GDS Holdings Limited Reports Third Quarter 2016 Results
- First Earnings Results as a
Public Company - Revenue Growth of 56.6% Year-over-Year
- Total Area Committed Increase of 69.6% Year-over-Year
Financial Highlights
- Net revenue increased by 56.6% year-over-year (“Y-o-Y”) to
RMB297.2 million (US$44.6 million ) in the third quarter of 2016 (3Q2015:RMB189.8 million ). - Service revenue increased by 58.4% Y-o-Y to
RMB266.9 million (US$40.0 million ) in the third quarter of 2016 (3Q2015:RMB168.4 million ). - Net loss was
RMB52.6 million (US$7.9 million ) in the third quarter of 2016, compared with a net loss ofRMB23.1 million in the third quarter of 2015. - Adjusted EBITDA (non-GAAP) increased by 82.7% to
RMB78.0 million (US$11.7 million ) in the third quarter of 2016 (3Q2015:RMB42.7 million ). See “Non-GAAP Disclosure” and “Reconciliations of GAAP and non-GAAP results” elsewhere in this earnings release. - Adjusted EBITDA margin (non-GAAP) increased to 26.2% in the third quarter of 2016 (3Q2015: 22.5%).
Operating Highlights
- Total area committed increased by 69.6% Y-o-Y to 58,627 sqm as of
September 30, 2016 (September 30, 2015 : 34,572 sqm). - Area utilized (or revenue generating space) increased by 63.0% Y-o-Y to 34,369 sqm as of
September 30, 2016 (September 30, 2015 : 21,083 sqm). - Area in service increased by 29.7% Y-o-Y to 48,822 sqm as of
September 30, 2016 (September 30, 2015 : 37,645 sqm). - Commitment rate for area in service was 93.8% (
September 30, 2015 : 84.5%) and utilization rate was 70.4% (September 30, 2015 : 56.0%). - Area under construction was 37,194 sqm as of
September 30, 2016 (September 30, 2015 : 13,163 sqm). - Pre-commitment rate for area under construction was 34.5% (
September 30, 2015 : 21.1%).
Initial Public Offering (“IPO”)
- On
November 2, 2016 , the Company successfully completed its IPO of 20,070,735 American Depositary Shares (“ADS”) (including 820,735 ADSs purchased upon the partial exercise, onDecember 2, 2016 , of the underwriters’ over-allotment option), each representing eight of its Class A ordinary shares, at a price ofUS$10.00 per ADS for a total offering size of approximatelyUS$200.7 million . Upon completion of the IPO, 349,087,677 preferred shares were automatically converted into 349,087,677 Class A ordinary shares on a one-to-one basis.
“We are pleased to report our earnings for the first time as a public company,” said Mr.
“Our third quarter results continued to demonstrate robust growth in our business,” said Mr.
Financial Results
Net revenue in the third quarter of 2016 was
Cost of revenue in the third quarter of 2016 was
Gross profit was
Sales and marketing expenses, excluding share-based compensation expenses, were
General and administrative expenses, excluding share-based compensation expenses, were
Research and development costs were
Net interest expenses for the third quarter of 2016 was
Adjusted EBITDA (non-GAAP) is defined as net loss excluding net interest expenses, income tax benefits, depreciation and amortization, accretion expenses for asset retirement costs and share-based compensation expenses. Adjusted EBITDA was
Adjusted EBITDA margin (non-GAAP) was 26.2% in the third quarter of 2016, compared with 22.5% in the third quarter of 2015 and 20.0% in the second quarter of 2016. For more information on these non-GAAP measures, see “Non-GAAP Disclosure” and “Reconciliations of GAAP and non-GAAP results” elsewhere in this earnings release.
Net loss in the third quarter of 2016 was
Basic and diluted loss per ordinary share in the third quarter of 2016 was
Basic and diluted loss per ADS in the third quarter of 2016 was
Sales
Net additional total area committed was 14,013 sqm in the third quarter of 2016, of which 12,293 sqm related to pre-commitments for data centers under construction. Total area committed at the end of the third quarter of 2016 was 58,627 sqm, compared with 34,572 sqm at the end of the third quarter of 2015 and 44,614 sqm at the end of the second quarter of 2016, an increase of 69.6% Y-o-Y and 31.4% Q-o-Q. The increase was driven primarily by new commitments from large Internet, e-commerce and cloud customers across several of the Company’s data centers.
