Explain the decrease in unit development cost (RMB 20k/kW or $3M/MW) compared to previous years.

Unit development cost has decreased by about 15% over the past three years due to stable MEP costs, flat per square meter cost with increased power density, and benefits from unprecedented scale and architectural changes for AI data centers. “I would say that the unit development cost on a like-for-like basis, whether we're talking in established markets or new markets, has decreased by about 15% over the past 3 years.”

Why was Q1 CapEx (RMB 770M) modest despite strong orders, especially for new builds?

Q1 CapEx is historically lower due to Chinese New Year. The full-year CapEx guidance remains unchanged, and the timing of quarterly spend is not significant. “The first quarter is Chinese New Year. And it tends to be historically slightly below the level of the other 3 quarters. So I can't really -- no other more fundamental explanation than that.”

How much of the RMB 30-50 billion capital investment will be self-funded versus through JVs or asset recycling?

Approximately 60% (RMB 24 billion) will be financed by project debt. The remaining RMB 14 billion will come from operating cash flow (nearly RMB 3 billion last year), ongoing asset monetization, and the existing RMB 19 billion cash balance. “Historically, we have financed our investment quite conservatively with around 60% project debt to total development cost. So we would be able to obtain and draw down on about 40 billion, which is RMB 24 billion of new debt. So that would leave RMB 14 billion, which is less than USD 2 billion that we have to finance.”

GDS

GDS Holdings (GDS) Q1 FY26 earnings call: guidance and Q&A

Q: Comment on pricing stability across different markets, especially with aggressive bidding from telcos in some areas.

Pricing for large-scale AI data centers is generally stable. Aggressive bidding is not normal and likely represents one-time deals in specific regions, not the overall market trend. “Our [indiscernible] is remain what we experienced last quarter is quite stable, yes.”

Earnings call· Mar 2026 (Q1 FY26)· Information Technology· May 20, 2026

Source: earnings call transcript

Executive summary

GDS Holdings Q1 FY26 — Strong AI-Driven Bookings and Capacity Expansion

GDS Holdings reported strong Q1 FY26 results, driven by unprecedented AI demand leading to significant new bookings and capacity expansion. The company is strategically investing in new data center developments, leveraging a strong balance sheet and disciplined capital allocation to capture multi-year growth opportunities in the AI infrastructure market. Management remains confident in exceeding its full-year bookings target while maintaining financial health.

Highlights

Total bookings stood at 1.8 gigawatts after Q1 FY26, reflecting strong demand.
Over 340 megawatts of new bookings year-to-date, well on track to exceed the full-year target of at least 500 megawatts.
Secured land bank expanded to nearly 4 gigawatts, supporting future growth.
Net debt to adjusted EBITDA decreased significantly from 6.8x at year-end 2024 to 4.7x at the end of Q1 FY26.
Cash and time deposits exceeded RMB 19 billion (USD 2.7 billion), providing strong liquidity for investments.

Concerns

Net additional area utilized in Q2 FY26 is expected to be slightly lower than Q1's 16,000 square meters.
A significant step-up in move-in rates is not anticipated until the second half of 2027.

Guidance & targets

Category	Target	Timeline	Confidence
New Bookings (Annual)	500 megawatts to 800 megawatts high materiality	Annual, next 3 years · FY26-FY28	High
New Investment	RMB 30 billion to RMB 50 billion high materiality	Next 3 years · FY26-FY28	High
FY26 New Bookings	at least 500 megawatts high materiality	Full-year 2026 · FY26	High
Net Debt to Adjusted EBITDA	between 5 to 6x medium materiality	Future	Medium

GDS operating KPIs by quarter

GDS operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Backlog	<600 MW Our backlog has increased to over 200,000 square meters or almost 600 megawatts most of which we will become billable within the next 6 to 8 quarters. Source: earnings call transcript	757 MW By the middle of the year, our backlog had increased substantially to 757 megawatts. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total bookings 1.8 gigawatts after 1Q FY26

New bookings (YTD) over 340 megawatts YTD

New bookings plus reservations over 1 gigawatt YTD

Reservations give near certainty of follow-on orders within 1-2 years.

Backlog over 200,000 square meters or almost 600 megawatts after 1Q FY26

increased

Most will become billable within the next 6 to 8 quarters.

Secured land bank nearly 4 gigawatts after 1Q FY26

increased

Land purchased from government exclusively for data center development.

