Q2 FY2026
Filed Aug 13, 2026GDS Holdings Limited Reports Second Quarter 2026 Results
Revenue, committed area, utilization and Adjusted EBITDA increased year-over-year, and full-year revenue and Adjusted EBITDA guidance was raised. However, gross profit declined, GAAP and non-GAAP margins contracted due to higher utility costs, and net income included RMB959.9 million of income from equity method investees related mainly to a DayOne dilution gain.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total net revenueGAAP | RMB3,088.0 million (US$455.1 million) | – | 6.5% increase |
| Service revenueGAAP | RMB3,086,667 thousand (US$454,918 thousand) | – | – |
| Equipment salesGAAP | RMB1,283 thousand (US$189 thousand) | – | – |
| Cost of revenueGAAP | RMB2,423.7 million (US$357.2 million) | – | 9.6% increase |
| Gross profitGAAP | RMB664.2 million (US$97.9 million) | – | 3.6% decrease |
| Gross profit marginGAAP | 21.5% | – | – |
| Adjusted GPnon-GAAP | RMB1,498.9 million (US$220.9 million) | – | 0.7% decrease |
| Adjusted GP marginnon-GAAP | 48.5% | – | – |
| Selling and marketing expensesGAAP | RMB32,215 thousand (US$4,748 thousand) | – | – |
| Selling and marketing expenses, excluding share-based compensation expensesnon-GAAP | RMB22.3 million (US$3.3 million) | – | 21.7% decrease |
| General and administrative expensesGAAP | RMB185,763 thousand (US$27,378 thousand) | – | – |
| General and administrative expenses, excluding share-based compensation expenses, depreciation and amortization expenses and operating lease cost relating to prepaid land use rightsnon-GAAP | RMB85.5 million (US$12.6 million) | – | 24.4% decrease |
| Research and development expensesGAAP | RMB7.1 million (US$1.0 million) | – | – |
| Income from operationsGAAP | RMB439,171 thousand (US$64,726 thousand) | – | – |
| Net interest expensesGAAP | RMB366.8 million (US$54.1 million) | – | 9.4% decrease |
| Income tax expensesGAAP | RMB213.5 million (US$31.5 million) | – | – |
| Share of results of equity method investeesGAAP | income of RMB959.9 million (US$141.5 million) | – | – |
| Net incomeGAAP | RMB837.6 million (US$123.5 million) | – | – |
| Net income marginGAAP | 27.1% | – | – |
| Basic income per ordinary shareGAAP | RMB0.52 (US$0.08) | – | – |
| Diluted income per ordinary shareGAAP | RMB0.44 (US$0.07) | – | – |
| Basic income per ADSGAAP | RMB4.13 (US$0.61) | – | – |
| Diluted income per ADSGAAP | RMB3.53 (US$0.52) | – | – |
| Adjusted EBITDAnon-GAAP | RMB1,406.0 million (US$207.2 million) | – | 2.5% increase |
| Adjusted EBITDA marginnon-GAAP | 45.5% | – | – |
| Net cash provided by operating activitiesGAAP | RMB1,416,260 thousand (US$208,731 thousand) | – | – |
| Purchase of property and equipment and land use rights, net of proceeds from disposalsGAAP | RMB1,249,766 thousand (US$184,193 thousand) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Service revenueThe Company said the year-over-year increase in total net revenue was mainly due to continued ramp-up of its data centers. | RMB3,086,667 thousand (US$454,918 thousand) | – | – |
| Equipment salesNot separately disclosed. | RMB1,283 thousand (US$189 thousand) | – | – |
year of 2026 outlook
- RevenueRMB12,700 million – RMB13,000 million
- NoteAdjusted EBITDA of RMB5,900 million – RMB6,100 million
- Notecapex guidance of around RMB10,000 million
- NoteRevenue guidance represents a Y-o-Y increase of between 11.1% to 13.7%.
- NoteAdjusted EBITDA guidance represents an increase of between 9.2% to 12.9%.
- NoteBoth revenue and Adjusted EBITDA guidance include the one-time items as disclosed in the first quarter of 2026.
What drove it
- Total area committed and pre-committed was 784,802 sqm, up 18.2% Y-o-Y and 8.2% Q-o-Q. Gross and net additional total area committed were both 59,317 sqm.
- Area in service was 684,977 sqm, up 10.8% Y-o-Y and 1.6% Q-o-Q.
- Area under construction was 170,355 sqm, up 28.8% Y-o-Y and 43.9% Q-o-Q.
- Area utilized was 542,236 sqm, up 13.2% Y-o-Y and 4.1% Q-o-Q. Gross additional area utilized was 24,841 sqm and net additional area utilized was 21,307 sqm.
- Commitment rate for area in service was 92.4%, and pre-commitment rate for area under construction was 89.2%.
- Utilization rate for area in service was 79.2%, compared with 77.5% as of June 30, 2025 and 77.3% as of March 31, 2026.
- The Company attributed revenue growth to continued ramp-up of its data centers.
- The Company said the increase in capex guidance reflects strong sales achievement, the current sales outlook and the corresponding increase in data center development activities.
Concerns
- Gross profit declined by 3.6% Y-o-Y to RMB664.2 million (US$97.9 million), while gross profit margin declined to 21.5% from 23.8%.
