Gds Holdings Ltd. · HKEX:9698

Gds — Q1 2020 Earnings Presentation

48 slides from Gds's earnings presentation, May 14, 2020

  1. Slide 1: 1Q20 Earnings Call

    1Q20 Earnings Call 14 May 2020 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: 1Q20 Highlights

    1Q20 HIGHLIGHTS Sales Momentum • Record organic net additional total area committed of +22,112 sqm • Total area committed increased by 43.6% y/y to 286,990 sqm • Three deals over 10 MW Capacity Expansion • Total capacity (in service + under construction) grew by 43.6% y/y to 340,692 sqm • Highest-ev

  5. Slide 5: Sales Achievement

    Sales Achievement Net Additional Total Area Committed (Sqm) 1Q20 Orders Breakdown Organic Acquisition (1) Area IT Power Contract Data Center 22,112 (Sqm) (MW) (1) Commences 21,617 22,443 20,987 SH14 7,000 13.0 4Q20 16,088 9,045 LF2 4,859 13.0 3Q20 LF4 7,416 12.9 2H21 13,398 Other 2,837 7.1 -- Total

  6. Slide 6: Customer Franchise

    Customer Franchise Total Area Committed by Customer (Sqm) Customer Segment Breakdown Customer #1 Customer #2 Others FSI & Large Enterprises In 24 DCs In 15 DCs 12.2% Large Internet 13.1% 48.0% 48.0% 48.0% 48.3% 46.2% 639 Customers 74.7% +5.8% Y/Y 19.4% (1) (2) 26.6% 24.0% 22.5% 21.1% Cloud Service P

  7. Slide 7: 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 340,692 Area Under Construction 315,797 96.1% 93.7% 91.7% 91.9% 91.9% 282,862 286,990 258,814 264,878 242,435 23

  8. Slide 8: Self-Developed Data Center Capacity Overview

    Self-Developed Data Center Capacity Overview By Market (1) Lease Vs. Own (1) At 1Q20 Under Held for Future Held for In Service Total At 1Q20 Under (Sqm) Construction Development In Service Future Total (Sqm) Construction Development Beijing 48,403 62,531 68,832 179,766 27.4% Lease 199,033 54,699 21,

  9. Slide 9: Resource Progress

    Resource Progress Capacity Expansion 1Q20 Area Under Construction 19,700 (3) 110,706 25,872 4,012 (2) 110,706 89,834 89,834 ZB4 84,765 BJ10 78,373 BJ11 BJ12 65,736 SH14 LF4 Area Under Projects Initiated Projects In Service Area Under Pending Acquisitions 1Q19 2Q19 3Q19 4Q19 1Q20 Construction 1Q20 1Q

  10. Slide 10: Shanghai Pujiang Site

    Shanghai Pujiang Site ◼ 25 kms from Waigaoqiao Phase 3 Phase 2 ◼ 212,000 sqm total land area SH16 ◼ Phase 1 (SH16, SH17) of 22,600 sqm net floor area SH17 ◼ Subsequent phases of ~50,000 sqm net floor area ◼ Purchased in 1Q20 for a total cash consideration of Rmb 1,370 mn © GDS 2016 9

  11. Slide 11: Lower Tier BTS Projects – Consolidated

    Lower Tier BTS Projects – Consolidated ◼ ZB4 came into service in 1Q20; ZB1-3 was in service in 2018 ◼ Total capacity of 18,468 sqm with 100% committed ZB3 ZB4 ZB2 ◼ 92.0% overall utilization rate ZB1 across ZB1-3 at 1Q20 ◼ 13.9% utilization rate for ZB4 at 1Q20 ◼ 100% renewable energy © GDS 2016 10

  12. Slide 12: Lower Tier BTS Projects – Joint Venture

    Lower Tier BTS Projects – Joint Venture Site 1 Site 2 Number of Data Centers Total Net Floor Area (Sqm) Total Projects 12 ~48,000 Projects Under Construction 2 7,776 Project in Service Held for Sale 2 7,777 Project in Service Held by GIC JV 0 0 © GDS 2016 11

  13. Slide 13: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  14. Slide 14: 1Q20 P&L Analysis

    1Q20 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 1Q19 4Q19 1Q20 Y/Y Q/Q Service Revenue 890,946 1,159,610 1,232,589 38.3% 6.3% Equipment Sales 895 19,577 7,829 774.7% (60.0%) Total Net Revenue 891,841 1,179,187 1,240,418 39.1% 5.2% Cost of Revenue (679,832) (884,464) (890,080)

