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Date
Thursday, Aug. 21, 2025 at 8 a.m. ET
Call participants
Rotating President — Ju Ma
Chief Financial Officer — Qiyu Wang
Board Director — Xinyuan Liu
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Takeaways
Wholesale IDC capacity in service-- Grew by 17.5% quarter over quarter in Q2 2025, reaching 674 megawatts at June 30, 2025, with customer-utilized capacity growing 17% to 511 megawatts, and utilization rate at 75.9%.
Total net revenues-- Increased 22.1% year over year to RMB 2,430,000,000 for Q2 2025, driven by wholesale segment growth.
Wholesale revenues-- Reached RMB 854,100,000, up 112.5% year over year, mainly from sales at NOR Campus 01 and EJS Campus 03.
Adjusted EBITDA-- Rose 27.7% year over year to RMB 732,500,000 in the second quarter of 2025, with an adjusted EBITDA margin of 30.1%, a 1.3 percentage point increase year over year.
Adjusted cash gross profit-- Increased 34.9% year over year to RMB 1,060,000,000 in the second quarter of 2025; adjusted cash gross margin improved to 43.6% in Q2 2025 from 39.5% in Q2 2024.
Retail revenues-- Accounted for the largest portion of total net revenues at RMB 959,000,000; retail capacity in service reached 52,131, with utilization rising to 63.9%; MRR per retail cabinet climbed to RMB 8,915.
Non-IDC revenues-- Recorded at RMB 621,000,000, reflecting expansion into consulting, and intelligent driving verticals.
New orders secured-- Won approximately 4 megawatts in retail (IT Services, Internet, AIoT, Financial Services), and a 20 megawatt wholesale order from a major cloud services provider for the Hebei project.
Capacity under construction-- Reported at 326 megawatts as of June 2025, with a precommitment rate of 55.2% at June 30, 2025, alongside 374 megawatts reserved for short-term, and 418 megawatts for long-term future development.
Delivery plan-- Targeting delivery of 326 megawatts over the next twelve months—227 megawatts in the second half of 2025, and 99 megawatts in 2026.
Liquidity position-- Ended the quarter with RMB 4,660,000,000 in cash and equivalents, restricted cash, and short-term investments; net operating cash inflow was RMB 366,600,000.
Debt metrics-- Net debt to trailing twelve months adjusted EBITDA was 5.3; 44.1% of total debt matures from 2025 to 2027.
CapEx-- Incurred RMB 3,890,000,000 in capital expenditures year to date in 2025; full-year 2025 CapEx expected at RMB 10,000,000,000–RMB 12,000,000,000.
Buyback authorization-- Board approved a share repurchase program up to US$50,000,000 over twelve months.
Upgraded 2025 guidance-- Fiscal 2025 total net revenue (GAAP) is guided to RMB 9,150,000,000–RMB 9,350,000,000 (up 11%–13%), adjusted EBITDA (non-GAAP) to RMB 2,760,000,000–RMB 2,820,000,000 (up 14%–16%) for the full year; adjusted EBITDA growth would be 18%–20% excluding RMB 87,700,000 EJS 02 disposal gain in 2024. Fiscal 2025 period ends Dec. 31, 2025.
AIDC hyperscale 2.0 strategy-- Announced aim to manage 10 gigawatts of data center assets by 2036, leveraging modular and standardized build technologies for faster, more flexible deployments.
ESG recognition-- Received "A grade" from the Carbon Disclosure Project for supplier engagement, with acknowledgment as a supplier engagement leader in low-carbon technology, and energy efficiency initiatives.
Summary
VNET Group(VNET -8.33%) reported accelerated growth in wholesale data center capacity and revenues in Q2 2025, fueled by robust customer demand and rapid move-ins, particularly within AI-focused sectors. Management highlighted new strategic wins across both retail and wholesale segments, supported by technology-driven efficiencies that reduce build times and enhance operational flexibility. The company raised its fiscal 2025 guidance for both revenue and adjusted EBITDA (non-GAAP), citing strong execution and elevated customer commitments. New modular construction techniques were showcased as a driver for future scalability, targeting a tenfold capacity expansion by 2036. Management emphasized prudent balance sheet measures, including a new share buyback and active debt maturity management, while maintaining high liquidity. Recent ESG accolades further advance the company’s narrative around sustainable growth and industry leadership.
Ju Ma said, "the demand for AI remains unchanged," and indicated customer orders continue to be predominantly AI-driven.
Management noted a "one-off income" in wholesale MRR attributed to increased electricity bill revenues during Q2 2025.
