GDS Holdings Limited (NASDAQ: GDS) reported Q1 EPS of ($0.01), $0.07 better than the analyst estimate of ($0.08). Revenue for the quarter came in at $175.2 million versus the consensus estimate of $175.78 million.

First Quarter 2020 Financial Highlights

• Net revenue increased by 39.1% year-over-year (“Y-o-Y”) to RMB1,240.4 million (US$175.2 million) in the first quarter of 2020 (1Q2019: RMB891.8 million).
• Service revenue increased by 38.3% Y-o-Y to RMB1,232.6 million (US$174.1 million) in the first quarter of 2020 (1Q2019: RMB890.9 million).
• Net loss was RMB92.0 million (US$13.0 million) in the first quarter of 2020, compared with a net loss of RMB136.6 million in the first quarter of 2019.
• Adjusted EBITDA (non-GAAP) increased by 49.3% Y-o-Y to RMB572.1 million (US$80.8 million) in the first quarter of 2020 (1Q2019: RMB383.2 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 46.1% in the first quarter of 2020 (1Q2019: 43.0%).

Operating Highlights

• Total area committed and pre-committed increased by 22,112 square meters (“sqm”) in the first quarter of 2020 to 286,990 sqm as of March 31, 2020, an increase of 43.6% Y-o-Y (March 31, 2019: 199,831 sqm).
• Area in service increased by 4,023 sqm in the first quarter of 2020 to 229,986 sqm as of March 31, 2020, an increase of 34.1% Y-o-Y (March 31, 2019: 171,515 sqm).
• Area utilized (or area in service which is revenue-generating) increased by 7,816 sqm in the first quarter of 2020 to 163,838 sqm as of March 31, 2020, an increase of 38.8% Y-o-Y (March 31, 2019: 118,050 sqm).
• Commitment rate for area in service was 91.9% as of March 31, 2020 (March 31, 2019: 96.1%), and utilization rate was 71.2% as of March 31, 2020 (March 31, 2019: 68.8%).
• Area under construction was 110,706 sqm as of March 31, 2020 (March 31, 2019: 65,736 sqm).
• Pre-commitment rate for area under construction was 68.4% as of March 31, 2020 (March 31, 2019: 53.4%).

“We kicked off 2020 with an outstanding first quarter fueled by strong results across the full spectrum of our business, despite challenges presented by the COVID-19 pandemic," said Mr. William Huang, Chairman and Chief Executive Officer. "Our net additional total area committed was over 22,000 sqm during the quarter, carrying on the strong momentum from 2019. Our data center capacity expanded by approximately 25,000 sqm, with the addition of major new projects in the Beijing and Shanghai markets. Most important of all, we kept up our record of zero infections across our workforce and zero interruptions to customer operations. We are confident of our ability to continue satisfying the unprecedented demand for data center services in the digital era.”

“Our sustained growth performance in the first quarter of 2020, with 39.1% revenue and 49.3% adjusted EBITDA growth, clearly demonstrates the resilience of our business,” commented Mr. Dan Newman, Chief Financial Officer. “Our adjusted EBITDA margin hit a new high of 46.1% during the quarter, increasing by 3.1 percentage points compared with the same period last year. We remain strongly capitalized for the opportunities in front of us.”

Business Outlook

The Company confirms that the previously provided guidance for total revenues of RMB5,510 – RMB5,750 million, adjusted EBITDA of RMB2,550 – RMB2,670 million and capital expenditures of RMB7,500 million for the full year of 2020 remains unchanged.

This forecast reflects the Company’s preliminary view based on the current business situation and market conditions. Due to the impact of the COVID-19 pandemic and the resulting business disruption in many aspects of the Chinese and global economy, this forecast remains uncertain and subject to change. While China appears to be on a path to recovery, the situation is evolving, and we are closely monitoring developments. Looking beyond the current period, we are confident that GDS will emerge stronger, with even greater opportunity to drive long-term sustainable growth.

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