21Vianet Group, Inc. Reports Fourth Quarter and Full Year 2016 Unaudited Financial Results
BEIJING, March 08, 2017 (GLOBE NEWSWIRE) -- 21Vianet Group, Inc. (Nasdaq: 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, 2016. The Company will hold a conference call at 8:00 p.m. Eastern Time on Wednesday, March 8, 2017. Dial-in details are provided at the end of the release.
Mr. Steve Zhang, Chief Executive Officer of the Company, stated, "Despite facing severe headwinds in our managed network services business, we continue to see stable growth in our core IDC, VPN, and cloud businesses this quarter. Last December, in partnership with Microsoft, we launched Power BI, a business data analytics cloud service, adding to our wide-array of cloud offerings for our customers. Most recently, we finalized and signed an investment agreement with Warburg Pincus, which expands upon the strategic agreement previously announced. The end result remains the same, as we will establish joint ventures for our digital real estate business with a focus on the customized wholesale data center market, and will aim to build out 80,000 to 100,000 additional cabinets in the next five to seven years. Our core retail colocation and cloud services will be supplemented with wholesale data center services, providing more complete and expanded service offerings to our customers. This restructuring of our business will allow us to continue to fine-tune our Capex structure, improve our operating leverage, and provide customers with more value-added services such as hybrid cloud solutions. With the evolving internet landscape in China and the strong demands of internet traffic, computing, and data storage, we will solidify our position as a leading internet infrastructure services provider and meet the ever-changing needs of our customers."
Mr. Terry Wang, Chief Financial Officer of the Company, further commented, "We are pleased to announce that we met our fourth quarter and full year guidance for both top line net revenues and adjusted EBITDA. In 2016, we increased our total revenues to RMB3.64 billion, which was primarily driven by a 14.2% year-over-year increase in revenues from our hosting and related businesses. During the fourth quarter of 2016, we added over 300 cabinets in our self-built data centers, bringing the total number of cabinets up to 26,380. Our cloud business maintained its growth trajectory, which was mainly attributable to the robust results from our partnerships with Microsoft and IBM. Looking forward, we will aim to consistently deploy new cabinets and enhance our monthly recurring revenues in order to reignite our top line growth and realize margin expansion. Additionally, even though our MNS and CDN businesses continued to experience pricing pressure and intense competition in 2016, we began seeing signs of price stabilization. We are confident that we will generate further value for our shareholders through our continuous effort to optimize operations, our sustainable investment in asset-light businesses and the emerging opportunities in customized wholesale data centers."
Fourth Quarter 2016 Financial Results
REVENUES: Net revenues for the fourth quarter of 2016 were RMB900.6 million (US$129.7 million), as compared with RMB983.4 million in the comparative period in 2015. The decrease was primarily due to a decrease in MNS revenues.
Net revenues from hosting and related services increased by 4.7% to RMB790.1 million (US$113.8 million) in the fourth quarter of 2016 from RMB754.7 million in the comparative period in 2015, primarily due to an increase in total number of billable cabinets, partially offset by the lower utilization rate and MRR, or monthly recurring revenue, per cabinet.
Net revenues from MNS were RMB110.6 million (US$15.9 million) in the fourth quarter of 2016, as compared with RMB228.7 million in the comparative period in 2015. The decrease was primarily due to a 107 million decrease in Aipu revenues, which was driven by intensified competition.
GROSS PROFIT: Gross profit for the fourth quarter of 2016 was RMB183.4 million (US$26.4 million), as compared with RMB219.2 million in the comparative period in 2015. Gross margin for the fourth quarter of 2016 was 20.4%, as compared with 22.3% in the comparative period in 2015.
Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, was RMB222.6 million (US$32.1 million) in the fourth quarter of 2016, as compared with RMB264.3 million in the comparative period in 2015. Adjusted gross margin was 24.7% in the fourth quarter of 2016, compared with 26.9% in the comparative period in 2015.
OPERATING EXPENSES: Total operating expenses were RMB690.4 million (US$99.4 million) in the fourth quarter of 2016, as compared with RMB314.5 million in the comparative period in 2015. Adjusted operating expenses, which exclude a one-time impairment of long-term asset, share-based compensation expenses and changes in the fair value of contingent purchase consideration payable, were RMB309.8 million (US$44.6 million), as compared with RMB275.9 million in the comparative period in 2015. As a percentage of net revenues, adjusted operating expenses were 34.4%, as compared with 28.1% in the comparative period in 2015.
Sales and marketing expenses were RMB92.0 million (US$13.3 million) in the fourth quarter of 2016, as compared with RMB101.8 million in the comparative period in 2015. The decrease was primarily due to reduced agency fees.
