Gds Holdings Ltd. · HKEX:9698

Gds — Q3 2018 Earnings Presentation

41 slides from Gds's earnings presentation, Nov 13, 2018

  1. Slide 1: 3Q18 Earnings Call

    3Q18 Earnings Call 13 November 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: 3Q18 Highlights

    3Q18 HIGHLIGHTS Sales Momentum • Net additional area committed of 18,734 sqm • Total area committed increased by 13.1% q/q to 161,799 sqm Capacity Expansion • 147,342 sqm in service and 43,718 sqm under construction • Invested Rmb 1,076 mn ($157 mn) of capex for capacity expansion Financial Results

  5. Slide 5: Sales Achievement

    Sales Achievement Net Additional Area Committed (Sqm) Total Area Committed by Customer Segment FSI & Large Enterprises Cloud Service Providers 59,271 16.2% 18,734 41,485 3Q Large Internet 578 20.5% Customers 20,246 +16.5% Y/Y 25,125 63.3% 2Q 14,933 1Q 20,291 1Q FY15 FY16 FY17 9M18 © GDS 2016 4

  6. Slide 6: Key Demand Drivers

    Key Demand Drivers Public Cloud IaaS ($ Mn) AI–Derived Business Value ($ Bn) China US Greater China North America CAGR: ~44.7% CAGR: ~24.5% CAGR: ~34.2% CAGR: ~23.4% 42,633 ~1,250 ~880 18,112 12,185 ~385 ~380 2,881 2018 2022 2018 2022 2018 2022 2018 2022 Note: Note: Gartner “Forecast: Public Cloud S

  7. Slide 7: Resource Progress

    Resource Progress Area Under Construction (Sqm) 23,131 20,436 19,358 43,718 41,023 1,078 (2) (1) SH10 SH8 BJ6 CD2 Phase 1 SZ5 Phase 3 HB2 BJ5 Phase 2 HB3 Area Under Construction Projects Initiated Projects In Service Area Under Construction 30/06/18 3Q18 3Q18 30/09/18 Note: 1.Area under construction

  8. Slide 8: New Data Centers In Service

    New Data Centers In Service SH8 HB2, HB3 CD2 © GDS 2016 7

  9. Slide 9: Data Center Operations Unaffected By Typhoon Mangkhut

    Data Center Operations Unaffected By Typhoon Mangkhut GDS Data Centers SZ1, SZ2, SZ3, SZ4, SZ5 GZ1, GZ2, GZ3 © GDS 2016 8

  10. Slide 10: 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 Area In Service 191,060 Area Under Construction 169,007 95.6% 96.3% 161,799 143,832 93.8% 143,065 91.8% 125,763 122,819 115,310

  11. Slide 11: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  12. Slide 12: 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

  13. Slide 13: 3Q18 P&L Analysis

    3Q18 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 3Q17 2Q18 3Q18 Y/Y Q/Q Service Revenue 423,042 626,347 752,620 77.9% 20.2% Equipment Sales 1,391 11,163 10,201 633.4% 8.6% Total Net Revenue 424,433 637,510 762,821 79.7% 19.7% Cost of Revenue (321,709) (499,989) (590,956) 83.7%

  14. Slide 14: 3Q18 Underlying Trends

    3Q18 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 3Q17 2Q18 3Q18 Y/Y Q/Q Total Net Revenue 424,433 637,510 762,821 79.7% 19.7% Less: Equipment Sales 1,391 11,163 10,201 633.4% (8.6%) Service Revenue 423,042 626,347 752,620 77.9% 20.2% Adjusted NOI 201,892 290,817 366,902 8

  15. Slide 15: Revenue & Area Utilized

    Revenue & Area Utilized Revenue (Rmb Mn) Area Utilized (Sqm) & MSR (Rmb / Sqm / Month) Service Revenue Equipment Sales 100,679 86,665 66,905 61,713 10.2 50,579 11.2 10.8 11.8 1.4 3Q17 4Q17 1Q18 2Q18 3Q18 752.6 626.3 3,031 Average MSR 551.5 493.7 2,931 423.0 2,858 2,753 2,759 Including HB Excluding H

  16. Slide 16: Underlying Adjusted NOI & EBITDA

    Underlying Adjusted NOI & EBITDA Underlying Adjusted NOI & Margin Underlying Adjusted EBITDA & Margin 47.6% 45.5% 45.3% 46.2% 48.5% 31.9% 32.2% 33.0% 35.3% 38.0% Rmb Mn 365.2 Rmb Mn 286.1 289.5 249.8 221.1 224.6 201.5 182.3 159.1 134.9 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 © GDS 2016 15

  17. Slide 17: Stabilized vs. Ramping-Up Data Centers

    Stabilized vs. Ramping-Up Data Centers Breakdown of Area In Service as at 3Q18 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 99.4% 96.2% SH4 8,415 83.1% 46.9% SH1 6

  18. Slide 18: Cost Breakdown & Operating Leverage

    Cost Breakdown & Operating Leverage 3Q18 Cost Breakdown & Operating Leverage (Rmb Mn) % of Service Revenue Service Revenue 752.6 2Q18 3Q18 Utility Cost 186.8 24.1% 24.8% Rent, Labour & Other (1) 200.6 29.7% 26.7% Underlying Adjusted NOI 365.2 46.2% 48.5% SG&A (2) 82.3 11.2% 10.9% Other Income (Expen

