Thank you. Hello, everyone.

Welcome to the second quarter 2026 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. 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 uncertainties 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 this 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, Mr. William Huang.

Please go ahead, William.

Hello, everyone. This is William.

Thank you for joining us on today's call. AI is transforming our business.

Our sales momentum is the strongest we have ever seen. In the second quarter, we achieved 260 MW of new bookings, bringing our total for the first half of 2026 to a record 470 MW.

During the current quarter, we are well underway to securing further major business wins with leading customers. We are confident today raising our full-year sales target to 1 GW.

All of our sales agreements include a binding take-or-pay commitment. It is a metric which we disclose as bookings.

The sales agreements specified delivery dates, which is up to four quarters after bookings. This allows us to invest based on secured commitments.

Following the delivery date, there's an agreed ramp-up period, usually another four quarters, which gives us visibility to the timing of new billings. Alongside new bookings, our customers also request us to reserve deployable capacity at the same sites for their future needs.

Reservation has become an integral part of our sales agreement. Far this year, we have secured an additional 600 MW of reservations from our customers.

We expect to end this year with over 1 GW of new reservations. This provides us with high visibility for new orders in the next couple of years as customers convert reservations to binding commitments.

China's tech giants and the emerging AI leaders are driving the adoption of advanced agentic models. This has led to a structural upgrade in the demand for computing power and AI infrastructure.

GDS is uniquely positioned to address this opportunity as a result of our strategic customer relationships, presence across all key markets in China, track record of execution, and financing capability. The strength of our platform is clearly evident in the compositions of our first half bookings.

We won significant new business from each of the three largest hyperscale customers. At the same time, we started to establish relationships with a group of emerging AI leaders which have the potential to generate incremental demand in the future.

Our new business wins are diversified across the market. For the first half of the year, around half our bookings came from established markets and half from new markets, including the Ulanqab and Huailai in Inner Mongolia, and Songshan in Guangdong Province.

We are progressing well with customers for our Zhongwei campus in Ningxia Province, which is another new market. This sales success validates our differentiation resource strategy.

At the midpoint of this year, we have total binding commitments for over 2 GW plus a further 600 MW of reservation. On the capacity side, we have around 3 GW of developable capacity which is not yet committed to under reservation.

It is mostly in new markets. In view of our current sales momentum, we are actively adding to the deployment pipeline in the markets where demand is growing.

While pursuing our ambitious target, we remain selective in terms of customers and contract terms. We invest against binding long-term commitments from the customers, and we are committed to maintaining financial discipline.

I will now pass on to Dan for the financial and operating review.

Thank you, William. I'll start from the backlog build-up on slide 10.

We started the current year with a backlog of 450 MW. By the middle of the year, our backlog had increased substantially to 757 MW.

Based on the pricing in the contracts and our operating cost benchmarks, we estimate that we can generate RMB2.2 million of adjusted EBITDA per megawatt on average from this backlog. Our booked but not billed adjusted EBITDA was therefore around RMB1.6 billion.

By year end, assuming we achieve our sales target, we expect the backlog to increase further to over 1 GW. Turning to slide 11, during the first half of 2026, our net move-in was 145 MW.

During the second half, we forecast move-in of another 90 MW, making 235 MW for the full year. The move-in pattern over the course of 2026 reflects the timing of bookings last year.

For 2027, we forecast move-in will increase substantially to more than double the number for 2026. The move-in will be heavily weighted to the second half of 2027.

Assuming we sustain our sales momentum, 2028 should see another step up in move-in. Turning to capex on slide 12, our unit capex for the new capacity which we are constructing averages around RMB20 million a megawatt.

As we just raised our sales target for the current year, we are also raising our guidance for capex paid from RMB9 billion to RMB10 billion, most of which is in the second half. Our plan is to continue financing new investments with around 60% debt and 40% equity at the project level.

Assuming we can generate a stabilized cash yield on new investments of 10% to 11%, this implies leverage of around 5.5 to 6 times at the project level. Our primary source of debt is onshore RMB-denominated long-term bank borrowings.

The onshore bank market remains highly supportive. During 2Q 2026 alone, we were able to complete RMB4.9 billion of new debt financing and refinancing.

For the project equity, we have various sources. We have cash of nearly RMB20 billion on our balance sheet, and we have delevered down to 4.7 times net debt to last-quarter annualized adjusted EBITDA.

We have operating cash flow which continues to strengthen. We have our onshore asset monetization program, which we are building up in a very deliberate way.

Following our successful C-REIT IPO, the first post-IPO asset injection is currently under regulatory review. Turning to slide 16, we are revising upwards our full-year revenue and adjusted EBITDA guidance to reflect a more accurate financial outlook for this year, which includes the one-time items disclosed in 1Q 2026.

