Hello, everyone. Welcome to the first 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 US 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 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 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 the call over 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. Over the past few quarters, we have seen a resurgence in data center demand driven by AI.

We believe this is the beginning of a multi-year growth story, supported by increasing availability of domestic chips. Customers are planning their future deployments at unprecedented scale with a high degree of conviction.

As market leaders, GDS is well prepared to address this opportunities to the fullest extent. We have the trust of all the key customers, a multi-gigawatt development pipeline in strategic locations, and a very strong balance sheet.

Up to the end of 1Q '26, our total bookings stood at 1.8 gigawatts. In our three-year business plan, we target adding 500 megawatts to 800 megawatts of new bookings every year, with the potential to do more.

To deliver this capacity, we are prepared to commit RMB30 billion to RMB50 billion of new investment over the next three years. The economics of the data center business in China is solid, and this new investment will create significant value for our shareholders.

On the last earnings call, we announced a sales target for 2026 of at least 500 megawatts. In the year to date, we have already done over 340 megawatts of new bookings, and we are still being selective.

We are well on track to reach or exceed our full year target. We have won significant new orders from all of our largest customers for deployments across the whole of our platform, including the new markets.

For the hyperscale business, customers are planning gigawatt scale deployments in single clusters. When they sign new sales agreements with us, they commit to a certain amount of capacity, which we disclose as bookings, and ask us to reserve the rest of the site for their subsequent phases.

In the year to date, total new bookings plus reservations comes to over 1 gigawatt. The reservations give us near certainty of winning follow-on orders within the next one or two years.

In order to fulfill our customer requirements, we expanded our platform to new locations which can accommodate the largest AI deployments. These new locations integrate well with our platform in established markets, enabling us to serve diversify customer requirements.

Anticipating the demand trend, we increased our secured land bank to nearly 4 gigawatts. Typically, we are purchasing land from the government exclusively for our data center development.

As we obtain customer commitment, we will be granted power quota for this site. We synchronize the timing of construction with new bookings and fixed move-in schedules.

Over the past 15 months, we initiated over 100,000 square meters or 400 megawatts of new construction, which is almost entirely pre-committed. Our backlog has increased to over 200,000 square meters or almost 600 megawatts, most of which will become billable within the next 6 to 8 quarters.

As this occurs, our growth will start to accelerate. AI in China is a transformational opportunity.

We are super motivated to support this development, and we'll commit all the resource requirement to the expansion of our AI infrastructure platform. I will now pass on to Dan for the financial and operating review.

Thank you, William. For our new business, the unit development cost averages around RMB20,000 per kilowatt or $3 million per megawatt, depending on specification, cooling technology, and location.

Pricing for new business is stable, and at current levels, we're able to generate an adjusted gross profit yield of 10% to 11% for stabilized assets. As shown on slide 13, across the whole of our in-service portfolio, the adjusted gross profit yield is currently around 11%.

We calculate this ratio based on adjusted gross profit, which includes the cash cost of operating assets, divided by gross PP&E, which includes replacement capex already incurred, and for conservatism, we added back historic impairment charges. The portfolio yield has been stable at around 11% for the past few years, based on a portfolio with utilization rate of around 75%.

As our new bookings are delivered, we expect the portfolio yield to remain in the 10% to 11% range, which in our view is a reasonable return. Assuming a 6-year investment cycle of development, ramp-up, stabilized operations, and then asset monetization, we expect to generate a return on equity of around 20% from the incremental investment.

This underpins our confidence in growing the business. As shown on slide 13, during the first quarter, net additional area utilized was around 16,000 square meters.

During the current quarter, this metric will be slightly lower, and then in the second half of the year, it will rebound to around 20,000 square meters per quarter. During the second half of next year, as we start to see the flow-through from this year's higher level of new bookings, the move-in rate will step up noticeably.

MSR on slide 16 is a useful metric for financial forecasting purposes, but must be seen together with unit development cost. This is why we think it's more relevant to look at the gross profit yield or cash-on-cash yield as a measure of the economics of our business.

Turning to slide 18, during the first quarter, we recorded 7.9% growth in revenue and 8% growth in adjusted EBITDA after excluding one-time items which arose in the normal course of business. We find it useful to look at our growth rates on a pro forma basis, adding back the deconsolidated revenue and adjusted EBITDA of the assets which we monetized in March and July of 2025.

