BEIJING, March 08, 2017 (GLOBE NEWSWIRE) -- 21Vianet Group, Inc. (Nasdaq:VNET) ("21Vianet" or the "Company"), a leading carrier-neutral internet data center services provider in China, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2016. The Company will hold a conference call at 8:00 p.m. Eastern Time on Wednesday, March 8, 2017. Dial-in details are provided at the end of the release.

Mr. Steve Zhang, Chief Executive Officer of the Company, stated, "Despite facing severe headwinds in our managed network services business, we continue to see stable growth in our core IDC, VPN, and cloud businesses this quarter. Last December, in partnership with Microsoft, we launched Power BI, a business data analytics cloud service, adding to our wide-array of cloud offerings for our customers. Most recently, we finalized and signed an investment agreement with Warburg Pincus, which expands upon the strategic agreement previously announced. The end result remains the same, as we will establish joint ventures for our digital real estate business with a focus on the customized wholesale data center market, and will aim to build out 80,000 to 100,000 additional cabinets in the next five to seven years. Our core retail colocation and cloud services will be supplemented with wholesale data center services, providing more complete and expanded service offerings to our customers. This restructuring of our business will allow us to continue to fine-tune our Capex structure, improve our operating leverage, and provide customers with more value-added services such as hybrid cloud solutions. With the evolving internet landscape in China and the strong demands of internet traffic, computing, and data storage, we will solidify our position as a leading internet infrastructure services provider and meet the ever-changing needs of our customers."

Mr. Terry Wang, Chief Financial Officer of the Company, further commented, "We are pleased to announce that we met our fourth quarter and full year guidance for both top line net revenues and adjusted EBITDA. In 2016, we increased our total revenues to RMB3.64 billion, which was primarily driven by a 14.2% year-over-year increase in revenues from our hosting and related businesses. During the fourth quarter of 2016, we added over 300 cabinets in our self-built data centers, bringing the total number of cabinets up to 26,380. Our cloud business maintained its growth trajectory, which was mainly attributable to the robust results from our partnerships with Microsoft and IBM. Looking forward, we will aim to consistently deploy new cabinets and enhance our monthly recurring revenues in order to reignite our top line growth and realize margin expansion. Additionally, even though our MNS and CDN businesses continued to experience pricing pressure and intense competition in 2016, we began seeing signs of price stabilization. We are confident that we will generate further value for our shareholders through our continuous effort to optimize operations, our sustainable investment in asset-light businesses and the emerging opportunities in customized wholesale data centers."

Fourth Quarter 2016 Financial Results

REVENUES: Net revenues for the fourth quarter of 2016 were RMB900.6 million (US$129.7 million), as compared with RMB983.4 million in the comparative period in 2015. The decrease was primarily due to a decrease in MNS revenues.

Net revenues from hosting and related services increased by 4.7% to RMB790.1 million (US$113.8 million) in the fourth quarter of 2016 from RMB754.7 million in the comparative period in 2015, primarily due to an increase in total number of billable cabinets, partially offset by the lower utilization rate and MRR, or monthly recurring revenue, per cabinet.

Net revenues from MNS were RMB110.6 million (US$15.9 million) in the fourth quarter of 2016, as compared with RMB228.7 million in the comparative period in 2015. The decrease was primarily due to a 107 million decrease in Aipu revenues, which was driven by intensified competition.

GROSS PROFIT: Gross profit for the fourth quarter of 2016 was RMB183.4 million (US$26.4 million), as compared with RMB219.2 million in the comparative period in 2015. Gross margin for the fourth quarter of 2016 was 20.4%, as compared with 22.3% in the comparative period in 2015.

Adjusted gross profit, which excludes share-based compensation expenses and amortization of intangible assets derived from acquisitions, was RMB222.6 million (US$32.1 million) in the fourth quarter of 2016, as compared with RMB264.3 million in the comparative period in 2015. Adjusted gross margin was 24.7% in the fourth quarter of 2016, compared with 26.9% in the comparative period in 2015.

OPERATING EXPENSES: Total operating expenses were RMB690.4 million (US$99.4 million) in the fourth quarter of 2016, as compared with RMB314.5 million in the comparative period in 2015. Adjusted operating expenses, which exclude a one-time impairment of long-term asset, share-based compensation expenses and changes in the fair value of contingent purchase consideration payable, were RMB309.8 million (US$44.6 million), as compared with RMB275.9 million in the comparative period in 2015. As a percentage of net revenues, adjusted operating expenses were 34.4%, as compared with 28.1% in the comparative period in 2015.

