But so far, we don’t think it’s going to be a very material change. So I think the last part of your question, talk about – I think you referred to installing in existing data centers. So that’s an interesting one, because if you look at all the parts in equipment data center, some of it is used intensively like cooling and some of it is on standby, like power generation. So there’s already a replacement cycle for cooling, which typically is every five years. So, that gives us an in-built opportunity as when we change out the cooling plant and equipment, we can always consider to change the technology as well.
William Huang: Yes, I’ll add a little bit. I think in the last two years, our new design data center design is all very high power density. That means we already assessed the trend in China. So our edge of town campus design all can fulfill the future AI demand already – this is all the campus, which we developed in the last two years, whatever in Shanghai, surrounding Shanghai or Beijing or Shenzhen Guangdong, all very high power density and high power capacity. So that means we are well positioned to catch up the AI era.
Timothy Zhao: Great. Thank you for the color. It’s very helpful. Thank you.
Operator: [Operator Instructions] We are now going to proceed with our next question. And the questions come from the line of Mingxuan Li from CICC. Please ask your question.
Mingxuan Li: Hi, management. Thanks for taking my questions. I have questions about the EBITDA margin. The first one is, why your one-time service revenue has nearly 100 EBITDA margin, because this 70 million revenue portfolio included in EBITDA. And also, excluding the one-time impact, the second quarter EBITDA margin was still better than the first quarter and the same quarter last year. What’s the drivers behind this?
Dan Newman: Thanks for the question. I couldn’t hear so clearly. So let me try to answer based on what I could make out. I think you asked to begin with why that one-time service revenue contributed such a significant improvement in the EBITDA. So the reason for that is, because it’s associated with the termination, which means that, there is not a lot of operating cost that goes with that revenue. There is no power consumption and so on, which goes with that revenue. So that revenue has a very high-profit margin on an incremental basis. Excluding that revenue as we did in our disclosures to normalize numbers set a base for the following quarters. I think the EBITDA margin has fluctuated as always, but it’s been in a similar range for a number of quarters.
So there is more pronounced seasonality now in our business since power tariffs went up and as we’ve seen some exceptionally hot summers in China, it has resulted in at least a couple of percent, if not more percentage point difference between our EBITDA margins in winter and summer. So that was – that’s visible in our number. But overall, if we take a trend over a number of quarters, I think EBITDA margins are going to remain at quite a similar level to where they are today. I think the most significant negative impact has been the increase in power tariffs in China. It’s possible that, that will reverse at some point in the future. We don’t have any knowledge about that. But with – yes, we’re looking at EBITDA margins, which already reflect that impact, and we expect the margin to improve, but only slightly from current levels over the following couple of years.
Mingxuan Li: Thanks. Very clear.
Operator: We’re now going to proceed with our next question. And the questions come from the line of Michael Elias from TD Cowen. Please ask your question.
