UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March 2015
Commission File Number: 001-35126
21Vianet Group, Inc.
M5, 1 Jiuxianqiao East Road,
Chaoyang District
Beijing 100016
The People’s Republic of China
(86 10) 8456 2121
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| 21Vianet Group, Inc. | ||
| By: | /s/ Shang-Wen Hsiao | |
| Name: | Shang-Wen Hsiao | |
| Title: | Chief Financial Officer | |
Date: March 10, 2015
Exhibit Index
Exhibit 99.1 — Press Release
Exhibit 99.1
21Vianet Group, Inc. Reports Fourth Quarter and Full Year 2014 Unaudited Financial Results
4Q14 Net Revenues Up 56.4% YOY to RMB853.9 Million
4Q14 Adjusted EBITDA Up 55.7% YOY to RMB160.1 Million
Live Conference Call to be Held at 8:00 PM U.S. Eastern Time, March 9, 2015
BEIJING, March 9, 2015 (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 of 2014. The Company will hold a conference call at 8:00 p.m. Eastern Time on March 9, 2015. Dial-in details are provided at the end of the release.
Fourth Quarter 2014 Financial Highlights
| • | Net revenues increased by 56.4% to RMB853.9 million (US$137.6 million) from RMB545.9 million in the comparative period in 2013. |
| • | Adjusted EBITDA1 increased by 55.7% to RMB160.1 million (US$25.8 million) from RMB102.9 million in the comparative period in 2013. |
Full Year 2014 Financial Highlights
| • | Net revenues increased by 46.3% to RMB2.88 billion (US$463.6 million) from RMB1.97 billion in 2013. |
| • | Adjusted EBITDA increased by 52.9% to RMB558.9 million (US$90.1 million) from RMB365.6 million in 2013. |
Mr. Josh Chen, Founder, Chairman and Chief Executive Officer of the Company, stated, “We ended 2014 on a strong note, as we saw continued strong growth momentum in our internet data center (IDC), content delivery network (CDN), and cloud businesses. We further expanded our IDC portfolio as we added an additional 3,378 cabinets, allowing our total cabinet count to grow to 21,522, a 53% year-over-year increase. Furthermore, we welcomed new strategic investments from Kingsoft and Xiaomi, and additional investments by Temasek. Our cooperation with Kingsoft calls for at least 5,000 new cabinets to be leased over the next three years, which will serve as an incremental source of demand for our IDC business. We are excited to see leading global technology companies inside and outside of China that share our vision and believe that their investments offer significant strategic value to both our core operations and new business opportunities. Looking ahead at 2015, we expect demand drivers for our business to remain robust, supported by increased Internet usage and penetration in China, additional demand for cloud services, the continued growth of mobile Internet traffic, and increased demand from financial institutions. These drivers will fuel our growth and allow us to continue executing on our strategies, strengthening our position as a leading integrated Internet infrastructure services provider.”
Mr. Shang-Wen Hsiao, Chief Financial Officer of the Company, commented, “We finished 2014 with another quarter marked by consistent and steady growth, with total revenues growing by 56.4% year-over-year and adjusted EBITDA growing by 55.7% year-over-year. In addition, we were able to significantly increase our data center capacity while maintaining our targeted utilization rate. We also saw continued improvement in our accounts receivables metric, as the days-sales-outstanding (DSO) decreased further from 92 days in the third quarter to 78 days in the fourth quarter. As we move forward, we are confident that we will be able to build upon the strong financial and operating performance of 2014 and continue to execute our strategies to capitalize on the trends taking place in China’s dynamic and evolving data center and cloud services markets.”
| 1 | Adjusted 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 and EBITDA is defined as net profit (loss) from operations before income tax expense (benefit), foreign exchange gain, other expenses, other income, interest expense, interest income and depreciation and amortization. |
Fourth Quarter 2014 Financial Results
REVENUES: Net revenues for the fourth quarter of 2014 increased by 56.4% to RMB853.9 million (US$137.6 million) from RMB545.9 million in the comparative period in 2013.
Net revenues from hosting and related services increased by 63.8% to RMB596.2 million (US$96.1 million) in the fourth quarter of 2014 from RMB364.0 million in the comparative period in 2013, primarily due to an increase in the total number of cabinets under management, an increase in demand for the Company’s CDN and cloud computing services, as well as contributions from acquisitions, partially offset by the transition to a Value Added Tax (VAT) system. Net revenues from managed network services increased by 41.6% to RMB257.7 million (US$41.5 million) in the fourth quarter of 2014 from RMB181.9 million in the comparative period in 2013 primarily driven by the contributions from acquisitions, which was partially offset by network grooming efforts and the transition to a VAT system.
