Are there differences in demand profile or contract terms from emerging AI leaders compared to established hyperscale customers?

GDS is selectively building relationships with emerging AI leaders, whose demand profiles are getting bigger. While main business is still driven by hyperscalers, diversifying the customer base is a strategic goal. “I think in terms of their demand profile, it looks like it's getting bigger and bigger, but we are still very selective. Our main customers and the new business mainly driven by the hyperscale, a couple of large hyperscale.”

What is the new guidance, does it include C-REIT impact, and how should we think about the MRR slowdown and future improvement?

Guidance does not include further asset monetization (C-REIT transaction is under regulatory review). MRR is forecast to be down 3% in Q4 FY26 YoY, and similar next year, due to location mix and legacy contract transition, which will take another 18 months to resolve. “Frank, first of all, on guidance, to make clear that our guidance does not take account of any further asset monetization. There's a transaction in progress under regulatory review.”

What drove the better-than-expected Q2 move-in, and what is the supply/demand trend in China's data center market considering government power quota approvals?

Q2 move-in fluctuations are not significant; current year move-in reflects 2025 bookings. Power quotas are now centrally controlled and selective, favoring market leaders. GDS's land bank strategy and brand advantage help secure allocations through a multi-level government approval process. “I think the current power, there's a couple of key points. Number one is now it's controlled by the central government and the municipal government as well.”

GDS

GDS Holdings (GDS) Q2 FY26 earnings call: guidance and Q&A

Q: What are the downside risks to the dramatically improved move-in forecast for next year, especially regarding GPU availability and customer CapEx? Does the take-or-pay contract protect GDS revenue?

Management is positive on GPU supply, noting domestic supply is catching up. New orders are also driven by CPU demand. Take-or-pay contracts have fixed delivery dates (up to 4 quarters from booking) and assumed 4-quarter straight-line ramp-up for move-in, protecting GDS revenue. “But the GPU, I think in terms of the domestic GPU, the supply is catching up. I think it took a while in the last couple of quarters, right, as we mentioned. But now it looks like on track to catch up.”

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 13, 2026

Source: earnings call transcript

Executive summary

GDS Holdings Q2 FY26 — Record Bookings and Raised Sales Target

GDS Holdings reported record bookings in Q2 FY26, driven by strong AI-related demand from hyperscalers and emerging AI leaders, leading to a raised full-year sales target of 1 gigawatt. The company is strategically expanding capacity in new markets and maintaining financial discipline with robust project-level financing. While facing a near-term slowdown in MRR due to legacy contracts, management anticipates substantial move-in acceleration and EBITDA growth in 2027 and 2028.

Highlights

Achieved 260 megawatts of new bookings in Q2 FY26, bringing H1 2026 total to a record 470 megawatts.
Raised full-year 2026 sales target to 1 gigawatt.
Secured an additional 600 megawatts of reservations in H1 2026, expecting over 1 gigawatt by year-end.
Completed RMB 4.9 billion of new debt financing and refinancing in Q2 FY26.
Net debt to annualized adjusted EBITDA improved to 4.7x.

Concerns

Monthly Recurring Revenue (MRR) is forecast to be down 3% in Q4 FY26 compared to Q4 FY25, with a similar decline expected next year.
Legacy contracts will continue to impact MRR for another 18 months until transition to current market pricing is complete.
Move-in patterns are heavily weighted to the second half of 2027, delaying significant EBITDA growth acceleration.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year new bookings	1 gigawatt high materiality	FY26	High
Full-year new reservations	over 1 gigawatt medium materiality	FY26	High
FY27 Net move-in	more than double 2026 number (235 megawatts) high materiality	FY27	Medium
Full-year CapEx paid	RMB 10 billion high materiality	FY26	High
Project-level financing mix	60% debt and 40% equity medium materiality	Ongoing	High
Stabilized cash yield on new investments	10% to 11% medium materiality	Long-term	Medium
Project-level leverage	5.5 to 6x medium materiality	Long-term	Medium
Full-year revenue and adjusted EBITDA	Revised upwards high materiality	FY26	High
Monthly Recurring Revenue (MRR) growth	down 3% medium materiality	Q4 · FY26	High
Monthly Recurring Revenue (MRR) growth	down by a similar amount (approx. 3%) medium materiality	FY27	Medium

GDS operating KPIs by quarter

GDS operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call 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

New bookings 470 megawatts H1 FY26

record

Includes binding take-or-pay commitments.

New reservations 600 megawatts H1 FY26

additional

Customers reserve deployable capacity for future needs; 100% conversion rate based on current experience.

Backlog 757 megawatts Mid-FY26

increased substantially from 450 megawatts at start of year

Estimated to generate RMB 1.6 billion of booked but not billed adjusted EBITDA.

Total binding commitments over 2 gigawatts Mid-FY26

Includes bookings and other long-term commitments.

