Full Year 2024 Gorilla Technology Group Inc Earnings Call
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Speaker Change: Thank you for standing by. This is the conference operator. Welcome to the Gorilla Technology Group Inc. full year 2024 earnings call. Gorilla Technology Group is listed on the NASDAQ under the ticker GRRR.
Speaker Change: As a reminder, all participants are in listen only mode and the conference is being recorded.
Speaker Change: After the presentation, there will be an opportunity to ask questions. To join the question, Q, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero.
Speaker Change: Before we begin, we will read the further looking statement. Today's call includes further looking statements made under Bruce Lent.
Speaker Change: made pursuant to the Safe Harbor Provision of the Private Security's litigation reforms act of 1995.
Speaker Change: 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 defer materially.
Speaker Change: Overlooking Statements often include terms such as expects, beliefs, plans, anticipates, may, should, and similar expressions.
Speaker Change: 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
Speaker Change: Accept as required by law, where let 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 or other life.
Speaker Change: I would now like to turn the conference over to Jayesh Chandan, Chair, Chairman and Chief Executive Officer, Bruce Bower, Interim Chief Financial Officer and Dr. Rajna Chaudhan, Chief Technology Officer. Please go ahead.
Speaker Change: Thank you very much, Michelle. First of all, before I begin, I would like to thank our incredible community of institutional retail investors.
Speaker Change: You've all been standing by me and this incredible business we've built through every single high in every single low. You believe it's not only endured but it also fueled everything we have and we will build. So thank you.
Speaker Change: I would like to quickly give you an update as to where we are with Gorilla technology as a company today but more importantly talk to you about how we have evolved as a business starting from 2022 all the way up until 2024 going into 2025.
Speaker Change: In 2022, we were largely a regional player with limited global reach and all complicated capital structures and a business that was technically promising.
Speaker Change: But commercially constrained as well at the same time. And fast forward today, what you're seeing is a radically transformed organization built for scale, sustainability and dominance in some of the fastest growing markets on the planet.
Speaker Change: Now, in 2023, we began our shift. We doubled down on our global expansion. We cleaned up the business, rebuilt the leadership team, stabilized at operations, and began unlocking national level opportunities.
Speaker Change: Now, our revenue, as you all know, jumped by about 189% to about $64.7 million, but also turned a prior net loss of $87 million into a meaningful net profit. But 2024 is when the engine truly fired.
Speaker Change: We delivered at 74 million plus dollars in revenue exceeding guidance and reinforcing the strength of our global sales execution.
Speaker Change: On that income, excluding one-off non-cash item search to about $21 million and that's was surpassing guidance by 253 plus percent.
Speaker Change: That was purely driven by Discipline Cost Control and Shop Operational Focus.
Speaker Change: Out of just a deeper doubt reached about 20 plus million dollars are performing estimates by little over 70 plus per cent and that shows operational efficiency and a scalable business model.
Speaker Change: But more importantly, if you look at our operating income, excluding exceptional items, we climb to a little over $19 million that exceeded the guidance by 1.040%, highlighting also robust performance across the business.
Speaker Change: But what was also very notable to learn, which I'm sure the market has already realised, is that we beat market expectations on a just DPS by a little of 470% reflecting.
Speaker Change: I was strong underlying profitability of the business. Now, these are much as papergains. These are hard-earned results, delivering one-house security across five different continents, securing sovereign level infrastructure projects and scaling long-term recurring revenue streams.
Speaker Change: and next here is the question we keep hearing especially from skeptics and other naysayers if I may
Speaker Change: How's Gorilla signing multi-billion dollar deals? How are we building a six billion dollar pipeline? Is that even real? These are questions I've been faced on daily basis.
Speaker Change: Now let me be clear, we're yet not out there called pitching. These are inbound opportunities that are coming to us because the market is finally catching up to what we have built.
Speaker Change: Whether it's government's strategic funds, global partners, they're seeking out to lead their national digital transformation programs and they're seeking us.
Speaker Change: When you've delivered on the ground, like what we've done in Taiwan, Thailand, Latin America, United Kingdom, were troubles.
Speaker Change: When you're recognized by someone like Global Edge Fund as the exclusive AI and digital infrastructure partner, doors open, then a major platform such as one Amazon selects Gorilla AI Stack to support the mission critical operations to create a tokenized nature capital.
Speaker Change: You do not have to convince anyone that we're real. The work speaks for itself. So yes, we have nearly 2 billion plus in signed contracts on who contracts want to date. These are not theoretical. They have structured commercial agreements with details coped.
