NEWS WRAP: VNET records first annual profit in three years

The data center operator secured several significant customer orders amid strong AI-driven demand

Teri Yu

Chinese data center operator VNET Group Inc. (VNET.US) on Wednesday reported its revenue rose by a healthy 18% in the fourth quarter, driven by several major new orders for its wholesale business related to a recent surge in AI-driven demand.

VNET reported fourth-quarter revenue of 2.25 billion yuan ($307 million), up from 1.9 billion yuan a year earlier. Its wholesale business was a standout during the quarter, posting 125.4% revenue growth to a record 665.2 million yuan. That more than offset a slight 1.1% decline during the quarter for its retail business, its biggest revenue source, which fell to 965 million yuan. Revenue from its non-data center business, which includes cloud and VPN services, also fell 1.9% during the quarter to 616.5 million yuan.

The company returned to the black during the quarter with a 3.5 million yuan profit, reversing a loss of 2.42 billion yuan in the same period of 2023.

VNET secured several big orders during the quarter totaling 252.5 MW from both existing and new customers, including a 32 MW order from an existing internet customer in the Yangtze River Delta, one of the company’s strongest regions, officials said on the company’s earnings call. It also won a 1.5 MW order from a new intelligent driving customer and signed an agreement for 100 MW of capacity with an internet customer in Ulanqab in China’s Inner Mongolia region.

The company said the capacity in service for its wholesale data center business increased to 486 MW, with a utilization rate of 95.6% for its mature wholesale capacity at the end of last year.

“Moving into 2025, we are seeing persistent high demand for high performance data centers with recent breakthroughs by DeepSeek propeling the dramatic AI development and driving the internet data center industry’s rapid growth,” said rotating President Ma Zhu on the earnings call.

VNET posted 11.4% revenue growth to 8.26 billion for all of 2024. And more importantly, the company recorded a full-year profit of 248 million yuan, a turnaround from its 2.6 billion yuan loss in 2023 and its first annual profit since 2021.

Looking ahead, VNET said it expects to generate revenue of 9.1 billion yuan to 9.3 billion yuan this year, representing modest year-on-year growth of 10% to 13%.

VNET shares fell 7.64% after it released its report on Wednesday in the U.S. But the stock is up more than fivefold over the last year on expectation for strong growth driven by demand from AI-based applications, which often require huge amounts of off-site computing power. VNET’s stock currently trades at a price-to-sales (P/S) ratio of 3.07 trailing rival GDS (GDS.US; 9698.HK) at 5.16. 

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