GDS Holdings’ Earnings Call: Record Growth Amid Challenges

GDS Holdings’ Earnings Call: Record Growth Amid Challenges

GDS Holdings ((GDS)) has held its Q4 earnings call. Read on for the main highlights of the call.

GDS Holdings’ recent earnings call presented a mixed sentiment, highlighting both significant achievements and notable challenges. The company celebrated record move-ins and a massive new order, demonstrating strong growth potential. However, it also faced challenges, including a slight decline in utilization rates and MSR, alongside increased CapEx requirements for 2025.

Record Move-In Rates

GDS Holdings reported an unprecedented move-in rate, achieving 79,000 square meters during 2024. This milestone was entirely organic and concentrated in Tier 1 markets, showcasing the company’s robust growth and market penetration.

Massive New Order

In the first quarter of 2025, GDS secured its largest single order in China, totaling approximately 40,000 square meters or 152 megawatts. The company committed to a full move-in within six months, underscoring its operational efficiency and market demand.

Asset Monetization Program Success

The company successfully executed its first asset monetization transaction, with a total enterprise value of up to RMB2.9 billion. This transaction implies an EV to EBITDA ratio of around 13 times, reflecting strong financial management and strategic asset utilization.

DayOne’s Record Commitment

DayOne, a key player in GDS’s ecosystem, achieved a record 340 megawatts of new commitments in 2024. This accomplishment points to a strong pipeline expected to continue into 2025, indicating sustained business momentum.

Positive Cash Flow Before Financing

For 2024, GDS reported a positive cash flow before financing of RMB379 million, aligning with its financial targets and demonstrating effective cash management.

Decline in Utilization Rate

The utilization rate ended 2024 at 74%, with expectations to increase only to the high 70s% by the end of 2025. This slight decline poses a challenge to the company’s operational efficiency.

Slight Decline in MSR per Square Meter

The MSR per square meter saw a 2.3% decline in the fourth quarter of 2024 compared to the same period in 2023, with further slight declines anticipated, impacting revenue per unit area.

Increased CapEx for 2025

GDS anticipates an increase in CapEx for 2025 to RMB4.3 billion, with an additional RMB2.3 billion allocated for the new 152 megawatt order. This increase reflects the company’s commitment to expanding its infrastructure to meet growing demand.

Forward-Looking Guidance

Looking ahead, GDS Holdings provided detailed guidance, emphasizing the growing demand for AI inferencing in Tier 1 markets. The company projects revenues between RMB11.29 billion and RMB11.59 billion for 2025, with adjusted EBITDA between RMB5.19 billion and RMB5.39 billion. CapEx is projected at around RMB4.3 billion, supported by asset monetization proceeds. The company is also advancing its asset monetization strategy, enhancing financial flexibility and supporting further growth.

In summary, GDS Holdings’ earnings call reflected a balanced outlook, with significant achievements in move-ins and new orders, alongside challenges in utilization rates and increased CapEx. The company’s forward-looking guidance suggests continued growth and strategic financial management, positioning it well for the future.

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