Gds Holdings Ltd. · HKEX:9698

Gds — FY2018 Earnings Presentation

46 slides from Gds's earnings presentation, Mar 13, 2019

  1. Slide 1: 4Q18 & FY18 Earnings Call

    4Q18 & FY18 Earnings Call 13 March 2019 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: FY18 Highlights

    FY18 HIGHLIGHTS Sales Momentum • Net additional area committed of +81,215 sqm (FY17: +41,485 sqm) • Total area committed increased by 79.2% y/y to 183,743 sqm Capacity Expansion • 225,557 sqm of total capacity, with net add of +99,794 sqm • Invested Rmb 4,733 mn ($688 mn) of capex for capacity expan

  5. Slide 5: 4Q18 Highlights

    4Q18 HIGHLIGHTS Sales Momentum • Net additional total area committed of +21,944 sqm • Total area committed increased by 13.6% q/q to 183,743 sqm Capacity Expansion • 160,356 sqm in service and 65,201 sqm under construction • Invested Rmb 1,693 mn ($246 mn) of capex for capacity expansion Financial R

  6. Slide 6: Sales Achievement

    Sales Achievement Net Additional Area Committed (Sqm) Total Area Committed by Customer Segment FSI & Large Enterprises Cloud Service Providers 81,215 21,944 12.7% 4Q Large 18,734 Internet 16.0% 591 41,485 Customers 3Q +11.3% Y/Y 25,125 20,246 71.3% 2Q 14,933 1Q 20,291 1Q FY15 FY16 FY17 FY18 © GDS 20

  7. Slide 7: Key Demand Drivers

    Key Demand Drivers China Public Cloud – IaaS ($ mn) China AI Market Value ($ mn) CAGR: ~43.4% CAGR: ~43.9% 11,327 9,840 2,678 2,292 2018 2022 2018 2022 Source: Source: Gartner “Forecast: Public Cloud Services, Worldwide, 2016-2022, 4Q18 Update”. IDC Semi-annual Cognitive / AI Spend Guide © GDS 2016

  8. Slide 8: Resource Progress

    Resource Progress Capacity Expansion 4Q18 & FY18 66,403 47,190 33,250 12,814 (1) (1) (2) 65,201 SH6 43,718 BJ5 Phase 1 8 new DCs KS2 24,505 plus 1 additional phase KS3 SH7 10 new DCs SH12 plus1 additional phase BJ7 Area Under Construction Projects Initiated Projects In Service Area Under Constructio

  9. Slide 9: Total Capacity by Market

    Total Capacity by Market Area In Service + Area Under Construction 125,763 Sqm 225,557 Sqm Shanghai / Kunshan Chengdu / Hebei / Other 38% 17% Chengdu / Hebei / Other Shanghai / Kunshan 22% 37% Beijing Beijing 20% 10% Shenzhen / Guangzhou 31% Shenzhen / Guangzhou 25% YE17 YE18 © GDS 2016 8

  10. Slide 10: New Data Centers

    New Data Centers SH6 KS2 & KS3 KS1 KS3 KS2 ~45km to Shanghai City Center Data center shell purpose-built for GDS by property partner; SH7 is Two new data centers to be constructed simultaneously on site owned currently under construction at adjacent site. by GDS, leveraging power infrastructure alre

  11. Slide 11: 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 225,557 Area In Service Area Under Construction 191,060 183,743 169,007 96.3% 161,799 95.6% 94.9% 143,832 93.8% 143,065 91.8% 12

  12. Slide 12: Our Strategy

    Our Strategy n Build on resource advantage by securing capacity to support sales Strategic Priorities p Organically or by acquisition For 2019 n Develop new high growth customers and deepen existing relationships n Optimize design, further standardization, leverage scale p Reduce unit development co

  13. Slide 13: Strategic Investment by Ping An

    Strategic Investment by Ping An Who is Ping An Why Ping An Strategic Customer ü Top customer with focus on technology ü Potential for large-scale IT deployment / expansion Ping An Good Doctor Resources Cooperation ü 3rd largest non-SOE company in China with $190 bn market cap (1) ü Access to real es

  14. Slide 14: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  15. Slide 15: 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 High visibility into continued growth and margin expansion 5 Sufficient capital to

  16. Slide 16: 4Q18 & FY18 P&L Analysis

    4Q18 & FY18 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 3Q18 4Q18 Q/Q FY17 FY18 Y/Y Service Revenue 752,620 829,050 10.2% 1,591,860 2,759,490 73.4% Equipment Sales 10,201 471 95.4% 24,306 32,587 34.1% Total Net Revenue 762,821 829,521 8.7% 1,616,166 2,792,077 72.8% Cost of Rev

