Revenue growth has decelerated sharply to 6.2% in Q2 2026, while gross margin contracted severely to 19.5% from 33.6% in the prior quarter, indicating significant cost pressures and margin compression.
GDS Holdings Limited (GDS) annual income statement — 12-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 |
|---|
| Sales/Revenue | 12.26B | 11.43B | 10.32B | 9.96B | 9.33B | 7.82B | 5.74B | 4.12B | 2.79B | 1.62B | 1.06B | 703.64M | 468.34M |
| Revenue Growth % | 8.65% | 10.76% | 3.67% | 6.76% | 19.27% | 36.24% | 39.21% | 47.65% | 72.76% | 53.05% | 50.07% | 50.24% | - |
| Cost of Goods Sold | 9.27B | 8.85B | 8.1B | 8.03B | 7.39B | 6.04B | 4.19B | 3.08B | 2.17B | 1.21B | 790.29M | 515M | 388.17M |
| COGS % of Revenue | - | 77.38% | 78.47% | 80.69% | 79.24% | 77.24% | 72.98% | 74.71% | 77.71% | 74.73% | 74.84% | 73.19% | 82.88% |
| Gross Profit | 2.98B | 2.59B | 2.22B | 1.92B | 1.94B | 1.78B | 1.55B | 1.04B | 622.44M | 408.47M | 265.67M | 188.64M | 80.17M |
| Gross Margin % | 24.34% | 22.62% | 21.53% | 19.31% | 20.76% | 22.76% | 27.02% | 25.29% | 22.29% | 25.27% | 25.16% | 26.81% | 17.12% |
| Gross Profit Growth % | - | 16.32% | 15.61% | -0.69% | 8.79% | 14.77% | 48.69% | 67.52% | 52.38% | 53.75% | 40.84% | 135.31% | - |
| Operating Expenses | 880.6M | 1.05B | 1.07B | 4.38B | 1.38B | 1.21B | 877.51M | 562.95M | 454.09M | 326.24M | 308.05M | 185.94M | 150.99M |
| OpEx % of Revenue | - | 9.18% | 10.37% | 44% | 14.84% | 15.47% | 15.29% | 13.66% | 16.26% | 20.19% | 29.17% | 26.43% | 32.24% |
| Selling, General & Admin | 941.99M | 1.05B | 1.03B | 1.33B | 1.34B | 1.17B | 837.46M | 541.32M | 440.17M | 318.98M | 298.95M | 186.3M | 154.27M |
| SG&A % of Revenue | - | 9.16% | 10.02% | 13.35% | 14.32% | 14.97% | 14.59% | 13.13% | 15.77% | 19.74% | 28.31% | 26.48% | 32.94% |
| Research & Development | 32.59M | 32.7M | 36.32M | 38.16M | 35.81M | 39.34M | 40.05M | 21.63M | 13.91M | 7.26M | 9.1M | 3.55M | 1.6M |
| R&D % of Revenue | - | 0.29% | 0.35% | 0.38% | 0.38% | 0.5% | 0.7% | 0.52% | 0.5% | 0.45% | 0.86% | 0.51% | 0.34% |
| Other Operating Expenses | -2M | -30.94M | -40K | 3.01B | 12.76M | 0 | 0 | 0 | 0 | 0 | 2.5M | 1.17M | -412K |
| Operating Income | 2.1B | 1.54B | 1.15B | -2.46B | 551.78M | 569.52M | 672.94M | 479.78M | 168.35M | 82.23M | -42.37M | -1.22M | -75.7M |
| Operating Margin % | 17.16% | 13.44% | 11.16% | -24.69% | 5.92% | 7.28% | 11.73% | 11.64% | 6.03% | 5.09% | -4.01% | -0.17% | -16.16% |
| Operating Income Growth % | - | 33.37% | 146.85% | -545.6% | -3.12% | -15.37% | 40.26% | 184.98% | 104.74% | 294.06% | -3381.84% | 98.39% | - |
| EBITDA | 5.64B | 5.1B | 1.31B | 1.17B | 898M | 705.99M | 2.33B | 1.62B | 909.86M | 460.36M | 184.98M | 144.19M | 7.05M |
| EBITDA Margin % | 46.02% | 44.65% | 12.69% | 11.74% | 9.63% | 9.03% | 40.63% | 39.34% | 32.59% | 28.48% | 17.52% | 20.49% | 1.51% |
| EBITDA Growth % | 19.18% | 289.7% | 12.01% | 30.21% | 27.2% | -69.72% | 43.78% | 78.25% | 97.64% | 148.87% | 28.29% | 1943.78% | - |
