GDS investments (GDS 17.14%) delivered two strong results in its latest quarterly report, and investors were only too happy to reward the company for that performance. They drove the price of its American Depositary Shares (ADSs) sharply higher after news of the results made headlines on Wednesday, so much so that they ended the day up more than 17%. That compares very well with the 0.4% increase in the S&P500 Index on Wednesday.

A second quarter that beats estimates

In the second quarter, GDS increased its net revenue by 14% year-on-year to over 2.83 billion yuan (US$397 million). If one-time revenue items in the same quarter of 2023 are excluded, this growth rate rises to nearly 18%.

There were encouraging changes in the bottom line as well: the data center operator’s net loss increased only slightly, reaching nearly 232 million yuan ($33 million), compared to a deficit of 225 million yuan ($32 million) in the same period last year. On an ADS basis, the latest net loss was 1.30 yuan ($0.18).

Regardless of the performance, both positions beat average analyst estimates. Forecasters who track GDS stock predict that the niche technology company will generate 2.79 billion yuan ($391 million) and post a much higher net loss per ADS of 1.82 yuan ($0.26).

Selected guidelines reaffirmed

GDS also reiterated its full-year 2024 forecast. The company expects its total revenue to be between 11.34 billion and 11.76 billion yuan ($1.59 billion to $1.65 billion), with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) declining to 4.95 billion to 5.15 billion yuan ($694 million to $722 million). It did not provide guidance on net profit or loss.