Gds Holdings Ltd. · HKEX:9698

Gds — Q3 2020 Earnings Presentation

50 slides from Gds's earnings presentation, Nov 17, 2020

  1. Slide 1: 3Q20 Earnings Call

    3Q20 Earnings Call 17 Nov 2020 NASDAQ: GDS HKEX: 9698 © GDS 2016

  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: © GDS 2016

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  5. Slide 5: 3Q20 Highlights

    3Q20 HIGHLIGHTS (1)(2) Sales Momentum • Organic net additional total area committed of +23,884 sqm • Total area committed increased by 47.4% y/y to 357,344 sqm Capacity Expansion • Total capacity (in service + under construction) grew by 46.9% y/y to 415,489 sqm • +107,220 sqm of secured pipeline (i

  6. Slide 6: Sales Achievement

    Sales Achievement Net Additional Total Area Committed (Sqm) – By Quarter Net Additional Total Area Committed (Sqm) – By Year Organic Acquisition (1) Organic Acquisition (1) 46,471 92,467 81,215 81,135 19,927 19,927 11,862 9,045 23,884 21,617 22,443 22,112 41,485 9,045 25,125 11,131 69,353 72,090 72,

  7. Slide 7: Hyperscale Orders

    Hyperscale Orders Hyperscale Orders Obtained In 3Q20 Langfang 9 – Under Construction Area IT Power Contract Data Center Committed Committed Commences (Sqm) (MW) GZ6 4,573 8.0 4Q20 LF4 7,416 12.9 2H21 LF9 10,830 25.8 1H21 © GDS 2016 6

  8. Slide 8: Customer Diversification

    Customer Diversification Customer Segment Breakdown By Total Area Committed Leading CSP / Large Internet Customer Additions 2011 – 2016 FSI & Large Enterprises 10.0% 2017 (1) 15.8% Large Internet 695 2018 Customers 74.2% +13.0% Y/Y (2) 2019 Cloud Service Providers 2020 Notes: 1. Azure China is opera

  9. Slide 9: Growing Construction Pipeline – Area Under Construction

    Growing Construction Pipeline – Area Under Construction (U/C) Area U/C (Sqm) & Pre-Commitment Rate – By Quarter Area U/C (Sqm) & Pre-Commitment Rate – By Year 65.9% 63.6% 65.9% 71.6% 62.3% 68.4% 48.4% 63.6% 39.0% 135,871 133,208 135,871 27.1% 110,706 89,834 89,834 84,765 65,201 25,055 24,505 3Q19 4Q

  10. Slide 10: Resource Progress

    Resource Progress (1) Organic Capacity Expansion 3Q20 (Sqm) Area In Service (Sqm) & Commitment Rate 14,330 14,455 (2) 133,208 135,871 91.9% 91.9% 94.1% 95.8% 91.7% KS4 SH15 279,618 266,260 LF9 KS3 LF2 225,963 229,986 198,097 Area Under Projects Initiated Projects In Service Area Under Construction 3

  11. Slide 11: Self-Developed Data Center Capacity Overview

    Self-Developed Data Center Capacity Overview By Market (1) Area Under Total Developed & Developable As At 3Q20 (Sqm) Area In Service Held For Future Development Construction Capacity Beijing 83,132 76,848 90,750 250,730 32.7% Shanghai 86,351 44,962 131,382 262,695 34.3% Greater Bay Area 69,023 14,06

  12. Slide 12: Greater Bay Area – Huidong Land

    Greater Bay Area – Huidong Land 80KM Huidong Guangming Pingshan n Greenfield site in Huidong County Longgang n One of the key areas identified for data center development under New Infrastructure plan n 24 km away from SZ4 Futian n 115,000 sqm of land area; 72,000 sqm of NFA © GDS 2016 11

  13. Slide 13: Beijing – Langfang Update

    Beijing – Langfang Update Area Capacity Commitment Tenure Status Committed (Sqm) Rate (Sqm) LF1 Lease In Service 4,949 4,949 100% Shunyi LF2 Lease In Service 5,458 5,458 100% Changping LF3 Own Under Construction 11,664 11,664 100% LF4 Own Under Construction 14,832 14,832 100% LF5 Own Under Construct

