VNET Group (VNET -6.52%) reported second quarter 2025 results on August 21, 2025, with total net revenues (GAAP) rising 22.1% year-over-year to RMB 2.43 billion and adjusted EBITDA increased 27.7% year-over-year to RMB 732.5 million, driven by a rapid expansion in wholesale data center capacity and strong AI-driven customer demand. Management raised full-year 2025 revenue and adjusted EBITDA guidance, announced a $50 million share repurchase program in late June 2025, and detailed execution progress on its long-term AIDC (Artificial Intelligence Data Center) hyperscale strategy. Key takeaways focus on VNET’s accelerated wholesale growth, deployment of technology-driven modular construction, and evolving capital management approach.

Wholesale IDC capacity surges, fueling VNET revenue growth

Wholesale in-service capacity grew 17.5% quarter-over-quarter to 674 megawatts, while utilized wholesale capacity increased 17% quarter-over-quarter to 511 megawatts, with utilization rates stable at 75.9%. Wholesale revenue soared 112.5% year-over-year to RMB 854.1 million, outpacing retail and non-IDC segment growth.

Our adjusted EBITDA for the second quarter also increased by 27.7% year over year to RMB 732,000,000, with an adjusted EBITDA margin of 30.1%, up 1.3 percentage points year over year."
-- Ju Ma, Rotating President
"In the second quarter, wholesale revenues, our key revenue growth driver, increased significantly by 112.5% to RMB 854,100,000, mainly attributable to sales at the NOR Campus 01 and EJS Campus 03. Retail revenues continue to account for the largest part of our total net revenues, reaching RMB 959,000,000 for the second quarter."

This outsized wholesale expansion demonstrates successful execution on hyperscale client onboarding while intensifying capital needs and operational complexity.

VNET’s modular approach accelerates data center delivery

VNET’s adoption of standardized building modules and modular data center (MDC) technologies has shortened delivery cycles by one-third versus traditional construction, supporting the company’s ability to deliver 400–450 megawatts in 2025—approximately three times 2024’s total deliveries. Implementation has begun in Inner Mongolia, Hebei Province, and Beijing, underpinning structural cost and speed advantages versus conventional peers.

"our building standardization technology utilizes standardized modules as data centers' core building units, allowing us to rapidly construct data centers tailored to diverse customer needs. This method cuts construction cycles by one-third compared to traditional construction methods. Additionally, our modular data center technology integrates various functions, including power supply systems, cooling systems, etc, into separate functional modules. These modules are manufactured and pretested in factories and shipped to data center sites for installation, which significantly enhances our installation efficiency. They can also be swapped out, allowing us to selectively upgrade only specific modules instead of entire systems, reducing improvement costs and extending data centers' life cycles."
-- Ju Ma, Rotating President

This technology-led construction strategy enables VNET to flexibly meet surging AI-driven customer requirements and improve asset efficiency.

Capital deployment intensifies with REITs and share buyback

VNET maintained total cash, cash equivalents, restricted cash, and short-term investments of RMB 4.66 billion as of June 30, 2025, with net operating cash flow for the first half of 2025 reached RMB 562,300,000, and As of June 30, 2025, the net debt-to-trailing twelve months adjusted EBITDA ratio was 5.3. Management is ramping up CapEx to a guided range of RMB 10 billion to RMB 12 billion for full year 2025, primarily to support record data center deliveries, and has initiated both public and private Real Estate Investment Trust (REIT) structures alongside a $50 million U.S. dollar repurchase authorization.

"For the projects, we have been actively promoting the REIT projects. We have the public and also the private REITs. We have four to five. As mentioned, this year through the REIT project, we have to have our recovery of RMB 2,000,000,000."
-- Ju Ma, Rotating President

Pursuing multiple new capital channels, including REITs and share buybacks, reflects an active capital management strategy to balance growth funding, enhance valuation, and return value to shareholders even as net leverage remains elevated due to the build cycle.

Looking Ahead

For full-year 2025, VNET raised total net revenue guidance to RMB 9.15 billion to RMB 9.35 billion (up 11%–13% year-over-year) and adjusted EBITDA guidance to RMB 2.76 billion to RMB 2.82 billion (up 14%–16%), noting that growth would be 18%–20% excluding a 2024 disposal gain. Management confirmed a delivery pipeline of 326 megawatts over the next twelve months, accelerated AI-centric client demand, and reiterated plans to grow managed capacity to 10 gigawatts by 2036 under its hyperscale 2.0 strategy.