GDS Holdings Ltd. · HKEX:9698

GDS — Q2 2022 Earnings Presentation

48 slides from GDS's earnings presentation, Aug 23, 2022

  1. Slide 1: 2Q22 Earnings Call

    2Q22 Earnings Call 23 August 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: 2Q22 Highlights

    2Q22 HIGHLIGHTS (1)(2) Uninterrupted Operations • Recurring revenue business, with net additional area utilized of +13,659 sqm • Total area utilized of 345,678, +22.7% y/y and utilization rate of 68.5% Customer Commitments • New customer commitments (net) of +13,045 sqm or +34 MW • Total area commit

  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) (2) (1) (2) Organic Acquisition B-O-T Organic Acquisition B-O-T 161,558 44,848 38,006 118,722 3,440 19,166 27,911 92,800 22,864 26,611 81,215 23,538 16,665 3,698 9,464 9,045 3

  6. Slide 6: New Hyperscale Customer Commitments

    New Hyperscale Customer Commitments Largest Bookings In 2Q22 Shanghai Pujiang Site (SH16/17/18) Area IT Power Customer Data Center Committed Committed Segment (Sqm) (MW) HK1 1,040 4.0 Global Cloud SH17 Phase 2 & 3 3,905 9.0 FSI LF14 6,904 14.1 China Cloud © GDS 2016 5

  7. Slide 7: Customer Franchise Development

    Customer Franchise Development Total Area Committed By Segment (Sqm) (2Q22) Hyperscale Customer Additions (1) FSI & Large Enterprises 2011 – 2016 76,172 12.9% (2) 2017 2018 Large Internet 113,987 785 19.4% Customers (3) +9.3% Y/Y 2019 397,895 67.7% 2020 Cloud Service Providers 2021 Notes: . 1. Exclu

  8. Slide 8: Customer Move-In Rate

    Customer Move-In Rate Net Additional Area Utilized (Sqm) Total Area Utilized (Sqm) & Utilization Rate (%) (1) (2) Organic Acquisition B-O-T 68.5% 67.4% 66.0% 66.1% 30,587 65.5% 1,841 345,678 319,475 332,019 300,328 15,122 18,678 19,147 281,650 908 3,505 1,733 13,659 12,545 5,361 5,089 16,037 15,642

  9. Slide 9: Backlog Vs Move-In Rate

    Backlog Vs Move-In Rate Backlog At Quarter End (Sqm) Net Additional Area Utilized By Year (Sqm) (1) (2) Backlog for Area In Service Backlog for Area Under Construction Organic Acquisition 237,347 242,990 242,376 232,956 225,022 84,744 78,709 16,855 98,983 106,050 104,532 15,236 97,573 96,148 46,614

  10. Slide 10: New Capacity Delivery Schedule

    New Capacity Delivery Schedule Net Additional Area In Service & Scheduled Capacity Additions (Sqm) FY21: 154,030 FY22: 48,131 FY23: 60,636 92,690 38,765 sqm originally scheduled for delivery in 2022 pushed back to 2023 or beyond (1) 70,835 61,340 40,052 31,631 20,585 16,500 1H21 2H21 1H22 2H22 1H23

  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 (%) 63.1% 64.1% 96.2% 95.9% 93.8% 95.3% 95.9% 62.1% 61.3% 58.2% 504,383 168,128 487,883 492,344 165,175 163,102 161,515 454,354 157,227 426,543 2Q21 3Q21 4Q21 1Q22 2Q

  12. Slide 12: Accelerating Regionalization Plan

    Accelerating Regionalization Plan Capacity Name Location Ownership Status RFS (MW) Hong Kong & Macau HK1 HK Own Under Construction 2022 19 HK2 HK Own Under Construction 2024 18 Nusajaya Tech Park HK3 HK BTS Lease Pipeline 2024 21 HK4 HK Own Pipeline 2025 22 MC1 Macau Own Pipeline 2024 14 South East

  13. Slide 13: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  14. Slide 14: 2Q22 P&L Analysis

    2Q22 P&L Analysis Quarterly Financial Review Rmb‘000 (Unless Indicated) 2Q21 1Q22 2Q22 Y/Y Q/Q Service Revenue 1,862,951 2,243,535 2,302,729 23.6% 2.6% Equipment Sales 968 59 7,681 693.5% 12,918.6% Total Net Revenue 1,863,919 2,243,594 2,310,410 24.0% 3.0% Cost of Revenue (1,424,050) (1,757,177) (1,

  15. Slide 15: 2Q22 Underlying Trends

    2Q22 Underlying Trends Quarterly Financial Review Rmb‘000 (Unless Indicated) 2Q21 1Q22 2Q22 Y/Y Q/Q Total Net Revenue 1,863,919 2,243,594 2,310,410 24.0% 3.0% Less: Equipment Sales 968 59 7,681 693.5% 12,918.6% Service Revenue 1,862,951 2,243,535 2,302,729 23.6% 2.6% Adjusted GP 1,006,851 1,174,648

