VNET (VNET) 21 Nov 242024 Q3 Earnings call transcript

Hello, ladies and gentlemen. Thank you for standing by for the Third Quarter 2024 Earnings Conference Call for VNET Group, Inc. [Operator Instructions] Participants from our management include Mr. Gavin Shen, Rotating President; Mr. Qiyu Wang, Chief Financial Officer; Mr. President; Vice Executive Ma, Mr. Ju Vice Qi Ms. Yang, Senior President; the of note recorded. I that Liu, over now Investor conference company. Please Director Relations to call the being Xinyuan today's Ms. the call to turn speaker first today, like would is Xinyuan Liu. Please go ahead.

and everyone, XXXX to our Hello, earnings operator. third call. conference you, welcome Thank quarter

forward-looking IR the earlier that as well our harbor services. Please note Our distributed you the Securities find as today, earnings U.S. release under a of Litigation website can call statements will provisions of Reform contain today's and safe XXXX. was copy made on our Private Newswire Act

Forward-looking statements from cause our risks uncertainties materially actual expectations. that are may subject to current differ results to and

documents and please as VNET these conference detailed SEC. disclosure our note call our obligation filed does release the unaudited of GAAP release audited not For we earnings undertake the other ir.vnet.com. applicable this and call, non-GAAP update to under of can refer this that except with uncertainties, statements, discussions VNET's any forward-looking press any the latest risks VNET's of also measures during to laws. Please to summary required at and annual from report non-GAAP be matters. include presentation to a and reconciliation will downloaded contains which matters. A earnings IR conference the press website unaudited GAAP refer viewed and financial

session that be President; deliver join text our utilizing Rotating in Q&A you will Gavin Wang, to powered we mentioned, alert prepared quarter's Qiyu this to CFO. to remarks, by Qiyu person. will technology like Newlink.ai I'd like the Next, and and our speech I

on website will A webcast at also being ir.vnet.com. is be this of conference recorded. conference this call our available Additionally,

presentation. started Now today's let's with get

results. I'll everyone. joining Thank our and start quarter you third morning, today. for Good an overview with of call good our evening,

IDC to Slide cost efforts. growth in mainly business. year-over-year to wholesale RMB led the allocation of X. driven by rapid a and revenues to strong quarter, net XX.X% RMB increased also a our billion, We by resource increase million, by our turn year-over-year delivered thanks Adjusted to EBITDA Let's XX.X% X.XX XXX optimization

business utilization respond quarter-over-quarter. we Our and megawatts to XX.X%. environment, segment business X.X rose the XX wholesale from in reached strong quarter-over-quarter. XX%, our rising utilized This the as remarkable this increasing high in rate of RMB million business at and quarter-over-quarter capitalized momentum, effectively and of a net points XXX revenues market's reached wholesale megawatts year-over-year scale with capacity XX and XX.X% wholesale megawatts on by of maintained capacity XX year-over-year by year-over-year infrastructure XXX service by percentage end digital rate demand. Wholesale of demand XXX September, megawatts to reached new our as mature this healthy its to by Wholesale megawatts, XXX ability a high megawatts our needs. The growth increasing of reflects utilization expanding pace a the to increasing

provided the reliable our line operations IDC value. growth Together, the future us Our sustained and position and our Furthermore, position to service business to support rate smoothly and current results capacity for of enhancing for remaining with demonstrate retail continued and September. unused and cash shareholder stable dedication of as ample progress business these well end utilization company's credit development.

Moving quarter. on order to our during this new wins

XX third We with order megawatts. customers quarter X the during continue new attracting totaling to high-quality wins,

area earnings As and have another call, Ulanqab XX totaling services the [ elsewhere. X you Greater in our we orders in for we megawatts X mentioned on orders addition our IT see to our last secured on campus for that X, the X can data ] Slide centers Beijing

in computing XX an more clusters, in detail Internet of Huailai Hebei will Province, wholesale Campus IDC a megawatts won new one green order review located at we from later. customer our Specifically, for which our I

province also data a our information data wholesale as X.X-megawatt a from in another and X.X-megawatt semiconductor Hubei demand data for centers Northern for appeal order Internet customer well received customer services. region. into services centers an customer and center order enduring retail for regions and retail strong of from reliable order We as wholesale The and our our the across XX-megawatt the from underscores a our high-quality a technology IDC retail communications customer key

strides growing Slide development power. in demand to at look for quarter. AI-driven during that high-performance made our X harnessing turn trends to shaped let's We the demand the the third AI computing Now significant

our Internet efficiency. see to cloud operational primarily video, continue and number applications services, and leading demand computing stems leaders increasing among customers from financial sectors. an the short industry industries local AI-driven clients of for semiconductor enhanced We services, adopting AI in

