Adjusted EBITDA up 228.9% YoY to RMB171.0 million
Adjusted EBITDA margin expanded to 22.3% from 5.8% in prior year period
BEIJING, March 12, 2018 (GLOBE NEWSWIRE) -- 21Vianet Group, Inc. VNET ("21Vianet" or the "Company"), a leading carrier-neutral Internet data center services provider in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2017. The Company will hold a conference call at 8:00 pm on Monday, March 12, 2018 U.S. Eastern Time to discuss the financial results. Dial-in details are provided at the end of this release.
Fourth Quarter 2017 Financial Highlights
- Net revenues for hosting and related services increased by 8.9% year over year to RMB765.8 million (US$117.7 million).
- Gross profit increased by 9.2% year over year to RMB200.2 million (US$30.8 million). Gross margin expanded to 26.1% from 20.4% in the same period in 2016.
- Adjusted EBITDA increased by 228.9% year over year to RMB171.0 million (US$26.3 million). Adjusted EBITDA margin expanded to 22.3% from 5.8% in the same period of 2016.
Mr. Steve Zhang, Co-Chief Executive Officer of the Company, stated, "2017 was an exciting and milestone year for 21Vianet. We completed the restructuring of the Company by optimizing and then ultimately divesting our loss-generating managed network services (MNS) business, which allows us to fully focus our resources on our core hosting and related services business. During the past quarter, we further expanded our client base, including new relationships with Meitu, Douyu, and 99Bill, while many of our large clients, such as Xiaomi, Momo, Huawei and Lianjia, continued to expand their capacity at our IDC centers. As China's internet companies migrate from public cloud to the hybrid cloud, their demand for customized cloud solutions rose continuously throughout 2017. To satisfy our customers' specific requirements, we have proactively expanded our service offerings with more customized solutions. We are confident that our carrier- and cloud-neutral solutions coupled with customization will enable us to capitalize on rising demand and solidify our leadership position in this blooming Chinese market."
Ms. Sharon Liu, Chief Financial Officer of the Company, commented, "We are pleased to once again deliver better-than-expected financial and operating results in the fourth quarter. Our revenue from the core hosting and related services business increased by 8.9% to RMB765.8 million and our Adjusted EBIDTA increased by 228.9% to RMB171.0 million, both of which exceeded the upper end of our guidance. Furthermore, in December of last year, we successfully completed the divestiture of the remaining equity stake in Sichuan Aipu Network Co. Ltd ("Aipu"), as well as the elimination of the Aipu put option. As we move toward a leaner business model with an improved cost structure, we expect our financial and operating metrics to show continued improvement going forward."
Fourth Quarter 2017 Financial Results
REVENUES: Total net revenues were RMB765.8 million (US$117.7 million) in the fourth quarter of 2017, compared to RMB900.6 million in the same period in 2016. The decrease in net revenues was due to the discontinuation of the Company's MNS business following the completion of the divestiture in the third quarter of 2017.
Net revenues for hosting and related services, which represent 100% of the company's total net revenues in the fourth quarter of 2017, increased by 8.9% year over year to RMB765.8 million (US$117.7 million) in the fourth quarter of 2017 from RMB703.2 million in the same period in 2016. The increase was primarily due to the growth in revenues from the Company's business lines of hosting and related services.
GROSS PROFIT: Gross profit increased by 9.2% to RMB200.2 million (US$30.8 million) in the fourth quarter of 2017 from RMB183.4 million in the same period in 2016. Gross margin increased to 26.1% in the fourth quarter of 2017 from 20.4% in the same period in 2016. The increase was primarily due to the divestiture of the MNS business and execution of the Company's cost control strategies.
Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, was RMB211.1 million (US$32.4 million) in the fourth quarter of 2017, compared to RMB222.6 million in the same period in 2016. Adjusted gross margin expanded to 27.6% in the fourth quarter of 2017 from 24.7% in the same period in 2016.
OPERATING EXPENSES: Total operating expenses were RMB192.4 million (US$29.6 million) in the fourth quarter of 2017, compared to RMB690.4 million in the same period in 2016. The decrease in operating expenses was primarily due to the divestiture of the MNS business and the execution of the Company's cost control strategies.
Adjusted operating expenses, which exclude impairment of long-lived assets, impairment of goodwill, share-based compensation expenses and changes in the fair value of contingent purchase consideration payable, decreased by 44.1% to RMB173.2 million (US$26.6 million) in the fourth quarter of 2017 from RMB309.8 million in the same period in 2016. As a percentage of net revenues, adjusted operating expenses decreased to 22.6% in the fourth quarter of 2017 from 34.4% in the same period in 2016.
Sales and marketing expenses decreased by 53.6% to RMB42.7 million (US$6.6 million) in the fourth quarter of 2017 from RMB92.0 million in the same period in 2016. The decrease was primarily due to the divesture of our MNS business
General and administrative expenses decreased by 38.2% to RMB115.4 million (US$17.7 million) in the fourth quarter of 2017 from RMB186.7 million in the same period in 2016. The decrease was primarily due to the divesture of our MNS business and a reduction in headcount.
Research and development expenses were RMB29.3 million (US$4.5 million) in the fourth quarter of 2017, compared to RMB38.4 million in the same period in 2016. The decrease was primarily due to the divesture of our MNS business.
