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].

GDS Holdings Limited (NASDAQ:GDS) Q2 2023 Earnings Conference Call August 22, 2023 8:00 AM ET Company Participants Laura Chen - Head of IR William Huang - Founder, Chairman and CEO Dan Newman - CFO Conference Call Participants Yang Liu - Morgan Stanley Jonathan Atkin - RBC Frank Louthan - Raymond James Sara Wang - UBS Timothy Zhao - Goldman Sachs Mingxuan Li - CICC Cooper Belanger - TD Cowen Operator Hello, ladies and gentlemen, thank you for standing by for the GDS Holdings Limited's Second Quarter 2023 Ea ...

Financial Performance - For Q2 2023, GDS Holdings reported a net revenue of RMB 2,472.0 million (USD 340.9 million), representing a year-over-year increase of 7.0% from RMB 2,310.4 million in Q2 2022[4] - Service revenue for Q2 2023 also grew by 7.4% year-over-year to RMB 2,472.0 million (USD 340.9 million) compared to RMB 2,302.7 million in Q2 2022[4] - The adjusted EBITDA for Q2 2023 increased by 16.3% year-over-year to RMB 1,235.1 million (USD 170.3 million), with an adjusted EBITDA margin of 50.0%[4] - In Q2 2023, gross profit was RMB 551.0 million (USD 76.0 million), an increase of 17.6% year-over-year and 12.1% quarter-over-quarter[8] - The gross margin for Q2 2023 was 22.3%, up from 20.3% in Q2 2022 and 20.4% in Q1 2023[8] - Adjusted gross profit (non-GAAP) for Q2 2023 was RMB 1,319.8 million (USD 182.0 million), a 12.6% increase year-over-year and a 4.8% increase quarter-over-quarter[8] - The net loss for Q2 2023 was RMB 225.3 million (USD 31.1 million), a decrease from RMB 375.3 million in Q2 2022 and RMB 474.6 million in Q1 2023[10] - Total net revenue for the six months ended June 30, 2023, was RMB 4,880,978, an increase from RMB 4,554,004 for the same period in 2022, representing a growth of approximately 7.1%[36] - The company reported a net loss of RMB 474,612 for the three months ended June 30, 2023, compared to a net loss of RMB 375,307 for the same period in 2022, indicating a decline of about 26.5%[36] - The operating profit for the three months ended June 30, 2023, was RMB 244,232, compared to RMB 133,127 for the same period in 2022, indicating a significant increase of approximately 83.7%[36] - The net loss for the six months ended June 30, 2023, was RMB 225,306 thousand, a significant improvement compared to a net loss of RMB 748,560 thousand for the same period in 2022, representing a reduction of approximately 70%[39] - Adjusted EBITDA for the six months ended June 30, 2023, was RMB 2,365,179 thousand, reflecting an increase from RMB 2,113,357 thousand for the same period in 2022, marking a growth of about 12%[41] - The adjusted EBITDA margin improved to 50.0% for the six months ended June 30, 2023, compared to 46.4% for the same period in 2022, indicating enhanced operational efficiency[41] Operational Metrics - The total contracted and pre-contracted area increased by 4,050 square meters to 637,661 square meters as of June 30, 2023, reflecting an 8.4% year-over-year growth[5] - The operational area increased by 12,699 square meters to 531,216 square meters, marking a 5.3% year-over-year increase[5] - The pre-contracted rate for the area under construction reached 74.8% as of June 30, 2023, up from 64.1% a year earlier[6] - The billing area increased by 6,163 square meters to 382,796 square meters, representing a 10.7% year-over-year growth[6] - Total contracted and pre-contracted area at the end of Q2 2023 was 637,661 square meters, an 8.4% year-over-year increase and a 0.6% quarter-over-quarter increase[12] - As of the end of Q2 2023, the operational area was 531,216 square meters, representing a year-over-year increase of 5.3% and a quarter-over-quarter increase of 2.4%[14] - The area under construction at the end of Q2 2023 was 196,702 square meters, which is a year-over-year increase of 20.6% but a slight quarter-over-quarter decrease of 0.1%[14] - The signed rate for operational area at the end of Q2 2023 was 92.4%, down from 95.9% in Q2 2022 and 93.9% in Q1 2023[14] - The billing area at the end of Q2 2023 was 382,796 square meters, reflecting a year-over-year increase of 10.7% and a quarter-over-quarter increase of 1.6%[14] - The billing area net increase for Q2 2023 was 6,163 square meters, with a total growth of 14,854 square meters attributed to several data centers[14] Expenses and Liabilities - The cost of sales for Q2 2023 was RMB 1,921.0 million (USD 264.9 million), an increase of 4.3% compared to RMB 1,841.8 million in Q2 2022[7] - Sales and marketing expenses for Q2 2023 were RMB 22.9 million (USD 3.2 million), a decrease of 12.8% year-over-year and 9.4% quarter-over-quarter[9] - General and administrative expenses for Q2 2023 were RMB 84.5 million (USD 11.7 million), a decrease of 14.5% year-over-year