Gds Holdings Ltd. · HKEX:9698

Gds — Q3 2023 Earnings Presentation

55 slides from Gds's earnings presentation, Nov 22, 2023

  1. Slide 1: 3Q23 Earnings Call

    3Q23 Earnings Call 22 November 2023 NASDAQ: GDS HKEX: 9698 © 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: 3Q23 Highlights

    3Q23 HIGHLIGHTS (1) Customer Commitments • New customer commitments (net) of +16,072 sqm • Total area committed increased by 5.7% y/y to 653,732 sqm, or 1,469 MW Customer Move-In • Additional area utilized (net) of +15,878 sqm • Total area utilized of 398,674 sqm, +10.8% y/y, and utilization rate of

  5. Slide 5: Gross Additional Area Committed (Organic Only)

    Gross Additional Area Committed (Organic Only) By Quarter (Sqm) By Year (Sqm) China International (1) China International (1) 32,402 99,197 95,362 4,085 80,506 21,499 68,098 28,331 27,069 16,098 49,266 14,066 99,197 91,277 11,669 5,792 12,177 21,499 68,098 6,385 52,175 14,066 37,089 10,306 5,333 5,2

  6. Slide 6: Net Additional Area Committed

    Net Additional Area Committed By Quarter (Sqm) By Year (Sqm) (1) (2) (1) (2) Organic - China Organic - International B-O-T Acquisition Organic - China Organic - International B-O-T Acquisition 161,558 30,315 27,911 118,722 38,006 22,864 92,800 3,440 16,072 9,045 27,069 73,894 12,347 16,665 28,331 95

  7. Slide 7: Largest Hyperscale Orders In 3Q23

    Largest Hyperscale Orders In 3Q23 LF5 Phase 2: 4,274 Sqm / 12.0 MW LF15 Phase 3 / LF16: 12,656 Sqm / 29.1 MW LF3/4/5 Campus LF15/16/17 Campus (1) Notes: 1. LF17 is currently held for future development. © GDS 2016 6

  8. Slide 8: Gross Additional Area Utilized

    Gross Additional Area Utilized By Quarter (Sqm) By Year (Sqm) China International China International 86,929 20,781 80,630 923 3,632 15,822 14,854 19 55,937 12,573 12,192 783 48,623 48,208 111 4,415 86,006 80,630 17,149 15,803 14,071 55,826 12,192 12,573 48,623 43,793 3Q22 4Q22 1Q23 2Q23 3Q23 FY19 F

  9. Slide 9: Net Additional Area Utilized

    Net Additional Area Utilized By Quarter (Sqm) By Year (Sqm) China International China International 15,878 84,744 78,709 923 14,184 3,632 10,685 51,073 47,696 111 83,821 78,709 14,184 6,085 6,163 12,246 28,126 783 10,685 50,962 4,415 47,696 6,085 5,380 23,711 3Q22 4Q22 1Q23 2Q23 3Q23 FY19 FY20 FY21

  10. Slide 10: Total Area Utilized & Utilization Rate

    Total Area Utilized & Utilization Rate By Quarter (Sqm) By Year (Sqm) 72.6% 71.8% 72.1% 71.9% 71.8% 71.9% 70.3% 70.5% 67.9% 65.5% 398,674 398,674 382,796 370,547 370,547 376,632 359,862 319,475 234,731 156,022 3Q22 4Q22 1Q23 2Q23 3Q23 FY19 FY20 FY21 FY22 9M23 © GDS 2016 9

  11. Slide 11: Backlog For Area In Service

    Backlog For Area In Service By Quarter (Sqm) By Year (Sqm) China International China International 138,364 128,208 122,285 122,285 111 110,448 107,808 110,845 111 111 110,845 8,155 111 8,155 1,294 81,063 138,364 128,097 122,174 55,582 122,174 110,337 106,514 102,690 102,690 81,063 55,582 3Q22 4Q22 1

  12. Slide 12: Backlog For Area Under Construction

    Backlog For Area Under Construction By Quarter (Sqm) By Year (Sqm) China International China International 146,531 147,057 144,214 144,214 137,884 137,884 130,299 37,656 30,988 122,306 30,988 41,481 31,271 31,271 31,271 98,983 3,162 64,939 122,306 113,226 113,226 106,613 108,875 105,576 106,613 99,0

