• 21Vianet Group, Inc. Reports Unaudited Fourth Quarter and Full Year 2018 Financial Results

    ソース: Nasdaq GlobeNewswire / 04 3 2019 21:30:50   Europe/London

    BEIJING, March 05, 2019 (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 fourth quarter and the full year ended December 31, 2018. The Company will hold a conference call at 8:00 pm on Monday, March 4, 2019, U.S. Eastern Time to discuss the financial results. Dial-in details are provided at the end of this release.

    Fourth Quarter 2018 Financial Highlights

    • Revenues from hosting and related services increased by 17.8% year over year to RMB901.9 million (US$131.2 million).
    • Gross profit increased by 23.1% year over year to RMB246.3 million (US$35.8 million). Gross margin expanded to 27.3% from 26.1% in the same period of 2017. Adjusted cash gross profit increased by 27.9% year over year to RMB409.2 million (US$59.5 million) from RMB320.1 million. Adjusted cash gross margin expanded to 45.4% from 41.8% in the same period of 2017.
    • Adjusted EBITDA increased by 49.3% year over year to RMB255.3 million (US$37.1 million). Adjusted EBITDA margin expanded to 28.3% from 22.3% in the same period of 2017.
    • Net cash generated from operating activities was RMB237.0 million (US$34.5 million) compared to RMB157.1 million in the same period of 2017.

    Full Year 2018 Financial Highlights (including hosting and related business only)

    • Revenues from hosting and related services revenues increased by 14.3% year over year to RMB3.40 billion (US$494.7 million).
    • Gross profit increased by 11.8% year over year to RMB944.9 million (US$137.4 million). Gross margin decreased to 27.8% from 28.4% in 2017. Adjusted cash gross profit increased by 21.2% year over year to RMB1.51 billion (US$220.0 million) from RMB1.25 billion. Adjusted cash gross margin expanded to 44.5% from 42.0% in 2017.
    • Adjusted EBITDA increased by 36.8% year over year to RMB917.7 million (US$133.5 million). Adjusted EBITDA margin expanded to 27.0% from 22.5% in 2017.
    • Net cash generated from operating activities was RMB705.0 million (US$102.5 million) compared to RMB487.2 million in 2017.

    Fourth Quarter 2018 Operational Highlights

    • Hosting MRR1 per cabinet increased to RMB8,457 in the fourth quarter of 2018 compared to RMB7,766 in the fourth quarter of 2017 and RMB8,384 in the third quarter of 2018.
    • Total cabinets under management increased to 30,654 as of December 31, 2018, compared to 30,303 as of September 30, 2018 and 29,080 as of December 31, 2017. As of December 31, 2018, the Company had 25,711 cabinets in its self-built data centers and 4,943 cabinets in its partnered data centers.
    • Utilization rate in the fourth quarter of 2018 fell slightly to 70.3% compared to the third quarter of 2018, mainly attributable to the additional 1,194 cabinets that were delivered in September 2018, and 350 cabinets that were delivered in the fourth quarter of 2018.

    “We concluded a fruitful 2018 with a solid fourth quarter performance,” commented Mr. Alvin Wang, Chief Executive Officer and President of the Company. “Our resilient financial growth and improving operating performance once again demonstrated the effectiveness of our business operation optimization and our ability to capitalize on the increasing market demand for high-quality data hosting, hybrid IT, and cloud services. To sustain our strong growth momentum, we actively acquired new land resources and new customers while expanding our footprint to new Tier-1 markets and beyond. In addition, we continued to deepen our strategic partnerships with world-class technology companies such as Red Hat Inc. to explore more solutions that can empower our customers’ business expansions. Looking ahead to 2019 and beyond, we are confident that the counter-cyclical nature of our business as well as our leadership in the Chinese IDC market will facilitate our pursuit of long-term sustainable growth.”

    Ms. Sharon Liu, Chief Financial Officer of the Company, commented, “We delivered a strong quarter with healthy top- and bottom-line growth. In the fourth quarter of 2018, we had net revenues of RMB901.9 million, again exceeding the high end of our previous guidance range. More importantly, our adjusted EBITDA margin further increased to 28.3%, maintaining its consistent improvement over the previous quarters. In 2018, we improved adjusted EBITDA margin significantly to 27.0% from 22.5% in the previous year. In 2019, we are confident that as we continue to execute on our growth strategies and fortify our market leading position, we will yield long-term value for our shareholders.”

