Prepared remarks
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. 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 uncertainties 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.
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 decisions 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. While 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, the Middle East, North Africa, Latin America and beyond, the results are loud enough.
I believe the results are loud enough on their own. We're seeing immense acceleration from Q2, Q3, Q4 going into 2026. 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 2026 as well. Bruce, do you want to take them through the numbers on a very high level?
Yes, so I would like to mention a few of the highlights that I'm sure you've seen from the release. The first is, of course, the revenue of $18.3 million, 109% year-on-year growth. We're quite happy with the adjusted EBITDA of $5.16 million, which represents a 48% increase year-on-year. The adjusted net income stands at $4.47 million, which is a 46.7% increase. In total, this means that we're executing well on the contracts, and it’s flowing through into profitability. The balance sheet remains strong. Total cash reserves, both restricted and unrestricted, closed the quarter at $33.8 million. In addition, we did that while managing to reduce debt. 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 have actually reduced the debt further to $17 million. We've done that in a cash-neutral fashion, where basically, we have blocked deposits that are collateralizing the loan.
Pay off $1 of debt then releases $1 of blocked deposit. We're very proud of the way we have managed the balance sheet in this time. One other thing I'd like to point out is we ended the first quarter with around 20.15 million shares outstanding. The fully diluted share count remains the same because that increase in outstanding shares came due to the exercise of warrants. In the second quarter, we spent $1.8 million on share buybacks, totaling $5.4 million on the buyback program in the last 12 months. We have a total $10 million authorized for the program, giving us $4.6 million of remaining capacity. We have done all this while investing for the future as Jay mentioned. Regarding guidance, the guidance for 2025 remains the same at $100 million to $110 million based on a backlog where we have contracts signed that are due to be implemented or are being implemented already. We expect an EBITDA of $20 million to $25 million based on that revenue number and a net profit in the range of $15 million to $20 million, excluding extraordinary items.
The backlog continues to shape up, sitting at $70 million for 2026, with several projects in proof-of-concept stage. Importantly, we have over $5 billion in pipeline and qualified leads, which has actually decreased from earlier in the year due to our MOU with the Provincial Electricity Authority in Thailand moving into proof-of-concept stage. Outside of that, the qualified leads related to potential contract value have grown. We remain confident in our balance sheet and ability to manage funding effectively. Those are the main points for me. Back to you, Jay, or over to the moderator.
Nick, I'm happy to take questions so that we can respond and get some more time to answer all the questions both from analysts and shareholders.
Questions and answers
Your first question today will come from Brian Kinstlinger with Alliance Global Partners.
Nice results. I'm hoping we can clarify a few points. I thought I heard your earlier comment, but I want to ensure I fully understand. Regarding the Royal Thai Tourist Police contract that you mentioned was valued between $50 million and $60 million, can you remind us if this is a signed purchase order? Did you mention going into proof-of-concept? I'd like to discuss whether the details have already been finalized or what stage you're at in that process.
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 about Gorilla recommending our AI surveillance system. What we've helped them do is 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. We are closely working with their leadership to expand and deepen the platform capabilities nationwide. We're now integrating the Royal Thai Tourist Police with immigration, working with the AOT. We will also 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 forth. What they're asking us to do is not just deploy surveillance systems, but also to build connectivity across these key islands so that they could keep in touch and allow tourists to travel safely across all these islands without getting lost. This technology will help them connect to emergency services at any time using an RFID tag or their mobile phones if they're stranded or lost. I hope that answers your question.
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 are questions about those kinds of things about your contracts. So just take us through what has been signed versus what's the opportunity?
Perfect. The one that is being signed is for a tune of $50 million to $60 million. We are now headed towards where we've actually got a teaming agreement with them. I can confirm that we will be looking at a total size of between $500 million to $550 million for the entirety of the project spread over 5 to 6 years.
That's the addressable opportunity. Got it. Yes, I have a few more questions. I will ask one and then return to the queue. Regarding the various contracts you've mentioned, can you provide an update on the large $400 million opportunity for the smart education contracts? I believe there was a memorandum of understanding, and now that six months have passed, what progress has been made toward a formal agreement?
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. I'm very happy to report that we're in the late stage negotiation process on actually two of the projects, one for smart education. And they've added an $80-plus million for Smart Cloud Infrastructure for the same educational project as well. We're working to get their final support for both projects, which are very transformative. If you give me a few more days, maybe a couple of 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.
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.
If I just chip in one thing. When we announced an initial MOU 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 when dealing with critical national infrastructure and security, there’s usually a proof-of-concept phase that takes months, and the purpose is to ensure everything works properly before moving into a binding agreement.
Your next question today will come from John Roy with Water Tower Research.
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?
John, great question. Good to hear from you. 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. We have a very significant qualified pipeline. What we're doing in Q2 and Q3 is we're laser focused on converting these large deals, which are in late-stage negotiation. 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. This is active progress and tied to national outcomes. Second, we're actively working on major deployments. We are now entering into multi-year contracts, none of our contracts are one-year contracts. The minimum is 3, 5, and I think the average is about 7 to 10 now.
