GDS Holdings Limited Reports Fourth Quarter and Full Year 2016 Results
Fourth Quarter 2016 Financial Highlights
- Net revenue increased by 49.1% year-over-year (“Y-o-Y”) to
RMB311.7 million (US$44.9 million ) in the fourth quarter of 2016 (4Q2015:RMB209.1 million ). - Service revenue increased by 55.0% Y-o-Y to
RMB299.7 million (US$43.2 million ) in the fourth quarter of 2016 (4Q2015:RMB193.4 million ). - Net loss was
RMB69.6 million (US$10.0 million ) in the fourth quarter of 2016, compared with a net loss ofRMB28.2 million in the fourth quarter of 2015. - Adjusted EBITDA (non-GAAP) increased by 90.6% Y-o-Y to
RMB92.0 million (US$13.3 million ) in the fourth quarter of 2016 (4Q2015:RMB48.3 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 29.5% in the fourth quarter of 2016 (4Q2015: 23.1%).
Full Year 2016 Financial Highlights
- Net revenue increased by 50.1% to
RMB1,056.0 million (US$152.1 million ) in 2016 (2015:RMB703.6 million ). - Service revenue increased by 53.5% to
RMB1,003.0 million (US$144.5 million ) in 2016 (2015:RMB653.6 million ). - Net loss was
RMB276.4 million (US$39.8 million ) in 2016, compared with a net loss ofRMB98.6 million in 2015. - Adjusted EBITDA (non-GAAP) increased by 64.3% to
RMB270.5 million (US$39.0 million ) in 2016 (2015:RMB164.7 million ). - Adjusted EBITDA margin (non-GAAP) increased to 25.6% in 2016 (2015: 23.4%).
Operating Highlights
- Total area committed increased by 70.0% Y-o-Y to 61,043 sqm as of
December 31, 2016 (December 31, 2015 : 35,918 sqm). - Area utilized (or revenue generating space) increased by 65.8% Y-o-Y to 37,082 sqm as of
December 31, 2016 (December 31, 2015 : 22,365 sqm). - Area in service increased by 61.0% Y-o-Y to 60,982 sqm as of
December 31, 2016 (December 31, 2015 : 37,869 sqm). - Commitment rate for area in service was 89.0% as of
December 31, 2016 (December 31, 2015 : 87.5%) and utilization rate was 60.8% as ofDecember 31, 2016 (December 31, 2015 : 59.1%). - Area under construction was 25,055 sqm as of
December 31, 2016 (December 31, 2015 : 35,525 sqm). - Pre-commitment rate for area under construction was 27.1% as of
December 31, 2016 (December 31, 2015 : 7.8%).
“2016 was a year of great achievement for
“We are delighted to report our financial results for the fourth quarter and full year 2016,” said Mr.
Fourth Quarter 2016 Financial Results
Net revenue in the fourth quarter of 2016 was
Cost of revenue in the fourth quarter of 2016 was
Gross profit was
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 fourth quarter of 2016 were
Foreign currency exchange gain for the fourth 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 29.5% in the fourth quarter of 2016, compared with 23.1% in the fourth quarter of 2015 and 26.2% in the third quarter of 2016.
Net loss in the fourth quarter of 2016 was
Basic and diluted loss per ordinary share in the fourth quarter of 2016 was
Basic and diluted loss per American Depositary Share (“ADS”) in the fourth quarter of 2016 was
Sales
Total area committed at the end of the fourth quarter of 2016 was 61,043 sqm, compared with 35,918 sqm at the end of the fourth quarter of 2015 and 58,627 sqm at the end of the third quarter of 2016, an increase of 70.0% Y-o-Y and 4.1% 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 fourth quarter of 2016 was 60,982 sqm, compared with 37,869 sqm at the end of the fourth quarter of 2015 and 48,822 sqm at the end of the third quarter of 2016, an increase of 61.0% Y-o-Y and 24.9% Q-o-Q. During the fourth quarter of 2016, the Company completed the construction of SZ3, CD1 Phase 2 and SH3 data centers, which in aggregate added 12,160 sqm to area in service.
Area under construction at the end of the fourth quarter of 2016 was 25,055 sqm, compared with 35,525 sqm at the end of the fourth quarter of 2015 and 37,194 sqm at the end of the third quarter of 2016. The decrease over the third quarter of 2016 was due to completion of SZ3, CD1 Phase 2 and SH3 data centers which are now included in area in service.