Sales and marketing expenses were RMB92.0 million (US$13.3 million) in the fourth quarter of 2016, as compared with RMB101.8 million in the comparative period in 2015. The decrease was primarily due to reduced agency fees.

General and administrative expenses were RMB186.7 million (US$26.9 million) in the fourth quarter of 2016, as compared with RMB141.0 million in the comparative period in 2015. The increase was primarily due to increased staff cost.

Research and development expenses were RMB38.4 million (US$5.5 million) in the fourth quarter of 2016, as compared with RMB41.6 million in the comparative period in 2015.

Bad debt provisions were RMB47.5 million (US$6.8 million) in the fourth quarter of 2016, as compared with RMB25.1 million in the comparative period in 2015.

Changes in the fair value of contingent purchase consideration payable was a gain of RMB67.2 million (US$9.7 million) in the fourth quarter of 2016, as compared with a loss of RMB5.1 million in the comparative period in 2015.

One-time impairment of long-term asset was RMB392.9 million (US$56.6 million) in the fourth quarter of 2016.

ADJUSTED EBITDA: Adjusted EBITDA for the fourth quarter of 2016 was RMB52.0 million (US$7.5 million), as compared with RMB102.1 million in the comparative period in 2015. The decrease in adjusted EBITDA was primarily due to the inclusion of a RMB47.5 million bad debt provision. Adjusted EBITDA margin for the fourth quarter of 2016 was 5.8% compared with 10.4% in the comparative period in 2015. Adjusted EBITDA for the fourth quarter of 2016 excludes a one-time impairment of long-term asset of RMB392.9 million (US$56.6 million), share-based compensation expenses of RMB56.7 million (US$8.2 million) and changes in the fair value of contingent purchase consideration payable which was a gain of RMB67.2 million (US$9.7 million).

NET PROFIT/LOSS: Net loss for the fourth quarter of 2016 was RMB485.2 million (US$69.9 million), as compared with a net loss of RMB112.9 million in the comparative period in 2015.

Adjusted net loss for the fourth quarter of 2016 was RMB66.1 million (US$9.5 million), as compared with an adjusted net loss of RMB29.1 million in the comparative period in 2015. Adjusted net loss in the fourth quarter of 2016 mainly excludes a one-time impairment of long-term asset of RMB392.9 million (US$56.6 million) and changes in the fair value of contingent purchase consideration payable and related deferred tax impact which was a gain of RMB67.9 million (US$9.8 million). Adjusted net margin in the fourth quarter of 2016 was negative 7.3%, as compared with negative 3.0% in the comparative period in 2015.

LOSS PER SHARE: Diluted loss per share for the fourth quarter of 2016 was RMB0.69, which represents the equivalent of RMB4.14 (US$0.60) per American Depositary Share ("ADS"). Each ADS represents six ordinary shares. Adjusted diluted loss per share for the fourth quarter of 2016 was RMB0.08, which represents the equivalent of RMB0.48 (US$0.07) per ADS. Adjusted diluted loss per share is calculated using adjusted net loss as discussed above divided by the weighted average number of shares.

As of December 31, 2016, the Company had a total of 679.8 million ordinary shares outstanding, or equivalent of 113.3 million ADSs.

BALANCE SHEET: As of December 31, 2016, the Company's cash and cash equivalents and short-term investment were RMB1.58 billion (US$226.9 million).

Fourth Quarter 2016 Operational Highlights
  • Monthly Recurring Revenues ("MRR") per cabinet was RMB8,490 in the fourth quarter of 2016, compared with RMB8,696 in the third quarter of 2016.
  • Total cabinets under management increased to 26,380 as of December 31, 2016 from 26,184 as of September 30, 2016, with 19,294 cabinets in the Company's self-built data centers and 7,086 cabinets in its partnered data centers.
  • Utilization rate was 75.2% in the fourth quarter of 2016, compared with 77.9% in the third quarter of 2016.
  • Hosting churn rate, which is based on the Company's core IDC business, was 0.55% in the fourth quarter of 2016, compared with 0.95% in the third quarter of 2016.