| D&A (Non-Cash Add-back) | 3.54B | 3.57B | 0 | 3.63B | 0 | 0 | 1.66B | 1.14B | 741.51M | 378.13M | 227.35M | 145.41M | 82.75M |
| EBIT | 2.09B | 2.5B | 1.31B | -2.26B | 898M | 705.99M | 672.94M | 479.78M | 168.35M | 82.23M | -19.49M | 16.33M | -2.67M |
| Net Interest Income | -1.69B | -1.63B | -1.83B | -1.94B | -1.85B | -1.6B | -1.29B | -915.68M | -636.97M | -406.4M | -263.16M | -125.55M | -124.97M |
| Interest Income | 0 | 154.04M | 89.78M | 97.55M | 42.46M | 50.45M | 29.01M | 53.02M | 19.21M | 5.6M | 0 | 1.35M | 6.93M |
| Interest Expense | 1.69B | 1.79B | 1.92B | 2.04B | 1.89B | 1.65B | 1.32B | 968.69M | 656.19M | 412M | 263.16M | 126.9M | 131.91M |
| Other Income/Expense | 2.18B | -107.35M | -1.77B | -1.84B | -1.54B | -1.52B | -1.22B | -906.21M | -608.01M | -415.2M | -242.35M | -109.35M | -58.88M |
| Pretax Income | 4.28B | 1.43B | -614.86M | -4.3B | -989.88M | -948.75M | -548.44M | -426.43M | -439.66M | -332.98M | -284.73M | -110.57M | -134.58M |
| Pretax Margin % | 34.92% | 12.5% | -5.96% | -43.19% | -10.61% | -12.13% | -9.56% | -10.34% | -15.75% | -20.6% | -26.96% | -15.71% | -28.74% |
| Income Tax | 526.8M | 469.72M | 156.05M | -14.78M | 276.24M | 242.46M | 120.78M | 15.65M | -9.39M | -6.08M | -8.31M | -11.98M | -4.58M |
| Effective Tax Rate % | 12.31% | 32.87% | -25.38% | 0.34% | -27.91% | -25.56% | -22.02% | -3.67% | 2.14% | 1.82% | 2.92% | 10.84% | 3.41% |
| Net Income | 3.74B | 949.64M | 3.3B | -4.29B | -1.27B | -1.19B | -669.21M | -442.08M | -430.27M | -326.9M | -276.41M | -98.58M | -130M |
| Net Margin % | 30.52% | 8.31% | 32.01% | -43.09% | -13.61% | -15.18% | -11.66% | -10.72% | -15.41% | -20.23% | -26.18% | -14.01% | -27.76% |
| Net Income Growth % | -20.21% | -71.26% | 177.01% | -238.09% | -6.88% | -77.4% | -51.38% | -2.75% | -31.62% | -18.27% | -180.38% | 24.17% | - |
| Net Income (Continuing) | 3.75B | 959.36M | -770.91M | -4.29B | -1.27B | -1.19B | -669.21M | -442.08M | -430.27M | -326.9M | -276.41M | -98.58M | -130M |
| Discontinued Operations | 0 | 0 | 4.07B | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 903.15M | 897.96M | 129.93M | 165.58M | 116.59M | 59.17M | 120.82M | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 14.42 | 4.24 | 18.16 | -23.68 | -8.24 | -7.20 | -4.72 | -3.60 | -3.44 | -3.36 | -10.80 | -2.08 | -38.16 |
| EPS Growth % | -38.76% | -76.65% | 176.69% | -187.38% | -14.44% | -52.54% | -31.11% | -4.65% | -2.38% | 68.89% | -419.23% | 94.55% | - |
| EPS (Basic) | - | 4.64 | -4.16 | -24.00 | -8.24 | -7.20 | -5.04 | -4.08 | -3.44 | -3.36 | -10.80 | -2.08 | -38.16 |
| Diluted Shares Outstanding | 259.47M | 205.57M | 184.38M | 183.52M | 183.06M | 181.61M | 156.69M | 137.87M | 123.78M | 98.07M | 37.39M | 48.28M | 3.41M |
| Basic Shares Outstanding | 194.38M | 190.07M | 184.38M | 181.26M | 183.06M | 181.61M | 145.5M | 121.85M | 123.78M | 98.07M | 37.39M | 48.28M | 3.41M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - | - | - |
Quick answers to the most common questions about buying GDS stock.
