You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under, see “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. A. Operating Results Overview We are a leading carrier-neutral and cloud-neutral data center services provider in China. We have one of the largest carrier-neutral data center networks in China with an aggregate capacity in service of 889MW from our wholesale IDC business and 49,863 cabinets in service from our retail IDC business as of December 31, 2025. We offer managed hosting services to host our customers’ servers and networking equipment and provide interconnectivity to improve the performance, availability and security of their internet infrastructure. We also provide cloud services through partnerships to cover public, private and hybrid cloud scenarios. In addition, we provide customized enterprise VPN services and solutions, including SD-WAN, to enterprises across various industries. These value-added services strengthen our capability to provide quality services and meet our customers’ additional demands. We historically provided managed network services, consisting of CDN services, hosting area network services, route optimization and last-mile broadband services. In September 2017, we disposed of 66.67% of the equity interests in six wholly-owned subsidiaries engaged in the managed network services business, collectively referred as to the WiFire Entities, and the remaining 33.33% equity interest in the WiFire Entities was disposed in late 2023. In September and December 2017, we disposed all of our equity interests and shares in Sichuan Aipu Network Co., Ltd. and its affiliates, collectively referred as the Aipu Group, engaged in the last-mile broadband business. As a result of these transactions, we deconsolidated the financial results related to the managed network services business from our consolidated statements of operations starting from the fourth quarter of 2017. Our total net revenues generated from providing hosting and related services increased from RMB7,412.9 million in 2023 to RMB8,259.1 million in 2024, and further increased to RMB9,949.3 million in 2025, representing a CAGR of 15.9% from 2023 to 2025. We recorded a net loss of RMB2,579.2 million in 2023, a net income of RMB248.4 million in 2024, and recorded a net loss of RMB133.4 million in 2025, which reflected share-based compensation expenses of RMB35.3 million, RMB148.6 million, and RMB25.8 million in 2023, 2024, and 2025, respectively. Our results of operations also reflect the effects of our acquisitions and dispositions during the respective periods. Factors Affecting Our Results of Operations Our business and results of operations are generally affected by the development of China’s data center services market, which has grown rapidly in recent years. According to Frost & Sullivan, the total revenue of China’s data center services market is expected to grow at a CAGR of 13.2% from 2025 to 2030, reaching RMB339.0 billion by 2030. However, any adverse changes in the data center services market in China may harm our business and results of operations. While our business is generally influenced by factors affecting the data center services market in China, we believe that our results of operations are more directly affected by company-specific factors, including capacity in service and utilization rate, monthly recurring revenues and churn rate, pricing, growth in complementary markets and optimization of our cost structure. Capacity in Service and Utilization Rate Our revenues are directly affected by our capacity in service and the utilization rate of our capacity. As of December 31, 2025, our wholesale IDC business had a capacity in service of 889MW and commitment and utilization rates of 95.3% and 70.1%, respectively. As of December 31, 2025, our retail IDC business had a capacity in service of 49,863 cabinets and a utilization rate of 64.0%. Our period-end utilization rate fluctuates due to the continuous changes in both the amount of our utilized capacity and total capacity in service. Our future results of operations and growth prospects will largely depend on our ability to increase our total capacity in service while maintaining an optimal utilization rate. 109 Table of Contents With the rapid growth of China’s internet industry, demand for cabinet spaces has increased significantly and we do not always have sufficient self-built data center capacity to meet such demand. It usually takes 9 to 18 months to build a data center together with cabinets and equipment installed. To meet our customers’ immediate demand, we partner with China Telecom, China Unicom, China Mobile or other parties and lease cabinets from them. Due to the time needed to build data centers and the long-term nature of these investments, if we overestimate the market demand for cabinets, it will lower our utilization rate and negatively affect our results of operations. Monthly Recurring Revenues and Churn Rate Our average monthly recurring revenues and churn rate directly affect our results of operations. Our hosting and related services are based on a recurring revenue model. We consider these services recurring as we generally bill our customers and recognize revenues on a fixed and recurring basis each month during the terms of our service contracts with them. Our non-recurring revenues are primarily comprised of fees charged for installation services, additional bandwidth used by customers beyond the contracted amount and other value-added services. These services are considered to be non-recurring as they are billed and recognized over the period of the customer service agreement. We use “monthly recurring revenues” to measure the revenues we recognize from our managed hosting services on a recurring basis each month. In 2023, 2024, and 2025, our recurring revenues were consistently around 90% of our net revenues. Our average monthly recurring revenues per cabinet for retail IDC business were RMB8,852, RMB8,769, and RMB9,045 for the years ended December 31, 2023, 2024, and 2025, respectively. We use the churn rate to measure the reduction of monthly revenues that is attributable to the termination of customer contracts as a percentage of total monthly recurring revenues of the previous month. Our average monthly churn rate for our managed hosting services was 0.4% in 2023, 0.2% in 2024, and 0.1% in2025. Pricing Our results of operations also depend on the price level of our services. Due to the quality of our services and our optimized interconnectivity among carriers and networks, we are generally able to command premium pricing for our services. Nonetheless, because we are generally regarded as a premium data center and network service provider, many customers only place their mission critical servers and equipment, but not other non-critical functions, in our data centers. As we try to acquire more business from new and existing customers, expand into new markets, or try to adapt to changing market conditions, we may need to lower our prices or provide other incentives to compete effectively. Growth in New and Complementary Markets Our results of operations also depend on the growth of our cloud service business and VPN service business that complement our core managed hosting service business. Cloud services, largely through our partnerships with Microsoft and other cloud service providers, have continually contributed to our results of operations since 2013. While our cloud computing platforms are now supporting a significant number of customers, we believe the cloud computing market in China is still in its early stages. Key factors for growth in this market include signing up services from new customers, improving utilization rates of cloud computing resources with existing customers introducing well-developed applications to improve cloud computing adoption rates, and partnering with more cloud providers to offer a comprehensive cloud-neutral platform. As one of the largest enterprise VPN service providers in the Asia Pacific region, we have experienced and expect continual growth in this market to meet customers’ growing demand for enterprise-grade VPN services with secure, dedicated connections. Key growth drivers include adding new customers, increasing the number of connections with existing customers and realizing revenue synergies with our other business groups. 