GDS Holdings Limited Reports First Quarter 2017 Results
First Quarter 2017 Financial Highlights
- Net revenue increased by 65.8% year-over-year (“Y-o-Y”) to
RMB350.0 million (US$50.9 million ) in the first quarter of 2017 (1Q2016:RMB211.1 million ). - Service revenue increased by 69.8% Y-o-Y to
RMB343.7 million (US$49.9 million ) in the first quarter of 2017 (1Q2016:RMB202.4 million ). - Net loss was
RMB44.3 million (US$6.4 million ) in the first quarter of 2017, compared with a net loss ofRMB38.8 million in the first quarter of 2016. - Adjusted EBITDA (non-GAAP) increased by 132.3% Y-o-Y to
RMB123.9 million (US$18.0 million ) in the first quarter of 2017 (1Q2016:RMB53.4 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 35.4% in the first quarter of 2017 (1Q2016: 25.3%).
Operating Highlights
- Total area committed increased by 84.8% Y-o-Y to 68,313 sqm as of
March 31, 2017 (March 31, 2016 : 36,959 sqm). - Area utilized (or revenue generating space) increased by 58.2% Y-o-Y to 37,898 sqm as of
March 31, 2017 (March 31, 2016 : 23,957 sqm). - Area in service increased by 61.3% Y-o-Y to 61,092 sqm as of
March 31, 2017 (March 31, 2016 : 37,869 sqm). - Commitment rate for area in service was 90.0% as of
March 31, 2017 (March 31, 2016 : 88.8%) and utilization rate was 62.0% as ofMarch 31, 2017 (March 31, 2016 : 63.3%). - Area under construction was 35,055 sqm as of
March 31, 2017 (March 31, 2016 : 35,525 sqm). - Pre-commitment rate for area under construction was 37.9% as of
March 31, 2017 (March 31, 2016 : 9.4%).
“We continued to achieve robust growth in the first quarter 2017,” said Mr.
“We are pleased to report solid financial results for the first quarter 2017,” said Mr.
First Quarter 2017 Financial Results
Net revenue in the first quarter of 2017 was
Cost of revenue in the first quarter of 2017 was
Gross profit was
Adjusted Net Operating Income (“Adjusted NOI”) (non-GAAP) is defined as gross profit excluding depreciation and amortization, accretion expenses for asset retirement costs and share-based compensation expenses allocated to cost of revenue. Adjusted NOI was
Adjusted NOI margin (non-GAAP) was 51.2% in the first quarter of 2017, compared with 45.1% in the first quarter of 2016 and 45.2% in the fourth quarter of 2016.
Selling and marketing expenses, excluding share-based compensation expenses of
General and administrative expenses, excluding share-based compensation expenses of
Research and development costs were
Net interest expenses for the first quarter of 2017 were
Foreign currency exchange loss for the first quarter of 2017 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 35.4% in the first quarter of 2017, compared with 25.3% in the first quarter of 2016 and 29.5% in the fourth quarter of 2016.
Net loss in the first quarter of 2017 was
Basic and diluted loss per ordinary share in the first quarter of 2017 was
Basic and diluted loss per American Depositary Share (“ADS”) in the first quarter of 2017 was
Sales
Total area committed at the end of the first quarter of 2017 was 68,313 sqm, compared with 36,959 sqm at the end of the first quarter of 2016 and 61,043 sqm at the end of the fourth quarter of 2016, an increase of 84.8% Y-o-Y and 11.9% quarter-over-quarter (“Q-o-Q”). The sales increase was driven primarily by booming Cloud adoption in
Data Center Resources
Area in service at the end of the first quarter of 2017 was 61,092 sqm, compared with 37,869 sqm at the end of the first quarter of 2016 and 60,982 sqm at the end of the fourth quarter of 2016, an increase of 61.3% Y-o-Y and 0.2% Q-o-Q.
