21Vianet Group, Inc. (Nasdaq:VNET) ("21Vianet" or the "Company"), a
leading carrier-neutral internet data center services provider in
China, today announced its unaudited financial results for the
second quarter of 2016. The Company will hold a conference call at
8:00 p.m. Eastern Time on August 16, 2016. Dial-in details are
provided at the end of the release.
Second Quarter 2016 Financial
Highlights
- Net revenues increased to RMB910.8 million (US$137.1 million)
from RMB866.8 million in the comparative period in 2015
Mr. Steve Zhang, Chief Executive Officer of the
Company, stated, "Despite headwinds in certain market segments, we
are pleased to report that core business areas, including IDC,
Cloud and VPN gained solid growth momentum in the second quarter.
Following a slow start during the first quarter this year, new
cabinet additions in our self-built data centers were back on track
and utilization continued to trend up and we expect the momentum in
our core IDC segment to continue. Additionally, we are
experiencing solid growth in our cloud business, driven by both
steady growth from our existing Microsoft cloud business, as well
as contributions from IBM cloud business. However, challenges in
our managed network services (“MNS”) segment remain, which we are
proactively and aggressively addressing. As we continue to focus on
our key growth areas and optimizing our revenue mix, we believe
that we are well positioned to capture the tremendous growth
potential in China and maintain our position as a leading internet
infrastructure service provider in China."
Mr. Terry Wang, Chief Financial Officer of the
Company, commented, "We see positive signs in terms of new business
opportunities and cost control initiatives, even as pricing
pressure continued to limit our top line growth in the managed
network services. Our total revenues in the second quarter of 2016
increased to RMB910.8 million (US$137.1 million), primarily driven
by improving year-over-year growth in the hosting related business,
including IDC, Cloud and VPN services. Overall number of cabinets
reached 24,098 during the quarter and those in our self-built data
centers accounted for 69% of total. Utilization rate further
improved to 76.2%, from 74.6% in the first quarter and 67.5% a year
ago as cabinet billing growth remained strong. Further, we are
pleased with our operations team’s progress on cost control front,
which is yet to be fully reflected in our quarterly financial
results and should yield positive results in the coming quarters.
With our core hosting business steadily growing, new business
opportunities opening up and cost-control effort progressing, we
remain confident to reignite margin growth going forward."
Second Quarter 2016 Financial
Results
REVENUES: Net revenues for the
second quarter of 2016 increased by 5.1% to RMB910.8 million
(US$137.1 million) from RMB866.8 million in the comparative period
in 2015, primarily driven by a year-over-year increase in IDC,
Cloud and VPN revenues, partially offset by the decline in MNS
revenues.
Net revenues from hosting and related services
increased by 19.3% to RMB767.9 million (US$115.5 million) in the
second quarter of 2016 from RMB643.7 million in the comparative
period in 2015, primarily due to the year-over-year increase in
total number of billable cabinets and improved utilization rate,
partially offset by lower MRR, or monthly recurring revenue, per
cabinet. Net revenues from MNS were RMB142.9 million (US$21.5
million) in the second quarter of 2016, compared with RMB223.1
million in the comparative period in 2015. The decrease is
primarily due to the continued industry-wide decline in bandwidth
prices and lower revenue contribution from Aipu, which is
undergoing a business optimization process.
GROSS PROFIT: Gross profit for
the second quarter of 2016 was RMB172.9 million (US$26.0 million),
compared with RMB204.0 million in the comparative period in 2015.
Gross margin for the second quarter of 2016 was 19.0%, compared
with 23.5% in the comparative period in 2015. The decrease in gross
margin was primarily due to continued weakness in the MNS
business.
Adjusted gross profit, which excludes
share-based compensation expenses and amortization of intangible
assets derived from acquisitions, was RMB200.8 million (US$30.2
million) in the second quarter of 2016, compared with RMB245.7
million in the comparative period in 2015. Adjusted gross margin
was 22.0% in the second quarter of 2016, compared with 28.3% in the
comparative period in 2015.
OPERATING EXPENSES: Total
operating expenses increased to RMB300.5 million (US$45.2 million)
in the second quarter of 2016 from RMB293.6 million in the
comparative period in 2015. Adjusted operating expenses, which
exclude share-based compensation expenses and changes in the fair
value of contingent purchase consideration payable, increased to
RMB313.4 million (US$47.2 million) from RMB209.5 million in the
comparative period in 2015. As a percentage of net revenues,
adjusted operating expenses were 34.4%, compared with 24.2% in the
comparative period in 2015 and 25.5% in the first quarter of
2016.
Sales and marketing expenses increased by 7.0%
to RMB83.5 million (US$12.6 million) in the second quarter of 2016
from RMB78.0 million in the comparative period in 2015.
General and administrative expenses increased by
19.5% to RMB199.4 million (US$30.0 million) in the second quarter
of 2016 from RMB166.9 million in the comparative period in 2015,
primarily due to an one-time bad debt provision and higher
depreciation expense.
Research and development expenses increased by
2.9% to RMB33.0 million (US$5.0 million) in the second quarter of
2016 from RMB32.1 million in the comparative period in 2015.
Changes in the fair value of contingent purchase
consideration payable was a gain of RMB15.3 million (US$2.3
million) in the second quarter of 2016, compared with a loss of
RMB16.6 million in the comparative period in 2015.