Changes in the fair value of contingent purchase consideration payable was a loss of RMB3.8 million (US$0.6 million) in the fourth quarter of 2017, compared to a gain of RMB67.2 million in the same period in 2016.
ADJUSTED EBITDA: Adjusted EBITDA for the fourth quarter of 2017 increased by 228.9% to RMB171.0 million (US$26.3 million), from RMB52.0 million in the same period in 2016. Adjusted EBITDA margin expanded to 22.3% in the fourth quarter of 2017 from 5.8% in the same period in 2016. Adjusted EBITDA for the fourth quarter of 2017 excludes disposal gain of subsidiaries of RMB677.1 million (US$104.1 million), share-based compensation expense of RMB15.4 million (US$2.4 million), and changes in the fair value of contingent purchase consideration payable which was a loss of RMB3.8 million (US$0.6million).
NET PROFIT/LOSS: Net profit was RMB797.6 million (US$122.6 million) in the fourth quarter of 2017, compared to a net loss of RMB485.2 million in the same period in 2016. The increase in net profit was primarily due to a one-off gain from the disposal of subsidiaries of RMB677.1 million (US$104.1 million).
Adjusted net profit for the fourth quarter of 2017 was RMB51.6 million (US$7.9 million), as compared with an adjusted net loss of RMB70.6 million in the same period in 2016. Adjusted net profit in the fourth quarter of 2017 excludes share-based compensation expense of RMB15.4 million (US$2.4 million), amortization of intangible assets derived from acquisitions of RMB10.8 million (US$1.7 million), changes in the fair value of contingent purchase consideration payable and related deferred tax impact of RMB3.8 million (US$ 0.6 million), disposal gain of subsidiaries of RMB677.1 million (US$104.1 million), impairment of long-term investment of RMB0.1 million (US$21 thousand), tax impact for the reconciliation adjustments of RMB4.6 million (US$0.7 million),and tax impact for the disposal of long-term investment of RMB94.2 million (US$14.5 million). Adjusted net margin was positive 6.7% in the fourth quarter of 2017, as compared to negative 7.8% in the same period in 2016.
PROFIT PER SHARE: Diluted profit per share was RMB1.18 (US$0.18) in the fourth quarter of 2017, which represents the equivalent of RMB7.08 (US$1.09) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares.
Adjusted diluted profit per share was RMB0.08 (US$0.01) in the fourth quarter of 2017, which represents the equivalent of RMB0.48 (US$0.06) per ADS. Adjusted diluted profit per share is calculated using adjusted net profit divided by the weighted average number of shares.
As of December 31, 2017, the Company had a total of 675.5 million diluted ordinary shares outstanding, or the equivalent of 112.6 million ADS.
As of December 31, 2017, the Company's cash and cash equivalents and short-term investment were RMB2,498.5 million (US$384.0 million).
Net cash generated from operating activities was RMB106.3 million (US$16.3 million) in the fourth quarter of 2017.
Full Year 2017 Financial Performance
For the full year of 2017, net revenues for hosting and related services increased to RMB2.98 billion (US$457.3 million) from RMB2.67 billion in the prior year. Adjusted EBITDA for the full year was RMB514.9 million (US$79.1 million), as compared with RMB243.9 million in the prior year. Adjusted EBITDA margin was 15.2%, as compared with 6.7% in the prior year. Adjusted EBITDA for the full year excludes share-based compensation expenses of RMB47.1 million (US$7.2 million), changes in the fair value of contingent purchase consideration payable which was a loss of RMB0.9 million (US$0.1 million), impairment of long-lived assets of RMB401.8 million (US$61.8 million), and impairment of goodwill of RMB766.4 million (US$117.8 million). Adjusted net loss for the full year was RMB190.8 million (US$29.3 million), as compared with RMB359.1 million in the prior year. Adjusted net loss in the full year excludes share-based compensation expense of RMB47.1 million (US$7.2 million), amortization of intangible assets derived from acquisitions of RMB104.3 million (US$16.0 million), changes in the fair value of contingent purchase consideration payable and related deferred tax impact of RMB0.9 million (US$0.1 million), impairment of long-lived assets of RMB401.8 million (US$61.8 million), impairment of goodwill of RMB766.4 million (US$117.8 million), disposal gain of subsidiaries of RMB497.0 million (US$76.4 million), impairment of long-term investment of RMB20.3 million (US$3.1 million), tax impact for the reconciliation adjustments of RMB22.8 million (US$3.5million), and tax impact for the disposal of long-term investment of RMB94.2 million (US$14.5million). Adjusted diluted loss per share for the full year of 2017 was RMB0.28 (US$0.04), which represents the equivalent of RMB1.68 (US$0.24) per ADS.
Fourth Quarter 2017 Operational Highlights
- Monthly Recurring Revenues for the Company's hosting and related services business per cabinet was RMB 7,766 in the fourth quarter of 2017, compared to RMB 7,878 in the fourth quarter of 2016 and RMB 7,817 in the third quarter of 2017.
- Total cabinets under management increased to 29,080 as of December 31, 2017 from 27,424 as of September 30, 2017, with 23,823 cabinets in the Company's self-built data centers and 5,257 cabinets in its partnered data centers.