Turning to slide 17, in order to put our first half '26 financial performance and revised full-year '26 guidance into context, we have made some pro forma adjustments. Starting from reported revenue and reported adjusted EBITDA, we deduct the one-time items in 1Q 2026.

For consistency, we also deduct recurring income in prior quarters which was restructured into the one-time payment. We deduct the revenue and adjusted EBITDA contributed by the monetized assets prior to their deconsolidation.

These adjustments establish a clean basis for comparison. For first half of 2026, our pro forma adjusted EBITDA increased by 12.7%.

Taking the midpoint of our revised guidance for full-year '26, the implied growth rate for pro forma adjusted EBITDA is 6.5%. We'd now like to open the call to questions.

Operator?

Thanks for the opportunity to ask question, and congratulations on the upward revision of full-year guidance. I would like to ask about the future potential move-in.

I think that there's a lot of debate on your customers' capex and also the availability of GPU in the market, and also the constrain of computing power. We also see that you expect your move-in to improve dramatically next year.

What could be the downside risk for that? If there's any concern or a delay in when customer gets the GPUs, will the take-or-pay contract protect GDS revenue?

Thank you.

Okay. Yeah.

Yes, thank you. I think the dynamic of the demands from the different dimension, I think of course, the key driver is still the GPU.

GPU, I think in terms of the domestic GPU, the supply is catching up. Yeah.

I think it took a while in the last couple of quarter, right, as we mentioned. Now looks like on track for catching up.

This is the number one. In the meanwhile, I think they also drive a lot of traditional cloud growth.

What we have seen is that the new orders quite a big number is driven by the CPU, it will not impact in terms of the supply is no issue. I think this is all positive.

That's why we take the more positive way to look at the current or future chip supply. That's our view.

If you look at a lot of the traditional cloud business, they're still raising their target and the growth is very significant as well. I think let's be clear there.

Thank you. How about the take-or-pay term protect the GDS revenue?

Yeah. Yeah.

I have two comments. The first is that in each contract there is a specific delivery date when the capacity has to be available for move-in by the customer.

That is a fixed date in each contract. It's up to four quarters from when the booking is disclosed.

That part, I think, is unchangeable. After that, there's a move-in period and it varies from contract to contract.

We've been very focused on trying to select contracts which have a shorter move-in period and a fixed commitment. For the purposes of forecasting, we assumed that the move-in will be on average over four quarters on a straight-line basis.

That is what our forecast reflects. In reality, it could be faster or it could be slower, but I don't think it will materially deviate from that.

Thank you.

Thank you for the opportunity to ask a question. Then congrats on the really solid new order signs.

As management just mentioned that there's increasing demand from emerging AI leaders, just wondering is there any difference in the demand profile or contract terms compared to established cloud or internet hyperscale customers we've already served for quite some time?

I think we're just start to build up our relationship. Far, we're very selective some business from some new AI leader.

I think in terms of the demand profile, it looks like it's getting bigger and bigger, right? We are still very selective.

Our main customer base and the new business mainly driven by the hyperscale, a couple of large hyperscale. We think there are some new customer in future.

It's a right thing to do to diversify our customer base. We just start to build some relationship with them right now.

Of course, their demand workload is obviously inference. Which we believe, yeah.

I see. Thank you.

Great. Thank you.

I wanted to get an update on what your new guidance and what does that imply for the impact of potential action with the C-REIT contribution? Does that include any of that?

How would you expect that to impact revenue and EBITDA? Then secondly, if you could just address the slow down in MRR.

How should we think about that? If we're looking forward, are you signing contracts that should be resulting in an improvement in MRR going forward?

How should we think about that? Thanks.

Hi. On guidance, to make clear that our guidance does not take account of any further asset monetization.

There's a transaction in progress under regulatory review. We can't be any more specific about timing of that.

To be clear, it's not factored in. For the MSR, we've provided guidance about the yield in terms of EBITDA per megawatt for the backlog and the new business that we're winning.

I think that will help the forecasting. If we go back to MSR, I always make the comparison on a same-quarter basis.

If we take 4Q '26, compare with 4Q '25, we forecast that it will be down 3% and then maybe by a similar amount next year. Part of that is the change in the location mix, because there's a substantial amount of new business in new markets.

Part of it is due to the legacy contracts where we have about another 18 months to go before we're through the transition of adjusting all of our contracts to the current market pricing. Our guidance this year and what we indicate in the future will fully reflect that.

I should point out that in the Tier 1 market, also the new market, the current price level is quite stable. It's more about the transition,

right? Great.

Thank you.

Hi. Thanks, management, for taking my question.

Congrats on the upward trend for the new orders. I have one question regarding the move-in.

I remember in last earnings call, we are seeing a soft move-in rate in Q2, but it seems that the number is better than in the market expectations. What have been the key drivers for better move-in in Q2?

Secondly, how do we see the demand and supply trend in the data center market in China considering the power quota approval progress by the government? Thank you.

