Q4 2025 GDS Holdings Ltd Earnings Call

March 17, 2026

Speaker #1: After management's prepared marks, there will be a question-and-answer session. Today's conference call is being recorded. I will now turn the call over to your host, Ms. Laura Chen.

Speaker #1: Head of Investor Relations for the company. Please go ahead, Laura.

Speaker #2: Thank you. Hello, everyone. Welcome to the fourth quarter and full year 2025 earnings conference call of GDS Holdings Limited. The company's results were issued via Newswire Services earlier today and are posted online.

Laura Chen: Thank you. Hello, everyone. Welcome to the Q4 and Full Year 2025 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'll 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 Wei Huang, GDS Founder, Chairman, and CEO, who will provide an overview of our business strategy and performance. Mr. Daniel Newman, GDS CFO, will then review 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 U.S. 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.

Speaker #2: A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at investors.gdservices.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.

Speaker #2: Mr. Dan Newman, GDS CFO, will then review 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 U.S. Private Securities Litigation Reform Act of 1995.

Speaker #2: Forward-looking statements involve inherent risks and certainties. As such, the company's results may be materially different from the views expressed today. Further information regarding these and other risks and certainties is included in the company's prospectus as filed with the US SEC.

Laura Chen: Further information regarding these and other risks and uncertainties is included in the company's prospectus 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 that 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 unaudited most directly comparable GAAP measures. I'll now turn the call over to GDS Founder, Chairman, and CEO, William Huang. Please go ahead, William.

Speaker #2: The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please also note that the GDS earnings press release and its conference call include discussions of audited GAAP financial information as well as unaudited non-GAAP financial measures.

Speaker #2: GDS press release contains a reconciliation of the un-audited non-gap measures to the un-audited most directly comparable gap measures. I'll now turn the call over to GDS founder, chairman, and CEO, William Huang.

Speaker #2: Please go ahead, William.

Speaker #3: Thank you. Hello, everyone. This is William. Thank you for joining us on today's call. 2025 was a great year for GDS in terms of performance.

William Wei Huang: Thank you. Hello, everyone. This is William. Thank you for joining us on today's call. 2025 was a great year for GDS in terms of performance. We recorded 11% growth in both revenue and adjusted EBITDA. We beat the top end of our adjusted EBITDA guidance. With the contribution from asset monetization, we were free cash flow positive. AI in China has really taken off. Increasing availability of domestic high-performance chips is a key enabler. All our major customers are investing in hyperscale computing infrastructure to support AI adoption. As a result, we are seeing robust recovery in data center demand across both new markets and established markets. It is exciting times to be a data center company again. To address this opportunity, we are building up our resources and the funding.

William Huang: Thank you. Hello, everyone. This is William. Thank you for joining us on today's call. 2025 was a great year for GDS in terms of performance. We recorded 11% growth in both revenue and adjusted EBITDA. We beat the top end of our adjusted EBITDA guidance. With the contribution from asset monetization, we were free cash flow positive. AI in China has really taken off. Increasing availability of domestic high-performance chips is a key enabler. All our major customers are investing in hyperscale computing infrastructure to support AI adoption. As a result, we are seeing robust recovery in data center demand across both new markets and established markets. It is exciting times to be a data center company again. To address this opportunity, we are building up our resources and the funding.

Speaker #3: We recorded 11% growth in both revenue and adjusted EBITDA. We beat the top end of our adjusted EBITDA guidance. And, with the contribution from asset monetization, we were free cash flow positive.

Speaker #3: AI in China has really taken off. Increasing availability of domestic high-performance chips is a key enabler. All our major customers are investing in hyperscale computing infrastructure to support AI adoption.

Speaker #3: As a result, we are seeing robust recovery in data center demand across both new markets and established markets. It is exciting times to be a data center company again.

Speaker #3: To address this opportunity, we are building up our resources and funding. On the resource side, we are working on a three-gigawatt pipeline comprising big clusters in new growth markets.

William Wei Huang: On the resource side, we are working on a 3-GW pipeline comprising big clusters in new growth markets. This will complement the 700 MW of powered land, which we are holding for future development in low latency established markets. On the funding side, we have increased our cash reserves to over $2.8 billion, including proceeds from the recent sell down of our stake in Day One and the CPS new issue. Furthermore, our success last year in opening up channels for asset monetization gives us a competitive advantage in accessing equity onshore. During Q4 2025, our gross additional area utilized was around 23,000 sq m. For the full year, gross move-in was over 86,000 sq m, our highest ever level. Our moving target for 2026 is similar to last year.

William Huang: On the resource side, we are working on a 3-GW pipeline comprising big clusters in new growth markets. This will complement the 700 MW of powered land, which we are holding for future development in low latency established markets. On the funding side, we have increased our cash reserves to over $2.8 billion, including proceeds from the recent sell down of our stake in Day One and the CPS new issue. Furthermore, our success last year in opening up channels for asset monetization gives us a competitive advantage in accessing equity onshore. During Q4 2025, our gross additional area utilized was around 23,000 sq m. For the full year, gross move-in was over 86,000 sq m, our highest ever level. Our moving target for 2026 is similar to last year.

Speaker #3: This will complement the 700 megawatts of power on the land, which we are holding for future development in low-latency established markets. On the funding side, we have increased our cash reserves to over US dollar 2.8 billion including proceeds from the recent sell-down of our stake in day one, and the CPS new issue.

Speaker #3: Furthermore, our success last year in opening up channels for asset monetization gives us a competitive advantage in accessing equity onshore. During Q4 2025, our growth additional area utilization utilized was around 23,000 square meters.

Speaker #3: For the full year, growth move-in was over 86,000 square meters—our highest ever level. Our moving target for 2026 is similar to last year.

Speaker #3: However, as our bookings started to step up over the current year, it will lead to higher move-in one year forward. During Q4 '25, our growth in additional area committed was over 21,000 square meters.

William Wei Huang: However, as our bookings step up over the current year, it will lead to higher move-in one year forward. During Q4 2025, our gross additional area committed was over 21,000 sq m. For the full year, our new bookings was over 96,000 sq m or over 300 MW, 3 times the level of the past 3 years. In 2026, we are aiming over 500 MW of gross new bookings. Another big step up from last year. We expect 60% to 70% of new business to come from AI. So far this year, we have already secured 200 MW of new orders, plus over 500 MW of MOUs, which are a strong indicator of future commitment. This 700 MW of total demand comes mainly from three of our largest customers.

William Huang: However, as our bookings step up over the current year, it will lead to higher move-in one year forward. During Q4 2025, our gross additional area committed was over 21,000 sq m. For the full year, our new bookings was over 96,000 sq m or over 300 MW, 3 times the level of the past 3 years. In 2026, we are aiming over 500 MW of gross new bookings. Another big step up from last year. We expect 60% to 70% of new business to come from AI. So far this year, we have already secured 200 MW of new orders, plus over 500 MW of MOUs, which are a strong indicator of future commitment. This 700 MW of total demand comes mainly from three of our largest customers.

Speaker #3: For the full year, our new bookings were over 96,000 square meters, or over 300 megawatts. That's three times the level of the past three years.

Speaker #3: In 2026, we are aiming for over 500 megawatts of gross new bookings—another big step up from last year. We expect 60% to 70% of new business to come from AI.

Speaker #3: So far this year, we have already secured 200 megawatts of new orders, plus over 500 megawatts of MOUs, which are a strong indicator of future commitment.

Speaker #3: This 700 megawatts of total demand comes mainly from three of our largest customers. It's a great start towards our full-year sales target.

William Wei Huang: It's a great start towards our full year sales target. Now the domestic chip supply is more certain. We are moving faster to secure multi gigawatts of additional power to land in new markets, which can support big class development, deployments. We're focusing on the three locations, Horinger in Inner Mongolia, Zhongwei in Ningxia Province, and Shaoguan in Guangdong Province. We have already won over 400 megawatts of new orders and MOUs for these locations. These new growth markets, all of which are official national hubs, integrates well with our existing platform, enabling us to serve the different needs of our diversified customer base. We are very excited about the opportunities in front of us and look forward to growth in sync with China's AI development. I will now pass on to Dan for the financial and operating review.

