Hello, ladies and gentlemen. Thank you for standing by for GDS Holdings Limited's first quarter 2026 earnings conference call. At this time, our participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Laura Chen, head of investment relations for the company. Please go ahead, Laura. Hello, everyone.

Welcome to the first quarter of 2026 earnings conference call of GDS Holdings Limited. The company's results were issued via offline services earlier today and are posted online. A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our RIL website at investorsgdsservices.com. Leading today's call is Mr. William Hwan, GDS founder, chairman, and CEO, who will provide an overview of our business strategy and performance. Mr. Dan Newman, GDS CFO, will then review the financial and operating results. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security Subligation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in a company's prospectus as filed with the U.S. SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that GDS Erwin's press release and its conference call can include discussions of unaudited debt financial information as well as unaudited non-gap financial measures. GDS press release contains a reconciliation of the unaudited non-gap measures to the unaudited most directly comparable gap measures. I will now turn the call over to GDS founder, chairman, and CEO, Mr. William Hwang. Please go ahead, William.

Hello, everyone. This is William. Thank you for joining us on today's call. Over the past few quarters, we have seen a resurgence in data center demand driven by AI. We believe this is the beginning of a multi-year growth story, supported by increasing availability of domestic chips customers are planning their future deployments at unprecedented scale with a high degree of conviction as market leaders GDS is a well prepared to adjust these opportunities to the fullest extent we have the trust of all the key customers a multi-gigawatt development pipeline in strategic locations and a very strong balance sheet up to the end of 1q 26 our total bookings stood at 1.8 gigawatts in our three years business plan we target adding 500 megawatts to 800 megawatts of new bookings every year with the potential to do more to deliver this capacity we are prepared to commit IMB 30 billion to IMB 50 billion of new investment over the next three years economics of the data center business in China is solid and this is this new investment will create significant value for our shareholders on the last earning call we announced a scale a sales target for 2026 of at least 500 megawatts in the year today we have already done over 340 megawatts of new bookings and we are still being selective we are well on track to reach our exceed our full year target we have one significant new orders from all of our largest customers for deployments across the whole of our platform including and including the new markets for the hyperscale business customers are planning planning gigawatt scale deployments in single clusters when they sign new sales agreements with us they commit to a certain amount of capacity which we disclose as bookings and ask us to reserve the rest of the site for their subsequent phases in a year today total new bookings plus reservations comes to over one gigawatts the reservation give us near certain near certainty of winning follow-on order orders within the next one or two years in order to fulfill our customer requirements we expanded our platform to new locations which can accommodate the largest AI deployments these new locations integrated well with our platform in establish the market in the enabling us to serve diversify customer requirement anticipating the demand chance we increased our secured them bank to nearly four gigawatts typically we are purchasing land from the government exclusively for our data center development as we obtain customer commitment we will be granted a power quota for this site we synchronize the timing of construction with new bookings and fixed moving schedules over the past 15 months we initiated over 100 100 square a thousand square meters or 400 megawatts of new construction which is almost entirely pre-committed our backlog has increased to over 200 000 square meters or almost 600 megawatts most of which we will become billable within the next six to eight quarters as this occurs our growth will start to accelerate. AI in China is a transformational opportunity. We are super motivated to support this development and will commit all the resource requirements to the expansion of our AI infrastructure platform. I will now pass on to Dan for the financial and operating review.

Thank you, William. For our new business, the unit development cost averages around 20,000 RMB per kilowatt, or 3 million US dollars per megawatt, depending on specification, calling technology, and location. Pricing for new business is stable, and at current levels, we're able to generate an adjusted gross profit yield of 10 to 11 percent for stabilized assets as shown on slide 13 across out the whole of our in-service portfolio the adjusted gross profit yield is currently around 11 percent we calculate this ratio based on adjusted gross profit which includes the cash cost of operating assets divided by gross PP&E, which includes replacement CAPEX already incurred, and for conservatism, we added back historic impairment charges. The portfolio yield has been stable at around 11% for the past few years, based on a portfolio with utilization rate of around 75%. As our new bookings are delivered, we expect the portfolio yield to remain in the 10 to 11 percent range, which in our view is a reasonable return. Assuming a six-year investment cycle of development, ramp-up, stabilized operations, and then asset monetization we expect to generate a return on equity of around 20% from the incremental investment this underpins our confidence in growing the business the final slide 13 during the first quarter net additional area utilized was around 16,000 square meters during the current quarter this metric will be slightly lower, and then in the second half of the year, it will rebound to around 20,000 square meters per quarter. During the second half of next year, as we start to see the flow through from this year's higher level of new bookings, the move-in rate will step up noticeably. MSR on slide 16 is a useful metric for financial forecasting purposes that must be seen together with unit development cost. This is why we think it's more relevant to look at the gross profit yield or cash on cash yield as a measure of the economics of our business. Turning to slide 18, during the first quarter, we recorded 7.9 percent growth in revenue and 8 percent growth in adjusted EBITDA after excluding one-time items which arose in the normal course of business we find it useful to look at our growth rates on a pro forma basis adding back the deconsolidated revenue and adjusted EBITDA are the assets which we monetized in March and July of 2025. This shows pro forma revenue and adjusted EBITDA growing at 12 to 13 percent after excluding one-time items. Turning to slides 19 and 20 in 1q 26 now organic capex was 770 million RMB in addition we received cash proceeds of 2.7 billion RMB or 385 million US dollars from the sale of a small part of our equity interest in day one which is recorded in investing cash flow we also received cash proceeds of 2.1 billion RMB or 300 million US dollars from the issue of convertible preferred shares which is recorded in financing cash flow as a result of the capital recycling a new issue we are now sitting on over 19 billion RMB or 2.7 billion US dollars of cash and time deposits this is an ideal situation to be in as we prepare for a new growth phase turning to slide 23 our net debt the last quarter annualized adjusted dbd has decreased from 6.8 times at the end of 2024 to 4.7 times at the end of the first quarter of 2026 as we step up our investment this ratio ratio will increase to between five to six times, which we consider an acceptable level. Finishing on slide 25, we maintain our full-year guidance unchanged. Now we'd like to open the call to questions operator.

