VNET Group, Inc.

Hello, ladies and gentlemen. Thank you for standing by for the third 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. Key Yu Wang, Chief Financial Officer, Ms. Jin Huan 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. Jin Huan Lu. Please go ahead.

Thank you, Operator. Hello, everyone, and welcome to our third quarter 2025 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 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. VNAT does not undertake any obligations to update any forward-looking statements except as required under applicable laws. Please also know that VNAT's earnings press release and this conference call include the disclosure of unaudited GAAP and non-GAAP financial matters. VNAT's earnings press release contains a 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. 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 website at ir.vnet.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 third quarter of 2025. Let's turn to slide four. we delivered another strong quarter, demonstrating our strategy's effectiveness in capturing opportunities. On the operational side, our wholesale IDC business sustained its robust growth trajectory, driven by our rapid delivery capabilities and customers' fast-moving pace. As of September 30, 2025, Our wholesale capacity in service grew by 16.1% quarter over quarter to 783 megawatts, an increase of around 109 megawatts. Wholesale capacity utilized by customers rose by 13.8% quarter over quarter to 582 megawatts, an increase of around 70 megawatts. while the utilization rate was 74.3%, reflecting customers' continuous demand for our high-quality, high-performance AIDC services. Our retail IDC business continued to progress smoothly, benefiting from growing AI-driven demand. This quarter, our retail MRR per cabinet increased for six consecutive quarters, reaching RMB 8,948. On the financial side, Our total net revenues increased by 21.7% year-over-year to RMB 2.58 billion for the third quarter. Wholesale revenues remained our key growth driver, reaching RMB 956 million, a significant year-over-year increase of 82.7%, fueled by the rapid growth of our wholesale IDC business. Our adjusted EBITDA for the third quarter also increased by 27.5% year-over-year to RMB 758 million. In addition, building on the increase we announced to our full-year guidance before Q2 earnings this year, we are further increasing our full-year revenue and adjusted EBITDA guidance this quarter, thanks to faster-than-anticipated movings among wholesale IDC customers and ongoing operational efficiency gains. Supported by our premium wholesale and retail IDC services, we continue to capitalize on strong customer momentum and secure new orders in the third quarter. I'll share more on the next slide. Moving on to our new order wins on slide five. In the third quarter, we secured three wholesale orders totaling 63 megawatts, specifically In addition to the 20 megawatt order from our JV project we mentioned on our last call, we won a 40 megawatt order from an internet company as announced in September, and a three megawatt order from an intelligent driving company, all four data centers in the greater Beijing area. Entering the fourth quarter, we are seeing continued order momentum, including a 32 megawatt wholesale order we just secured from an internet company for a data center in the Yangtze River Delta. Furthermore, driven by growing demand from customers for intelligent deployment, we secured a combined capacity of approximately two megawatts in new retail orders across multiple retail data centers from customers in the cloud services, local services, and financial services sectors. During the quarter, Rapid AI development and broader adoption of AI applications continued to fuel growth in China's IDC industry. We saw sustained momentum in AI-related investments, especially from hyperscalers that are executing strong CapEx expansion plans. This has further accelerated demand for high-performance data centers. Driven by AI training and inference needs, AI has become the core growth driver of the IDC industry. propelling the industry's business model evolution from project-based resource delivery to platform-based services that provide integrated AIDC solutions. Meanwhile, customer demand and critical resources, such as power, are increasingly concentrated among leading IDC players. As an industry pioneer in AIDC development, we're leveraging our acute insights strong resources, and premium, reliable services to seize these structural growth opportunities by quickly meeting customers' needs. Now, let's delve into our business updates, starting with our wholesale business on slide 7. Our wholesale business maintained strong growth momentum. with capacity in service increasing by around 109 MW quarter over quarter to 783 MW and utilization rate remaining stable at 74.3%, mainly attributable to our delivery capacities at our NOR Campus 02 and NHB Campus 01A and faster-than-expected move-ins at our NOR Campus 01. Our mature capacity utilization rate also reached 94.7%, a relatively high level. We have a clear growth path for our wholesale data center capacity. Let's move on to slide eight. As of the end of the third quarter, our total wholesale resource capacity was around 1.8 gigawatts. Specifically, our capacity under construction was around 306 megawatts. Capacity held for short-term future development was around 414 megawatts, and capacity held for long-term future development was around 291 megawatts. These secured resources represent a significant advantage in light of the IDC industry's limited effective supply and are in line with our optimistic view of AI-driven demand's long-term growth potential. Moving to our retail IDC business on slide nine. our retail business continued to progress smoothly in the third quarter. Retail capacity in service was 52,288 cabinets, with the utilization rate increasing slightly to 64.8% as of the end of September. As I just mentioned, our retail MRR per cabinet has increased for six consecutive quarters, reaching RMB 8,948. Turning to our delivery plan on slide 10, with our strong and efficient delivery capabilities, we successfully delivered a total of around 109 megawatts in the third quarter of 2025, bringing our total deliveries around 297 megawatts as of the end of September this year. We currently have seven data centers under construction, with six in the greater Beijing area and one in the Yangtze River Delta. We plan to deliver around 306 megawatts of capacity over the next 12 months or around 132 megawatts during the fourth quarter of 2025 and the first quarter of 2026 and around 174 megawatts during the second and third quarters of 2026. This delivery plan reflects our view as of the end of September. but we may update these estimates as we gain greater visibility over the next couple of quarters. In conclusion, our strong third quarter results showcase our ability to identify opportunities and our readiness to seamlessly meet evolving market demand. Our visionary Hyperscale 2.0 framework has positioned us to lead under the new global AI-driven paradigm. Supported by advantages across high-density deployment, delivery speed and quality, and cutting-edge, sustainable technology. As AI-related demand grows, we will continue to advance our effective dual-core strategy and hyperscale 2.0 framework, seizing opportunities to further unleash our growth potential in the AI era. Now, I will turn the call over to our CFO, Qi Yu, for further discussion of our operating and financial performance. Thank you, everyone.