    Fourth Quarter 2018 Financial Results

    REVENUES: Net revenues increased by 17.8% to RMB901.9 million (US$131.2 million) in the fourth quarter of 2018 from RMB765.8 million in the same period of 2017 and increased by 3.7% from RMB870.1 million in the third quarter of 2018. The increase was primarily attributable to the growing demand for data centers and cloud services in the domestic market.

    GROSS PROFIT: Gross profit increased by 23.1% to RMB246.3 million (US$35.8 million) in the fourth quarter of 2018 from RMB200.2 million in the same period of 2017 and increased by 2.1% from RMB241.2 million in the third quarter of 2018. Gross margin was 27.3% in the fourth quarter of 2018 compared to 26.1% in the same period of 2017 and 27.7% in the third quarter of 2018. The year-over-year improvement in gross margin was mainly attributable to the Company’s continuous efforts in maximizing its operating efficiency.

    ADJUSTED CASH GROSS PROFIT, which excludes depreciation, amortization, and share-based compensation expenses, increased by 27.9% to RMB409.2 million (US$59.5 million) in the fourth quarter of 2018 from RMB320.1 million in the same period of 2017 and increased by 4.4% from RMB391.9 million in the third quarter of 2018. Adjusted cash gross margin expanded to 45.4% in the fourth quarter of 2018 from 41.8% in the same period of 2017 and 45.0% in the third quarter of 2018.
                                                                                                                                                                                                
    OPERATING EXPENSES: Total operating expenses decreased by 5.7% to RMB181.4 million (US$26.4 million) in the fourth quarter of 2018 from RMB192.4 million in the same period of 2017 and increased by 2.8% from RMB176.6 million in the third quarter of 2018. As a percentage of net revenues, total operating expenses decreased to 20.1% in the fourth quarter of 2018 from 25.1% in the same period of 2017 and 20.3% in the third quarter of 2018. The decrease of operating expenses as a percentage of net revenues was primarily due to the successful implementation of the Company’s efficiency enhancement initiatives.

    Sales and marketing expenses were RMB49.2 million (US$7.2 million) in the fourth quarter of 2018 compared to RMB42.7 million in the same period of 2017 and RMB39.9 million in the third quarter of 2018. The increase was mainly attributable to increased marketing activities and higher sales commissions, which was in line with the growth of the Company’s net revenues in the fourth quarter of 2018.

    Research and development expenses were RMB23.6 million (US$3.4 million) in the fourth quarter of 2018 compared to RMB29.3 million in the same period of 2017 and RMB24.3 million in the third quarter of 2018. 

    General and administrative expenses were RMB131.0 million (US$19.0 million) in the fourth quarter of 2018 compared to RMB115.4 million in the same period of 2017 and RMB110.2 million in the third quarter of 2018. The increase was mainly attributable to share-based compensation expenses that the Company recognized during the fourth quarter of 2018.

    ADJUSTED OPERATING EXPENSES, which exclude share-based compensation expenses and changes in the fair value of contingent purchase consideration payables, decreased by 0.5% to RMB172.4 million (US$25.1 million) in the fourth quarter of 2018 from RMB173.2 million in the same period of 2017 and increased by 5.9% from RMB162.9 million in the third quarter of 2018. As a percentage of net revenues, adjusted operating expenses decreased to 19.1% in the fourth quarter of 2018 from 22.6% in the same period of 2017 and increased slightly from 18.7% in the third quarter of 2018.

    ADJUSTED EBITDA: Adjusted EBITDA in the fourth quarter of 2018 increased by 49.3% to RMB255.3 million (US$37.1 million) from RMB171.0 million in the same period of 2017 and increased by 4.1% from RMB245.2 million in the third quarter of 2018. Adjusted EBITDA in the fourth quarter of 2018 excluded share-based compensation expenses of RMB29.2 million (US$4.2 million) and changes in the fair value of contingent purchase consideration payables, which was a gain of RMB18.5 million (US$2.7 million). Adjusted EBITDA margin expanded to 28.3% in the fourth quarter of 2018 from 22.3% in the same period of 2017 and 28.2% in the third quarter of 2018.

    NET PROFIT/LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS: Net loss attributable to ordinary shareholders in the fourth quarter of 2018 was RMB114.1 million (US$16.6 million) compared to a net profit of RMB798.6 million in the same period of 2017 and a net loss of RMB29.6 million in the third quarter of 2018. Net loss attributable to ordinary shareholders in the fourth quarter of 2018 included a foreign exchange gain of RMB2.5 million (US$0.4 million) compared to RMB4.3 million in the same period of 2017 and a loss of RMB55.0 million in the third quarter of 2018.

