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21Vianet Group, Inc. Reports Second Quarter 2015 Unaudited Financial Results

2Q15 Net Revenues Up 31.7% YOY to RMB866.8 Million

2Q15 Adjusted EBITDA Up 13.2% YOY to RMB149.4 Million

Live Conference Call to be Held at 8:00 PM U.S. Eastern Time, August 26, 2015

BEIJING, Aug. 26, 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 second quarter of 2015. The Company will hold a conference call at 8:00 p.m. Eastern Time on August 26, 2015. Dial-in details are provided at the end of the release.

Second Quarter 2015 Financial Highlights

  • Net revenues increased by 31.7% to RMB866.8 million (US$139.8 million) from RMB658.0 million in the comparative period in 2014.
  • Adjusted EBITDA1 increased by 13.2% to RMB149.4 million (US$24.1 million) from RMB132.0 million in the comparative period in 2014.

Mr. Josh Chen, Founder, Chairman and Chief Executive Officer of the Company, stated, "During the second quarter, we further executed on our strategy with steady growth in our core internet data center ("IDC") and CDN businesses. For our IDC businesses, demand remains strong as we had another quarter of increasing cabinet sales. Following a seasonally soft first quarter, our CDN business also started to recover and is expected to further improve in the second half of 2015. However, this quarter also brought with it some challenges, including delays in new cabinet builds, continued headwinds in bandwidth prices and incremental costs due to organizational transitions. As we further optimize our operations, strengthen our organization and continue to invest in core growth opportunities, we are confident in our ability to address these challenges and re-accelerate our growth organically and profitably."

Mr. Terry Wang, Chief Financial Officer of the Company, commented, "We finished another quarter of steady growth, with net revenues growing by 31.7% year over year and adjusted EBITDA growing by 13.2% year over year. We further improved our data center utilization rate to 67.5% from 65.0%, while maintaining our low hosting churn rate of 0.37%. In addition, our days-sales-outstanding ("DSO") also further improved to 77 days in the second quarter of 2015. However, we also recognize that our operating results this quarter were softer than expected in a few areas, and we are actively working with our operations team to address these issues. As we fine-tune our cost structure and become more disciplined in our capital investment programs in a market that is increasingly sophisticated and value-driven, we believe we are well positioned to capitalize on our strategy as a leading internet infrastructure services provider."

Second Quarter 2015 Financial Results

REVENUES: Net revenues for the second quarter of 2015 increased by 31.7% to RMB866.8 million (US$139.8 million) from RMB658.0 million in the comparative period in 2014.

Net revenues from hosting and related services increased by 37.9% to RMB643.7 million (US$103.8 million) in the second quarter of 2015 from RMB466.9 million in the comparative period in 2014, primarily due to contributions from acquisitions, an increase in the total number of cabinets under management, as well as a year-over-year increase in demand for the Company's cloud and CDN services, partially offset by the transition to a Value Added Tax ("VAT") system. Net revenues from managed network services increased by 16.7% to RMB223.1 million (US$36.0 million) in the second quarter of 2015 from RMB191.1 million in the comparative period in 2014 primarily driven by the contributions from acquisitions, which was partially offset by industry-wide decline in bandwidth prices and the transition to a VAT system.

GROSS PROFIT: Gross profit for the second quarter of 2015 increased by 12.9% to RMB204.0 million (US$32.9 million) from RMB180.6 million in the comparative period in 2014. Gross margin for the second quarter of 2015 was 23.5%, compared with 27.4% in the comparative period in 2014. The decrease in gross margin was primarily due to continued softness in MNS business and higher spending in telecom and electricity costs.

Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, increased by 24.2% to RMB245.7 million (US$39.6 million) from RMB197.9 million in the comparative period in 2014. Adjusted gross margin was 28.3% in the second quarter of 2015, compared with 30.1% in the comparative period in 2014.

