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Presentation

Gorilla Technology Group Inc. beats earnings expectations. Reported EPS is $0.23, expectations were $0.01.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Gorilla Technology Group, Inc. Earnings Call for the First Quarter of 2025. [Operator Instructions]. Before we begin, we will read the forward-looking statement. Today’s call includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and projections about future events and are subject to known and unknown risks and certainties that could cause actual results to differ materially. Forward-looking statements often include terms such as expects, believes, plans, anticipates, may, should, and similar expressions.

For a discussion of important factors that could affect Gorilla’s results, please refer to our filings with the SEC, including our most recent annual report on Form 20-F. Except as required by law, Gorilla undertakes no obligation to update or revise any forward-looking statements made on this call, whether as a result of new information, future events or otherwise. I would now like to turn the conference over to Jay Chandan, Chairman and Chief Executive Officer, and Bruce Bower, Chief Financial Officer. Please go ahead.

Jayesh Chandan: Thank you very much, Nick. Well, for everyone who’s here today, first of all, welcome to our conference call. I’m delighted you all could join. This has been one of the operationally significant quarters in Gorilla’s history. We are expanding across the United States, Latin America, Southeast Asia and East Asia, converting real pipeline into delivery and deepening partnerships with some of the world’s most respected institutions. Gorilla is scaling fast and executing harder. The quarter reflects exactly what we have been building towards, a strong financial performance, global expansion and material progress across smart infrastructure, AI security and national digital systems. What you all are seeing right now is not an early-stage growth.

It’s a strategic expansion. We’re securing projects in ports, airports, data centers, hospitals, education, law enforcement and all of this is now moving from negotiation to execution. Over the last 2 years, we have made deliberate decision to focus inward, fixing the fundamentals, which is very key for our business, restructuring globally, scaling our delivery capability, hiring the right people and proving above all that we can execute. We are not just a hype-driven company. Whilst others were chasing headlines and inflated projections, we were securing national infrastructure contracts deploying mission-critical systems in the public sector and more importantly, getting our financial house in order. That meant, tightening our operations, rebuilding the teams, pushing through complexity in multiple markets quietly, consistently and without the need for a drumroll.

Now with our revenue up more than 100% year-on-year and with a positive net income and more importantly, with a $5 billion-plus pipeline and real deals being delivered across Southeast Asia, Middle East, North Africa, Latin America and beyond, the results are loud enough or I believe the results are loud enough on their own. We’re seeing immense acceleration from Q2, Q3, Q4 going into 2026. And I couldn’t be more excited to join you all on this call and let you know that we are positioned for a very strong ’26 as well. Bruce, do you want to take them through the numbers on a very high level?

Bruce Gregory Bower: Yes, so I would like to mention a few of the highlights that I’m sure you’ve seen from the release. So the first is, of course, the revenue of $18.3 million, 109% year-on-year growth. But not only that, we’re quite happy with the adjusted EBITDA of $5.16 million, which represents a 48% increase year-on-year. And then the adjusted net income of $4.47 million, which is a 46.7% increase. In total, this means that we’re executing well on the contracts, the business that we have, and it’s flowing through into profitability. The other thing I’d like to point out is that the balance sheet remains strong. So the first thing is total cash reserves both restricted and unrestricted closed the quarter at $33.8 million.

In addition, we did that while managing to reduce debt. So the debt has dropped from over $20 million at the end of the year to $18.4 million. Subsequent to the close of the quarter, we actually have reduced the debt further to $17 million as of today. We’ve done that in a cash-neutral fashion, where basically, we have blocked deposits, that are collateralizing the loan. So pay off a $1 of debt, that releases $1 of blocked deposit. So we’re very proud of the way that we have managed the balance sheet in this time. A couple of other things I’d like to point out is, first of all, the cap table. So we ended the first quarter with around 20.15 million — with less than 20 million shares outstanding, slightly less than 20 million, and now it’s a hair over 20 million shares outstanding at 20.15 million.

