VNET Group, Inc.

Hello ladies and gentlemen. Thank you for standing by for the fourth quarter and full year 2025 earnings conference call for VNet Group Inc. After 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 Ms Sharon Liu, Rotating President, Mr. Peter Zhang, SVP of Operational Finance, and Ms. Xin Yuan Liu, Head of Investor Relations for the company. Please note that today's conference call is being recorded. I'll now like to turn the call over to the first speaker today, Ms. Xin Yuan Liu. Please go ahead.

Thank you, Operator. Hello, everyone, and welcome to our fourth quarter and full year 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 priorities and this conference call include the disclosure of unaudited GAAP and non-GAAP financial matters. VNet'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 Ms. Sharon Liu, our rotating president, and Mr. Peter Zhang, our SVP of operational finance. 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. Ms. Liu, 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 fourth quarter and full year of 2025. Before we dive into the key figures, I want to underscore that 2025 was an exceptional year for VNet. Our effective dual core strategy and hyperscale 2.0 framework empowered us to capture surging AI demand and deliver impressive results. Let's turn to slide four. On the operational side, our wholesale IDC business continued to grow significantly, driven by robust customer demand and our rapid delivery capabilities. As of December 31st, 2025, Our wholesale capacity in service grew to 889 megawatts, an increase of around 107 megawatts quarter over quarter, bringing our total deliveries for the full year of 2025 to a record high 404 megawatts. In line with our full-year delivery plan, wholesale capacity utilized by customers rose to 623 megawatts, an increase of around 41 megawatts quarter over quarter, driven by continued strong customer demand and our solid execution. Customers moved into 270 megawatts over the full year, bringing the utilization rate to 70.1%. Our retail IDC business continued to progress smoothly, benefiting from growing AI-driven demand. In the fourth quarter, our retail MRR per cabinet was RMB 9,420. Retail utilization rate was stable at 64.0%. On the financial side, our total net revenues increased by 19.6% year-over-year to RMB 2.69 billion for the fourth quarter. Wholesale revenues remained the key growth driver, reaching RMB 978.1 million. a significant year-over-year increase of 47.1%. Our adjusted EBITDA for the fourth quarter also increased by 11.6% year-over-year to RMB 805.1 million, driven by the rapid growth of our wholesale IDC business, excluding the one-off impact of asset disposals in the fourth quarter of 2024. Adjusted EBITDA increased by 39.3% year-over-year. For the full year of 2025, our total revenues grew significantly by 20.5% to RMB 9.95 billion, and adjusted EBITDA grew 22.6% to RMB 2.98 billion, both significantly outperforming our 2025 guidance. We continue to advance our capital recycling strategy in 2025 and achieved meaningful results. In November 2025, we successfully issued an RMB 860 million holding type real estate green asset-backed security. Also, in March 2026, two of our private rates projects were listed on the Shanghai Stock Exchange, with a total offer size of approximately RMB 6.36 billion. Moving into 2026, Customer demand for our wholesale IDC business remains strong. Meanwhile, our ongoing operational efficiency gains are providing increasingly robust support for this business's high-quality growth. We expect our full-year 2026 revenue to be in the range of RMB 11.5 billion to RMB 11.8 billion, representing a year-over-year increase of 15.6% to 18.6%. and adjusted EBITDA to be in the range of RMB 3.55 billion to RMB 3.75 billion, representing a year-over-year increase of 19.2% to 25.9%. Moving on to our new order wins on slide 5. Order momentum remained strong in the fourth quarter, largely fueled by brisk demand from customers. During the quarter, we secured five wholesale orders, totaling 135 MW. Specifically, in addition to the 32 MW order mentioned on our last call, we won a 12 MW order from Internet customer for a data center in the Yangtze River Delta. Meanwhile, we also won a 56 MW order from a cloud service provider and a 25 MW order from an intelligent driving customer, and an 11 MW order from another Internet customer for our data centers in the greater Beijing area this quarter. Furthermore, bolstered by AI-driven demand, we secured a combined capacity of approximately 2 MW in new retail orders across multiple retail data centers from customers in the intelligent driving, local services, AIoT and financial services sectors. China's IDC industry continues to thrive, driven by strong market demand as well as supportive policies. At the national level, authorities have rolled out a series of systematic and actionable policies, sustaining their support for the digital economy and computing infrastructure. At the industry