Ju Ma confirmed a "recovery of RMB 2,000,000,000" through ongoing REIT-related projects in 2025.
Management reported that "the orders at hand for our client will not be affected" by AI chip supply constraints, but continues to monitor developments with suppliers such as NVIDIA.
There was acknowledgment of a slight sequential revenue decline in retail IDC during Q2 2025, which management characterized as "within the reasonable range," and projected a stable or increasing trend going forward.
Industry glossary
IDC: Internet Data Center; a facility to house servers and IT infrastructure for cloud, managed hosting, and network connectivity services.
AIDC: Artificial Intelligence Data Center; a data center specially designed and equipped for AI workloads, such as training and inference operations.
MRR: Monthly Recurring Revenue; recurring monthly income earned per unit (e.g., per data center cabinet).
MSR: Monthly Service Revenue; monthly revenue generated per major service contract, particularly in wholesale data center operations.
REIT: Real Estate Investment Trust; a vehicle for financing and managing income-producing real estate, in this context, referring to securitization of data center assets via public or private market structures.
Full Conference Call Transcript
Xinyuan Liu: Thank you, Operator. Hello, everyone, and welcome to our Second Quarter 2025 Earnings Conference Call. Our earnings release was distributed earlier today, and you can find a copy on our IR site as well as on newswire services. Please note that today's call will contain forward-looking statements made under the safe harbor provisions of The US Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report and other documents filed with the SEC.
VNET does not undertake any obligations to update any forward-looking statements except as required under applicable laws. Please also note that VNET's earnings press release and this conference call include the disclosure of unaudited GAAP and non-GAAP financial matters. VNET's earnings press release contains reconciliation of the unaudited non-GAAP matters to the unaudited GAAP matters. A summary presentation we will refer to during this conference call can be viewed and downloaded from our website at ir.vnet.com. Next, I'd like to alert you that we will be utilizing text-to-speech technology powered by newlink.ai to deliver this quarter's prepared remarks by Mr. Ju Ma, our Rotating President, and Mr. Qiyu Wang, our CFO.
The management team will join the Q&A session in person. Additionally, this conference is being recorded. A webcast of this conference call will also be available on our IR website at ir.vnet.com. Now let's get started with today's presentation. Mr. Ma, please go ahead.
Ju Ma: Good morning and good evening, everyone. Thank you for joining our call today. I'll start with an overview of our major accomplishments during 2025. We delivered strong quarterly results thanks to continued effective strategic execution. On the operational side, our wholesale IDC business maintained its significant growth momentum, supported by our customers' fast move-in pace. As of 06/30/2025, our wholesale capacity in service grew by 17.5% quarter over quarter to 674 megawatts, an increase of around 101 megawatts. Wholesale capacity utilized by customers rose by 17% quarter over quarter to 511 megawatts, an increase of around 74 megawatts, while the utilization rate was stable at 75.9%, reflecting a fast move-in pace in our wholesale data centers.
Our retail IDC business continued to progress smoothly, supported by growing AI-driven demand from customers. Both our high-quality wholesale and retail IDC services continue to attract customers from various industries in the second quarter. I'll dig into those details on the next slide. On the financial side, both our revenues and adjusted EBITDA maintained solid growth. Specifically, our total net revenues increased by 22.1% year over year to RMB 2,430,000,000 for the second quarter. Notably, wholesale revenues reached RMB 854,000,000 for the quarter, representing impressive year-over-year growth of 112.5%, fueled by the rapid growth of our wholesale IDC business.
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. Moving on to our new order wins on slide five. In the second quarter, driven by growing demand from customers for intelligent deployment, we secured a combined capacity of around four megawatts in retail orders from customers in the IT Services, Internet, AIoT, and Financial Services Sectors. These orders span multiple retail data centers in the Greater Beijing area, the Yangtze River Delta, the Greater Bay Area, and other regions.
Furthermore, we recently won a 20 megawatt wholesale order from a leading cloud services provider for the project we operate in Hebei province with our joint venture partner. As AI permeates every aspect of the world, new growth opportunities for data centers, the bedrock of AI infrastructure, continue to emerge. AI-driven demand remains especially robust in China, including training and inference demand from customers across multiple industries conducting intelligent deployments. To capture these opportunities and strengthen our competitiveness, we unveiled our hyperscale 2.0 framework for the future of our AIDC development at our Investor Day in Wulan Chabu in late June.
