Gds Holdings Ltd. · HKEX:9698

Gds — Q2 2018 Earnings Presentation

45 slides from Gds's earnings presentation, Aug 14, 2018

  1. Slide 1: 2Q18 Earnings Call

    2Q18 Earnings Call 14 August 2018 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: 2Q18 Highlights

    2Q18 HIGHLIGHTS Sales Momentum • Net additional total area committed of 20,246 sqm • Total area committed increased by 16.5% q/q to 143,065 sqm Capacity Expansion • 127,984 sqm in service and 41,023 sqm under construction • Invested Rmb 1,157 mn ($175 mn) of capex for capacity expansion Financial Re

  5. Slide 5: Sales Achievement

    Sales Achievement Net Additional Area Committed (Sqm) Total Area Committed by Customer Segment FSI & Large Enterprises Cloud Service Providers 41,485 40,537 16.2% 20,246 16.3% 562 25,125 2Q Large Customers Internet +23.5% Y/Y 14,933 67.5% 20,291 1Q 1Q FY15 FY16 FY17 1H18 © GDS 2016 4

  6. Slide 6: Resource Progress

    Resource Progress Area Under Construction (Sqm) (1) 845 56,891 24,330 23,664 40,357 41,023 15,868 GZ3 Phase 1 SZ5 Phase 2 SH10 BJ4 HB1 BJ6 BJ5 Phase 1 GZ3 Phase 1 SZ5 Phase 3 SH9 SH11 SH11 Area Under Construction Projects Initiated Projects In Service Area Under Construction Projects Initiated Area

  7. Slide 7: Built-To-Suit Data Centers in Hebei

    Built-To-Suit Data Centers in Hebei © GDS 2016 6

  8. Slide 8: Site Acquisition in Hong Kong

    Site Acquisition in Hong Kong Existing building to be demolished is ~20% of the developable GFA © GDS 2016 7

  9. Slide 9: Synchronized Sales & Capacity Growth

    Synchronized Sales & Capacity Growth Commitments vs. Capacity (Sqm) Commitment & Pre-Commitment Rates Area Committed Area Pre-Committed Commitment Rate Pre-Commitment Rate 169,007 Area In Service Area Under Construction 143,832 143,065 95.6% 122,819 93.8% 125,763 115,310 92.2% 91.8% 109,605 102,528

  10. Slide 10: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  11. Slide 11: Financial Highlights

    Financial Highlights 1 Record level of new customer commitments and growing backlog 2 Track record of delivering backlog, driving revenue growth 3 Realizing operating leverage at the data center and corporate levels 4 Sufficient capital to maintain a fully funded business plan 5 High visibility into

  12. Slide 12: 2Q18 P&L Analysis

    2Q18 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 2Q17 1Q18 2Q18 Y/Y Q/Q Service Revenue 331,490 551,473 626,347 88.9% 13.6% Equipment Sales 4,724 10,752 11,163 136.3% 3.8% Total Net Revenue 336,214 562,225 637,510 89.6% 13.4% Cost of Revenue (254,853) (439,308) (499,989) 96.2%

  13. Slide 13: 2Q18 Underlying Trends

    2Q18 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 2Q17 1Q18 2Q18 Y/Y Q/Q Total Net Revenue 336,214 562,225 637,510 89.6% 13.4% Less: Equipment Sales 4,724 10,752 11,163 136.3% 3.8% Service Revenue 331,490 551,473 626,347 88.9% 13.6% Adjusted NOI 156,281 252,007 290,817 86.

  14. Slide 14: Revenue & Area Utilized

    Revenue & Area Utilized Revenue (Rmb Mn) Area Utilized (Sqm) & MSR (Rmb / Sqm / Month) 86,665 Service Revenue Equipment Sales 66,905 61,713 11.2 50,579 42,470 10.8 11.8 1.4 4.7 2Q17 3Q17 4Q17 1Q18 2Q18 626.3 551.5 493.7 Average MSR 423.0 331.5 3,031 2,931 2,750 2,858 2,719 2Q17 3Q17 4Q17 1Q18 2Q18 ©

  15. Slide 15: Underlying Adjusted NOI & EBITDA

    Underlying Adjusted NOI & EBITDA Underlying Adjusted NOI & Margin Underlying Adjusted EBITDA & Margin 46.9% 47.6% 45.5% 45.3% 46.2% 30.3% 31.9% 32.2% 33.0% 35.3% Rmb Mn Rmb Mn 289.5 221.1 249.8 182.3 224.6 159.1 201.5 134.9 155.5 100.4 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 © GDS 2016 14

  16. Slide 16: Stabilized vs. Ramping-Up Data Centers

    Stabilized vs. Ramping-Up Data Centers Breakdown of Area In Service as at 2Q18 Stabilized Data Centers Ramping-Up Data Centers Area In Service Net Floor Commitment Utilization Net Floor Commitment Utilization Area (Sqm) Rate Rate Area (Sqm) Rate Rate KS1 6,546 99.3% 96.3% SH3 7,950 99.6% 70.3% SH1 6