OPERATING EXPENSES: Total operating expenses increased to RMB293.6 million (US$47.4 million) from RMB156.7 million in the comparative period in 2014. Adjusted operating expenses, which exclude share-based compensation expenses and the changes in the fair value of contingent purchase consideration payable, increased to RMB209.5 million (US$33.8 million) from RMB132.9 million in the comparative period in 2014. As a percentage of net revenue, adjusted operating expenses were 24.2%, compared with 20.2% in the comparative period in 2014 and 24.3% in the first quarter of 2015.

Sales and marketing expenses increased by 32.7% to RMB78.0 million (US$12.6 million) from RMB58.8 million in the comparative period in 2014, primarily due to an increase in the number of the sales and service personnel in the Company's overall business and acquisitions of businesses with higher sales and marketing expenses.

General and administrative expenses increased by 160.9% to RMB166.9 million (US$26.9 million) from RMB64.0 million in the comparative period in 2014, primarily due to increased headcount associated with the growth in the Company's overall business, acquisitions with higher general and administrative expenses and incremental expenses due to organizational transitions.

Research and development expenses increased by 27.6% to RMB32.1 million (US$5.2 million) from RMB25.1 million in the comparative period in 2014, 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 RMB16.4 million (US$2.7 million) in the second quarter of 2015, compared with a loss of RMB8.8 million in the comparative period in 2014.

ADJUSTED EBITDA: Adjusted EBITDA for the second quarter of 2015 increased by 13.2% to RMB149.4 million (US$24.1 million) from RMB132.0 million in the comparative period in 2014. Adjusted EBITDA margin for the quarter was 17.2% compared with 20.1% in the comparative period in 2014 and 19.4% in the first quarter of 2015. Adjusted EBITDA in the second quarter of 2015 excludes share-based compensation expenses of RMB69.8 million (US$11.3 million) and changes in the fair value of contingent purchase consideration payable of RMB16.6 million (US$2.7 million).

NET PROFIT/LOSS: Net loss for the second quarter of 2015 was RMB141.8 million (US$22.9 million), compared with a net loss of RMB59.5 million in the comparative period in 2014.

Adjusted net loss for the second quarter of 2015 was RMB16.0 million (US$2.6 million) compared with an adjusted net profit of RMB23.2 million in the comparative period in 2014. Adjusted net loss in the second quarter of 2015 excludes share-based compensation expenses of RMB69.8 million (US$11.3 million), amortization of intangible assets derived from acquisitions of RMB39.4 million (US$6.4 million), changes in the fair value of contingent purchase consideration payable of RMB16.6 million (US$2.7 million) in the aggregate. Adjusted net margin was negative 1.8%, compared with positive 3.5% in the comparative period in 2014 and positive 2.2% in the first quarter of 2015.

EARNING/LOSS PER SHARE: Diluted loss per ordinary share for the second quarter of 2015 was RMB0.28, which represents the equivalent of RMB1.68 (US$0.27) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares. Adjusted diluted loss per share for the second quarter of 2015 was RMB0.02, which represents the equivalent of RMB0.12 (US$0.02) per ADS. Adjusted earnings per share is calculated using adjusted net profit as discussed above divided by the weighted average number of shares.

As of June 30, 2015, the Company had a total of 519.7 million ordinary shares outstanding, or the equivalent of 86.6 million ADSs.

BALANCE SHEET: As of June 30, 2015, the Company's cash and cash equivalents and short-term investment were RMB2.91 billion (US$469.6 million).

Second Quarter 2015 Operational Highlights

  • Monthly Recurring Revenues ("MRR") per cabinet was RMB9,872 in the second quarter of 2015, compared with RMB10,031 in the first quarter of 2015.
  • Total cabinets under management increased to 22,238 as of June 30, 2015 from 22,024 as of March 31, 2015, with 14,957 cabinets in the Company's self-built data centers and 7,281 cabinets in its partnered data centers.
  • Utilization rate was 67.5% in the second quarter of 2015, compared with 65.0% in the first quarter of 2015.
  • Hosting churn rate, which is based on the Company's core IDC business, was 0.37% in the second quarter of 2015, compared with 0.19% in the first quarter of 2015.

