Q1 2025 VNET Group Inc Earnings Call
Unknown Executive: Hello ladies and gentlemen, thank you for standing by for the first quarter 2025 earnings conference call for VNet Group Inc. After the management's prepared remarks, there will be a question and answer session. Please note the Chinese line is in listen-only mode.
Hello, Ladies and gentlemen, thank you for standing by for the first quarter 2025 earnings Conference calls will be net group Inc.
After the managements prepared remarks, there will be a question and answer session.
Please note the Chinese mine is in listen only mode.
Unknown Executive: If you wish to ask questions, please dial in through the English line.
If you wish to ask questions. Please dial into the English line.
Unknown Executive: Participants from our management include Mr. Ju Ma, rotating president Mr. Qiyu Wang, Chief Financial Officer Ms. Xinyuan Liu, Head of Investor Relations of the company Please note that today's conference call is being recorded.
Mr. Ku: Participants from my management include Mr. Jim on rotating president Mr. Ku I'm, the Chief Financial Officer.
Michigan Lu: Michigan, one Lu head of Investor Relations of the company.
Michigan Lu: Please note that today's conference call is being recorded.
Xinyuan Liu: I will now turn the call over to the first speaker today, Ms Xinyuan Liu. Please go ahead. Thank you operator.
Speaker Change: I will now turn the call over to the first speaker today, Ms Jin Wang Li.
Speaker Change: Please go ahead.
Speaker Change: Thank you operator, Hello, everyone and welcome to our first quarter 'twenty to 'twenty five earnings conference call.
Xinyuan Liu: Hello everyone and welcome to our first quarter 2025 earnings conference call. Our earnings release was distributed earlier today and you can find a copy on our website as well as on Newswire services. Please note that today's call will contain forward-looking statements made under the CPAPA provisions of the U.S. Private Securities Litigation Reform Act of 1995. Overlooking statements are subject to risks and uncertainties that may cause actual results to differ mutually from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report and other documents filed with the SEC.
Speaker Change: Our earnings release was distributed earlier today and you can find a copy of our Irish site as well as our newswire services. Please note that today's call will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Speaker Change: Forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations.
Speaker Change: So detailed discussions of these risks and uncertainties. Please refer to our latest annual report and other documents filed with the S. E C.
Xinyuan Liu: Vianet does not undertake any obligations to update any forward-looking statements, except as required under applicable law. Please also note that Vianet's earnings press release and this conference call include the disclosure of unaudited GAAP and non-GAAP financial matters. Vianet's earnings press release contains reconsideration of the unaudited non-GAAP matters to the unaudited GAAP matters.
Speaker Change: <unk> does not undertake any obligations to update any forward looking statements, except as required under applicable laws.
Speaker Change: Please also note that <unk> earnings press release, and this conference call include the disclosure of Oh did it get and non-GAAP financial matters.
Speaker Change: We announced earnings press release contains reconciliation of the unaudited non-GAAP measures to the Oh did it get matters.
Xinyuan Liu: Our summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at ir.vienet.com Next, I'd like to alert you that we will be utilizing text-to-speech technology powered by Neolink.ai to deliver this quarter's prepared remarks by Mr. Ju Ma, our rotating president, and Mr. Qiyu Wang, our CFO. The management team will join the Q&A session in person. Additionally, this conference is being recorded. A webcast of this conference call will also be available on our IR website at ir.vienet.com.
Speaker Change: A summary presentation, which we will refer to during this conference call can be viewed and downloaded from our IR website at IR there'll be no dotcom next I'd like to alert you that we will be utilizing text to speech technology powered by Newland don't AI to deliver this quarter's prepared remarks by Mr. <unk>.
Speaker Change: Humor, all rotating president and Mr. Choo, Wang our CFO.
Speaker Change: The management team will join the Q&A session you in person.
Speaker Change: Additionally, this conference is being recorded.
Speaker Change: Well that passed on this conference call will also be available on our IR website at IR there'll be no dotcom.
Unknown Executive: Now let's get started with today's presentation.
Speaker Change: Now, let's get started with todays presentation. Mr. Mike. Please go ahead.
Ju Ma: Mr. Ma, please go ahead. Good morning and good evening, everyone. Thank you for joining our call today.
Speaker Change: Good morning, and good evening everyone.
Speaker Change: Thank you for joining our call today I would like to begin by sharing our primary accomplishment during the first quarter of 2025.
Ju Ma: I would like to begin by sharing our primary accomplishment during the first quarter of 2021. As we embarked on the new year's journey, we achieved a strong set of results that set a positive tone for the year ahead. On the operational side, our wholesale IDC business recorded another impressive performance, supported by our robust deliveries and our customers' fast-moving business. 2025, our wholesale capacity in service grew 18.1% quarter over quarter to 573 MW, an increase of 88 MW. Wholesale capacity utilized grew 23.9% quarter over quarter to 437 MW, a record high increase of 84 MW, while the utilization rate increased by 3.6 percentage points to 76.2%, indicating that newly delivered orders are being moved in faster than ever before.
Speaker Change: As we embark on the new year, we achieved a strong set of results that set a positive tone for the year ahead on the operational side, our wholesale IDC business recorded another impressive performance supported by a robust deliveries and our customers are moving pace.
Speaker Change: As of March 31st 2025, Oh wholesale capacity in service.
Speaker Change: It grew 18.1% quarter over quarter to 573 megawatts, an increase of 88 megawatts.
Speaker Change: Rail capacity utilized grew 23, 9% quarter over quarter to 437 megawatts a record high increase of 84 megawatt while the utilization rate increased by three six percentage points to 76, 2%, indicating that newly delivered orders R. B.
Speaker Change: Moving faster than ever before Meanwhile, our retail business continued to progress really benefiting from the rapid deployment of D. C. Baltimore propelled by our dual core strategy, we consistently secured high quality orders from customers across various industries I will elaborate on this in detail on the <unk>.
Ju Ma: Meanwhile, our retail business continued to progress smoothly benefiting from the rapid Furthermore, propelled by our dual core strategy, we consistently secured high quality orders from customers across various industries.
Ju Ma: I will elaborate on this in detail on the next On the financial side, we maintained our solid growth trajectory across both total net revenues and adjusted EBITDA. Our total net revenues increased by 18.3% year-over-year to RMB 2.25 billion for the first quarter. Notably, wholesale revenues reached a new record high of RMB 673 million for the quarter, representing an impressive year-over-year growth rate of 86.5%. Thanks to the rapid growth of our Wholesale IDC business, our adjusted EBITDA for the first quarter also increased by 26.4% year-over-year to RMB682 million, with an adjusted EBITDA margin of 30.4%, up 1.9 percentage points year-over-year.
Speaker Change: Next slide on.
Speaker Change: On the financial side, we maintained a solid growth trajectory across both total net revenue and adjusted EBITDA. Our total net revenues increased by 18, 3% year over year to Aman.