Speaker Change: Faced delivery schedules and monetization milestone and the remaining 4.6 billion pipeline it's not
Speaker Change: It includes late-stage contracts, formal MOUs, transitioning into final terms and more importantly government-backed frameworks with long-term commercial scope. Now I want to address a very, very common misunderstanding.
Speaker Change: Just because an MOU is signed or even a contract is secure, it does not mean the revenue falls from the tree the next day.
Speaker Change: This is not a plug-and-play. We're not selling pre-packed software over the checkout counter and we're definitely not selling taco trucks. What we are doing is far more ambitious and we are far more complex.
Speaker Change: Before the first dollar is earned, I need to educate everybody as to how this goes by. Things we need to do, we must, first of all, understand the client's national priorities.
Math the real world complexity of legacy infrastructure.
Scope & Architect, Future State Environments
Speaker Change: has become what we call build trust as a strategic partner not just as a transactional vendor.
Speaker Change: Engage in solution design, proof of conservation, architecture planning, compliance alignment and finally most importantly we have to work with multiple global partners often under the sovereign levels scrutiny.
Speaker Change: Only then do we move into delivery and delivery at a national scale takes time. Why? Because when you are digitizing an energy grid or re-imagining national cybersecurity infrastructure or building the smart ecosystem across thousands of institutions,
Speed Without Structure
is failure.
Speaker Change: So when I say we are signing long term deals, it's not to impress the market today.
Speaker Change: It is to build a 5, 10, 15, 20 at 30 year revenue base.
Speaker Change: So that when Bruce Raj and I can stand in front of the market our investors and analysts will say with conviction.
Speaker Change: We know what we're delivering, we know where the revenue is coming from, and more importantly, we're building something that lasts. Now this is not just a business growth, we're talking about this is category leadership.
Thank you.
Speaker Change: And finally, before I hand it over, let me say this, we're just getting started not just globally both in the United States.
Speaker Change: We're expanding very rapidly, and this is not just about business development, but it's also about engineering, policy, engagement, and partnerships that will place Gorilla the heart of the AI infrastructure narrative in the United States.
Speaker Change: Now, this is not speculative tech hype. This is infrastructure policy, AI and execution at scale. But more importantly, as we now take you through a business strategy, technology roadmap and financials, I ask you to look beyond the noise.
Speaker Change: See Gorilla for what it is. It's a company with a proven model, real profitability, global reach and a pipeline that is not built on height but built on delivery trust and unmatched execution capability.
Speaker Change: So here are a few things I want to leave you with. We are not here to compete for space but we are here to define.
Speaker Change: will define that particular space or define it as if I may say it.
Speaker Change: We're not just following a category but we're trying to build one but more importantly the market is just beginning to realize that. Now I will hand it over to Bruce and Bruce do you want to take them to the numbers behind that momentum? Thank you.
Bruce Bower: Thank you Jay. Thank you everyone. So the first thing before I dive in is I want to say that we shared today the abridged financials.
Bruce Bower: There will be a 20 F filing which is our year end full financial filing that will be coming up in a matter of a week or two. So stay on the lookout for that, that will have all the details behind this.
Thank you. Bye-bye. Bye-bye.
Speaker Change: To reiterate just the key numbers, I'll walk through the income statement and go through those.
Speaker Change: So, first is the revenue, as we mentioned, delivered 74.67 million, we're quite thrilled with this as it's a 15% increase over last year.
Speaker Change: This is really due to performance from some of the large contracts that we had announced earlier, so 2023.
Speaker Change: and also some onboarding of new clients or new contracts from repeat clients.
Speaker Change: The gross profit was 49.96%. This is a decline from last year due to a change in the mix.
Speaker Change: What we saw was basically in 2023 a very high margin focus on services on high margin services and we think that that was basically a one off.
Speaker Change: going forward we expect the gross margin to stay around this level, so 45 to no 50% range we think that this is the margins that the business is able to generate at scale going forward.
Speaker Change: As we scroll down to the cost items, you can see that basically the SGNA and the R&D spend were downless in 2024. That reflects the right sizing of the business, some structured layoff that we took in 2023 and 2024.
Speaker Change: really to get the business down to, you know, cut some of the fat and get some muscle mass.
Speaker Change: We're starting to hire again and to rebuild in some key areas especially with the senior team. So in the second half of this of last year and then in the beginning of this year we have been building up in the fire scene technology team operations.