William Huang: It's a great start towards our full year sales target. Now the domestic chip supply is more certain. We are moving faster to secure multi gigawatts of additional power to land in new markets, which can support big class development, deployments. We're focusing on the three locations, Horinger in Inner Mongolia, Zhongwei in Ningxia Province, and Shaoguan in Guangdong Province. We have already won over 400 megawatts of new orders and MOUs for these locations. These new growth markets, all of which are official national hubs, integrates well with our existing platform, enabling us to serve the different needs of our diversified customer base. We are very excited about the opportunities in front of us and look forward to growth in sync with China's AI development. I will now pass on to Dan for the financial and operating review.

Speaker #3: Now the domestic chip supply is more certain. We are moving faster to secure multi-gigawatts of additional power on the land in new markets, which can support big cluster development deployments.

Speaker #3: We are focusing on the three locations: Hollinger in Inner Mongolia, Zhongwei in Ningxia Province, and Shaoguan in Guangdong Province. We have already won over 400 megawatts of new orders and MOUs for these locations.

Speaker #3: These new growth markets, all of which are officially national hubs, integrate well with our existing platform, enabling us to serve the different needs of our diversified customer base.

Speaker #3: We are very excited about the opportunities in front of us and look forward to growth in sync with China's AI development. I will now pass on to Dan for the financial and operating review.

Speaker #2: Thank you, William. Starting on slide 17. In FY25, revenue and adjusted EBITDA increased by 10.8% year on year. During the year, we completed two asset monetization transactions.

Daniel Newman: Thank you, William. Starting on slide 17. In FY 2025, revenue and adjusted EBITDA increased by 10.8% year-over-year. During the year, we completed two asset monetization transactions, an ABS in Q1 2025 and a C-REIT IPO in Q3 2025. Following which we deconsolidated the underlying data center project companies. If we add back the deconsolidated revenue and EBITDA, the pro forma growth rates were 13.2% for revenue and 14.2% for adjusted EBITDA. Turning to slide 20. Now MSR per square meter has been declining due to a combination of lower market selling price, and change in location mix to include more edge of town sites and, going forward, new growth markets. Comparing Q4 2025 with Q4 2024, the decrease was 2.4%.

Dan Newman: Thank you, William. Starting on slide 17. In FY 2025, revenue and adjusted EBITDA increased by 10.8% year-over-year. During the year, we completed two asset monetization transactions, an ABS in Q1 2025 and a C-REIT IPO in Q3 2025. Following which we deconsolidated the underlying data center project companies. If we add back the deconsolidated revenue and EBITDA, the pro forma growth rates were 13.2% for revenue and 14.2% for adjusted EBITDA. Turning to slide 20. Now MSR per square meter has been declining due to a combination of lower market selling price, and change in location mix to include more edge of town sites and, going forward, new growth markets. Comparing Q4 2025 with Q4 2024, the decrease was 2.4%.

Speaker #2: An ABS in one Q2 2025 and a C-REIT IPO in three Q2 2025. Following which, we deconsolidated the underlying data center project companies. If we add back the deconsolidated revenue and EBITDA, the pro forma growth rates were 13.2% for revenue and 14.2% for adjusted EBITDA.

Speaker #2: Turning to slide 20. Now, MSR per square meter has been declining due to a combination of lower market selling price and change in location mix.

Speaker #2: To include more edge-of-town sites and, going forward, new gross markets. Comparing Q4 '25 with Q4 '24, the decrease was 2.4%. At the same time, we have also seen a comparable decrease in unit development costs.

Daniel Newman: At the same time, we have also seen a comparable decrease in unit development costs. As a result, the overall yield on our portfolio as measured by adjusted gross profit divided by gross PP&E, excluding construction in progress, has remained steady at around 11%. Looking forward, we expect further MSR reduction of 3% to 4% by the end of 2026 due to the same combination of factors. However, the yield on our new investments in both established and new markets continues to be in the 10% to 11% range. Turning to slide 23. In 2025, our organic CapEx was RMB 4.7 billion, in line with our guidance. Net of the cash proceeds from asset monetization of RMB 2.3 billion, our CapEx was around RMB 2.4 billion.

Dan Newman: At the same time, we have also seen a comparable decrease in unit development costs. As a result, the overall yield on our portfolio as measured by adjusted gross profit divided by gross PP&E, excluding construction in progress, has remained steady at around 11%. Looking forward, we expect further MSR reduction of 3% to 4% by the end of 2026 due to the same combination of factors. However, the yield on our new investments in both established and new markets continues to be in the 10% to 11% range. Turning to slide 23. In 2025, our organic CapEx was RMB 4.7 billion, in line with our guidance. Net of the cash proceeds from asset monetization of RMB 2.3 billion, our CapEx was around RMB 2.4 billion.

Speaker #2: As a result, the overall yield on our portfolio as measured by adjusted gross profit divided by gross PP&E excluding construction in progress has remained steady at around 11%.

Speaker #2: Looking forward, we expect further MSR reduction of three to four percent by the end of 2026 due to the same combination of factors. However, the yield on our new investments in both established and new markets continues to be in the 10 to 11 percent range.

Speaker #2: Turning to slide 23. In 2025, our organic CAPEX was RMB 4.7 billion, in line with our guidance. Net of the cash proceeds from asset monetization of RMB 2.3 billion, our CAPEX was around RMB 2.4 billion.

Daniel Newman: As shown on slide 24, our operating cash flow for the full year was around CNY 3.4 billion. The significant improvement year-over-year was helped by a reduction in AR days from 109 in Q4 2024 to 82 days in Q4 2025, as a result of our tight control of collections. After taking into account asset monetization proceeds, we achieved positive cash flow pre-financing of CNY 1 billion. In 2026, we are guiding for organic CapEx of around CNY 9 billion, which corresponds with our 500 megawatt+ sales target. This year's CapEx will contribute to next year's growth. We have started work on a follow-on asset injection into our C-REIT. We have selected an asset which is larger than the seed asset for the IPO.

Dan Newman: As shown on slide 24, our operating cash flow for the full year was around CNY 3.4 billion. The significant improvement year-over-year was helped by a reduction in AR days from 109 in Q4 2024 to 82 days in Q4 2025, as a result of our tight control of collections. After taking into account asset monetization proceeds, we achieved positive cash flow pre-financing of CNY 1 billion. In 2026, we are guiding for organic CapEx of around CNY 9 billion, which corresponds with our 500 megawatt+ sales target. This year's CapEx will contribute to next year's growth. We have started work on a follow-on asset injection into our C-REIT. We have selected an asset which is larger than the seed asset for the IPO.

Speaker #2: As shown on slide 24, our operating cash flow for the full year was around RMB 3.4 billion. The significant improvement year on year was helped by a reduction in AR days from 109 in Q4 '24 to 82 days in Q4 '25.

Speaker #2: As a result, about tight control of collections. After taking into account asset monetization proceeds, we achieved positive cash flow pre-financing of RMB 1 billion.

Speaker #2: In 2026, we are guiding for organic CAPEX of around RMB 9 billion, which corresponds with our 500-megawatt-plus sales target. This year's CAPEX will contribute to next year's growth.

Speaker #2: We have started work on a follow-on asset injection into our C-REIT. We have selected an asset which is larger than the seed asset for the IPO.

Speaker #2: We aim to complete the asset injection in the second half of 2026 if possible. However, we have not included any assumed proceeds in our CAPEX guidance.

