Workflow
GDS(GDS) - 2025 Q1 - Earnings Call Transcript
2025-05-20 13:00

Financial Data and Key Metrics Changes - In Q1 2025, the company achieved a revenue growth of 12% year on year and adjusted EBITDA growth of 16%, marking the highest growth rate in the past two years [8][19] - The adjusted EBITDA margin for Q1 2025 was 48.6%, compared to 46.9% in Q1 2024, primarily due to lower operating costs [19][68] - The company realized a gain on deconsolidation of subsidiaries sold to the ABS of over RMB1 billion, which was not included in adjusted EBITDA [19] Business Line Data and Key Metrics Changes - The gross move-in during Q1 2025 was approximately 20,000 square meters, all in Tier one markets, with a utilization rate of 75.7% [8] - The company added 70 MW of new commitments in Q1 2025, bringing the total power committed to over 530 MW, with expectations to exceed 750 MW soon [15][25] Market Data and Key Metrics Changes - The demand environment has improved significantly due to AI developments, particularly in Tier one markets, with a notable mega deal signed in Q1 2025 [9][10] - The company holds around 900 MW of capacity for future developments in Tier one markets, indicating strong positioning to capture upcoming AI demand [12][13] Company Strategy and Development Direction - The company is focused on backlog delivery and new orders with faster-moving schedules, anticipating that around 40% of the current backlog will be delivered by year-end [9] - The asset monetization program is progressing well, providing financing flexibility and options to capitalize on new projects [14][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for AI-related services, particularly in Tier one markets, and noted that the demand for AI inferencing is expected to grow significantly [9][33] - There are uncertainties regarding AI chip supply in China in the short term, but management believes that as supply stabilizes, demand will increase [11][12] Other Important Information - The company is making good progress with the establishment of an onshore listed Sea REIT, which is expected to create a valuation benchmark for stabilized data centers in China [21][64] - The company maintains its guidance for total revenue and adjusted EBITDA unchanged despite the ABS deconsolidation [23] Q&A Session Summary Question: Update on China demand from hyperscalers and chipset supply - Management noted that demand remains strong, particularly driven by AI inference, and they are well-positioned with 900 MW held for future development [33][34] Question: Financial guidance expectations post-ABS deconsolidation - The impact of the ABS transaction closing at the end of Q1 is expected to reduce full-year EBITDA by around RMB130 million, adjusting the growth rate from 11% to 8.5% [35][36] Question: Comparison of IRR profile or EBITDA yield across different markets - The development yield in new markets is in the low teens, which is higher than current yields in China, indicating a different supply-demand balance [42][43] Question: When will the China business be self-funding? - The company is currently break-even in terms of free cash flow before financing and expects to generate sufficient cash flow to cover annual CapEx [46] Question: Pricing outlook for the China business - The pricing for new business in China is stable across major markets, with confidence in maintaining this stability [68]