  13. Slide 13: Capacity Expansion

    Capacity Expansion Net Additional Area In Service By Year (Sqm) Delivery Schedule For Current Projects (Sqm) China International China International 102,217 154,030 7,440 104,002 64,438 21,884 69,495 154,030 94,777 104,002 38,423 20,932 69,495 27,904 44,554 12,460 10,145 1,145 26,759 25,963 10,787 F

  14. Slide 14: Area In Service & Commitment Rate

    Area In Service & Commitment Rate By Quarter (Sqm) By Year (Sqm) 95.6% 95.5% 93.9% 94.6% 93.8% 95.5% 92.4% 91.9% 92.4% 91.9% 554,210 554,210 518,517 531,216 510,511 515,787 515,787 13,605 487,883 13,605 3,112 1,303 1,145 1,145 1,145 923 333,853 509,208 514,642 517,372 528,104 540,605 229,851 514,642

  15. Slide 15: Area Under Construction & Pre-Commitment Rate

    Area Under Construction & Pre-Commitment Rate By Quarter (Sqm) By Year (Sqm) 74.4% 74.8% 76.1% 77.4% 76.1% 71.5% 71.5% 71.5% 66.5% 61.3% 192,713 196,858 196,702 192,713 189,585 182,355 189,585 40,434 46,819 49,962 158,035 161,515 40,434 39,469 39,469 40,434 14,501 7,061 97,610 7,061 152,279 150,039

  16. Slide 16: International Highlights

    International Highlights Significant Milestones n HK1 became revenue-generating n Anchor customer order for HK2 in 4Q23 n Site selected for SNG1, Singapore n NTP1, Johor, became revenue-generating n Acquired land for second Johor campus, KTP n Formed equity JV with INA for Indonesia © GDS 2016 15

  17. Slide 17: International Projects Overview

    International Projects Overview Capacity deliverable by the end of 2026, subject to customer orders and delivery schedule Project Current Status Ready For Service IT Power Capacity (MW) Hong Kong – HK1 In Service 2Q23 18.2 Hong Kong – HK2 Under Construction 1Q25 18.0 Hong Kong – HK3 Pipeline FY26 21

  18. Slide 18: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  19. Slide 19: 3Q23 P&L Analysis

    3Q23 P&L Analysis Quarterly Financial Review Rmb‘000 (Unless Indicated) 3Q22 2Q23 3Q23 Y/Y Q/Q Service Revenue 2,367,593 2,472,020 2,518,978 6.4% 1.9% Equipment Sales 0 0 55 / / Total Net Revenue 2,367,593 2,472,020 2,519,033 6.4% 1.9% Cost of Revenue (1,874,788) (1,921,023) (2,071,584) 10.5% 7.8% A

  20. Slide 20: 3Q23 P&L Analysis (Excluding One-Time Items In 2Q23)

    3Q23 P&L Analysis (Excluding One-Time Items In 2Q23) (1) Quarterly Financial Review Rmb‘000 (Unless Indicated) 3Q22 2Q23 (Excl. One-Time) (1) 3Q23 Y/Y Q/Q Service Revenue 2,367,593 2,401,303 2,518,978 6.4% 4.9% Equipment Sales 0 0 55 / / Total Net Revenue 2,367,593 2,401,303 2,519,033 6.4% 4.9% Cost

  21. Slide 21: Revenue & Area Utilized By Quarter

    Revenue & Area Utilized By Quarter (1) Total Revenue (Rmb Mn) Gross / Net Additional Area Utilized (Sqm) & MSR Net Additional Area Utilized Churn (1) 2,519.0 20,781 2,367.6 2,404.0 2,409.0 2,401.3 15,822 4,903 14,854 1,638 12,192 12,573 1,507 8,691 6,488 15,878 14,184 10,685 6,085 6,163 3Q22 4Q22 1Q

  22. Slide 22: Adjusted GP & EBITDA By Quarter

    Adjusted GP & EBITDA By Quarter Adjusted GP (Rmb Mn) & Margin Adjusted EBITDA (Rmb Mn) & Margin (1) (2) 50.7% 50.9% 52.3% 52.0% 49.5% 45.0% 44.6% 46.9% 47.6% 44.7% 1,224.7 1,259.4 1,249.1 (1) 1,247.3 1,130.0 1,142.4 (2) 1,126.3 1,201.3 1,066.6 1,071.5 3Q22 4Q22 1Q23 2Q23 3Q23 3Q22 4Q22 1Q23 2Q23 3Q2