AI our quickly and demand. capabilities capture customers' AI service accommodate infrastructure empowering is aligning Currently, to and expanded capable for surging market's and with response capacity data AI-driven of the have our processing. meeting We XX% computing training model in our over high-performance requirements, us computing needs power wholesale of

the witnessed have development starting surge XXXX. unprecedented language We large of in model

the During around of have megawatts AI are to approximately our new orders, set which we demands XX% XXX year, facilitate of past won of customers.

with their specific Additionally, requirements, we effectively. more to us better our have customers to AI enabling deepened our services understand clients our to collaboration tailor

achieve power liquid can are cabinet solutions XX to dissipation and and cooling and to We that per and XXX up our refrigeration up modules advancing on of consistently air research kilowatts per of cabinet. cooling kilowatts development heat

centers our cooling deployments cutting-edge also We data continued cabinet and with technology. to designs, innovative high-density enhance

to training approximately demand situated demonstration is the as to system language the our integrated big X. us innovation project to and for high from the as customers, of enabling Slide West meet like fine-tuning. national XX efficiently collaborative as just integration their centers. cluster of part is introduce to national Zhangjiakou Moving downtown computing models It including which and Campus, Beijing kilometers large Huailai the power, national serves for Data IDC for data Project East for inference close model I'd a Computing well of

known a Huailai and located Northwest Huailai campus meters. Ulanqab first power. On Internet stands service to a an Inner square capacity business Haitong. into our its and green province, grid geographic around load Energy computing Administration from Hubei order to customer and our XX-megawatt Owing received XXX the Beijing, total area advantages. Currently, note, our home recently from power its continue cluster center demand related campus is we to of Huailai AI approval our gigawatt-level we is in succeeding in Mongolia IDC for a computing data in as computing project Huailai develop meet and project source Green Energy equivalent for a photovoltaic those the XXX,XXX project. of storage wind kilowatts hyperscale of co-located won exceptional construction as energy XXX,XXX of the offers kilowatt with strategic XXX,XXX as kilowatt well of XXX,XXX encompasses cluster and Ulanqab approved Huailai plan to third land to green The Our IDC XXX,XXX megawatts capacity power our of XX,XXX campus phases. of campus' at a computing integrated power to kilowatts project approximately build storage capabilities, kilowatts multiple cluster IDC recently hours. planned

Holdings supply more cost-efficient used center of elevate proportion integrated operations to the It dedicated progress Not our our also also the Ulanqab in generate includes data achieved, is green It Shandong High transmission business stable Furthermore, in but energy. We of renewable our our sources electricity Group the projects green grid just approximately million-kilowatt create strategic from renewable, construction power only for about neutrality, of develop will expected the steady electricity this data center line. and are energy key a Limited for in its green hours renewable line XXX of China. with Ulanqab annually very to energy approval. ESG synergies one data storage project industry once energy project Speed centers providing project source long-term a another Northern is the excited value our cooperation to energy green campus, will view equipped approval Ulanqab's are as carbon few green of one supply in Chinese with load to with initiatives. Ulanqab will of campus a our transmission the dedicated our Ulanqab power creator it projects propelling

moving to regional data on a Now update.