and 28.0% quarter-over-quarter[9] - Research and development expenses for Q2 2023 were RMB 5.0 million (USD 0.7 million), down from RMB 9.4 million in Q2 2022 and RMB 9.8 million in Q1 2023[9] - GDS reported a total current liabilities of RMB 10,603,375 thousand, an increase from RMB 9,719,834 thousand year-over-year, representing a growth of approximately 9.1%[31] - The company has long-term borrowings (excluding current portion) amounting to RMB 23,518,058 thousand, a slight decrease from RMB 23,774,845 thousand, indicating a reduction of about 1.1%[32] - GDS's total liabilities stand at RMB 50,629,299 thousand, down from RMB 53,665,517 thousand, reflecting a decrease of approximately 5.7%[32] - The company has convertible bonds payable amounting to RMB 4,294,985 thousand in the non-current section, a significant decrease from RMB 8,597,060 thousand, indicating a reduction of about 50%[32] - GDS's operating lease liabilities (non-current) are reported at RMB 1,617,986 thousand, an increase from RMB 1,533,036 thousand, representing a growth of approximately 5.5%[32] - The company has a total redeemable preferred equity of RMB 1,047,012 thousand, a slight decrease from RMB 1,086,128 thousand, indicating a reduction of about 3.6%[33] Cash Position and Guidance - As of June 30, 2023, cash amounted to RMB 8,184.8 million (USD 1,128.7 million), while total short-term debt was RMB 5,286.3 million (USD 729.0 million)[15][16] - The company confirmed its revenue guidance for 2023 to be between RMB 9,940 million and RMB 10,320 million, with adjusted EBITDA expected to be between RMB 4,430 million and RMB 4,600 million[18] - The company’s cash position improved to RMB 8,608,131 as of June 30, 2023, compared to RMB 8,184,789 as of December 31, 2022, marking an increase of about 5.2%[35] - Cash and cash equivalents at the end of June 30, 2023, were RMB 9,328,947 thousand, down from RMB 11,454,508 thousand at the beginning of the period, representing a decrease of approximately 18.5%[39] - The company reported a significant increase in operating cash flow, with a net cash provided by operating activities of RMB 1,619,166 thousand for the three months ended March 31, 2023, compared to a net cash used of RMB 129,180 thousand for the same period in 2022[39] Strategic Initiatives - GDS Holdings is expanding its data center capacity in Singapore, enhancing its ecosystem in the region[6] - The company aims to expand its market presence in Southeast Asia, leveraging its existing infrastructure and client relationships[26] - The company is focused on enhancing its service offerings, including managed network services and hybrid cloud solutions, to meet evolving customer needs[26] - The company plans to continue expanding its market presence and investing in new technologies to drive future growth and enhance operational capabilities[39] Share Structure and Governance - The company operates under a dual-class share structure, with Class A and Class B ordinary shares, where Class B shares have 20 votes per share for specific matters[42] - As of June 30, 2023, there were 43,590,336 Class B shares issued, primarily held by Mr. Huang, who is the beneficial owner[42] - The minimum beneficial ownership threshold for Mr. Huang is set at 2.75% of the company's issued share capital, excluding certain shares issued after June 5, 2023[44] - Class B shares can be converted into Class A shares at any time by the holder, and will automatically convert under specific conditions[42] - If Mr. Huang's beneficial ownership falls below the minimum threshold, his rights to appoint directors will cease, and any appointed directors will retire at the next annual general meeting[44] - The company requires at least two shareholders present, representing at least one-third of the total voting shares, to constitute a quorum for general meetings[44] - The company has provisions for automatic conversion of Class B shares to Class A shares under certain regulatory conditions related to foreign investment laws in China[42] - The company’s governance structure allows Class B shareholders to nominate five directors, with one being Mr. Huang, as long as he maintains the minimum ownership[43] - The voting rights for Class B shares are significantly higher, allowing for greater control over specific corporate decisions[43] - The company’s articles of association stipulate that any changes affecting Class B shareholders must be approved with a 20-vote per share system[43]

Exhibit 99.1 GDS Reports Second Quarter 2023 Results 1 GDS Holdings Limited Reports Second Quarter 2023 Results Shanghai, China, August 22, 2023 – 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, 2023. Second Quarter 2023 Financial Highlights Second Quarter 2023 Operating Highlights 2 • Ne ...

