• GDS Holdings Limited Reports Second Quarter 2024 Results

    Source: Nasdaq GlobeNewswire / 21 Aug 2024 07:00:09   America/New_York

    SHANGHAI, China, Aug. 21, 2024 (GLOBE NEWSWIRE) -- GDS Holdings Limited (“GDS Holdings”, “GDS” or the “Company”) (NASDAQ: GDS; HKEX: 9698), a leading developer and operator of high-performance data centers in China and South East Asia, today announced its unaudited financial results for the second quarter ended June 30, 2024.

    Second Quarter 2024 Financial Highlights

    • Net revenue increased by 14.3% year-over-year (“Y-o-Y”) to RMB2,826.4 million (US$388.9 million) in the second quarter of 2024 (2Q2023: RMB2,472.0 million). Net revenue increased by 17.7% Y-o-Y in the second quarter of 2024 (excluding previously disclosed one-time items of RMB70.7 million from the same period last year).
    • Net loss was RMB231.8 million (US$31.9 million) in the second quarter of 2024 (2Q2023: net loss of RMB225.3 million).
    • Adjusted EBITDA (non-GAAP) increased by 6.2% Y-o-Y to RMB1,312.2 million (US$180.6 million) in the second quarter of 2024 (2Q2023: RMB1,235.1 million). Adjusted EBITDA increased by 14.9% Y-o-Y in the second quarter of 2024 (excluding previously disclosed one-time items of RMB92.8 million from the same period last year). See “Non-GAAP Disclosure” and “Reconciliations of GAAP and non-GAAP results” elsewhere in this earnings release.
    • Adjusted EBITDA margin (non-GAAP) was 46.4% in the second quarter of 2024 (2Q2023: 50.0%).

    Second Quarter 2024 Operating Highlights        

    • Total area committed and pre-committed increased by 18.7% Y-o-Y to 756,992 sqm as of June 30, 2024 (June 30, 2023: 637,661 sqm).
    • Area in service increased by 18.8% Y-o-Y to 630,963 sqm as of June 30, 2024 (June 30, 2023: 531,216 sqm).
    • Commitment rate for area in service was 92.5% as of June 30, 2024 (June 30, 2023: 92.4%).
    • Area under construction was 226,272 sqm as of June 30, 2024 (June 30, 2023: 196,703 sqm).
    • Pre-commitment rate for area under construction was 76.6% as of June 30, 2024 (June 30, 2023: 74.8%).
    • Area utilized increased by 20.9% Y-o-Y to 462,673 sqm as of June 30, 2024 (June 30, 2023: 382,796 sqm).
    • Utilization rate for area in service was 73.3% as of June 30, 2024 (June 30, 2023: 72.1%).

    “Disciplined execution, with strong focus on our strategic objectives, drove solid results in the second quarter,” said Mr. William Huang, Chairman and CEO of GDS. “In China, we saw an improving trend in gross move-in, while other metrics remain stable. Internationally, we secured significant new customer orders in Johor, capitalizing on extraordinary regional demand and strengthening our presence in what is fast emerging as a top global data center hub.”

    “In the second quarter, we grew revenue by 17.7% and Adjusted EBITDA by 14.9% year-over-year (excluding previously disclosed one-time items from the same period last year),” said Mr. Dan Newman, Chief Financial Officer. “Supported by our strengthened financial position especially from the equity raise for International business, we are well aigned with our growth initiatives to deliver long-term value for our stakeholders.”

    Second Quarter 2024 Financial Results

    Net revenue in the second quarter of 2024 was RMB2,826.4 million (US$388.9 million), a 14.3% increase over the same period last year of RMB2,472.0 million, or a 17.7% increase over the same period last year of RMB2,401.3 million (excluding a previously disclosed one-time termination fee of RMB70.7 million). The normalized Y-o-Y increase was mainly due to continued ramp-up of our data centers and business growth.

    • Net revenue for China1 was RMB2,579.6 million (US$355.0 million), an 8.9% increase over the same period last year of RMB2,369.0 million (excluding a previously disclosed one-time termination fee of RMB70.7 million).
    • Net revenue for International2 was RMB255.5 million (US$35.2 million), a 690.2% increase over the same period last year of RMB32.3 million.

    Cost of revenue in the second quarter of 2024 was RMB2,188.5 million (US$301.2 million), a 13.9% increase over the same period last year of RMB1,921.0 million. The Y-o-Y increase was in line with the continued growth of our business.

    Gross profit was RMB637.8 million (US$87.8 million) in the second quarter of 2024, a 15.8% increase over the same period last year of RMB551.0 million.

    Gross profit margin was 22.6% in the second quarter of 2024, compared with 22.3% in the same period last year or 20.0% in the same period last year (excluding a previously disclosed one-time termination fee). The normalized Y-o-Y increase was mainly due to the fast ramp-up of our International business.

