GRRR Gorilla Technology Group Inc

Gorilla Technology Group Inc. (“Gorilla” or the “Company”) (NASDAQ: GRRR), a global provider of AI-based edge video analytics, IoT technologies, and cybersecurity, today reported its unaudited financial results for the six months ended June 30, 2023.

Highlights

• Booked sales exceeded internal target of $41 million, standing at $272 million, a 563% increase
• Evolved from a Project centric business to a Product & Services Business, as demonstrated by multi-hundred-million-dollar contract for Government of Egypt
• Implemented financial and operational discipline by transitioning out of marginal or unprofitable projects
• Will implement Smart Government Security Convergence solution for the Government of Egypt
• Largest contract in company history, with total revenues of $270 million over three years
• Aggressive actions to safeguard shareholders from illegal stock manipulation
• Recorded gross margin of 49.4%, a significant increase from the previous year's margin of 33.1%, standing as compelling evidence of a successful transformation to position the company for sustainable and profitable growth at scale
• Operating expense decreased by $1.9 million compared with the prior year
• 2023 and 2024 revenue guidance at $65 million and $90 million, respectively

Gorilla Chief Executive Officer Jay Chandan commented, “Just after quarter-end we announced a transformational contract with the Government of Egypt, in which we will implement a Smart Government Security Convergence solution. This contract affirms our standing as a reliable global solutions provider, which is important because MENA-region governments are actively seeking innovative partners to support their transformation from conventional systems to digital technologies. Egypt is a notable milestone in our globalization strategy and puts us on a path to profitability by the end of 2024. This contract and other wins give us outstanding visibility in revenue and profitability for the next three years. The contract is worth more than $270 million over three years and represents the largest customer win in Gorilla’s history. Together with other recent wins in Taiwan and UK, we have now secured $300 million worth of projects. We have successfully transformed from being a Project Centric business to a Product & Services Solutions business and have greatly expanded on our Platform as a Service. Our service offerings now include Smart City, Network, Video, Cybersecurity and IoT across select verticals including Government & Public Services, Manufacturing, Telecom, Retail, Transportation & Logistics, Healthcare and Education. We have made significant progress within the last 10 months and this, I believe, will be a turning point in Gorilla’s history.”

Chandan continued, “Yesterday, we issued a statement addressing the illegal and unethical manipulation of our stock dating back to late 2022. We do not make this accusation lightly and have gathered persuasive evidence that supports our view. We hired an economic analysis firm with expertise in suspicious trading activity, and after detailed work they uncovered compelling evidence suggesting manipulation of our share price. Meanwhile, we uncovered evidence of illegal attempts to extort below-market sales of our shares and colluding efforts to deceive shareholders and take activist actions. We have many tools to pursue the perpetrators, including legal action and warning our honest shareholders. We will fight to make Gorilla a thriving success, and we will stop at nothing to end the unjustified attacks being perpetrated upon us.”

Commenting on results, Gorilla Chief Financial Officer Daphne Huang noted, “We are on track to achieve revenues of approximately $65 million for the full year, driven by progress in our performance and strong demand. We are aiming to be cashflow positive by the end of 2024. We have also instilled sound operating and financial discipline into our business via the massive transformation we started last autumn. We see evidence of success in the decision to avoid unfocused and unprofitable business. Solid growth in security convergence demonstrates the wisdom of our product portfolio and the Egypt project win shows that this segment can drive explosive growth in the years ahead. Despite an uncertain macroeconomic environment today, we see vast opportunities ahead of us and are confident in our capacity to continue improving our performance through 2023 and 2024. You can also see the better quality of customers and projects in our gross margin, which expanded to nearly 50%. Based on the current Egypt project plan and revenue recognition practices, as well as other projects, we anticipate second half 2023 revenue of approximately $58 million.”

First Half 2023 Results

Unless noted otherwise, all figures are for the six months ended June 30, 2023, and all comparisons are with the corresponding period of 2022.