  23. Slide 23: Capex Paid

    Capex Paid (1) Past 5 Quarters (Rmb Mn) Past 5 Years (Rmb Mn) China (2) Acquisition International Rmb Mn 3Q22 4Q22 1Q23 2Q23 3Q23 13,691.5 China (2) 1,558.5 1,557.0 1,440.6 775.4 676.8 996.3 11,274.9 3,992.4 Acquisition 377.2 (4.3) 151.3 (8.8) 94.0 9,378.0 1,980.8 143.8 1,357.5 ~7,500 3,471.2 Intern

  24. Slide 24: Cash Flow Before Financing

    Cash Flow Before Financing GDS Holdings Excluding International International Standalone For 9 Months Ended For 9 Months Ended Rmb Mn Rmb Mn 30/09/23 30/09/23 Operating Cash Flow 1,322.8 Operating Cash Flow (206.9) Investment Cash Flow (3,129.2) Investment Cash Flow (2,042.9) Cash Flow Before Financ

  25. Slide 25: Financing Obligations & Liquidity

    Financing Obligations & Liquidity GDS Holdings Consolidated GDS Holdings Excluding International (R m b M n U n le s s In d ic a te d ) 3Q22 4Q22 1Q23 2Q23 3Q23 (Rmb Mn Unless Indicated) 3Q23 To ta l L o a n 2 5 ,5 7 9 .0 2 7 ,1 4 2 .0 2 7 ,9 5 7 .3 2 8 ,5 8 1 .9 2 9 ,1 3 4 .9 Total Net Debt 38,686.

  26. Slide 26: Loan Maturity Schedule

    Loan Maturity Schedule At 3Q23 (Rmb Mn) (1) Project Loan - China Project Loan - International Working Capital Convertible Bond (2) 6,621 6,280 5,719 5,832 1,963 4,147 4,451 4,164 3,287 1,359 2,766 2,430 42 5,832 180 3,756 3,245 850 2,765 2,788 2,250 2,170 2,116 105 745 2023 2024 2025 2026 2027 2028

  27. Slide 27: Business Outlook

    Business Outlook Confirming FY23 Guidance Unchanged Rmb Mn FY22 Actual FY23 Guidance Implied Y/Y Total Revenue 9,325.6 9,940 – 10,320 +6.6% – 10.7% Adjusted EBITDA 4,251.4 4,430 – 4,600 +4.2% – 8.2% Capex (1) 11,274.9 ~7,500 -33.5% Notes: 1. Refers to net cash used in investing activities, including

  28. Slide 28: Questions & Answers

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

  29. Slide 29: Appendix

    Appendix © GDS 2016

  30. Slide 30: Our Data Center Portfolio – Beijing & Shanghai Markets

    Our Data Center Portfolio – Beijing & Shanghai Markets Self-Developed Data Centers In Service & Under Construction In Tier 1 Markets (3Q23) Beijing – Tianjin – Hebei: 44 DCs (1) Yangtze River Delta: 30 DCs (1) BJ5/10/11/12/15/16/20/21/22/23 CS1/2/3 SH1/2/3/4/6/7/8/9/ BJ4/6 10/11/12/14/15/19 BJ13/14

  31. Slide 31: Our Data Center Portfolio – Greater Bay Area & Chengdu / Chongqing

    Our Data Center Portfolio – Greater Bay Area & Chengdu / Chongqing Self-Developed Data Centers In Service & Under Construction In Tier 1 Markets (3Q23) Greater Bay Area: 17 DCs (1) Chengdu – Chongqing: 3 DCs (1) SZ5 SZ8 GZ1/2/3/6 SZ4 HZ1 GZ4 SZ6/9/10 SZ11 SZ1/2/3 CD1/2 CQ1 Notes: 1. HY1 is not shown

  32. Slide 32: Our Data Center Portfolio – International

    Our Data Center Portfolio – International Self-Developed Data Centers Under Construction in Hong Kong & South East Asia (3Q23) Hong Kong – 2 DCs South East Asia – 4 DCs NTP1/2/3/4 HK1/2 © GDS 2016 31

  33. Slide 33: Key Operating KPIs

    Key Operating KPIs Past 8 Quarters As At 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 Area In Service (Sqm) 487,883 492,344 504,383 510,511 515,787 518,517 531,216 554,210 Area Under Construction (Sqm) 161,515 168,128 163,102 182,355 192,713 196,858 196,702 189,585 Total Capacity (Sqm) 649,398 660,473 66

