Chindata Group Reports Third Quarter 2020 Unaudited Financial Results

Rhea-AI Summary

Chindata Group Holdings Limited (Nasdaq: CD) reported a strong third quarter for 2020, with revenues rising by 64.5% to RMB467.5 million (US$68.9 million) compared to RMB284.1 million in Q3 2019. However, the company experienced a net loss of RMB173.7 million (US$25.6 million), significantly higher than the RMB45.7 million loss in the same period last year. Adjusted EBITDA increased by 143.3% to RMB228.0 million (US$33.6 million), with a margin expansion to 48.8%. As of September 30, 2020, cash reserves surged to RMB3.50 billion (US$515.2 million) from RMB1.12 billion at year-end 2019.

Positive

• Total revenues increased by 64.5% to RMB467.5 million.
• Adjusted EBITDA rose by 143.3% to RMB228.0 million.
• Adjusted EBITDA margin expanded to 48.8%.
• Cash, cash equivalents, and restricted cash increased to RMB3.50 billion.

Negative

• Net loss widened to RMB173.7 million from RMB45.7 million year-over-year.
• Total operating expenses surged by 159.1% to RMB283.6 million.

BEIJING, Nov. 19, 2020 (GLOBE NEWSWIRE) -- Chindata Group Holdings Limited (“Chindata Group” or the “Company”) (Nasdaq: CD), a leading carrier-neutral hyperscale data center solution provider in Asia-Pacific emerging markets, today announced its unaudited financial results for the third quarter ended September 30, 2020.

Third Quarter 2020 Financial and Operating Highlights

• Total revenues increased by 64.5% to RMB467.5 million (US$68.9 million) from RMB284.1 million in the same period of 2019.
  
  
• Net loss was RMB173.7 million (US$25.6 million), compared to RMB45.7 million in the same period of 2019.
  
  
• Adjusted EBITDA increased by 143.3% to RMB228.0 million (US$33.6 million) from RMB93.7 million in the same period of 2019. Adjusted EBITDA margin expanded to 48.8%, compared to 33.0% in the same period of 2019.
  
  
• As of September 30, 2020, total data center IT capacity in service had increased to 248MW from 196MW as of June 30, 2020.
  
  
• As of September 30, 2020, total data center IT capacity under construction was 226MW.

Mr. Jing Ju, Chief Executive Officer and the founder of Chindata Group, commented, “In the third quarter of 2020, we maintained our commitment towards helping leading enterprises manage their core assets and focused on providing our clients with key tasks solutions as well as developing our own core capabilities. As such, we were able to not only sustain a high growth trajectory for our hyperscale data center business, but also meet global digital industry leaders’ needs for data center capacity expansion in emerging markets in a speedy manner.”

“During the quarter, we delivered strong financial results as our total revenue grew by 11.8% quarter over quarter to RMB467.5, thus demonstrating our strong execution capability and firm commitment to our ‘Customer First’ business philosophy.” Mr. Dongning Wang, Chief Financial Officer of Chindata Group, commented, “As we continuously enhance our full-stack service capabilities along the industry value chain, we should be able to further improve our company-wide operational efficiency. We also foresee strong demands for our customized hyperscale solutions for the rest of 2020 and beyond.”

Third quarter 2020 Financial Results

TOTAL REVENUES
Total revenues in the third quarter of 2020 increased by 64.5% to RMB467.5 million (US$68.9 million) from RMB284.1 million in the same period of 2019, primarily driven by the robust growth of the Company’s colocation services in the period.

COST OF REVENUES
In line with the Company’s revenue growth, total cost of revenues in the third quarter of 2020 increased by 37.2% to RMB277.2 million (US$40.8 million) from RMB201.9 million in the same period of 2019, mainly driven by the increases in utility costs and depreciation and amortization expenses.

GROSS PROFIT
Gross profit in the third quarter of 2020 increased by 131.6% to RMB190.3 million (US$28.0 million) from RMB82.2 million in the same period of 2019. Gross margin in the third quarter of 2020 expanded to 40.7% from 28.9% in the same period of 2019.

OPERATING EXPENSES
Total operating expenses in the third quarter of 2020 increased by 159.1% to RMB283.6 million (US$41.8 million) from RMB109.4 million in the same period of 2019.

