GDS - Earnings call transcript Q1 2022

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Operator

Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After managements prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. turn over to Ms. your like now the to call host, I'd Chen, for Relations of company. Laura Investor the Head Please go ahead, Laura.

Laura Chen

William and company's GDS investorsgdsservices.com. Thank the Huang, financial you. overview and CFO, Founder, call our answer Mr. we Leading CEO, today's Khoo, Limited. are of will at business presentation, review A earlier this performance; conference will First to and Mr. who IR issued is viewed website Ms. The to Jamie Holdings and which questions. GDS Quarter XXXX posted our call and can the will results; Newswire Hello, then Earnings GDS downloaded Chairman Conference is today everyone. Services our provide COO, results of available were Welcome refer operating Dan from summary during an via online. Newman, strategy Call be to also

that made Private Harbor will continue, discussion contain please we Litigation Reform statements Securities of note provisions Act of forward-looking Before XXXX. Safe today's the the under US

Forward-looking inherent risks involve uncertainties. and statements

the to unaudited Chairman as comparable to will this William. GAAP go measures Founder, As from be forward-looking of press the and note to statements, as is measures. information perspective The under most unaudited reconciliation law. SEC. includes GDS release in non-GAAP of company's required call turn may with unaudited applicable ahead, the today. directly any financial company these GDS CEO, filed expressed Please the other that, release and US materially as results any uncertainties included the information different press not financial does a risks over now assume company's I contains the GDS and conference update discussions Further call, such, and Please unaudited regarding William. well views GAAP obligation except as earnings measures. non-GAAP

William Huang

call. you. is joining us Hello, today's for William. This you on Thank everyone. Thank

with deal recurring We to business including recent is of a adjusted contracts first defensive. environment. results by challenges, the the China. by Despite revenue and XX% in underpinned XX% We pleased solid are with the difficult set a quarter. COVID generate unprecedented year-on-year. long-term customers. to We lockdown by revenues, high Everyone having EBITDA and operating report grew quality GDS for resilient in challenges, I'm is

XX,XXX the continued business deal We by funding to a with position the of strengthened a of strategic must additional the completed and US$XXX our million from win to We near-term, million new customer we meters of with commitments. further net square bond US$XXX financing. challenges In raising to issued investors, project ability. convertible our best

already scarce is accelerating in our locked which customer greater opportunities same for as the the strengthening will have and our market It secured, a we at the time. resource proven customer longer-term future. franchise, relationships will regional pipeline, on further our With consolidating enormous potential, position remain in expansion. the strategic the However, our and through record, focused developing to and materialize medium-term of a resource matter we adding just track growth time, arise

happened the Starting areas late because the COVID to lockdowns X. slide the many mass turning city So of from outbreak. China in February of

situations. of of through out today. XX centers gone We service down data And data locked centers a which XX still have XX have in are lockdown total over

XXX never healthy. continuous to including inside needed in centers We were keep our customers. from XXX safe around people to lockdowns isolated while our keeping our GDS XXX employees these We failed and deliver. and inside the During data centers operation, people data

care data All every We recognized customers. our highly of. data is appreciated effort of as inside It running people are our employees. appreciated and centers from the usual our are also All by interruption. center taken really without

Turning to X. slide

the XX%. Chinese we to On additional rate still square of the year of utilized of also top the quarter rate. this area lockdowns of first XXX,XXX The New the always utilization meters over impacted for Nonetheless, increased our season Year. because achieved And is net slower move-in a quarter.

slide a X, in maintained high we on for always under our area and rate X shown commitment area construction. have service As and

have totaling square XX% area We to meters, equivalent with It of which backlog is a our future very large growth. utilized. visibility us provided XXX,XXX high

solid. is backlog Our

Tier scarce. increasingly supply Our data X is centers are concentrated in where market

Our customers resource. need this

will backlog. continue the to deliver We

it a is matter just I time. said, of As

Turning to X. slide

the into is this we XX% new delivery commitment. service year an XXXX, slower one quarter We down by backed meters data the construction. of anchor have X,XXX initiated scaled center with under Phase SHXX and capacity In environment. current to customer our of capacity align brought first which square X

to the slide and XX. X Turning

for slower and hyperscale a customers, new the came In orders; one customers large two still square financial customers, remaining is came requirements. substantial with we out are three booked from new there delivery other XX,XXX the While of some XXXX, XQ there commitments meters institution existing the internet cloud new customer. and including from