    PROFIT/LOSS PER SHARE: Basic and diluted loss per share were RMB0.17 (US$0.02) in the fourth quarter of 2018, which represents the equivalent of RMB1.02 (US$0.12) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares. Diluted earnings per share is calculated using net earnings attributable to ordinary shareholders divided by the weighted average number of diluted shares outstanding.

    As of December 31, 2018, the Company's cash and cash equivalents, restricted cash, and short-term investments were RMB2.91 billion (US$422.7 million).

    Net cash generated from operating activities was RMB237.0 million (US$34.5 million) in the fourth quarter of 2018 compared to RMB157.1 million in the same period of 2017 and RMB260.7 million in the third quarter of 2018.

    Full Year 2018 Financial Results

    To fully reflect the Company’s performance, all analysis between “REVENUES” and “ADJUSTED EBITDA” present 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 14.3% to RMB3.40 billion (US$494.7 million) in 2018 from RMB2.98 billion in the prior year. The increase was primarily due to the same factors that led to the quarterly increase.

    GROSS PROFIT: Gross profit increased by 11.8% to RMB944.9 million (US$137.4 million) in 2018 from RMB844.9 million in the prior year. Gross margin was 27.8% in 2018 compared to 28.4% in the prior year.

    ADJUSTED CASH GROSS PROFIT, which excludes depreciation, amortization, and share-based compensation expenses, increased by 21.2% to RMB1.51 billion (US$220.0 million) in 2018 from RMB1.25 billion in the prior year. Adjusted cash gross margin expanded to 44.5% in 2018 from 42.0% in the prior year.
                                                                                                                                                                                                
    OPERATING EXPENSES: Total operating expenses increased by 2.8% to RMB707.4 million (US$102.9 million) in 2018 from RMB688.3 million in the prior year. As a percentage of net revenues, total operating expenses decreased to 20.8% in 2018 from 23.1% in the prior year. The decrease of operating expenses as a percentage of net revenues was primarily due to the successful implementation of the Company’s efficiency enhancement initiatives.

    Sales and marketing expenses were RMB172.2 million (US$25.0 million) in 2018 compared to RMB171.8 million in the prior year.

    Research and development expenses were RMB92.1 million (US$13.4 million) in 2018 compared to RMB97.6 million in the prior year.

    General and administrative expenses were RMB462.6 million (US$67.3 million) in 2018 compared to RMB417.2million in the prior year.

    ADJUSTED OPERATING EXPENSES, which exclude share-based compensation expenses and changes in the fair value of contingent purchase consideration payables, increased by 3.8% to RMB664.4 million (US$96.6 million) in 2018 from RMB639.9 million in the prior year. As a percentage of net revenues, adjusted operating expenses decreased to 19.5% in 2018 from 21.5% in the prior year.

    ADJUSTED EBITDA: Adjusted EBITDA in 2018 increased by 36.8% to RMB917.7 million (US$133.5 million) from RMB670.8 million in the prior year. Adjusted EBITDA in 2018 excluded share-based compensation expenses of RMB59.5 million (US$8.7 million) and changes in the fair value of contingent purchase consideration payables, which was a gain of RMB13.9 million (US$2.0 million). Adjusted EBITDA margin expanded to 27.0% in 2018 from 22.5% in the prior year.

    NET PROFIT/LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS: Net loss attributable to ordinary shareholders for 2018 was RMB205.1 million (US$29.8 million) compared to a net loss of RMB772.7 million in the prior year. Net loss in 2018 included a foreign exchange loss of RMB81.1 million (US$11.8 million) compared to RMB17.2 million in the prior year.

    PROFIT/LOSS PER SHARE: Basic and diluted loss per share were RMB0.30 (US$0.04) for 2018, which represents the equivalent of RMB1.80 (US$0.24) per ADS. Diluted loss per share is calculated using net loss attributable to ordinary shareholders divided by the weighted average number of diluted shares outstanding.

    Net cash generated from operating activities was RMB705.0 million (US$102.5 million) in 2018 compared to RMB487.2 million in 2017.