Yangtze regions capacity with can Beijing driven mainly see you remain construction focused of our Slide construction on the the Greater we proportion Delta increasing quarter, during latter the area by on Huailai IDC the River development of third As the under the XX, and campus.

starting quarter. wholesale on Now our continues our business growth, updates, business overall with in an XX. Wholesale revenue business let's to XX.X% year-over-year recording delve into Slide drive our increase this

These of Our with quarter-over-quarter the a XXX megawatts a by facilitate move-ins XX reaching improvements an utilization of timely customer September the utilization rate ability total quarter as last utilization responses utilization mature megawatts XX% XX.X% our capacity from during rate rate our XX.X%. increase of of ramp-up increased of quick and capacity with September quarter. the of service year. The of reflect last needs to XX.X% and to customer XX end for to end capacity of in a rate compared increased megawatts

our clear for We have growth a wholesale data center path capacity.

second development driven in illustrates by Campus in demand N-ORXX. past to E-JS XXX quarters our utilized the to and strong to in in utilization. XX third progress capacity Let's increasing from C the megawatts and move on megawatts continued XX, megawatts Slide during quarter primarily XXX Notably, which quarter capacity XXX our the quarter the from customer first

quarter B, to increasing our new end construction had clients. capture from megawatts capacity Campus increase is the ramped N-HB We quarter precommitment mainly demand, up the construction for Campus rate XX September, infrastructure This past also in in quarter. first third a under XXX the under megawatts XXX provide will to to XXX the By of megawatts further attributed computing total to for quarters XX.X%. in risen second N-OR high-performance XX construction reliable, our the to the in to future order of capacity the and which rising

short-term of with to to the due primarily held Additionally, an by for increased abundance certainty. XXX XX high future development capacity megawatts megawatts demand

construction on closely are orders, soon which our enter to multiple customers potential the expected are phase. with communicating We

further Given our our wholesale data capacity centers, rate solidify planning growth the market in center a in the X capacity gigawatt approximately high to leadership data services position are precommitment we to expand of the continuous demand, sector. our total targeting of and

our retail Slide business on XX. to Moving

end utilization XX.X%. IDC business The cabinets. continued has retail slightly rate capacity the XX.X% the rate September, Our in in of as with retail steady service smoothly mature XX,XXX capacity third increased to quarter. at utilization holding to was of operate The

Our MRR this has RMB to retail RMB per quarter X,XXX slightly last from quarter. cabinet X,XXX increased

XX. from business XX to have the the on over our IDC approximately fourth We third next to the Turning plan deliver IT We centers under capacity resource construction. to pipeline an for the megawatts quarter we see XXXX Slide months XXX of of our remains Currently, data robust. that new quarter capacity of X XXXX.

quarter third our Our capacity the equivalent XXXX, was XXX capacity for business meaning XX% service. new wholesale current as the that of service approximately is in the to of of of megawatts our in capacity end expected

XXXX upcoming delivering we XXX and total during of quarter during and megawatts Specifically, XXXX XXXX. anticipate fourth the and second approximately XXX of of first megawatts the in approximately the quarters in third total quarter

expand [ our to customers' than and digital X cities strong industrial consultation by SD-WAN strong sectors, in regions boasts customers quarter to strategically of third conclusion, and strategy For effective services continued XXX [ our and In upgrades premium XXX The manufacturing VPN results. will ] and footprint its its ]business currently non-IDC the business worldwide customer and operations. more going support ICT base drove the other business, forward. expand our VPN in acquiring execution offering new countries over its POPs to

strength will build IDC we to ahead, services. offer high-performance data core centers innovative refine and to our Looking continue

and We the are confident amid success boom. our know-how that will capabilities innovation AI our industry empower

to ESG Hi-Speed continue Additionally, green to development you, Holdings priority Group, Shandong our and we more building our all and to the to goals, everyone. cooperation I turn about now will stakeholders. Thank propelling high-quality Qiyu our on energy as and we will develop remains value financial to discuss operating to deliver call our our deepen our over VNET's strive of business performance. strategic commitment with sustainable our

Good everyone. morning, good evening, and

rates that the third note quarter otherwise financials and Before basis. are unless for terms. our the on unless are we quarter a reviewing of year-over-year all specified, we of discussion growth present otherwise Furthermore, are detailed stated, third please XXXX start, in today renminbi the the I'm all performance,

financial Moving businesses strong results. high-quality In quarter, the high focused and on with third on delivered remain to Slide we margins operational revenue and XX.

revenues Our RMB by total net billion. to XX.X% X.XX increased

to RMB year-over-year our Our adjusted cash gross by grew XX.X% profit by to while increased adjusted also million, XXX XX.X% RMB million. XXX EBITDA