General and administrative expenses were RMB186.7 million (US$26.9 million) in the fourth quarter of 2016, as compared with RMB141.0 million in the comparative period in 2015. The increase was primarily due to increased staff cost.
Research and development expenses were RMB38.4 million (US$5.5 million) in the fourth quarter of 2016, as compared with RMB41.6 million in the comparative period in 2015.
Bad debt provisions were RMB47.5 million (US$6.8 million) in the fourth quarter of 2016, as compared with RMB25.1 million in the comparative period in 2015.
Changes in the fair value of contingent purchase consideration payable was a gain of RMB67.2 million (US$9.7 million) in the fourth quarter of 2016, as compared with a loss of RMB5.1 million in the comparative period in 2015.
One-time impairment of long-term asset was RMB392.9 million (US$56.6 million) in the fourth quarter of 2016.
ADJUSTED EBITDA: Adjusted EBITDA for the fourth quarter of 2016 was RMB52.0 million (US$7.5 million), as compared with RMB102.1 million in the comparative period in 2015. The decrease in adjusted EBITDA was primarily due to the inclusion of a RMB47.5 million bad debt provision. Adjusted EBITDA margin for the fourth quarter of 2016 was 5.8% compared with 10.4% in the comparative period in 2015. Adjusted EBITDA for the fourth quarter of 2016 excludes a one-time impairment of long-term asset of RMB392.9 million (US$56.6 million), share-based compensation expenses of RMB56.7 million (US$8.2 million) and changes in the fair value of contingent purchase consideration payable which was a gain of RMB67.2 million (US$9.7 million).
NET PROFIT/LOSS: Net loss for the fourth quarter of 2016 was RMB485.2 million (US$69.9 million), as compared with a net loss of RMB112.9 million in the comparative period in 2015.
Adjusted net loss for the fourth quarter of 2016 was RMB66.1 million (US$9.5 million), as compared with an adjusted net loss of RMB29.1 million in the comparative period in 2015. Adjusted net loss in the fourth quarter of 2016 mainly excludes a one-time impairment of long-term asset of RMB392.9 million (US$56.6 million) and changes in the fair value of contingent purchase consideration payable and related deferred tax impact which was a gain of RMB67.9 million (US$9.8 million). Adjusted net margin in the fourth quarter of 2016 was negative 7.3%, as compared with negative 3.0% in the comparative period in 2015.
LOSS PER SHARE: Diluted loss per share for the fourth quarter of 2016 was RMB0.69, which represents the equivalent of RMB4.14 (US$0.60) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares. Adjusted diluted loss per share for the fourth quarter of 2016 was RMB0.08, which represents the equivalent of RMB0.48 (US$0.07) per ADS. Adjusted diluted loss per share is calculated using adjusted net loss as discussed above divided by the weighted average number of shares.
As of December 31, 2016, the Company had a total of 679.8 million ordinary shares outstanding, or equivalent of 113.3 million ADSs.
BALANCE SHEET: As of December 31, 2016, the Company's cash and cash equivalents and short-term investment were RMB1.58 billion (US$226.9 million).
Fourth Quarter 2016 Operational Highlights
- Monthly Recurring Revenues ("MRR") per cabinet was RMB8,490 in the fourth quarter of 2016, compared with RMB8,696 in the third quarter of 2016.
- Total cabinets under management increased to 26,380 as of December 31, 2016 from 26,184 as of September 30, 2016, with 19,294 cabinets in the Company's self-built data centers and 7,086 cabinets in its partnered data centers.
- Utilization rate was 75.2% in the fourth quarter of 2016, compared with 77.9% in the third quarter of 2016.
- Hosting churn rate, which is based on the Company’s core IDC business, was 0.55% in the fourth quarter of 2016, compared with 0.95% in the third quarter of 2016.
Full Year 2016 Financial Performance
For the full year of 2016, net revenue increased to RMB3.64 billion (US$524.5 million) from RMB3.63 billion in the prior year. Adjusted EBITDA for the full year was RMB243.9 million (US$35.1 million), as compared with RMB540.4 million in the prior year. Adjusted EBITDA margin was 6.7%, as compared with 14.9% in the prior year. Adjusted EBITDA for the full year excludes impairment of long-term asset of RMB392.9 million (US$56.6 million), share-based compensation expenses of RMB118.7 million (US$17.1 million) and changes in the fair value of contingent purchase consideration payable of RMB93.3 million (US$13.4 million). Adjusted net loss for the full year was RMB332.9 million (US$47.9 million), as compared with a loss of RMB10.8 million in the prior year. Adjusted net loss in the full year excludes impairment of long-term asset of RMB392.9 million (US$56.6 million), share-based compensation expenses of RMB118.7 million (US$17.1 million), amortization of intangible assets derived from acquisitions of RMB151.0 million (US$21.8 million), changes in the fair value of contingent purchase consideration payable and related deferred tax assets of RMB93.5 million (US$13.5 million), and a one-time loss on debt extinguishment of RMB29.8 million (US$4.3 million). Adjusted diluted loss per share for the full year of 2016 was RMB0.40 (US$0.06), which represents the equivalent of RMB2.40 (US$0.35) per ADS.