Area under construction at the end of the first quarter of 2017 was 35,055 sqm, compared with 35,525 sqm at the end of the first quarter of 2016 and 25,055 sqm at the end of the fourth quarter of 2016, a decrease of 1.3% Y-o-Y and an increase of 39.9% Q-o-Q. The increase over the fourth quarter of 2016 was due to the inclusion of the acquired SZ5 data center which is under construction.
Commitment rate of area in service was 90.0% at the end of the first quarter of 2017, compared with 88.8% at the end of the first quarter of 2016 and 89.0% at the end of fourth quarter 2016. Pre-commitment rate of area under construction was 37.9% at the end of the first quarter of 2017, compared with 9.4% at the end of the first quarter of 2016 and 27.1% at the end of the fourth quarter 2016.
Area utilized at the end of the first quarter of 2017 was 37,898 sqm, compared with 23,957 sqm at the end of the first quarter of 2016 and 37,082 sqm at the end of the fourth quarter of 2016, an increase of 58.2% Y-o-Y and 2.2% Q-o-Q.
Utilization rate of area in service was 62.0% at the end of the first quarter of 2017, compared with 63.3% at the end of the first quarter of 2016 and 60.8% at the end of the fourth quarter 2016.
Balance Sheet
As of
Recently, the Company added a new data center project in
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: | 13289941 |
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: | 13289941 |
A live and archived webcast of the conference call will be available on the Company's investor relations website at http://investors.gds-services.com.
Non-GAAP Disclosure
Our management and board of directors use adjusted NOI, adjust NOI margin, 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 NOI and 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 Preliminary Unaudited Financial Information
The unaudited financial information set out in this earnings release 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 financial information.
About
Safe Harbor
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “believe,” “continue,” “estimate,” “expect,” “future,” “guidance,” “intend,” “is/are likely to,” “may,” “ongoing,” “plan,” “potential,” “target,” “will,” and similar statements. Among other things, statements that are not historical facts, including statements about GDS Holdings’ beliefs and expectations regarding the growth of its businesses and its revenue for the full fiscal year, the business outlook and quotations from management in this announcement, as well as GDS Holdings’ strategic and operational plans, are or contain forward-looking statements.
| GDS HOLDINGS LIMITED | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) | ||||||
| As of December 31, 2016 |
As of March 31, 2017 |
|||||
| RMB | RMB | US$ | ||||
| Assets | ||||||
| Current assets | ||||||
| Cash | 1,811,319 | 1,527,318 | 221,891 | |||
| Accounts receivable, net of allowance for doubtful accounts | 198,851 | 261,015 | 37,921 | |||
| Value-added-tax (“VAT”) recoverable | 72,958 | 75,964 | 11,036 | |||
| Prepaid expenses and other current assets | 127,185 | 140,159 | 20,363 | |||
| Total current assets | 2,210,313 | 2,004,456 | 291,211 | |||
| Property and equipment, net | 4,322,891 | 4,595,418 | 667,628 | |||
| Goodwill and intangible assets, net | 1,433,656 | 1,429,421 | 207,668 | |||
| Other non-current assets | 237,006 | 270,940 | 39,362 | |||
| Total assets | 8,203,866 | 8,300,235 | 1,205,869 | |||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities | ||||||
