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21Vianet Group, Inc. Reports Unaudited Third Quarter 2018 Financial Results
Nov 20,2018

3Q18 adjusted EBITDA margin expanded to 28.2%
Raising full year 2018 adjusted EBITDA guidance

BEIJING, Nov. 21, 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 third quarter ended September 30, 2018. The Company will hold a conference call at 8:00 pm on Tuesday, November 20, 2018, U.S. Eastern Time to discuss the financial results. Dial-in details are provided at the end of this release.

Third Quarter 2018 Financial Highlights (including hosting and related services & MNS1 business)           

  • Revenues from hosting and related services increased by 14.6% year over year and 5.0% quarter over quarter to RMB870.1 million (US$126.7 million).

  • Adjusted cash gross margin expanded to 45.0% from 38.3% in the same period of 2017 and 43.9% in the second quarter of 2018.

  • Operating profit improved to RMB64.6 million (US$9.4 million) from an operating loss of RMB1,223.6 million in the same period of 2017 and RMB51.5 million in the second quarter of 2018.

  • Adjusted EBITDA increased by 81.6% year over year and 10.9% quarter over quarter to RMB45.2 million (US$35.7 million). Adjusted EBITDA margin expanded to 28.2% from 15.2% in the same period of 2017 and 26.7% in the second quarter of 2018.

  • Net cash generated from operating activities was RMB260.7 million (US$38.0 million) in the third quarter of 2018 compared to RMB206.6 million in the same period of 2017 and RMB111.4 million in the second quarter of 2018.

The financial results of the same period of 2017 included those from both the hosting and related services business and the MNS business. The year-over-year improvement was partially attributable to the disposal of the MNS business in September 2017.

Third Quarter 2018 Operational Highlights

  • Hosting MRR2 per cabinet increased to RMB8,384 in the third quarter of 2018 compared to RMB7,817 in the third quarter of 2017 and RMB8,271 in the second quarter of 2018.

  • Total cabinets under management increased to 30,303 as of September 30, 2018 from 29,149 as of June 30, 2018. As of September 30, 2018, the Company had 25,361 cabinets in its self-built data centers and 4,942 cabinets in its partnered data centers.

  • Utilization rate in the third quarter of 2018 remained stable at 71.1% compared to the second quarter of 2018, due to the additional 1,194 cabinets that were delivered in September 2018.

Mr. Alvin Wang, Chief Executive Officer and President of the Company, stated, “We maintained our strong momentum in revenue growth and profitability expansion during the third quarter of 2018. Our revenues grew by 14.6% year over year as we won new orders from existing customers, attracted additional notable customers, and experienced growth of Microsoft cloud service in China. Meanwhile, our adjusted EBITDA margin expanded to 28.2%, as we continuously grew our scale and improved our operational efficiency. While remain cautiously optimistic about our growth prospect and profitability against a backdrop of macroeconomic uncertainties, we will continue to execute our long-term strategy by accelerating our capacity growth in Tier 1 cities, nearby satellite cities and quasi-tier 1 cities. As we maintain our focus on sharpening our competitive edges in network quality and technology capability, we will be well-positioned to capitalize on the increasing market demand in China going forward.”

Ms. Sharon Liu, Chief Financial Officer of the Company, commented, “We once again delivered a solid quarter with strong top- and bottom-line growths. In the third quarter of 2018, our net revenues reported RMB870.1 million, beating the high-end of our guidance. More importantly, our adjusted EBITDA margin further increased to 28.2%, showcasing constant improvement in the past three quarters. We are raising our full year 2018 adjusted EBITDA guidance to reflect our achievement.”

Third 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 14.6% to RMB870.1 million (US$126.7 million) in the third quarter of 2018 from RMB759.3 million in the same period of 2017 and increased by 5.0% from RMB828.3 million in the second quarter of 2018. The increase was primarily due to the growing demand for data centers and cloud services in the domestic market.