ADJUSTED EBITDA: Adjusted
EBITDA for the second quarter of 2016 was RMB15.5 million (US$2.3
million), compared with RMB149.4 million in the comparative period
in 2015. The decrease in adjusted EBITDA was primarily due to a
combination of lower gross profit and an aggregate one-time expense
of RMB69.9 million (US$10.5 million), which included a change of
bonus policy and accrual of bad debt provision. Adjusted EBITDA
margin for the second quarter of 2016 was 1.7% compared with 17.2%
in the comparative period in 2015 and 12.6% in the first quarter of
2016. Adjusted EBITDA for the second quarter of 2016 excludes a
reversal of share-based compensation expenses of RMB8.7 million
(US$1.3 million) and changes in the fair value of contingent
purchase consideration payable which was a gain of RMB15.3 million
(US$2.3 million).
Under the terms and conditions governing the
Company’s 6.875% Bonds due 2017 (the "Bonds"), the Company is
required to maintain a ratio of Adjusted EBITDA to Consolidated
Interest Expense of 2.75:1 or higher for the six month period ended
June 30, 2016. As a result of the decrease in Adjusted
EBITDA, the Company will not be able to meet this
requirement. However, as mentioned above, the decrease in
Adjusted EBITDA was primarily attributable to non-recurring factors
and one-time expenses, the effect of which the Company believes to
be temporary. Notwithstanding the above, the Company intends
to amend the offer to purchase announced on August 1, 2016 to
include a consent solicitation for a waiver from the requirement to
meet certain financial ratios under the Bonds for the period ended
June 30, 2016. The Company intends to fund the repurchase of
the Bonds and consent fee, if any, with cash on hand and it
currently has sufficient cash to repurchase or redeem the
outstanding Bonds. Details of the amended offer to purchase
and consent solicitation will be announced at a later date.
NET PROFIT/LOSS: Net loss for
the second quarter of 2016 was RMB123.8 million (US$18.6 million),
compared with a net loss of RMB141.8 million in the comparative
period in 2015.
Adjusted net loss for the second quarter of 2016
was RMB108.9 million (US$16.4 million) compared with an adjusted
net loss of RMB16.0 million in the comparative period in 2015.
Adjusted net loss in the second quarter of 2016 excludes a reversal
of share-based compensation expenses of RMB8.7 million (US$1.3
million), amortization of intangible assets derived from
acquisitions of RMB39.0 million (US$5.9 million), changes in the
fair value of contingent purchase consideration payable which was a
gain of RMB15.3 million (US$2.3 million) in aggregate. Adjusted net
margin in the second quarter of 2016 was negative 12.0%, compared
with negative 1.8% in the comparative period in 2015 and negative
8.6% in the first quarter of 2016.
LOSS PER SHARE: Diluted loss
per ordinary share for the second quarter of 2016 was RMB0.22,
which represents the equivalent of RMB1.32 (US$0.20) per American
Depositary Share ("ADS"). Each ADS represents six ordinary shares.
Adjusted diluted loss per share for the second quarter of 2016 was
RMB0.19, which represents the equivalent of RMB1.14 (US$0.17) per
ADS. Adjusted loss per share is calculated using adjusted net loss
as discussed above divided by the weighted average number of
shares.
As of June 30, 2016, the Company had a total of
683.1 million ordinary shares outstanding, or equivalent of 113.9
million ADSs.
BALANCE SHEET: As of June 30,
2016, the Company's cash and cash equivalents and short-term
investment were RMB3.57 billion (US$537.2 million).
Second Quarter 2016 Operational Highlights
- Monthly Recurring Revenues ("MRR") per cabinet was RMB8,793 in
the second quarter of 2016, compared with RMB9,115 in the first
quarter of 2016.
- Total cabinets under management increased to 24,098 as of June
30, 2016 from 23,825 as of March 31, 2016, with 16,637 cabinets in
the Company's self-built data centers and 7,461 cabinets in its
partnered data centers.
- Utilization rate was 76.2% in the second quarter of 2016,
compared with 74.6% in the first quarter of 2016.
- Hosting churn rate, which is based on the Company’s core IDC
business, was 1.06% in the second quarter of 2016, compared with
0.41% in the first quarter of 2016.
Recent Developments
On June 16, 2016, the Company announced new
addition to the board, with Ms. Wei Yuan appointed as a director of
the Company.
On June 30, 2016, the Company received a letter
from Mr. Josh Sheng Chen ("Mr. Chen"), Chairman of the Board,
Kingsoft Corporation Limited ("Kingsoft") and Tsinghua Unigroup
International Co., Ltd. ("Unigroup", together with Mr. Chen and
Kingsoft, the "Buyer Group"), stating that the Buyer Group would
withdraw the non-binding going private proposal (the "Proposal")
dated June 10, 2015, with immediate effect. On the same day, the
Company announced a US$200 million share repurchase program which
would be valid for the next 12 months from the date of
announcement.
On July 6, 2016, the Company announced that
21Vianet and Kingsoft, a leading internet based software developer,
distributor and service provider, have extended the strategic
cooperation on data center cabinets leasing. The renewed agreement
extends the term of the strategic cooperation on data center
cabinets leasing by three years until January 2021.
Financial Outlook
For the third quarter of 2016, the Company
expects net revenues to be in the range of RMB900 million to RMB940
million, representing approximately 0.4% year-over-year decline at
the mid-point. Adjusted EBITDA is expected to be in the range of
RMB40 million to RMB60 million, representing approximately 59%
year-over-year decline at the mid-point.
For the full year 2016, the Company now expects
net revenues to be in the range of RMB3.62 billion to RMB3.66
billion, representing approximately 0.2% growth over 2015 at the
mid-point. Adjusted EBITDA for the full year 2016 is expected to be
in the range of RMB240 million to RMB260 million, representing
approximately 54% decline over 2015 at the mid-point. These
forecasts reflect the Company's current and preliminary view, which
may be subject to change.
Conference Call
The Company will hold a conference call on
Tuesday, August 16, 2016 at 8:00 pm U.S. Eastern Time, or
Wednesday, August 17, 2016 at 8:00 am Beijing Time to discuss the
financial results.