This shows pro forma revenue and adjusted EBITDA growing at 12% to 13% after excluding one-time items. Turning to slides 19 and 20, in 1Q '26, our organic capex was RMB770 million.

In addition, we received cash proceeds of RMB2.7 billion or $385 million from the sale of a small part of our equity interest in DayOne, which is recorded in investing cash flow. We also received cash proceeds of RMB2.1 billion or $300 million from the issue of convertible preferred shares, which is recorded in financing cash flow.

As a result of the capital recycling and new issue, we are now sitting on over RMB19 billion or $2.7 billion of cash and time deposits. This is an ideal situation to be in as we prepare for a new growth phase.

Turning to slide 23, our net debt to last quarter annualized adjusted EBITDA has decreased from 6.8 times at the end of 2024 to 4.7 times at the end of the first quarter of 2026. As we step up our investment, this ratio will increase to between 5 to 6 times, which we consider an acceptable level.

Finishing on slide 25, we maintain our full year guidance unchanged. Now we'd like to open the call to questions.

Operator?

Hey, thanks for the opportunity to ask a question. I would like to hear your comment on the pricing for the data center business.

I think Dan previously mentioned that the overall pricing environment is stable. Could you please break it down to different market or locations?

Because from time to time, we hear that in certain market, it's a little bit under supply and also in certain market, there are some relative aggressive bidding from telcos, etc. Could you please comment on the pricing in different markets, please?

Thank you.

I think, Liu Yang, I think this is William. I think in the last earnings call, we already say the new incremental demand, which is driven by AI, right, a large-scale data center demand.

In general, the price pretty stable, number one. Number two, I think of course in the whole market, you cannot stop some bidder, right, use some price tools try to win.

It's not normal, right? It's not normal and it's maybe in my view, it's in some region, some deal, it's a one-time, it's not a represent the whole market situation.

Our view is that it remained what we experienced last quarter. It's quite stable, yeah.

Got it. Thank you.

Hi. My question is basically on the development cost.

Dan, I think you mentioned roughly 20, 20%, RMB20 million or $3 million per kilowatt, if I remember right. That number sounds a lot lower than what it used to be a few years back when you updated those numbers, I think.

Could you talk a little bit about what are the variables that have changed? Is it mostly the location that has really changed or are there any other factors that have really changed to kind of reduce that development cost over the last maybe, I think, two to three years?

Gokul,

I would say that the unit development cost on a like-for-like basis, whether we're talking in established markets or new markets, has decreased by about 15% over the past three years. That would be the case with the MEP, the mechanical electrical plant, which accounts for about 70% of the total development cost.

I've also said that the land, concrete, steel, and construction costs has been quite stable. If we measure it on a per square meter basis, the unit cost is relatively flat.

The power density has increased. If we were to measure that part on a per kilowatt basis, it might appear to have come down as well.

That's why I think overall on a per kilowatt basis, the decrease is about 15% over three years.

I try to add a couple of color. Number one, the scale is unprecedented, right?

Scale also make the cost a bit lower, right? That's fair nature.

This is number one. Even for the vendor perspective, large scale gives a lot of manufacturing product company a lot of benefit, right?

They're willing to reduce the cost, reduce the price. This is number one.

Number two, I think this a lot of AI data center this compared with previous cloud, the architecture-wise also changed a lot. This is another reason to drive down the cost, right?

That's two two more reasons.

Thank you.

Thank you for the opportunity to ask a question. I have one question regarding first quarter capex.

Since the first quarter capex is RMB770 million, it seems a little bit modest given the strong orders we've seen year to date, and especially given the majority of the new orders should be new builds. May I ask what's the reason behind this gap?

Thank you.

Sara, I would point you to our full year capex guidance, which remains unchanged. The timing of incurring capex per quarter is not that significant, right?

The first quarter is Chinese New Year, and it tends to be historically slightly below the level of the other three quarters. I have no other more fundamental explanation than that.

Got you. Thank you.

Great, thank you. Of the roughly RMB3 billion that you discussed in capital you're spending, how much of that will be funding yourself versus maybe with some JV investors or with capital recycling from some of your other assets?

Thanks.

Frank, it's Dan. Let me just go over these numbers again to make sure everyone is clear.