Speaker Change: Also on the call side, we saw a foreign exchange loss of about 27.5 million dollars that is primarily due to the impact of the one-off evaluation that we saw in Egypt in March of 2024.
Speaker Change: Now, this is a provision that we've taken to be sort of max conservative. There is the potential for a reversal or a decrease in the provision.
Speaker Change: As first of all the the exchange rate could settle down or reverse and secondly as there is the potential for compensation from clients for exchange rate, some of the exchange rate losses.
Speaker Change: So for now we have booked the maximum provision and we await further developments.
Speaker Change: The the other big impact here, as we mentioned at the bottom of the press release was in terms of the conversion of the preferred shares and the exercise the warrants. So basically this is.
Speaker Change: This is a non-cash loss of $59.54 million. I want to emphasize that this is on paper. It doesn't change any of the operating results and it doesn't change any of the cash items.
Speaker Change: So so that was a brief tour of the profit and loss in terms of the cash flow. So last year, we saw a significant outflow from operations of cash from operations of 34 million that was financed by basically raising money from the market in the first part of 'twenty 'twenty four.
Speaker Change: That build it.
Speaker Change: Or is that decrease in cash flow was finance was due to a build in the contract assets I E Unbilled revenue.
Speaker Change: This is basically because we for work and then as we performed work and recognize revenue.
Speaker Change: Weighted to bill it.
Speaker Change: We believe that the Unbilled revenue is peaked at the end of 2024.
Speaker Change: We are billing actively to our main customers now in terms of sending the invoices and moving it into the accounts receivable column.
Speaker Change: We also expect that this year will be cash flow positive from operations because of that right. The unbilled revenue will expand dramatically, we're sending bills to customers and collecting them.
Speaker Change: Or or awaiting collection and in the next week or two.
Speaker Change: In terms of where we are with the balance sheet. The unrestricted cash balance is $21 $7 million at the end of the year that is up from $5 $3 million at the end of 2023.
Speaker Change: That's obviously a dramatic improvement.
Speaker Change: That came partly from the reduction in the restricted cash balance so restricted cash ended the year at $15 77 million that was down from 41.47 million that.
Speaker Change: That basically is because we had several guarantees to two clients, where we delivered a certain milestone we reached a certain milestone and we were able to unlock those guarantees and turn them from restricted cash in the unrestricted cash.
And some of that cash was put to work in either in some.
Speaker Change: Hardware prepayments or in.
Other uses for the business.
Speaker Change: [laughter] also part of that.
Speaker Change: The freeing up of cash part of the increase in cash was used to pay down debt. So we finished at 20 142 million down from 25.09 million of debt.
Speaker Change: So that is improvements and we expect further improvement along those lines.
Speaker Change: So to come to the shareholder structure as of today. So I mentioned this earlier, but there are no preferred shares those were all converted into ordinary shares in 'twenty in 2024.
Speaker Change: We have about 700.
Speaker Change: And shares that can be issued private warrants.
Speaker Change: But once you strike prices 590.
Speaker Change: And then we have the publicly traded warrants G. R. R. W.
Speaker Change: Which are about 950000 potential shares.
Speaker Change: All told that means that we reduced the fully diluted share count from the middle of last year until now by about 750000 shares. So we've tried to be very keep a lid on on dilution.
Speaker Change: [laughter].
Speaker Change: Coming too.
Speaker Change: A couple of other points for 'twenty to 'twenty four it so as I mentioned, we will announce the full financials it'll be a filing with the SEC.
Speaker Change: We expect to see improvements in the language about material weaknesses and internal controls.
Speaker Change: Obviously, I don't want to front run the exact statement, but.
Speaker Change: We have made a lot of progress in the year in terms of internal controls operations and Sarbanes Oxley complaints. So we expect to see.
Speaker Change: Much better statement about internal controls. We also expect to announce that we are sarbanes Oxley compliance and actually that's two years ahead of the requiring that the exchange has for us.
Speaker Change: I want to turn out to the guidance for towards the towards five so as we mentioned earlier in the year the guidance is $100 million to $110 million of revenue.
Speaker Change: The gross margins are 40% to 50%, it's a wide range it should be closer to the top end of the range then the vitamins the range.
Speaker Change: And then we see 20% to 25% EBITDA margins and net margin of 10, 218% again theres a wide range because of certain it depends basically where we book the revenue for tax purposes.