RMB to expense improve XX.X% and In administrative off addition, efficiency with is our million and year-over-year and general marketing, development efforts to third sales operational quarter. XXX paid by decreasing the and research for

our robust continue will we capital forward, measures position. Going control maintain optimize to cost financial to our working and refine

development, deepened healthy on Additionally, and through profitability emphasis its flow. the company high-quality maintaining costs increasing has while cash efficiencies controlling

million profitability net RMB extinguishment. last Sequentially, net We the million, a of XXX a quarter profit a year, third gain of the of also recorded a as of RMB for year. profit delivering from net cumulative well a improvements XXXX, the in increase consistent improvement XX period X same we this the the improved third company's company to operational debt on first loss as due the XXXX. In significant the our substantial significantly profit primarily XXX%, quarter of months the recorded for net and of

line. Let's our look closely more at top

scale retail and have IDC of from non-IDC total data previously, based mentioned from we business center revenues wholesale the with remaining have projects, subdivided our on business net revenues nature we business and IDC As separate. into

can Slide to by by key growth you driven strong million revenues momentum, revenue XXX Campus data wholesale year-over-year see our centers. XX% driver XX, our on and mainly with XX remained the RMB As N-ORXX E-JS increasing

revenues retail net continue the revenues. account largest to for part Our of

stable, remained X.X% sequentially XXX relatively to Our million. by increasing retail RMB revenues

continued Our progress to non-IDC business smoothly.

margins, third solid enhance to to quarter, efficiency. continuous efforts the maintained thanks our we overall During

Slide on shown have remain quite stable. we gross As and margins margins cash our XX, adjusted EBITDA

of XX. higher year. the operating quarter. and first XXXX, collection the effectively strong cash a flow primarily billion the measured period last of Moving Slide customers to same months during X.XX for of due net on RMB liquidity steady the X maintained that We We expenditures. inflow payment slightly to of than from on cash recorded

healthy position billion, with second remained of equivalents, X.X cash total short-term cash stable to that Our the end cash RMB and of company's as investments restricted compared quarter. the reaching the

to XX-month on with prudent We debt the XX EBITDA take management, months' to maintained our trailing to look X.X debt at debt ratio EBITDA debt our both let's Slide at X.X, trailing a Next, total strategic our healthy a ratio XX. at the adjusted and XX% approach at net maturing planning repayment. total management the to remaining in level. to company's only prioritize maturity medium-term and of and in comprises debt short- debt. XXXX debt debt long-term XXXX We ensure of debt our Notably, security adjusted

to future now which Turning spending, our as and view a critical investment presence. CapEx growth we in industry

of expansion. stable past between billion. which over XX, used Slide billion X CapEx first wholesale has can months and RMB you X.XX of X billion the XXXX, As our was remained on see X relatively In our years the business RMB was billion, CapEx RMB X RMB X.X for

year the to flow we're will We have billion expect capital around making CapEx leverage reasonable guidance RMB X.X mature progress for full healthy by high our selling the balance CapEx a solid maintaining the and we future, our likely the while position. sufficient plan steady our of sheet, cash assets, support supported our reach for in XXXX end near

Now Slide moving for on guidance to our year XXXX XX. full

guidance wholesale year and are progress. EBITDA, our along faster-than-expected move-ins adjusted wholesale projects a from customers, primarily of because the our our to total increase our decided business, growth with business' IDC full retail core steady have to revenues accelerating We net

representing expect of to EBITDA total billion a be in RMB range X.X%; to in range billion, to of year-over-year we increase to X XX.X%. revenues X.X increase the billion, of X.X of Specifically, to RMB RMB adjusted the billion X.X% a RMB XX.X% and to X.XX be net year-over-year

details some our on share to want I Next, project. pre-REIT

the centers one the a we of significant have As China's leading second agreement Taicang cannibalization through this end co-establish recently. to agreement the progress campus. entering our stake proactively a sign XXX% final a made to XXXX fund, our stages into previously wholesale definitive of of Currently, first insurance will acquire of which by the pre-REITs in are in phases we expect with and mentioned, are and of fund the advancing companies data and IDC

