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VNET's AI Data Center Growth Fuels Financial Strain
22 Aug
Summary
- Second-quarter revenue grew 14.2% to RMB2.78 billion.
- Adjusted EBITDA rose 25.4% but gross margin declined.
- Substantial debt remains despite new financing efforts.
VNET Group, Inc. has reported a robust 14.2% year-over-year revenue increase for its second quarter, reaching RMB2.78 billion. The company's AI data-center expansion contributed to a notable 25.4% rise in adjusted EBITDA to RMB918.3 million. Despite this growth, the aggressive buildout has intensified financial pressures, as indicated by a decline in GAAP gross margin to 18.2% and a decrease in operating cash flow.
Wholesale IDC revenue emerged as the largest segment, up 29.3% to RMB1.10 billion, with expanded capacity and significant new orders from a leading cloud provider. VNET secured 862 megawatts in wholesale order wins year-to-date. The company maintains strong visibility with a high commitment rate of 96.3%, although overall wholesale utilization saw a slight slip.
Financially, VNET ended June with RMB7.21 billion in liquid assets against substantial debt obligations, including RMB19.24 billion in long-term debt. The company secured RMB3.77 billion in new financing during the quarter. The bull case hinges on contracted demand converting to revenue and improving operating leverage, potentially boosted by a CATL partnership.