Speaker Change: <unk> two 5 billion for the first quarter, notably wholesale revenues reached a new record high of RMB $673 million for the quarter, representing an impressive year over year growth rate of 86.5%. Thanks to the rapid growth of our wholesale IDC business all adjusted E. P.
Speaker Change: EBITDA for the first quarter also increased by 26, 4% year over year to RMB 682 million with an adjusted EBITDA margin of 30.4% up one nine percentage points year over year, excluding the one off impact of asset disposals last quarter adjusted.
Ju Ma: Excluding the one-off impact of asset disposals last quarter, adjusted EBITDA increased by 18.1% quarter-over-quarter. We also further strengthened our financing capabilities, diversifying our channels at a relatively low cost. In March, we issued US$430 million of convertible senior notes due in 2030 at an interest rate of 2.5% per annum. We also secured our first sustainability-linked loan of RMB500 million with a 3.7% interest rate per annum. Furthermore, our all-in cost for one of our new loan projects reached a record low at 3.05%, 55 basis points lower than the five-year LPR.
Speaker Change: EBITDA increased by 18, 1% quarter over quarter.
Speaker Change: We also further strengthened our financing capabilities diversifying our channels and a relatively low cost in March we issued $430 million of convertible senior notes due in 'twenty 30 at an interest rate of two 5% per annum. We also secured our first sustainability linked.
Speaker Change: Loan of RMB 500 million with a three 7% interest rate per annum.
Speaker Change: Furthermore, our all in cost for one of our new loan projects reached a record low at 3.05% 55 basis points lower than the five year L. P. R. Next let's delve into our first quarter accomplishments in more detail.
Ju Ma: Next, let's delve into our first quarter accomplishments in more detail. Moving on to our new order wins on slide 5, we continue to win quality wholesale and retail orders in the first quarter. In addition to the wholesale orders, we disclosed last quarter a 55 MW order from a leading cloud computing customer and a 64 MW order from an internet customer through our JVP. We won a 6MW wholesale order from an intelligent driving customer for our data centers in the Greater Beijing Area. Furthermore, breakthroughs by DeepSeek are propelling growing demand among companies. for our retail IDC services to deploy intelligence.
Speaker Change: Moving onto our new order wins on slide five we continue to win quality wholesale and retail orders in the first quarter. In addition to the wholesale order, we disclosed last quarter, a 55 megawatt order from a leading cloud computing customer and a 64 megawatt order from an internet customer through our JV.
Speaker Change: <unk> project, we want a six megawatt wholesale order from an intelligent driving customer so our data centers in the greater Beijing area. Furthermore, breakthroughs by deep seek are propelling growth demand among customers, where our retail IDC services to deploy intelligent applications during the quarter we secured.
Ju Ma: During the quarter, we secured a combined capacity of around 4MW in retail orders from customers in the Internet, finance, local services, intelligent driving, and gaming services. These orders span multiple retail data centers in Greater Beijing Area, the Yangtze River Delta, the Greater Bay Area, and other regions.
Speaker Change: The combined capacity of around four megawatts in retail orders from customers in the Internet finance local services intelligence driving and gaming sectors.
Speaker Change: These orders spanned multiple retail data centers in greater Beijing area, the younger whether delta the greater Bay area and other regions.
Ju Ma: At the beginning of 2025, China's AI development entered an explosive new phase of growth driven by Deep-Sea Breakthrough technology. This created surging AI-related demand for premium IDC services, boosting the IDC industry's growth as an industry-leading player known for our high-performance data centers and reliable premium services. We quickly seized growth opportunities, winning quality, new orders, and driving progress, notably fueled by the rising demand for private deployments triggered by DeepSeek. Our retail IDC businesses' revenues from customer private deployment of open-source large-language models increased by 309% in March compared to January.
Speaker Change: At the beginning of 2025, China AI development entered an explosive new phase of growth driven by deep Sea breakthrough technology. This created celgene AI related demand for premium IDC services boosting the IDC industry's growth as an industry leading player known for our high performance data centers.
Speaker Change: Reliable premium services, we quickly ceased growth opportunities, we need quality, new odor and driving progress, notably fueled by the rising demand for private deployment triggered by deep seek our retail I D. C business as revenues from customer a private deployment of open source large language model.
Speaker Change: Increased by 309% in March compared to January looking ahead, we remain confident in the China market growth potential we believe that the increasing maturity of open source model technology and the continuous expansion of intelligent application scenarios will continue to drive high demand for compute.
Ju Ma: Looking ahead, we remain confident in the China market's growth potential. We believe that the increasing maturity of open-source model technology and the continuous expansion of intelligent application scenarios will continue to drive high demand for computing power and premium IDC services. further fueling our sustainable high quality.
Speaker Change: <unk> power and premium IDC services further fueling our sustainable high quality growth.
Ju Ma: Now let's delve into our business. Starting with our wholesale business on slide 8, our wholesale business maintained its robust growth momentum, with capacity in service increasing to 573 MW and utilization rate rising to 76.2%. Thanks to our strong delivery capabilities at our NOR Campus 01 and EJS Campus 03 and faster-than-expected moving at our EJS Campus 02 and NHB Campus 01B, we also delivered a mature capacity utilization rate of 94.5%, a relatively high level, and a ramp-up capacity utilization rate of 32.1%. we have a clear growth path for our wholesale data center.
Speaker Change: So, let's delve into our business update.
Speaker Change: Starting with our wholesale business on slide eight our wholesale business maintained its robust growth momentum with capacity in service, increasing to 573 megawatts and utilization rate rising to 76, 2%. Thanks to our strong delivery capabilities at our N O our campus zero, one and EJ accounts.
Speaker Change: Zero, three and fostered unexpected movies and our EGF campus zero, two and an H b temporary zero M. B. We also delivered a mature capacity utilization rate of 94.5% a relatively high level and the ramp up capacity utilization rate of 32, 1%.
Speaker Change: We have a clear growth path for our wholesale data center capacity, let's move on to slide nine our overall wholesale data center capacity continued to grow in the first quarter our capacity under construction was 377 megawatts with a pre commitment rate for capacity under construction stable.
Ju Ma: Let's move on to slide 9. Our overall wholesale data center capacity continued to grow. In the first quarter, our capacity under construction was 377 MW, with a pre-commitment rate for capacity under construction stable at 81.6% as of the end of March. Additionally, capacity held for short-term future development remained relatively steady at 256 MW. Capacity held for long-term future development further expanded to 414 MW. As we remain confident in China's market growth potential, as AI spurs greater demand for premium IDC, We will maintain our robust expansion plan to ensure we are well prepared for further business.
Speaker Change: At 81, 6% as of the end of March. Additionally capacity held for short term future development remained relatively steady at 256 megawatt capacity help a long term future developing further expanded to 440 megawatts and we remain confident in China of market growth.
Speaker Change: Oh, that's a iceberg greater demand for premium IDC services, we will maintain a robust expansion plan to ensure we are well prepared for further business growth.