our results the customer in billion. a assets company. This in valued project's by the the as transaction megawatts of further company's seamless direct as assets mature managing insurance the in diversifying VNET the with and it cash China. center data the while highlights cycle, a long-term If ratio. The underlying for provide to structure capital operations REIT fund, centers investment our consolidate the have bolstering experience. The will reserves This first this financial a investors we'll major project financial of VNET's XXX premium underlying It source through interest progresses effectively daily assets further equity to reduce total company will long-term will will and RMB prowess capital REITs. balance and retain statement assets including are company's XX% approximately and sheet planned, cycle X.XX consideration build debt strengthen healthy, data the approximately efficiency. company's capital cash continue our enhancing through existing the incremental of manage and interest company operating will a of Chinese a flow multi-tier sustainable marks equity capacity steady by supporting public receive pursue development. billion asset at IT held structures, the a RMB insurance and exits X.XX continue VNET in and to our the and create sources high-quality

Ltd., service Shandong of expected project facilitating come year to project source-grid-load-storage As energy Holdings earlier, further VNET's obtained approval. recently our usage. and Group will of next mentioned Ulanqab, during the local Gavin into a second green collaboration the is integrated with increase governmental This in Hi-Speed proportion half

deepen will Going to our forward, we initiatives. commitment our further ESG

we development, will to sustainable growth by continue growth. we propel wholesale effective of enhanced and execution were quarter robust Supported AI-driven to cash growth thanks robust invest by strategy. core our dual deliver significantly revenue fundamentals high-quality pleased to business in opportunities business, position, especially up, healthy profitability, led our our business in strong to sum our the and better-than-expected To another continued

for prepared today. remarks concludes This our

ready now are take to We questions.

question Instructions] Wang [Operator Your from with UBS. first comes Sara

I have two questions.

have than -- this or it's is rather see only X First multiple for that that X actually X hyperscale to X encouraging orders signed customer. we quarter new or

I ask how the what pricing And the year? is driving when on the little demand? new still here, a So pricing. computing orders see is the is bit or return on AI demand more this Maybe we

have more shall in to is definitely long-term peers competition raising project energy also CapEx, So Language] My shall question of integrated How margin our given given power about some second how this going think win than it's the So [Foreign and about before? about on relationship. believe we better on now green the the I project are forward. of we green pricing solution Ulanqab. supply? Language] margin customers we an and of we think pricing can might think [Foreign helping be

[Interpreted] Ju your will Vice President. Executive This Ma, take is I question. first

rightly did we be workload-related most have requests. signed from to out you orders QX. them orders, And pointed X AI new that, to new XX we of lot megawatts. specific, totaling As And are of a

total year And so past being our that And received megawatts. of AI them totaled with among new related. said, workload the XXX XX% our for orders them,

course, demand is growth right that driven AI-related you from the are workload. the mainly by of So market

market of do And the the that the that is growth stronger applications forward, we seeing looking inference are inference-related out there of requests a notice in boom. faster because we market. And more are in demand as rolled being for AI

become that reading going a stronger demand market into next year. inference will our So is

among However, new its to orders. proportion going the is increase

our add of And starting this, center clients proximity launching that, actually a like the campus. to respond to one their training campus retail serve QX needs. to given to and started are our -- plan ahead. our and that planning needs geographic Huailai cater in users' from we Beijing, are And have just inferencing needs is to we planning to to we quick IDC because, for we services inference for market its further did moves So integrated

that's orders. for your question So on answer new the an

[Interpreted] On President. this is question, your second Rotating Gavin,

our of newly pricing with remained consistent orders, the it For secured previous our orders.

up. stable price a more the the demand, year become we pick of second and are are half anticipating we seeing in starting gradually As balanced supply will and to even the

also, scale, our retail are of effect for seeing cost because are our having -- we And for economies creditworthiness. is we campus, of gradually our better wholesale economies coming construction down, -- more

brings these costs ROI. these coming are result, down. seeing we total that the are So operational -- cost as increased for for centers And a

received Qi Region. Yang. authorities This green your is project. on have we take will I energy the in [Interpreted] Ulanqab the approval Recently, Autonomous related question Inner from third Mongolia

Shandong the approval and the think going significantly will new us carried the Hi-Speed. the They that. by related work, With I construction construction energy construction be increase will for work to it's out by the That's doing subsidiaries Hi-Speed. the between synergies company. to the be Shandong owned

capacity total So XXX,XXX of for we have a this kilowatt received granted project.