GROSS PROFIT: Gross profit for the fourth quarter of 2014, increased by 65.0% to RMB238.0 million (US$38.4 million) from RMB144.2 million in the comparative period in 2013. Gross margin for the fourth quarter of 2014 was 27.9%, compared with 26.4% in the comparative period in 2013. The increase in gross margin was primarily due to higher margin revenue contributions from acquisitions and cloud services.
Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, increased by 83.4% to RMB290.7 million (US$46.9 million) from RMB158.5 million in the comparative period in 2013. Adjusted gross margin increased to 34.0% in the fourth quarter of 2014 from 29.0% in the comparative period in 2013.
OPERATING EXPENSES: Total operating expenses increased by 162.6% to RMB344.3 million (US$55.5 million) from RMB131.1 million in the comparative period in 2013. Adjusted operating expenses, which exclude share-based compensation expenses and the changes in the fair value of contingent purchase consideration payable, increased to RMB234.4 million (US$37.8 million) from RMB102.0 million in the comparative period in 2013. As a percentage of net revenue, adjusted operating expenses were 27.5%, compared with 18.7% in the comparative period in 2013 and 25.5% in the third quarter of 2014.
Sales and marketing expenses increased by 107.0% to RMB100.1 million (US$16.1 million) from RMB48.3 million in the comparative period in 2013, primarily due to expansion of the sales and service personnel in the Company’s overall business and acquisitions with higher sales and marketing expenses.
General and administrative expenses increased by 192.5% to RMB159.6 million (US$25.7 million) from RMB54.6 million in the comparative period in 2013, primarily due to increased headcount associated with the growth in the Company’s overall business and acquisitions with higher general and administrative expenses.
Research and development expenses increased by 89.6% to RMB39.9 million (US$6.4 million) from RMB21.0 million in the comparative period in 2013, which reflected the Company’s efforts to further strengthen its research and development capabilities and expand its cloud computing and CDN service offerings.
Change in the fair value of contingent purchase consideration payable was a loss of RMB44.8 million (US$7.2 million) in the fourth quarter of 2014, compared with a loss of RMB7.2 million in the comparative period in 2013.
ADJUSTED EBITDA: Adjusted EBITDA for the fourth quarter of 2014 increased by 55.7% to RMB160.1 million (US$25.8 million) from RMB102.9 million in the comparative period in 2013. Adjusted EBITDA margin for the quarter was 18.8% compared with 18.8% in the comparative period in 2013 and 19.8% in the third quarter of 2014. Adjusted EBITDA in the fourth quarter of 2014 excludes share-based compensation expenses of RMB68.9 million (US$11.1 million) and changes in the fair value of contingent purchase consideration payable of RMB44.8million (US$7.2 million).
NET PROFIT/LOSS: Net loss for the fourth quarter of 2014 was RMB155.5 million (US$25.1 million), compared with a net loss of RMB3.9 million in the comparative period in 2013.
Adjusted net profit for the fourth quarter of 2014 was RMB7.1 million (US$1.1 million) compared with RMB41.0 million in the comparative period in 2013. Adjusted net profit in the fourth quarter of 2014 excludes share-based compensation expenses of RMB68.9 million (US$11.1 million), amortization of intangible assets derived from acquisitions of RMB49.0 million (US$7.9 million), changes in the fair value of contingent purchase consideration payable and related deferred tax impact of RMB44.8 million (US$7.2 million) in the aggregate. Adjusted net margin was 0.8%, compared with 7.5% in the comparative period in 2013 and 2.1% in the third quarter of 2014.
EARNING/LOSS PER SHARE: Diluted loss per ordinary share for the fourth quarter of 2014 was RMB0.44, which represents the equivalent of RMB2.64 (US$0.43) per American Depositary Share (“ADS”). Each ADS represents six ordinary shares. Adjusted diluted loss per share for the fourth quarter of 2014 was RMB0.03, which represents the equivalent of RMB0.18 (US$0.03) per ADS. Adjusted loss per share is calculated using adjusted net loss as discussed above divided by the weighted average number of shares.
As of December 31, 2014, the Company had a total of 396.2 million ordinary shares outstanding, or the equivalent of 66.0 million ADSs.
BALANCE SHEET: As of December 31, 2014, the Company’s cash and cash equivalents and short-term investment were RMB1.56 billion (US$250.7 million). Taking into consideration the equity investment transactions with Kingsoft, Xiaomi and Temasek for a total amount of US$296 million, which closed on January 15, 2015, our cash, cash equivalents and short-term investments on a pro forma basis totaled approximately RMB 3.4 billion (US$546.7 million).