Recent Developments
On March 5, 2017, the Company signed an investment agreement (“IA”) with Warburg Pincus to establish a multi-stage joint venture (“JV”) and build a digital real estate platform in China. The IA supersedes the strategic agreement signed on October 31, 2016. The overall structure remains the same, while the IA added certain details on how the cooperation will be carried out. Pursuant to the IA, 21Vianet will still seed the initial JV with four existing high-performing IDC assets, valued at over US$300 million, and Warburg Pincus will contribute direct capital and extensive industry network and resources in the real estate sector. Also pursuant to the IA, 21Vianet will own 51% of the equity interest in the initial JV while Warburg Pincus will own the remaining 49%. With respect to future JVs, 21Vianet will own 49% of the equity interest while Warburg Pincus will own the remaining 51%.
Financial Outlook
For the first quarter of 2017, the Company expects net revenues to be in the range of RMB820 million to RMB880 million, as compared with RMB862.3 million in the prior year period. Adjusted EBITDA is expected to be in the range of RMB65 million to RMB85million, as compared with RMB108.6 million in the prior year period.
For the full year of 2017, the Company now expects net revenues to be in the range of RMB3.7 billion to RMB3.9 billion, as compared with RMB3.64 billion in the prior year. Adjusted EBITDA for the full year 2017 is expected to be in the range of RMB420 million to RMB460 million, as compared with RMB243.9 million in the prior year. These forecasts reflect the Company's current and preliminary view, which may be subject to change.
Conference Call
The Company will hold a conference call on Wednesday, March 8, 2017 at 8:00 pm U.S. Eastern Time, or Thursday, March 9, 2017 at 9:00 am 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: | 72616852 |
| The replay will be accessible through March 16, 2017, by dialing the following numbers: | |
| United States Toll Free: | +1-855-452-5696 |
| International: | +61-2-9003-4211 |
| Conference ID: | 72616852 |
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 RMB6.9430 to US$1.00, the noon buying rate in effect on December 31, 2016 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, managed network services, cloud services, content delivery network services, last-mile wired broadband 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. 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 more than 30 cities throughout China, servicing a diversified and loyal base of more than 2,000 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.
| 21VIANET GROUP, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”)) | ||||||||
| As of | As of | |||||||
| December 31, 2015 | December 31, 2016 | |||||||
| RMB | RMB | US$ | ||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 1,685,054 | 1,297,418 | 186,867 | |||||
| Restricted cash | 195,230 | 1,963,561 | 282,812 | |||||
| Accounts and notes receivable, net | 694,108 | 655,459 | 94,406 | |||||
| Short-term investments | 104,897 | 277,946 | 40,033 | |||||
| Inventories | 13,539 | 4,431 | 638 | |||||
| Prepaid expenses and other current assets | 642,553 | 777,131 | 111,930 | |||||
| Deferred tax assets | 31,113 | 43,362 | 6,245 | |||||
| Amount due from related parties | 105,137 | 182,615 | 26,302 | |||||
| Total current assets | 3,471,631 | 5,201,923 | 749,233 | |||||
| Non-current assets: | ||||||||
| Property and equipment, net | 3,653,071 | 3,781,613 | 544,666 | |||||
| Intangible assets, net | 1,274,166 | 977,341 | 140,766 | |||||
| Land use rights, net | 64,682 | 167,646 | 24,146 | |||||