- Utilization rate was 75.7 % in the fourth quarter of 2017, compared to 73.8 % in the third quarter of 2017.
- Hosting churn rate, which is based on the Company's core IDC business, was 0.18% in the fourth quarter of 2017, compared to 0.97% in the third quarter of 2017.
Recent Developments
On December 20, 2017, the Company announced completion of its divestiture of all remaining equity interest in Aipu and elimination of related put options.
On January 9, 2018, the Company announced that Mr. Terry Wang has resigned due to personal reasons and Ms. Sharon Xiao Liu assumed the position of Chief Financial Officer following his departure.
On February 5, 2018, the Company announced the addition of Mr. Alvin Wang to its leadership team as co-CEO to strengthen its cooperation with its shareholders and to foster strategic partnerships with various external parties.
Financial Outlook
The following forecast reflects the Company's current and preliminary view on the market and its operational conditions, which is subject to change.
For the first quarter of 2018, the Company expects net revenues to be in the range of RMB770 million to RMB790 million. Adjusted EBITDA is expected to be in the range of RMB178 million to RMB190 million.
For the full year of 2018, the Company now expects net revenues to be in the range of RMB3.25 billion to RMB3.35 billion. Adjusted EBITDA for the full year 2018 is expected to be in the range of RMB750 million to RMB830 million.
Conference Call
The Company will hold a conference call at 8:00 pm on Monday, March 12, 2018 U.S. Eastern Time, or 8:00 am on Tuesday, March 13, 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: | 1299086 |
| The replay will be accessible through March 19, 2018 by dialing the following numbers: | |
| United States Toll Free: | +1-855-452-5696 |
| International: | +61-2-9003-4211 |
| Conference ID: | 1299086 |
A live and archived webcast of the conference call will be available through the Company's investor relation website at http://ir.21vianet.com.
Non-GAAP Disclosure
In evaluating its business, 21Vianet considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measure to review and assess its operating performance: adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net profit, adjusted net margin, adjusted EBITDA, adjusted EBITDA margin, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted basic earnings per ADS and adjusted diluted earnings per ADS. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.
The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.
Exchange Rate
This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.5063 to US$1.00, the noon buying rate in effect on December 31, 2017 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.
Statement Regarding Unaudited Condensed Financial Information
The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information.
About 21Vianet
21Vianet Group, Inc. is a leading carrier-neutral Internet data center services provider in China. 21Vianet provides hosting and related services, cloud services, and business VPN services, improving the reliability, security and speed of its customers' Internet infrastructure. Customers may locate their servers and networking equipment in 21Vianet's data centers and connect to China's Internet backbone through 21Vianet's extensive fiber optic network. 21Vianet operates in more than 30 cities throughout China, servicing a diversified and loyal base of more than 4,000 hosting enterprise customers that span numerous industries ranging from Internet companies to government entities and blue-chip enterprises to small- to mid-sized enterprises.
Safe Harbor Statement
This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, quotations from management in this announcement as well as 21Vianet's strategic and operational plans contain forward-looking statements. 21Vianet may also make written or oral forward-looking statements in its reports filed with, or furnished to, the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about 21Vianet's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: 21Vianet's goals and strategies; 21Vianet's expansion plans; the expected growth of the data center services market; expectations regarding demand for, and market acceptance of, 21Vianet's services; 21Vianet's expectations regarding keeping and strengthening its relationships with customers; 21Vianet's plans to invest in research and development to enhance its solution and service offerings; and general economic and business conditions in the regions where 21Vianet provides solutions and services. Further information regarding these and other risks is included in 21Vianet's reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and 21Vianet undertakes no duty to update such information, except as required under applicable law.
Investor Relations Contacts:
21Vianet Group, Inc.
Calvin Jiang
+86 10 8456 2121
IR@21Vianet.com
ICR, Inc.