XX, slide highlighted chain financial continuing accounted book the of around enterprises institution XX% last to Turning in quarter which for new the XQ. large we and

year Hong confident meters XX,XXX Asia around than add. are contributions large in square see and target We still be thought net pipeline, of achieving Kong could sales our From we from before. what there the full of we Southeast

with been months our along to past Jamie. in slide I Singapore have for few Turning XX, COO, the

Currently, substantial plan. for pursue We the and constructions. a a market of our has in know globally We have on to was home it market to Singapore from regionalization is According Singapore the moratorium Cushman & data latent center governments there growing. much fastest X one our data customers how progress center elected is made Top Singapore. Wakefield, demand

numbers it to that allow go clearly will indicate demand may have some excess development, soon While new the elsewhere.

establish constraints are are flow of We To legal one between first Singapore. significant proximity our understanding, data center the cross-border close and to there projects data to movers the no hyperscale Malaysia, on of green Singapore, in Indonesia.

have regional as are serve established the north hub both both to south Indonesia to market. Singapore of projects the to and Malaysia well-placed in Johor, to therefore the only are Furthermore, and of Batam, we player domestic sites Our Singapore. the

across now Nusajaya this a projects site, XXX Green with visionary Park be Johor, on-site by of co-develop under megawatt an generation. at phase partnership signed is Data Center of individual complement to Johor capacity from first a our of powered Tech YTL will at recently XXX YTL This Park, we facility center design kilometers approximately Power To megawatt XX a construction. The Singapore. data solar

Digital have data Hong have megawatt capacity. phase digitalization Cushman internet the months. megawatts to high-quality project considering We continued are couple a and Hong in an center data is existing next network we the Nongsa us Park, next five difficult and and construction how new According to the in West the will in of Asia, Kong. our connectivity center In project all is meet start we signed supply launching to XXX this first of first area. concentrated we This ever purchase of give of of XX Across land solve Kong visibility requirements. which HKX, of the data extraordinary over the major Batam and HKX, is Southeast excellent the HKX. globally, completed now all the lease cloud services. Hong Macau, Top years, for the offers and favorite build-to-suit estate in availability Together it center In HKX Kong our projects a achievement capacity & carrier-neutral market for over with Wakefield, will Kowloon XX first the real for quarter Macau,

Our presence. customers strategic are very excited about this unique

a Leveraging this orders announce several significant value the anchor expect China, year. through period short we Mainland in additional franchise of that time, shareholders over We within will the for believe course our of expansion. of our to strength regional create we

operating Thank hand you. financial and for the over Now, review. I Dan will the to

Dan Newman

service underlying William. In you, the profit by gross revenue by of on Starting strip on out sales and from X.X% grew contribution adjusted where the 'XX, equipment we XQ grew by X.X%, quarter. underlying grew EBITDA Thank changes. quarter slide adjusted effects X.X% FX XX, and our

XX.X% to adjusted the XX.X% underlying previous compared was EBITDA Our quarter. margin in

backlog driven meters lockdowns Net square slide to in was projects revenue square 'XX one in unaffected XX,XXX markets and areas. X,XXX is additional remote Around X,XXX Turning Tier of meters. XQ square utilized by acquisitions. in Service of area closing was BOT the meters growth mainly during delivery and committed by affected XX. was

quarter, meter was and we square similar revenue level per the meter, the town previous RMBX,XXX mainly of from edge expect second at a net During of BOT month, per move-in service Monthly down additional is projects. quarter. per due utilized. compared dilution square to area to It X.X% by

For FY XXXX, still terms percentage to year digits on mid-single in decline expect MSR year. by we

Turning to XX. slide

'XX underlying quarter. adjusted compared was gross XX.X% for XX.X% profit to previous the in XQ Our margin

we than ceiling costs XXXX prior couple quarter. kilowatt more XX% experienced to have and a we unit hour basis, result a ago. the power coal As On in prices tariffs compared we China, current raising XX% on in to the thermal per a the of in increase level. were tariffs power stabilized around now of as appear XQ power a of Thermal higher at around are quarters paying

estimate for on tariffs point power X around elevated profit we this our impact indicated As we year. previous that a have to margin calls, percentage will on X.X

thermal expect time, tariffs over However, power normalize. to we

to Turning Slide XX.

