VNET Group, Inc.

Hello ladies and gentlemen. Thank you for standing by for the first quarter 2025 earnings conference call for VNet Group Inc. 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. Qi Yuan, Chief Financial Officer, Ms. Jinwan Liu, 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. Jinwan Liu. Please go ahead.

Thank you, Operator. Hello, everyone. and welcome to our first quarter 2025 earnings conference call. Our earnings release was disputed earlier today, and you can find a copy on our website as well as our 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. 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 press release and this conference call include the disclosure of unaudited GAAP and non-GAAP financial matters. VNAT's earnings precedence contains reconciliation of the unaudited non-GAAP matters to the unaudited GAAP matters. A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at ir.vnat.com. Next, I'd like to alert you that we will be utilizing text-to-speech technology powered by Neolink.ai, to deliver this quarter's prepared remarks by Mr. Ju Ma, our rotating president, and Mr. Qi Yu Wang, our CFO. The management team will join the Q&A session in person. Additionally, this conference is being recorded. A webcast of this conference call will also be available on our IR website at ir.vna.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 would like to begin by sharing our primary accomplishments during the first quarter of 2025. As we embarked on the new year journey, we achieved a strong set of results that set a positive tone for the year ahead. On the operational side, our wholesale IDC business recorded another impressive performance, supported by our robust deliveries and our customers' fast-moving pace. As of March 31, 2025, our wholesale capacity in service grew 18.1% quarter over quarter to 573 MW, an increase of 88 MW. All sale capacity utilized grew 23.9% quarter over quarter to 400 and 37 megawatts, a record high increase of 84 megawatts, while the utilization rate increased by 3.6 percentage points to 76.2%, indicating that newly delivered orders are being moved in faster than ever before. Meanwhile, our retail business continued to progress smoothly benefiting from the rapid deployment of DeepSeek. Furthermore, propelled by our dual core strategy, we consistently secured high quality orders from customers across various industries. I will elaborate on this in detail on the next slide. On the financial side, We maintained our solid growth trajectory across both total net revenues and adjusted EBITDA. Our total net revenues increased by 18.3% year-over-year to RMB 2.25 billion for the first quarter. Notably, wholesale revenues reached a new record high of RMB 673 million for the quarter, representing an impressive year-over-year growth rate of 86.5%. Thanks to the rapid growth of our wholesale IDC business, our adjusted EBITDA for the first quarter also increased by 26.4% year-over-year to RMB 682 million, with an adjusted EBITDA margin of 30.4% up 1.9 percentage point year-over-year. Excluding the one-off impact of asset disposals last quarter, adjusted EBITDA increased by 18.1% quarter-over-quarter. We also further strengthened our financing capabilities, diversifying our channels at a relatively low cost. In March, we issued 430 million US dollars of convertible senior notes due in 2030 at an interest rate of 2.5% per annum. We also secured our first sustainability-linked loan of RMB 500 million with a 3.7% interest rate per annum. Furthermore, our all-in cost for one of our new loan projects reached a record low at 3.05%, 55 basis points lower than the 5-year LPR. Next, let's delve into our first quarter accomplishments in more detail. Moving on to our new order wins on slide five, we continue to win quality wholesale and retail orders in the first quarter. In addition to the wholesale orders, we disclosed last quarter a 55 megawatt order from a leading cloud computing customer and a 64 megawatt order from an internet customer through our JV project. We won a six megawatt wholesale order from an intelligent driving customer for our data centers in the greater Beijing area. Furthermore, breakthroughs by DeepSeq are propelling growing demand among customers for our retail IDC services to deploy intelligent applications. During the quarter, we secured a combined capacity of around four megawatts in retail orders from customers in the internet, finance, local services, intelligent driving, and gaming sectors. These orders span multiple retail data centers in greater Beijing area, the Yangtze River Delta, the greater Bay Area, and other regions. At the beginning of 2025, China's AI development entered an explosive new phase of growth driven by deep-sea breakthrough technology. This created surging AI-related demand for premium IDC services, boosting the IDC industry's growth. As an industry leading player known for our high-performance data centers and reliable premium services, we quickly seized growth opportunities, winning quality, new orders, and driving progress. Notably fueled by the rising demand for private deployment triggered by DeepSeq, our retail IDC businesses revenues from customer private deployment of open source large language models increased by 309% in March compared to January. Looking ahead, we remain confident in the China market's growth potential. We believe that the increasing maturity of open-source model technology and the continuous expansion of intelligent application scenarios will continue to drive high demand for computing power and premium IDC services, further fueling our sustainable, high-quality growth. Now let's delve into our business update. Starting with our wholesale business on slide eight, our wholesale business maintained its robust growth momentum with capacity in service increasing to 573 megawatts and utilization rate rising to 76.2%. Thanks to our strong delivery capabilities at our NOR Campus 01 and EJS Campus 03 and faster than expected movings at our EJS Campus 02 and NHB Campus 01B, we also delivered a mature capacity utilization rate of 94.5%, a relatively high level and a ramp up capacity utilization rate of 32.1%. We have a clear growth path for our wholesale data center capacity. Let's move on to slide nine. Our overall wholesale data center capacity continued to grow. In the first quarter, our capacity under construction was 377 megawatts with a pre-commitment rate for capacity under construction stable at 81.6% as of the end of March. Additionally, capacity held for short-term future development remained relatively steady at 256 megawatts. Capacity held for long-term future development further expanded to 414 MW, as we remain confident in China's market growth potential as AI spurs greater demand for premium IDC services. We will maintain our robust expansion plan to ensure we are well prepared for further business growth. Moving to our retail IDC business on slide 10, our retail business continued to progress smoothly in the first quarter. Retail capacity in service was 51,960 cabinets, with the utilization rate increasing slightly to 63.7% as of the end of March. MRR per retail cabinet increased to RMB 8,898 this quarter. Turning to our delivery plan on slide 11, supported by our robust and efficient delivery capabilities, we successfully delivered a total of 88 megawatts in the first quarter. We currently have eight data centers under construction with six in the greater Beijing area and two in the Yangtze River Delta. We plan to deliver 377 megawatts of capacity over the next 12 months, or around 165 megawatts. during the second and third quarters of 2025, and around 212 megawatts during the fourth quarter of 2025 and the first quarter of 2026. This ambitious delivery plan reflects strong demand from our customers and our outstanding delivery capabilities. Now turning to our non-IDC business, a key component of our overall business, Di Xian continued to expand its customer base by acquiring new customers from several state-owned enterprises, as well as the financial services and home appliances sectors for their premium dedicated internet services and internet connection services. What's more, I am pleased to share that Di Xian recently received approval as a zero-outage supplier for a fifth consecutive year from T-Systems. which is part of Deutsche Telekom, in recognition of DEC's reliable, outstanding services. In conclusion, thanks to the strong execution of our effective dual core strategy, we delivered robust first quarter results, propelling progress across both our wholesale and retail businesses. Going forward, we will continue leveraging our high-performance data center network, reliable solutions, and outstanding delivery capabilities to meet our customers' growing demands, driving growth, and advancing the development of China's digital economy. Now I will turn the call over to our CFO, Qi Yu, for further discussion of our operating and financial performance. Thank you, everyone.