Commitment rate of area in service was 89.0% at the end of the fourth quarter of 2016, compared with 87.5% at the end of the fourth quarter of 2015 and 93.8% at the end of third quarter 2016. Pre-commitment rate of area under construction was 27.1% at the end of the fourth quarter of 2016, compared with 7.8% at the end of the fourth quarter of 2015 and 34.5% at the end of the third quarter 2016.
Area utilized at the end of the fourth quarter of 2016 was 37,082 sqm, compared with 22,365 sqm at the end of the fourth quarter of 2015 and 34,369 sqm at the end of the third quarter of 2016, an increase of 65.8% Y-o-Y and 7.9% Q-o-Q.
Utilization rate of area in service was 60.8% at the end of the fourth quarter of 2016, compared with 59.1% at the end of the fourth quarter of 2015 and 70.4% at the end of the third quarter 2016. The lower utilization rate over the previous quarter was mainly due to the increase in area in service as a result of the completion of SZ3, CD1 Phase 2 and SH3 data centers and the time lag before customers move in.
Balance Sheet
As of
On
The Company is in the process of taking over a project which is currently under construction in
Full Year 2016 Financial Results
Net revenue in 2016 was
Cost of revenue in 2016 was
Gross profit was
Sales 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 in 2016 were
Adjusted EBITDA was
Adjusted EBITDA margin (non-GAAP) was 25.6% in 2016, compared with 23.4% in 2015.
Net loss in 2016 was
Basic and diluted loss per ordinary share in 2016 was
Basic and diluted loss per ADS in 2016 was
Business Outlook
For the full year of 2017, the Company expects its total revenues to be between
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: | 70493460 |
A telephone replay will be available approximately two hours after the call until
United States: | 1-646-254-3697 |
International: Hong Kong: China: |
+61-2-8199-0299 +852-3051-2780 400-632-2162 |
Replay Access Code: | 70493460 |
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 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’s 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’s 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$")) |
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As of December 31, 2015 |
As of December 31, 2016 |
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RMB | RMB | US$ | |||||
Assets | |||||||
Current assets | |||||||
Cash | 924,498 | 1,811,319 | 260,884 | ||||
Accounts receivable, net of allowance for doubtful accounts | 111,013 | 198,851 | 28,640 | ||||
Value-added-tax (“VAT”) recoverable | 59,680 | 72,958 | 10,508 | ||||
Prepaid expenses and other current assets | 91,508 | 127,185 | 18,319 | ||||
Total current assets | 1,186,699 | 2,210,313 | 318,351 | ||||
Property and equipment, net | 2,512,687 | 4,322,891 | 622,626 | ||||
Goodwill and intangible assets, net | 1,341,599 | 1,433,656 | 206,489 | ||||
Other non-current assets | 87,287 | 237,006 | 34,137 | ||||
Total assets | 5,128,272 | 8,203,866 | 1,181,603 | ||||
Liabilities, Redeemable Preferred Shares and Shareholders’ Equity (Deficit) | |||||||
Current liabilities | |||||||
Short-term borrowings and current portion of long-term borrowings | 428,218 | 628,478 | 90,520 | ||||
Accounts payable | 215,658 | 513,543 | 73,966 | ||||
Accrued expenses and other payables | 232,428 | 248,607 | 35,807 | ||||
Capital lease and other financing obligations, current | 48,745 | 88,593 | 12,760 | ||||
Total current liabilities | 925,049 | 1,479,221 | 213,053 | ||||
Long-term borrowings, excluding current portion | 958,264 | 1,509,676 | 217,439 | ||||
Convertible bonds payable | 648,515 | 1,040,550 | 149,870 | ||||
Capital lease and other financing obligations, non-current | 424,939 | 1,022,959 | 147,337 | ||||
Other long-term liabilities | 116,696 | 164,986 | 23,762 | ||||
Total liabilities | 3,073,463 | 5,217,392 | 751,461 | ||||
Redeemable preferred shares | 2,395,314 | - | - | ||||
Shareholders' equity (deficit) | |||||||
