– Year-on-year growth in fiscal 2023 will be nearly 300% in constant currency –
– Booked sales exceeded internal target of $41 million, standing at $272 million (a 563% increase) –
– Revenue guidance of $65 million for 2023 and $90 million for 2024 –
– Improved Visibility with Revenue Contracted Through 2026 –
– 49.4% Gross Margin Affirms Success in Improving Quality of Customer Base –
LONDON, Aug. 09, 2023 (GLOBE NEWSWIRE) — 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
Media
Jeff Fox
The Blueshirt Group
| 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 | ) |
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