Thank you so much. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for a name to be announced. To redraw your question, please press star, one and one again. For the benefit of all participants on today's call, please limit yourself just to one question. If you have more questions, please re-enter the queue. Thank you so much. And now we're going to take our first question, and it comes line of Yang Liu from Morgan Your line is open. Please ask your question.

Thanks for the opportunity to ask a question. I would like to hear your comment on the pricing for the data center business. I think Dan previously mentioned that overall pricing environment is stable, but could you please break it down to different markets or locations because from time to time we hear that in certain markets it's a little bit under supply and also in certain markets there is some aggressive bidding from telcos, etc. or could you please comment on the pricing in different markets please thank you yeah I think this wouldn't I think they're in the last last earnings call we already say that's the new incremental demand which is a given

about air right a larger scale data center demand in general I mean at the price pretty stable number one number two I think they're of course in the in a in a whole market you know you cannot stop some a bidder right you know use some a price price tools try to win them but it's not normal right it's not normal and it's maybe it's a in my view it's a in some region some deal it's a one-time it's a it's another represented a whole market situation our feet our I would think it remains what we experienced last quarter. It's quite stable.

Thank you. Got it.

Thank you.

Now we're going to take our next question. And the question comes line of Gokul Hariharan from JP Morgan. Your line is open. Please ask a question.

Yeah, hi. My question is basically on the development cost. Dan, I think you mentioned roughly 20 million RMB or $3 million per kilowatt, if I remember right. That number sounds a lot lower than what it used to be a few years back when you updated those numbers, I think. Could you talk a little bit about what are the variables that have changed? Is it mostly the location that has really changed? Or are there any other factors that have really changed to kind of reduce that development cost over the last maybe, I think, two to three years?

I would say that the unit development cost on a like-for-like basis, whether we're talking in established markets or new markets, has decreased by about 15% over the past three years. that that would be the case with the MEP the mechanical electrical plant which accounts for about 70% of the total development cost I'd also say that the land concrete steel and construction cost has been quite stable if we measure it on a per square meter basis the unit cost is relatively flat but the power

density has increased so if we were to measure that part on a per kilowatt basis it might appear to have come down as well so that's why I think overall on a per kilowatt basis the decrease is about 15% over three years yeah I try to add a couple day color I mean a number one the scale is unprecedented right so scale also make the cost a bit lower right that's that's very nature I mean this is number one even for the vendor perspective a scale gig that's larger scale give a lot of the manufacturing product company a lot a lot of benefit right so they're willing to reduce the cost or reduce price this is the number one and number two I think there is a lot of the AI data center this is compared with the previous call the architecture wise also change a lot so this is another reason to drive their houses right so that that's a to to to more reason okay thank you thank you now we're going to take our next question and the question comes line of Sarah Wang from UBS your line is open please ask your question thank you for the opportunity to opportunity to ask a question so i have one

question regarding uh first quarter capex so since the first quarter capex is um 770 million rmb so it seems a little bit modest given the strong orders we find here today and especially given the majority of the new orders should be new views so let me ask what's the reason behind this cap thank you Sarah I would point you to our full year capex guidance which remains unchanged I mean the the timing of incurring capex per quarter is not that significant right first quarter is Chinese New Year and it tends to be historically slightly below the level of the other three quarters. So I can't really have no other more fundamental explanation than that.

Gotcha. Thank you.

Thank you. Now we're going to take our next question. And the question comes line of Frank Lawson from Raymond James and Associates. Your line is open. Please ask a question.

