Gds Holdings Ltd. · HKEX:9698

Gds — FY2019 Earnings Presentation

45 slides from Gds's earnings presentation, Mar 19, 2020

  1. Slide 1: 4Q19 & FY19 Earnings Call

    4Q19 & FY19 Earnings Call 19 March 2020 NASDAQ: GDS © GDS 2016 0

  2. Slide 2: Disclaimer

    DISCLAIMER This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such a

  3. Slide 3: Business Strategy & Performance Highlights

    Business Strategy & Performance Highlights William Huang, Chairman & CEO © GDS 2016

  4. Slide 4: FY19 Highlights

    FY19 HIGHLIGHTS Sales Momentum • Net additional total area committed of +81,135 sqm, or 174 MW • Total area committed increased by 44.2% y/y to 264,878 sqm Capacity Expansion • Total capacity increased by 90,000 sqm to 315,797 sqm, +40.0% y/y • Total development pipeline of +320,000 sqm • Signed 3 M

  5. Slide 5: 4Q19 Highlights

    4Q19 HIGHLIGHTS Sales Momentum • Net additional total area committed of +22,443 sqm • Total area committed increased by 44.2% y/y to 264,878 sqm Capacity Expansion • Total capacity (in service + under construction) grew by 40.0% y/y to 315,797 sqm • Signed BJ10/11/12 acquisition • Acquired property

  6. Slide 6: Sales Achievement

    Sales Achievement Net Additional Total Area Committed (Sqm) Net Additional Total Area Committed Breakdown 81,215 81,135 FSI & Large Enterprises 4Q 13.1% 22,443 Large Internet 14.3% 41,485 3Q 624 72.6% 21,617 Customers +5.6% Y/Y 25,125 2Q 20,987 14,933 1Q 16,088 Cloud Service Providers FY15 FY16 FY17

  7. Slide 7: Customer Diversification

    Customer Diversification Net Additional Area Committed by Customer Segment Hyperscale Customer Additions by Year Top 2 Customers Other Customers 2016 (1) 30.1% 2017 35.7% 49.9% 48.5% 49.3% 2018 69.9% 64.3% 50.1% 51.5% 50.7% (2) 2019 FY15 FY16 FY17 FY18 FY19 Notes: 1. Azure China is operated by a sub

  8. Slide 8: Synchronized Sales & Capacity Growth

    Synchronized Sales & Capacity Growth Commitments vs. Capacity (Sqm) Commitment / Pre-Commitment Rates Area Committed Commitment Rate Pre-Commitment Rate Area Pre-Committed 315,797 Area In Service Area Under Construction 264,878 91.9% 91.8% 94.9% 87.5% 89.0% 225,557 183,743 63.6% 125,763 48.4% 102,52

  9. Slide 9: Resource Progress

    Resource Progress Capacity Expansion 4Q19 & FY19 (1) 57,000 37,362 27,684 (2) 30,700 (3) 17,160 89,834 84,765 4 new DCs GZ6 SH14 65,201 SH13 BJ9 BJ10 plus 3 additional phases SH15 SZ6 BJ11 8 new DCs LF6 BJ6 BJ12 plus 1 additional phase LF7 LF1 Area Under Construction Projects Initiated Projects In S

  10. Slide 10: Development Pipeline – Acquired Land & Buildings

    Development Pipeline – Acquired Land & Buildings Total Secured Development Pipeline of +320,000 sqm (1) Langfang Land Site 1 Phase 2 (LF4, LF5) Shanghai 14 n Phase 1 – LF3 under construction n Located in Waigaoqiao n 44,000 sqm land area n RMB 330.2 mn n 29,000 sqm IT area n 37,000 sqm of GFA n 11,0

  11. Slide 11: Langfang Case Study

    Langfang Case Study IT Capacity Commitment Rate Tenure Status (Sqm) 4Q19 (%) LF1 Lease In Service 4,949 100% LF2 (1) Lease Under Construction 4,859 0% LF1, 2 LF7 LF Land LF3 Site 2 Own Under Construction 11,664 100% LF Land (LF Land Site 1 Phase 1) Site 1 P3 LF4 / LF5 LF6 Own Land Acquired ~29,000 -

