On Wednesday, GDS Holdings (NASDAQ:GDS) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
GDS Holdings reported a resurgence in data center demand driven by AI, with bookings reaching 1.8 gigawatts and a target of adding 500 to 800 megawatts annually over the next three years.
The company plans to invest RMB 30 billion to RMB 50 billion in new data center development, supported by a strong balance sheet and customer commitments.
Financial performance showed a 7.9% growth in revenue and 8% growth in adjusted EBITDA for Q1 2026, with stable pricing and improved unit development costs.
GDS Holdings maintains a full-year sales target of at least 500 megawatts and has already achieved over 340 megawatts in new bookings year-to-date.
Management expressed confidence in meeting growth targets due to a solid pipeline, strategic land acquisitions, and a disciplined approach to new orders.
Full Transcript
Laura Chen (Moderator)
Laura hello everyone. Welcome to the first quarter 2026 earnings conference call of GDS Holdings Ltd. The company’s results were issued via PR Newswire Services earlier today and are posted online. A summary presentation which we will refer to during this conference call can be viewed and downloaded from our IR website at investors.gdsservices.com Leading today’s call is Mr. William Huang, GDS founder, chairman and CEO, who will provide an overview of our business strategy and performance. Mr. Dan Newman, GDS CFO, will then review the financial and operating results. Before we continue, please note that today’s discussion will contain forward looking statements made under the safe harbor provisions of the U.S. private Securities Litigation Reform act of 1995. Forward looking statements involve inherent risks and uncertainties. As such, the Company’s results may be materially different from the views expressed. Further information regarding these and other risks uncertainties is included in the Company’s prospectus as filed with the U.S. SEC. The Company does not assume any obligation to update any forward looking statements except as required under applicable law. Please also note that GDS earnings press release and its conference call can include discussions of unaudited GAAP financial information as well as unaudited non GAAP financial measures. GDS press release contains a reconciliation of the unaudited non GAAP measures to the unaudited, most directly comparable GAAP measures. I’ll now turn the call over to GDS founder, chairman and CEO Mr. William Huang.
William Huang (Founder, Chairman, and CEO)
Please go ahead William hello everyone, this is William. Thank you for joining us on today’s call. Over the past few quarters we have seen a resurgence in data center demand driven by AI. We believe this is the beginning of a multi year growth story supported by increasing availability of domestic chips. Customers are planning their future deployments at unprecedented scale with a high degree of conviction. As market leaders, GDS is well prepared to address these opportunities to the fullest extent. We have the trust of all the key customers, a multi gigawatt development pipeline in strategic locations and a very strong balance sheet. Up to the end of 1Q26 our total bookings stood at 1.8 gigawatts. In our three years business plan we target adding 500 megawatts to 800 megawatts of new bookings every year with the potential to do more to deliver this capacity. We are prepared to commit RMB 30 billion to RMB 50 billion of new investment over the next three years. The economics of the data center business in China is solid and this new investment will create significant value for our shareholders. On the last earnings call, we announced a sales target for 2026 of at least 500 megawatts in the year today we have already done over 340 megawatts of new bookings and we are still being selective. We are well on track to reach or exceed our full year target. We have won significant new orders from all of our largest customers for deployments across the whole of our platform including the new markets. For the hyperscale business, customers are planning gigawatt scale deployments in single clusters. When they sign new sales agreements with us, they commit to a certain amount of capacity which we disclose as bookings and ask us to reserve the rest of the site for their subsequent phases in a year or so. Today, total new bookings plus reservations comes to over 1 gigawatt. The reservation give us near certainty of winning follow on orders within the next one or two years. In order to fulfill our customer requirements, we expanded our platform to new locations which can accommodate the largest AI deployments. These new locations integrated well with our platform in established market enabling us to serve diversified customer requirement. Anticipating this demand trend, we increased our secured land bank to nearly 4 gigawatts. Typically, we are purchasing land from the government exclusively for our data center development. As we obtain customer commitment, we will be granted a power quota for this site. We synchronized the timing of construction with new bookings and fixed moving schedules. Over the past 15 months we initiated over 100,000 square meters or 400 megawatts of new construction which is almost entirely pre committed. Our backlog has increased to over 200,000 square meters or almost 600 megawatts, most of which will become billable within the next six to eight quarters. As this occurs, our growth will start to accelerate. AI in China is a transformational opportunity. We are super motivated to support this development and will commit all the resource requirements to the expansion of our AI infrastructure platform. I will now pass on to Dan for the financial and operating review.
Dan Newman (Chief Financial Officer)
Thank you William. Around new business, the unit development cost averages around 20,000 RMB per kilowatt or US$3 million per megawatt depending on specification, cooling technology and location. Pricing for new business is stable and at current levels we’re able to generate an adjusted gross profit yield of 10 to 11% for stabilized assets as shown on slide 13 across the whole of our in service portfolio. The adjusted gross profit yield is currently around 11%. We calculate this ratio based on adjusted gross profit which includes the cash cost of operating assets divided by gross PP and E which includes replacement capex already incurred. And for conservatism we added back historic impairment charges. The portfolio yield has been stable at around 11% for the past few years based on a portfolio with utilization rate of around 75%. As our new bookings are delivered, we expect the portfolio yield to remain in the 10% to 11% range, which in our view is a reasonable return. Assuming a six year investment cycle of development, ramp up stabilized operations and then asset monetization, we expect to generate a return on equity of around 20% from the incremental investment. This underpins our confidence in growing the business. As shown on slide 13 during the first quarter net additional area utilized was around …
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