level, accelerating AI adoption and enterprise digital transformation along with increasingly clear and sustained investment commitments from large and mid-sized customers, particularly leading Internet companies and cloud service providers are fueling strong, visible demand for high-quality IDC services. Market demand is further shifting toward large-scale, clustered and highly reliable data center infrastructure, while rising requirements for delivery certainty Long-term scalability and green operations are tightening effective supply. Our industry-leading delivery performance, premium IDC services, and scalable data center clusters continue to strengthen VNet's competitiveness in this market environment. Guided by our dual core strategy and hyperscale 2.0 framework, we are well positioned to capture growth opportunities and expand market share in an increasingly AI-driven infrastructure landscape. 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 107 MW quarter, over quarter to 889 MW, and utilization rate at 70.1%. mainly attributable to rapid deliveries at our NOR Campus 02A and NHB Campus 03, and fast move-ins at our NOR Campus 02A. Our mature capacity utilization rate also reached 93.1%, 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 fourth quarter, our total wholesale resource capacity was around 2.2 gigawatts. Specifically, our capacity under construction was around 452 megawatts. Capacity held for short-term future development was around 513 megawatts. And capacity held for long-term future development was around 327 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 9. Our retail business progressed smoothly in the fourth quarter. Retail capacity in service decreased to 49,863 cabinets. from 52,288 cabinets last quarter, mainly because the target retail data center under our private REITs project was excluded from the group's consolidated capacity. The utilization rate was stable at 64.0% as of the end of December. Our MRR per retail cabinet increased slightly to RMB 9,420 this quarter, from RMB 8,948 last quarter driven by the increasing adoption of value-added services amid vast AI-driven demand. Turning to our delivery plan on slide 10, as I mentioned before, leveraging our efficient delivery capabilities, we successfully delivered a total of around 107 megawatts in the fourth quarter of 2025, bringing our total deliveries to around 404 megawatts as of the end of December 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 450 to 500 megawatts of capacity over the next 12 months to meet the strong demand from our wholesale customers. In conclusion, our robust fourth quarter and full year 2025 results validate our operational excellence growth strategy and our ability to identify and capture market demand in the AI era. As we move into 2026, we will continue to advance our dual core strategy and hyperscale 2.0 framework, developing our scalable, high performance and energy efficient data centers to seize growth opportunities while empowering China's digital economy for sustainable growth. Now, I will turn the call over to our SVP of Operational Finance, Peter, 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 financial performance, please note that, unless otherwise stated, all the financials we present today are for the fourth quarter and the full year of 2025 and are in Renminbi 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 fourth quarter, we continued to pursue high-quality business. Our total net revenues increased by 19.6% to RMB 2.69 billion, mainly driven by the rapid growth of our wholesale business. Our adjusted cash gross profit rose by 23.1%, to RMB 1.14 billion, while our adjusted EBITDA also grew year over year by 11.6% to RMB 805.1 million. Meanwhile, excluding the one-off impact of asset disposals in the fourth quarter of 2024, our adjusted cash growth profit and adjusted EBITDA increased significantly by 31.1% and 39.3% respectively, year over year. For the full year, our total net revenues were RMB 9.95 billion, increasing by 20.5%, and adjusted EBITDA reached RMB 2.98 billion, reflecting an impressive 22.6% increase from the prior year, both exceeding the raised guidance we issued in the third quarter. Let's look more closely at our top line. As you can see on slide 13, in the fourth quarter, wholesale revenues, our key revenue growth driver, increased significantly by 47.1% to RMB 978.1 million, mainly attributable to activity at the NOR Campus 02A. For the full year, our wholesale revenues increased significantly by 77.4% to RMB 3.46 billion, driven by rapid customer moving pace this year. Retail revenues increased by 7.6% to RMB 1.04 billion for the fourth quarter and increased by 3.5% to RMB 3.96 billion for 2025. Our non-IDC business revenues increased by 8.8% to RMB 670.8 million for the fourth quarter and increased by 1.8% to RMB 2.52 billion for 2025. During the fourth quarter, we maintained solid margins thanks to our ongoing efficiency improvements. As shown on slide 14, our adjusted cash growth margins