Ordinary shares | 76 | 260 | 37 | ||||
Additional paid-in capital | 303,621 | 4,036,959 | 581,443 | ||||
Accumulated other comprehensive loss | (61,949 | ) | (192,080 | ) | (27,665 | ) | |
Accumulated deficit | (582,253 | ) | (858,665 | ) | (123,673 | ) | |
Total shareholders’ equity (deficit) | (340,505 | ) | 2,986,474 | 430,142 | |||
Commitments and contingencies | |||||||
Total liabilities, redeemable preferred shares and shareholders' equity (deficit) | 5,128,272 | 8,203,866 | 1,181,603 |
GDS HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for number of shares and per share data) |
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Three months ended | Year ended | |||||||||||||||
December 31, 2015 |
September 30, 2016 |
December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
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RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||
Net revenue | ||||||||||||||||
Service revenue | 193,373 | 266,890 | 299,731 | 43,170 | 653,591 | 1,003,015 | 144,464 | |||||||||
Equipment sales | 15,719 | 30,266 | 11,938 | 1,719 | 50,045 | 52,945 | 7,626 | |||||||||
Total net revenue | 209,092 | 297,156 | 311,669 | 44,889 | 703,636 | 1,055,960 | 152,090 | |||||||||
Cost of revenue | (154,567 | ) | (222,514 | ) | (235,738 | ) | (33,953 | ) | (514,997 | ) | (790,286 | ) | (113,825 | ) | ||
Gross profit | 54,525 | 74,642 | 75,931 | 10,936 | 188,639 | 265,674 | 38,265 | |||||||||
Operating expenses | ||||||||||||||||
Selling and marketing expenses | (18,544 | ) | (17,109 | ) | (19,906 | ) | (2,867 | ) | (57,588 | ) | (71,578 | ) | (10,309 | ) | ||
General and administrative expenses | (32,576 | ) | (43,323 | ) | (52,595 | ) | (7,575 | ) | (128,714 | ) | (227,370 | ) | (32,748 | ) | ||
Research and development expenses | (1,496 | ) | (2,156 | ) | (2,179 | ) | (314 | ) | (3,554 | ) | (9,100 | ) | (1,311 | ) | ||
Income (loss) from operations | 1,909 | 12,054 | 1,251 | 180 | (1,217 | ) | (42,374 | ) | (6,103 | ) | ||||||
Other income(expenses): | ||||||||||||||||
Net interest expenses | (35,486 | ) | (69,404 | ) | (83,468 | ) | (12,022 | ) | (125,546 | ) | (263,164 | ) | (37,903 | ) | ||
Foreign currency exchange gain(loss), net | 1,393 | 2,645 | 11,564 | 1,666 | 11,107 | 18,310 | 2,637 | |||||||||
Others, net | 1,528 | 503 | 789 | 114 | 5,089 | 2,501 | 360 | |||||||||
Loss before income taxes | (30,656 | ) | (54,202 | ) | (69,864 | ) | (10,062 | ) | (110,567 | ) | (284,727 | ) | (41,009 | ) | ||
Income tax benefit | 2,481 | 1,626 | 225 | 32 | 11,983 | 8,315 | 1,198 | |||||||||
Net loss | (28,175 | ) | (52,576 | ) | (69,639 | ) | (10,030 | ) | (98,584 | ) | (276,412 | ) | (39,811 | ) | ||
Change in redemption value of redeemable preferred shares | (27,732 | ) | (29,441 | ) | 292,980 | 42,198 | (110,926 | ) | 205,670 | 29,623 | ||||||
(Cumulative) Dividend on preferred shares | (1,781 | ) | (1,863 | ) | (327,072 | ) | (47,108 | ) | (7,127 | ) | (332,660 | ) | (47,913 | ) | ||
Net loss attributable to ordinary shareholders | (57,688 | ) | (83,880 | ) | (103,731 | ) | (14,940 | ) | (216,637 | ) | (403,402 | ) | (58,101 | ) | ||
Loss per ordinary share | ||||||||||||||||
Basic and diluted | (0.26 | ) | (0.38 | ) | (0.19 | ) | (0.03 | ) | (0.99 | ) | (1.35 | ) | (0.19 | ) | ||
Weighted average number of ordinary share outstanding | ||||||||||||||||
Basic and diluted | 217,987,922 | 217,987,922 | 540,305,476 | 540,305,476 | 217,987,922 | 299,093,937 | 299,093,937 |
GDS HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) |
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Three months ended | Year ended | |||||||||||||||
December 31, 2015 |
September 30, 2016 |
December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
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RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||
Net loss | (28,175 | ) | (52,576 | ) | (69,639 | ) | (10,030 | ) | (98,584 | ) | (276,412 | ) | (39,811 | ) | ||