We’re working with national stakeholders to help them understand the difference between an OpEx and a CapEx model, ensuring that these deployments will show meaningful returns for Gorilla long-term into 2026, 2027, and 2028. We are looking at new markets and new partnerships. We expect to announce new market entry, including further expansion into the regions I just mentioned. But at the same time, we are advancing our discussions with well-known household name partners around energy, AI, hardware integration. The fourth important approach is our financial discipline. We could be aggressively spending money trying to fuel growth, but we are focused on profitable growth. The fifth important point is monitoring media and market visibility. We ensure investors are taking note of Gorilla with earnings, new partnerships, global projects in motion and hope Q2 and Q3 will lead to increased exposure.
Lastly, we are pursuing strategic acquisitions in Southeast Asia. We’re finalizing an acquisition in Thailand that will deepen our operational depth and local scale. We expect to close that in Q2 and begin integration in Q3.
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?
Without going into specific contracts, I would say that in 2025 the guidance is for $93 million of backlog this year. That is almost entirely due to existing contracts and clients. That is three large clients and several smaller contracts. For next year, we count the backlog at $70 million so far, due to a couple of existing clients and several new contracts that start at the end of 2025, but most of the financial benefit hits in 2026.
Your next question today will come from Mike Latimore with Northland Capital Markets.
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?
Did you say sequential revenue growth?
Yes, our guidance is for the full year. We don't guide to any particular quarter just because the timing with some government clients can slip. It is clear that the full year guidance compared to the first quarter indicates the second half will be stronger than the first half in terms of the top line. In terms of gross margin, we guide to 40% to 45% this year. We are tightening the terms we accept. The aim is to see the margin drift higher over the next 2 to 3 years towards the 45% to 50% range.
Got it. And what is the current headcount? And what might that be by the year-end?
Great question. We're currently north of about 200 full-time employees, and 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 expect to be between 300 to 400 full-time employees and probably between 100 to 200 contractors. We have been hiring quite significantly in India, Egypt, and Thailand to scale for growth.
And your next question today is coming from Brian Kinstlinger with Alliance Global Partners with a follow-up.
Three quick questions. The first on the Amazon contract. You said you've spent $5 million in terms of investments. What is it that you're investing? Where is that money going towards? And how much more investment is needed?
Bruce, do you want to talk about the agreement?
Yes. We have a SAFE agreement. We have an equity stake in ONE AMAZON, which does a couple of things for us. A SAFE is a Simple Agreement for Future Equity, meaning we are issued equity when they do a priced funding round. Currently, we have a contract that guarantees equity in that event. The ONE AMAZON project, as you may know, is a 30-year project for environmental monitoring across the Amazon Basin. On the capital side, we are in deep discussions with leading family offices, institutional investors, and development banks across the U.S. and Latin America. This is a new financial framework for valuing and protecting natural capital using real-time AI-driven intelligence. We are working with strategic partners to create global validation for this project.
Okay, so that gives you financial interest, got it.
Yes, this is why they have Gorilla on Board of the company as well. The ONE AMAZON project is crucial as we are looking into deploying our own constellation of low orbit satellites for sovereign environmental intelligence over the Amazon. This will allow us to provide services, putting us in control of our own data economy. We are working closely with companies investing in eco-tourism, renewable energy, agroforestry among others. This strategy is expected to enhance both the intrinsic token value and long-term data revenue. I hope that answers your question.
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?
Yes, that is absolutely correct. There was a disproportionate amount of hardware more than what we expect in the first quarter. The first quarter is usually the slowest, and we also carry higher SG&A costs. The margins both gross and EBITDA margins will normalize over the full year. We target the full year, not individual quarters because things can move around. The unbilled receivable is part of what we need to bill and collect. We anticipate collecting on those by the end of June or in July. Cash is moving in the right direction.
The $18 million outflow you didn't invoice yet for — to some of your customers for your work. Is that right?
That's correct. We didn't invoice in the first quarter. We had delivered a lot of goods. So that explains the unbilled amount.
This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.
Thank you, Nick. To everyone listening and shareholders, I've been quiet for a purpose. It has been a phenomenal period of momentum and expansion for Gorilla. We're engaged in projects across infrastructure, ports, data centers and so on. We're expanding rapidly across Asia. We are in the final contracting stages for many projects. The ONE AMAZON project is progressing at pace. We've signed an OEM agreement with Hewlett Packard Enterprise, it's not just a logo partnership, it's an operational venture. This marks a major leap in our global scale-up strategy and validates our strength of technology and execution. We're also scaling up our core intelligence platform. We have been actively engaged in scaling up 5G lawful interception in Taiwan and expanding into the Middle East where there's high demand for secure, high integrity 5G interception infrastructure. Gorilla is not just participating; we are absolutely leading. We are solving national problems with speed, precision, and confidence. This next phase is all about converting momentum into lasting infrastructure and long-term impact. Thank you for believing in us. We will make this happen. This is just the beginning.
This concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.