GDS Holdings Limited (NASDAQ:GDS) Q2 2019 Earnings Conference Call Transcript

Aug 13, 2019 • 08:00 am ET

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GDS Holdings Limited (NASDAQ:GDS) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by for the GDS Holdings Limited Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to your host, Ms. Laura Chen, Head of Investor Relations for the Company. Please go ahead, Laura.

Executive
Laura Chen

Thank you, operator. Hello everyone, welcome to 2Q 2019 earnings conference call of GDS Holdings Limited. The Company's results were issued via newswire 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 IR website at investors.gds-services.com.

Leading today's call is Mr. William Huang, 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 US Private Securities Litigation 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 the Company's perspective, as filed with the US SEC.

The Company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note the GDS earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. GDS press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

I will now turn the call over to GDS' Founder, Chairman and CEO, William Huang. Please go ahead, William.

Executive
William Wei Huang

Thank you, Laura. Hello, everyone. This is William. Thank you for joining us on today's call. I'm pleased to report another good quarter with strong results across all aspects of our business. In the second quarter we signed up customers for almost 21,000 square meter of net additional area committed or around 52 megawatt of IT power, which should generate over $90 million of annual recurring revenue when fully delivered. Maintaining data center supply in tier 1 markets continue to be a critical success fact. We made a significant progress in securing key resource, both organically and inorganically enabling us to maintain our resource advantage.

During this quarter, we initiated three new projects and today we are announcing another new acquisition. We continue to deliver operationaly resulting in over 50% service revenue growth and over 80% adjusted EBITDA growth year-on-year. Our utilization rate moved up to 70% which drew our NOI margin to 53% and adjusted EBITDA margin to 43.5%, putting us well ahead of the guidance track. Last but not least, we are particularly excited about our new strategic partnership with GIC, Singapore's sovereign wealth fund to develop and operate build-to-suit data center, initially focus focusing our program for one of our top customers.

This is a milestone achievement, both from a business and