GDS Holdings Ltd. Q1 FY2025 earnings call

William Huang's Remarks

• Started 2025 with solid results, 12% revenue growth and 15% adjusted EBITDA growth YOY. Gross move-in of 20,000 sq meters in Tier 1 markets, utilization rate 75.7%. Around 40% of backlog to be delivered by year-end. AI demand shifted to Tier 1 markets with inferencing, mega deal of 152 megawatts signed in 1Q '25. DayOne added 70 megawatts of new commitments, on track for over 750 megawatts in power commitments.

Dan Newman's Remarks

• 1Q '25 revenue up 12% YOY, adjusted EBITDA up 16.1% YOY. Adjusted EBITDA margin 48.6% in 1Q '25. ABS transaction completed, received cash proceeds, deconsolidated debt. Progress on C-REIT, received NDRC approval, under review by CSRC and Shanghai Stock Exchange. Equity value of GDS on sum-of-parts basis, DayOne's equity interest expected to appreciate.

In the first quarter of 2025, GDS Holdings Limited achieved a 12% year-on-year revenue growth and a 15% year-on-year adjusted EBITDA growth. Gross move-in during 1Q '25 was around 20,000 square meters, all in Tier 1 markets, and the utilization rate reached 75.7%.

Guidance

• Kept total revenue and adjusted EBITDA guidance unchanged. Expected quarterly adjusted EBITDA to increase by high-single digits YOY over next three quarters. CapEx guidance unchanged. DayOne on track to achieve total power commitments of over 750 megawatts in next few months.

Risks

• Uncertainties around AI chip supply in China in the short-term.

Q: Regarding China demand, especially from hyperscalers, and order intake in Q2.

A: Demand strong, AI-related demand continues, 900 megawatts held for future development in Tier 1 markets.

Q: On financial guidance, impact of ABS transaction.

A: ABS transaction closing reduced full year EBITDA by around RMB130 million, but still expect to meet original guidance.

Q: Comparing IRR profile/EBITDA yield across markets for DayOne.

A: Development yield in low-teens, higher than China currently.

Q: When China business self-funding, funding for DayOne's 750 megawatts.

A: China roughly breakeven in free cash flow before financing, DayOne fully capitalized to develop committed portfolio.

Q: Growth area committed in 1Q, locations and customers.

A: Driven by traditional hyperscale customer in Nangang near Shanghai/Beijing.

Q: Government regulations on AI data centers in China.

A: 900 megawatts capacity mostly with power energy quota, new policies not impacting.

Q: Overseas business client mix, AI/non-AI, and C-REIT progress.

A: DayOne client mix international and Chinese, C-REIT application under review by CSRC, hope to launch later this year.

Q: China business pricing outlook, DayOne EBITDA margin.

A: China business pricing stable, DayOne EBITDA margin 31% in 1Q '25, expected to increase with ramp-up