Q2 2023 Highlights - The company's total capacity reached 945 MW, with a 47 MW increase in Q2 2023[10] - In-service capacity increased by 91 MW in Q2 2023, reaching 730 MW[10] - Contracted & IOI capacity reached 850 MW, with a 34 MW increase in Q2 2023[10] - Utilized capacity reached 585 MW, with a 48 MW increase in Q2 2023[10] - The contracted & IOI ratio was 90% by Q2 2023[10] - Revenue in FY23Q2 was RMB 1,553.8 million, a 49.7% year-over-year increase[10] - Adjusted EBITDA in FY23Q2 was RMB 816.1 million, a 49.9% year-over-year increase, with an adjusted EBITDA margin of 52.5%[10] - GAAP net income in FY23Q2 was RMB 219.2 million, a 9.8% year-over-year increase, with a GAAP net margin of 14.1%[10] - The company reiterated its 2023 guidance, with revenue expected to be between RMB 5,880 million and RMB 6,080 million, and adjusted EBITDA expected to be between RMB 3,100 million and RMB 3,220 million[10] Business Updates - A new hyperscale project, CN20, with a designed capacity of 49 MW located in Datong campus in Shanxi Province, is 100% committed by the client[18] - MY06-2, a hyperscale project with a designed capacity of 42 MW located in Johor, Malaysia, was running at 76% utilization ratio by 23Q2 and is 100% committed by the client[18] - MY06-4, a new 12 MW hyperscale project in Johor campus, Malaysia, is scheduled for delivery starting from 24Q1 and is currently 100% committed[19] - CN23, a new 26 MW hyperscale project in one of the campuses in Zhangjiakou city, Hebei Province, is scheduled for delivery starting from 25Q1 and is currently 49% contracted[19] - MY06-3, an existing 43 MW hyperscale project in Johor campus, Malaysia, was further expanded to 53 MW during 23Q2 and is currently 100% committed[19] Financials - Total revenue for H1 2023 reached RMB 2,997.3 million, a 53.0% year-over-year increase[62] - Adjusted EBITDA for H1 2023 reached RMB 1,629.9 million, a 56.9% year-over-year increase[67] - Net income after taxes for H1 2023 reached RMB 472.2 million, a 60.5% year-over-year increase[62] - The company's total debt reached RMB 11,668.2 million[84]

Financial Data and Key Metrics Changes - Revenue for Q1 2023 was RMB1,443.5 million, representing a 56.8% year-over-year growth [10][22] - Adjusted EBITDA grew by 64.6% year-over-year to RMB813.8 million, achieving a new high margin of 56.4% [10][25] - Net income increased by 167.5% year-over-year to RMB253 million, with a net margin of 17.5% [10][23] - Operating income rose by 81.3% to RMB456.1 million, with an operating income margin of 31.6% [23] Business Line Data and Key Metrics Changes - The company added one new project, increasing total capacity by 27 megawatts to 898 megawatts [8][12] - Total utilized capacity reached 537 megawatts, with a solid utilization rate of 84% [9][17] - Client commitment rate stood at 91% of total capacity, with an additional 16 megawatts secured in Q1 [9][14] Market Data and Key Metrics Changes - Overseas business contributed approximately 9% of total utilized capacity, consistent with previous quarters [22] - The company secured a contracted capacity of around 2 megawatts for an existing Northern China project [14] - The commitment status of the asset portfolio remained healthy, with over 95% of contracts having terms of 10 years or longer [17] Company Strategy and Development Direction - The company is focused on energy-efficient data center solutions, leveraging its unique supply model and in-house capabilities [7][10] - There is a strong emphasis on accommodating AI-related demand, with plans to enhance high-density cabinet deployments [6][15] - The company aims to cooperate with partners in renewable energy generation and storage to achieve green data center objectives [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the healthy demand for data center services driven by advancements in AI and machine learning [6][10] - The company reiterated its full-year revenue guidance range of RMB5.88 billion to RMB6.08 billion, with an optimistic outlook for adjusted EBITDA [11][29] - Management noted that the operating cash flow has normalized and is expected to continue improving [66] Other Important Information - The company received multiple awards for its data center design, construction, and energy efficiency [20][21] - The total cash position at the end of Q1 was RMB5,769.3 million, with a net debt position of RMB5,245.4 million [27][28] Q&A Session Summary Question: Inquiry about EBITDA margin improvements - Management attributed the EBITDA margin improvement to accelerated customer move-ins, cost control, and the absence of expected diesel consumption due to unexecuted public substation revamping [31][33] Question: Concerns about net adds in capacity - Management confirmed that most new project deliveries are expected in the second half of the year, with confidence in exceeding revenue guidance due to AI-related demand [36][38] Question: Energy storage integration policies - Management highlighted the importance of energy storage systems for data centers and plans to collaborate with partners in renewable energy to enhance efficiency [40][42] Question: Clarification on revenue guidance and AIGC demand - Management indicated that the revenue guidance includes potential incremental AIGC demand, with expectations for increased demand from anchor clients [46][50] Question: Operating costs sustainability - Management noted that while operating costs may fluctuate, the overall cost control measures and stable utility costs are expected to support healthy margins [60][64]