is of project this to operation, is XXX green into electricity. kilowatt once of total So put worth of million expected it a hours generate

supply provide would this So long-term green campus. our to energy Ulanqab

the the will that the second start expecting supply power. grid, the are to integrated We of in year, the into half and electricity be

significantly used once said, regard it's done, being energy all So that's to the will with by with Ulanqab campus increase the of that proportion I going to think of improve. margin margin, the the green next year. And

with CICC. comes next Che Shuyun Your from question

Congratulations first projects such project made on pre-REIT Language] results. may [Foreign more utilization revenue This carry EBITDA know And company current details the the margin. out the progress, and in for in will I question the future? strong is as has the similar rate, My Taicang.

plan to the Could business with the VNET's wholesale in management about in is the question outlook us second of Language] please months. [Foreign next deliver year? megawatts XXX next my CapEx And share XX the

while, in at your and call. take more to to I'm I'll first has Actually, able details the this question. very [Interpreted] a making be Taicang the for been pleased project share earnings

ramping rate the first of rate still now, phase of million. and at that expected by that the time, by to second XXX rise XX% the next the RMB have plus, our utilization XX% the at an around around is give end take. that And ramping or year. campus, is up would EBITDA stage, And phase -- Taicang will given For right we utilization we

And the we of through domestic first a had IDC. cooperation. lot have China's companies this for very process, equity foundation have laid to insurance project insurance the them with company engaged stake has very X Taicang solid where we X In a engaged The and directly experience extensively. And the large purchased example marks gained [Interpreted] this good, of large-scale project. our future

So going projects. similar advance forward, we would

rate Taicang is around So utilization at our for the campus moment, the XX%.

is to advance than likely would would a this when net to we this to lower rate us generate allow project utilization because such So cash the flow. some

for the So the able we the to going have And first to into our the we're Taicang is Ulanqab the is [Foreign project XXXX project, we goal statements as is maintain inflow that pre-REITs -- consult out delivered statements. done. so Meanwhile, are cash project to once for phase carry Language] level consolidate group financial project. will our our for pre-REITs still

[Interpreted] Next CapEx. on

robust seeing demand CapEx wholesale would for that are our services, into translate increased and We XXXX. for

our to closely the make CapEx to grow to sure strategic strategy at synergies suppliers work Our and in is that steady order our pace. maximize with a

Please Your ahead. with next Daley Securities. question Bank of comes America Li go from

have I strong questions. two the on results. Congrats

but in by demand a is we First in have Hebei also regarding outlook Ulanqab, in one the Huailai region, project Mongolia, province.

how demand we X region may the CapEx years? the X So next Language] the X And which we to future? in in the regions spend [Foreign see more in do

How the gross the second key trend? And margin the profit what's margin. a in gross better we future is trend. drivers margin? profit We the margin QX gross see [Foreign for is gross Language] My good about see do question the

X possibilities other while strategy, group's at on the the development [Interpreted] campuses your now, Right and opportunities or X exploring would I'll regions. focus we take strategically regions question. for first

Ulanqab So first area the the focus campus. strategic is

And campus or scale So we're model handling language related. is this majority we the our a build scalable, campus. of as requests campus. training position A green, goal oriented tasks a driven to this gigawatt at or is large into

of majority our the the province. the at the that's Huailai campus region Hubei or request campus. And this we're handling at that strategic So focus workloads second is

receive We this new to orders have for campus. started

are is to we this to very our a that. gigawatt -- hour also scale So see And into gigawatt a campus. pleased goal

it benefit. its enjoy to proximity the Given geographic spillover could Beijing,

to well Taicang the other inference located from campus some the clients is province. workloads. campus this this going than Suzhou next use by campus strategic going us out training-related expand this. our as other phase. as requests to going and we're Meanwhile, to other small-scale This some the to Jiangsu to be Beijing. And region. existing campus that, region. that accommodate within use clients for And we're Jiangsu in for So Jiangsu wholesale to in planning core a our the our is the to node province we'll construction explore business We're support We're to in in opportunities using carry third accommodate

rising margin, margin. profit reason we of discount as have we that explained rise business to One, a because And constantly question term our On of reasons personnel optimization includes rate. margin. centers. gross so as increase revenue as retail reason year, there last And made X as explain profit our we our the discount gross business [Interpreted] second your are the margin well could it reasons X non-IDC for the third that the optimizing the that has our business. a these are on of IDC is All profit share profit than That is the gross wholesale the higher PUE. gross among lower well adjustment our

third we our reason, the the adjust On depreciation. last for reason, term

it's more reflecting the actual on So -- situation hence, the it's ground.