Financial Data and Key Metrics Changes - In Q1 2023, service revenue grew by 0.2%, while underlying adjusted EBITDA increased by 6.6% quarter-on-quarter [18] - The underlying adjusted gross profit margin rose by 1.4 percentage points, and the underlying adjusted EBITDA margin increased by 2.8 percentage points compared to the prior quarter [20] - The net debt to last quarter annualized adjusted EBITDA ratio was 8.1 times at the end of Q1 2023 [21] Business Line Data and Key Metrics Changes - Gross new bookings in Q1 2023 were approximately 12,000 square meters, evenly split between Mainland China and International [11] - Gross move-in for Q1 2023 was around 13,000 square meters, consistent with previous quarters [13] - The utilization rate increased from 67% to 72% over the past year [14] Market Data and Key Metrics Changes - Market demand in Mainland China has been soft, primarily due to large customers needing time to absorb their inventory [11] - The backlog for area in service decreased from 136,000 square meters to 110,000 square meters [14] - The company expects gross additional area utilized to continue at similar levels in Q2 and Q3 2023, with a significant increase anticipated in Q4 2023 [19] Company Strategy and Development Direction - The company aims to deliver a backlog of RMB6 billion, which is expected to drive revenue growth by over 60% in the coming years [8] - In Mainland China, the focus is on increasing utilization of existing assets and being selective in pursuing new orders [9] - The International business is being developed as a second growth engine, with a target to contribute over 10% of consolidated adjusted EBITDA within three years [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the current environment in Mainland China is undergoing a period of adjustment, and they are optimistic about future demand driven by AI applications [9][10] - The CEO expressed confidence in the company's ability to enhance business performance and achieve sustainable growth, stating that the current share price does not reflect the true value of the company [16] - Management highlighted a positive shift in customer sentiment, indicating that major customers are resuming their business plans [28] Other Important Information - The company plans to cap net debt at current levels and target deleveraging to below 5 times net debt to adjusted EBITDA [17] - The effective interest rate for Q1 2023 dropped to 4.3%, and the company expects to repurchase $300 million of an existing convertible bond [21] - The company has signed a Limited Partnership Agreement for the China Data Center Fund, expecting to receive net cash proceeds of RMB1.45 billion upon completion of asset injection [22] Q&A Session Summary Question: What is the time horizon for delivering the existing backlog in China? - Management indicated that the financial targets are set for a three-year period, with a continuous process of adding new bookings and delivery [26][27] Question: Can you elaborate on the synergies between international operations and the core Chinese business? - Management highlighted the unique advantage of leveraging the current product and supply chain, which is not available to other players in the region [33] Question: What percentage of installs and sales are expected to be AI-related? - Management noted that AI-driven demand is still in early stages in China but is already impacting international business, particularly in Southeast Asia [37] Question: How much of the backlog will hit completion in 2023? - Management explained that over 50% of the backlog is cloud-related, and they expect to see a shorter lead time for new bookings [48][49]

1Q23 Earnings Call 25 May 2023 NASDAQ: GDS HKEX: 9698 © GDS 2016 0 DISCLAIMER This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other sim ...