• Selling and marketing expenses in the third quarter of 2020 increased by 107.7% to RMB34.5 million (US$5.1 million) from RMB16.6 million in the same period of 2019, primarily due to more marketing activities and higher personnel costs as the Company continued to expand its business.
  
  
• General and administrative expenses in the third quarter of 2020 increased by 186.6% to RMB236.6 million (US$34.8 million) from RMB82.5 million in the same period of 2019. This increase was mainly driven by (i) higher share-based compensation expenses, which increased to RMB121.3 million (US$17.9 million) in the third quarter of 2020 from RMB45.9 million in the same period of 2019; and (ii) a one-off management consulting services fee, incurred in connection of the initial public offering, in the amount of RMB61.0 million.
  
  
• Research and development expenses in the third quarter of 2020 increased by 21.3% to RMB12.5 million (US$1.8 million) from RMB10.3 million in the same period of 2019, mostly due to higher personnel costs as the Company continued to invest in its research and development initiatives to further enhance its service offerings.
  

OPERATING LOSS
Operating loss in the third quarter of 2020 was RMB93.2 million (US$13.7 million), compared to RMB27.3 million in the same period of 2019.

ADJUSTED EBITDA
Adjusted EBITDA in the third quarter of 2020 increased by 143.3% to RMB228.0 million (US$33.6 million) from RMB93.7 million in the same period of 2019. Adjusted EBITDA is defined as net loss excluding depreciation and amortization, interest income and expenses, income tax (benefits) expenses, share-based compensation, expense related to the reorganization, management consulting service fee, change in fair value of financial instruments, foreign exchange (gain) loss and non-cash operating lease cost relating to prepaid land use rights. Adjusted EBITDA margin in the third quarter of 2020 was 48.8%, compared to 33.0% in the same period of 2019.

NET LOSS
Net loss in the third quarter of 2020 was RMB173.7 million (US$25.6 million), compared to RMB45.7 million in the same period of 2019.

NET LOSS PER ADS
Basic and diluted net loss per American Depositary Share (“ADS”) were RMB0.58 (US$0.08). Basic and diluted net loss per share were RMB0.29 (US$0.04). Each ADS represents two of the Company’s Class A ordinary shares.

BALANCE SHEET
As of September 30, 2020, the Company had RMB3.50 billion (US$515.2 million) in cash, cash equivalents and restricted cash, compared to RMB1.12 billion as of December 31, 2019.

RECENT DEVELOPMENT
On October 2, 2020, the Company successfully completed its initial public offering (“IPO”) of 40,000,000 ADSs, each representing two Class A ordinary shares of the Company, at a price of US$13.50 per ADS for a total offering size of US$540 million.

On October 2, 2020, the Company’s underwriters exercised their options to acquire additional 6,000,000 ADSs at the public offering price. On the same day, the Company also closed its private placement of 9,629,630, 5,925,926 and 4,444,444 Class A ordinary shares to Joyful Phoenix Limited, SCEP Master Fund, and Shiying Finance Limited, respectively.

Business Outlook
For full year 2020, the Company expects its total revenues range from RMB1,770 million to RMB1,790 million and adjusted EBITDA to range from RMB830 million to RMB850 million. These forecasts reflect the Company’s current and preliminary views on the market and operational conditions, which are subject to change.

Conference Call Information
The Company will hold a conference call on Thursday, November 19, 2020, at 7:30 A.M. Eastern Time (or 8:30 P.M. Beijing Time on the same day) to discuss the financial results.

In advance of the conference call, all participants must use the following link to complete the online registration process to receive a unique registrant ID and a set of participant dial-in numbers to join the conference call.

Conference ID:	4252618
Registration Link:	http://apac.directeventreg.com/registration/event/4252618

The replay will be accessible through November 27, 2020, by dialing the following numbers:

United States Toll Free:	+1-855-452-5696
International:	+61-2-8199-0299
Conference ID:	4252618

A live and archived webcast of the conference call will also be available at the Company's investor relations website at https://investor.chindatagroup.com/.

About Chindata Group
Chindata Group is a leading carrier-neutral hyperscale data center solution provider in Asia-Pacific emerging markets and a first mover in building next-generation hyperscale data centers in China, India and Southeast Asia markets, focusing on the whole life cycle of facility planning, investment, design, construction and operation of ecosystem infrastructure in the IT industry. Chindata Group provides its clients with business solutions in major countries and regions in Asia-Pacific emerging markets, including asset-heavy ecosystem chain services such as industrial bases, data centers, network and IT value-added services.