Great. Thank you. Of the roughly 3 billion RMB that you discussed in capital you're spending, how much of that will you be funding yourself versus maybe with some JV investors or with capital recycling from some of your other assets?

Frank, Stan, let me just go over these numbers again and make sure everyone is clear. So William was talking about having a sales plan of 500 megawatts to 800 megawatts over the next three years. that's our current our current view and if you apply logic of what i said 20 000 rmb per kilowatt or three million us dollars per megawatt that's how you end up with total capex over three years of between 30 to 50 billion rmb so if we if we pick take the the midpoint of that and say 40 billion RMB. Historically, we have financed our investment quite conservatively with around 60% project debt to total development cost. So we would be able to obtain and draw down on about 60% of 40 billion, which is 24 billion RMB of new debt. So that would leave 14 billion RMB, which is less than 2 billion U.S. dollars that we have to finance. But we have several different sources for that. We have our operating cash flow, which which last year was nearly $3 billion RMB. We have our ongoing asset monetization program, which we're trying to build up step by step. And we also have $2.7 billion of cash now on balance sheet.

I think we are in a strong position to finance that level of investment and other options may arise, as you point out, development partnerships and so on. great thank you very much thank you now we're going to take over the next question and the next question comes for land of a lesion from Maguire your line is open please ask your question great thank you man for taking my question I just wanted to get a sense on the new bookings trajectory the year today 340 megawatts new booking seems to be very encouraging considering

the current token consumption and how you know AI agents are are significantly boosting that compute demand how would you kind of evaluate that upside surprises on the current scale thank you potential yeah we number one I think dear we are five five hundred megawatt we have very confident for this number with a new booking definitely that's a base case we are looking at a more high number booking but it's too early to say what kind of level we can reach we would try to but because we are still very we remain very disciplined to selective order in terms of the moving part ties and and and customer types so this is a in general I think it's we are we're very confident we can do more but even though we still want to do a high-quality order.

Got it. And if I may, just a quick follow-up. Would it be possible for you guys to consider kind of doing some of the NeoCloud business models as well? Because it does seem like some of the peers are trying to accumulate more resources on the compute site. So that was being perceived as approach to boost the MSR or revenue in general.

Is that something that we're considering as well? yeah i think yeah new crawl actually is not something new in china already uh tradition historically there are a lot of big platform uh gpu service provider customer already right if we are already serve them indirectly right so this is number one but number two i think we are we for a long-term perspective we also build start to build some relationship with them so far we did we haven't do any business with them and uh we will see because in terms of maybe we can as I said we're we'll maintain our very discipline in terms of the financial return and the risk everything right so if some new car high quality nickel we're willing to do something with them start to build some relationship thank you very much thank you now we're going to take over next question and the question comes line of Timothy ciao from Goldman Sachs your land is open please ask a question for the rest of this year in terms of the mobile pace and we are the few more inspectors that may affect the

user rate ramp thank you Timothy I couldn't hear you clearly but yeah I Yes. You're asking about the moving pace. I did address that in the prepared remarks. As you know, it was 16,000 square meters in the first quarter. It will be a lower number in the second quarter, and then it will rebound, I'd say, to around 20,000 square meters in the third quarter of this year, in the fourth quarter of this year. And next year, we will see a significant step up, but it will be in the second half of 2027, in the third and fourth quarter of 2027. But if we look at 2026 and 2027 as a whole, I think the move-in this year will be somewhat over 70,000 square meters, and then next year's number is going to be very substantially larger than that, maybe double something of that order of magnitude.

Sure. And can I ask a follow-up if I am just wondering, I think behind this, I think we have to see new factor so i.e. like how much of that is uh contributed by the fertilizer chip versus the imported chips i just wondering if you can share more color okay okay oh yeah i think i i i'm not sure if it's your question i mean import uh chips will affect our movie right is there a question yeah oh yeah yes yes okay okay Frank is it this year's forecast another base on there any input the chips so all based on the domestic chips supply chain so it will not now impact our current estimation so if the import coming maybe maybe some upside cool note okay got it thank you thank you now we're going to take our next question and the question comes line of daily leave from Bank of America securities your line is open please ask your question hi my friend thanks for taking my question my question is about our land and the power resources we have secured quite strong resources in one queue and are we planning to expand our resources in the following quarters and if we have the plan in future and what what kind of area we would focus on thank you continue to add to our result I think that last quarter we already answered the question we are we will continue to develop the new new market and the established market as well because in China what happened is the training and the inference demands all happening in the same time so I think here we are that we tried because everybody know GDS is a platform player not just a project player right so we try to build try to fulfill all the kind of the AI demand whatever is a training or in the future or let's say inference so we try to catch up the world position to catch up a different pace of the AI demand thank you thank you due to time limit of today's call I would like now to turn the call back over to the company

for any closing marks thank you once again for joining us today and see you next time bye thank you this concludes today's conference call you may now disconnect your line thank you