GDS Holdings Limited (NASDAQ: GDS) reported Q1 EPS of ($0.18), $0.03 worse than the analyst estimate of ($0.15). Revenue for the quarter came in at $132.9 million versus the consensus estimate of $130.02 million.

First Quarter 2019 Financial Highlights

• Net revenue increased by 58.6% year-over-year (“Y-o-Y”) to RMB891.8 million (US$132.9 million) in the first quarter of 2019 (1Q2018: RMB562.2 million).
• Service revenue increased by 61.6% Y-o-Y to RMB890.9 million (US$132.8 million) in the first quarter of 2019 (1Q2018: RMB551.5 million).
• Net loss was RMB136.6 million (US$20.4 million) in the first quarter of 2019, compared with a net loss of RMB85.9 million in the first quarter of 2018.
• Adjusted EBITDA (non-GAAP) increased by 111.4% Y-o-Y to RMB383.2 million (US$57.1 million) in the first quarter of 2019 (1Q2018: RMB181.3 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 43.0% in the first quarter of 2019 (1Q2018: 32.2%).

Operating Highlights

• Total area committed increased by 62.7% Y-o-Y to 199,831 square meters (“sqm”) as of March 31, 2019 (March 31, 2018: 122,819 sqm).
• Area utilized (or revenue generating space) increased by 76.4% Y-o-Y to 118,050 sqm as of March 31, 2019 (March 31, 2018: 66,905 sqm).
• Area in service increased by 65.8% Y-o-Y to 171,515 sqm as of March 31, 2019 (March 31, 2018: 103,475 sqm).
• Commitment rate for area in service was 96.1% as of March 31, 2019 (March 31, 2018: 93.8%), and utilization rate was 68.8% as of March 31, 2019 (March 31, 2018: 64.7%).
• Area under construction was 65,736 sqm as of March 31, 2019 (March 31, 2018: 40,357 sqm).
• Pre-commitment rate for area under construction was 53.4% as of March 31, 2019 (March 31, 2018: 63.8%).

“2019 began right where 2018 left off, with robust growth that translated into strong first quarter results across our business,” said Mr. William Huang, Chairman and Chief Executive Officer. “We continued our sales momentum by adding over 16,000 sqm of net additional area committed in the first quarter of the year which exceeded our expectations. In particular, we are delighted to secure a new strategic customer, a global Cloud leader, with a sizable first-time deal. We now have every single hyperscale Cloud service provider present in our data centers, giving us a unique strategic position at the heart of this ecosystem. On the resource side, we made good progress in securing land and power for hyperscale development at strategic locations on the edge of Tier 1 markets. We are well on track to sustain our resource advantage in each key market in China and thereby position GDS to fulfil unprecedented levels of demand in years to come.”

“First quarter 2019 marked the continuation of our growing financials with a 59% increase in revenue and a 111% increase in adjusted EBITDA,” commented Mr. Dan Newman, Chief Financial Officer. “As a result of our operating leverage, our adjusted EBITDA margin hit another new high of 43%, more than 10.5 percentage points above the same period last year. We successfully completed a follow-on public equity offering, raising approximately US$445 million of net proceeds, as well as a strategic investment by Ping An in the form of convertible preferred shares, raising US$150 million. We now have sufficient equity capital to cover our expansion plans for the foreseeable future.”

Business Outlook

The Company confirms that the previously provided guidance for total revenues of RMB3,900 – RMB4,100 million, adjusted EBITDA of RMB1,640 – RMB1,700 million and capital expenditures of RMB4,500 – RMB5,000 million for the full year of 2019 remains unchanged.

For earnings history and earnings-related data on GDS Holdings Limited (GDS) click here.