Ju Ma: Moving to our retail IDC business Our retail business continued to progress smoothly in the first quarter. Retail capacity in service was 51,960 cabinets. with the utilization rate increasing slightly to 63.7% as of the end of March. MRR per retail cabinet increased to RMB 8,898 this quarter.
Speaker Change: Moving to our retail IDC business on slide 10, our retail business continues to progress smoothly in the first quarter retail capacity in service was 51960 cabinets.
Speaker Change: With the utilization rate, increasing slightly to 63, 7% as of the end of March and our our per retail covenant increased to RMB 8898 this quarter.
Ju Ma: Turning to our delivery plan on slide 11, supported by our robust and efficient delivery capabilities, we successfully delivered a total of 88 megawatts. In the first quarter, we currently have eight data centers under construction, with six in the greater Beijing area and two in the Yangtze River Delta. We plan to deliver 377 megawatts. over the next 12 months, or around 165 MW during the second and third quarters of 2025, and around 212 MW during the fourth quarter of 2025, and the first quarter of 2020. This ambitious delivery plan reflects strong demand from our customers and our outstanding delivery capability.
Speaker Change: Turning to our delivery plan on slide 11, supported by a robust and efficient delivery capabilities.
Speaker Change: That's really delivered a total of 88 megawatts in the first quarter. We currently have eight data centers under construction with fixed in the greater Beijing area and two in the younger River Delta We plan to deliver 377 megawatts of capacity over the next 12 months or around 100.
Speaker Change: 65 megawatts during the second and third quarters of 2025 and around 212 megawatts during the fourth quarter of 2025 in the first quarter of 2026.
Speaker Change: This ambitious delivery plan reflects strong demand from our customers and our outstanding delivery capabilities.
Ju Ma: Now turning to our non-IDC business. Key components of our overall business, Dxia continues to expand its customer base by acquiring new customers from several state-owned enterprises, as well as the financial services and home appliances. for their premium dedicated internet services and internet connection services. What's more, I am pleased to share that DECN recently received approval as a zero-outage supplier for a fifth consecutive year. which is part of Deutsche Telekom in recognition of the ESA's reliable, outstanding technology.
Speaker Change: Now turning to our non IDC business, a key component of our overall business continued.
Speaker Change: <unk> continued to expand its customer base by acquiring new customers from several state owned enterprises as well as the financial services and home appliances sector or their premium dedicated Internet services and Internet connection services, what's more I am pleased to share that these and recently received approval.
Speaker Change: Eroded supplier for a fifth consecutive year from T system, which is part of Deutsche Telekom in recognition of these reliable outstanding services in conclusion, thanks to the strong execution of our effective dual core strategy, we delivered robust first quarter results propelling progress across both our wholesale.
Ju Ma: In conclusion, thanks to the strong execution of our effective dual core strategy, we delivered robust first quarter results, propelling progress across both our wholesale and retail business. Going forward, we will continue leveraging our high-performance data center network, reliable solutions, and outstanding delivery capabilities to meet our customers' growing demands, driving growth and advancing the development of China's digital economy.
Speaker Change: <unk> and retail businesses.
Speaker Change: Going forward, we will continue leveraging our high performance data center networks reliable solution and outstanding delivery capabilities to meet our customers' growing demand driving growth and advancing the development of China's digital economy, now I will turn the call over to our C. F O T for further discussion of our <unk>.
Qiyu Wang: Now I will turn the call over to our CFO, Ti Yu, for further discussion of our operating and financial performance. Thank you everyone. Good morning and good evening, everyone.
Speaker Change: Operating and financial performance.
Speaker Change: You everyone.
Speaker Change: Good morning, and good evening, everyone before we start the detailed discussion of our first quarter performance. Please note that unless otherwise stated.
Qiyu Wang: Before we start the detailed discussion of our first quarter performance, please note that unless otherwise stated, all the financials we present today are for the first quarter of 2025 and are in RMB terms. Furthermore, unless otherwise specified, all the growth rates I am reviewing are on a year-over-year basis. Let's turn to slide 13. In the first quarter, we continued to pursue high-quality, high-margin business. Our total net revenues increased by 18.3% to RMB 2.25 billion, mainly driven by rapid growth of wholesale business. Our adjusted cash gross profit rose by 26.4% to RMB 967.8 million, while our adjusted EBITDA also grew year-over-year by 26.4% to RMB 682.4 million.
Speaker Change: All the financials. We present today are for the first quarter of 2025 and are in renminbi terms.
Speaker Change: Furthermore, unless otherwise specified all of the growth rates I am reviewing are on a year over year basis.
Speaker Change: Let's turn to slide 13 in the first quarter, we continued to pursue high quality high margin business. Our total net revenues increased by 18, 3% to RMB 2.25 billion, mainly driven by rapid growth of wholesale business. Our adjusted cash gross profit rose by 26, 4% to our.
Speaker Change: 967.8 million, while our adjusted EBITDA also grew year over year by 26, 4% to RMB $682 4 million. Meanwhile, excluding the one off impact of asset disposals last quarter, our adjusted cash gross profit and adjusted EBITDA increased by 11.5%.
Qiyu Wang: Meanwhile, excluding the one-off impact of asset disposals last quarter, our adjusted cash gross profit and adjusted EBITDA increased by 11.5% and 18.1%, respectively, quarter-over-quarter. Let's look more closely at our top line. As you can see on slide 14, in the first quarter, wholesale revenues, our key revenue growth driver, increased significantly by 86.5% to RMB673.2 million, mainly attributable to sales at the EGS Campa02 and HB Campa01B. Also, excluding the one-off impact of asset disposals last quarter, wholesale revenues increased by 14.1% quarter over quarter. Retail revenues continued to account for the largest part of our total net revenues and increased by 4.8% to RMB968.3 million.
Speaker Change: <unk>, an 18.1% respectively quarter over quarter.
Speaker Change: Let's look more closely at our topline.
Speaker Change: As you can see on slide 14 in the first quarter wholesale revenues are key revenue growth driver increased significantly by 86.5% to RMB 673.2 million, mainly attributable to sales at the E. G. S campus zero, two and entropy campus zero one B also excluding the one off impact of asset disposals last.
Speaker Change: Quarter wholesale revenues increased by 14.1% court over quarter retail revenues continued to account for the largest part of our total net revenues an increase by 4.8% to RMB $968 3 million are non IDC business remained stable.
Qiyu Wang: Our non-IDC business remained stable. During the first quarter, we maintained solid margins thanks to our continuous efforts to enhance overall efficiency. As shown on slide 15, our adjusted cash gross margins improved to 43.1% from 40.3% in the same period last year. Our adjusted EBITDA margin rose to 30.4%, compared with 28.4% in the same period last year.
Speaker Change: During the first quarter, we maintained solid margins, thanks to our continuous efforts to enhance overall efficiency as shown on slide 15, our adjusted cash gross margins improved to 43, 1% from 40.3% in the same period last year, our adjusted EBITDA margin rose to 34%.
Speaker Change: With 28, 4% in the same period last year.