William was talking about having a sales plan of 500 megawatts to 800 megawatts over the next three years, that's our current view. If you apply the logic of what I said, RMB20,000 per kilowatt or $3 million per megawatt, that's how you end up with total capex over three years of between RMB30 to RMB50 billion.

If we take the midpoint of that, say RMB40 billion, historically, we have financed our investment quite conservatively with around 60% project debt to total development cost. We will be able to obtain and draw down on about 60% of RMB40 billion, which is RMB24 billion of new debt.

That would leave RMB14 billion, which is less than $2 billion, that we have to finance. We have several different sources for that.

We have our operating cash flow, which last year was nearly RMB3 billion. We have our ongoing asset monetization program, which we're trying to build up step by step.

We also have $2.7 billion of cash now on balance sheet. I think we're in a strong position to finance that level of investment.

Other options may arise, as you point out, development partnerships and so on.

Great, thank you very much.

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

I just wanted to get a sense on the new bookings trajectory. The year to date 340 megawatts new booking seems to be very encouraging.

Considering the current token consumption and how AI agents are significantly boosting that compute demand, how would you kind of evaluate that upside surprises on the current scale? Thank you.

Potential to upsize.

Number one, I think we are 500 megawatt we're very confident for this number with a new booking, definitely, that's the base case. We are looking at a more high number booking, but it's too early to say what kind of level we can reach.

Because we remain very disciplined to select the order in terms of the move-in, price, and customer types. This is in general, I think we're very confident we can do more.

Even though we still want to do high-quality order.

Got it. If I may, just a quick follow-up.

Would it be possible for you guys to consider kind of doing some of the neocloud business models as well? Because it does seem like some of the peers are trying to accumulate more resources from the compute side.

That was being perceived as an approach to boost the MSR or revenue in general. Is that something that we're considering as well?

Neocloud actually is not something new in China already. Historically, there are a lot of big platform GPU service provider customer already, right?

We are already serve them indirectly, right? This is number one.

Number two, I think for the long-term perspective, we also start to build some relationship with them. Far, we haven't to do any business with them, and we will see because as I said, we will maintain our very disciplined in terms of the financial return and the risk, everything, right?

If high-quality neocloud, we're willing to do something with them, start to build some relationship. Yeah.

All right. Thank you very much.

Great, thank you, management, for taking my question. My question is regarding the move-in pace or the net additional area utilized.

Just wondering after the first quarter, can you share your latest outlook for the rest of this year in terms of move-in pace and what are the key move-in factors that may affect the utilization rate ramp-up? Thank you.

Timothy, I couldn't hear you clearly, but I'm told you ask about the move-in pace. I did address that in the prepared remarks.

As it was 16,000 square meters in the first quarter. It will be a lower number in the second quarter, and then it will rebound, I'd say, to around 20,000 square meters in the third quarter of this year and fourth quarter of this year.

Next year, we will see a significant step-up, but it will be in the second half of 2027, the third and fourth quarter of 2027. If we look at 2026 and 2027 as a whole, I think the move-in this year will be somewhat over 70,000 square meters.

Then next year's number is going to be very substantially larger than that, maybe double, something of that order of magnitude.

Sure. Can I ask a follow-up, if I may?

Just wondering, I think, behind this move-in assumptions, I think what are the key factors? I.e., how much of that is contributed by the domestic chips versus imported chips?

Just wondering if you can share more color.

William,

imported chips and whether chips will affect our move-in.

Okay. Okay.

Oh yeah, I think I'm not sure if it's your question, import chips will affect our move-in, right? Is that a question?

Yeah. Yes.

More like, yes.

Okay. Frankly speaking, this year's forecast not based on any import chips.

All based on the domestic chips supply chain. It will not now impact our current estimation.

If import coming, maybe some upside, who know, right?

Okay. Got it.

Thank you.

Hi, management. Thanks for taking my question.

My question is about our land and the power resources. We have secured quite strong resources in 1Q, and are we planning to expand our resources in the following quarters?

If we have the plan in future, and what type of area we would focus on? Thank you.

I think last quarter, we already answered the question. We will continue to develop the new market and established market as well, because in China, what happened is the training and inference demands all happening in the same time.

I think we try because everybody know GDS is a platform player, not just a project player, right? We try to fulfill all the kind of the AI demand, whatever is training or in the future or let's say, inference.

We well-positioned to catch up the difference pace of the AI demand.

Thank you, William.

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

Thank you.