Fourth Quarter 2014 Operational Highlights
| • | Monthly Recurring Revenues (“MRR”) per cabinet was RMB10,400 in the fourth quarter of 2014, compared with RMB10,433 in the third quarter of 2014. |
| • | Total cabinets under management increased to 21,522 as of December 31, 2014, from 18,144 as of September 30, 2014, with 14,572 cabinets in the Company’s self-built data centers and 6,950 cabinets in its partnered data centers. |
| • | Utilization rate was 70.2% in the fourth quarter of 2014, compared with 70.5% in the third quarter of 2014. |
| • | Hosting churn rate, which is based on the Company’s core IDC business, was 0.25% in the fourth quarter of 2014, compared with 0.47% in the third quarter of 2014. |
Full Year 2014 Financial Performance
For the full year of 2014, net revenue increased by 46.3% to RMB2.88 billion (US$463.6 million) from RMB1.97 billion in the prior year. Adjusted EBITDA for the full year increased by 52.9% to RMB558.9 million (US$90.1 million) from RMB365.6 million in the prior year. Adjusted EBITDA margin was 19.4%, compared with 18.6% in the prior year. Adjusted EBITDA for the full year excludes share-based compensation expense of RMB233.7 million (US$37.7 million) and changes in the fair value of contingent purchase consideration payable of RMB22.6 million (US$3.6 million). Adjusted net profit for the full year was RMB79.4 million (US$12.8 million), compared with RMB120.5 million in the prior year. Adjusted net profit in the full year excludes share-based compensation expense of RMB233.7 million (US$37.7 million), amortization of intangible assets derived from acquisitions of RMB106.9 million (US$17.2 million), and changes in the fair value of contingent purchase consideration payable and related deferred tax assets of RMB25.6 million (US$4.1 million). Adjusted diluted earnings per share for the full year of 2014 was RMB0.14 (US$0.02), which represents the equivalent of RMB0.84 (US$0.12) per ADS.
Recent Developments
In December 2014, 21Vianet entered into definitive share purchase agreements with Kingsoft Corporation Limited (“Kingsoft”), a leading internet based software developer, distributor and service provider, Xiaomi Corporation (“Xiaomi”), a leading designer, manufacturer and marketer of mobile devices and other electronic equipment and a provider of internet services and Temasek, a Singapore based investment company, for a total amount of US$296 million. Pursuant to the agreements, Kingsoft, Xiaomi, and Temasek will own 11.6%, 3.4%, and 13.1%, respectively, of the equity ownership in 21Vianet. The transaction closed on January 15, 2015.
Financial Outlook
For the first quarter of 2015, the Company expects net revenues to be in the range of RMB883 million to RMB925 million, representing approximately 54% growth year-over-year at the mid point. Adjusted EBITDA is expected to be in the range of RMB162 million to RMB182 million, representing approximately 52% growth year-over-year at the mid point. For the full year 2015, the Company now expects net revenues to be in the range of RMB3.91 billion to RMB4.11 billion, representing approximately 39% growth over 2014 at the mid point. Adjusted EBITDA for the full year 2015 is expected to be in the range of RMB760 million to RMB860 million, representing approximately 45% growth over 2014 at the mid point. 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 Monday, March 9, 2015 at 8:00 pm Eastern Time, or Tuesday, March 10, 2015 at 8:00 am Beijing Time to discuss the financial results.
Participants may access the call by dialing the following numbers:
| United States: | +1-845-675-0438 | |
| International Toll Free: | +1-855-500-8701 | |
| China Domestic: | 400-1200654 | |
| Hong Kong: | +852-3018-6776 | |
| Conference ID: | # 83036849 |
The replay will be accessible through March 16, 2015 by dialing the following numbers:
| United States Toll Free: | +1-855-452-5696 | |
| International: | +61-2-90034211 | |
| Conference ID: | # 83036849 |
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 measures 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 RMB6.2046 to US$1.00, the noon buying rate in effect on December 31, 2014 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 40 cities throughout China, servicing a diversified and loyal base of more than 2,000 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, the outlook for the first quarter and full year of 2015 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 fourth 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.
CONTACT: Investor Relations Contacts:
21Vianet Group, Inc.
Eric Chu, CFA
+1 908 707 2062
IR@21Vianet.com
Joseph Cheng
+86 10 8456 2121
IR@21Vianet.com
ICR, Inc.