Qiyu Wang: Moving on to liquidity on slide 16, we maintained robust and healthy liquidity, bolstered by net operating cash inflow of RMB195.7 million during the first quarter. Our cash positions remained solid, with total cash and cash equivalents, restricted cash, and short-term investments reaching RMB5.79 billion as of March 31, 2025. Next, let's take a look at our debt structure on slide 17. We maintained our prudent approach to debt management, with our net debt to the trailing 12-months adjusted EBITDA ratio at 5 and total debt to the trailing 12-months adjusted EBITDA ratio at 6.5, both remaining at a healthy level.
Speaker Change: Moving on to liquidity on slide 16, we maintain robust and healthy liquidity bolstered by net operating cash inflow of RMB $195 7 million during the first quarter, our cash position remains solid with total cash and cash equivalents restricted cash and short term investments, reaching RMB 5.79 billion.
Speaker Change: As of March 31, 'twenty twenty-five.
Speaker Change: Next let's take a look at our debt structure on slide 17, we maintained our prudent approach to debt management with our net debt to the trailing 12 months adjusted EBITDA ratio at five and total debt to the trailing 12 months adjusted EBITDA ratio at 6.5, both remaining at a healthy level.
Qiyu Wang: Our trailing 12 months adjusted EBITDA to Interest Coverage Ratio Improved to 7.5 as of March 31, 2025. We prioritize long-term debt maturity planning in our debt and strategic management to ensure the security of debt repayment. Additionally, the company's short- and medium-term debt maturing in 2025 to 2027 comprises 45.6% of our total debt.
Speaker Change: Our trailing 12 months adjusted EBITDA to interest coverage ratio improved to 7.5 as of March 31st 2025, we prioritize long term debt maturity planning in our debt and strategic management to ensure the security of debt repayment. Additionally, the companys short and medium term debt maturing in 'twenty 'twenty.
Speaker Change: Five to 2027 comprises 45.6% of our total debt.
Qiyu Wang: Turning now to CAPEX spending. As you can see on slide 18, for the first quarter, our CAPEX was RMB 1.82 billion, with the majority allocated to the expansion of our wholesale IDC business. As disclosed last quarter, we expect our CAPEX for full year 2025 to be in the range of RMB 10 billion and RMB 12 billion. The increase is mainly to support our planned delivery of 400 to 450 MW in 2025, or approximately three times 2024's total deliveries and surpassing our total deliveries in the past three years combined.
Speaker Change: Turning now to Capex spending as you can see on slide 18 for the first quarter. Our Capex was RMB 1.82 billion with the majority allocated to the expansion of our wholesale IDC business as disclosed last quarter, we expect our K packs for full year 2025 to be in the range of RMB 10 billion and RMB 12.
Speaker Change: Billion. The increase is mainly to support our planned delivery of 400 to 450 megawatts in 'twenty 'twenty five or approximately three times 'twenty 'twenty four is total deliveries and surpassing our total deliveries in the past three years combined.
Qiyu Wang: Now moving to our full year guidance for 2025 on slide 19. We are reiterating our previous guidance for the full year of 2025 with anticipated total net revenues to be between RMB 9.1 billion to RMB 9.3 billion, representing year-over-year growth of 10% to 13%. Adjusted EBITDA is expected to be in the range of RMB 2.7 billion to RMB 2.76 billion, representing year-over-year growth of 15% to 18%. Based on our new orders and the delivery plan, our capital expenditure for 2025 is still expected to be in the range of RMB 10 billion to RMB 12 billion, representing year-over-year growth of 101% to 141%.
Speaker Change: Now moving to our full year guidance for 'twenty twenty-five on slide 19, we are reiterating our previous guidance for the full year of 2025 with anticipated total net revenues to be between RMB nine 1 billion to RMB, nine 3 billion representing year over year growth of 10% to 13% and.
Speaker Change: Adjusted EBIT is expected to be in the range of RMB, two 7 billion to RMB 276 billion representing year over year growth of 15% to 18% based on our new orders and the delivery plan or our capital expenditure for 2025 is still expected to be in the range of RMB 10 billion.
Speaker Change: <unk> to RMB 12 billion, representing year over year growth of 101% to 141%.
Qiyu Wang: Before I conclude, I'd like to briefly update you on our ESG initiatives. In April, we issued our fifth annual ESG report, detailing the company's 2024 endeavors and progress in sustainability, including our verified carbon inventory results. During 2024, we upgraded our SHIELD sustainability system to broaden stakeholder coverage and amplified our impact. We achieved encouraging progress across green power engagement, efficient energy consumption, and employee diversity and equality. Notably, our total energy usage from renewable sources reached about 360,880 MWh during the year, marking a five-fold increase year-over-year and accounting for 18% of total resources utilized by VNet. Also, our average annual power usage efficiency reached 1.27, and the percentage of female employees in our management positions increased to 33%.
Speaker Change: Before I conclude I'd like to briefly update you on our ESG initiatives in April we issued our fifth annual ESG report detailing the company's 'twenty 'twenty four endeavors and progress in sustainability, including our verified carbon inventory results. During 2024, we upgraded our shield sustainability.
Speaker Change: All of the system to broadens stakeholder coverage and amplifying our impact we achieved encouraging progress across green power engagement efficient energy consumption and employee diversity and equality.
Speaker Change: Notably our total energy usage from renewable sources reached about 360880 megawatt hour during the year, marking a five fold increase year over year and accounting for 18% of total resources utilized by V. Net.
Speaker Change: Also our average annual power usage efficiency reached one point to seven and the percentage of female employees and our management positions increased to 33%. These efforts continued to garner recognition from top ESG rating authorities. This year, we ranked first among Chinese enterprises in the I T services industry in the Chi.
Qiyu Wang: These efforts continued to garner recognition from top ESG rating authorities. This year, we ranked first among Chinese enterprises in the IT services industry in the China edition of the S&P Global Sustainability Yearbook for the third consecutive year and won the 2025 Top 1% and Industry Mover Awards. Moving forward, we will remain committed to integrating ESG best practices across our business, facilitating the development of China's green digital economy.
Speaker Change: The addition of the S&P global sustainability yearbook for the third consecutive year and won the 2025 top 1% and industry Mover Awards moving forward, we will remain committed to integrating ESG best practices across our business facilitating the development of China's Green digital economy.
Qiyu Wang: In summary, we got off to a strong start for 2025, highlighted by robust business growth and enhanced profitability. We will remain dedicated to our sustainable, high-quality growth strategy and continue to invest in future development, capturing market opportunities, and creating sustainable, long-term value for our stakeholders.
Speaker Change: In summary, we got off to a strong start for 2025 highlighted by robust business growth and enhanced graff and ability will remain dedicated to our sustainable high quality growth strategy and continued to invest in future development, capturing market opportunities and creating sustainable long term value for our.
Speaker Change: Stakeholders.
Unknown Executive: This concludes our prepared remarks for today.
Speaker Change: This concludes our prepared remarks for today, we are now ready to take questions.