Good morning and good evening, everyone. Before we start the detailed discussion of our third quarter performance, please note that, unless otherwise stated, all the financials we present today are for the third quarter of 2025 and are in MMB terms. Furthermore, unless otherwise specified, all the growth rates I am reviewing are on a year-over-year basis. Let's turn to slide 12. In the third quarter, we continued to pursue high-quality business. Our total net revenues increased by 21.7% to RMB $2.58 billion, mainly driven by the rapid growth of our wholesale business. Our adjusted cash gross profit rose by 22.1% to RMB 1.05 billion, while our adjusted EBITDA also grew year-over-year by 27.5% to RMB 758.3 million. Let's look more closely at our top line. As you can see on slide 13, in the third quarter, wholesale revenues, our key revenue growth driver, increased significantly by 82.7% to RMB 955.5 million. and the rapid growth was mainly attributable to the NOR Campus 01. Retail revenues increased by 2.4% to RMB 999.1 million. Our non-IDC business revenues increased by 0.8% to RMB 627.1 million. During the third quarter, we maintained solid margins thanks to our continuous efforts to enhance overall efficiency. As shown on slide 14, our adjusted cash gross margins improved to 40.7% from 40.6% in the same period last year. Our adjusted EBITDA margin rose to 29.4% compared with 28% in the same period last year. Moving on to liquidity, on slide 15, we maintained robust and healthy liquidity bolstered by a net operating cash inflow of RMB 800 and 9.8 million during the third quarter, bringing our net operating cash flow for the first nine months of the year to RMB 1.37 billion. Our cash position remained solid, with total cash and cash equivalents, restricted cash, and short-term investments reaching RMB 5.33 billion as of September 30, 2025. Next, let's take a look at our debt structure on slide 16. We maintained our prudent approach to debt management. As of September 30, 2025, our net debt to the trailing 12 months adjusted EBITDA ratio was 5.5 and total debt to the trailing 12 months adjusted EBITDA ratio was 6.7, both remaining at healthy levels. Our trailing 12 months adjusted EBITDA to interest coverage ratio was 6.5. We prioritize long-term debt maturity planning in our debt and strategic management to ensure the security of debt repayment. Currently, the company's short and medium-term debt maturing in 2025 to 2027 comprises 41.4% of our total debt. Turning now to CapEx spending, as you can see on slide 17, for the first nine months, our CapEx was RMB $6.24 billion, with the majority allocated to the expansion of our wholesale IDC business. We still expect our capex for the full year 2025 to be in the range of RMB 10 billion and RMB 12 billion. The increase is mainly to support our planned delivery of 400 to 450 megawatts in 2025. Now moving to our full year guidance for 2025 on slide 18. As we expect faster than anticipated move-ins among wholesale IDC customers and ongoing operational efficiency gains through the end of the year, we have further increased our full year revenue and adjusted EBITDA guidance. We now expect total net revenues to be in the range of RMB 9.55 billion to RMB 9.867 billion, a year-over-year increase of 16% to 19%. And adjusted EBITDA to be in the range of RMB 2.91 billion to RMB 2.945 billion, representing a year-over-year increase of 20% to 21%. If the RMB 87.7 million of disposal gains on the EJS02 data center were excluded from the adjusted EBITDA calculation for 2024, the year-over-year growth rate would be 24% to 26%. Please note our updated guidance factors in the impact of the private REIT transactions we issued early this November and excludes the target IDC project's financials from our consolidated financial statements. Before I conclude, I'd like to briefly update you on our ESG efforts. Our outstanding sustainability performance has once again earned recognition from a leading global rating institution. In the 2025 S&P Global Corporate Sustainability Assessment, VNet score increased to 73 from 70 last year, ranking among the top 8% of the IT service industry globally. We stand out in areas including risk management, information security, environmental management, and customer relations, underscoring our comprehensive capabilities in sustainability development. This quarter's strong growth and enhanced profitability are yet another testament to our high-quality growth strategy. Looking ahead, we will continue to consolidate our core strengths and capture growth opportunities, delivering sustainable long-term value for all stakeholders. This concludes our prepared remarks for today.