  14. Slide 14: Shanghai – Kunshan / Changshu Update

    Shanghai – Kunshan / Changshu Update Area Capacity Commitment Tenure Status Committed (Sqm) Rate (Sqm) Changshu KS1 Own In Service 6,546 6,464 98.7% KS2 Own In Service 7,771 7,771 100% KS3 Own In Service 7,410 7,410 100% 80KM KS4 Lease Under Construction 3,500 0 0.0% Baoshan KS5 & KS6 Lease Held For

  15. Slide 15: M&A Update

    M&A Update BJ13 – Jul 2020 BJ14 – Sep 2020 SH19 – 4Q20 n Located in Tongzhou, new seat of n ~19,000 sqm of NFA n Located in Waigaoqiao cluster Beijing Municipal Government n Adjacent to existing BJ5 data n ~12,789 sqm of NFA n 18,000 sqm of NFA with owned land center n Phase 1 of 7,963 in service an

  16. Slide 16: Managed Build-To-Suit Data Centers

    Managed Build-To-Suit (“BTS”) Data Centers Note: These projects are not included in our KPIs. As At 3Q20 Number of Data Centers Total Planned Net Floor Area (Sqm) Customer 1 (GIC JV Data Centers) Projects Under Construction 5 19,442 Projects In Service Held For Sale 3 11,665 Projects In Service Held

  17. Slide 17: Financial & Operating Review

    Financial & Operating Review Dan Newman, CFO © GDS 2016

  18. Slide 18: 3Q20 P&L Analysis

    3Q20 P&L Analysis Quarterly Financial Review Rmb‘000 (unless indicated) 3Q19 2Q20 3Q20 Y/Y Q/Q Service Revenue 1,058,921 1,334,475 1,522,353 43.8% 14.1% Equipment Sales 7,267 7,730 2,396 (67.0%) (69.0%) Total Net Revenue 1,066,188 1,342,205 1,524,749 43.0% 13.6% Cost of Revenue (791,963) (981,103) (

  19. Slide 19: 3Q20 Underlying Trends

    3Q20 Underlying Trends Quarterly Financial Review Rmb‘000 (unless indicated) 3Q19 2Q20 3Q20 Y/Y Q/Q Total Net Revenue 1,066,188 1,342,205 1,524,749 43.0% 13.6% Less: Equipment Sales 7,267 7,730 2,396 (67.0%) (69.0%) Service Revenue 1,058,921 1,334,475 1,522,353 43.8% 14.1% Adjusted GP 571,040 721,00

  20. Slide 20: Revenue & Area Utilized

    Revenue & Area Utilized Revenue (Rmb Mn) Net Additional Area Utilized (Sqm) (1) & MSR Service Revenue Equipment Sales Organic Acquisition 29,324 2.4 18,202 14,988 16,589 7.7 10,713 7,819 7.8 7,816 19.6 10,383 14,336 7.3 3Q19 4Q19 1Q20 2Q20 3Q20 1,522.4 1,334.5 MSR (Rmb / Sqm / Month) 1,159.6 1,232.6

  21. Slide 21: Underlying Adjusted GP & Adjusted EBITDA

    Underlying Adjusted GP & Adjusted EBITDA Underlying Adjusted GP (Rmb Mn) & Margin Underlying Adjusted EBITDA (Rmb Mn) & Margin 53.8% 52.8% 53.9% 54.0% 53.4% 45.9% 45.6% 47.4% 47.8% 47.1% 812.2 717.2 720.5 637.5 664.3 584.1 612.5 570.1 528.5 485.6 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 © G

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

    Stabilized vs. Ramping-Up Data Centers Breakdown Of Area In Service As At 3Q20 Stabilized Data Centers Ramping-Up Data Centers A re a In S e rv ic e (S q m ) C o m m itm e n t R a te U tiliz a tio n R a te Area In Service A re a In S e rv ic e (S q m ) C o m m itm e n t R a te U tiliz a tio n R a te

  23. Slide 23: Construction Program

    Construction Program Self-Developed Data Centers Organic Capacity Delivery Schedule (Sqm) Area Under Pre-Commitment Rate RFS Date Tenure Type Construction (Sqm) (%) SH13 4Q20 Lease Convert 6,493 65.5% 53,746 SH14 Phase 1 (1) 4Q20 Own Convert 7,000 100% SH16 4Q20 Own Convert 3,000 0.0% BJ7 4Q20 Lease

