Gorilla Technology Group Inc. Q4 FY2024 earnings call

• Transformation: From a regional player in 2022 to a globally expanded, stabilized business by 2023. - Revenue Growth: 2024 revenue over $74 million, 15% increase from 2023. - Profitability: Turned prior net loss into meaningful net profit in 2023, and strong profitability in 2024 driven by disciplined cost control and operational focus. - Global Expansion: Doubled down on global expansion, rebuilt leadership team, and unlocked national level opportunities. - Contract Execution: Signing multibillion dollar deals with inbound opportunities, but detailed execution steps including understanding client priorities, scoping, proof of concept, and working with global partners before delivery. - Technology Evolution: Shifted from software to purpose-built appliances to comprehensive solution-based software, focusing on edge AI for real-world impact.

In 2024, Gorilla Technology Group delivered over $74 million in revenue, exceeding guidance. Net income excluding one-off non-cash items surged to over $21 million, surpassing guidance by 253%. Adjusted EBITDA reached over $20 million, outperforming estimates by over 70%. Operating income excluding exceptional items climbed to over $19 million, exceeding guidance by over 40%. Adjusted EPS beat market expectations by over 470%. Revenue in 2023 jumped by 189% to $64.7 million, turning a prior net loss of $87 million into net profit.

• 2025 Revenue: Guidance of $100 million to $110 million. - Gross Margins: 40% to 50%. - EBITDA Margins: 20% to 25%. - Net Margins: 10% to 18%. - Backlog: $93 million backlog for 2025, with anticipation of projects like Thai Tourist Police and Latin American smart cities boosting revenue. - Cash Flow: Anticipates cash flow positive operations in 2025 due to reductions in restricted cash collections and no significant investment expected. - 2026 Outlook: Confident revenues will be higher than 2025 guidance, with $67 million backlog attributable to 2026.

• Exchange Rate Losses: Foreign exchange loss of about $27.5 million due to Egypt's devaluation in March 2024, with potential for reversal or compensation. - Contract Execution Complexity: Delivering contracts at national scale takes time due to understanding client priorities, legacy infrastructure, compliance, and working with multiple global partners under sovereign-level scrutiny.

Q: Looking at your guidance, how much does the Egypt project represent of this year’s revenue guidance?

A: Egypt currently is about 50% of revenue, next year under 30%, and well under 15% by 2026-2027.

Q: Order some that’s needed before you start recognizing material revenue on ONE Amazon, the Thailand energy deal and the Asia smart school deal and when might that occur?

A: Takes 3 to 4 months after completing solution design, architecture planning, compliance, and working with partners; no copy/paste button for each project due to unique compliance and integration needs.

Q: Bruce, you mentioned 10% to 18% margin for 2025, was that EBITDA, was that net margin?

A: Net margin. 20% to 25% is the forecast for EBITDA margin.

Q: As it relates to the $400 million-plus smart education first phase of that contract, in December, you were down selected as the provider, has that contract been finalized?

A: No, going through stringent PoC with customer; SOW is over 900 pages; best guess estimate is just south of 6 months for signing.

Q: What is different about the approach you’re taking or is it generating any barriers or kind of give us some more depth as to what exactly is AI about your product suite?

A: Gorilla builds AI for the edge, focusing on real-world impact in areas like public safety, transportation, critical infrastructure; optimized for constrained hardware and real-time processing, delivering value in weeks not quarters.

Q: What other kind of milestones might investors look for along the way to see that you are going to hit what you hopefully are going to hit in 2025 and 2026?

A: Key milestones include contracts moving from MOU to definitive contracts with defined milestones, timing, and payment amounts; tracking revenue conversion, delivery milestones, cash flow, and client satisfaction.