Unknown Executive: We are now ready to take questions. Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your questions.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: If you wish to cancel your request please press star two.
Speaker Change: If you're on a speakerphone please pick up the handset to ask your question.
Unknown Executive: We will now pause a moment to allow to order our queue.
Speaker Change: We will now pause in Ireland to allow to older alky.
Tom Tang: Your first question comes from Tom Tang from Morgan Stanley, please go ahead. Okay, thanks for the opportunity to ask questions, and congratulations on a very robust result for the first quarter. So I have one question on the demand side. So we know that H20 has been banned by the United States, so I just wanted to have an update on the customer demand and all the procurement processes after the chip has been banned. Just wondering if there's any changes and if we have any outlooks in the future. Thank you.
Speaker Change: Your first question comes from Tom Tang from Morgan Stanley. Please go ahead.
Tom Tang: Okay. Thanks for answering for the auction as you ask questions and congratulation on a very robust result for the first quarter.
Speaker Change: So I have one question is on the demand side. So we know that H 'twenty has been banned.
Speaker Change: Body Nice day. So just why do you have an update on the customer demand and or the procurement processes after tea.
Speaker Change: Chip I think Ben just wondering if there's any.
Speaker Change: And if we have any outlook in the future. Thank you.
Speaker Change: Yeah.
Unknown Executive: First of all, I would like to congratulate the company on its strong performance in the first quarter. My question is about the needs of big customers. We know that the GPU chip of H.2.0 NVIDIA is in a state of backup. I would like to ask, in such a situation, what is the situation of the purchase of some orders from some big customers, and what is the outlook for the future bidding rhythm?
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Speaker Change: Hey, Charlie media that you can share on that which Alan Johnson told me he got some Guangzhou reshaped Alcoa.
Speaker Change: Getting done to tackle that.
Speaker Change: Very light.
Speaker Change: On the technology shifts.
Unknown Executive: Thank you for your question. As you said, in the first quarter, there was a shortage of chips and hard drives. This had a very short impact on the needs of our big customers. However, our big customers quickly adapted to this situation. At present, their orders are enough to support our delivery this year and the first half of next year.
Speaker Change: Okay.
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Speaker Change: On the legal entity.
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Speaker Change: She told us that unless they don't stand out to me that you should expect that one that I don't want a frequent question Ashish.
Speaker Change: Okay, and kind of a common thing done.
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Speaker Change: So let me now Sherman Joseph.
Unknown Executive: Thank you for your question.
Speaker Change: Thank you for your question.
Unknown Executive: Let me take your very first question. Yes, as we are aware that the H20 embargo was in place starting from this year. And because of that, it has caused a short-term impact on our client's demand, particularly for those hyperscalers. However, there was a quick adjustment. Now everything is back on track. So our current order on hand is sufficient to fill all the capacities to be delivered this year, as well as the first half of next year. After a very, very short adjustment, the demand for big customers is now stable. At the same time, from the rhythm of the tender, it has now returned to normal.
Speaker Change: Let me take your very first question, yes, as we are aware that the H 'twenty Chi.
Speaker Change: Embargo was in place starting from this year.
Speaker Change: And because of that it has caused a short term impact on our clients.
Speaker Change: And particularly for those hyper scaler. However, there was a quick adjustment now everything is back on track.
Speaker Change: So our current order on hand is sufficient to fill all the capacities to be delivered this year as well as the first half of next year.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: I don't want to shrink whole notion that cheap.
Speaker Change: Okay.
Speaker Change: So Scott.
Unknown Executive: There are customers who still require our delivery to be more efficient than the original plan.
Speaker Change: It will come with you on the also on the.
Speaker Change: Telephone.
Speaker Change: Jim.
Speaker Change: Please go ahead with you and I talked a little bit.
Speaker Change: Hello.
Joe: Hey, Joe accomplishing.
Unknown Executive: occasionally technical tools to enhance primacy in the world. Like I said, the hyperscalers quickly adjusted their demand after the short-lived impact because of the chip embargo. Now everything is back on track, and we expect that there is going to be sustained demand from these hyperscalers. And they are also asking us to scale up the capacity to be delivered to them. We expect that there is going to be still a lot of demand for GPUs used for large-language model training, as well as scaled-up data centers. So therefore, there is going to be continued and sustained demand from these hyperscalers.
Speaker Change: How much of the problem.
Speaker Change: Okay got you.
Speaker Change: That level of compliance.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Like I said, the hyper scalar so quickly adjusted if their demand after the short list.
Speaker Change: And in fact because of chip embargo now everything is back on track and we expect that there is going to be sustained demand from these hyper scaler and they are also asking us to scale up with the capacity to be delivered to them. We expected that there is going to be.
Speaker Change: Still a lot of demand for J P. You should use the four largest language module training as well.
Speaker Change: Scaled up data centers, so therefore, theres going to be continued and sustained demand from these hyperscale. Thank you.
Unknown Executive: Thank you.
Unknown Executive: Next question. Thank you.
Speaker Change: The next question please.
Speaker Change: Yes.
Speaker Change: Thank you as a reminder for the benefit of all participants on today's call. Please ask your question to management in English and then repeat in Chinese.
Unknown Executive: As a reminder, for the benefit of all participants on today's call, please ask your question to management in English and then repeat in Chinese.
Edison Lee: Your next question comes from Edison Lee from Jefferies. Please go ahead. Thank you for taking my questions. I have two quick questions. Number one is on your retail demand. I think that right now you disclosed that 4 megawatts of new retail contracts. I want to know if these are AI-driven applications and whether you are charging based on power rather than cabinets. And number two question is that your MRR has gone up materially in the first quarter of this year and maybe you can share some colors on the drivers behind that increase in MRR. Thank you.
Edison Lee: Next question comes from Edison Lee from Jefferies. Please go ahead.
Edison Lee: I don't want to hear my questions I have two quick questions number one is on your retail demand I think that right now you would just close at four megawatt of.
Speaker Change: The old retail context, I want to know if these are AI driven applications.
Speaker Change: What are you are charging fees on pollo, rather than tablets and number two question is that.
Speaker Change: MYR has caller.
Speaker Change: Two really into first quarter of this year and maybe you can share some colors on the drivers behind that increase in MRO gender.
Speaker Change: Unlucky Tokyo call you called out the Ecopetrol kidney demons sense that people are doing acute only you can answer the silica gel water you go out.
Speaker Change: This other thing Dan Sheehan, you, but since you hit industrial should go should AI.
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Ju Ma: As you can see, in the Q1 of 2025, we received about 4 trillion yuan in new orders from the retail sector. These orders are like your analysis. Most of them are orders brought by AI drive. These include Internet companies, financial technology companies, Internet life, local life, and smart driving. These are all new orders brought by AI. Only a small number of them are contributed by cloud-based companies. So it's like your observation. It can be said that most of them are received by AI drive.
Tony: Well, thank you Tony.
Speaker Change: Thank you.
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Speaker Change: Yeah.
Speaker Change: And that training materials.
Speaker Change: Yes.