GROSS PROFIT: Gross profit increased by 11.1% to RMB241.2 million (US$35.1 million) in the third quarter of 2018 from RMB217.1 million in the same period of 2017 and increased by 5.1% from RMB229.4 million in the second quarter of 2018. Gross margin decreased slightly to 27.7% in the third quarter of 2018 from 28.6% in the same period of 2017 but remained stable compared to the second quarter of 2018. The year-over-year decrease in gross margin was mainly due to an increase in depreciation.

ADJUSTED CASH GROSS PROFIT, which excludes depreciation, amortization, and share-based compensation expenses, increased by 24.2% to RMB391.9 million (US$57.1 million) in the third quarter of 2018 from RMB315.6 million in the same period of 2017 and increased by 7.7% from RMB364.0 million in the second quarter of 2018. Adjusted cash gross margin expanded to 45.0% in the third quarter of 2018 from 41.6% in the same period of 2017 and 43.9% in the second quarter of 2018.
                                                                                                                                             
OPERATING EXPENSES: Total operating expenses increased by 1.1% to RMB176.6 million (US$25.7 million) in the third quarter of 2018 from RMB174.6 million in the same period of 2017 but decreased by 0.8% from RMB177.9 million in the second quarter of 2018. As a percentage of net revenues, total operating expenses decreased to 20.3% in the third quarter of 2018 from 23.0% in the same period of 2017 and 21.5% in the second 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 3.0% to RMB162.9 million (US$23.7 million) in the third quarter of 2018 from RMB158.1 million in the same period of 2017 and increased by 0.6% from RMB161.9 million in the second quarter of 2018. As a percentage of net revenues, adjusted operating expenses decreased to 18.7% in the third quarter of 2018 from 20.8% in the same period of 2017 and 19.5% in the second quarter of 2018. The decrease of adjusted operating expenses as a percentage of total revenues was primarily due to the successful implementation of the Company’s efficiency enhancement initiatives.

Sales and marketing expenses were RMB39.9 million (US$5.8 million) in the third quarter of 2018 compared to RMB50.1 million in the same period of 2017 and from RMB41.8 million in the second quarter of 2018.

Research and development expenses were RMB24.3 million (US$3.5 million) in the third quarter of 2018 compared to RMB22.2 million in the same period of 2017 and RMB22.2 million in the second quarter of 2018.

General and administrative expenses were RMB110.2 million (US$16.1 million) in the third quarter of 2018 compared to RMB98.8 million in the same period of 2017 and RMB109.1 million in the second quarter of 2018.

ADJUSTED EBITDA: Adjusted EBITDA in the third quarter of 2018 increased by 39.5% to RMB245.2 million (US$35.7 million) from RMB175.8 million in the same period of 2017 and increased by 10.9% from RMB221.1 million in the second quarter of 2018. Adjusted EBITDA in the third quarter of 2018 excludes share-based compensation expenses of RMB12.9 million (US$1.9 million) and changes in the fair value of contingent purchase consideration payable, which was a loss of RMB1.4 million (US$0.2 million). Adjusted EBITDA margin expanded to 28.2% in the third quarter of 2018 from 23.1% in the same period of 2017 and 26.7% in the second quarter of 2018.

NET LOSS: Net loss in the third quarter of 2018 was RMB27.9 million (US$4.1 million) compared to a net loss of RMB1,479.1 million in the same period of 2017 and a net loss of RMB95.5 million in the second quarter of 2018. Net loss in the third quarter of 2018 included a foreign exchange loss of RMB55.0 million (US$8.0 million) compared to RMB5.6 million in the same period of 2017 and RMB73.4 million in the second quarter of 2018.

LOSS PER SHARE: Basic and diluted loss per share was RMB0.04(US$0.01) in the third quarter of 2018, which represents the equivalent of RMB0.24(US$0.06) 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 September 30, 2018, the Company's cash and cash equivalents, restricted cash and short-term investments were RMB2.96 billion (US$431.4 million).

Net cash generated from operating activities was RMB260.7 million (US$38.0 million) in the third quarter of 2018 compared to RMB206.6 million in the same period of 2017 and RMB111.4 million in the second quarter of 2018.