  17. Slide 17: 4Q18 & FY18 Underlying Trends

    4Q18 & FY18 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 3Q18 4Q18 Q/Q FY17 FY18 Y/Y Total Net Revenue 762,821 829,521 8.7% 1,616,166 2,792,077 72.8% Less: Equipment Sales 10,201 471 (95.4%) 24,306 32,587 34.1% Service Revenue 752,620 829,050 10.2% 1,591,860 2,759,490 73.4

  18. Slide 18: Revenue & Area Utilized

    Revenue & Area Utilized Revenue (Rmb Mn) Area Utilized (Sqm) & MSR (Rmb / Sqm / Month) Service Revenue Equipment Sales 108,326 100,679 86,665 0.5 61,713 66,905 10.2 11.2 10.8 11.8 4Q17 1Q18 2Q18 3Q18 4Q18 829.1 2,931 752.6 Average MSR 2,858 626.3 2,801 551.5 2,753 2,759 493.7 Including HB (1) Exclud

  19. Slide 19: Underlying Adjusted NOI & EBITDA

    Underlying Adjusted NOI & EBITDA Underlying Adjusted NOI & Margin Underlying Adjusted EBITDA & Margin 45.5% 45.3% 46.2% 48.5% 49.8% 32.2% 33.0% 35.3% 38.0% 40.0% Rmb Mn 412.8 Rmb Mn 365.2 331.4 286.1 289.5 249.8 221.1 224.6 182.3 159.1 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 © GDS 2016 18

  20. Slide 20: Stabilized vs. Ramping-Up Data Centers

    Stabilized vs. Ramping-Up Data Centers Breakdown of Area In Service as at 4Q18 Stabilized Data Centers Ramping-Up Data Centers Area In Service Net Floor Area Commitment Utilization Rate Net Floor Area Commitment (Sqm) Rate Utilization Rate (Sqm) Rate KS1 6,546 97.0% 93.9% SH4 8,415 95.4% 55.9% SH1 6

  21. Slide 21: Cost Breakdown & Operating Leverage

    Cost Breakdown & Operating Leverage 4Q18 Cost Breakdown & Operating Leverage (Rmb Mn) % of Service Revenue Service Revenue 829.1 3Q18 4Q18 Utility Cost 191.7 24.8% 23.1% Rent, Labour & Other (1) 224.6 26.7% 27.1% Underlying Adjusted NOI 412.8 48.5% 49.8% SG&A (2) 84.3 10.9% 10.2% Other Income (Expen

  22. Slide 22: 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 1,692.7 RFS Date (Sqm) Rate (%) 1,157.5 SH9 1H19 3,880 100% 1,076.1 806.8 BJ4 1H19 4,500 0% 779.3 BJ5 Phase 2 1H19 8,092 94.4% SZ5 Phase 3 1H19 6,821 0% SH10 2H1

  23. Slide 23: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule as at 31/12/18 (Rmb Mn) 31/12/17 30/09/18 31/12/18 Working Capital & Project Loan / LQA Adjusted Rmb Mn Rmb Mn Rmb Mn EBITDA 2,458.0 Convertible Bond Total Loan 4,250.2 6,060.2 6,487.0 4.9 x Convertible Bond 0 2,005.0 2

  24. Slide 24: Convertible Preferred Share Issue

    Convertible Preferred Share Issue Transaction Summary Instrument Convertible Preferred Shares Investor Ping An Overseas Holdings Size $150 million Dividend 5% p.a. Conversion Price $35.60 Forced Conversion 150% of Conversion Price after Year 3 Issuer’s Call Option After Year 8 at Par Value Governanc

  25. Slide 25: Contract Backlog Build-Up

    Contract Backlog Build-Up Backlog Build-Up FY18 (Sqm) Total Area Committed & Area Utilized (Sqm) Net Additional Area Committed Total Area Committed Area Utilized Net Additional Area Utilized 183,743 161,799 59,271 38,966 143,065 21,944 7,647 75,417 122,819 108,326 61,120 102,528 100,679 40,815 86,66

  26. Slide 26: Business Outlook

    Business Outlook FY19 Guidance Rmb Mn FY18 Actual FY19 Guidance Implied Y/Y Total Revenue 2,792.1 3,900 – 4,100 39.7% - 46.8% Adjusted EBITDA 1,046.5 1,640 – 1,700 56.7% - 62.4% Capex (1) 4,733.1 4,500 – 5,000 -- Note: 1. Refers to net cash used in investing activities. The Company adopted updated a

