Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook for its stock performance [2]. Core Insights - The company has shown steady revenue growth, with a projected increase in operating income from 9,957 million RMB in 2023 to 11,387 million RMB in 2024, reflecting a growth rate of 14.4% [2][3]. - The adjusted EBITDA for the company is expected to improve significantly, with projections of 50.94 billion RMB in 2024, 59.91 billion RMB in 2025, and 71.62 billion RMB in 2026 [3]. - The domestic business is performing well, with a notable increase in occupancy rates and data center area, which has grown to 580,165 square meters, a year-on-year increase of 9.9% [3]. - International business demand is also on the rise, with significant growth in the GDSI segment, which achieved a revenue of 2.56 billion RMB in Q2 2024, a quarter-on-quarter increase of 24% [3]. Financial Summary - The company's total assets are reported at 791.65 billion RMB, with a net asset value of 194.47 billion RMB [1]. - The projected net profit is expected to improve from a loss of 4,285 million RMB in 2023 to a profit of 329 million RMB by 2026 [2][4]. - The gross profit margin is anticipated to increase, with net profit margins projected to rise from -43.0% in 2023 to 30.1% in 2026 [2][4]. Business Development - The company is actively pursuing asset monetization projects, including the establishment of a REIT for data center assets, which is currently undergoing regulatory approval [3]. - The company has a cash balance of 31 billion RMB as of Q2 2024, with plans for further equity financing to support growth initiatives [3]. Market Position - The report highlights the company's strong position in both domestic and international markets, with a clear strategy for growth and expansion in data center services [3]. - The company is expected to benefit from increased demand for data center services driven by technological advancements and digital transformation trends [3].

Investment Rating - The report maintains a "Buy" rating for the company [2][6] Core Insights - The company reported better-than-expected Q2 results, with revenue of approximately 2.826 billion RMB, a year-on-year increase of 17.7%, and adjusted EBITDA of 1.312 billion RMB, up 14.9% [1][5] - The company has maintained its full-year guidance, expecting revenue between 11.34 billion and 11.76 billion RMB, with a year-on-year growth rate of 13.9% to 18.1% [1][5] - The company is experiencing robust growth in its China operations, benefiting from accelerated onboarding of large internet companies, with Q2 revenue reaching 2.58 billion RMB, a year-on-year increase of 8.9% [1][5] - The international business is gaining momentum with significant orders, including a 205MW capacity reservation in Malaysia and a large sales contract with a global tech company [1][5] - The company plans to complete a Series B financing of 600 to 800 million USD by the end of 2024 to support its international expansion [1][5] Financial Summary - For 2024, the company expects total revenue of 11.508 billion RMB, with a year-on-year growth of 15.6% [4][7] - Adjusted EBITDA is projected to be 4.950 to 5.150 billion RMB, reflecting a year-on-year growth of 7.0% to 11.4% [4][7] - The company has a market capitalization of approximately 20.88 billion HKD and a year-to-date stock price change of 56.95% [3][4]

Financial Performance - For Q2 2024, GDS Holdings reported a net revenue of RMB 2,826.4 million (USD 388.9 million), representing a year-over-year increase of 14.3%[4] - Adjusted EBITDA for Q2 2024 grew by 6.2% year-over-year to RMB 1,312.2 million (USD 180.6 million), with an adjusted EBITDA margin of 46.4%[4] - Gross profit for Q2 2024 was RMB 637.8 million (USD 87.8 million), a 15.8% increase from RMB 551.0 million in the same period last year[8] - The net loss for Q2 2024 was RMB 231.8 million (USD 31.9 million), slightly higher than the net loss of RMB 225.3 million in the same period last year[10] - Total net revenue for the six months ended June 30, 2024, reached RMB 5,453,736, an increase from RMB 4,880,978 for the same period in 2023, representing a growth of approximately 11.7%[33] - Gross profit for the six months ended June 30, 2024, was RMB 1,211,499, compared to RMB 1,042,684 for the same period in 2023, reflecting a year-over-year increase of about 16.2%[33] - The net loss attributable to the shareholders of the company for the six months ended June 30, 2024, was RMB 571,568, compared to RMB 729,119 for the same period in 2023, showing a reduction in losses by approximately 21.6%[33] Operational Metrics - The total contracted and pre-contracted area reached 756,992 square meters, an increase of 18.7% year-over-year[5] - The operational area increased by 18.8% year-over-year to 630,963 square meters, with a utilization rate of 92.5%[5] - The billing area grew by 20.9% year-over-year to 462,673 square meters, with a billing rate of 73.3%[6] - The total area signed and pre-signed at the end of Q2 2024 was 614,094 square meters, a year-over-year increase of 3.5% from 593,068 square meters[12] - The operational area at the end of Q2 2024 was 