  12. Slide 12: Acquisitions

    Acquisitions Capacity Acquired (1) Current Status 19,700 n GZ6 acquisition was closed in 4Q19 with area in service of 6,608 sqm 14,637 n Entered into contracts to provide services to 11,862 customers and to operate the BJ9 data center, 11,131 BJ10 pending closing of its acquisition BJ9 SH11 BJ11 6,5

  13. Slide 13: Our Priorities for 2020

    Our Priorities for 2020 Customers Resources Financing n Deepen relationships with strategic n Maintain focus on providing low latency n Maintain fully funded business plan customers by being a solution provider product in Tier 1 markets – downtown / edge of town n Ensure access to diversified source

  14. Slide 14: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  15. Slide 15: 4Q19 & FY19 P&L Analysis

    4Q19 & FY19 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 3Q19 4Q19 Q/Q FY18 FY19 Y/Y Service Revenue 1,058,921 1,159,610 9.5% 2,759,490 4,094,571 48.4% Equipment Sales 7,267 19,577 169.4% 32,587 27,834 (14.6%) Total Net Revenue 1,066,188 1,179,187 10.6% 2,792,077 4,122,405 47.6

  16. Slide 16: 4Q19 & FY19 Underlying Trends

    4Q19 & FY19 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 3Q19 4Q19 Q/Q FY18 FY19 Y/Y Total Net Revenue 1,066,188 1,179,187 10.6% 2,792,077 4,122,405 47.6% Less: Equipment Sales 7,267 19,577 169.4% 32,587 27,834 (14.6%) Service Revenue 1,058,921 1,159,610 9.5% 2,759,490 4,0

  17. Slide 17: Revenue & Area Utilized

    Revenue & Area Utilized Revenue (Rmb Mn) Area Utilized (Sqm) & MSR (Rmb / Sqm / Month) Service Revenue Equipment Sales 156,022 137,820 127,107 118,050 108,326 19.6 7.3 0.1 0.9 0.5 4Q18 1Q19 2Q19 3Q19 4Q19 1,159.6 1,058.9 985.1 Average MSR 829.1 890.9 2,679 2,665 2,644 2,631 2,624 4Q18 1Q19 2Q19 3Q19

  18. Slide 18: Underlying Adjusted NOI & EBITDA

    Underlying Adjusted NOI & EBITDA Underlying Adjusted NOI (Rmb Mn) & Margin Underlying Adjusted EBITDA (Rmb Mn) & Margin 49.8% 51.3% 53.0% 53.8% 52.8% 40.0% 42.5% 44.3% 45.9% 45.6% 612.5 570.1 528.5 521.9 485.6 457.3 435.9 412.8 378.4 331.4 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 © GDS 2016

  19. Slide 19: Stabilized vs. Ramping-Up Data Centers

    Stabilized vs. Ramping-Up Data Centers Breakdown of Area In Service as at 4Q19 Stabilized Data Centers Ramping-Up Data Centers Net Floor Area Commitment Utilization Area In Service (Sqm) Rate Rate Net Floor Area Commitment Utilization (Sqm) Rate Rate KS1 6,546 98.1% 93.8% SH1 6,432 96.9% 94.7% SH5 P

  20. Slide 20: Cost Breakdown & Operating Leverage

    Cost Breakdown & Operating Leverage 4Q19 Cost Breakdown & Operating Leverage (Rmb Mn) % of Service Revenue Service Revenue 1,159.6 4Q18 1Q19 2Q19 3Q19 4Q19 FY18 FY19 Utility Cost 247.7 23.1% 22.8% 23.3% 22.9% 21.4% 23.8% 22.5% Rent, Labour & Other (1) 299.4 27.1% 25.9% 23.7% 23.3% 25.8% 28.5% 24.7%

  21. Slide 21: Capital Expenditure

    Capital Expenditure Capex Paid (Rmb Mn) (1) FY19 Highlights BTS Projects Acquisition & Property / Land Purchase n Total capex paid for FY19 was Rmb 5,131.2 mn, Organic Capex 5,131.2 4,733.1 compared to Rmb 4,733.1 mn for FY18 270.2 n Rmb 578.6 mn was paid for acquisitions 1,157.2 1,477.3 n Rmb 385.1