  27. Slide 27: Questions & Answers

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

  28. Slide 28: Appendix

    Appendix © GDS 2016

  29. Slide 29: 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, SH12 5 54 61 58 BJ4 SH5 43 30 SH6, 7 & SH11 BJ7 KS1, 2, 3 BJ1, 2, 3 © GDS 2016 28

  30. Slide 30: 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 KM 38 45 © GDS 2016 29

  31. Slide 31: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As At: 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Area In Service (Sqm) 61,092 71,577 77,832 101,258 103,475 127,984 147,342 160,356 Area Under Construction (Sqm) 35,055 38,028 37,478 24,505 40,357 41,023 43,718 65,201 Total Capacity (Sqm) 96,147 109,605 115,310 125,7

  32. Slide 32: Data Center Summary By Market

    Data Center Summary By Market As at 31/12/18 (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) (

  33. Slide 33: Self-Developed Data Centers In Service – Shanghai / Kunshan

    Self-Developed Data Centers In Service – Shanghai / Kunshan As at 31/12/18 (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 Owned 6,546 6,347 97.0% 6,144 93.9% SH1 2H11 Purpose-Built

  34. Slide 34: Self-Developed Data Centers In Service – Shenzhen / Guangzhou

    Self-Developed Data Centers In Service – Shenzhen / Guangzhou As at 31/12/18 (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 4,225 98.6% 4,218 98.4% SZ2 1H16 Converted Leas

  35. Slide 35: Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei

    Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei As at 31/12/18 (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% BJ2 2H17 Con

  36. Slide 36: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction As at 31/12/18 (Sqm, Unless Indicated) Area Under Pre-Commitment Market Data Center Ready For Service Type Tenure Area Pre-Committed Construction Rate SH9 1H19 Converted Leased 3,880 3,880 100% SH10 2H19 Converted Leased 3,491 0 0% SH7 2H19 Purpose-Buil

  37. Slide 37: Top Customers

    Top 5 Customers In terms of Total Area Committed End User % of Total Area Committed % of 4Q18 Service Revenue Number of Data Centers (1) Internet / Cloud Service Provider 27.9% 26.9% 17 Internet / Cloud Service Provider 24.2% 20.1% 13 Cloud Service Provider 11.4% 0.5% 5 Internet 10.3% 8.2% 5 Interne

  38. Slide 38: Principal Shareholders

    Principal Shareholders As at 31/12/18 Ordinary Shares ADS % of Total William Huang (1) 67,915,944 8,489,493 6.78% Directors & Officers 12,530,655 1,566,331 1.25% STT 354,937,732 44,367,216 35.43% SBCVC 66,691,574 8,336,446 6.66% Ping An Insurance (2) 63,369,856 7,921,232 6.33% Cyrus One 64,257,028 8

  39. Slide 39: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) 71 69 67 63 64 # of Days FY16 FY17 FY18 1H18 3Q18 4Q18 58 53 DPO – Opex 96 96 78 79 80 80 DPO – Capex 112 133 125 154 196 75 Total DPO 106 122 113 133 153 76 Total DPO (Excl. 104 108 98 108 12

  40. Slide 40: Historical Financial Results

    Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Year Ended Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 2017 2018 RMB RMB RMB RMB RMB USD RMB RMB USD Net Revenue Service revenue 493,663 551,473 626,347 752,620 8

  41. Slide 41: Historical Financial Results

    Historical Financial Results Condensed Consolidated Balance Sheets (1) Amounts in thousands. As of Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 RMB RMB RMB RMB RMB USD Cash 1,873,446 2,978,627 4,450,958 3,491,694 2,161,622 314,395 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 Year Ended Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 2017 2018 RMB RMB RMB RMB RMB USD RMB RMB USD Net cash (used in) provided by operating (28,623) (14

  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, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 2017 2018 RMB RMB RMB RMB RMB USD RMB RMB USD Net loss (116,543) (85,926) (102,077) (119,354) (122,911) (17,875) (326,900) (43

  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, 2017 Mar 31, 2018 Jun 30, 2018 Sep 30, 2018 Dec 31, 2018 2017 2018 RMB RMB RMB RMB RMB USD RMB RMB USD Net loss (116,543) (85,926) (102,077) (119,354) (122,911) (17,875) (326,90

  45. Slide 45: ASC 842 – Impact on Adopting New Accounting Standard

    ASC 842 – Impact on Adopting New Accounting Standard Adjustments to the Consolidated Balance Sheet as of January 1, 2019 The Company will adopt ASC 842, the new lease accounting standard on January 1, 2019 using the effective date method, under which the application date will be the adoption date an

  46. Slide 46: 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 — FY2018 Earnings Presentation on 6ix