Speaker Change: We have a lot of confidence in those predictions as well because the backlog at the moment is $93 million so to expand on what Jay was talking about.
Speaker Change: The backlog for us means revenue, whereas the contract signs it is either in the process of being delivered or it is booked to be delivered in 2025. So that 93 million is what is is just what's attributable to 2025.
We also expect a ramp up in some of the projects that we have discussed before so for instance, our work with the titers beliefs are.
Speaker Change: Our work in Santa Marta and some of the other smart cities in Latin America.
Speaker Change: Which will take us beyond the backlog figure at 93 million into a range of 100 to 110. So that's how we get there.
Speaker Change: I don't yet have the exact amounts and timing for those but we know that those projects will generate revenue this year and.
Speaker Change: Together, they will get us to the 110 guidance.
Speaker Change: We anticipate that I should say.
Speaker Change: So we anticipate cash from operations to be positive.
Speaker Change: Due to further reductions in restricted cash.
Speaker Change: Collections from customers.
Speaker Change: Also because as of now we don't expect seem to be good investments.
Speaker Change: Last but not least is talking about that we own a property in Taipei.
Speaker Change: Which is on the market. The plan is very much that we will repay our debt load.
With the proceeds from the sale of the property that will also free up about $5 $5 million of cash that is restricted them because it is pledged as collateral to against alone.
Speaker Change: And last but not least I want to talk a little bit of 2026, so as Jay mentioned.
Speaker Change: A lot of the.
Speaker Change: M O us contracts et cetera that we have announced to the market.
Speaker Change: Have a revenue impact where we're still figuring out when exactly it starts you know, it's not press a button and it starts it it could take six months to start it could take nine months it could take 12 months.
Speaker Change: But nonetheless, we are confident that revenues will be in 2026.
Speaker Change: Then our guidance for 2025.
Speaker Change: We also.
Speaker Change: Have a backlog of $67 million.
Speaker Change: Which is attributable just to 2026. So this is contracts that we already are working on where you know looking forward. We can see that we will deliver this revenue in 2026.
Speaker Change: We also have funding for our current project portfolio.
Speaker Change: Growing the business require us putting capital to work in in different projects and to service different contracts.
Speaker Change: If we.
Speaker Change: We get more contracts or the.
Speaker Change: They've become.
Speaker Change: Sooner or David I guess would be the right way to say it.
Speaker Change: Then we will seek to utilize first our cash balance secondly, our debt in the form of bank debt also project level finance and last would be equity.
Speaker Change: So if we had you know.
Speaker Change: An amazing run of converting projects into signed contracts that would be operational this year than there was a chance we would raise equity but of course, we would only do that if it was accretive for shareholders by delivering EBITDA and revenue growth and you know to fund exciting projects.
Speaker Change: Otherwise, we will stick with the current project portfolio.
Speaker Change: And then we will fund it with our own resources.
Speaker Change: So that is all for me was that I'd like to turn it over to Jay and Suraj Juergen.
Speaker Change: Thank you Bruce and Hello, everyone.
Speaker Change: I'd like to take a moment to share a few thoughts from a technological development standpoint, so that it helps ground ourselves a gorilla. Our journey has been very intentional from being a software company to purpose built appliances company and now onto delivering comprehensive solution based software.
Speaker Change: Yes.
Speaker Change: Each evolution brought us closer to our customer deepening our understanding of the challenges in allowing us to control more of the value chain.
Speaker Change: Initially we specialized in powerful AI software, but software alone left our customers facing hardware incompatibilities integration headaches infrastructure gaps and unpredictable performance recognizing this we shifted our approach at the top of 'twenty 'twenty four we transitioned into creating purpose.
Speaker Change: <unk> built appliances pairing our AI with optimized hardware.
Speaker Change: This gave our customers reliable performance enhance security and faster realization of value.
Speaker Change: Yet we knew our customers needed even more.
Speaker Change: We deliver complete outcome focused solutions fully integrated systems designed to solve into any challenges not just isolated components.
Speaker Change: The one Amazon project illustrates this perfectly.
Speaker Change: We don't simply go win offering AI software or Standalone appliances instead.
Speaker Change: We are designing and deploying an integrated solution combining infrastructure video analytics secured communications all seamlessly embedded within the Amazons ecosystem.
Speaker Change: This holistic approach unites hardware software services intelligence and data center operations, all working cohesively towards strategic long term goals.