Financial Performance - Revenue for Q1 2023 was RMB1,443.5 million, representing a 56.8% year-over-year growth[2] - Net income for Q1 2023 was RMB253.0 million, reflecting a 167.5% year-over-year increase[2] - Adjusted EBITDA for Q1 2023 increased by 64.6% year-over-year to RMB813.8 million, with an adjusted EBITDA margin of 56.4%[2] - Operating income in Q1 2023 increased by 81.3% to RMB456.1 million (US$66.4 million) with an operating income margin of 31.6%[16] - Net income in Q1 2023 rose by 167.5% to RMB253.0 million (US$36.8 million), resulting in a net income margin of 17.5%[17] - Adjusted net income in Q1 2023 grew by 77.9% to RMB315.8 million (US$46.0 million), achieving an adjusted net income margin of 21.9%[20][21] - Revenue for the three months ended March 31, 2023, was RMB 1,443,547, representing a 3.7% increase from RMB 1,390,254 for the previous quarter[39] - Net income for the same period was RMB 252,972, a significant increase of 116.7% compared to RMB 116,462 in the previous quarter[39] - Adjusted EBITDA for the three months ended March 31, 2023, was RMB 813,800, reflecting a margin of 56.4%[44] - Operating income increased to RMB 456,110 for the three months ended March 31, 2023, up from RMB 309,376 in the previous quarter, marking a 47.5% increase[39] - The net income margin improved to 17.5% for the three months ended March 31, 2023, compared to 8.4% in the previous quarter[44] Capacity and Utilization - Total capacity reached 898MW by the end of Q1 2023, a 27.6% year-over-year increase[3] - Utilized capacity grew by 12MW to 537MW, representing a 56.1% year-over-year growth, with an overall utilization ratio of 84%[7] - Total contracted and "Indication of Interest" (IOI) capacity increased by 16MW to 816MW, a 31.8% year-over-year growth[3] Guidance and Outlook - The company reiterated its 2023 revenue guidance of RMB5,880 million to RMB6,080 million and raised its adjusted EBITDA guidance to RMB3,100 million to RMB3,220 million[2] - The company updated its full-year 2023 revenue guidance to RMB5,880 million – RMB6,080 million, reflecting a 29.2-33.6% increase over 2022[24] - Adjusted EBITDA guidance for 2023 was revised to RMB3,100 million – RMB3,220 million, indicating a 31.0-35.6% increase over 2022[24] Expenses and Cash Flow - Total operating expenses in Q1 2023 decreased by 1.4% to RMB167.1 million (US$24.3 million) from RMB169.5 million in Q1 2022[15] - Research and development expenses in Q1 2023 were RMB24.9 million (US$3.6 million), a 29.5% increase from RMB19.2 million in Q1 2022[15] - Selling and marketing expenses in Q1 2023 decreased by 4.3% to RMB21.4 million (US$3.1 million) from RMB22.4 million in Q1 2022[15] - Cash generated from operating activities reached RMB 693,276 for the three months ended March 31, 2023, compared to RMB 389,401 in the previous quarter, an increase of 78.1%[41] - The company reported a net cash increase of RMB 1,705,045 for the three months ended March 31, 2023, compared to a net decrease of RMB 923,708 in the previous quarter[41] - As of March 31, 2023, the company had cash, cash equivalents, and restricted cash of RMB5,769.3 million (US$809.3 million), up from RMB4,064.2 million as of December 31, 2022[22] Awards and Recognition - The Lingqiu campus received the Data Center Design and Construction Award, highlighting the company's commitment to environmentally friendly practices[8] Financial Health - The company maintained a pre-tax ROIC of 18.7% by the end of Q1 2023, reflecting strong financial health[5] - Basic earnings per share for the three months ended March 31, 2023, was 0.35, up from 0.16 in the previous quarter[39] - The company experienced a foreign exchange gain of RMB 2,045 for the three months ended March 31, 2023, compared to a loss of RMB 4,174 in the previous quarter[39]

Financial Risks and Regulatory Compliance - The company is exposed to foreign currency risks due to a substantial portion of revenues and expenses being denominated in Renminbi, which may negatively impact financial results when translated into U.S. dollars[185]. - Compliance with U.S. public company regulations is expected to increase legal and accounting costs, potentially impacting financial results[192]. - The company may incur significant costs related to compliance with the Sarbanes-Oxley Act, diverting management's attention from core operations[192]. - Changes in China's economic and political conditions could materially affect the company's operations and financial results[204]. - The evolving legal environment in the PRC may materially affect the company's business and prospects, potentially leading to a decline in the value of its ADSs[206]. - Future regulatory changes could impose additional compliance requirements that may adversely affect the company's operations[236]. - The company may face uncertainties regarding the approval and filing requirements from the CSRC for future financing activities[259]. - The company faces potential penalties from the CSRC or other PRC governmental authorities if it fails to obtain necessary approvals for offshore equity or debt financing activities[261]. - The company must comply with SAFE regulations regarding offshore investment activities, which may expose it to liabilities