Skip to content
    GDS
    Earnings call· Jun 2026(Q2 FY26)

    GDS Holdings Q2 FY26 earnings call GDS

    Aug 13, 2026 Source

    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

    5

    • 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

    3

    • 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

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

    Operational metrics

    20
    New bookings
    260
    Q2 FY26

    Strongest sales momentum ever.

    New bookings
    470record
    H1 FY26

    Record total for the first half of 2026.

    New reservations
    600additional
    H1 FY26

    Customers request to reserve deployable capacity at the same site for their future needs.

    Total binding commitments
    over 2
    Mid-FY26

    Includes bookings and other long-term commitments.

    Developable capacity
    around 3
    Mid-FY26

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

    Backlog
    450
    Start of FY26

    Backlog at the beginning of the current year.

    Backlog
    757increased substantially
    Mid-FY26

    Increased from 450 megawatts at the start of the year.

    Booked but not billed adjusted EBITDA
    RMB 1.6
    Mid-FY26

    Estimated from 757 megawatts backlog at RMB 2.2 million per megawatt.

    Adjusted EBITDA per megawatt
    RMB 2.2on average
    Ongoing

    Estimated from pricing in contracts and operating cost benchmarks for the backlog.

    Net move-in
    145
    H1 FY26

    Reflects timing of bookings from last year.

    Net move-in
    235
    FY26

    Forecast for the full year, with 90 megawatts in H2.

    Unit CapEx for new capacity
    RMB 20averages around
    Ongoing

    For capacity currently under construction.

    New debt financing
    RMB 4.9
    Q2 FY26

    Completed in Q2 FY26, including refinancing.

    Cash and investments balance
    RMB 20nearly
    Mid-FY26

    Available on the balance sheet for project equity.

    Net debt to annualized adjusted EBITDA
    4.7delevered down to
    Last quarter

    Improved leverage ratio.

    Pro forma adjusted EBITDA growth
    12.7
    H1 FY26

    Adjusted for one-time items and deconsolidated assets.

    Pro forma adjusted EBITDA growth
    6.5implied growth rate
    FY26

    Taking the midpoint of revised guidance.

    Bookings split by market
    50% established / 50% new
    H1 FY26

    Diversified across established and new markets (Ulanqab, Horinger, Shaoguan).

    CPU/GPU move-in mix
    around 50-50
    Current

    General assumption for current move-ins.

    CPU/GPU move-in mix
    GPU will a little bit higher
    Next year

    Based on domestic GPU supply catching up.

    Industry KPIs

    8
    MetricValueDetails
    Headcount dso—
    Infra economicsRMB 20 millionper megawatt
    Rpo current rpo757 megawattsmegawatts
    Customer logo metrics3 largest hyperscale customers; emerging AI leaderscustomers
    Large customer cohorts3 largest hyperscale customerscustomers
    Bookings tcv book to bill470 megawattsmegawatts
    Genai ai book of business—
    Ai agentic channel product adoptionAdvanced agentic models

    Orderbook & backlog

    5
    New bookings470 megawattsH1 FY26

    record

    Includes binding take-or-pay commitments.

    New reservations600 megawattsH1 FY26

    additional

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

    Backlog757 megawattsMid-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 commitmentsover 2 gigawattsMid-FY26

    Includes bookings and other long-term commitments.

    Developable capacityaround 3 gigawattsMid-FY26

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

    Deals & partnerships

    1
    C-REITFirst post-IPO asset injection into C-REIT

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

    Capital programs

    1
    Onshore Asset Monetization Program (C-REIT)underway

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

    Risks & headwinds

    4
    Monthly Recurring Revenue (MRR) declineQ4 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 contractsNext 18 months

    MRR impacted for another 18 months

    Mitigation: Adjusting all contracts to current market pricing.

    Move-in timing concentrationH2 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 injectionNear-term

    Timing of transaction uncertain

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

    What to watch in Q3 FY26

    5

    C-REIT asset injection approval

    Next quarter
    CurrentUnder regulatory review
    TargetApproval 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.

    Q&A highlights

    6

    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 read7 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    07

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.