Jack Wang
+1 (646) 405-4922
IR@21Vianet.com
| 21VIANET GROUP, INC. | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) | ||||||
| As of | As of | |||||
| December 31, 2016 | December 31, 2017 | |||||
| RMB | RMB | US$ | ||||
| (Audited) | (Unaudited) | (Unaudited) | ||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | 1,297,418 | 1,949,631 | 299,653 | |||
| Restricted cash | 1,963,561 | 242,494 | 37,271 | |||
| Accounts and notes receivable, net | 655,459 | 455,811 | 70,057 | |||
| Short-term investments | 277,946 | 548,890 | 84,363 | |||
| Inventories | 4,431 | 710 | 109 | |||
| Prepaid expenses and other current assets | 777,131 | 933,750 | 143,514 | |||
| Amount due from related parties | 182,615 | 114,256 | 17,561 | |||
| Total current assets | 5,158,561 | 4,245,542 | 652,528 | |||
| Non-current assets: | ||||||
| Property and equipment, net | 3,781,613 | 3,319,424 | 510,186 | |||
| Intangible assets, net | 977,341 | 401,115 | 61,650 | |||
| Land use rights, net | 167,646 | 163,671 | 25,156 | |||
| Deferred tax assets | 100,676 | 172,818 | 26,562 | |||
| Goodwill | 1,755,970 | 989,530 | 152,088 | |||
| Long term investments | 298,871 | 510,926 | 78,528 | |||
| Restricted cash | 33,544 | 3,344 | 514 | |||
| Amount due from related parties | - | 20,210 | 3,106 | |||
| Other non-current assets | 147,302 | 81,581 | 12,539 | |||
| Total non-current assets | 7,262,963 | 5,662,619 | 870,329 | |||
| Total assets | 12,421,524 | 9,908,161 | 1,522,857 | |||
| Liabilities and Shareholders' Equity | ||||||
| Current liabilities: | ||||||
| Short-term bank borrowings | 1,683,676 | 50,000 | 7,685 | |||
| Accounts and notes payable | 529,569 | 252,892 | 38,869 | |||
| Accrued expenses and other payables | 787,916 | 657,133 | 100,999 | |||
| Deferred revenue | 320,023 | 55,753 | 8,569 | |||
| Advances from customers | 201,397 | 403,244 | 61,977 | |||
| Income taxes payable | 21,899 | 13,309 | 2,046 | |||
| Amounts due to related parties | 121,928 | 55,675 | 8,557 | |||
| Current portion of long-term bank borrowings | 39,303 | 70,289 | 10,803 | |||
| Current portion of capital lease obligations | 243,723 | 201,315 | 30,942 | |||
| Current portion of deferred government grant | 5,107 | 4,574 | 703 | |||
| Current portion of bonds payable | 419,316 | 11,139 | 1,712 | |||
| Total current liabilities | 4,373,857 | 1,775,323 | 272,862 | |||
| Non-current liabilities: | ||||||
| Long-term bank borrowings | 268,221 | 187,638 | 28,839 | |||
| Deferred revenue | 62,531 | - | - | |||
| Unrecognized tax benefits | 28,689 | 16,511 | 2,538 | |||
| Deferred tax liabilities | 274,700 | 190,873 | 29,337 | |||
| Non-current portion of capital lease obligations | 536,623 | 600,882 | 92,354 | |||
| Non-current portion of deferred government grant | 25,886 | 17,861 | 2,745 | |||
| Bonds payable | - | 1,918,069 | 294,802 | |||
| Total non-current liabilities | 1,196,650 | 2,931,834 | 450,615 | |||
| Redeemable noncontrolling interests | 700,000 | - | - | |||
| Shareholders' equity | ||||||
| Treasury stock | (204,557 | ) | (337,683 | ) | (51,901 | ) |
| Ordinary shares | 45 | 46 | 7 | |||
| Additional paid-in capital | 9,015,846 | 8,980,407 | 1,380,263 | |||
| Accumulated other comprehensive gain | 118,290 | (2,673 | ) | (411 | ) | |
| Statutory reserves | 64,622 | 38,736 | 5,954 | |||
| Accumulated deficit | (2,869,031 | ) | (3,629,300 | ) | (557,813 | ) |
| Total 21Vianet Group, Inc. shareholders' equity | 6,125,215 | 5,049,533 | 776,099 | |||
| Noncontrolling interest | 25,802 | 151,471 | 23,281 | |||
| Total shareholders' equity | 6,151,017 | 5,201,004 | 799,380 | |||
| Total liabilities, redeemable noncontrolling interests and shareholders' equity | 12,421,524 | 9,908,161 | 1,522,857 | |||
| 21VIANET GROUP, INC. | |||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data) | |||||||||||||||
| Three months ended | Twelve months ended | ||||||||||||||
| December 31, 2016 | September 30, 2017 | December 31, 2017 | December 31, 2016 | December 31, 2017 | |||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||
| Net revenues | |||||||||||||||
| Hosting and related services | 703,171 | 759,255 | 765,814 | 117,703 | 2,668,655 | 2,975,178 | 457,276 | ||||||||
| Managed network services | 197,476 | 126,780 | - | - | 973,119 | 417,527 | 64,173 | ||||||||
