Adjusted EBITDA up 103.6% YoY to RMB221.1 million
Adjusted EBITDA margin expanded to 26.7%
Raised full year guidance for both net revenues and adjusted EBITDA
BEIJING, Aug. 17, 2018 (GLOBE NEWSWIRE) -- 21Vianet Group, Inc. (Nasdaq:VNET) ("21Vianet" or the "Company"), a leading carrier- and cloud-neutral Internet data center services provider in China, today announced its unaudited financial results for the second quarter ended June 30, 2018. The Company will hold a conference call at 8:00 pm on Thursday, August 16, 2018, U.S. Eastern Time to discuss the financial results. Dial-in details are provided at the end of this release.
Second Quarter 2018 Financial Highlights (including hosting and related services & MNS1 business)
Revenues from hosting and related services increased by 11.4% year over year to
RMB828.3 million (US$125.2 million).
Adjusted cash gross margin expanded to 43.9% from 38.2% in the same period of 2017.
Operating profit improved to RMB51.5 million from an operating loss of RMB80.6 million
in the same period of 2017.
Adjusted EBITDA increased by 103.6% year over year to RMB221.1 million (US$33.4 million
). Adjusted EBITDA margin expanded to 26.7% from 12.4% in the same period of 2017.
Net cash generated from operating activities was
RMB111.4 million (US$16.8 million) in the second quarter of 2018 compared to
RMB87.2 million in the same period of 2017.
The financial results of the same period 2017 included those from both the hosting and related services business and the MNS business. The year-over-year improvement was partially driven by the disposal of the MNS business in September 2017.
Second Quarter 2018 Operational Highlights
Hosting MRR2 per cabinet increased to RMB8,271 in the second quarter of 2018 compared to
RMB7,697 in the second quarter of 2017 and RMB7,905 in the first quarter of 2018.
Total cabinets under management increased slightly to 29,149 as of June 30, 2018 from 29,035 as of
March 31, 2018. As of June 30, 2018, the Company had 24,167 cabinets in its self-built data centers and 4,982 cabinets in its partnered data centers.
Utilization rate was 71.1% in the second quarter of 2018 compared to 70.0% in the first quarter of 2018.
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1MNS: Refers to managed network services.
2Hosting MRR: Refers to Monthly Recurring Revenues for the hosting business.
Mr. Alvin Wang, Chief Executive Officer and President of the Company, stated, “Our strategy of focusing entirely on our core hosting and related services business continued to drive revenue and profitability growth. During the second quarter, we further improved our operational efficiency and achieved an adjusted EBITDA margin of 26.7%. Also we expanded our data center capacity, garnered new significant client wins in the Internet and financial services sectors, and expanded the order size from our existing clients. In addition, we have methodically entered into the promising wholesale data center market. We are confident that our commitment to network safety, availability, reliability, neutrality, and quality shall enable us to continuously gain market share and solidify our industry leadership.”
Ms. Sharon Liu, Chief Financial Officer of the Company, commented, “During the second quarter of 2018, we sustained solid growth in revenue and continued rapid improvement in adjusted EBITDA margin. Our net revenues from hosting and related services increased by 11.4% year over year to RMB828.3 million, while our adjusted EBITDA grew by 29.1% to RMB221.1 million. As we keep close track of our business development and maintain stringent internal control, we have been able to achieve or exceed our own guidance three quarters in a row. For the remainder of 2018, we expect continuous improvement in economy of scale and operational efficiency to result in EBITDA growth outpacing revenue growth and EBITDA margin expanding further.”
Second Quarter 2018 Financial Results
To fully reflect the Company’s performance, all analysis between “REVENUES” and “ADJUSTED EBITDA” presents only the results of the hosting and related service business. The MNS business, which was disposed of in the third quarter of 2017, is excluded.
REVENUES: Net revenues increased by 11.4% to RMB828.3 million (US$125.2 million) in the second quarter of 2018 from RMB743.4 million in the same period of 2017 and increased by 3.4% from RMB800.8 million in the first quarter of 2018. The increase was primarily due to continuously increasing demand from the Company’s new and existing customers.
GROSS PROFIT: Gross profit increased by 3.6% to RMB229.4 million (US$34.7 million) in the second quarter of 2018 from RMB221.4 million in the same period of 2017 and increased by 0.7% from RMB227.9 million in the first quarter of 2018. Gross margin decreased slightly to 27.7% in the second quarter of 2018 from 29.8% in the same period of 2017 but remained relatively stable compared to the first quarter of 2018. The decrease was mainly due to an increase in depreciation.
ADJUSTED CASH GROSS PROFIT, which excludes depreciation, amortization, and share-based compensation expenses, increased by 14.4% to RMB364.0 million(US$55.0 million) in the second quarter of 2018 from RMB318.2 million in the same period of 2017 and increased by 4.8% from RMB347.5 million in the first quarter of 2018. Adjusted cash gross margin expanded to 43.9% in the second quarter of 2018 from 42.8% in the same period of 2017 and 43.4% in the previous quarter. The increase was a result of the Company’s efficient management of cabinet capacity, power usage efficiency and human resources in the second quarter of 2018. Since the second quarter of 2018, the Company eliminated approximately 214 lower-margin cabinets in partnered data centers, bringing the total number of partnered cabinets to 4,982 in the second quarter of 2018 from 5,768 in the same period of 2017.