Participants may access the call by dialing the following
numbers:
United States: |
|
+1-845-675-0438 |
International Toll
Free: |
|
+1-855-500-8701 |
China Domestic: |
|
400-1200654 |
Hong Kong: |
|
+852-3018-6776 |
Conference ID: |
|
58092112 |
The replay will be accessible through August 24, 2016, by
dialing the following numbers:
United States Toll
Free: |
|
+1-855-452-5696 |
International: |
|
+61-2-9003-4211 |
Conference ID: |
|
58092112 |
A live and archived webcast of the conference call will be
available through the Company's investor relation website at
http://ir.21vianet.com.
Non-GAAP Disclosure
In evaluating its business, 21Vianet considers
and uses the following non-GAAP measures defined as non-GAAP
financial measures by the SEC as supplemental measure to review and
assess its operating performance: adjusted gross profit, adjusted
gross margin, adjusted operating expenses, adjusted net profit,
adjusted net margin, adjusted EBITDA, adjusted EBITDA margin,
adjusted basic earnings per share, adjusted diluted earnings per
share, adjusted basic earnings per ADS and adjusted diluted
earnings per ADS. The presentation of these non-GAAP financial
measures is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with U.S. GAAP. For more information on these non-GAAP
financial measures, please see the table captioned "Reconciliations
of GAAP and non-GAAP results" set forth at the end of this press
release.
The non-GAAP financial measures are provided as
additional information to help investors compare business trends
among different reporting periods on a consistent basis and to
enhance investors' overall understanding of the Company's current
financial performance and prospects for the future. These non-GAAP
financial measures should be considered in addition to results
prepared in accordance with U.S. GAAP, but should not be considered
a substitute for, or superior to, U.S. GAAP results. In addition,
the Company's calculation of the non-GAAP financial measures may be
different from the calculation used by other companies, and
therefore comparability may be limited.
Exchange Rate
This announcement contains translations of
certain RMB amounts into U.S. dollars (“USD”) at specified rates
solely for the convenience of the reader. Unless otherwise stated,
all translations from RMB to USD were made at the rate of RMB6.646
to US$1.00, the noon buying rate in effect on June 30, 2016 in the
H.10 statistical release of the Federal Reserve Board. The Company
makes no representation that the RMB or USD amounts referred could
be converted into USD or RMB, as the case may be, at any particular
rate or at all. For analytical presentation, all percentages are
calculated using the numbers presented in the financial statements
contained in this earnings release.
Statement Regarding Unaudited Condensed
Financial Information
The unaudited financial information set forth
above is preliminary and subject to potential adjustments.
Adjustments to the consolidated financial statements may be
identified when audit work has been performed for the Company's
year-end audit, which could result in significant differences from
this preliminary unaudited condensed financial information.
About 21Vianet
21Vianet Group, Inc. is a leading
carrier-neutral Internet data center services provider in China.
21Vianet provides hosting and related services, managed network
services, cloud services, content delivery network services,
last-mile wired broadband services and business VPN services,
improving the reliability, security and speed of its customers'
Internet infrastructure. Customers may locate their servers and
networking equipment in 21Vianet's data centers and connect to
China's Internet backbone through 21Vianet's extensive fiber optic
network. In addition, 21Vianet's proprietary smart routing
technology enables customers\' data to be delivered across the
Internet in a faster and more reliable manner. 21Vianet operates in
more than 30 cities throughout China, servicing a diversified and
loyal base of more than 2,000 hosting enterprise customers that
span numerous industries ranging from Internet companies to
government entities and blue-chip enterprises to small- to
mid-sized enterprises
Safe Harbor Statement
This announcement contains forward-looking
statements. These forward-looking statements are made under the
"safe harbor" provisions of the U.S. Private Securities Litigation
Reform Act of 1995. These statements can be identified by
terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar statements.
Among other things, quotations from management in this announcement
as well as 21Vianet's strategic and operational plans contain
forward-looking statements. 21Vianet may also make written or oral
forward-looking statements in its reports filed with, or furnished
to, the U.S. Securities and Exchange Commission, in its annual
reports to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or
employees to third parties. Statements that are not historical
facts, including statements about 21Vianet's beliefs and
expectations, are forward-looking statements. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not
limited to the following: 21Vianet's goals and strategies;
21Vianet's expansion plans; the expected growth of the data center
services market; expectations regarding demand for, and market
acceptance of, 21Vianet's services; 21Vianet's expectations
regarding keeping and strengthening its relationships with
customers; 21Vianet's plans to invest in research and development
to enhance its solution and service offerings; and general economic
and business conditions in the regions where 21Vianet provides
solutions and services. Further information regarding these and
other risks is included in 21Vianet's reports filed with, or
furnished to, the Securities and Exchange Commission. All
information provided in this press release and in the attachments
is as of the date of this press release, and 21Vianet undertakes no
duty to update such information, except as required under
applicable law.