| Deferred tax assets | 46,900 | 57,314 | 8,255 | |||||
| Goodwill | 1,755,970 | 1,755,970 | 252,912 | |||||
| Long term investments | 198,907 | 298,871 | 43,046 | |||||
| Restricted cash | 128,515 | 33,544 | 4,831 | |||||
| Amount due from related parties | 70,000 | - | - | |||||
| Other non-current assets | 183,868 | 147,302 | 21,216 | |||||
| Total non-current assets | 7,376,079 | 7,219,601 | 1,039,838 | |||||
| Total assets | 10,847,710 | 12,421,524 | 1,789,071 | |||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Short-term bank borrowings | 276,000 | 1,683,676 | 242,500 | |||||
| Accounts and notes payable | 482,622 | 529,569 | 76,274 | |||||
| Accrued expenses and other payables | 637,957 | 787,916 | 113,484 | |||||
| Deferred revenue | 342,105 | 320,023 | 46,093 | |||||
| Advances from customers | 185,800 | 201,397 | 29,007 | |||||
| Income taxes payable | 49,959 | 21,899 | 3,154 | |||||
| Amounts due to related parties | 397,588 | 121,928 | 17,561 | |||||
| Current portion of long-term bank borrowings | 38,803 | 39,303 | 5,661 | |||||
| Current portion of capital lease obligations | 140,488 | 243,723 | 35,103 | |||||
| Current portion of deferred government grant | 6,332 | 5,107 | 736 | |||||
| Current portion of bonds payable | 263,365 | 419,316 | 60,394 | |||||
| Total current liabilities | 2,821,019 | 4,373,857 | 629,967 | |||||
| Non-current liabilities: | ||||||||
| Long-term bank borrowings | 103,421 | 268,221 | 38,632 | |||||
| Deferred revenue | 68,535 | 62,531 | 9,006 | |||||
| Amounts due to related parties | 27,384 | - | - | |||||
| Unrecognized tax benefits | 14,492 | 28,689 | 4,132 | |||||
| Deferred tax liabilities | 293,212 | 274,700 | 39,565 | |||||
| Non-current portion of capital lease obligations | 579,070 | 536,623 | 77,290 | |||||
| Non-current portion of deferred government grant | 31,288 | 25,886 | 3,728 | |||||
| Bonds payable | 1,984,685 | - | - | |||||
| Mandatorily redeemable noncontrolling interests | 100,000 | - | - | |||||
| Total non-current liabilities | 3,202,087 | 1,196,650 | 172,353 | |||||
| Redeemable noncontrolling interests | 790,229 | 700,000 | 100,821 | |||||
| Shareholders' equity | ||||||||
| Treasury stock | (193,142 | ) | (204,557 | ) | (29,462 | ) | ||
| Ordinary shares | 34 | 45 | 6 | |||||
| Additional paid-in capital | 6,403,117 | 9,199,248 | 1,324,967 | |||||
| Accumulated other comprehensive loss | (24,236 | ) | 118,290 | 17,037 | ||||
| Statutory reserves | 63,174 | 64,622 | 9,308 | |||||
| Accumulated deficit | (2,233,985 | ) | (3,052,433 | ) | (439,642 | ) | ||
| Total 21Vianet Group, Inc. shareholders’ equity | 4,014,962 | 6,125,215 | 882,214 | |||||
| Noncontrolling interest | 19,413 | 25,802 | 3,716 | |||||
| Total shareholders' equity | 4,034,375 | 6,151,017 | 885,930 | |||||
| Total liabilities, redeemable noncontrolling interests and shareholders' equity | 10,847,710 | 12,421,524 | 1,789,071 | |||||
| 21VIANET GROUP, INC. | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
| (Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) | |||||||||||||||||||||
| Three months ended | Year ended | ||||||||||||||||||||
| December 31, 2015 | September 30, 2016 | December 31, 2016 | December 31, 2015 | December 31, 2016 | |||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
| Net revenues | |||||||||||||||||||||
| Hosting and related services | 754,706 | 828,121 | 790,079 | 113,795 | 2,707,445 | 3,092,256 | 445,378 | ||||||||||||||
| Managed network services | 228,677 | 139,885 | 110,568 | 15,925 | 926,927 | 549,518 | 79,147 | ||||||||||||||
| Total net revenues | 983,383 | 968,006 | 900,647 | 129,720 | 3,634,372 | 3,641,774 | 524,525 | ||||||||||||||