We are now ready to take questions. Thank you.

We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, please ask your question to management in English and then repeat in Chinese. Your first question comes from Tom Tang from Morgan Stanley. Please go ahead.

Thanks, management, for this opportunity to ask questions, and congrats again on a very strong quarterly result. So I have two questions. So first question is more on the 2026 outlook. So we're hearing that there has been some expansion in the domestic chipset capacities. So just wondering what is our current outlook for the overall order tendering in 2026? Second question is about private rates. So we noticed that we have filed another private rates with a size of almost 10 billion RMB. So just wondering what will be the timeline of this private rates execution, how much cash we're going to recycle, and what will be our impact to the financial statements? 我简单翻译一下就说, 先感谢管理层给我这个提问的机会, 然后再次恭喜是一个非常强劲的业绩。 我这边可能有两个问题, 第一个问题是关于2026年的展望的, 我们有听到最近好像国产芯片有一些不错的进展, 所以不知道管理层在现在会对2026年的一个, Thank you.

Thank you for your question. Let me answer your first question. You talked about the overall outlook for next year. Since it is the end of the year, our company will also have a more in-depth exchange with our customers. We hope to get to know the path of its development with our customers, and prepare for our resource reserves. From our own communication and our pipeline situation, we believe that next year, the market in 2026, should maintain a stable and alive basic status. At the same time, in the process of communication, we also found that the current customers' expansion of their business and the layout in different areas has been very small. They will carry out different plans in different seasons. From these perspectives, when we provide services to our customers, we must first make advance arrangements. At the same time, according to the season, whether it is its bidding rhythm or its delivery rhythm, they all give us higher requirements. In short, we believe that in 2026, the domestic market will remain stable. You just mentioned a very important point, uh uh uh uh Thank you.

This is Ma Jun. I'll take your question. Thank you very much. You know, as we are approaching the end of the year, we are engaging our customers and trying to learn about their development path. This would put us in a well position to plan our resources accordingly. So according to our communications with the clients and also the current status quo of the pipeline, we believe that the market will be fairly stable with moderate increase for the year 2023. According to our conversations with clients, we feel that they are having very detailed expansion plan or growth nationwide. Therefore, we have to plan carefully in order to accommodate the user's needs because they are having They are requiring us to deliver the capacities at a faster pace with a higher requirement. So that's why we are planning accordingly as well. And so the overall reading for the next year is that the market is going to be stable with a moderate increase. And with regard to your second question on the domestic chip, so we, VNet, is tracking and monitoring the development of the domestic chips very closely. We know that the sector is evolving very quickly with a lot more options available. And we believe that in 2026, we're going to see intensive competition among domestic chip players. Other than the two to three major players, there are more upcoming players coming into the market. So we're going to see significant growth, development in this sector. So that would give the customers a lot more choices with more certainty. Again, that would push the development or in return drive the development of our business. Thank you.

我来说一下刚才你问到的瑞兹的情况。 确实是我们这两个项目是我们继我们首个私募瑞兹试水成功以后推出的。 The underlying assets of our first project are urban-type IDC. The underlying assets of these two projects are all base-type. This is also the first time that we have realized a base-type project through a large-scale issuance of SMU REITs. If these two projects can successfully be issued, it also marks the completion of our base-type business, which is to develop, maintain, partially withdraw, and long-term operation of capital wallets.