Chindata Group operates two sub-brands: "Chindata" and "Bridge Data Centres". Chindata operates hyper-density IT cluster infrastructure in the Greater Beijing Area, the Yangtze River Delta Area and the Greater Bay Area, the three key economic areas in China, and has become the engine of the regional digital economies. Bridge Data Centres, with its top international development and operation talents in the industry, owns fast deployable data center clusters in Malaysia and India, and seeks business opportunities in other Asia-Pacific emerging markets.

Exchange Rate Information
Unless otherwise stated, all translations from Renminbi into U.S. dollars were made at RMB6.7896 to US$1.00, the noon buying rate on September 30, 2020 as set forth in the H.10 statistical release of the Federal Reserve Board. The percentages stated in this press release are calculated based on the RMB amounts.

Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident,” “potential,” “continue” or other similar expressions. Among other things, the business outlook and quotations from management in this announcement, as well as Chindata Group’s strategic and operational plans, contain forward-looking statements. Chindata Group may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Chindata Group’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Chindata Group’s goals and strategies; its future business development, financial condition and results of operations; the expected growth and competition of the data center and IT market; its ability to generate sufficient capital or obtain additional capital to meet its future capital needs; its ability to maintain competitive advantages; its ability to keep and strengthen its relationships with major clients and attract new clients; its ability to locate and secure suitable sites for additional data centers on commercially acceptable terms; government policies and regulations relating to Chindata Group’s business or industry; general economic and business conditions in the regions where Chindata Group operates and globally and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Chindata Group’s filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Chindata Group undertakes no obligation to update any forward-looking statement, except as required under applicable law.

Use of Non-GAAP Financial Measures
To supplement Chindata Group’s consolidated financial results presented in accordance with U.S. GAAP, Chindata Group uses adjusted EBITDA and adjusted EBITDA margin as non-GAAP financial measure. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

The Company believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating its operating results as they do not include all items that impact its net loss or income for the period, and are presented to enhance investors’ overall understanding of the Company’s financial performance. A limitation of using the non-GAAP financial measure is that the non-GAAP measure exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company’s results of operations. The non-GAAP financial measure presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data.

For Enquiries, Please Contact:

Ms. Joy Zhang
Zhuo.zhang@chindatagroup.com

Ms. Xiaolin Zhao
xiaolin.zhao@chindatagroup.com

CHINDATA GROUP HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
	As of December 31, 2019			As of September 30, 2020
	RMB			RMB			US$
ASSETS
Current assets
Cash and cash equivalents	1,038,897			3,383,027			498,266
Restricted cash	14,365			36,794			5,419
Accounts receivable, net	304,695			328,524			48,386
Value added taxes recoverable	80,715			150,921			22,228
Prepayments and other current assets	134,459			202,607			29,841
Total current assets	1,573,131			4,101,873			604,140
Non‑current assets
Property and equipment, net	4,404,587			5,480,468			807,186
Operating lease right-of-use assets	430,288			550,540			81,086
Finance lease right-of-use assets	155,347			147,843			21,775
Goodwill and intangible assets, net	827,069			797,311			117,431
Restricted cash	66,578			77,845			11,465
Value added taxes recoverable	247,851			311,208			45,836
Other non-current assets	66,332			157,041			23,130
Total non‑current assets	6,198,052			7,522,256			1,107,909
Total assets	7,771,183			11,624,129			1,712,049
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term bank loans and current portion of long-term bank loans	63,347			134,183			19,763
Accounts payable	959,372			817,650			120,427
Current portion of operating lease liabilities	37,767			38,284			5,639
Current portion of finance lease liabilities	5,485			4,946			728
Accrued expenses and other current liabilities	200,808			1,017,178			149,814
Total current liabilities	1,266,779			2,012,241			296,371
Non‑current liabilities
Long-term bank loans	2,692,154			3,924,398			578,001
Operating lease liabilities	217,523			209,953			30,923
Finance lease liabilities	61,161			60,200			8,867
Other non-current liabilities	296,393			428,551			63,119
Total non‑current liabilities	3,267,231			4,623,102			680,910
Total liabilities	4,534,010			6,635,343			977,281
Shareholders’ equity:
Ordinary shares	34			38			6
Additional paid-in capital	3,512,291			5,535,666			815,315
Statutory reserves	13,908			13,908			2,048
Accumulated other comprehensive income	40,011			1,373			202
Accumulated deficit	(329,071	)		(562,199	)		(82,803	)
Total shareholders’ equity	3,237,173			4,988,786			734,768
Total liabilities and shareholders’ equity	7,771,183			11,624,129			1,712,049

