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21Vianet Group, Inc. Reports Unaudited First Quarter 2013 Financial Results(GlobeNewswire Via Acquire Media NewsEdge) 1Q13 Net Revenues Up 26.0% YOY to RMB435.7 Million 1Q13 Adjusted EBITDA Up 15.4% YOY to RMB80.1 Million Live Conference Call to be Held at 8:00 PM U.S. Eastern Time, May 16, 2013 BEIJING, May 16, 2013 (GLOBE NEWSWIRE) -- 21Vianet Group, Inc. (Nasdaq:VNET) ("21Vianet" or the "Company"), the largest carrier-neutral internet data center services provider in China, today announced its unaudited financial results for the first quarter. The Company will hold a conference call at 8:00 p.m. Eastern Time on May 16, 2013. Dial-in details are provided at the end of the release. First quarter 2013 Financial Highlights Net revenues increased by 26.0% to RMB435.7 million (US$70.2 million) from RMB345.8 million in the comparative period in 2012.Adjusted EBITDA1increased by 15.4% to RMB80.1 million (US$12.9 million) from RMB69.5 million in the comparative period in 2012. Mr. Josh Chen, Founder, Chairman and Chief Executive Officer of the Company, stated, "Following a year that focused on expanding our capacity to meet customer demand, we have become focused on improving utilization as well as further building out our infrastructure to support strong customer demand as well as our upcoming launch of cloud services with Microsoft. With our growing business scale, the increasing mix of higher margin self-built facilities, as well as the ramp-up in cloud services later this year with Microsoft, we continue to see significant opportunities for revenue acceleration and continued growth in the coming quarters." Mr. Shang-Wen Hsiao, President and Chief Financial Officer of the Company, commented, "We are pleased to come in-line with our prior guidance despite an increase in bandwidth costs associated with the upgrade to our network capacity during the past quarter. In addition, we are very pleased with the successful completion of our bond offering of RMB1 billion in aggregate principal in March, which demonstrated the investors' confidence in the growth momentum and potentials of our business in the coming years. With the additional funding from this offering, we are well positioned to continue executing our strategic build-out plan for data centers and fiber network as well as the rollout of our cloud platform with Microsoft." First Quarter 2012 Financial Results REVENUES: Net revenues for the first quarter of 2013 increased by 26.0% to RMB435.7 million (US$70.2 million) from RMB345.8 million in the comparative period in 2012. Net revenues from hosting and related services increased by 39.7% to RMB264.7 million (US$42.6 million) in the first quarter of 2013 from RMB189.5 million in the comparative period in 2012, primarily due to an increase in the total number of cabinets under management in both the Company's self-built and partnered data centers. Net revenues from managed network services increased by 9.4% to RMB171.0 million (US$27.5 million) in the first quarter of 2013 from RMB156.3 million in the comparative period in 2012, primarily driven by an increase in network capacity demand for data transmission services. GROSS PROFIT: For the first quarter of 2013, gross profit increased by 18.2% to RMB116.1 million (US$18.7 million) from RMB98.2 million in the comparative period in 2012. Gross margin for the first quarter of 2013 was 26.6% compared with 28.4% in the comparative period in 2012. Gross margin decreased slightly primarily due to an increase in cost of revenues, resulting from increased depreciation and increased utilities expenses for the Company's self-built data centers. Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, increased by 19.6% to RMB125.6 million (US$20.2 million) from RMB105.0 million in the comparative period in 2012. Adjusted gross margin was 28.8% in the first quarter of 2013, compared with 30.4% in the comparative period in 2012 and 29.5% in the fourth quarter of 2012. OPERATING EXPENSES: Total operating expenses were RMB89.2 million (US$14.4 million), compared to RMB109.3 million in the comparative period in 2012. Sales and marketing expenses increased to RMB30.4 million (US$4.9 million) from RMB25.1 million in the comparative period in 2012, primarily due to the expansion of the Company's sales and service support team. General and administrative expenses increased to RMB45.3 million (US$7.3 million) from RMB29.5 million in the comparative period in 2012, primarily due to an increase in headcount, office rentals and other expansion related expenses associated with the Company's efforts to expand its cloud