GDS Holdings achieves 10.2% revenue growth, signals robust AI demand and strategic land acquisition plans for future expansion.

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 Holdings earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non GAAP financial measures. GDS Holdings 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 Holdings Founder, Chairman and CEO. Go ahead, William.

Thank you. Hello everyone, this is William. Thank you for joining us on today's call. During the third quarter our revenue increased by 10.2% and our adjusted EBITDA increased by 11.4% year on year, maintaining the healthy growth trend since our business began to recover last year. During Q3 2025 our gross additional area utilized was around 23,000 square meters. We are on track to achieve our highest ever year of move in. We continue to deliver the long term backlog. In addition, we are now delivering the 40,000 square meter or 152 megawatt order which we won in the first quarter of this year. By being selective with new business, we have successfully shortened the book to bill period and brought down our backlog. Nonetheless, we still have visibility for over 70,000 square meters of moving from the backlog next year. Our total new bookings for the first nine months is 75,000 square meters are all 240 megawatts. We expect to achieve nearly 300 megawatts for the full year, which is a big step up from the level of the past few years. Around 65% of our bookings in 2025 are AI related. Nonetheless, AI demand in China is still at a very early stage if we look at the big picture. The domestic tech industry has reached a critical juncture with major players making unprecedented financial commitment to AI infrastructure. This marks a definitive end to the previous downturn and signals the beginning of a robust recovery for the data center sector. All of our major customers are committed to the massive scale of this new investment cycle with capital expenditure plans of hundreds of billions underscoring the intensity of the new AI arms race, leading local chip companies are making continuous development progress in terms of performance, efficiency and capacity. The growth of the domestic chip segments will secure the long term growth of the AI infrastructure industry. We have unwavering confidence in the AI demand to come. Based on the development and the ramp up of domestic technologies. We believe that new bookings in the coming years could be better and this is what we are preparing for in our strategic plan. There are two essential ingredients to win big AI-powered land and access to capital. We have already secured around 900 megawatts of powered land in and around Tier 1 markets which is suitable for AI demand, particularly for AI inferencing. In addition, based on our communications with our customers, we are in the process of securing more powered land in complementary locations and we believe that 900 megawatts will not be enough. On the financing side, we recently completed the first IPO of a data center REIT in China. The transaction was a huge success. We intend injecting more assets in the REIT next year and establishing a continuous pipeline of asset monetization. The REIT gives us a significant competitive advantage in terms of accessing capital for from the domestic equity market. It enables us to monetize assets efficiently, repeatedly and at the lowest possible cost. The China market is at an inflection point. The outlook for the data center industry is very exciting. Our market position is as strong as ever. Over the past few years we have taken a conservative approach. We improved our asset utilization and significantly strengthened our balance sheet. Going forward, we will maintain our financial discipline while at the same time taking a more aggressive approach to new business. I will now pass on to Dan for the financial and operating review.