improved modestly to 42.3% from 41.1% in the same period last year. Our adjusted EBITDA margin was largely stable at 30.0%. Moving on to liquidity, on slide 15, we maintained robust and healthy liquidity, bolstered by a net operating cash inflow of RMB 546.4 million during the fourth quarter, bringing our net operating cash inflow for this year to RMB 1.92 billion. If the RMB 231.0 million of income tax from one-off asset and equity disposal were excluded, the net operating cash inflow for this year was RMB 2.15 billion. Our cash position remains solid with total cash and cash equivalents, restricted cash, and short-term investments reaching RMB 6.58 billion as of December 31st, 2025. Next, let's take a look at our debt structure on slide 16. We maintained our prudent approach to debt management. As of December 31st, 2025, our net debt to the adjusted last quarter annualized EBITDA ratio was 4.3 and total debt to the adjusted last quarter annualized EBITDA ratio was 6.2, both remaining at healthy levels. Our adjusted trading 12 months EBITDA to interest coverage ratio was 6.7. 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 2026 to 2028 comprises 46.6% of our total debt. Turning now to CapEx spending. As you can see on slide 17, for full year 2025, our CapEx was RMB 8.24 billion. with the majority allocated to the expansion of our wholesale IDC business. Actual CapEx came in below our prior full year guidance, primarily due to cost efficiencies from economies of scale and enhanced supply chain management. We expect our CapEx for the full year 2026 to be in the range of RMB 10 billion and RMB 12 billion, mainly to support our planned delivery of 450 to 500 megawatts in 2026. We made meaningful progress in advancing our asset monetization strategy this year. In November 2025, we successfully issued a holding type green real estate asset backed security under one of our private rate programs, the first of its kind in China's IDC industry. The offering totaled RMB 860 million with equity consideration of around RMB 800 million. implying evaluation of approximately 13 times EV to EBITDA. Notably, this project has received a G1 rating from an authoritative third-party evaluation institution, the highest possible rating in the relevant evaluation system. VNet sees consolidating the project for financial reporting purposes. However, as the issuer and originator for the private REIT project, VNet will remain responsible for the IDC project's operation to ensure its healthy long-term development. More recently, in March 2026, two of our private REIT projects were successfully listed on the Shanghai Stock Exchange with a combined offering size of approximately RMB 6.36 billion and an EV to EBITDA multiple of around 13 times to 14 times. Looking ahead, we will continue to execute capital recycling initiatives to further unlock the value of our existing IDC assets. Proceeds from these initiatives will be reinvested into new project development and incremental business expansion, supporting our long-term growth strategy. Additionally, they will effectively reduce leverage and optimize the company's capital structure, ultimately creating long-term value for shareholders. Now moving to our full year guidance for 2026 on slide 19. As we expect strong demand from our wholesale IDC customers and ongoing operational efficiency gains throughout 2026, we expect total net revenues to be in the range of RMB 11.5 billion to RMB 11.8 billion, a year over year increase of 15.6% to 18.6% and adjusted EBITDA to be in the range of RMB 3.55 billion to RMB 3.75 billion, representing a year-over-year increase of 19.2% to 25.9%. Before I conclude, I'd like to briefly update you on our ESG efforts, building on our constant dedication to sustainability. VNet continues to receive recognition from leading global rating institutions. we have been included in the global edition of the S&P Global Sustainability Yearbook, 2026, for a second consecutive year, reflecting the consistency of our ESG practice. In addition, VNet earned a B rating in CDP's 2025 Climate Change Questionnaire, underscoring strong performance across key environmental metrics. Looking ahead, we will continue to strengthen our ESG framework embedding sustainability more deeply into our operations and business strategy to support our sustainable growth and value creation. To sum up, our strong fourth quarter performance capped 2025 and laid a solid foundation for 2026. We will continue to reinforce our core strengths, optimize resource allocation, and proactively capture opportunities arising from AI adoption and enterprise digital transformation. We remain dedicated to delivering high-quality growth that creates 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 then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2 and if you are on a speakerphone, please pick up your handset before asking 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. First question today comes from Tom Tang at Morgan Stanley. Please go ahead.