Calvin Jiang
+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, 2013 | December 31, 2014 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Audited) | (Unaudited) | (Unaudited) | ||||||||||
| Assets |
||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
1,458,856 | 644,415 | 103,861 | |||||||||
| Restricted cash |
193,020 | 161,649 | 26,053 | |||||||||
| Accounts receivable, net |
610,413 | 739,040 | 119,112 | |||||||||
| Short-term investments |
1,101,826 | 911,242 | 146,866 | |||||||||
| Inventories |
— | 10,059 | 1,621 | |||||||||
| Notes receivable |
— | 905 | 146 | |||||||||
| Prepaid expenses and other current assets |
154,875 | 309,441 | 49,869 | |||||||||
| Deferred tax assets |
17,816 | 35,002 | 5,641 | |||||||||
| Amount due from related parties |
67,498 | 54,867 | 8,843 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current assets |
3,604,304 | 2,866,620 | 462,012 | |||||||||
| Non-current assets: |
||||||||||||
| Property and equipment, net |
1,402,177 | 3,102,882 | 500,094 | |||||||||
| Intangible assets, net |
336,889 | 1,404,453 | 226,357 | |||||||||
| Deferred tax assets |
14,149 | 42,573 | 6,862 | |||||||||
| Goodwill |
410,500 | 1,755,970 | 283,011 | |||||||||
| Long term investments |
106,726 | 126,307 | 20,357 | |||||||||
| Restricted cash |
219,056 | 121,415 | 19,569 | |||||||||
| Amount due from related parties |
— | 98,500 | 15,875 | |||||||||
| Other non-current assets |
37,761 | 121,461 | 19,576 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total non-current assets |
2,527,258 | 6,773,561 | 1,091,701 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total assets |
6,131,562 | 9,640,181 | 1,553,713 | |||||||||
|
|
|
|
|
|
|
|||||||
| Liabilities and Shareholders’ Equity |
||||||||||||
| Current liabilities: |
||||||||||||
| Short-term bank borrowings |
173,726 | 160,181 | 25,816 | |||||||||
| Accounts payable |
188,217 | 369,844 | 59,608 | |||||||||
| Notes payable |
— | 16,230 | 2,616 | |||||||||
| Accrued expenses and other payables |
292,421 | 599,491 | 96,620 | |||||||||
| Deferred revenue |
32,558 | 347,441 | 55,997 | |||||||||
| Advances from customers |
546 | 97,679 | 15,743 | |||||||||
| Income taxes payable |
11,476 | 35,013 | 5,643 | |||||||||
| Amounts due to related parties |
147,699 | 355,642 | 57,319 | |||||||||
| Current portion of long-term bank borrowings |
197,000 | 955,647 | 154,022 | |||||||||
| Current portion of capital lease obligations |
14,600 | 71,939 | 11,594 | |||||||||
| Current portion of deferred government grant |
— | 6,150 | 991 | |||||||||
| Deferred tax liabilities |
3,115 | 2,696 | 435 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current liabilities |
1,061,358 | 3,017,953 | 486,404 | |||||||||
| Non-current liabilities: |
||||||||||||
| Long-term bank borrowings |
965,740 | 61,673 | 9,940 | |||||||||
| Deferred revenue |
— | 74,044 | 11,934 | |||||||||
| Amounts due to related parties |
78,321 | 280,728 | 45,245 | |||||||||
| Non-current portion of capital lease obligations |
337,139 | 511,679 | 82,468 | |||||||||
| Unrecognized tax benefits |
18,559 | 20,453 | 3,296 | |||||||||
| Deferred tax liabilities |
78,593 | 310,340 | 50,018 | |||||||||
| Non-current portion of deferred government grant |
18,046 | 27,422 | 4,420 | |||||||||
| Bonds payable |
998,505 | 2,264,064 | 364,901 | |||||||||
| Mandatorily redeemable noncontrolling interests |
100,000 | 100,000 | 16,117 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total non-current liabilities |
2,594,903 | 3,650,403 | 588,339 | |||||||||
| Redeemable noncontrolling interests |
— | 773,706 | 124,699 | |||||||||
| Shareholders’ equity |
||||||||||||
| Treasury stock |
(8,917 | ) | (213,665 | ) | (34,437 | ) | ||||||
| Ordinary shares |
26 | 26 | 4 | |||||||||
| Additional paid-in capital |
3,944,764 | 4,196,191 | 676,303 | |||||||||
| Accumulated other comprehensive income loss |
(82,589 | ) | (65,754 | ) | (10,598 | ) | ||||||
| Statutory reserves |