RMBX.X consideration. CapEx Our organic consisting of RMBX.X acquisition billion, for was billion RMBX.X XQ for for CapEx XXXX and billion

payable in around RMBX.X deferred which acquisitions, for respect we liability had first balance by the end XQ consideration of of at our As the XXXX, end of had contingent a sheet, quarter. on the of closed and billion

which further We our interest not few closed of in in XQ the XXXX amounts out cost million April. XX, RMBXXX buying we partner acquisition These of for Shenzhen do and during projects. include the have a announced a of

balance XXXX, cash Looking end to billion ratio position X.X times. XX. last and had annualized adjusted the EBITDA on XQ US$X.X or At our RMBXX.X on quarter Slide at we financing billion our debt of our of of net sheet,

of compared the interest in for X.X% the with full XXXX quarter was Our X.X% effective for year rate X.X% XXXX. or XQ previous

convertible we XXXX, notes and senior million US$XXX a of a successfully issue through tenor. coupon with X.XX% XQ raised seven-year During the

capital US$XXX we RMBX.X as debt XXXX, by During short-term around million. or XQ working is loans, shown which here reduce will billion

XX. Slide Turning to

we As of the under this, XXX,XXX by had total committed service XXX,XXX in square Against of capacity area and had total customers end square of meters. we meters. construction XQ, of

a complete the It all inventory, is our area total held capacity of cost approvals we generate which utilized buildings and Assuming and of backlog existing a projects, we with top billion, most a we of around amount X projects can development. energy The out resources. remaining square made the CapEx US$X.X small is RMBXX.X amount XX%. we to around of relatively growth finance On revenue sell valuable and meters or billion future project that by existing increase Tier of is would or existing another we pipeline of small to deliver with generation investment. our markets, located in have which quota, XXX,XXX very asset. believe secured It's because for large amount already have land predominantly all

half Based original to in XQ moderate open revenue We and on pickup guidance rate and over EBITDA. to are XX. so on now we the results the the know in the original call and would assumption this assumes We we year. of to the that like slide months range are Accordingly, relaxation XXXX one in deliver to think leaving we a two time. at our this to for -- second XXXX questions. what a current performance of Turning reasonable to lockdowns guidance our make still point far move-in unchanged. in progressive within quarter, is our of the adjusted This next track

operator? please, So

Operator

Thank you.

[Operator We will Goldman ahead. Our comes first Instructions] question-and-answer go session. the at Tina question Please Hou begin from now Sachs.

Tina Hou

for and you. Hi. that big domestic how say, much potential very in XX of to and from you time. can in be you morning, the of rate management, growth in is your question and Good there. me Southeast longer term, One presence could Asia, Thank do overseas our the from market, market, think terms the what especially kind versus a projects it we of expect five years, market thank China

William Huang

Yeah. first. answer I’ll

market US increased see the Asia a indicated And there is a mainly count, payer. domestic think driven Southeast the this by the future of customer number the the market huge unit significantly for I count will local the the what that’s potential. huge Chinese -- of market, potential region. the and in very we lot That has the are because unit

in this of population XXX around this in population region. terms the million area In is

ago early market right, the the is I the still over outside. eight high, Chinese level the the market in I the more think is because, But to potential years my Chinese -- like in China and That's stage. the the market similar market but think yeah. the time, view. let's around at It's is -- of say, will least grow XX% of XX%,

think Asian small, of but fastest yeah. some amount growing compared on market rate, in positioned demand is the still stage our analyst region. based right? in the world I growth the the total market So, in most terms we current So now with well is the That's should -- this Southeast thinking, in China report,

Tina Hou

have Thank So... follow-up? a you, I quick William. Can just

William Huang

Yeah. Southeast market -- is understanding in current By I the total Asia the way, based totally, my mean. market, Southeast X,XXX on megawatts existing Asia

Tina Hou

it. Got

William Huang

Yeah.