Daniel Newman: We aim to complete the assets injection in the second half of 2026 if possible. However, we have not included any assumed proceeds in our CapEx guidance. Turning to slide 25. During Q1 2026, we raised $385 million through the partial sell down of our stake in Day One. After the sell down, our remaining stake is worth $2.2 billion or $11 per GDS ADS benchmarked to Day One's Series C and USD price. We also issued $300 million of convertible preferred shares to Fortesource Capital. As a result, we are now sitting on nearly RMB 20 billion or $2.8 billion of cash. This is an ideal situation to be in as we prepare for a new growth phase. Turning to slide 26 and 27.

Dan Newman: We aim to complete the assets injection in the second half of 2026 if possible. However, we have not included any assumed proceeds in our CapEx guidance. Turning to slide 25. During Q1 2026, we raised $385 million through the partial sell down of our stake in Day One. After the sell down, our remaining stake is worth $2.2 billion or $11 per GDS ADS benchmarked to Day One's Series C and USD price. We also issued $300 million of convertible preferred shares to Fortesource Capital. As a result, we are now sitting on nearly RMB 20 billion or $2.8 billion of cash. This is an ideal situation to be in as we prepare for a new growth phase. Turning to slide 26 and 27.

Speaker #2: Turning to slide 25. During the first quarter of 2026, we raised $385 million through the partial sell-down of our stake in Day One.

Speaker #2: After the sell-down, our remaining stake is worth $2.2 billion, or $11 per GDS ADS, benchmarked to day one's Series C in USU price.

Speaker #2: We also issued $300 million of convertible preferred shares to Huatai Capital Investment. As a result, we are now sitting on nearly RMB 20 billion, or $2.8 billion, of cash.

Speaker #2: This is an ideal situation to be in as we prepare for a new growth phase. Turning to slide 26 and 27. Our net debt to last quarter annualized adjusted EBITDA decreased from 6.8 times at the end of 2024 to 5.8 times at the end of 2025.

Daniel Newman: Our net debt to last quarter annualized Adjusted EBITDA decreased from 6.8x at the end of 2024 to 5.8x at the end of 2025. The decrease is mainly due to a combination of positive cash flow pre-financing, the deconsolidation of debt of the project companies sold to the ABS and C-REIT, and the proceeds of the equity capital raise, which we did in Q2 2025. If we add back the purchase of time deposits, which is included in our reported investing cash flow, and the proceeds of the capital recycling, a new issue in Q1 2026, our net debt to EBITDA ratio decreases to 4.8x. At the beginning of 2023, we set a target of achieving positive cash flow pre-financing and net debt to EBITDA of below 5x within three years.

Dan Newman: Our net debt to last quarter annualized Adjusted EBITDA decreased from 6.8x at the end of 2024 to 5.8x at the end of 2025. The decrease is mainly due to a combination of positive cash flow pre-financing, the deconsolidation of debt of the project companies sold to the ABS and C-REIT, and the proceeds of the equity capital raise, which we did in Q2 2025. If we add back the purchase of time deposits, which is included in our reported investing cash flow, and the proceeds of the capital recycling, a new issue in Q1 2026, our net debt to EBITDA ratio decreases to 4.8x. At the beginning of 2023, we set a target of achieving positive cash flow pre-financing and net debt to EBITDA of below 5x within three years.

Speaker #2: The decrease is mainly due to a combination of positive cash flow pre-financing; the deconsolidation of debt of the project companies sold to the ABS and C-REIT; and the proceeds of the equity capital raised which we did in two Q25.

Speaker #2: If we add back the purchase of time deposits, which is included in our reported investment cash flow, and the proceeds of the capital recycling and new issue in one Q2-6, our net debt to EBITDA ratio decreases to 4.8 times.

Speaker #2: At the beginning of 2023, we set a target of achieving positive cash flow pre-financing and net debt to EBITDA of below five times within three years.

Speaker #2: Looking back, it was an aggressive target, but I'm pleased to say that we made it. Turning to slide 29. For FY25, we achieved the midpoint of our revenue guidance and beat the top end of our adjusted EBITDA guidance.

Daniel Newman: Looking back, it was an aggressive target, but I'm pleased to say that we made it. Turning to slide 29. For FY 2025, we achieved the midpoint of our revenue guidance and beat the top end of our adjusted EBITDA guidance. For 2026, we expect total revenues to be between RMB 12.4 to 12.9 billion, implying a year-on-year increase of between approximately 8.5 to 12.8%. For adjusted EBITDA, we expect between RMB 5.75 billion to 6 billion, implying a year-on-year increase of between approximately 6.4 to 11%. As a result of the asset monetizations during 2025, the year-on-year growth rates are not directly comparable.

Dan Newman: Looking back, it was an aggressive target, but I'm pleased to say that we made it. Turning to slide 29. For FY 2025, we achieved the midpoint of our revenue guidance and beat the top end of our adjusted EBITDA guidance. For 2026, we expect total revenues to be between RMB 12.4 to 12.9 billion, implying a year-on-year increase of between approximately 8.5 to 12.8%. For adjusted EBITDA, we expect between RMB 5.75 billion to 6 billion, implying a year-on-year increase of between approximately 6.4 to 11%. As a result of the asset monetizations during 2025, the year-on-year growth rates are not directly comparable.

Speaker #2: For 2026, we expect total revenues to be between RMB 12.4 billion and RMB 12.9 billion, implying a year-on-year increase of approximately 8.5 to 12.8 percent.

Speaker #2: For adjusted EBITDA, we expect between RMB 5.75 billion to RMB 6 billion, implying a year-on-year increase of approximately 6.4% to 11%. As a result of the asset monetizations during 2025, the year-on-year growth rates are not directly comparable.

Speaker #2: If we add back the forecast revenue and adjusted EBITDA for the data center project companies sold to the ABS and C-REIT, the implied growth rate of our pro forma revenue and adjusted EBITDA guidance is approximately 1.6 percentage points higher.

Daniel Newman: If we add back the forecast revenue and Adjusted EBITDA for the data center project companies sold to the ABS and C-REIT, the implied growth rate of our pro forma revenue and Adjusted EBITDA guidance is approximately 1.6 percentage points higher. This is shown on slide 30. We'd now like to open the call to questions. The operator, please.

Dan Newman: If we add back the forecast revenue and Adjusted EBITDA for the data center project companies sold to the ABS and C-REIT, the implied growth rate of our pro forma revenue and Adjusted EBITDA guidance is approximately 1.6 percentage points higher. This is shown on slide 30. We'd now like to open the call to questions. The operator, please.

Speaker #2: This is shown on slide 30. We'd now like to open the call to questions for operator, please.

Speaker #3: Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We'll now go to our first question. Our first question comes from the line of Yang Liu from Morgan Stanley. Please go ahead. Your line is open.

Speaker #3: To withdraw your question, please press star one and one again. We'll now go to our first question. Our first question comes from the line of Yang Liu from Morgan Stanley.

Speaker #3: Please go ahead. Your line is open.

Yang Liu: Thanks for the opportunity to ask a question. First, congratulations on the very strong booking year to date. I have two questions. The first is about the conversion from MOU to contract. What is the timetable behind this kind of conversion? Or what is the potential risk for this kind of conversion? Or what do we need to do? Or what do our customer need to do behind this kind of conversion? That's my first question. The second question is about the competition in the new key focus area, like in the Mongolia, Zhongwei, and Shaoguan. We know that GDS has been far leading in tier one market, but how about in those new focus areas?

Speaker #4: Thanks for the opportunity to ask a question, and first, congratulations on the very strong booking year to date. I have two questions. The first is about the conversion from MOU to contract.

Speaker #4: What is the timetable behind this kind of conversion? What is the potential risk for this kind of conversion? What do we need to do, or what do our customers need to do, behind this kind of conversion?

Speaker #4: That's my first question. And the second question is about the computation in the new key focus area, like in Mongolia, Zhongwei, and Shaoguan. We know that GDS has been far leading in tier one markets, but how about in those new focus areas?

Yang Liu: Are we seeing more competition or less competition in those places? What is the GDS advantage there? Thank you.