Foreign currency translation adjustments, net of nil tax | (43,109 | ) | (14,158 | ) | (65,397 | ) | (9,419 | ) | (118,491 | ) | (130,131 | ) | (18,743 | ) | ||
Comprehensive loss | (71,284 | ) | (66,734 | ) | (135,036 | ) | (19,449 | ) | (217,075 | ) | (406,543 | ) | (58,554 | ) |
GDS HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) |
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Three months ended | Year ended | |||||||||||||||||||
December 31, 2015 |
September 30, 2016 |
December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
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RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||||||
Net loss | (28,175 | ) | (52,576 | ) | (69,639 | ) | (10,030 | ) | (98,584 | ) | (276,412 | ) | (39,811 | ) | ||||||
Depreciation and amortization | 42,632 | 62,617 | 71,269 | 10,265 | 145,406 | 227,355 | 32,746 | |||||||||||||
Amortization of debt issuance cost and debt | - | - | 5,495 | 791 | - | 5,917 | 852 | |||||||||||||
Share-based compensation expense | 708 | - | 6,978 | 1,005 | 4,061 | 64,165 | 9,242 | |||||||||||||
Others | 300 | (1,854 | ) | (1,411 | ) | (203 | ) | (10,589 | ) | (12,842 | ) | (1,850 | ) | |||||||
Changes in operating assets and liabilities, net of effect of an acquisition: | (47,134 | ) | (108,688 | ) | (40,350 | ) | (5,812 | ) | (120,592 | ) | (158,411 | ) | (22,817 | ) | ||||||
Net cash used in operating activities | (31,669 | ) | (100,501 | ) | (27,658 | ) | (3,984 | ) | (80,298 | ) | (150,228 | ) | (21,638 | ) | ||||||
Purchase of property, plant and equipment | (158,169 | ) | (386,874 | ) | (283,272 | ) | (40,800 | ) | (731,905 | ) | (987,701 | ) | (142,259 | ) | ||||||
Payment related to acquisitions | - | - | - | - | - | (159,363 | ) | (22,952 | ) | |||||||||||
Net cash used in investment activities | (158,169 | ) | (386,874 | ) | (283,272 | ) | (40,800 | ) | (731,905 | ) | (1,147,064 | ) | (165,211 | ) | ||||||
Net proceeds from financing activities | 781,144 | 451,976 | 1,281,292 | 184,544 | 1,127,685 | 2,128,614 | 306,583 | |||||||||||||
Net cash provided by financing activities | 781,144 | 451,976 | 1,281,292 | 184,544 | 1,127,685 | 2,128,614 | 306,583 | |||||||||||||
Effect of exchange rate changes on cash | (512 | ) | (346 | ) | 42,225 | 6,083 | 2,258 | 55,499 | 7,995 | |||||||||||
Net increase (decrease) of cash | 590,794 | (35,745 | ) | 1,012,587 | 145,843 | 317,740 | 886,821 | 127,729 | ||||||||||||
Cash at the beginning of period | 333,704 | 834,477 | 798,732 | 115,041 | 606,758 | 924,498 | 133,155 | |||||||||||||
Cash at end of period | 924,498 | 798,732 | 1,811,319 | 260,884 | 924,498 | 1,811,319 | 260,884 |
GDS HOLDINGS LIMITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS (Amount in thousands of Renminbi ("RMB") and US dollars ("US$")) |
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Three months ended | Year ended | |||||||||||||||
December 31, 2015 |
September 30, 2016 |
December 31, 2016 |
December 31, 2015 |
December 31, 2016 |
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RMB | RMB | RMB | US$ | RMB | RMB | US$ | ||||||||||
Net loss | (28,175 | ) | (52,576 | ) | (69,639 | ) | (10,030 | ) | (98,584 | ) | (276,412 | ) | (39,811 | ) | ||
Net interest expenses | 35,486 | 69,404 | 83,468 | 12,022 | 125,546 | 263,164 | 37,903 | |||||||||
Income tax benefit | (2,481 | ) | (1,626 | ) | (225 | ) | (32 | ) | (11,983 | ) | (8,315 | ) | (1,198 | ) | ||
Depreciation and amortization | 42,632 | 62,617 | 71,269 | 10,265 | 145,406 | 227,355 | 32,746 | |||||||||
Accretion expenses for asset retirement costs | 92 | 165 | 153 | 22 | 255 | 588 | 85 | |||||||||
Share-based compensation expenses | 708 | - | 6,978 | 1,005 | 4,061 | 64,165 | 9,242 | |||||||||
Adjusted EBITDA | 48,262 | 77,984 | 92,004 | 13,252 | 164,701 | 270,545 | 38,967 | |||||||||
Adjusted EBITDA margin | 23.1% | 26.2% | 29.5% | 29.5% | 23.4% | 25.6% | 25.6% |
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