VNET Group (NASDAQ:VNET) said its first-quarter 2026 results were driven by rapid expansion in its wholesale internet data center business, as management pointed to rising artificial intelligence-related demand and new large-scale orders as key growth catalysts.
Rotating President Sharon Liu said the company began the year with “strong results” supported by execution of its dual-core strategy and Hyperscale 2.0 framework. Total net revenues rose 19.8% year over year to RMB 2.69 billion, while adjusted EBITDA increased 30.6% to RMB 891.5 million.
Peter Zhang, senior vice president of operational finance, said wholesale revenue became the company’s largest revenue category for the first time, surpassing retail revenue during the quarter.
Wholesale Business Drives Growth
VNET’s wholesale revenue increased 58.1% year over year to RMB 1.06 billion, which Zhang attributed mainly to activity at NOR Campus 01 and NOR Campus 02A. Retail revenue rose 5.4% to RMB 1.02 billion, while non-IDC business revenue increased 0.3% to RMB 606.6 million.
Liu said wholesale capacity in service rose by 18 megawatts quarter over quarter to 907 MW as of March 31. Wholesale capacity utilized by customers increased by 64 MW to 687 MW, lifting the utilization rate to 75.7%, up 5.6 percentage points from the prior quarter. She said the increase was mainly due to fast customer move-ins at NOR Campus 02A and NHB Campus 03.
The company’s mature wholesale capacity utilization rate reached 93.8%. Total wholesale resource capacity stood at 2.48 gigawatts at the end of the quarter. Capacity under construction rose to 516 MW, with a year-to-date pre-commitment rate of 85.8%. VNET also reported 697 MW held for short-term future development and 359 MW held for long-term future development.
Retail IDC capacity in service increased to 50,170 cabinets from 49,863 in the previous quarter. Retail utilization remained stable at 64.1%, and monthly recurring revenue per retail cabinet increased slightly to RMB 9,448.
AI Demand Fuels New Orders
Liu said VNET secured new orders totaling 519 MW year to date in 2026, including three wholesale orders totaling 517 MW. The company received two orders, for 110 MW and 400 MW, from an internet customer at separate data centers in the Greater Beijing area. Another data center in the Greater Beijing area won a 7 MW order from a local services customer.
The company also secured approximately 2 MW of new retail orders across multiple retail data centers from customers in the local services, internet and IT services sectors.
Liu said continued policy support for AI-related initiatives and demand for high-quality data center resources are creating industry tailwinds. She also said effective supply remains limited in core regions due to utility and power quota constraints, which benefits operators with existing resource reserves and project deployments.
In response to a question from Morgan Stanley analyst Tom Tang, management said the roughly 500 MW of new orders are expected to be delivered over the next two to three years, from 2026 through 2028, with the first batch expected in the second half of 2026. Management said the orders should have a positive impact on EBITDA over the next three years but did not change the company’s 2026 capital expenditure guidance.
Delivery Plan and Capital Spending
VNET delivered 18 MW of capacity in the first quarter. Liu said the company’s delivery plan is weighted toward the second half of the year. VNET currently has eight data centers under construction, including seven in the Greater Beijing area and one in the Yangtze River Delta.
The company plans to deliver 516 MW over the next 12 months, including about 250 MW during the second and third quarters of 2026 and about 266 MW during the fourth quarter of 2026 and first quarter of 2027. Liu said most of that capacity is allocated to the company’s Wulanchabu IDC campus to meet wholesale customer demand.
Zhang said first-quarter capital expenditures were RMB 1.91 billion, with most spending directed toward wholesale IDC expansion. VNET maintained its full-year 2026 CapEx guidance of RMB 10 billion to RMB 12 billion, which Zhang said is intended to support planned delivery of 450 MW to 500 MW in 2026.
Management also discussed the company’s asset monetization efforts. Zhang said two private REIT projects were listed on the Shanghai Stock Exchange in March, with a combined offering size of approximately RMB 6.36 billion and an enterprise value-to-EBITDA multiple of about 13 times to 14 times. He said VNET expects to realize at least RMB 2 billion in total cash proceeds from REIT-related initiatives this fiscal year.
Liquidity, Debt and Guidance
VNET reported RMB 173.7 million in net operating cash inflow for the quarter. Excluding RMB 119.1 million in income tax related to capital transactions and other one-time items, Zhang said net operating cash inflow would have been RMB 292.8 million.
As of March 31, VNET had RMB 8.8 billion in total cash and cash equivalents, restricted cash and short-term investments. Zhang said the company’s net debt to adjusted last-quarter annualized EBITDA ratio was 3.8, while total debt to adjusted last-quarter annualized EBITDA was 6.1. Adjusted trailing 12-month EBITDA to interest coverage was 5.8.
The company reaffirmed its full-year 2026 outlook. VNET expects:
- Total net revenues of RMB 11.5 billion to RMB 11.8 billion, representing year-over-year growth of 15.6% to 18.6%.
- Adjusted EBITDA of RMB 3.55 billion to RMB 3.75 billion, representing year-over-year growth of 19.2% to 25.9%.
Strategic Investor and Expansion Plans
Liu said affiliates of CATL have entered into a share purchase agreement to acquire up to approximately 38.1% of VNET’s shares from subsidiaries of Shandong Hi-Speed Holdings Group, with closing expected in the fourth quarter of this year. She said the company sees potential strategic synergies with CATL in technological innovation, supply chain and next-generation AI data center development.
During the Q&A session, management said potential areas of collaboration include AIDC energy storage, supply chain resources and high-voltage direct current technology. Management also said VNET will continue to pursue green and low-carbon data center development and evaluate cooperation opportunities with Shandong Hi-Speed Holdings Group.
On pricing, management said demand for premium AIDC resources has remained strong through the first quarter and into the second quarter. Customers are signing long-term contracts to secure resources, and management said it expects prices to remain stable, with the possibility of upward movement if supply-demand dynamics improve.
Management said VNET is actively exploring additional resources in Inner Mongolia, the Yangtze River Delta and key East Data, West Compute hubs, with a goal of acquiring gigawatt-level resources. The company also said it is evaluating overseas resources, including in Southeast Asia and other regions, in response to inquiries from key customers.
VNET also said it has been exploring the feasibility of a potential Hong Kong listing as part of efforts to optimize its capital structure, support long-term strategic development and broaden its international investor base, but management said any related plans remain under evaluation.
About VNET Group (NASDAQ:VNET)
VNET Group, Inc (NASDAQ: VNET) is a leading carrier-neutral internet data center (IDC) services provider in China. Established in 1999 and headquartered in Beijing, the company delivers a full spectrum of infrastructure solutions that support the growing digital economy. Its core offerings include data center colocation, managed hosting, network connectivity, and disaster recovery services designed to meet the performance and reliability requirements of enterprise and internet content customers.
The company's product portfolio spans private cloud, public cloud and hybrid cloud deployments, enabling clients to scale computing resources on demand.
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