Gds Holdings Ltd. · HKEX:9698

Gds — Q2 2023 Earnings Presentation

53 slides from Gds's earnings presentation, Aug 22, 2023

  1. Slide 1: 2Q23 Earnings Call

    2Q23 Earnings Call 22 August 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: Strategic Business Objectives

    Strategic Business Objectives China International 1. Selectively target new business based on 1. Develop 2nd growth engine for GDS inventory and speed of move-in shareholders 2. Prioritize delivery of Rmb 6 bn backlog to 2. Win new business from reference China grow revenue with less capex and globa

  5. Slide 5: 2Q23 Highlights

    2Q23 HIGHLIGHTS (1) Customer Commitments • New customer commitments (gross) of +16,098 sqm • Total area committed increased by 8.4% y/y to 637,661 sqm, or 1,428 MW Customer Move-In • Gross additional area utilized of +14,854 sqm • Total area utilized of 382,796 sqm, +10.7% y/y, and utilization rate

  6. Slide 6: 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 68,098 28,331 27,069 16,098 14,145 14,066 99,197 1,040 91,277 11,669 5,792 68,098 27,767 6,385 52,175 13,105 14,066 12,177 10,306 5,333 5,28

  7. Slide 7: 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 9,045 27,069 73,894 13,045 12,347 16,665 1,040 28,

  8. Slide 8: Largest Hyperscale Orders In 2Q23

    Largest Hyperscale Orders In 2Q23 BJ23: 3,171 Sqm / 6.1 MW LF15 Phase 2: 3,616 Sqm / 8.3 MW NTP1/2/3/4: 5,110 Sqm / 6.0 MW NTP1/2/3/4 BJ23 LF15 Phase 2 © GDS 2016 7

  9. Slide 9: Gross Additional Area Utilized

    Gross Additional Area Utilized By Quarter (Sqm) By Year (Sqm) 15,822 86,929 14,854 80,630 14,218 12,192 12,573 55,937 48,623 27,427 2Q22 3Q22 4Q22 1Q23 2Q23 FY19 FY20 FY21 FY22 1H23 © GDS 2016 8

  10. Slide 10: Net Additional Area Utilized

    Net Additional Area Utilized By Quarter (Sqm) By Year (Sqm) 84,744 14,184 78,709 13,659 10,685 51,073 47,696 6,085 6,163 12,248 2Q22 3Q22 4Q22 1Q23 2Q23 FY19 FY20 FY21 FY22 1H23 © GDS 2016 9

  11. Slide 11: Total Area Utilized & Utilization Rate

    Total Area Utilized & Utilization Rate By Quarter (Sqm) By Year (Sqm) 72.6% 72.1% 71.8% 72.1% 70.5% 70.3% 71.8% 68.5% 67.9% 65.5% 382,796 382,796 370,547 376,632 370,547 359,862 345,678 319,475 234,731 156,022 2Q22 3Q22 4Q22 1Q23 2Q23 FY19 FY20 FY21 FY22 1H23 © GDS 2016 10

  12. Slide 12: Backlog For Area In Service

    Backlog For Area In Service By Quarter (Sqm) By Year (Sqm) 137,844 138,364 128,208 122,285 122,285 110,448 107,808 107,808 81,063 55,582 2Q22 3Q22 4Q22 1Q23 2Q23 FY19 FY20 FY21 FY22 1H23 © GDS 2016 11

  13. Slide 13: Backlog For Area Under Construction

    Backlog For Area Under Construction By Quarter (Sqm) By Year (Sqm) China International China International 146,531 147,057 147,057 137,884 137,884 130,299 37,656 41,481 122,306 41,481 31,271 31,271 31,271 104,532 98,983 64,939 122,306 106,613 108,875 105,576 106,613 105,576 100,330 99,028 95,821 64,

  14. Slide 14: Capacity Expansion

    Capacity Expansion Net Additional Area In Service By Year (Sqm) Delivery Schedule For Current Projects (Sqm) China International 154,030 76,703 68,824 21,884 7,440 104,002 51,176 69,495 20,638 61,385 54,819 27,904 30,538 15,429 FY19 FY20 FY21 FY22 1H23 2H23 2024 2025 & Beyond © GDS 2016 13

  15. Slide 15: Area In Service & Commitment Rate

    Area In Service & Commitment Rate By Quarter (Sqm) By Year (Sqm) 95.9% 95.6% 95.5% 93.9% 94.6% 93.8% 95.5% 92.4% 92.1% 92.4% 531,216 515,787 531,216 510,511 515,787 518,517 487,883 504,383 333,853 229,851 2Q22 3Q22 4Q22 1Q23 2Q23 FY19 FY20 FY21 FY22 1H23 © GDS 2016 14

  16. Slide 16: Area Under Construction & Pre-Commitment Rate

    Area Under Construction & Pre-Commitment Rate By Quarter (Sqm) By Year (Sqm) 74.4% 74.8% 77.4% 74.8% 71.5% 71.5% 71.5% 64.1% 66.5% 61.3% 192,713 196,858 196,702 196,702 192,713 182,355 163,102 40,434 46,819 49,962 158,035 161,515 40,434 49,962 40,434 14,501 7,061 14,501 97,610 7,061 148,601 152,279