Okay, thank you, management, for the opportunity to ask questions. And again, congratulate on a very strong result and a very solid full guidance for the year of 2026. So I have two questions. So first of all, we heard that there has been some big customers starting tender on their 2026 and 2027 data centers in the beginning of the year. So just wondering, have we been participating in those tender and what has been our current progress? And secondly, we know that our fourth quarter total resource on hand had an almost 400 megawatt increase quarter on quarter. So just wondering, what are the regions for our new resources? And do we have any outlook for our new resources for the year? 我来简单翻译一下,就首先还是感谢管理层给我这个提问的机会。 非常恭喜一个抢金的业绩以及一个比较稳健的二流年的展望。 我只有两个问题,第一个问题是我没有了解到 There are some large customers in the beginning of the year who have already started a relatively large-scale bidding work. So I would like to ask you about our participation here and how it has progressed. The second question is that we see that the total resource of the fourth quarter has increased by nearly 400 trillion. So I would like to know where these new resources are mainly distributed and what is the outlook for the new resources in 2026. Thank you.

Tom, thank you for your question. Let me answer your two questions. One is that we did notice that at the beginning of this year, our customers had a lot of bidding movements. World Internet, as a supplier of the domestic tier one, also participated in bidding. If there is any progress in bidding in the future, we will make a disclosure in our earnings. You can pay attention to the future disclosure of the company. Secondly, when we were in Q4, there were some major progress in overall resources. The increase was mainly in the environmental area, one was in the Ulan Chabu area, and the other was in the surrounding areas of Beijing. In the future, in terms of resources, we will still look at the entire environmental area, including Inner Mongolia and Beijing. Another one, we will continue to expand resources on the basis of our storage resources in the long triangle. Overall, we will look at some areas with relatively low energy costs, as well as areas with relatively low network time, to provide a comprehensive service to customers. Thank you.

Thank you, Tom, for your question. Let me take your two questions. We did notice that at the beginning of the year, some of our key clients have already hosted meetings or tenders. And as the Tier 1 IDC provider in China, we have also participated in these meetings. However, we are going to update on the market in terms of the progress. and also the ones in our future earnings release. So please do follow our latest updates on this related matter. And with regard to the second question, indeed we have notably increased our resource reserve in Q4 and a majority of these resources are located in the greater Beijing area. specifically in Wulan-Chabu and also the area surrounding Beijing. Going forward, we will strategically value our resources reserve in the greater Beijing area, particularly Inner Mongolia and its surrounding regions. On top of that, we are also... On top of the existing resources that we have in the Yangtze River Delta region, we are actively acquiring resources, spending our reserve in that region. Just a quick point, we are actively looking for areas or regions where there are favorable utility conditions, so we would also actively deploy in these areas. so as to provide a service which features low latency to meet our customers' demand.

Next question, please.

Thank you. Your next question comes from Edison Lee at Jefferies. Please go ahead.

Hi. Thank you for taking my questions and congrats on the results as well. I have three questions. Number one is, out of the 450 megawatt to 500 megawatt of capacity addition guidance this year, what percentage has been locked in already? And what do you think is the progress over the next few quarters? And number two is, On CapEx, 10 billion to 12 billion RMB guidance this year, what percentage of that guidance is actually for 2027 growth? And then certainly, can you explain how you're going to finance this 10 to 12 billion RMB CapEx? 我有三個問題,首先恭喜你們的這個業績非常好。 第一個就是你們今年這個450到500像我的一個, Thank you.

Edison, thank you for your question. Let me answer the first question first. For the first question, in fact, the company also announced in our presentation that as of now, there are 156 megawatts of customer capacity in the 452 megawatts of electricity in the company. Then, as we answered the first question, as we recruit customers, Let me answer your first question. Thank you, Edison.

In our presentation slides, we have actually disclosed that we have locked in 150 megawatt out of the 450 megawatt plant. And we are going to disclose these capacity that's already secured in our future earnings call as we participate in the biddings, assigned MOUs, as well as the contracts that's being signed. So please do follow up, follow these announcements from our futures earnings calls quarter by quarter. And overall, the company is very highly confident in the capacity to be locked in for 2026. And now I'll pass it over to Peter for the second question. Hello.

We have run some numbers internally, and the majority of the CapEx for 2026 is to deliver the capacity.

in 2026, and few of that CapEx or very little of that CapEx is going to be used for the capacity extension and delivery in 2027. So hopefully that answers your question.

好的,第三个问题是关于就是公司CapEx的融资,还是我这边来回答。 整体上的话, Actually, from the project level, we mainly use project loans to support project-level financing. Because the company can now get very good conditions in China, a project loan with a longer term and lower cost. As for the other parts, the company will still have a very diversified process, including our current cash flow, which will be about 2 billion a year. And then, in fact, the company has also gone through the SMU rates process, Thank you.