these X and So conditions we with reasons margin. profit a having better are gross

Your Tang next Tom with Morgan question Stanley. from comes

the Congratulations on question, results. strong fourth which only one is quarter I have outlook. on the very

more expecting whether can orders we details if coming -- we're think business any Language] in, see So for [Foreign new about demand quarter, especially training the from the more we have in or and demand? how AI or fourth it's wholesale to on some transitional different

your take question. [Interpreted] Let me

of QX. that we guidance, give. that profit faster pace a in expect consistent we and at wholesale look that our business grow you for our our be will retail guidance gross at revenue business, the If the in non-IDC and with business to And terms

be to relatively going flat. it's So or consistent

in our that based QX, look able delivery set. are annual confident and deliveries you on we at that, If are we target fulfill the to

said, plan our fulfill with forward. that we going can we are confident So operational that being

Edison question next with Lee comes Your from Jefferies.

of three looking went terms short-term amount in training from question [indiscernible] versus number your maybe [indiscernible]. And megawatts power [indiscernible] number requirement actually of tech terms to demand? number development XXX two inferencing up question XXX at one. Question CapEx, held for is That's for AI in of megawatts.

can to Difficulty] that So Language] what you explain [Technical driving growth? [Foreign was us

third please you question? your can Edison, repeat

question one question? Number number or three

three. Number

Number XX, future on development [Technical your short Page Difficulty]. is term three

is Sorry, stable. connection not your

in I'll don't the call ask back, worry.

the first Just let's about talk questions. two

I'll take question. your [Interpreted] first

very Given we last expect next current strongly, demand into the AI supply demand to for that's to year. will workload in training-related landscape continue the and the perform China, for and going

that are trading some and services training, inferencing-related Huailai notice accommodate firms pure for did stronger such as and campuses requests. are there firms, as inference we well as why at having our actually they our services retail integrated expanding driving industries However, service as demand That's to demand. are well autonomous quantitative like we

we expect growth quicker year next into a such continue well trend some So stronger, time in then year. QX next a to and with

to the purchase RMB is centers. the [Interpreted] X maintenance, the we of centers of of I'll demand. our with -- And repairs about the our we half talk repurposing to to retail billion spend investment these than used the GPU-related data regard hardwares X that used and is other that CapEx. in spent RMB Other so over on the wholesale billion, business, meet for users' half retail data around

that be the delivered will other requests. their -- So coupled with related

Timothy next comes from with Zhao Your Sachs. Goldman question

the I think is recurring think revenue, services is explain that to my One I on monthly a terms in there monthly reason Could you IDC wholesale increase calculation, I business, revenue the bigger extent. a of have based drivers two Great. it seems or that, behind? Q-on-Q your questions or the on here.

can in next your any capacity IDC year just please? for this if fourth [Foreign give Language] think I us service for management quarter secondly, wondering outlook for year, wholesale the business, the And and

your me Let question. first take [Interpreted]

for I business, think that's mainly because clients than a in the are we our wholesale moving faster expected. lot

of that's why costs increasing And effective profitability the is that, our revenue quarter-over-quarter. So as it's the scale to our expectation. are costs, well as improving, than monthly the than other better also we seeing economies, and recurring in construction decrease funding the thanks

reasons increased X these So explain MRR. the

delivery plan the On we our outlook, [Interpreted] maintain unchanged. current delivery

deliveries planned the deliver to going in of are QX. We the rest

this the that's delivery So planned on year. for

expansion as Looking have on the we ahead year. our the orders to be also the existing have we delivered year, clients, given as capacity already well potential to our received guidance next given with next the that

and for that for Thank concludes today. Ladies gentlemen, you participating. our conference

your disconnect [Interpreted] transcript interpreter spoken that present the live on this lines. [Portions marked now an may call.] You are by of were