| Total net revenues | 900,647 | 886,035 | 765,814 | 117,703 | 3,641,774 | 3,392,705 | 521,449 | ||||||||
| Cost of revenues | (717,276 | ) | (696,234 | ) | (565,645 | ) | (86,938 | ) | (2,929,638 | ) | (2,634,295 | ) | (404,884 | ) | |
| Gross profit | 183,371 | 189,801 | 200,169 | 30,765 | 712,136 | 758,410 | 116,565 | ||||||||
| Operating expenses | |||||||||||||||
| Sales and marketing | (92,018 | ) | (77,268 | ) | (42,702 | ) | (6,563 | ) | (352,926 | ) | (256,682 | ) | (39,451 | ) | |
| Research and development | (38,425 | ) | (38,308 | ) | (29,340 | ) | (4,509 | ) | (149,337 | ) | (149,143 | ) | (22,923 | ) | |
| General and administrative | (186,744 | ) | (129,683 | ) | (115,351 | ) | (17,729 | ) | (639,648 | ) | (519,950 | ) | (79,915 | ) | |
| Bad debt provision | (47,450 | ) | (4,366 | ) | (1,147 | ) | (176 | ) | (117,564 | ) | (37,427 | ) | (5,752 | ) | |
| Changes in the fair value of contingent purchase consideration payable | 67,197 | (1,002 | ) | (3,834 | ) | (589 | ) | 93,307 | (937 | ) | (144 | ) | |||
| Impairment of long-lived assets | (392,947 | ) | (401,808 | ) | - | - | (392,947 | ) | (401,808 | ) | (61,757 | ) | |||
| Impairment of goodwill | - | (766,440 | ) | - | - | - | (766,440 | ) | (117,800 | ) | |||||
| Total operating expenses | (690,387 | ) | (1,418,875 | ) | (192,374 | ) | (29,566 | ) | (1,559,115 | ) | (2,132,387 | ) | (327,742 | ) | |
| Other operating income | - | 5,439 | - | - | 6,783 | 5,439 | 836 | ||||||||
| Operating (loss) profit | (507,016 | ) | (1,223,635 | ) | 7,795 | 1,199 | (840,196 | ) | (1,368,538 | ) | (210,341 | ) | |||
| Interest income | 4,839 | 6,664 | 10,821 | 1,663 | 21,078 | 32,925 | 5,060 | ||||||||
| Interest expense | (40,652 | ) | (57,417 | ) | (50,836 | ) | (7,813 | ) | (198,589 | ) | (185,313 | ) | (28,482 | ) | |
| Impairment of long-term investment | - | (20,397 | ) | 139 | 21 | - | (20,258 | ) | (3,114 | ) | |||||
| Disposal (loss) gain of subsidiaries | - | (180,048 | ) | 677,084 | 104,066 | - | 497,036 | 76,393 | |||||||
| Other income | 555 | 7,220 | 3,260 | 501 | 28,922 | 16,764 | 2,577 | ||||||||
| Other expense | (1,825 | ) | (12,630 | ) | (232 | ) | (36 | ) | (16,449 | ) | (17,060 | ) | (2,622 | ) | |
| Foreign exchange gain (loss) | 28,849 | (5,628 | ) | 4,328 | 665 | 56,341 | (17,153 | ) | (2,636 | ) | |||||
| Loss on debt extinguishment | - | - | - | - | (29,841 | ) | - | - | |||||||
| (Loss) profit before income taxes and gain from equity method investments | (515,250 | ) | (1,485,871 | ) | 652,359 | 100,266 | (978,734 | ) | (1,061,597 | ) | (163,165 | ) | |||
| Income tax benefit/(expense) | 17,818 | (19,794 | ) | 127,478 | 19,593 | 11,160 | 90,170 | 13,859 | |||||||
| Gain from equity method investments | 12,225 | 26,546 | 17,732 | 2,725 | 35,652 | 53,783 | 8,266 | ||||||||
| Net (loss) profit | (485,207 | ) | (1,479,119 | ) | 797,569 | 122,584 | (931,922 | ) | (917,644 | ) | (141,040 | ) | |||
| Net loss attributable to noncontrolling interest | 225,353 | 104,354 | 1,073 | 165 | 298,324 | 144,914 | 22,273 | ||||||||
| Net (loss) profit attributable to ordinary shareholders | (259,854 | ) | (1,374,765 | ) | 798,642 | 122,749 | (633,598 | ) | (772,730 | ) | (118,767 | ) | |||
| (Loss) profit per share | |||||||||||||||
| Basic | (0.69 | ) | (2.20 | ) | 1.19 | 0.18 | (1.37 | ) | (1.36 | ) | (0.21 | ) | |||
| Diluted | (0.69 | ) | (2.20 | ) | 1.18 | 0.18 | (1.37 | ) | (1.36 | ) | (0.21 | ) | |||
| Shares used in (loss) profit per share computation | |||||||||||||||
| Basic* | 681,210,352 | 670,701,497 | 671,279,121 | 671,279,121 | 617,169,833 | 672,836,226 | 672,836,226 | ||||||||
| Diluted* | 681,210,352 | 670,701,497 | 675,505,879 | 675,505,879 | 617,169,833 | 672,836,226 | 672,836,226 | ||||||||
| (Loss) profit per ADS (6 ordinary shares equal to 1 ADS) | |||||||||||||||
| Basic | (4.14 | ) | (13.20 | ) | 7.14 | 1.10 | (8.22 | ) | (8.16 | ) | (1.26 | ) | |||
| Diluted | (4.14 | ) | (13.20 | ) | 7.08 | 1.09 | (8.22 | ) | (8.16 | ) | (1.26 | ) | |||
| * 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$") except for number of shares and per share data) | |||||||||||||||
| Three months ended | Twelve months ended | ||||||||||||||
| December 31, 2016 | September 30, 2017 | December 31, 2017 | December 31, 2016 | December 31, 2017 | |||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||