We also outlined our blueprint for growing the capacity of our data center assets under management to 10 gigawatts by 2036. Driven by the proliferation of AI, the data center industry's development has reached an inflection point where traditional IDCs are shifting to AIDCs to meet dynamic market demand. In parallel, data centers' business model is evolving from simply providing project-based capacity delivery to serving as a platform offering comprehensive AIDC solutions. As a pioneer in AIDC development with strong fundamentals and deep industry know-how, VNET is poised to shape this trend through our hyperscale 2.0 framework. Our innovative technologies enable us to construct high-quality, flexible AIDCs faster, ensuring rapid deliveries to meet customer needs.
For example, 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.
By leveraging these technologies, we can build quickly and combine modules with different functions flexibly to meet customer-specific requirements, ensuring fast capacity delivery to our customers. We believe these innovations position us as a front-runner in the IDC industry going forward. Execution of our hyperscale 2.0 framework is already underway, starting in Inner Mongolia, Hebei Province, and Beijing, where we plan to establish data center hubs encompassing megawatt-scale cabinets, 100 megawatt-scale buildings, and gigawatt-scale campuses. Ultimately, as I mentioned earlier, we aim to manage a 10 gigawatt integrated data center asset cluster by 2036 that seamlessly combines computing power and energy management across multiple campuses, empowering us to shape the future development of AIDC solutions.
Now let's delve into our business updates, starting with our wholesale business on slide eight. Our wholesale business continued to grow rapidly, with capacity in service increasing by around 101 megawatts quarter over quarter to 674 megawatts, and utilization rate remaining stable at 75.9%, mainly attributable to our strong delivery capabilities at our NOR Campus 01 and faster than expected move-ins at our NOR Campus 01 and EJS Campus 03. Our mature capacity utilization rate also reached 94.6%, a relatively high level. We have a clear growth path for our wholesale data center capacity. Let's move on to slide nine. Our overall wholesale data center capacity maintained its growth trajectory in the second quarter.
Our capacity under construction was around 326 megawatts, with a precommitment rate for capacity under construction of 55.2% as of June. Capacity held for short-term future development was around 374 megawatts, and capacity held for long-term future development was around 418 megawatts, as we remain confident in the long-term growth potential of AI-driven demand. Moving to our retail IDC business on Slide 10. Our retail business continued to progress smoothly in the second quarter. Retail capacity in service was 52,131 with the utilization rate increasing slightly to 63.9% as of June. MRR per retail cabinet increased to RMB 8,915 this quarter. Turning to our delivery plan on slide 11.
With our robust and efficient delivery capabilities, we successfully delivered a total of around 188 megawatts in 2025. We currently have eight data centers under construction, with six in the Greater Beijing area and two in the Yangtze River Delta. We plan to deliver around 326 megawatts of capacity over the next twelve months, or around 227 megawatts during the second half of 2025 and around 99 megawatts during 2026. This ambitious delivery plan reflects strong demand from our customers and our delivery prowess. Now turning to our non-IDC business.
A key component of our business further expanded its customer base by winning new customers in the consulting and intelligent driving industries for its premium dedicated Internet services, VPN services, IDC services, and cloud services. In conclusion, our robust second quarter results further validate our core strengths and effective strategic execution. Looking ahead, we will continue to sharpen our competitive advantages with faster deliveries and consistently reliable IDC services as we embark on our ambitious hyperscale 2.0 framework to build greener, more intelligent data centers for the AI era. And as always, we will remain committed to driving innovation and fostering industry development as we grow, delivering value to all of our stakeholders.
Now I will turn the call over to our CFO, Qiyu Wang, for further discussion of our operating and financial performance. Thank you, everyone.
Qiyu Wang: Good morning, and good evening, everyone. Before we start the detailed discussion of our second quarter performance, please note that unless otherwise stated, all the financials we present today are for 2025 and are in renminbi terms. Furthermore, unless otherwise specified, all the growth rates I am reviewing are on a year-over-year basis. Let's turn to slide 13. In the second quarter, we continued to pursue high-quality, high-margin business. Our total net revenues increased by 22.1% to RMB 2,430,000,000, mainly driven by the rapid growth of our wholesale business. Our adjusted cash gross profit rose by 34.9% to RMB 1,060,000,000, while our adjusted EBITDA also grew year over year 27.7% to RMB 732,500,000.
Let's look more closely at our top line. As you can see on Slide 14, 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. Our non-IDC business revenues were RMB 621,000,000 for the second quarter. During the second quarter, we maintained solid margins thanks to our continuous efforts to enhance overall efficiency. As shown on slide 15, our adjusted cash gross margins improved to 43.6% from 39.5% in the same period last year.