This is Chi Yuan. I will take your second question with regard to the RITs projects. So these two RITs projects followed on the heel of our first private RITs projects. So the underlying project for our first RITs project was retail IDC, whereas the underlying assets for these two RITs projects are wholesale IDCs. So this would be the first time that we have scaled private risk issuance with the underlying assets of wholesale IDCs. So if these issues were too successful, this would officially mark that we have completed the full closed-loop capital cycle of development, holding, partial exit, as well as the long-term operation.

These two projects are currently being reviewed by the exchange. We expect that the value of the valuation will be significantly better than the project we just launched. And after these two projects are launched, unlike our first project, World Internet will continue to merge the accounting report. That is to say, the launch of these two projects will not affect the income and EBITDA data on our balance sheet and the merger data. And then we have similar base-type projects

These two RAISE projects are currently being reviewed by the exchanges, and the expected valuation multiples would be better than the first RAISE project. Once the two RITs projects were successfully issued, unlike the first RITs project, we will consolidate the financial statements of these two projects into the group-level financial statements. Therefore, it wouldn't impact the group-level financial statements, specifically the revenue or EBITDA data. We are planning to adopt a similar approach with future private rates projects with underlying assets of wholesale IDCs. And our goal is to complete the issuance by Q1 next year.

Next question.

Thank you. Your next question comes from Timothy Xiao from Goldman Sachs. Please go ahead.

Great. Thank you, Madeline, for taking my question. And congrats on the very solid results. Two questions here.

One, I think this earlier mentioned that Ren seems to receive more orders.

Hello?

Yeah, we can hear you now.

OK. Yeah, so I was up here to be, we need more orders in your wholesale campuses in Hebei and Jiangsu. From the geographical location perspective, how do you think about the customer preferences and what kind of does each campus serve differently? That's my first question. My second question is regarding the price. I noticed that for this quarter, there is some fluctuation in the wholesale MSR. I'm just wondering how do you think about the pricing trend into the fourth quarter and next year for the wholesale of A&E? I'll translate it quickly. Thank you for accepting my question. Congratulations on a very stable quarter performance. I have two questions here. The first one is a follow-up that Guan Yicheng just talked about. Now, the customer's water quality will become relatively high, especially for base-type water centers in different locations. I would like to ask, what are the customers' preferences and considerations? What are the needs of customers in our different bases? This is the first question. The second question is about the price of our base-based data center. We see that there may be some fluctuations in the third quarter. What is our judgment on the price trend of the fourth quarter and the entire base-based data center next year?

Thank you. Thank you. Let me answer your question. The first one is what you just mentioned, that is, now customers in the national scope, their orders, they have their own considerations for different areas. In fact, customers themselves do not have any obvious preferences, but according to their own business type, from their headquarters, including its original content, the original capacity, the convenience of expansion, these few dimensions are considered.

I'll take your first question. Actually, the client takes specific considerations with regard to their orders for their business across different regions. They do not have very particular preferences. I think the major considerations on their end is, first, the type of business and product offerings. Second, the distance or proximity to their headquarters. And the third is how convenient it is to scale up the existing capacity that they have with us.

对,另外一个就是您可以看到,就是以我们公司为例, 那客户在不同的地点来释放订单的节奏也是不一样的。 一般每个季度都会有一些变化。 那从我们来讲,您知道我们在环境地区的基地以及长三角地区的基地, 承接现在主要客户的需求比较多。 At the same time, in our specific way, for example, in the Hebei region, for example, in the Wulanchabu region, the customer release also has its rhythm. This is from our point of view, on the one hand, it is mainly the customer's own business. For example, he will choose a close location according to the requirements of the experiment. At the same time, there is also a very important consideration, that is, the expansion of the customer, his close expansion of this demand.

And take VNetUs, for example. So we have observed that the clients have different types of pays with regard to their requests across different regions. And it would vary quarter by quarter. We have a lot of the demand coming from the greater Beijing area as well as the Yangtze Delta area. However, we do have upcoming new demands from customers for campuses in Hebei Province as well as the Wulan Chapel campus. Like I said, the major considerations on the client side is their type of current product offerings and the proximity to their headquarters. as well as how convenient it is to scale their existing capacity with us. So that's the major considerations on their end. And based on that, they are varying their requests quarter by quarter.

您同时也问到了关于现在价格的一些情况。 那首先我想跟您分享的是, 从目前特别是Q3来看, 我们的价格,特别是基地型项目的价格, 是保持非常平稳的这个态势。 And with regard to the pricing of our wholesale IDCs, according to what we have observed, the pricing for Q3 was fairly stable. 那我愿意再稍微的做两点说明。 第一个就是, And I would like to elaborate on that.