| Cost of revenues | (764,214 | ) | (781,124 | ) | (717,276 | ) | (103,309 | ) | (2,780,614 | ) | (2,929,638 | ) | (421,956 | ) | |||||||
| Gross profit | 219,169 | 186,882 | 183,371 | 26,411 | 853,758 | 712,136 | 102,569 | ||||||||||||||
| Operating expenses | |||||||||||||||||||||
| Sales and marketing | (101,797 | ) | (100,138 | ) | (92,018 | ) | (13,253 | ) | (359,460 | ) | (352,926 | ) | (50,832 | ) | |||||||
| Research and development | (41,569 | ) | (36,079 | ) | (38,425 | ) | (5,534 | ) | (142,835 | ) | (149,337 | ) | (21,509 | ) | |||||||
| General and administrative | (140,995 | ) | (162,746 | ) | (186,744 | ) | (26,897 | ) | (568,741 | ) | (639,648 | ) | (92,128 | ) | |||||||
| Bad debt provision | (25,069 | ) | (27,103 | ) | (47,450 | ) | (6,834 | ) | (32,199 | ) | (117,564 | ) | (16,933 | ) | |||||||
| Changes in the fair value of contingent purchase consideration payable | (5,060 | ) | 12,285 | 67,197 | 9,678 | (43,325 | ) | 93,307 | 13,439 | ||||||||||||
| Impairment of long-lived assets | - | - | (392,947 | ) | (56,596 | ) | - | (392,947 | ) | (56,596 | ) | ||||||||||
| Other operating income | - | 6,783 | - | - | 8,569 | 6,783 | 977 | ||||||||||||||
| Total operating expenses | (314,490 | ) | (306,998 | ) | (690,387 | ) | (99,436 | ) | (1,137,991 | ) | (1,552,332 | ) | (223,582 | ) | |||||||
| Operating loss | (95,321 | ) | (120,116 | ) | (507,016 | ) | (73,025 | ) | (284,233 | ) | (840,196 | ) | (121,013 | ) | |||||||
| Interest income | 5,692 | 3,716 | 4,839 | 697 | 53,494 | 21,078 | 3,036 | ||||||||||||||
| Interest expense | (60,963 | ) | (49,490 | ) | (40,652 | ) | (5,855 | ) | (274,184 | ) | (198,589 | ) | (28,603 | ) | |||||||
| Loss on debt extinguishment | - | (29,841 | ) | - | - | - | (29,841 | ) | (4,298 | ) | |||||||||||
| Other income | 20,115 | 23,894 | 189 | 27 | 30,430 | 28,556 | 4,113 | ||||||||||||||
| Other expense | (1,848 | ) | (1,010 | ) | (1,825 | ) | (263 | ) | (3,701 | ) | (16,449 | ) | (2,369 | ) | |||||||
| Foreign exchange gain | 7,248 | 8,511 | 28,849 | 4,155 | 72,394 | 56,341 | 8,115 | ||||||||||||||
| Loss before income taxes and gain from equity method investments | (125,077 | ) | (164,336 | ) | (515,616 | ) | (74,264 | ) | (405,800 | ) | (979,100 | ) | (141,019 | ) | |||||||
| Income tax (expense) benefit | (28,044 | ) | (10,064 | ) | 17,818 | 2,566 | (47,830 | ) | 11,160 | 1,607 | |||||||||||
| Gain from equity method investments | 40,231 | 2,852 | 12,591 | 1,813 | 52,355 | 36,018 | 5,188 | ||||||||||||||
| Net loss | (112,890 | ) | (171,548 | ) | (485,207 | ) | (69,885 | ) | (401,275 | ) | (931,922 | ) | (134,224 | ) | |||||||
| Net (income) loss attributable to noncontrolling interest | (11,194 | ) | 37,579 | 41,951 | 6,042 | (26,824 | ) | 114,922 | 16,552 | ||||||||||||
| Net loss attributable to ordinary shareholders | (124,084 | ) | (133,969 | ) | (443,256 | ) | (63,843 | ) | (428,099 | ) | (817,000 | ) | (117,672 | ) | |||||||
| Loss per share | |||||||||||||||||||||
| Basic | (0.24 | ) | (0.15 | ) | (0.69 | ) | (0.10 | ) | (0.85 | ) | (1.37 | ) | (0.20 | ) | |||||||
| Diluted | (0.24 | ) | (0.15 | ) | (0.69 | ) | (0.10 | ) | (0.85 | ) | (1.37 | ) | (0.20 | ) | |||||||
| Shares used in loss per share computation | |||||||||||||||||||||
| Basic* | 523,366,544 | 682,146,465 | 681,210,352 | 681,210,352 | 492,065,239 | 617,169,833 | 617,169,833 | ||||||||||||||
| Diluted* | 523,366,544 | 682,146,465 | 681,210,352 | 681,210,352 | 492,065,239 | 617,169,833 | 617,169,833 | ||||||||||||||
| Loss per ADS (6 ordinary shares equal to 1 ADS) | |||||||||||||||||||||
| Basic | (1.44 | ) | (0.90 | ) | (4.14 | ) | (0.60 | ) | (5.10 | ) | (8.22 | ) | (1.18 | ) | |||||||
