Why Is Data Center Provider GDS Holdings Stock Shooting Higher Today?

GDS Holdings Ltd GDS shares are trading higher after its second-quarter FY24 results.

Net revenue increased 14.3% Y/Y to $388.9 million, missing the consensus of $389.4 million. The increase was mainly due to the ongoing ramp-up of the data centers and business growth.

Adjusted gross profit was $199.7 million, an increase of 10.0% Y/Y, and the margin was 51.4%, compared with 53.4% a year ago. 

As of June-end, the total area committed and pre-committed increased by 18.7% Y/Y to 756,992 sqm, while the area in service grew by 18.8% Y/Y to 630,963 sqm.

The commitment rate for the area in service was 92.5%, slightly up from 92.4% in the previous year. The area under construction expanded by 15% Y/Y to 226,272 sqm, with a pre-commitment rate rising to 76.6% from 74.8% in the prior year quarter.

Additionally, the area utilized grew by 20.9% Y/Y to 462,673 sqm, with a utilization rate of 73.3%, up from 72.1% a year earlier.

Adjusted EBITDA rose 6.2% Y/Y to $180.6 million, with margin declining to 46.4% from 50.0% a year ago.

As of June 30, the cash balance was $1.36 billion. Loss per ADS of $0.18 topped the consensus loss of $0.26.

William Huang, Chairman and CEO, said, “In China, we saw an improving trend in gross move-in, while other metrics remain stable. Internationally, we secured significant new customer orders in Johor, capitalizing on extraordinary regional demand and strengthening our presence in what is fast emerging as a top global data center hub.”

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 6.50 billion.

According to Benzinga Pro, GDS stock has gained 37% in the past five days.

Price Action: GDS shares are up 20% at $15.12 at the last check Wednesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.