35,178 | 52,263 | 8,423 | |||||||||
| Accumulated deficit |
(1,429,410 | ) | (1,794,975 | ) | (289,297 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total 21Vianet Group, Inc. shareholders’ equity |
2,459,052 | 2,174,086 | 350,398 | |||||||||
| Non-controlling interest |
16,249 | 24,033 | 3,873 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total shareholders’ equity |
2,475,301 | 2,198,119 | 354,271 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities and shareholders’ equity |
6,131,562 | 9,640,181 | 1,553,713 | |||||||||
|
|
|
|
|
|
|
|||||||
21VIANET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amount in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)
| Three months ended | Year Ended | |||||||||||||||||||||||||||
| December 31, 2013 |
September 30, 2014 |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
||||||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||
| Net revenues |
||||||||||||||||||||||||||||
| Hosting and related services |
363,957 | 513,212 | 596,221 | 96,093 | 1,259,260 | 1,980,688 | 319,229 | |||||||||||||||||||||
| Managed network services |
181,920 | 265,313 | 257,689 | 41,532 | 707,457 | 895,759 | 144,370 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total net revenues |
545,877 | 778,525 | 853,910 | 137,625 | 1,966,717 | 2,876,447 | 463,599 | |||||||||||||||||||||
| Cost of revenues |
(401,644 | ) | (547,666 | ) | (615,877 | ) | (99,261 | ) | (1,449,845 | ) | (2,066,304 | ) | (333,028 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Gross profit |
144,233 | 230,859 | 238,033 | 38,364 | 516,872 | 810,143 | 130,571 | |||||||||||||||||||||
| Operating expenses |
||||||||||||||||||||||||||||
| Sales and marketing |
(48,338 | ) | (85,947 | ) | (100,075 | ) | (16,129 | ) | (154,479 | ) | (287,229 | ) | (46,293 | ) | ||||||||||||||
| General and administrative |
(54,565 | ) | (90,383 | ) | (159,576 | ) | (25,719 | ) | (186,907 | ) | (493,309 | ) | (79,507 | ) | ||||||||||||||
| Research and development |
(21,049 | ) | (31,435 | ) | (39,906 | ) | (6,432 | ) | (77,831 | ) | (121,676 | ) | (19,611 | ) | ||||||||||||||
| Changes in the fair value of contingent purchase consideration payable |
(7,188 | ) | 64,895 | (44,789 | ) | (7,219 | ) | (55,882 | ) | (22,629 | ) | (3,647 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total operating expenses |
(131,140 | ) | (142,870 | ) | (344,346 | ) | (55,499 | ) | (475,099 | ) | (924,843 | ) | (149,058 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Operating profit (loss) |
13,093 | 87,989 | (106,313 | ) | (17,135 | ) | 41,773 | (114,700 | ) | (18,487 | ) | |||||||||||||||||
| Interest income |
21,992 | 20,227 | 12,862 | 2,073 | 48,503 | 67,904 | 10,944 | |||||||||||||||||||||
| Interest expense |
(47,055 | ) | (67,950 | ) | (66,531 | ) | (10,723 | ) | (136,775 | ) | (232,020 | ) | (37,395 | ) | ||||||||||||||
| Loss on debt extinguishment |
— | — | — | — | — | (41,581 | ) | (6,702 | ) | |||||||||||||||||||
| (Loss) Income from equity method investment |
(116 | ) | (509 | ) | 78 | 13 | (1,372 | ) | (671 | ) | (108 | ) | ||||||||||||||||
| Other income |
4,551 | 7,300 | 15,413 | 2,484 | 6,232 | 26,560 | 4,281 | |||||||||||||||||||||
| Other expense |
(81 | ) | (804 | ) | (70 | ) | (11 | ) | (2,112 | ) | (1,040 | ) | (168 | ) | ||||||||||||||
| Foreign exchange (loss) gain |
(4,747 | ) | (1,861 | ) | (8,756 | ) | (1,411 | ) | 7,072 | (16,256 | ) | (2,620 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (Loss) Profit before income taxes |
(12,363 | ) | 44,392 | (153,317 | ) | (24,710 | ) | (36,679 | ) | (311,804 | ) | (50,255 | ) | |||||||||||||||
| Income tax benefit (expense) |
8,444 | (6,493 | ) | (2,168 | ) | (349 | ) | (10,324 | ) | (16,673 | ) | (2,687 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Consolidated net (loss) profit |
(3,919 | ) | 37,899 | (155,485 | ) | (25,059 | ) | (47,003 | ) | (328,477 | ) | (52,942 | ) | |||||||||||||||
| Net (profit) loss attributable to non-controlling interest |