580,165 square meters, reflecting a 9.9% year-over-year increase from 528,105 square meters[13] - The billing area at the end of Q2 2024 was 419,976 square meters, a 10.2% increase compared to 380,978 square meters in the same period last year[14] - The operational area occupancy rate was 84.1% at the end of Q2 2024, compared to 58.4% in Q2 2023 and 98.2% in Q1 2024[18] International Expansion - International revenue surged by 690.2% year-over-year to RMB 255.5 million (USD 35.2 million)[8] - The total area signed and pre-signed in international markets reached 142,898 square meters, a significant year-over-year increase of 220.5% from 44,593 square meters[15] - GDS Holdings emphasized a strong focus on strategic goals, contributing to robust performance in Q2 2024, particularly in international markets[6] Expenses and Cost Management - In Q2 2024, total sales and marketing expenses were RMB 22.5 million (USD 3.1 million), a decrease of 1.9% compared to RMB 22.9 million (USD 3.2 million) in the same period last year[9] - General and administrative expenses increased by 51.0% to RMB 127.6 million (USD 17.6 million) from RMB 84.5 million (USD 11.7 million) year-over-year, primarily due to rapid international business expansion[9] - R&D costs in Q2 2024 were RMB 10.9 million (USD 1.5 million), up from RMB 5.0 million (USD 0.7 million) in the same period last year[9] Future Guidance and Strategy - The company confirmed its revenue guidance for 2024 to be between RMB 11,340 million and RMB 11,760 million, with adjusted EBITDA expected to be between RMB 4,950 million and RMB 5,150 million[19] - Capital expenditures for 2024 are expected to remain around RMB 6,500 million[19] - The company plans to expand its market presence and enhance product offerings in the upcoming quarters, focusing on technology advancements and strategic partnerships[34] - The company is focusing on strategic acquisitions to enhance its service offerings and market share, targeting a 20% increase in operational efficiency through these initiatives[38] Financial Position and Stability - As of June 30, 2024, total cash was RMB 9,907.8 million (USD 1,363.4 million) with total short-term debt of RMB 5,597.5 million (USD 770.2 million)[11] - The company reported a total asset value of RMB 79,165,413 as of December 31, 2024, an increase from RMB 74,446,690 as of December 31, 2023, indicating growth in asset base[31] - Total liabilities decreased to RMB 56,290,271 as of December 31, 2024, from RMB 54,322,887 as of December 31, 2023, suggesting improved financial stability[31] - The company’s cash position improved to RMB 9,907,823 as of June 30, 2024, compared to RMB 7,710,711 as of December 31, 2023, indicating better liquidity[31] Risks and Challenges - The company faces risks related to market competition, regulatory changes, and operational challenges that could impact its financial performance[29] - The company emphasizes the importance of addressing inherent risks and uncertainties in its forward-looking statements regarding business growth and revenue expectations[28] Corporate Governance and Structure - The company has a dual-class share structure, with Class A and Class B shares, where Class B shares have 20 votes per share in specific matters[57] - The company’s bylaws allow Class B shareholders to nominate five directors, with voting power of 20 votes per Class B share[58] - The quorum for the shareholders' meeting requires at least two voting shareholders representing no less than one-third of the total voting shares[59]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 11.28, indicating a potential upside of 43.0% from the current price of HKD 7.89 [2][6]. Core Insights - The company's Q1 2024 performance was broadly in line with expectations, showing steady growth with a revenue of approximately RMB 2.63 billion, a year-on-year increase of 9.1%. Adjusted EBITDA was RMB 1.18 billion, up 4.7% year-on-year, representing 25.5% of the annual forecast [1][5]. - The company has maintained its full-year guidance, expecting total revenue between RMB 11.34 billion and RMB 11.76 billion, with a year-on-year growth rate of 13.9% to 18.1% [1][5]. - The company is expanding its business scale, with operational area increasing to 583,229 square meters, a 1.9% quarter-on-quarter rise, and a utilization rate of 74.9% [1][5]. - International business continues to progress, with significant capacity reservations and a recent increase in funding for international data center expansion [1][5]. Financial Summary - For the fiscal year ending December 31, 2024, the company is projected to achieve revenues of RMB 11.36 billion, with a compound annual growth rate (CAGR) of 12% from 2024 to 2026. Adjusted EBITDA is expected to be RMB 4.65 billion, with a CAGR of 11% during the same period [2][4]. - The company reported a net loss of RMB 1.10 billion for 2024, with an expected improvement in losses over the following years [4][7]. - The company’s operational metrics show a total operational area of 583,229 square meters and a signed area of 668,012 square meters, reflecting a stable business environment [5][7].