Data Center Resources
Area in service at the end of the third quarter of 2016 was 48,822 sqm, compared with 37,645 sqm at the end of the third quarter of 2015 and 48,548 sqm at the end of the second quarter of 2016, an increase of 29.7% Y-o-Y and 0.6% Q-o-Q.
Area under construction at the end of the third quarter of 2016 was 37,194 sqm, compared with 13,163 sqm at the end of the third quarter of 2015 and 31,794 sqm at the end of the second quarter of 2016. The increase of 5,400 sqm during the third quarter of 2016 was mainly due to
Commitment rate of area in service was 93.8% at the end of the third quarter of 2016, compared to 84.5% at the end of the third quarter of 2015 and 90.8% at the end of second quarter 2016. Pre-commitment rate of area under construction was 34.5% at the end of the third quarter of 2016, compared to 21.1% at the end of the third quarter of 2015 and 1.7% at the end of the second quarter 2016.
Area utilized at the end of the third quarter of 2016 was 34,369 sqm, compared with 21,083 sqm at the end of the third quarter of 2015 and 32,152 sqm at the end of the second quarter of 2016, an increase of 63.0% Y-o-Y and 6.9% Q-o-Q.
Utilization rate of area in service was 70.4% at the end of the third quarter of 2016, compared to 56.0% at the end of the third quarter of 2015 and 66.2% at the end of the second quarter 2016.
Balance Sheet
As of
Conference Call
Management will hold a conference call at
| United States: | 1-845-675-0437 |
| International: | +65-6713-5090 |
| Hong Kong: | +852-3018-6771 |
| China: | 400-620-8038 |
| Conference ID: | 23825635 |
A telephone replay will be available approximately two hours after the call until
| United States: | 1-646-254-3697 |
| International: | +61-2-8199-0299 |
| Hong Kong: | +852-3051-2780 |
| China: | 400-632-2162 |
| Replay Access Code: | 23825635 |
A live and archived webcast of the conference call will be available on the Company's investor relation website at investors.gds-services.com.
Non-GAAP Disclosure
Our management and board of directors use adjusted EBITDA and adjusted EBITDA margin, which are non-GAAP financial measures, to evaluate our operating performance, establish budgets and develop operational goals for managing our business. In particular, we believe that the exclusion of the expenses eliminated in calculating adjusted EBITDA can provide a useful measure of our core operating performance.
We also present these non-GAAP measures because we believe these non-GAAP measures are frequently used by securities analysts, investors and other interested parties as measures of the financial performance of companies in our industry.
These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, cash flows or our liquidity, investors should not consider them in isolation, or as a substitute for net income (loss), cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP.
We mitigate these limitations by reconciling the non-GAAP financial measure to the most comparable U.S. GAAP performance measure, all of which should be considered when evaluating our performance.
For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and non-GAAP results” set forth at the end of this press release.
Exchange Rate
This announcement contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of
Statement Regarding Unaudited Condensed Financial Information
The unaudited financial information set forth above is preliminary and subject to potential adjustments. Adjustments to the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which could result in significant differences from this preliminary unaudited condensed financial information.