Tina Hou

Thank you, yeah.

So is companies projects? my kind domestic follow-up Asia should in IRR, the our also of Chinese for to local IRR, Southeast would and project the international customers, including also we be customers project addition and the what expect

William Huang

is serve is but already. have implementation, customer, priority terms for kinds Yeah, clear. our have customers installed of they customer, our this course, the implementation region, all of methodology in very region first in I of serving business this base the which in been GDS,

So our I think first target. this is

just we internet also customers. player well. potentially and As talk car you said, as are Chinese serving We, all not also and local international we’ll players the to

In some on color? add terms Dan, maybe you return, of the

Dan Newman

Yeah.

we the the now. towards returns up what well end top of levels typically to the think range I right probably China, China the in achieve be in will of

have going are Singapore. where We power excess a Singapore constrained development good than Malaysia cost very is us. and markets already development cost what lower We very favorable the there's substantial dynamic the of the and amount is handle to the have a adjacent Indonesia, and demand. a operating very cost of in In tariffs including be for substantially market

initial course we've have for because time. in some of a We also what going orders, price pretty the good with the be is potential idea been selling of for quite dialogue to customers

still offer par if returns this those days. a I for based not as nearshore we towards generate which top on the can at competitive price we what of inputs, and in are that compare these achieve can indicated, So the of range on believe end very capacity least we China

Tina Hou

Thank clear. very you very That's much.

Operator

question Our Markets. comes go Capital of next from RBC ahead. Jon Please Atkin

Jon Atkin

think is in financing talked And a spend you just unchanged, there? what on options you view going Thank slowing you. the environment, on is M&A, the so – One M&A questions. you Two your and about then needed…? schedule, the but CapEx view case forward is I offset how

Dan Newman

Yeah, so I'll answer the questions, William.

William Huang

Yeah.

Dan Newman

would CapEx Kong billion the months gave RMBXX was X billion X gave in that organic, and of X and Southeast then in RMBX previous billion in we guidance quarterly and the which remind, to billion year, in of of billion RMB RMB Hong for X just land China Kong and Southeast Asia, Hong and earnings it And Mainland script Firstly would a RMB saying this balance in couple ago RMB X the I be and a RMB acquisitions billion Asia. China billion be is in bank. breakdown,

is acquisitions banking estimate. a the and bottom-up So land

been already have which done. deals that's So

of first of and Out in change. have RMB we around already the no will incurred in quarter. billion is quarter, which that balance we the and payments, consideration RMB X.X the be payments, purchase number mainly made acquisition that second So X land billion,

the the billion, of and For in X just part, X the is Mainland remaining quarter. the which in we only regionally, over RMB out billion organic China RMB first billion X RMB incurred

through with paid. lot It that adjustments for well. involves of to kind I would its because quarterly to billion. rate way some four X delivery takes you work a to fact, can with at which, up actual CapEx mean that quarters run And see, run So schedule, as we've is to of line of in the coordination part, RMB in the that rate. customers add made course, time

we CapEx, reflected the of First slow have to of CapEx all, amount incurrence and the the then of it gets and down in timing payments.

your M&A, the breaking I how were think I would first you're but could M&A? question, On you second that less be year. in think we CapEx than will year in it saying of half Jon, half the finance the somewhat of be the up, the

Jon Atkin

Yes.

wanted billion if to talked that get financing environment. on to RMB organic your the You expansion about or development more give but you the current X.X you meet to pipeline, growth need you aggressive

Dan Newman

answering and or to acquisitions fully business I we our already. are set early if the And obtain able be always those. I'll resources new the secure may, individual are If projects with projects. which the can surplus we We That's we've to need by financed Well, aside – that capitalize there committed for to and as capital pursue over we be Yes. cycle the to been be start could have that. approach. some opportunities debt to then other it of what off each we cash as of we life equity project we that opportunities, wish could above to pursue, then in

in even range have the good we current that environment, think I a very of options.

