GDS Holdings ((GDS)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for GDS Holdings painted a picture of robust financial health, marked by significant revenue and EBITDA growth. The company celebrated successful capital raising efforts and strategic milestones like the C-REIT IPO. However, the call also highlighted challenges, such as uncertainties in AI demand due to chip supply issues and the potential impact of asset monetization on future growth.
Revenue and EBITDA Growth
GDS Holdings reported a commendable 12.4% increase in revenue and an 11.2% rise in adjusted EBITDA year-on-year for the second quarter of 2025. This growth underscores the company’s strong operational performance and ability to capitalize on market opportunities.
Successful Capital Raising
The company successfully raised USD 676 million through convertible bonds and equity. This capital injection has significantly strengthened the holding company’s balance sheet, providing a solid foundation for future investments and growth initiatives.
C-REIT IPO Success
A major milestone in GDS’s onshore asset monetization strategy was achieved with the C-REIT IPO. The units are trading at implied cap rates below 5% on the Shanghai Stock Exchange, reflecting investor confidence and the strategic value of this initiative.
Strong Utilization and Bookings
During Q2 2025, GDS Holdings saw gross move-ins of 20,000 square meters and a utilization rate of 77.5%. The company also recorded gross new bookings of 23,000 square meters, primarily from the traditional Internet and cloud sectors, indicating strong demand and effective market positioning.
DayOne Expansion
DayOne, a key investment for GDS, added 246 megawatts of new commitments, bringing the total to over 780 megawatts. Additionally, the announcement of a second campus site in Finland marks a significant expansion of GDS’s global footprint.
AI Demand Uncertainty
The earnings call noted a period of ‘wait and see’ for AI-driven demand, attributed to uncertainty in chip supply within China. This has resulted in a quieter market for AI demand, presenting a challenge for future growth in this sector.
EBITDA Margin Decline
The adjusted EBITDA margin for Q2 2025 was reported at 47.3%, a slight decline from 47.8% in Q2 2024. This marginal decrease highlights the need for continued efficiency improvements amidst growing operational costs.
Impact of Asset Monetization on Future Growth
Future revenue and EBITDA growth will be impacted by asset monetizations, with an estimated reduction of 6 percentage points in the growth rate. This strategic decision reflects a balancing act between immediate capital gains and long-term growth potential.
Forward-Looking Guidance
GDS Holdings projects continued solid growth despite a slight decline in MSR per square meter by 1.7% compared to Q2 2024. The company plans to deliver 35% of its current backlog in the second half of 2025, indicating confidence in its operational capabilities and market demand.
In summary, the earnings call for GDS Holdings highlighted a strong financial performance with strategic advancements and successful capital initiatives. While challenges such as AI demand uncertainty and the impact of asset monetization on growth were noted, the company’s forward-looking guidance suggests a positive outlook for the remainder of the year.