110 Table of Contents Our Cost Structure Our ability to maintain and improve our gross margins depends on our ability to effectively manage our cost of revenues, which consist of telecommunications costs and other data center related costs. Telecommunications costs consist of (i) expenses associated with acquiring bandwidth and related resources from carriers for our data centers, and (ii) rentals, utilities and other costs in connection with the cabinets we lease from our partnered data centers. Other data center related costs include utilities and rental expenses for our self-built data centers, employee payroll, depreciation and amortization of our property and equipment, and other related costs. The changes in these costs usually reflect the changes in the number of cabinets under management and our headcount. The mix of self-built data centers and partnered data centers also affects our cost structure. The gross margin for cabinets located in our partnered data centers is generally lower than that of cabinets located in our self-built data centers. This is because telecommunication carriers who lease cabinet spaces to us for our partnered data centers typically demand a profit on top of their costs in connection with the leasing of cabinet spaces to us. We plan to continue to lease data centers from such carriers or purchase data center facilities to meet the immediate market demand while building new or expanding our existing self-built data centers in the Greater Beijing Area, Yangtze River Delta, Greater Bay Area and other regions in China. If we cannot effectively manage the market demand and increase the number of cabinets located in self-built data centers relative to partnered data centers, we may not be able to improve our gross margins. Key Components of Results of Operations Net Revenues The following table sets forth our net revenues for the years presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ (in thousands) Net revenues 7,412,930 8,259,069 9,949,261 ​ We generate all of our revenues from the hosting and related services business. We provide retail IDC business to house our customers’ servers and networking equipment in our data centers and wholesale IDC business to deliver customized data center sites to our customers based on their unique requirements. We also provide non-IDC business including cloud services and VPN services, as part of our hosting and related services business. The contracts with our wholesale customers generally have terms ranging from eight to ten years. The contracts with our retail customers generally have terms ranging from one to three years and most of these contracts have an automatic renewal provision. Our customers are generally billed on a monthly basis according to the services used in the previous month. Cost of Revenues Our cost of revenues primarily consists of telecommunications cost and other costs. The following table sets forth, for the periods indicated, our cost of revenues in absolute amounts and as a percentage of our total net revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ ​ RMB ​ ​ ​ Net Revenues ​ ​ ​ RMB ​ ​ ​ Net Revenues ​ ​ ​ RMB ​ ​ ​ Net Revenues ​ (in thousands, except percentages) Cost of revenues: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Telecommunications costs 2,799,673 37.8 2,807,993 34.0 2,797,167 28.1 Others 3,320,772 44.8 3,618,921 43.8 4,959,605 49.9 Total cost of revenues 6,120,445 82.6 6,426,914 77.8 7,756,772 78.0 ​ ​ 111 Table of Contents Telecommunications costs refer to expenses incurred in acquiring telecommunication resources from carriers for our data centers, including bandwidth and cabinet leasing costs. Cabinet leasing costs cover rentals, utilities and other costs associated with the cabinets we lease from our partnered data centers. Our other costs of revenues include utilities costs for our self-built data centers, depreciation and amortization, employee payroll and other compensation costs and other miscellaneous items related to our service offerings. We expect that our cost of revenues of hosting and related services will continue to increase as our business expands, both organically and as a result of acquisitions. Operating Expenses Our operating expenses consist of sales and marketing expenses, general and administrative expenses and research and development expenses. The following table sets forth our operating expenses, both as an absolute amount and as a percentage of total net revenues for the periods indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ % of Net ​ ​ ​ % of Net ​ ​ ​ % of Net ​ ​ ​ ​ RMB ​ ​ ​ Revenues ​ ​ ​ RMB ​ ​ ​ Revenues ​ ​ ​ RMB ​ ​ ​ Revenues ​ (in thousands, except percentages) Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing expenses(1) 266,207 3.6 263,756 3.2 279,201 2.8 Research and development expenses(1) 322,220 4.3 246,612 3.0 261,133 2.6 General and administrative expenses(1) 541,850 7.3 659,030 8.0 796,861 8.0 Provision for doubtful debt 368,505 5.0 107,899 1.3 102,749 1.0 Impairment of long-lived assets ​ 506,686 6.8 — — — — Impairment of goodwill ​ 1,364,191 ​ 18.4 ​ — ​ — ​ — ​ — Operating income ​ (106,273) (1.4) (114,585) (1.4) (27,755) (0.3) Total Operating Expenses(1) ​ 3,263,386 ​ 44.0 ​ 1,162,712 ​ 14.1 ​ 1,412,189 ​ 14.1 Note: (1) Includes share-based compensation expense as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ (in thousands) Allocation of share-based compensation expenses: ​ ​ ​ ​ ​ ​ Sales and marketing expenses 3,141 20,048 1,677 Research and development expenses 3,272 5,249 949 General and administrative expenses 28,883 118,374 21,956 Total share-based compensation expenses 35,296 143,671 24,582 ​ Sales and Marketing Expenses Our sales and marketing expenses primarily consist of compensation and benefit expenses for our sales and marketing staff, including share-based compensation expenses, as well as advertisement and agency service fees. Our sales and marketing expenses also include office-related expenses and business development expenses associated with our sales and marketing activities. To a lesser extent, our sales and marketing expenses include depreciation of equipment used associated with our selling and marketing activities. 112 Table of Contents Research and Development Expenses Our research and development expenses primarily include salaries, employee benefits, share-based compensation expenses and other expenses incurred in connection with our technological innovations, such as our proprietary smart routing technology and cloud computing infrastructure service technologies. General and Administrative Expenses Our general and administrative expenses primarily consist of compensation and benefits paid to our management and administrative staff, including share-based compensation expenses, the cost of third-party professional services, and depreciation and amortization of property and equipment used in our administrative activities. Our general and administrative expenses, to a lesser extent, also include office rent, office-related expenses, and expenses associated with training and team building activities. Share-Based Compensation Expenses We recorded share-based compensation expenses in connection with share options and RSUs granted under our 2010 Plan, 2014 Plan and 2020 Plan. We recorded share-based compensation expenses in the amount of RMB35.3 million, RMB143.7 million, and RMB24.6 million for the years ended December 31, 2023, 2024, and 2025, respectively, in connection with our share-based incentive grants. Taxation The Cayman Islands The Cayman Islands currently does not levy taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our company levied by the government of the Cayman Islands, except for stamp duties that may be applicable on instruments executed in, or after execution brought within the jurisdiction of, the Cayman Islands. The Cayman Islands is not a party to any double taxation treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands. Additionally, upon payments of dividends by our company to the shareholders, no Cayman Islands withholding tax will be imposed. The British Virgin Islands The Company and all dividends, interest, rents, royalties, compensation and other amounts paid by the Company to persons who are not resident in the BVI and any capital gains realized with respect to any shares, debt obligations, or other securities of the Company by persons who are not resident in the BVI are exempt from all provisions of the Income Tax Ordinance in the BVI. No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable by persons who are not resident in the BVI with respect to any shares, debt obligation or other securities of the Company. All instruments relating to transfers of property to or by the Company and all instruments relating to transactions in respect of the shares, debt obligations or other securities of the Company and all instruments relating to other transactions relating to the business of the Company are exempt from payment of stamp duty in the BVI. This assumes that the Company does not hold an interest in real estate in the BVI. There are currently no withholding taxes or exchange control regulations in the BVI applicable to the Company or its members. Hong Kong Subsidiaries in Hong Kong are subject to Hong Kong profits tax rate of 16.5% for the years ended December 31, 2023, 2024, and 2025. A two-tiered profits tax rates regime was introduced in 2018 under which the first HK$2.0 million of assessable profits earned by an eligible company will be taxed at 8.25% and the remaining profits will continue to be taxed at 16.5%. There is an anti-fragmentation measure where each group will have to nominate only one company in the group to benefit from the progressive rates. Additionally, upon payments of dividends by the Company to its shareholders, no holding tax will be imposed. 