  19. Slide 19: Capex & On-Going Investment

    Capex & On-Going Investment Capex Paid & Capex Incurred Current Construction Program Capex Paid (Rmb Mn) (1) Net Floor Area Pre-Commitment RFS Date (Sqm) Rate (%) 1,157.5 1,076.1 SH6 4Q18 7,071 45.3% 779.3 806.8 SH9 1H19 3,880 100% 443.7 BJ4 1H19 4,500 0% BJ5 Phase 1 1H19 5,136 100% 3Q17 4Q17 1Q18 2

  20. Slide 20: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule as at 30/09/18 (Rmb Mn) 30/09/17 30/06/18 30/09/18 Workin g Capital & Project Loan / LQA Adjusted 3,164.1 Rmb Mn Rmb Mn Rmb Mn EBITDA Convertible Bond Total Loan 3,194.6 5,990.2 6,060.2 5.0x Convertible Bond 995.5 1,925

  21. Slide 21: 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 161,799 20,246 19,760 18,734 14,014 143,065 61,120 122,819 55,914 56,400 102,528 100,679 82,850 86,665 66,905 61,7

  22. Slide 22: Updated Business Outlook

    Updated Business Outlook FY18 Revised Guidance FY18 FY18 FY18 Original Revised Revised Rmb Mn FY16 Actual FY17 Actual Actual Y/Y Implied Y/Y Guidance Guidance Guidance @ 31/03/18 @ 30/06/18 @ 30/09/18 Total Revenue 1,056.0 1,616.2 53.1% 2,460 ~ 2,560 2,533 ~ 2,636 > 2,750 > 70.2% Adjusted EBITDA 270

  23. Slide 23: Questions & Answers

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

  24. Slide 24: Appendix

    Appendix © GDS 2016

  25. Slide 25: 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

  26. Slide 26: 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 25

  27. Slide 27: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As At: 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Area In Service (Sqm) 60,982 61,092 71,577 77,832 101,258 103,475 127,984 147,342 Area Under Construction (Sqm) 25,055 35,055 38,028 37,478 24,505 40,357 41,023 43,718 Total Capacity (Sqm) 86,037 96,147 109,605 115,310

  28. Slide 28: Data Center Summary By Market

    Data Center Summary By Market As at 30/09/18 (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) (

  29. Slide 29: Self-Developed Data Centers In Service – Shanghai / Kunshan

    Self-Developed Data Centers In Service – Shanghai / Kunshan As at 30/09/18 (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 6,505 99.4% 6,299 96.2% SH1 2H11 Purpose-Built

  30. Slide 30: Self-Developed Data Centers In Service – Shenzhen / Guangzhou

    Self-Developed Data Centers In Service – Shenzhen / Guangzhou As at 30/09/18 (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 4,220 98.5% 4,218 98.4% SZ2 1H16 Converted Leas

  31. Slide 31: Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei

    Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei As at 30/09/18 (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 Leased 2,435 2,431 99.8% 2,386 98.0% Beijing BJ2

  32. Slide 32: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction As at 30/09/18 (Sqm, Unless Indicated) Area Under Area Pre- Pre-Commitment Market Data Center Ready For Service Type Tenure Construction Committed Rate SH6 4Q18 Purpose-Built Leased 7,071 3,200 45.3% Shanghai SH9 1H19 Converted Leased 3,880 3,880 100% S

  33. Slide 33: Top Customers

    Top 5 Customers Top 5 Customers in terms of Total Area Committed End User % of Total Area Committed % of 3Q18 Service Revenue Number of Data Centers (1) Internet / Cloud Service Provider 31.3% 27.3% 17 Internet / Cloud Service Provider 27.8% 20.1% 12 Internet 10.8% 7.7% 5 Internet 3.7% 0% 2 Cloud Se

  34. Slide 34: Principal Shareholders

    Principal Shareholders As at 30/09/18 Ordinary Shares ADS % of Total William Huang (1) 67,915,944 8,489,493 6.8% Directors & Officers (2) 11,272,935 1,409,116 1.1% SBCVC 67,491,574 8,436,447 6.7% STT 351,554,516 43,944,314 35.1% Ping An Insurance 63,369,856 7,921,232 6.3% Cyrus One 64,257,028 8,032,

  35. Slide 35: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) 71 69 67 63 # of Days FY15 FY16 FY17 1H18 3Q18 53 DPO – Opex 105 96 96 79 80 DPO – Capex 130 112 133 154 196 Total DPO 119 106 122 133 153 Total DPO (Excl. 119 104 108 108 122 Acquisitions) FY

  36. Slide 36: Historical Financial Results

    Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 RMB RMB RMB RMB RMB USD Net Revenue Service revenue 423,042 493,663 551,473 626,347 752,620 109,584 Equipment sales 1,

  37. Slide 37: Historical Financial Results

    Historical Financial Results Condensed Consolidated Balance Sheets (1) Amounts in thousands. As of Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 RMB RMB RMB RMB RMB USD Cash 1,174,079 1,873,446 2,978,627 4,450,958 3,491,694 508,400 Accounts receivable, net of allowance for doubtfu

  38. Slide 38: Historical Financial Results

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

  39. Slide 39: Reconciliation from Net Loss to Adjusted NOI

    Reconciliation from Net Loss to Adjusted NOI Adjusted NOI Amounts in thousands Three Months Ended Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 RMB RMB RMB RMB RMB USD Net loss (90,329) (116,543) (85,926) (102,077) (119,354) (17,379) Net interest expenses 105,733 136,307 115,054 1

  40. Slide 40: Reconciliation from Net Loss to Adjusted EBITDA

    Reconciliation from Net Loss to Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Sep 30, 2017 Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 RMB RMB RMB RMB RMB USD Net loss (90,329) (116,543) (85,926) (102,077) (119,354) (17,379) Net interest expenses 105,733 136,307 115

  41. Slide 41: 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

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