And then the fully diluted share count remains the same because that increase in outstanding shares came due to the exercise of warrants. The other thing I’d like to point out is that during the quarter, the second quarter. So subsequent to this sort of the earnings release, we spent $1.8 million on share buybacks. So that means that we’ve spent a total of $5.4 million on the buyback program in the last 12 months. In addition to that, we have a total $10 million program authorized, so that gives us $4.6 million of remaining capacity. We’ve done all this with the business — with the balance sheet, while also investing for the future. So Jay, of course, mentioned some of the pipeline and some of the partnerships that we have. I would like to highlight, first of all, the ONE AMAZON partnership, where in the first quarter, we made a $1.5 million investment.

We followed with $3.5 million in the second quarter. So a total commitment of $5 million to secure that long-term partnership. I’m sure Jay can mention more about what’s going on in general with that, but we’re very happy to have — to be participating in this partnership in a financial way. At the moment, you can see that, that investment is carried at cost on the balance sheet for the quarter. One other thing I’d like to point out is the guidance. So the guidance has remained for 2025, the same where it’s $100 million to $110 million is the revenue guidance. This is based on a backlog, which is revenue that we have secured in the sense of where we have contracts signed and is either due to be implemented or it’s being implemented already.

There’s a date attached to the revenue. And we expect an EBITDA of $20 million to $25 million based on that revenue number and then a net profit in the range of $15 million to $20 million. Of course, that excludes extraordinary items. So that guidance remains the same. And then 2026, we are not in a position to issue guidance for the full year, but we can say that the backlog continues to shape up. So it’s at $70 million for 2026, and then also, we have several projects that we have talked about, where it’s in the proof-of-concept stage and advancing. So we are confident that, that backlog will grow. And then the last thing, as Jay mentioned, that we have over $5 billion in pipeline and qualified leads. The sharp observers will look at that, has actually decreased from earlier in the year, where it was over $6 billion.

The reason for that is actually because our MOU with the PEA, the Provincial Electricity Authority in Thailand has moved into proof-of-concept stage. So it’s no longer a qualified lead, it’s in the proof-of-concept stage. So that’s the reason for the drop. Outside of that, actually, the qualified leads, the amount of sort of contracts — potential contract value attached to them, grew. And then one other thing, not quantitative, but I’d like to talk about the funding. So as you can tell, we have a strong balance sheet, fortress-like in terms of cash balance, both restricted and unrestricted cash and also the debt that continues to reduce. The funding that we have on the balance sheet now is enough to tackle the projects that we have signed already, and it’s enough to tackle what we envision as the projects that we we’ll be signing shortly.

If we were to sign more projects that need funding, then we would first look for project level funding. Second would be debt or debt- like instruments and only then maybe would we look for equity. But I’d just like to emphasize that we’re very confident in the balance sheet that we have and our ability to take on new projects without — first of all, hopefully, without having to raise outside funding. And if we do have to raise outside funding, Jay and I remain committed to protecting shareholders. That — those are the main points for me. Back to you, Jay, or over to the moderator.

Jayesh Chandan: Nick, I’m happy to take questions so that we can respond — get some more time and respond more diligently to all the questions, both the analysts and the shareholders may have.

Operator: [Operator Instructions] Your first question today will come from Brian Kinstlinger with Alliance Global Partners.

Brian David Kinstlinger: Nice results. I’m hoping we can dig — I thought I heard your comment that helped clarify, but I want to make sure I understand. For the Royal Thai Tourist Police contract that you had, originally talked about $50 million to $60 million. Can you remind us, is this a signed purchase order? Did you just say you were going into POC? And just maybe I’d like to hash out if details have already been completed or where you are in that process?

Jayesh Chandan: Brian, first of all, thanks for joining in. The Royal Thai project has actually exceeded our expectations. We started out with a simple proof-of-concept. And as I’m not sure if you’ve seen the National Daily actually put out a press release, it was not us. This is the National Daily put out a press release about Gorilla and recommending our AI surveillance system. What we’ve helped them do as soon as we kind of finished the proof of concept was to apprehend a little more than 200 suspects every week, which has been a real success. Now that, for me, in a real world speaks for itself. Now we are closely working with their leadership to expand and deepen the platform capabilities nationwide. So we have now been asked to actually work on a multitude of projects because of the success of this.