  17. Slide 17: Cost Breakdown & Operating Leverage

    Cost Breakdown & Operating Leverage 2Q18 Cost Breakdown & Operating Leverage (Rmb Mn) % of Service Revenue Service Revenue 626.3 1Q18 2Q18 Utility Cost 151.2 22.9% 24.1% Rent, Labour & Other (1) 185.7 31.8% 29.7% Underlying Adjusted NOI 289.5 45.3% 46.2% SG&A (2) 70.2 12.4% 11.2% Other Income (Expen

  18. Slide 18: Capex & On-Going Investment

    Capex & On-Going Investment Capex Paid & Capex Incurred Current Construction Program Capex Paid (Rmb Mn) (1) RFS Date Net Floor Area (Sqm) Pre-Commitment Rate (%) Area Under Construction as at 2Q18 1,157.5 HB2 2H18 4,992 100% 779.3 806.8 HB3 2H18 4,992 100% SH6 2H18 7,071 45.3% 402.1 443.7 SH8 2H18

  19. Slide 19: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule as at 30/06/18 (Rmb Mn) 30/06/17 31/03/18 30/06/18 Workin g Capital & Project Loan 2,800 / LQA Adjusted Rmb Mn Rmb Mn Rmb Mn EBITDA Convertible Bond Total Loan 2,950.4 5,150.4 5,990.2 6.5x Convertible Bond 1,016.2 0 1,9

  20. Slide 20: Financial Resources

    Financial Resources Financing Capacity With Existing Capital Existing Project Commitments Rmb Bn Rmb Bn Cost to Complete Projects In Service & Existing Cash Balance at 2Q18 4.5 2.2 Under Construction at 2Q18 Additional Debt Assuming 1 : 1 4.5 Estimated Cost to Complete Projects Initiated 0.7 Leverag

  21. Slide 21: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) 71 67 63 # of Days FY15 FY16 FY17 1H18 53 47 DPO – Opex 105 96 96 79 DPO – Capex 130 112 133 154 Total DPO 119 106 122 133 Total DPO (Excl. Acquisitions) 119 104 108 108 FY15 FY16 FY17 1Q18 2Q

  22. Slide 22: Acquisitions

    Acquisitions Date of Acquisition (1) Equity Consideration (Rmb Mn) (2) Acquired Liabilities + Stabilized Net Floor Commitment Implied Data Center Cost to Complete (3) Cash EBITDA Area (Sqm) Rate (5) EV / EBITDA Offshore Onshore Offshore Onshore Total (Rmb Mn) (Rmb Mn) (6) GZ1 N/A 19-May-16 - 129.5 1

  23. Slide 23: Guangzhou Data Center Cluster

    Guangzhou Data Center Cluster GZ2 GZ1 GZ3 © GDS 2016 22

  24. Slide 24: SZ5 Transaction Structure

    SZ5 Transaction Structure SZ5 Target Group GDS Holdings Offshore Purchase (Consideration: Rmb 311.0 mn) RDTJ Limited EDE III (HK) Limited (Hong Kong) (Hong Kong) Purchase completed on 24-May-17. Change of ownership and director, etc. filed with Offshore Hong Kong Companies Registry on same date. 100

  25. Slide 25: GZ2 & GZ3 Transaction Structures

    GZ2 & GZ3 Transaction Structures GZ2 GZ3 GZ2 Target Group GDS Holdings GZ3 Target Group GDS Holdings Offshore Offshore Purchase Purchase Raojin Limited EDF (HK) Limited PSDC Limited RDKH (HK) Limited (Hong Kong) (Hong Kong) (Hong Kong) (Hong Kong) Offshore 100% Offshore 100% Onshore Onshore ASSET CO

  26. Slide 26: Contract Backlog Build-Up

    Contract Backlog Build-Up Backlog Build-up (Sqm) Total Area Committed & Area Utilized (Sqm) Net Additional Area Committed Total Area Committed Area Utilized Net Additional Area Utilized 143,065 20,246 19,760 122,819 20,291 5,192 102,528 56,400 55,914 86,665 82,850 76,541 40,815 66,905 61,713 50,579

  27. Slide 27: Updated Business Outlook

    Updated Business Outlook FY18 Revised Guidance FY18 FY18 Revised vs. Original Rmb Mn FY17 Actual Implied Y/Y Implied Y/Y Original Guidance Revised Guidance Guidance Total Revenue 1,616.2 2,460 ~ 2,560 52.2% ~ 58.4% 2,533 ~ 2,636 56.7% ~ 63.1% +3% @ Both Ends Adjusted EBITDA 512.3 905 ~ 935 76.7% ~ 8