    Recent Development

    In February 2019, the Company reached an agreement to acquire a recently-constructed data center in urban Chengdu City, Sichuan Province, China. Upon the completion of quality inspections, the new data center is expected to add approximately 500 cabinets to the Company’s sales pipeline. This additional capacity will enable 21Vianet to access the new Tier-1 market in Chengdu, the primary economic center and core network hub for Southwest China, where the customer demand for high-quality data center services has been growing.

    Financial Outlook

    For the first quarter of 2019, the Company expects net revenues to be in the range of RMB860 million to RMB880 million. Adjusted EBITDA is expected to be in the range of RMB230 million to RMB250 million.

    For the full year of 2019, the Company expects net revenues to be in the range of RMB3,760 million to RMB3,860 million. Adjusted EBITDA is expected to be in the range of RMB1,000 million to RMB1,100 million. The midpoints of the Company’s updated estimates imply an increase of 12% year-over-year in total revenues and an increase of 14% 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 Monday, March 4, 2019 U.S. Eastern Time, or 9:00 am on Tuesday, March 5, 2019 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: 8385847

    The replay will be accessible through March 12, 2019 by dialing the following numbers:

    United States Toll Free: +1-855-452-5696
    International: +61-2-9003-4211
    Conference ID: 8385847

    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 RMB6.8755 to US$1.00, the noon buying rate in effect on December 31, 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. 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

    ______________________________________________
    1
    Hosting 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  December 31, 2018 
     RMB   RMB   US$ 
     (Audited)   (Unaudited)    (Unaudited)  
    Assets        
    Current assets:        
    Cash and cash equivalents1,949,631  2,358,556  343,038 
    Restricted cash242,494  265,214  38,574 
    Accounts and notes receivable, net455,811  524,305  76,257 
    Short-term investments548,890  245,014  35,636 
    Prepaid expenses and other current assets934,460  1,159,574  168,652 
    Amounts due from related parties  114,256    125,446    18,245 
    Total current assets  4,245,542    4,678,109    680,402 
             
    Non-current assets:        
    Property and equipment, net3,319,424  4,031,242  586,320 
    Intangible assets, net401,115  355,313  51,678 
    Land use rights, net163,671  147,493  21,452 
    Goodwill989,530  989,530  143,921 
    Long-term investments510,926  544,323  79,168 
    Amounts due from related parties20,210  34,424  5,007 
    Restricted cash3,344  37,251  5,418 
    Deferred tax assets172,818  159,441  23,190 
    Other non-current assets  81,581    173,591    25,248 
    Total non-current assets  5,662,619    6,472,608    941,402 
    Total assets  9,908,161    11,150,717    1,621,804 
             
    Liabilities and Shareholders' Equity        
    Current liabilities:        
    Short-term bank borrowings50,000  50,000  7,272 
    Accounts and notes payable252,892  389,508  56,652 
    Accrued expenses and other payables657,133  659,320  95,894 
    Deferred revenue55,753  57,754  8,400 
    Advances from customers403,244  670,037  97,453 
    Income taxes payable13,309  13,111  1,907 
    Amounts due to related parties55,675  52,328  7,611 
    Current portion of long-term bank borrowings70,289  75,284  10,950 
    Current portion of capital lease obligations201,315  219,695  31,953 
    Current portion of deferred government grant  4,574    4,173    607 
    Total current liabilities  1,764,184    2,191,210    318,699 
             
    Non-current liabilities:        
    Long-term bank borrowings187,638  112,000  16,290 
    Amounts due to related parties-  504,478  73,373 
    Unrecognized tax benefits16,511  6,677  971 
    Deferred tax liabilities190,873  157,720  22,939 
    Non-current portion of capital lease obligations600,882  765,993  111,409 
    Non-current portion of deferred government grant17,861  11,619  1,690 
    Bonds payable  1,929,208    2,037,836    296,391 
    Total non-current liabilities  2,942,973    3,596,323    523,063 
             
    Shareholders' equity        
    Treasury stock(337,683) (337,683) (49,114)
    Ordinary shares46  46  7 
    Additional paid-in capital8,980,407  9,141,494  1,329,575 
    Accumulated other comprehensive (loss) gain(2,673) 85,979  12,505 
    Statutory reserves38,736  42,403  6,167 
    Accumulated deficit  (3,629,300)   (3,838,032)   (558,219)
    Total 21Vianet Group, Inc. shareholders’ equity  5,049,533    5,094,207    740,921 
    Noncontrolling interest151,471  268,977  39,121 
    Total shareholders' equity  5,201,004    5,363,184    780,042 
    Total liabilities and shareholders' equity  9,908,161    11,150,717    1,621,804 
             