About
Safe Harbor
This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company’s control, which may cause the Company’s actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the
| GDS HOLDINGS LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) |
|||||||||
| As of December 31, 2015 |
As of September 30, 2016 |
||||||||
| RMB | RMB | US$ | |||||||
| Assets | (Unaudited) | (Unaudited) | |||||||
| Current assets | |||||||||
| Cash | 924,498 | 798,732 | 119,777 | ||||||
| Accounts receivable, net of allowance for doubtful accounts | 111,013 | 190,033 | 28,497 | ||||||
| Value-added-tax (“VAT”) recoverable | 59,680 | 128,355 | 19,248 | ||||||
| Prepaid expenses and other current assets | 91,508 | 139,059 | 20,853 | ||||||
| Total current assets | 1,186,699 | 1,256,179 | 188,375 | ||||||
| Property and equipment, net | 2,512,687 | 3,949,420 | 592,250 | ||||||
| Goodwill and intangible assets, net | 1,341,599 | 1,437,891 | 215,625 | ||||||
| Other non-current assets | 87,287 | 118,068 | 17,705 | ||||||
| Total assets | 5,128,272 | 6,761,558 | 1,013,955 | ||||||
| Liabilities, Redeemable Preferred Shares and Shareholders’ Deficit | |||||||||
| Current liabilities | |||||||||
| Short-term borrowings and current portion of long-term borrowings | 428,218 | 574,459 | 86,145 | ||||||
| Accounts payable | 215,658 | 473,156 | 70,954 | ||||||
| Accrued expenses and other payables | 232,428 | 237,776 | 35,657 | ||||||
| Obligations under capital leases, current | 48,745 | 83,198 | 12,476 | ||||||
| Total current liabilities | 925,049 | 1,368,589 | 205,232 | ||||||
| Long-term borrowings, excluding current portion | 958,264 | 1,407,700 | 211,097 | ||||||
| Convertible bonds payable | 648,515 | 1,001,670 | 150,209 | ||||||
| Obligations under capital leases, non-current | 424,939 | 864,609 | 129,656 | ||||||
| Other long-term liabilities | 116,696 | 226,180 | 33,920 | ||||||
| Total liabilities | 3,073,463 | 4,868,748 | 730,114 | ||||||
| Redeemable preferred shares | 2,395,314 | 2,534,943 | 380,137 | ||||||
| Shareholders' deficit | |||||||||
| Ordinary shares | 76 | 76 | 11 | ||||||
| Additional paid-in capital | 303,621 | 273,499 | 41,014 | ||||||
| Accumulated other comprehensive loss | (61,949 | ) | (126,683 | ) | (18,997 | ) | |||
| Accumulated deficit | (582,253 | ) | (789,025 | ) | (118,324 | ) | |||
| Total shareholders’ deficit | (340,505 | ) | (642,133 | ) | (96,296 | ) | |||
| Commitments and contingencies | - | - | - | ||||||
| Total liabilities, redeemable preferred shares and shareholders' deficit | 5,128,272 | 6,761,558 | 1,013,955 | ||||||
| GDS HOLDINGS LIMITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data) |
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| Three months ended | Nine months ended | ||||||||||||||||||||||
| September 30, 2015 |
June 30, 2016 |
September 30, 2016 | September 30, 2015 |
September 30, 2016 | |||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
| Net revenue | |||||||||||||||||||||||
| Service revenue | 168,441 | 234,010 | 266,890 | 40,022 | 460,218 | 703,284 | 105,464 | ||||||||||||||||
| Equipment sales | 21,309 | 2,026 | 30,266 | 4,539 | 34,326 | 41,007 | 6,149 | ||||||||||||||||
| Total net revenue | 189,750 | 236,036 | 297,156 | 44,561 | 494,544 | 744,291 | 111,613 | ||||||||||||||||
| Cost of revenue | (138,911 | ) | (175,138 | ) | (222,514 | ) | (33,368 | ) | (360,430 | ) | (554,548 | ) | (83,159 | ) | |||||||||