Financial Outlook

For the fourth quarter of 2018, the Company expects net revenues to be in the range of RMB870 million to RMB890 million. Adjusted EBITDA is expected to be in the range of RMB245 million to RMB265 million.

Consequently, for the full year of 2018, the Company now expects net revenues to be in the range of RMB3,370 million to RMB3,390 million. Adjusted EBITDA is expected to be in the range of RMB905 million to RMB925 million. The midpoints of the Company’s updated estimates imply an increase of 13.6% year-over-year in total revenues and 36.4% year-over-year in adjusted EBITDA.

The forecast reflects the Company’s current and preliminary view on the market and its operational conditions, which is subject to change.

Conference Call

The Company will hold a conference call at 8:00 pm on Tuesday, November 20, 2018 U.S. Eastern Time, or 9:00 am on Wednesday, November 21, 2018 Beijing Time, to discuss the financial results.

Participants may access the call by dialing the following numbers:

United States Toll Free: +1-855-500-8701
International: +65-6713-5440
China Domestic: 400-120-0654
Hong Kong: +852-3018-6776
Conference ID:  8076287

The replay will be accessible through November 28, 2018 by dialing the following numbers:

United States Toll Free: +1-855-452-5696
International:  +61-2-9003-4211
Conference ID:  8076287

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 cash gross profit, adjusted cash gross margin, adjusted operating expenses, adjusted EBITDA, adjusted EBITDA margin, 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 RMB6.868 to US$1.00, the noon buying rate in effect on September 30, 2018 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- and cloud-neutral Internet data center services provider in China. 21Vianet provides hosting and related services, including IDC services, cloud services, and business VPN services to improve the reliability, security and speed of its customers' Internet infrastructure. Customers may locate their servers and equipment in 21Vianet's data centers and connect to China's Internet backbone through 21Vianet's extensive fiber optic network. 21Vianet operates in more than 30 cities throughout China, servicing a diversified and loyal base of nearly 5,000 hosting and related 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.

Investor Relations Contacts:

21Vianet Group, Inc.
Rene Jiang
+86 10 8456 2121
IR@21Vianet.com

Julia Jiang
+86 10 8456 2121
IR@21Vianet.com

ICR, Inc.
Jack Wang
+1 (646) 405-4922
IR@21Vianet.com

____________________________________

1MNS: Refers to managed network services.

2Hosting MRR: Refers to Monthly Recurring Revenues for the hosting business.

21VIANET GROUP, INC.  
CONSOLIDATED BALANCE SHEETS  
(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))  
  As of As of   
December 31, 2017 September 30, 2018  
  RMB  RMB  US$  
  (Audited)  (Unaudited)   (Unaudited)   
Assets          
Current assets:        
Cash and cash equivalents   1,949,631     2,334,260     339,875    
Restricted cash   242,494     398,138     57,970    
Accounts and notes receivable, net   455,811     570,112     83,010    
Short-term investments   548,890     227,037     33,057    
Prepaid expenses and other current assets   934,460     1,215,211     176,939    
Amount due from related parties   114,256     134,292     19,553    
Total current assets   4,245,542     4,879,050     710,404    
         
Non-current assets:        
Property and equipment, net   3,319,424     3,975,522     578,847    
Intangible assets, net   401,115     362,904     52,840    
Land use rights, net   163,671     148,390     21,606    
Goodwill   989,530     989,530     144,078    
Long-term investments   510,926     695,277     101,234    
Amount due from related parties   20,210     20,735     3,019    
Restricted cash   3,344     3,537     515    
Deferred tax assets   172,818     143,866     20,947    
Other non-current assets   81,581     136,288     19,844    
Total non-current assets   5,662,619     6,476,049     942,930    
Total assets   9,908,161     11,355,099     1,653,334    
         