| Diluted | (1.44 | ) | (0.90 | ) | (4.14 | ) | (0.60 | ) | (5.10 | ) | (8.22 | ) | (1.18 | ) | |||||||
| * Shares used in loss per share/ADS computation were computed under weighted average method. | |||||||||||||||||||||
| 21VIANET GROUP, INC. | |||||||||||||||||||||
| RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS | |||||||||||||||||||||
| (Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data) | |||||||||||||||||||||
| Three months ended | Year ended | ||||||||||||||||||||
| December 31, 2015 | September 30, 2016 | December 31, 2016 | December 31, 2015 | December 31, 2016 | |||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||
| Gross profit | 219,169 | 186,882 | 183,371 | 26,411 | 853,758 | 712,136 | 102,569 | ||||||||||||||
| Plus: share-based compensation expense | 6,582 | 1,173 | 1,865 | 269 | 12,422 | (4,110 | ) | (592 | ) | ||||||||||||
| Plus: amortization of intangible assets derived from acquisitions | 38,583 | 36,504 | 37,369 | 5,382 | 157,119 | 151,037 | 21,754 | ||||||||||||||
| Adjusted gross profit | 264,334 | 224,559 | 222,605 | 32,062 | 1,023,299 | 859,063 | 123,731 | ||||||||||||||
| Adjusted gross margin | 26.9 | % | 23.2 | % | 24.7 | % | 24.7 | % | 28.2 | % | 23.6 | % | 23.6 | % | |||||||
| Operating expenses | (314,490 | ) | (306,998 | ) | (690,387 | ) | (99,436 | ) | (1,137,991 | ) | (1,552,332 | ) | (223,582 | ) | |||||||
| Plus: share-based compensation expense | 33,537 | 32,208 | 54,808 | 7,894 | 177,605 | 122,839 | 17,692 | ||||||||||||||
| Plus: changes in the fair value of contingent purchase consideration payable | 5,060 | (12,285 | ) | (67,197 | ) | (9,678 | ) | 43,325 | (93,307 | ) | (13,439 | ) | |||||||||
| Plus: impairment of long-lived assets | - | - | 392,947 | 56,596 | - | 392,947 | 56,596 | ||||||||||||||
| Adjusted operating expenses | (275,893 | ) | (287,075 | ) | (309,829 | ) | (44,624 | ) | (917,061 | ) | (1,129,853 | ) | (162,733 | ) | |||||||
| Net loss | (112,890 | ) | (171,548 | ) | (485,207 | ) | (69,885 | ) | (401,275 | ) | (931,922 | ) | (134,224 | ) | |||||||
| Plus: share-based compensation expense | 40,119 | 33,381 | 56,673 | 8,163 | 190,027 | 118,729 | 17,101 | ||||||||||||||
| Plus: amortization of intangible assets derived from acquisitions | 38,583 | 36,504 | 37,369 | 5,382 | 157,119 | 151,037 | 21,754 | ||||||||||||||
| Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact | 5,060 | (12,285 | ) | (67,874 | ) | (9,776 | ) | 43,325 | (93,489 | ) | (13,465 | ) | |||||||||
| Plus: loss on debt extinguishment | - | 29,841 | - | - | - | 29,841 | 4,298 | ||||||||||||||
| Plus: impairment of long-lived assets | - | - | 392,947 | 56,596 | - | 392,947 | 56,596 | ||||||||||||||
| Adjusted net loss | (29,128 | ) | (84,107 | ) | (66,092 | ) | (9,520 | ) | (10,804 | ) | (332,857 | ) | (47,940 | ) | |||||||
| Adjusted net margin | -3.0 | % | -8.7 | % | -7.3 | % | -7.3 | % | -0.3 | % | -9.1 | % | -9.1 | % | |||||||
| Net loss | (112,890 | ) | (171,548 | ) | (485,207 | ) | (69,885 | ) | (401,275 | ) | (931,922 | ) | (134,224 | ) | |||||||
| Minus: Provision for income taxes | (28,044 | ) | (10,064 | ) | 17,818 | 2,566 | (47,830 | ) | 11,160 | 1,607 | |||||||||||
| Minus: Interest income | 5,692 | 3,716 | 4,839 | 697 | 53,494 | 21,078 | 3,036 | ||||||||||||||
| Minus: Interest expenses | (60,963 | ) | (49,490 | ) | (40,652 | ) | (5,855 | ) | (274,184 | ) | (198,589 | ) | (28,603 | ) | |||||||
| Minus: Loss on debt extinguishment | - | (29,841 | ) | - | - | - | (29,841 | ) | (4,298 | ) | |||||||||||
| Minus: Exchange gain | 7,248 | 8,511 | 28,849 | 4,155 | 72,394 | 56,341 | 8,115 | ||||||||||||||