Recent Developments

On June 10, 2015 the Company announced that its Board of Directors received a non-binding proposal letter, from Mr. Josh Sheng Chen, Chairman of the Board and Chief Executive Officer of the Company, Kingsoft Corporation Limited and Tsinghua Unigroup International Co., Ltd., proposing a "going-private" transaction to acquire all of the outstanding ordinary shares of the Company not already owned by the buyer group.

On June 16, 2015 the Board of Directors formed a special committee of independent directors to review and evaluate the "going-private" proposal. In early July, the Company announced that the Board had retained Morgan Stanley Asia Limited as its financial advisor, K&L Gates LLP as its international and U.S. legal counsel and Conyers Dill & Pearman as its Cayman legal counsel in connection with its review and evaluation of the proposal.

On June 22, 2015, Mr. Shang-Wen Hsiao resigned from his role as Chief Financial Officer of the Company. He was succeeded by Mr. Terry Wang, who previously served as the Company's independent director and Chair of the Audit Committee since April 2011. Mr. Hsiao was made an advisor to the Board of Directors effective July 1, 2015.

Financial Outlook

For the third quarter of 2015, the Company expects net revenues to be in the range of RMB900 million to RMB940 million, representing approximately 18% year-over-year growth at the mid-point. Adjusted EBITDA is expected to be in the range of RMB146 million to RMB166 million, representing approximately 1% year-over-year growth at the mid-point. For the full year 2015, the Company now expects net revenues to be in the range of RMB3.58 billion to RMB3.68 billion (revised from prior guidance of RMB3.91 billion to RMB4.11 billion), representing approximately 26% growth over 2014 at the mid-point. Adjusted EBITDA for the full year 2015 is expected to be in the range of RMB620 million to RMB660 million (revised from prior guidance of RMB760 million to RMB860 million), representing approximately 15% 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 Wednesday, August 26, 2015 at 8:00 pm Eastern Time, or Thursday, August 27, 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: # 96476886

The replay will be accessible through September 2, 2015 by dialing the following numbers:

United States Toll Free: +1-855-452-5696
International: +61-2-90034211
Conference ID: # 96476886

A live and archived webcast of the conference call will be available through the Company's investor relation website at http://ir.21vianet.com.

Non-GAAP Disclosure

In evaluating its business, 21Vianet considers and uses the following non-GAAP measures defined as non-GAAP financial measures by the SEC as supplemental measure to review and assess its operating performance: adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted net profit, adjusted net margin, adjusted EBITDA, adjusted EBITDA margin, adjusted basic earnings per share, adjusted diluted earnings per share, adjusted basic earnings per ADS and adjusted diluted earnings per ADS. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP and non-GAAP results" set forth at the end of this press release.

The non-GAAP financial measures are provided as additional information to help investors compare business trends among different reporting periods on a consistent basis and to enhance investors' overall understanding of the Company's current financial performance and prospects for the future. These non-GAAP financial measures should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for, or superior to, U.S. GAAP results. In addition, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and therefore comparability may be limited.

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.2000 to US$1.00, the noon buying rate in effect on June 30, 2015 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

Statement Regarding Unaudited Condensed Financial Information

The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company's year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information.

About 21Vianet

21Vianet Group, Inc. is a leading carrier-neutral Internet data center services provider in China. 21Vianet provides hosting and related services, managed network services, cloud services, content delivery network services, last-mile wired broadband services and business VPN services, improving the reliability, security and speed of its customers' Internet infrastructure. Customers may locate their servers and networking equipment in 21Vianet's data centers and connect to China's Internet backbone through 21Vianet's extensive fiber optic network. In addition, 21Vianet's proprietary smart routing technology enables customers' data to be delivered across the Internet in a faster and more reliable manner. 21Vianet operates in more than 30 cities throughout China, servicing a diversified and loyal base of more than 2,000 hosting enterprise customers that span numerous industries ranging from Internet companies to government entities and blue-chip enterprises to small- to mid-sized enterprises