Full Year 2016 Financial Performance

For the full year of 2016, net revenue increased to RMB3.64 billion (US$524.5 million) from RMB3.63 billion in the prior year. Adjusted EBITDA for the full year was RMB243.9 million (US$35.1 million), as compared with RMB540.4 million in the prior year. Adjusted EBITDA margin was 6.7%, as compared with 14.9% in the prior year. Adjusted EBITDA for the full year excludes impairment of long-term asset of RMB392.9 million (US$56.6 million), share-based compensation expenses of RMB118.7 million (US$17.1 million) and changes in the fair value of contingent purchase consideration payable of RMB93.3 million (US$13.4 million). Adjusted net loss for the full year was RMB332.9 million (US$47.9 million), as compared with a loss of RMB10.8 million in the prior year. Adjusted net loss in the full year excludes impairment of long-term asset of RMB392.9 million (US$56.6 million), share-based compensation expenses of RMB118.7 million (US$17.1 million), amortization of intangible assets derived from acquisitions of RMB151.0 million (US$21.8 million), changes in the fair value of contingent purchase consideration payable and related deferred tax assets of RMB93.5 million (US$13.5 million), and a one-time loss on debt extinguishment of RMB29.8 million (US$4.3 million). Adjusted diluted loss per share for the full year of 2016 was RMB0.40 (US$0.06), which represents the equivalent of RMB2.40 (US$0.35) per ADS.

Recent Developments

On March 5, 2017, the Company signed an investment agreement ("IA") with Warburg Pincus to establish a multi-stage joint venture ("JV") and build a digital real estate platform in China. The IA supersedes the strategic agreement signed on October 31, 2016. The overall structure remains the same, while the IA added certain details on how the cooperation will be carried out. Pursuant to the IA, 21Vianet will still seed the initial JV with four existing high-performing IDC assets, valued at over US$300 million, and Warburg Pincus will contribute direct capital and extensive industry network and resources in the real estate sector. Also pursuant to the IA, 21Vianet will own 51% of the equity interest in the initial JV while Warburg Pincus will own the remaining 49%. With respect to future JVs, 21Vianet will own 49% of the equity interest while Warburg Pincus will own the remaining 51%.

Financial Outlook

For the first quarter of 2017, the Company expects net revenues to be in the range of RMB820 million to RMB880 million, as compared with RMB862.3 million in the prior year period. Adjusted EBITDA is expected to be in the range of RMB65 million to RMB85million, as compared with RMB108.6 million in the prior year period.

For the full year of 2017, the Company now expects net revenues to be in the range of RMB3.7 billion to RMB3.9 billion, as compared with RMB3.64 billion in the prior year. Adjusted EBITDA for the full year 2017 is expected to be in the range of RMB420 million to RMB460 million, as compared with RMB243.9 million in the prior year. 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, March 8, 2017 at 8:00 pm U.S. Eastern Time, or Thursday, March 9, 2017 at 9:00 am Beijing Time to discuss the financial results.
Participants may access the call by dialing the following numbers:
   
United States Toll Free: +1-855-500-8701                
International: +65-6713-5440
China Domestic: 400-120-0654
Hong Kong: +852-3018-6776
Conference ID: 72616852
   
   
The replay will be accessible through March 16, 2017, by dialing the following numbers:
   
United States Toll Free: +1-855-452-5696
International: +61-2-9003-4211
Conference ID: 72616852
   

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 RMB6.9430 to US$1.00, the noon buying rate in effect on December 31, 2016 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, 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.
 
