GDS (NASDAQ:GDS) Posts Quarterly Earnings Results, Beats Expectations By $0.51 EPS

Key Points

• GDS beat quarterly expectations: The company reported $0.52 in EPS versus a $0.01 consensus and revenue of $475.1 million, ahead of the $454.3 million estimate.
• AI demand is driving strong growth: First-half bookings reached 470 MW, leading management to raise its full-year bookings target to 1 GW. Backlog grew to 757 MW, supporting higher expected customer move-ins in 2027 and beyond.
• Expansion carries cost and margin risks: GDS raised 2026 capital-expenditure guidance to RMB 10 billion and expects same-quarter margin on sales to decline about 3% in Q4 2026, partly due to new-market mix and legacy-contract repricing.

GDS (NASDAQ:GDS - Get Free Report) released its earnings results on Thursday. The company reported $0.52 earnings per share for the quarter, topping the consensus estimate of $0.01 by $0.51, FiscalAI reports. The business had revenue of $475.06 million during the quarter, compared to the consensus estimate of $454.25 million. GDS had a return on equity of 15.62% and a net margin of 23.83%.

Here are the key takeaways from GDS's conference call:

• Record sales momentum: GDS booked 260 MW in Q2 and 470 MW in the first half, prompting management to raise its full-year bookings target to 1 GW. Customers also reserved 600 MW of future capacity, with reservations expected to exceed 1 GW by year-end.
• Strong growth visibility: Backlog rose to 757 MW at midyear, representing an estimated RMB 1.6 billion of booked-but-not-billed adjusted EBITDA. Management expects 2027 move-ins to more than double 2026 levels, with another step-up anticipated in 2028.
• Management raised full-year revenue and adjusted EBITDA guidance, while first-half pro forma adjusted EBITDA increased 12.7%. The guidance does not include any potential contribution from a further asset monetization currently under regulatory review.
• Investment and pricing pressures remain: 2026 CapEx guidance increased to RMB 10 billion, and management expects same-quarter MSR to decline about 3% in Q4 2026 and potentially by a similar amount next year due partly to new-market mix and legacy contract repricing.

GDS Stock Performance

NASDAQ:GDS traded down $0.36 during midday trading on Friday, hitting $34.41. The company's stock had a trading volume of 1,663,961 shares, compared to its average volume of 2,218,281. GDS has a fifty-two week low of $26.97 and a fifty-two week high of $48.61. The company has a debt-to-equity ratio of 1.25, a current ratio of 1.87 and a quick ratio of 1.87. The firm has a market cap of $6.90 billion, a P/E ratio of 21.92 and a beta of 0.43. The firm's 50 day moving average is $32.11 and its 200-day moving average is $38.65.

More GDS News

Here are the key news stories impacting GDS this week:

• Positive Sentiment: GDS said AI demand is accelerating customer bookings, with first-half bookings reaching a record level. Management described current sales momentum as the company’s strongest ever and set a 1-gigawatt sales target for 2026. GDS CEO says AI is transforming the business as sales momentum hits strongest level ever
• Positive Sentiment: The company raised its 2026 revenue outlook to approximately $1.9 billion, above the roughly $1.8 billion analyst consensus. A growing backlog is expected to support a significant increase in customer move-ins during 2027. GDS Q2 earnings call focuses on AI demand
• Positive Sentiment: Reported second-quarter revenue was about $475 million, ahead of the approximately $454 million consensus estimate, while the company swung to a profit compared with a loss a year earlier. GDS Holdings reports second-quarter 2026 results
• Neutral Sentiment: Analyst and media reports show inconsistent EPS comparisons: one report cited earnings of $0.52 per share versus a $0.01 consensus, while another cited $0.56 versus a $1.35 estimate. The discrepancy may reflect different earnings definitions or estimates, creating uncertainty around the quality of the beat. GDS Holdings misses Q2 earnings and revenue estimates
• Negative Sentiment: The stock’s decline suggests investors may be focusing on the earnings-estimate uncertainty, the capital requirements associated with rapid data-center expansion, and the delay before much of the AI-related backlog contributes to revenue and cash flow.

Insider Buying and Selling at GDS

In other news, VP Yixin Qian sold 10,000 shares of the company's stock in a transaction dated Wednesday, June 10th. The stock was sold at an average price of $35.25, for a total value of $352,500.00. Following the sale, the vice president owned 66,865 shares in the company, valued at $2,356,991.25. This represents a 13.01% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Also, Director Judy Qing Ye sold 37,394 shares of the firm's stock in a transaction that occurred on Tuesday, June 2nd. The stock was sold at an average price of $36.21, for a total transaction of $1,354,036.74. Additional details regarding this sale are available in the official SEC disclosure. 7.99% of the stock is currently owned by corporate insiders.

Hedge Funds Weigh In On GDS

A number of hedge funds have recently made changes to their positions in GDS. NewEdge Advisors LLC acquired a new position in shares of GDS during the 1st quarter worth approximately $25,000. Advisors Asset Management Inc. purchased a new position in GDS during the first quarter worth approximately $25,000. EverSource Wealth Advisors LLC lifted its position in GDS by 41.6% during the second quarter. EverSource Wealth Advisors LLC now owns 1,806 shares of the company's stock worth $55,000 after buying an additional 531 shares in the last quarter. Northwestern Mutual Wealth Management Co. increased its stake in shares of GDS by 113.0% in the 2nd quarter. Northwestern Mutual Wealth Management Co. now owns 1,836 shares of the company's stock worth $56,000 after acquiring an additional 974 shares during the last quarter. Finally, Van ECK Associates Corp increased its stake in shares of GDS by 245.3% in the 4th quarter. Van ECK Associates Corp now owns 1,692 shares of the company's stock worth $59,000 after acquiring an additional 1,202 shares during the last quarter. Institutional investors and hedge funds own 33.71% of the company's stock.

Analyst Ratings Changes

Several equities research analysts have recently commented on GDS shares. Piper Sandler set a $36.00 price target on shares of GDS in a report on Thursday, May 21st. Zacks Research downgraded shares of GDS from a "strong-buy" rating to a "hold" rating in a research note on Friday, July 24th. Weiss Ratings raised shares of GDS from a "hold (c-)" rating to a "hold (c)" rating in a research note on Monday, May 18th. TD Cowen reduced their price objective on shares of GDS from $37.00 to $36.00 and set a "buy" rating for the company in a research note on Thursday, May 21st. Finally, Wall Street Zen upgraded GDS from a "sell" rating to a "hold" rating in a report on Saturday, May 2nd. One investment analyst has rated the stock with a Strong Buy rating, five have given a Buy rating and two have issued a Hold rating to the stock. According to MarketBeat, GDS has a consensus rating of "Moderate Buy" and an average target price of $48.33.

About GDS

GDS Holdings Limited, founded in 2001 and headquartered in Shanghai, is a leading network-neutral data center services provider in China. The company operates a portfolio of state-of-the-art data center facilities designed to support the mission-critical IT infrastructure of cloud service providers, internet enterprises, financial institutions, and government entities. GDS was among the first Chinese providers to offer high-density colocation solutions, catering to customers with demanding computing and storage requirements.

GDS specializes in delivering scalable colocation, cross-connect, and interconnection services within its facilities, enabling clients to establish high-speed, low-latency connections to major cloud platforms and internet exchange points.

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