(388 | ) | 1,704 | (18,603 | ) | (2,998 | ) | (1,223 | ) | (20,003 | ) | (3,224 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net (loss) profit attributable to ordinary shareholders |
(4,307 | ) | 39,603 | (174,088 | ) | (28,057 | ) | (48,226 | ) | (348,480 | ) | (56,166 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (Loss) Earnings per share |
||||||||||||||||||||||||||||
| Basic |
(0.01 | ) | 0.10 | (0.44 | ) | (0.07 | ) | (0.13 | ) | (0.87 | ) | (0.14 | ) | |||||||||||||||
| Diluted |
(0.01 | ) | 0.09 | (0.44 | ) | (0.07 | ) | (0.13 | ) | (0.87 | ) | (0.14 | ) | |||||||||||||||
| Shares used in (loss) earnings per share computation |
||||||||||||||||||||||||||||
| Basic* |
391,398,775 | 404,495,442 | 400,031,170 | 400,031,170 | 364,353,974 | 401,335,788 | 401,335,788 | |||||||||||||||||||||
| Diluted* |
391,398,775 | 418,601,672 | 400,031,170 | 400,031,170 | 364,353,974 | 401,335,788 | 401,335,788 | |||||||||||||||||||||
| (Loss) Earnings per ADS (6 ordinary shares equal to 1 ADS) |
||||||||||||||||||||||||||||
| Basic |
(0.06 | ) | 0.60 | (2.64 | ) | (0.43 | ) | (0.78 | ) | (5.22 | ) | (0.84 | ) | |||||||||||||||
| Diluted |
(0.06 | ) | 0.54 | (2.64 | ) | (0.43 | ) | (0.78 | ) | (5.22 | ) | (0.84 | ) | |||||||||||||||
| * | Shares used in (loss) earnings 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$”) except for number of shares and per share data)
| Three months ended | Year Ended | |||||||||||||||||||||||||||
| December 31, 2013 |
September 30, 2014 |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
||||||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||||||
| Gross profit |
144,233 | 230,859 | 238,033 | 38,364 | 516,872 | 810,143 | 130,571 | |||||||||||||||||||||
| Plus: share-based compensation expense |
2,617 | -117 | 3,722 | 600 | 8,054 | 7,163 | 1,154 | |||||||||||||||||||||
| Plus: amortization of intangible assets derived from acquisitions |
11,681 | 33,793 | 48,953 | 7,890 | 43,744 | 106,922 | 17,233 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted gross profit |
158,531 | 264,535 | 290,708 | 46,854 | 568,670 | 924,228 | 148,958 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted gross margin |
29.0 | % | 34.0 | % | 34.0 | % | 34.0 | % | 28.9 | % | 32.1 | % | 32.1 | % | ||||||||||||||
| Operating expenses |
(131,140 | ) | (142,870 | ) | (344,346 | ) | (55,499 | ) | (475,099 | ) | (924,843 | ) | (149,058 | ) | ||||||||||||||
| Plus: share-based compensation expense |
21,986 | 9,348 | 65,144 | 10,499 | 59,715 | 226,572 | 36,517 | |||||||||||||||||||||
| Plus: changes in the fair value of contingent purchase consideration payable |
7,188 | (64,895 | ) | 44,789 | 7,219 | 55,882 | 22,629 | 3,647 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted operating expenses |
(101,966 | ) | (198,417 | ) | (234,413 | ) | (37,781 | ) | (359,502 | ) | (675,642 | ) | (108,894 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Net (loss) profit |
(3,919 | ) | 37,899 | (155,485 | ) | (25,059 | ) | (47,003 | ) | (328,477 | ) | (52,942 | ) | |||||||||||||||
| Plus: share-based compensation expense |
24,603 | 9,231 | 68,866 | 11,099 | 67,769 | 233,735 | 37,671 | |||||||||||||||||||||
| Plus: amortization of intangible assets derived from acquisitions |
11,681 | 33,793 | 48,953 | 7,890 | 43,744 | 106,922 | 17,233 | |||||||||||||||||||||
| Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact |
8,646 | (64,895 | ) | 44,789 | 7,219 | 55,956 | 25,613 | 4,128 | ||||||||||||||||||||
| Plus: loss on debt extinguishment |
— | — | — | — | — | 41,581 | 6,702 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted net profit |
41,011 | 16,028 | 7,123 | 1,149 | 120,466 | 79,374 | 12,792 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted net margin |
7.5 | % | 2.1 | % | 0.8 | % | 0.8 | % | 6.1 | % | 2.8 | % | 2.8 | % | ||||||||||||||
| Net (loss) profit |
(3,919 | ) | 37,899 | (155,485 | ) | (25,059 | ) | (47,003 | ) | (328,477 | ) | (52,942 | ) | |||||||||||||||