I'll take your question on the financing channels. Predominantly, we are tapping into the project loans to finance our project. Given our current condition, the company is able to secure favorable and long-term loans with very low interest rates. On top of that, we are also exploring diversified means of financing channels. On top of that, we can finance these CapEx with our cash flow. Each year, we're generating around 2 billion RMB cash, so that can support our CapEx. In addition to all of these, we have successfully conducted or implemented the private rate That is also another financing channel. Additionally, we are also going to tap into private equity as well as other means as a public listed company to finance our CapEx. All in all, we are going to maintain a fine balance between our debt and equity financing amount. So we would maintain our leverage ratio within a reasonable range with prudent approach being implemented along the way.

Next question, please.

Thank you. Your next question comes from Daily Lee at B of A Securities. Please go ahead.

Hi, management. Thanks for taking my question. Firstly, congrats on the strong results and the solid guidance. I have two questions here. Number one is about our utilization rate in the Q4 last year. Since the quote on quote dropped a bit, could you update us what's the underlying reason And how do you see the future clients moving progress in the following quarters? And do we have a target for the full year utilization rate? My second question is about the CapEx. It seems that last year the CapEx number is behind our target, which seems a good thing in the view of investors. And for this year, Yeah, could you introduce us the reasons for the cappas? And for this year, do we see upsides for the more delivery given we have, you know, more cappas for this year? 好的,谢谢。 我这边可能翻译一下。 谢谢管理层我的提问。 然后我这边有两个问题。 第一个问题是关于我们的utilization rate, 利用率,就是刺激度。 The copper coin is not bad, and the gold coin has a slight decline. I would like to ask the reason behind this. How do we look at the trend in the next few months? Do we have a goal for the whole year? Secondly, regarding our capital expenditure, the number of capital expenditures last year was actually lower than our previous target. Maybe for investment, it's a good thing. We spent less money and paid a stronger target. I want to ask the reason behind this. And then for 2025, Thank you.

Thank you for your question. Let me answer the first one first. Regarding the price rate, from the numbers revealed by Q4, our price rate has slightly fluctuated. This is still related to the calculation of the price rate, because Q4's delivery is still concentrated at the end of the year, so the overall impact of the entire quarter will be lowered. But if we deliver less in Q1, the utilization rate will still be We think this is a normal fluctuation. 所以从整个2026年来说,公司对于上架也是比较有信心的。 我们认为它还是会维持在一个70到75的这个range之内, 那季度可能会有不同的波动。 对,关于Kapex的问题,我先交给Peter。 Let me take your question on the utilization rate.

Thanks for the question. Indeed, as we have disclosed in our presentation, the Q4 utilization rate did fluctuate. However, to clarify, majority of the deliveries happen in the end of the year, hence the fluctuation out there. Actually, our utilization rate can be specifically break down into two parts. One is the utilization rate for the mature capacities we have in place. Right now, that's in 90% to 95% range. However, for the ramp-up capacities, that's another portion of the utilization rate. We see these fluctuations as perfectly normal. Overall, the company is confident in the utilization rate in 2026. We're confident to maintain that within 70 to 75 percent. However, there is going to be fluctuations quarter by quarter. Hopefully, that answers your question. Now, I'll pass it over to Peter for the second question.

Regarding the second question, I would like to respond to it. The first one is the KPI of 2015. In fact, our final value is 8.2 billion. In terms of product quality, on the one hand, it is mainly due to our entire scale. In 2015, the investment of 2015 and 2014 was greatly increased. Under this situation, the entire scale of the production has been optimized or effected. This is on the one hand. On the other hand, we are also continuously optimizing and upgrading the entire supply chain. On the CapEx question, in 2025, our CapEx expenditure was $8 billion.

Actually, that compared to 2024 was a significant increase. However, we didn't notice, but nevertheless, we saw some economies upscale because of the significant increase in the CapEx. Meanwhile, we are also enhancing our capacity along the supply chain management. That also gives us some tailwinds. Looking ahead to 2026, our CapEx guidance is around 10 to 12 billion RMB. Majority is going to be used to deliver the capacity as well as to fuel our continuous expansion.

Next question, please.