Safe Harbor Statement

This announcement contains forward-looking statements. These forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the outlook for the second 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 third parties. Statements that are not historical facts, including statements about 21Vianet's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: 21Vianet's goals and strategies; 21Vianet's expansion plans; the expected growth of the data center services market; expectations regarding demand for, and market acceptance of, 21Vianet's services; 21Vianet's expectations regarding keeping and strengthening its relationships with customers; 21Vianet's plans to invest in research and development to enhance its solution and service offerings; and general economic and business conditions in the regions where 21Vianet provides solutions and services. Further information regarding these and other risks is included in 21Vianet's reports filed with, or furnished to, the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of this press release, and 21Vianet undertakes no duty to update such information, except as required under applicable law.

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.

21VIANET GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
As of As of
December 31, 2014 June 30, 2015
RMB RMB US$
(Audited) (Unaudited) (Unaudited)
Assets
Current assets:
Cash and cash equivalents 644,415 1,441,635 232,522
Restricted cash 161,649 100,606 16,227
Accounts and notes receivable, net 739,945 746,964 120,478
Short-term investments 911,242 1,469,620 237,035
Inventories 10,059 12,103 1,952
Prepaid expenses and other current assets 309,441 520,097 83,892
Deferred tax assets 35,002 35,354 5,702
Amount due from related parties 54,867 84,345 13,604
Total current assets 2,866,620 4,410,724 711,412
Non-current assets:
Property and equipment, net 3,036,707 3,505,606 565,420
Intangible assets, net 1,404,453 1,339,583 216,062
Land use right 66,175 65,430 10,553
Deferred tax assets 42,573 48,204 7,775
Goodwill 1,755,970 1,755,970 283,221
Long term investments 126,307 157,970 25,479
Restricted cash 121,415 122,156 19,703
Amount due from related parties 98,500 70,000 11,290
Other non-current assets 121,461 120,385 19,417
Total non-current assets 6,773,561 7,185,304 1,158,920
Total assets 9,640,181 11,596,028 1,870,332
Liabilities and Shareholders' Equity
Current liabilities:
Short-term bank borrowings 160,181 250,000 40,323
Accounts and notes payable 386,074 410,952 66,283
Accrued expenses and other payables 599,491 738,930 119,182
Deferred revenue 347,441 327,233 52,780
Advances from customers 97,679 133,260 21,494
Income taxes payable 35,013 44,074 7,109
Amounts due to related parties 326,804 406,433 65,554
Current portion of long-term bank borrowings 955,647 921,951 148,702
Current portion of capital lease obligations 71,939 73,915 11,922
Current portion of deferred government grant 6,150 6,382 1,029
Current portion of bonds payable -- 264,155 42,606
Deferred tax liabilities 2,696 3,198 516
Total current liabilities 2,989,115 3,580,483 577,500
Non-current liabilities:
Long-term bank borrowings 61,673 102,905 16,598
Deferred revenue 74,044 70,158 11,316
Amounts due to related parties 280,728 19,214 3,099
Unrecognized tax benefits 20,453 11,897 1,919
Deferred tax liabilities 310,340 296,196 47,774
Non-current portion of capital lease obligations 511,679 503,143 81,152
Non-current portion of deferred government grant 27,422 34,180 5,513