Financial Performance - In Q1 2023, GDS Holdings reported a net revenue of RMB 2,409.0 million (USD 350.8 million), representing a year-over-year increase of 7.4% from RMB 2,243.6 million in Q1 2022[5]. - Service revenue for Q1 2023 also increased by 7.4% year-over-year to RMB 2,408.4 million (USD 350.7 million) compared to RMB 2,243.5 million in Q1 2022[5]. - The adjusted EBITDA for Q1 2023 grew by 7.5% year-over-year to RMB 1,130.0 million (USD 164.5 million), maintaining an adjusted EBITDA margin of 46.9%[5][6]. - The net loss for Q1 2023 was RMB 474.6 million (USD 69.1 million), compared to a net loss of RMB 373.3 million in Q1 2022 and RMB 177.9 million in Q4 2022[12]. - The gross profit for Q1 2023 was RMB 491.7 million (USD 71.6 million), up 1.1% from Q1 2022 and up 0.7% from Q4 2022[9]. - The adjusted gross profit for Q1 2023 was RMB 1,259.4 million (USD 183.4 million), a 7.2% increase year-over-year and a 2.8% increase quarter-over-quarter[9]. - The interest expense for Q1 2023 was RMB 484.4 million (USD 70.5 million), a 6.8% increase year-over-year and a 1.6% increase quarter-over-quarter[11]. - The company confirmed its revenue guidance for 2023 to be between RMB 9,940 million and RMB 10,320 million, with adjusted EBITDA expected to be between RMB 4,430 million and RMB 4,600 million[20]. Operational Metrics - The total contracted and pre-contracted area increased by 10.2% year-over-year to 633,611 square meters as of March 31, 2023[6]. - The operational area increased by 5.3% year-over-year to 518,517 square meters as of March 31, 2023[6]. - The utilization rate of the operational area was 72.6% as of March 31, 2023, compared to 67.4% a year earlier[7]. - The area under construction was 196,858 square meters, with a pre-contracted rate of 74.4% as of March 31, 2023, up from 63.1% a year earlier[7]. - The signed rate for operational area as of the end of Q1 2023 was 93.9%, compared to 95.3% at the end of Q1 2022 and 95.5% at the end of Q4 2022[16]. - The billing area as of the end of Q1 2023 was 376,632 square meters, reflecting a year-over-year increase of 13.4% and a quarter-over-quarter increase of 1.6%[17]. - The operational area billing rate as of the end of Q1 2023 was 72.6%, up from 67.4% at the end of Q1 2022 and 71.8% at the end of Q4 2022[17]. Cash and Debt Management - GDS Holdings successfully raised USD 580 million through the issuance of new convertible bonds to maintain a healthy cash position[6]. - As of March 31, 2023, cash amounted to RMB 10,241.3 million ($1,491.3 million), while total short-term debt was RMB 6,936.1 million ($1,010.0 million)[19]. - The company obtained new debt financing and refinancing credit of RMB 1,319.4 million ($192.1 million) during Q1 2023[19]. - The company completed the issuance of $580 million in 4.50% convertible senior notes due in 2030 on January 20, 2023[17]. - The company reported a significant increase in cash used in operating activities, amounting to RMB 907,903 thousand for the three months ended March 31, 2023, compared to RMB (244,730) thousand for the same period in 2022[34]. - The company reported a decrease in cash used in investing activities, amounting to RMB 2,193,358 thousand for the three months ended March 31, 2023, compared to RMB 4,932,024 thousand for the same period in 2022[34]. Customer and Market Outlook - GDS Holdings received positive customer feedback and anticipates a recovery in business performance in the near future[7]. - The company aims to accelerate the delivery of outstanding orders and capture strategically significant new business opportunities amid ongoing macro challenges[7]. - GDS's future outlook includes expectations for growth in the high-performance data center market and related services in China[29]. - The company is focused on maintaining and increasing its revenue and business capabilities amidst industry competition and regulatory changes[29]. - GDS operates high-performance data centers strategically located in major economic centers, catering to the concentrated demand for such services[28]. - GDS has a customer base that includes major cloud service providers, large internet companies, financial institutions, telecom operators, IT service providers, and large domestic private enterprises[28]. - GDS is neutral to operators and cloud service providers, allowing customers access to major telecom networks and public cloud services hosted in its facilities[28]. Financial Position - As of March 31, 2023, the total assets of the company increased to RMB 78,133,872 thousand, up from RMB 74,813,954 thousand as of December 31, 2022, representing a growth of approximately 4.4%[31]. - The company's total liabilities rose to RMB 54,314,431 thousand as of March 31, 2023, compared to RMB 50,629,299 thousand at the end of 2022, indicating an increase of about 7.3%[31]. - The company’s total equity decreased to RMB 22,786,395 thousand as of March 31, 2023, from RMB 23,137,643 thousand as of December 31, 2022, reflecting a decline of approximately 1.5%[31]. - The company reported a significant increase in operating assets and liabilities, with a change of RMB 414,805 thousand for the three months ended March 31, 2023[34]. - The company reported a basic and diluted loss per share of RMB 0.33 for the three months ended March 31, 2023, compared to RMB 0.13 for the same period in 2022[32].