Speaker #4: Are we seeing more competition, or fewer competitors in those places? And what is the GDS advantage there? Thank you.

Yang Liu: Are we seeing more competition or less competition in those places? What is the GDS advantage there? Thank you.

Speaker #5: Okay. The first question is, I think this is a high certainty to convert to our order. This is number one. In terms of the timing, I think it's within two quarters.

Daniel Newman: Okay. The first question is, I think this is a high certainty to convert to our order. This is number one. In terms of the timing, I think it's within two quarter. I think it's a high chance we can convert to the real contract. So we are very confident on that. This is number one. Number two, I think in terms of the new market, right? New market. I think the current market before we step in, I think there's some data center operator already there. It's never too late because now the government set up a very high barrier right now. Number one, they will measure.

Dan Newman: Okay. The first question is, I think this is a high certainty to convert to our order. This is number one. In terms of the timing, I think it's within two quarter. I think it's a high chance we can convert to the real contract. So we are very confident on that. This is number one. Number two, I think in terms of the new market, right? New market. I think the current market before we step in, I think there's some data center operator already there. It's never too late because now the government set up a very high barrier right now. Number one, they will measure.

Speaker #5: I think it's a high chance we can convert to the real contract, so we are very confident on that. This is number one. Number two, I think in terms of the new market, right?

Speaker #5: New market. I think the current market, before we step in, I think there's some data center, already data center operator already there. But it's never too late.

Speaker #5: Because now the government set up a very high barrier right now. Number one, they will measure—I mean, they will measure the criteria for choosing the partner to be able to acquire the land.

Daniel Newman: I mean, they will measure the criteria for choosing the partner.

Dan Newman: I mean, they will measure the criteria for choosing the partner.

William Wei Huang: To be able to acquire the land, they have a couple of criteria. Number one, they will seriously look at the company's track record. Second, they will make sure you have the customer commitment behind you. Number third, they also will look at your financial capability as well. This is the current government, how they look at a potential partner. I think if that's the case, which it is, it's already set up at a high barrier. We think we are able to still lead, sit on the leading position.

William Huang: To be able to acquire the land, they have a couple of criteria. Number one, they will seriously look at the company's track record. Second, they will make sure you have the customer commitment behind you. Number third, they also will look at your financial capability as well. This is the current government, how they look at a potential partner. I think if that's the case, which it is, it's already set up at a high barrier. We think we are able to still lead, sit on the leading position.

Speaker #5: They have a couple of the criteria. Number one, they will seriously look at the company's track record. Second, they will make sure you have the customer commitment behind you.

Speaker #5: And the number third, they also will look at your financial capability as well. So if this is the current government, how they look at it—partner, potential partner.

Speaker #5: So I think if that's the case, which it is, it's already set up at a high barrier. And we think we are able to still sit in the leading position.

Speaker #4: Thank you.

Yang Liu: Thank you.

Speaker #3: Thank you. We'll now move on to our next question. Our next question comes from the line of Jonathan Atkin from RBC CM. Please go ahead.

Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Jonathan Atkin from RBCCM. Please go ahead. Your line is open.

Speaker #3: Your line is open.

Jonathan Atkin: Thanks. So you referenced a lot of your orders and current interests being AI oriented. Can you talk a little bit about the non-AI kind of traditional cloud, even enterprise types of workloads and the demand trends that you're seeing there? Any further color around the types of AI workloads, and would you associate it primarily with large foundation models or inference or what? Thank you.

Speaker #4: Thanks. So you referenced a lot of your orders and current interests being AI-oriented. Can you talk a little bit about the non-AI, kind of traditional cloud—even enterprise—types of workloads, and the demand trends that you're seeing there?

Speaker #4: And then any further color around the types of AI workloads? And would you associate it primarily with large foundation models or inference or what?

Speaker #4: Thank you.

Speaker #5: I think the majority, I mean, the demand is very clearly driven by AI, right? GPU-type, data center demand. Of course, I think the traditional cloud still grows.

William Wei Huang: I think the majority, I mean, the demands are driven by the AI, right? GPU type data center demand. Of course, I think the traditional cloud still grows and they're more associated with the AI demand. I think that's the kind of profile. It's not like before, 100% driven by the traditional cloud. Now, the cloud still grows, but more associated with the AI. That's a slight change, the driver, right? What's the second question?

William Huang: I think the majority, I mean, the demands are driven by the AI, right? GPU type data center demand. Of course, I think the traditional cloud still grows and they're more associated with the AI demand. I think that's the kind of profile. It's not like before, 100% driven by the traditional cloud. Now, the cloud still grows, but more associated with the AI. That's a slight change, the driver, right? What's the second question?

Speaker #5: And the more associated with the AI demand. So I think that's the current profile. It's not like before, 100% driven by the traditional cloud.

Speaker #5: Now the cloud still grows, but it's more associated with the AI. That's a slight change—the driver, right? So, what's the second question?

Jonathan Atkin: Type of AI.

Speaker #3: With AI applications.

William Wei Huang: Inference or machine learning, the workload.

William Huang: Inference or machine learning, the workload.

Speaker #6: First of all, machine learning. The workload.

Laura Chen: The workload of AI.

Speaker #3: The workload of AI.

Speaker #5: Of course, the training is still continuing—that's for sure. Because China is still behind the U.S., right? For a couple of years.

William Wei Huang: I think, of course, the training still continue, that's for sure. Because China still behind the US, right? For a couple of years, and now it's catching up. Looks like the training is still a key driver to drive the data center demand. In the meanwhile, I think the large language model owner, they start to, I mean, a lot of demands also driven by the inferencing right now. That's why our tier one, let's say, traditional market still getting growth in the last year. We also estimate this year still have a very strong demand from both AI type and inference type and the cloud.

William Huang: I think, of course, the training still continue, that's for sure. Because China still behind the US, right? For a couple of years, and now it's catching up. Looks like the training is still a key driver to drive the data center demand. In the meanwhile, I think the large language model owner, they start to, I mean, a lot of demands also driven by the inferencing right now. That's why our tier one, let's say, traditional market still getting growth in the last year. We also estimate this year still have a very strong demand from both AI type and inference type and the cloud.

Speaker #5: And now it's catching up. So it looks like the training is still a key driver to drive the data center demand. But in the meanwhile, I think the large language model owner, they are starting to—I mean, a lot of demand is also driven by the inference right now.

Speaker #5: That's why our tier one let's say traditional market still get the growth in the last year. And we are also we also estimate this year still have a very strong demand from both AI type and inference type.

Speaker #5: And the cloud.

Jonathan Atkin: I wonder if you could maybe just touch on the competitive environment, and it probably varies a little bit by region and market and so forth. In terms of other projects that your peers are pursuing, how would you characterize competition that is meeting the demand? Is that at all different from the last time you gave us an update? Thank you.

Speaker #4: And then I wondered if you could maybe just touch on the competitive environment, and it probably varies a little bit by region and market and so forth.

Speaker #4: But in terms of other projects that your peers are pursuing, how would you characterize competition that is meeting the demand? And is that at all different from the last time you gave us an update?

Speaker #4: Thank you.

Jonathan Atkin: General update.

Speaker #3: General update.

Jonathan Atkin: Competitive environment in new markets, I think.

Speaker #6: Question of environment and new markets, I think. Competitive environment and new markets.

William Wei Huang: What?

William Huang: What?

Jonathan Atkin: Competitive environment.

Jonathan Atkin: Oh.

Jonathan Atkin: Competitive environment.

William Wei Huang: Yeah. I think if you are aware, if GDS seriously step in a new market, we definitely will dominate the market. That's how we look. That's our behavior, right? Otherwise, we will not step in, right? We definitely get ready to step in and give. Over time, I think we'll take the absolutely leadership in this region. But I think the competition, AI in China, data center competition in China just a start for AI. I think it's good timing to step in because especially if you have enough of financial capability, that's more easy to win the battle, right?

