GDS Holdings Limited (NASDAQ: GDS) reported Q3 EPS of ($0.18), $0.11 worse than the analyst estimate of ($0.07). Revenue for the quarter came in at $224.6 million versus the consensus estimate of $224.21 million.

Third Quarter 2020 Financial Highlights

• Net revenue increased by 43.0% year-over-year (“Y-o-Y”) to RMB1,524.7 million (US$224.6 million) in the third quarter of 2020 (3Q2019: RMB1,066.2 million).
• Service revenue increased by 43.8% Y-o-Y to RMB1,522.4 million (US$224.2 million) in the third quarter of 2020 (3Q2019: RMB1,058.9 million).
• Net loss was RMB204.6 million (US$30.1 million) in the third quarter of 2020, compared with a net loss of RMB108.6 million in the third quarter of 2019.
• Adjusted EBITDA (non-GAAP) increased by 48.3% Y-o-Y to RMB717.1 million (US$105.6 million) in the third quarter of 2020 (3Q2019: RMB483.7 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 47.0% in the third quarter of 2020 (3Q2019: 45.4%).

Operating Highlights

• Total area committed and pre-committed increased by 23,884 square meters (“sqm”) in the third quarter of 2020 to 357,344 sqm as of September 30, 2020, an increase of 47.4% Y-o-Y (September 30, 2019: 242,435 sqm).
• Area in service increased by 13,358 sqm in the third quarter of 2020 to 279,618 sqm as of September 30, 2020, an increase of 41.2% Y-o-Y (September 30, 2019: 198,097 sqm).
• Area utilized (or area in service which is revenue-generating) increased by 16,589 sqm in the third quarter of 2020 to 209,751 sqm as of September 30, 2020, an increase of 52.2% Y-o-Y (September 30, 2019: 137,820 sqm).
• Commitment rate for area in service was 95.8% as of September 30, 2020 (September 30, 2019: 91.7%), and utilization rate was 75.0% as of September 30, 2020 (September 30, 2019: 69.6%).
• Area under construction was 135,871 sqm as of September 30, 2020 (September 30, 2019: 84,765 sqm).
• Pre-commitment rate for area under construction was 65.9% as of September 30, 2020 (September 30, 2019: 71.6%).

“We recorded another quarter of strong growth, propelled by sustained sales momentum,” said Mr. William Huang, Chairman and Chief Executive Officer. “During the third quarter, we secured approximately 24,000 sqm (net) of new customer commitments. With one quarter left for 2020, we have already exceeded the organic sales performance for the whole of last year. To underpin our growth, we added to our land bank in Beijing and Shenzhen and increased our presence in key locations with strategic acquisitions in Beijing and Shanghai. While celebrating the fourth anniversary of our U.S. IPO and Nasdaq listing on November 2, 2020, we completed our Hong Kong IPO and secondary listing on the Main Board of the Hong Kong Stock Exchange, an important milestone and the beginning of a new chapter for our company.”

“Our financial performance was once again robust in the third quarter with 43.0% revenue growth and 48.3% adjusted EBITDA growth,” commented Mr. Dan Newman, Chief Financial Officer. “Our adjusted EBITDA margin remained at 47.0%, compared with 45.4% a year ago. Through our successful IPO in Hong Kong, we raised over US$1.8 billion of net proceeds, significantly strengthening our capital base to support our future business expansion.”

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