First, customers are moving in faster than we expected. Therefore, the IRR of these projects are better than when expected.

第二个,非常坦诚的跟您交流,就是确确实实公司在 And number two, frankly speaking, in areas where the dynamics of supply and demand

is in tight balance, VNet do not engage in the beatings with low prices. Therefore, we are able to secure a fairly stable order or contract price. Thank you. Next question.

Thank you. Your next question comes from Daily Lee from Bank of America. Please go ahead.

Hi, management. Thanks for taking my question. Congrats on the strong results. I have two questions here. First one is in our last earnings call we mentioned we have a few projects and we are participating for the tendering and could you update us the progress And have we completed all the projects ongoing? How many projects are we doing with our clients? And in the future, how do you see the seasonality of mold changing in the future? My second question is about the new land and power resources. In this quarter, we see our total resources on hand is largely stable. And in future, where would we, which area would be our focus to find more resources, land and power? Okay, let me translate it for you. The business management is a very advanced industry. The first question I would like to ask is that at the last conference, we mentioned that we participated in some bidding work for some customers. I would like to ask about the progress. Now, some of the projects may already be completed. What other projects are still in the process of discussion? In the future, what do we expect from the new orders and customers? The second question is about our resources. At present, the second quarter of the third quarter is in a stable state. In the future, our new electricity and land resources Thank you. Thank you for your question. Let me answer your question.

Regarding the first question, I will also describe it a little bit. I will give you an explanation and explanation. From the perspective of the development trend, it is true that In the first, second, and third quarter of 2025, the needs of customers are released at a different pace with different customers. We only follow the customer's rhythm to catch up with the customer's needs and provide services to the customer. As you can see, I made a simple statistics. From today forward, in the first 12 months, we have received more than 331 trillion orders in total.

Thank you for questions. You know, as we have observed for the first three quarters that different customers coming up with different requests at the different paces. And for us, we followed their paces closely. And I have did a very brief summary for what we have achieved in terms of the new orders that we have secured for the past 12 months. That was 331 megawatts.

Looking ahead to 2026, based on the services we are offering to our clients, as well as the understanding of our clients,

we are confident that we are able to sustain this growth momentum.

同时我们在服务客户基地型项目的同时, 我们也密切关注客户以及整体的AI的发展的趋势。 那么我们也认为随着AI的逐步的推进, 特别是训练和推理, balance, push, and gradually become new growth engines. These characteristics, we also predict that after this trend, we will also deploy resources, transform the system, and judge the GPU. We have confidence in this judgment. We also believe that with the gradual release of these needs, especially large customers will train, push,

And so with regard to the wholesale IDCs, we have been following closely the client's AI development trend. We have noticed that customers are actually balancing their inferencing and training demands. And we have... you know, captures that change. The customers are pivoting more towards the inferencing, and we're deploying resources accordingly to meet that customer's needs. So therefore, we are repurposing some of our cabinets and acquiring GPUs in advance. So this would put us in a good position to accommodate our users' needs. And, you know, particularly with these orders from the key clients, we are confident in that with the efforts On our end, we are able to accommodate users' needs as the AI growth momentum continues to unleash.

想回答您第二个问题,这个问题是非常关键以及是公司考量比较多的一个问题。 首先想跟您说明一下,除了我们会通过和客户的 We will prepare for the next year's work and resources while the company has planned and obtained resources in the next five years as a basic time length for our future development.

And with regard to your second question on resources that we're planning to acquire in the future, that's something that the company values a lot and put a lot of thoughts in. Based on the service that we offer to our clients as well as the understanding that we have on them, we are planning our resources for the next year. On top of that, we have extended our planning over to five-year horizon rather than on a yearly basis. So this would allow us to plan more strategically to accommodate users' needs.

考虑到五年,有几个基本的考量。 第一个,客户的通算和质算的服务的比例。 第二个就是客户在不同区域对资源的需求。 第三个来讲就是AI和GPU的发展。

And to break it down, we carefully weigh three factors. One is the split, the demand split between generic computing power versus the smart computing power. And the second is the geolocations. And the third is the AI GPU-related chip development.

具体到您的问题,我在最后做一点补充说明。 具体到明年。 Next year, we will focus on the environmental areas, including the Ulan-Ude, Hebei, and the surrounding areas of Beijing. At the same time, we have also started the resource acquisition work in the Long Triangle area, facing a five-year mid-term layout, supporting Long Triangle customers. In addition, we have also initiated the layout work of resources outside of the environmental and Long Triangle areas. When there is a preliminary result, we will announce it in real time.