  24. Slide 24: Capital Expenditure

    Capital Expenditure Capex Paid – By Quarter (Rmb Mn) (1) Capex Paid – By Year (Rmb Mn) (1) Organic Capex Rmb Mn 3Q19 4Q19 1Q20 2Q20 3Q20 Land / Property Purchase 6,632.8 Acquisition 370.7 BTS Projects 944.3 5,131.2 Organic Capex 957.9 1,222.8 1,048.7 936.8 1,975.4 4,733.1 270.2 578.6 1,356.9 475.1 L

  25. Slide 25: Financing Obligations & Liquidity

    Financing Obligations & Liquidity Debt & Cash Outstanding Loan Maturity Schedule As At 30/09/20 (Rmb Mn) 30/09/19 30/06/20 30/09/20 Rmb Mn Rmb Mn Rmb Mn / LQA Adjusted Working Capital EBITDA 4,944 Total Loan 8,358.6 11,019.7 11,930.3 4.1 Project C onvertible Bond 2,075.0 2,086.2 2,009.8 0.7 Converti

  26. Slide 26: Backlog & Move-In Analysis

    Backlog & Move-In Analysis Backlog Build-Up For 3Q20 (Sqm) Backlog By Data Center Status (Sqm) Net Additional Total Area Committed Backlog for Area In Service Net Additional Area Utilized Backlog for Area Under Construction 23,884 16,589 147,593 140,299 140,299 147,593 123,152 108,856 104,615 89,573

  27. Slide 27: Updated Business Outlook

    Updated Business Outlook FY20 Revised Annual Guidance Original FY20 Revised FY20 Revised FY20 Vs Rmb Mn FY19 Actual Guidance Implied Y/Y Guidance Guidance Implied Y/Y Original FY20 (Mar-20) (Aug-20) (Nov-20) Guidance Total Revenue 4,122.4 5,510 – 5,750 33.7% – 39.5% No Change 5,700 – 5,750 38.3% – 3

  28. Slide 28: Questions & Answers

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

  29. Slide 29: Appendix

    Appendix © GDS 2016

  30. Slide 30: 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 – 21 DCs Shanghai – 22 DCs CS1 BJ5/10/11/12 SH1/2/3/4/6/7/8/ 88 9/10/11/12/14/15 BJ4/6 54 13 50 33 27 SH5 61 BJ1/2/3/9 SH16/17 30 50 SH13 BJ7/8 LF1/2/3/4/5

  31. Slide 31: 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 30

  32. Slide 32: Key Operating KPIs

    Key Operating KPIs Last 8 Quarters As At 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Area In Service (Sqm) 160,356 171,515 180,441 198,097 225,963 229,986 266,260 279,618 Area Under Construction (Sqm) 65,201 65,736 78,373 84,765 89,834 110,706 133,208 135,871 Total Capacity (Sqm) 225,557 237,251 258,814

  33. Slide 33: Data Center Summary By Market

    Data Center Summary By Market As At 30/09/20 (Sqm, Unless Indicated) Area Held for Pre- Area In Area Under Total Area Area Pre- Total Area Area Commitment Utilization Future Commitment # of Self- Service Construction Capacity Committed Committed Committed Utilized Rate Rate Development Rate Market D

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

    Self-Developed Data Centers In Service – Beijing As At 30/09/20 (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 2,400 98.6% 2,349 96.5% BJ2 2H17 Convert Lease 5,819 5,763 99.0

  35. Slide 35: Self-Developed Data Centers In Service – Shanghai

    Self-Developed Data Centers In Service – Shanghai As At 30/09/20 (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 6,319 98.2% 6,113 95.0% SH2 2H15 Purpose-Built Lease 7,7

  36. Slide 36: Self-Developed Data Centers In Service – Greater Bay Area

    Self-Developed Data Centers In Service – Greater Bay Area As At 30/09/20 (Sqm, Unless Indicated) Data Center Ready For Service Type Tenure Area In Service Area Committed Commitment Rate Area Utilized Utilization Rate SZ1 2H14 Convert Lease 4,286 4,272 99.7% 4,252 99.2% SZ2 1H16 Convert Lease 4,308 4

  37. Slide 37: Self-Developed Data Center In Service – Chengdu / Lower Tier Markets

    Self-Developed Data Center In Service – Chengdu / Lower Tier Markets As At 30/09/20 (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 5,987 95.6% 4,731 75.5% Chengdu