- Adjusted GP margin declined to 48.5% from 52.0%, and Adjusted EBITDA margin declined to 45.5% from 47.3%, primarily due to a higher level of utility costs as a percentage of net revenue.
- Net income included RMB959.9 million (US$141.5 million) of income from equity method investees, mainly from a dilution gain on the DayOne investment after completion of DayOne’s Series C Convertible Preferred Share issue.
- Income tax expenses increased to RMB213.5 million (US$31.5 million) from RMB64.9 million, mainly due to income tax incurred from an intra-group transfer of interests in a subsidiary in preparation for the potential second asset injection into the C-REIT.
- Total short-term debt was RMB9,209.5 million (US$1,357.3 million) and total long-term debt was RMB36,921.5 million (US$5,441.6 million).
What to watch
- Execution against revised full-year 2026 total revenue guidance of RMB12,700 million – RMB13,000 million and Adjusted EBITDA guidance of RMB5,900 million – RMB6,100 million.
- Utility costs as a percentage of net revenue and their effect on gross profit margin and Adjusted EBITDA margin.
- Conversion of 784,802 sqm of total area committed and pre-committed into utilized area and revenue.
- Delivery of 170,355 sqm of area under construction, which carried an 89.2% pre-commitment rate.
- Capital deployment under capex guidance of around RMB10,000 million and associated funding requirements.
Balance sheet and cash flow
- Cash and cash equivalents were RMB14,927.3 million (US$2,200.0 million) as of June 30, 2026.
- Total short-term debt was RMB9,209.5 million (US$1,357.3 million) as of June 30, 2026.
- Total long-term debt was RMB36,921.5 million (US$5,441.6 million) as of June 30, 2026.
- The Company obtained new debt financing and refinancing facilities of RMB4,907.3 million (US$723.2 million) during the second quarter of 2026.
- Net cash provided by operating activities was RMB1,416,260 thousand (US$208,731 thousand).
- Net cash used in investing activities was RMB1,547,237 thousand (US$228,035 thousand).
- Net cash provided by financing activities was RMB308,130 thousand (US$45,413 thousand).
Analysis
GDS reported Q2 2026 total net revenue of RMB3,088.0 million (US$455.1 million), up 6.5% year-over-year, driven mainly by continued ramp-up of data centers. Operating demand indicators were stronger than revenue growth: total area committed and pre-committed rose 18.2% year-over-year and 8.2% quarter-over-quarter to 784,802 sqm, while area utilized rose 13.2% year-over-year and 4.1% quarter-over-quarter to 542,236 sqm. Utilization reached 79.2%, compared with 77.5% a year earlier.
Profitability weakened at the gross-profit level despite revenue growth. Cost of revenue rose 9.6% year-over-year to RMB2,423.7 million (US$357.2 million), outpacing revenue, and gross profit declined 3.6% to RMB664.2 million (US$97.9 million). Gross profit margin declined to 21.5% from 23.8%. The Company attributed the gross-margin and adjusted-margin declines to higher utility costs as a percentage of net revenue. Adjusted EBITDA increased 2.5% to RMB1,406.0 million (US$207.2 million), but its margin declined to 45.5% from 47.3%.
GAAP net income was RMB837.6 million (US$123.5 million), compared with a net loss of RMB70.6 million in Q2 2025. This result included RMB959.9 million (US$141.5 million) of income from equity method investees, mainly the dilution gain on GDS's DayOne investment following DayOne's Series C Convertible Preferred Share issue. Interest expense fell 9.4% year-over-year to RMB366.8 million (US$54.1 million), while income tax expense increased to RMB213.5 million (US$31.5 million), mainly due to an intra-group transfer undertaken in preparation for a potential second C-REIT asset injection.
Development activity is accelerating. Area under construction increased 43.9% quarter-over-quarter to 170,355 sqm, with an 89.2% pre-commitment rate. The Company raised full-year 2026 revenue guidance to RMB12,700 million – RMB13,000 million, Adjusted EBITDA guidance to RMB5,900 million – RMB6,100 million and capex guidance to around RMB10,000 million. Liquidity included RMB14,927.3 million (US$2,200.0 million) of cash and cash equivalents, against RMB9,209.5 million (US$1,357.3 million) of short-term debt and RMB36,921.5 million (US$5,441.6 million) of long-term debt. Operating cash flow was RMB1,416,260 thousand (US$208,731 thousand) during the quarter, while purchases of property and equipment and land use rights were RMB1,249,766 thousand (US$184,193 thousand).
Management, verbatim
During the quarter, we ramped up backlog delivery while maintaining a high level of net new bookings. As things stand today, we are on track to achieving a record sales commitment for this year, which is much higher than our original target.
Mr. William Huang, Chairman and Chief Executive Officer
With strengthened financial standing and funding capabilities to support our business expansion, we remain focused on creating sustainable, long-term value for our business partners and shareholders.
Mr. Dan Newman, Chief Financial Officer
Not in the filing
stated, not guessed- Prior-release outlook for comparison with reported Q2 2026 actual results was not provided separately; vs_prior_guidance is therefore empty.
- Free cash flow was not reported.
- Capital returns, including share repurchases and cash dividends, were not reported.
- Operating-segment revenue disclosures were not reported beyond service revenue and equipment sales.
- Forward guidance for gross margin, operating expenses and tax rate was not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.