| Gross profit | 183,371 | 189,801 | 200,169 | 30,765 | 712,136 | 758,410 | 116,565 | ||||||||
| Plus: share-based compensation expense | 1,865 | (181 | ) | 84 | 13 | (4,110 | ) | (277 | ) | (43 | ) | ||||
| Plus: amortization of intangible assets derived from acquisitions | 37,369 | 30,848 | 10,797 | 1,659 | 151,037 | 104,275 | 16,027 | ||||||||
| Adjusted gross profit | 222,605 | 220,468 | 211,050 | 32,437 | 859,063 | 862,408 | 132,549 | ||||||||
| Adjusted gross margin | 24.7% | 24.9% | 27.6% | 27.6% | 23.6% | 25.4% | 25.4% | ||||||||
| Operating expenses | (690,387 | ) | (1,413,436 | ) | (192,374 | ) | (29,566 | ) | (1,552,332 | ) | (2,126,948 | ) | (326,906 | ) | |
| Plus: share-based compensation expense | 54,808 | 15,981 | 15,317 | 2,354 | 122,839 | 47,406 | 7,286 | ||||||||
| Plus: changes in the fair value of contingent purchase consideration payable | (67,197 | ) | 1,002 | 3,834 | 589 | (93,307 | ) | 937 | 144 | ||||||
| Plus: impairment of long-lived assets | 392,947 | 401,808 | - | - | 392,947 | 401,808 | 61,757 | ||||||||
| Plus: Goodwill impairment | - | 766,440 | - | - | - | 766,440 | 117,800 | ||||||||
| Adjusted operating expenses | (309,829 | ) | (228,205 | ) | (173,223 | ) | (26,623 | ) | (1,129,853 | ) | (910,357 | ) | (139,919 | ) | |
| Net (loss) profit | (485,207 | ) | (1,479,119 | ) | 797,569 | 122,584 | (931,922 | ) | (917,644 | ) | (141,040 | ) | |||
| Plus: share-based compensation expense | 56,673 | 15,800 | 15,401 | 2,367 | 118,729 | 47,129 | 7,244 | ||||||||
| Plus: amortization of intangible assets derived from acquisitions | 37,369 | 30,848 | 10,797 | 1,659 | 151,037 | 104,275 | 16,027 | ||||||||
| Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact | (67,874 | ) | 1,002 | 3,834 | 589 | (93,489 | ) | 937 | 144 | ||||||
| Plus: loss on debt extinguishment | - | - | - | - | 29,841 | - | - | ||||||||
| Plus: impairment of long-lived assets | 392,947 | 401,808 | - | - | 392,947 | 401,808 | 61,757 | ||||||||
| Plus: Goodwill impairment | - | 766,440 | - | - | - | 766,440 | 117,800 | ||||||||
| Plus: Disposal loss (gain) of subsidiaries | - | 180,048 | (677,084 | ) | (104,066 | ) | - | (497,036 | ) | (76,393 | ) | ||||
| Plus: Impairment of long-term investment | - | 20,397 | (139 | ) | (21 | ) | - | 20,258 | 3,114 | ||||||
| Plus: tax impact for the reconciliation adjustments | (4,489 | ) | (6,004 | ) | (4,546 | ) | (699 | ) | (26,257 | ) | (22,764 | ) | (3,499 | ) | |
| Plus: tax impact for the disposal of long-term investment | - | - | (94,195 | ) | (14,478 | ) | - | (94,195 | ) | (14,478 | ) | ||||
| Adjusted net (loss) profit | (70,581 | ) | (68,780 | ) | 51,637 | 7,935 | (359,114 | ) | (190,792 | ) | (29,324 | ) | |||
| Adjusted net margin | -7.8% | -7.8% | 6.7% | 6.7% | -9.9% | -5.6% | -5.6% | ||||||||
| Net (loss) profit | (485,207 | ) | (1,479,119 | ) | 797,569 | 122,584 | (931,922 | ) | (917,644 | ) | (141,040 | ) | |||
| Minus: Provision for income taxes | 17,818 | (19,794 | ) | 127,478 | 19,593 | 11,160 | 90,170 | 13,859 | |||||||
| Minus: Interest income | 4,839 | 6,664 | 10,821 | 1,663 | 21,078 | 32,925 | 5,060 | ||||||||
| Minus: Interest expenses | (40,652 | ) | (57,417 | ) | (50,836 | ) | (7,813 | ) | (198,589 | ) | (185,313 | ) | (28,482 | ) | |
| Minus: Loss on debt extinguishment | - | - | - | - | (29,841 | ) | - | - | |||||||
| Minus: Exchange gain (loss) | 28,849 | (5,628 | ) | 4,328 | 665 | 56,341 | (17,153 | ) | (2,636 | ) | |||||
| Minus: Gain from equity method investment | 12,225 | 26,546 | 17,732 | 2,725 | 35,652 | 53,783 | 8,266 | ||||||||
| Minus: Other income | 555 | 7,220 | 3,260 | 501 | 28,922 | 16,764 | 2,577 | ||||||||
| Minus: Other expenses | (1,825 | ) | (12,630 | ) | (232 | ) | (36 | ) | (16,449 | ) | (17,060 | ) | (2,622 | ) | |
| Minus: Impairment of long-term investment | - | (20,397 | ) | 139 | 21 | - | (20,258 | ) | (3,114 | ) | |||||
| Minus: Disposal (loss) gain of subsidiaries | - | (180,048 | ) | 677,084 | 104,066 | - | 497,036 | 76,393 | |||||||
| Plus: depreciation | 130,486 | 132,240 | 120,228 | 18,479 | 480,105 | 519,654 | 79,869 | ||||||||
| Plus: amortization | 46,092 | 41,352 | 23,738 | 3,648 | 185,658 | 147,448 | 22,662 | ||||||||
| Plus: share-based compensation expense | 56,673 | 15,800 | 15,401 | 2,367 | 118,729 | 47,129 | 7,244 | ||||||||
