VNET Group, Inc.

Thank you for standing by for the fourth quarter and full year 2024 earnings conference call for V-Net Group Incorporated. After the management's prepared remarks, there will be a question and answer session. Please note the Chinese line is in listen-only mode. If you wish to ask questions, please dial in through the English line. Participants from our management include Mr. Zhu Ma, rotating president, Mr. Keyu Wang, chief financial officer, Mr. Key Yang, Senior Vice President, and Ms. Shin Yeon-lu, Head of Investor Relations of the company. Please note that today's conference call is being recorded. I will now turn the call over to the first speaker today, Ms. Shin Yeon-lu. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to our fourth quarter and full year 2024 earnings conference call. Our earnings release was distributed earlier today. and you can find a copy on our website as well as on useware services. Please note that today's call will contain forward-looking statements made under the sick harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ maturely 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. VNet does not undertake any obligations to update any forward-looking statements except as required under applicable laws. Please also note that VNet's earnings precedence and this conference call include the disclosure of unaudited GAAP and non-GAAP financial matters. Binance Earnings Press release contains a reconciliation of the unaudited gap matters to the unaudited gap matters. A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at ir.binance.com. Now let's get started with today's presentation. Mr. Ma, please go ahead.

Good morning and good evening, everyone. Thank you for joining our call today. I'd like to begin with several key achievements from our fourth quarter and full-year performance in 2024. Firstly, our wholesale business has delivered remarkable growth, while our retail business has remained stable. Secondly, our net revenue and adjusted EBITDA have significantly surpassed our previous guidance. Thirdly, we have recently secured a total of 252.5 MW in orders from customers across the Internet, cross-computing, and intelligent driving industries. Looking ahead to 2025, our delivery plan and orders from customers for the next 12 months have seen substantial increases. I will now provide a detailed overview of these achievements. Let's turn to slide five. We closed 2024 with a strong fourth quarter, highlighted by our wholesale IDC business's remarkable performance as we identified and capitalized on emerging market opportunities, especially advanced technology-driven demand. As of December 31st, 2024, our wholesale capacity in service increased significantly, rising by 127 megawatts quarter over quarter to 486 megawatts. wholesale capacity utilized reached 353 megawatts, increasing by 73 megawatts quarter-over-quarter, thanks to strong customer demand for our wholesale data centers. We have also observed a notable uptake in our wholesale customers' moving pace recently, accelerating to six to 12 months from around 24 months in the past. Meanwhile, our retail ITC business continued to progress smoothly as of December 31, 2024. Our retail capacity in service was 52,107 cabinets, with self-built cabinets increasing by 212 year-over-year and 189 quarter-over-quarter. We also deliver impressive financial results for the fourth quarter and the full year. Let's move on to slide six. Our net revenue increased by 18.3% year-over-year to 2.25 billion RMB for the fourth quarter. Notably, revenue from the wholesale business reached a record high at 665 million RMB for the quarter, representing our farthest year-over-year growth rates. at 125.4% for any quarter of 2024. Adjusted EBITDA for the fourth quarter also increased by 63.8% year over year to 721.3 million RMB, meaning due to our wholesale IDC business rapid growth. Our adjusted EBITDA margin for the fourth quarter increased by nearly 10% points year-over-year to 32.1%. For the full year, we delivered net revenues of 8.26 billion RMB up 11.4% year-over-year, and adjusted EBITDA of 2.43 billion RMB up 19.1% year-over-year. both exceeding the high end of increased guidance we provided last quarter. Meanwhile, we achieved a full-year net profit of 248 million RMB, marking a turnaround from net loss in 2023 through continuous profitability improvements. Moving on to our new order wins on slide seven. Our high-performance data centers, outstanding delivery capabilities, and premium services continued to attract quality orders. In the fourth quarter, we secured a 32 megawatts order from an existing internet customer for our capacity in the Yangtze River Delta. and one of our retail base centers located in the Great Bay area also win a 1.5 megawatts order from a new customer in intelligent driving industry during the quarter. Meanwhile, we signed a framework agreement with an Internet customer for 100 megawatts of capacity, including a 28 megawatts order to be delivered in the fourth quarter of 2025. Additionally, we also secured a 55 megawatts order from a leading cross-computing customer in this region, demonstrating our customers' deep and enduring trust in our high-quality services. Furthermore, we recently win 64 megawatts wholesale order from an internet customer for the project. We operate in Hebei province with our joint venture partner, Changzhou Gongxin Group. This joint venture enable us to serve more customers while minimizing the impact on our balance sheet, providing an efficient means of growing our customer base and optimizing our business layout. Looking ahead, we will continue utilizing joint venture structures to further enhance our efficiency and facilitate high-quality business development. Now, moving to our four-year guidance for 2025 on slide 8. We expected total net revenues for 2025 to be between £9.1 billion to £9.3 billion RMB, representing year-over-year growth of 10% to 13%. adjusted EBITDA is expected to be in the range of 2.7 billion to 2.76 billion RMB, representing year-over-year growth of 15% to 18%. Based on our new orders and delivery plan, our capital expenditure for 2025 is expected to be in the range of 10 billion to 12 billion RMB, representing year-over-year growth of 101% to 141%. Also, we expect to deliver 400 to 450 megawatts in the next 12 months, an increase of 161% to 194% from 2024's total deliveries. Moving into 2025, we are seeing persistent high demand for high-performance data centers, with recent breakthroughs by DeepSeq propelling the domestic AI development and driving the IDC industry's ragged growth. As such, we are confident that the immense growth potential in China's IDC market is poised to be further unlocked. Let's take a closer look at our recent observations on slide 9, starting with DeepSeq's impact. DeepSeq's innovative achievements have significantly bolstered confidence in domestic AI development, catalyzing a surge in inference demand and