GDS Q1 Earnings Call Highlights

Key Points

• AI-driven demand is accelerating GDS’s data center bookings in China, with management calling it the start of a multi-year growth cycle. The company had 1.8 gigawatts of total bookings at quarter-end and said year-to-date new bookings plus reservations topped 1 gigawatt.
• GDS has expanded its land bank to nearly 4 gigawatts and is preparing to invest RMB 30 billion to RMB 50 billion over the next three years to meet demand. Management said much of its new construction is already pre-committed and backlog should start converting into billable revenue over the next six to eight quarters.
• The company reported higher first-quarter revenue and EBITDA and ended the period with more than RMB 19 billion in cash and time deposits. GDS kept full-year guidance unchanged and said its leverage remains manageable even as investment ramps up.

GDS NASDAQ: GDS said demand for data center capacity in China is accelerating as artificial intelligence workloads drive larger deployments, prompting the company to prepare for a new investment cycle backed by a significantly expanded land bank and strong liquidity.

On the company’s first-quarter 2026 earnings call, Founder, Chairman and CEO William Huang said GDS has seen a “resurgence in data center demand driven by AI” over the past several quarters. He said management believes the trend marks the start of a multi-year growth cycle supported by the increasing availability of domestic chips in China.

“Customers are planning their future deployments at unprecedented scale with a high degree of conviction,” Huang said, adding that GDS is positioned with “a multi-gigawatt development pipeline in strategic locations” and a strong balance sheet.

Bookings accelerate as AI deployments scale

Huang said GDS had total bookings of 1.8 gigawatts at the end of the first quarter. Under the company’s three-year business plan, GDS is targeting 500 megawatts to 800 megawatts of new bookings annually, with the potential to exceed that level.

The company previously set a 2026 sales target of at least 500 megawatts. Huang said GDS had already secured more than 340 megawatts of new bookings year to date and remains “well on track to reach or exceed” its full-year target.

Huang said the company has won new orders from its largest customers across its platform, including in new markets. In the hyperscale segment, he said customers are planning gigawatt-scale deployments in single clusters. In addition to signed capacity that GDS discloses as bookings, customers are asking the company to reserve additional site capacity for later phases.

“In the year to date, total new bookings plus reservations comes to over 1 gigawatt,” Huang said. He added that those reservations give the company “near certainty” of winning follow-on orders within the next one to two years.

Land bank reaches nearly 4 gigawatts

To meet customer demand, GDS has expanded into new locations capable of supporting large AI deployments, while continuing to serve established markets. Huang said the company has increased its secured land bank to nearly 4 gigawatts.

He said GDS typically purchases land from government entities specifically for data center development and obtains power quotas after customer commitments are secured. The company is timing construction around bookings and fixed move-in schedules.

Over the past 15 months, GDS initiated more than 100,000 square meters, or about 400 megawatts, of new construction, which Huang said is “almost entirely pre-committed.” The company’s backlog has grown to more than 200,000 square meters, or nearly 600 megawatts, most of which management expects to become billable over the next six to eight quarters.

“As this occurs, our growth will start to accelerate,” Huang said.

CFO outlines economics and capital plan

Chief Financial Officer Dan Newman said the unit development cost for new business averages around RMB 20,000 per kilowatt, or about $3 million per megawatt, depending on specifications, cooling technology and location.

Newman said pricing for new business is stable, and at current levels GDS can generate an adjusted gross profit yield of 10% to 11% for stabilized assets. Across the company’s in-service portfolio, adjusted gross profit yield is currently around 11%, a level Newman said has been stable for the past few years with utilization around 75%.

Newman said the company expects portfolio yield to remain in the 10% to 11% range as new bookings are delivered. Assuming a six-year investment cycle covering development, ramp-up, stabilized operations and asset monetization, he said GDS expects to generate a return on equity of around 20% from incremental investment.

Huang said GDS is prepared to commit RMB 30 billion to RMB 50 billion of new investment over the next three years to deliver planned capacity. During the question-and-answer session, Newman explained that a midpoint investment level of RMB 40 billion could be financed with approximately 60% project debt, consistent with the company’s historical approach. That would imply about RMB 24 billion of new debt, with the remainder funded through sources including operating cash flow, asset monetization and cash on the balance sheet.

First-quarter revenue and EBITDA rise

Newman said first-quarter revenue grew 7.9% and adjusted EBITDA increased 8%, excluding one-time items that arose in the normal course of business. On a pro forma basis, adding back revenue and adjusted EBITDA from assets monetized in March and July 2025, he said revenue and adjusted EBITDA grew 12% to 13%, excluding one-time items.

Organic capital expenditures were RMB 770 million in the first quarter. Newman said the company also received RMB 2.7 billion, or $385 million, from the sale of a small portion of its equity interest in DayOne, recorded in investing cash flow. GDS also received RMB 2.1 billion, or $300 million, from the issuance of convertible preferred shares, recorded in financing cash flow.

As a result, Newman said GDS ended the quarter with more than RMB 19 billion, or $2.7 billion, in cash and time deposits. Net debt to last-quarter annualized adjusted EBITDA declined from 6.8 times at the end of 2024 to 4.7 times at the end of the first quarter of 2026. Newman said the ratio may rise to between 5 and 6 times as the company increases investment, a level management considers acceptable.

GDS maintained its full-year guidance unchanged.

Management says pricing remains stable

Asked about pricing across different markets, Huang said the pricing environment for incremental AI-driven demand remains broadly stable. He acknowledged that some bidders may use aggressive pricing in specific regions or deals, but said those cases are not representative of the overall market.

On development costs, Newman said unit development costs have declined by about 15% over the past three years on a like-for-like basis. He cited lower costs in mechanical and electrical plant, which account for about 70% of total development cost, while land, concrete, steel and construction costs have been relatively stable on a per-square-meter basis. Huang added that unprecedented scale and changes in AI data center architecture have also helped reduce costs.

Newman said net additional area utilized was around 16,000 square meters in the first quarter. He expects the second-quarter figure to be slightly lower before rebounding to around 20,000 square meters per quarter in the second half. For 2026, he said move-ins should be somewhat above 70,000 square meters, with a substantially larger figure expected in 2027, particularly in the second half.

Huang said the company’s current move-in outlook is based on the domestic chip supply chain and does not assume imported chips. Any availability of imported chips could represent potential upside, he said.

About GDS NASDAQ: 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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