  16. Slide 16: Revenue & Area Utilized By Quarter

    Revenue & Area Utilized By Quarter Total Revenue (Rmb Mn) Net Additional Area Utilized (Sqm) & MSR (1) (2) Organic Acquisition B-O-T 2,310.4 30,587 2,243.6 2,187.4 1,841 2,061.4 1,863.9 15,122 18,678 19,147 908 1,733 3,505 12,545 13,659 5,361 5,089 16,037 15,642 13,624 7,456 8,298 2Q21 3Q21 4Q21 1Q2

  17. Slide 17: Underlying Adjusted GP & EBITDA & Margin

    Underlying Adjusted GP & EBITDA & Margin Underlying Adjusted GP (Rmb Mn) & Margin Underlying Adjusted EBITDA (Rmb Mn) & Margin 54.0% 52.5% 52.5% 52.4% 50.9% 48.1% 46.9% 47.2% 47.1% 46.0% 1,174.6 1,171.9 1,148.2 1,055.9 1,058.2 1,031.1 1,083.0 966.0 1,006.8 896.7 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q

  18. Slide 18: Capex Paid

    Capex Paid (1) Past 5 Quarters (Rmb Mn) Past 5 Years (Rmb Mn) Organic - Mainland China Rmb Mn 2Q21 3Q21 4Q21 1Q22 2Q22 Organic - Regional (4) 13,691.5 Acquisition ~12,000 3,992.4 Organic (2) 1,868.4 3,241.9 2,313.9 2,161.7 1,744.5 9,378.0 ~4,000 996.3 1,357.5 143.8 7,004.5 ~2,000 Acquisition (3) 2,9

  19. Slide 19: Forming China Data Center Fund

    Forming China Data Center Fund Enhance Access To Capital & Accelerate Monetisation § Entered into Framework Agreement with SWF for formation of offshore China Data Center Fund § RMB 6.7 billion equivalent to $1 billion of capital commitments, with 70% coming from SWF and 30% from GDS § Fund may acqu

  20. Slide 20: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule At 30/06/22 (Rmb Mn) 3 0 /0 6 /2 1 3 1 /0 3 /2 2 3 0 /0 6 /2 2 (3) Working Capital Project Loan Convertible Bond / L Q A A d ju s te d Rmb Mn Rmb Mn Rmb Mn E B IT D A To ta l L o a n 1 7 ,2 0 7 .7 2 5 ,8 3 6 .3 2 4 ,6 8

  21. Slide 21: Fixed Assets & Net Debt

    Fixed Assets & Net Debt Breakdown By Stage Of Development for 2Q22 In Service Portfolio Fixed Assets (1) Rmb 40,936 mn Net Debt (2) Rmb 21,175 mn GDS Consolidated Adj. Gross Profit Rmb 1,246 mn (1) Fixed Assets Rmb 58,797 mn Net Debt / LQA Adj. Gross Profit 4.2x Net Debt (2) Rmb 30,553 mn Adj. EBITD

  22. Slide 22: Growth Visibility

    Growth Visibility Quarterly Resource Financial Status At Review 2Q22 (Sqm) Area Utilized Backlog Total Area Committed 588,054 345,678 242,376 Cost To Complete: Rmb 9.8 bn Area In Service Under Construction Total Capacity 667,485 504,383 163,102 Held For Future Secured Pipeline 457,270 457,270 Notes:

  23. Slide 23: Business Outlook

    Business Outlook FY22 Revised Vs. Original Annual Guidance 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: 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 (2Q22) 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

  27. Slide 27: 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 (2Q22) Greater Bay Area: 19 DCs (1) Chengdu – Chongqing: 3 DCs (1) SZ5 SZ8 GZ1/2/3/6 SZ4 HZ1 GZ4 SZ6/9/10 SZ11 HK1/2 SZ1/2/3 CD1/2 CQ1 Notes: 1. Includes a

  28. Slide 28: Key Operating KPIs

    Key Operating KPIs Past 8 Quarters As At 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 Area In Service (Sqm) 291,282 333,853 360,542 426,543 454,354 487,883 492,344 504,383 Area Under Construction (Sqm) 170,186 158,035 170,149 165,175 157,227 161,515 168,128 163,102 Total Capacity (Sqm) 461,468 491,888 53

  29. Slide 29: Data Center Summary By Market

    Data Center Summary By Market At 30/06/22 (Sqm, Unless Indicated) (1) Area Held for Pre- Area In Area Under Area Area Pre- Total Area Commitment Utilization Total Capacity Future Area Utilized Commitment # of Self- Service Construction Committed Committed Committed Rate Rate Development (2) Rate Mar

  30. Slide 30: Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei

    Self-Developed Data Centers In Service – Beijing / Tianjin / Hebei At 30/06/22 (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

  31. Slide 31: Self-Developed Data Centers In Service – Yangtze River Delta

    Self-Developed Data Centers In Service – Yangtze River Delta At 30/06/22 (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 6,212 96.6% 6,010 93.4% SH2 2H15 Purpose-Built L

  32. Slide 32: Self-Developed Data Centers In Service – Greater Bay Area

    Self-Developed Data Centers In Service – Greater Bay Area At 30/06/22 (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 4,278 99.8% 4,266 99.5% SZ2 1H16 Convert Lease 4,308 4,30