|
21VIANET
GROUP, INC. |
CONSOLIDATED BALANCE SHEETS |
(Amount in
thousands of Renminbi (“RMB”) and US dollars (“US$”)) |
|
|
|
|
As of |
As
of |
|
December 31, 2015 |
June 30, 2016 |
|
RMB |
RMB |
US$ |
|
(Audited) |
(Unaudited) |
(Unaudited) |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash
equivalents |
|
1,685,054 |
|
|
3,555,069 |
|
|
534,927 |
|
Restricted cash |
|
195,230 |
|
|
196,775 |
|
|
29,608 |
|
Accounts and notes
receivable, net |
|
694,108 |
|
|
747,298 |
|
|
112,445 |
|
Short-term
investments |
|
104,897 |
|
|
14,810 |
|
|
2,228 |
|
Inventories |
|
13,539 |
|
|
8,262 |
|
|
1,243 |
|
Prepaid expenses and other
current assets |
|
642,553 |
|
|
818,449 |
|
|
123,152 |
|
Deferred tax assets |
|
31,113 |
|
|
38,926 |
|
|
5,857 |
|
Amount due from related
parties |
|
105,137 |
|
|
153,727 |
|
|
23,131 |
|
Total current assets |
|
3,471,631 |
|
|
5,533,316 |
|
|
832,591 |
|
Non-current
assets: |
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
3,653,071 |
|
|
3,860,863 |
|
|
580,939 |
|
Intangible assets,
net |
|
1,274,166 |
|
|
1,196,642 |
|
|
180,057 |
|
Land use right, net |
|
64,682 |
|
|
76,584 |
|
|
11,523 |
|
Deferred tax assets |
|
46,900 |
|
|
56,640 |
|
|
8,523 |
|
Goodwill |
|
1,755,970 |
|
|
1,755,970 |
|
|
264,219 |
|
Long term investments |
|
198,907 |
|
|
268,482 |
|
|
40,398 |
|
Restricted cash |
|
128,515 |
|
|
32,050 |
|
|
4,823 |
|
Amount due from related
parties |
|
70,000 |
|
|
- |
|
|
- |
|
Other non-current
assets |
|
183,868 |
|
|
216,820 |
|
|
32,625 |
|
Total non-current assets |
|
7,376,079 |
|
|
7,464,051 |
|
|
1,123,107 |
|
Total
assets |
|
10,847,710 |
|
|
12,997,367 |
|
|
1,955,698 |
|
Liabilities and
Shareholders' Equity |
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
Short-term bank
borrowings |
|
276,000 |
|
|
229,000 |
|
|
34,457 |
|
Accounts and notes
payable |
|
482,622 |
|
|
572,317 |
|
|
86,116 |
|
Accrued expenses and other
payables |
|
637,957 |
|
|
652,126 |
|
|
98,127 |
|
Deferred revenue |
|
342,105 |
|
|
341,290 |
|
|
51,353 |
|
Advances from
customers |
|
185,800 |
|
|
161,636 |
|
|
24,321 |
|
Income taxes payable |
|
49,959 |
|
|
23,169 |
|
|
3,486 |
|
Amounts due to related
parties |
|
397,588 |
|
|
198,109 |
|
|
29,809 |
|
Current portion of
long-term bank borrowings |
|
38,803 |
|
|
39,020 |
|
|
5,871 |
|
Current portion of capital
lease obligations |
|
140,488 |
|
|
208,438 |
|
|
31,363 |
|
Current portion of
deferred government grant |
|
6,332 |
|
|
5,926 |
|
|
892 |
|
Current portion of bonds
payable |
|
263,365 |
|
|
1,988,777 |
|
|
299,249 |
|
Total current
liabilities |
|
2,821,019 |
|
|
4,419,808 |
|
|
665,044 |
|
Non-current
liabilities: |
|
|
|
|
|
|
|
|
|
Long-term bank
borrowings |
|
103,421 |
|
|
197,321 |
|
|
29,691 |
|
Deferred revenue |
|
68,535 |
|
|
71,423 |
|
|
10,747 |
|
Amounts due to related
parties |
|
27,384 |
|
|
- |
|
|
- |
|
Unrecognized tax
benefits |
|
14,492 |
|
|
21,988 |
|
|
3,309 |
|
Deferred tax
liabilities |
|
293,212 |
|
|
284,407 |
|
|
42,794 |
|
Non-current portion of
capital lease obligations |
|
579,070 |
|
|
574,247 |
|
|
86,406 |
|
Non-current portion of
deferred government grant |
|
31,288 |
|
|
28,702 |
|
|
4,319 |
|
Bonds payable |
|
1,984,685 |
|
|
- |
|
|
- |
|
Mandatorily redeemable
noncontrolling interests |
|
100,000 |
|
|
- |
|
|
- |
|
Total non-current
liabilities |
|
3,202,087 |
|
|
1,178,088 |
|
|
177,266 |
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling
interests |
|
790,229 |
|
|
787,364 |
|
|
118,474 |
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity |
|
|
|
|
|
|
|
|
|
Treasury stock |
|
(193,142 |
) |
|
(162,428 |
) |
|
(24,440 |
) |
Ordinary shares |
|
34 |
|
|
45 |
|
|
7 |
|
Additional paid-in
capital |
|
6,403,117 |
|
|
9,161,557 |
|
|
1,378,528 |
|
Accumulated other
comprehensive loss |
|
(24,236 |
) |
|
2,944 |
|
|
443 |
|
Statutory reserves |
|
63,174 |
|
|
63,174 |
|
|
9,506 |
|
Accumulated deficit |
|
(2,233,985 |
