GDS Holdings Limited

Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's second quarter 2025 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 Investor Relations for the company. Please go ahead, Laura.

Thank you. Hello, everyone. Welcome to the second quarter of 2025 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 Compton. 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 certainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risk conservatives 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 include discussions of an audited gap 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, William Huang. Please go ahead, William.

Okay, thank you. Hello, everyone. This is William. Thank you for joining us on today's call. We delivered a solid second quarter. growing revenue by 12.4% and adjusted EBITDA by 11.2% year-on-year. We raised the net proceeds of US dollar 676 million through the issue of convertible bonds and equity in the international capital market, strengthening our HODLCO balance sheet More recently, we achieved a significant milestone in our onshore asset monetization strategy. With the successful completion of our CREITs IPO, the units of our CREITs are now trading on the Shanghai Stock Exchange at an implied cap rate of below 5%. This is a major breakthrough, giving us access to China equity capital market on highly advantageous terms. Our growth moving during 2Q25 was around 20,000 square meters, which is consistent with the level over the past five quarters. Our utilization rate has continued to climb. reaching 77.5%. Moving over the next few quarters will remain solid, driven by delivery of the 152 megawatts order, which we signed in 1Q25. We expect to deliver 35% of our total current backlog in the second half of 2025. In 2025, most new bookings were 23,000 square meters, mainly from traditional internet and the cloud business, with a good mix of customers and the locations. AI demand was relatively quiet due to the uncertainty of chip supply in China. Customers have a number of options across both imported and domestically sourced chips. It's a complicated matrix of performance, technology, availability, and other considerations. We think that it will take some time for customers to decide which way to go. We are very confident about AI-driven demand over the medium and long term. However, we are still in a period of wait and see. We should have a clear view after a few more months. During this period, we think that the most important thing is for us to be ready to respond. ready in terms of developable capacity and ready in terms of access to capital. On the capacity side, we have around 900 megawatts of power land held for future development in and around the tier one markets. We believe the coming waves of AI demand is going to be mainly for inference. This kind of demand is latency sensitive and will require relatively large sites distributed across the tier one markets. For operational reasons, customers will seek to deploy capacity for inferencing within established cloud regions and availability zones. We have multiple sites suitable for AI inferencing around Beijing, Shanghai, and Shenzhen. We have undertaken preliminary site preparations so that we can develop with a short lead time. This is an important consideration for customers. We believe there is a good chance that we will develop all of the all of these 900 megawatts and more over the next few years. The issue is only the timing of takeoff. On the financing side, we completed the first ever data center ABS transaction in China in late March. We then followed this up with the first ever data center REITs IPO in China in August. By pioneering these transactions, we have proven our ability to recycle capital from stabilized data center assets. This comes at the perfect time as we can use the proceeds to fund the new investment opportunities. Furthermore, the terms on which we have monetized the asset, established a benchmark for the value of our stabilized asset data center in trade markets, creating potential to unlock more value for shareholders. Our power of the land and our monetization vehicles are unique in China and give us significant competitive advantage as we enter into the AI era. Lastly, I would like to share some operation updates for our equity investment in Day One. In 2Q25, Day One added a phenomenal 246 megawatts of new commitments, which bring its total power committed by customers to over 780 megawatts. The new order in 2025 included an anchor customer commitment for its Thailand project. More recently, they announced that it has secured a second campus site in Finland, building on its successful market entry. Taiwan is well ahead of schedule to meet the target of one gigawatt of total power commitments within three years. I will now pass on to Dan for the financial and operating review.