VNET Group, Inc. Sponsored ADR ((VNET)) has held its Q1 earnings call. Read on for the main highlights of the call.
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VNET Group, Inc. recently held its earnings call, revealing a positive sentiment driven by robust growth in its wholesale IDC business and strong financial performance. The company expressed confidence in sustained demand and future growth potential, despite facing short-term challenges from the H20 chip embargo and high capital expenditure requirements.
Strong Wholesale IDC Business Growth
VNET Group’s wholesale IDC business demonstrated remarkable growth, with wholesale capacity in service increasing by 18.1% quarter over quarter to 573 megawatts. This growth translated into wholesale revenues reaching a record high of RMB 673 million, marking an impressive 86.5% year-over-year increase.
Record Utilization Rates
The company reported a significant rise in wholesale capacity utilization, which grew by 23.9% quarter over quarter to 437 megawatts. This led to a utilization rate increase of 3.6 percentage points, reaching 76.2%.
Robust Financial Performance
VNET’s financial performance was strong, with total net revenues increasing by 18.3% year over year to RMB 2.25 billion. Additionally, adjusted EBITDA saw a 26.4% year-over-year increase, reaching RMB 682 million.
Successful New Orders and AI Demand
The company secured new wholesale and retail orders, including a 6-megawatt wholesale order and 4 megawatts in retail orders. This success was driven by demand for AI and intelligent applications.
Strong Liquidity and Financing
VNET strengthened its financial position by issuing $430 million in convertible senior notes and securing a RMB 500 million sustainability-linked loan, enhancing its liquidity and financing capabilities.
ESG Achievements
The company made significant strides in its ESG initiatives, with renewable energy usage increasing fivefold to account for 18% of total resources. VNET also achieved top ESG ratings.
Impact of H20 Chip Embargo
The U.S. embargo on H20 chips had a short-term impact on demand from hyperscale clients. However, the company noted that demand has since adjusted.
High CapEx Requirements
VNET anticipates substantial capital expenditures for 2025, estimated between RMB 10 billion and RMB 12 billion, to support planned capacity deliveries.
Forward-Looking Guidance
Looking ahead, VNET Group, Inc. provided optimistic guidance for 2025, expecting total net revenues to range from RMB 9.1 billion to RMB 9.3 billion and adjusted EBITDA between RMB 2.7 billion and RMB 2.76 billion. The company plans significant capital expenditures and continues to focus on ESG initiatives, having achieved a fivefold increase in renewable energy usage.
In summary, VNET Group, Inc.’s earnings call conveyed a positive outlook, underscored by strong growth in its wholesale IDC business and robust financial performance. Despite facing short-term challenges, the company remains optimistic about its future growth potential and commitment to sustainability.