             

     

    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 
      Twelve months ended 
      December 31, 2017  September 30, 2018  December  31, 2018   December 31, 2017  December 31, 2018 
      RMB  RMB  RMB  US$  RMB  RMB  US$ 
      (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited) 
    Net revenues                     
    Hosting and related services 765,814  870,068  901,887  131,174  2,975,178  3,401,037  494,660 
    Managed network services   -    -     -     -    417,527    -    - 
    Total net revenues 765,814  870,068  901,887  131,174  3,392,705  3,401,037  494,660 
    Cost of revenues   (565,645)   (628,873)   (655,546)   (95,345)   (2,634,295)   (2,456,166)   (357,235)
    Gross profit 200,169  241,195  246,341  35,829  758,410  944,871  137,425 
                          
    Operating expenses                     
    Other operating income -  -  5,027  731  5,439  5,027  731 
    Sales and marketing (42,702) (39,918) (49,210) (7,157) (256,682) (172,176) (25,042)
    Research and development (29,340) (24,333) (23,583) (3,430) (149,143) (92,109) (13,397)
    General and administrative (115,351) (110,243) (130,963) (19,048) (519,950) (462,637) (67,288)
    (Allowance) reversal for doubtful debt (1,147) (643) (1,241) (180) (37,427) 598  87 
    Changes in the fair value of contingent purchase consideration payables   (3,834)   (1,413)   18,528    2,695    (937)   13,905    2,022 
    Impairment of long-lived assets -  -  -  -  (401,808) -  - 
    Goodwill impairment -  -  -  -  (766,440) -  - 
    Total operating expenses   (192,374)   (176,550)   (181,442)   (26,389)   (2,126,948)   (707,392)   (102,887)
                          
    Operating profit (loss) 7,795  64,645  64,899  9,440  (1,368,538) 237,479  34,538 
    Interest income 10,821  13,484  14,214  2,067  32,925  45,186  6,572 
    Interest expense (50,836) (60,766) (72,430) (10,535) (185,313) (236,066) (34,334)
    Impairment of long-term investment 139  -  -  -  (20,258) -  - 
    Disposal gain of subsidiaries 677,084  -  -  -  497,036  4,843  704 
    Other income 3,260  8,436  7,050  1,025  16,764  58,033  8,441 
    Other expense (232) (137) (1,875) (273) (17,060) (4,103) (597)
    Foreign exchange gain (loss)   4,328    (55,024)   2,488    362    (17,153)   (81,055)   (11,789)
    Loss on debt extinguishment          -     -  - 
    Gain (loss) before income taxes and gain (loss) from equity method investments 652,359  (29,362) 14,346  2,086  (1,061,597) 24,317  3,535 
    Income tax benefits (expenses) 127,478  7,624  46,350  6,741  90,170  (24,411) (3,550)
    Gain (loss) from equity method investments   17,732    (6,156)   (158,738)   (23,087)   53,783    (186,642)   (27,146)
    Net gain (loss) 797,569  (27,894) (98,042) (14,260) (917,644) (186,736) (27,161)
    Net loss (profit) attributable to noncontrolling interest   1,073    (1,739)   (16,020)   (2,330)   144,914    (18,329)   (2,666)
    Net gain (loss) attributable to ordinary shareholders   798,642    (29,633)   (114,062)   (16,590)   (772,730)   (205,065)   (29,827)
                          
    Profit (loss) per share                     
    Basic 1.19  (0.04) (0.17) (0.02) (1.36) (0.30) (0.04)
    Diluted 1.18  (0.04) (0.17) (0.02) (1.36) (0.30) (0.04)
    Shares used in profit (loss) per share computation                     
    Basic* 671,279,121  676,327,014  676,361,072  676,361,072  672,836,226  674,732,130  674,732,130 
    Diluted* 675,505,879  676,327,014  676,361,072  676,361,072  672,836,226  674,732,130  674,732,130 
                          
    Profit (loss) per ADS (6 ordinary shares equal to 1 ADS)                     
    Basic 7.14  (0.24) (1.02) (0.12) (8.16) (1.80) (0.24)
    Diluted 7.08  (0.24) (1.02) (0.12) (8.16) (1.80) (0.24)
                          
    * Shares used in profit (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$”))
                          