Financial Performance - For Q1 2024, GDS Holdings reported a net revenue of RMB 2,627.4 million (USD 363.9 million), representing a year-over-year increase of 9.1% from RMB 2,409.0 million in Q1 2023[4]. - The net loss for Q1 2024 was RMB 344.9 million (USD 47.8 million), an improvement from a net loss of RMB 474.6 million in Q1 2023[4]. - Adjusted EBITDA for Q1 2024 grew by 4.7% year-over-year to RMB 1,183.4 million (USD 163.9 million), with an adjusted EBITDA margin of 45.0%[4][6]. - The gross profit for Q1 2024 was RMB 573.7 million (USD 79.5 million), a 16.7% increase from RMB 491.7 million in Q1 2023[7]. - The adjusted gross profit for Q1 2024 was RMB 1,368.1 million (USD 189.5 million), up 8.6% from RMB 1,259.4 million in Q1 2023[8]. - The cost of sales for Q1 2024 was RMB 2,053.7 million (USD 284.4 million), a 7.1% increase from RMB 1,917.3 million in Q1 2023[7]. - In Q1 2024, the adjusted gross margin was 52.1%, compared to 52.3% in Q1 2023 and 49.7% in Q4 2023, primarily due to a decrease in maintenance and other operating costs[9]. - The company confirmed its revenue guidance for 2024 to be between RMB 11,340 million and RMB 11,760 million, with adjusted EBITDA expected to be between RMB 4,950 million and RMB 5,150 million[18]. Operational Metrics - The total contracted and pre-contracted area as of March 31, 2024, was 668,012 square meters, a 5.4% increase from 633,611 square meters a year earlier[5]. - The operational area increased by 12.5% year-over-year to 583,229 square meters, with a utilization rate of 74.9%[5]. - The total signed and pre-signed area at the end of Q1 2024 was 668,012 square meters, a 5.4% increase from 633,611 square meters at the end of Q1 2023, but a 0.4% decrease from 670,975 square meters at the end of Q4 2023[12]. - The operational area at the end of Q1 2024 was 583,229 square meters, a 12.5% increase from 518,517 square meters at the end of Q1 2023 and a 1.9% increase from 572,555 square meters at the end of Q4 2023[14]. - The billing area at the end of Q1 2024 was 436,875 square meters, a 16.0% increase from 376,632 square meters at the end of Q1 2023 and a 4.3% increase from 418,748 square meters at the end of Q4 2023[15]. - The operational area billing rate in Q1 2024 was 74.9%, compared to 72.6% in Q1 2023 and 73.1% in Q4 2023[15]. Expenses and Investments - Sales and marketing expenses in Q1 2024 were RMB 26.7 million (USD 3.7 million), a 5.3% increase from RMB 25.3 million in Q1 2023 and a 2.9% increase from RMB 25.9 million in Q4 2023, mainly due to increased marketing activities[9]. - General and administrative expenses in Q1 2024 were RMB 153.4 million (USD 21.2 million), a 30.6% increase from RMB 117.4 million in Q1 2023 and a 13.5% increase from RMB 135.1 million in Q4 2023, driven by international business expansion[9]. - R&D expenses in Q1 2024 were RMB 10.0 million (USD 1.4 million), compared to RMB 9.8 million in Q1 2023 and RMB 12.8 million in Q4 2023[9]. - GDS Holdings increased its private equity financing for GDSI from USD 587 million to USD 672 million to support accelerated customer demand[6]. - The company obtained new debt financing and refinancing credit amounting to RMB 4,294.0 million (USD 594.7 million) in the first quarter of 2024[16]. - The company plans to focus on expanding its market presence and investing in new technologies to drive future growth[30]. Debt and Cash Position - As of March 31, 2024, cash amounted to RMB 7,641.4 million (USD 1,058.3 million) while total short-term debt was RMB 5,893.5 million (USD 816.2 million)[16]. - The total long-term debt reached RMB 42,207.0 million (USD 5,845.6 million), including long-term loans of RMB 26,806.8 million (USD 3,712.7 million)[16]. - The company's cash and cash equivalents as of March 31, 2024, were RMB 7,641,439 thousand, a decrease of 0.9% from RMB 7,710,711 thousand as of December 31, 2023[29]. Market Outlook and Strategy - GDS Holdings is focused on maintaining and enhancing relationships with new and existing customers to support its business growth[27]. - The company is exploring strategic acquisitions and investments to expand its operations and market presence[27]. - GDS Holdings anticipates continued growth in the high-performance data center market in China and Southeast Asia, driven by increasing adoption of cloud computing and cloud service providers[27]. - The future outlook remains positive with expectations of continued revenue growth and improved margins[39]. - The company is committed to investing in new technologies to stay competitive in the market[39]. Risks and Compliance - GDS Holdings faces inherent risks and uncertainties that may impact its actual performance compared to forward-looking statements, including competition and regulatory changes in the industry[27]. - The company is committed to providing accurate and timely updates regarding its business outlook and operational strategies[27].

