GDS Holdings Ltd. · HKEX:9698

GDS — Q3 2022 Earnings Presentation

50 slides from GDS's earnings presentation, Nov 22, 2022

  1. Slide 1: 3Q22 Earnings Call

    3Q22 Earnings Call 22 November 2022 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: 3Q22 Highlights

    3Q22 HIGHLIGHTS (1)(2) Resilient Performance • Net additional area utilized of +14,184 sqm • Total area utilized of 359,862 sqm, +19.8% y/y and utilization rate of 70.5% Customer Commitments • New customer commitments (net) of +30,315 sqm or +74 MW • Total area committed increased by 16.0% y/y to 61

  5. Slide 5: Net Additional Area Committed

    Net Additional Area Committed Net Additional Area Committed By Quarter (Sqm) Net Additional Area Committed By Year (Sqm) (1) Mainland China - Organic Mainland China - Acquisition (1) Mainland China - Organic Mainland China - Acquisition (3) Mainland China - B-O-T (2) International Mainland China - B

  6. Slide 6: Largest New Hyperscale Commitments In 3Q22

    Largest New Hyperscale Commitments In 3Q22 TJ1: 4,282 Sqm / 9.5 MW Nusajaya Tech Park (NTP1/2/3): 25,933 Sqm / 64.3 MW (1) Notes: 1. Letter of Award with sales agreement currently being finalized. © GDS 2016 5

  7. Slide 7: Customer Franchise Development

    Customer Franchise Development Total Area Committed By Segment (Sqm) (3Q22) Hyperscale Customer Additions (1) FSI & Large Enterprises 2011 – 2016 77,132 12.5% (2) 2017 2018 Large Internet 143,994 817 23.3% Customers (3) +10.6% Y/Y 2019 397,244 64.2% 2020 Cloud Service Providers 2021 Notes: . 1. Excl

  8. Slide 8: Backlog

    Backlog Backlog For Area In Service Backlog For Area Under Construction (1) Mainland China International Mainland China International (1) 130,299 138,364 136,940 137,844 135,383 128,208 106,050 104,532 31,271 222 130 111 97,573 98,983 3,162 4,202 3,162 3,162 135,383 138,364 136,718 137,714 128,097 1

  9. Slide 9: Customer Move-In Rate

    Customer Move-In Rate Total Area Utilized (Sqm) & Utilization Rate (%) Net Additional Area Utilized (Sqm) Mainland China - Organic Mainland China - Acquisition (1) 70.5% Mainland China - B-O-T (2) International (3) 68.5% 66.1% 65.5% 67.4% 359,862 18,678 19,147 345,678 332,019 923 319,475 908 300,328

  10. Slide 10: New Capacity Delivery Schedule

    New Capacity Delivery Schedule Net Additional Area In Service & Scheduled Capacity Additions (Sqm) ~59,000 sqm originally scheduled for delivery in 2022 pushed back to 2023 or beyond (1) 154,030 119,515 104,002 57,376 Including International of ~15,700 sqm 28,093 2020 2021 2022 2023 2024 & Beyond No

  11. Slide 11: Area In Service & Area Under Construction

    Area In Service & Area Under Construction Area In Service (Sqm) & Commitment Rate (%) Area Under Construction (Sqm) & Pre-Commit Rate (%) 95.9% 93.8% 95.3% 95.9% 71.5% 95.6% 63.1% 64.1% 62.1% 61.3% 504,383 510,511 487,883 492,344 182,355 454,354 1,303 1,303 161,515 168,128 163,102 923 1,303 157,227

  12. Slide 12: GDS International Corporate Structure

    GDS International Corporate Structure Simplified For Purpose Of Illustration Raising private equity for a minority investment in GDS Holdings International holding company Mainland China (1) International (2) Beijing - Tianjin - Hebei Hong Kong Yangtze River Delta Macau Greater Bay Area Singapore Ch

  13. Slide 13: GDS International Strategy

    GDS International Strategy Vision Build a leading regional and then global data center platform Enhanced Focus International HoldCo headquartered in Singapore with dedicated management Competitive Advantages Leverage GDS industry-leading capabilities, business relationships, and scale economics Foll