| Short-term borrowings and current portion of long-term borrowings | 628,478 | 438,210 | 63,664 | |||
| Accounts payable | 513,543 | 462,556 | 67,199 | |||
| Accrued expenses and other payables | 248,607 | 272,442 | 39,581 | |||
| Capital lease and other financing obligations, current | 88,593 | 113,522 | 16,493 | |||
| Total current liabilities | 1,479,221 | 1,286,730 | 186,937 | |||
| Long-term borrowings, excluding current portion | 1,509,676 | 1,856,128 | 269,661 | |||
| Convertible bonds payable | 1,040,550 | 1,034,895 | 150,351 | |||
| Capital lease and other financing obligations, non-current | 1,022,959 | 1,027,498 | 149,276 | |||
| Other long-term liabilities | 164,986 | 145,583 | 21,151 | |||
| Total liabilities | 5,217,392 | 5,350,834 | 777,376 | |||
| Shareholders' equity | ||||||
| Ordinary shares | 260 | 260 | 38 | |||
| Additional paid-in capital | 4,036,959 | 4,050,465 | 588,457 | |||
| Accumulated other comprehensive loss | (192,080 | ) | (198,354 | ) | (28,817 | ) |
| Accumulated deficit | (858,665 | ) | (902,970 | ) | (131,185 | ) |
| Total shareholders’ equity | 2,986,474 | 2,949,401 | 428,493 | |||
| Commitments and contingencies | ||||||
| Total liabilities and shareholders' equity | 8,203,866 | 8,300,235 | 1,205,869 | |||
| GDS HOLDINGS LIMITED | ||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$") | ||||||||||||
| except for number of shares and per share data) | ||||||||||||
| Three months ended | ||||||||||||
| March 31, 2016 | December 31, 2016 | March 31, 2017 | ||||||||||
| RMB | RMB | RMB | US$ | |||||||||
| Net revenue | ||||||||||||
| Service revenue | 202,384 | 299,731 | 343,665 | 49,928 | ||||||||
| Equipment sales | 8,715 | 11,938 | 6,378 | 927 | ||||||||
| Total net revenue | 211,099 | 311,669 | 350,043 | 50,855 | ||||||||
| Cost of revenue | (156,896 | ) | (235,738 | ) | (243,845 | ) | (35,426 | ) | ||||
| Gross profit | 54,203 | 75,931 | 106,198 | 15,429 | ||||||||
| Operating expenses | ||||||||||||
| Selling and marketing expenses | (13,734 | ) | (19,906 | ) | (21,256 | ) | (3,088 | ) | ||||
| General and administrative expenses | (28,489 | ) | (52,595 | ) | (48,768 | ) | (7,085 | ) | ||||
| Research and development expenses | (1,987 | ) | (2,179 | ) | (1,458 | ) | (212 | ) | ||||
| Income from operations | 9,993 | 1,251 | 34,716 | 5,044 | ||||||||
| Other income (expenses): | ||||||||||||
| Net interest expenses | (52,963 | ) | (83,468 | ) | (78,608 | ) | (11,420 | ) | ||||
| Foreign currency exchange gain (loss), net | (1,391 | ) | 11,564 | (2,606 | ) | (379 | ) | |||||
| Others, net | 662 | 789 | 826 | 120 | ||||||||
| Loss before income taxes | (43,699 | ) | (69,864 | ) | (45,672 | ) | (6,635 | ) | ||||
| Income tax benefits | 4,921 | 225 | 1,367 | 199 | ||||||||
| Net loss | (38,778 | ) | (69,639 | ) | (44,305 | ) | (6,436 | ) | ||||
| Change in redemption value of redeemable preferred shares | (30,275 | ) | 292,980 | 0 | 0 | |||||||
| (Cumulative) Dividend on preferred shares | (1,862 | ) | (327,072 | ) | 0 | 0 | ||||||
| Net loss attributable to ordinary shareholders | (70,915 | ) | (103,731 | ) | (44,305 | ) | (6,436 | ) | ||||
| Loss per ordinary share | ||||||||||||
| Basic and diluted | (0.33 | ) | (0.19 | ) | (0.06 | ) | (0.01 | ) | ||||
| Weighted average number of ordinary share outstanding | ||||||||||||
| Basic and diluted | 217,987,922 | 540,305,476 | 760,009,043 | 760,009,043 | ||||||||
| GDS HOLDINGS LIMITED | |||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||||||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) | |||||||||||