OPERATING EXPENSES: Total operating expenses increased by 3.0% to RMB177.9 million (US$26.9 million) in the second quarter of 2018 from RMB172.7 million in the same period of 2017 and increased by 3.8% from RMB171.5 million in the first quarter of 2018. As a percentage of net revenues, total operating expenses was 21.5% in the second quarter of 2018, compared to 23.2% in the same period of 2017 and 21.4% in the first quarter of 2018.
Adjusted operating expenses, which exclude share-based compensation expenses and changes in the fair value of contingent purchase consideration payable, increased by 1.2% to RMB161.9 million (US$24.5 million) in the second quarter of 2018 from RMB160.0 million in the same period of 2017 but decreased by 3.2% from RMB167.2 million in the first quarter of 2018. As a percentage of net revenues, adjusted operating expenses decreased to 19.5% in the second quarter of 2018 from 21.5% in the same period of 2017 and 20.9% in the previous quarter. The decrease was primarily due to the successful implementation and execution of the Company’s cost control measures.
Sales and marketing expenses were RMB41.8 million (US$6.3 million) in the second quarter of 2018, compared to RMB45.0 million in the same period of 2017 and from RMB41.2 million in the first quarter of 2018.
Research and development expenses were RMB22.2 million (US$3.3 million) in the second quarter of 2018 compared to RMB23.9 million in the same period of 2017 and RMB22.0 million in the first quarter of 2018.
General and administrative expenses were RMB109.1 million (US$16.5 million) in the second quarter of 2018 compared to RMB104.8 million in the same period of 2017 and RMB112.3 million in the first quarter of 2018.
ADJUSTED EBITDA: Adjusted EBITDA for the second quarter of 2018 increased by 29.1% to RMB221.1 million (US$33.4 million) from RMB171.3 million in the same period of 2017 and increased by 12.8% compared to the first quarter of 2018. Adjusted EBITDA for the second quarter of 2018 excludes share-based compensation expenses of RMB10.8 million (US$1.6 million) and changes in the fair value of contingent purchase consideration payable, which was a loss of RMB5.5 million (US$0.8 million). Adjusted EBITDA margin expanded to 26.7% in the second quarter of 2018 from 23.0% in the same period of 2017 and 24.5% in the first quarter of 2018.
NET PROFIT/LOSS: Net loss for the second quarter of 2018 was RMB95.5 million (US$14.4 million) compared to net loss of RMB119.3 million in the same period of 2017 and net profit of RMB34.7 million in the first quarter of 2018. The quarter-over-quarter change was mainly due to foreign exchange fluctuation.
PROFIT/LOSS PER SHARE: Basic and diluted loss per share was RMB0.14(US$0.02) in the second quarter of 2018, which represents the equivalent of RMB0.84(US$0.12) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares. Diluted profit per share is calculated using net profit divided by the weighted average number of shares.
As of June 30, 2018, the Company's cash and cash equivalents, restricted cash and short-term investments were RMB2.66 billion (US$401.6 million).
Net cash generated from operating activities was RMB111.4 million (US$16.8 million) in the second quarter of 2018.
Recent Developments
In August 2018, the Company secured over 1,000 datacenter cabinets in Shanghai, China. The newly added cabinets are consistent with the Company’s capacity expansion strategy. The Company expects these additional cabinets to be delivered in two batches by the end of 2018.
In August 2018, the Company and a subsidiary of Tus Holdings entered into a long-term lease agreement for the Company’s rights to use over 20,000m2 property in Beijing, China. The new property is expected to add 3,000 to 4,000 additional cabinet to the Company’s datacenter network. The first batch of cabinets is estimated to be delivered in the second half of 2019.
On July 19, 2018, the Company announced that its wholly-owned subsidiary Shanghai Blue Cloud Technology Co., Ltd. (“21V Blue Cloud”) has entered into distribution agreements with four world-class cloud service providers including Unify Cloud, AvePoint, Agile Point and Fadada.com who officially authorized 21V Blue Cloud as a distributor of their products and services in mainland China.
Financial Outlook
For the third quarter of 2018, the Company expects net revenues to be in the range of RMB840 million to RMB860 million. Adjusted EBITDA is expected to be in the range of RMB230 million to RMB250 million.
Based on solid first half 2018 results, the Company is raising its full year 2018 guidance for both net revenues and adjusted EBITDA. For the full year, the Company now expects net revenues to be in the range of RMB3.28 billion to RMB3.38 billion. Adjusted EBITDA for the full year is expected to be in the range of RMB800 million to RMB880 million.
The forecast reflects the Company’s current and preliminary view on the market and its operational conditions, which is subject to change.