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

Thank you, Mr. Guan, for the opportunity to ask me a question. I also congratulate you on the very strong 4G performance and stable 2016. I have two questions here. The first is about our 2016 guidance. Mr. Guan, please help us analyze the income growth target of 2016 for wholesale data center, retail data center, and non-data center business. And about EBITDA growth, is there a more detailed analysis? Thank you, Benjamin, for taking my question and congrats on the solid results and outlook. I have two questions here. One is on the breakdown of your 2006 outlook. Just wondering if you can provide more detailed guidance in terms of the revenue growth outlook between the wholesale IDC, retail IDC, and non-IDC bearings and any color on EBITDA growth between different segments would be quite helpful. Secondly, it's on the pricing trend. I note that for your wholesale bearings in the fourth quarter, there was some pricing fluctuation. However, for the retail business, the pricing trend seems to be more robust. Just wondering if you can share any color on the pricing fluctuation between wholesale and retail business in the fourth quarter. Thank you.

您好,关于您两个问题我先回应一下。 那第一个问题关于整个2026的指引。 那分三个模块给您一个反馈吧。 第一个是城市性的IDC。 In terms of 2025, there will be an increase of a certain degree. This is definitely due to our political business. The second is that the base-based business will still maintain a relatively high growth rate. The current IEDC business is relatively stable. I will give you a basic report from three dimensions. Regarding the second question, you just mentioned the price fluctuation of your business. Thank you.

With regard to the guidance for 2026, I would like to break it down based by the three segments. For retail IDC, it's going to continue to grow year over year, and that is also true for our wholesale IDC services. We're going to witness significant growth. Whereas for our non-IDC business, it's going to be stabilized. It's going to be stable. Moving on to the pricing trend, indeed for our retail IDC service, we have seen the MRR continue to trend up. That comes from several drivers. Number one, our customers have a stronger demand for our value-added services. Number two, our unit price per cabinet is also increasing. Also, the high power density cabinets we have also yield higher MRR. Overall, that is going to contribute to a stronger MRR going forward in 2026.

Next question, please.

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

Okay, thanks, management. So two questions from me. So first, could you follow up on the guidance? So could you give us some color on the gearing ratio for this year? For example, the net debt to EBITDA for guidance for this year. And if we're seeing continued or further higher demands than our expected, any chances that we could further increase our geowin ratio? And my second question is regarding the Ulaan Chabu project. So we noticed some policy tailwinds in terms of the coordination of computing and powers. So just wonder, could management give us some color on building the in-house um green energy in woodland project any um progress in terms of building your own solar wind um power and self-sufficient self-sufficiency rates etc uh uh, uh, Hello, I would like to respond to the first question.

In fact, from the data that has been disclosed, we can see that the ratio of our Jifuzai and EBITDA is 4.3 times 2,250. This is still a relatively stable level. Let me take your first question on the hearing ratio.

As we have disclosed, in 2025, debt to EBITDA ratio was 4.3 which is within a robust level and as we see more demand from the market we will to seize these opportunities but again we will try to balance the cadence our financing as well as the demand from the market Like I said, we are going to tap into various means of financing channels. So the key is to maintain our leverage ratio within a stable range.

对,我接下来去回应一下我们的这个绿电算力一体化的项目。 就从世界互联的战略上来讲,我们还是会长期的聚焦于 Thank you.

With regard to the green power or AI energy integrated projects, that is actually one of the key strategies for the company to provide integrated power and AI services for our clients and we do value the provision of green power to our customers and we have of the Bullion Travel Project advancing steadily, and that is going to be put into service by the end of the year. And we are going to disclose the further progress in our futures earnings calls. Thank you.

Next question, please.

Thank you. Your next question comes from Xion Qi from CICC. Please go ahead.

Thank you for taking my questions. Congratulations on the strong earnings. I have two questions. First, with the rapid development of the AI agent, the inference demand is expected to scale up. And in the long term, will WeNet adjust the plans for energy and land quarters, particularly in terms of regional structure? My second question is, in last quarter, WeNet won large orders, including customers from internet, cloud, and smart driving. Looking at customer structure, what changes to measurements expect in 2026? 谢谢管理层接受我的问题,恭喜这个非常强劲的业家。 我有两个问题,第一个就是我们看到随着现在AI Agents的一个快速的发展, 推理需求呢预计是快速的会起量的。 考虑到这个因素来看,我们如果说从长期的角度上来看, 公司在获取能耗指标和土地指标的计划上, 是否会有一些对应的调整,尤其是在这个地域结构上的。 My second question is that the company received a very large order in the fourth quarter of 2025. Then we also see that the structure of the customer is based on the Internet, cloud manufacturers and smart drivers, etc. From the structure of the customer, the company expects to have a change in 2026. These are my two questions.