  14. Slide 14: Hong Kong – Unique Cluster & Development Pipeline In West Kowloon

    Hong Kong – Unique Cluster & Development Pipeline In West Kowloon Project Portfolio Overview HK3 3 Kms HK2 Project Status RFS Tenure Capacity Commitments HK1 (MW) (MW) HK4 Under HK1 1Q23 Owned 19 18.2 (3) Construction New Territories North Under HK2 2Q24 Owned 18 -- Construction West Kowloon Tseung

  15. Slide 15: Early Mover Advantage In Singapore–Johor–Batam

    Early Mover Advantage In Singapore–Johor–Batam Project Portfolio Overview (1) Property IT Capacity Commitment Project Status RFS Ownership (MW) (MW) (2) Nusajaya Tech Park (NTP) 6 kms from Singapore Under NTP Phase 1 2023 Owned 64 64 Construction Land Acquisition NTP Phase 2 2025 Owned 36 -- In Proc

  16. Slide 16: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  17. Slide 17: 3Q22 P&L Analysis

    3Q22 P&L Analysis Quarterly Financial Review Rmb‘000 (Unless Indicated) 3Q21 2Q22 3Q22 Y/Y Q/Q Service Revenue 2,061,104 2,302,729 2,367,593 14.9% 2.8% Equipment Sales 314 7,681 0 (100.0%) (100.0%) Total Net Revenue 2,061,418 2,310,410 2,367,593 14.9% 2.5% Cost of Revenue (1,605,983) (1,841,809) (1,

  18. Slide 18: 3Q22 Underlying Trends

    3Q22 Underlying Trends Quarterly Financial Review Rmb‘000 (Unless Indicated) 3Q21 2Q22 3Q22 Y/Y Q/Q Total Net Revenue 2,061,418 2,310,410 2,367,593 14.9% 2.5% Less: Equipment Sales 314 7,681 0 (100.0%) (100.0%) Service Revenue 2,061,104 2,302,729 2,367,593 14.9% 2.8% Adjusted GP 1,083,109 1,172,339

  19. Slide 19: Revenue & Area Utilized By Quarter

    Revenue & Area Utilized By Quarter Total Revenue (Rmb Mn) Net Additional Area Utilized (Sqm) & MSR (1) Mainland China - Organic Mainland China - Acquisition (2) (3) Mainland China - B-O-T International 2,310.4 2,367.6 2,187.4 2,243.6 2,061.4 18,678 19,147 923 908 13,659 14,184 1,733 3,505 12,545 92

  20. Slide 20: Underlying Adjusted GP & EBITDA & Margin

    Underlying Adjusted GP & EBITDA & Margin Underlying Adjusted GP (Rmb Mn) & Margin Underlying Adjusted EBITDA (Rmb Mn) & Margin 52.5% 52.5% 52.4% 50.9% 50.7% 46.9% 47.2% 47.1% 46.0% 45.1% 1,201.3 1,068.9 1,174.6 1,171.9 1,055.9 1,058.2 1,148.2 1,031.1 1,083.0 966.0 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 4Q21

  21. Slide 21: Capex Paid

    Capex Paid (1) Past 5 Quarters (Rmb Mn) Past 5 Years (Rmb Mn) Mainland China - Organic Rmb Mn 3Q21 4Q21 1Q22 2Q22 3Q22 Mainland China - Acquisition (4) International 13,691.5 Mainland China 2,448.4 2,169.4 1,512.7 1,194.7 1,558.5 – Organic (2) 996.3 ~12,000 2,000 3,992.4 Mainland China 9,378.0 9,143

  22. Slide 22: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule At 30/09/22 (Rmb Mn) 3 0 /0 9 /2 1 3 0 /0 6 /2 2 3 0 /0 9 /2 2 Working Capital Project Loan Convertible Bond (3) / L Q A A d j. Rmb Mn Rmb Mn Rmb Mn E B IT D A To ta l L o a n 18,978.9 24,688.1 25,579.0 6.0 6,275 C o n