And as you can see tourism is growing quite significantly, in Thailand, they’ve gone from having 32 million tourists to 43 million tourists this year. What we are doing is we are now integrating the Royal Thai Police with the — Royal Thai Tourist Police with the immigration, working with the AOT. And finally, we are going to be working with the individual provinces of each of those key islands, including Phuket, Krabi, Similan, James Bond, Ko Phi Phi, Phang Nga Bay and so on and so forth. What they’re asking us to do is not just deploy surveillance systems, but they’re also asking us to build connectivity across these key islands. So that they could keep in touch and allow each of these tourists to travel safely across all these islands so that they don’t get lost.

And this is also helping them connect to the emergency services at any given point of time where they’re going to use an RFID tag or their mobile phones, if they’re stranded or lost. And that would be Gorilla’s technology as well. I hope that answers your question.

Brian David Kinstlinger: It did mostly. I just want to make sure I understood. The $50 million to $60 million that was discussed, is that the total opportunity of the Thai Police and the islands? Is that a signed contract number? Or is that — just take me through — I think there’s questions about those kinds of things about your contracts. So just take us through what has been signed versus what’s the opportunity?

Jayesh Chandan: Perfect. So the one that is being signed is to a tune of $50 million to $60 million. What we are now going towards or headed towards is where we’ve actually got a teaming agreement with them and I can confirm that. That we will be looking at a total size of between $500 million to $550 million for the entirety of the project. But this is spread over 5 to 6 years, just FYI.

Brian David Kinstlinger: That’s the addressable opportunity. Got it.

Jayesh Chandan: That is addressable opportunity.

Brian David Kinstlinger: Yes. So I’ve got a few more, I may ask one question and respect and go back in the queue, because I have a few more. Again, talking to — you put out a lot on different contracts. Can you update us on where you are with that large $400 million opportunity for the smart education contracts, I believe that was MOU and we’re 6 months down the road. What’s the progress you’re making on a formal agreement?

Jayesh Chandan: So Brian, I understand it’s been a little over 6 months, but let me tell you, the world has been in turmoil and all governments have been shaking every single day, as you can imagine. So decisions have been very complicated. Political situations have been also very complicated, but that did not stop us from pushing. We’ve been pushing. And I’m very happy to report that we’re in the late stage negotiation process on actually 2 of the projects — of the education projects. One is for smart education. And on top of that, they’ve just added a little nugget which is another $80-plus million for Smart Cloud Infrastructure for the same educational project as well. As I mentioned, it’s — we are working to get their support, their final support, both of which are very transformative.

And if you give me a few more days, maybe a couple of weeks — 3 to 4 weeks I will be able to give you a more concrete solid update by then. But I can tell you that we are literally in the last stage right now as we speak.

Brian David Kinstlinger: Don’t commit to weeks. When it happens, it happens. You’ll update us thank you, and I’ll get back in the queue and ask two more when I’m back.

Bruce Gregory Bower: If I just chip in one thing. So when we announced an initial MOU or something along those lines with clients, that’s usually based on the proposal that we’ve made, all sides understand the proposal, the scope, et cetera, and we move forward on that basis. But governments when it’s dealing with critical national infrastructure and security, they don’t just say, let’s go and do everything all at once. There’s usually a proof-of-concept phase. We test it. We make sure that everything works as planned. The economics are as planned, et cetera. and then it moves into a rollout phase where it’s more copy paste and scale over. So typically, when we announce an agreement like this, for instance, with the Royal Thai Tourist Police, the initial scope, we have to go through a proof-of-concept phase that takes months and for a larger opportunity may even take 1 year or more.

And the whole purpose of that is to make sure it works properly, and then it moves into a binding agreement where all sides are happy with the scope, who’s going to do, what time frames, what milestones, billing cycles, et cetera. So the timing may be a little frustrating for investors where things take longer than they would like, but that’s the only way that it’s going to happen.

Operator: [Operator Instructions] And your next question today will come from John Roy with Water Tower Research.