public decision public highlight to a of in Firstly, when a would to range IPO-ed have we raising. within options. make the and then there's is US, something have we What do capital XXXX, private, or through capital whether four And private done since raising through we placements. private that I

private Equity, privately. we YTL. announced the equity just wealth That and with recently capital you the preferred and the with An, or If ventures, largest two and Hillhouse one capital raisings with joint then recall, in China. in bonds. Ping done We've And wealth fund, convertible all are of one with Private co-development with with equity sovereign CyrusOne, also Sequoia These accessing was CITIC sovereign private firm convertible recently, fund. with and category

believe we we that So a US. company we've listed solid. six years The during publicly are the this still been fundamentals the did very business in

asset providers very private future interest backlog. from we that high from capital very emphasizing sector, leaders. There market with investing in in our visibility strong keep base growth and we our this for have particularly from As is

wish access terms So on be be of this do to we that unusable pursue, bottom-line will if that is capital what opportunities are to to there undoubtedly to we to able do. wish we able

Jon Atkin

Internet, an ask so inside And of forth. about what and little the so last bit bit on But of of a question maybe China, if just demand FSI you in well you then, the as last mix talked versus Enterprise, a I Cloud could little as one talked script versus update quarter? about

Jamie Khoo

we a the I and profile from, don't quite positioned talked add, over time when for comes quarters time. where we demand if we for but know about actually demand want last being to changes talked few

In year, So increased financial XX during new from had wins, Chinese quarter, We including first Wall better probably some institutions, maybe last we XX%. significantly it level, new tremendous a Foreign. second business And FSI global be banks business the Street. enterprise in and banks saw quarter, similar and the XX% both, the of on was most of bookings. and Domestic, top will

sales our So and demonstrates William, the we've like positioned FSI we're that effort side? add something what asset enterprise to our correctly. that would what base on you doing

William Huang

Yeah.

I one. day always our our from think goal, base, right customer diversify

So industry. let that's of the any from catch different kind up why us growth

back from Enterprise the Internet and look demand we XX enterprise the the up well. now start years, as we Cloud last we from And you to go balanced If Internet the customer, the also also takeoff. Cloud, more catch and Then the booming. then

from capture So base. because us the -- demand very, the any That's of I always we very we change. think the -- are to a allowed market solid have very kind customer

to right -- our base good which the So thing had. solid always we do -- is build the -- only that thing the customer build

few still bit from think target. enterprise last this saw and financial the can So now Obviously, cloud last slowdown but of quarter, growth institution. we I the a right, we quarter -- our and last growth meet maybe the little the and since quarters, quarter

last that year, So, we change. since already saw

to people we and financial year, more customer to institute. last So increase hire to sales our enterprise penetrate started the the

right Now thing we the we the saw effort coming did year. and last

Operator

Please Our go Thank at Michael Instructions] comes ahead. [Operator from question you. Elias Cowen. next

Unidentified Analyst

bit from wanted Thank could is I imply in you level your around coming more Kong to as do could just customers' secondarily, to along a and Asia/Hong are leasing Hi. indicates provide that from prepared Asia you China. that with little bit Mainland you you. if wonder for I color the Jess your a meter in of that up of that on target does What split guidance Con exact What hearing see in remarks coming [ph] visibility Michael. reach square your you This that? XXXX. your step leasing an to Southeast a XX,XXX part have is existing from the on? in of noted target. organic between touch pipeline little you And leasing acceleration come Southeast

William Huang

ahead. Dan, you go

Dan Newman

sorry. Yeah, I’m

a On us make different not of the of to can of didn't number of our we provide really kind We particular type right, of orders quantification appropriate first part so customer quota a split. particular a some the deliberately question, on from or targets for put any ways, it's region.

Hong Singapore, couple a custom orders two around of three projects we Kong, in have have We anchor one Johor Batam. major we projects where and and disclosed in three in haven't yet campuses,

projects in five So that's total.

course, customers, really investments sales leading commitment. there's a made projects with have, a a of meaningful on year. on this financial when being that's will going say disclose combination, depends Of right actually consultation how or in wouldn't commitments to of number a those we hard so the why many It firm within put too for sale we've been it firm now there But period It's long on it. our close a order, appropriate to time. be dialogue and be these could

what I investors think give call enough to strong proof concept as a in anchor Southeast of very orders have we will feeling we're it, about, Asia doing. to

I think probably most that's the thing. important

like to you something? was question William square visibility the add second on XX,XXX meters. Your about would

William Huang

Yeah.