| Gross profit | 50,839 | 60,898 | 74,642 | 11,193 | 134,114 | 189,743 | 28,454 | ||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Selling and marketing expenses | (15,550 | ) | (20,829 | ) | (17,109 | ) | (2,566 | ) | (39,044 | ) | (51,672 | ) | (7,749 | ) | |||||||||
| General and administrative expenses | (37,301 | ) | (102,963 | ) | (43,323 | ) | (6,497 | ) | (96,138 | ) | (174,775 | ) | (26,209 | ) | |||||||||
| Research and development expenses | (801 | ) | (2,778 | ) | (2,156 | ) | (323 | ) | (2,058 | ) | (6,921 | ) | (1,038 | ) | |||||||||
| (Loss) income from operations | (2,813 | ) | (65,672 | ) | 12,054 | 1,807 | (3,126 | ) | (43,625 | ) | (6,542 | ) | |||||||||||
| Other income(expenses): | |||||||||||||||||||||||
| Net interest expenses | (29,620 | ) | (57,329 | ) | (69,404 | ) | (10,408 | ) | (90,060 | ) | (179,696 | ) | (26,947 | ) | |||||||||
| Foreign currency exchange gain, net | 5,258 | 5,492 | 2,645 | 398 | 9,714 | 6,746 | 1,012 | ||||||||||||||||
| Others, net | 1,169 | 547 | 503 | 75 | 3,561 | 1,712 | 257 | ||||||||||||||||
| Loss before income taxes | (26,006 | ) | (116,962 | ) | (54,202 | ) | (8,128 | ) | (79,911 | ) | (214,863 | ) | (32,220 | ) | |||||||||
| Income tax benefit | 2,861 | 1,543 | 1,626 | 244 | 9,502 | 8,090 | 1,213 | ||||||||||||||||
| Net loss | (23,145 | ) | (115,419 | ) | (52,576 | ) | (7,884 | ) | (70,409 | ) | (206,773 | ) | (31,007 | ) | |||||||||
| Change in redemption value of redeemable preferred shares | (27,731 | ) | (27,594 | ) | (29,441 | ) | (4,415 | ) | (83,194 | ) | (87,310 | ) | (13,093 | ) | |||||||||
| Dividends on cumulative preferred shares | (1,782 | ) | (1,863 | ) | (1,863 | ) | (279 | ) | (5,346 | ) | (5,588 | ) | (838 | ) | |||||||||
| Net loss available to ordinary shareholders | (52,658 | ) | (144,876 | ) | (83,880 | ) | (12,578 | ) | (158,949 | ) | (299,671 | ) | (44,938 | ) | |||||||||
| Loss per ordinary share | |||||||||||||||||||||||
| Basic and diluted | (0.24 | ) | (0.66 | ) | (0.38 | ) | (0.06 | ) | (0.73 | ) | (1.37 | ) | (0.21 | ) | |||||||||
| Weighted average number of ordinary share outstanding | |||||||||||||||||||||||
| Basic and diluted | 217,987,922 | 217,987,922 | 217,987,922 | 217,987,922 | 217,987,922 | 217,987,922 | 217,987,922 | ||||||||||||||||
| GDS HOLDINGS LIMITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) |
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| Three months ended | Nine months ended | |||||||||||||||||||||
| September 30, 2015 |
June 30, 2016 |
September 30, 2016 | September 30, 2015 |
September 30, 2016 | ||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
| Net loss | (23,145 | ) | (115,419 | ) | (52,576 | ) | (7,884 | ) | (70,409 | ) | (206,773 | ) | (31,007 | ) | ||||||||
| Foreign currency translation adjustments, net of nil tax | (78,218 | ) | (66,969 | ) | (14,158 | ) | (2,123 | ) | (75,382 | ) | (64,734 | ) | (9,707 | ) | ||||||||
| Comprehensive loss | (101,363 | ) | (182,388 | ) | (66,734 | ) | (10,007 | ) | (145,791 | ) | (271,507 | ) | (40,714 | ) | ||||||||
| GDS HOLDINGS LIMITED | ||||||||||||||||||||||||
| RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS | ||||||||||||||||||||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) | ||||||||||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||||||||||
| September 30, 2015 |
June 30, 2016 |
September 30, 2016 | September 30, 2015 |
September 30, 2016 | ||||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
| Net loss | (23,145 | ) | (115,419 | ) | (52,576 | ) | (7,884 | ) | (70,409 | ) | (206,773 | ) | (31,007 | ) | ||||||||||