Revenue and Financial Performance - In 2023, the revenue contribution from the VIE and its subsidiaries accounted for 95.3% of the total revenue, down from 96.1% in both 2021 and 2022[5]. - The company's net revenue increased from RMB 7,818.7 million in 2021 to RMB 9,956.5 million in 2023, representing a growth of 6.8%[20]. - Adjusted EBITDA rose from RMB 3,703.4 million in 2021 to RMB 4,624.1 million in 2023, indicating a continuous improvement in operational efficiency[20]. - The company's cumulative losses increased from RMB 3,910.8 million in 2021 to RMB 9,469.8 million in 2023[198]. - Revenue from colocation services accounted for 87.1% of total net revenue in 2023, up from 83.3% in 2021[198]. - The company reported a significant increase in revenue, reaching $1.2 billion, representing a 15% year-over-year growth[103]. - The company anticipates a revenue growth of 10% for the next fiscal year, projecting total revenue to reach approximately $660 million[134]. Operational Structure and Governance - The company operates primarily through contractual arrangements with the VIE, which may not provide control as effective as direct ownership, posing potential risks[8]. - The company has established a series of contractual arrangements with its VIE and its shareholders, including exclusive technology licenses and service agreements[8]. - The management holding company is controlled through a series of contractual arrangements, with five designated management shareholders holding 20% equity each[7]. - GDS Investment Company directly and indirectly holds equity in 60 subsidiaries in mainland China[180]. - The company has established contractual arrangements to control VIE and its subsidiaries, ensuring effective operational governance and economic benefits[184]. Regulatory and Compliance Risks - There is uncertainty regarding the interpretation and application of current and future Chinese laws affecting the company's contractual rights[9]. - The company is subject to significant regulatory risks due to its reliance on contractual arrangements for operating in the value-added telecommunications sector[9]. - The Foreign Company Accountability Act (HFCA) poses a risk as the company may be classified as a "covered issuer" if its auditor is unable to be inspected due to foreign jurisdiction issues, which could lead to trading restrictions on its securities[13]. - The company may face severe penalties if its corporate structure and contractual arrangements are found to violate any current or future Chinese laws or regulations[9]. - The company is subject to capital control measures for profit remittance as per the regulations issued by the State Administration of Foreign Exchange (SAFE) on January 26, 2017, which require compliance with real transaction principles[107]. Market and Competitive Landscape - The Chinese high-performance data center services market continues to grow at a strong fundamental growth rate, driven by digital transformation trends and the application of new technologies[17]. - The company faces competition from both domestic and international network-neutral data center service providers, leveraging its operational track record and market share[60]. - The company is expanding its market presence in Southeast Asia, targeting a 25% market share by the end of 2024[103]. Data Center Operations and Development - The total net floor area in operation as of December 31, 2023, is 572,555 square meters, with 92.8% contracted by customers[17]. - The total net floor area under construction is 182,746 square meters, with 76.4% pre-contracted by customers[17]. - The company operates 93 self-developed data centers with a total net operating area of 565,062 square meters as of December 31, 2023[30]. - The company has a total estimated potential development area of approximately 458,330 square meters for future projects[20]. - The company has begun planning for potential future developments several years in advance, including securing land for new data centers[32]. Sustainability and Energy Efficiency - In 2023, over 38% of the company's electricity consumption came from renewable energy sources[62]. - The average Power Usage Effectiveness (PUE) for data centers with an IT load rate of 30% or more reached approximately 1.28 in 2023, indicating high energy efficiency[31]. - The company is committed to sustainability, with plans to implement eco-friendly practices in all new data center developments[138]. Customer Relationships and Satisfaction - The average customer satisfaction score was 9.647 out of 10, with a net promoter score of 85% based on a survey conducted by NielsenIQ[54]. - The company has successfully attracted major cloud service providers to host their public