  38. Slide 38: Self-Developed Data Centers Under Construction

    Self-Developed Data Centers Under Construction As At 30/09/20 (Sqm, Unless Indicated) Area Under Area Pre- Pre-Commitment Market Data Center Ready For Service Type Tenure Construction Committed Rate BJ7 4Q20 Convert Lease 11,116 3,857 34.7% BJ8 1H21 Convert Lease 10,911 10,911 100% LF3 1H21 Purpose-

  39. Slide 39: Self-Developed Data Center Capacity – Lease Vs Own

    Self-Developed Data Center Capacity – Lease Vs Own As At 30/09/20 Area Under Held For Future Total Developed & Sqm Area In Service Construction Development Developable Capacity Lease 235,247 56,166 52,756 344,169 Own 36,239 79,705 305,478 421,422 Total 271,486 135,871 358,234 765,591 % Lease 86.7% 4

  40. Slide 40: Top Customers

    Top 5 Customers By Total Area Committed (1) By Revenue (1) % of Total Area Number of Data End User End User % of 3Q20 Total Net Revenue Committed as at 3Q20 Centers (2) Customer 1 36.2% 27 Customer 1 26.1% Customer 2 22.0% 17 Customer 2 21.4% Customer 3 6.5% 5 Customer 3 8.0% Customer 4 5.6% 10 Cust

  41. Slide 41: Forthcoming Contract Renewals

    Forthcoming Contract Renewals Contract Renewal Schedule Period Sqm % of Total Area Committed 4Q20 9,928 2.8% FY21 28,259 7.9% FY22 18,577 5.2% FY23 33,907 9.5% Thereafter 266,674 74.6% Total Area Committed As At 30/09/20 357,344 100.0% © GDS 2016 40

  42. Slide 42: Principal Shareholders

    Principal Shareholders As At 30/09/20 Pro Forma Ordinary Shares (1) Equivalent ADS Equivalent ADS % of Total ADS Change (3) William Huang (2) 80,446,240 10,055,780 10,055,780 5.4% Directors & Officers 17,830,935 2,228,867 2,228,867 1.2% STT GDC 437,043,684 54,630,461 +5,030,600 59,661,061 32.1% Ping

  43. Slide 43: Working Capital Management

    Working Capital Management Accounts Receivable Turnover Days (# of Days) Days Payable Outstanding (DPO) (1) # of Days 3Q19 4Q19 1Q20 2Q20 3Q20 88 88 76 77 70 DPO – Opex 110 99 96 114 107 DPO – Capex 231 66 94 106 136 Total DPO 179 72 95 108 129 Total DPO (Excl. Acquisitions) 169 65 82 89 110 3Q19 4Q

  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, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 RMB RMB RMB RMB RMB USD Net Revenue Service revenue 1,058,921 1,159,610 1,232,589 1,334,475 1,522,353 224,218 Equipmen

  45. Slide 45: Historical Financial Results – Balance Sheets

    Historical Financial Results Condensed Consolidated Balance Sheets Amounts in thousands. As of Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 RMB RMB RMB RMB RMB USD Cash 5,752,790 5,810,938 3,611,121 7,742,082 6,004,537 884,373 Accounts receivable, net of allowance for doubtful ac

  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, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 RMB RMB RMB RMB RMB USD Net cash provided by (used in) operating activities 165,219 72,113 (169,799) 186,037 (7,943) (

  47. Slide 47: Reconciliation from Gross Profit to Adjusted GP

    Reconciliation from Gross Profit to Adjusted GP Adjusted GP Amounts in thousands Three Months Ended Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 RMB RMB RMB RMB RMB USD Gross profit 274,225 294,723 350,338 361,102 408,965 60,234 Depreciation and amortization 282,112 300,422 296,6

  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, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Sep 30, 2020 RMB RMB RMB RMB RMB USD Net loss (108,642) (103,662) (92,031) (101,047) (204,635) (30,139) Net interest expenses 241,038 233,615 26

  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 the stage of Area Under Construction being

  50. Slide 50: Analyst Coverage

    Analyst Coverage B roker A nalyst C ontact BAML Paul D ew berry paul.dew berry@ baml.com Berenberg N ate C rossett nate.crosssett@ berenberg-us.com BOC I Michael Meng michael.meng@ bocigroup.com C IC C Kai Qian kai.qian@ cicc.com.cn C iti Arthur Lai arthur.y.lai@ citi.com C itic Yingbo Xu xuyb@ citi

GDS Holdings — Q3 2020 Earnings Presentation on 6ix