    Adjusted Gross Profit (“Adjusted GP”) (non-GAAP) is defined as gross profit excluding depreciation and amortization, operating lease cost relating to prepaid land use rights, accretion expenses for asset retirement costs and share-based compensation expenses allocated to cost of revenue. Adjusted GP was RMB1,451.5 million (US$199.7 million) in the second quarter of 2024, a 10.0% increase over the same period last year of RMB1,319.8 million, or a 16.2% increase over the same period last year of RMB1,249.1 million (excluding a previously disclosed one-time termination fee of RMB70.7 million). See “Non-GAAP Disclosure” and “Reconciliations of GAAP and non-GAAP results” elsewhere in this earnings release.

    Adjusted GP margin (non-GAAP) was 51.4% in the second quarter of 2024, compared with 53.4% in the same period last year or 52.0% in the same period last year (excluding a previously disclosed one-time termination fee). The normalized Y-o-Y decrease was mainly due to higher utility cost.

    Selling and marketing expenses, excluding share-based compensation expenses of RMB4.0 million (US$0.6 million), were RMB22.5 million (US$3.1 million) in the second quarter of 2024, a 1.9% decrease over the same period last year of RMB22.9 million (excluding share-based compensation of RMB9.3 million). The Y-o-Y decrease was mainly due to less marketing activities.

    General and administrative expenses, excluding share-based compensation expenses of RMB40.9 million (US$5.6 million), depreciation and amortization expenses of RMB99.6 million (US$13.7 million) and operating lease cost relating to prepaid land use rights of RMB16.6 million (US$2.3 million), were RMB127.6 million (US$17.6 million) in the second quarter of 2024, a 51.0% increase over the same period last year of RMB84.5 million, or a 19.8% increase over the same period last year (excluding a previously disclosed one-time cash reimbursement of RMB22.1 million) (excluding share-based compensation expenses of RMB30.7 million, depreciation and amortization expenses of RMB136.8 million and operating lease cost relating to prepaid land use rights of RMB17.5 million). The normalized Y-o-Y increase was mainly due to fast expansion of our international business.

    Research and development costs were RMB10.9 million (US$1.5 million) in the second quarter of 2024, compared with RMB5.0 million in the same period last year.

    Net interest expenses for the second quarter of 2024 were RMB505.2 million (US$69.5 million), a 7.6% increase over the same period last year of RMB469.5 million. The Y-o-Y increase was mainly due to a higher level of total borrowings.

    Foreign currency exchange gain for the second quarter of 2024 was RMB11.8 million (US$1.6 million), compared with a gain of RMB5.0 million in the same period last year.

    Others, net for the second quarter of 2024 was RMB5.9 million (US$0.8 million), compared with RMB20.2 million in the same period last year.

    Income tax expenses for the second quarter of 2024 were RMB59.9 million (US$8.2 million), compared with RMB25.3 million in the same period last year.

    Net loss in the second quarter of 2024 was RMB231.8 million (US$31.9 million), compared with a net loss of RMB225.3 million in the same period last year.

    Adjusted EBITDA (non-GAAP) is defined as net loss excluding net interest expenses, income tax expenses (benefits), depreciation and amortization, operating lease cost relating to prepaid land use rights, accretion expenses for asset retirement costs, share-based compensation expenses, gain from purchase price adjustment and impairment losses of long-lived assets. Adjusted EBITDA was RMB1,312.2 million (US$180.6 million) in the second quarter of 2024, a 6.2% increase over the same period last year of RMB1,235.1 million, or a 14.9% increase over the same period last year of RMB1,142.4 million (excluding a previously disclosed one-time termination fee of RMB70.7 million and cash reimbursement of RMB22.1 million in the same period last year).

    • Adjusted EBITDA for China3 was RMB1,233.2 million (US$169.7 million), a 4.3% increase over the same period last year of RMB1,182.1 million (excluding a previously disclosed one-time termination fee of RMB70.7 million and cash reimbursement of RMB22.1 million).
    • Adjusted EBITDA for International was RMB84.5 million (US$11.6 million), compared with negative RMB39.4 million in the same period last year.

    Adjusted EBITDA margin (non-GAAP) was 46.4% in the second quarter of 2024, compared with 50.0% in the same period last year or 47.6% in the same period last year (excluding previously disclosed one-time items). The normalized Y-o-Y decrease was mainly due to higher utility cost and higher level of corporate expenses for International business.

    Basic and diluted loss per ordinary share in the second quarter of 2024 was RMB0.16 (US$0.02), compared with RMB0.16 in the same period last year.

    Basic and diluted loss per American Depositary Share (“ADS”) in the second quarter of 2024 was RMB1.30 (US$0.18), compared with RMB1.31 in the same period last year.

    Liquidity:

    As of June 30, 2024, cash was RMB9,907.8 million (US$1,363.4 million).

    • Cash for GDSH was RMB8,395.9 million (US$1,155.3 million).
    • Cash for GDSI was RMB1,511.9 million (US$208.0 million).

