VNET Group Inc (NASDAQ: VNET) Q2 2025 Earnings call | 08/21/2025

VNET reported a strong second quarter, driven by exceptional growth in its wholesale data center business. The company raised its full-year 2025 guidance, reflecting confidence in continued demand and its execution capabilities.

Financial Highlights

• Revenue: Total net revenues grew 22.1% year-over-year (YoY) to RMB 2.43 billion. Wholesale revenue was the standout, surging 112.5% YoY to RMB 854.1 million.

• Profitability: Adjusted EBITDA increased 27.7% YoY to RMB 732.5 million, with the margin expanding to 30.1% from 28.8% a year ago.

• Guidance: The company raised its full-year 2025 guidance. It now expects:

  • Revenue between RMB 9.15 billion and RMB 9.35 billion (11-13% YoY growth).

  • Adjusted EBITDA between RMB 2.76 billion and RMB 2.82 billion (14-16% YoY growth, or 18-20% excluding a one-time gain in 2024).

• Liquidity & Capex: The company maintained a solid cash position of RMB 4.66 billion. Capital expenditure for H1 was RMB 3.89 billion, primarily for wholesale expansion, with full-year capex expected to be RMB 10-12 billion to support a massive delivery plan.

Operational & Business Highlights

• Wholesale Business: This was the key growth driver. Wholesale capacity in service grew 17.5% quarter-over-quarter (QoQ) to 674 megawatts (MW), with a stable utilization rate of 75.9%. The company has a strong pipeline with 326 MW under construction (55% pre-committed) and significant capacity held for future development.

• Retail Business: Progressed smoothly with a slight increase in cabinet utilization to 63.9%. Monthly recurring revenue (MRR) per retail cabinet increased to RMB 8,915.

• Massive Delivery Plan: The company plans to deliver ~400-450 MW in 2025 (triple 2024's deliveries). For the next 12 months, it plans to deliver 326 MW, with 227 MW expected in H2 2025 and 99 MW in H1 2026.

• New Strategy - Hyperscale 2.0: VNET unveiled its "Hyperscale 2.0" framework, aiming to build an integrated 10-gigawatt data center asset cluster by 2036. This strategy focuses on using standardized and modular construction technologies to build high-quality AI Data Centers (AIDCs) faster and more flexibly to meet dynamic customer demand.

• New Orders: The company secured a significant 20 MW wholesale order from a leading cloud provider and several retail orders across various sectors and regions.

Key Analyst Questions & Management Outlook

• Demand & Chip Supply: Management expressed optimism about H2 2025 demand, particularly in key regions like Beijing and the Yangtze River Delta. They are closely monitoring the impact of NVIDIA's resumed chip shipments to China but stated that current orders from core clients are not expected to be affected.

• Pricing & Margins: Wholesale market prices were described as stable. An increase in Monthly Service Revenue (MSR) was attributed to seasonal factors like higher electricity bills and one-time income, not a fundamental price hike.

• ESG & Innovation: The company received an 'A' grade from CDP for supplier engagement and highlighted its wind power project in Ulanqab, expected to begin delivering power by end-2024 or early-2025, which will positively impact power costs and sustainability metrics.

• REITs Progress: Management is actively promoting 4-5 public and private REITs projects, aiming to recover RMB 2 billion through these asset-level financing initiatives in 2025.