GDS Holdings Limited (NASDAQ: GDS) reported Q3 EPS of ($0.02), versus ($0.12) reported last year. Revenue for the quarter came in at $111.1 million versus the consensus estimate of $102.22 million.

Third Quarter 2018 Financial Highlights

• Net revenue increased by 79.7% year-over-year (“Y-o-Y”) to RMB762.8 million (US$111.1 million) in the third quarter of 2018 (3Q2017: RMB424.4 million).
• Service revenue increased by 77.9% Y-o-Y to RMB752.6 million (US$109.6 million) in the third quarter of 2018 (3Q2017: RMB423.0 million).
• Net loss was RMB119.4 million (US$17.4 million) in the third quarter of 2018, compared with a net loss of RMB90.3 million in the third quarter of 2017.
• Adjusted EBITDA (non-GAAP) increased by 125.3% Y-o-Y to RMB301.2 million (US$43.8 million) in the third quarter of 2018 (3Q2017: RMB133.7 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 39.5% in the third quarter of 2018 (3Q2017: 31.5%).

Operating Highlights

• Total area committed increased by 95.3% Y-o-Y to 161,799 square meters (“sqm”) as of September 30, 2018 (September 30, 2017: 82,850 sqm).
• Area utilized (or revenue generating space) increased by 99.1% Y-o-Y to 100,679 sqm as of September 30, 2018 (September 30, 2017: 50,579 sqm).
• Area in service increased by 89.3% Y-o-Y to 147,342 sqm as of September 30, 2018 (September 30, 2017: 77,832 sqm).
• Commitment rate for area in service was 96.3% as of September 30, 2018 (September 30, 2017: 89.8%) and utilization rate was 68.3% as of September 30, 2018 (September 30, 2017: 65.0%).
• Area under construction was 43,718 sqm as of September 30, 2018 (September 30, 2017: 37,478 sqm).
• Pre-commitment rate for area under construction was 45.4% as of September 30, 2018 (September 30, 2017: 34.6%).

“We had another outstanding quarter in terms of new business, signing up nearly 19,000 sqm of additional customer commitments and staying on track to achieve twice what we did last year,” said Mr. William Huang, Chairman and Chief Executive Officer. “Despite macro market conditions, we continue to see strong demand for high-performance data center capacity in China from across our customer franchise, driven mainly by cloud adoption and AI deployment. Through our deep relationships with hyperscale customers and the strategically located resource which we have secured for capacity expansion, GDS is strongly positioned for the coming opportunities.”

“Once again, we have delivered year on year adjusted EBITDA growth of well over 100%,” said Mr. Dan Newman, Chief Financial Officer. “Our adjusted EBITDA margin in the third quarter was eight percentage points higher than a year ago, as we continued to realize significant operating leverage. We are further raising our full year 2018 revenue and adjusted EBITDA guidance to reflect the continued out-performance.”

Updated Business Outlook

For the full year of 2018, the Company now expects its total revenues to be not less than RMB2,750 million, an increase of approximately 4.3% from the top end of the previously guided range of RMB2,636 million; and adjusted EBITDA to be not less than RMB1,020 million, an increase of approximately 5.9% from the top end of the previously guided range of RMB963 million. The updated estimates imply an increase of not less than 70.2% year-over-year in total revenues and not less than 99.1% year-over-year in adjusted EBITDA. The previous guidance of capital expenditures of around RMB4,000 million for the full year of 2018 remains unchanged.

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