Bonds payable 2,264,064 2,000,000 322,581
Mandatorily redeemable noncontrolling interests 100,000 100,000 16,129
Total non-current liabilities 3,650,403 3,137,693 506,081
Redeemable noncontrolling interests 773,706 775,791 125,128
Shareholders' equity
Treasury stock (213,665) (213,665) (34,462)
Ordinary shares 26 34 5
Additional paid-in capital 4,225,029 6,346,857 1,023,687
Accumulated other comprehensive income loss (65,754) (64,981) (10,481)
Statutory reserves 52,263 58,109 9,372
Accumulated deficit (1,794,975) (2,042,693) (329,466)
Total 21Vianet Group, Inc. shareholders' equity 2,202,924 4,083,661 658,655
Non-controlling interest 24,033 18,400 2,968
Total shareholders' equity 2,226,957 4,102,061 661,623
Total liabilities and shareholders' equity 9,640,181 11,596,028 1,870,332
21VIANET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data)
Three months ended Six months ended
June 30, 2014 March 31,2015 June 30, 2015 June 30, 2014 June 30, 2015
RMB RMB RMB US$ RMB RMB US$
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues
Hosting and related services 466,880 613,228 643,709 103,824 871,255 1,256,937 202,732
Managed network services 191,137 246,879 223,078 35,980 372,757 469,957 75,799
Total net revenues 658,017 860,107 866,787 139,804 1,244,012 1,726,894 278,531
Cost of revenues (477,392) (629,762) (662,810) (106,905) (902,761) (1,292,572) (208,479)
Gross profit 180,625 230,345 203,977 32,899 341,251 434,322 70,052
Operating expenses
Sales and marketing (58,814) (90,400) (78,031) (12,586) (101,207) (168,431) (27,166)
General and administrative (63,956) (129,208) (166,885) (26,917) (243,350) (296,093) (47,757)
Research and development (25,130) (34,031) (32,059) (5,171) (50,335) (66,090) (10,660)
Changes in the fair value of contingent purchase consideration payable (8,807) (20,946) (16,643) (2,684) (42,735) (37,589) (6,063)
Total operating expenses (156,707) (274,585) (293,618) (47,358) (437,627) (568,203) (91,646)
Other operating income -- -- 8,569 1,382 -- 8,569 1,382
Operating profit (loss) 23,918 (44,240) (81,072) (13,077) (96,376) (125,312) (20,212)
Interest income 13,575 13,830 20,449 3,298 34,815 34,279 5,529
Interest expense (48,562) (71,867) (71,664) (11,559) (97,539) (143,531) (23,150)
Loss on debt extinguishment (41,581) -- -- -- (41,581) -- --
Income (loss) from equity method
investment
136 11,295 123 20 (240) 11,418 1,842
Other income 230 1,660 2,876 464 3,847 4,536 732
Other expense (145) (951) (183) (30) (166) (1,134) (183)
Foreign exchange (loss) gain (6,576) 10,167 (5,269) (850) (5,639) 4,898 790
Loss before income taxes (59,005) (80,106) (134,740) (21,734) (202,879) (214,846) (34,652)
Income tax expense (460) (8,563) (7,091) (1,144) (8,012) (15,654) (2,525)
Consolidated net loss (59,465) (88,669) (141,831) (22,878) (210,891) (230,500) (37,177)
Net income attributable to non-controlling interest (2,756) (8,058) (3,315) (535) (3,104) (11,373) (1,834)
Net loss attributable to ordinary shareholders (62,221) (96,727) (145,146) (23,413) (213,995) (241,873) (39,011)
Loss per share
Basic (0.16) (0.23) (0.28) (0.05) (0.53) (0.51) (0.08)
Diluted (0.16) (0.23) (0.28) (0.05) (0.53) (0.51) (0.08)
Shares used in earnings per share computation
Basic* 400,894,924 432,372,059 489,847,525 489,847,525 400,392,899 461,268,566 461,268,566
Diluted* 400,894,924 432,372,059 489,847,525 489,847,525 400,392,899 461,268,566 461,268,566
Loss per ADS (6 ordinary shares equal to 1 ADS)
Basic (0.96) (1.38) (1.68) (0.27) (3.18) (3.06) (0.49)
Diluted (0.96) (1.38) (1.68) (0.27) (3.18) (3.06) (0.49)