Liabilities and Shareholders' Equity        
Current liabilities:        
Short-term bank borrowings   50,000     69,999     10,192    
Accounts and notes payable   252,892     421,242     61,334    
Accrued expenses and other payables   657,133     542,539     78,995    
Deferred revenue   55,753     52,619     7,661    
Advances from customers   403,244     590,069     85,916    
Income taxes payable   13,309     32,903     4,791    
Amounts due to related parties   55,675     230,174     33,514    
Current portion of long-term bank borrowings   70,289     104,974     15,285    
Current portion of capital lease obligations   201,315     206,559     30,076    
Current portion of deferred government grant   4,574     4,574     666    
Current portion of bonds payable   11,139     12,239     1,782    
Total current liabilities   1,775,323     2,267,891     330,212    
         
Non-current liabilities:        
Long-term bank borrowings   187,638     125,000     18,200    
Amounts due to related parties     433,984     63,189    
Unrecognized tax benefits   16,511     22,492     3,275    
Deferred tax liabilities   190,873     182,680     26,599    
Non-current portion of capital lease obligations   600,882     843,374     122,798    
Non-current portion of deferred government grant   17,861     12,985     1,891    
Bonds payable   1,918,069     2,027,695     295,238    
Total non-current liabilities   2,931,834     3,648,210     531,190    
               
               
Shareholders' equity              
Treasury stock   (337,683 )   (337,683 )   (49,168 )  
Ordinary shares    46     46     7    
Additional paid-in capital   8,980,407     9,019,296     1,313,235    
Accumulated other comprehensive (loss) gain   (2,673 )   92,781     13,509    
Statutory reserves   38,736     40,014     5,826    
Accumulated deficit   (3,629,300 )   (3,721,580 )   (541,874 )  
Total 21Vianet Group, Inc. shareholders’ equity   5,049,533     5,092,874     741,535    
Noncontrolling interest   151,471     346,124     50,397    
Total shareholders' equity   5,201,004     5,438,998     791,932    
Total liabilities and shareholders' equity   9,908,161     11,355,099     1,653,334    
         
         

 

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    Nine months ended   
  September 30, 2017 June 30, 2018 September  30, 2018   September 30, 2017 September 30, 2018  
  RMB RMB RMB US$   RMB RMB US$  
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)   (Unaudited) (Unaudited) (Unaudited)  
Net revenues                  
Hosting and related services   759,255     828,317     870,068     126,684       2,209,364     2,499,150     363,883    
Managed network services   126,780     -      -      -       417,527     -     -    
Total net revenues   886,035     828,317     870,068     126,684       2,626,891     2,499,150     363,883    
Cost of revenues   (696,234 )   (598,884 )   (628,873 )   (91,566 )     (2,068,650 )   (1,800,620 )   (262,175 )  
Gross profit   189,801     229,433     241,195     35,118       558,241     698,530     101,708    
Operating expenses                    
Sales and marketing   (77,268 )   (41,816 )   (39,918 )   (5,812 )     (213,980 )   (122,966 )   (17,904 )  
Research and development   (38,308 )   (22,163 )   (24,333 )   (3,543 )     (119,803 )   (68,526 )   (9,978 )  
General and administrative   (129,683 )   (109,091 )   (110,243 )   (16,052 )     (404,599 )   (331,674 )   (48,293 )  
(Allowance) reversal for doubtful debt   (4,366 )   627     (643 )   (94 )     (36,280 )   1,839     268    
Changes in the fair value of contingent purchase consideration payable   (1,002 )   (5,494 )   (1,413 )   (206 )     2,897     (4,623 )   (673 )  
Impairment of long-lived assets   (401,808 )   -     -     -       (401,808 )   -     -    
Goodwill impairment   (766,440 )   -     -     -       (766,440 )   -     -    
                     
Total operating expenses   (1,418,875 )   (177,937 )   (176,550 )   (25,707 )     (1,940,013 )   (525,950 )   (76,580 )  
Other operating income   5,439         -       5,439     -     -    
Operating (loss) profit   (1,223,635 )   51,496     64,645     9,411       (1,376,333 )   172,580     25,128    
Interest income   6,664     8,961     13,484     1,963       22,104     30,972     4,510    
Interest expense   (57,417 )   (51,328 )   (60,766 )   (8,848 )     (134,477 )   (163,636 )   (23,826 )  
                       
