Hello ladies and gentlemen. Thank you for standing by for GDS Holdings Limited’s 3Q17 earnings conference call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference call is being recorded. I will now turn the call over to your host, Ms. Laura Chen, Head of Investor Relations for the Company. Please go ahead, Laura.

Hello everyone and welcome to the 3Q17 earnings conference call of GDS Holdings Limited. The Company’s results were issued via newswire services earlier today and are posted online. A summary presentation, which we will refer to during this conference call, can be viewed and downloaded from our IR website at: investors.gds-services.com. Leading today’s call is Mr. William Huang, GDS’s Founder, Chairman and CEO, who will provide an overview of our business strategy and performance. Mr. Dan Newman, GDS’s CFO, will then review the financial and operating results. Before we continue, please note that today’s discussion will contain forward-looking statements made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company’s results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in the Company’s prospectus as filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements except as required under applicable law. Please also note that GDS’s earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. GDS’s press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to GDS’s Founder, Chairman and Chief Executive Officer, William Huang. Please go ahead.

Hello everyone. Thank you for joining today’s call. A few days ago, we celebrated the 1-year anniversary of our IPO on NASDAQ. I am pleased to say that over the past year we have delivered everything that we said we would, and more. I am also pleased for all our shareholders to see that our share price is now trading well above the IPO price. In 3Q17 we continued to make significant progress across all aspects of our business and further strengthened our market leadership position. Starting with the financial highlights on Slide 4. We grew service revenue by over 58 percent year-on-year driven by a 47 percent increase in total area utilized over the period. Delivery of the backlog accelerated in 3Q17, with the addition of over 8,000 square meters of revenue-generating space – by far our highest addition in a single quarter. We realized further operating leverage, with Adjusted EBITDA growing by over 70 percent year-on-year and our adjusted EBITDA margin reaching 31.5 percent, compared with 26.2 percent in the same period last year. At the same time, we continued to add significantly to our customer contracts, signing up over 6,000 square meters (net) of new commitments in 3Q17. As shown on Slide 5, our total area committed grew to over 82,000 square meters, 41 percent higher than 1 year ago. Over the first three quarters of this year, we have added over 21,000 square meters (net) of new customer commitments worth over $100 million dollars in terms of annual recurring revenue when fully delivered. This sales achievement is ahead of our expectations at the beginning of the year. It reflects a booming market and the strength of our strategic positioning which has given us a consistently high win rate. We have significant sales pipeline which we are…

Thank you, William. Slide 11 shows our P&L analysis for 3Q17, but in order to better highlight the underlying trends, I will start with the version shown on Slide 12. On a GAAP basis, service revenue grew by 27.6% quarter-on-quarter to Rmb 423.0 million in 3Q17. On a non-GAAP basis, underlying Adjusted NOI grew by 29.6% quarter-on-quarter to Rmb 201.5 million and underlying Adjusted EBITDA grew by 34.4% quarter-on-quarter to Rmb 134.9 million. The underlying Adjusted EBITDA margin was 1.6 percentage points higher at 31.9% in 3Q17 compared with 30.3% in 2Q17. Turning to Slide 13. In 3Q17, there was an increase in area utilized of 8,109 square meters which was the major factor driving higher revenue growth. This increase resulted from accelerated move-in by certain Cloud customers at our SH3, SZ2 and SZ5 facilities, plus the move-in which occurred at the newly in-service BJ2 data center. The average monthly service revenue or MSR per square meter was Rmb 3,031 in 3Q17 compared with Rmb 2,750 in 2Q17. The MSR increase was mainly due to our high addition to area utilized in 3Q17 occurring early in the quarter, driving up the average. We do expect MSR to be sustained at the normalized level in the coming quarters. On Slide 14 we show growth in NOI and EBITDA and margin development over the past 5 quarters. In 3Q17, we achieved an underlying Adjusted NOI margin of 47.6%, which was 0.7 percentage points higher than for 2Q17. To better understand NOI margin development, we can look at the analysis on Slide 15. The pie chart on the left shows the breakdown of our total capacity in service and under construction by stage of development. At the end 3Q17, we had just over 34,000 square meters, or 29.7% of our total capacity which…

[Operator Instructions] We have the first question from the line of Gokul Hariharan. Please ask your question.

Congrats on the great results William and Dan, and congrats on the CyrusOne deal also, I had a couple of questions, Dan, you did mention about the breakdown of the portfolio by development stage, could you give us some idea about where you expect the EBITDA margins for maybe the area in service and area in stabilized ones and area in service ramping up standard datacenters, roughly -- I don't think you want to give the exact numbers, but if you could give us some rough ranges on that? And the second question I had is, William did refer to some of the projects for a strategic reason looking at some of the non-Tier 1 locations, could you talk about what size this would account for eventually in terms of the overall area under service, is it going to be small, or is it going to be something that's quite big for some of your bigger cloud customers?