  17. Slide 17: Johor Campus Opening

    Johor Campus Opening Groundbreaking To Opening In 14 Months June 2022 : Groundbreaking August 2023 : Opening © GDS 2016 16

  18. Slide 18: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  19. Slide 19: 3-Year Financial Targets

    3-Year Financial Targets China Segment International Segment 1. Grow Adj. EBITDA at mid-teens % CAGR 1. Contribute over 15% of Group Adj. EBITDA within 3 years 2. Reduce organic capex from Rmb 6 bn in FY22 to Rmb 2 – 3 bn p.a. 2. Low-risk investment with firm pre- commitments 3. Reduce capital WIP f

  20. Slide 20: 2Q23 P&L Analysis

    2Q23 P&L Analysis Quarterly Financial Review Rmb‘000 (Unless Indicated) 2Q22 1Q23 2Q23 Y/Y Q/Q Service Revenue 2,302,729 2,408,449 2,472,020 7.4% 2.6% Equipment Sales 7,681 509 0 (100.0%) (100.0%) Total Net Revenue 2,310,410 2,408,958 2,472,020 7.0% 2.6% Cost of Revenue (1,841,809) (1,917,271) (1,92

  21. Slide 21: Revenue & Area Utilized By Quarter

    Revenue & Area Utilized By Quarter Total Revenue (Rmb Mn) Net Additional Area Utilized (Sqm) & MSR Organic B-O-T Net of 6,488 sqm churn in 13,659 14,184 1Q23 and 8,690 sqm in 2Q23 2,409.0 2,472.0 2,367.6 2,404.0 mainly due to a single 2,310.4 10,685 customer redeploying between 5,361 GDS data center

  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% 50.7% 50.9% 52.3% 53.4% 46.0% 45.0% 44.6% 46.9% 50.0% 1,319.8 1,224.7 1,259.4 1,235.1 1,172.3 1,201.3 1,130.0 1,062.2 1,066.6 1,071.5 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 3Q22 4Q22 1Q23 2Q23 Notes:

  23. Slide 23: Capex Paid

    Capex Paid (1) Past 5 Quarters (Rmb Mn) Past 5 Years (Rmb Mn) China (2) Acquisition International Rmb Mn 2Q22 3Q22 4Q22 1Q23 2Q23 13,691.5 China (2) 1,194.7 1,558.5 1,557.0 1,440.6 775.4 996.3 11,274.9 3,992.4 Acquisition 328.0 377.2 (4.3) 151.3 (8.8) 9,378.0 1,980.8 143.8 1,357.5 ~7,500 3,471.2 Int

  24. Slide 24: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule Pro Forma (1) (Rmb Mn) Working Capital Project Loan CB (R m b M n u n le s s in d ic a te d ) 2Q22 3Q22 4Q22 1Q23 2Q23 To ta l L o a n 2 4 ,6 8 8 .1 2 5 ,5 7 9 .0 2 7 ,1 4 2 .0 2 7 ,9 5 7 .3 2 8 ,5 8 1 .9 C o n v e rtib

  25. Slide 25: 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

  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 Service & Under Construction In Tier 1 Markets (2Q23) Beijing – Tianjin – Hebei: 43 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

  29. Slide 29: 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 (2Q23) 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

  30. Slide 30: Our Data Center Portfolio – International

    Our Data Center Portfolio – International Self-Developed Data Centers Under Construction in Hong Kong & South East Asia (2Q23) Hong Kong – 2 DCs South East Asia – 4 DCs NTP1/2/3/4 HK1/2 © GDS 2016 29

  31. Slide 31: Key Operating KPIs

    Key Operating KPIs Past 8 Quarters As At 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Area In Service (Sqm) 454,354 487,883 492,344 504,383 510,511 515,787 518,517 531,216 Area Under Construction (Sqm) 157,227 161,515 168,128 163,102 182,355 192,713 196,858 196,702 Total Capacity (Sqm) 611,581 649,398 66

  32. Slide 32: Data Center Summary By Market

    Data Center Summary By Market At 30/06/23 (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

  33. Slide 33: Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei

    Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei At 30/06/23 (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

  34. Slide 34: Self-Developed Data Centers In Service – Yangtze River Delta

    Self-Developed Data Centers In Service – Yangtze River Delta At 30/06/23 (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 6,064 94.3% 5,829 90.6% SH2 2H15 Purpose-Built L

  35. Slide 35: Self-Developed Data Centers In Service – Greater Bay Area

    Self-Developed Data Centers In Service – Greater Bay Area At 30/06/23 (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 4,276 99.8% 4,261 99.4% SZ2 1H16 Convert Lease 4,308 4,30

  36. Slide 36: Self-Developed Data Centers In Service – Other

    Self-Developed Data Centers In Service – Other At 30/06/23 (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 5,913 94.4% 3,906 62.4% Chengdu – 8,250 8,250 100% 5,078

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

    Self-Developed Data Centers Under Construction At 30/06/23 (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 2024 Purpose-Built Own 8,140 8,140 100%