113 Table of Contents The PRC The Company’s PRC subsidiaries are incorporated in the PRC and subject to the statutory rate of 25% on the taxable income in accordance with the Enterprise Income Tax Law, or the EIT Law, which was effective on January 1, 2008 and amended on December 29, 2018, except for certain entities eligible for preferential tax rates. Dividends, interests, rent or royalties payable by the Company’s PRC subsidiaries to any non-PRC resident enterprise and proceeds from any such non-PRC resident enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the corresponding non-PRC resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangement with China that provides a reduced withholding tax rate or an exemption from withholding tax. VNET Beijing was qualified as a High and New Technology Enterprise, or HNTE, since 2008 and is eligible for a 15% preferential tax rate. In October 2014, VNET Beijing obtained a new certificate and renewed the certificate in October 2017, 2020 and 2023, with a validity term of three years. In accordance with the PRC Income Tax Law, an enterprise awarded with the HNTE certificate may enjoy a reduced EIT rate of 15%. For the years ended December 31, 2023, 2024, and 2025, the tax rate for VNET Beijing was 15%, 15% and 15%, respectively. From the year ended December 31, 2021 to the year ending December 31, 2030, certain subsidiaries located in Inner Mongolia Autonomous Region, Shaanxi Province and Sichuan Province, were qualified for a preferential tax rate of 15%. The preferential tax rate is awarded to companies that are located in West Regions of China which operate in certain encouraged industries. In October 2015, SH Blue Cloud, a subsidiary located in Shanghai, was qualified for a HNTE and became eligible for a 15% preferential tax rate. The HNTE certificate has been renewed in November 2018, November 2021 and December 2024 with a validity term of three years. For the years ended December 31, 2023, 2024, and 2025, SH Blue Cloud enjoyed a preferential tax rate of 15%. In November 2016, SZ DYX, a subsidiary located in Guangdong Province, was qualified for a HNTE and became eligible for a 15% preferential tax rate effective for three consecutive years. The HNTE certificate has been renewed in November 2019, December 2022 and December 2025, with a validity term of three years. For the years ended December 31, 2023, 2024, and 2025, SZ DYX enjoyed a preferential tax rate of 15%. In December 2016, BJ TenxCloud, a subsidiary located in Beijing was qualified for a HNTE and became eligible for 15% preferential tax rate effective for three consecutive years and the certificate was reapplied in December 2019, December 2022 and December 2025 with a validity term of three years. Accordingly, for the years ended December 31, 2023, 2024, and 2025, BJ TenxCloud enjoyed a preferential tax rate of 15%. In December 2025, SH Edge Connect, a subsidiary located in Shanghai, was qualified for a HNTE and became eligible for 15% preferential tax rate effective for three consecutive years with a validity term of three years. Accordingly, for the years ended December 31, 2023, 2024, and 2025, the applicable tax rate assessed for SH Edge Connect was 25%, 25% and 15%, respectively. The EIT Law also provides that enterprises established under the laws of foreign countries or regions and whose “place of effective management” is located within the PRC are considered PRC tax resident enterprises and subject to PRC income tax at the rate of 25% on worldwide income. The definition of “place of effective management” refers to an establishment that exercises, in substance, overall management and control over the production and business, personnel, accounting, properties, etc. of an enterprise. The administrative practice associated with interpreting and applying the concept of “place of effective management” is unclear. The Company does not believe that the legal entities organized outside the PRC should be considered as residents for EIT Law purposes. If such entity is deemed as a PRC tax resident, it will be subject to PRC income tax at the rate of 25% on its worldwide income under the EIT Law, meanwhile the dividends it receives from another PRC tax resident company will be exempted from 25% PRC income tax. 114 Table of Contents In November 2011, the Ministry of Finance and the State Taxation Administration jointly issued two circulars setting out the details of the pilot value-added tax, or VAT, reform program, which changed the charge of sales tax from business tax to VAT for certain pilot industries. The pilot VAT reform program initially applied only to the pilot industries in Shanghai, and was expanded to eight additional regions, including, among others, Beijing and Guangdong province, in 2012. In August 2013, the program was further expanded nationwide. In May 2016, the program was expanded to cover additional industry sectors such as construction, real estate, finance and consumer services. In November 2017, PRC State Counsel issued State Counsel Order 691 to abolish business tax, and issued the amendment to Interim Regulations of PRC Value Added Taxes, or the VAT Regulation, pursuant to which enterprises and individuals that (i) sell goods or labor services of processing, repair or replacement of goods, (ii) sell services, intangible assets, or immovables, or (iii) import goods within the territory of the PRC are subject to VAT. Effective from September 2012, the vast majority of services provided by VNET China and certain services provided by VNET Technology and VNET Beijing were subject to a VAT of 6%. On March 20, 2019, the Ministry of Finance, the State Taxation Administration and the General Administration of Customs jointly issued the Notice of Strengthening Reform of VAT Policies, or the Announcement No. 39. Pursuant to the Announcement No. 39, the generally applicable VAT rates are simplified to 13%, 9%, 6%, and nil, which became effective on April 1, 2019. In addition, a general VAT taxpayer is allowed to offset its qualified input VAT paid on taxable purchases against the output VAT chargeable on the telecommunication services and modern services provided by it. Pillar Two income taxes The Company is part of a multinational enterprise group which is subject to the Global AntiBase Erosion Model Rules (“Pillar Two model rules”) published by the Organisation for Economic Co-operation and Development. From January 1, 2025, the Company is liable to Pillar Two income taxes under the Hong Kong Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 for its earnings in the Hong Kong SAR and certain other jurisdictions where a domestic minimum top-up tax has not been implemented, including the Chinese mainland. Recently Issued Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 to our consolidated financial statements included elsewhere in this annual report. Inflation In the last three years, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the annual average percent changes in the consumer price index in China for 2023, 2024, and 2025 were 0.2%, 0.2%, and 0%, respectively. Although we have not been materially affected by inflation in the past, we cannot assure you that we will not be affected in the future by higher rates of inflation in China. 115 Table of Contents Results of Operations The following table sets forth our consolidated results of operations for the periods indicated both in absolute amount and as a percentage of our total net revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the results you may expect for future periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ % ​ ​ ​ RMB ​ ​ ​ % ​ (in thousands, except percentages) Consolidated Statements of Operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net revenues ​ 7,412,930 100.0 8,259,069 100.0 9,949,261 100.0 Cost of revenues ​ (6,120,445) (82.6) (6,426,914) (77.8) (7,756,772) (78.0) Gross profit ​ 1,292,485 17.4 1,832,155 22.2 2,192,489 22.0 Sales and marketing expenses ​ (266,207) (3.6) (263,756) (3.2) (279,201) (2.8) Research and development expenses ​ (322,220) (4.3) (246,612) (3.0) (261,133) (2.6) General and administrative expenses ​ (541,850) (7.3) (659,030) (8.0) (796,861) (8.0) Provision for doubtful debt ​ (368,505) (5.0) (107,899) (1.3) (102,749) (1.0) Impairment of long-lived assets ​ (506,686) (6.8) — — — — Impairment of goodwill ​ (1,364,191) ​ (18.4) ​ — ​ — ​ — ​ — Operating income ​ 106,273 1.4 114,585 1.4 27,755 0.3 Total operating expenses ​ (3,263,386) (44.0) (1,162,712) (14.1) (1,412,189) (14.1) Operating (loss) profit ​ (1,970,901) ​ (26.6) ​ 669,443 ​ 8.1 ​ 780,300 ​ 7.9 Interest income ​ 41,802 0.6 27,958 0.3 37,358 0.4 Interest expense ​ (312,172) (4.2) (400,975) (4.9) (598,625) (6.0) Impairment of long-term investments ​ (11,166) (0.2) — — — — Other income ​ 27,344 0.4 52,728 0.6 55,576 0.6 Other expenses ​ (16,086) (0.2) (27,290) (0.3) (18,433) (0.2) Changes in the fair value of financial instruments ​ (165,930) (2.2) (74,112) (0.9) (314,332) (3.2) Gain on debt extinguishment ​ — ​ — ​ 246,175 ​ 3.0 ​ — ​ — Gain on deconsolidation of a subsidiary ​ — ​ — ​ — ​ — ​ 469,838 ​ 4.7 Foreign exchange (loss) gain, net ​ (78,965) (1.1) (19,242) (0.2) 5,523 0.1 (Loss) income before income taxes and gain from equity method investments ​ (2,486,074) (33.5) 474,685 5.7 417,205 4.3 Income tax expenses ​ (114,374) (1.5) (234,229) (2.8) (557,510) (5.6) Gain from equity method investments ​ 3,279 0.0 7,967 0.1 6,884 0.1 Net (loss) income ​ (2,597,169) ​ (35.0) ​ 248,423 ​ 3.0 ​ (133,421) ​ (1.2) Net income attributable to noncontrolling interest ​ (46,667) (0.6) (65,223) (0.8) (67,518) (0.7) Net income attributable to redeemable noncontrolling interests ​ — ​ — ​ — ​ — ​ (50,903) ​ (0.5) Net (loss) income attributable to VNET Group, Inc. ​ (2,643,836) (35.6) 183,200 2.2 (251,842) (2.4) ​ Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Net Revenues Our net revenues increased by 20.5% from RMB8,259.1 in 2024 to RMB9,949.3 million in 2025, primarily due to expansion in capacity in service of wholesale IDC business. Cost of Revenues Our cost of revenues increase by 20.7% from RMB6,426.9 million in 2024 to RMB7,756.8 million in 2025, primarily due to increases in our utility costs attributable to the delivery of additional capacity. Gross Profit As a result of the foregoing, our gross profit increased by 19.7% from RMB1,832.2 million in 2024 to RMB2,192.5 million in 2025. Gross margin in the full year of 2025 was 22.0%, compared with 22.2% in the full year of 2024. Operating Expenses Our operating expenses increased by 21.5% from RMB1,162.7 million in 2024 to RMB1,412.2 million in 2025. Our operating expenses as a percentage of net revenues remained flat at 14.1% in both years. Sales and Marketing Expenses. Our sales and marketing expenses increased by 5.9% from RMB263.8 million in 2024 to RMB279.2 million in 2025, primarily due to increase in the staff costs. As a percentage of net revenues, our sales and marketing expenses decreased from 3.2% in 2024 to 2.8% in 2025. 116 Table of Contents Research and Development Expenses. Our research and development expenses increased by 5.9% from RMB246.6 million in 2024 to RMB261.1 million in 2025, primarily due to increase in the depreciation and agency service fees. As a percentage of net revenues, our research and development expenses decreased from 3.0% in 2024 to 2.6% in 2025. General and Administrative Expenses.Our general and administrative expenses increased by 20.9% from RMB659.0 million in 2024 to RMB796.9 million in 2025, primarily due to a increase in our staff costs. The percentage of general and administrative expenses to net revenue was 8.0% in both 2024 and 2025. Provision for doubtful debt.Our provision for doubtful debt decreased from RMB107.9 million in 2024 to RMB102.7 million in 2025. As a percentage of net revenues, our provision for doubtful debt decreased from 1.3% in 2024 to 1.0% in 2025. Interest Income Our interest income increased by 33.6% from RMB28.0 million in 2024 to RMB37.4 million in 2025. Interest Expense Our interest expense increased by 49.3% from RMB401.0 million in 2024 to RMB598.6 million in 2025, primarily due to the increases in bank and other borrowings. Other Income Our other income increased from RMB52.7 million in 2024 to RMB55.6 million in 2025. Other income comprises miscellaneous non-operating income that we generate. Other Expenses Our other expenses decreased from RMB27.3 million in 2024 to RMB18.4 million in 2025. Gain on Deconsolidation of a Subsidiary Our gain on deconsolidation of a subsidiary was RMB469.8 million in 2025 due to deconsolidate the subsidiary transferred to a holding-type real estate asset-backed plan (the “ABS Plan”). Changes in the Fair Value of Financial Instruments Changes in the fair value of financial instruments were a loss of RMB314.3 million in 2025, primarily due to the increase in the fair value of the 2027 Convertible Notes for the year ended December 31, 2025. Foreign Exchange Gain, Net We had a foreign exchange gain, net of RMB5.5 million in 2025, which represents unrealized net income caused by the appreciation of the U.S. dollar against the Renminbi. Income Tax Expenses We recorded income tax expenses in the amount of RMB557.5 million in 2025, compared with income tax expenses of RMB234.2 million in 2024, with the effective tax rate of 131.5%. This is primarily due to: ● Change in valuation allowance in Chinese mainland operations leads to an increase in the income tax expense in the amount of RMB241.4 million in 2025; and ● Other tax jurisdiction effect in Cayman Islands increases the income tax expense by RMB107.1 million in 2025. ● Intra-entity transfers of subsidiaries increases the income tax expense by RMB101.7 million in 2025. Net Income (Loss) As a result of the foregoing, we recorded a net loss of RMB133.4 million in 2025, as compared to a net income of RMB248.4 million in 2024. Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 See “Item 5. Operating and Financial Review and Prospects - 5.A Operating Results - Results of Operations - Year Ended December 31, 2024 Compared to Year Ended December 31, 2023” beginning on page 117 of our annual report on Form 20 - F for the year ended December 31, 2024 filed with the Securities and Exchange Commission on April 25, 2025. 117 Table of Contents B. Liquidity and Capital Resources Cash Flows and Working Capital The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have experienced recurring losses from operations. As of December 31, 2025, we had an accumulated deficit of RMB11,125.6 million and net current liabilities of RMB995.3 million. For the year ended December 31, 2025, the net cash we generated from operating activities amounted to RMB1,918.6 million. Our ability to continue as a going concern is dependent on our ability to generate cash flows from operations, and our ability to arrange adequate financing arrangements. As of December 31, 2025, we had RMB5,523.6 million in cash and cash equivalents and RMB678.1 million in restricted cash (current and non-current portion) and RMB379.2 million in short-term investments. As of December 31, 2024, we had RMB1,492.4 million in cash and cash equivalents and RMB588.6 million in restricted cash (current and non-current portion). As of December 31, 2025, we had short-term bank borrowings and long-term borrowings (current portion) from various commercial banks and financial institutions with an aggregate outstanding balance of RMB3,231.7 million, and long-term borrowings (excluding current portion) from various commercial banks and financial institutions with an aggregate outstanding balance of RMB11,579.7 million. The short-term bank borrowings outstanding as of December 31, 2024, and 2025 bear a weighted-average interest rate of 4.35% and 3.18% per annum, respectively. The long-term borrowings (including current and non-current portions) outstanding as of December 31, 2024, and 2025 bore weighted-average interest rates of 4.53% and 3.90% per annum, respectively. As of December 31, 2024, we had short-term bank borrowings and long-term borrowings (current portion) from various commercial banks and financial institutions with an aggregate outstanding balance of RMB2,009.2 million, and long-term borrowings (excluding current portion) from various commercial banks and financial institutions with an aggregate outstanding balance of RMB7,767.4 million. We had unused credit lines in an aggregate amount of RMB7,280.9 million as of December 31, 2025, under credit agreements with 17 banks. As of the same date, we used RMB12,938.1 million of the credit lines under the credit agreements with 28 banks, pursuant to which we were granted credit lines in an aggregate amount of RMB20,219.0 million. Utilization of such unused portions requires approval by the banks regarding whether the proposed usage align with the qualified purposes set forth in the relevant credit agreements. We believe the working capital as of December 31, 2025, is sufficient for our present requirements. ​ 118 Table of Contents As of December 31, 2025, we had short-term bank borrowings and long-term borrowings (current portion) of RMB3,231.7 million, long-term borrowings (excluding current portion) of RMB11,579.7 million and borrowings from redeemable noncontrolling shareholders of RMB1,253.1 million, all of which were onshore borrowings. We believe we have sufficient financial resources to meet both of our onshore and offshore borrowings when due. The growth of our business relies on the construction of new data centers. We also intend to acquire or invest in companies whose businesses are complementary to ours. We intend to use the proceeds of our outstanding debt mainly to construct new data centers and fund our acquisitions. As of December 31, 2025, we had purchase commitments made for acquisitions of machinery, equipment, construction in progress, bandwidth