And more specifically, with regard to next year, we are going to focus, number one, the greater Beijing area, particularly Hubei and the Beijing surrounding areas. Second, number two, the Yangtze River Delta areas. We are starting to acquire resources for the next five years to accommodate our users' demand. And additionally, we are exploring the resources outside of these two major areas that I mentioned. Thank you.

Thank you. Your next question comes from Sarah Wong from UBS. Please go ahead.

Thank you for the opportunity to ask a question. I actually only have one question. I recall earlier this year, management had shared that one of the top priorities from HabitSkill customers is the time to market. So has that changed? And also, as inference demand is going to be the growth driver into next year, is there any change in the customer's consideration in terms of new order release? And if we talk about more workloads by inference, does that mean maybe user latency will be a relatively more important configuration factor going forward. 感谢提问的机会, 那也非常恭喜公司取得很强劲的业绩。 那我只有一个问题, 就想请教一下, 因为今年上半年的时候, 我记得管理层有提到, 当时这个客户对于新的, 尤其是AI数据中心的交付速度, 有比较高的一个要求, 我不知道那个, Thank you.

I'll answer the second half of your question.

Yes, we have observed that growth. inferencing will become a major growth driver for next year.

所以这样对于客户来讲,他对地点的选择,他会要求的食盐会越来越小,越小越好。 所以在环境地区,包括河北,包括乌兰茶部,对于我们公司来讲,客户在这方面来讲的话,要求下单会比较多。

So that means that the customers have a higher requirement in terms of latency. So the lower latency, the better. Therefore, we are in a very good position to meet customers' needs with our campuses in the greater Beijing area, particularly Hebei Province, as well as the Wulanchabu campus.

Back to your first question, Chase, this question is very important to us. And with regard to the first half of your question, yes, it is quite a trade-off that we have to face.

So we are facing significant challenges in terms of how fast the customer wants to move in with the capacity that they have secured with us.

目前我们是通过三个主要的做法能够来满足客户的要求。 第一个就是我们提前布局好土建和外电。 第二个就是我们进一步加强供应链的整合能力。

And there are three approaches that we are taking to meet customers' demand. Number one, we are planning early in terms of civil engineering and external power supply. Number two, we are consolidating our capacity in terms of supply chain management. Number three, we are adopting electromechanical modularization as well as other standardized construction solutions to meet customers' needs.

那最后也要跟您分享,就是客户的要求一般还是T加6,也就是六个月之内交付。 那我们通过刚才跟您分享的这三个手段能够满足客户的T加6的要求,甚至我们还做到过一次T加3的交付给客户。

As you know, the general timeline that the customer expects is T plus 6, which means they want to move in within six months after signing the contract. Yes, we are able to accommodate users' needs in terms of the horizon. In one particular case, we're even able to accommodate or deliver within three months after signing the contract, just so you know. Thank you.

Next question, please.

Thank you. Your next question comes from Xu Yunzhi from CICC. Please go ahead. Hi, my name is Xu Yunzhi.

Congratulations on the company's strong owners and thank you for taking my question. My first question is about the wholesale IDC and the delivery piece for the wholesale IDC business is very fast and has the company set the utilization rate target for the next two years. My second question is about the retail IDC business. We have seen the retail business, EDC business, MRR has been growing for several quarters and what are the main drivers behind this trend and how do you view this sustainability in the future? Hello, management. Congratulations on the very strong performance of the company. Thank you for giving me the opportunity to ask this question. The first question is that I would like to ask, under a very fast pace of IDC delivery, how does the management look at the target of our entire turnover rate in the next two years, especially our base-type business? The second one is about the sales type. We have already seen that our MRR has been growing in a file for several consecutive seasons. What are the driving factors behind this? And how to look at such a continuity in the future?

Thank you. Thank you for your question. The first one is about the market rate of this base-type business. As we just talked about, we will adhere to the rapid market rhythm according to the requirements of the client. With regard to the utilization rate, of course, the customers are demanding to live in at a faster pace.

For our mature IDCs, the utilization rate is inching closer to 95%.

Talking about the target of the market share, I think it mainly depends on the delivery amount in the next two years. At the same time, we will provide more information in Q4 to answer your questions. At the same time, in the long term, we are confident that our market share will steadily improve.

And with regard to the specific target on the utilization rate, I think partly that depends on the capacity that's going to be delivered in the next two years. We will disclose more information in the Q4 financials. And we are, you know, in the long run, we are confident that the utilization rate will steadily increase.