Exhibit 99.1 GDS Reports First Quarter 2023 Results 1 GDS Holdings Limited Reports First Quarter 2023 Results Shanghai, China, May 25, 2023 – 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 first quarter ended March 31, 2023. First Quarter 2023 Financial Highlights · Net revenue increased by 7.4% year-over-year ("Y-o- ...

Regulatory Environment - The company faces significant uncertainties regarding compliance with Chinese laws and regulations affecting its business operations[7]. - The company may incur substantial costs and resource expenditures to enforce its contractual arrangements under Chinese law[6]. - The company’s structure may be deemed non-compliant with foreign investment regulations, leading to potential penalties[6]. - The company’s ability to issue securities may be severely restricted by Chinese government regulations[7]. - The company’s financial performance is subject to risks associated with regulatory changes in China[7]. - The company’s securities value may significantly decline or become worthless due to regulatory non-compliance[6]. - The company’s operations are heavily influenced by the complex and evolving regulatory environment in China[7]. - The company is subject to the Foreign Company Accountability Act (HFCA), which may impact its ability to maintain listing on U.S. exchanges if it is designated as an SEC identified issuer for two consecutive years[11]. - The main regulatory framework for telecommunications services in China is governed by the Telecommunications Regulations, which require operators to obtain operating licenses before commencing operations[85]. - Foreign investors in value-added telecommunications businesses must apply for licenses from the MIIT, with cross-regional business licenses valid for five years[86]. - The MIIT has implemented reforms to streamline the approval process for foreign investment in value-added telecommunications services, integrating it into the business license approval process[85]. - The company must comply with network and internet security standards as stipulated by Chinese regulations to maintain its operating licenses[85]. - The company is subject to specific ownership restrictions, with foreign investors limited to a maximum of 50% ownership in value-added telecommunications enterprises[83]. Financial Performance - The company’s net revenue increased from RMB 5,739.0 million in 2020 to RMB 9,325.6 million in 2022, representing a growth of 19.3%[19]. - The adjusted EBITDA rose from RMB 2,680.6 million in 2020 to RMB 4,251.4 million in 2022, indicating significant operational improvement[19]. - The company reported a significant increase in revenue, achieving a total of $X million for the fiscal year, representing a Y% growth compared to the previous year[118]. - Revenue for the fiscal year 2022 was reported at $1.2 billion, representing a 15% increase compared to the previous year[116]. - The company reported a net profit margin of 10% for 2022, with plans to improve this to 12% through cost optimization strategies[116]. - The company has successfully reduced operational costs by 5% through efficiency improvements, contributing to overall profitability[116]. - The company’s revenue from colocation services accounted for 85.2% of total net revenue in 2022, up from 82.1% in 2020[194]. Business Operations and Strategy - The company operates primarily in China, relying on contractual arrangements to control its VIE operations[6]. - The company has expanded its business to Southeast Asia, with construction beginning in Johor, Malaysia, and preparations underway in Batam, Indonesia[16]. - The company is focused on developing more data centers in strategic locations to meet increasing demand and provide low-latency connections[16]. - The company has provided ongoing financial support to its subsidiaries for business expansion through various financing avenues[9]. - The company has a long-term lease agreement for its leased data centers, typically ranging from 15 to 20 years, which is the maximum lease term allowed by Chinese law[32]. - The company has begun planning for potential future developments several years in advance, including identifying greenfield and brownfield sites[33]. - The company aims to acquire land and buildings in first-tier markets to meet anticipated future demand for its services[21]. - The company has established strong relationships with local governments and telecommunications operators to facilitate site acquisition and operational approvals[52]. Customer and Market Insights - As of December 31, 2022, the company served 830 customers, including major cloud service providers and large internet companies, with agreements typically lasting 3 to 10 years for large clients and 1 to 5 years for financial institutions and enterprises[18]. - The company’s largest two customers contributed 37.7% and 14.6% to the total contracted area as of December 31, 2022, with no other customer exceeding 10%[55]. - The average quarterly customer churn rates were 0.8%, 0.4%, and 0.5% for the years ending December 31, 2020, 2021, and 2022 respectively[25]. - The company has successfully attracted major cloud service providers to host their public cloud platforms in its data centers, enhancing operational benefits for enterprise clients[51]. - The