and cabinet capacity of RMB4,000.3 million becoming due within twelve months, and we intend to use a portion of the proceeds to fund these purchase commitments. Except as disclosed in this annual report, we have no outstanding bank loans or financial guarantees or similar commitments to guarantee the payment obligations of third parties. We believe that our current cash, cash equivalents and time deposits, our cash flow from operations and proceeds from our financing activities will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for the next 12 months. If we have additional liquidity needs in the future, we may conduct additional financing, including equity offering and debt financing in private or public capital markets and control of operating expenses and capital expenditure where necessary, to meet such needs. As of December 31, 2025, the total amount of cash and cash equivalents, restricted cash and short-term investments was RMB6,580.9 million, of which RMB0.2 million, RMB4,267.8 million, RMB953.9 million and RMB1,359.0 million was held by our parent company, consolidated affiliated entities, PRC subsidiaries and offshore subsidiaries, respectively. Cash transfers from our PRC subsidiaries to our subsidiaries outside of China are subject to PRC government control of currency conversion. Restrictions on the availability of foreign currency may affect the ability of our PRC subsidiaries and consolidated affiliated entities to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Governmental regulation of currency conversion may limit our ability to receive and utilize our revenues effectively.” The major cost that would be incurred to distribute dividends is the withholding tax imposed on the dividends distributed by our PRC operating subsidiaries at the rate of 10% or a lower rate under an applicable tax treaty, if any. Convertible Notes 2027 Convertible Notes In January 2022, we issued USD-denominated convertible notes due 2027 in an aggregate principal amount of US$250.0 million at an interest rate of 2% per annum, or the 2027 Convertible Notes, pursuant to an investment agreement with the funds managed by Blackstone Tactical Opportunities, or Blackstone (NYSE: BX), the world’s largest alternative investment firm (the “2022 Convertible Notes Investment Agreement”). The 2027 Convertible Notes will be convertible, at any time on and after the original issuance date, at the option of holders, into Class A ordinary shares of the Company at a conversion price of US$1.8333 per Class A ordinary share, or into ADSs at a conversion price of US$11.00 per ADS. The conversion prices are subject to adjustment under the terms of the 2027 Convertible Notes. The Company may affect a mandatory conversion at its election, if its ADSs achieve a price threshold of 200% of the conversion price for a specified period. Such 2027 Convertible Notes will bear an interest rate of 2.0% per annum and rank senior to any of the Company’s other indebtedness that is expressly subordinated in right of payment to the 2027 Convertible Notes. Unless the 2027 Convertible Notes have been duly redeemed or converted into Class A ordinary shares of the Company in full prior to the maturity date of the 2027 Convertible Notes, certain number of Series A-1 perpetual convertible preferred shares of the Company with a par value US$0.00001 per share will be issued as repayment of the 2027 Convertible Notes to upon maturity, pursuant to the calculation method set forth in the 2027 Convertible Notes. Moreover, subject to certain conditions, holders of the 2027 Convertible Notes have the right to require the Company to redeem, all of their 2027 Convertible Notes, or any portion of the principal thereof, during the redemption period set forth in the 2027 Convertible Notes. In the event of occurrence of a Fundamental Change, holders of the 2027 Convertible Notes have the right to require the Company to redeem, all of their 2027 Convertible Notes, or any portion of the principal thereof, at a redemption price equal to the sum of the principal amount of the notes, plus the total amount of accrued interest, plus Incremental Amount. In accordance with the 2027 Convertible Notes, a “Fundamental Change” is defined to include any one of more of the following events: (a) a “person” or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than the Company or any of its wholly-owned subsidiaries, has become or files any report with the SEC indicating that such person or group has become the direct or indirect “beneficial owner” (as defined below) of the Company’s equity securities representing more than fifty percent (50%) of the voting power of all of the Company’s then-outstanding equity securities; 119 Table of Contents (b) the consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any Person, other than one or more of the Company’s wholly-owned subsidiaries; or (ii) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) all of the Class A Ordinary Shares are exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, cash or other property (other than changes resulting solely from a subdivision or combination, or a change in par value, of the Ordinary Shares); provided, however, that any merger, consolidation, share exchange or combination of the Company pursuant to which all Persons that directly or indirectly “beneficially owned” (as defined below) all classes of the Company’s equity securities immediately before such transaction directly or indirectly “beneficially own,” immediately after such transaction, more than fifty percent (50%) of all classes of equity securities of the surviving, continuing or acquiring company or other transferee, as applicable, or the parent thereof, in substantially the same proportions vis-à-vis each other as immediately before such transaction will be deemed not to be a Fundamental Change pursuant to this clause (b); (c) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; (d) (i) the Founder ceases to be the largest holder of the Company’s voting power represented by all voting securities of the Company (excluding all voting securities of the Company beneficially owned by the investors and their affiliates (as such term is defined in Rule 405 under the Securities Act)) and (ii) the Founder has resigned from the Board, or been removed from the Board by the Board or the Company’s shareholders; or (e) the ADSs are delisted from unless the Company’s ADSs or Class A Ordinary Shares are listed for trading on another reputable international stock exchange (including The Stock Exchange of Hong Kong). For the purposes of this definition, whether a Person is a “beneficial owner” and whether shares are “beneficially owned” will be determined in accordance with Rule 13d-3 under the Exchange Act. In accordance with the 2027 Convertible Notes, the term “Incremental Amount” is defined as an incremental amount (which shall not be less than zero), if applicable, that is equal to (a) 50% of the principal amount, minus (b) the interest that has already been paid in cash, minus (c) the fair market value of non-cash dividend that have already been paid in accordance with the agreements underlying the 2027 Convertible Notes, minus (d) the accrued interest and minus (e) the stub period interest that has accrued until, but excluding, the date that the redemption price under the 2027 Convertible Notes is paid in full. In February 2026, the Company and the investors entered into an amendment agreement with respect to the 2027 Convertible Notes, or the Amended Notes, pursuant to which the maturity date was extended to October 1, 2027. As part of the amendment, the holders will no longer be able to receive Series A-1 perpetual convertible preferred shares of the Company. The Amended Notes continue to bear interest at a rate of 2.00% per annum, provided that an initial accumulated interest amount of US$80.50 per US$1,000 principal was established for the period from the original issuance date to the amendment date. Prior to certain transfer events, interest on the Amended Notes is deferred and added to such accumulated interest amount. Holders may convert the principal and any accumulated interest amount at a conversion price of US$11.00 per ADS, and the Company may settle such conversions in cash, ADSs, or a combination thereof at its election. In addition, subject to certain conditions, holders were granted a revised right to require the Company to repurchase the Amended Notes at a price equal to 100% of the principal plus the accumulated interest amount and any accrued and unpaid interest. In connection with the amendment, the parties also entered into an amendment agreement of the 2022 Convertible Notes Investment Agreement on February 13, 2026. On February 17, 2026, holders of the Amended Notes notified the Company of the occurrence of a Transfer Event and a Minimum Shareholding Event (each, as defined in the Indenture of the Amended Notes) in connection with the Indenture for the Amended Notes. The Accumulated Interest Amount (as defined in the Indenture) on the Transfer Event Effective Date, i.e. February 17, 2026, shall be equal to US$20,125,000.00. With the occurrence of the Minimum Shareholding Event Effective Date, (i) certain corporate governance rights entitled to the Investors pursuant to the 2022 Convertible Notes Investment Agreement and (ii) certain corporate governance rights entitled to the Preferred Shares Investors under the investment agreement, dated as of June 22, 2020 by and among the Company and certain investment vehicles of funds managed by Blackstone Tactical Opportunities (the “Preferred Shares Investors”) (such agreement, the “2020 Preferred Shares Investment Agreement”) have been terminated. 