21VIANET GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
     
  As of   As of
  December 31, 2015   December 31, 2016
  RMB   RMB   US$
  (Audited)   (Unaudited)   (Unaudited)
Assets      
Current assets:      
Cash and cash equivalents   1,685,054       1,297,418       186,867  
Restricted cash   195,230       1,963,561       282,812  
Accounts and notes receivable, net   694,108       655,459       94,406  
Short-term investments   104,897       277,946       40,033  
Inventories   13,539       4,431       638  
Prepaid expenses and other current assets   642,553       777,131       111,930  
Deferred tax assets   31,113       43,362       6,245  
Amount due from related parties   105,137       182,615       26,302  
Total current assets   3,471,631       5,201,923       749,233  
Non-current assets:      
Property and equipment, net   3,653,071       3,781,613       544,666  
Intangible assets, net   1,274,166       977,341       140,766  
Land use rights, net   64,682       167,646       24,146  
Deferred tax assets   46,900       57,314       8,255  
Goodwill   1,755,970       1,755,970       252,912  
Long term investments   198,907       298,871       43,046  
Restricted cash   128,515       33,544       4,831  
Amount due from related parties   70,000       -        -  
Other non-current assets   183,868       147,302       21,216  
Total non-current assets   7,376,079       7,219,601       1,039,838  
Total assets   10,847,710       12,421,524       1,789,071  
Liabilities and Shareholders' Equity      
Current liabilities:      
Short-term bank borrowings   276,000       1,683,676       242,500  
Accounts and notes payable   482,622       529,569       76,274  
Accrued expenses and other payables   637,957       787,916       113,484  
Deferred revenue   342,105       320,023       46,093  
Advances from customers   185,800       201,397       29,007  
Income taxes payable   49,959       21,899       3,154  
Amounts due to related parties   397,588       121,928       17,561  
Current portion of long-term bank borrowings   38,803       39,303       5,661  
Current portion of capital lease obligations   140,488       243,723       35,103  
Current portion of deferred government grant   6,332       5,107       736  
Current portion of bonds payable   263,365       419,316       60,394  
Total current liabilities   2,821,019       4,373,857       629,967  
Non-current liabilities:      
Long-term bank borrowings   103,421       268,221       38,632  
Deferred revenue   68,535       62,531       9,006  
Amounts due to related parties   27,384       -        -  
Unrecognized tax benefits   14,492       28,689       4,132  
Deferred tax liabilities   293,212       274,700       39,565  
Non-current portion of capital lease obligations   579,070       536,623       77,290  
Non-current portion of deferred government grant   31,288       25,886       3,728  
Bonds payable   1,984,685       -        -  
Mandatorily redeemable noncontrolling interests   100,000       -        -  
Total non-current liabilities   3,202,087       1,196,650       172,353  
       
Redeemable noncontrolling interests   790,229       700,000       100,821  
       
Shareholders' equity      
Treasury stock   (193,142 )     (204,557 )     (29,462 )
Ordinary shares    34       45       6  
Additional paid-in capital   6,403,117       9,199,248       1,324,967  
Accumulated other comprehensive loss   (24,236 )     118,290       17,037  
Statutory reserves   63,174       64,622       9,308  
Accumulated deficit   (2,233,985 )     (3,052,433 )     (439,642 )
Total 21Vianet Group, Inc. shareholders' equity   4,014,962       6,125,215       882,214  
Noncontrolling interest   19,413       25,802       3,716  
Total shareholders' equity   4,034,375       6,151,017       885,930  
Total liabilities, redeemable noncontrolling interests and shareholders' equity    10,847,710       12,421,524       1,789,071  
                 

 
           
21VIANET GROUP, INC.  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data)  
                   
  Three months ended     Year ended  
  December 31, 2015   September 30, 2016   December 31, 2016   December 31, 2015   December 31, 2016  
  RMB   RMB   RMB   US$   RMB   RMB   US$  
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)  
Net revenues                  
Hosting and related services   754,706       828,121       790,079       113,795       2,707,445       3,092,256       445,378    
Managed network services   228,677       139,885       110,568       15,925       926,927       549,518       79,147    
Total net revenues   983,383       968,006       900,647       129,720       3,634,372       3,641,774       524,525    
Cost of revenues   (764,214 )     (781,124 )     (717,276 )     (103,309 )     (2,780,614 )     (2,929,638 )     (421,956 )  
Gross profit   219,169       186,882       183,371       26,411       853,758       712,136       102,569    
Operating expenses                  
Sales and marketing   (101,797 )     (100,138 )     (92,018 )     (13,253 )     (359,460 )     (352,926 )     (50,832 )  
Research and development   (41,569 )     (36,079 )     (38,425 )     (5,534 )     (142,835 )     (149,337 )     (21,509 )  
General and administrative   (140,995 )     (162,746 )     (186,744 )     (26,897 )     (568,741 )     (639,648 )     (92,128 )  
Bad debt provision   (25,069 )     (27,103 )     (47,450 )     (6,834 )     (32,199 )     (117,564 )     (16,933 )  
Changes in the fair value of contingent purchase consideration payable     (5,060 )     12,285       67,197       9,678       (43,325 )     93,307       13,439    
Impairment of long-lived assets   -       -       (392,947 )     (56,596 )     -       (392,947 )     (56,596 )  
Other operating income   -       6,783       -       -       8,569       6,783       977    
Total operating expenses   (314,490 )     (306,998 )     (690,387 )     (99,436 )     (1,137,991 )     (1,552,332 )     (223,582 )  
Operating loss     (95,321 )     (120,116 )     (507,016 )     (73,025 )     (284,233 )     (840,196 )     (121,013 )  
Interest income   5,692       3,716       4,839       697       53,494       21,078       3,036    
Interest expense   (60,963 )     (49,490 )     (40,652 )     (5,855 )     (274,184 )     (198,589 )     (28,603 )  
Loss on debt extinguishment   -       (29,841 )     -       -       -       (29,841 )     (4,298 )  
Other income   20,115       23,894       189       27       30,430       28,556       4,113    
Other expense   (1,848 )     (1,010 )     (1,825 )     (263 )     (3,701 )     (16,449 )     (2,369 )  
Foreign exchange gain   7,248       8,511       28,849       4,155       72,394       56,341       8,115    
Loss before income taxes and gain from equity method investments   (125,077 )     (164,336 )     (515,616 )     (74,264 )     (405,800 )     (979,100 )     (141,019 )  
Income tax (expense) benefit   (28,044 )     (10,064 )     17,818       2,566       (47,830 )     11,160       1,607    
Gain from equity method investments   40,231       2,852       12,591       1,813       52,355       36,018       5,188    
Net loss   (112,890 )     (171,548 )     (485,207 )     (69,885 )     (401,275 )     (931,922 )     (134,224 )  
Net (income) loss attributable to noncontrolling interest   (11,194 )     37,579       41,951       6,042       (26,824 )     114,922       16,552    
Net loss attributable to ordinary shareholders   (124,084 )     (133,969 )     (443,256 )     (63,843 )     (428,099 )     (817,000 )     (117,672 )  
                   