Developable capacity around 3 gigawatts Mid-FY26

Capacity not yet committed or under reservation, mostly in new markets.

Deals & partnerships

C-REIT First post-IPO asset injection into C-REIT

Follows successful C-REIT IPO, part of onshore asset monetization program.

Capital programs

Onshore Asset Monetization Program (C-REIT) underway

First post-IPO asset injection is currently under regulatory review. Not factored into current guidance.

Risks & headwinds

Monthly Recurring Revenue (MRR) decline Q4 FY26 and FY27

down 3% in Q4 FY26 YoY, similar amount next year

Mitigation:Transitioning legacy contracts to current market pricing over the next 18 months; current pricing in Tier 1 and new markets is stable.

Impact from legacy contracts Next 18 months

MRR impacted for another 18 months

Mitigation:Adjusting all contracts to current market pricing.

Move-in timing concentration H2 FY27

Significant increase in move-in in H2 2027

Mitigation:This is a timing issue, not a demand issue, as it reflects prior bookings.

Regulatory review for C-REIT asset injection Near-term

Timing of transaction uncertain

Mitigation:Management cannot be specific about timing, but the process is underway.

What to watch in Q3 FY26

C-REIT asset injection approval

Next quarter

Current Under regulatory review

Target Approval and close

Why it matters

Successful asset injection will provide equity financing for new projects and validate the asset monetization strategy.

Following our successful C-REIT IPO, the first post-IPO asset injection is currently under regulatory review.

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

Q&A highlights

What are the downside risks to the dramatically improved move-in forecast for next year, especially regarding GPU availability and customer CapEx? Does the take-or-pay contract protect GDS revenue?

Management is positive on GPU supply, noting domestic supply is catching up. New orders are also driven by CPU demand. Take-or-pay contracts have fixed delivery dates (up to 4 quarters from booking) and assumed 4-quarter straight-line ramp-up for move-in, protecting GDS revenue.

“But the GPU, I think in terms of the domestic GPU, the supply is catching up. I think it took a while in the last couple of quarters, right, as we mentioned. But now it looks like on track to catch up.”

asked by Yang Liu · answered by William Huang

2 min read 7 chapters

Detailed narrative

AI-Driven Demand and Record Bookings

GDS is experiencing its strongest sales momentum ever, driven by AI transformation and the adoption of advanced agentic models by China's tech giants and emerging AI leaders. The company achieved 260 megawatts of new bookings in Q2 FY26, bringing the first half total to a record 470 megawatts.

This strong performance has led to an upward revision of the full-year sales target to 1 gigawatt, with all agreements including binding take-or-pay commitments.

Strategic Capacity Expansion and Reservations

Alongside new bookings, customers are requesting reservations for deployable capacity for future needs. GDS secured an additional 600 megawatts of reservations in H1 2026, expecting over 1 gigawatt by year-end. These reservations provide high visibility for future orders, with management noting a 100% conversion rate based on past experience.

The company has around 3 gigawatts of developable capacity, mostly in new markets, and is actively adding to its deployment pipeline.

Customer Diversification and Market Presence

The first half bookings demonstrate diversification, with significant new business from the three largest hyperscale customers and new relationships established with emerging AI leaders. Bookings were split roughly equally between established markets and new markets like Ulanqab, Horinger, and Shaoguan, validating GDS's differentiated resource strategy and broad market presence across China.

Financial Discipline and Capital Allocation

GDS maintains financial discipline by investing against binding long-term customer commitments. The company plans to finance new investments with a 60% debt and 40% equity mix at the project level, targeting a stabilized cash yield of 10% to 11%. This approach, supported by RMB 4.9 billion in new debt financing in Q2 FY26 and a strong cash balance of RMB 20 billion, underpins its capacity expansion.

Move-in Acceleration and Future Growth

While move-in for FY26 is forecast at 235 megawatts, reflecting prior-year bookings, a substantial increase is expected in 2027, more than doubling the 2026 figure, with a heavy weighting to the second half. This acceleration is anticipated to drive significant EBITDA growth in 2027 and 2028, with the mix of CPU and GPU-based move-ins potentially shifting towards more GPU next year as domestic supply catches up.

MRR and Legacy Contract Transition

The company forecasts a 3% year-over-year decline in Monthly Recurring Revenue (MRR) for Q4 FY26, with a similar trend expected next year. This is attributed to changes in location mix and the ongoing transition of legacy contracts to current market pricing, a process expected to take another 18 months. Management notes that pricing in Tier 1 and new markets is currently stable.

C-REIT and Asset Monetization

GDS is progressing with its onshore asset monetization program, following a successful C-REIT IPO. The first post-IPO asset injection is currently under regulatory review, though its impact is not factored into the current financial guidance. This program is a key component of the company's equity financing strategy for new projects.

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