      Three months ended  Twelve months ended 
      December 31, 2017
     September 30, 2018
     December  31, 2018
     December 31, 2017
     December 31, 2018
      RMB
     RMB
     RMB  US$  RMB
     RMB  US$ 
    Gross profit 200,169  241,195  246,341  35,829  758,410  944,871  137,425 
    Plus: depreciation and amortization 119,814  150,056  161,201  23,446  559,963  565,101  82,191 
    Plus: share-based compensation expenses 84  689  1,672  243  (277) 2,668  388 
    Adjusted cash gross profit 320,067  391,940  409,214  59,518  1,318,096  1,512,640  220,004 
    Adjusted cash gross margin 41.8%  45.0%  45.4%  45.4%  38.9%  44.5%  44.5% 
                          
    Operating expenses (192,374) (176,550) (181,442) (26,389) (2,126,948) (707,392) (102,887)
    Plus: share-based compensation expenses 15,317  12,240  27,528  4,004  47,406  56,870  8,271 
    Plus: changes in the fair value of contingent purchase consideration payables 3,834  1,413  (18,528) (2,695) 937  (13,905) -2,022 
    Plus: impairment of long-lived assets -  -  -  -  401,808  -  - 
    Plus: Goodwill impairment -  -  -  -  766,440  -  - 
    Adjusted operating expenses (173,223) (162,897) (172,442) (25,080) (910,357) (664,427) (96,638)
                          
    Operating profit (loss) 7,795  64,645  64,899  9,440  (1,368,538) 237,479  34,538 
    Plus: depreciation and amortization 143,966  166,244  179,759  26,145  667,102  634,606  92,300 
    Plus: share-based compensation expenses 15,401  12,929  29,200  4,247  47,129  59,538  8,659 
    Plus: changes in the fair value of contingent purchase consideration payables 3,834  1,413  (18,528) (2,695) 937  (13,905) -2,022 
    Plus: impairment of long-lived assets -  -  -  -  401,808  -  - 
    Plus: Goodwill impairment -  -  -  -  766,440  -  - 
    Adjusted EBITDA 170,996  245,231  255,330  37,137  514,878  917,718  133,475 
    Adjusted EBITDA margin 22.3%  28.2%  28.3%  28.3%  15.2%  27.0%  27.0% 
                          
                          

     

    21VIANET GROUP, INC.
    SUPPLEMENTARY DISCLOSURE FOR HOSTING AND RELATED SERVICES
    (Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))
             
     Three months ended  Twelve months ended 
     December 31, 2017
     September 30, 2018
     December  31, 2018
     December 31, 2017
     December 31, 2018
    GAAP DisclosureRMB
     RMB
     RMB
     US$  RMB
     RMB US$ 
    Net revenues765,814  870,068  901,887  131,174  2,975,178  3,401,037 494,660 
    Cost of revenues(565,645) (628,873) (655,546) (95,345) (2,130,279) (2,456,166)(357,235)
    Gross profit200,169  241,195  246,341  35,829  844,899  944,871 137,425 
    Other operating income-  -  5,027  731  5,439  5,027 731 
    Sales and marketing(42,702) (39,918) (49,210) (7,157) (171,761) (172,176)(25,042)
    Research and development(29,340) (24,333) (23,583) (3,430) (97,597) (92,109)(13,397)
    General and administrative(115,351) (110,243) (130,963) (19,048) (417,154) (462,637)(67,288)
    (Allowance) reversal for doubtful debt(1,147) (643) (1,241) (180) (6,257) 598 87 
    Changes in the fair value of contingent purchase consideration payables(3,834) (1,413) 18,528  2,695  (937) 13,905 2,022 
    Total operating expenses(192,374) (176,550) (181,442) (26,389) (688,267) (707,392)(102,887)
    Operating profit7,795  64,645  64,899  9,440  156,632  237,479 34,538 
                        
    Non-GAAP Disclosure                   
    Gross profit200,169  241,195  246,341  35,829  844,899  944,871 137,425 
    Plus: depreciation and amortization119,814  150,056  161,201  23,446  403,407  565,101 82,191 
    Plus: share-based compensation expenses84  689  1,672  243  (162) 2,668 388 
    Adjusted cash gross profit320,067  391,940  409,214  59,518  1,248,144  1,512,640 220,004 
    Adjusted cash gross margin41.8%  45.0%  45.4%  45.4%  42.0%  44.5% 44.5% 
                        