I would like to answer your second question. Thank you very much for your attention to our retail business. And thanks for your attention on our retail IDC business.

As you know, the wholesale IDC business has been growing fairly quickly in contrast to the retail IDC. We are very pleasant to see the MRR of our retail business continue to grow quarter over quarter for several consecutive quarters. As you know, competition landscape in this sector is fairly intense.

这背后的我觉得主要的原因有这么几个。 第一个从外部来看,客户对于零售型业务的需求从原来的只有存储, . . . . .

I think the growth partly boils down to a couple of factors. Number one, in terms of the needs as customers, they are adding smart computing on top of storage plus generic computing. And we are proactively repurposing our cabinets in order to meet their demands, in order to capitalize on this growth momentum and need.

从我们内部的角度来看,我们做了两件事情。 And factor number two, on our side, on top of the hosting service we offer to the clients, we are providing support.

incremental value-added services on the software level, let's say, networking as well as storage networking services?

另外呢,就是之前呢,我也跟大家也分享过, 就是在两年前我们就已经开始进行 我们零售业或者城市型数据中心的高电机柜的改造, 从这个工作我们每年都进行, 那目前看呢,我们也受益于此。

And another factor is the initiative of repurposing the retail cabinets into higher density cabinets, and clearly we are benefiting from these efforts and initiatives.

最后我想说一句就是只要客户的需求存储, Last but not least, should the demand from customers in terms of storage

our generic computing plus value-added services sustain. We're confident to sustain the growth momentum of our retail business. Thank you.

Next question, please. Thank you. Your next question comes from Andy Yu from DBS. Please go ahead.

Hi. Thank you, management, for taking my questions, and congratulations on the solid results. So I have two questions. So your key peer has announced plans to expand into regions with lower electricity costs to capture AI training demand. So how do you see the supply-demand dynamics will evolve in these regions where the NETs currently have a first-mover advantage? And secondly, the government's stand on data center series has become more positive with a shorter timeline for new asset ingestion post-IPO. Do we expect our series application to accelerate And apart from REITs project, what will our funding strategy be going forward? 让我翻译一下,恭喜公司亮丽的业绩,我有两条问题想请教一下。 昨天邮箱也宣布计划进入电费更低的地区来满足AID训练需求。 公司在沃南查部已经有宪法布局,请问管理层怎样看未来这些地区的供需和进进的情况会有怎样的改变? Thank you. I will answer your first question. I think it is like this.

According to various companies, Thank you. I'll take your first question.

I think different companies are adopting different strategic growth approaches with regard to their own reading on the market dynamics as well as their development legacy. So they are actually deploying resources based on all of these factors. However, I would like to elaborate on how we go about it.

Like I reiterated many times, over the next three to five years, AI is going to be increasingly more important to growth driver. For this whole process, our company has such a proposal for your reference. First of all, we think that basic model training will be concentrated in a few powerful companies in China. More companies are using basic models for use.

On the corporate level, our reading is that the training of foundational models, that type of demand will be increasingly concentrated to one or few top capable deep pocketed players. So that's the first reading that we have on the market.

The second is about reasoning and personalization deployment will maintain a growth trend. This can be verified from Jason Huang's recent speech.

And number two, we believe that inferencing and private deployment will continue to sustain its growth momentum as it can be evidenced or confirmed from Jason Huang's remarks.

The third, we believe that in the next five years, And number three, we believe over the course of the next five years, as the domestic GPU chips grow,

There is going to be more demand from the inferencing, private deployment, as well as many emerging group intelligent agents. So these are the growth areas or customer demands that we are paying closer attention to.

所以最后我想表达的意思就是我们世界互联会秉持一个协调发展的理念。

So in a nutshell, we, VNet, will adhere to the principle of a coordinated, balanced development, so using our resources to meet users' varying demands. 好,谢谢。 Thank you.

我要回答一下您那个第二个问题,关于公募瑞士。 . . . .

So our C rate is still underway. However, I am not in a position to disclose any information at the moment, and we wish to update to you later as we see more progress. So other than the C rates or public rates, we are proactively advancing the holding type ABS, also known as private rates. And we have successfully issued one, and we are hopeful that this would allow us to recycle a major sizable fund or capital from such types of issuance.

另外在这里借这个机会也想分享一个好消息,就是我们在国内的运营主体北京世纪互联刚刚拿到了国内的一个评级机构的3A评级。 And additionally, I am happy to share that we, so one of the operating entity, domestic operating entity, Beijing VNet,

has just received a AAA rating from a domestic rating institution, which is rare among private-owned companies, non-public, so non-OEMs, non-state-owned companies. So with this rating, a favorable rating, so we are actively advancing the issuance of domestic corporate bonds, particularly the science and tech innovation bond, which comes with a very favorable interest rate. So should it be pulled through, we are going to benefit from a lower interest rate with a widening channel of financing.