Daley, I wouldn't read anything into the quarterly fluctuations. Most of the move-in in the current year is of capacity that was booked in 2025 or even before.

If you look at the bookings in 2025, they had a very strong first quarter 2025 and then the second, third, fourth quarter were at a lower and a consistent level. Then from the first quarter of this year, where our bookings increased by a very large amount, that sustained in the second quarter.

William gave an indication for the full year that sustained. I think you can derive from that the outlook for move-in over 2020 remainder of 2026 and 2027, where we see a significant increase in move-in in the second half of 2027, which is going to lead to a significant acceleration of EBITDA growth.

Second question is

about power quota.

I think the current power quota there's a couple of key points. I think number one is now it's controlled by the central government and municipal provincial government as well.

Basically, if you apply the power, first step is to go to the municipal level to get the local government their commitment and their full support, right? This is number one.

Now government is quite selective right now is that they try to give the market leader more allocation. That's why we build up our land bank in the last 18 months so quickly, right, and take some advantage of the GDS brand, right?

The second then we go to the provincial level NDRC approval, then have to final approval from the central government, the NDRC of central government. That's the key process how we get the power location.

Thank you, William. Thank you.

Yeah. Thank you for taking my questions.

Congrats on the good results. My question, sorry, it's really centering around just reconfirming the definition of the bookings and the reservations.

I assume that bookings mean contracts have been signed and reservations mean that is being is sort of an MOU with indicated interest by the customers and you look forward to converting that into signed contracts over the next few quarters. Is my understanding correct?

Not exactly. What I'd like to make clear is that there's a sales agreement which contains a booking, which is a contractual take-or-pay commitment.

Within the same document, we undertake to reserve capacity to enable the customer to have certainty of being able to make commitments typically at the same site in future over a period of time. The bookings and the reservations go together and that's how the customers look at it from a resource planning perspective.

In the meanwhile, I think we should say based on our last 12 or 18 months experience, our customer exercise their reservation in 100% based. That's our current experience.

In terms of case by case, we should still negotiate with the moving percentage of that. In general, reservation provide very, very high certainty for our future booking.

Okay. Can I follow up by asking your booking targets this year, right now is 1 GW.

I think in the last quarter, I think your target was still 500 MW. This doubling of the bookings target, I believe, is driven by your customers or your assessment of the customer's demand.

Is it possible for you to split the customer's demand into training versus inference, or you have no idea how to split that?

I can say the campus like in the new market, I think they will host different workload. It's a training plus inference.

They both host their workload.

Why we increased

guidance, I think increased guidance is number one is the whole market demand we see is increase. If you look at our hyperscalers, they continue to increase their capex.

That's in line with that. That's number one.

Number two, I think GDS still maintained a lot of big advantage, which is our customer preferred vendor. Everybody know we step in the new growth and we start our new business plan.

I think in terms of the capital readiness even better than the other competitor. I think the customer will more rely on us.

In terms of your power resource, can you talk about the locations of your power resource?

What

the part we identify is developable capacity that is almost entirely in new markets. We have capacity in established markets, but it's under reservation.

There's only a small amount in established markets that is not committed or reserved.

Is it very different from what you disclosed in the last quarter in terms of locations?

No, it's not. No, look at the new market, right?

Reservation, right? Reservation increase in the Tier 1 market and in the new market, yeah.

It's in the aggregate base.

Sure. Thank you, management, for taking my question.

I think I just want to get more clarity on the move-in and how do you want to look at the revenue and EBITDA beyond this year. Just wondering if you can give us a breakdown, for example, for this year, what are the move-ins, what is the proportion between CPU-based and GPU-based?

Into next year, it seems that you are looking for the move-in to be more than double to close to 700 MW next year. What will be that breakdown between GPU and CPU next year?

With that 700 MW move-in, of course, I think the majority will be more geared towards the second half of the next year. If the case, then how do you think about the revenue and EBITDA growth, I think beyond this year, into 2027 and 2028?

Thank you.

In general, we don't have the current specific number in terms of that breakdown there. In general, I think I can give you the general assumption, maybe it's around 50-50.

About growth in 2027, we provide annual guidance. Obviously, we'll be doing that until we give the full-year results in around March next year.

What you can already see is that over the course of next year, there's going to be a very significant acceleration. The growth rate from 1Q, 2Q, 3Q, 4Q is going to be very different.

I think what really matters is where we are at the end of the year and where we are in 2028. I believe it's already a strong indication that in 2028, GDS is going to be a pretty high-growth company.

Thank you. May I follow up on the breakdown 50-50, just wondering if that refers to both this year and the next year and onwards, or how that mix can change in the next year?

Yeah. Maybe GPU will a little bit higher next year.

That's what I guess, yeah, based on the current domestic supply is catching up. I think, yeah.

Thank you all once again for joining us today, and see you next time. Bye.

Thank you.

Bye.