| Minus: Gain from equity method investment | 40,231 | 2,852 | 12,591 | 1,813 | 52,355 | 36,018 | 5,188 | ||||||||||||||
| Minus: Other income | 20,115 | 23,894 | 189 | 27 | 30,430 | 28,556 | 4,113 | ||||||||||||||
| Minus: Other expenses | (1,848 | ) | (1,010 | ) | (1,825 | ) | (263 | ) | (3,701 | ) | (16,449 | ) | (2,369 | ) | |||||||
| Plus: depreciation | 105,355 | 122,484 | 129,243 | 18,615 | 402,035 | 478,862 | 68,970 | ||||||||||||||
| Plus: amortization | 46,917 | 44,452 | 47,335 | 6,818 | 189,257 | 186,901 | 26,919 | ||||||||||||||
| Plus: share-based compensation expense | 40,119 | 33,381 | 56,673 | 8,163 | 190,027 | 118,729 | 17,101 | ||||||||||||||
| Plus: changes in the fair value of contingent purchase consideration payable | 5,060 | (12,285 | ) | (67,197 | ) | (9,678 | ) | 43,325 | (93,307 | ) | (13,439 | ) | |||||||||
| Plus: impairment of long-lived assets | - | - | 392,947 | 56,596 | - | 392,947 | 56,596 | ||||||||||||||
| Adjusted EBITDA | 102,130 | 67,916 | 51,985 | 7,489 | 540,411 | 243,936 | 35,134 | ||||||||||||||
| Adjusted EBITDA margin | 10.4 | % | 7.0 | % | 5.8 | % | 5.8 | % | 14.9 | % | 6.7 | % | 6.7 | % | |||||||
| Adjusted net loss | (29,128 | ) | (84,107 | ) | (66,092 | ) | (9,520 | ) | (10,804 | ) | (332,857 | ) | (47,940 | ) | |||||||
| Less: Net (profit) loss attributable to noncontrolling interest | (11,194 | ) | 37,579 | 41,951 | 6,042 | (26,824 | ) | 114,922 | 16,552 | ||||||||||||
| Adjusted net loss attributable to the Company’s ordinary shareholders | (40,322 | ) | (46,528 | ) | (24,141 | ) | (3,478 | ) | (37,628 | ) | (217,935 | ) | (31,388 | ) | |||||||
| Adjusted loss per share | |||||||||||||||||||||
| Basic | (0.08 | ) | (0.02 | ) | (0.08 | ) | (0.01 | ) | (0.06 | ) | (0.40 | ) | (0.06 | ) | |||||||
| Diluted | (0.08 | ) | (0.02 | ) | (0.08 | ) | (0.01 | ) | (0.06 | ) | (0.40 | ) | (0.06 | ) | |||||||
| Shares used in adjusted loss per share computation: | |||||||||||||||||||||
| Basic* | 523,366,544 | 682,146,465 | 681,210,352 | 681,210,352 | 492,065,239 | 617,169,833 | 617,169,833 | ||||||||||||||
| Diluted* | 523,366,544 | 682,146,465 | 681,210,352 | 681,210,352 | 492,065,239 | 617,169,833 | 617,169,833 | ||||||||||||||
| Adjusted loss per ADS (6 ordinary shares equal to 1 ADS) | |||||||||||||||||||||
| Basic | (0.48 | ) | (0.12 | ) | (0.48 | ) | (0.07 | ) | (0.36 | ) | (2.40 | ) | (0.35 | ) | |||||||
| Diluted | (0.48 | ) | (0.12 | ) | (0.48 | ) | (0.07 | ) | (0.36 | ) | (2.40 | ) | (0.35 | ) | |||||||
| * Shares used in adjusted loss/ADS per share computation were computed under weighted average method. | |||||||||||||||||||||
| 21VIANET GROUP, INC. | |||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||
| (Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”)) | |||||||||
| Three months ended | |||||||||
| September 30, 2016 | December 31, 2016 | ||||||||
| RMB | RMB | US$ | |||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
| Net loss | (171,548 | ) | (485,207 | ) | (69,885 | ) | |||
| Adjustments to reconcile net loss to net cash generated from operating activities: | |||||||||
| Foreign exchange gain | (8,511 | ) | (28,849 | ) | (4,155 | ) | |||
| Changes in the fair value of contingent purchase consideration payable | (12,285 | ) | (67,197 | ) | (9,678 | ) | |||
| Depreciation of property and equipment | 122,484 | 129,243 | 18,615 | ||||||
| Amortization of intangible assets | 45,683 | 46,103 | 6,640 | ||||||
| Provision for doubtful accounts and other receivables | 24,091 | 48,706 | 7,015 | ||||||
| Share-based compensation expense | 33,382 | 56,672 | 8,162 | ||||||
| Loss on debt extinguishment | 29,841 | - | - | ||||||