Speaker Change: Thank you Angela.
Speaker Change: Okay.
Speaker Change: Yes.
Ju Ma: Thank you for the question. As you rightly mentioned that we did win a 4MW order for our retail IDC business in the first quarter. And as you correctly mentioned that most of the demand are from AI-driven, and that covers the demand for FinTech, local services, internet companies, as well as intelligent driving.
Speaker Change: Thank you for question.
Speaker Change: You rightly mentioned that too we did win it.
Speaker Change: Four megawatt order for our retail IDC business in the first quarter and as you correctly mentioned that most of the demand or from AI driven and that covers.
Speaker Change: Demand for.
Speaker Change: Fantastic local services.
Speaker Change: Internet companies as well.
Speaker Change: Intelligent driving so these are all AI driven demand for these retail ITC surfaces and very little of that demand is for our cloud based gaming.
Ju Ma: So these are all AI-driven demand for these retail IDC services, and very little of that demand is for cloud-based gaming.
Qiyu Wang: Let me answer the question about the increase in retail MRR. As Mr. Ma just said, our recent orders are basically driven by AI, and these AI orders require high-power cabinets. Our company continues to modify the high-power of retail data centers, so naturally, the MRR of the project will also increase.
Speaker Change: Okay, well that's great.
Speaker Change: So or Samsung.
Speaker Change: He enjoys John model, Florida, Georgia M. A woman can see the thing then keep industrial AI should only done <unk> Doshi I'll call. Dan go ahead.
Speaker Change: Oh, yes for sure.
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Qiyu Wang: And this is Qiyu, I would like just to make a quick add to what Mr. Ma has mentioned that on the drivers behind the MMR, most of the recent orders that we win for the retail IDC business is indeed from AI-driven, and that require high-voltage cabinets, therefore, the company has been continuously repurposing some of the cabinets to accommodate such needs. And for that, we do charge a higher price, so the bill is higher, so that explains the upgrading MMR. Thank you.
Charlie: And this is Charlie I would like just to make a quick added to what Mr. <unk> has mentioned to that.
Speaker Change: The drivers behind the ml and landmark.
Speaker Change: Most of the recent orders that we win for the retail.
Speaker Change: Data from AI driven.
Speaker Change: Does that require high voltage cabinets. Therefore, the company has been continuously repurposing some of the cabinets to accommodate such needs.
Speaker Change: For that we do charge a higher price. So the bill is higher so that explains it.
Speaker Change: Upgrowing MMR.
Speaker Change: Thank you.
Unknown Executive: Next question. Thank you.
Speaker Change: Next question please.
Speaker Change: Thank you. Your next question comes from Timothy Zhao from Goldman Sachs. Please go ahead.
Timothy Zhao: Your next question comes from Timothy Zhao from Goldman Sachs. Please go ahead.
Unknown Executive: Pardon me, Timothy, your line may be muted.
Speaker Change: Pardon me Timothy your line may be muted.
Daley Li: Your next question comes from Daley Li from Bank of America Securities. Please go ahead. Hi, thanks management for taking my question. Firstly, congrats on the strong 1Q results. I have two questions here.
Speaker Change: Your next question comes from Daily Lee from Bank of America Securities. Please go ahead.
Daily Lee: Hi, Thanks management for taking my question Firstly, congrats on the strong one Q results I have two questions here number one is regarding our gross.
Unknown Executive: Number one is regarding our gross profit margin in 1Q. Are we seeing a strong, quote unquote, improvement? And could the management give us some color? What's key drivers for the gross profit margin improvement? And what should be our future target or normalized gross profit margin?
Daily Lee: Gross profit margin in one key always see a strong quarter on quarter improvement and Oh can the management give me some color whats key drivers for the gross profit margin and implement and what.
Daily Lee: Should be our future tuck age or normalized.
Daily Lee: Our gross profit margin and the same countries about our rates progress. If you look on our P. O comedy also started.
Unknown Executive: And the second question is about our rates progress. If you look at our peer company, they also submit the application.
Daily Lee: The application and how do we see our rates climb for private Reits or public race is sent home this year.
Unknown Executive: And how do we see our rates plan for private rates or public rates in S&H this year? Let me translate.
Speaker Change: Oh, well I think it's yeah I'm trying to think I said you know what you meant do you go when you go into your Chemicals' Lupica Molly do you should call. Your Ito can now be showing you could jump in.
Unknown Executive: First of all, thank you for accepting my question. The first question is about our gross profit margin in 1Q. We see a clear improvement on the return. I'd like to ask if the management could share the reasons behind it.
Speaker Change: Anytime that you go got shot I shall many sure when exactly.
Speaker Change: I think on the shopping.
Unknown Executive: And when will our gross profit margin reach in the future?
Speaker Change: If you will I wouldn't want you to.
Speaker Change: China already without yes, I'm not sure it team.
Unknown Executive: The second question is about the progress of our RIS. We see that Youshang has also submitted some applications.
Speaker Change: Yeah, I wouldn't your screening women they could reach today, you've got Ginger I'm, calling you wish I E. You generally shouldn't you, okay, when we got something and say.
Unknown Executive: I would like to ask about our company's future plans for the private and public RIS, the volume of this project, including a timetable. I will answer both questions.
Speaker Change: We largely cause similar routes how good more recently, where that you could see why did he the xiaomi <unk> bulk where he or she can be alcohol akshay.
Speaker Change: Yeah, sure well I think I saw a moderately itchy settlement.
Qiyu Wang: There are two main reasons for the increase in gross profit. First, the company's base-level business is increasing. The base-level business itself has a higher gross profit rate than the city-level business, so it will gradually increase the gross profit of the entire group. Second, the gross profit rate of our city-level business itself is also increasing.
Speaker Change: Got it.
Speaker Change: Understood.
Speaker Change: Yeah.
Speaker Change: So at that time.
Speaker Change: Thanks, Joe.
Speaker Change: Yeah, we all colleagues yeah, so kubota.
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Speaker Change: Yeah, well Bush and Molly do you think she golf question, Yes sure.
Qiyu Wang: This is the main reason.
Speaker Change: Well I'm sure she does that.
Unknown Executive: 通过这些高电的改造 So through these electronic high energy remodels 来提升我们一些更高质量的收入 to continue our way forward and gain 之前一些毛利率比较低的一些收入 higher outstanding performance. 我们就把一些空间让给高电 Hence we gave electronic high energy 所以整体上公司的毛利率 Lifting the gross domestic product 比较低的经济增长 from the subsidies This is Xiyuan Wang.
Speaker Change: <unk>.
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Speaker Change: Okay.
Speaker Change: So you don't see yourself in the course of the model.
Speaker Change: Are you interested.
Speaker Change: This is true you all know two questions first on the drivers for the improved gross profit margin what is the number one.
Qiyu Wang: I will take your questions. First, on the drivers of the improved gross profit margin, reason number one, the share or proportion of our wholesale IDC service is gradually improving. This is a business that has a higher gross profit margin. Therefore, overall, it is contributing to a higher gross profit margin on a corporate level.