The following table summarizes financial results:

		Six months ended
		June 30
Items		2023					2022
		(Unaudited)
Revenue		$	6,429,335				$	13,800,930
Cost of revenue			(3,250,584	)				(9,226,561	)
Gross Profit			3,178,751					4,574,369
Gross Margin			49.4	%				33.1	%
Operating expense			(10,470,307	)				(12,402,188	)
Operating loss			(7,291,556	)				(7,827,819	)
Net loss		$	(7,269,758	)			$	(8,636,040	)

The following table shows our EBIT, EBITDA, and adjusted EBITDA, together reconciled to the loss for the six months period ended June 30, 2023, and 2022.         

	Six months ended June 30, 2023			Six months ended June 30, 2022
	(Unaudited)
Loss for the period	$	(7,269,758	)	$	(8,636,040	)
Income tax expense		2,172			356,130
Interest and Finance costs		(23,970	)		452,091
EBIT	$	(7,291,556	)		(7,827,819	)
Depreciation expense		321,902			3,420,393
Amortization expense		406,573			1,030,193
EBITDA	$	(6,563,081	)	$	(3,377,233	)
Transaction costs (one time)(1)		3,097,764			2,151,856
Adjusted EBITDA		(3,465,317	)		(1,225,377	)

(1) Transaction costs are one-off expenses for one-time employee expenses and professional services related to asset acquisition, professional services for one-time project which are considered as one-off corporate development events and added back for calculation of adjusted EBITDA.

Despite the lower revenue base, gross margin increased from 33.1% to 49.4%. Operating expense decreased by $1.9 million compared to the same period in 2022. Adjusted EBITDA was negative $3.5 million compared to negative $1.2 million a year ago.

Outlook

The Company updated guidance to reflect the Egypt contract. Based on the current project plan and revenue recognition practices, Gorilla reaffirms 2023 full year revenue guidance of $65 million, as such anticipates second half 2023 revenue of approximately $58 million. With won business to date of $300 million, the Company is comfortable offering initial guidance for 2024 revenue of $90 million.

About Gorilla Technology Group Inc.

"Empowering Your Tomorrow"

Gorilla, headquartered in London U.K., is a global solution provider in Security Intelligence, Network Intelligence, Business Intelligence and IoT technology. Gorilla provides a wide range of solutions, including, Smart City, Network, Video, Cybersecurity and IoT across select verticals of Government & Public Services, Manufacturing, Telecom, Retail, Transportation & Logistics, Healthcare and Education.

The Company’s vision is to empower a connected tomorrow through innovative and transformative technologies. Gorilla envisions a world where seamless connectivity transcends boundaries, enriching lives, industries, and societies.

Gorilla’s commitment is to lead the way in pioneering cutting-edge solutions that bridge gaps, foster collaboration and inspire progress. By relentlessly pushing the boundaries of technology, the Company aims to create an ecosystem where individuals, businesses and communities thrive in an era of digital empowerment.

Through continuous innovation, ethical practices and a steadfast dedication to quality, Gorilla strives to shape a future where every interaction, transaction, and experience is enhanced by the power of technology.

For more information go to Gorilla-Technology.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Gorilla’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “might” and “continues,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, statements regarding our beliefs about future revenues, our ability to attract the attention of customers and investors alike, our ability to fund operations as we execute a strategic shift to pursue the larger and higher margin opportunities in Security Convergence, our expectations to swing to profit in the quarters ahead, our immediate priorities, Gorilla’s strategic shift to enable it to pursue larger projects with better revenue visibility, Gorilla’s contract with the Government of Egypt, Gorilla’s ability to win additional projects and execute definitive contracts related thereto, along with those other risks described under the heading “Risk Factors” in the Form 20-F Gorilla filed with the Securities and Exchange Commission (the “SEC”) on April 28, 2023, and those that are included in any of Gorilla’s future filings with the SEC. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Most of these factors are outside of the control of Gorilla and are difficult to predict. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Gorilla undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made except as required by law or applicable regulation.

Non-IFRS Measures

Certain of the measures included in this press release are non-IFRS financial measures, including adjusted EBITDA. Non-IFRS financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with IFRS, and non-IFRS financial measures as used by Gorilla are not reported by all their competitors and may not be comparable to similarly titled amounts used by other companies.

We believe that the non-IFRS measures such as adjusted EBITDA provide useful information about our core operating results, enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. We present adjusted EBITDA to provide more information and greater transparency to investors about our operating results.