* Shares used 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$") except for number of shares and per share data)
Three months ended Six months ended
June 30, 2014 March 31,2015 June 30, 2015 June 30, 2014 June 30, 2015
RMB RMB RMB US$ RMB RMB US$
Gross profit 180,625 230,345 203,977 32,899 341,251 434,322 70,052
Plus: share-based compensation expense 1,890 2,212 2,305 372 3,558 4,517 729
Plus: amortization of intangible assets derived from acquisitions 15,378 40,169 39,434 6,360 24,176 79,603 12,839
Adjusted gross profit 197,893 272,726 245,716 39,631 368,985 518,442 83,620
Adjusted gross margin 30.1% 31.7% 28.3% 28.3% 29.7% 30.0% 30.0%
Operating expenses (156,707) (274,585) (293,618) (47,358) (437,627) (568,203) (91,646)
Plus: share-based compensation expense 15,033 44,244 67,496 10,886 152,080 111,740 18,023
Plus: changes in the fair value of contingent purchase consideration payable 8,807 20,946 16,643 2,684 42,735 37,589 6,063
Adjusted operating expenses (132,867) (209,395) (209,479) (33,788) (242,812) (418,874) (67,560)
Net loss (59,465) (88,669) (141,831) (22,878) (210,891) (230,500) (37,177)
Plus: share-based compensation expense 16,923 46,456 69,801 11,258 155,638 116,257 18,751
Plus: amortization of intangible assets derived from acquisitions 15,378 40,169 39,434 6,360 24,176 79,603 12,839
Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact 8,807 20,946 16,643 2,684 45,719 37,589 6,063
Plus: loss on debt extinguishment 41,581 -- -- -- 41,581 -- --
Adjusted net profit 23,224 18,902 (15,953) (2,576) 56,223 2,949 476
Adjusted net margin 3.5% 2.2% -1.8% -1.8% 4.5% 0.2% 0.2%
Net loss (59,465) (88,669) (141,831) (22,878) (210,891) (230,500) (37,177)
Minus: Provision for income taxes (460) (8,563) (7,091) (1,144) (8,012) (15,654) (2,525)
Minus: Interest income 13,575 13,830 20,449 3,298 34,815 34,279 5,529
Minus: Interest expenses (48,562) (71,867) (71,664) (11,559) (97,539) (143,531) (23,150)
Minus: loss on debt extinguishment (41,581) -- -- -- (41,581) -- --
Minus: Exchange gain/loss (6,576) 10,167 (5,269) (850) (5,639) 4,898 790
Minus: Loss from equity method investment 136 11,295 123 20 (240) 11,418 1,842
Minus: Other income 230 1,660 2,876 464 3,847 4,536 732
Minus: Other expenses (145) (951) (183) (30) (166) (1,134) (183)
Plus: depreciation 59,783 93,878 98,462 15,881 106,109 192,340 31,023
Plus: amortization 22,534 49,876 45,517 7,341 36,791 95,393 15,386
Plus: share-based compensation expense 16,923 46,456 69,801 11,258 155,638 116,257 18,751
Plus: changes in the fair value of contingent purchase consideration payable 8,807 20,946 16,643 2,684 42,735 37,589 6,063
Adjusted EBITDA 131,965 166,916 149,351 24,087 244,897 316,267 51,011
Adjusted EBITDA margin 20.1% 19.4% 17.2% 17.2% 19.7% 18.3% 18.3%
Adjusted net profit (loss) 23,224 18,902 (15,953) (2,576) 56,223 2,949 476
Less: Net income attributable to non-controlling interest (2,756) (8,058) (3,315) (535) (3,104) (11,373) (1,834)
Adjusted net profit (loss) attributable to the Company's ordinary shareholders 20,468 10,844 (19,268) (3,111) 53,119 (8,424) (1,358)
Adjusted earnings (loss) per share
Basic 0.05 0.02 (0.02) (0.00) 0.13 (0.00) (0.00)
Diluted 0.05 0.02 (0.02) (0.00) 0.13 (0.00) (0.00)
Shares used in adjusted earnings per share computation:
Basic* 400,894,924 432,372,059 489,847,525 489,847,525 400,392,899 461,268,566 461,268,566
Diluted* 415,461,883 444,663,246 489,847,525 489,847,525 414,916,456 461,268,566 461,268,566