if not adhered to[268]. - The company is subject to fluctuations in the Renminbi exchange rate, which could adversely affect its financial condition and the value of dividends payable in foreign currencies[265]. - Future restrictions by the PRC government on foreign currency access could limit the company's ability to pay dividends in foreign currencies[266]. Operational Challenges and Market Conditions - The merger of Chindata and Bridge Data Centres in 2019 has resulted in a limited operating history, making it challenging to predict future performance and financial prospects[189]. - The company faces risks related to natural disasters and health epidemics, which could disrupt operations and adversely affect financial condition[196]. - Political tensions between the United States and China could reduce trade and investment levels, negatively impacting the company's business and financial condition[197]. - The company faces challenges from third-party contractors who may pass on their increased labor costs, potentially raising service costs[283]. - Rising inflation and labor costs in China are expected to negatively impact profitability and growth, with average wages anticipated to continue increasing[281]. Corporate Structure and Governance - The company operates through a VIE structure, which may face regulatory scrutiny and could affect the enforceability of contractual arrangements[198]. - The registered shareholders of the VIEs may have conflicts of interest that could adversely affect the company's control and economic benefits from the VIEs[231]. - The company has no arrangements to address potential conflicts of interest between the shareholders of the VIEs and itself[232]. - The company relies on contractual arrangements that have not been tested in a court of law, which may limit its operational control[228]. - The company may lose the ability to use and enjoy the assets of the VIEs if they undergo bankruptcy or liquidation, which could materially and adversely affect its business[239]. - The company has the right to prevent unauthorized voluntary liquidation of the VIEs by requesting shareholders to transfer their equity ownership interests[240]. Taxation and Financial Implications - The company is subject to PRC value-added tax rates ranging from 6% to 13% on revenues generated from its contractual arrangements with the VIEs[227]. - The withholding tax rate of 10% applies to dividends payable by mainland China companies to non-PRC-resident enterprises, which could limit the company's ability to grow[253]. - The PRC Enterprise Income Tax Law imposes a 10% withholding tax on dividends payable to non-PRC investors, which could adversely affect non-PRC shareholders[296]. - The company may face uncertainties regarding the reporting and implications of past and future transactions involving PRC taxable assets, potentially leading to additional tax liabilities[294]. - Compliance with PRC regulations regarding indirect transfers of equity interests may result in unfavorable tax consequences for the company and its non-PRC shareholders[295]. Shareholder Rights and Market Dynamics - The company does not expect to pay dividends in the foreseeable future, relying on price appreciation for returns on investment[326]. - The dual-class structure may prevent inclusion in certain stock market indices, potentially affecting trading price and liquidity of the ADSs[322]. - Significant sales or perceived potential sales of ADSs could lead to a decline in market price[329]. - The trading volume and price of ADSs may be influenced by fluctuations in quarterly results and changes in financial estimates by analysts[318]. - The company retains discretion over dividend declarations, which may depend on future operational results and cash flow[327]. - Holders of American Depositary Shares (ADSs) may experience dilution in their holdings due to limitations on participation in future rights offerings[338]. Legal and Jurisdictional Issues - The company is incorporated under Cayman Islands law, which may complicate legal actions against it or its directors in the U.S.[350]. - The company's fifth amended and restated articles of association provide that U.S. federal courts will have exclusive jurisdiction for disputes arising under the Securities Act or the Exchange Act[357]. - The deposit agreement limits ADS holders' rights to pursue claims against the depositary, including waiving the right to a jury trial[342]. - The depositary may close its books at any time, which could limit the transferability of ADSs[349]. - Certain corporate governance practices in the Cayman Islands differ significantly from those in the United States, potentially affording less protection to shareholders[355]. Auditor and Compliance Concerns - The company’s auditor, Ernst & Young Hua Ming LLP, is subject to PCAOB inspection issues, which could lead to delisting of its ADSs if not resolved[308]. - The SEC may prohibit trading of the company's shares if its auditor is not inspected for two consecutive years under the Holding Foreign Companies Accountable Act[307]. - The company has been identified as a "Commission-Identified Issuer" due to PCAOB inspection limitations, impacting its ability to trade in the U.S. market[308]. - The inability of the PCAOB to conduct inspections could lead to a loss of investor confidence in the company's financial statements[312].