Thank you. Thank you for your question. 我想肯定行业整个都看到了一个推理需求的增长那公司也也看到了其实我们现在的客户那对于通算制算对于算力以及推理的需求其实都在不断的增加那么目前的数据中心也是在 support these several aspects of customer demand. From the perspective of market layout, in fact, in the area, just like what we just introduced, we will focus on looking at the environment and long triangle areas. As you know, World Internet, we also have a city data center. We are also actively exploring whether there will be ah, 边端的推理的需求。 所以对于城市型的数据中心, 啊, 那我们也是给客户积极的提供这种增值的服务, 啊, 来满足这个边缘的推理的计算的一个需求。 对, 第二个问题呢, 啊, 实际上, 啊, 世界互联在批发业务的客户上还是非常丰富的。 像您提到的, 我们有这个通算、制算的客户, 包括互联网的客户, 也包括这个, Thank you for your question.

Indeed, the industry as a whole has witnessed an increase of demand for inferencing, and currently the customers that we serve have demand for generic computing, smart computing or intelligent computing, as well as inferencing. And our current data centers are actually accommodating these demands. And in terms of the geographic resource deployment, The top priority for us is the greater Beijing area as well as the greater Yangtze River Delta region. As you know that VNet has retail data centers which is intended to provide inferencing and computing services for clients. That is usually in the case of edge computing. So, these type of value-added services are in high demand among our clients. Going forward, actually, like I said, we have a variety of customers in terms of the mix of our customers. Some of them are leading Internet giants, hyperscalers, as well as AI cloud providers. But like I said, we are going to provide a comprehensive solution that is going to meet the demands of all kinds of customers. Like I mentioned, the edge computing service that's needed by some autonomous driving companies as well as financial companies. We are using our retail city data center to accommodate these types of needs. We believe we're going to provide a full-scale, like a full-stop solution to our customers.

Next question, please.

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

Thank you for the opportunity to ask a question. And again, congratulations on the solid results. I have two questions. So first of all, I think last year the central NDRC imposed a window guidance on new power quota release. May I have an update on the latest data? What's the process of acquiring new power quota? Are we still under window guidance from the central government? And then second question is competition. So given the strong demand, how shall we think about the rental fee trend? Do we expect the rental fee to increase? Or in other words, usually in previous up cycle, when a demand is quite strong, there could be some new entrance. So just wondering what's the latest observation from the management's perspective? Thank you for the opportunity to ask questions. Congratulations on achieving strong performance. I have two questions. The first question is about the central government's window guidance. What kind of situation is the acquisition of new energy? What kind of review process is needed? The second question is about competition. The demand for AI is very strong. Do we expect to see the rent rise? Or do we see some new competitors in the industry? Can the management department share your latest opinion?

Thank you. Thank you, Sarah. Regarding the window guidance of Far-Away, We think this is still a very good policy, which can better maintain the balance of supply and demand in the market, and it is beneficial to our Tier 1 data center suppliers. To be honest, window guidance is still relatively low overall. But World Internet, we are also in Q4, Thank you very much. to determine some of the client's layout. We also do a good resource acquisition in advance to be able to better match the client's needs. Currently, from the perspective of the industry, we feel that the overall price is stable. If we look at it from a long-term perspective, with the tightening of industry supply, we also hope to be able to see further Thank you Sarah for your question.

We actually view the window guidance from NDRC as favorable policy for us. because that is going to affect the supply and demand dynamics in the market. However, as the Tier 1 service, as the Tier 1 data center provider, I think the window guidance is favoring us. As we, we did notice that the approval rate from NDRC was quite low. On the good side, we have successfully got the approval for our data center application in our greater Beijing area by the end of Q4. And we are going to continue to apply for new power quotas according to our own reason. And looking at the rental costs, I think as the Tier 1 player, we are well positioned because we have developed a very stronger relationship with our existing customers and we can anticipate and learn about their needs and match their needs with our resources. So we are well positioned in that regard. I would say the overall rental cost is stable, but as we see the supply and demand dynamics continue to tighten up, we might see the prices begin to stabilize first and then eventually to rise. But overall, that is my optimistic view on the overall trend. But again, overall, we are bullish on the future development.

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