    Total short-term debt was RMB5,597.5 million (US$770.2 million), comprised of short-term borrowings and the current portion of long-term borrowings of RMB5,016.9 million (US$690.4 million), the current portion of convertible bonds payable of RMB570 thousand (US$78 thousand) and the current portion of finance lease and other financing obligations of RMB580.0 million (US$79.8 million). Total long-term debt was RMB43,068.7 million (US$5,926.4 million), comprised of long-term borrowings (excluding current portion) of RMB26,720.2 million (US$3,676.8 million), the non-current portion of convertible bonds payable of RMB8,494.8 million (US$1,168.9 million) and the non-current portion of finance lease and other financing obligations of RMB7,853.7 million (US$1,080.7 million).

    • Total gross debt for GDSH, comprised of short-term and long-term borrowings, convertible bonds payable and finance lease and other financing obligations, was RMB43,815.0 million (US$6,029.1 million).
    • Total gross debt for GDSI, comprised of short-term and long-term borrowings, was RMB4,851.2 million (US$667.5 million).

    During the second quarter of 2024, the Company obtained new debt financing and refinancing facilities of RMB2,211.6 million (US$304.3 million), including RMB100.0 million (US$13.8 million) for GDSH and RMB2,111.6 million (US$290.6 million) for GDSI. Furthermore, GDSI raised gross cash proceeds of US$672.0 million from the issue of new Series A Convertible Preferred Shares, out of which US$448.0 million was received during the second quarter of 2024 and the balance of US$224.0 million was received during the third quarter of 2024.

    Second Quarter 2024 Operating Results

    China

    Sales

    Total area committed and pre-committed at the end of the second quarter of 2024 was 614,094 sqm, compared with 593,068 sqm at the end of the second quarter of 2023 and 608,645 sqm at the end of the first quarter of 2024, an increase of 3.5% Y-o-Y and 0.9% quarter-over-quarter (“Q-o-Q”), respectively. In the second quarter of 2024, gross additional total area committed was 9,678 sqm, mainly contributed by data centers in Shanghai, Beijing and Langfang. Net additional total area committed was 5,449 sqm.

    Data Center Resources

    Area in service at the end of the second quarter of 2024 was 580,165 sqm, compared with 528,105 sqm at the end of the second quarter of 2023 and 549,352 sqm at the end of the first quarter of 2024, an increase of 9.9% Y-o-Y and 5.6% Q-o-Q. In the second quarter of 2024, net additional area in service for China was 30,813 sqm, mainly from data centers in Langfang.

    Area under construction at the end of the second quarter of 2024 was 117,861 sqm, compared with 146,741 sqm at the end of the second quarter of 2023 and 141,576 sqm at the end of the first quarter of 2024, a decrease of 19.7% Y-o-Y and 16.8% Q-o-Q, respectively. During the second quarter of 2024, we initiated the construction of a new data center in Langfang, LF18 Phase 1, with net floor area of 3,990 sqm and 100% pre-committed.

    Commitment rate for area in service was 92.3% at the end of the second quarter of 2024, compared with 92.3% at the end of the second quarter of 2023 and 92.1% at the end of the first quarter of 2024. Pre-commitment rate for area under construction was 66.9% at the end of the second quarter of 2024, compared with 71.9% at the end of the second quarter of 2023 and 72.6% at the end of the first quarter of 2024.

    Move-In

    Area utilized at the end of the second quarter of 2024 was 419,976 sqm, compared with 380,978 sqm at the end of the second quarter of 2023 and 403,609 sqm at the end of the first quarter of 2024, an increase of 10.2% Y-o-Y and 4.1% Q-o-Q. In the second quarter of 2024, gross additional area utilized was 20,027 sqm, mainly contributed by data centers in Langfang. Net additional area utilized was 16,366 sqm.

    Utilization rate for area in service was 72.4% at the end of the second quarter of 2024, compared with 72.1% at the end of the second quarter of 2023 and 73.5% at the end of the first quarter of 2024.

    International

    Sales

    Total area committed and pre-committed at the end of the second quarter of 2024 was 142,898 sqm, compared with 44,593 sqm at the end of the second quarter of 2023 and 59,367 sqm at the end of the first quarter of 2024, an increase of 220.5% Y-o-Y and 140.7% Q-o-Q. In the second quarter of 2024, net additional total area committed was 83,531 sqm, mainly contributed from our NTP and KTP campuses in Johor, Malaysia.

    Data Center Resources

    Area in service at the end of the second quarter of 2024 was 50,798 sqm, compared with 3,112 sqm at the end of the second quarter of 2023 and 33,877 sqm at the end of the first quarter of 2024, an increase of 1,532.5% Y-o-Y and 49.9% Q-o-Q. In the second quarter of 2024, net additional area in service was 16,921 sqm, mainly from NTP4 and NTP5 data centers.

    Area under construction at the end of the second quarter of 2024 was 108,411 sqm, compared with 49,962 sqm at the end of the second quarter of 2023 and 30,961 sqm at the end of the first quarter of 2024, an increase of 117.0% Y-o-Y and 250.2% Q-o-Q. During the second quarter of 2024, we initiated the construction of two new data centers at our NTP campus, NTP6 and NTP7, and four new data centers at our KTP campus, KTP1, KTP2, KTP4 and KTP5, with an overall pre-commitment rate of 96.4% across these six data centers.