  23. Slide 23: Business Outlook

    Business Outlook Confirm Revised FY22 Guidance Unchanged FY22 Original FY22 Revised Rmb Mn FY21 Actual Implied Y/Y Implied Y/Y Guidance Guidance 2Q22 Total Revenue 7,818.7 9,320 - 9,680 19.2% - 23.8% 9,250 – 9,400 18.3% - 20.2% Adjusted EBITDA 3,703.4 4,285 - 4,450 15.7% - 20.2% 4,200 – 4,280 13.4%

  24. Slide 24: Questions & Answers

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

  25. Slide 25: Appendix

    Appendix © GDS 2016

  26. Slide 26: Growth Visibility

    Growth Visibility Quarterly Resource Financial Status At Review 3Q22 (Sqm) Area Utilized Backlog Total Area Committed 618,369 359,862 258,507 Total Cost To Complete: Rmb 11.6 bn, including Mainland China of Rmb 7.1 bn Area In Service Under Construction Total Capacity 692,866 510,511 182,355 Held For

  27. Slide 27: 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 (3Q22) Beijing – Tianjin – Hebei: 42 DCs (1) Yangtze River Delta: 31 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

  28. Slide 28: 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 (3Q22) 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. Excludes Hong Ko

  29. Slide 29: Our Data Center Portfolio – International

    Our Data Center Portfolio – International Self-Developed Data Centers In Service & Under Construction in Hong Kong & South East Asia (3Q22) Hong Kong – 2 DCs South East Asia – 3 DCs NTP1/2/3 HK1/2 © GDS 2016 28

  30. Slide 30: Key Operating KPIs

    Key Operating KPIs Past 8 Quarters As At 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Area In Service (Sqm) 333,853 360,542 426,543 454,354 487,883 492,344 504,383 510,511 Area Under Construction (Sqm) 158,035 170,149 165,175 157,227 161,515 168,128 163,102 182,355 Total Capacity (Sqm) 491,888 530,691 59

  31. Slide 31: Data Center Summary By Market

    Data Center Summary By Market At 30/09/22 (Sqm, Unless Indicated) (1) # of Self- Area Held for Pre- Area In Area Under Area Area Pre- Total Area Commitment Utilization Developed Total Capacity Future Area Utilized Commitment Market Service Construction Committed Committed Committed Rate Rate Data De

  32. Slide 32: Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei

    Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei At 30/09/22 (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 2,425 99.6% 2,368 97.3% BJ2 2H17 Convert Lease 5

  33. Slide 33: Self-Developed Data Centers In Service – Yangtze River Delta

    Self-Developed Data Centers In Service – Yangtze River Delta At 30/09/22 (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 6,203 96.4% 5,983 93.0% SH2 2H15 Purpose-Built L

  34. Slide 34: Self-Developed Data Centers In Service – Greater Bay Area

    Self-Developed Data Centers In Service – Greater Bay Area At 30/09/22 (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 4,273 99.7% 4,261 99.4% SZ2 1H16 Convert Lease 4,308 4,30

  35. Slide 35: Self-Developed Data Centers In Service – Chengdu / Chongqing & Other

    Self-Developed Data Centers In Service – Chengdu / Chongqing & Other At 30/09/22 (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 5,747 91.8% 4,090 65.3% Chengdu – 8

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

    Self-Developed Data Centers Under Construction At 30/09/22 (Sqm, Unless Indicated) Area Under Market Data Center Ready For Service Type Tenure Area Pre-Committed Pre-Commitment Rate Construction BJ13 Phase 1 4Q22 Purpose-Built Own 5,465 5,465 100% BJ13 Phase 2 2H23 Purpose-Built Own 8,438 8,438 100%

  37. Slide 37: Forming Consolidated JVs For Selected B-O-T Projects

    Forming Consolidated JVs For Selected B-O-T Projects B-O-T Data Centers 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 94.5% ZB3 2H18 In Service 100% 4,662 94.6% Beijing – Tianjin – Hebei ZB4 1H20 In Ser