) |
|
(2,473,760 |
) |
|
(372,226 |
) |
Total 21Vianet
Group, Inc. shareholders’ equity |
|
4,014,962 |
|
|
6,591,532 |
|
|
991,818 |
|
Noncontrolling
interest |
|
19,413 |
|
|
20,575 |
|
|
3,096 |
|
Total
shareholders' equity |
|
4,034,375 |
|
|
6,612,107 |
|
|
994,914 |
|
Total liabilities,
redeemable noncontrolling interests and shareholders'
equity |
|
10,847,710 |
|
|
12,997,367 |
|
|
1,955,698 |
|
|
|
|
|
|
|
|
|
|
|
21VIANET
GROUP, INC. |
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
|
(Amount in
thousands of Renminbi (“RMB”) and US dollars (“US$”) except for
number of shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
Six months ended |
|
|
|
June 30, 2015 |
|
|
March 31,2016 |
|
|
June 30, 2016 |
|
|
|
June 30, 2015 |
|
|
June 30, 2016 |
|
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
US$ |
|
|
|
RMB |
|
|
RMB |
|
|
US$ |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net
revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hosting and related
services |
|
643,709 |
|
|
706,126 |
|
|
767,930 |
|
|
115,549 |
|
|
|
1,256,937 |
|
|
1,474,056 |
|
|
221,799 |
|
Managed network
services |
|
223,078 |
|
|
156,146 |
|
|
142,919 |
|
|
21,505 |
|
|
|
469,957 |
|
|
299,065 |
|
|
45,000 |
|
Total net revenues |
|
866,787 |
|
|
862,272 |
|
|
910,849 |
|
|
137,054 |
|
|
|
1,726,894 |
|
|
1,773,121 |
|
|
266,799 |
|
Cost of revenues |
|
(662,810 |
) |
|
(693,292 |
) |
|
(737,946 |
) |
|
(111,038 |
) |
|
|
(1,292,572 |
) |
|
(1,431,238 |
) |
|
(215,357 |
) |
Gross
profit |
|
203,977 |
|
|
168,980 |
|
|
172,903 |
|
|
26,016 |
|
|
|
434,322 |
|
|
341,883 |
|
|
51,442 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
(78,031 |
) |
|
(77,315 |
) |
|
(83,455 |
) |
|
(12,557 |
) |
|
|
(168,431 |
) |
|
(160,770 |
) |
|
(24,191 |
) |
General and
administrative |
|
(166,885 |
) |
|
(133,801 |
) |
|
(199,368 |
) |
|
(29,999 |
) |
|
|
(296,093 |
) |
|
(333,169 |
) |
|
(50,132 |
) |
Research and
development |
|
(32,059 |
) |
|
(41,857 |
) |
|
(32,976 |
) |
|
(4,962 |
) |
|
|
(66,090 |
) |
|
(74,833 |
) |
|
(11,260 |
) |
Changes in the fair value
of contingent purchase consideration payable |
|
(16,643 |
) |
|
(1,481 |
) |
|
15,306 |
|
|
2,303 |
|
|
|
(37,589 |
) |
|
13,825 |
|
|
2,080 |
|
Total operating expenses |
|
(293,618 |
) |
|
(254,454 |
) |
|
(300,493 |
) |
|
(45,215 |
) |
|
|
(568,203 |
) |
|
(554,947 |
) |
|
(83,503 |
) |
Other operating
income |
|
8,569 |
|
|
- |
|
|
- |
|
|
- |
|
|
|
8,569 |
|
|
- |
|
|
- |
|
Operating
loss |
|
(81,072 |
) |
|
(85,474 |
) |
|
(127,590 |
) |
|
(19,199 |
) |
|
|
(125,312 |
) |
|
(213,064 |
) |
|
(32,061 |
) |
Interest income |
|
20,449 |
|
|
8,882 |
|
|
3,641 |
|
|
548 |
|
|
|
34,279 |
|
|
12,523 |
|
|
1,884 |
|
Interest expense |
|
(71,664 |
) |
|
(55,692 |
) |
|
(52,755 |
) |
|
(7,938 |
) |
|
|
(143,531 |
) |
|
(108,447 |
) |
|
(16,318 |
) |
Gain from equity method
investment |
|
123 |
|
|
1,201 |
|
|
19,374 |
|
|
2,915 |
|
|
|
11,418 |
|
|
20,575 |
|
|
3,096 |
|
Other income |
|
2,876 |
|
|
1,106 |
|
|
3,367 |
|
|
507 |
|
|
|
4,536 |
|
|
4,473 |
|
|
673 |
|
Other expense |
|
(183 |
) |
|
(1,104 |
) |
|
(12,510 |
) |
|
(1,882 |
) |
|
|
(1,134 |
) |
|
(13,614 |
) |
|
(2,048 |
) |
Foreign exchange (loss)
gain |
|
(5,269 |
) |
|
(5,243 |
) |
|
24,224 |
|
|
3,645 |
|
|
|
4,898 |
|
|
18,981 |
|
|
2,856 |
|
Loss before income
taxes |
|
(134,740 |
) |
|
(136,324 |
) |
|
(142,249 |
) |
|
(21,404 |
) |
|
|
(214,846 |
) |
|
(278,573 |
) |
|
(41,918 |
) |
Income tax (expense)
benefit |
|
(7,091 |
) |
|
(14,994 |
) |
|
18,400 |
|
|
2,769 |
|
|
|
(15,654 |
) |
|
3,406 |
|
|
512 |
|
Net
loss |
|
(141,831 |
) |
|
(151,318 |
) |
|
(123,849 |
) |
|
(18,635 |
) |
|
|
(230,500 |
) |
|
(275,167 |
) |
|
(41,406 |
) |
Net (income) loss
attributable to noncontrolling interest |
|
(3,315 |
) |
|
8,518 |
|
|
26,874 |
|
|
4,044 |
|
|
|
(11,373 |
) |
|
35,392 |
|
|
5,325 |
|
Net loss
attributable to ordinary shareholders |
|
(145,146 |
) |