Impairment of long-term investment    (20,397 )   -     -     -       (20,397 )   -     -    
Disposal (loss) gain of subsidiaries   (180,048 )   4,843     -     -       (180,048 )   4,843     705    
Other income   7,220     20,386     8,436     1,228       13,504     50,983     7,423    
Other expense   (12,630 )   (565 )   (137 )   (20 )     (16,828 )   (2,228 )   (324 )  
Foreign exchange loss   (5,628 )   (73,360 )   (55,024 )   (8,012 )     (21,481 )   (83,543 )   (12,164 )  
(Loss) gain before income taxes and gain (loss) from equity method investments   (1,485,871 )   (39,567 )   (29,362 )   (4,278 )     (1,713,956 )   9,971     1,452    
Income tax (expenses) benefits   (19,794 )   (44,305 )   7,624     1,110       (37,308 )   (70,761 )   (10,303 )  
Gain (loss) from equity method investments   26,546     (11,659 )   (6,156 )   (896 )     36,051     (27,904 )   (4,063 )  
Net loss   (1,479,119 )   (95,531 )   (27,894 )   (4,064 )     (1,715,213 )   (88,694 )   (12,914 )  
Net loss (profit) attributable to noncontrolling interest   104,354     1,321     (1,739 )   (253 )     143,841     (2,309 )   (336 )  
Net loss attributable to ordinary shareholders   (1,374,765 )   (94,210 )   (29,633 )   (4,317 )     (1,571,372 )   (91,003 )   (13,250 )  
                   
                   
(Loss) profit per share                  
Basic   (2.20 )   (0.14 )   (0.04 )   (0.01 )     (2.54 )   (0.13 )   (0.02 )  
Diluted   (2.20 )   (0.14 )   (0.04 )   (0.01 )     (2.54 )   (0.13 )   (0.02 )  
Shares used in (loss) profit per share computation                  
Basic*   670,701,497     675,062,068     676,327,014     676,327,014       673,261,889     674,723,544     674,723,544    
Diluted*   670,701,497     675,062,068     676,327,014     676,327,014       673,261,889     674,723,544     674,723,544    
                   
(Loss) profit per ADS (6 ordinary shares equal to 1 ADS)                 
Basic (13.20 ) (0.84 ) (0.24 )   (0.06 )   (15.24 )   (0.78 )   (0.12 )  
Diluted (13.20 ) (0.84 ) (0.24 )   (0.06 )   (15.24 )   (0.78 )   (0.12 )  
                   
* Shares used in (loss) profit 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$”))  
                   
  Three months ended    Nine months ended   
  September 30,
2017
June 30, 2018 September  30, 2018   September 30,
2017
September 30, 2018  
  RMB RMB RMB US$   RMB RMB  US$   
Gross profit   189,801     229,433     241,195     35,118       558,241     698,530     101,708    
Plus: depreciation and amortization   149,434     134,282     150,056     21,849       440,149     403,900     58,809    
Plus: share-based compensation expenses   (181 )   293     689     100       (361 )   996     145    
Adjusted cash gross profit   339,054     364,008     391,940     57,067       998,029     1,103,426     160,662    
Adjusted cash gross margin 38.3%   43.9%   45.0%   45.0%     38.0%   44.2%   44.2%    
Operating expenses   (1,413,436 )   (177,937 )   (176,550 )   (25,707 )     (1,934,574 )   (525,950 )   (76,580 )  
Plus: share-based compensation expenses   15,981     10,547     12,240     1,782       32,089     29,342     4,272    
Plus: changes in the fair value of contingent purchase consideration payable   1,002     5,494     1,413     206       (2,897 )   4,623     673    
Plus: impairment of long-lived assets    401,808     -     -     -       401,808     -     -     
Plus: Goodwill impairment   766,440     -     -     -       766,440     -     -     
Adjusted operating expenses   (228,205 )   (161,896 )   (162,897 )   (23,719 )     (737,134 )   (491,985 )   (71,635 )  
Operating (loss) profit   (1,223,635 )   51,496     64,645     9,411       (1,376,333 )   172,580     25,128    
Plus: depreciation and amortization   173,592     153,313     166,244     24,206       523,136     454,847     66,227    
Plus: share-based compensation expenses   15,800     10,840     12,929     1,882       31,728     30,338     4,417    
Plus: changes in the fair value of contingent purchase consideration payable   1,002     5,494     1,413     206       (2,897 )   4,623     673    
Plus: impairment of long-lived assets    401,808     -      -      -        401,808     -      -     
Plus: Goodwill impairment   766,440     -      -      -        766,440     -      -     
Adjusted EBITDA   135,007     221,143     245,231     35,705       343,882     662,388     96,445    
Adjusted EBITDA margin 15.2%   26.7%   28.2%   28.2%     13.1%   26.5%   26.5%    
                   

