GDS Holdings Ltd. Q4 FY2024 earnings call

• AI in China: Demand for AI inferencing in Tier 1 markets is increasing, and GDS is well-positioned with land and power.
• 2024 performance: Gross move-in was 79,000 square meters, all organic and in Tier 1 markets. Ended 2024 with a backlog of 110,000 square meters, expecting to deliver over half in 2025. Utilization rate ended 2024 at 74%, expected to reach high 70s% by end of 2025.
• New orders: Won a massive new order in 1Q '25 for around 40,000 square meters/152 megawatts, the largest single order in China history, with a 6-month delivery and 1-year cycle to full utilization.
• DayOne: In 2024, accomplished 340 megawatts of new commitments, ended with 467 megawatts of total IT power committed, confident of over 250 megawatts of new commitments in 2025, on track to hit 1 gigawatt in less than 3 years.

In 4Q '24, revenue increased by 9.1% and adjusted EBITDA by 13.9% year-on-year. For 2024, revenue grew by 5.5% and adjusted EBITDA by 3% year-on-year. When normalizing by excluding one-time items in 2023 and reversing BOT projects transfer in 2024, revenue grew by 7.9% and adjusted EBITDA by 7.7%. MSR per square meter declined 2.3% in 4Q '24 compared to 4Q '23. 2024 CapEx totaled RMB3 billion, in line with revised guidance. The base case CapEx for 2025 was RMB2.5 billion, but with an additional RMB2.3 billion for a new order, total CapEx for 2025 is around RMB4.3 billion. Cash flow before financing was positive RMB379 million in 2024; expected negative in 2025 but net debt remains unchanged.

• 2025 total revenues expected between RMB11.29 billion to RMB11.59 billion, a year-on-year increase of approximately 9.4% to 12.3%. Adjusted EBITDA expected between RMB5.19 billion and RMB5.39 billion, a year-on-year increase of approximately 6.4% to 10.5%. CapEx around RMB4.3 billion.
• Normalized adjusted EBITDA growth midpoint around 10.7% if ABS not considered. With ABS sale gain, midpoint around 16.7% growth. Adjusted EBITDA growth expected low teens in 2026. No guidance for DayOne, but DayOne ended 2024 with run rate adjusted EBITDA ~US$60 million, expected to increase multiples over next 2 years.

• Forward-looking statements involve inherent risks and uncertainties.
• Chip supply issues affecting AI deployments.
• Asset monetization and C-REIT progress subject to regulatory and market conditions.

Q: Visibility on DayOne's spin-off plan and schedule.

A: Plan to list within 18 months.

Q: C-REIT progress.

A: Significant progress, but details not disclosed yet, expected to be announced when allowed.

Q: CapEx and new order wins.

A: CapEx includes 152 MW order, selective on new orders due to chip supply concerns.

Q: Customer types and book-to-bill rate.

A: Current demand mainly AI inference, lead time from order to full utilization 12 months, contract terms longer.

Q: Supply/demand in Tier 1, DayOne orders.

A: Tier 1 market supply-demand balance improving, DayOne new commitments from diversified customers.

Q: ABS proceeds, Thailand/Batam.

A: ABS proceeds for debt paydown or reinvestment, Thailand campus due to strong demand, Batam project going well.

Q: ABS valuation, China move-in pace.

A: ABS valuation referenced to C-REITs, move-in pace improved with 6-month delivery for new order.