Adjusted EBITDA represents EBITDA excluding transaction costs and share listing expenses which are one-off expenses for professional services related to our Business Combination, asset acquisition and SOX 404 implementation project, which are considered as non-recurring corporate development events and added back for calculation of adjusted EBITDA.

The final table which shows our EBIT, EBITDA, and adjusted EBITDA, together reconciled to the loss for the period ended June 30, 2023, and 2022 in this results announcement has more details on the non-IFRS financial measures and the related reconciliations between these financial measures.

For More Information:

Investors

Gary Dvorchak

The Blueshirt Group

gary@blueshirtgroup.com 

Media

Jeff Fox

The Blueshirt Group

jeff@blueshirtgroup.com 

Gorilla Technology Group Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(Unaudited)

(Expressed in United States dollars)

	Six months ended June 30
Items	2023				2022
Revenue	$	6,429,335			$	13,800,930
Cost of revenue		(3,250,584	)			(9,226,561	)
Gross profit		3,178,751				4,574,369
Operating expenses
Selling and marketing expenses		(901,355	)			(1,980,709	)
General and administrative expenses		(7,641,876	)			(3,295,612	)
Research and development expenses		(2,772,621	)			(7,766,833	)
Other income		79,089				11,037
Other gains – net		766,456				629,929
Total operating expenses		(10,470,307	)			(12,402,188	)
Operating loss		(7,291,556	)			(7,827,819	)
Non-operating income and expenses
Interest income		400,516				11,957
Finance costs		(376,546	)			(464,048	)
Total non-operating income and expenses		23,970				(452,091	)
Loss before income tax		(7,267,586	)			(8,279,910	)
Income tax expense		(2,172	)			(356,130	)
Loss for the period	$	(7,269,758	)		$	(8,636,040	)
Other comprehensive loss
Components of other comprehensive loss that may be reclassified to profit or loss
Exchange differences on translation of foreign operations	$	(185,082	)		$	(874,697	)
Other comprehensive loss for the period, net of tax	$	(185,082	)		$	(874,697	)
Total comprehensive loss for the period	$	(7,454,840	)		$	(9,510,737	)
Loss per share
Basic loss per share	$	(0.11	)		$	(0.29	)
Diluted loss per share	$	(0.11	)		$	(0.29	)

Gorilla Technology Group Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(Expressed in United States dollars)

Items	June 30, 2023				December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	10,268,581			$	22,996,377
Financial assets at fair value through profit or loss - current		1,053,621				1,073,229
Financial assets at amortized cost		8,859,457				6,871,187
Contract assets		4,551,822				725,441
Accounts receivable		12,507,386				14,041,611
Inventories		56,544				68,629
Prepayments - current		244,039				1,266,442
Other receivables		732,054				648,617
Other current assets		38,421				61,803
Total current assets		38,311,925				47,753,336
Non-current assets
Property, plant and equipment		15,731,102				16,132,567
Right-of-use assets		8,269				16,675
Intangible assets		9,060,563				56,342
Deferred income tax assets		29,464				29,905
Prepayments - non-current		482,230				612,982
Other non-current assets		939,513				659,071
Total non-current assets		26,251,141				17,507,542
Total assets	$	64,563,066			$	65,260,878
Items	June 30, 2023				December 31, 2022
Liabilities and Equity
Liabilities
Current liabilities
Short-term borrowings	$	15,189,220			$	13,492,935
Contract liabilities		113,221				58,475
Notes payable		593				602
Accounts payable		3,765,166				6,674,528
Other payables		5,400,184				3,620,998
Provisions - current		70,758				88,469
Lease liabilities		8,387				16,981
Warrant liabilities		1,328,165				2,042,410
Long-term borrowings, current portion		2,781,744				2,108,896
Other current liabilities, others		143,909				152,373
Total current liabilities		28,801,347				28,256,667
Non-current liabilities
Long-term borrowings		6,491,613				8,251,788
Provisions - non-current		46,887				61,057
Deferred income tax liabilities		145,997				148,183
Total non-current liabilities		6,684,497				8,461,028
Total liabilities		35,485,844				36,717,695
Equity
Equity attributable to owners of parent
Share capital
Ordinary share		7,174				7,136
Capital surplus
Capital surplus		162,719,230				154,730,389
Retained earnings
Accumulated deficit		(104,254,138	)			(96,984,380	)
Other equity interest
Financial statements translation differences of foreign operations		185,096				370,178
Treasury shares		(29,580,140	)			(29,580,140	)
Equity attributable to owners of the parent		29,077,222				28,543,183
Total equity		29,077,222				28,543,183
Significant contingent liabilities and unrecognized contract commitments
Total liabilities and equity	$	64,563,066			$	65,260,878

