GDS Holdings Limited

Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Laura Chen, Head of Investment Relations for the company. Please go ahead, Laura.

Thank you. Hello, everyone. Welcome to 3Q21 earnings conference call of GDS Holdings Limited. The company's results were issued via 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. Ms. Jamie Koo, our COO, is also available to answer questions. 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 Security Litigation Reform Act of 1995, Forward-looking statements involve inherent risks and certainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and certainties is included in a company's prospectus as filed with the US 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 this conference call 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 will now turn over the call to GDS founder, chairman, and CEO. William, please go ahead, William.

Thank you, Laura. Hello, everyone. This is William. Thank you for joining me on today's call. I'm pleased to report another quarter of solid results, with revenue and adjusted EBITDA up around 35%. During the third quarter, we made significant progress in key areas which underpin our future success. We sustained our sales momentum We further diversified our customer base with another great hyperscale wing. We enhanced our capacity pipeline with strategically important resource acquisitions. We took steps to secure our transition to renewables. And we put in place further foundations for our existing platform expansion in Southeast Asia. In 3Q21, we booked 23,000 square meters of new organic commitments in general markets. We remain well on track to hit our sales target of over 90,000 square meters organic booking for the full year. As shown on slide 5, we won five high-scale orders. Two orders were under an existing multi-year sales framework agreement with the top customers. Two were from one of China's largest internet platforms, which is a new high-scale logo for us, demonstrating the strength of demand from internet. And a further order was from a major Chinese bank, which highlights the growing potential of financial institutions. Our sustained sales is strong evidence that customers are not holding back on their medium-term and long-term business plans. For us to offer a complete solution to our customers, we must have continuous capacity supply in each tier one market. Securing this supply means working with government policy. But governments recognize the importance of data centers to the digital economy, the government also attached great importance to sustainability. In its plans for the industry, the government has made clear that they want to see new data centers, which are large scale, highly efficient, smart, secure, and technologically advanced. They want data centers in tier one markets used predominantly for low-latency applications. They want a well-integrated edge, hub, and remote data center layout. And last but not least, they want data centers which are more green and lead the way in terms of renewable energy usage. GDS is well aligned with all of these governments' objectives. Going forward, we expect new project approvals and the energy quota will become even more difficult to obtain in tier one markets. In some downtown locations, supply is already constrained. We therefore took the decision to accelerate our acquisition of qualified projects in key locations. Turning to slide nine, in Beijing, we closed the acquisition of Beijing's 17, 19, 18, and 19, which brings us 10,700 square meters of developed and developable capacity. In addition, we recently signed an agreement for the acquisition of another 13,000 square meters of capacity, comprising four data centers on land. owned by the project company, which are nearly complete and not yet committed. We will market this data center to financial and enterprise customers, whose national headquarters are mostly located in Beijing. In Shenzhen, we are acquiring a data center with 3,600 square meters of capacity, which is nearly complete and already committed to our customers. In Guangdong, we are acquiring a portfolio of development projects at multiple locations. The portfolio has a total developable net floor area of over 100,000 square meters, or IT power capacity over 250 megawatts. The projects are either at an early stage or held for future development. Guangdong province has stated that the new application will be extremely limited for the next few years. This acquisition enables us to materially step up our market presence. With the acquisition of Wuhan 1 and 2, we are entering a new market. Wuhan is the economic hub of central China. where many high-scale cloud and internet companies set up their regional headquarters. The two data centers have a net floor area of 8,400 square meters, and the first phase is under construction. With the additional of this acquisition to our secure pipeline, we are well-placed in terms of supply in each tier one market. Turning to slide 11, In a couple of weeks' time, we will publish our inaugural ESG report and set out our sustainability targets for 2030. As is typical for data center companies, 99% of our carbon emissions come from electricity consumption. We estimate that for cloud and internet companies, around 60 to 70 of their carbon emissions come from data center operations, including in-house and all sorts of data centers. It is therefore critical, important to us, our customers, the government, and other stakeholders that we set proper targets and have a feasible feasible strategy to reach carbon neutrality. Where are we today? In FY20, over 20% of our total electricity consumption was green. In the current year, we expect the percentage to be over 30%. And by 2025, we should exceed 50%. We are increasing our green energy usage in three main ways. The first is by direct investment in renewable energy generation. We started in a small way by installing solar walls on some of our data center buildings. But our ultimate objective is to have large-scale integrated development. We are working with partners and the government to make this happen, but it will take time to realize. The second is by direct power purchase, or DPP, which we are already doing pretty much to the maximum extent possible in Shanghai, Shenzhen, Chengdu, and Chongqing, as well as for some remote sites. DPP is currently constrained by the availability of renewable in children's markets, but supply will increase significantly over the next few years. The third is by the purchase of renewable energy certificates, or RETs, which in the near term is the most practical option. We recently signed a multi-year agreement with CGN New Energy, a state-owned independent power producer with the wind, solar, and hydro portfolio to purchase over 30,000 gigawatt of renewable energy certificates. To put this into context, 30,000 gigawatt is over seven times our current annualized electricity consumption. We believe that this is one of the largest renewable deals done by any private industry user in China. In a further sign of progress, some of our data centers in Beijing were recently allocated tradable carbon credits as a result of our success in lowering PoE. These GDS data centers are among the very first to be allowed to participate in Beijing's official emissions trading market. Now, turning to slide 12. Yesterday, we announced our second project commitment in Southeast Asia. We are in the process of acquiring greenfield land for 28 megawatt data center development in Nangsa Digital Park, Batam, Indonesia. A special economic which is 25 kilometers from Singapore. This is a new location for data center development, which you can see from the quota in our press announcement, has a strong support from both Indonesia and Singapore governments. We expect to obtain renewable energy for this site, which will further enhance its marketability and competitive edge. With this addition, we now have strategically location high-scale project both in the north and the south of Singapore, with great potential for creating unique ecosystems and interconnectivity in and around the Singapore hub. At the Nongshan Jaya Tech Park in Johor, Our land is next door to Telecom Malaysia's regional data center. We are pleased to have signed a strategic cooperation agreement with Telecom Malaysia, both for network connectivity and for use of available capacity in their facility, which will enable us to kickstart our presence before our own data center come online. Our regional strategy is driven by the requirements of our whole market customers. To reinforce this point, we have recently signed a strategic cooperation agreement with a major Chinese cloud service provider to support its international expansion. Under the agreement, we will be prioritized as their data center provider in the region. The strategic cooperation extends mutual trust between us and the customer from China to Southeast Asia, providing a strong foundation for the success of our regional strategy. Now, I will hand over to Dan for the financial and operation reviews. Thank you.