The depreciation arrives first

VNET lifted second-quarter net revenues 14.2 per cent to 2.78 billion yuan, and its wholesale arm, which leases entire data-centre halls rather than individual cabinets, grew 29.3 per cent. Gross profit still fell 7.8 per cent to 505.2 million yuan, and the gross margin narrowed to 18.2 per cent from 22.5 per cent. The company names the cause itself: depreciation on the capacity it has been building.[1]

The company's preferred measures climb while the accounting ones fall. Adjusted cash gross margin, which strips out depreciation, amortisation and share-based pay, was 41.8 per cent against 43.6 per cent a year earlier. Adjusted EBITDA rose 25.4 per cent to 918.3 million yuan and its margin reached 33.0 per cent from 30.1 per cent, helped by adjusted operating expenses falling to 9.8 per cent of revenue from 15.0 per cent. That improvement comes from the expense line. The margin on the capacity itself, measured before depreciation, moved the other way.[1]

The megawatts still filling

Capacity in service reached 1,007 megawatts at the end of June, up from 674 megawatts a year earlier, and customers were using 744 megawatts, up from 511 megawatts. Because the build ran ahead of the take-up, the overall utilisation rate slipped to 73.9 per cent from 75.9 per cent. The decisive rate sits one level down: utilisation of ramp-up capacity, meaning halls below 80 per cent, fell to 36.6 per cent from 45.0 per cent at the end of March.[1]

This is the assumption carrying the year. VNET guides to capital expenditure of 10 billion to 12 billion yuan for 2026 against adjusted EBITDA of 3.55 billion to 3.75 billion yuan, so roughly three units of spending go out for every unit of adjusted cash profit, and the return rests on how fast ramp-up halls fill. A quarter of heavy delivery can lower that rate on its own, because new campuses enter the pool empty, so a single reading settles nothing. The weight sits on the next one.[1]

The schedule for the capital

On 13 August I argued of Nebius that the adjusted profit had arrived while the schedule for the capital had not. VNET puts numbers on the same gap. Net cash from operating activities was 218.1 million yuan in the quarter against 366.6 million yuan a year earlier, while in the same three months the company raised 3.77 billion yuan of new debt, refinancing, equity and other funding. At the end of June it carried 4.18 billion yuan of short-term debt and 19.24 billion yuan of long-term debt against 7.21 billion yuan of cash, restricted cash and short-term investments.[1], [2]

The observable test is narrow. If the 585 megawatts under construction enter service at the pace of the past year, the ramp-up utilisation rate stays below 45.0 per cent in the quarter ending 30 September, and the gap between adjusted EBITDA and gross profit widens again rather than closing. That is the rate to watch: it decides whether the megawatts already built are an asset or a cost.[1]