    Commitment rate for area in service was 95.2% at the end of the second quarter of 2024, compared with 100% at the end of the second quarter of 2023 and 100% at the end of the first quarter of 2024. Pre-commitment rate for area under construction was 87.2% at the end of the second quarter of 2024, compared with 83.0% at the end of the second quarter of 2023 and 82.3% at the end of the first quarter of 2024.

    Move-In

    Area utilized at the end of the second quarter of 2024 was 42,698 sqm, compared with 1,817 sqm at the end of the second quarter of 2023 and 33,265 sqm at the end of the first quarter of 2024, an increase of 2,249.4% Y-o-Y and 28.4% Q-o-Q. In the second quarter of 2024, net additional area utilized was 9,432 sqm, mainly contributed by NTP4 data center.

    Utilization rate for area in service was 84.1% at the end of the second quarter of 2024, compared with 58.4% at the end of the second quarter of 2023 and 98.2% at the end of the first quarter of 2024.

    Business Outlook

    The Company confirms that the previously provided guidance of total revenues for the year of 2024 of RMB11,340 – RMB11,760 million, Adjusted EBITDA of RMB4,950 – RMB5,150 million and capex of around RMB6,500 million remain unchanged.

    This forecast reflects the Company’s preliminary view on the current business situation and market conditions, which are subject to change.

    Conference Call

    Management will hold a conference call at 8:00 a.m. U.S. Eastern Time on August 21, 2024 (8:00 p.m. Beijing Time on August 21, 2024) to discuss financial results and answer questions from investors and analysts.

    Participants should complete online registration using the link provided below at least 15 minutes before the scheduled start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, a personal PIN and an e-mail with detailed instructions to join the conference call.

    Participant Online Registration:
    https://register.vevent.com/register/BIb44615ecd2044a83b68167305fb82909

    A live and archived webcast of the conference call will be available on the Company's investor relations website at investors.gds-services.com.

    Non-GAAP Disclosure

    Our management and board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted GP and Adjusted GP margin, which are non-GAAP financial measures, to evaluate our operating performance, establish budgets and develop operational goals for managing our business. We believe that the exclusion of the income and expenses eliminated in calculating Adjusted EBITDA and Adjusted GP can provide useful and supplemental measures of our core operating performance. In particular, we believe that the use of Adjusted EBITDA as a supplemental performance measure captures the trend in our operating performance by excluding from our operating results the impact of our capital structure (primarily interest expense), asset base charges (primarily depreciation and amortization, operating lease cost relating to prepaid land use rights, accretion expenses for asset retirement costs and impairment losses of long-lived assets), other non-cash expenses (primarily share-based compensation expenses), and other income and expenses which we believe are not reflective of our operating performance, whereas the use of adjusted gross profit as a supplemental performance measure captures the trend in gross profit performance of our data centers in service by excluding from our gross profit the impact of asset base charges (primarily depreciation and amortization, operating lease cost relating to prepaid land use rights and accretion expenses for asset retirement costs) and other non-cash expenses (primarily share-based compensation expenses) included in cost of revenue.

    We note that depreciation and amortization is a fixed cost which commences as soon as each data center enters service. However, it usually takes several years for new data centers to reach high levels of utilization and profitability. The Company incurs significant depreciation and amortization costs for its early stage data center assets. Accordingly, gross profit, which is a measure of profitability after taking into account depreciation and amortization, does not accurately reflect the Company’s core operating performance.

    We also present these non-GAAP measures because we believe these non-GAAP measures are frequently used by securities analysts, investors and other interested parties as measures of the financial performance of companies in our industry.

    These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, cash flows or our liquidity, investors should not consider them in isolation, or as a substitute for gross profit, net income (loss), cash flows provided by (used in) operating activities or other consolidated statements of operations and cash flow data prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures instead of their nearest GAAP equivalent. First, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted GP, and Adjusted GP margin are not substitutes for gross profit, net income (loss), cash flows provided by (used in) operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP. Second, other companies may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of these non-GAAP financial measures as tools for comparison. Finally, these non-GAAP financial measures do not reflect the impact of net interest expenses, incomes tax benefits (expenses), depreciation and amortization, operating lease cost relating to prepaid land use rights, accretion expenses for asset retirement costs, share-based compensation expenses, gain from purchase price adjustment and impairment losses of long-lived assets, each of which have been and may continue to be incurred in our business.

    We mitigate these limitations by reconciling the non-GAAP financial measure to the most comparable U.S. GAAP performance measure, all of which should be considered when evaluating our performance. We do not provide forward-looking guidance for certain financial data, such as depreciation, amortization, accretion, share-based compensation and net income (loss); the impact of such data and related adjustments can be significant. As a result, we are not able to provide a reconciliation of forward-looking U.S. GAAP to forward-looking non-GAAP financial measures without unreasonable effort. Such forward-looking non-GAAP financial measures include the forecast for Adjusted EBITDA in the section captioned “Business Outlook” set forth in this press release.