  15. Slide 15: 1Q20 Underlying Trends

    1Q20 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 1Q19 4Q19 1Q20 Y/Y Q/Q Total Net Revenue 891,841 1,179,187 1,240,418 39.1% 5.2% Less: Equipment Sales 895 19,577 7,829 774.7% (60.0%) Service Revenue 890,946 1,159,610 1,232,589 38.3% 6.3% Adjusted NOI 457,332 613,147 664,9

  16. Slide 16: Revenue & Area Utilized

    Revenue & Area Utilized Revenue (Rmb Mn) Area Utilized (Sqm) & MSR (Rmb / Month / Sqm) Service Revenue Equipment Sales 163,838 156,022 137,820 127,107 118,050 7.8 19.6 7.3 0.1 0.9 1Q19 2Q19 3Q19 4Q19 1Q20 1,232.6 1,159.6 1,058.9 985.1 Average MSR 890.9 2,679 2,665 2,631 2,624 2,569 1Q19 2Q19 3Q19 4Q

  17. Slide 17: Revenue Recognized Vs. Cash Collected

    Revenue Recognized Vs. Cash Collected Rmb ‘000 Cumulative Revenue Recognized Cumulative Cash Collected (1 Quarter Lag) (1) 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Notes: 1. Cash collected

  18. Slide 18: Underlying Adjusted NOI & EBITDA

    Underlying Adjusted NOI & EBITDA Underlying Adjusted NOI (Rmb Mn) & Margin Underlying Adjusted EBITDA (Rmb Mn) & Margin 51.3% 53.0% 53.8% 52.8% 53.9% 42.5% 44.3% 45.9% 45.6% 47.4% 664.3 612.5 584.1 570.1 528.5 521.9 485.6 457.3 435.9 378.4 1Q19 2Q19 3Q19 4Q19 1Q20 1Q19 2Q19 3Q19 4Q19 1Q20 © GDS 2016

  19. Slide 19: Cost Breakdown & Operating Leverage

    Cost Breakdown & Operating Leverage 1Q20 Cost Breakdown & Operating Leverage (Rmb Mn) % of Service Revenue Service Revenue 1,232.6 1Q19 2Q19 3Q19 4Q19 1Q20 Utility Cost 249.2 22.8% 23.3% 22.9% 21.4% 20.2% Rent, Labour & Other (1) 319.1 25.9% 23.7% 23.3% 25.8% 25.9% Underlying Adjusted NOI 664.3 51.3

  20. Slide 20: Capital Expenditure

    Capital Expenditure Capex Paid (Rmb Mn) (1) Highlights of 1Q20 BTS Projects Acquisition & Property / Land Purchase ◼ Rmb 1,353.0 mn was paid for acquisitions and 2,607.2 2,535.9 Organic Capex property / land purchase (mainly related to the Pujiang site in Shanghai) 1,285.6 1,353.0 ◼ Rmb 1,048.7 mn w

  21. Slide 21: Construction Program

    Construction Program Self-Developed Data Centers Delivery Schedule (Sqm) Net Floor Area Pre-Commitment RFS Date Tenure Type (Sqm) Rate (%) SH12 4Q20 Lease Convert 3,653 100% 43,213 SH13 4Q20 Lease Convert 6,493 65.5% SH15 3Q20 Lease Convert 1,518 100% KS2 2Q20 Own Greenfield 6,120 100% KS3 3Q20 Own

  22. Slide 22: Stabilized vs. Ramping-Up Data Centers

    Stabilized vs. Ramping-Up Data Centers Breakdown of Area In Service as at 1Q20 Stabilized Data Centers Ramping-Up Data Centers Area In Service Net Floor Area Utilization Commitment Rate Net Floor Area Commitment Utilization (Sqm) Rate (Sqm) Rate Rate KS1 6,546 98.2% 94.0% SH1 6,432 96.9% 94.0% SH5 2

  23. Slide 23: Development Cost & NOI Yield

    Development Cost & NOI Yield Total Development Cost NOI Yield: NOI / Total Development Cost 15.0% Rmb ‘000 (Unless Specified) YE16 YE17 YE18 YE19 Assets Held Under Finance Lease 1,312,454 2,681,468 4,858,041 6,562,665 Other Fixed Assets 3,624,095 6,449,891 10,671,272 15,202,294 13.8% Total Gross PPE