|
(142,800 |
) |
|
(96,975 |
) |
|
(14,591 |
) |
|
|
(241,873 |
) |
|
(239,775 |
) |
|
(36,081 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
(0.28 |
) |
|
(0.28 |
) |
|
(0.22 |
) |
|
(0.03 |
) |
|
|
(0.51 |
) |
|
(0.50 |
) |
|
(0.08 |
) |
Diluted |
|
(0.28 |
) |
|
(0.28 |
) |
|
(0.22 |
) |
|
(0.03 |
) |
|
|
(0.51 |
) |
|
(0.50 |
) |
|
(0.08 |
) |
Shares used in loss per
share computation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic* |
|
489,847,525 |
|
|
525,041,586 |
|
|
578,617,002 |
|
|
578,617,002 |
|
|
|
461,268,566 |
|
|
551,875,790 |
|
|
551,875,790 |
|
Diluted* |
|
489,847,525 |
|
|
525,041,586 |
|
|
578,617,002 |
|
|
578,617,002 |
|
|
|
461,268,566 |
|
|
551,875,790 |
|
|
551,875,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per ADS (6
ordinary shares equal to 1 ADS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
(1.68 |
) |
|
(1.68 |
) |
|
(1.32 |
) |
|
(0.20 |
) |
|
|
(3.06 |
) |
|
(3.00 |
) |
|
(0.45 |
) |
Diluted |
|
(1.68 |
) |
|
(1.68 |
) |
|
(1.32 |
) |
|
(0.20 |
) |
|
|
(3.06 |
) |
|
(3.00 |
) |
|
(0.45 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Shares used
in loss per share/ADS computation were computed under weighted
average method. |
21VIANET
GROUP, INC. |
|
|
|
|
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS |
|
|
|
|
(Amount in
thousands of Renminbi (“RMB”) and US dollars (“US$”) except for
number of shares and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
Six months ended |
|
|
|
June 30, 2015 |
|
|
March 31,2016 |
|
|
June 30, 2016 |
|
|
|
June 30, 2015 |
|
|
June 30, 2016 |
|
|
|
RMB |
|
|
RMB |
|
|
RMB |
|
|
US$ |
|
|
|
RMB |
|
|
RMB |
|
|
US$ |
|
Gross profit |
|
203,977 |
|
|
168,980 |
|
|
172,903 |
|
|
26,016 |
|
|
|
434,322 |
|
|
341,883 |
|
|
51,442 |
|
Plus: share-based
compensation expense |
|
2,305 |
|
|
3,925 |
|
|
(11,073 |
) |
|
(1,666 |
) |
|
|
4,517 |
|
|
(7,148 |
) |
|
(1,076 |
) |
Plus: amortization of
intangible assets derived from acquisitions |
|
39,434 |
|
|
38,197 |
|
|
38,967 |
|
|
5,863 |
|
|
|
79,603 |
|
|
77,164 |
|
|
11,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross
profit |
|
245,716 |
|
|
211,102 |
|
|
200,797 |
|
|
30,213 |
|
|
|
518,442 |
|
|
411,899 |
|
|
61,977 |
|
Adjusted gross
margin |
|
28.3 |
% |
|
24.5 |
% |
|
22.0 |
% |
|
22.0 |
% |
|
|
30.0 |
% |
|
23.2 |
% |
|
23.2 |
% |
Operating expenses |
|
(293,618 |
) |
|
(254,454 |
) |
|
(300,493 |
) |
|
(45,215 |
) |
|
|
(568,203 |
) |
|
(554,947 |
) |
|
(83,503 |
) |
Plus: share-based
compensation expense |
|
67,496 |
|
|
33,468 |
|
|
2,355 |
|
|
354 |
|
|
|
111,740 |
|
|
35,823 |
|
|
5,390 |
|
Plus: changes in the fair
value of contingent purchase consideration payable |
|
16,643 |
|
|
1,481 |
|
|
(15,306 |
) |
|
(2,303 |
) |
|
|
37,589 |
|
|
(13,825 |
) |
|
(2,080 |
) |
Adjusted operating
expenses |
|
(209,479 |
) |
|
(219,505 |
) |
|
(313,444 |
) |
|
(47,164 |
) |
|
|
(418,874 |
) |
|
(532,949 |
) |
|
(80,193 |
) |
Net loss |
|
(141,831 |
) |
|
(151,318 |
) |
|
(123,849 |
) |
|
(18,635 |
) |
|
|
(230,500 |
) |
|
(275,167 |
) |
|
(41,406 |
) |
Plus: share-based
compensation expense |
|
69,801 |
|
|
37,393 |
|
|
(8,718 |
) |
|
(1,312 |
) |
|
|
116,257 |
|
|
28,675 |
|
|
4,315 |
|
Plus: amortization of
intangible assets derived from acquisitions |
|
39,434 |
|
|
38,197 |
|
|
38,967 |
|
|
5,863 |
|
|
|
79,603 |
|
|
77,164 |
|
|
11,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus: changes in the fair
value of contingent purchase consideration payable and related
deferred tax impact |
|
16,643 |
|
|
1,976 |
|
|
(15,306 |
) |
|
(2,303 |
) |
|
|
37,589 |
|
|
(13,330 |
) |
|
(2,006 |
) |
Adjusted net
(loss) profit |
|
(15,953 |
) |
|
(73,752 |
) |
|
(108,906 |
) |
|
(16,387 |
) |
|
|
2,949 |
|
|
(182,658 |
) |
|
(27,486 |
) |
Adjusted net
margin |
|
-1.8 |
% |
|
-8.6 |
% |
|
-12.0 |
% |
|
-12.0 |
% |
|
|
0.2 |
% |
|
-10.3 |
% |
|
-10.3 |
% |
Net loss |
|
(141,831 |
) |
|
(151,318 |
) |
|
(123,849 |
) |
