GDS Holdings Limited

Hello, ladies and gentlemen. Thank you for standing by for the GDS Holdings Limited's second quarter 2020 free earnings conference call. At this time, all participants are in listen-only mode. After management prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I would now like to turn the call over to your host, Ms. Laura Chen, Head of Investor Relations for the company. Please go ahead, Laura.

Hello, everyone. Welcome to the second quarter of 2023 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 investorsgdsservices.com. Leading today's call is Mr. William Huang, GDS founder, chairman, and CEO of who will provide an overview of our business strategy and performance. Mr. Dan Newman, GDS CFO, will then review the financial and operating results. With 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 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 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 gap financial information, as well as unaudited non-gap financial measures. GDS press release contains a reconciliation of the unaudited non-gap measures to the unaudited most directly comparable gap measures. I'll now turn the call over to GDS founder, chairman, and CEO, Mr. William Huang. Please go ahead, William.

Thank you. Hello, everyone. This is William. Thank you for joining us on today's call. During the second quarter, we continued to focus on our strategic business objectives. In China, we are selectively targeting new business to give us a shorter book-to-bill cycle. We are prioritizing delivery of the backlog to grow revenue with less capex. We are increasing utilization rates to drive up return on invested capital. We are only initiating new projects based on firmly committed orders, and we are monetizing assets to achieve positive free cash flow as soon as possible. For international, we are developing a second growth engine. We are winning new business from reference China and the global customers. We are leveraging our competitive advantage in cost and speed of execution. We are financing expansion without relying on GDS balance sheet, and we will benchmark variation creation through external funding rounds. By pursuing these objectives, we will strengthen our financial position and unlock value for GDS shareholders. As we review our performance quarter by quarter. We will measure our progress against these targets. Turning to the slide five. In the first half of 2023, our gross additional area committed was around 28,000 square meters, 55% from China and 45% international. In China, new business volumes are down as customers need more time to ramp up. This gives us breathing space to focus on our other priorities while our market leadership position remains as strong as ever. In Southeast Asia, demand is very strong. We have one great new business which lifts us, our growth. For the second half of 2023, we expect gross new booking at a similar level to the first half. Looking further ahead, there's no doubt that demand will rebound in China. Data center supply in tier one markets has been restricted for several years. As demand strengthens, we will be well positioned with our secure pipeline. Turning to slide seven, in 2Q23, we won three notable orders. In Beijing, we won 3,200 square meters or 6.1 megawatt order from a major Chinese financial institution. This used up some of our inventory and comes with a confirmed moving schedule. Outside of Beijing, in Lanfang, we won 3,600 square meters or 8.3 megawatt order from a large internet customer. This is for expansion at a site where the customer has already deployed. In Southeast Asia, we were able to increase power capacity for our Johor data centers, which results in upsizing of an existing order. Turning to slide eight, our growth moving for the second quarter was around 15,000 square meters. This is consistent with the quarterly run rate for the past two years. In the second half of 2023, we will start to see significant moving from international. As a result, our quarterly growth will be higher than in prior quarters. Turning to size 13, we are bringing new capacity into service when customers are ready to move in. In the first half of 2023, we brought 15,000 square meters into service, almost all in China. In the second half of 2023, we will bring another 50,000 square meters into service, 30,000 square meters in China and 20,000 square meters internationally. All of this capacity has confirmed moving schedules. Turning to slide 60, we recently held an opening ceremony to deliver our first data center at the Nusa Jaya Tech Park, Johor. 14 months ago, this was an empty piece of land. Today, you can see three large data centers, one of which is for AI computing, with 70 megawatt of IT power capacity in total. Our ability to deliver so quickly in a new overseas market says a lot about our execution capability. For this project, we use our proprietary prefabricated liquid cooling and power modules. It gives us time to market and development cost advantage, which are critical success factors. in today's market. When we set up in Johor, our vision was to establish the security data center hub to serve the region by integrating Johor, Batam, and Singapore. We are therefore delighted to be selected by the Singapore government alone with three other data center operators for a total of about 80 megawatt new data center capacity in Singapore. Through the pilot data center call for application DCCFA exercise, we are finalizing our development plans and will provide updates in due course. In Bhutan, we continue to make progress with establishing the essential infrastructure for our proposed development. Our international expansion is gaining momentum. I will now pass on to Dan for financial and operating review.