  34. Slide 34: Data Center Summary By Market

    Data Center Summary By Market At 30/09/23 (Sqm, Unless Indicated) (1) Area Held for Pre- # of Self- Area In Area Under Total Future Area Area Pre- Total Area Commitment Utilization Area Utilized Commitment Market Developed Service Construction Capacity Development ( Committed Committed Committed Rat

  35. Slide 35: Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei

    Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei At 30/09/23 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate BJ1 2H15 Convert Lease 2,435 2,423 99.5% 2,369 97.3% BJ2 2H17 Convert Lease 5

  36. Slide 36: Self-Developed Data Centers In Service – Yangtze River Delta

    Self-Developed Data Centers In Service – Yangtze River Delta At 30/09/23 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate SH1 2H11 Purpose-Built Lease 6,432 6,084 94.6% 5,807 90.3% SH2 2H15 Purpose-Built L

  37. Slide 37: Self-Developed Data Centers In Service – Greater Bay Area

    Self-Developed Data Centers In Service – Greater Bay Area At 30/09/23 (Sqm, Unless Indicated) Ready For Data Center Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate Service SZ1 2H14 Convert Lease 4,286 4,271 99.7% 4,072 95.0% SZ2 1H16 Convert Lease 4,308 4,30

  38. Slide 38: Self-Developed Data Centers In Service – China Other

    Self-Developed Data Centers In Service – China Other At 30/09/23 (Sqm, Unless Indicated) Ready For Area Commitment Market Data Center Type Tenure Area In Service Area Utilized Utilization Rate Service Committed Rate CD1 1H17 Purpose-Built Own 6,262 5,889 94.0% 3,317 53.0% Chengdu – 8,250 8,250 100%

  39. Slide 39: Self-Developed Data Centers In Service – International

    Self-Developed Data Centers In Service – International At 30/09/23 (Sqm, Unless Indicated) Ready For Area Commitment Market Data Center Type Tenure Area In Service Area Utilized Utilization Rate Service Committed Rate Hong Kong HK1 Phase 1 1H23 Purpose-Built Own 1,967 1,967 100% 783 39.8% South East

  40. Slide 40: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction At 30/09/23 (Sqm, Unless Indicated) Area Under Market Data Center Ready For Service Type Tenure Area Pre-Committed Pre-Commitment Rate Construction BJ13 Phase 2 2024 Purpose-Built Own 8,404 8,404 100% BJ14 Phase 1 2025 & Beyond Purpose-Built Own 8,140 8

  41. Slide 41: B-O-T Projects

    B-O-T Projects B-O-T Data Centers At 3Q23 Market Data Center RFS Status GDS Ownership Net Floor Area Utilization Rate ZB1 1H18 In Service 100% 5,132 94.9% ZB2 2H18 In Service 100% 4,662 94.7% ZB3 2H18 In Service 100% 4,662 94.6% Beijing – Tianjin – Hebei ZB4 1H20 In Service 100% 4,012 97.8% LF10 1H2

  42. Slide 42: Self-Developed Data Center Capacity By Tenure

    Self-Developed Data Center Capacity By Tenure At 30/09/23 Held For Future Total Developed & Sqm Area In Service Area Under Construction Development Developable Capacity Lease 305,871 39,253 20,662 365,786 Own 171,936 146,892 428,751 747,579 B-O-T 68,910 3,440 - 72,350 3 rd Party 7,493 - - 7,493 Tota

  43. Slide 43: Stabilized Vs. Ramping-Up Data Centers

    Stabilized Vs. Ramping-Up Data Centers Breakdown Of Area In Service At 3Q23 Stabilized Data Centers Ramping-Up Data Centers SH1 Ar e a I n Se r v ic e ( Sq m ) 6,432 Co m m it m e n t Ra t e 94.6% Ut iliza t io n Ra t e 90.3% Area In Service Area In Service (Sqm) Commitment Rate Utilization Rate SH6

  44. Slide 44: Customer Franchise Development

    Customer Franchise Development Total Area Committed By Segment (Sqm) (3Q23) Hyperscale Customer Additions (1) 2011 – 2016 FSI & Large Enterprises 86,489 (2) 2017 13.2% 2018 Large Internet 853 2019 (3) 188,051 Customers 28.8% 379,192 58.0% 2020 2021 Cloud Service Providers 2022 Notes: . 1. Excludes c