Next question, please.

Thank you. Your next question comes from Ethan Jiang from Nomura. Please go ahead.

Okay, thanks, management, for taking the questions. So only one quick question. So how do you see the trend for our unit CapEx spending? Because I noted that for the first nine months, the total CapEx spending was around $6 billion versus our four-year guidance of $10 to $12. So it looks a bit behind. a schedule versus our capacity delivery schedule and so just wonder if management can provide some colors on this and also for next year's capex what's our outlook and potential sources for funding our next year's capex 我们现在主要的CAPEX都在这个基地型的业务上。

那目前基地型的单千瓦CAPEX的这个水平是在平稳下降的一个趋势。 So majority of our CAPEX is on the wholesale IDC, and CAPEX per unit megawatt for our wholesale IDC campuses are gradually trending down.

明年的CAPEX预算我们还在编制过程中。 We are preparing our financing plan according to the scale of the similar 25 years. The source of the funds is mainly the asset creditization at the project level, as well as the issuance of domestic bonds as mentioned earlier. We achieved more than 20 billion yuan in capital recovery through the pre-raise, smooth raise, and development funds at the project level throughout the 25 years.

And we are still in the process of putting together our CapEx for next year, and we are preparing the similar size of funding. And the proceeds or the sources of these funding would mainly come from asset securitization as well as issuance of a domestic corporate bond. A quick number that I want to share with you. So through the pre-risk, private risk and development fund that issued in 2025, we have successfully recycled 2 billion RMB through the equity assets. And our goal is that we're going to beat this number in 2026.

There are a lot of tools in our toolboxes, financing toolboxes, I would say, and we are confident that we are able to fund our CapEx.

while keeping the leverage ratio within a secure range or safe range.

Next question, please.

Thank you. Your next question comes from Anthony Leng from J.P. Morgan. Please go ahead.

Hello, Mr. Guan. Can you hear me? Yes, we can.

Thank you, Mr. Guan. Congratulations on your good performance. I have two quick questions for you. So I have two questions regarding the four-year lipstick guidance. So the four-year guidance implies that the 4Q revenue appears to be down a little bit, based on the midpoint. And what could be the potential reasoning, given the strong fast customer moving rate? Is there potential upside to the four-year guidance further? The second question is regarding 3Q reported to take the margin. There was some sequential decline versus 2Q, despite a very strong customer moving rate. What could be the potential driver to cause this decline? And what could be the next few quarters in the margin trend? So, my first question is about the performance of the whole-year uptrend. The revenue in the fourth quarter seems to have a different ratio. Do you have any special reasons for this? Or will there be room for further improvement in our full-year revenue? Or is our full-year revenue a little bit optimistic? The second question is about the third quarter's AIDA margin. This part looks like the ratio is going down. Thank you. Let me answer these two questions.

In terms of year-round guidance, we have always had a more cautious style. As for the specific figures, we still need to further observe the speed of our new customers, including the situation of power consumption. This has something to do with our revenue. At present, it is very unlikely that the revenue will decrease compared to what you said in the fourth quarter. You can refer to our year-round performance guidance for more positive space.

Let me take your question. As always, we have been consistently prudent in terms of offering our full-year revenue guidance. I think we are going to watch closely the pace of our customers moving in, as well as the electricity used by them, because they are closely related to the revenue. Looking to the quarter-over-quarter growth, I think there's very little likelihood the Q4 revenue will decline sequentially. I would advise you to refer to the upper end of our full-year revenue guidance range.

关于EBITDA margin的问题, 其实是在一个正常的水平, 就是因为我们现在基地型的业务占比在增加, 而且会计上客户用的电费实际上是在我们的损益表里面的, 它的收入和成本都在我们的损益表里, 这一部分的, And with regard to the EBITDA margin, I would say it's within a reasonable range because

Majority of our offerings revenue is from the wholesale IDC business. And because of the rising temperatures in Q3, therefore we are seeing more tariffs for Q3. Given that these are actually reflected in our P&L in terms of the tariffs that we pay, However, with regard to our operational costs, they are consistent. We do not see huge fluctuations. So I would say this is reasonable seasonal fluctuations.

Thank you.

Thank you, ladies and gentlemen. That concludes our conference for today. Thank you for participating. You may now disconnect your lines.