  22. Slide 22: Construction Program

    Construction Program Self-developed Data Centers Build-to-Suit Data Centers for GIC JV Net Floor Area Pre-Commitment RFS Date Tenure Type (Sqm) Rate (%) Number of Total Net SH12 2H20 Lease Convert 3,653 100% Data Floor Area Centers (Sqm) KS2 1H20 Own Greenfield 6,120 100% KS3 2H20 Own Greenfield 5,2

  23. Slide 23: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule as at 31/12/19 (Rmb Mn) 31/12/18 30/09/19 31/12/19 Rmb Mn Rmb Mn Rmb Mn / LQA Adj. Working Capital Project Loan Convertible Bond EBITDA Total Loan 6,487.0 8,358.6 9,166.2 4.3 2,893 2,854 Convertible Bond 2,004.7 2,075.0

  24. Slide 24: Backlog & Move-In Analysis

    Backlog & Move-In Analysis Backlog Build-Up for 4Q19 and FY19 (Sqm) Backlog by Data Center Status (Sqm) Net Additional Area Committed Backlog for Area In Service Net Additional Area Utilized Backlog for Area Under Construction 108,856 58,692 29,494 104,615 22,443 18,202 93,711 104,615 108,856 81,781

  25. Slide 25: Business Outlook

    Business Outlook FY20 Guidance Rmb Mn FY19 Actual FY20 Guidance Implied Y/Y Total Revenue 4,122.4 5,510 – 5,750 33.7% – 39.5% Adjusted EBITDA 1,824.0 2,550 – 2,670 39.8% – 46.4% Capex (1) 5,131.2 ~7,500 ~46% Note: 1. Refers to net cash used in investing activities. © GDS 2016 24

  26. Slide 26: Questions & Answers

    Questions & Answers www.gds-services.com ir@gds-services.com © GDS 2016

  27. Slide 27: Appendix

    Appendix © GDS 2016

  28. Slide 28: Our Data Center Portfolio – Beijing & Shanghai Markets

    Our Data Center Portfolio – Beijing & Shanghai Markets Self-developed Data Centers in Tier 1 Markets (1) Beijing – 17 DCs (2) Shanghai – 17 DCs SH1/2/3/4/6/7/8 BJ5/10/11/12 /9/10/11/12/15 BJ4/6 13 54 50 27 SH5 61 BJ1/2/3/9 30 50 SH13 BJ7/8 LF1/2/3/6/7 KS1/2/3 Note: 1. Distance in km. 2. BJ9/10/11/12

  29. Slide 29: Our Data Center Portfolio – Great Bay Area & Chengdu

    Our Data Center Portfolio – Great Bay Area & Chengdu Self-developed Data Centers in Tier 1 Markets (1) Great Bay Area – 12 DCs Chengdu – 2 DCs SZ4 GZ1/2/3/6 SZ5 65 45 38 GZ4 SZ6 25 HK1 SZ1/2/3 CD1/2 Note: 1. Distance in km. © GDS 2016 28

  30. Slide 30: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As at 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Area In Service (Sqm) 103,475 127,984 147,342 160,356 171,515 180,441 198,097 225,963 Area Under Construction (Sqm) 40,357 41,023 43,718 65,201 65,736 78,373 84,765 89,834 Total Capacity (Sqm) 143,832 169,007 191,060 22

  31. Slide 31: Data Center Summary By Market

    Data Center Summary By Market As at 31/12/19 (Sqm, Unless Indicated) Pre- Area in Area Under Area Area Pre- Total Area Commitment Utilization Total Capacity Area Utilized Commitment Service Construction Committed Committed Committed Rate Rate Market Rate (1) (2) (1 + 2) (3) (4) (3 + 4) (5) (3 / 1) (

  32. Slide 32: Self-Developed Data Centers In Service – Shanghai / Kunshan

    Self-Developed Data Centers In Service – Shanghai / Kunshan As at 31/12/19 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area in Service Area Committed Commitment Rate Area Utilized Utilization Rate KS1 2H10 Purpose-Built Own 6,546 6,420 98.1% 6,143 93.8% SH1 2H11 Purpose-Built L

  33. Slide 33: Self-Developed Data Centers In Service – Shenzhen / Guangzhou

    Self-Developed Data Centers In Service – Shenzhen / Guangzhou As at 31/12/19 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area in Service Area Committed Commitment Rate Area Utilized Utilization Rate SZ1 2H14 Converted Lease 4,286 4,220 98.5% 4,216 98.4% SZ2 1H16 Converted Lease