Thank you William. Starting on slide 15 as William mentioned, in 3 quarter 25 our reported adjusted EBITDA grew by 11.4% year on year. At the end of first Q25 we deconsolidated the data center project companies which we sold to the ABS and then during 3/25 we deconsolidated the data center project companies which we sold to the C reit. In order to present a consistent trend, we have adjusted historic numbers to take out the EBITDA contribution of the deconsolidated companies for the first nine months of 2025 and for the comparative period on this pro forma basis, our adjusted ebitda for the first nine months grew by 15.4%. Turning to Slide 16, our C REIT started trading on the Shanghai Stock Exchange on 8 August. As of yesterday's close, the C REIT units were priced at 4.375 RMB 45.8% up from the IPO price at this level. The Sea REIT is trading on 24.6 times EV to the projected 2026 EBITDA. As disclosed in the C REIT Offering Memorandum, the implied Dividend yield is 3.6% based on the projected cash available for distribution. Also, as stated in the Offering Memorandum, it is our strategic objective to grow and diversify our C REIT so that it is a viable option for us to recycle capital on a repeated basis, thereby unlocking value for GDS shareholders and freeing up funds for new investment. Under current regulations, we are permitted to apply for approval for the first post IPO asset injection six months after the IPO date, I.e. during 2Q26. Thereafter it will take some time to complete the regulatory review process. For the first IPO post IPO asset injection, we are preparing assets with a target enterprise value of around 4 to 6 billion RMB. This compares with an enterprise value of 2.4 billion RMB for the assets which we injected into the C REIT at ipo. With the creation of the C REIT platform, we have the opportunity to invest in new data centers, ramp up, operate and then once the track record qualifies, to monetize over a five to six year investment cycle. Even if we take a very conservative view on potential future exit multiples into the C reit, the return on new investment is still very compelling. This could not have happened at a better time. As we address the upcoming AI demand wave, we think it's a game changer. Turning to slide 17 for the first nine months of 2025 our organic capex was 3.8 billion RMB. We still expect our organic capex for the full year to be around 4.8 billion RMB. However, net of the cash proceeds of the asset monetization our capex will be around 2.7 billion RMB. As shown on slide 18, our operating cash flow for the full year will be around 2.5 billion RMB. Therefore, after taking into account the asset monetization proceeds, our China business is almost self funding. Turning to slides 19 and 20, our net debt to last quarter annualized adjusted EBITDA Multiple decreased from 6.8 times at the end of 2024 to 6.0x at the end of 3Q25. The decrease is mainly due to the cash proceeds of the asset monetization and the deconsolidation of debt of the project companies sold to the ABS and CREIT as well as the offshore equity capital raise which we did in 2Q25. We are benefiting from the favorable interest rate Environment in China. With our effective interest rate dropping to 3.3% turning to slide 22 after nine months, we are on track to achieve the midpoint of our revenue guidance and at or above the top end of our EBITDA guidance for the full year of 2025. Our growth rate during the current year has clearly benefited from the strong new bookings in 1Q25 and a short book to bill period. This gives a clear illustration of how our growth rate can accelerate with a pickup in demand. The relatively subdued new bookings since 2Q2 at 25 will affect our growth rate next year. However, in our internal projections, we foresee higher bookings next year leading to growth acceleration thereafter. We'd now like to open the call to questions Operator.

Thank you. We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for a name to be announced. For the benefit of all participants on today's call, please limit yourself to one or two questions. If you have more questions, please. Our first question comes from the line of Yang Liu of Morgan Stanley. Please go ahead.

Thanks for the opportunity. I have two questions here. The first one is regarding the China market inflection. As William just mentioned, the China market is approaching the inflection point. What do we need to see to see that really happen in the near future? And in terms of your strategy to go a little bit more aggressive in China, could you please elaborate more? For example, where is the location or what type of project, et cetera are you planning? The second question is regarding the overall investment profile because now we have a seaweed platform and it is a very effective way to recycle capital. And what is the new overall investment return with C. Reitz scheme? Thank you.

Okay, I think number one question is yeah, I think how to experience aggressive approach. I think what we see in the market demand is very strong in China. I think our customer announced their big investment in the next five years. I think now another signal is domestic chip is catching up just as what I mentioned. I think in terms of the efficiency, chips efficiency and the production capacity, I think they all improve a lot. That means the real data center opportunity is coming. So we will well position. As I just mentioned we still have the largest powered land bank around tier one market. This is very good for the future inferencing. Another is I think the China tech player. They will continue to do massive training. So I think in order to. Capture. This opportunity we will acquire more land in some Very cheap power location and as much close to the let's say tier one city. Yeah. So I think this is our strategy and we are a lot of the land acquisition is in process and maybe something will happen we can announce in next earnings call. This is number one. Number two, I think they make an experience with the risk. Sure. The unit economics of data center investment in China is very solid. The selling price is stable. The unit development cost has come down to a level which is very efficient and this allows us to generate typically 11 to 12% cash on cash yield on new investment. What has changed is the way that we can look at and evaluate investment. If we take the approach of investing which maybe takes one year to construct and then one year for the customer to move in fully, we have to hold the asset and operate for three years to establish the track record which is required before assets can be injected into C REITs. But then in the year, the following year which would be year five or six, we can consider an asset injection even if we use an exit multiple, a cap rate which is being very conservative compared with even where we IPO'd our C REIT. But we look at the IRR over a five to six year period then it is in the low to mid teens and the levered IRR the return on equity is well into the 20s. I think fundamentally this is very attractive. Yeah. I added one more point. I think we believe now is the right timing to step in the market because number one I think the price is more stable. Number two, I think the development cost is almost at the historical bottom. Right. So I think this is the right timing to maintain a very good return; it is the right timing. Yeah.

