GDS Holdings Limited

Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's second quarter 2024 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'll now turn the call over to your host, Ms. Laura Chen, Head of Investor Relations for the company. Please go ahead, Laura.

Thank you. Hello everyone, welcome to the second quarter 2024 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'll 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, CEO of GDS International, 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 Delegation 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 uncertainties 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 at this conference call includes 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 over the call to GDS founder, chairman, and CEO. William, please go ahead, William.

Thank you. Hello everyone, this is William. Thank you for joining us on today's call. In QQ24, we achieved a revenue growth of 18% and adjusted EBITDA growth of 15%. This growth rate is quite remarkable in current market conditions. It reflects the progress which we have made in stabilizing our China business. and uplift from the highly successful execution of our international strategy. For our China business, we have two key financial objectives. Number one is to grow EBITDA at a steady rate. And then number two is to generate a positive cash flow before financing. We believe that this combination can create significant equity value and help drive our share price recovery. In order to achieve these objectives, we provide delivery in the background. At the same time, we take a highly selective approach to new business, targeting orders which fits our inventory and have fixed moving schedules. This will allow us to grow while minimizing the need for incremental capex. We have been following this strategy for a while and it's starting to produce noticeable results. Over the past couple of quarters, the growth moving rate has clearly stepped up. In 2Q24, it was over 20,000 square meters, the highest level for the past three years. The main reason for this improvement is the contract which we signed with faster moving schedule. These are mainly large internet customers whose business continues to grow strongly. However, We are also beginning to see improvements from orders which have been in the backlog for longer. We expect this trend to continue as our customers implement their AI plans. In order to support higher moving, we need to complete some projects which have been in progress for a while. In the first half of 2024, we brought 45,000 square meters into service. At 30 June, this was already over 20% utilized. In the second half of 2024, we expect to complete another 32,000 square meters. The good news is that this does not require a lot of new capex. as we only incur the cost to complete. The first indications of improved demand is customers observing capacity for which they already made commitments. This is underway. After that, we will start to see more new business opportunities. We are well-positioned to support AI demand as we are holding enough land and power quota. In the meantime, we will stick with our strategy of being very selective about what new business we take on. In our international business, we are already seeing very strong demand. We had a phenomenal second quarter with two 206 megawatts of new orders spread across our two campuses in Johor. More recently, we signed a master sales agreement with a global technology company for capacity at our new campus in Bataan. This is a major breakthrough which will lead to further large orders. Singapore, Jeho Batan, is fast emerging as one of the very largest data center markets in the world. And we have a great market position. Where is this demand coming from? Part of it is regional expansion. And part of it is spillover from the US, which is mostly AI-related. A critical success fact is that we were first mover into Johor and helped to create the market. We anticipated where demand will flow and secure this resource, which give us a time-to-market advantage. We have shown that we can execute delivery data centers in record time with state-of-the-art design and technology solutions. We have also shown that we can operate working with the local institutions to source and train talent. From the perspective of our customers, these are really meaningful differentiators. As of today, we have 388 megawatts of total customer commitments, out of which 101 megawatts is already utilized and 287 megawatts is backlogged. The delivery schedule for most of the backlog is very short and the customers undertake to move in quickly. As a result, based on the terms of the existing contracts, we expect to have over 350 megawatts of utilized capacity within 24 months. I will now pass on to Dan for the financial and operating review. Thank you William.