  34. Slide 34: Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei (ZB)

    Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei (ZB) As at 31/12/19 (Sqm, Unless Indicated) Ready For Commitment Market Data Center Type Tenure Area in Service Area Committed Area Utilized Utilization Rate Service Rate BJ1 2H15 Converted Lease 2,435 2,286 93.9% 2,246 92.3% BJ2 2H17

  35. Slide 35: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction As at 31/12/19 (Sqm, Unless Indicated) Area Under Market Data Center Type Tenure Area Pre-Committed Pre-Commitment Rate Construction SH12 Purpose-Built Lease 3,653 3,653 100% SH13 Converted Lease 6,493 0 0% Shanghai / Kunshan SH15 Converted Lease 1,518

  36. Slide 36: Top Customers

    Top 5 Customers In Terms of Total Area Committed As at 31/12/19 End User % of Total Area Committed % of 4Q19 Service Revenue Number of Data Centers (1) Internet / Cloud Service Provider 30.6% 25.8% 21 Internet / Cloud Service Provider 21.1% 19.2% 15 Cloud Service Provider 10.4% 0.6% 5 Internet 7.2%

  37. Slide 37: Contracts Renewal

    Contracts Renewal Contracts Renewal Schedule Period Sqm % of Total Area Committed FY20 23,622 8.9% FY21 25,566 9.7% FY22 18,886 7.1% FY23 25,537 9.6% Thereafter 171,267 64.7% Total Area Committed as at 31/12/19 264,878 100.0% © GDS 2016 36

  38. Slide 38: Principal Shareholders

    Principal Shareholders As at 31/12/19 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 69,200,744 8,650,093 8,650,093 5.7% Directors & Officers 15,369,927 1,921,240 1,921,240 1.3% STT 424,120,604 53,015,075 53,015,075 34.9% SBCVC 34,557,344 4,31

  39. Slide 39: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) 76 72 70 64 63 # of Days 4Q18 1Q19 2Q19 3Q19 4Q19 FY18 FY19 62 58 DPO – Opex 80 82 91 110 99 78 82 DPO – Capex 75 162 243 231 66 125 138 Total DPO 76 136 178 179 72 113 121 Total DPO (Excl. 64

  40. Slide 40: Historical Financial Results – Statements of Operations

    Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Year Ended Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Dec 31, 2018 Dec 31, 2019 RMB RMB RMB RMB RMB USD RMB RMB USD Net Revenue Service revenue 829,050 890,946 9

  41. Slide 41: Historical Financial Results – Balance Sheets

    Historical Financial Results Condensed Consolidated Balance Sheets (1) Amounts in thousands. As of Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 RMB RMB RMB RMB RMB USD Cash 2,161,622 6,001,214 5,730,578 5,752,790 5,810,938 834,689 Accounts receivable, net of allowance for doubtfu

  42. Slide 42: Historical Financial Results – Cash Flows

    Historical Financial Results Condensed Consolidated Statements of Cash Flows Amounts in thousands Three Months Ended Year Ended Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Dec 31, 2018 Dec 31, 2019 RMB RMB RMB RMB RMB USD RMB RMB USD Net cash provided by (used in) operating acti

  43. Slide 43: Reconciliation from Net Loss to Adjusted NOI

    Reconciliation from Net Loss to Adjusted NOI Adjusted NOI Amounts in thousands Three Months Ended Year Ended Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Dec 31, 2018 Dec 31, 2019 RMB RMB RMB RMB RMB USD RMB RMB USD Net loss (122,911) (136,620) (93,159) (108,642) (103,662) (14,88

  44. Slide 44: Reconciliation from Net Loss to Adjusted EBITDA

    Reconciliation from Net Loss to Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Year Ended Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Dec 31, 2018 Dec 31, 2019 RMB RMB RMB RMB RMB USD RMB RMB USD Net loss (122,911) (136,620) (93,159) (108,642) (103,662)

  45. Slide 45: Definition of KPIs

    Definition of KPIs Area In Service Net floor area of data centers in service for which one or more modules have been equipped and fitted out ready for utilization by customers Area Under Construction Net floor area of data centers which are under construction and not yet ready for service Area Commi

GDS Holdings — FY2019 Earnings Presentation on 6ix