cloud platforms in its data centers, enabling direct private connections for enterprise clients[42]. - The average quarterly customer churn rate increased from 0.4% in 2021 to 1.9% in 2023, reflecting potential challenges in customer retention[26]. International Expansion and Strategic Partnerships - The company has established a long-term strategic partnership with STT GDC, which is its largest shareholder, providing industry expertise and governance guidance[174]. - The company established a joint venture with Indonesia Investment Authority (INA) in October 2023 to develop and expand data center operations in Indonesia[176]. - The company has expanded its footprint in Southeast Asia by acquiring land in Johor, Malaysia, and Batam, Indonesia, as part of its strategic plan to serve the region[175]. Legal and Litigation Matters - The company is involved in a pending class action lawsuit in California, alleging violations of the Securities Exchange Act[66]. - The company must comply with the requirements set forth in the Building (Planning) Regulations regarding the development intensity of buildings used as data centers[121]. Employee and Workforce Management - As of December 31, 2023, the company had 2,345 employees, an increase from 2,185 in 2022, representing a growth of approximately 7.3%[63]. - The annual employee turnover rate was reported at 16.5%[62]. - The company provides an average of 32.1 hours of training per employee annually[62].

Investment Rating - The report maintains an "Outperform" rating for GDS Holdings [3][4][10] Core Views - The company's net loss has expanded due to non-cash asset impairment, reflecting weak industry demand [4][9] - The company achieved total revenue of approximately RMB 9.957 billion in 2023, a year-on-year increase of 6.8%, with adjusted EBITDA of RMB 4.624 billion, up 8.8% [4][10] - The company is focusing on international business expansion, having secured a total of USD 587 million in convertible preferred stock subscriptions to support operations [4][10] - Revenue growth is expected to improve in 2024, with projections indicating a growth rate of over 12% [4][10] Financial Summary - Revenue projections for 2024-2026 are RMB 11.151 billion (+12%), RMB 12.824 billion (+15%), and RMB 15.004 billion (+17%) respectively [4][10] - Adjusted EBITDA for the same period is expected to be RMB 5.046 billion (+0.16%), RMB 5.667 billion (-2.0%), and RMB 6.332 billion [4][10] - The target price is set at HKD 19.09, reflecting a target market cap of RMB 26.892 billion based on a 13x EV/EBITDA multiple for 2024 [4][10]

Financial Performance - In Q4 2023, net revenue increased by 6.3% year-over-year to RMB 2,556.5 million (USD 360.1 million) compared to RMB 2,404.0 million in Q4 2022[5] - The net loss for Q4 2023 was RMB 3,164.6 million (USD 445.7 million), a significant increase from a net loss of RMB 177.9 million in Q4 2022[5] - Adjusted EBITDA for Q4 2023 grew by 5.7% year-over-year to RMB 1,132.6 million (USD 159.5 million), with an adjusted EBITDA margin of 44.3%[5] - For the full year 2023, net revenue rose by 6.8% to RMB 9,956.5 million (USD 1,402.3 million) from RMB 9,325.6 million in 2022[6] - The net loss for 2023 was RMB 4,285.4 million (USD 603.6 million), compared to a net loss of RMB 1,266.1 million in 2022[6] - Adjusted EBITDA for 2023 increased by 8.8% to RMB 4,624.1 million (USD 651.3 million), with an adjusted EBITDA margin of 46.4%[6] - The total revenue for the year ended December 31, 2023, was RMB 8,034,051,000, representing a significant increase compared to RMB 7,389,774,000 for the previous year, marking a growth of approximately 8.7%[32] - The net loss attributable to the shareholders of the company for the year ended December 31, 2023, was RMB 4,290,053,000, compared to a net loss of RMB 1,509,885,000 for the previous year, indicating a deterioration in financial performance[32] - The gross profit for the year ended December 31, 2023, was RMB 1,467,200,367, slightly down from RMB 1,469,982,015 in the previous year, reflecting a marginal decline[32] - The company’s operating loss for the year ended December 31, 2023, was RMB 4,300,170,000, compared to an operating loss of RMB 1,268,890,000 in the previous year, highlighting increased operational challenges[32] Revenue and Growth - The company achieved a net increase of 20,074 square meters in billing area in Q4 2023, contributing to revenue growth[8] - The company expects total revenue for 2024 to be between RMB 11,340 million and RMB 11,760 million, representing a year-over-year growth of approximately 13.9% to 18.1%[20] - The expected adjusted EBITDA for 2024 is projected to be between RMB 4,950 million and RMB 5,150 million, with a year-over-year growth of approximately 