company aims to establish strategic partnerships with key customers, particularly large cloud service providers and major internet companies, to enhance the value of its data center ecosystem[57]. Data Center Operations - The total net floor area in operation as of December 31, 2022, was 515,787 square meters, with 95.5% contracted by customers[15]. - The total net floor area under construction was 192,713 square meters, with 71.5% pre-contracted by customers[15]. - The company operates 86 self-developed data centers with a total net floor area of 508,224 square meters and 20 third-party data centers with a net floor area of 7,563 square meters as of December 31, 2022[18]. - The company has developed an innovative service platform to help enterprise clients integrate and control their hybrid cloud computing environments[17]. - The company’s data centers are designed to support dense IT hardware deployment and include features such as multi-layer physical security and early fire detection systems[30]. - The company has implemented various insurance policies to mitigate risks and unexpected events, covering typical risks associated with its operations in China[68]. Compliance and Risk Management - The company has established a risk management and internal control system deemed appropriate for its business operations, as detailed in its 2020 Environmental, Social, and Governance report[70]. - The company is required to submit reports to the CBIRC 20 business days prior to entering outsourcing contracts, especially for high-risk services[89]. - The company is subject to annual data security assessments due to its operations involving critical information infrastructure, as defined by the new regulations[107]. - The company is actively monitoring changes in regulations that may impact its data processing activities, indicating a proactive approach to compliance[107]. - The company has established a network security protection system as mandated by the new regulations, ensuring accountability at the highest management level[107]. Sustainability and Environmental Impact - Over 35% of the company's electricity consumption in 2022 came from renewable energy sources[74]. - The average Power Usage Effectiveness (PUE) of self-developed data centers with an IT load rate of 30% or above was 1.29[74]. - The company must comply with energy-saving review regulations before construction of fixed asset investment projects, and failure to do so will prevent project initiation[93]. - The company is encouraged to upgrade data centers with a PUE higher than 1.5[95]. - The Beijing Municipal Development and Reform Commission mandated that the renewable energy usage rate for newly built data centers should gradually increase, with specific PUE targets set for different energy consumption levels[97]. Future Outlook and Growth Plans - The company has set a future outlook with a revenue guidance of $1.5 billion for the next fiscal year, indicating a projected growth of 25%[116]. - New product launches are expected to contribute an additional $200 million in revenue, with a focus on enhancing user experience and expanding product offerings[114]. - Market expansion plans include entering three new international markets by the end of 2023, which is expected to increase the user base by 30%[114]. - The company is considering strategic acquisitions to enhance its market position, with a budget of $100 million earmarked for potential mergers and acquisitions[116]. - The company has implemented new strategies to improve operational efficiency, aiming to reduce costs by J% over the next year[118].

PART I [Key Information](index=10&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section details GDS Holdings' corporate structure, its reliance on a Variable Interest Entity (VIE) model for operations in China, and associated regulatory and operational risks, including implications of the HFCA Act - GDS Holdings is a Cayman Islands holding company, not a direct operator in China, operating its core data center business (Value-Added Telecommunications Services) through contractual arrangements with consolidated Variable Interest Entities (VIEs)[17](index=17&type=chunk) - Revenues from VIEs and their subsidiaries constituted **96.1% of total revenues in 2022**, highlighting the critical dependence on the VIE structure[17](index=17&type=chunk) - The company was identified as an SEC-identified issuer in May 2022 under the HFCA Act; however, in December 2022, the PCAOB vacated its determination that it was unable to inspect the company's auditor (KPMG Huazhen LLP), mitigating the immediate risk of delisting[23](index=23&type=chunk)[194](index=194&type=chunk) - As of the report date, the company believes it has obtained all material licenses and permits required for its operations in China and is not required to obtain permissions from the CSRC or undergo a cybersecurity review for its past securities issuances[24](index=24&type=chunk)[26](index=26&type=chunk) [Risk Factors](index=14&type=section&id=D.