GDS (NASDAQ:GDS) executives said 2025 delivered double-digit growth and a sharp rebound in demand tied to artificial intelligence infrastructure in China, as the company pointed to improving visibility on domestic chip supply and rising hyperscale customer activity heading into 2026.
Founder, Chairman and CEO William Huang told investors that 2025 was “a great year” for the company, citing 11% growth in both revenue and adjusted EBITDA and results that exceeded the top end of adjusted EBITDA guidance. He added that, with contributions from asset monetization, GDS was free cash flow positive.
AI-led demand recovery and stepped-up sales targets
In operational terms, Huang said gross additional area utilization in the fourth quarter was around 23,000 square meters, and full-year gross move-in exceeded 86,000 square meters, a company record. For 2026, management’s move-in target is “similar to last year,” while indicating that higher bookings in 2026 would likely translate into higher move-in in the following year.
Bookings were a focal point of the call:
- Gross additional area committed in 4Q 2025 was over 21,000 square meters.
- Full-year 2025 new bookings were over 96,000 square meters, or over 300 MW, which management said was about three times the level of the prior three years.
- For 2026, the company is aiming for more than 500 MW of gross new bookings, with an expectation that 60% to 70% of new business will come from AI.
Huang said the company had already secured 200 MW of new orders so far in 2026, along with more than 500 MW of memorandums of understanding (MOUs). He described the MOUs as a “strong indicator of future commitment” and said the total 700 MW of demand was mainly from three of GDS’s largest customers.
New growth markets and resource pipeline
To address demand, Huang said GDS is building a “3 GW pipeline” focused on large clusters in new growth markets, which would complement 700 MW of powered land held for future development in established low-latency markets.
Management highlighted three focus locations for additional power and land resources: Horinger in Inner Mongolia, Zhongwei in Ningxia Province, and Shaoguan in Guangdong Province. Huang said the company is moving faster to secure “multi-gigawatts of additional power to land” in these areas now that chip supply is “more certain,” and added that GDS has already won over 400 MW of new orders and MOUs for these locations.
On competitive dynamics in new markets, Huang said data center operators were already present in some of these regions, but argued that government policies have raised barriers to entry. He said authorities evaluate track record, customer commitment, and financial capability when selecting partners for land acquisition, and said GDS believes it can maintain a leading position under those criteria.
When asked about the conversion of MOUs into contracts, Huang said the likelihood of conversion was high and that conversion typically occurs “within two quarter.”
Pricing, yields, and project returns
CFO Dan Newman said monthly service revenue (MSR) per square meter has been declining due to a combination of lower market selling prices and a changing location mix that includes more “edge of town sites” and, going forward, new growth markets. Comparing 4Q 2025 with 4Q 2024, MSR per square meter decreased 2.4%.
Newman said unit development costs have fallen in a comparable manner, leaving portfolio yield—measured as adjusted gross profit divided by gross PP&E, excluding construction in progress—steady at around 11%. Looking forward, he said GDS expects a further MSR reduction of 3% to 4% by the end of 2026 for similar reasons, while maintaining investment yields in the 10% to 11% range for both established and new markets.
In Q&A, Newman added that the MSR decline could extend further out, suggesting 2028 could see another 3% to 4% decline. Huang also addressed a question about longer-term pricing power by pointing to U.S. market pricing history and said stronger pricing power “could be” possible over time.
On returns, management said the company’s cash-on-cash yield target remains 10% to 11% across markets, and Newman said that, under GDS’s approach of developing, ramping, holding through a qualification period, and then monetizing, those yields can support a return on equity above 20%.
Capital spending, asset monetization, and balance sheet updates
Newman said 2025 revenue and adjusted EBITDA increased 10.8% year over year. He noted that GDS completed two asset monetization transactions in 2025—an ABS in the first quarter and a C-REIT IPO in the third quarter—and deconsolidated the underlying data center project companies. On a pro forma basis that adds back deconsolidated revenue and EBITDA, Newman said growth rates would have been 13.2% for revenue and 14.2% for adjusted EBITDA.
For 2025, organic CapEx was RMB 4.7 billion, in line with guidance. Net of RMB 2.3 billion of cash proceeds from asset monetization, net CapEx was around RMB 2.4 billion. Operating cash flow for the year was approximately RMB 3.4 billion, which Newman attributed in part to improved collections and a reduction in accounts receivable days from 109 in 4Q 2024 to 82 in 4Q 2025. After factoring in asset monetization proceeds, GDS achieved positive cash flow pre-financing of RMB 1 billion.
For 2026, GDS guided organic CapEx of around RMB 9 billion, which management said corresponds to the 500 MW+ sales target and is expected to contribute to growth in 2027. Asked whether CapEx guidance could rise given early sales momentum, Newman said the RMB 9 billion outlook is “adequate” and he would not expect it to change, emphasizing typical build timelines for new sites.
Management also provided updates on funding and leverage. Newman said that in the first quarter of 2026, GDS raised $385 million through a partial sell-down of its stake in DayOne and issued $300 million of convertible preferred shares to Huatai Capital Investment. Following those steps, Newman said the company had nearly RMB 20 billion, or $2.8 billion, of cash.
Net debt to last quarter annualized adjusted EBITDA decreased to 5.8x at the end of 2025 from 6.8x at the end of 2024, driven by positive cash flow pre-financing, deconsolidation of project-company debt tied to the ABS and C-REIT transactions, and proceeds from an equity capital raise in 2Q 2025. Newman said that on an adjusted view incorporating time deposits and certain proceeds, the ratio would be 4.8x. He also said the company reached its previously set target of achieving positive cash flow pre-financing and net debt to EBITDA below 5x within three years.
2026 outlook and delivery cadence
For 2026, Newman said GDS expects total revenue between RMB 12.4 billion and RMB 12.9 billion, implying year-over-year growth of approximately 8.5% to 12.8%. Adjusted EBITDA is expected between RMB 5.75 billion and RMB 6.0 billion, implying growth of approximately 6.4% to 11%. He cautioned that year-over-year growth is not directly comparable due to 2025 asset monetizations, and said a pro forma view would add roughly 1.6 percentage points to the implied growth rates.
On delivery cadence for the 200 MW of new orders already secured in 2026, Newman said investors should assume roughly four quarters on average to deliver, followed by a four-quarter ramp-up—faster than historical cloud-driven deployments. Management also noted that this type of hyperscale AI business tends to carry longer contract terms, with Newman citing 7-10 years and “mostly at the ten-year end.”
When asked about customer mix, Newman said demand is “almost entirely” from Chinese customers. Huang added that while GDS has about 1,000 customers overall, new demand is mainly driven by the top three AI players in China, and he acknowledged that customer concentration has been rising across the hyperscale segment.
About GDS (NASDAQ:GDS)
GDS Holdings Limited, founded in 2001 and headquartered in Shanghai, is a leading network-neutral data center services provider in China. The company operates a portfolio of state-of-the-art data center facilities designed to support the mission-critical IT infrastructure of cloud service providers, internet enterprises, financial institutions, and government entities. GDS was among the first Chinese providers to offer high-density colocation solutions, catering to customers with demanding computing and storage requirements.
GDS specializes in delivering scalable colocation, cross-connect, and interconnection services within its facilities, enabling clients to establish high-speed, low-latency connections to major cloud platforms and internet exchange points.