Speaker Change: That's the future that we're building where guerrilla serves has the foundational platform delivery engine and the trusted partner for intelligent large scale infrastructure.
Speaker Change: I'm often asked this question.
Speaker Change: So long does it take for gorilla to operationalize these large scale projects.
Speaker Change: The reality is that it depends.
Speaker Change: These projects, all big and with clearly identifying and understanding critical problems, whether it's enhancing traffic safety for a city, providing secure surveillance for our nation are helping partners modernize infrastructure.
Speaker Change: The foundational understanding informs every subsequent step that you take.
Speaker Change: Once clarity is established we move quickly, but deliberately involving relevant experts early and clearly mapping out constraints, maybe environmental regulatory and operational.
Speaker Change: Then we leverage our extensive library of proven blueprints and we take these designed architectures optimize them through our ownership of the entire stack, which is software and hardware.
Speaker Change: So what distinguishes gorilla.
Speaker Change: Is our dedication beyond product delivery, we manage deployment integration complexities AI optimization for localized conditions custom model creation and user training, we engineered solutions for the real world resilience not full lab simulations to one Amazon project exemplifies.
Speaker Change: This commitment from gorilla.
Speaker Change: Starting from a shared vision for intelligent Congress conservation of the Amazon Rain Forest, we have architected, a robust solution integrating advanced AI secured communications and physical infrastructure.
Speaker Change: So how does the gorilla project come to life, it's very simple to clear purpose precise execution and total ownership from start to finish. This is how we consistently transform complex problems.
Speaker Change: Food lasting solutions.
Speaker Change: With that back to you Jay.
Thanks Raj I'm I'm now are very keen to open the forum for the Atlas and <unk> questions.
Speaker Change: Thank you.
Speaker Change: I guess the question and answer session and trying to question here you May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.
Speaker Change: If you have anything else because fun. Please pickup your handset before pressing anarchy cause Italia question.
Star then two.
Speaker Change: The first question comes from Mike Latimore Northland Securities. Please go ahead.
Speaker Change: Hi, This is keaton choky on for Mike I'm looking at your guidance I was wondering how much does the Egypt projects represent of this year's revenue guidance.
Speaker Change: Hey, I'm.
Speaker Change: I can take that question. So if you looked at let me go back and I think since Mike's been involved with the business. It was in 2022.
Speaker Change: E Egypt didn't form a big part of our revenue in 'twenty two 'twenty three there was a big part of our revenue 24 will be managed to kind of derisk the business and I think that was something which I've been talking about as to how we move away from.
Speaker Change: From single large contracts today, if you look at our revenue is broken down into four or five large customers 25, I'm looking at roughly about seven to eight large customers.
Speaker Change: All in all we have about 97 customers today.
Speaker Change: And Egypt currently is about 50% of that.
Speaker Change: Probably slightly less than that.
Speaker Change: Next year, it will be under 30%.
Speaker Change: And the year after and be well under 15%. So we our aim is to make sure that by the time, we're in 'twenty six 'twenty seven.
Speaker Change: We are going to have no client greater than 10% to 15%.
Speaker Change: Okay.
Speaker Change: Thank you for the color on that and then.
Speaker Change: What are some that's needed before you start recognizing material revenue on one Amazon, Thailand energy deal and the Asia Smart school deal and when might that occur.
Speaker Change: Sure.
Speaker Change: You know I think the first thing the first most important thing, which I mentioned earlier is that it takes us a lot of time and effort before we start building you know each of these customers requirements understanding the customers' requirements. So whether it be that the solution design, but it is the architectural planning, but they just didn't compliance whether it's working with multiple partners why isn't it.
Speaker Change: And you'll see validation and building that infrastructure policy and so on and so forth.
Speaker Change: Once we have done all off the list and then it takes us at least between three to four months before we can start building and scaling up there. The operations now first of all what we have to do is you have to build the people and structure.
Speaker Change: See you cannot scale up globally without without having a playbook. So we have to kind of building. The leadership team we have to bring in deep operational capability, we have to create the model for the customer and then more importantly are.
Speaker Change: Being a small company and everybody keeps pointing is out that we had about 150 to 200 people today. We've got about 200 people Raj current desiring a little over 140 people as we speak so by the end of this year, we should be anything between 600 to 800 people, but the problem is that you have to move with speed for the customers secondly, the complexity of the.
Deliberate as we rollout and you talked about the southeast Asia.
