VNET Group, Inc.

Hello, ladies and gentlemen. Thank you for standing by for the second 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. Ken Yu Wong, Chief Financial Officer, Ms. Xingling 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. Xingling Liu. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to our second quarter 2025 earnings conference call. Our earnings release was distributed 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 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 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 know that VNet's earnings precedence and this conference call include the disclosure of unauthentic GAAP and non-GAAP financial matters. VNet's earnings prejudice 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.vnet.com. Next, I'd like to alert you that we will be utilizing text-to-speech technology powered by Newlink.ai, to deliver this quarter's prepared remarks by Mr. Qu 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'll start with an overview of our major accomplishments during the second quarter of 2025. We delivered strong quarterly results thanks to continued effective strategic execution. On the operational side, our wholesale IDC business maintained its significant growth momentum supported by our customers' fast move in pace. As of June 30, 2025, our wholesale capacity in service grew by 17.5% quarter over quarter to 674 megawatts, an increase of around 101 megawatts. Wholesale capacity utilized by customers rose by 17% quarter over quarter to 511 megawatts, an increase of around 74 megawatts, while the utilization rate was stable at 75.9%, reflecting a fast-moving pace in our wholesale data centers. Our retail IDC business continue to progress smoothly supported by growing AI driven demand from customers. Both our high quality wholesale and retail IDC services continue to attract customers from various industries in the second quarter. I'll dig into those details on the next slide. On the financial side, both our revenues and adjusted EBITDA maintained solid growth. Specifically, Our total net revenues increased by 22.1% year over year to RMB 2.43 billion for the second quarter. Notably, wholesale revenues reached RMB 854 million for the quarter, representing impressive year over year growth of 112.5%, fueled by the rapid growth of our wholesale IDC business. Our adjusted EBITDA for the second quarter also increased by 27.7% year-over-year to RMB 732 million, with an adjusted EBITDA margin of 30.1%, up 1.3 percentage points year-over-year. Moving on to our new order wins on slide 5. In the second quarter, driven by growing demand from customers for intelligent deployment, we secured a combined capacity of around 4 megawatts in retail orders from customers in the IT services, Internet, AIoT and financial services sectors. These orders span multiple retail data centers in the Greater Beijing Area, the Yangtze River Delta, the Greater Bay Area and other regions. Furthermore, we recently won a 20 megawatt wholesale order from a leading cloud services provider for the project we operate in Hebei Province with our joint venture partner. As AI permeates every aspect of the world, New growth opportunities for data centers, the bedrock of AI infrastructure, continue to emerge. AI-driven demand remains especially robust in China, including training and inference demand from customers across multiple industries conducting intelligent deployments. To capture these opportunities and strengthen our competitiveness, we unveiled our Hyperscale 2.0 framework for the future of our AIDC development at our investor day in Wulanchapu in late June. We also outlined our blueprint for growing the capacity of our data center assets under management to 10 gigawatts by 2036. Driven by the proliferation of AI, the data center industry's development has reached an inflection point where traditional IDCs are shifting to AIDCs to meet dynamic market demand. In parallel, Data Center's business model is evolving from simply providing project-based capacity delivery to serving as a platform offering comprehensive AIDC solutions. As a pioneer in AIDC development with strong fundamentals and deep industry know-how, VNet is poised to shape this trend through our hyperscale 2.0 framework. Our innovative technologies enable us to construct high-quality, flexible AIDCs faster, ensuring rapid deliveries to meet customer needs. For example, our building standardization technology utilizes standardized modules as data center's core building units, allowing us to rapidly construct data centers tailored to diverse customer needs. This method cuts construction cycles by one-third compared to traditional construction methods. Additionally, our modular data center technology integrates various functions, including power supply systems, cooling systems, et cetera, into separate functional modules. These modules are manufactured and pretested in factories and shipped to data center sites for installation, which significantly enhances our installation efficiency. They can also be swapped out, allowing us to selectively upgrade only specific modules instead of entire systems, reducing improvement costs and extending data center's life cycles By leveraging these technologies, we can build quickly and combine modules with different functions flexibly to meet customer-specific requirements, ensuring fast capacity delivery to our customers. We believe these innovations position us as a front-runner in the IDC industry going forward. Execution of our Hyperscale 2.0 framework is already underway, starting in Inner Mongolia, Hebei Province, and Beijing. where we plan to establish data center hubs encompassing megawatt scale cabinets, 100 megawatt scale buildings, and gigawatt scale campuses. Ultimately, as I mentioned earlier, we aim to manage a 10 gigawatt integrated data center asset cluster by 2036 that seamlessly combines computing power and energy management across multiple campuses, empowering us to shape the future development of AIDC solutions. Now, let's delve into our business updates, starting with our wholesale business on slide eight. Our wholesale business continued to grow rapidly, with capacity in service increasing by around 101 megawatts quarter over quarter to 674 megawatts, and utilization rate remaining stable at 75.9%, mainly attributable to our strong delivery capabilities at our NOR Campus 01 and faster than expected move-ins at our NOR Campus 01 and EJS Campus 03. Our mature capacity utilization rate also reached 94.6%, a relatively high level. 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 maintained its growth trajectory in the second quarter. Our capacity under construction was around 326 megawatts, with a pre-commitment rate for capacity under construction of 55.2% as of the end of June. Capacity held for short-term future development was around 374 megawatts, and capacity held for long-term future development was around 418 megawatts, as we remain confident in the long-term growth potential of AI-driven demand. Moving to our retail IDC business on slide 10, our retail business continued to progress smoothly in the second quarter. Retail capacity in service was 52,131 cabinets, with the utilization rate increasing slightly to 63.9% as of the end of June, MRR per retail cabinet increased to RMB 8,915 this quarter. Turning to our delivery plan on slide 11, with our robust and efficient delivery capabilities, we successfully delivered a total of around 188 megawatts in the first half of 2025. 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 around 326 megawatts of capacity over the next 12 months, or around 227 megawatts during the second half of 2025, and around 99 megawatts during the first half of 2026. This ambitious delivery plan reflects strong demand from our customers and our outstanding delivery prowess. Now turning to our non-IDC business, a key component of our business. Di Xian further expanded its customer base by winning new customers in the consulting and intelligent driving industries for its premium dedicated internet services, VPN services, IDC services, and cloud services. In conclusion, our robust second quarter results further validate our core strengths and effective strategic execution. Looking ahead, we will continue to sharpen our competitive advantages with faster deliveries and consistently reliable IDC services as we embark on our ambitious hyperscale 2.0 framework to build greener, more intelligent data centers for the AI era. And as always, we will remain committed to driving innovation and fostering industry development as we grow, delivering 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.