Financial Data and Key Metrics Changes - Revenue in Q4 2022 was RMB 1,390.3 million, representing a 77.8% year-over-year growth, while full-year revenue reached RMB 4,551.7 million, a 59.6% increase year-over-year [7][23] - Adjusted EBITDA for Q4 2022 was RMB 720.9 million, a 78.4% year-over-year growth, with a margin of 51.9%. For the full year, adjusted EBITDA was RMB 2,374.2 million, a 67.3% increase year-over-year [7][28] - The company expects full-year 2023 revenue to be between RMB 5,880 million and RMB 6,080 million, and adjusted EBITDA to be between RMB 3,000 million and RMB 3,110 million, indicating around a 30% increase from 2022 [7][32] Business Line Data and Key Metrics Changes - The company added 1 new project with an additional 50 megawatts of capacity in Q4 2022, bringing total capacity to 871 megawatts and total data centers to 32 [5][9] - Utilized capacity increased by 71 megawatts in Q4, totaling 525 megawatts, with a solid utilization rate of 86% [6][13] - The commitment rate for total capacity reached 92% by the end of Q4, compared to 85% in the previous quarter [12] Market Data and Key Metrics Changes - The company reported a 35.9% year-over-year increase in total client commitment, with 211 megawatts of client commitment received in 2022 [11] - Overseas business contributed to 9% of total utilized capacity in Q4, up from less than 5% in previous quarters [14][22] - The company is focusing on the Southeast Asian market, with significant projects in Malaysia and India ramping up steadily [20][35] Company Strategy and Development Direction - The company is actively participating in the national East Data West Computation Plan, planning a 150-megawatt campus in Gansu Province [18] - The management emphasized the importance of leveraging energy resources and maintaining operational efficiency to support future demand [20][36] - The company aims to achieve an additional 120 to 150 megawatts of lift capacity in the next two years, with a focus on existing anchor clients [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the momentum from existing clients and the long-term demand driven by emerging AI technologies [19][41] - The company is prepared for potential explosive growth in demand due to advancements in AI, particularly with clients involved in AI computing [44] - Management highlighted the importance of maintaining a healthy financial profile and operational readiness to meet future demand [31][36] Other Important Information - The company completed a $300 million senior notes offering in February 2023, which will support product development in China and overseas [6][16] - A one-off long-lived asset impairment cost of around RMB 83.5 million was recorded due to the decision to discontinue the Chinidea manufacturing business line [24][50] Q&A Session Summary Question: Breakdown of the 120-150 megawatt new booking in the next 2 years - Management indicated that 80% of the new bookings will come from existing key anchor clients, with 70% from China and 30% from overseas [38] Question: Impact of AI and data science on demand - Management believes that AI technologies will significantly increase computing power demand, benefiting the data center industry [41][42] Question: CapEx guidance for 2023 and revenue/EBITDA assumptions - CapEx is forecasted to be around RMB 5 billion, based on current business plans and project delivery schedules [49] - Management stated that the 30% revenue and EBITDA growth forecast is conservative, reflecting existing contracts and execution under construction [51][52]

Revenue Growth - Total revenue for Q4 2022 increased by 77.8% YoY to RMB1,390.3 million (US$201.6 million), driven by robust growth in colocation services[13] - Fiscal year 2022 revenue reached RMB4,551.7 million (US$659.9 million), representing a 59.6% YoY growth and exceeding guidance by 2.7%[2] - The company set its 2023 total revenue guidance at RMB5,880 million – RMB6,080 million, a 29.2-33.6% increase over 2022[25] Profitability Metrics - Adjusted EBITDA for Q4 2022 grew by 78.4% YoY to RMB720.9 million, with an adjusted EBITDA margin of 51.9%[5] - Gross profit for Q4 2022 increased by 64.4% YoY to RMB569.7 million, with a gross margin of 41.0%[16] - Operating income in Q4 2022 increased by 39.7% to RMB309.4 million (US$44.9 million) with an operating income margin of 22.3%[18] - Net income in Q4 2022 increased by 1.6% to RMB116.5 million (US$16.9 million) with