William Huang: Yeah. I think if you are aware, if GDS seriously step in a new market, we definitely will dominate the market. That's how we look. That's our behavior, right? Otherwise, we will not step in, right? We definitely get ready to step in and give. Over time, I think we'll take the absolutely leadership in this region. But I think the competition, AI in China, data center competition in China just a start for AI. I think it's good timing to step in because especially if you have enough of financial capability, that's more easy to win the battle, right?

Speaker #5: Yeah, I think if you're aware, if GDS seriously steps into a new market, we definitely will dominate the market. That's how we look at it.

Speaker #5: That's our behavior, right? So otherwise, we are the market—otherwise, we will not step in, right? We definitely get ready to step in and give over time.

Speaker #5: I think we will take the absolute leadership in this region. So, I think the competition in AI in China, and the data center competition in China, is just starting for AI.

Speaker #5: So I think it's good timing to step in, because especially if you have enough financial capability, that's more easy to win the battle, right?

Speaker #4: Thank you.

Jonathan Atkin: Thank you.

Speaker #3: Thank you. We'll now move on to our next question. Please stand by while we compile the Q&A queue. We'll now move on to our next question.

Operator: Thank you. We'll now move on to our next question. Please stand by while we compile the Q&A queue. We'll now move on to our next question. Our next question comes from the line of Sara Wang from UBS. Please go ahead. Your line is open.

Speaker #3: And our next question comes from the line of Sarah Wang from UBS. Please go ahead, your line is open.

Sara Wang: Thank you for the opportunity to ask question. Congratulations again on the really solid new bookings. I have two questions. The first one is on supply. I still remember that earlier last year management took a very rational and cautious stance on taking new orders because back then there was some uncertainties around chip supply. However, given the strong order and MOU momentum here today, should we interpret that as a sign that chip supply has improved meaningfully? Or in other words, from a supply side perspective, are there any factors constraining project delivery? That's my first question. My second question is that I noticed that GDS power land reservation has increased from 900MW last quarter to 3.7GW this quarter.

Speaker #7: Thank you for the opportunity to ask a question, and congratulations again on the really solid new bookings. So, I have two questions. The first one is on supply.

Speaker #7: So I still remember that earlier last year, management took a very rational and cautious stance on taking new orders, because back then, there were some uncertainties around chip supply.

Speaker #7: However, given the strong order and MOU momentum year to date, should we interpret that as a sign that chip supply has improved meaningfully? Or, in other words, from a supply-side perspective, are there any factors constraining project delivery?

Speaker #7: So that's my first question. And then my second question is that I noticed that GDS Power Land Reservation has increased from 900 megawatts last quarter to 3.7 gigawatts this quarter.

Speaker #7: So, may I ask, where are the main locations of the new resources? And how do the project returns in these new areas differ from our existing projects?

Sara Wang: May I ask, where are the main locations of the new resources, and how does the project returns in this new area differ from our existing projects? Thank you.

Speaker #7: Thank you.

William Wei Huang: Yeah. I think we have a different view, right? We are always looking more deeply into the industry. That means that we are very disciplined in CapEx investment. Last year we are slightly conservative because of the chip supply still was not that certain. This year the certainty is more improved, right? I think in terms of the US export policy changes and the domestic chips also catching up. If you recall a couple of quarters ago when we talk about this, we stay on the very, we would always say, "Wait, wait and see," right? That's the right strategy to more discipline to make the CapEx investment.

Speaker #3: Chip supply.

Speaker #5: Yeah.

Speaker #3: With the chip supply.

Speaker #5: Yeah. I think we have a different view, right? So we always look more deeply into the industry. So that's why we are—also, that means that we are very disciplined with CapEx investment.

William Huang: Yeah. I think we have a different view, right? We are always looking more deeply into the industry. That means that we are very disciplined in CapEx investment. Last year we are slightly conservative because of the chip supply still was not that certain. This year the certainty is more improved, right? I think in terms of the US export policy changes and the domestic chips also catching up. If you recall a couple of quarters ago when we talk about this, we stay on the very, we would always say, "Wait, wait and see," right? That's the right strategy to more discipline to make the CapEx investment.

Speaker #5: So last year, we were slightly conservative because the chip supply was still not that certain. So this year, the certainty has improved, right?

Speaker #5: I think in terms of the US export policy changes and the domestic chips also catching up. If you recall, a couple of the quarter ago, when we talk about this where we stay on the very we will always say we're in the sea, right?

Speaker #5: So that's the right strategy, to be more disciplined to make CapEx investments. Now we are much more comfortable because the whole environment changed, adapted to a more positive, more certain environment.

William Wei Huang: Now we are much comfortable because the whole environment changed, adapted to a more positive, more certainty. I think that's the. We think it's the right timing to step in a big way, right? What

William Huang: Now we are much comfortable because the whole environment changed, adapted to a more positive, more certainty. I think that's the. We think it's the right timing to step in a big way, right? What

Speaker #5: So, I think that's the—we think it's the right timing to step in in a big way, right? Land banker—I think, in terms of land banker, I just mentioned that in my script, right?

Sara Wang: Yeah.

William Wei Huang: Landbank. I think in terms of landbank, I just mentioned that, you know, in my script, right? I think there's a Horinger in Mongolia and Zhongwei in Ningxia Province and Shaoguan is in Guangdong Province. I think that's all the national data center hub, right? I think the location will be great for future and well recognized by all our existing customers.

William Huang: Landbank. I think in terms of landbank, I just mentioned that, you know, in my script, right? I think there's a Horinger in Mongolia and Zhongwei in Ningxia Province and Shaoguan is in Guangdong Province. I think that's all the national data center hub, right? I think the location will be great for future and well recognized by all our existing customers.

Speaker #5: So, I think there's Hohhot in Inner Mongolia and Zhongwei in Ningxia province. And then Shaoguan is in Guangdong province. I think that's all the national data center hubs, right?

Speaker #5: So I think the location will be great for the future, and will be recognized by all our existing customers.

Speaker #3: Thank you. And how should we think about the project returns? Thank you.

Sara Wang: Thank you. How shall we think about the project returns? Thank you.

William Wei Huang: Project returns.

William Huang: Project returns.

Speaker #5: Project returns. Yeah.

Sara Wang: The project returns.

William Wei Huang: Yeah.

William Huang: Yeah.

Daniel Newman: Sara, as I said during the script, we're still able to generate a simple cash on cash yield of 10% to 11%, whether we're taking on new business in established markets or new markets. With our business model of developing, ramping up, and holding for the qualification period and then monetizing, that yield is sufficient for us to realize a return on equity above 20%.

Dan Newman: Sara, as I said during the script, we're still able to generate a simple cash on cash yield of 10% to 11%, whether we're taking on new business in established markets or new markets. With our business model of developing, ramping up, and holding for the qualification period and then monetizing, that yield is sufficient for us to realize a return on equity above 20%.

Speaker #4: Sarah, as I said during the script, we're still able to generate a simple cash-on-cash yield of 10 to 11 percent. Whether we're taking on new business in established markets or new markets, and with our business model of developing, ramping up, and holding for the qualification period and then monetizing, that yield is sufficient for us to realize a return on equity above 20 percent.

Speaker #3: Got it. Very clear. Thank you. Thank you. We'll now move on to our next question. Our next question comes from the line of Gokul Hariharan from JP Morgan.

Sara Wang: Got it. Very clear. Thank you.

Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Gokul Hariharan from J.P. Morgan. Please go ahead. Your line is open.

Speaker #3: Please go ahead. Your line is open.

Speaker #8: Yeah, hi. Thanks for taking my question. My first question is on the 200-megawatt order that you've already secured. Could we talk a little bit about the nature of the urgency of this project?

