VNET Group, Inc.

Hello, ladies and gentlemen. Welcome and thank you for standing by for the fourth quarter and full year 2023 earnings conference call for VNet Group Inc. At this time, all participants are in the listen-only mode. After the speaker's presentation, we'll have answer and question session. At this time, all of the participants are in the listen-only mode. After the management's pre-mark, there will be a question and answer session Our participants from our management team includes Mr. Jeff Dong, Chief Executive Officer, Mr. Qi Yuan, Chief Financial Officer, Ms. Xinyuan Liu, Investor Relations Director of the company. Please note that today's conference call is being recorded and I will now turn the call over to the first speaker today, Ms. Xinyuan Liu. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to our fourth quarter and full year 2023 Earnings Conference Call. Our earnings release was distributed earlier today, and you can find a copy on our website 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. VNAT does not undertake any obligations to update any forward-looking statements except as required under applicable laws. Please also note that VNAT's earnings press release and this conference call include the disclosure of audited GAAP and non-GAAP financial matters. VNAT's earnings press release contains a reconciliation of the audited non-GAAP matters to the audited GAAP matters. As a reminder, this conference is being recorded. In addition, a webcast of this conference call will also be available on our IR website at ir.vnat.com. I will now turn the call over to our CEO, Jeff.

thank you good morning and good evening everyone thank you for joining our call today i'd like to begin by providing an overview of our fourth quarter and full year 2023 performance we ended 2023 on a solid note and made the steady economic recovery demonstrating effective execution of our dual core growth strategy we meet our 2023 delivery target with 8,321 self-filled cabinets delivered during the year. As of year in 2023, we had grown our total cabinets under management to approximately 93,600 compared with approximately 87,300 years ago. The number of utilized cabinets increased by 2,827 to 55,235 in the fourth quarter. driving our overall utilization rate to 59% compared with 55% a year ago. Our retail IDC MRR per capita remains stable in the fourth quarter at RMB 9,477. In terms of our financial performance, we continue to focus on high-quality revenue during the quarter. Joining our net revenues to RMB 1.9 billion as well as 3.8% year-over-year increase in our adjusted EBITDA to RMB 440.2 million. Turning to our full-year performance, our net revenues increased by 4.9% year-over-year to RMB 7.41 billion and adjusted EBITDA grown by 8.9% year-over-year to RMB 2.04 billion. Our robust operational and financial performance reflects our effective strategy and strong execution, as well as our ability to grow our business by skillfully leveraging market trends and a supportive policy environment. According to this year's government work report, China is increasing its efforts to promote the innovative development of the digital economy Specifically, the report called for policy support for the digital economy's high-quality development. As stated, China will set up the development and application of big data and artificial intelligence, launch the AI-plus initiative, and build world-class digital industry clusters. We believe these initiatives and goals will further drive market demand for high-quality data centers and premium ITC services. As a leading ITC service provider, VNAN is strategically positioned to capitalize on these emerging opportunities through our comprehensive operational strengths across marketing and service, as well as operations and maintenance. I'd like to share our fourth quarter business updates. We are excited to see AI-driven demand from our customers continue to climb, especially computing power demand for training large language models. Among our wholesale customers, those in the short video industries are actively developing and integrating AI functions, requiring massive high-performance computing power to enhance their content creation capabilities and business operations. In our retail business, demand is also increasing steadily from customers in industries including autonomous driving, local services, and virtual reality, where large language models are widely deployed for business. Our high-performance data centers empower us to fulfill various AI-driven demands with innovative solutions. Moving on to our wholesale business, we extended our impressive delivery track record to our wholesale customers with timely, high-quality deliveries of approximately 109 megawatts for the full year. These deliveries have not only solidified our reliability, but also boosted customer satisfaction. Of particular note is the rapid ramp-up period we have delivered to leading wholesale customers. For several of our projects, moving periods were much faster than initially anticipated. Furthermore, we recently secured a new order from one of our existing customers, a leading cloud service provider in China. The new order is for approximately 15 megawatt in one of our projects in the Yangtze River Delta region and is scheduled for completion in 2024. Once again, this new order showcased our long-term customer loyalty and our industry-leading service capabilities. Our retail business remained resilient during the quarter, attracting new customers across mobility, cloud service, AI, and the IT service industry. We also extended contracts with loyal existing customers in finance, local services, autonomous driving, and gaming, where demand remains solid. On the value-added service front, our full-stack, one-stop innovative biometal-as-a-service solution based on AI technologies continues to win customers. including one of China's leading providers of energy-efficient computing solutions for smart mobility. This customer's demand for computing power is surging rapidly due to growing adoption of advanced driver assistance systems and autonomous driving technology in the mobility industry. Our innovative Biometer as a Service solution provides secure and flexible computing power resources to support the customer's intelligence driving simulation training and the LLM operation, empowering the customer's future growth. Turning now to our recent ESG performance, our commitment to sustainability once again won recognition from global leading ESG rating agencies in 2023. Earning a rating from MSCI for the second consecutive year, this represents the highest ranking awarded today in China's internet service and infrastructure industry, distinguishing us among our peers. In addition, our company scored 53 in the 2023 S&P Global Corporate Sustainability Assessment. ranking the highest among China's IT service industry and in the top 11% in the industry globally. Looking ahead, we will remain steadfast in our pursuit of ESG excellence, embracing and promoting a green future industry-wide. Before I conclude, I'd like to share some meaningful progress we made on our refinancing projects. In late December 2023, we completed the US$299 million strategic investment from Shandong High-Speed Holdings Group, who further strengthens our balance sheet. We have also established a partnership with Shandong High-Speed Holdings, who cooperatively explore new opportunities in renewable energies. Amid the booming computing power, Demand driven by AI development, we believe our core business will enjoy great synergies with Shandong high-speed holdings resources and expertise in traditional infrastructure fields. We look forward to collaborating with Shandong high-speed holdings on the rate of green energy initiatives to jointly advance towards our carbon neutrality targets while meeting society's surging demand for digital transformation. Also, on 1st February of this year, we successfully completed the repurchase payment relating to our convertible senior notes due in 2026 in aggregate principal amount of 600 million USD. Amid the tepid capital market, this stands as another testament to our resilient business fundamentals, as well as our commitment to long-term sustainable development. In conclusion, strong execution of our UCOR strategy for high-quality growth drove our solid performance in 2023, while laying a firm foundation for 2024. Having seen the booming AI trend, we are growing our business alongside the macro environment's steady recovery. We will continue to build on our core capabilities as we head into 2024, fulfilling market demand for secure and premium IDC services and facilitating digital transformation across a wider spectrum of verticals. Our unwavering commitment to our shareholders is to feel sustainable growth and generate long-term value. Before I share our delivery projection for 2024, I want to highlight that going forward, these projections will be expressed in terms of power capacity instead of number of cabinets. We believe power capacity will more meaningfully reflect our business development, giving our data centers increasing power density amid the growing AI trend. That said, we expect to deliver 100 to 120 megawatt during 2024. Thank you, everyone. I will now turn the call to Qi Yu to discuss our financial performance for the quarter.