Total area committed and pre-committed at the end of the third quarter of 2024 was 626,783 sqm, compared with 609,140 sqm at the end of the third quarter of 2023 and 614,094 sqm at the end of the second quarter of 2024, an increase of 2.9% Y-o-Y and 2.1% quarter-over-quarter ("Q-o-Q"), respectively. In the third quarter of 2024, gross additional total area committed was 20,913 sqm, mainly contributed by data centers in Beijing and Langfang. Net additional total area committed was 12,689 sqm.

Data Center Resources

Area in service at the end of the third quarter of 2024 was 595,606 sqm, compared with 540,606 sqm at the end of the third quarter of 2023 and 580,165 sqm at the end of the second quarter of 2024, an increase of 10.2% Y-o-Y and 2.7% Q-o-Q. In the third quarter of 2024, net additional area in service for China was 15,441 sqm, mainly from data centers in Shanghai and Langfang.

Area under construction at the end of the third quarter of 2024 was 120,422 sqm, compared with 150,116 sqm at the end of the third quarter of 2023 and 117,861 sqm at the end of the second quarter of 2024, a decrease of 19.8% Y-o-Y and an increase of 2.2% Q-o-Q, respectively. During the third quarter of 2024, we initiated the construction of additional phases in existing data centers in Langfang, namely LF14 Phase 2, LF16 Phase 4 and LF18 Phase 2 & 3, with a total net floor area of 17,436 sqm and a pre-commitment rate of 85.1% across these new phases.

Commitment rate for area in service was 92.1% at the end of the third quarter of 2024, compared with 91.7% at the end of the third quarter of 2023 and 92.3% at the end of the second quarter of 2024. Pre-commitment rate for area under construction was 65.1% at the end of the third quarter of 2024, compared with 75.4% at the end of the third quarter of 2023 and 66.9% at the end of the second quarter of 2024.

Move-In

Area utilized at the end of the third quarter of 2024 was 438,654 sqm, compared with 393,225 sqm at the end of the third quarter of 2023 and 419,976 sqm at the end of the second quarter of 2024, an increase of 11.6% Y-o-Y and 4.4% Q-o-Q. In the third quarter of 2024, gross additional area utilized was 25,942 sqm, mainly contributed by data centers in Shanghai, Changshu, and Langfang. Net additional area utilized was 18,678 sqm.

Utilization rate for area in service was 73.6% at the end of the third quarter of 2024, compared with 72.7% at the end of the third quarter of 2023 and 72.4% at the end of the second quarter of 2024.

International

Sales

Total area committed and pre-committed at the end of the third quarter of 2024 was 158,910 sqm, compared with 44,593 sqm at the end of the third quarter of 2023 and 142,898 sqm at the end of the second quarter of 2024, an increase of 256.4% Y-o-Y and 11.2% Q-o-Q. In the third quarter of 2024, net additional total area committed was 16,011 sqm, mainly contributed from our NTP site in Johor, Malaysia, and NDP site in Batam, Indonesia.

Data Center Resources

Area in service at the end of the third quarter of 2024 was 51,862 sqm, compared with 13,605 sqm at the end of the third quarter of 2023 and 50,798 sqm at the end of the second quarter of 2024, an increase of 281.2% Y-o-Y and 2.1% Q-o-Q. In the third quarter of 2024, net additional area in service was 1,064 sqm, mainly from HK1 Phase 1 data center.

Area under construction at the end of the third quarter of 2024 was 114,319 sqm, compared with 39,469 sqm at the end of the third quarter of 2023 and 108,411 sqm at the end of the second quarter of 2024, an increase of 189.6% Y-o-Y and 5.4% Q-o-Q. During the third quarter of 2024, we initiated the construction of two new data centers on our NDP site in Batam, Indonesia, namely NDP2 and NDP3, with a total net floor area of 7,417 sqm, and both are 100% pre-committed.

Commitment rate for area in service was 99.3% at the end of the third quarter of 2024, compared with 100% at the end of the third quarter of 2023 and 95.2% at the end of the second quarter of 2024. Pre-commitment rate for area under construction was 93.9% at the end of the third quarter of 2024, compared with 78.5% at the end of the third quarter of 2023 and 87.2% at the end of the second quarter of 2024.