Gokul Hariharan: Yeah. Hi. Thanks for taking my question. My first question is on the 200-MW order that you've already secured. Could you talk a little bit about the nature of the urgency of this project, obviously given AI demand seems to be accelerating. When do you expect to deliver this to customers? Is it also more like an accelerated schedule like we saw with the 150-MW order that we saw last year? That's my first question. Secondly, just trying to understand a little bit on the realized MSR trends. Previously, we were expecting MSR to start to flatten out a little bit in 2027. Now obviously our location mix is probably changing a little bit in response to some of the new demand trends.

Speaker #8: Obviously, given AI demand seems to be accelerating, when do you expect to deliver this to customers? Is it also more like an accelerator schedule, like we saw with the 150-megawatt order that we saw last year?

Speaker #8: That's my first question. And secondly, just trying to understand a little bit on the realized MSR trends—previously, we were expecting MSR to start to flatten out a little bit in 2027.

Speaker #8: But now, obviously, our location mix is probably changing a little bit in response to some of the new demand trends. So, Dan, maybe could you help us understand how MSR is likely to shape up, let's say, one or two years out from now—the realized MSR—based on the contracts that you're signing right now?

Gokul Hariharan: Dan, maybe could you help us understand how MSR is likely to shape up, let's say one or two years out from now, the realized MSR based on the contracts that you're signing right now?

Speaker #4: Sure. Gokul, the 200-megawatt new orders—I think you can assume for the forecasting that it will take us four quarters on average to deliver.

Daniel Newman: Sure. Gokul. The 200 MW new orders, you can assume for forecasting that it will take us 4 quarters on average to deliver, and then it will be a four-quarter ramp up. This is faster than historically when we were doing the more traditional cloud business, and it's consistent with our parameters in terms of selecting new business. The MSR decrease, it will continue beyond next year. I think in 2028, it's probably 3% to 4% again. The offset in terms of higher volume growth is going to lift our overall growth rate. In 2026, I think, William said that we're expecting our move-in to be similar to last year, which is in a sort of 80 to 90 thousand square meter range.

Dan Newman: Sure. Gokul. The 200 MW new orders, you can assume for forecasting that it will take us 4 quarters on average to deliver, and then it will be a four-quarter ramp up. This is faster than historically when we were doing the more traditional cloud business, and it's consistent with our parameters in terms of selecting new business. The MSR decrease, it will continue beyond next year. I think in 2028, it's probably 3% to 4% again. The offset in terms of higher volume growth is going to lift our overall growth rate. In 2026, I think, William said that we're expecting our move-in to be similar to last year, which is in a sort of 80 to 90 thousand square meter range.

Speaker #4: And then it will be a four-quarter ramp-up. This is faster than historically, when we were doing the more traditional cloud business, and it's consistent with our parameters in terms of selecting new business.

Speaker #4: The MSR decrease, it will continue. Beyond next year, I think in 2028, it's probably 3 to 4 percent again. But the offset in terms of higher volume growth is going to lift our overall growth rate.

Speaker #4: In 2026, I think William said that we're expecting our move-in to be similar to last year, which is in a sort of 80,000 to 90,000 square meter range.

Speaker #4: But if all goes to plan in terms of meeting our sales target this year, we'll be looking at a move-in which could be, like, double that next year.

Daniel Newman: If all goes to plan in terms of meeting our sales target this year, you know, we'll be looking at a move-in which could be like double that next year. The combination of those two factors is gonna drive our growth higher.

Dan Newman: If all goes to plan in terms of meeting our sales target this year, you know, we'll be looking at a move-in which could be like double that next year. The combination of those two factors is gonna drive our growth higher.

Speaker #4: So it's a combination of those two factors that is going to drive our growth higher.

Gokul Hariharan: Understood. Just one follow-up on the locations, as we're adding some of these newer locations, which are a little bit more remote sites, but obviously the new data center centers for the country. Is the customer concentration high in some of these new locations, like previously when we went to build-to-suit. I think it became very customer specific. How do we think about the customer concentration in some of these new locations like Shaoguan, or Inner Mongolia, et cetera?

Speaker #8: Understood. Just one follow-up on the locations, as we're adding some of these newer locations which are a little bit more remote sites. But obviously, the new data centers for the country—is the customer concentration high in some of these new locations, like previously when we went to build-to-suit?

Speaker #8: I think it became very much like very customer specific. How should we think about the customer concentration in some of these new locations like Shaoguan or in Mongolia, etc.?

Speaker #3: I need to think.

William Wei Huang: Yeah, I think the global views everywhere, every data center company now is getting more concentrated in terms of customer.

William Huang: Yeah, I think the global views everywhere, every data center company now is getting more concentrated in terms of customer.

Speaker #5: Yeah. I think global views everywhere, every data center company now is getting more concentrated in terms of customer. The answer, I think, that maybe Global in China may be top three.

Gokul Hariharan: Mm-hmm.

William Wei Huang: The answer, I think that maybe global in China may be top 3. It's a better trend, right? In the global point of view, I think it's 4 or 5 company, right? Everybody is as a trend. If you position your hyperscale data center operator, a DevOp center operator, right? It's not a traditional colo. If you look at the colo business, this looks like a more diversified, right? This is the reality here.

William Huang: The answer, I think that maybe global in China may be top 3. It's a better trend, right? In the global point of view, I think it's 4 or 5 company, right? Everybody is as a trend. If you position your hyperscale data center operator, a DevOp center operator, right? It's not a traditional colo. If you look at the colo business, this looks like a more diversified, right? This is the reality here.

Speaker #5: That's a trend, right? From a global point of view, I think it's four or five companies, right? Everybody sees it as a trend. If you position yourself as a hyperscale data center operator, DevApp center operator, right?

Speaker #5: It's not a traditional colo if you look at the colo business. This looks like more diversified, right? But this is the reality. Yeah.

Daniel Newman: I'd just add the contract length for this kind of business is certainly at the long end or longer than what we typically have been putting before. We quite often find 10-year contracts, which I think, you know, de-risks the investment in these projects.

Dan Newman: I'd just add the contract length for this kind of business is certainly at the long end or longer than what we typically have been putting before. We quite often find 10-year contracts, which I think, you know, de-risks the investment in these projects.

Speaker #4: I'll just add that the contract length for this kind of business is certainly at the long end, or longer than what we typically have been paying before.

Speaker #4: So, quite often, we find 10-year contracts, which I think de-risk the investment in these projects.

Speaker #5: Yeah, I think in terms of customer numbers, GDS already had 1,000 customers, right? So, of course, the new demand is mainly driven by the top three AI players in China, right?

William Wei Huang: Yeah. I think in terms of customer number, GDS already has 1000 customer, right? Of course, the new demands are mainly driven by the top three AI player in China, right?

William Huang: Yeah. I think in terms of customer number, GDS already has 1000 customer, right? Of course, the new demands are mainly driven by the top three AI player in China, right?

Gokul Hariharan: Understood. Thank you.

Speaker #8: Understood. Thank you.

Speaker #3: Thank you. We'll now move on to our next question. And our next question comes from the line of Frank Luthen from Raymond James and Associates.

Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Frank Louthan from Raymond James & Associates. Please go ahead. Your line is open.

Speaker #3: Please go ahead. Your line is open.

[Analyst] (Raymond James & Associates): Hey, guys, this is Rob on for Frank Louthan. Thank you for taking my question. Just looking at the demand and the bookings, what's the growth in demand that you're seeing from your non-domestic Chinese customers year-over-year? And what would you say is the outlook for that going forward?

Speaker #9: Hey, guys. This is Rob on for Frank. Thank you for taking my question. So, just looking at the demand and the bookings, what's the growth in demand that you're seeing from your non-domestic Chinese customers year over year?

Speaker #9: And what would you say is the outlook for that going forward?

Daniel Newman: Rob, the demand is from Chinese customers, almost entirely. I think the market opportunity is around 3 gigawatts per annum, concentrated, as William said, in the very largest customers. You know, we talk about 500 megawatt sales target. Just put it into the context of that kind of scale of addressable market.

