VNET Group’s Earnings Call: Robust Growth and Positive Outlook

VNET Group, Inc. Sponsored ADR ((VNET)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call from VNET Group, Inc. showcased a robust quarter characterized by significant growth in revenue and EBITDA, primarily driven by the wholesale IDC business. Despite encountering some seasonal fluctuations in EBITDA margin and maintaining high debt ratios, the company’s overall performance and increased full-year guidance signal a positive outlook for the future.

Significant Revenue Growth

The company reported a substantial increase in total net revenues, which rose by 21.7% year over year, reaching RMB 2.58 billion for the third quarter. This growth highlights the company’s ability to effectively capitalize on market opportunities and expand its revenue base.

Wholesale IDC Business Expansion

VNET Group’s wholesale IDC business witnessed a notable expansion, with wholesale capacity in service growing by 16.1% quarter over quarter to 783 megawatts. The utilization rate stood at an impressive 74.3%, underscoring the efficiency and demand for the company’s services.

Strong Adjusted EBITDA Growth

The company’s adjusted EBITDA saw a significant year-over-year increase of 27.5%, reaching RMB 758 million. This growth reflects the company’s operational efficiency and its ability to generate higher earnings from its core business operations.

Full-Year Guidance Increase

VNET Group has raised its full-year revenue and adjusted EBITDA guidance, driven by faster than anticipated move-ins among wholesale IDC customers. This adjustment indicates the company’s confidence in its future performance and growth trajectory.

Wholesale Revenue Surge

The wholesale segment of the business experienced a remarkable revenue surge, with an 82.7% year-over-year increase to RMB 956 million. This surge highlights the growing demand and success of the company’s wholesale offerings.

Strong Liquidity Position

VNET Group reported a strong liquidity position, with net operating cash flow for the first nine months of 2025 amounting to RMB 1.37 billion and a solid cash position of RMB 5.33 billion. This financial stability provides a solid foundation for future investments and growth.

ESG Score Improvement

The company’s ESG score improved to 73 from 70, placing it among the top 8% of the IT service industry globally. This improvement reflects VNET Group’s commitment to sustainable practices and corporate responsibility.

Seasonal EBITDA Margin Fluctuation

The earnings call noted a sequential decline in EBITDA margin due to seasonal factors such as increased electricity tariffs. Despite this fluctuation, the overall financial health of the company remains strong.

High Debt Ratios

VNET Group’s high debt ratios were highlighted, with a net debt to trailing twelve months adjusted EBITDA ratio at 5.5 and a total debt to EBITDA ratio at 6.7. While these figures indicate a significant level of leverage, the company’s growth prospects and cash flow generation provide a counterbalance.

Forward-Looking Guidance

Looking ahead, VNET Group provided optimistic guidance, driven by strong operational and financial performance. The company expects total net revenues to range between RMB 9.55 billion and RMB 9.867 billion, with adjusted EBITDA projected to be between RMB 2.91 billion and RMB 2.945 billion. The guidance reflects anticipated faster customer move-ins and efficiency gains, alongside ongoing investments in AI and data center capacities.

In conclusion, VNET Group, Inc.’s earnings call painted a positive picture of the company’s current performance and future prospects. With significant growth in revenue and EBITDA, an expanding wholesale IDC business, and a strong liquidity position, the company is well-positioned for continued success. Despite some challenges such as seasonal EBITDA margin fluctuations and high debt ratios, the overall sentiment remains optimistic, supported by increased full-year guidance and strategic investments.