Speaker Change: The share or proportion of our wholesale IDC service is gradually improving this is a business that has a higher gross profit margin.
Speaker Change: Therefore overall it is contributing to a higher gross profit margin on a corporate level.
Qiyu Wang: Reason number two, we are repurposing some of the cabinets to accommodate the demand for retail IDC services because that brings a higher MMR. With that going in progress, we are automatically closing or gradually phasing out some of those low margin services. These two reasons combined have pushed up the overall gross profit margin, and we expect that to continue in the future.
Speaker Change: Reason number two we are repurposing some often.
Speaker Change: Cabinets to accommodate the demand for retail.
Speaker Change: Services, and because that brings a higher MLR and with that going in progress we are automatically clothing or.
Speaker Change: Phasing out some of that was low margin services. So these two reasons combined have pushed up the.
Speaker Change: Overall, our gross profit margin and we expected that to continue in the future.
Qiyu Wang: As you said, this year is a critical year for RISC in China. We can see that the progress of the two commercial RISCs is very smooth. We also see that some of the data valuation is also relatively ideal. Our public RISC is also actively promoting.
Speaker Change:
Speaker Change: You saw that in a junior in Chicago.
Speaker Change: The Gwen and the EMEA.
Speaker Change: Although you will shine a formal rates alone.
Speaker Change: Not necessarily.
Speaker Change: I mean, it kind of as you go into cherish Fuji Udrih, a shipyard eshop no woman Docomo races.
Speaker Change: Oh, I see our seven nano <unk> chassis.
Qiyu Wang: I hope there will be some good news in the second half of the year. As for Simulrace, both the valuation and the speed of the project are ideal. Simulrace has also received an official approval from the exchange. It should be available soon. As you rightly mentioned that this year marks a critical year for the Chinese rates sector and the two peers in the IDC business have also seen fairly smooth progress in terms of their public risk. And as we see it, the valuation of these rates is reasonable, and our public risk project is also progressing well.
Speaker Change: Simple recipe and one channel as a country and how does it sound that there'll be a shot in the walnuts similar rates.
Speaker Change: Joe you saw at that juncture Shaanxi.
Julian Segal: Sorry, Julian Segal.
Julian Segal: As you rightly mentioned that this year marks a critical year for the Chinese rate sector and most of.
Julian Segal: The two peers in the IDC business have also seen.
Julian Segal: <unk> fairly soon it is progress in terms of their public right.
Julian Segal: As we see it to the valuation of these races.
Julian Segal: Reasonable and our public Ridge project is also progressing well.
Qiyu Wang: As the current situation stands, the current valuation of these private rates is reasonable, and it is progressing as we have expected. As you have noticed that our private risk project has been formally accepted and approved by the Shanghai Stock Exchange.
Julian Segal: As the current situation status at the current valuation of the.
Julian Segal: Private rates.
Julian Segal: It is reasonable and it's progressing as we had expected.
Julian Segal: As you have noticed that our private to rich project has been formally accepted and approved by the Shanghai stock exchange.
Qiyu Wang: So hopefully we will hear some good results in the second half of the year. With our successful pre-REITs project, we are actively advancing all types of asset securitization projects and we will maintain our annual target of recovering 2 billion RMB target unchanged and we are confident in achieving that goal for this year.
Julian Segal: So hopefully we will hear some good results in the second half of the year. The woman's does that get your opinion, Joe Cawley rates fall fall to telling me a.
Julian Segal: Chunk almost all the previous to the south and the woman Junior in July.
Julian Segal: Finally, I'd see them creep class Arshavin you didn't do you think it won't be all share may not be a hard one there was something to lunch.
Speaker Change: But with our successful pre rates project. So we are actively advancing or types of secured asset securitization project and we will maintain our annual target of recovering 2 billion RMB.
Julian Segal: Target unchanged and we are confident in achieving that goal for this year. Thank you.
Unknown Executive: Next question, please. Thank you.
Speaker Change: Next question please.
Julian Segal: Thank you. Your next question comes from Louis Chen from Citi. Please go ahead.
Lewis Cheng: Your next question comes from Lewis Cheng from Citi. Please go ahead. Okay, thank you. Thank you, Mr. Wang, for taking my question. Congratulations on a strong result. So, I have two quick questions.
Louis Chen: Okay. Thank you. Thank you Mr isn't taking my question and congratulations on the strong results.
Louis Chen: So I have two quick questions. So first of all like wondering if we have any plans for that a share IPO in Hong Kong and then you see do you like I Wonder if we can make sure more like yes. That's my first question and then my second question is.
Unknown Executive: So, first of all, like, wondering if we have any plans for the AShare ITO in Hong Kong? And then if you do, like, wondering if we can, like, share more, like, details? That's my first question.
Unknown Executive: And then my second question is about the electricity tablet, because we spoke that there's some downswing for some electricity tablets. So, wondering if you see there's, like, any, like, positive impact to the EBITDA margin it had, or there's, like, no impact? So, I have two quick questions. So, like, wondering if you see there's any positive impact to the EBITDA margin it had, or there's, like, no impact?
Julian Segal: About the electricity tablet because we spoke that bears some downswing for sounds like there's some good talent. So wondering if you see there is there like any like pockets impacted it and you can imagine a hat or dare say no impact.
Julian Segal: Just to take their Nintendo today, what you hinted you played out or Sip in Jack I'll, let you do it sequentially, you'll Uh huh.
Julian Segal: What's it been Oh, Yeah go shop, the web E. D Link you guys don't see.
Julian Segal: She went in Santiago.
Neil: Neil if there was a little quiet user known well my life Shanghai sounds good so yeah yeah.
Julian Segal: So it doesn't you can't say that that will kind of housekeeping you hit a citizen I can't say, you're just asking that does.
Julian Segal: A week ago that we like with Wednesday, but then they got EBITDA market.
Julian Segal: What does it look like.
Julian Segal: That was a little tough on me and the notion that it just yet.
Julian Segal: Oh.
Qiyu Wang: Let me answer the question. First, regarding the listing of Hong Kong stocks, it is true that Hong Kong is now clearly welcoming our Xiexian Meigu listed company to return to Hong Kong. We have also had a very in-depth communication with the Hong Kong Exchange, and we have also had some formal, face-to-face communication.
Julian Segal: Well nothing that I haven't.
Julian Segal: Do you go quietly Congress shall sure sure.
Julian Segal: Sure sure sure.
Speaker Change: Hi, Joe.
Julian Segal: Oh, Yeah, sure playing Zynga all of them and see them equal shot once a week uncle sure let me again take.
Julian Segal: It also lets you see how sustainable that goes home.
Speaker Change: Or is it seems to me Joe sure National demand.
Speaker Change: Ghost homes are at today.
Qiyu Wang: We are working on it, but there is no timetable yet. Thank you for your question. Yes, looking at the potential Hong Kong listing, we know that the Hong Kong Stock Exchange extends its hands wide open to welcome those U.S. listed companies to do listing in Hong Kong. And we have held in-depth conversation with the Hong Kong Stock Exchange and we have also had formal engagement in written form. It's progressing.