                   
                   
Loss per share                  
Basic   (0.24 )     (0.15 )     (0.69 )     (0.10 )     (0.85 )     (1.37 )     (0.20 )  
Diluted   (0.24 )     (0.15 )     (0.69 )     (0.10 )     (0.85 )     (1.37 )     (0.20 )  
Shares used in loss per share computation                  
Basic*   523,366,544       682,146,465       681,210,352       681,210,352       492,065,239       617,169,833       617,169,833    
Diluted*   523,366,544       682,146,465       681,210,352       681,210,352       492,065,239       617,169,833       617,169,833    
                   
Loss per ADS (6 ordinary shares equal to 1 ADS)                  
Basic (1.44 )   (0.90 )   (4.14 )   (0.60 )   (5.10 )   (8.22 )   (1.18 )  
Diluted (1.44 )   (0.90 )   (4.14 )   (0.60 )   (5.10 )   (8.22 )   (1.18 )  
                   
* Shares used in loss per share/ADS computation were computed under weighted average method.   
                   

 
           
21VIANET GROUP, INC.  
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS    
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data)  
                   
  Three months ended     Year ended  
  December 31, 2015   September 30, 2016   December 31, 2016   December 31, 2015   December 31, 2016  
  RMB   RMB   RMB   US$   RMB   RMB   US$  
Gross profit   219,169       186,882       183,371       26,411       853,758       712,136       102,569    
Plus: share-based compensation expense   6,582       1,173       1,865       269       12,422       (4,110 )     (592 )  
Plus: amortization of intangible assets derived from acquisitions   38,583       36,504       37,369       5,382       157,119       151,037       21,754    
                                           
Adjusted gross profit   264,334       224,559       222,605       32,062       1,023,299       859,063       123,731    
Adjusted gross margin 26.9 %   23.2 %   24.7 %   24.7 %   28.2 %   23.6 %   23.6 %  
Operating expenses   (314,490 )     (306,998 )     (690,387 )     (99,436 )     (1,137,991 )     (1,552,332 )     (223,582 )  
Plus: share-based compensation expense   33,537       32,208       54,808       7,894       177,605       122,839       17,692    
Plus: changes in the fair value of contingent purchase consideration payable   5,060       (12,285 )     (67,197 )     (9,678 )     43,325       (93,307 )     (13,439 )  
Plus: impairment of long-lived assets    -       -       392,947       56,596       -       392,947       56,596    
Adjusted operating expenses   (275,893 )     (287,075 )     (309,829 )     (44,624 )     (917,061 )     (1,129,853 )     (162,733 )  
Net loss   (112,890 )     (171,548 )     (485,207 )     (69,885 )     (401,275 )     (931,922 )     (134,224 )  
Plus: share-based compensation expense   40,119       33,381       56,673       8,163       190,027       118,729       17,101    
Plus: amortization of intangible assets derived from acquisitions   38,583       36,504       37,369       5,382       157,119       151,037       21,754    
                                           