120 Table of Contents 2030 Convertible Notes In March 2025, we issued USD-denominated convertible senior note due 2030 in an aggregate principal amount of US$430.0 million at an interest rate of 2.5% per annum, or the 2030 Convertible Notes. Holders of the 2030 Convertible Notes have the right to require the Company to repurchase all or part of their 2030 Convertible Notes in cash on April 3, 2028 or, subject to certain conditions, in the event of certain fundamental changes, at a repurchase price equal to 100% of the principal amount of the 2030 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the relevant repurchase date. In addition, on or after April 10, 2028, the Company may redeem all or part of the 2030 Convertible Notes for cash subject to certain conditions, at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the relevant optional redemption date. Furthermore, the Company may redeem all but not part of the 2030 Convertible Notes in the event of certain changes in the tax laws, at a redemption price equal to 100% of the principal amount of the 2030 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but not including, the related redemption date. Holders of the 2030 Convertible Notes may not convert the 2030 Convertible Notes at any time on or prior to the 40th day following the last date of the original issuance of the 2030 Convertible Notes (such date, the “Compliance Period End Date”). After the Compliance Period End Date and prior to the close of business on the business day immediately preceding October 1, 2029, the 2030 Convertible Notes will be convertible only if certain conditions are met. From and after October 1, 2029, holders of the 2030 Convertible Notes may convert their notes at any time at their election until the close of business on the second scheduled trading day immediately preceding the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, the ADSs or a combination of cash and ADSs, at the Company’s election, subject to certain restrictions. The 2030 Convertible Notes will initially be convertible at a conversion rate of 72.7273 ADSs per US$1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately US$13.75 per ADS and represents a conversion premium of approximately 25.0% above the Nasdaq closing price of the Company’s ADSs on March 12, 2025, which was US$11.00 per ADS. The initial conversion rate is subject to adjustment upon the occurrence of certain events. In accordance with the 2030 Convertible Notes, a “Fundamental Change” is defined to include any one of more of the following events: (a) (A) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than us, our subsidiaries, our and their employee benefit plans, and any permitted holder (as defined in the 2030 convertible notes), has become, and files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become, the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of: (i) our then outstanding ordinary share capital (including ordinary share capital held in the form of ADSs) representing more than 50% of the voting power of our ordinary share capital, or (ii) more than 50% of our outstanding Class A ordinary shares (including Class A ordinary shares held in the form of ADSs), or (B) any of the permitted holders (or any other “person” or “group” within the meaning of Section 13(d) of the Exchange Act subject to aggregation of our ordinary share capital with such person) has become, and files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person has become, the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of more than 60% of our then outstanding ordinary share capital; (b) the consummation of (A) any recapitalization, reclassification or change of the Class A ordinary shares or the ADSs (other than changes resulting from a subdivision or combination or a change in par value) as a result of which the Class A ordinary shares or the ADSs would be converted into, or exchanged for, stock, other securities, other property or assets; (B) any share exchange, consolidation or merger of us, or any similar transaction, pursuant to which the Class A ordinary shares or the ADSs will be converted into cash, securities or other property; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of us, our subsidiaries and our consolidated affiliated entities, taken as a whole, to any person other than one of our wholly-owned subsidiaries; provided, however, that a transaction described in clause (A) or (B) in which the holders of all classes of our ordinary share capital immediately prior to such transaction own, directly or indirectly, more than 50% of all classes of common equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions vis-a-vis each other as such ownership immediately prior to such transaction shall not be a fundamental change pursuant to this clause (b); (c) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; (d) the ADSs (or other common equity or depositary shares in respect of common equity underlying the notes) cease to be listed or quoted on any of the New York Stock Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market (or any of their respective successors); or 121 Table of Contents (e) any change in or amendment to the laws, regulations and rules of the PRC or the official interpretation or official application thereof (a “change in law”) that results in (x) us, our subsidiaries and our consolidated affiliated entities (collectively, the “company group”) (as in existence immediately subsequent to such change in law), as a whole, being legally prohibited from operating substantially all of the business operations conducted by the company group (as in existence immediately prior to such change in law) as of the last date of the period described in our consolidated financial statements for the most recent fiscal quarter and (y) our being unable to continue to derive substantially all of the economic benefits from the business operations conducted by the company group (as in existence immediately prior to such change in law) in the same manner as reflected in our consolidated financial statements for the most recent fiscal quarter; provided that we have not furnished to the trustee on or before the 20th calendar day after the date of such change in law an opinion from an independent financial advisor or an independent legal counsel stating either (x) that we are able to continue to derive substantially all of the economic benefits from the business operations conducted by the company group (as in existence immediately prior to such change in law), taken as a whole, as reflected in our consolidated financial statements for the most recent fiscal quarter (including after giving effect to any corporate restructuring or reorganization plan of the company group) or (y) that such change in law would not materially adversely affect our ability to make principal and interest payments on the notes when due or to effect the conversion of the notes in accordance herewith. Selected Condensed Consolidating Cash Flows Data The following table sets forth a summary of our cash flows for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2023 ​ 2024 ​ 2025 ​ ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ ​ RMB ​ ​ (in thousands) Net cash generated from operating activities ​ 2,063,480 ​ 2,005,393 ​ 1,918,550 Net cash used in investing activities ​ (3,905,109) (4,390,708) (8,011,594) Net cash generated from (used in) financing activities ​ 3,941,134 (627,654) 10,220,881 Effect on foreign exchange rate changes on cash and cash equivalents and restricted cash ​ 9,988 (4,945) (7,225) Net increase (decrease) in cash and cash equivalents and restricted cash ​ 2,109,493 (3,017,914) 4,120,612 Cash and cash equivalents and restricted cash at beginning of the year ​ 2,989,494 5,098,987 2,081,073 Cash and cash equivalents and restricted cash at end of the year ​ 5,098,987 2,081,073 6,201,685 Cash and cash equivalents, restricted cash and short-term investments at end of the year ​ 5,455,807 2,081,073 6,580,883 ​ Operating Activities Net cash generated from operating activities was RMB1,918.6 million in 2025, primarily resulting from a net loss of RMB133.4 million, positively adjusted for certain items such as (i) depreciation and amortization of RMB2,126.0 million, (ii) reduction in the carrying amount of right-of-use assets of RMB679.8 million, (iii) changes