 

21VIANET GROUP, INC.  
SUPPLEMENTARY DISCLOSURE FOR HOSTING AND RELATED SERVICES  
(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))  
                   
  Three months ended    Nine months ended   
  September 30, 2017 June 30, 2018 September  30, 2018   September 30, 2017 September 30, 2018  
GAAP Disclosure RMB RMB RMB US$   RMB RMB US$  
Net revenues   759,255     828,317     870,068     126,684       2,209,364     2,499,150     363,883    
Cost of revenues   (542,179 )   (598,884 )   (628,873 )   (91,566 )     (1,564,633 )   (1,800,620 )   (262,175 )  
Gross profit   217,076     229,433     241,195     35,118       644,731     698,530     101,708    
Sales and marketing   (50,063 )   (41,816 )   (39,918 )   (5,812 )     (129,059 )   (122,966 )   (17,904 )  
Research and development   (22,167 )   (22,163 )   (24,333 )   (3,543 )     (68,257 )   (68,526 )   (9,978 )  
General and administrative   (98,766 )   (109,091 )   (110,243 )   (16,052 )     (301,805 )   (331,674 )   (48,293 )  
(Allowance) reversal for doubtful debt   (2,590 )   627     (643 )   (94 )     (5,110 )   1,839     268    
Changes in the fair value of contingent purchase consideration payable   (1,002 )   (5,494 )   (1,413 )   (206 )     2,897     (4,623 )   (673 )  
Total operating expenses   (174,588 )   (177,937 )   (176,550 )   (25,707 )     (501,333 )   (525,950 )   (76,580 )  
Other operating income   5,439     -     -     -       5,439     -     -    
Operating profit   47,927     51,496     64,645     9,411       148,837     172,580     25,128    
                   
Non-GAAP disclosure                  
Gross profit   217,076     229,433     241,195     35,118       644,731     698,530     101,708    
Plus: depreciation and amortization   98,693     134,282     150,056     21,849       283,593     403,900     58,809    
Plus: share-based compensation expenses   (175 )   293     689     100       (246 )   996     145    
Adjusted cash gross profit   315,594     364,008     391,940     57,067       928,078     1,103,426     160,662    
Adjusted cash gross margin 41.6%   43.9%   45.0%   45.0%     42.0%   44.2%   44.2%    
Operating expenses   (174,588 )   (177,937 )   (176,550 )   (25,707 )     (501,333 )   (525,950 )   (76,580 )  
Plus: share-based compensation expenses   15,501     10,547     12,240     1,782       32,089     29,342     4,272    
Plus: changes in the fair value of contingent purchase consideration payable   1,002     5,494     1,413     206       (2,897 )   4,623     673    
Adjusted operating expenses   (158,085 )   (161,896 )   (162,897 )   (23,719 )     (472,141 )   (491,985 )   (71,635 )  
Operating profit   47,927     51,496     64,645     9,411       148,837     172,580     25,128    
Plus: depreciation and amortization   111,510     153,313     166,244     24,206       322,010     454,847     66,227    
Plus: share-based compensation expenses   15,326     10,840     12,929     1,882       31,843     30,338     4,417    
Plus: changes in the fair value of contingent purchase consideration payable   1,002     5,494     1,413     206       (2,897 )   4,623     673    
Adjusted EBITDA   175,765     221,143     245,231     35,705       499,793     662,388     96,445    
Adjusted EBITDA margin 23.1%   26.7%   28.2%   28.2%     22.6%   26.5%   26.5%    
                   