Thank you.

Thank you for the questions. One moment for the next question. Our next question comes from Sarah Wang of UPS. Please go ahead.

Thank you. And again congratulations on the solid results. It's glad to hear that GDS Holdings is being more aggressive in acquiring new business opportunities. So I have actually one question but two parts. So I think Ben just mentioned we're expecting higher booking next year. So regarding this booking, does that include our potentially new power land acquired in relatively regions with relatively lower power tariff? And then second question is that if we are going into complementary markets on top of our 900 megawatts resources, then how shall we think about the like? Is there any difficulties in acquiring new power quota? Because this year we have heard they're actually relatively rationalizing or controlling the new power CODA release in China in general. Yeah, that's my question. Thank you.

Okay, the first question. I think that our new booking next year, right. We're not fully relying the new acquisition of the land. Well, definitely we will if we can success to secure the land, powered land, we can do more. Right. So this is our focus. What our focus based. The second. What's the second difficulty? I think the power quotas are always. I mean in general always not easy. Right. But based on our track record and the reputation, I see a lot of governments willing to work with us. So for us it's not that challenging for us. We have a lot of the experience in the last 10 years to build up the right relationship with the governments and a power company.

Got it. Thank you.

Thank you for the questions. One moment for the next question. The next question comes from the line of Frank Lutheran from Raymond James and Associates. Please go ahead.

Great, thank you. Can you give us an update on. update on private funding rounds and potential updates for a possible IPO. And then what is the outlook on. Your customers getting Graphics Processing Units (GPUs) and be able to ramp their installs going forward? When do we expect that to crack open? Thanks.

Yeah, I think I answered a couple of. Maybe Dan can add more color. I have to say, I think after series B, I think Day One is fully independent. So we cannot represent day one anymore since that time. Right. But we still can give some highlight information right. About the day one because we are quite enjoy the equity value increase. Right. For our shareholders. I think the all business in Asia Pacific and Europe which we already announced, the market where we already stepped in remain very, very good, very, very positive and the demand still remained very, very strong. So I think the day one's business on the right track and could it be better? So that's all what I can tell you. Maybe if you are interested, maybe we can introduce to the day one right people to explain more detail. Okay. And on potential for additional installations to ramp up.

Frank, ask about the new business in day one. In day one, I think.

Yeah. I just can. What I can tell you is that remain very, very strong positive view for the future. Yes, I cannot tell any detail more. I cannot represent. This is a GDS earnings call. Right. Sorry about that.

Thank you. Thank you for the questions. The next question will come from Michael Elias from TD Cowen. Please go ahead.

Great. Thanks for taking the question. So in the US when we think. About the training workloads that we're seeing, we're seeing gigawatt-scale projects getting deployed and I'm curious when you think about what training will look like In China are you seeing the opportunity to deploy at that kind of a scale that is in the gigawatt-scale range? And then second question is, can you give us an update as you think about these AI data centers that you expect to build, what the time to build those data centers are and how that varies from traditional cloud data centers and if I can squeeze it in any notable constraints or long lead time items that we should be aware of. Thank you.

I think scale-wise, I think. Our. Client talk about the gigawatt level, I mean new demand, right. So I think this is just like three years ago in what happening in US and the number wise we are talking everybody, every big player talk about gigawatt-size, new demand. So I think there is catching up. That's what we have been seeing, we have seen. So in terms of time to market, right. I think in China we can build very fast. I think normally 9 months to 12 months are very normal start from the piling to deliver. Right. The extremely case we can build, let's say even build within eight months. So that's our record in China. Any bottlenecks? No, I don't think in terms of development supply chain in China is not an issue. Got it.

Thanks for the call, really appreciate it.

Thank you for the questions. The next questions will come from the line of Daley Lee of Bank of America Securities. Please go ahead.