enterprises' enthusiasm for investing in AI, including large CFP, Internet enterprises, and the small-medium enterprises. DeepSafe innovative models and technologies are enhancing efficiency and reducing both costs and dependencies on high-performance chips for training and inference. It will become easier for companies to execute their AI strategies, triggering wider AI adoption industry-wide and a greater need to build out AI infrastructure. In turn, lower overview barriers to entry for AI will unleash greater demand for our reliable wholesale IDC services. Furthermore, as more companies integrate AI into their operations, inference demand is expected to surge. we have already observed significant growing demand from small and medium-sized enterprises for private deployment of DeepSeq. We expect this positive market trend to persist for the foreseeable future. bringing exciting business opportunities for our retail IDC business. We will seize these opportunities to effectively enhance our retail data center's utilization rate and MRR, laying a solid foundation for our long-term business development. Let's turn to slide 10. As we have shared previously, the Yangtze River Delta and the Great Beijing Area are our core business regions. The layout of our wholesale capacity in service is dynamically balanced in two regions, with the proportion of capacity under construction in the Great Beijing Area increasing On a related note, industry research suggests that overall utilization rates at China's data center are set to increase steadily. Tier 1 cities with vibrant digital economies are expected to begin experiencing supply shortages of the high-performance data centers needed to run AI applications as AI-related business expand. Most both physically as a crucial area for the development of China's AI, internet, and high technology industry, the great Beijing region is experiencing steady growth in data-centered adoption and utilization rates. With the deepening application of generated AI and enhancement of computing power and the network infrastructure, the overall utilization rate of wholesale data center in the Great Beijing area is projected to reach 85% as earlier as 2025, marking the first potential supply shortage in the market. In the Yangtze River Delta region, a new wave of structural upgrades in AI technology will temporarily relieve pressure on the supply-demand imbalance in 2025. Given the suspended growth in demand, the overall utilization rate of wholesale data centers in the Yangtze River Delta region is expected to reach 85% by 2026, at which point this area will also face supply shortages. As a leading player in the computing infrastructure industry, we have a clear growth path for our IBC business. Our strong delivery and service capabilities precision us well to capture market opportunities, stemming from these strategies driving our sustainable growth. Now, let's delve into our business updates, starting with our wholesale business on slide 11. As the company's primary growth engine, our wholesale business achieved outstanding fourth quarter results in terms of both revenue, which reached 665 million RMB, and the growth rates accelerated to 125.4% year over year. This segment is striving as high performance IDC services remain in high demand across the market, especially as leading internet players continues to deepen their investment in AI for the driving demand goals. To meet this demand, we increased capacity in service during the quarter by 127 megawatts. to 486 megawatts. Meanwhile, capacity utilized rose by 73 megawatts to 353 megawatts, mainly driven by high utilization and faster than expected movings. Our wholesale business utilization rate decreased slightly to 72.6% due to our delivery of 127 megawatts concentrated in the fourth quarter of 2024. We also delivered a mature capacity utilization rate of 95.6%, a relatively high level, and a ramp-up capacity utilization rate of 34%. We have a clear growth path for wholesale data center capacity. Let's move on to slide 12. We maintained our growth trend in overall wholesale data center capacity with 486 megawatts in services and utilized the capacity increasing to 353 megawatts by the end of the fourth quarter. Our capacity under construction was 406 megawatts in the fourth quarter with a pre-commitment rate for capacity under construction of 82.9% by the end of December. Additionally, capacity held for short-term future development increased sequentially by 75 megawatts to 267 megawatts, primarily due to an abundance of demand with high certainty. With AI development driving greater market demand for IBC services, we will continue to press forward with our robust expansion plan for wholesale data center capacity laying a foundation for further business growth. Moving to our retail IDC business on slide 13. Our retail business remains stable and continued to progress smoothly in the fourth quarter. Retail capacity in service was 52,107 cabinets with 33,068 utilized cabinets for utilization rate of 63.5% as of the end of December. MRR per retail cabinet increased slightly to 8,794 RMB this quarter. Turning to our delivery plan on slide 14, in 2024, we successfully brought a total of 153 megawatts into services, showcasing our robust and efficiency delivery capabilities and the deep commitment to meeting customer demand. This includes over 127 megawatts during the fourth quarter and 26 megawatts in the first nine months, far surpassing our guidance. For 2025, customer demand for high performance, reliable IDC resources remain strong, and we expect our deliveries will set a new annual record. We currently have eight data centers under construction and plan to deliver 406 megawatts of capacity over the next 12 months, all around 140 megawatts during the first half of 2025 and around 266 megawatts in total during the second half of 2025, reflecting strong customer demand and outstanding delivery capabilities. non-ITC business also remains a key component of our overall business growth. Notably, we continued to expand our D1C business customer base by acquiring new customers from the medical technology, professional services, and consulting industries for D1C premium dedicated internet services, EVPL, and SD-WAN services. In conclusion, Our effective new core strategy and strong execution draws excellent fourth quarter and full-year 2024 results. Moving into 2025, we remain confident in China's core potential, led by certain demand in the IDC industry due to the AI boom. To capitalize on this opportunity, we will continue to innovate, strengthening our capability and expanding our high-performance data center network to offer our customer solution designed to seamlessly address their demands in the AI era. As always, we are committed to delivering sustainable long-term value to all of our stakeholders. Now, I will turn the call over to our CFO, Qi Yu, for further discussion of our operating and financial performance. Thank you, everyone.