I general, right, talk -- think a at are bit can that. achieve, we still to we we I meters, early about talk you to think -- early it's confident of in square about XX,XXX confirmed little But about accelerates. future if think catch customer's number one, all But for -- well profile. position demand the our growth. so our order plan our its prepared for monitor very customer to business current the still customers We to up, are or maintain in future still whatever accelerate closely, preparing the -- it is

goal our say for long-term, still I So the accelerate not, or are what still will accelerate, The short-term, it we demand we happens is not mid-term think will and cannot but change. confident right.

Operator

Thank you.

comes Raymond Louthan go at ahead. Frank James. from question Please next Our

Frank Louthan

just thank go I to Great, you. want the to back guidance.

So issues you chain inflation. the a at the in were guidance when came and was bit chain little of because your supply the getting end having lower of supply issues, year customers

they've now you they What's that the lockdowns and think installations been obviously, do that the just Now equipment the chain year? it how precluded be issues, will bolster it should about supply Are or now the the something gotten factors? able have or that later assumption the two there's is and to they have confident keep from those from they'll the lower installing have that have bigger because lockdowns. if through would do of it the you we mind this guidance your factor in hitting you to

Dan Newman

lockdowns. difference is main The Yes. the

which think well. about the Shanghai the about but I in known early. period for is restrictions as an in investors detail in think for guidance in extended think that's a don't don't of Beijing which Langfang, surrounding also areas where Then how of outside I quite had saw Beijing, well went Shanghai, been then that don't but Province. gave have in And I that we is when news time the I what know what bit in relatively necessarily there's I lockdown much specific extent was still but of as lockdown the Changshu would Province months. is be known was anyone quite just the lockdown, lockdowns so two is government some into anticipated we well precaution mid-March, that's Hebei lockdown think in it a

you presentation the place. datacenters taking is at where up datacenters. move-in ramping look appendix earnings show the most we up Ramping what page it's the and is where we call in our of If in

NT, that you surrounding Nantong, you Then datacenters area at with Shanghai down LF, very or by worst affected datacenters Changshu see just area our all look ramping start may that in which be up substantial SH that's just and the lockdown. the have If scan lockdowns. you'll amongst areas, We in is two the of look and at we certainly said prepared one of during and and a the the come remarks from been that, an as or right, the you was of Langfang last CS, number to level part affected not to our factors. the recover to we was table and is affected are which year but coming Beijing progressively of looked would which assume at that by which move-in we Last government thereafter months lockdowns that end it at it comments guidance, lockdowns when the next by end that in have number year. assumed was affected other I to a by

acquisitions at look the of terms in in square you quarterly thousands teens year meters the it last if per quarter. So high move-in excluding was of

year probably utilized because happen mid within direction So their of you our and saying the roughly a a given what mathematically, by in if have second revenue happens that decline And that's area that the MSR our we and think one average the for can we single-digits if we come with will are construct other, that that I you divide progression by then do quarterly can guidance, calculate and have metric. so cross-check everyone we kind will the that will assume would half revenue of guidance. out own then

Operator

you. Thank

comes question JPMorgan. ahead. from Gokul at next Hariharan Please Our go

Gokul Hariharan

William Hi. Yes. Thanks, Dan. and

down? going for there are cost. than services they all, revenue, kind a of financial more and of that bigger a cloud are next investments talk models of of quality becoming of on on selective of is you you terms the different cloud, that kind any First in profile at in how Is your terms customers that one forward? the that lot in terms you. the looking of customers, growth terms do does secondly in mentioned becomes four having your customers, significant that a customers bit cloud And have demand And a the yesterday years in their mean you little in Thank part terms cloud what step growth three of discussions expectations say, service part, customers biggest engagement IRR a FSI with have, rather think the growth they If meaningful Could of about MSR? financial growth? any or for much cloud have? of about you let's there anything on they