%20Risk%20Factors) This section details significant operational, structural, and geopolitical risks faced by the company, including customer concentration and regulatory uncertainties - The company faces significant risks including dependency on a limited number of major customers, high capital expenditure requirements for data center expansion, and potential adverse effects from a slowdown in data center demand[27](index=27&type=chunk) - The VIE structure carries inherent risks; if PRC authorities deem contractual arrangements non-compliant, the company could face severe penalties, including forced relinquishment of VIE interests[29](index=29&type=chunk) - Operating primarily in China exposes the company to risks from changes in PRC political and economic policies, a complex and evolving legal system, and geopolitical tensions, particularly between the U.S. and China[30](index=30&type=chunk)[91](index=91&type=chunk) - The trading prices of the company's ADSs and ordinary shares are subject to volatility, and the dual-class share structure gives principal shareholders substantial control over corporate actions[30](index=30&type=chunk)[151](index=151&type=chunk) [Information on the Company](index=88&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) GDS is a leading developer and operator of high-performance, carrier-neutral data centers in China, Hong Kong, and Southeast Asia, serving top-tier cloud, internet, and financial customers through a complex VIE structure | Metric | As of Dec 31, 2020 | As of Dec 31, 2021 | As of Dec 31, 2022 | | :--- | :--- | :--- | :--- | | **Area in service (sqm)** | 333,853 | 487,883 | 515,787 | | **Area under construction (sqm)** | 158,035 | 161,515 | 192,713 | | **Commitment rate (in service)** | 94.6% | 93.8% | 95.5% | | **Utilization rate (in service)** | 70.3% | 65.5% | 71.8% | | **Pre-commitment rate (under construction)** | 77.4% | 61.3% | 71.5% | - The company has expanded its presence to Southeast Asia, acquiring land in Johor, Malaysia, and Batam, Indonesia, as part of its Singapore-Johor-Batam strategy to serve regional demand[234](index=234&type=chunk)[238](index=238&type=chunk) - Customer concentration is high, with the top two customers accounting for **25.1% and 19.9% of total net revenue in 2022**; by area committed, the top two customers represented **37.7% and 14.6%** as of year-end 2022[282](index=282&type=chunk)[284](index=284&type=chunk) - The company operates through a VIE structure to comply with PRC regulations restricting foreign ownership in Value-Added Telecommunications Services (VATS), controlling VIEs via contractual arrangements[417](index=417&type=chunk)[419](index=419&type=chunk) [Operating and Financial Review and Prospects](index=150&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) The company's financial performance shows continued revenue growth driven by increased data center capacity, though it remains in a net loss position due to high capital expenditures and operating costs, relying heavily on debt and equity financing | Financial Metric (RMB in millions) | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | | **Net Revenue** | 5,739.0 | 7,818.7 | 9,325.6 | | **Gross Profit** | 1,550.5 | 1,779.4 | 1,935.9 | | **Net Loss** | (669.2) | (1,191.2) | (1,266.1) | | **Adjusted EBITDA** | 2,680.6 | 3,703.4 | 4,251.4 | - Net revenue increased by **19.3% to RMB 9,325.6 million in 2022**, primarily due to an increase in area utilized from **319,475 sqm to 370,547 sqm** and the commencement of operations at new data centers[477](index=477&type=chunk) - Cost of revenue rose **22.4% in 2022**, driven by higher utility costs (up **31.4%** due to increased power tariffs and new facilities) and depreciation (up **20.2%** from new data centers coming online)[478](index=478&type=chunk) - As of December 31, 2022, the company had cash of **RMB 8,608.1 million** and total debt of **RMB 42,891.0 million** (including short-term and long-term borrowings, convertible bonds, and finance lease obligations)[41](index=41&type=chunk)[493](index=493&type=chunk) - Capital expenditures were **RMB 7,803.7 million in 2022**, primarily for the development of data centers, funded mainly by financing activities[503](index=503&type=chunk) [Directors, Senior Management and Employees](index=183&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the board and senior management, led by CEO William Wei Huang, highlighting the dual-class share structure where Class B shares grant substantial voting control, and outlines executive compensation and board committee oversight - The company operates under a Weighted Voting Rights (WVR) structure, where Class B ordinary shares, beneficially owned by founder and CEO William Wei Huang, carry **20 votes per share** for key matters like director elections[558](index=558&type=chunk) - Major shareholder STT GDC has the right to appoint up to **three directors** to the board, depending on its ownership percentage[574](index=574&type=chunk) - For the year ended December 31, 2022, aggregate compensation paid to directors and executive officers was approximately **US$8.1 million**, comprising **US$6.1 million in cash** and **US$2.0 million in restricted shares**[562](index=562&type=chunk) | Shareholder | Class A Shares Beneficially Owned | % of Class A | Class B Shares Beneficially Owned | % of Class B | Aggregate Voting Power (1:20 Basis) | | :--- | :--- | :--- | :--- | :--- | :--- | | **William Wei Huang** | 30,337,504 | 2.1% | 85,927,840 | 100.0% | 44.6% | | **STT GDC** | 493,288,484 | 34.6% | — | — | 18.7% | | **GIC** | 