GDS Earnings Recap
Beat 7 of last 7 quarters
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GDS's record bookings and raised sales target underscore the accelerating AI infrastructure buildout in China, with hyperscalers committing to gigawatt-scale deployments. The company's expansion into new markets and its ability to secure binding take-or-pay contracts highlight the scale and financial discipline required to meet surging AI compute demand. This signals continued robust demand for data center capacity, power, and related infrastructure across China.
GDS reported record sales momentum with 260 MW of new bookings in Q2, bringing H1 to 470 MW, and raised its full-year sales target to 1 GW. Backlog grew to 757 MW, implying ~RMB 1.6B of future adjusted EBITDA. Net move-in was 145 MW in H1, with 90 MW forecast for H2. The company completed RMB 4.9B of new debt financing in Q2 and raised CapEx guidance to RMB 10B. Management highlighted strong demand from China's tech giants and emerging AI leaders, with bookings diversified across established and new markets.
Management raised full-year sales target to 1 GW from 500 MW, citing unprecedented AI-driven demand and strong customer commitments. They expect to end 2026 with over 1 GW of new reservations, providing visibility for future orders. Move-in is forecast to more than double in 2027, heavily weighted to H2, with another step-up in 2028. Full-year revenue and adjusted EBITDA guidance were revised upward, with pro forma adjusted EBITDA growth implied at 6.5% at the midpoint. CapEx guidance was raised to RMB 10B, financed with ~60% debt and 40% equity at the project level. Management remains selective on customers and contract terms, investing only against binding take-or-pay commitments.
“AI is transforming our business. Our sales momentum is the strongest we have ever seen.”
on Sales momentum
“We are confidently raising our full year sales target to 1 gigawatt.”
on Guidance raise
“I believe it's already a strong indication that in 2028, GDS is going to be a pretty high-growth company.”
on Growth outlook
What could be the downside risk to the dramatic move-in improvement next year, and will take-or-pay contracts protect revenue if a customer delays GPU deployment?
William noted domestic GPU supply is catching up and demand is also driven by CPU-based workloads, reducing supply risk. Dan confirmed each contract has a fixed delivery date and a move-in period; forecasts assume a straight-line 4-quarter ramp, which could be faster or slower but unlikely to deviate materially.
Is there any difference in demand profile or contract terms from emerging AI leaders compared to established hyperscalers?
William said they are being selective with new AI leaders, with main business still driven by hyperscalers. They are building relationships to diversify the customer base, and demand from these new customers is expected to grow.
Can you confirm the definition of bookings and reservations, and is the booking target doubling driven by customer demand?
Dan clarified that bookings are contractual take-or-pay commitments, while reservations are within the same sales agreement to reserve future capacity. William added that based on 12-18 months experience, customers exercise reservations 100% of the time, providing high certainty. The target raise reflects increased market demand and GDS's competitive advantage.