John Marc Andre Roy: I was curious as to what definitive steps you’re taking to sustain the growth? Obviously, this kind of growth is amazing, but it’s difficult to continue. I was wondering if you could give us some color as to the steps you’re taking to continue the growth?

Jayesh Chandan: John, great question. Good to hear from you. So there are 5 to 6 key steps we are taking today. First of all, as you know, we’ve built a strong foundation. We’re scaling towards what we call position. First step, we’re converting pipeline into revenue. Now we have a very significant qualified pipeline. What we are doing in Q2 and Q3 is we’re laser focused on converting these large deals, which are a late- stage negotiation. Bruce touched upon it. It is frustrating for shareholders. It is frustrating for us, but we have not lost sight. These are across public safety, education, energy in regions such as Southeast Asia, Latin America, Middle East, North Africa and the United States. And this is not just pipeline for the sake of PR, as many have alluded to, it is active progressing and tied to national outcomes.

Second, we are very actively working across major deployments in the progress. For example, we are now entering into multiyear contracts, none of our contracts, none of our contracts are 1-year contracts. The minimum is 3, 5, I think, the average is about 7 to 10 now is what we’re looking at. So what we are doing is we’re working with national stakeholders to get them to understand the difference between an OpEx model and a CapEx model, making sure that these deployments will show up meaningfully for Gorilla at the same time, not just in Q2, Q3 and Q4, but ’26, ’27 and ’28. We are looking at new markets and new partnerships. That’s number three. That’s our foot #3 or prong #3. We are — we expect to announce new market entry including further expansion into the regions I just mentioned.

But at the same time, we’re also advancing our discussions with very well-known household name partners, typically around energy, AI, hardware integration, and these alliances were only helping us scale faster whilst we maintain a capital discipline. The fourth most important approach, is our financial discipline. We could be going out willy-nilly and spending a lot of money trying to bring growth. But what we are focused on is profitable growth. We’re not chasing it purely because at any cost, but more importantly, what we are doing, we’re scaling with structure. What is important to us, margin, EBITDA, cash flow, they remain core to our KPI. The fifth most important point is we are keeping a very keen eye on media and market visibility. We are making sure that investors are taking note, they’re starting to pay attention to Gorilla.

With earnings, new partnerships, global projects in motion, we hope that Q2 and Q3 will be more a period of increased exposure and momentum building. And last, to round it off, John. We’re also pursuing strategic acquisition in Southeast Asia. We are finalizing currently on an acquisition in Thailand that will allow us to get operational depth and local scale. This will allow us to consolidate regional operations and turn Gorilla into a dominant AI infrastructure player, not just in Thailand but also across the entire ASEAN region. We expect to close that sometime in Q2 and begin the integration in Q3. I hope that answers your question.

John Marc Andre Roy: Yes, does a great job. Maybe this is one for Bruce as a follow-up. I mean what is the state of your pipeline or backlog? And maybe if you could give us some color on what is in that and what is not in that, if you know what I mean?

Bruce Gregory Bower: Without going into specific contracts, I would say that in 2025 the guidance is — we have $93 million of backlog for this year. That is almost entirely due to existing contracts and clients. And then that’s three large clients and then the several sort of smaller ones. For next year, we count the backlog at $70 million so far. That is a couple of existing clients, and then that is several smaller new or new contracts that start at the end of 2025, but most of the financial benefit hits in 2026.

Operator: Your next question today will come from Mike Latimore with Northland Capital Markets.

Unidentified Analyst: This is [ Aditya ] on behalf of Michael Latimore. So could you give some color on if you expect sequential revenue growth each quarter this year? And also some color on the gross margins?

Jayesh Chandan: Did you say sequential revenue…

Unidentified Analyst: Sequential revenue growth. Yes.

Jayesh Chandan: Bruce, do you want to take that?

Bruce Gregory Bower: Yes. So our guidance is for the full year. We don’t guide to any particular quarter. And that’s just because some of the government clients and sometimes the timing could slip by a week or something. So we don’t want to risk the quarter by saying that every quarter will be a stair step up. But it’s obvious from the full year guidance compared to the first quarter that the second half will be stronger than the first half in terms of top line. In terms of gross margin, we guide to 40% to 45% for this year. Jay mentioned about our financial discipline and I think that’s a very good point. So the first is that we have basically a cutoff for new projects of 40%. The other thing is that given the scale of the number of qualified leads and the number of new opportunities that are coming our way every day is we’re basically tightening up the terms that we accept.