computing service offering. Research and development expenses increased to RMB15.9 million (US$2.6 million) from RMB11.4 million in the comparative period in 2012, which reflected the Company's efforts to further strengthen its research and development capabilities and expand its cloud computing service offerings. Change in the fair value of contingent purchase consideration payable was a gain of RMB2.3 million (US$0.4 million) in the first quarter of 2013, compared with a loss in the change in fair value of contingent purchase consideration payable of RMB43.2 million in the prior year period. This non-cash gain was primarily due to a decrease in the market value of the Company's shares, which resulted in a decrease in the fair value of share-based contingent purchase considerations payable as of March 31, 2013 associated with the Company's past acquisitions. Adjusted operating expenses, which exclude share-based compensation expenses and the changes in the fair value of contingent purchase consideration payable, increased to RMB80.0 million (US$12.9 million) from RMB55.8 million in the comparative period in 2012. As a percentage of net revenue, adjusted operating expenses were 18.4%, compared with 16.1% in the comparative period in 2012. ADJUSTED EBITDA: Adjusted EBITDA for the first quarter of 2013 increased to RMB80.1 million (US$12.9 million) from RMB69.5 million in the comparative period in 2012. Adjusted EBITDA margin for the quarter was 18.4%, compared with 20.1% in the comparative period in 2012 and 18.7% in the fourth quarter of 2012. Adjusted EBITDA in the first quarter of 2013 excludes share-based compensation expenses of RMB13.0 million (US$2.1 million) and changes in the fair value of contingent purchase consideration payable of RMB2.3 million (US$0.4 million). NET PROFIT/LOSS: Net profit for the first quarter of 2013 increased to RMB12.0 million (US$1.9 million), compared to a net loss of RMB15.9 million in the comparative period in 2012. Adjusted net profit for the first quarter of 2013 was RMB31.1 million (US$5.0 million),compared with RMB37.9 million in the comparative period in 2012. Adjusted net profit in the first quarter of 2013 excludes share-based compensation expenses of RMB13.0 million (US$2.1 million), amortization of intangible assets derived from acquisitions of RMB8.2 million (US$1.3 million), and changes in the fair value of contingent purchase consideration payable and related deferred tax impact of RMB2.1 million (US$0.3 million) in the aggregate. Adjusted net margin was 7.1%, compared to 11.0% in the comparative period in 2012 and 9.5% in the fourth quarter of 2012.The decrease in adjusted net profit was primarily due to an increase in operating and interest expenses and an increase in operating expenses associated with the Microsoft cloud partnership. EARNING/LOSS PER SHARE: Diluted earnings per ordinary share for the first quarter of 2013 was RMB0.03, which represents the equivalent of RMB0.18 (US$0.03) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares. Adjusted diluted earnings per share for the first quarter of 2013 was RMB0.08, which represents the equivalent of RMB0.48 (US$0.08) per ADS. Adjusted earnings per share is calculated using adjusted net profit as discussed above to divide the weighted average shares number. As of March 31, 2013, the Company had a total of 347.6 million ordinary shares outstanding, or the equivalent of 57.9 million ADSs. BALANCE SHEET: As of March 31, 2013, the Company's cash and cash equivalents and short-term investment were RMB1.5 billion (US$247.3 million). First Quarter 2013 Operational Highlights Monthly Recurring Revenues ("MRR") per cabinet remained stable at RMB10,422 in the first quarter of 2013, compared to RMB10,467 in fourth quarter of 2012. Total cabinets under management increased to 11,963 as of March 31, 2013, from 11,917 as of December 31, 2012, with 7,404 cabinets in the Company's self-built data centers and 4,559 cabinets in its partnered data centers. Utilization rate was 68.1% in the first quarter of 2013, compared to 66.3% in the fourth quarter of 2012. Churn rate was 1.75% in the first quarter of 2013, compared to 0.84% in the fourth quarter of 2012, reflecting some temporary disruptions in the Company's business as a result of a major upgrade to the Company's network capacity, which was completed in January 2013. Top 20 customers' churn rate remained 0%.Recent Developments In March 2013, the Company successfully completed its bonds offering of RMB1 billion (approximately equivalent to US$161.0 million) in aggregate principal amount due 2016 with a coupon rate of 7.875% per annum. Financial