a net income margin of 8.4%[19] - Adjusted net income in Q4 2022 increased by 65.2% to RMB236.2 million (US$34.2 million) with an adjusted net income margin of 17.0%[23] Capacity and Utilization - Total capacity increased by 50MW to 871MW by the end of Q4 2022, reflecting a 29.4% YoY growth[3] - Utilized capacity rose by 71MW to 525MW, representing a 72.5% YoY increase, with an overall utilization ratio of 86%[10] - The company received a total of 211MW client commitments in 2022, resulting in a year-end total client commitment of 800MW, a 35.9% YoY increase[6] - Commitment ratio for total capacity was 92% by the end of Q4 2022, indicating strong demand and client confidence[7] Expenses - Total operating expenses in Q4 2022 increased by 108.3% to RMB260.4 million (US$37.7 million) from RMB125.0 million in Q4 2021[17] - For the fiscal year 2022, total operating expenses increased by 34.3% to RMB704.4 million (US$102.1 million) from RMB524.5 million in 2021[17] Cash and Assets - As of December 31, 2022, the company had cash, cash equivalents, and restricted cash of RMB4,064 million (US$589.3 million)[24] - Total assets as of December 31, 2022, were RMB 23,100,231 thousand (US$ 3,349,219 thousand), up from RMB 18,681,951 thousand in 2021[38] - Cash and cash equivalents at the end of the period were RMB 4,987,934 thousand (US$ 589,258 thousand), down from RMB 5,241,002 thousand at the beginning of the period[40] Comprehensive Income - The company reported a comprehensive income of RMB 609,090 thousand (US$ 88,309 thousand) for the year ended December 31, 2022[39] Research and Development - Research and development expenses for the year ended December 31, 2022, were RMB 83,496 thousand (US$ 12,106 thousand), compared to RMB 75,344 thousand in 2021, indicating continued investment in innovation[39] Debt and Financing - A $300 million senior notes offering was completed on February 23, 2023, to support project development, with a coupon rate of 10.5%[3] Other Financial Metrics - Basic and diluted earnings per ADS in Q4 2022 were RMB0.32 (US$0.04) and for the fiscal year 2022 were RMB1.78 (US$0.26)[21] - The adjusted EBITDA guidance for 2023 is set at RMB3,000 million – RMB3,110 million, a 26.4-31.0% increase over 2022[25]

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was RMB1,202.7 million, representing a year-over-year increase of 52.4% [9] - Adjusted EBITDA grew by 66.8% year-over-year to RMB614.5 million, with a margin of 51.1% [9][19] - GAAP net income reached RMB241 million, a 207.4% increase year-over-year, with a net margin of 20% [9][18] Business Line Data and Key Metrics Changes - Total capacity increased by 45 megawatts in Q3, reaching 821 megawatts, with 579 megawatts in service [8] - Client commitment rate remained strong at 85% of total capacity, with 96% of in-service capacity committed by clients [11][12] - Utilized capacity increased to 454 megawatts, reflecting a utilization rate of 78% [13] Market Data and Key Metrics Changes - The Greater Beijing region accounted for 75% of total capacity and 94% of utilized capacity, with the highest utilization ratio of 83% [15] - APAC projects now represent 49% of total construction capacity, indicating a growing focus on emerging markets [15] Company Strategy and Development Direction - The company aims to leverage its advantages in hyperscale business and continue investments in R&D to enhance competitive power [6][7] - Expansion plans include a focus on the APAC emerging markets, with significant capacity under construction in Malaysia and India [14][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand, with a target of 120 to 150 megawatts of new orders annually [24][25] - The company anticipates stable power prices in the near term, with a strategic advantage in regions with abundant power supply [29] Other Important Information - The company celebrated the opening of the MY06 project in Malaysia, which has a design capacity of over 100 megawatts [14] - The company issued its third annual ESG report, emphasizing a strategy focused on zero carbon and sustainable development [16] Q&A Session Summary Question: Demand outlook and sustainability - Management confirmed no pull forward in demand and expects sustainable growth of 120 to 150 megawatts annually, with strong demand from both China and overseas markets [24][25] Question: Electricity cost trends - Management indicated that electricity costs have risen