William Huang

Yes.

driver drive growth. I demand think a -- the the to cloud driver main service data and still major is center provider

think selectively, high they still even the I growth about the talk rate. pursue they

I will this let's does slowdown, mean they dramatically. think say, not

think think, they is pursue XX%, I I think, growth still, still maintain, at that number they least. XX% I the

is their bit number, view. hand, right, big we of about demand other things Internet cloud my giants So this to profile the the enterprise hybrid talk lot a the or on because change, little in a But do still they start and a model.

from So purchase to to demand the direct center. end shifted little the user cloud our a data bit

current to last total a our one total in from the perspective, think similar industry size saw. still year, the industry. but That's maintained demand another the we with trend from demand market I compared shifted

mainframe changed IT very financial the model to racks, institutions, of from represent of X,XXX the lot customer traditional because the let's server small size. a they They terms DI the [ph] the enterprise also from the demand, their structure gear, X,XXX demand I colo In and racks base. typical a think big say,

very, So big. order for still the very profile demand each

of data price call want – can right? some So like you terms semi-hyperscale to demand, there add color? the a it's You in

Dan Newman

centers. downtown entirely. as call entirely what more or trusting, answers almost well is price else the question we It's would it Semi-hyperscale I'm data about actually actually.

we unless, had and I'm – data Shenzhen, have Unless, time get very we been strategy which have within we sorry, to that, sourcing So centers consuming Shanghai, the we've to within continued done Beijing, this done not within is able would business. which of pursue challenging.

is a customers town, differential downtown So, edge it's which I the pricing and still mostly for significant recognize and all There between think downtown. accept.

and of think, downtown town. are between probably IRRs edge quite now quite – similar I the

and structure average FSI our So, think, to on. difference I IRRs, much so or our don't makes this cost business operating to

Operator

Thank you.

comes question Nomura. next at go Ying Joel Our ahead. from Please

Joel Ying

questions. management my for Thanks, taking

the saw PV So, quota tightening actually, actually Beijing in cover emission policy a area. and management monitoring for trend I

expect or some mid center, data industry renovation. Maybe they the term? company So any we into should impact old to long need

extra maybe time be to Management long issues talk about So solve in such need Can that? Thank some you. might we might run. or capital

William Huang

question? your what's pardon, So,

Dan Newman

shifts Yeah. of It's Yeah. it. some even to I or economic or efficient, to for role positively, of more they fact, try strategy with this data NDRC Joel, more yesterday, at mean, integration to push kind through if helping natural which that to announced government have government platform creating the out would a down. become operators like a constructive William, it times, not increase on data maybe and the there years was some all. – X take demand the old and monitoring to implementation yeah, was XX previously establish list And trying that think PV assertive data announced of to shut affect the a several requires levels policy, that. follow create because exercise, center this to they mean, right, I of try or was very we've in PVs. forcing us centers from efficiency to actions it monitoring to negatively. small of I municipal It for played think there's older think IT it doesn't I'm in be from a I

William Huang

efficiency the I player think Yeah. like, Yeah. market. most should on because data the in some Yeah. I think add it's center GDS,

I benefit self-benefit improve power think do to efficiency our to a -- view asked our just goal us job. government always our point the this our day-to-day is not just of from

it Dan affect not what like us. mention would Just

Operator

you. Thank

go from question at [ph] Daiwa. Please Weng Alex ahead. comes next Our

Unidentified Analyst

Could hear management. me? Hi, Yes. you

Dan Newman

Yes.

Unidentified Analyst

Its Congratulations the [ph] I Wong on just Markets. results. of diversification customer on behalf question strong Hung And ask our from Capital mentioned earlier. Choi. as we question Daiwa a regarding first John will

injection enterprise financial trying year. cloud the second quarter, new My your and maybe As as towards to the any of MSR structure plan in on account middle to have a the the days. years. revenue showed in one And on winning first we observation mix we to mix by structure, of low target are with point this diversify from contracts is this see capacity international our question more negotiate three target for observed our contract? decline back the the is also, we we regarding is And occurred new single there our do have in revenue next year