  24. Slide 24: Pending Acquisitions

    Pending Acquisitions Rmb Mn (Unless Specified) – Subject to Adjustment at Closing Implied EV / Estimated Closing of (1) Estimated Stabilized IT Area Commitment Rate (3) Utilization Rate (3) Data Center Enterprise Value Acquisition Cash NOI (2) (Sqm) (%) (%) (EV) (x) BJ9 Pending 707 8.6 8,029 96.2% 9

  25. Slide 25: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule as at 31/03/20 (Rmb Mn) 31/03/19 31/12/19 31/03/20 Working Capital Project Loan Convertible Bond / LQA Rmb Mn Rmb Mn Rmb Mn Adjusted EBITDA Total Loan 7,442.7 9,166.2 9,466.4 4.2 Convertible Bond 1,969.7 2,049.6 2,084.7

  26. Slide 26: Backlog & Move-In Analysis

    Backlog & Move-In Analysis Backlog Build-Up for 1Q20 (Sqm) Backlog by Data Center Status (Sqm) Net Additional Area Committed Backlog for Area In Service Net Additional Area Utilized Backlog for Area Under Construction 22,112 7,816 123,152 123,152 108,856 104,615 108,856 123,152 93,711 81,781 108,856

  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 Markets

    Our Data Center Portfolio – Beijing & Shanghai Markets Self-Developed Data Centers In Service & Under Construction in Tier 1 Markets (1) Beijing – 15 DCs Shanghai – 18 DCs SH1/2/3/4/6/7/8/9/ BJ5 10/11/12/14/15 BJ4/6 13 54 50 27 SH5 61 BJ1/2/3/9 30 50 SH13 BJ7/8 LF1/2/3/4/6/7 KS1/2/3 Note: 1. Distanc

  30. Slide 30: 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 (1) Great Bay Area – 12 DCs Chengdu / Chongqing – 2 DCs SZ4 GZ1/2/3/6 SZ5 65 45 38 GZ4 SZ6 25 HK1 SZ1/2/3 CD1/2 Note: 1. Distance in km. © GDS 2016 29

  31. Slide 31: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As at 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Area In Service (Sqm) 127,984 147,342 160,356 171,515 180,441 198,097 225,963 229,986 Area Under Construction (Sqm) 41,023 43,718 65,201 65,736 78,373 84,765 89,834 110,706 Total Capacity (Sqm) 169,007 191,060 225,557 2

  32. Slide 32: Data Center Summary By Market

    Data Center Summary By Market As at 31/03/20 (Sqm, Unless Indicated) Pre- Area in Area Under Total Area Area Pre- Total Area Commitment Utilization Area Utilized Commitment # of Self- Service Construction Capacity Committed Committed Committed Rate Rate Rate Market Developed Data Centers (1) (2) (1

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

    Self-Developed Data Centers In Service – Beijing As at 31/03/20 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area in Service Area Committed Commitment Rate Area Utilized Utilization Rate BJ1 2H15 Converted Lease 2,435 2,235 91.8% 2,195 90.2% BJ2 2H17 Converted Lease 5,819 5,802

  34. Slide 34: Self-Developed Data Centers In Service – Shanghai

    Self-Developed Data Centers In Service – Shanghai As at 31/03/20 (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 Own 6,546 6,428 98.2% 6,150 94.0% SH1 2H11 Purpose-Built Lease 6,432

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

    Self-Developed Data Centers In Service – Greater Bay Area As at 31/03/20 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area in Service Area Committed Commitment Rate Area Utilized Utilization Rate SZ1 2H14 Converted Lease 4,286 4,234 98.8% 4,215 98.3% SZ2 1H16 Converted Lease 4,3

  36. Slide 36: Self-Developed Data Center In Service – Chengdu / Lower Tier Markets

    Self-Developed Data Center In Service – Chengdu / Lower Tier Markets As at 31/03/20 (Sqm, Unless Indicated) Ready For Commitment Market Data Center Type Tenure Area in Service Area Committed Area Utilized Utilization Rate Service Rate CD1 1H17 Purpose-Built Own 6,262 5,950 95.0% 4,621 73.8% Chengdu