to over 30% of revenue but expect stability in the near term due to advantageous locations [27][29] Question: Move-in rate and revenue contribution from overseas - The ramp-up rate for the MY06 project is strong, with expectations for increased overseas revenue contribution in the coming years [30][32] Question: Power costs and gross margin - Management explained that the increase in power costs is due to changes in the charging mechanism in Hebei, but overall EBITDA margins remain healthy [34][36] Question: Rental price trends - Domestic contract pricing has remained stable, while overseas pricing is competitive with a pass-through model for power costs [39][41]

[Overall Performance Summary](index=1&type=section&id=Overall%20Performance%20Summary) Chindata Group achieved strong Q3 2022 financial and operational growth, leading to a second full-year guidance raise [Q3 2022 Financial & Operating Highlights](index=1&type=section&id=Recent%20Financial%20and%20Operating%20Highlights) Chindata Group achieved strong Q3 2022 growth in revenue, net income, and data center capacity, leading to a raised full-year guidance Q3 2022 Key Financial Metrics (YoY) | Metric | Q3 2022 | YoY Growth | | :--- | :--- | :--- | | Revenue | RMB 1,202.7 million | 62.4% | | Net Income | RMB 241.0 million | 207.4% | | Adjusted EBITDA | RMB 614.5 million | 66.8% | Q3 2022 Key Operating Metrics (YoY) | Metric | Q3 2022 | YoY Growth | | :--- | :--- | :--- | | Total Capacity | 821 MW | 39.7% | | Utilized Capacity | 454 MW | 69.3% | | Total Contracted & IOI Capacity | 700 MW | 41.9% | - The company raised its full-year 2022 guidance for the second time, increasing revenue guidance to **RMB 4.33-4.43 billion** and adjusted EBITDA guidance to **RMB 2.2-2.26 billion**[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Quote) Management highlighted strong performance, 9M 2022 revenue exceeding full-year 2021, and emphasized strong financials and a healthy balance sheet - CEO Huapeng Wu noted that **9M 2022 revenue surpassed full-year 2021 revenue**, leading to the second guidance raise[4](index=4&type=chunk) - CFO Dongning WANG highlighted a healthy balance sheet with a **low total debt to capital ratio of 44.1%** and an **un-levered pre-tax ROIC of around 17%**[5](index=5&type=chunk) [Business Operations](index=2&type=section&id=Business%20Highlights) The company expanded its data center asset portfolio, strengthened its presence in APAC emerging markets, and advanced sustainability initiatives [Asset Portfolio Overview](index=2&type=section&id=Asset%20Overview) As of Q3 2022, total data center capacity grew to 821MW, with in-service capacity reaching 579MW and a healthy 78% utilization ratio Capacity Status (as of Q3 2022) | Capacity Type | Q3 2022 | YoY Growth | | :--- | :--- | :--- | | Total Capacity | 821 MW | 39.7% | | In-service Capacity | 579 MW | 56.4% | | Under-construction Capacity | 242 MW | - | | Utilized Capacity | 454 MW | 69.3% | - A new **43MW** under-construction hyperscale project (MY06-3) was added in Johor, Malaysia, with delivery scheduled for 2024[7](index=7&type=chunk) - Total contracted and IOI capacity reached **700MW**, a **41.9% YoY increase**, with a **96% commitment ratio** for in-service capacity[8](index=8&type=chunk) - The overall utilization ratio for in-service capacity remained healthy at **78%**, consistent with the previous quarter[11](index=11&type=chunk) [APAC Emerging Markets Development](index=3&type=section&id=Recent%20Development%20on%20APAC%20emerging%20markets) The company expanded its presence in APAC emerging markets, with Malaysia and India accounting for 19% of total capacity, while Greater Beijing remains the core - Project MY06 in Johor, Malaysia, with a total designed capacity of **over 100MW**, celebrated its grand opening, with **19MW** put into service in October[12](index=12&type=chunk) Capacity Distribution by Region (Q3 2022) | Region | Total Capacity | % of Total | | :--- | :--- | :--- | | APAC (Malaysia & India) | 160 MW | 19% | | Greater Beijing Area | 620 MW | 75% | | Yangtze River Delta & Greater Bay | 42 MW | 6% | - APAC projects represent a growing portion of the development pipeline, accounting for **49% of total under-construction capacity**[13](index=13&type=chunk) [Sustainability and R&D Initiatives](index=3&type=section&id=Recent%20Development%20on%20Sustainability,%20Research%20%26%20Development%20and%20Innovation) The company advanced