VNET Group (NASDAQ:VNET) reported second-quarter 2026 revenue growth driven by its wholesale internet data center business, while management said demand for AI computing infrastructure continued to support new orders, capacity expansion and longer-term customer reservations.
Total net revenue rose 14.2% year over year to RMB 2.78 billion. Adjusted EBITDA increased 25.4% to RMB 918.3 million, and adjusted net income was RMB 7.4 million, compared with an adjusted net loss in the prior-year quarter, according to Peter Zhang, senior vice president of operational finance.
Wholesale Orders and Capacity Expansion
Rotating President Wen Teng said VNET secured 347 megawatts of new orders during the quarter, including 345 megawatts from its wholesale IDC business. The wholesale order came from a leading cloud service provider for a data center in the greater Beijing area.
Including 517 megawatts of orders announced in the prior quarter, VNET’s wholesale IDC business secured 862 megawatts of new orders in the first half of 2026. The company also received about 2 megawatts of retail orders from customers in IT services, local services and financial services.
As of June 30, wholesale capacity in service had increased 49.4% year over year to 1,007 megawatts, surpassing one gigawatt for the first time. Customer-utilized wholesale capacity increased 45.5% to 744 megawatts, resulting in a utilization rate of 73.9%. Mature capacity utilization was 92.5%.
VNET said 96.3% of its in-service wholesale capacity was committed by customers. Its 585 megawatts of wholesale capacity under construction was 94.2% pre-committed. More than 90% of wholesale IDC revenue was recurring, and the weighted average remaining lease term for committed capacity was seven years.
Customer reservations stood at 355 megawatts at the end of the quarter, bringing total orders and reservations to more than 1.2 gigawatts. Teng said reservations are typically included in the same sales agreements as firm orders and represent future expansion capacity locked in by customers at the same location. He said all customer reservations historically had converted into firm orders, although timing depends on customers’ deployment schedules.
- Approximately 287 megawatts of orders are scheduled for delivery in 2026.
- About 345 megawatts are expected to be delivered in 2027.
- Roughly 230 megawatts are scheduled for delivery in 2028 and beyond.
AI Demand, Supply Constraints and Pricing
Management said AI training and inference workloads were supporting demand from leading internet companies, cloud providers and AI-focused businesses. Teng said several major companies were expected to issue gigawatt-scale tenders in 2026, primarily in national hubs under China’s Eastern Data, Western Computing Initiative.
While national data center capacity continues to expand, Teng said there is a structural mismatch between aggregate supply and the availability of high-power computing resources. He cited power availability and chip supply chains as constraints on effective computing-capacity supply, adding that multiple industry analysts expect the imbalance to continue until around 2028.
On pricing, Teng said existing projects would continue to follow contracted rates. For new projects, VNET will consider regional peer pricing, construction costs, resource scarcity, competitive conditions and targeted returns.
Management said wholesale customer move-ins were steady in the second quarter and could improve marginally in the second half of 2026. Teng attributed the expected improvement partly to the planned release of domestic chip production capacity, while noting that customers’ model-development and project-implementation timelines also affect deployment pace.
Revenue Mix, Margins and Capital Spending
Wholesale revenue increased 29.3% year over year to RMB 1.10 billion, accounting for 39.8% of total revenue and exceeding retail revenue for a second consecutive quarter. Retail revenue rose 9.1% to RMB 1.05 billion, while non-IDC business revenue increased 1.1% to RMB 628.4 million.
Retail IDC capacity in service totaled 50,081 cabinets, with utilization stable at 64.5%. Monthly recurring revenue per retail cabinet increased to RMB 9,799.
Adjusted cash gross profit rose 9.4% to RMB 1.16 billion. Adjusted cash gross margin declined to 41.8% from 43.6% a year earlier, which Zhang attributed primarily to higher utility costs for customers. In response to a question on sequential margin movement, he also cited substantially higher electricity usage in the second quarter under a pass-through mechanism and a one-off gain recorded in the first quarter.
Adjusted EBITDA margin improved to 33.0% from 30.1% a year earlier. Zhang said the company intends to continue pursuing cost reductions through scale, headcount controls and the use of AI tools.
Capital expenditures totaled RMB 3.55 billion in the first half, largely for wholesale data center construction and capacity expansion. VNET maintained its full-year CapEx forecast of RMB 10 billion to RMB 12 billion, supporting planned delivery of 450 to 500 megawatts during 2026.
Resource Pipeline and Overseas Strategy
VNET said its total capacity in mainland China exceeded 3.5 gigawatts at the end of the quarter, and wholesale resource capacity exceeded 4 gigawatts after an approximately 1.5-gigawatt increase during the quarter. The company said it added more than 900 megawatts of domestic resource reserves, primarily in Inner Mongolia and East China, as well as approximately 500 megawatts of overseas resources.
The company plans to deliver 585 megawatts over the next 12 months, including about 333 megawatts in the second half of 2026 and about 252 megawatts in the first half of 2027. Most of those deliveries are expected to come from its Ulanqab IDC campus.
Management said its first overseas project is expected to be delivered in Southeast Asia, while the company also evaluates opportunities in the Middle East and Europe. Zhang and Executive Vice President Sharon Liu said overseas development will remain prudent, with land acquired using the company’s funds and mechanical and electrical buildouts beginning only after firm customer orders are secured.
VNET also announced a strategic cooperation agreement with CATL focused on integrating computing and energy infrastructure. Teng said the companies aim to develop gigawatt-scale compute-energy facilities, distributed compute-energy networks and a zero-carbon token ecosystem, though he did not provide a timetable or financial targets for the partnership.
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.