So like Jay mentioned, in terms of margins, in terms of length of contract duration, et cetera, the nature of the mix we’re trying to be much more disciplined. So the aim is to drift — is to see the margin — the gross margin drifts higher over the next 2 to 3 years, hopefully, towards closer to 45% to 50% range.

Unidentified Analyst: Got it. And what is the current headcount? And what might that be by the year-end?

Jayesh Chandan: Great question. So we’re currently north of about 200 plus. Those are full-time employees, contractors will be a little over 100. With the acquisition closing, we’ll be at about 300 full-time employees. By the end of this year, we should be between 300 to 400 full-time employees and probably between 100 to 200 contractors. As you can see, [ Aditya ] we’ve been hiring quite significantly in India, Egypt and in Thailand. And what we are going to do is scale for growth.

Operator: And your next question today is coming from Brian Kinstlinger with Alliance Global Partners with a follow up.

Brian David Kinstlinger: Three quick questions. The first on the Amazon contract. You’ve spent $5 million in terms of you said of investments. What is it that you’re investing? Where is that money going towards? And how much more investment is needed?

Jayesh Chandan: Bruce, do you want to talk about the agreement and then…

Bruce Gregory Bower: Yes. So we have a SAFE agreement. We’re basically ONE AMAZON, which is the company that does two things. We have an equity stake in that. So for those not familiar, SAFE means a Simple Agreement for Future Equity. So when they do a priced funding round, that is the moment in which we are issued equity. But right now, this is a contract that will guarantee as equity in that event. So ONE AMAZON — Jay will go into more detail, but basically, this is not in the token. This is in the parent company that manages the token and also the impact investments. So it’s the top co.

Brian David Kinstlinger: Okay, so that gives you financial interest, got it.

Jayesh Chandan: It does — and that’s why they got Gorilla on Board of the company as well. So the ONE AMAZON project, as you may know, it’s a 30-year project for environmental monitoring across the Amazon Basin, right? On the capital side, we are in deep, deep discussions with leading family offices, institutional investors and development banks across U.S. and Latin America. This is not just an environmental data project is what we’re calling it is a new financial framework for valuing and protecting nature — natural capital using real-time AI-driven intelligence. Now the reason why we’ve been very active and what we are doing right now is three things. One, we are working with strategic partners and creating a global validation.

So as you know, we have partners such as AECOM, Goldman Sachs, MIT, [indiscernible] Media Labs and so on and what we are doing is that we’re expecting this alliance to become a gold standard for climate-aligned finance. Now if you look at the second aspect of the ONE AMAZON, we are actively engaged in evaluating the deployment of our own constellation of low orbit satellite so that we can provide sovereign environmental intelligence over the Amazon itself, relating overpriced third-party services and putting us in control of our own data economy. Okay? This is important because this would mean that Gorilla along with ONE AMAZON will launch its own low-orbit satellite. So we are actively looking at whether we purchase these satellites or actually, we buy the company itself.

That’s number two. Third. What we are also doing is actually, we’re building a model where we’re not just talking about deploying value for the token, we’re actually creating value for the data that is being generated. So what are we doing today? We’re working very closely with companies who are potentially going to be investing into ecotourism, renewable energy, agroforestry, biodiversity, credit monetization and so on and so forth. And as I mentioned previously, Brian, 25% of the funds of every dollar raised is going towards Gorilla for technology deployment, and we’re well positioned to create both, increasing the intrinsic token value and long-term recurring data revenue. And as I’ve mentioned, this is putting us in control of our own data economy.

I hope that answers your question.