Outlook For the second quarter of 2013, the Company expects net revenues to be in the range of RMB465 million to RMB472 million. Adjusted EBITDA is expected to be in the range of RMB85 million to RMB91 million. These forecasts reflect the Company's current and preliminary view, which is subject to change. Conference Call The Company will hold a conference call on Thursday, May 16, 2013 at 8:00 pm Eastern Time, or Friday, May 17, 2013 at 8:00 am Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers: United States: +1-646-254-3515 International Toll Free: +1-855-500-8701 China Domestic: 400-1200654 Hong Kong: +852-3051-2745 Conference ID: #58116143 The replay will be accessible through May 23, 2013 by dialing the following numbers: United States Toll Free: +1- 855-452-5696 International: +61-2-8199-0299 Conference ID: #58116143 A webcast of the conference call will be available through the Company's investor relations 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 press release contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars, in this press release, were made at a rate of RMB6.2108 to US$1.00, the noon buying rate in effect on March 29, 2013 in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. 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 the largest carrier-neutral internet data center services provider in China. 21Vianet provides hosting and related services, managed network services, cloud infrastructure services, and content delivery network services, improving the reliability, security and speed of its customers' internet infrastructure. Customers may locate their servers and networking equipment in 21Vianet's data centers and connect to China's internet backbone through 21Vianet's extensive fiber optic network. In addition, 21Vianet's proprietary smart routing technology enables customers' data to be delivered across the internet in a faster and more reliable manner. 21Vianet operates in 43 cities throughout China, servicing a diversified and loyal base of more than 2,000 customers that span many 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, the outlook for the first quarter of 2013 and 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. 21Vianet does not undertake any obligation to update any forward-looking statement, except as required under applicable law. 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. 1Adjusted EBITDA is a non-GAAP financial measure, which is defined as EBITDA excluding share-based compensation expenses and changes in the fair value of contingent purchase consideration payable. 21VIANET GROUP, INC.CONSOLIDATED BALANCE SHEETS(Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) As ofAs of December 31, 2012March 31, 2013 RMBRMBUS$ (Audited)(Unaudited)(Unaudited)Assets Current assets: Cash and cash equivalents 432,254 842,251 135,611 Restricted cash 191,766 190,967 30,748 Accounts receivable, net 293,369 387,700 62,424 Short-term investments 222,701 693,558 111,670 Notes receivable -- 1,521 245 Prepaid expenses and other current assets 95,756 138,642 22,323 Deferred tax assets 8,585 8,250 1,328 Amount due from related parties 18,726 26,703 4,299Total current assets 1,263,157 2,289,592 368,648Non-current assets: Property and equipment, net 822,707 1,136,878 183,049 Intangible assets, net 303,909 345,550 55,637 Deferred tax assets 11,231 12,251 1,973 Goodwill 296,688 333,326 53,669 Long-term investments 57,599 57,097 9,193 Restricted cash 221,628 222,286 35,790 Other assets -- 11,357 1,829Total non-current assets 1,713,762 2,118,745 341,140Total assets 2,976,919 4,408,337 709,788Liabilities and Shareholders' Equity Current liabilities: Short-term bank borrowings 176,961 190,532 30,678 Accounts payable 109,571 159,389 25,663 Accrued expenses and other payables 167,498 179,552 28,913 Advances from customers 22,976 19,886 3,202 Income taxes payable 23,506 24,455 3,937 Amounts due to related parties 105,037 121,128 19,503 Current portion of long-term bank borrowings 167,879 184,000 29,626 Current portion of capital lease obligations 36,719 36,280 5,841Total current liabilities 810,147 915,222 147,363Non-current liabilities: Long-term bank borrowings 63,000 63,000 10,144 Amounts due to related parties 86,316 108,022 17,393 Non-current portion of capital lease obligations 52,352 347,754 55,992 Unrecognized tax benefits 12,340 12,800 2,061 Deferred tax liabilities 44,666 55,051 8,864 Deferred government grants 18,793 18,859 3,036 Bonds payable -- 964,534 155,299 Total non-current liabilities 277,467 1,570,020 252,789Commitments and contingencies Shareholders' equity Treasury stock (20,702) (14,730) (2,372) Ordinary shares 