For fiscal year 2025, GDS Holdings Limited (GDS) reported total revenue of $11.43B. This represents a 2341.0% increase compared to $468.3M in 2014.
GDS Holdings Limited (GDS) is profitable, generating $949.6M in net income for the fiscal year ending 2025 with a net profit margin of 8.3%.
GDS Holdings Limited (GDS) reported an operating income of $1.54B, resulting in an operating profit margin of 13.4%. This margin reflects the operational efficiency of the business before interest and taxes.
GDS Holdings Limited (GDS) generated $2.59B in gross profit for the year, representing a gross profit margin of 22.6%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
Margin compression from energy costs
Growth Decelerates Amid Volatility
GDS's revenue growth has decelerated from a peak of 23.6% in Q1 2026 to 6.2% in Q2 2026, suggesting a significant slowdown in customer move-in cycles or market demand.
The sharp deceleration in year-over-year revenue growth from 23.6% to 6.2% in the most recent quarter indicates that the company's expansion is losing momentum. This trend, when viewed alongside the volatile quarterly revenue figures, suggests that growth is not being driven by a consistent, organic pipeline but may be lumpy and dependent on large, infrequent customer deployments. Investors should monitor whether this represents a temporary pause or a more structural slowdown in the hyperscale demand that underpins GDS's business model.
Gross Margin Volatility Signals Cost Pressures
GDS's gross margin swung dramatically from 33.6% in Q1 2026 to 19.5% in Q2 2026, a level significantly below global peers like Equinix (51.3%), indicating severe cost headwinds or unfavorable revenue mix.
The extreme volatility in gross margin, collapsing by over 1,400 basis points in a single quarter, points to a business model highly sensitive to input costs, likely electricity, and the timing of new facility ramp-ups. The current 19.5% margin is structurally weak compared to international benchmarks, suggesting GDS lacks the pricing power or operational efficiency to offset its high fixed-cost base. This margin profile leaves the company with little buffer against rising energy prices or slower utilization, directly threatening its path to sustainable profitability.
Operating Leverage Fails to Materialize
Despite revenue growth, operating income declined from $908.0M in Q1 2026 to $437.9M in Q2 2026, indicating that cost growth is outpacing revenue gains and negating any potential operating leverage.
The inability to translate top-line growth into higher operating income reveals a fundamental lack of operating leverage in the current phase. The sharp drop in operating margin from 27.0% to 14.2% suggests that SG&A and other overhead costs are not being controlled effectively as the business scales. This implies that management's cost discipline is insufficient to support the capital-intensive expansion, and the company may be trapped in a cycle where growth requires disproportionate spending, eroding profitability.
Net Income Distorted by Non-Operating Items
Reported net income is highly erratic, swinging from a $2.6B profit in Q1 2026 to an $832.9M profit in Q2 2026, with EPS growth of 197.7% in Q1 appearing disconnected from operational performance.
The massive swings in net income and EPS, which do not correlate with the underlying operating income trend, strongly suggest the presence of significant non-operating items, such as gains or losses on investments, debt extinguishment, or tax adjustments. The 197.7% EPS growth in Q1 2026, for instance, is not supported by a proportional increase in operating profit, indicating low earnings quality. Analysts must adjust for these items to assess the true recurring profitability of the core data center operations.
SG&A Discipline Deteriorates
Selling, General & Administrative expenses as a percentage of revenue have trended upward, reaching 5.0% in Q2 2026 from 4.1% in Q1 2026, signaling weakening overhead efficiency.
The rising SG&A burden, despite a high-fixed-cost operational model, indicates that corporate overhead is growing faster than the revenue base. This trend is particularly concerning because it occurs alongside decelerating revenue growth, suggesting that management is not achieving the scale efficiencies expected from a maturing data center operator. If this trajectory continues, it will further compress operating margins and delay the company's timeline to consistent GAAP profitability.
Sustainability of Profitability is Questionable
The company's recent quarters of positive net income are interspersed with significant losses, and the latest operating margin of 14.2% remains below the level needed to service its capital-intensive model sustainably.
A skeptical view would focus on the pattern of inconsistent profitability, where quarters of positive net income are often followed by losses (e.g., Q4 2025 loss of $467.1M). The current operating margin, while improved from historical lows, is still compressed by high energy costs and under-utilized new capacity. The core risk is that GDS is generating accounting profits through non-recurring items while its core operations struggle to generate sufficient free cash flow to fund its massive capital expenditure program without continuous external financing.