Brian David Kinstlinger: It does. My last two-part question for Bruce, I think it’s a numbers question. First, the gross margin in the quarter was about 500 points below your target. I assume that’s more hardware deliveries and that the remainder of the year will be less weighted towards hardware. That’s my first question. Is that true? Or is that what you’re thinking? And then second, on the cash flow, you would have been cash flow positive, but you’ve got this large unbilled receivable, a very large outflow. Maybe just speak to that and how that might reverse itself, so you’ll be generating cash for the remainder of the year maybe?

Bruce Gregory Bower: Yes. So on the first one, that is absolutely correct. So there was a disproportionate amount of hardware more than sort of what we expect for the full year in the mix in the first quarter, and that is what — that’s one of the reasons. The second thing is that in terms of the overall margins for the company is first quarter is usually the slowest. So in terms of business — and we also carry higher SG&A costs. So there’s usually 13 months in Taiwan. There’s usually some other kind of costs at the same time, activity is slower. So yes, those are the two reasons why the margins both, gross and the EBITDA margins would be a little bit weaker in the first quarter, and we expect that to normalize over the full year. Like I mentioned, we target the full year, not an individual quarter because things can move around. And then second, to your second question, I’m sorry, I’m blanking on it …

Brian David Kinstlinger: You have an $18 million outflow for unbilled. So I assume your — you haven’t invoiced yet, but maybe just take us through the dynamics of that in collections.

Bruce Gregory Bower: Yes. So there are two components to it. So one is what we need to build and the second is what we need to collect. So in the second quarter so far, we haven’t so far, we haven’t raised any new invoices or substantial new invoices. We will do that in the remaining 2 weeks, and then we have collected on the receivables that were there. We’ve collected about $7 million on the receivables that were there at the — $5 million on the receivables and $2 million was release of the guarantee. The receivables that were there in the end of the first quarter. So the cash is moving in the right direction. And then basically, we are we’re collecting on some of the other receivables. We anticipate collecting them either before the end of June or in July. It is trending in the right direction.

Brian David Kinstlinger: The $18 million outflow you didn’t invoice yet for — to some of your customers for your work. Is that right?

Bruce Gregory Bower: That’s correct. So we didn’t really invoice in the first quarter. And then the second thing is that we performed a lot of work or we deliver a lot of goods. So that’s why.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Jayesh Chandan: Thank you, Nick. Everybody who’s listening and shareholders, and I’ve been awfully quiet and that’s with a purpose. It has been a phenomenal period of momentum and expansion for Gorilla. As I’ve mentioned to Brian and the rest of the team, John and so on, we are scaling rapidly. We’re currently engaged in projects across infrastructure, ports, seaports, data centers and so on. We’re expanding very rapidly across Asia. And as I mentioned, we’re in the final contracting stages for quite a number of projects. ONE AMAZON project is moving forward at a pace. We are really, really kicking it out there. As you all know, we’ve also recently signed an OEM agreement with Hewlett Packard Enterprise. This is not a logo partnership, as many have alluded to.

It’s an operational venture. I’m actually meeting with their CEO and all of the senior leadership next week in Las Vegas, where we’ll be showing Gorilla’s full stack to their global partners. This also marks a major leap in our global scale-up strategy and validates our strength of technology and execution, unlike others may lead you to believe. We are also actively very engaged in scaling up our core intelligence platform. For example, we didn’t talk about it. But we have been actively engaged with our current — one of our current large clients in scaling up their 5G lawful interception in Taiwan. And being an existing customer and moving to the next phase of deployment, we’re also in active discussions to introduce the same solution in the Middle East for where there’s a high demand, especially now for secure, high integrity 5G interception infrastructure, which is growing very quickly.

So across the regions and sectors, Gorilla is no longer just participating, we are absolutely leading. And the reason I’ve been quiet is not because of some reports. I’ve been quite because I’ve been working, I’ve been pushing the boundaries and we’re all coming together to make sure that we’re able to deliver success to our customers and to our stakeholders. That is my only objective. Now we are solving national problems with speed, precision and confidence. But more importantly, this next phase of growth is all about converting that momentum into lasting infrastructure and long-term impact. So thank you for — thank you all for believing in us. Thank you for believing in me and we will make this happen. This is just the beginning. Thank you once again, everybody.

Operator: This concludes today’s conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.