  38. Slide 38: Self-Developed Data Center Capacity – Lease Vs. Own

    Self-Developed Data Center Capacity – Lease Vs. Own At 30/09/22 Held For Future Total Developed & Sqm Area In Service Area Under Construction Development Developable Capacity Lease 303,413 44,354 30,022 377,789 Own 130,402 134,561 409,248 674,211 B-O-T 68,910 3,440 - 72,350 3 rd Party 7,786 - - 7,78

  39. Slide 39: Stabilized Vs. Ramping-Up Data Centers

    Stabilized Vs. Ramping-Up Data Centers Breakdown Of Area In Service At 3Q22 Stabilized Data Centers Ramping-Up Data Centers SH1 Area In Service (Sqm) 6,432 Commitment Rate 96.4% Utilization Rate 93.0% Area In Service Area In Service (Sqm) Commitment Rate Utilization Rate SH2 7,712 99.9% 91.2% SH7 6,

  40. Slide 40: Top Customers

    Top 5 Customers By Total Area Committed (1)(2) By Revenue (1) % Of Total Area Number of Data End User End User % Of 3Q22 Total Net Revenue Committed As At 3Q22 Centers (3) Customer 1 38.5% 47 Customer 1 26.1% Customer 2 14.9% 17 Customer 2 19.7% Customer 3 5.5% 6 Customer 3 4.6% Customer 4 4.1% 5 Cu

  41. Slide 41: Forthcoming Contract Renewals

    Forthcoming Contract Renewals Contract Renewal Schedule Period Sqm % of Total Area Committed From Oct 1 to Dec 31, 2022 26,664 4.3% FY23 55,960 9.0% FY24 70,811 11.5% FY25 59,404 9.6% FY26 57,367 9.3% Thereafter 348,164 56.3% Total Area Committed At 30/09/22 618,369 100% © GDS 2016 40

  42. Slide 42: Principal Shareholders

    Principal Shareholders At 30/09/22 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 86,047,840 10,755,980 10,755,980 5.7% 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,

  43. Slide 43: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# Of Days) (1) Days Payable Outstanding (DPO) (2) # of Days 3Q21 4Q21 1Q22 2Q22 3Q22 101 97 86 81 DPO – Opex 94 88 83 83 82 74 DPO – Capex 130 136 271 191 237 Total DPO 121 124 197 154 172 Total DPO (Excl. Acquisitions) 99 93 141 116 137

  44. Slide 44: Historical Financial Results – Statements of Operations

    Historical Financial Results Condensed Consolidated Statements Of Operations Amounts in thousands Three Months Ended Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 (1) RMB RMB RMB RMB RMB USD Net Revenue Service revenue 2,061,104 2,185,857 2,243,535 2,302,729 2,367,593 332,831 Equi

  45. Slide 45: Historical Financial Results – Balance Sheets

    Historical Financial Results Condensed Consolidated Balance Sheets Amount in thousands. As of Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 RMB RMB RMB RMB RMB USD ( 1 ) Cash 10,103,624 9,968,109 11,320,911 9,159,176 9,092,404 1,278,190 Accounts receivable, net of allowance for do

  46. Slide 46: Historical Financial Results – Cash Flows

    Historical Financial Results Condensed Consolidated Statements of Cash Flows Amounts in thousands Three Months Ended Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 (1) RMB RMB RMB RMB RMB USD Net cash provided by (used in) )operating activities 456,191 406,095 (244,730) 1,619,166 5

  47. Slide 47: 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 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 RMB RMB RMB RMB RMB USD (1) Gross profit 455,435 487,273 486,417 468,601 492,805 69,277 Depreciation and amortizati

  48. Slide 48: Reconciliation from Net Loss to Adjusted EBITDA

    Reconciliation from Net Loss to Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 (1) RMB RMB RMB RMB RMB USD Net loss (301,131) (312,882) (373,253) (375,307) (339,663) (47,749) Net interest expenses 392,072 442,8

  49. Slide 49: 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

  50. Slide 50: Analyst Coverage

    Analyst Coverage Broker Analyst Contact BofA Paul Dewberry paul.dewberry@baml.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 marleyng

GDS Holdings — Q3 2022 Earnings Presentation on 6ix