GDS Holdings Limited

Hello, ladies and gentlemen. Thank you for standing by for the GDS Holdings Limited's fourth quarter and full year 2024 earnings conference call. At this time, all participants are in a 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 Shen. Head of Investor Relations for the company. Please go ahead, Laura.

Thank you. Hello, everyone. Welcome to the fourth quarter and full year 2024 earnings conference call of GDS Holdings Limited. The company's results were issued via News File Services 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 investorsgdsservices.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 US Private Securities Litigation Reform Act of 1995. forward-looking statements involved 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 the 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 release and this conference call include discussions of unaudited debt financial information as well as unaudited non-debt financial measures. GDS press release contains a reconciliation of the unaudited non-debt measures to the unaudited most directly comparable debt measures. I'll now turn the call over to GDS founder, chairman, and CEO, William Huang. Please go ahead, William.

Thank you, Rona. Hello, everyone. This is William. Thank you for joining us on today's call. The race is on for AI in China. We saw the beginnings of it last year when cloud and internet companies increased their capex. This led to an initial wave of demand for AI training in remote locations. Now the race has gone to another level with demand for AI inferencing in tier one markets. Based on our dialogue with our customers, this type of demand could run into multiples of gigawatts over the next few years. Looking at the opportunity from GDS perspective, it is exciting times to be a data center company again. The opportunity in tier one markets plays to our strengths. We are by far the best positioned in terms of land and power to fulfill this kind of demand. And the largest cloud and internet companies in China are all our largest customers. A key fact affecting the timing of customer deployments is the availability of chips. For deployments over the next few quarters, we do not see any significant risk and we are willing to commit to new business. However, for deployments further into the future, we think the right approach for us is to wait and see. The demand supply situations in tier one markets continues to improve. and we have the flexibility to decide when to move forward. We just executed our first asset monetization transaction. From a financial perspective, this enabled us to address immediate opportunities without deviating from our current paths and the strict discipline. As our asset monetization program becomes fully established, we will have flexibility to do more while delivering on our commitments to shareholders. Several years ago, we laid out a strategy to get GDS back on track with steady growth and a strong financial position. We remain firmly committed to this strategy. We focus on tier one markets where we can add the most value. We prioritize delivering the backlog. We remain highly selective about new business, pursuing orders which match our inventory and which have fast moving schedule. We incur capex when needed. with short lead time ahead of our customer moving. We recycle capital through asset monetization, which is repeatable and scalable. And we create additional value through our equity stake in day one, which is now a stand-alone business. Let's review our progress in implementing this strategy. Our growth moving during 2024 was 79,000 square meters, all organic and all in tier 1 markets. This is the highest in our history. The moving rate picked up in 1Q2024 and has stayed at a consistently high level into the current year. The pickup was due to a combination of backlog, delivery, and new orders with fast moving. As shown on slide 7, we started 2025 with 110,000 square meters of backlog for area in service. We expect to deliver over half of this during the current year. We ended 2024 with a utilization rate of 74%. We expect utilization to increase to high 70% by end of 2025. Our gross additional area committed during 2024 was 49,000 square meters, similar to the past two years. in line with our strategy. We targeted new business to absorb in inventory. A good illustration is the three new orders which we won in 4Q24 all related in capacity, in service, or under construction. During 1Q25, We won a massive new order with the existing hyperscale customer for around 40,000 square meters or 152 megawatts, spread across two sites in Langfang and Changshu. It is the largest single order in our history in China. This new order requires us to deliver data center within six months. The customer committed to moving fully within the following six months. The whole cycle from obtaining the new order to full utilization is about one year. This is a high-quality AI-driven new business with no trip supply risk. It fully satisfies customers. all of our criteria for CapEx with a short lead time, fast moving, and the long counter-tenant. Furthermore, the sites are existing campuses where we already invested in past years. As a result, we only needed to incur the cost to complete, and we are able to meet the deadline for rapid delivery. For air inferencing in tier 1 markets, hyperscale customers typically require sites with at least 15 megawatts of available capacity, deliverable within a short period of time. Fortunately, we are very well placed in this regard. we have multiple sites suitable for AI inferencing around Beijing, Shanghai, and Shenzhen Guangzhou. After completing the 152 megawatt new order, we will still have around 900 megawatts of deliverable capacity. As demand continues to grow, there are a few sites in Tier 1 markets with the necessary scale and the time to market. This should benefit us. Turning to slide 13, I would like to share some operating updates for day one, which became our equity investing upon closing of its Series B equity rates. In 2024, Daewon accomplished a historical 340 MW of new commitments. Daewon ended 2024 with 467 MW of total IT power committed, most of which will be available within the next two years. Daewon's sales pipeline is highly visible and strong. Day One is confident of doing over 250 megawatts of new commitments during 2025, and it remains on track to hit one gigawatt of total IT power committed in less than three years. I will now pass on to Dan for financial and operating review.