|
(18,635 |
) |
|
|
(230,500 |
) |
|
(275,167 |
) |
|
(41,406 |
) |
Minus: Provision for
income taxes |
|
(7,091 |
) |
|
(14,994 |
) |
|
18,400 |
|
|
2,769 |
|
|
|
(15,654 |
) |
|
3,406 |
|
|
512 |
|
Minus: Interest
income |
|
20,449 |
|
|
8,882 |
|
|
3,641 |
|
|
548 |
|
|
|
34,279 |
|
|
12,523 |
|
|
1,884 |
|
Minus: Interest
expenses |
|
(71,664 |
) |
|
(55,692 |
) |
|
(52,755 |
) |
|
(7,938 |
) |
|
|
(143,531 |
) |
|
(108,447 |
) |
|
(16,318 |
) |
Minus: Exchange (loss)
gain |
|
(5,269 |
) |
|
(5,243 |
) |
|
24,224 |
|
|
3,645 |
|
|
|
4,898 |
|
|
18,981 |
|
|
2,856 |
|
Minus: Gain from equity
method investment |
|
123 |
|
|
1,201 |
|
|
19,374 |
|
|
2,915 |
|
|
|
11,418 |
|
|
20,575 |
|
|
3,096 |
|
Minus: Other income |
|
2,876 |
|
|
1,106 |
|
|
3,367 |
|
|
507 |
|
|
|
4,536 |
|
|
4,473 |
|
|
673 |
|
Minus: Other expenses |
|
(183 |
) |
|
(1,104 |
) |
|
(12,510 |
) |
|
(1,882 |
) |
|
|
(1,134 |
) |
|
(13,614 |
) |
|
(2,048 |
) |
Plus: depreciation |
|
98,462 |
|
|
108,940 |
|
|
118,195 |
|
|
17,785 |
|
|
|
192,340 |
|
|
227,135 |
|
|
34,177 |
|
Plus: amortization |
|
45,517 |
|
|
46,222 |
|
|
48,892 |
|
|
7,357 |
|
|
|
95,393 |
|
|
95,114 |
|
|
14,312 |
|
Plus: share-based
compensation expense |
|
69,801 |
|
|
37,393 |
|
|
(8,718 |
) |
|
(1,312 |
) |
|
|
116,257 |
|
|
28,675 |
|
|
4,315 |
|
Plus: changes in the fair
value of contingent purchase consideration payable |
|
16,643 |
|
|
1,481 |
|
|
(15,306 |
) |
|
(2,303 |
) |
|
|
37,589 |
|
|
(13,825 |
) |
|
(2,080 |
) |
Adjusted
EBITDA |
|
149,351 |
|
|
108,562 |
|
|
15,473 |
|
|
2,328 |
|
|
|
316,267 |
|
|
124,035 |
|
|
18,663 |
|
Adjusted EBITDA
margin |
|
17.2 |
% |
|
12.6 |
% |
|
1.7 |
% |
|
1.7 |
% |
|
|
18.3 |
% |
|
7.0 |
% |
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net (loss)
profit |
|
(15,953 |
) |
|
(73,752 |
) |
|
(108,906 |
) |
|
(16,387 |
) |
|
|
2,949 |
|
|
(182,658 |
) |
|
(27,486 |
) |
Less: Net (profit) loss
attributable to noncontrolling interest |
|
(3,315 |
) |
|
8,518 |
|
|
26,874 |
|
|
4,044 |
|
|
|
(11,373 |
) |
|
35,392 |
|
|
5,325 |
|
Adjusted net loss
attributable to the Company’s ordinary shareholders |
|
(19,268 |
) |
|
(65,234 |
) |
|
(82,032 |
) |
|
(12,343 |
) |
|
|
(8,424 |
) |
|
(147,266 |
) |
|
(22,161 |
) |
|
|
|
|
|
|
|
|
|
Adjusted loss per
share |
|
|
|
|
|
|
|
|
Basic |
|
(0.02 |
) |
|
(0.14 |
) |
|
(0.19 |
) |
|
(0.03 |
) |
|
|
(0.00 |
) |
|
(0.33 |
) |
|
(0.05 |
) |
Diluted |
|
(0.02 |
) |
|
(0.14 |
) |
|
(0.19 |
) |
|
(0.03 |
) |
|
|
(0.00 |
) |
|
(0.33 |
) |
|
(0.05 |
) |
Shares used in adjusted
loss per share computation: |
|
|
|
|
|
|
|
|
Basic* |
|
489,847,525 |
|
|
525,041,586 |
|
|
578,617,002 |
|
|
578,617,002 |
|
|
|
461,268,566 |
|
|
551,875,790 |
|
|
551,875,790 |
|
Diluted* |
|
489,847,525 |
|
|
525,041,586 |
|
|
578,617,002 |
|
|
578,617,002 |
|
|
|
461,268,566 |
|
|
551,875,790 |
|
|
551,875,790 |
|
|
|
|
|
|
|
|
|
|
Adjusted loss per ADS (6
ordinary shares equal to 1 ADS) |
|
|
|
|
|
|
|
|
Basic |
|
(0.12 |
) |
|
(0.84 |
) |
|
(1.14 |
) |
|
(0.17 |
) |
|
|
(0.00 |
) |
|
(1.98 |
) |
|
(0.30 |
) |
Diluted |
|
(0.12 |
) |
|
(0.84 |
) |
|
(1.14 |
) |
|
(0.17 |
) |
|
|
(0.00 |
) |
|
(1.98 |
) |
|
(0.30 |
) |
|
|
|
|
|
|
|
|
|
* Shares used
in adjusted loss/ADS per share computation were computed under
weighted average method. |
21VIANET GROUP, INC. |
CONSOLIDATED STATEMENT OF CASH
FLOWS |
(Amount in thousands of Renminbi (“RMB”) and
US dollars (“US$”)) |
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
March 31, 2016 |
|
|
June 30, 2016 |
|
|
|
RMB |
|
|
RMB |
|
|
US$ |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Net loss |
|
(151,318 |
) |
|
(123,849 |
) |
|
(18,635 |
) |
Adjustments to reconcile net loss to net cash
generated from operating activities: |
|
|
|
|
|
|
|
|
|
Foreign exchange loss
(gain) |
|
5,243 |
|
|
(24,224 |
) |
|
(3,645 |
) |
Changes in the fair
value of contingent purchase consideration payable |
|
1,481 |
|
|
(15,306 |
) |
|