Dan, maybe you answer this first question?

By the way this pie chart can be constructed from the data which is disclosed in the appendix of the presentation. So if we look at the 2 parts of the pie which relate to datacenters and service, "stabilized" refers to datacenters where the utilization rate is above 80%, it happens, currently, to be 92.7%, for that part of the portfolio in aggregate. So that part of the portfolio is pretty close to reaching the highest level attainable in terms of margin. So we never refer to it as EBITDA margin, we refer it to as NOI margin. The NOI margin for that part of the portfolio is around 60%. For the part which is ramping up, it's the aggregate of datacenters at all sorts of different stages, some are EBITDA negative, and some are breakeven and some are on their way closer to reaching stabilization. If we add the red and the gold looking at this pie chart, we add the stabilized and the ramping-up together, the aggregate NOI margin for the area in service is 47%. So that gives you some idea of how much the ramping-up part is dragging down or averaging down the overall. But the area under construction, most of the costs, pre-operating costs are capitalized. We do include in SG&A some start-up costs of a few million RMB and of course there are some other overheads related to new projects. But the area under construction doesn't impact the NOI margin. It only impacts the NOI margin as projects move from under construction to in service.

Number one, I think the global market trend has evolved. The whole market mainly driven by the hyper-scale, a cloud player and Internet giants, this is what happened in China already. So in China it's same, I see -- what we can tell is -- to echo this evolution I think the product (inaudible) difference. So we still -- as I said, we still keep the develops -- our focus on develop, our core datacenter in our all the key market, Tier 1 city, this is already -- I don't want to repeat it. To echo the market evolving, I say, we are -- we see some hyper-scale demand is in -- will happen in near future in Tier 2 city and to catch up with this another growth driver, GDS is well prepare to catch up with that. So I think that we can tell in the next couple of years the growth was 2 type of the growths, one is the high performance datacenter which as we already did in last 10 years, another new growth driver will come from the hyper-scale. We don't want to lose this opportunity. But so far we are quite selected to do in Tier 2 city. Our another strategy as I repeated in the last couple of quarters, I say we will not -- we are focused on our Tier 1 city, and we will focus on to follow up our key customer, which is a cloud player, and that therefore it will add GDS in the next few years still maintain the competitive advantage in strategic review. That's my answer. But if you look at -- currently -- let me give you some clear percentage of our business. I just want to say just as thoughts, it's not to say I cannot give you a certain number currently.

We have the next question from the line of Jonathan Atkin.

Thanks very much, so I was interested in the guidance change and how much of that reflects inorganic factors, I may've missed it, I think you may've called out the revenue contribution from Guangzhou 2, but if you could maybe just clarify how much of the guidance is organic versus -- organic? And then secondly in the scripts you spoke about obtaining additional resources, land would be an example of that, and can you talk a little bit about the different cities where you have land not yet under development, and therefore it would appear in any of the charts that you provided. You've talked about challenges in the Beijing market in prior calls, but if you could maybe give us a little bit of color around that, that would be helpful.

You asked whether the guidance change was related to the acquisition. The answer to that is no. The Guangzhou 2 acquisition has just closed. So we're about 6 weeks from the yearend, so only very short period of time. As it so happens, if you go back to the IPO prospectus, you'll see that we had an MOU for this acquisition some time ago. We thought it might happen earlier, but we waited until certain conditions were right including the redundant power capacity. So we moved ahead when those conditions were met. As relates to area held for future development, I think what we're trying to highlight is that we have projects where you see Phase 1, or Phase 2 even, but we have expansion capacity on those sites. So just to give some examples, in Shenzhen, Shenzhen 4 and Phase 2 is as big as Shenzhen 4 Phase 1. In -- Shanghai 6 is on a site where we have an agreement with the property partner for the build-to-suit lease of 2 datacenters. So the second one which is just dirt on the ground, we've reserved the name Shanghai 7. And in Shanghai 5 we're also in (inaudible) 2 phases. In Chengdu, Chengdu 2 Phase 1 is part of a potentially a much larger construction. And we have land in Kunshan, we have a development agreement for a relatively large site in a very prime location in Beijing. So it's actually quite a lot if you add it all up, and it's very much within our control as to when we activate this. And that is part of what gives us confidence about being able to sustain our sales momentum beyond what you see in terms of what's under construction. But I think the point that William was making which I just want to reemphasize is that the market growth opportunity is bigger than we foresaw and which I think anyone foresaw and we have already taken steps to supplement our resource plan in quite a significant way and that will become apparent over the next few quarters.

[Operator Instructions] As there are no further questions, I'd like to now turn the call back over to the company for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact GDS’s investor relations through the contact information on our website or The Piacente Group Investor Relations.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.