| Plus: changes in the fair value of contingent purchase consideration payable | (67,197 | ) | 1,002 | 3,834 | 589 | (93,307 | ) | 937 | 144 | ||||||
| Plus: impairment of long-lived assets | 392,947 | 401,808 | - | - | 392,947 | 401,808 | 61,757 | ||||||||
| Plus: Goodwill impairment | - | 766,440 | - | - | - | 766,440 | 117,800 | ||||||||
| Adjusted EBITDA | 51,985 | 135,007 | 170,996 | 26,282 | 243,936 | 514,878 | 79,135 | ||||||||
| Adjusted EBITDA margin | 5.8% | 15.2% | 22.3% | 22.3% | 6.7% | 15.2% | 15.2% | ||||||||
| Adjusted net (loss) profit | (70,581 | ) | (68,780 | ) | 51,637 | 7,935 | (359,114 | ) | (190,792 | ) | (29,324 | ) | |||
| Less: Net loss attributable to noncontrolling interest | 225,353 | 104,354 | 1,073 | 165 | 298,324 | 144,914 | 22,273 | ||||||||
| Adjusted net profit (loss) attributable to the Company's ordinary shareholders | 154,772 | 35,574 | 52,710 | 8,100 | (60,790 | ) | (45,878 | ) | (7,051 | ) | |||||
| Adjusted (loss) profit per share | |||||||||||||||
| Basic | (0.08 | ) | (0.10 | ) | 0.08 | 0.01 | (0.44 | ) | (0.28 | ) | (0.04 | ) | |||
| Diluted | (0.08 | ) | (0.10 | ) | 0.08 | 0.01 | (0.44 | ) | (0.28 | ) | (0.04 | ) | |||
| Shares used in adjusted (loss) profit per share computation: | |||||||||||||||
| Basic* | 681,210,352 | 670,701,497 | 671,279,121 | 671,279,121 | 617,169,833 | 672,836,226 | 672,836,226 | ||||||||
| Diluted* | 681,210,352 | 670,701,497 | 675,505,879 | 675,505,879 | 617,169,833 | 672,836,226 | 672,836,226 | ||||||||
| Adjusted (loss) profit per ADS (6 ordinary shares equal to 1 ADS) | |||||||||||||||
| Basic | (0.48 | ) | (0.60 | ) | 0.48 | 0.06 | (2.64 | ) | (1.68 | ) | (0.24 | ) | |||
| Diluted | (0.48 | ) | (0.60 | ) | 0.48 | 0.06 | (2.64 | ) | (1.68 | ) | (0.24 | ) | |||
| * Shares used in adjusted loss/ADS per share computation were computed under weighted average method. | |||||||||||||||
| 21VIANET GROUP, INC. | ||||||||||||||
| RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS （SEGMENT REPORTING） | ||||||||||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data) | ||||||||||||||
| Three months ended | Year ended | |||||||||||||
| December 31, 2016 | September 30, 2017 | December 31, 2017 | December 31, 2016 | December 31, 2017 | ||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||
| Hosting and related services | ||||||||||||||
| Operating profit | (8,077 | ) | 47,927 | 7,795 | 1,199 | 44,101 | 156,632 | 24,073 | ||||||
| Plus: depreciation and amortization | 96,935 | 111,510 | 143,966 | 22,127 | 345,190 | 465,976 | 71,619 | |||||||
| Plus: share-based compensation expense | 41,807 | 15,326 | 15,401 | 2,367 | 86,955 | 47,244 | 7,261 | |||||||
| Plus: changes in the fair value of contingent purchase consideration payable | (1,022 | ) | 1,002 | 3,834 | 589 | (19,394 | ) | 937 | 144 | |||||
| Adjusted EBITDA | 129,643 | 175,765 | 170,996 | 26,281 | 456,852 | 670,789 | 103,097 | |||||||
| Managed network services | ||||||||||||||
| Operating profit | (498,939 | ) | (1,271,562 | ) | - | - | (884,297 | ) | (1,525,170 | ) | (234,414 | ) | ||
| Plus: depreciation and amortization | 79,643 | 62,082 | - | - | 320,573 | 201,126 | 30,913 | |||||||
| Plus: share-based compensation expense | 14,866 | 474 | - | - | 31,774 | (115 | ) | (18 | ) | |||||
| Plus: changes in the fair value of contingent purchase consideration payable | (66,176 | ) | - | - | - | (73,913 | ) | - | - | |||||
| Plus: impairment of long-lived assets | 392,947 | 401,808 | - | - | 392,947 | 401,808 | 61,757 | |||||||
| Plus: Goodwill impairment | - | 766,440 | - | - | - | 766,440 | 117,800 | |||||||
| Adjusted EBITDA | (77,658 | ) | (40,758 | ) | - | - | (212,916 | ) | (155,911 | ) | (23,963 | ) | ||
| 21VIANET GROUP, INC. | ||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) | ||||||
| Three months ended | ||||||
| September 30, 2017 | December 31, 2017 | |||||
| RMB | RMB | US$ | ||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net (loss) profit | (1,479,119 | ) | 797,569 | 122,584 | ||
| Adjustments to reconcile net (loss) profit to net cash generated from operating activities: | ||||||
| Foreign exchange loss (gain) | 5,628 | (4,328 | ) | (665 | ) | |
| Changes in the fair value of contingent purchase consideration payable | 1,002 | 3,834 | 589 | |||
| Gain on disposal of property and equipment | (2,837 | ) | (743 | ) | (114 | ) |