| Minus: Provision for income taxes |
8,444 | (6,493 | ) | (2,168 | ) | (349 | ) | (10,324 | ) | (16,673 | ) | (2,687 | ) | |||||||||||||||
| Minus: Interest income |
21,992 | 20,227 | 12,862 | 2,073 | 48,503 | 67,904 | 10,944 | |||||||||||||||||||||
| Minus: Interest expenses |
(47,055 | ) | (67,950 | ) | (66,531 | ) | (10,723 | ) | (136,775 | ) | (232,020 | ) | (37,395 | ) | ||||||||||||||
| Minus: loss on debt extinguishment |
— | — | — | — | — | (41,581 | ) | (6,702 | ) | |||||||||||||||||||
| Minus: Exchange (loss) gain |
(4,747 | ) | (1,861 | ) | (8,756 | ) | (1,411 | ) | 7,072 | (16,256 | ) | (2,620 | ) | |||||||||||||||
| Minus: (Loss) gain from equity method investment |
(116 | ) | (509 | ) | 78 | 13 | (1,372 | ) | (671 | ) | (108 | ) | ||||||||||||||||
| Minus: Other income |
4,551 | 7,300 | 15,413 | 2,484 | 6,232 | 26,560 | 4,281 | |||||||||||||||||||||
| Minus: Other expenses |
(81 | ) | (804 | ) | (70 | ) | (11 | ) | (2,112 | ) | (1,040 | ) | (168 | ) | ||||||||||||||
| Plus: depreciation |
40,958 | 79,637 | 93,240 | 15,028 | 141,286 | 278,986 | 44,964 | |||||||||||||||||||||
| Plus: amortization |
17,009 | 41,961 | 59,536 | 9,595 | 58,903 | 138,288 | 22,288 | |||||||||||||||||||||
| Plus: share-based compensation expense |
24,603 | 9,231 | 68,866 | 11,099 | 67,769 | 233,735 | 37,671 | |||||||||||||||||||||
| Plus: changes in the fair value of contingent purchase consideration payable |
7,188 | (64,895 | ) | 44,789 | 7,219 | 55,882 | 22,629 | 3,647 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted EBITDA |
102,851 | 153,923 | 160,118 | 25,806 | 365,613 | 558,938 | 90,083 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Adjusted EBITDA margin |
18.8 | % | 19.8 | % | 18.8 | % | 18.8 | % | 18.6 | % | 19.4 | % | 19.4 | % | ||||||||||||||
| Adjusted net profit |
41,011 | 16,028 | 7,123 | 1,149 | 120,466 | 79,374 | 12,792 | |||||||||||||||||||||
| Less: Net (profit) loss attributable to non-controlling interest |
(388 | ) | 1,704 | (18,603 | ) | (2,998 | ) | (1,223 | ) | (20,003 | ) | (3,224 | ) | |||||||||||||||
| Adjusted net profit (loss) attributable to the Company’s ordinary shareholders |
40,623 | 17,732 | (11,480 | ) | (1,849 | ) | 119,243 | 59,371 | 9,568 | |||||||||||||||||||
| Adjusted earnings (loss) per share |
||||||||||||||||||||||||||||
| Basic |
0.10 | 0.04 | (0.03 | ) | (0.00 | ) | 0.33 | 0.15 | 0.02 | |||||||||||||||||||
| Diluted |
0.10 | 0.04 | (0.03 | ) | (0.00 | ) | 0.31 | 0.14 | 0.02 | |||||||||||||||||||
| Shares used in adjusted earnings (loss) per share computation: |
||||||||||||||||||||||||||||
| Basic* |
391,398,775 | 404,495,442 | 400,031,170 | 400,031,170 | 364,353,974 | 401,335,788 | 401,335,788 | |||||||||||||||||||||
| Diluted* |
409,435,985 | 418,601,672 | 400,031,170 | 400,031,170 | 378,572,051 | 416,528,735 | 416,528,735 | |||||||||||||||||||||
| Earnings (loss) per ADS (6 ordinary shares equal to 1 ADS) |
||||||||||||||||||||||||||||
| Basic |
0.60 | 0.24 | (0.18 | ) | (0.03 | ) | 1.98 | 0.90 | 0.12 | |||||||||||||||||||
| Diluted |
0.60 | 0.24 | (0.18 | ) | (0.03 | ) | 1.86 | 0.84 | 0.12 | |||||||||||||||||||
| * | Shares used in adjusted earnings (loss) per share/ADS 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$”))
| Three months ended | ||||||||||||
| September 30, 2014 | December 31, 2014 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||
| Net profit |
37,899 | (155,485 | ) | (25,059 | ) | |||||||
| Adjustments to reconcile net profit to net cash generated from operating activities: |
||||||||||||
| Foreign exchange loss |
1,861 | 8,756 | 1,411 | |||||||||
| Changes in the fair value of contingent purchase consideration payable |
(64,895 | ) | 44,789 | 7,219 | ||||||||
| Depreciation of property and equipment |
79,637 | 93,240 | 15,028 | |||||||||
| Amortization of intangible assets |
41,961 | 59,536 | 9,595 | |||||||||
| Loss (gain) on disposal of property and equipment |
(2,512 | ) | (133 | ) | (21 | ) | ||||||