sustainability through its D-A-T-A ESG strategy, securing green loans and receiving awards for innovative cooling technology - The company issued its third annual ESG report, outlining a **D-A-T-A** (De-carbonization, Alignment, Technology, Advanced attitude) strategy[14](index=14&type=chunk) - The company's hybrid evaporative cooling technology, estimated to achieve a **PUE of 1.16**, received the first prize at the China CDCC summit[16](index=16&type=chunk)[18](index=18&type=chunk) [Financial Performance Analysis](index=4&type=section&id=Third%20Quarter%20and%20First%20Nine%20Months%20of%202022%20Financial%20Results%20Summary) This section details the company's strong Q3 and 9M 2022 financial results, including revenue, net income, and key balance sheet items [Q3 2022 Financial Results](index=4&type=section&id=Q3%202022%20Financial%20Results) Q3 2022 total revenues grew 62.4% YoY to RMB 1,202.7 million, with net income surging 207.4% and adjusted EBITDA increasing 66.8% Q3 & 9M 2022 Financial Performance (YoY) | Metric | Q3 2022 (RMB million) | Q3 YoY | 9M 2022 (RMB million) | 9M YoY | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | 1,202.7 | 62.4% | 3,161.4 | 52.7% | | Gross Profit | 466.2 | 46.6% | 1,323.1 | 55.1% | | Operating Income | 317.5 | 72.2% | 879.1 | 93.8% | | Net Income | 241.0 | 207.4% | 535.2 | 165.2% | | Adjusted EBITDA | 614.5 | 66.8% | 1,653.3 | 62.9% | | Adjusted Net Income | 294.3 | 162.8% | 713.8 | 113.5% | Q3 2022 Profitability Margins | Margin | Q3 2022 | Q3 2021 | Q2 2022 | | :--- | :--- | :--- | :--- | | Gross Margin | 38.8% | 42.9% | 42.0% | | Net Income Margin | 20.0% | 10.6% | 19.2% | | Adjusted EBITDA Margin | 51.1% | 49.7% | 52.4% | - Basic and diluted earnings per ADS in Q3 2022 were **RMB 0.66**[26](index=26&type=chunk) [Balance Sheet Summary](index=5&type=section&id=BALANCE%20SHEET) As of September 30, 2022, the company maintained a strong financial position with RMB 5.0 billion in cash and total assets of RMB 22.3 billion - As of September 30, 2022, the company held **RMB 5.0 billion** in cash, cash equivalents, and restricted cash[29](index=29&type=chunk) Key Balance Sheet Items (as of Sep 30, 2022) | Item | Amount (RMB thousands) | | :--- | :--- | | Total Assets | 22,263,480 | | Total Liabilities | 11,580,939 | | Total Shareholders' Equity | 10,682,541 | [Future Outlook and Guidance](index=5&type=section&id=2022%20Full%20Year%20Business%20Outlook) The company raised its full-year 2022 revenue and adjusted EBITDA guidance, reflecting strong business momentum [2022 Full Year Business Outlook](index=5&type=section&id=2022%20Full%20Year%20Business%20Outlook) The company raised its full-year 2022 revenue guidance to RMB 4.33-4.43 billion and adjusted EBITDA guidance to RMB 2.2-2.26 billion Updated Full Year 2022 Guidance | Metric | Previous Guidance (RMB) | Updated Guidance (RMB) | Updated YoY Growth | | :--- | :--- | :--- | :--- | | Total Revenues | 4,130 million – 4,230 million | 4,330 million – 4,430 million | 51.8% - 55.3% | | Adjusted EBITDA | 2,100 million – 2,180 million | 2,200 million – 2,260 million | 55.0% - 59.3% | [Financial Statements and Reconciliations](index=8&type=section&id=Financial%20Statements%20and%20Reconciliations) This section provides detailed unaudited consolidated financial statements and reconciliations of GAAP to non-GAAP financial measures [Unaudited Condensed Consolidated Balance Sheets](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the unaudited condensed consolidated balance sheets as of September 30, 2022, detailing assets, liabilities, and equity - The report includes the detailed unaudited condensed consolidated balance sheets[42](index=42&type=chunk)[43](index=43&type=chunk) [Unaudited Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This section presents the unaudited condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2022 - The report includes the detailed unaudited condensed consolidated statements of comprehensive income[44](index=44&type=chunk)[45](index=45&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section contains the unaudited condensed consolidated statements of cash flows for the three and nine months ended September 30, 2022 - The report includes the detailed unaudited condensed consolidated statements of cash flows[46](index=46&type=chunk)[47](index=47&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=11&type=section&id=UNAUDITED%20RECONCILIATIONS%20OF%20GAAP%20AND%20NON-GAAP%20RESULTS) This