    Operating expenses(192,374) (176,550) (181,442) (26,389) (688,267) (707,392)(102,887)
    Plus: share-based compensation expenses15,317  12,240  27,528  4,004  47,406  56,870 8,271 
    Plus: changes in the fair value of contingent purchase consideration payables3,834  1,413  (18,528) (2,695) 937  (13,905)(2,022)
    Adjusted operating expenses(173,223) (162,897) (172,442) (25,080) (639,924) (664,427)(96,638)
                        
    Operating profit7,795  64,645  64,899  9,440  156,632  237,479 34,538 
    Plus: depreciation and amortization143,966  166,244  179,759  26,145  465,976  634,606 92,300 
    Plus: share-based compensation expenses15,401  12,929  29,200  4,247  47,244  59,538 8,659 
    Plus: changes in the fair value of contingent purchase consideration payables3,834  1,413  (18,528) (2,695) 937  (13,905)(2,022)
    Adjusted EBITDA170,996  245,231  255,330  37,137  670,789  917,718 133,475 
    Adjusted EBITDA margin22.3%  28.2%  28.3%  28.3%  22.5%  27.0% 27.0% 
                        
                        

     

    21VIANET GROUP, INC.
    CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
    (Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”))
          
       Three months ended 
      December 31, 2017  September 30, 2018  December  31, 2018
       RMB    RMB    RMB    US$  
       (Unaudited)    (Unaudited)    (Unaudited)    (Unaudited)  
    CASH FLOWS FROM OPERATING ACTIVITIES             
    Net profit (loss) 797,569  (27,894) (98,042) (14,260)
    Adjustments to reconcile net profit (loss) to net cash generated from operating activities:             
    Depreciation and amortization 143,966  166,244  179,759  26,145 
    Stock-based compensation expenses 15,513  12,929  29,200  4,247 
    Gain from disposal of subsidiaries (677,084) -  -  - 
    Others (148,681) 41,616  95,122  13,835 
                 
    Changes in operating assets and liabilities             
    Accounts and notes receivable 32,070  (34,113) 44,566  6,482 
    Prepaid expenses and other current assets (23,235) (37,448) (117,604) (17,105)
    Accounts and notes payable (38,841) 37,690  (31,734) (4,616)
    Accrued expenses and other payables 92,272  (19,359) 96,432  14,025 
    Deferred revenue 8,674  11,154  5,135  747 
    Advances from customers (23,683) 114,528  79,968  11,631 
    Others (21,413) (4,632) (45,802) (6,662)
    Net cash generated from operating activities    157,127    260,715    237,000    34,469 
                 
    CASH FLOWS FROM INVESTING ACTIVITIES             
    Purchases of property and equipment (74,603) (123,027) (129,910) (18,895)
    Purchases of intangible assets (4,062) (4,032) (8,199) (1,192)
    Payments for investments (275,766) (196,319) (101,796) (14,806)
    Proceeds from other investing activities 100,000  18,061  97,917  14,241 
    Net cash used in investing activities    (254,431)   (305,317)   (141,988)   (20,652)
                 
    CASH FLOWS FROM FINANCING ACTIVITIES             
    Proceeds from issuance of 2020 bonds 619,180  -  -  - 
    Repayment of long-term bank borrowings (67,871) -  (42,690) (6,209)
    Repayment of short-term bank borrowings (1,520,000) -  (19,999) (2,909)
    Payments for capital lease (67,239) (50,996) (104,420) (15,187)
    Collection of prepayment for shares repurchase plan -  42,710  -  - 
    Payment for shares repurchase plan 60  -  -  - 
    (Payments for) proceeds from other financing activities (65,756) 89,810  (17,324) (2,520)
    Contribution from noncontrolling interest in a subsidiary 49,314  196,281  -  - 
    Net cash (used in) generated from financing activities    (1,052,312)   277,805    (184,433)   (26,825)
                 
     Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash  (4,967) 63,580  14,507  2,113 
     Net (decrease) increase in cash, cash equivalents and restricted cash  (1,154,583) 296,783  (74,914) (10,895)
     Cash, cash equivalents and restricted cash at beginning of period    3,350,052    2,439,152    2,735,935    397,925 
     Cash, cash equivalents and restricted cash at end of period    2,195,469    2,735,935    2,661,021    387,030 
                 
     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 December 31, 2017 by excluding the movement of restricted cash of RMB1,619.3 million.

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