Plus: changes in the fair value of contingent purchase consideration payable and related deferred tax impact   5,060       (12,285 )     (67,874 )     (9,776 )     43,325       (93,489 )     (13,465 )  
Plus: loss on debt extinguishment   -       29,841       -       -       -       29,841       4,298    
Plus: impairment of long-lived assets    -       -       392,947       56,596       -       392,947       56,596    
Adjusted net loss     (29,128 )     (84,107 )     (66,092 )     (9,520 )     (10,804 )     (332,857 )     (47,940 )  
Adjusted net margin -3.0 %   -8.7 %   -7.3 %   -7.3 %   -0.3 %   -9.1 %   -9.1 %  
Net loss   (112,890 )     (171,548 )     (485,207 )     (69,885 )     (401,275 )     (931,922 )     (134,224 )  
Minus: Provision for income taxes   (28,044 )     (10,064 )     17,818       2,566       (47,830 )     11,160       1,607    
Minus: Interest income   5,692       3,716       4,839       697       53,494       21,078       3,036    
Minus: Interest expenses   (60,963 )     (49,490 )     (40,652 )     (5,855 )     (274,184 )     (198,589 )     (28,603 )  
Minus: Loss on debt extinguishment   -       (29,841 )     -       -       -       (29,841 )     (4,298 )  
Minus: Exchange gain   7,248       8,511       28,849       4,155       72,394       56,341       8,115    
Minus: Gain  from equity method investment   40,231       2,852       12,591       1,813       52,355       36,018       5,188    
Minus: Other income   20,115       23,894       189       27       30,430       28,556       4,113    
Minus: Other expenses   (1,848 )     (1,010 )     (1,825 )     (263 )     (3,701 )     (16,449 )     (2,369 )  
Plus: depreciation   105,355       122,484       129,243       18,615       402,035       478,862       68,970    
Plus: amortization   46,917       44,452       47,335       6,818       189,257       186,901       26,919    
Plus: share-based compensation expense   40,119       33,381       56,673       8,163       190,027       118,729       17,101    
Plus: changes in the fair value of contingent purchase consideration payable   5,060       (12,285 )     (67,197 )     (9,678 )     43,325       (93,307 )     (13,439 )  
Plus: impairment of long-lived assets    -        -        392,947       56,596       -        392,947       56,596    
Adjusted EBITDA   102,130       67,916       51,985       7,489       540,411       243,936       35,134    
Adjusted EBITDA margin 10.4 %   7.0 %   5.8 %   5.8 %   14.9 %   6.7 %   6.7 %  
                   
                   
                   
Adjusted net loss (29,128 )   (84,107 )   (66,092 )   (9,520 )   (10,804 )   (332,857 )   (47,940 )  
Less: Net (profit) loss attributable to noncontrolling interest   (11,194 )     37,579       41,951       6,042       (26,824 )     114,922       16,552    
Adjusted net loss attributable to the Company's ordinary shareholders   (40,322 )   (46,528 )   (24,141 )   (3,478 )   (37,628 )   (217,935 )   (31,388 )  
                   
Adjusted loss per share                  
Basic (0.08 )   (0.02 )   (0.08 )   (0.01 )   (0.06 )   (0.40 )   (0.06 )  
Diluted (0.08 )   (0.02 )   (0.08 )   (0.01 )   (0.06 )   (0.40 )   (0.06 )  
Shares used in adjusted loss per share computation:                  
Basic* 523,366,544     682,146,465     681,210,352     681,210,352     492,065,239     617,169,833     617,169,833    
Diluted* 523,366,544     682,146,465     681,210,352     681,210,352     492,065,239     617,169,833     617,169,833    
                   
Adjusted loss per ADS (6 ordinary shares equal to 1 ADS)                  
Basic (0.48 )   (0.12 )   (0.48 )   (0.07 )   (0.36 )   (2.40 )   (0.35 )  
Diluted (0.48 )   (0.12 )   (0.48 )   (0.07 )   (0.36 )   (2.40 )   (0.35 )  
                   