(2,303 |
) |
Depreciation of
property and equipment |
|
108,940 |
|
|
118,195 |
|
|
17,785 |
|
Amortization of
intangible assets |
|
45,760 |
|
|
47,661 |
|
|
7,171 |
|
Provision for doubtful
accounts and other receivables |
|
26 |
|
|
44,741 |
|
|
6,732 |
|
Share-based
compensation expense |
|
37,393 |
|
|
(8,718 |
) |
|
(1,312 |
) |
Deferred income taxes
benefit |
|
(896 |
) |
|
(25,462 |
) |
|
(3,831 |
) |
Gain from equity method
investment |
|
(1,201 |
) |
|
(19,374 |
) |
|
(2,915 |
) |
Changes
in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Restricted cash |
|
17,463 |
|
|
72,707 |
|
|
10,940 |
|
Inventories |
|
1,913 |
|
|
3,364 |
|
|
506 |
|
Accounts and notes
receivable |
|
(68,477 |
) |
|
8,634 |
|
|
1,299 |
|
Unrecognized tax
expense |
|
915 |
|
|
6,581 |
|
|
990 |
|
Prepaid expenses and
other current assets |
|
(105,642 |
) |
|
(65,502 |
) |
|
(9,856 |
) |
Amounts due from
related parties |
|
16,226 |
|
|
(17,986 |
) |
|
(2,706 |
) |
Accounts and notes
payable |
|
64,183 |
|
|
25,512 |
|
|
3,839 |
|
Accrued expenses and
other payables |
|
(3,812 |
) |
|
54,268 |
|
|
8,166 |
|
Deferred revenue |
|
(895 |
) |
|
2,968 |
|
|
447 |
|
Advances from
customers |
|
8,476 |
|
|
(32,640 |
) |
|
(4,911 |
) |
Income taxes
payable |
|
8,427 |
|
|
(35,217 |
) |
|
(5,299 |
) |
Amounts due to related
parties |
|
(1,080 |
) |
|
(233 |
) |
|
(35 |
) |
Deferred government
grants |
|
(1,611 |
) |
|
(1,381 |
) |
|
(208 |
) |
Net cash
(used in) generated from operating activities |
|
(18,486 |
) |
|
14,739 |
|
|
2,219 |
|
CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Purchases of property
and equipment |
|
(140,963 |
) |
|
(156,703 |
) |
|
(23,579 |
) |
Purchases of intangible
assets |
|
(4,988 |
) |
|
(15,410 |
) |
|
(2,319 |
) |
Prepayment for future
asset acquisition |
|
- |
|
|
(24,381 |
) |
|
(3,669 |
) |
Receipt of loans from
third parties |
|
3,279 |
|
|
- |
|
|
- |
|
Payments for short-term
investments |
|
(11,280 |
) |
|
(933 |
) |
|
(140 |
) |
Proceeds received from
maturity of short-term investments |
|
102,300 |
|
|
- |
|
|
- |
|
Payments for long-term
investments |
|
- |
|
|
(49,000 |
) |
|
(7,373 |
) |
Net cash
used in investing activities |
|
(51,652 |
) |
|
(246,427 |
) |
|
(37,080 |
) |
CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Proceeds from
shareholders |
|
- |
|
|
2,548,695 |
|
|
383,499 |
|
Proceeds from exercise
of stock options |
|
1,956 |
|
|
1,491 |
|
|
224 |
|
Proceeds from long-term
bank borrowings |
|
51,500 |
|
|
58,850 |
|
|
8,855 |
|
Proceeds from
short-term bank borrowings |
|
65,000 |
|
|
53,000 |
|
|
7,975 |
|
Repayments of
short-term bank borrowings |
|
(100,000 |
) |
|
(65,000 |
) |
|
(9,780 |
) |
Repayments of long-term
bank borrowings |
|
(2,944 |
) |
|
(13,289 |
) |
|
(2,000 |
) |
Repayments of 2016
Bonds |
|
(264,250 |
) |
|
- |
|
|
- |
|
Consideration paid to
selling shareholders |
|
(2,475 |
) |
|
- |
|
|
- |
|
Prepayment for shares
repurchase plan |
|
- |
|
|
(39,787 |
) |
|
(5,987 |
) |
Payments for capital leases |
|
(34,594 |
) |
|
(39,105 |
) |
|
(5,884 |
) |
Repayments for
Mandatorily redeemable noncontrolling interests |
|
(100,000 |
) |
|
- |
|
|
- |
|
Net cash
(used in) generated from financing activities |
|
(385,807 |
) |
|
2,504,855 |
|
|
376,902 |
|
Effect of
foreign exchange rate changes on cash and short term
investments |
|
(5,294 |
) |
|
58,087 |
|
|
8,740 |
|
Net
(decrease) increase in cash and cash equivalents |
|
(461,239 |
) |
|
2,331,254 |
|
|
350,781 |
|
Cash and
cash equivalents at beginning of period |
|
1,685,054 |
|
|
1,223,815 |
|
|
184,146 |
|
Cash and
cash equivalents at end of period |
|
1,223,815 |
|
|
3,555,069 |
|
|
534,927 |
|
|
|
|
|
|
|
|
|
|
|
Investor Relations Contacts:
21Vianet Group, Inc.
Eric Chu, CFA
+1 908 707 2062
IR@21Vianet.com
Qing Liu
+86 10 8456 2121
IR@21Vianet.com
ICR, Inc.
Violet Gu
+1 (646) 405-4922
IR@21Vianet.com
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