Earnings (loss) per ADS (6 ordinary shares equal to 1 ADS)
Basic 0.30 0.12 (0.12) (0.02) 0.78 (0.00) (0.00)
Diluted 0.30 0.12 (0.12) (0.02) 0.78 (0.00) (0.00)
* Shares used in adjusted earnings/ADS per share computation were computed under weighted average method.
21VIANET GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
Three months ended
March 31, 2015 June 30, 2015
RMB RMB US$
(Unaudited) (Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (88,669) (141,831) (22,876)
Adjustments to reconcile net profit to net cash generated from operating activities:
Foreign exchange (gain) loss (10,167) 5,269 850
Changes in the fair value of contingent purchase consideration payable 20,946 16,643 2,684
Depreciation of property and equipment 93,878 98,462 15,881
Amortization of intangible assets 47,709 44,086 7,111
Loss on disposal of property and equipment 131 30 5
Provision for doubtful accounts and other receivables 1,335 2,818 455
Share-based compensation expense 46,456 69,802 11,258
Deferred income taxes benefit (12,132) (7,493) (1,209)
Gain from equity method investment (11,295) (123) (20)
Changes in operating assets and liabilities
Restricted cash 14,739 (46,161) (7,445)
Inventories (631) (1,413) (228)
Accounts and notes receivable (9,264) 213 34
Unrecognized tax expense 1,286 (9,842) (1,587)
Prepaid expenses and other current assets (76,713) (125,384) (20,223)
Amounts due from related parties (333) (667) (108)
Accounts and notes payable 41,476 (16,598) (2,677)
Accrued expenses and other payables 36,153 (17,548) (2,830)
Deferred revenue (9,378) (14,716) (2,374)
Advances from customers 8,533 27,048 4,363
Income taxes payable 11,458 (2,397) (387)
Amounts due to related parties (1,308) (950) (153)
Deferred government grants 7,600 (610) (98)
Net cash generated from operating activities 111,810 (121,361) (19,574)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (305,648) (232,069) (37,430)
Purchases of intangible assets (16,335) (12,258) (1,977)
Proceeds from disposal of property and equipment 116 137 22
Loans to third parties (2,030) (3,760) (606)
Payments for short-term investments (733,104) (819,274) (132,141)
Proceeds received from maturity of short-term investments 900,000 94,000 15,161
Payments for long-term investments (20,245) -- --
Net cash used in investing activities (177,246) (973,224) (156,972)
CASH FLOWS FROM FINANCING ACTIVITIES
Restricted cash 8,714 83,751 13,508
Proceeds from exercise of stock options 1,802 2,687 433
Proceeds from shareholders 626,674 1,181,825 190,617
Proceeds from long-term bank borrowings 42,213 31,710 5,115
Proceeds from short-term bank borrowings 70,000 109,000 17,581
Repayments of short-term bank borrowings (29,181) (60,000) (9,677)
Repayments of long-term bank borrowings (3,086) (63,310) (10,211)
Payments for the purchase of noncontrolling interest, net of cash acquired -Ningbo Tech (8,000) -- --
Payments for capital leases (12,341) (24,023) (3,875)
Net cash used in financing activities 696,795 1,261,640 203,490
Effect of foreign exchange rate changes on cash and short term investments 1,640 (2,835) (457)
Net increase in cash and cash equivalents 632,999 164,220 26,487
Cash and cash equivalents at beginning of period 644,415 1,277,414 206,035
Cash and cash equivalents at end of period 1,277,414 1,441,635 232,522

CONTACT: Investor Relations Contacts: 21Vianet Group, Inc. Eric Chu, CFA +1 908 707 2062 IR@21Vianet.com Qing Liu +86 10 8456 2121 IR@21Vianet.com ICR, Inc. Charles Eveslage +1 (646) 405-4922 IR@21Vianet.comSource:21Vianet Group, Inc.