Move-In

Area utilized at the end of the third quarter of 2024 was 43,165 sqm, compared with 5,449 sqm at the end of the third quarter of 2023 and 42,698 sqm at the end of the second quarter of 2024, an increase of 692.1% Y-o-Y and 1.1% Q-o-Q. In the third quarter of 2024, net additional area utilized was 467 sqm, mainly contributed by NTP5 and HK1 data centers.

Utilization rate for area in service was 83.2% at the end of the third quarter of 2024, compared with 40.1% at the end of the third quarter of 2023 and 84.1% at the end of the second quarter of 2024.

Recent Development

On Oct. 29, 2024, the Company announced that its international affiliate, DigitalLand Holdings Limited ("GDS International" or "GDSI"), which acts as the holding company for GDSH's data center assets and operations outside of mainland China, has entered into definitive agreements for certain institutional private equity investors to subscribe for US$1.0 billion of Series B convertible preferred shares (the "Series B") newly issued by GDSI.

Post closing and on an as-converted basis, GDSH will own approximately 37.6% of the equity interest of GDSI in the form of ordinary shares. The value of GDSH's equity interest in GDSI implied by the Series B subscription price is approximately US$1.3 billion, equivalent to approximately US$6.75 per American Depositary Share of GDSH. Post closing, GDSH will no longer consolidate GDSI for accounting purposes and GDSH will no longer have the right to appoint a majority of directors to the Board of GDSI.

Business Outlook

The Company confirms that the previously provided guidance of total revenues for the year of 2024 of RMB11,340 -- RMB11,760 million, Adjusted EBITDA of RMB4,950 -- RMB5,150 million remain unchanged.

The Company revised the previously provided capex guidance of RMB6,500 million, which includes RMB2,500 million for China and RMB4,000 million for International, to RMB 11,000 million, which includes RMB3,000 million for China as required to support move-in, and RMB8,000 million for International, reflecting an acceleration of business expansion.

This forecast reflects the Company's preliminary view on the current business situation and market conditions, which are subject to change.

Conference Call

Management will hold a conference call at 8:00 a.m. U.S. Eastern Time on November 19, 2024 (9:00 p.m. Beijing Time on November 19, 2024) to discuss financial results and answer questions from investors and analysts.

Participants should complete online registration using the link provided below at least 15 minutes before the scheduled start time. Upon registration, participants will receive the conference call access information, including dial-in numbers, a personal PIN and an e-mail with detailed instructions to join the conference call.

Participant Online Registration:

https://register.vevent.com/register/BI2347220aa72a4610bafc061a7977f70a

A live and archived webcast of the conference call will be available on the Company's investor relations website at investors.gds-services.com.

Non-GAAP Disclosure

Our management and board of directors use Adjusted EBITDA, Adjusted EBITDA margin, Adjusted GP and Adjusted GP margin, which are non-GAAP financial measures, to evaluate our operating performance, establish budgets and develop operational goals for managing our business. We believe that the exclusion of the income and expenses eliminated in calculating Adjusted EBITDA and Adjusted GP can provide useful and supplemental measures of our core operating performance. In particular, we believe that the use of Adjusted EBITDA as a supplemental performance measure captures the trend in our operating performance by excluding from our operating results the impact of our capital structure (primarily interest expense), asset base charges (primarily depreciation and amortization, operating lease cost relating to prepaid land use rights, accretion expenses for asset retirement costs and impairment losses of long-lived assets), other non-cash expenses (primarily share-based compensation expenses), and other income and expenses which we believe are not reflective of our operating performance, whereas the use of adjusted gross profit as a supplemental performance measure captures the trend in gross profit performance of our data centers in service by excluding from our gross profit the impact of asset base charges (primarily depreciation and amortization, operating lease cost relating to prepaid land use rights and accretion expenses for asset retirement costs) and other non-cash expenses (primarily share-based compensation expenses) included in cost of revenue.

We note that depreciation and amortization is a fixed cost which commences as soon as each data center enters service. However, it usually takes several years for new data centers to reach high levels of utilization and profitability. The Company incurs significant depreciation and amortization costs for its early stage data center assets. Accordingly, gross profit, which is a measure of profitability after taking into account depreciation and amortization, does not accurately reflect the Company's core operating performance.

We also present these non-GAAP measures because we believe these non-GAAP measures are frequently used by securities analysts, investors and other interested parties as measures of the financial performance of companies in our industry.

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November 19, 2024 07:00 ET (12:00 GMT)