  33. Slide 33: Self-Developed Data Centers In Service – Chengdu / Chongqing & Other

    Self-Developed Data Centers In Service – Chengdu / Chongqing & Other At 30/06/22 (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 6,065 96.9% 4,276 68.3% Chengdu – 8

  34. Slide 34: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction At 30/06/22 (Sqm, Unless Indicated) Market Data Center Ready For Service Type Tenure Area Under Construction Area Pre-Committed Pre-Commitment Rate BJ13 Phase 1 2H22 Purpose-Built Own 5,465 5,465 100% BJ13 Phase 2 1H23 Purpose-Built Own 8,438 8,438 100%

  35. Slide 35: 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

  36. Slide 36: Self-Developed Data Center Capacity – Lease Vs. Own

    Self-Developed Data Center Capacity – Lease Vs. Own At 30/06/22 Held For Future Total Developed & Sqm Area In Service Area Under Construction Development Developable Capacity Lease 303,413 44,354 22,805 370,572 Own 122,901 115,308 434,465 672,674 B-O-T 68,910 3,440 - 72,350 3 rd Party 9,159 - - 9,15

  37. Slide 37: Stabilized Vs. Ramping-Up Data Centers

    Stabilized Vs. Ramping-Up Data Centers Breakdown Of Area In Service At 2Q22 Stabilized Data Centers Ramping-Up Data Centers Area In Service (Sqm) Commitment Rate Utilization Rate Area In Service Area In Service (Sqm) Commitment Rate Utilization Rate SH1 6,432 96.6% 93.4% SH2 7,712 99.9% 90.8% SH7 6,

  38. Slide 38: 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 2Q22 Total Net Revenue Committed As At 2Q22 Centers (3) Customer 1 40.5% 47 Customer 1 24.2% Customer 2 15.7% 17 Customer 2 20.8% Customer 3 4.4% 6 Customer 3 6.4% Customer 4 3.9% 5 Cu

  39. Slide 39: Forthcoming Contract Renewals

    Forthcoming Contract Renewals Contract Renewal Schedule (1) Period Sqm % of Total Area Committed From July 1 to Dec 31, 2022 24,539 4.2% FY23 51,162 8.7% FY24 64,189 10.9% FY25 58,695 10.0% FY26 57,902 9.8% Thereafter 331,568 56.4% Total Area Committed At 30/06/22 588,054 100% © GDS 2016 38

  40. Slide 40: Principal Shareholders

    Principal Shareholders At 30/06/22 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) 9,657,356 1,207,169 1,207,169 0.7% STT GDC 477,288,484 59,661,060 59,661,060 31.7% Ping An 0 0 +4,

  41. Slide 41: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# Of Days) (1) Days Payable Outstanding (DPO) (2) # of Days 2Q21 3Q21 4Q21 1Q22 2Q22 97 94 86 81 DPO – Opex 94 94 88 83 83 74 DPO – Capex 116 130 136 271 191 Total DPO 111 121 124 197 154 Total DPO (Excl. Acquisitions) 92 99 93 141 116 2Q

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

    Historical Financial Results Condensed Consolidated Statements Of Operations Amounts in thousands Three Months Ended Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 (1) RMB RMB RMB RMB RMB USD Net Revenue Service revenue 1,862,951 2,061,104 2,185,857 2,243,535 2,302,729 343,788 Equi

  43. Slide 43: Historical Financial Results – Balance Sheets

    Historical Financial Results Condensed Consolidated Balance Sheets Amount in thousands. As of Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 RMB RMB RMB RMB RMB USD ( 1 ) Cash 12,326,895 10,103,624 9,968,109 11,320,911 9,159,176 1,367,429 Accounts receivable, net of allowance for d

  44. Slide 44: Historical Financial Results – Cash Flows

    Historical Financial Results Condensed Consolidated Statements of Cash Flows Amounts in thousands Three Months Ended Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 (1) RMB RMB RMB RMB RMB USD Net cash provided by (used in) )operating activities 363,274 456,191 406,095 (244,730) 1,6

  45. Slide 45: 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, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 RMB RMB RMB RMB RMB USD (1) Gross profit 439,869 455,435 487,273 486,417 468,601 69,960 Depreciation and amortizati

  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 Jun 30, 2021 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 (1) RMB RMB RMB RMB RMB USD Net loss (298,463) (301,131) (312,882) (373,253) (375,307) (56,031) Net interest expenses 411,722 392,0

  47. Slide 47: 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

  48. Slide 48: Analyst Coverage

    Analyst Coverage Broker Analyst Contact BofA Paul Dewberry paul.dewberry@baml.com BOCI Michael Meng michael.meng@bocigroup.com Berenberg Nate Crossett nate.crosssett@berenberg-us.com CICC Hongjie Li hongjie.li@cicc.com.cn Citi Andre Lin andre.lin@citi.com Citic Securities Junyun Chen chenjunyun@citi

GDS Holdings — Q2 2022 Earnings Presentation on 6ix