Sheet Items As of As of Amount in thousands December 31, 2023 September 30, 2024 RMB RMB US$ Cash, cash equivalents and Restricted cash 5,098,987 2,081,967 296,678 Accounts and notes receivable, net 1,715,975 1,861,828 265,308 Property and equipment, net 13,024,393 15,153,253 2,159,321 L
Slide 32: Key Cash Flow Items
Key Cash Flow Items Three months ended Amount in thousands September 30, 2023 June 30, 2024 September 30, 2024 RMB RMB RMB US$ Net cash generated from operating activities 454,313 405,204 760,366 108,350 Net cash used in investing activities (750,146) (1,027,098) (1,336,510) (190,450) Net cash (used
Slide 33: Definitions
Definitions Term Definition 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 IDC Business subdivided into wholesale IDC business and retail IDC business according to the
Slide 34: THANKS!
THANKS! http://ir.vnet.com Email: [email protected] IR Contact: Xinyuan Liu