23 23 4 Additional paid-in capital 3,294,855 3,313,290 533,472 Accumulated other comprehensive loss (57,367) (60,028) (9,665) Statutory reserves 25,871 25,871 4,165 Accumulated deficit (1,371,877) (1,359,987) (218,972)Total 21Vianet Group, Inc. shareholders' equity 1,870,803 1,904,439 306,632 Non-controlling interest 18,502 18,656 3,004Total shareholders' equity 1,889,305 1,923,095 309,636Total liabilities and shareholders' equity 2,976,919 4,408,337 709,788 21VIANET GROUP, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data) Three months ended March 31, 20122013 RMBRMBUS$ (Unaudited)(Unaudited)(Unaudited)Net revenues Hosting and related services 189,501 264,702 42,620 Managed network services 156,318 171,017 27,535 Total net revenues 345,819 435,719 70,155 Cost of revenues (247,647) (319,642) (51,466)Gross profit 98,172 116,077 18,689Operating expenses Sales and marketing expenses (25,148) (30,378) (4,891) General and administrative expenses (29,499) (45,286) (7,291) Research and development expenses (11,370) (15,902) (2,560) Changes in the fair value of contingent purchase consideration payable (43,239) 2,334 376 Total operating expenses (109,256) (89,232) (14,366)Operating (loss) profit (11,084) 26,845 4,323 Interest income 1,760 4,924 793 Interest expense (2,316) (11,972) (1,928) Loss from equity method investment -- (501) (81) Other income 1 848 137 Other expense (371) (1,316) (212) Foreign exchange (loss) gain (1,382) 1,630 262(Loss) profit before income taxes (13,392) 20,458 3,294 Income tax expense (2,511) (8,414) (1,355)Net (loss) profit (15,903) 12,044 1,939 Net income attributable to non-controlling interest (358) (154) (25)Net (loss) profit attributable to the Company's ordinary shareholders (16,261) 11,890 1,914 (Loss) earnings per share Basic (0.05) 0.03 0.01 Diluted (0.05) 0.03 0.01 Shares used in (loss) earnings per share computation Basic* 342,115,718 353,087,506 353,087,506 Diluted* 353,241,225 366,135,693 366,135,693 (Loss) earning per ADS (6 ordinary shares equal to 1 ADS) EPS - Basic (0.30) 0.18 0.03 EPS - Diluted (0.30) 0.18 0.03 * Shares used in (loss) earnings/ADS per share 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$") except for number of shares and per share data) Three months ended Mar 31, 2012Mar 31, 2013 RMBRMBUS$ Gross profit 98,172 116,077 18,689 Plus: share-based compensation expense 674 1,404 226 Plus: amortization of intangible assets derived from acquisitions 6,195 8,160 1,314 Adjusted gross profit 105,041 125,641 20,229 Adjusted gross margin30.4%28.8%28.8% Operating expenses (109,256) (89,232) (14,366) Plus: share-based compensation expense 10,220 11,594 1,867 Plus: changes in the fair value of contingent purchase consideration payable 43,239 (2,334) (376) Adjusted operating expenses (55,797) (79,972) (12,875) Net (loss) profit (15,903) 12,044 1,939 Plus: share-based compensation expense 10,894 12,998 2,093 Plus: amortization of intangible assets derived from acquisitions 6,195 8,160 1,314 Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact 36,753 (2,117) (341) Adjusted net profit 37,939 31,085 5,005 Adjusted net margin11.0%7.1%7.1% Net (loss) profit (15,903) 12,044 1,939 Minus: Provision for income taxes (2,511) (8,414) (1,355) Minus: Interest income 1,760 4,924 793 Minus: Interest expenses (2,316) (11,972) (1,928) Minus: Exchange gain/loss (1,382) 1,630 262 Minus: Loss from equity method investment -- (501) (81) Minus: Other income 1 848 137 Minus: Other expenses (371) (1,316) (212) Plus: depreciation 19,790 31,256 5,034 Plus: amortization 6,634 11,377 1,832 Plus: share-based compensation expense 10,894 12,998 2,093 Plus: changes in the fair value of contingent purchase consideration payable 43,239 (2,334) (376) Adjusted EBITDA 69,473 80,142 12,906 Adjusted EBITDA margin20.1%18.4%18.4% Adjusted net profit 37,939 31,085 5,005 Less: Net income attributable to non-controlling interest (358) (154) (25) Adjusted net profit attributable to the Company's ordinary shareholders 37,581 30,931 4,980 Adjusted earnings per share Basic 0.11 0.09 0.01 Diluted 0.11 0.08 0.01 Shares used in adjusted earnings per share computation: Basic* 342,115,718 353,087,506 353,087,506 Diluted* 342,115,718 366,135,693 366,135,693 Earnings per ADS (6 ordinary shares equal to 1 ADS) EPS - Basic 0.66 0.54 0.09 EPS - Diluted 0.66 0.48 0.08 * Shares used in adjusted earnings/ADS per share computation were computed under weighted average method. CONTACT: Investor Relations Contact: 21Vianet Group, Inc. Joseph Cheng +86 10 8456 2121 [email protected] ICR, Inc. Jeremy Peruski +1 (646) 405-4922 [email protected] Source: 21Vianet Group, Inc. 2013 GlobeNewswire, Inc. |