| Net interest expenses | 29,620 | 57,329 | 69,404 | 10,408 | 90,060 | 179,696 | 26,947 | |||||||||||||||||
| Income tax benefit | (2,861 | ) | (1,543 | ) | (1,626 | ) | (244 | ) | (9,502 | ) | (8,090 | ) | (1,213 | ) | ||||||||||
| Depreciation and amortization | 38,806 | 49,518 | 62,617 | 9,390 | 102,774 | 156,086 | 23,406 | |||||||||||||||||
| Accretion expenses for asset retirement costs | 77 | 135 | 165 | 25 | 163 | 435 | 65 | |||||||||||||||||
| Share-based compensation expenses | 187 | 57,187 | - | - | 3,353 | 57,187 | 8,576 | |||||||||||||||||
| Adjusted EBITDA | 42,684 | 47,207 | 77,984 | 11,695 | 116,439 | 178,541 | 26,774 | |||||||||||||||||
| Adjusted EBITDA margin | 22.5% | 20.0% | 26.2% | 26.2% | 23.5% | 24.0% | 24.0% | |||||||||||||||||
| GDS HOLDINGS LIMITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) |
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| Three months ended | Nine months ended | |||||||||||||||||||||
| September 30, 2015 |
June 30, 2016 |
September 30, 2016 | September 30, 2015 |
September 30, 2016 | ||||||||||||||||||
| RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
| Net loss | (23,145 | ) | (115,419 | ) | (52,576 | ) | (7,884 | ) | (70,409 | ) | (206,773 | ) | (31,007 | ) | ||||||||
| Amortization of debt issuance cost and debt discount | - | - | - | - | - | 422 | 63 | |||||||||||||||
| Depreciation and amortization | 38,806 | 49,518 | 62,617 | 9,390 | 102,774 | 156,086 | 23,406 | |||||||||||||||
| Share-based compensation expense | 187 | 57,187 | - | - | 3,353 | 57,187 | 8,576 | |||||||||||||||
| Deferred tax benefit | (993 | ) | (805 | ) | (1,854 | ) | (278 | ) | (10,889 | ) | (11,431 | ) | (1,714 | ) | ||||||||
| Changes in operating assets and liabilities, net of effect of an acquisition | (49,885 | ) | 15,392 | (108,688 | ) | (16,300 | ) | (73,458 | ) | (118,061 | ) | (17,705 | ) | |||||||||
| Net cash (used in) provided by operating activities | (35,030 | ) | 5,873 | (100,501 | ) | (15,072 | ) | (48,629 | ) | (122,570 | ) | (18,381 | ) | |||||||||
| Payments for purchase of property and equipment | (299,311 | ) | (144,247 | ) | (386,874 | ) | (58,015 | ) | (573,736 | ) | (704,429 | ) | (105,635 | ) | ||||||||
| Payments related to acquisitions | - | (119,363 | ) | - | - | - | (159,363 | ) | (23,897 | ) | ||||||||||||
| Net cash used in investing activities | (299,311 | ) | (263,610 | ) | (386,874 | ) | (58,015 | ) | (573,736 | ) | (863,792 | ) | (129,532 | ) | ||||||||
| Net proceeds from financing activities | 364,841 | 137,081 | 451,976 | 67,777 | 346,541 | 847,322 | 127,063 | |||||||||||||||
| Net cash provided by financing activities | 364,841 | 137,081 | 451,976 | 67,777 | 346,541 | 847,322 | 127,063 | |||||||||||||||
| Effect of exchange rate changes on cash | 1,313 | 15,650 | (346 | ) | (50 | ) | 2,770 | 13,274 | 1,990 | |||||||||||||
| Net increase (decrease) of cash | 31,813 | (105,006 | ) | (35,745 | ) | (5,360 | ) | (273,054 | ) | (125,766 | ) | (18,860 | ) | |||||||||
| Cash at beginning of period | 301,891 | 939,483 | 834,477 | 125,137 | 606,758 | 924,498 | 138,637 | |||||||||||||||
| Cash at end of period | 333,704 | 834,477 | 798,732 | 119,777 | 333,704 | 798,732 | 119,777 | |||||||||||||||
For investor and media inquiries, please contact:
GDS Holdings Limited
Laura Chen
Phone: +86 (21) 2033-0295
Email: ir@gds-services.com
The Piacente Group, Inc.
Ross Warner
Phone: +86 (10) 5730-6200
Email: GDS@tpg-ir.com
Alan Wang
Phone: +1 (212) 481-2050
Email: GDS@tpg-ir.com
GDS Holdings Limited