Capital programs

New Investment Program underway RMB 30 billion to RMB 50 billion

Funding: 60% project debt, operating cash flow, asset monetization, existing cash

Start: FY26

Benefit:Capacity to deliver 500-800MW of new bookings annually

Multi-year investment program to deliver new data center capacity, expected to generate ~20% ROE.

New Construction Initiative underway

Start: past 15 months

Benefit:over 100,000 square meters or 400 megawatts

Initiated new construction, almost entirely precommitted, to fulfill customer requirements.

Risks & headwinds

Aggressive bidding in certain markets

Not quantified, described as 'not normal' and 'onetime'

Mitigation:Remaining disciplined and selective on orders based on move-in, price, and customer types.

Slower move-in rate in Q2 FY26 Q2 FY26

Slightly lower than Q1's 16,000 square meters

Mitigation:Expected rebound in H2 FY26, with significant step-up in H2 FY27.

Increased leverage from investment as investments step up

Net debt to adjusted EBITDA will increase to between 5x to 6x

Mitigation:Considered an acceptable level by management, supported by strong balance sheet and financing plan.

What to watch in Q2 FY26

Net additional area utilized

Q2 FY26

Current 16,000 sq meters (Q1 FY26)

Target Lower than Q1 FY26

Why it matters

Indicates near-term capacity utilization and revenue generation, impacting short-term growth.

During the current quarter, this metric will be slightly lower.

Find out whether GDS delivers this. Inve re-checks your case every morning.

Q&A highlights

Comment on pricing stability across different markets, especially with aggressive bidding from telcos in some areas.

Pricing for large-scale AI data centers is generally stable. Aggressive bidding is not normal and likely represents one-time deals in specific regions, not the overall market trend.

“Our [indiscernible] is remain what we experienced last quarter is quite stable, yes.”

asked by Yang Liu · answered by William Huang

2 min read 6 chapters

Detailed narrative

AI-Driven Demand and Bookings Momentum

GDS Holdings is experiencing a resurgence in data center demand, primarily driven by AI, which management believes is the beginning of a multi-year growth story. The company reported total bookings of 1.8 gigawatts after Q1 FY26. Year-to-date, new bookings have already exceeded 340 megawatts, putting the company well on track to meet or exceed its full-year target of at least 500 megawatts.

This strong performance includes significant new orders from all largest customers across its platform, including new markets.

Capacity Expansion and Land Bank Strategy

To support the unprecedented scale of hyperscale AI deployments, GDS has expanded its platform to new locations capable of accommodating large AI infrastructure. These new sites are integrated with existing platforms to serve diverse customer requirements. The company has increased its secured land bank to nearly 4 gigawatts, typically purchasing land exclusively for data center development and obtaining power quotas upon customer commitments.

Construction timing is synchronized with new bookings and move-in schedules.

Capital Investment Plan and Financing

GDS plans to commit RMB 30 billion to RMB 50 billion in new investment over the next three years to deliver required capacity. This investment is expected to generate a return on equity of approximately 20% from incremental capital. The financing strategy involves approximately 60% project debt, with the remaining RMB 14 billion to be funded through operating cash flow (nearly RMB 3 billion last year), ongoing asset monetization, and a substantial cash balance of over RMB 19 billion (USD 2.7 billion).

Stable Pricing and Reduced Development Costs

Despite aggressive bidding in some markets, pricing for new data center business remains stable, enabling an adjusted gross profit yield of 10% to 11% for stabilized assets. The unit development cost has decreased by about 15% over the past three years, now averaging around RMB 20,000 per kilowatt or USD 3 million per megawatt.

This reduction is attributed to the unprecedented scale of new projects, stable MEP costs, and architectural changes in AI data centers.

Utilization and Move-in Pace Outlook

The in-service portfolio currently maintains a utilization rate of approximately 75%, with an adjusted gross profit yield of around 11%. Net additional area utilized was 16,000 square meters in Q1 FY26, expected to be slightly lower in Q2, then rebound to around 20,000 square meters per quarter in H2 FY26.

A significant step-up in move-in rates, driven by the flow-through of higher new bookings, is anticipated in the second half of 2027.

Balance Sheet Strength and Leverage

GDS has significantly strengthened its balance sheet, with net debt to last quarter annualized adjusted EBITDA decreasing from 6.8x at the end of 2024 to 4.7x at the end of Q1 FY26. The company holds over RMB 19 billion (USD 2.7 billion) in cash and time deposits, positioning it well for the new growth phase.

Management expects the leverage ratio to increase to between 5x to 6x as investments ramp up, which is considered an acceptable level.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.