in the fair value of financial instruments of RMB314.3 million, (iv) the increase in accrued expenses and other payables of RMB395.3 million, (v) the decrease in prepaid expenses and other current assets of RMB264.9 million and, partially offset by certain items such as the increase in accounts and notes receivable of RMB663.7 million, gain from disposal of subsidiaries of RMB469.8 million and the decrease in advances from customers of RMB438.7 million. Net cash generated from operating activities was RMB2,005.4 million in 2024, primarily resulting from a net income of RMB248.4 million, positively adjusted for certain items such as (i) depreciation and amortization of RMB1,598.3 million, (ii) share-based compensation expense of RMB148.6 million, (iii) provision for doubtful debt of RMB107.9 million, (iv) the increase in deferred government grant of RMB140.8 million, (v) the increase in accrued expenses and other payables of RMB139.7 million, and (vi) the decrease in prepaid expenses and other current assets of RMB115.0 million, partially offset by certain items such as the gain on debt extinguishment of RMB246.2 million, and the decrease in advances from customers of RMB226.4 million. Net cash generated from operating activities was RMB2,063.5 million in 2023, primarily resulting from a net loss of RMB2,597.2 million, positively adjusted for certain items such as (i) depreciation and amortization of RMB1,807.3 million, (ii) impairment of goodwill of RMB1,364.2 million, (iii) impairment of long-lived assets of RMB506.7 million, (iv) provision for doubtful debt of RMB368.5 million, (v) foreign exchange loss of RMB79.0 million, (vi) share-based compensation expense of RMB35.3 million, (vii) the increase in advances from customers of RMB447.3 million, and (viii) the increase in accrued expenses and other payables of RMB200.1 million, partially offset by certain item such as the increase in prepaid expenses and other current assets of RMB365.8 million. 122 Table of Contents Investing Activities Net cash used in investing activities was RMB8,011.6 million in 2025, as compared to net cash used in investing activities of RMB4,390.7 million in 2024. Net cash used in investing activities in 2025 is primarily related to our purchase of property and equipment in the amount of RMB7,656.6 million, our payment for short-term investments in the amount of RMB1,453.7 million, our payment for long-term investments in the amount of RMB278.6 million, offset by proceeds received from maturity of short-term investments of RMB1,092.5 million, proceeds from disposal of subsidiaries in the amount of RMB756.0 million and proceeds from disposal of property and equipment in the amount of RMB63.2 million. Net cash used in investing activities was RMB4,390.7 million in 2024, as compared to net cash used in investing activities of RMB3,905.1 million in 2023. Net cash used in investing activities in 2024 is primarily related to our purchase of property and equipment in the amount of RMB4,923.7 million, our purchase of intangible assets in the amount of RMB130.1 million and our payment for short-term investments in the amount of RMB167.1 million, offset by proceeds received from maturity of short-term investments of RMB529.4 million, proceeds from disposal of property and equipment in the amount of RMB276.8 million and proceeds from collection of the deposits associated with an acquisition in the amount of RMB200.0 million. Net cash used in investing activities was RMB3,905.1 million in 2023, as compared to net cash used in investing activities of RMB3,559.3 million in 2022. Net cash used in investing activities in 2023 is primarily related to our purchase of property and equipment in the amounts of RMB2,967.4 million, our payments for long-term investments in the amount of RMB517.3 million and our payment for short-term investments in the amount of RMB503.3 million, offset by proceeds received from maturity of short-term investments of RMB144.5 million and payment for loan to a related party in the amount of RMB115.0 million. Financing Activities Net cash generated from financing activities was RMB10,220.9 million in 2025, as compared to net cash used in financing activities of RMB627.7 million in 2024. Net cash generated from financing activities in 2025 is primarily related to proceeds from long-term bank borrowings of RMB4,976.0 million, proceeds from issuance of 2030 Convertible Notes of RMB3,015.1 million, contribution from noncontrolling interest in subsidiaries of RMB1,583.8 million and proceeds from short-term bank borrowings of RMB1,327.0 million, partially offset by repurchase of repayments and deposits for other long-term borrowings of RMB1,411.2 million, repayments of short-term bank borrowings of RMB743.4 million and repayments of long-term bank borrowings of RMB725.9 million. Net cash used in financing activities was RMB627.7 million in 2024, as compared to net cash generated from financing activities of RMB3,941.1 million in 2023. Net cash used in financing activities in 2024 is primarily related to repurchase of 2026 Convertible Notes of RMB4,262.3 million, repayments of long-term bank borrowings of RMB822.3 million and repayments and deposits for other long-term borrowings of RMB765.9 million, partially offset by proceeds from long-term bank borrowings of RMB3,014.8 million and proceeds from other long-term borrowings of RMB1,844.2 million. Net cash generated from financing activities was RMB3,941.1 million in 2023, as compared to net cash generated from financing activities amounting to RMB2,298.1 million in 2022. Net cash generated from financing activities in 2023 is primarily related to proceeds from issuance of ordinary shares of RMB2,122.1 million, proceeds from long-term bank borrowings of RMB1,813.9 million, partially offset by repurchase of 2025 Convertible Notes of RMB529.2 million, repayments of long-term bank borrowings of RMB292.6 million, and payments for purchase of property and equipment through finance lease of RMB210.9 million. Material Cash Requirements Our material cash requirements as of December 31, 2025 and any subsequent interim period primarily include our capital expenditures, short-term bank borrowings, long-term borrowings, convertible notes, purchase commitments, operating lease obligations and finance lease minimum lease payment. Our capital expenditures refer to the overall outflow of funds for acquiring property and equipment, intangible assets, land use rights, engaging in mergers and acquisitions as well as long term investments. Our capital expenditures have been primarily funded by cash generated from our operations and net cash provided by financing activities. We had capital expenditures of RMB3,578 million, RMB4,982.1 million, and RMB8,240.0 million in 2023, 2024, and 2025 respectively. We may incur additional capital expenditure for real property purchase, data center construction and network capacity expansion if our actual development is beyond our current plan. 123 Table of Contents As of December 31, 2025, our unused short-term and long-term borrowing facilities amounted to RMB7,280.9 million. We have pledged land use rights with the net book value of RMB249.0 million, property with the net book value of RMB431.2 million, leasehold improvements, renovation and decoration with the net book value of RMB112.0 million, data center equipment with the net book value of RMB714.4 million and office equipment with the net book value of RMB0.08 million for our borrowings. Short-term bank borrowings outstanding as of December 31, 2025 bear a weighted-average interest rate of 3.18% per annum. Long-term borrowings (including the current portions) outstanding as of December 31, 2025 bear a weighted-average interest rate of 3.90% per annum, and are denominated in Renminbi. These loans were obtained from financial institutions located in the PRC. Our convertible notes as of the date of this annual report consist primarily of (a) the 2027 Convertible Notes issued in January 2022, with an aggregate principal amount of US$250.0 million at an interest rate of 2% per annum, which will mature in October 2027 and (b) the 2030 Convertible Notes issued in March 2025, with an aggregate principal amount of US$430.0 million at an interest rate of 2.5% per annum, which will mature in April 2030. Our operating lease obligations are primarily related to the lease of office and data center space. Our operating cash payments for operating leases was RMB796.5 million, RMB847.9 million, and RMB961.7 million for the years ended December 31, 2023, 2024 and 2025, respectively. Our finance lease minimum lease payment is primarily related to finance leases for electronic equipment, optic fibers and property. Our financing cash payments for finance leases amounted to RMB210.9 million, RMB102.6 million, and RMB211.6 million for the years ended December 31, 2023, 20244 and 2025 respectively. We plan to fund our existing and future material cash requirements with cash from the proceeds from our operations, bank borrowings and other appropriate financing instruments, if available. We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We do not have retained or contingent interests in assets transferred. We have not entered into contractual arrangements that support the credit, liquidity or market risk for transferred assets. We do not have obligations that arise or could arise from variable interests held in an unconsolidated entity, or obligations related to derivative instruments that are both indexed to and classified in our own equity, or not reflected in the statement of financial position. Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2025. Holding Company Structure VNET Group, Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiaries and consolidated affiliated entities in China. As a result, although other means are available for us to obtain financing at the holding company level, VNET Group, Inc.’s ability to pay dividends and to finance any debt it may incur depends upon dividends paid by our subsidiaries. If our subsidiaries or any newly formed subsidiaries incur debt on its own behalf in the future, the instruments governing their debt may restrict its ability to pay dividends to VNET Group, Inc. In addition, our PRC subsidiaries and consolidated affiliated entities are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC laws, our PRC subsidiaries and consolidated affiliated entities are required to set aside a portion of their after-tax profits each year to fund a statutory reserve and to further set aside a portion of its after-tax profits to fund the employee welfare fund at the discretion of the board or the enterprise itself. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation of these subsidiaries and consolidated affiliated entities. 124 Table of Contents C. Research and Development, Patents and Licenses, etc. Research and Development and Intellectual Property Our strong research and development capabilities support and enhance our service offerings. We have an experienced research and development team and devote significant resources to our research and development efforts, focusing on improving customer experience, increasing operational efficiency and bringing innovative solutions to the market quickly. We have made continual investments and trainings for research and development to drive our growth in both mature and emerging businesses. As of December 31, 2025, we had 284 experienced engineers who have more than ten years of relevant industry experience. Our research and development efforts have yielded 249 patents, 165 patent applications and 450 software copyright registrations as of December 31, 2025, all in China and focused on the following areas: (i) energy-saving algorithm technologies, (ii) liquid cooling technology, (iii) power distribution architecture design, (iv) computing power and data center design, and facility maintenance and operations, (v) network operation and maintenance management, (vi) cloud-related technologies, and (vii) blockchain and other cutting-edge technologies. We rely on a combination of copyright, patent, trademark, trade secret and other intellectual property laws, nondisclosure agreements and other protective measures to protect our intellectual property rights. We generally control access to and use of our proprietary software and other confidential information through the use of internal and external controls, including physical and electronic security, contractual protections, and intellectual property law. We have implemented a strict security and information technology management system, including the prohibition of copying and transferring of codes. We educate our staff on the need to, and require them to, comply with such security procedures. We also promote protection through contractual prohibitions, such as requiring our employees to enter into confidentiality and non-compete agreements. D. Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2025 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions. E. Critical Accounting Estimates We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting estimates require a higher degree of judgment than others and we consider them as significant accounting estimates. Fair Value of 2027 Convertible Notes On January 28, 2022, we entered into an investment agreement with a company held and a fund managed by Blackstone Tactical Opportunities to issue the 2027 Convertible Notes with a principal amount of US$250.0 million. On August 20, 2024, the holders entered into an agreement with us to consent the cancellation of the redemption right solely due to any fundamental change caused by the SDHG investment. We assessed the above amendments to the terms of the 2027 Convertible Notes as an extinguishment of debt based on a qualitative and quantitative evaluation of the amendment. Upon the extinguishment, the 2027 Convertible Notes, the related interest payables and the derivative liability were derecognized and a gain on debt extinguishment of RMB246.2 million was recognized in the consolidated statement of operations for the year ended December 31, 2024. We elected to subsequently account for the 2027 Convertible Notes, as amended, at fair value as a whole with the interest expenses presented within the changes in fair value of financial instruments. 125 Table of Contents The fair value of 2027 Convertible Notes is measured using binomial tree pricing model that involves several parameters including our share price, share price volatility determined from our historical share prices, the remaining maturity term and the discount rate. The assumptions are inherently uncertain and subjective. Changes in any unobservable inputs may have a significant impact on the fair value of 2027 Convertible Notes. Changes in estimated useful lives of data center structural and supply assets We regularly assess the estimated useful lives of our property and equipment. In January 2024, we completed an assessment and revised our estimate of the useful lives of certain data center properties, including the data center structural and supply assets, which primarily included the infrastructure and decoration of data centers, cabinets, diesel generators, and uninterruptible power supply equipment, from a range of two to ten years, to three to fifteen years, based on our long-term use plan, considering a number of factors including current condition, historical useful life data of these assets and industry practices. This change in estimated useful lives was accounted for as a change in accounting estimate, in fiscal year 2024. Changes in facts and circumstances may result in revised estimates. Actual results could differ from such estimate, and as such, differences may be material to the consolidated financial statements. F. Off-Balance Sheet Arrangements We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. G. Safe Harbor This annual report on Form 20-F contains forward-looking statements. These statements are made under the “safe harbor” provisions of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “may,” “intend,” “is currently reviewing,” “it is possible,” “subject to” and similar statements. Among other things, the sections titled “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company,” and “Item 5. Operating and Financial Review and Prospects” in this annual report on Form 20-F, as well as our strategic and operational plans, contain forward -looking statements. We may also make written or oral forward-looking statements in our reports filed with or furnished to the SEC, in our annual report to shareholders, in press releases and other written materials and in oral statements made by our officers, directors or employees to third parties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements and are subject to change, and such change may be material and may have a material adverse effect on our financial condition and results of operations for one or more prior periods. Forward -looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained, either expressly or impliedly, in any of the forward-looking statements in this annual report on Form 20-F. Potential risks and uncertainties include, but are not limited to, a further slowdown in the growth of China’s economy, government measures that may adversely and materially affect our business, failure of the wealth management services industry in China to develop or mature as quickly as expected, diminution of the value of our brand or image due to our failure to satisfy customer needs and/or other reasons, our inability to successfully execute the strategy of expanding into new geographical markets in China, our failure to manage growth, and other risks outlined in our filings with the SEC. All information provided in this annual report on Form 20-F and in the exhibits is as of the date of this annual report on Form 20-F unless otherwise noted herein, and we do not undertake any obligation to update any such information, except as required under applicable law. 126 Table of Contents