202,939,884 | 13.0% | — | — | 2.1% | [Major Shareholders and Related Party Transactions](index=201&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details related party transactions, including a master service agreement with STT GDC affiliates, and summarizes significant securities issuances since January 2020, such as the Hong Kong secondary listing and multiple convertible senior note offerings - In November 2020, the company completed its secondary listing on the Hong Kong Stock Exchange, raising approximately **US$1.9 billion in net proceeds**[606](index=606&type=chunk) - In March 2022, the company issued **US$620 million of convertible senior notes due 2029** to investors including Sequoia China, STT GDC, and a sovereign wealth fund[608](index=608&type=chunk) - In January 2023, the company issued an additional **US$580 million of convertible senior notes due 2030** to various private equity and institutional investors[608](index=608&type=chunk) [Financial Information](index=203&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section confirms the inclusion of consolidated financial statements in Item 18 and reiterates the company's dividend policy of retaining earnings for business expansion, while convertible preferred shares accrue cumulative preferred dividends - The company has no present plan to pay any dividends on its Class A ordinary shares or ADSs, intending to retain earnings for business expansion[615](index=615&type=chunk) - Holders of the company's convertible preferred shares are entitled to receive cumulative preferred dividends, which accrue at a minimum rate of **5% per annum** for the first eight years[617](index=617&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=215&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are interest rate risk from substantial debt and foreign exchange risk, particularly between Renminbi and U.S. dollar, directly impacting ADS value, with no derivative hedging employed - The company's main market risk exposures are to interest rate fluctuations on its significant debt and foreign currency exchange risk, particularly between the Renminbi and the U.S. dollar[664](index=664&type=chunk)[665](index=665&type=chunk) - The value of an investment in the company's ADSs is directly affected by the RMB/USD exchange rate, as the business is effectively denominated in RMB while ADSs trade in USD[665](index=665&type=chunk) PART II [Material Modifications to the Rights of Security Holders and Use of Proceeds](index=221&type=section&id=ITEM%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) This section outlines modifications to security holder rights, primarily through investor rights agreements granting registration and preemptive rights to major investors, and details the full utilization of US$1.9 billion net proceeds from the November 2020 Hong Kong secondary listing for data center development and corporate purposes - The company granted significant investors, including Hillhouse Capital and STT GDC, registration rights and preemptive rights for future equity issuances[685](index=685&type=chunk) - The **US$1.9 billion** in net proceeds from the November 2020 Hong Kong public offering was fully used by December 31, 2022, for the development and acquisition of new data centers and general corporate purposes[686](index=686&type=chunk) [Controls and Procedures](index=222&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2022, a conclusion concurred with by the independent auditor - Management concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year 2022[688](index=688&type=chunk) - Based on the COSO framework, management assessed internal control over financial reporting to be effective as of December 31, 2022, with the independent auditor's report concurring with this assessment[689](index=689&type=chunk) [Corporate Governance](index=224&type=section&id=ITEM%2016G.%20CORPORATE%20GOVERNANCE) As a foreign private issuer, GDS follows Cayman Islands corporate governance practices, differing from Nasdaq standards, and is exempt from certain Hong Kong listing rules and the Hong Kong Takeovers Code, with a partial SFC disclosure exemption - The company is a foreign private issuer and follows Cayman Islands corporate governance practices, exempting it from certain Nasdaq requirements like having a majority-independent board[696](index=696&type=chunk) - The Hong Kong Takeovers Code does not apply to the company due to its secondary listing status and a specific ruling from the SFC[697](index=697&type=chunk) PART III [Financial Statements](index=226&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section includes the audited consolidated financial statements for GDS Holdings Limited for fiscal years 2020-2022, with KPMG Huazhen LLP providing an unqualified opinion on both financial statements and internal control, highlighting the realizability of deferred tax assets as a critical audit matter - The independent auditor, KPMG Huazhen LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[720](index=720&type=chunk) - The critical audit matter identified was the realizability of deferred tax assets associated with net operating losses, which depended on subjective management estimates of future taxable income and data center utilization rates[724](index=724&type=chunk)