21Vianet Group, Inc. Reports First Quarter 2012 Financial Results

21Vianet Group, Inc., the largest carrier-neutral Internet data center services provider in China, today announced its unaudited financial results for the first quarter of 2012. The Company will hold a conference call at 8:00 a.m. Eastern Time on May 17, 2012. Dial-in details are provided at the end of the release.

Mr. Josh Chen, Founder, Chairman and Chief Executive Officer of the Company, stated, "We are very pleased to announce strong first quarter 2012 results, which continue to verify the strong underlying growth fundamentals of our business. In anticipation of bringing over 2,000 cabinets of new capacity online in the second and third quarter this year, we strategically managed the first quarter's capacity demand by slightly increasing our total cabinet count by 211 cabinets. Simultaneously, we as well increased capacity utilization to over 82%. With this expansion roll-out in our self-built data centers, we remain on track to reach 13,000 cabinets by year-end 2012. We believe that these initiatives will furthermore strengthen our capacity, service offerings and market leadership to better meet China's surging demand for capacity over the coming quarters."

Mr. Shang Hsiao, President and Chief Financial Officer of the Company, commented, "We are pleased with our solid financial and operational results exemplified by our continued strong margins, high utilization rates, low churn rates as so then as our stable base of over 1,600 clients. During our hosting business remained the key growth driver while the quarter, managed network services once again outperformed our expectations, bolstered by strong demand in China for better and faster internet data transmission. We will continue to invest prudently in expanding our capacity and service offerings to support our growth, during driving returns for our shareholders."

REVENUES: Net earnings for the first quarter of 2012 increased by 64.2% to RMB345.8 million from RMB210.6 million in the comparative period in 2011.

Net earnings from hosting and related services increased by 47.0% to RMB189.5 million in the first quarter of 2012 from RMB128.9 million in the comparative period in 2011, primarily due to an increase in the total number of cabinets pursuant to this agreement management as then as the utilization rate in both our self-built and partnered data centers, which was attributable to growing customer demand.

Net earnings from managed network services increased by 91.3% to RMB156.3 million in the first quarter of 2012 from RMB81.7 million in the comparative period in 2011, primarily driven by an increase in network capacity demand for data transmission services. Excluding earnings contributed by Guangzhou Gehua Network Innovation and Development Co., Ltd., a business the Company acquired while the fourth quarter of 2011, net earnings from managed network services increased by 61.8% to RMB132.2 million from RMB81.7 million in the prior year comparative period.

Adjusted gross margin remained stable at 30.4%, compared to 30.0% in the comparative period in 2011, primarily due to a balanced increase in new self-built and partnered data centers. The Company plans to continue to shift its revenue mix towards a higher percentage of self-built data centers, which carry slightly higher gross margins relative to partnered data centers.

Change in the fair value of contingent purchase consideration payable was RMB43.2 million while the first quarter of 2012. This expense was primarily due to an increase in the fair value of cash and share-based contingent purchase considerations payable as of March 31, 2012 associated with the Company's acquisitions of the Managed Network Entities and Gehua.

Adjusted operating expenses, which exclude share-based compensation expenses and the changes in the fair value of contingent purchase consideration payable, increased to RMB55.8 million from RMB31.2 million in the comparative period in 2011. As a percentage of net revenue, adjusted operating expenses were 16.1%, compared with 14.8% in the comparative period in 2011.

The second quarter of 2012

For the second quarter of 2012, the Company expects net earnings to be in the range of RMB364 million to RMB370 million. Adjusted EBITDA is expected to be in the range of RMB70 million to RMB76 million. These forecasts reflect the Company's current and preliminary view, which is subject to change.

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 revenues per share, adjusted diluted revenues per share, adjusted basic revenues 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 under 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 to boot to results prepared under U.S. GAAP, however should not be considered a substitute for, or superior to, U.S. GAAP results. Moreover, the Company's calculation of the non-GAAP financial measures may be different from the calculation used by other companies, and in a nutshell comparability may be limited.

21Vianet Group, Inc. is the largest carrier-neutral Internet data center services provider in China. 21Vianet provides hosting and related services, managed network services and cloud computing infrastructure services, improving the reliability, security and speed of its clients' Internet connections through 21Vianet's Internet infrastructure. Clients 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. Should the contingency arise, 21Vianet's proprietary smart routing research, BroadEx, enables clients' data to be delivered across the Internet in a faster and more reliable manner. 21Vianet operates in 33 cities throughout China, servicing a diversified and loyal base of more than 1,600 customers that span many industries ranging from Internet companies to government entities and blue-chip enterprises to small- to mid-sized enterprises.

Non-GAAP financial measure

2Adjusted EBITDA margin is a non-GAAP financial measure, which is defined as adjusted EBITDA as a percentage of total net earnings.