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

    Self-Developed Data Centers Under Construction As at 31/03/20 (Sqm, Unless Indicated) Area Under Pre-Commitment Market Data Center Ready for Service Type Tenure Area Pre-Committed Construction Rate BJ7 4Q20 Converted Lease 11,116 3,857 34.7% BJ8 4Q20 Converted Lease 10,911 10,911 100% LF2 3Q20 Conve

  38. Slide 38: Top Customers

    Top 5 Customers In Terms of Total Area Committed as at 31/03/20 End User % of Total Area Committed % of 1Q20 Service Revenue Number of Data Centers (1) Internet / Cloud Service Provider 34.4% 26.8% 24 Internet / Cloud Service Provider 19.4% 18.4% 15 Cloud Service Provider 9.6% 0.6% 5 Internet 6.7% 9

  39. Slide 39: Contracts Renewal

    Contracts Renewal Contracts Renewal Schedule Period Sqm % of Total Area Committed FY20 18,039 6.3% FY21 26,294 9.2% FY22 17,599 6.1% FY23 25,786 9.0% Thereafter 199,272 69.4% Total Area Committed as at 31/03/20 286,990 100.0% © GDS 2016 38

  40. Slide 40: Principal Shareholders

    Principal Shareholders As at 31/03/20 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 5.7% Directors & Officers 15,418,679 1,927,334 1,927,334 1.3% STT 424,120,604 53,015,075 53,015,075 34.9% Ping An 0 0 4,213,483

  41. Slide 41: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) 76 77 72 70 # of Days 1Q19 2Q19 3Q19 4Q19 1Q20 63 DPO – Opex 82 91 110 99 96 DPO – Capex 162 243 231 66 94 Total DPO 136 178 179 72 95 Total DPO (Excl. Acquisitions) 121 163 169 65 82 1Q19 2Q1

  42. Slide 42: Historical Financial Results – Statements of Operations

    Historical Financial Results Condensed Consolidated Statements of Operations Amounts in thousands Three Months Ended Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 RMB RMB RMB RMB RMB USD Net Revenue Service revenue 890,946 985,094 1,058,921 1,159,610 1,232,589 174,075 Equipment sa

  43. Slide 43: Historical Financial Results – Balance Sheets

    Historical Financial Results Condensed Consolidated Balance Sheets Amounts in thousands. As of Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 RMB RMB RMB RMB RMB USD Cash 6,001,214 5,730,578 5,752,790 5,810,938 3,611,121 509,988 Accounts receivable, net of allowance for doubtful ac

  44. Slide 44: Historical Financial Results – Statements of Cash Flows

    Historical Financial Results Condensed Consolidated Statements of Cash Flows Amounts in thousands Three Months Ended Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 RMB RMB RMB RMB RMB USD Net cash (used in) provided by operating activities (59,806) 115,910 165,219 72,113 (169,799)

  45. Slide 45: Reconciliation from Net Loss to Adjusted NOI

    Reconciliation from Net Loss to Adjusted NOI Adjusted NOI Amounts in thousands Three Months Ended Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 RMB RMB RMB RMB RMB USD Net loss (136,620) (93,159) (108,642) (103,662) (92,031) (12,997) Net interest expenses 219,117 221,906 241,038 2

  46. Slide 46: Reconciliation from Net Loss to Adjusted EBITDA

    Reconciliation from Net Loss to Adjusted EBITDA Adjusted EBITDA Amounts in thousands Three Months Ended Mar 31, 2019 Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 RMB RMB RMB RMB RMB USD Net loss (136,620) (93,159) (108,642) (103,662) (92,031) (12,997) Net interest expenses 219,117 221,906 241

  47. Slide 47: Definition of KPIs

    Definition of KPIs Area In Service To the entire net floor area of data centers (or phases of data centers) which are ready for service To the entire net floor area of data centers (or phases of data centers) which are actively under construction and have not y et reached the Area Under Construction

  48. Slide 48: Analyst Coverage

    Analyst Coverage Broker Analyst Contact BAML Paul Dewberry paul.dewberry@baml.com Citi Arthur Lai arthur.y.lai@citi.com CICC Zhenyang Chen zhenyang.chen@cicc.com.cn Cowen Colby Synesael colby.synesael@cowen.com Credit Suisse Colin McCallum colin.mccallum@credit-suisse.com DBS Tsz Wang Tam tszwangtam

GDS Holdings — Q1 2020 Earnings Presentation on 6ix