7.0% to 11.4%[20] - The company reported a significant increase in service revenue, contributing RMB 3,013,416,000 for the year ended December 31, 2023, compared to RMB 2,404,034,000 in the previous year, which is an increase of approximately 25.3%[32] Costs and Expenses - In Q4 2023, the cost of sales was RMB 2,124.2 million (USD 299.2 million), an increase of 10.9% year-over-year and 2.5% quarter-over-quarter[9] - Q4 2023 gross profit was RMB 432.3 million (USD 60.9 million), down 11.4% from Q4 2022 and down 3.4% from Q3 2023[9] - The adjusted gross profit for Q4 2023 was RMB 1,270.9 million (USD 179.0 million), an increase of 3.8% year-over-year and 1.9% quarter-over-quarter[9] - The sales cost for 2023 was RMB 8,034.1 million (USD 1,131.6 million), an increase of 8.7% compared to RMB 7,389.8 million in 2022[14] - Research and development expenses in Q4 2023 were RMB 12.8 million (USD 1.8 million), up from RMB 10.0 million in Q4 2022 and RMB 10.5 million in Q3 2023[10] - Research and development expenses for the year ended December 31, 2023, totaled RMB 1,402,264,000, which is a slight increase from RMB 1,272,000,000 in the previous year, indicating continued investment in innovation[32] Assets and Liabilities - Total assets as of December 31, 2023, amounted to RMB 74.81 billion, a slight increase from RMB 74.45 billion as of December 31, 2022[31] - Cash and cash equivalents reached RMB 8.61 billion, compared to RMB 7.71 billion in the previous year, reflecting a growth of approximately 11.5%[31] - Total current assets increased to RMB 11.95 billion from RMB 10.98 billion, representing a year-over-year growth of about 8.8%[31] - Total liabilities decreased to RMB 50.63 billion from RMB 54.32 billion, indicating a reduction of approximately 6.2%[31] - The company's total equity attributable to shareholders rose to RMB 23.02 billion from RMB 18.89 billion, marking an increase of around 21.2%[31] - The total current liabilities increased to RMB 10.60 billion from RMB 8.31 billion, representing a growth of approximately 27.5%[31] Operational Metrics - Total contracted and pre-contracted area increased by 6.4% year-over-year to 670,975 square meters as of December 31, 2023[7] - Operating area increased by 11.0% year-over-year to 572,555 square meters as of December 31, 2023, with a contracted rate of 92.8%[7] - The adjusted gross profit margin for Q4 2023 was 49.7%, compared to 50.9% in Q4 2022 and 49.5% in Q3 2023[9] - The company is a leading developer and operator of high-performance data centers in China and Southeast Asia, strategically located in major economic centers[28] - The customer base primarily includes large cloud service providers, reflecting the company's capability to meet high-demand outsourcing requirements[28] Future Outlook - The company plans to expand its market presence and invest in new technologies to enhance service offerings and improve financial performance in the upcoming fiscal year[32] - The company plans to expand its market presence and invest in new product development to drive future growth[36] - The company is focusing on enhancing its operational efficiency and reducing costs to improve profitability in the upcoming quarters[36] Non-GAAP Metrics - The company utilizes adjusted EBITDA and adjusted gross margin as non-GAAP financial metrics to assess operational performance and set business targets[22] - The adjusted EBITDA and adjusted gross margin metrics are not defined by GAAP and should not be solely relied upon for assessing operational performance or cash flows[24] - The company does not provide forward-looking guidance on several financial metrics, including depreciation and amortization, due to their significant impact[25] Miscellaneous - The exchange rate used for converting RMB to USD is 7.0999 RMB per 1.00 USD, effective as of December 29, 2023[26] - Preliminary unaudited financial data may undergo adjustments during the year-end audit, potentially leading to significant differences[27] - The company reported a foreign exchange loss of RMB 53,625,000 for the year ended December 31, 2023, compared to a gain in the previous year, indicating increased volatility in currency markets affecting financial results[32] - The company reported a total of RMB 2.08 billion in convertible bonds due within one year, which was not present in the previous year's figures[31] - The company has made adjustments related to acquisition price adjustments, which positively impacted its financial results[36] - The company experienced a cash outflow from operating activities amounting to RMB 1,572,410 thousand for the year[36] - Cash and restricted cash at the end of the period was RMB 3,013,416 thousand, a decrease from RMB 4,856,318 thousand at the beginning of the year[36] - The company reported a net loss of RMB 1,266,118 thousand for the year ending December 31, 2023, compared to a net loss of RMB 4,285,393 thousand for the previous year, indicating a significant improvement[36] - The company reported a significant increase in user data, with a total of 1,270,922 users, representing a growth rate of 49.7%[35]