| Loss from disposal of intangible assets | 295 | - | - | |||
| Depreciation of property and equipment | 132,240 | 120,228 | 18,479 | |||
| Amortization of intangible assets | 41,352 | 23,738 | 3,648 | |||
| Provision for doubtful accounts and other receivables | 8,990 | (3,255 | ) | (500 | ) | |
| Impairment of long-lived assets | 401,808 | - | - | |||
| Impairment of goodwill | 766,440 | - | - | |||
| Impairment of long-term investment | 20,398 | (139 | ) | (21 | ) | |
| Loss (gain) from disposal of subsidiaries | 180,048 | (677,084 | ) | (104,066 | ) | |
| Share-based compensation expense | 15,720 | 13,643 | 2,097 | |||
| Deferred income taxes expense (benefits) | 5,887 | (126,095 | ) | (19,380 | ) | |
| Gain from equity method investment | (26,546 | ) | (17,732 | ) | (2,725 | ) |
| Dividend received from cost method invesemt | (396 | ) | - | - | ||
| Changes in operating assets and liabilities | - | |||||
| Restricted cash | 2,075 | (54,648 | ) | (8,399 | ) | |
| Inventories | (658 | ) | (599 | ) | (92 | ) |
| Accounts and notes receivable | 36,562 | 32,070 | 4,929 | |||
| Unrecognized tax benefits (expense) | 951 | (7,963 | ) | (1,224 | ) | |
| Prepaid expenses and other current assets | (119,384 | ) | (23,457 | ) | (3,605 | ) |
| Amounts due from related parties | 13,280 | 1,854 | 285 | |||
| Accounts and notes payable | 26,379 | (38,841 | ) | (5,970 | ) | |
| Accrued expenses and other payables | 120,015 | 98,005 | 15,063 | |||
| Deferred revenue | (11,598 | ) | 8,674 | 1,333 | ||
| Advances from customers | 77,225 | (23,683 | ) | (3,641 | ) | |
| Income taxes payable | 7,087 | (6,836 | ) | (1,051 | ) | |
| Amounts due to related parties | (13,419 | ) | (2,690 | ) | (413 | ) |
| Deferred government grants | (786 | ) | (5,179 | ) | (796 | ) |
| Net cash generated from operating activities | 208,639 | 106,343 | 16,345 | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Purchases of property and equipment | (77,872 | ) | (80,336 | ) | (12,347 | ) |
| Purchases of intangible assets | (43 | ) | (4,062 | ) | (624 | ) |
| Proceeds from disposal of property and equipment | 5,719 | - | - | |||
| Disposal of subsidiaries net of cash | (64,580 | ) | - | - | ||
| Payments for short-term investments | (337,137 | ) | (211,752 | ) | (32,546 | ) |
| Dividend received from cost method investment | 396 | - | - | |||
| Payments for long-term investments | (61,898 | ) | (64,014 | ) | (9,839 | ) |
| Restricted cash | - | (3,344 | ) | (514 | ) | |
| Net cash used in investing activities | (535,415 | ) | (363,508 | ) | (55,870 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES | - | |||||
| Restricted cash | 37,920 | 1,677,270 | 257,792 | |||
| Proceeds from exercise of stock options | 171 | 187 | 29 | |||
| Proceeds from loan from a third party | - | 100,000 | 15,370 | |||
| Proceeds from long-term bank borrowings | 11,740 | - | - | |||
| Proceeds from issuance of 2020 bonds | 1,316,974 | 619,180 | 95,166 | |||
| Payment of issurance cost of 2020 bonds | (3,278 | ) | (6,457 | ) | (992 | ) |
| Repayments of short-term bank borrowings | (40,676 | ) | (1,520,000 | ) | (233,620 | ) |
| Repayments of long-term bank borrowings | (11,843 | ) | (67,871 | ) | (10,432 | ) |
| Repayment of loan from a third party | (100,000 | ) | - | - | ||
| Prepayment for shares repurchase plan | (3,866 | ) | 60 | 9 | ||
| Payments for shares repurchase plan | (50,054 | ) | - | - | ||
| Rental prepayments and deposits for sales and leaseback transactions | (39,513 | ) | (59,486 | ) | (9,143 | ) |
| Payments for capital leases | (39,280 | ) | (67,239 | ) | (10,334 | ) |
| Contribution from noncontrolling interest in a subsidary | 62,357 | 49,314 | 7,579 | |||
| Net cash provided by financing activities | 1,140,652 | 724,958 | 111,424 | |||
| Effect of foreign exchange rate changes on cash and short term investments | (86,759 | ) | (3,098 | ) | (476 | ) |
| Net increase in cash and cash equivalents | 727,117 | 464,695 | 71,423 | |||
| Cash and cash equivalents at beginning of period | 757,819 | 1,484,936 | 228,230 | |||
| Cash and cash equivalents at end of period | 1,484,936 | 1,949,631 | 299,653 | |||
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Date | ticker | name | Actual EPS | EPS Surprise | Actual Rev | Rev Surprise |
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