  38. Slide 38: B-O-T Projects

    B-O-T Projects B-O-T Data Centers At 2Q23 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 95.0% LF10 1H2

  39. Slide 39: Self-Developed Data Center Capacity By Tenure

    Self-Developed Data Center Capacity By Tenure At 30/06/23 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 148,875 154,009 308,833 611,718 B-O-T 68,910 3,440 - 72,350 3 rd Party 7,560 - - 7,560 Tota

  40. Slide 40: Stabilized Vs. Ramping-Up Data Centers

    Stabilized Vs. Ramping-Up Data Centers Breakdown Of Area In Service At 2Q23 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 94.3% Ut iliza t io n Ra t e 90.6% Area In Service Area In Service (Sqm) Commitment Rate Utilization Rate SH6

  41. Slide 41: Customer Franchise Development

    Customer Franchise Development Total Area Committed By Segment (Sqm) (2Q23) Hyperscale Customer Additions (1) 2011 – 2016 FSI & Large Enterprises 84,643 (2) 13.3% 2017 2018 Large Internet 840 (3) Customers 2019 167,257 26.2% +7.0% Y/Y 385,761 60.5% 2020 2021 Cloud Service Providers 2022 Notes: . 1.

  42. Slide 42: 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 2Q23 Total Net Revenue Committed As At 2Q23 Centers (2) Customer 1 36.7% 47 Customer 1 27.6% Customer 2 14.4% 17 Customer 2 17.8% Customer 3 7.2% 8 Customer 3 4.5% Customer 4 5.0% 7 Cu

  43. Slide 43: Forthcoming Contract Renewals

    Forthcoming Contract Renewals Contract Renewal Schedule Period Sqm % of Total Area Committed Between 01/07/23 and 31/12/23 59,193 9.3% FY24 77,789 12.2% FY25 70,717 11.1% FY26 67,355 10.6% FY27 71,848 11.3% Thereafter 290,759 45.6% Total Area Committed At 30/06/23 637,661 100% © GDS 2016 42

  44. Slide 44: Principal Shareholders

    Principal Shareholders At 30/06/23 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 62,859,440 7,857,430 7,857,430 4.2% Directors & Officers (4) 6,057,356 757,169 757,169 0.4% STT GDC 477,288,484 59,661,060 59,661,060 31.7% Ping An 0 0 4,213,483

  45. Slide 45: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# Of Days) (1) Days Payable Outstanding (DPO) (2) 109 # of Days 2Q22 3Q22 4Q22 1Q23 2Q23 101 102 97 95 DPO – Opex 83 82 84 97 106 DPO – Capex 191 237 164 145 134 Total DPO 154 172 132 124 123 Total DPO (Excl. Acquisitions) 116 137 116 119

  46. Slide 46: Loan Maturity Schedule

    Loan Maturity Schedule At 30/06/23 (Rmb Mn) Working Capital Project Loan CB 6,668 6,321 4,690 4,421 3,957 4,480 4,191 3,354 2,894 2,833 2,248 4,690 4,421 3,777 3,354 2,893 2,833 2,143 2,188 2,130 105 180 2023 2024 2025 2026 2027 2028 2029 2030 2031 & Beyond N otes: 1. E x c hange rate of 7.2513:1 (R

  47. Slide 47: Historical Financial Results – Statements Of Operations

    Historical Financial Results Condensed Consolidated Statements Of Operations Amounts in thousands Three Months Ended Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 RMB RMB RMB RMB RMB USD Net Revenue Service revenue 2,302,729 2,367,593 2,404,034 2,408,449 2,472,020 340,907 Equipmen

  48. Slide 48: 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 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 RMB RMB RMB RMB RMB USD Cash 9,159,176 9,092,404 8,608,131 10,241,314 8,184,789 1,128,734 A cco u n ts re ce iva b le , n e t o f

  49. Slide 49: Historical Financial Results – Cash Flows

    Historical Financial Results Condensed Consolidated Statements Of Cash Flows Amounts in thousands Three Months Ended Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 RMB RMB RMB RMB RMB USD Net cash provided by (used in) operating activities 1,619,166 575,728 907,903 (129,180) 734,60

  50. Slide 50: 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 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 RMB RMB RMB RMB RMB USD Gross profit 468,601 492,805 488,034 491,687 550,997 75,986 Depreciation and amortization 6

  51. Slide 51: Reconciliation From Net Loss To Adjusted EBITDA

    Reconciliation From Net Loss To Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 RMB RMB RMB RMB RMB USD Net loss (375,307) (339,663) (177,895) (474,612) (225,306) (31,071) Net interest expenses 470,838 444,328 4

  52. Slide 52: 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

  53. Slide 53: Analyst Coverage

    Analyst Coverage Broker Analyst Contact BofA Daley Li daley.li2@bofa.com BOCI Michael Meng michael.meng@bocigroup.com CICC Hongjie Li hongjie.li@cicc.com.cn Citi Andre Lin andre.lin@citi.com Citic Securities Junyun Chen chenjunyun@citics.com CMB International Securities Marley Ngan marleyngan@cmbi.c

GDS Holdings — Q2 2023 Earnings Presentation on 6ix