 

21VIANET GROUP, INC.  
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS  
(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))  
             
     
  September  30, 2017 June 30, 2018 September  30, 2018  
   RMB   RMB   RMB   US$   
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   
 CASH FLOWS FROM OPERATING ACTIVITIES           
 Net loss    (1,479,119 )   (95,531 )   (27,894 )   (4,064 )  
 Adjustments to reconcile net loss to net cash generated from operating activities:           
  Depreciation and amortization    173,592     153,313     166,244     24,206    
  Impairment of long-lived assets    401,808     -     -     -    
  Impairment of goodwill    766,440     -     -     -    
  Stock-based compensation expenses    15,720     10,840     12,929     1,882    
  Loss from disposal of subsidiaries    180,048     -     -     -    
  Others    12,421     93,201     41,616     6,059    
 Changes in operating assets and liabilities           
  Accounts and notes receivable    36,562     (29,540 )   (34,113 )   (4,967 )  
  Prepaid expenses and other current assets    (119,384 )   (14,088 )   (37,448 )   (5,453 )  
  Accounts and notes payable    26,379     (4,819 )   37,690     5,488    
  Accrued expenses and other payables    120,015     25,971     (19,359 )   (2,819 )  
  Deferred revenue    (11,598 )   6,217     11,154     1,624    
  Advances from customers    77,225     (1,698 )   114,528     16,676    
  Others    6,455     (32,468 )   (4,632 )   (672 )  
 Net cash generated from operating activities    206,564     111,398     260,715     37,960    
           
           
 CASH FLOWS FROM INVESTING ACTIVITIES           
 Purchases of property and equipment    (77,872 )   (91,256 )   (123,027 )   (17,913 )  
 Purchases of intangible assets    (43 )   (3,756 )   (4,032 )   (587 )  
 Disposal of subsidiaries, net of cash    (77,719 )   -     -     -    
 Payments for investments    (399,035 )   (39,098 )   (196,319 )   (28,585 )  
 Proceeds from minority equity interest transfer of a subsidiary    -     -     196,129     28,557    
 Proceeds from other investing activities    6,115     357,302     18,061     2,630    
 Net cash (used in) generated from investing activities    (548,554 )   223,192     (109,188 )   (15,898 )  
           
           
 CASH FLOWS FROM FINANCING ACTIVITIES           
 Repayment of loan from a third party    (100,000 )   -     -     -    
 Proceeds from issuance of 2020 bonds    1,316,974     -     -     -    
 Repayment of long-term bank borrowings    (40,676 )   -     -     -    
 Repayment of short-term bank borrowings    (11,843 )   -     -     -    
 Repayments of bank borrowings    -     (27,953 )   -     -    
 Payments for capital lease    (39,280 )   (95,183 )   (50,996 )   (7,425 )  
 Withdrawal of advance for shares repurchase plan    -     -     42,710     6,219    
 Payment for shares repurchase plan    (50,054 )   -     -     -    
 (Payments for) proceeds from other financing activities    (34,746 )   38,801     89,810     13,077    
 Contribution from noncontrolling interest in a subsidary    62,357     -     -     -    
 Net cash generated from (used in) financing activities    1,102,732     (84,335 )   81,524     11,871    
 Effect of foreign exchange rate changes on cash, cash
  equivalents and restricted cash 
  (86,759 )   80,660     63,732     9,280    
 Net increase in cash, cash equivalents and restricted cash    673,983     330,915     296,783     43,213    
 Cash, cash equivalents and restricted cash at beginning of period    2,676,069     2,108,237     2,439,152     355,147    
 Cash, cash equivalents and restricted cash at end of period    3,350,052     2,439,152     2,735,935     398,360    
           
           
           
 Notes:           
The Company adopted Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash on January 1, 2018 and retrospectively adjusted the condensed consolidated statement of cash flows for the three months ended September 30, 2017 by excluding the movement of restricted cash of RMB53.1 million.  
           

Source: 21Vianet Group, Inc.