| Deferred income taxes benefit | (7,969 | ) | (31,605 | ) | (4,552 | ) | |||
| Gain from equity method investment | (2,852 | ) | (12,591 | ) | (1,813 | ) | |||
| Impairment of long-lived assets | - | 392,947 | 56,596 | ||||||
| Changes in operating assets and liabilities | |||||||||
| Restricted cash | (67,455 | ) | 11,846 | 1,706 | |||||
| Inventories | 2,214 | 1,617 | 233 | ||||||
| Accounts and notes receivable | (32,229 | ) | 51,084 | 7,358 | |||||
| Unrecognized tax expense | 717 | 5,984 | 862 | ||||||
| Prepaid expenses and other current assets | 32,589 | (9,855 | ) | (1,419 | ) | ||||
| Amounts due from related parties | (8,839 | ) | (6,359 | ) | (916 | ) | |||
| Accounts and notes payable | (22,603 | ) | (20,145 | ) | (2,901 | ) | |||
| Accrued expenses and other payables | 6,362 | 25,348 | 3,652 | ||||||
| Deferred revenue | (20,967 | ) | (9,192 | ) | (1,324 | ) | |||
| Advances from customers | 27,288 | 12,473 | 1,796 | ||||||
| Income taxes payable | 13,594 | (14,864 | ) | (2,141 | ) | ||||
| Amounts due to related parties | 834 | 4,031 | 581 | ||||||
| Deferred government grants | (2,291 | ) | (1,344 | ) | (194 | ) | |||
| Gain from cost method investment | (5,160 | ) | - | - | |||||
| Net cash (used in) generated from operating activities | (23,630 | ) | 98,846 | 14,238 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
| Purchases of property and equipment | (140,291 | ) | (126,341 | ) | (18,197 | ) | |||
| Purchases of intangible assets | (5,742 | ) | (9,910 | ) | (1,427 | ) | |||
| Payment for asset acquisition | (25,024 | ) | (6,859 | ) | (988 | ) | |||
| Receipt of loans from third parties | - | 40,000 | 5,761 | ||||||
| Payments for short-term investments | - | (272,914 | ) | (39,308 | ) | ||||
| Proceeds received from maturity of short-term investments | - | 10,000 | 1,440 | ||||||
| Payments for long-term investments | - | (5,025 | ) | (724 | ) | ||||
| Proceeds from long-term investments | 11,269 | - | - | ||||||
| Minority investment in ZJK Energy | - | 4,000 | 576 | ||||||
| Net cash used in investing activities | (159,788 | ) | (367,049 | ) | (52,867 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
| Restricted cash | (1,623,127 | ) | (76,284 | ) | (10,987 | ) | |||
| Proceeds from exercise of stock options | 401 | 662 | 95 | ||||||
| Proceeds from long-term bank borrowings | 49,650 | 54,620 | 7,867 | ||||||
| Proceeds from short-term bank borrowings | 1,570,676 | 37,000 | 5,329 | ||||||
| Repayments of short-term bank borrowings | (30,000 | ) | (123,000 | ) | (17,716 | ) | |||
| Repayments of long-term bank borrowings | (6,084 | ) | (27,003 | ) | (3,889 | ) | |||
| Repayments of 2017 Bonds | (1,596,335 | ) | - | - | |||||
| Consideration paid to selling shareholders | - | (142 | ) | (20 | ) | ||||
| Prepayment for shares repurchase plan | (27,245 | ) | 28,004 | 4,033 | |||||
| Payments for shares repurchase plan | (13,058 | ) | (29,607 | ) | (4,264 | ) | |||
| Payments for capital leases | (41,038 | ) | (61,616 | ) | (8,875 | ) | |||
| Net cash used in financing activities | (1,716,160 | ) | (197,366 | ) | (28,427 | ) | |||
| Effect of foreign exchange rate changes on cash and short term investments | 6,991 | 100,505 | 14,476 | ||||||
| Net decrease in cash and cash equivalents | (1,892,587 | ) | (365,064 | ) | (52,580 | ) | |||
| Cash and cash equivalents at beginning of period | 3,555,069 | 1,662,482 | 239,447 | ||||||
| Cash and cash equivalents at end of period | 1,662,482 | 1,297,418 | 186,867 | ||||||
Investor Relations Contacts: 21Vianet Group, Inc. Calvin Jiang +86 10 8456 2121 [email protected] ICR, Inc. Xueli Song +1 (646) 405-4922 [email protected]Source: 21Vianet Group, Inc.