| Provision for doubtful accounts and other receivables |
3,508 | 5,946 | 958 | |||||||||
| Stock based compensation expense |
9,231 | 68,866 | 11,099 | |||||||||
| Deferred income taxes benefit |
(4,956 | ) | (13,500 | ) | (2,176 | ) | ||||||
| Loss (gain) from equity method investment |
509 | (78 | ) | (13 | ) | |||||||
| Changes in operating assets and liabilities |
||||||||||||
| Restricted cash |
3,226 | (28,139 | ) | (4,535 | ) | |||||||
| Inventories |
(425 | ) | (1,682 | ) | (271 | ) | ||||||
| Accounts receivable |
132,683 | 8,298 | 1,337 | |||||||||
| Notes receivables |
(25 | ) | 144 | 23 | ||||||||
| Unrecognized tax expense |
(151 | ) | 7,072 | 1,140 | ||||||||
| Other current assets |
(40,613 | ) | 62,870 | 10,133 | ||||||||
| Amounts due from related parties |
(59 | ) | (2,844 | ) | (458 | ) | ||||||
| Accounts payable |
17,483 | 1,203 | 194 | |||||||||
| Notes payable |
12,842 | (4,524 | ) | (729 | ) | |||||||
| Accrued expenses and other payables |
3,185 | (44,215 | ) | (7,126 | ) | |||||||
| Deferred revenue |
(3,338 | ) | (7,305 | ) | (1,177 | ) | ||||||
| Advances from customers |
38,589 | 18,114 | 2,919 | |||||||||
| Income taxes payable |
9,119 | (9,897 | ) | (1,595 | ) | |||||||
| Amounts due to related parties |
250 | 3,879 | 625 | |||||||||
| Deferred government grants |
158 | (3,133 | ) | (505 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net cash generated from operating activities |
275,167 | 111,778 | 18,016 | |||||||||
|
|
|
|
|
|
|
|||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||
| Purchases of property and equipment |
(265,695 | ) | (191,087 | ) | (30,798 | ) | ||||||
| Purchases of intangible assets |
(5,421 | ) | (18,181 | ) | (2,930 | ) | ||||||
| Proceeds from disposal of property and equipment |
9,351 | 6,980 | 1,125 | |||||||||
| Rental payment of capital leases |
— | (30,716 | ) | (4,951 | ) | |||||||
| Loans to third parties |
(15,245 | ) | (21 | ) | (3 | ) | ||||||
| Loans to related parties |
(118,441 | ) | (185 | ) | (30 | ) | ||||||
| Receipt of loans to related parties |
5,688 | — | — | |||||||||
| Payments for short-term investments |
(11,732 | ) | — | — | ||||||||
| Proceeds received from maturity of short-term investments |
147,832 | 55,877 | 9,006 | |||||||||
| Payments for acquisitions, net of cash acquired |
(22,949 | ) | 118 | 19 | ||||||||
| Payments for long-term investments |
(22,770 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net cash used in investing activities |
(299,382 | ) | (177,215 | ) | (28,562 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||
| Restricted cash |
(3,544 | ) | (5,105 | ) | (823 | ) | ||||||
| Proceeds from exercise of stock options |
443 | 384 | 62 | |||||||||
| Proceeds from shareholders |
— | — | — | |||||||||
| Proceeds received on behalf of selling shareholders |
— | — | — | |||||||||
| Proceeds from long-term bank borrowings |
(88 | ) | 38,952 | 6,278 | ||||||||
| Proceeds from short-term bank borrowings |
42,265 | 61,000 | 9,831 | |||||||||
| Repayments of short-term bank borrowings |
(123,933 | ) | (119,866 | ) | (19,319 | ) | ||||||
| Repayments of long-term bank borrowings |
(593 | ) | (12,204 | ) | (1,967 | ) | ||||||
| Consideration paid to selling shareholders |
— | — | — | |||||||||
| Payments for acquisitions |
(562,997 | ) | (503,370 | ) | (81,129 | ) | ||||||
| Repurchase of ordinary shares |
(213,665 | ) | — | — | ||||||||
|
|
|
|
|
|
|
|||||||
| Net cash used in financing activities |
(862,112 | ) | (540,209 | ) | (87,067 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Effect of foreign exchange rate changes on cash and short term investments |
(2,133 | ) | (68 | ) | (11 | ) | ||||||
| Net decrease in cash and cash equivalents |
(888,460 | ) | (605,714 | ) | (97,624 | ) | ||||||
| Cash and cash equivalents at beginning of period |
2,138,589 | 1,250,129 | 201,485 | |||||||||
|
|
|
|
|
|
|
|||||||
| Cash and cash equivalents at end of period |
1,250,129 | 644,415 | 103,861 | |||||||||
|
|
|
|
|
|
|
|||||||