Gorilla Technology Group Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in United States dollars)

			Six months ended June 30
			2023				2022
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax		$	(7,267,586	)		$	(8,279,910	)
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expenses			321,902				3,420,393
Amortization expenses			406,573				1,030,193
Share-based payment expenses			500,000				0
Share option expenses			38,053				184,943
Loss on disposal of property, plant and equipment			257				0
Gains on reversal of accounts and other payables			(68,165	)			0
Gains on financial assets and liabilities at fair value through profit or loss			(616,686	)			0
Interest expense			376,546				464,048
Interest income			(400,516	)			(11,957	)
Changes in operating assets and liabilities
Changes in operating assets
Contract assets			(3,826,381	)			402,155
Accounts receivable			1,534,225				(1,175,393	)
Inventories			12,085				77,038
Prepayments			1,163,915				(939,900	)
Other receivables			(15,757	)			(4,010	)
Other current assets			(30,319	)			2,626
Other non-current assets			(15,315	)			33,359
Changes in operating liabilities
Contract liabilities			54,746				(1,386	)
Notes payable			(9	)			(45	)
Accounts payable			(2,846,303	)			927,603
Other payables			(1,288,629	)			542,481
Provisions			(30,203	)			(59,016	)
Other current liabilities			(8,464	)			(34,871	)
Cash outflow generated from operations			(12,006,031	)			(3,421,649	)
Interest received			386,537				11,957
Interest paid			(388,045	)			(313,902	)
Tax paid			(12,491	)			(360	)
Net cash flows used in operating activities			(12,020,030	)			(3,723,954	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment			(216,672	)			(2,815,381	)
Acquisition of intangible assets			(3,257,771	)			(14,252	)
Disposal in financial assets at amortized cost			0				2,225,422
Investment in financial assets at amortized cost			(1,988,270	)			0
(Increase) decrease in guarantee deposits			(265,127	)			34,033
Net cash flows used in investing activities			(5,727,840	)			(570,178	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings			11,037,443				867,694
Repayments of short-term borrowings			(9,238,450	)			0
Proceeds from long-term borrowings			0				1,574,876
Repayments of long-term borrowings			(872,431	)			(1,793,622	)
Principal repayment of lease liabilities			(8,665	)			(26,503	)
Loan to Global SPAC Partner Co.			0				(1,165,339	)
Payment of transaction cost			0				(87,419	)
Exercise of warrants			4,372,875				0
Net cash flows generated from (used in) financing activities			5,290,772				(630,313	)
Effect of foreign exchange rate changes			(270,698	)			529,800
Net decrease in cash and cash equivalents			(12,727,796	)			(4,394,645	)
Cash and cash equivalents at beginning of period			22,996,377				9,944,748
Cash and cash equivalents at end of period		$	10,268,581			$	5,550,103

The following table shows our adjusted EBITDA, together reconciled to the loss for the period ended June 30, 2023, and 2022.

Gorilla Technology Group Inc. and Subsidiaries
Reconciliation of Non-IFRS Financial Measures – Adjusted EBITDA Calculation
(Unaudited)
(Expressed in United States dollars)
Items		Six months ended June 30, 2023			Six months ended June 30, 2022
Loss for the period	$	(7,269,758	)	$	(8,636,040	)
Depreciation Expense		321,902			3,420,393
Amortization Expense		406,573			1,030,193
Income Tax Expense		2,172			356,130
Interest and Finance Costs		(23,970	)		452,091
Transaction Costs (one time)		3,097,764			2,151,856
Adjusted EBITDA	$	(3,465,317	)	$	(1,225,377	)