Gds Holdings Ltd. · HKEX:9698

Gds — Q3 2019 Earnings Presentation

43 slides from Gds's earnings presentation, Nov 14, 2019

  1. Slide 1: 3Q19 Earnings Call

    3Q19 Earnings Call 14 November 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: Performance Since IPO

    Performance Since IPO Revenue & Adjusted EBITDA (Rmb Mn) Total Area Committed (Sqm) 3Q16 3Q19 58,871 31-Dec-16 IPO Forecast 61,043 3.6x Actual 1,066 83,655 31-Dec-17 102,528 6.2x 106,911 484 31-Dec-18 183,743 297 78 124,310 30-Sep-19 242,435 Revenue Adjusted EBITDA © GDS 2016 3

  5. Slide 5: 3Q19 Highlights

    3Q19 HIGHLIGHTS Sales Momentum • Net additional total area committed of +21,617 sqm • Total area committed increased by 49.8% y/y to 242,435 sqm Capacity Expansion • Total capacity (in service + under construction) grew by 48.0% y/y to 282,862 sqm • Invested Rmb 1,150.4 mn ($161.0 mn) of capex for c

  6. Slide 6: Sales Achievement

    Sales Achievement Net Additional Area Committed (Sqm) Total Area Committed by Customer Segment 81,215 FSI & Large Enterprises 12.7% 58,692 Large Internet 14.3% 41,485 21,617 3Q 615 73.0% Customers +6.4% Y/Y 25,125 20,987 14,933 2Q 1Q 16,088 1Q Cloud Service Providers FY15 FY16 FY17 FY18 9M19 © GDS 2

  7. Slide 7: Customer Diversification

    Customer Diversification Hyperscale Customer Count Hyperscale Customer Additions By Year # of Customers with >5 MW in a Single Order 2016 13 (1) 2017 8 2018 5 3 (2) 2019 Notes: 2016 2017 2018 2019 1. Azure China is operated by a subsidiary of 21Vianet. 2. AWS Ningxia region is operated by NWCD and A

  8. Slide 8: Resource Progress

    Resource Progress Capacity Expansion – 3Q19 23,725 17,500 (1) 14,769 84,765 78,373 SH7 GZ6 (2) LF3 GZ3 Phase 2 BJ9 (2) HK1 SZ5 Phase 3 ZB4 (3) Area Under Construction Projects Initiated Projects In Service Area Under Construction Acquisitions 30/06/19 3Q19 3Q19 30/09/19 Notes: 1. Area in Service adj

  9. Slide 9: Synchronized Sales & Capacity Growth

    Synchronized Sales & Capacity Growth Commitments vs. Capacity (Sqm) Commitment Rates & Capacity Overview Commitment Rate Pre-Commitment Rate Area Committed Area Pre-Committed 91.7% 96.3% 94.9% 96.1% 93.7% Area In Service 282,862 71.6% Area Under Construction 258,814 66.1% 242,435 53.4% 237,251 45.4%

  10. Slide 10: Hong Kong Market

    Hong Kong Market HK1 150m HK2 Key Metrics HK1 + HK2 (1) Property Purchase Cost (HKD Mn) 1,650 Planned GFA (Sqm) 42,438 Planned IT Area (Sqm) 14,501 Planned IT Power Capacity (kW) 35,426 Notes: 1. Excluding stamp duty, lease modification premium, agency and legal fees. © GDS 2016 9

  11. Slide 11: Build-to-Suit Strategy

    Build-to-Suit Strategy Build-to-Suit Data Centers at Customer Sites Current Committed Projects Data Center Estimated IT Area (Sqm) RFS Project 1 4,000 1H20 Project 2 4,000 1H20 Project 3 4,000 2H20 Project 2 Project 4 4,000 1H21 Project 5 4,000 1H21 Project 1 Project 6 4,000 TBD Project 7 4,000 TBD

  12. Slide 12: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  13. Slide 13: 3Q19 P&L Analysis

    3Q19 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 3Q18 2Q19 3Q19 Y/Y Q/Q Service Revenue 752,620 985,094 1,058,921 40.7% 7.5% Equipment Sales 10,201 95 7,267 (28.8%) 7,549.5% Total Net Revenue 762,821 985,189 1,066,188 39.8% 8.2% Cost of Revenue (590,956) (723,420) (791,963) 34

  14. Slide 14: 3Q19 Underlying Trends

    3Q19 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 3Q18 2Q19 3Q19 Y/Y Q/Q Total Net Revenue 762,821 985,189 1,066,188 39.8% 8.2% Less: Equipment Sales 10,201 95 7,267 (28.8%) 7,549.5% Service Revenue 752,620 985,094 1,058,921 40.7% 7.5% Adjusted NOI 366,902 521,923 571,040