Financial Performance - For Q3 2023, GDS Holdings reported a net revenue of RMB 2,519.0 million (USD 345.3 million), representing a year-over-year increase of 6.4% from RMB 2,367.6 million in Q3 2022[5]. - The adjusted EBITDA for Q3 2023 was RMB 1,126.3 million (USD 154.4 million), reflecting a 5.6% increase compared to RMB 1,066.6 million in Q3 2022, with an adjusted EBITDA margin of 44.7%[5][8]. - The company recorded a net loss of RMB 420.8 million (USD 57.7 million) in Q3 2023, compared to a net loss of RMB 339.7 million in Q3 2022[5]. - The gross profit for Q3 2023 was RMB 447.4 million (USD 61.3 million), a decrease of 9.2% from RMB 492.8 million in Q3 2022[8]. - The gross margin for Q3 2023 was 17.8%, down from 20.8% in Q3 2022, primarily due to increased utility costs[8]. - Adjusted gross margin for Q3 2023 was 49.5%, down from 50.7% in Q3 2022 and 53.4% in Q2 2023, primarily due to increased utility costs[9]. - The company confirmed its revenue guidance for 2023 to be between RMB 9,940 million and RMB 10,320 million, with adjusted EBITDA expected between RMB 4,430 million and RMB 4,600 million[15]. - The net loss for the nine months ended September 30, 2023, was RMB 1,120,749 thousand, compared to RMB 1,088,223 thousand for the same period in 2022, an increase in loss of approximately 3%[30]. Operational Metrics - The total contracted and pre-contracted area increased by 16,072 square meters to 653,732 square meters as of September 30, 2023, a year-over-year growth of 5.7%[6]. - The operational area increased by 22,994 square meters to 554,210 square meters, marking an 8.6% year-over-year increase[6]. - The utilization rate of the operational area was 91.9% as of September 30, 2023, down from 95.6% a year earlier[6]. - The billing area increased by 15,878 square meters to 398,674 square meters, a 10.8% year-over-year increase[6]. - Total signed and pre-signed area at the end of Q3 2023 was 653,732 square meters, a year-over-year increase of 5.7% and a quarter-over-quarter increase of 2.5%[13]. - Operating area at the end of Q3 2023 was 554,210 square meters, an 8.6% year-over-year increase and a 4.3% quarter-over-quarter increase[14]. Expenses and Costs - Sales and marketing expenses for Q3 2023 were RMB 26.3 million (USD 3.6 million), a decrease of 9.7% year-over-year and an increase of 14.7% quarter-over-quarter[9]. - R&D expenses in Q3 2023 amounted to RMB 10.5 million (USD 1.4 million), up from RMB 6.7 million in Q3 2022 and RMB 5.0 million in Q2 2023[10]. - The company incurred net interest expenses of RMB 503,156 thousand for the three months ended September 30, 2023, compared to RMB 444,328 thousand for the same period in 2022, an increase of approximately 13%[29]. - The interest expense for the nine months ended September 30, 2023, was RMB 1,457,055 thousand, an increase from RMB 1,368,647 thousand in the same period of 2022[33]. - The company incurred share-based compensation expenses of RMB 255,851 thousand for the nine months ended September 30, 2023[33]. Cash and Debt Position - As of September 30, 2023, cash was RMB 7,524.9 million (USD 1,031.4 million) and total short-term debt was RMB 3,024.4 million (USD 414.5 million)[16]. - The company obtained new debt financing and refinancing credit of RMB 6,255.1 million during Q3 2023[16]. - The company's cash position was RMB 8,608,131 thousand as of September 30, 2023, compared to RMB 7,524,894 thousand at the end of 2022, marking an increase of around 14.4%[28]. - The total current liabilities increased to RMB 10,603,375 thousand as of September 30, 2023, from RMB 7,397,741 thousand at the end of 2022, representing a substantial rise of approximately 43.5%[28]. - The cash flow from financing activities for the nine months ended September 30, 2023, was RMB 2,765,599 thousand, compared to RMB 3,996,347 thousand in the same period of 2022[31]. Assets and Equity - The total current assets amounted to RMB 11,951,076 thousand, an increase from RMB 11,255,404 thousand as of December 31, 2022, representing a growth of approximately 6.2%[28]. - The total assets of GDS Holdings reached RMB 74,813,954 thousand as of September 30, 2023, compared to RMB 76,842,279 thousand at the end of 2022, indicating a decrease of about 2.7%[28]. - The total liabilities stood at RMB 50,629,299 thousand as of September 30, 2023, down from RMB 53,763,354 thousand at