    For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this press release.

    Exchange Rate

    This announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB7.2672 to US$1.00, the noon buying rate in effect on June 28, 2024 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all.

    Statement Regarding Preliminary Unaudited Financial Information

    The unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited financial information.

    About GDS Holdings Limited

    GDS Holdings Limited (NASDAQ: GDS; HKEX: 9698) is a leading developer and operator of high-performance data centers in China and South East Asia. The Company’s facilities are strategically located in primary economic hubs where demand for high-performance data center services is concentrated. The Company also builds, operates and transfers data centers at other locations selected by its customers in order to fulfill their broader requirements. The Company’s data centers have large net floor area, high power capacity, density and efficiency, and multiple redundancies across all critical systems. GDS is carrier and cloud-neutral, which enables its customers to access the major telecommunications networks, as well as the largest PRC and global public clouds, which are hosted in many of its facilities. The Company offers co-location and a suite of value-added services, including managed hybrid cloud services through direct private connection to leading public clouds, managed network services, and, where required, the resale of public cloud services. The Company has a 23-year track record of service delivery, successfully fulfilling the requirements of some of the largest and most demanding customers for outsourced data center services in China. The Company’s customer base consists predominantly of hyperscale cloud service providers, large internet companies, financial institutions, telecommunications carriers, IT service providers, and large domestic private sector and multinational corporations.

    Safe Harbor Statement

    This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “believe,” “continue,” “estimate,” “expect,” “future,” “guidance,” “intend,” “is/are likely to,” “may,” “ongoing,” “plan,” “potential,” “target,” “will,” and similar statements. Among other things, statements that are not historical facts, including statements about GDS Holdings’ beliefs and expectations regarding the growth of its businesses and its revenue for the full fiscal year, the business outlook and quotations from management in this announcement, as well as GDS Holdings’ strategic and operational plans, are or contain forward-looking statements. GDS Holdings may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) on Forms 20-F and 6-K, in its current, interim and annual reports to shareholders, in announcements, circulars or other publications made on the website of the Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause GDS Holdings’ actual results or financial performance to differ materially from those contained in any forward-looking statement, including but not limited to the following: GDS Holdings’ goals and strategies; GDS Holdings’ future business development, financial condition and results of operations; the expected growth of the market for high-performance data centers, data center solutions and related services in China and South East Asia; GDS Holdings’ expectations regarding demand for and market acceptance of its high-performance data centers, data center solutions and related services; GDS Holdings’ expectations regarding building, strengthening and maintaining its relationships with new and existing customers; the continued adoption of cloud computing and cloud service providers in China and South East Asia; risks and uncertainties associated with increased investments in GDS Holdings’ business and new data center initiatives; risks and uncertainties associated with strategic acquisitions and investments; GDS Holdings’ ability to maintain or grow its revenue or business; fluctuations in GDS Holdings’ operating results; changes in laws, regulations and regulatory environment that affect GDS Holdings’ business operations; competition in GDS Holdings’ industry in China and South East Asia; security breaches; power outages; and fluctuations in general economic and business conditions in China, South East Asia and globally, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks, uncertainties or factors is included in GDS Holdings’ filings with the SEC, including its annual report on Form 20-F, and with the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release and are based on assumptions that GDS Holdings believes to be reasonable as of such date, and GDS Holdings does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

    For investor and media inquiries, please contact:

    GDS Holdings Limited
    Laura Chen
    Phone: +86 (21) 2029-2203
    Email: ir@gds-services.com

    Piacente Financial Communications
    Ross Warner
    Phone: +86 (10) 6508-0677
    Email: GDS@tpg-ir.com

    Brandi Piacente
    Phone: +1 (212) 481-2050
    Email: GDS@tpg-ir.com

    GDS Holdings Limited

    ________________

    1 For the purpose of this earnings release, “China” or “GDSH” refers to GDS’s assets and operations in Mainland China, including third party data centers in Hong Kong and Macau. Includes the inter-company charges.

    2 For the purpose of this earnings release, “International” or “GDSI” refers to GDS’s assets and operations outside Mainland China, excluding third party data centers in Hong Kong and Macau.

    3 Includes the inter-company charges.


    GDS HOLDINGS LIMITED
    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
     
      As of
    December 31,
    2023    		As of June 30, 2024
      RMBRMBUS$
         
     Assets   
    Current assets   
     Cash7,710,711 9,907,823 1,363,362 
     Accounts receivable, net of allowance for credit losses2,545,913 3,393,766 466,998 
     Value-added-tax (“VAT”) recoverable214,385 201,597 27,741 
     Prepaid expenses and other current assets512,644 803,265 110,533 
     Total current assets10,983,653  14,306,451  1,968,634  
         