Hi Benjamin, thanks for for taking my question. I have two questions here. First one is about the. We got new order for the China market like near 30 megawatts. Could you share what's the. Can you hear me? Sorry, Sorry, go ahead, go ahead, go ahead. Sorry. Yeah, yeah, yeah. Could you give some color about the AI exposure? What's this from? What's the percentage from AI and is. This about inferencing model training for the recent order number two for the second one is about the. We heard the China government gave some window guidance in Tokyo this year to tighten to the data center supplier in China. And do you see any impact to us and to the market? Thank you.

Yeah, I think. Yeah. New order from. Okay. In our prepared remarks we commented that we will probably reach nearly 300 megawatts in terms of new bookings for the whole of 2025. I think we had 240 megawatts up to the end of the third quarter and there's some good new businesses in the fourth quarter. We also stated that by our estimation around 65% of the new bookings this year are AI related. We only have a presence in tier one markets. So that is AI and tier one markets. So that's going to be mainly AI inferencing or it can be a combination of AI inferencing and training and it's being deployed within the established cloud regions and cloud availability zones. The second question was window guidance about the carbon coal. I think this is always happening in the tier one market. Right. But we are lucky we already prepared for that and that's why I mentioned we still have almost 900 megawatts power the lamp. Powered land. These powers all gathered carbon quota or near tier one market. It's very difficult to apply new around the tier one market but in a remote area I think I didn't hear any, I didn't hear any about the window guidance because the power in those place it's the big problem is how to sell so the power capacity is very large in a remote area so getting power I think it's not very very difficult and local government very encouraged the data center. The operator built a data center in those place location. Yeah. Thank you. Wait a minute there. Thank you.

Thank you. Thank you for the questions. Our next question comes from Timothy Chow of Goldman Sachs. Please go ahead.

Thank you Major for taking my question and congrats on the solid results. I have two questions. First is about the pricing trend. I'm just wondering if you can share some color how you think about the MSR trend into fourth quarter and next year is given that probably the company is entering into a peak renewal period for the contract that was signed maybe five to seven years ago then how should we think about the MSR trend into next year? Second is about the overall market and the competitive landscape. I think right now you have been emphasizing time to market quite a lot. If you remember, I think maybe five years ago when there was a wave about the cloud Data centers and 5G network there was also way of increased data center supply in China. Just wondering if you think from where we are right now how do you think about the overall industry supply and demand dynamics. Thank you.

The first part of your question about the downward price reset when our install base contract come up for renewal and this has been going on for a few years and will continue for a few years more and the impact of that gets reflected in our MSR. I always give some comment on future expectations. Now I'd say that over 2026 we expect the MSR to decrease by 3 to 4%. That's on average comparing 1Q versus 1Q, 2Q versus 2Q and so on. And that is not only a function of the Downward price reset. We also have elevated higher levels of move in and that also has a dilute effect on. So that 3 to 4% reflects the combination of those factors. Yeah, I think I added a little bit my points. I think all the newly built data centers, the price quite stable since two years ago, nothing changed. I think this is very good but in the meanwhile I think the cost is more stable. So if you look at all the new builder asset return it's very decent. So I think this is a way to relook at the msr. Right. Because the new campus, new building did in general I think compare with the like Edge data center, the enterprise data center, even cloud data center the price definitely went down a lot. But if you look at the asset return since two years ago it's very very similar. Very. And this price is very very stable. Return is also very stable. It's 100% fit the REITs to inject the assets.

Tim also asked about the competitive landscape.

Competitive landscape. I think. The new competition. I think if you try to gain your customer's trust and reliable you should show your financial capability. Now our customers more care about the financial capability not just the capability you can build. Everybody can build easily. Right. I think if you try to commit a customer 500 megawatt or 1 gigawatt campus in the future I think the financial our customer definitely will consider about it. Do you have the capability to access the capital market? What's the cash position you have right now? So this is very, this is the new competitive advantage. In terms of this I think we are more, much more way ahead than any competitor else. Right. So I think this is not just a land and power competition, it's also the capability of the access to capital market. So in terms of this if I look around I think it's not that much company both has the land capability. Power the land capability and well position and let's say financing capability.

Thank you for the questions. Due to the time limits of today's call, I would like to now turn the call back over to the company for any closing remarks.

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

This concludes this conference call. You may now disconnect your line. Thank you.