Our adjusted EBITDA margin rose to 30.1% compared with 28.8% in the same period last year. Moving on to liquidity. On slide 16, we maintained robust and healthy liquidity, bolstered by a net operating cash inflow of RMB 366,600,000 during the second quarter, bringing the net operating cash flow for the first half of the year to RMB 562,300,000. Our cash positions remain solid with total cash and cash equivalents, restricted cash, and short-term investments reaching RMB 4,660,000,000 as of 06/30/2025. Next, let's take a look at our debt structure on slide 17. We maintained our prudent approach to debt management.
As of 06/30/2025, our net debt to the trailing twelve months adjusted EBITDA ratio was 5.3, and total debt to the trailing twelve months adjusted EBITDA ratio was 6.4, both remaining at healthy levels. Also, our trailing twelve months adjusted EBITDA to interest coverage ratio was 6.9. We prioritize long-term debt maturity planning in our debt and strategic management to ensure the security of debt repayment. Additionally, the company's short and medium-term debt maturing in 2025 to 2027 comprises 44.1% of our total debt. Turning now to CapEx spending. As you can see on slide 18, for 2025, our CapEx was RMB 3,890,000,000, with the majority allocated to the expansion of our wholesale IDC business.
We still expect our CapEx for the full year 2025 to be in the range of RMB 10,000,000,000 and RMB 12,000,000,000. The increase is mainly to support our planned delivery of 400 to 450 megawatts in 2025, or approximately three times 2024's total deliveries and surpassing our total deliveries in the past three years combined. Furthermore, in late June, our board authorized a buyback program under which we may repurchase up to US dollar 50,000,000 from time to time on the open market over the ensuing twelve months. The buyback program underscores our deep commitment to delivering value to shareholders and our confidence in VNET's future development and growth prospects. Now moving to our full-year guidance for 2025.
On slide 19, as we announced in a press release in late June, we have increased our full-year revenue and adjusted EBITDA guidance, fueled by faster than anticipated move-ins among wholesale IDC customers and ongoing operational efficiency gains. We now expect total net revenues to be in the range of RMB 9,150,000,000 to RMB 9,350,000,000, a year-over-year increase of 11% to 13%, and adjusted EBITDA to be in the range of RMB 2,760,000,000 to RMB 2,820,000,000, representing a year-over-year increase of 14% to 16%. If the RMB 87,700,000 on disposal gain of EJS 02 data center were excluded from the adjusted EBITDA calculation for 2024, the year-over-year growth would be 18% to 20%.
Before I conclude, I'd like to briefly update you on our ESG efforts. We are pleased to receive an A grade, the highest rating, in the 2024 supplier engagement assessment by the Carbon Disclosure Project. We were also recognized as a supplier engagement leader for our collaboration with supply chain partners on low-carbon technology R&D, enhancing our IDC operational energy efficiency, and empowering our partners to save energy and reduce emissions. Looking ahead, we will remain steadfast in our pursuit of ESG excellence, embracing and promoting a green future. In summary, we maintained our business' vibrant momentum with strong financial results during the second quarter.
Supported by our effective dual-core strategy and new hyperscale 2.0 framework, we are well-positioned to lead the AIDC transformation, capturing surging AI-driven opportunities, and delivering sustainable, long-term value for all stakeholders. This concludes our prepared remarks for today. We are now ready to take questions. Thank you.
Operator: If you wish to ask a question, please press 1 on your telephone and wait for your name to be announced. For the benefit of all participants on today's call, please ask your question to management in English, and then repeat in Chinese. Your first question comes from Tom Tang with Morgan Stanley.
Tom Tang: Thanks, management, for the opportunity to ask questions. And first of all, congratulations on a very strong quarterly result, especially on the wholesale business. So my question is mainly about the future demand and orders. So we noticed that NVIDIA has regained its permission to ship the new chipsets to China again last month. Just wondering based on all of our communication with our big customers, what is our current expectation of their future demand and their order tendering? Thank you.
Ju Ma: Thank you for your question. Now the market is relatively active. According to the report of these third-party institutions, we find that in the regions where the digital economy is relatively active, for example, in the Greater Beijing area and in the Yangtze River Delta, the AI demand is relatively strong, and also the relation between supply and demand has improved a lot. Your question also mentioned the bidding and the demand for the big client. Since you also have noticed that this year, our delivery plan is over 400 megawatts, it is all relatively large. The new orders should be delivered in six months. We will pay more attention to the demand released around September.
In addition to the 20 megawatt wholesale business, we are also paying a lot of attention to the potential demand and we are also communicating for this potential demand. I think most of them are highly relevant to the AI.
Operator: Next question, please. Your next question comes from Edison Lee with Jefferies.