    Non-current assets   
     Property and equipment, net47,499,494 48,937,933 6,734,084 
     Prepaid land use rights, net22,388 22,081 3,038 
     Operating lease right-of-use assets5,436,288 5,394,689 742,334 
     Goodwill and intangible assets, net7,765,055 7,660,434 1,054,110 
     Other non-current assets2,739,812 2,843,825 391,323 
     Total non-current assets63,463,037  64,858,962  8,924,889  
     Total assets74,446,690  79,165,413  10,893,523  
         
     Liabilities, Mezzanine Equity and Equity   
    Current liabilities   
     Short-term borrowings and current portion of long-term borrowings2,833,953 5,016,916 690,351 
     Convertible bonds payable, current0 570 78 
     Accounts payable3,424,937 3,089,299 425,102 
     Accrued expenses and other payables1,318,336 1,407,850 193,726 
     Operating lease liabilities, current180,403 183,785 25,290 
     Finance lease and other financing obligations, current547,847 579,972 79,807 
     Total current liabilities8,305,476  10,278,392  1,414,354  
         
    Non-current liabilities   
     Long-term borrowings, excluding current portion26,706,256 26,720,162 3,676,817 
     Convertible bonds payable, non-current8,434,766 8,494,835 1,168,928 
     Operating lease liabilities, non-current1,395,981 1,343,766 184,908 
     Finance lease and other financing obligations, non-current7,894,185 7,853,677 1,080,702 
     Other long-term liabilities1,586,223 1,599,439 220,090 
     Total non-current liabilities46,017,411  46,011,879  6,331,445  
     Total liabilities54,322,887  56,290,271  7,745,799  
         
    Mezzanine equity   
     Redeemable preferred shares1,064,766 1,071,247 147,408 
     Redeemable non-controlling interests0 3,109,219 427,843 
     Total mezzanine equity1,064,766  4,180,466  575,251  
         
    GDS Holdings Limited shareholders' equity   
     Ordinary shares516 527 73 
     Additional paid-in capital29,337,095 29,465,653 4,054,609 
     Accumulated other comprehensive loss(974,393)(1,048,755)(144,313)
     Accumulated deficit(9,469,758)(10,041,326)(1,381,732)
     Total GDS Holdings Limited shareholders' equity18,893,460  18,376,099  2,528,637  
    Non-controlling interests165,577 318,577 43,836 
     Total equity19,059,037  18,694,676  2,572,473  
         
     Total liabilities, mezzanine equity and equity74,446,690  79,165,413  10,893,523  
            


     GDS HOLDINGS LIMITED
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")
    except for number of shares and per share data)
      
      Three months ended Six months ended
      June 30, 2023March 31, 2024June 30, 2024 June 30, 2023June 30, 2024
      RMBRMBRMBUS$ RMBRMBUS$
              
    Net revenue        
    Service revenue2,472,020 2,627,367 2,826,369 388,921  4,880,469 5,453,736 750,459 
    Equipment sales0 0 0 0  509 0 0 
    Total net revenue2,472,020  2,627,367  2,826,369  388,921   4,880,978  5,453,736  750,459  
    Cost of revenue(1,921,023)(2,053,693)(2,188,544)(301,154) (3,838,294)(4,242,237)(583,751)
    Gross profit550,997  573,674  637,825  87,767   1,042,684  1,211,499  166,708  
              
    Operating expenses        
     Selling and marketing expenses(32,193)(33,628)(26,516)(3,649) (70,034)(60,144)(8,276)
     General and administrative expenses(269,527)(310,835)(284,787)(39,188) (559,023)(595,622)(81,960)
     Research and development expenses(5,045)(9,980)(10,889)(1,498) (14,830)(20,869)(2,872)
    Income from operations244,232  219,231  315,633  43,432   398,797  534,864  73,600  
    Other income (expenses):        
     Net interest expenses(469,472)(503,476)(505,231)(69,522) (953,899)(1,008,707)(138,803)
     Foreign currency exchange gain (loss), net4,953 (4,527)11,829 1,628  (2,022)7,302 1,005 
     Others, net20,243 6,234 5,876 809  46,036 12,110 1,666 
    Loss before income taxes(200,044)(282,538)(171,893)(23,653) (511,088)(454,431)(62,532)
    Income tax expenses(25,262)(62,393)(59,875)(8,239) (188,830)(122,268)(16,825)
    Net loss(225,306)(344,931)(231,768)(31,892) (699,918)(576,699)(79,357)
    Net income attributable to non-controlling interests(1,270)(896)(3,438)(473) (3,000)(4,334)(596)
    Net loss attributable to redeemable non-controlling interests0 0 9,465 1,302  0 9,465 1,302 
    Net loss attributable to GDS Holdings Limited shareholders(226,576)(345,827)(225,741)(31,063) (702,918)(571,568)(78,651)
    Cumulative dividend on redeemable preferred shares(13,306)(13,458)(13,477)(1,854) (26,201)(26,935)(3,706)
    Net loss available to GDS Holdings Limited ordinary shareholders(239,882)(359,285)(239,218)(32,917) (729,119)(598,503)(82,357)
              
    Loss per ordinary share        
    Basic and diluted(0.16)(0.24)(0.16)(0.02) (0.50)(0.41)(0.06)
              