CHINDATA GROUP HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
	For the three months ended												For the nine months ended
	September 30, 2019			June 30, 2020			September 30, 2020						September 30, 2019			September 30, 2020
	RMB			RMB			RMB			US$			RMB			RMB			US$
Revenue	284,136			418,128			467,484			68,853			505,625			1,278,088			188,242
Cost of revenue	(201,949	)		(251,391	)		(277,157	)		(40,821	)		(377,505	)		(771,422	)		(113,618	)
Gross profit	82,187			166,737			190,327			28,032			128,120			506,666			74,624
Operating expenses
Selling and marketing expenses	(16,602	)		(21,323	)		(34,475	)		(5,078	)		(33,082	)		(71,491	)		(10,529	)
General and administrative expenses	(82,535	)		(99,127	)		(236,583	)		(34,845	)		(170,249	)		(420,236	)		(61,894	)
Research and development expenses	(10,314	)		(7,414	)		(12,513	)		(1,843	)		(12,721	)		(28,311	)		(4,170	)
Total operating expenses	(109,451	)		(127,864	)		(283,571	)		(41,766	)		(216,052	)		(520,038	)		(76,593	)
Operating (loss) income	(27,264	)		38,873			(93,244	)		(13,734	)		(87,932	)		(13,372	)		(1,969	)
Interest income	1,017			2,315			6,280			925			3,890			10,299			1,517
Interest expense	(20,613	)		(65,975	)		(60,915	)		(8,972	)		(49,936	)		(178,543	)		(26,297	)
Foreign exchange gain (loss)	449			907			(1,293	)		(190	)		(2,089	)		(512	)		(75	)
Changes in fair value of financial instruments	(990	)		(8,216	)		(9,965	)		(1,468	)		(3,263	)		(8,499	)		(1,252	)
Others, net	1,280			2,689			1,894			279			(2,629	)		2,767			408
Loss before income taxes	(46,121	)		(29,407	)		(157,243	)		(23,160	)		(141,959	)		(187,860	)		(27,668	)
Income tax benefit (expense)	405			(15,941	)		(16,454	)		(2,423	)		1,386			(45,268	)		(6,667	)
Net loss	(45,716	)		(45,348	)		(173,697	)		(25,583	)		(140,573	)		(233,128	)		(34,335	)
Less: Net income attributable to non‑controlling interests	694			-			-			-			4,742			-			-
Net loss attributable to Chindata Group Holdings Limited	(46,410	)		(45,348	)		(173,697	)		(25,583	)		(145,315	)		(233,128	)		(34,335	)
Net loss per share:
Basic and diluted	(0.09	)		(0.08	)		(0.29	)		(0.04	)		(0.43	)		(0.40	)		(0.06	)
Other comprehensive (loss) income, net of tax of nil:
Foreign currency translation adjustments	(11,234	)		3,151			2,363			348			(11,156	)		(38,638	)		(5,691	)
Comprehensive loss	(56,950	)		(42,197	)		(171,334	)		(25,235	)		(151,729	)		(271,766	)		(40,026	)
Less: Comprehensive income attributable to non‑controlling interests	694			-			-			-			4,742			-			-
Comprehensive loss attributable to Chindata Group Holdings Limited	(57,644	)		(42,197	)		(171,334	)		(25,235	)		(156,471	)		(271,766	)		(40,026	)