section provides detailed reconciliations of GAAP financial measures to non-GAAP measures, including Adjusted EBITDA and Adjusted Net Income Q3 2022 Reconciliation of Net Income to Adjusted EBITDA (RMB thousands) | Item | Amount | | :--- | :--- | | Net income | 241,036 | | Add: Depreciation and amortization | 233,505 | | Add: Net interest expenses | 56,485 | | Add: Income tax expenses | 68,419 | | Add: Share-based compensation | 43,225 | | Other adjustments | (25,723) | | **Adjusted EBITDA** | **614,522** | Q3 2022 Reconciliation of Net Income to Adjusted Net Income (RMB thousands) | Item | Amount | | :--- | :--- | | Net income | 241,036 | | Add: D&A from business combination | 12,234 | | Add: Share-based compensation | 43,225 | | Add: Tax effects on non-GAAP adjustments | (2,209) | | **Adjusted Net Income** | **294,286** |

Financial Data and Key Metrics Changes - Total capacity expanded to 776MW, an increase of 72MW during the quarter, with 30 data centers in the asset portfolio [6][7] - Revenue for the quarter was RMB1,038.1 million, representing a 51.2% year-over-year growth [8][21] - Adjusted EBITDA was RMB544.3 million, a 60.8% year-over-year growth with a margin of 52.4% [8][24] - GAAP net income reached RMB199.6 million, a 206.3% year-over-year growth, with a historical high margin of 19.2% [8][22] Business Line Data and Key Metrics Changes - Total utilized capacity increased to 401MW, a 59.6% year-over-year growth [14] - Contracted and indication of interest capacity increased by 32MW during the quarter to 619MW, leading to a commitment rate of 84% [7][11] - 95% contracted & IOI ratio for in-service capacity, consistent with the previous quarter [11] Market Data and Key Metrics Changes - APAC emerging market capacity deployment accounts for around 15% of total capacity, with 89% of this capacity committed by clients [15] - The company has 117MW capacity either in service or under construction in Southeast Asia, targeting international customers like Microsoft and Google [34] Company Strategy and Development Direction - The company is focusing on the East Data, West Computation Policy to strengthen its foothold in key regions [16] - A new agreement with the local government in Datong, Shanxi Province aims to expand capacity to over 500MW, potentially making it the largest IDC campus in Asia [17][42] - Strategic partnership with Taiji Computer aims to leverage each other's strengths in technology and market access [18][35] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand from clients, with a conservative approach to forecasting ramp-up speeds [29] - The company maintains its full-year revenue and adjusted EBITDA guidance despite market fluctuations [40] - Management is optimistic about the Southeast Asian market, anticipating balanced demand and supply in the future [34] Other Important Information - The company closed a US$500 million syndicated loan to support further expansion [8][20] - Recent development of a waterless cooling technology, X-Cooling, aims to improve energy and water efficiency in data centers [19][68] Q&A Session Summary Question: Outlook for utilization rate ramp-up - Management indicated that the current ramp-up speed reflects strong business demand, but they will maintain a conservative nine-month forecast for moving rates [29] Question: Potential customers in Southeast Asia and competitive landscape - Management is optimistic about opportunities in Southeast Asia, with significant capacity already in place to serve international clients [34] Question: Expansion plan in Datong and utility costs - Management confirmed plans for a 500MW capacity in Datong, with adequate power supply in main campuses despite regional shortages [39][42] Question: Tax rate volatility - The tax rate varies due to operations in different countries and specific tax policies, with a compound effect from various jurisdictions [49][51] Question: Impact of market conditions on business - Management emphasized a cautious approach to forecasting, relying on actual commitments rather than industry trends [56] Question: Plans for green energy projects - The company will collaborate with partners for ecological power development in Datong, focusing on local resource utilization [64] Question: Adoption of X-Cooling technology - Management confirmed that the technology balances cost and efficiency, with significant potential for water savings [68]