GDS Holdings' Mixed Q1 Results: Strong Growth In Service Area But Revenue Falls Short

GDS Holdings Ltd GDS reported a first-quarter fiscal 2024 net revenue increase of 9.1% year-over-year to $363.89 million, missing the consensus of $374.55 million.

The increase was primarily driven by the full quarter revenue from additional area used in the fourth quarter of 2023 and 18,127 sqm of net additional area in the first quarter of 2024.

Loss per ADS of $0.27 beats the consensus loss of $0.29.

Adjusted gross profit was $189.5 million, an increase of 8.6% year over year, and margin was 52.1%, compared with 52.3% a year ago. 

The total area committed and pre-committed by customers rose 5.4% year over year to 668,012 sqm as of March-end.

Area in service rose 12.5% Y/Y to 583,229 sqm, with the commitment rate for area in service standing at 92.5% (vs. 93.9%) as of March-end. Area utilized was 436,875 sqm, an increase of 16% Y/Y and 4.3% Q/Q.

Adjusted EBITDA rose 4.7% year over year to $163.9 million. The adjusted EBITDA margin declined to 45% from 46.9% a year ago. As of March 31, the cash balance was $1.058 billion.

“We upsized the private equity raise for GDSI from US$587 million, as previously announced, to US$672 million, to accommodate acceleration of customer requirements, which further demonstrates our ability to fund International expansion on a standalone basis,” commented Dan Newman, Chief Financial Officer.

2024 Outlook: GDS reaffirmed its guidance of total revenues of RMB 11.34 billion – RMB 11.76 billion in 2024, Adjusted EBITDA of RMB 4.95 billion – RMB 5.15 billion, and capex of around RMB 6.500 billion.

Price Action: GDS shares closed at $9.30 on Tuesday.