Edison Lee: Hi. Yes. Thank you for taking my questions. I have two. Number one, can you update us on the build-out of wind power in Yuran's hub? And when they will actually come into effect and how that's going to impact the revenue and also the margin of the company? Number two, can you comment on your MSR on wholesale? Because it seems that your MSR or your MRR on the wholesale in the second quarter is actually up on a year-on-year basis. So maybe if you can explain a little bit of what is driving that unit price that would be great.
Ju Ma: Thank you for your question. The Winner Power project is well underway. By the end of this year and also in the beginning of next year, it will deliver power. This is relatively a new trial for us, so we cannot expect the impact on our P&L. However, it will mainly deliver a positive impact on our IR. The detailed statistics and figures will be offered when it begins to deliver power. For the second question, it has two factors. The first one is that the wholesale price is relatively very stable. The improvement in the MSR is mainly due to the signal effect in terms of the increase in the revenue from the electricity bills.
In this quarter, we have the one-off income.
Operator: Next question, please. Your next question comes from Daley Li with BofA Securities.
Daley Li: Hi, management. Thanks for taking my question. I have two questions here. The first one is regarding our gross margin. Our adjusted gross margin was quite healthy growth and improvement. For our GAAP level, gross margin seems to have dropped a little bit. What is the reason behind this? How do you think the future normalized gross profit margin? My second question is about the new financing channel, the REITs. Could you please update us on the progress of the private REITs and the series going forward?
Ju Ma: Thank you for your question. For the changes in the GP margin, it's affected by the timing of turning the CID into PPE and also the depreciation. There can be some seasonal factors that lead to the fluctuation. If we exclude the cash duty margin, it's still on a healthy and steady increase. 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.
Operator: Next question. Next question, please. Your next question comes from Timothy Zhao with Goldman Sachs.
Timothy Zhao: Great. Thank you for taking my question and congrats on the very strong results. Two questions here as well. First is regarding your full-year guidance. I'm pretty glad to see that you raised guidance actually two months ago. But after the very strong first half result, just wondering how management thinks about the second half outlook. If my calculation is correct, I think toward the high end of your guidance, the second half growth implied only around single-digit growth. Just wondering how should we think about the second half outlook. Secondly is regarding the retail IDC business.
As I see, there's some revenue decline on this retail IDC revenue in the second quarter of this year versus a stronger first quarter. Just wondering what is the reason behind.
Ju Ma: Thank you for your question. You have mentioned in spite of the upgrading in the guidance, the guidance for the second half of this year is still relatively conservative. Our consideration is that we needed to watch and see if the utilization speed and the pace of our customer or client will not be affected by the chips. If our wholesale utilization business can maintain its speed, we can upgrade the guidance for the second half of the year. Your second question is related to the RDC revenue for the retail business. Yes, there can be some slight decline, but it's still within the reasonable range. The revenue for the retail IDC will maintain relatively stable and even some increase.
Operator: Next question, please. Your next question comes from Andy Yu with DBS.
Andy Yu: Hi. Thank you for taking my question. Congratulations on solid results. I have a question regarding the second half outlook. Could management share some color on whether the rapid momentum of client looking can be sustained? Also, do we expect that the impact of AI chips supply constraints could affect new orders or customer moving in the second half of 2025?
Ju Ma: Thank you for your question. The outlook for the second half of this year is relatively optimistic. If we take into account the delivery in the first half of this year, we will also closely follow the rules of the new orders unleashed by our client. We are generally optimistic about the second half of this year. As for the move-in pace of our client, according to practice, once the order is confirmed, we usually have a very fast move-in pace. As for the supply of the chips of AI, we will closely follow companies like NVIDIA's chips and also the domestic chips. The expectation will be very clear very soon.
According to our experiences of serving our clients or our customers, once the order is confirmed, the move-in pace will be very fast. As for the wholesale business, we have also confirmed with the core client that the orders at hand for our client will not be affected.
Operator: Next question, please. Your next question comes from Sara Wang with UBS.
Sara Wang: Thank you for the opportunity to ask a question. And again, congratulations on the very solid results. I only have one question: management just mentioned that there could be potential new tenders from the customer. Do we expect similar customers and similar workload going forward, or could there be some change?
Ju Ma: Thank you for your question. I think our client will unleash their demand gradually. From the demand side, in terms of the business, the demand for AI remains unchanged.
Operator: Next question, please. Your next question comes from Minran Lee with CICC. Your line is open with CICC. Mingran Lee, your line is open for your question. We will just pause for a moment to see if we'll have Mingran back in the queue. That does conclude our call and conference for today. Thank you for participating. You may now disconnect.