* Shares used in adjusted loss/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    
    September 30, 2016     December 31, 2016  
    RMB       RMB     US$  
    (Unaudited)        (Unaudited)       (Unaudited)   
CASH FLOWS FROM OPERATING ACTIVITIES          
Net loss   (171,548 )     (485,207 )     (69,885 )  
Adjustments to reconcile net loss to net cash generated from   operating activities:          
Foreign exchange gain   (8,511 )     (28,849 )     (4,155 )  
Changes in the fair value of contingent purchase consideration   payable   (12,285 )     (67,197 )     (9,678 )  
Depreciation of property and equipment   122,484       129,243       18,615    
Amortization of intangible assets   45,683       46,103       6,640    
Provision for doubtful accounts and other receivables   24,091       48,706       7,015    
Share-based compensation expense   33,382       56,672       8,162    
Loss on debt extinguishment   29,841       -       -    
Deferred income taxes benefit   (7,969 )     (31,605 )     (4,552 )  
Gain from equity method investment   (2,852 )     (12,591 )     (1,813 )  
Impairment of long-lived assets   -       392,947       56,596    
Changes in operating assets and liabilities          
Restricted cash   (67,455 )     11,846       1,706    
Inventories   2,214       1,617       233    
Accounts and notes receivable   (32,229 )     51,084       7,358    
Unrecognized tax expense   717       5,984       862    
Prepaid expenses and other current assets   32,589       (9,855 )     (1,419 )  
Amounts due from related parties   (8,839 )     (6,359 )     (916 )  
Accounts and notes payable   (22,603 )     (20,145 )     (2,901 )  
Accrued expenses and other payables   6,362       25,348       3,652    
Deferred revenue   (20,967 )     (9,192 )     (1,324 )  
Advances from customers   27,288       12,473       1,796    
Income taxes payable   13,594       (14,864 )     (2,141 )  
Amounts due to related parties   834       4,031       581    
Deferred government grants   (2,291 )     (1,344 )     (194 )  
Gain from cost method investment   (5,160 )     -       -    
Net cash (used in) generated from operating activities     (23,630 )     98,846       14,238    
CASH FLOWS FROM INVESTING ACTIVITIES          
Purchases of property and equipment   (140,291 )     (126,341 )     (18,197 )  
Purchases of intangible assets   (5,742 )     (9,910 )     (1,427 )  
Payment for asset acquisition   (25,024 )     (6,859 )     (988 )  
Receipt of loans from third parties   -       40,000       5,761    
Payments for short-term investments   -       (272,914 )     (39,308 )  
Proceeds received from maturity of short-term investments   -       10,000       1,440    
Payments for long-term investments   -       (5,025 )     (724 )  
Proceeds from long-term investments   11,269       -       -    
Minority investment in ZJK Energy   -       4,000       576    
Net cash used in investing activities     (159,788 )     (367,049 )     (52,867 )  
CASH FLOWS FROM FINANCING ACTIVITIES          
Restricted cash   (1,623,127 )     (76,284 )     (10,987 )  
Proceeds from exercise of stock options   401       662       95    
Proceeds from long-term bank borrowings   49,650       54,620       7,867    
Proceeds from short-term bank borrowings   1,570,676       37,000       5,329    
Repayments of short-term bank borrowings   (30,000 )     (123,000 )     (17,716 )  
Repayments of long-term bank borrowings   (6,084 )     (27,003 )     (3,889 )  
Repayments of 2017 Bonds   (1,596,335 )     -       -    
Consideration paid to selling shareholders   -       (142 )     (20 )  
Prepayment for shares repurchase plan   (27,245 )     28,004       4,033    
Payments for shares repurchase plan   (13,058 )     (29,607 )     (4,264 )  
Payments for capital leases   (41,038 )     (61,616 )     (8,875 )  
Net cash used in financing activities     (1,716,160 )     (197,366 )     (28,427 )  
                   
Effect of foreign exchange rate changes on cash and short   term investments     6,991       100,505       14,476    
Net decrease in cash and cash equivalents     (1,892,587 )     (365,064 )     (52,580 )  
Cash and cash equivalents at beginning of period     3,555,069       1,662,482       239,447    
Cash and cash equivalents at end of period     1,662,482       1,297,418       186,867    
         
Investor Relations Contacts:21Vianet Group, Inc.Calvin Jiang+86 10 8456 2121IR@21Vianet.comICR, Inc.Xueli Song+1 (646) 405-4922IR@21Vianet.com