the end of 2022, reflecting a reduction of approximately 5.0%[28]. - GDS Holdings reported a total equity of RMB 23,137,643 thousand as of September 30, 2023, up from RMB 21,999,711 thousand at the end of 2022, which is an increase of approximately 5.2%[28]. - The company has a significant amount of goodwill and intangible assets valued at RMB 8,124,214 thousand as of September 30, 2023, compared to RMB 7,945,607 thousand at the end of 2022, showing an increase of about 2.3%[28]. Strategic Focus - The company is focusing on strengthening its financial position and advancing strategic initiatives to maximize return on invested capital and deliver long-term value to shareholders[7]. - The company is focused on expanding its high-performance data center solutions in China and Southeast Asia, anticipating growth in demand for cloud computing services[25]. - The management uses adjusted EBITDA and adjusted gross margin as key performance indicators to evaluate operational performance and set business goals[18]. - The company emphasizes that non-GAAP financial metrics should not be considered in isolation from GAAP metrics when assessing financial performance[19]. Conference and Forward-Looking Statements - The company will hold a conference call on November 22, 2023, at 8:00 AM ET to discuss financial performance and answer investor questions[17]. - Forward-looking statements are made in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995[24].

Financial Reporting - The company reported unaudited interim consolidated financial information for the six months ended June 30, 2023, prepared in accordance with US GAAP[3]. - Significant differences between US GAAP and IFRS were identified, impacting the financial results[7]. - The interim report was published on August 22, 2023, detailing financial performance for the three and six months ended June 30, 2023[2]. - The board of directors is responsible for the preparation of the reconciliation statement, which outlines the financial impacts of the differences between accounting policies[4]. - KPMG was engaged to conduct limited assurance work on the reconciliation statement, ensuring compliance with relevant standards[6]. - The reconciliation process involved comparing financial data reported under US GAAP with corresponding figures disclosed in the interim report[5]. - The interim financial results are subject to review and may differ from the final audited results[3]. Financial Performance - For the six months ended June 30, 2023, the company reported a gross profit of $1,042.7 million, reflecting a gross margin of approximately 27.2%[9]. - The operating profit for the same period was $398.8 million, with operating expenses amounting to $559.0 million[9]. - The net loss attributable to the shareholders of the company was $729.1 million, compared to a net loss of $962.3 million for the previous period[9]. - Total assets as of June 30, 2023, were reported at $74.8 billion, with total liabilities of $50.6 billion[10]. - The company incurred interest expenses of $953.9 million during the six-month period, contributing to the overall net loss[9]. - The company’s cash and cash equivalents were reported at $1.5 billion as of June 30, 2023[10]. Market Strategy and Growth - The company plans to focus on expanding its market presence and enhancing its product offerings in the upcoming quarters[9]. - The company reported a significant increase in user data, with a total of 1.2 million new users added in the last quarter[9]. - The company is investing in new technology development, with a budget allocation of $200 million for R&D in the next fiscal year[9]. - The company anticipates a revenue growth of 15% year-over-year for the next quarter, driven by new product launches and market expansion strategies[9]. Asset and Liability Overview - Total assets reported at $77,054,564, with a decrease of $142,274 compared to the previous period[11]. - Total liabilities amount to $53,665,517, reflecting a decrease of $1,807,467 in convertible bonds[11]. - Shareholders' equity totals $22,172,987, down by $227,116 from the last reporting period[11]. - Net property and equipment valued at $48,741,000, with an increase of $5,447,856[11]. - Current assets stand at $12,180,331, showing a slight decrease of $1,223[11]. - The company reported a cumulative loss of $(5,882,623), which includes a decrease of $(226,864) in the current period[11]. - The goodwill and intangible assets net value is $8,027,083, with a decrease of $39,305[11]. - The company has a total of $1,086,128 in redeemable preferred stock, classified as mezzanine equity[11]. - Long-term asset impairment losses are calculated using a two-step method under US GAAP, affecting the reported values[16].