  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

    Our Data Center Portfolio – Beijing & Shanghai Self-Developed Data Centers in Tier 1 Markets Beijing Shanghai KM SH9, 10 KM 2 BJ5 SH1, 2, 3, 4 2 BJ6 13 SH8 5 54 61 58 BJ4 SH5 43 SH6, 7 (1) & SH11 BJ1, 2, 3 KS1 Note: 1. SH7 is the 2nd building to be constructed next to SH6 which is currently held for

  31. Slide 31: Our Data Center Portfolio – Shenzhen, Guangzhou & Chengdu

    Our Data Center Portfolio – Shenzhen, Guangzhou & Chengdu Self-Developed Data Centers in Tier 1 Markets Chengdu Guangzhou Shenzhen CD1, 2 GZ1, 2, 3 SZ5 SZ3 SZ1, 2 SZ4 1.2 45.2 KM 37.9 © GDS 2016 30

  32. Slide 32: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As At: 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Area In Service (Sqm) 48,822 60,982 61,092 71,577 77,832 101,258 103,475 127,984 Area Under Construction (Sqm) 37,194 25,055 35,055 38,028 37,478 24,505 40,357 41,023 Total Capacity (Sqm) 86,016 86,037 96,147 109,605 1

  33. Slide 33: Data Center Summary By Market

    Data Center Summary By Market As At 30/06/18 (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) (

  34. Slide 34: Self-Developed Data Centers In Service – Shanghai / Kunshan

    Self-Developed Data Centers In Service – Shanghai / Kunshan As At 30/06/18 (Sqm, Unless Indicated) Ready For Commitment Data Center Type Tenure Area in Service Area Committed Area Utilized Utilization Rate Service Rate KS1 2H10 Purpose-Built Owned 6,546 6,498 99.3% 6,301 96.3% SH1 2H11 Purpose-Built

  35. Slide 35: Self-Developed Data Centers In Service – Shenzhen / Guangzhou

    Self-Developed Data Centers In Service – Shenzhen / Guangzhou As At 30/06/18 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area in Service Area Committed Commitment Rate Area Utilized Utilization Rate SZ1 2H14 Converted Leased 4,286 4,216 98.4% 4,216 98.4% SZ2 1H16 Converted Leas

  36. Slide 36: Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei

    Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei As At 30/06/18 (Sqm, Unless Indicated) Ready For Area Commitment Market Data Center Type Tenure Area in Service Area Utilized Utilization Rate Service Committed Rate BJ1 2H15 Converted Leased 2,435 2,429 99.8% 2,374 97.5% Beijing BJ2

  37. Slide 37: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction As At 30/06/18 (Sqm, Unless Indicated) Area Under Area Pre- Pre-Commitment Market Data Center Ready For Service Type Tenure Construction Committed Rate SH6 2H18 Purpose-Built Leased 7,071 3,200 45.3% Shanghai SH8 2H18 Converted Leased 5,052 2,500 49.5%

  38. Slide 38: Top Customers

    Top 5 Customers Top 5 Customers in terms of Total Area Committed End User % of Total Area Committed % of 2Q18 Service Revenue Number of Data Centers Internet / Cloud Service Provider 34.0% 28.3% 16 Internet / Cloud Service Provider 29.4% 16.1% 13 (1) Internet 9.5% 7.3% 4 Cloud Service Provider 3.3%

  39. Slide 39: Principal Shareholders

    Principal Shareholders As at 30/06/18 Ordinary Shares ADS % of Total William Huang (1) 67,590,336 8,448,792 6.8% Directors & Officers (2) 10,907,783 1,363,472 1.1% SBCVC 72,492,246 9,061,531 7.3% STT 341,737,732 42,717,217 34.3% Ping An Insurance 63,369,856 7,921,232 6.4% Cyrus One 64,257,028 8,032,

  40. Slide 40: Historical Financial Results

    Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Jun 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 RMB RMB RMB RMB RMB USD Net Revenue Service revenue 331,490 423,042 493,663 551,473 626,347 94,656 Equipment sales 4,7

  41. Slide 41: Historical Financial Results

    Historical Financial Results Condensed Consolidated Balance Sheets (1) Amounts in thousands. As of Jun 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 RMB RMB RMB RMB RMB USD Cash 1,466,013 1,174,079 1,873,446 2,978,627 4,450,958 672,645 Accounts receivable, net of allowance for doubtfu

  42. Slide 42: Historical Financial Results

    Historical Financial Results Condensed Consolidated Statements of Cash Flows (1) (2) Amounts in thousands Three Months Ended Jun 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 RMB RMB RMB RMB RMB USD Net cash used in operating activities (59,975) (55,528) (28,623) (143,429) (18,308) (2

  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 Jun 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 RMB RMB RMB RMB RMB USD Net loss (75,723) (90,329) (116,543) (85,926) (102,077) (15,425) Net interest expenses 85,755 105,733 136,307 115

  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 Jun 30, 2017 Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 RMB RMB RMB RMB RMB USD Net loss (75,723) (90,329) (116,543) (85,926) (102,077) (15,425) Net interest expenses 85,755 105,733 136,3

  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 — Q2 2018 Earnings Presentation on 6ix