  45. Slide 45: Top 5 Customers

    Top 5 Customers By Total Area Committed (1)(2) By Revenue (1) % Of Total Area Number of Data End User End User % Of 3Q23 Total Net Revenue Committed As At 3Q23 Centers (2) Customer 1 34.8% 46 Customer 1 30.2% Customer 2 14.1% 17 Customer 2 17.1% Customer 3 7.9% 10 Customer 3 4.5% Customer 4 7.6% 5 C

  46. Slide 46: Forthcoming Contract Renewals

    Forthcoming Contract Renewals Contract Renewal Schedule Period Sqm % of Total Area Committed Between 01/10/23 and 31/12/23 48,394 7.4% FY24 89,800 13.7% FY25 64,305 9.8% FY26 63,067 9.6% FY27 88,786 13.6% Thereafter 299,380 45.8% Total Area Committed At 30/09/23 653,732 100% © GDS 2016 45

  47. Slide 47: Principal Shareholders

    Principal Shareholders At 30/09/23 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 64,411,440 8,051,430 8,051,430 4.3% Directors & Officers (4) 6,057,356 757,169 757,169 0.4% STT GDC 477,288,484 59,661,060 59,661,060 31.6% Ping An 0 0 4,213,483

  48. Slide 48: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# Of Days) (1) Days Payable Outstanding (DPO) (2) 109 # of Days 3Q22 4Q22 1Q23 2Q23 3Q23 101 102 104 95 DPO – Opex 82 84 97 106 96 DPO – Capex 237 164 145 134 153 Total DPO 172 132 124 123 127 Total DPO (Excl. Acquisitions) 137 116 119 11

  49. Slide 49: Historical Financial Results – Statements of Operations

    Historical Financial Results Condensed Consolidated Statements Of Operations Amounts in thousands Three Months Ended Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 (1) RMB RMB RMB RMB RMB USD Net Revenue Service revenue 2,367,593 2,404,034 2,408,449 2,472,020 2,518,978 345,255 Equi

  50. Slide 50: Historical Financial Results – Balance Sheets

    Historical Financial Results Condensed Consolidated Balance Sheets A m o u n t in th o u san d s. A s o f Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 RMB RMB RMB RMB RMB U S D (1) Cash 9,092,404 8,608,131 10,241,314 8,184,789 7,524,894 1,031,373 A cco u n ts re ce iva b le , n e

  51. Slide 51: Historical Financial Results – Statements of Cash Flows

    Historical Financial Results Condensed Consolidated Statements Of Cash Flows Amounts in thousands Three Months Ended Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 RMB RMB RMB RMB RMB USD (1) Net cash provided by (used in) operating activities 575,728 907,903 (129,180) 734,601 510,

  52. Slide 52: Reconciliation From Gross Profit To Adjusted Gross Profit

    Reconciliation From Gross Profit To Adjusted Gross Profit Adjusted Gross Profit Amounts in thousands Three Months Ended Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 (1) RMB RMB RMB RMB RMB USD Gross profit 492,805 488,034 491,687 550,997 447,449 61,329 Depreciation and amortizati

  53. Slide 53: Reconciliation From Net Loss To Adjusted EBITDA

    Reconciliation From Net Loss To Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 (1) RMB RMB RMB RMB RMB USD Net loss (339,663) (177,895) (474,612) (225,306) (420,831) (57,679) Net interest expenses 444,328 476,7

  54. Slide 54: Definition Of KPIs

    Definition Of KPIs Area In Service Entire net floor area of data centers (or phases of data centers) which are ready for service Entire net floor area of data centers (or phases of data centers) which are actively under construction and have not yet reached Area Under Construction the stage of being

  55. Slide 55: Analyst Coverage

    Analyst Coverage Broker Analyst Contact BofA Daley Li daley.li2@bofa.com CICC Hongjie Li hongjie.li@cicc.com.cn Citi Andre Lin andre.lin@citi.com Citic Securities Junyun Chen chenjunyun@citics.com Cowen Michael Elias michael.elias@cowen.com Daiwa John Choi john.choi@hk.daiwacm.com DBS Tsz Wang Tam t

GDS Holdings — Q3 2023 Earnings Presentation on 6ix