VNET revenue rises 19.8% on wholesale surge as CATL eyes stake

VNET Group (NASDAQ:VNET) recorded a 19.8% increase in first-quarter revenue, driven by accelerating enterprise demand for its wholesale data center space, even as one-off tax expenses tied to capital transactions widened its net loss.

The Beijing-based carrier-neutral internet data center services provider reported unaudited net revenues of RMB2.69 billion ($384.2 million) for the three months ended March 31, 2026.

The expansion highlights strong underlying momentum in China’s artificial intelligence and cloud infrastructure sectors, which have heavily boosted the company's large-scale data facilities.

Operating momentum was anchored by VNET’s wholesale internet data center (IDC) division, where revenue surged 58.1% year-over-year.

The company expanded its total wholesale capacity in service to 907 megawatts during the quarter, maintaining a healthy utilization rate of 75.7% across its expanded footprint.

Adjusted EBITDA advanced 30.6% year-over-year to RMB891.5 million ($127.2 million), reflecting improved operational leverage from its newer campus deliveries.

However, the rapid expansion and corporate restructuring squeezed some profitability metrics.

Gross margin dipped to 22.9%, down from 25.2% in the prior-year period, as depreciation and power costs from newly commissioned facilities scaled up.

VNET’s net loss widened significantly to RMB531.8 million ($75.9 million) for the quarter, compared to a loss of RMB185.3 million a year earlier.

The decline was heavily affected by RMB486.2 million in non-recurring tax expenses related to recent capital transactions.

To help optimize its asset-heavy balance sheet, VNET confirmed it has advanced its capital-recycling initiatives by successfully listing two public Real Estate Investment Trust (REIT) infrastructure projects, providing a new path to monetize mature data assets.

The company also highlighted a major upcoming ownership shift.

Contemporary Amperex Technology Co. Limited (CATL), the world’s largest electric vehicle battery manufacturer, has proposed a strategic equity investment through its affiliates.

The secondary transaction, which is expected to close later this year subject to final approvals, could see CATL affiliates acquire up to a 38.1% stake in VNET.

The partnership is slated to center on developing next-generation green power solutions and AI-optimized data infrastructure.

Meanwhile, VNET reaffirmed its previously issued full-year 2026 guidance, continuing to project total net revenues between RMB11.5 billion and RMB11.8 billion, alongside adjusted EBITDA of RMB3.55 billion to RMB3.75 billion.