    Weighted average number of ordinary share outstanding        
    Basic and diluted1,467,200,367 1,469,982,015 1,470,013,200 1,470,013,200  1,467,200,367 1,469,997,608 1,469,997,608 
                    



    GDS HOLDINGS LIMITED
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
     
     Three months ended Six months ended
     June 30, 2023March 31, 2024June 30, 2024 June 30, 2023June 30, 2024
     RMBRMBRMBUS$ RMBRMBUS$
             
    Net loss(225,306)(344,931)(231,768)(31,892) (699,918)(576,699)(79,357)
    Foreign currency translation adjustments, net of nil tax(310,992)(56,025)(16,334)(2,248) (263,053)(72,359)(9,957)
    Comprehensive loss(536,298)(400,956)(248,102)(34,140) (962,971)(649,058)(89,314)
    Comprehensive income attributable to non-controlling interests(2,396)(97)(2,323)(320) (3,891)(2,420)(333)
    Comprehensive loss attributable to redeemable non-controlling interests0 0 5,548 763  0 5,548 763 
    Comprehensive loss attributable to GDS Holdings Limited shareholders(538,694)(401,053)(244,877)(33,697) (966,862)(645,930)(88,884)
                    


    GDS HOLDINGS LIMITED
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
     
     Three months ended Six months ended
     June 30, 2023March 31, 2024June 30, 2024 June 30, 2023June 30, 2024
     RMBRMBRMBUS$ RMBRMBUS$
             
    Net loss(225,306)(344,931)(231,768)(31,892) (699,918)(576,699)(79,357)
    Depreciation and amortization874,109 856,739 874,168 120,290  1,717,468 1,730,907 238,181 
    Amortization of debt issuance cost and debt discount45,226 38,562 31,364 4,316  89,918 69,926 9,622 
    Share-based compensation expense63,029 76,646 75,682 10,414  147,894 152,328 20,961 
    Others5,073 12,227 (34,653)(4,768) 4,432 (22,426)(3,086)
    Changes in operating assets and liabilities(27,530)(764,215)(260,556)(35,855) (654,373)(1,024,771)(141,013)
    Net cash provided by (used in) operating activities734,601  (124,972)454,237  62,505   605,421  329,265  45,308  
             
    Purchase of property and equipment and land use rights(1,415,175)(1,595,107)(1,960,947)(269,836) (3,457,278)(3,556,054)(489,330)
    Receipts (payments) related to acquisitions and investments8,807 0 (70,791)(9,741) (142,448)(70,791)(9,741)
    Net cash used in investing activities(1,406,368)(1,595,107)(2,031,738)(279,577) (3,599,726)(3,626,845)(499,071)
             
    Net proceeds from financing activities(1,551,157)1,621,969 3,833,394 527,491  2,323,258 5,455,363 750,682 
    Net cash (used in) provided by financing activities(1,551,157)1,621,969  3,833,394  527,491   2,323,258  5,455,363  750,682  
    Effect of exchange rate changes on cash and restricted cash134,877 (9,909)30,883 4,252  159,819 20,974 2,888 
             
    Net (decrease) increase of cash and restricted cash(2,088,047)(108,019)2,286,776 314,671  (511,228)2,178,757 299,807 
    Cash and restricted cash at beginning of period10,456,645 7,917,932 7,809,913 1,074,680  8,882,066 7,917,932 1,089,544 
    Reclassification as assets of disposal group classified as held for sale1,966 0 0 0  (274)0 0 
    Cash and restricted cash at end of period8,370,564  7,809,913  10,096,689  1,389,351   8,370,564  10,096,689  1,389,351  


    GDS HOLDINGS LIMITED
    RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")
    except for percentage data)
     
      Three months ended Six months ended
      June 30, 2023March 31, 2024June 30, 2024 June 30, 2023June 30, 2024
      RMBRMBRMBUS$ RMBRMBUS$
              
    Gross profit550,997  573,674  637,825  87,767   1,042,684  1,211,499  166,708  
    Depreciation and amortization735,993 755,960 773,302 106,411  1,466,901 1,529,262 210,434 
    Operating lease cost relating to prepaid land use rights9,387 10,634 10,706 1,473  17,743 21,340 2,936 
    Accretion expenses for asset retirement costs1,731 1,488 1,690 233  3,457 3,178 437 
    Share-based compensation expenses21,697 26,324 27,934 3,844  48,396 54,258 7,466 
    Adjusted GP1,319,805  1,368,080  1,451,457  199,728   2,579,181  2,819,537  387,981  
    Adjusted GP margin53.4%52.1%51.4%51.4% 52.8%51.7%51.7%
                    


    GDS HOLDINGS LIMITED
    RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")
    except for percentage data)
     
      Three months ended Six months ended
      June 30, 2023March 31, 2024June 30, 2024 June 30, 2023June 30, 2024
      RMBRMBRMBUS$ RMBRMBUS$
              