Dan Newman: Rob, the demand is from Chinese customers, almost entirely. I think the market opportunity is around 3 gigawatts per annum, concentrated, as William said, in the very largest customers. You know, we talk about 500 megawatt sales target. Just put it into the context of that kind of scale of addressable market.

Speaker #4: Well, the demand is from Chinese customers—almost entirely. I think the market opportunity is around 3 gigawatts per annum, concentrated, as William said, in the very largest customers.

Speaker #4: So we talk about 500 megawatt sales target. Put it into the context of that kind of scale of addressable market.

Speaker #3: Thank you. We'll now move on to our next question. Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead.

Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Timothy Zhao from Goldman Sachs. Please go ahead. Your line is open.

Speaker #3: Your line is open.

Speaker #10: Great. Thank you, Magnum, for taking my question. Two questions here. One is really on the resource expansion that you mentioned about the 3 gigawatts pipeline into a new growth market.

Timothy Zhao: Great. Thank you, gentlemen, for taking my question. Two questions here. One is really on the resource expansion that you mentioned about the 3 gigawatts pipeline into a new growth market. Just wondering, I think between the 3 key hubs that you mentioned in Mongolia, Ningxia, and Guangdong, what is the, like, difference or similarities among those regions in terms of customer preference or the IT workload, the pricing, et cetera? The follow-on question related to that is what is the regional breakdown between those 3 key hubs out of the 3 gigawatts pipeline that you have or out of the 500 megawatts MOUs that you disclose year to date? Second question is on the CapEx.

Speaker #10: Just wondering, I think between the three key hubs that you mentioned, in Mongolia, Ningxia, and Guangdong, what is the difference or similarities among those regions in terms of customer preference or the IT workload, the pricing, etc.?

Speaker #10: And the follow-up question related to that is that what is the regional breakdown between those three key hubs out of the three gigawatts pipeline that you have or out of the 500 megawatts MOUs that you disclose year to date?

Speaker #10: And second question is on the CAPEX. I think given that you have very strong sales momentum year to date, and to convert that 500 megawatts into contract probably around two quarters, do you see any possibilities to further reverse up the CAPEX guidance for this year?

Timothy Zhao: I think, given that you have very strong sales momentum year to date and to convert that 500MW into contract probably around two quarters, do you see any possibilities to further revise up the CapEx guidance for this year? Thank you.

Speaker #10: Thank you.

Speaker #5: I think there are three new markets. I think the workload is similar. I mean, major I mean, workload is still changing. Plus, partially, it's an influence, right?

William Wei Huang: I think there are three new market. I think the workload is similar. I mean major workload is still training plus partially is inference, right? Meanwhile, we just mentioned, I think in the traditional market, which say low latency market, right? We also got a lot of orders from our customer, the large language model customer because they already start to deploy the inference workload. I think it's quite balanced. In general, I think maybe it's 65% to 70% will go to the new market and still 30 to 40% is go to traditional market, right? Which we used to call the tier one market.

William Huang: I think there are three new market. I think the workload is similar. I mean major workload is still training plus partially is inference, right? Meanwhile, we just mentioned, I think in the traditional market, which say low latency market, right? We also got a lot of orders from our customer, the large language model customer because they already start to deploy the inference workload. I think it's quite balanced. In general, I think maybe it's 65% to 70% will go to the new market and still 30 to 40% is go to traditional market, right? Which we used to call the tier one market.

Speaker #5: And in the meanwhile, which is a mission—I think in the traditional market, we'd say low latency market, right? We also got a lot of orders from our customer, the large language model customer, because they already started to deploy the inference workload.

Speaker #5: So I think it's quite balanced. In general, I think maybe it's 65% to 70%. We'll go to the new market, and still 30% to 40% is going to the traditional market, right?

Speaker #5: Which we used to call the tier one market. That's sort of the different workload.

William Wei Huang: That's sort of the difference of workload.

William Huang: That's sort of the difference of workload.

Daniel Newman: Tim, your question around regarding CapEx, as I mentioned earlier, you should assume that it takes us four quarters to build, because in many cases, we're talking about new build in a site which is where we have no previous presence. We commence construction in Q1 2026. It's for delivery to customer in Q1 2027. As we win new business going through this year, that will lead to more starts. I think the CapEx guidance of CNY 9 billion is adequate. I would not expect to change that.

Dan Newman: Tim, your question around regarding CapEx, as I mentioned earlier, you should assume that it takes us four quarters to build, because in many cases, we're talking about new build in a site which is where we have no previous presence. We commence construction in Q1 2026. It's for delivery to customer in Q1 2027. As we win new business going through this year, that will lead to more starts. I think the CapEx guidance of CNY 9 billion is adequate. I would not expect to change that.

Speaker #4: Tim, on your question regarding CAPEX, as I mentioned earlier, you should assume that it takes us four quarters to build. In many cases, we're talking about new build in a site which is where we have no previous presence.

Speaker #4: So we commence construction in Q1 '26, and it's for delivery to the customer in Q1 '27. So as we win new business going through this year, that will lead to more starts.

Speaker #4: But I think the CAPEX guidance of $9 billion is adequate. I would not expect to change that.

Speaker #3: Thank you. We'll now move on to our next question. Our next question comes from the line of Elie Zhang from Macquarie. Please go ahead.

Operator: Thank you. We'll now move on to our next question. Our next question comes from the line of Ellie Jiang from Macquarie. Please go ahead. Your line is open.

Speaker #3: Your line is open.

Speaker #11: Great, thank you so much, management, for taking my question. I just have one question that's more longer-term. Just now, management talked about the data center demand in China being just at the beginning of picking up.

Ellie Jiang: Great. Thank you so much management for taking my question. I just have one question that's more longer term. Just now management talked about, you know, the data center demand in China is just at the beginning of picking up. Would it be fair if we look in the next, you know, three to five years to kind of mirror the US trajectory? I mean, especially on kind of how the large hyperscalers have been accelerating the CapEx deployment pace. And lastly, you know, how do you really see the longer term sort of market size and positioning in that trajectory? Thank you.

Speaker #11: Would it be fair if we look in the next three to five years to kind of mirror the US trajectory? I mean, especially on how the large hyperscalers have been accelerating the CapEx deployment pace?

Speaker #11: And do you see similar commitments from our key customers? And lastly, how do you really see the longer-term kind of market size and positioning in that trajectory?

Speaker #11: Thank you.

Speaker #5: Yeah. If you look at it for our estimation, I think yes, China demand will grow trajectory more like the US because it's just behind a couple of years, right?

William Wei Huang: Yeah. If you look at it, for our estimation, I think that yes, China demand will do will like growth trajectory more like US because just behind a couple of years, right? That's happening right now. Last year, we just talk about that demand is already there. It's all about just about the chip supply, right? Now, it looks like it is getting much better, more positive right now. More certainty in terms of the chip supply. It will go. It will same pace to similar pace as US, right?

William Huang: Yeah. If you look at it, for our estimation, I think that yes, China demand will do will like growth trajectory more like US because just behind a couple of years, right? That's happening right now. Last year, we just talk about that demand is already there. It's all about just about the chip supply, right? Now, it looks like it is getting much better, more positive right now. More certainty in terms of the chip supply. It will go. It will same pace to similar pace as US, right?

Speaker #5: That's happening right now. So if the last year, we just talked about that demand is already there. It's all about just about the chip supply, right?

Speaker #5: Now it looks like this is getting much better, more positive, right now. Most certainly in terms of the chip supply. So it will go, it will seem, at a pace similar to the US, right?

Speaker #5: So, I think if you look at the last two years, all the big AI companies and tech companies continue to raise their CAPEX guidance.

William Wei Huang: I think if you look at it last two years, all the big AI company, tech company continue to raise their CapEx guidance just like it would happen in US.

William Huang: I think if you look at it last two years, all the big AI company, tech company continue to raise their CapEx guidance just like it would happen in US.

Speaker #5: Just like what happened in the US.