  15. Slide 15: Revenue & Area Utilized

    Revenue & Area Utilized Revenue (Rmb Mn) Area Utilized (Sqm) & MSR (Rmb / Sqm / Month) Service Revenue Equipment Sales 137,820 127,107 118,050 108,326 100,679 7.3 0.1 0.9 0.5 10.2 3Q18 4Q18 1Q19 2Q19 3Q19 1,058.9 985.1 890.9 829.1 Average MSR 752.6 2,678 2,679 2,665 2,644 2,624 3Q18 4Q18 1Q19 2Q19 3

  16. Slide 16: Underlying Adjusted NOI & EBITDA

    Underlying Adjusted NOI & EBITDA Underlying Adjusted NOI (Rmb Mn) & Margin Underlying Adjusted EBITDA (Rmb Mn) & Margin 48.5% 49.8% 51.3% 53.0% 53.8% 38.0% 40.0% 42.5% 44.3% 45.9% 570.1 521.9 485.6 457.3 435.9 412.8 365.2 378.4 331.4 286.1 3Q18 4Q18 1Q19 2Q19 3Q19 3Q18 4Q18 1Q19 2Q19 3Q19 © GDS 2016

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

    Stabilized vs. Ramping-Up Data Centers Breakdown of Area In Service as at 3Q19 Stabilized Data Centers Ramping-Up Data Centers Area In Service Net Floor Area Commitment Utilization Net Floor Area Commitment Utilization (Sqm) Rate Rate (Sqm) Rate Rate KS1 6,546 98.1% 93.6% SH5 Phase 1 2,062 100% 51.0

  18. Slide 18: Cost Breakdown & Operating Leverage

    Cost Breakdown & Operating Leverage 3Q19 Cost Breakdown & Operating Leverage (Rmb Mn) % of Service Revenue Service Revenue 1,058.9 3Q18 4Q18 1Q19 2Q19 3Q19 Utility Cost 243.0 24.8% 23.1% 22.8% 23.3% 22.9% Rent, Labour & Other (1) 245.8 26.7% 27.1% 25.9% 23.7% 23.3% Underlying Adjusted NOI 570.1 48.5

  19. Slide 19: Capex & On-Going Investment

    Capex & On-Going Investment Capex Paid (Rmb Mn) (1)(2) Construction Program 3Q19 1,692.7 Net Floor Area Pre-Commitment RFS Date (Sqm) Rate (%) SH12 2H20 3,653 100% KS2 1H20 6,120 100% 1,150.4 1,076.1 KS3 2H20 5,290 100% 834.4 SZ6 4Q19 2,066 0% GZ4 1H20 7,000 0% 539.1 BJ6 1H20 5,167 86.7% BJ7 1H20 11

  20. Slide 20: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule as at 30/09/19 (Rmb Mn) 30/09/18 30/06/19 30/09/19 Working Capital Project Loan Convertible Bond / LQA Adjusted Rmb Mn Rmb Mn Rmb Mn EBITDA 3,787 Total Loan 6,060.2 7,611.4 8,358.6 4.3 Convertible Bond 2,005.0 2,013.9 2

  21. Slide 21: Contract Backlog

    Contract Backlog Backlog Build-Up 3Q19 (Sqm) Backlog by Data Center Status Net Additional Area Committed Net Additional Area Utilized In Service Under Construction 21,617 10,713 104,615 93,711 60,690 sqm 43,925 sqm 58.0% 42.0% Backlog at Backlog at 30/06/19 30/09/19 © GDS 2016 20

  22. Slide 22: Updated Business Outlook

    Updated Business Outlook FY19 Revised Guidance FY19 FY19 FY19 3Q19 vs. 2Q19 Rmb Mn FY18 Actual Original Implied Y/Y Revised Guidance Implied Y/Y Revised Guidance Implied Y/Y Revised Guidance 2Q19 3Q19 Guidance Total Revenue 2,792.1 3,900 – 4,100 39.7% – 46.8% 4,000 – 4,100 43.3% – 46.8% No Change 43

  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, SH12 5 54 61 58 BJ4 SH5 43 30 SH6, 7 & SH11 BJ7, 8 50 KS1, 2, 3 BJ1, 2, 3, 9 LF1, 2, 3 © GDS 2016 24

  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 GZ1, 2, 3, 6 GZ4 SZ5 SZ1, 2, 3 SZ6 CD1, 2 25 SZ4 65 KM 38 45 © GDS 2016 25