    Net loss(225,306)(344,931)(231,768)(31,892) (699,918)(576,699)(79,357)
    Net interest expenses469,472 503,476 505,231 69,522  953,899 1,008,707 138,803 
    Income tax expenses25,262 62,393 59,875 8,239  188,830 122,268 16,825 
    Depreciation and amortization874,109 856,739 874,168 120,290  1,717,468 1,730,907 238,181 
    Operating lease cost relating to prepaid land use rights26,845 27,603 27,316 3,759  53,549 54,919 7,557 
    Accretion expenses for asset retirement costs1,731 1,488 1,690 233  3,457 3,178 437 
    Share-based compensation expenses63,029 76,646 75,682 10,414  147,894 152,328 20,961 
    Adjusted EBITDA1,235,142  1,183,414  1,312,194  180,565   2,365,179  2,495,608  343,407  
    Adjusted EBITDA margin50.0%45.0%46.4%46.4% 48.5%45.8%45.8%
                    


    GDS HOLDINGS LIMITED
    SELECTED SEGMENT INFORMATION
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
     
      Three months ended June 30, 2023 Three months ended March 31, 2024 Three months ended June 30, 2024
      GDSHGDSIEliminationTotal GDSHGDSIEliminationTotal GDSHGDSIEliminationTotal
      RMBRMBRMBRMB RMBRMBRMBRMB RMBRMBRMBRMBUS$
                     

    Net revenue    		2,439,682  32,338  0  2,472,020   2,426,138  206,004  (4,775)2,627,367   2,579,594  255,533  (8,758)2,826,369  388,921  
                     

    Net loss    		(125,709)(99,330)(267)(225,306) (272,512)(69,455)(2,964)(344,931) (172,845)(55,666)(3,257)(231,768)(31,892)
    Net interest expenses443,638 25,834 0 469,472  462,508 42,114 (1,146)503,476  450,271 57,043 (2,083)505,231 69,522 
    Income tax expenses25,257 5 0 25,262  62,392 1 0 62,393  59,864 11 0 59,875 8,239 
    Depreciation and amortization840,498 33,611 0 874,109  782,672 74,067 0 856,739  790,901 83,430 (163)874,168 120,290 
    Operating lease cost relating to prepaid land use rights26,443 402 0 26,845  27,312 291 0 27,603  27,603 (287)0 27,316 3,759 
    Accretion expenses for asset retirement costs1,680 51 0 1,731  1,698 (210)0 1,488  1,690 0 0 1,690 233 
    Share-based compensation expenses63,029 0 0 63,029  76,646 0 0 76,646  75,682 0 0 75,682 10,414 

    Adjusted EBITDA    		1,274,836  (39,427)(267)1,235,142   1,140,716  46,808  (4,110)1,183,414   1,233,166  84,531  (5,503)1,312,194  180,565  
                     

    Net cash provided by (used in) operating activities    		829,293  (94,692)0  734,601   (96,262)(28,710)0  (124,972) 599,443  (106,926)(38,280)454,237  62,505  
                     

    Net cash (used in) provided by investing activities    		(982,604)(641,401)217,637  (1,406,368) (1,302,818)(701,564)409,275  (1,595,107) 654,451  (1,146,380)(1,539,809)(2,031,738)(279,577)
    - Purchase of property and equipment and land use rights(773,774)(641,401)0 (1,415,175) (943,032)(652,075)0 (1,595,107) (852,847)(1,146,380)38,280 (1,960,947)(269,836)
    - Receipts (payments) related to acquisitions and investments8,807 0 0 8,807  49,489 (49,489)0 0  (70,791)0 0 (70,791)(9,741)
                                  
    - GDSH investment in GDSI(217,637)0 217,637 0  (409,275)0 409,275 0  1,578,089 0 (1,578,089)0 0 
                     
     Net cash (used in) provided by financing activities(1,927,646)594,126  (217,637)(1,551,157) 1,298,276  732,968  (409,275)1,621,969   (119,209)2,374,514  1,578,089  3,833,394  527,491  
                                  


    GDS HOLDINGS LIMITED
    SELECTED SEGMENT INFORMATION CONT’D
    (Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
     
     As of December 31, 2023As of June 30, 2024
     RMBRMBUS$
        
    Property and equipment, net   
    GDSH40,098,416 40,087,960 5,516,287 
    GDSI7,408,567 8,863,680 1,219,683 
    Elimination(7,489)(13,707)(1,886)
    Total47,499,494 48,937,933 6,734,084 
        
    Gross debt (Note)   
    GDSH42,547,203 43,814,967 6,029,140 
    GDSI5,170,653 4,851,165 667,543 
    Elimination(1,300,849)0 0 
    Total46,417,007 48,666,132 6,696,683 
        
    Cash   
    GDSH7,301,976 8,395,908 1,155,315 
    GDSI408,735 1,511,915 208,047 
    Total7,710,711 9,907,823 1,363,362 

    Note: Gross debt comprised of short-term and long-term borrowings, convertible bonds payable and finance lease and other financing obligations. For GDSI, for December 31, 2023, gross debt also includes the amounts due to GDSH.


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