Speaker #11: Got it. Thank you very much. And if I may, sorry, if we continue on that route, would it be possible at one point—because just now, management talked about the MSR still declining slightly all the way until 2028.

Ellie Jiang: Got it. Thank you very much. If I may, sorry. If we continue on that route, would it be possible at one point, 'cause just now management talked about the MSR still declining, you know, slightly all the way until 2028. Would it be possible at some point we still see, you know, hyper demand really building, especially given how, you know, the open-source or all these agentic integration seems to be driving token consumption by 10x or even 20x. At some point, would it be possible for us to see even stronger pricing power down the road?

Speaker #11: But would it be possible at some point that we still see hyper demand really building in, especially given how the open clause or all these agentic integrations seem to be driving token consumption by 10x or even 20x?

Speaker #11: Then, at some point, would it be possible for us to see even stronger pricing power down the road?

William Wei Huang: Yeah.

William Huang: Yeah.

William Wei Huang: Yes. Could be. I think it could be. I think if you look at the US, the price, let's say adoption profile in the last 5 years, it's. If you look at it, 5 years ago, the US price used to be down to $60 per kW, right? Now, it's 3 times average, right? So, 2 or 3 times average. So that's profile. I think that will be high chance it will be, right?

William Huang: Yes. Could be. I think it could be. I think if you look at the US, the price, let's say adoption profile in the last 5 years, it's. If you look at it, 5 years ago, the US price used to be down to $60 per kW, right? Now, it's 3 times average, right? So, 2 or 3 times average. So that's profile. I think that will be high chance it will be, right?

Speaker #5: Yeah, it could be. I think it could be. I think if you look at the US, the price let's say adoption years, it's if you look at it, five years ago, the US price used to be down to 60 US dollars per kW, right?

Speaker #5: Now it's three times average, right? So two or three times average. So that profile, I think that will be a high chance it will be, right?

Ellie Jiang: Understood. Thank you very much.

William Wei Huang: I give you the sense of the whole, I mean, the western part of China. The total power capacity now, as of now, just 30GW available to supply the future growth. In general, it is still limited, right?

Speaker #5: I give you the I give you the sense in the whole I mean, the Western of the current Western part of China, the total power capacity now as of now, just 30 megawatts, gigawatts.

William Huang: I give you the sense of the whole, I mean, the western part of China. The total power capacity now, as of now, just 30GW available to supply the future growth. In general, it is still limited, right?

Speaker #5: To be available to supply the future growth—in general, it's still limited, right?

Speaker #11: Got it. Thank you.

Ellie Jiang: Got it. Thank you.

Speaker #3: Thank you. We'll now move on to our next question. Our next question comes from the line of Daily Lee from Bank of America Securities.

Operator: Thank you. We'll now move on to our next question. Ellie Jiang from Macquarie. Our next question comes from the line of Daley Lee from Bank of America Securities. Please go ahead. Your line is open.

Speaker #3: Please go ahead. Your line is open.

Daley Li: Hi, management. Thanks for taking my question. Congrats on the strong orders for year to date and for the MOU. My first question about the 500MW MOU. Could management introduce, is this for mainly for 2027? And it's how many years? What could be the time horizon or time period? Is it like a two, one or two year or like three year contract, potential contract? My second question is about the CapEx and the financing, the updates. Given the net billion RMB CapEx, how do we see the financing and the need, given we have strong cash on hand right now? Thank you.

Speaker #12: Hi, management. Thanks for taking my question. Congrats on the strong orders for year-to-date and for the MOU. My first question about the 500 megawatts MOU.

Speaker #12: Could management introduce is this for mainly for 2026 sorry, 2027? And how many years? What could be the time horizon or time period? It's like a two one or two year or like three year contract.

Speaker #12: Potential contracts. My second question is about the CAPEX and the financing of the update. Given the net billing R&B CAPEX, how do we see the financing and the need, given we have strong cash on hand right now?

Speaker #12: Thank you.

Speaker #4: Yeah. The sorry, the.

Daniel Newman: Yeah. The five, sorry.

Dan Newman: Yeah. The five, sorry.

Daniel Newman: 500MW MOU.

Dan Newman: 500MW MOU.

Speaker #11: 500 megawatts.

Daniel Newman: Sorry.

Dan Newman: Sorry.

Daniel Newman: 500 MW MOU. The delivery time.

Dan Newman: 500 MW MOU. The delivery time.

Speaker #3: 500 megawatts MOU.

Speaker #11: The. The delivery time?

Daniel Newman: Yeah. The delivery time is, as I mentioned before, 4 quarters. The business that we're winning in the current Q1 this year is going to contribute to move-in next year. It's logical that if we meet our sales target of 500 megawatts, then next year's move-in could be around double the current year's move-in. Yeah, it would flow through like that. The contract length, I think much longer than what you mentioned. It would be 7 to 10 years.

Dan Newman: Yeah. The delivery time is, as I mentioned before, 4 quarters. The business that we're winning in the current Q1 this year is going to contribute to move-in next year. It's logical that if we meet our sales target of 500 megawatts, then next year's move-in could be around double the current year's move-in. Yeah, it would flow through like that. The contract length, I think much longer than what you mentioned. It would be 7 to 10 years.

Speaker #4: Yeah. The delivery time is, as I mentioned before, is four quarters. So the business that we're winning in the current first quarter of this year is going to contribute to moving next year.

Speaker #4: And it's logical that if we meet our sales target of 500 megawatts, then next year's move-in could be around double current year's move-in. It would flow through like that.

Speaker #4: The contract lengths, I think it's much longer than what you mentioned. It would be seven to ten years—mostly at the ten-year end of that.

Daniel Newman: Yeah.

Dan Newman: Yeah.

Daniel Newman: Mostly at the ten-year end of that. For financing, last year we were self-funding in China. That was achieved when our CapEx was RMB 5 billion, and we were able to complete two asset monetizations last year, an ABS and a C REIT. Now our CapEx has gone up to RMB 9 billion, and here we have a plan for an asset monetization that we can't be sure, but we aim to complete that in the second half of the year. I don't know whether we will be self-funding in China. Let's say CapEx is RMB 9 billion, operating cash flow is RMB 3 billion, and maybe there's some proceeds from asset monetization. If there's anything left, it will be very easy for us to finance that in the traditional way with project debt.

Dan Newman: Mostly at the ten-year end of that. For financing, last year we were self-funding in China. That was achieved when our CapEx was RMB 5 billion, and we were able to complete two asset monetizations last year, an ABS and a C REIT. Now our CapEx has gone up to RMB 9 billion, and here we have a plan for an asset monetization that we can't be sure, but we aim to complete that in the second half of the year. I don't know whether we will be self-funding in China. Let's say CapEx is RMB 9 billion, operating cash flow is RMB 3 billion, and maybe there's some proceeds from asset monetization. If there's anything left, it will be very easy for us to finance that in the traditional way with project debt.

Speaker #4: For financing last year, we were self-funding in China. But that was achieved when our CAPEX was RMB 5 billion. And we were able to complete two asset monetizations last year, an ABS and a C-REIT.

Speaker #4: So now our CAPEX has gone up to RMB 9 billion. And we have a plan for an asset monetization that we can't be sure of, but we aim to complete that in the second half of the year.

Speaker #4: But I don't know whether we will be self-funding in China let's say CAPEX is 9 billion, operating cash flow is 3 billion, and maybe there's some proceeds from asset monetization.

Speaker #4: If there's anything left, it will be very easy for us to finance that in the traditional way with project debt.

Speaker #12: Thank you.

Daley Li: Thank you.

Speaker #3: Thank you. There are no further questions at this time, so I'll hand the call back to Laura for closing remarks.

Operator: Thank you. There are no further questions at this time, so I'll hand the call back to Laura for closing remarks. Thank you all once again for joining us today, and see you next time. Bye-bye. This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.

Speaker #13: Thank you all once again for joining us today. See you next time. Bye-bye.

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