  27. Slide 27: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As At: 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 Area In Service (Sqm) 101,258 103,475 127,984 147,342 160,356 171,515 180,441 198,097 Area Under Construction (Sqm) 24,505 40,357 41,023 43,718 65,201 65,736 78,373 84,765 Total Capacity (Sqm) 125,763 143,832 169,007 1

  28. Slide 28: Data Center Summary By Market

    Data Center Summary By Market As at 30/09/19 (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 30/09/19 (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 6,423 98.1% 6,130 93.6% 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 30/09/19 (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 4,218 98.4% 4,214 98.3% SZ2 1H16 Converted Leas

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

    Self-Developed Data Centers In Service – Beijing, Chengdu & Hebei (ZB) As at 30/09/19 (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 2,286 93.9% 2,242 92.1% BJ2 2H1

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

    Self-Developed Data Centers Under Construction As at 30/09/19 (Sqm, Unless Indicated) Area Under Pre-Commitment Market Data Center Ready For Service Type Tenure Area Pre-Committed Construction Rate SH12 2H20 Purpose-Built Leased 3,653 3,653 100% Shanghai / Kunshan KS2 1H20 Purpose-Built Owned 6,120

  33. Slide 33: Top Customers

    Top 5 Customers In Terms of Total Area Committed End User % of Total Area Committed % of 3Q19 Service Revenue Number of Data Centers (1) Internet / Cloud Service Provider 29.5% 28.3% 18 Internet / Cloud Service Provider 22.5% 17.9% 12 Cloud Service Provider 11.4% 0.6% 5 Internet 7.9% 10.9% 6 Cloud S

  34. Slide 34: Contracts Renewal

    Contracts Renewal Contracts Renewal Schedule Period Sqm % of Total Area Committed 4Q19 9,605 4.0% FY20 23,021 9.5% FY21 22,262 9.2% FY22 7,983 3.3% FY23 25,405 10.5% Thereafter 154,159 63.5% Total Area Committed as at 3Q19 242,435 100.0% © GDS 2016 33

  35. Slide 35: Principal Shareholders

    Principal Shareholders As at 30/09/19 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 69,200,744 8,650,093 8,650,093 5.9% Directors & Officers 14,963,599 1,870,449 1,870,449 1.3% STT 405,922,804 50,740,350 50,740,350 34.9% Ping An 63,369,856 7,

  36. Slide 36: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) 76 72 69 64 63 # of Days 3Q18 4Q18 1Q19 2Q19 3Q19 DPO – Opex 80 80 82 91 110 DPO – Capex 196 75 162 243 231 Total DPO 153 76 136 178 179 Total DPO (Excl. Acquisitions) 122 64 121 163 169 3Q18

  37. Slide 37: Accounting Impacts for JV with GIC

    Accounting Impacts for JV with GIC Pre-Sale Post-Sale • Management fee as Revenue • Disposal gain from 90% ownership Income Statement • Operating expenses (if any) • Operating expenses • Minority effect for 10% ownership as Gain on investment • Total capex on Property, plant & equipment • Investment

  38. Slide 38: Historical Financial Results

    Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 RMB RMB RMB RMB RMB USD Net Revenue Service revenue 752,620 829,050 890,946 985,094 1,058,921 148,148 Equipment sales

  39. Slide 39: Historical Financial Results

    Historical Financial Results Condensed Consolidated Balance Sheets (1) Amounts in thousands. As of Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 RMB RMB RMB RMB RMB USD Cash 3,491,694 2,161,622 6,001,214 5,730,578 5,752,790 804,845 Accounts receivable, net of allowance for doubtfu

  40. Slide 40: Historical Financial Results

    Historical Financial Results Condensed Consolidated Statements of Cash Flows Amounts in thousands Three Months Ended Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 RMB RMB RMB RMB RMB USD Net cash provided by (used in) operating activities 37,460 111,367 (59,806) 115,910 165,219 23

  41. Slide 41: Reconciliation from Net Loss to Adjusted NOI

    Reconciliation from Net Loss to Adjusted NOI Adjusted NOI Amounts in thousands Three Months Ended Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 RMB RMB RMB RMB RMB USD Net loss (119,354) (122,911) (136,620) (93,159) (108,642) (15,198) Net interest expenses 182,152 202,493 219,117

  42. Slide 42: Reconciliation from Net Loss to Adjusted EBITDA

    Reconciliation from Net Loss to Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Sep 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 RMB RMB RMB RMB RMB USD Net loss (119,354) (122,911) (136,620) (93,159) (108,642) (15,198) Net interest expenses 182,152 202,493 21

  43. Slide 43: 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 — Q3 2019 Earnings Presentation on 6ix