Julian Segal: Sure.
Julian Segal: Hi, Neil.
Julian Segal: Okay sure.
Julian Segal: Thank you for the question.
Julian Segal: Yes.
Julian Segal: Looking out to the potential Hong Kong listing.
Julian Segal: With that to the Hong Kong stock exchange extends out.
Julian Segal: Hence wide open to welcome those.
Julian Segal: Our U S listed companies to do dual listing in Hong Kong and we have held in depth conversation with the Hong Kong stock exchange and we have also.
Julian Segal: Formal engagement and reaching for them.
Qiyu Wang: However, at this moment, I cannot give you a specific timeline on that.
Julian Segal: However, at this moment I cannot give you a specific timeline on that.
Qiyu Wang: As for the electricity bill, we haven't seen any significant decrease in the electricity bill in our data centers. Overall, the electricity bill is relatively stable, so I don't think there's much to worry about. With regard to your question on the electricity bills, we at the moment do not see a declining trend for the utility bills across our IDCs.
Julian Segal: Alright.
Julian Segal: Sure.
Julian Segal: More telling them they own.
Julian Segal: Yes, Hey.
Julian Segal: Okay.
Julian Segal: Cause I suppose you don't see in cats annual shutdown the chooser.
Speaker Change: Jonathan you can't say I actually you could draw.
Julian Segal: <unk> costs are declining.
Speaker Change: Okay.
Speaker Change: With regard to your question on the electricity bills.
Speaker Change: At the moment to not see a declining trend for that utility bills across our I D. CS.
Qiyu Wang: It's fairly stable, so no change whatsoever on that front. Thank you.
Speaker Change: It's fairly stable so.
Speaker Change: No change whatsoever on that front. Thank you.
Unknown Executive: Next question. Thank you.
Speaker Change: Next question please.
Speaker Change: Thank you. Your next question comes from Sara Wang from UBS. Please go ahead.
Sarah Wong: Your next question comes from Sarah Wong from UBS. Please go ahead. Thank you for the opportunity to ask a question and congratulations on a solid result.
Sara Wang: Thank you for the opportunity to ask a question and congratulations on a solid than we thought I only have one question on the wholesale business. So I noticed that all of a deliberate plan, it's actually indulgent fault whereby according to the to cover the first quarter of next year. So does that mean.
Sarah Wong: I only have one question on the wholesale business. So I noticed that our delivery plan is actually rolling forward by a quarter to cover the first quarter of next year. So does that mean we also have visibility of utilization ramp up into next year? In other words, given our solid delivery plan, how shall we think about utilization rate for the next three to four quarters? Thank you for the opportunity to ask a question and congratulations on a solid result. I only have one question on the wholesale business. So I noticed that our delivery plan is actually rolling forward by a quarter to cover the first quarter of next year.
Sara Wang: We also have visibility off on each of our different ramp up into next year in other words I didn't give that already like solid.
Sara Wang: We plan how shall we think about utilization rate for the next three to four quarters.
Speaker Change: Guys here by NATO now coffee chit allocate how tells you that you see now well you know if I keep asking here without <unk> when she I'm not can you kind of element. There you got to also with your why is your thesis kind of lets you to Los Angeles, San Jose There sure you'll forgot that I didn't hear if you do that you've got to also look to you why now it sounds like basketball.
Sarah Wong: So does that mean we also have visibility of utilization ramp up into next year? In other words, given our solid delivery plan, how shall we think about utilization rate for the next three to four quarters?
Speaker Change: All of them and they can go out there you are calling for that sounds about right. Yeah, yeah, Yeah, Craig So a lot of fans quit the legal John Pat, but the only way you'll have to wash it and what that says all right a very talented guy.
Speaker Change: It sounds like you'll file and the guy from all kind of I should say like let's see it without some value that you gotta Tricia just yet.
Unknown Executive: Thank you for the opportunity to ask a question and congratulations on a solid delivery plan. As you can see, in the first quarter of this year, our customers' requirements for our products and sales are very high. We have also completed the customer's requirements and delivery tasks In the first quarter, our delivery has also reached a new high in history.
Kimberly: Thank you Kimberly yeah, sorry opinion there.
Speaker Change: A couple of days, but they also.
Speaker Change: Sure.
Speaker Change: EMEA you talked you said you don't take yourself.
Speaker Change: Yeah.
Speaker Change: Thank you all for them.
Speaker Change: Got you.
Speaker Change: You don't take the niche Oakland computer.
Speaker Change: I don't know what we are trying to show that shingle.
Unknown Executive: Thank you.
Speaker Change: Thank you.
Qiyu Wang: I'll take a question. As you really mentioned and have observed from our financials that our clients do have a lot of demand for the capacity and to accommodate their capacity need, we have actually responded actively and delivered the capacity needed and they have been moving in fairly quickly. And actually, we have just hit a record high in terms of the capacity that's utilized.
Speaker Change: I'll take your question.
Speaker Change: As you really mentioned it happens I've observed from our financials.
Speaker Change: Our clients do have a lot of.
Speaker Change: Demand for the capacity and to accommodate to their capacity needs. We have actually responded actively and deliver to the capacity.
Speaker Change: Capacity needed and they have been moving in fairly quickly and.
Speaker Change: Actually we have just hit a record high in terms of the capacity that's utilized.
Qiyu Wang: We just added for the past quarter. Based on our communication with the client and the client's order certainty, we expect that in the last three quarters of 2025 and the first quarter of 2026, we will continue to maintain a very good price-to-price ratio. And according to the communications with these clients as well as assessing their willingness and also how firm they are about moving in scheduling, so we are confident to that for the upcoming three quarters plus another quarter next year. We are going to see very pleasant move-in rhythm from these clients.
Speaker Change: Just added over the past quarter.
Speaker Change: So your tone in general men can cope with a cold.
Speaker Change: We're supporting them.
Speaker Change: Uh huh.
Speaker Change: Oh, yes, the wholesale money towards auto.
Speaker Change: And that would be eager to pay for January.
Speaker Change: Yes.
Speaker Change: Thank you Qi <unk>.
Speaker Change: Okay. So that you do not wait box for you Glenn.
Speaker Change: Tricia.
Speaker Change: Holiday shutdown that Chantal.
Speaker Change: And according to the communications with these clients as well as assessing there will there.
Speaker Change: Our willingness and also how firm they are about and living in scheduling. So we are confident to that for the upcoming three quarters plus the other another quarter next year, we're going to see very.
Speaker Change: Pleasant Moveon read them.
Speaker Change: From these clients.
Unknown Executive: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Unknown Executive: Ladies and gentlemen, that concludes our conference for today. Thank you for participating. You may now disconnect your lines.
Speaker Change: Ladies and gentlemen that concludes our conference for today.
Speaker Change: Thank you for participating you may now disconnect your line.
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