CHINDATA GROUP HOLDINGS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$"))
	For the three months ended												For the nine months ended
	September 30, 2019			June 30, 2020			September 30, 2020						September 30, 2019			September 30, 2020
	RMB			RMB			RMB			US$			RMB			RMB			US$
Net loss	(45,716	)		(45,348	)		(173,697	)		(25,583	)		(140,573	)		(233,128	)		(34,335	)
Depreciation and amortization	67,201			95,932			102,319			15,070			152,378			293,743			43,264
Share-based compensation	45,862			60,991			150,416			22,154			45,862			251,740			37,077
Amortization of debt issuance cost	3,787			7,176			12,003			1,768			5,821			24,749			3,645
Others	(1,019	)		6,287			(8,447	)		(1,244	)		7,930			(8,706	)		(1,282	)
Changes in operating assets and liabilities	17,277			83,489			55,887			8,231			13,144			118,420			17,441
Net cash generated from operating activities	87,392			208,527			138,481			20,396			84,562			446,818			65,810
Purchases of property and equipment and intangible assets	(679,616	)		(469,114	)		(804,889	)		(118,547	)		(869,213	)		(1,606,010	)		(236,540	)
Purchase of land use rights	(3,141	)		(10,825	)		(160,879	)		(23,695	)		(23,711	)		(194,358	)		(28,626	)
Cash paid for business combination, net of cash acquired	-			-			-			-			(1,879,040	)		-			-
Net cash used in investing activities	(682,757	)		(479,939	)		(965,768	)		(142,242	)		(2,771,964	)		(1,800,368	)		(265,166	)
Net proceeds from financing activities	879,458			916,465			2,498,256			367,953			3,472,944			3,789,095			558,073
Net cash generated from financing activities	879,458			916,465			2,498,256			367,953			3,472,944			3,789,095			558,073
Exchange rate effect on cash, cash equivalents and restricted cash	(23,453	)		236			(60,708	)		(8,942	)		(25,331	)		(57,719	)		(8,502	)
Net increase in cash, cash equivalents and restricted cash	260,640			645,289			1,610,261			237,165			760,211			2,377,826			350,215
Cash, cash equivalents and restricted cash at beginning of period	644,274			1,242,116			1,887,405			277,985			144,703			1,119,840			164,935
Cash, cash equivalents and restricted cash at end of period	904,914			1,887,405			3,497,666			515,150			904,914			3,497,666			515,150

CHINDATA GROUP HOLDINGS LIMITED
UNAUDITED RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
(Amount in thousands of Renminbi ("RMB") and US dollars ("US$") except for percentage data)
		For the three months ended												For the nine months ended
		September 30, 2019			June 30, 2020			September 30, 2020						September 30, 2019			September 30, 2020
		RMB			RMB			RMB			US$			RMB			RMB			US$
Net loss		(45,716	)		(45,348	)		(173,697	)		(25,583	)		(140,573	)		(233,128	)		(34,335	)
Add: Depreciation & Amortization(1)		68,141			96,953			103,342			15,221			153,833			296,812			43,716
Add: Interest income & expense		19,596			63,660			54,635			8,047			46,046			168,244			24,780
Add: Income tax (benefit) expenses		(405	)		15,941			16,454			2,423			(1,386	)		45,268			6,667
Add: Share-based compensation		45,862			60,991			150,416			22,154			45,862			251,740			37,077
Add: Expenses related to the Reorganization(2)		2,169			-			-			-			36,312			-			-
Add: Management consulting services fee		3,149			3,934			64,862			9,553			12,208			72,757			10,715
Add: Changes in fair value of financial instruments		990			8,216			9,965			1,468			3,263			8,499			1,252
Add: Foreign exchange (gain) loss		(449	)		(907	)		1,293			190			2,089			512			75
Add: Non-cash operating lease cost relating to prepaid land use rights		389			745			721			106			634			2,081			306
Adjusted EBITDA		93,726			204,185			227,991			33,579			158,288			612,785			90,253
Adjusted EBITDA margin		33.0	%		48.8	%		48.8	%		48.8	%		31.3	%		47.9	%		47.9	%
Note:
(1) Before the deduction of government grants.
(2) Expenses related to the Reorganization are non-recurring expenses related to the transactions in the Reorganization.

FAQ

What were Chindata Group's Q3 2020 revenues?

Chindata Group's Q3 2020 revenues increased by 64.5% to RMB467.5 million.

What was the net loss for Chindata Group in Q3 2020?

The net loss for Chindata Group in Q3 2020 was RMB173.7 million.

How much did Chindata Group's adjusted EBITDA grow in Q3 2020?

Chindata Group's adjusted EBITDA grew by 143.3% to RMB228.0 million in Q3 2020.

What is the cash position of Chindata Group as of September 30, 2020?

As of September 30, 2020, Chindata Group had cash reserves of RMB3.50 billion.

What is the business outlook for Chindata Group for the full year 2020?

Chindata Group expects total revenues to range from RMB1,770 million to RMB1,790 million for the full year 2020.