So the of into capacity actually XX% observation half? much. capacity our the the added because you over second what's on injection in that second half have we second our half, in Thank biggest risk downward our the very seen for

Dan Newman

targets, for But set strategy we Alex, a customers point course. particular Okay. sales or of have quotas of and of markets. we kind don't planning particular view, from

I internal from want at to that previously. tried make about capacity, mentioned consider I high-value that the location have I MSR. to small the the approach. also part The change itself or to right right is I what address that, that I'd mean pretty town into both in renewals the a comments we I about renewals place to be the customer of goes base, although And whether of demand in to of some it's would particularly say think contracts, assumptions So we demand. reflects about strategic, MSR pricing remote. we that be which is new mean downtown, the right time that position capture and for the reflecting be don't edge

We data -- like few Now you've what older market. to are five do centers particularly contracts that have close each for commented year in to overall few before our for contracts, some quite renewals old seven a flat. first times

today business was So where then. hundred had would XX size a their in with -- time, call and we it number of their two, four volume few not customers. that would meters, than what XXx be square some, a has But order at market, since particular like the we by data one, total hyperscale more the increased center or three, us

typically So, edge have and town capacity those they capacity. of downtown customers

part edge difference. our so location and -- did decline up The we've come total overall the it's of some very seen is contract much town By difference not contracts make biggest the base, projects a for it into renewal MSR, factor small doesn't once and on. you our pretty projects, of those only small far when make a the that So, for BOT that but mix. there, it material

if the to For this that you I XX,XXX year the and we last in around of we annum back, couple down around brought and years CapEx -- number, square mean service the XX,XXX added meters XX,XXX. capacity to in of we've look yes, last per --

consult because order that do also the have commitments So, in customers there's adhere of move-in, slower have contractual delivery we've we to to because we done to that with but had that to.

relatively If in any there I with the activity. to at extent deal being in strategic execute, supply be was bulk chain notice. we to a We we're very you're point affected by mean not what of of deliver from a of purchase think to hold to able inventory call in whether our to construction very suppliers and in asking it small. We a equipment orders. lot able They great risk I way. place produce that's short of view terms issues us

Kong we equipment really on to a meter in China, into capacity mainland may ripple construction that's mainland we in plant move-in. effect through yes, within of number, service more -- the of because so material logistics slow business decision of the sort the that's don't we not the down It But small as So, terms getting Kong. to square of our Hong of rate China supplied. what's slower the had XX,XXX bring driving and be at some which Hong just experience issues really don't

Operator

you. Thank

Our comes Sara at next go UBS. from Wang question Please ahead.

Sara Wang

ask for you Thank a the opportunity to question. Hi.

outlook than year. earnings shared that So I year call recall that into next should last be Management during the our better this

year? towards assumptions view year? Thank our are next into outlook are we you. what still what far So happened key the so Then given for holding the next same

Dan Newman

can't end what of we're there date, arbitrary an a And bottom Sara, will know at giving start if we point cycle, will because knows said, doubt I'm and Everyone know mean will exactly clearly, be year you going the just specifically if better. I I you that. would through that's benefit year next some remember be said recovery. I I don't the a - I cycle meant -- right? and the and I but

historic on fallen quite data not ratio We for has a the got wide long held we that period and many see to backlog historically. to - move-in has of have Currently, the that level move-in range a time. a to although backlog quarters seen there's of we've of ratio

think I changed. fundamental structurally that has don't or yes, changed I So it's think well levels. – below historical don't anything has

the and are cyclical market. the a that's of some think unprecedented affecting factors, currently I reflection of which

than see So should moving case the backlog away the once once and cycle seeing those once historical that's why higher rates see don't we ratio I will if go return see we -- to that growth currently. then turn, and the we're not

Sara Wang

have Thank you. Thank That's to you. we questions. closing turn like the the to company all time over remarks. now the I'd for for back call

Laura Chen

us for again once today. all you joining Thank

Relations. questions please the Piacente Investor Relations the or Group to contact website free Investor information our Bye. feel have on you through GDS contact If further

Operator

Thank you. This concludes this conference call.

You all may now disconnect.

GDS Holdings Limited (GDS) 19 May 222022 Q1 Earnings call transcript