| Three months ended | |||||||||||
| March 31, 2016 | December 31, 2016 | March 31, 2017 | |||||||||
| RMB | RMB | RMB | US$ | ||||||||
| Net loss | (38,778 | ) | (69,639 | ) | (44,305 | ) | (6,436 | ) | |||
| Foreign currency translation adjustments, net of nil tax | 16,393 | (65,397 | ) | (6,274 | ) | (912 | ) | ||||
| Comprehensive loss | (22,385 | ) | (135,036 | ) | (50,579 | ) | (7,348 | ) | |||
| GDS HOLDINGS LIMITED | |||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||
| (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) | |||||||||
| Three months ended | |||||||||
| March 31, 2016 | December 31, 2016 | March 31, 2017 | |||||||
| RMB | RMB | RMB | US$ | ||||||
| Net loss | (38,778 | ) | (69,639 | ) | (44,305 | ) | (6,436 | ) | |
| Depreciation and amortization | 43,951 | 71,269 | 77,324 | 11,234 | |||||
| Amortization of debt issuance cost and debt discount | 422 | 5,495 | 4,530 | 658 | |||||
| Share-based compensation expense | 0 | 6,978 | 13,506 | 1,962 | |||||
| Others | (8,772 | ) | (1,411 | ) | (4,131 | ) | (600 | ) | |
| Changes in operating assets and liabilities | (24,765 | ) | (40,350 | ) | (85,378 | ) | (12,404 | ) | |
| Net cash used in operating activities | (27,942 | ) | (27,658 | ) | (38,454 | ) | (5,586 | ) | |
| Purchase of property and equipment | (173,308 | ) | (283,272 | ) | (379,970 | ) | (55,203 | ) | |
| Payment related to acquisitions | (40,000 | ) | 0 | 0 | 0 | ||||
| Net cash used in investing activities | (213,308 | ) | (283,272 | ) | (379,970 | ) | (55,203 | ) | |
| Net proceeds from financing activities | 258,265 | 1,281,292 | 146,352 | 21,262 | |||||
| Net cash provided by financing activities | 258,265 | 1,281,292 | 146,352 | 21,262 | |||||
| Effect of exchange rate changes on cash | (2,030 | ) | 42,225 | (11,929 | ) | (1,733 | ) | ||
| Net increase (decrease) of cash | 14,985 | 1,012,587 | (284,001 | ) | (41,260 | ) | |||
| Cash at the beginning of period | 924,498 | 798,732 | 1,811,319 | 263,151 | |||||
| Cash at end of period | 939,483 | 1,811,319 | 1,527,318 | 221,891 | |||||
| GDS HOLDINGS LIMITED UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for percentage data) |
||||||||||
| Three months ended | ||||||||||
| March 31, 2016 | December 31, 2016 | March 31, 2017 | ||||||||
| RMB | RMB | RMB | US$ | |||||||
| Gross profit | 54,203 | 75,931 | 106,198 | 15,429 | ||||||
| Depreciation and amortization | 40,776 | 64,002 | 71,288 | 10,357 | ||||||
| Accretion expenses for asset retirement costs | 135 | 153 | 153 | 22 | ||||||
| Share-based compensation expenses | 0 | 945 | 1,730 | 251 | ||||||
| Adjusted NOI | 95,114 | 141,031 | 179,369 | 26,059 | ||||||
| Adjusted NOI margin | 45.1% | 45.2% | 51.2% | 51.2% | ||||||
| Three months ended | ||||||||
| March 31, 2016 | December 31, 2016 | March 31, 2017 | ||||||
| RMB | RMB | RMB | US$ | |||||
| Net loss | (38,778 | ) | (69,639 | ) | (44,305 | ) | (6,436 | ) |
| Net interest expenses | 52,963 | 83,468 | 78,608 | 11,420 | ||||
| Income tax benefits | (4,921 | ) | (225 | ) | (1,367 | ) | (199 | ) |
| Depreciation and amortization | 43,951 | 71,269 | 77,324 | 11,234 | ||||
| Accretion expenses for asset retirement costs | 135 | 153 | 153 | 22 | ||||
| Share-based compensation expenses | 0 | 6,978 | 13,506 | 1,962 | ||||
| Adjusted EBITDA | 53,350 | 92,004 | 123,919 | 18,003 | ||||
| Adjusted EBITDA margin | 25.3% | 29.5% | 35.4% | 35.4% | ||||
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