Speaker Change: No two projects at the same rate, whether it's lawful interception deployment in Taiwan or the Ministry of Education in South East Asia. Every single one of them comes out with their own compliance integration political context, and so on so there's no coffee pace button for each of these.
Speaker Change: The cash flow, we have to make sure that were working in multiple jurisdictions with different banking gratulation regulations, FX controls payment cultures and managing each of them is a master class of patients if I may and let me tell you. This Egypt alone has given us an entire M. B of course already.
Speaker Change: And then finally more importantly is to deliver.
Speaker Change: You know I will let <unk> kind of fill in a few sentences on that but when we do country lead development programs, we have to absolutely baked ourselves into the entire delivery framework Raj do you have anything to comment.
Speaker Change: Well I'll I'll Echo what you just said.
Speaker Change: J D.
Speaker Change: The merging of minds with the different work styles and are mechanisms in place across countries is certainly a learning to be had but the good news is that.
Speaker Change: The fact that not a pretty early on in the equation itself and we've established rhythms across all of these different governments. There are you know our execution, that's pretty much like clockwork at the moment. So I think we are in great standing.
Speaker Change: Great one thing I'd like to add is also we discuss how these projects ramp up.
Speaker Change: Takes time.
Speaker Change: And we don't include.
Speaker Change: Any of these projects into revenue forecast until we know exactly when and how much so as we sort of signing them and doing the scope of work and getting started on the work.
Speaker Change: Not included in our forecast, it's only when we know how much and when it moves into the forecast.
Speaker Change: Okay. Thank you. Thank you for that additional color and just kind of spinning off that do these do the contracts for these large deals provide upfront payments. So you can buy the required supplies and hardware and another kind of spin off of that for the <unk>.
Speaker Change: On Amazon deal the funds raised so far how much of that will get directed to gorilla for technological development.
Speaker Change:
Speaker Change: Yes, I know it depends on what these projects are.
Speaker Change: For example, the educational project in Southeast Asia is a multi year multi phase smart education initiative the.
Speaker Change: The first phase is only 460 million plus dollars out of the 10 faces, which we talked about the customer is not going to pay us an advanced payment that he's going to pay us on a monthly basis for the next five years. So think about it. This way every year every year I complete the first phase the next phase.
Speaker Change: And the base case after that and so on and so forth. So when you look at the project itself by the time I'm on year nine I'm already on your 14, because it will take me you know five years to deploy their project.
Speaker Change: And years living there'll be <unk> 16, and then you've got a five year maintenance projects. So you're looking at a 20 year project and the customer is going to pay your monthly for the next 15 to 20 years. So no those customers will not pay us in advance but if.
Speaker Change: If you're looking at someone like the PPA project for example.
Speaker Change: They are going to pay us in advance, but that's not going to be enough or just buying all the you know the equipment, both hardware and software.
Speaker Change: I think you know it would be unrealistic for us to come back to the market and tell them that yes, we're going to get paid and that all that is going to cover for the cost of the project itself. Because the project is $1 $8 billion into customer decides to pay US 10 minutes, 10% in advance then it's only $180 million.
Speaker Change: Still need to raise substantial capital and that's why when Bruce alluded to the fact that we are going to be working with the lifestyle. The local institutions, whether it's D. I F. Whether it's the U K, yes, whether it's ADP, but at its local banks C. D. J P. Morgan and it doesn't matter who it is we will try and raise money.
Speaker Change: Through through effective meets at that point in time.
Speaker Change: Hum.
Speaker Change: To your question.
Speaker Change: Yeah. Thank you and congrats on the quarter a return to the queue.
Thank you.
Speaker Change: The next question comes from Brian can plan their alliance Global partners. Please go ahead.
Brian: Thanks for taking my questions first Bruce.
Speaker Change: Bruce you mentioned, an 810% to 18% margin for 2025 was that EBITDA was that net margin I, just I didn't catch that.
Speaker Change: Net margin, 20% to 25% is the forecast for EBITDA margin and net margin is it's a wider range yet.
Speaker Change: Got it Okay and then.
Speaker Change: As it relates to the 400 million plus smart education first phase of that contract in.
Speaker Change: In December I think you announced you were down selected as the provider I kind of thought of that as an intent to award is.
Speaker Change: Is that contract been finalized I'm confused by your answer your previous answer.
Speaker Change: If it hasn't been signed yet.
Speaker Change: What are the obstacles right now too.
Speaker Change: To getting that contract agreed upon.
Speaker Change: Brian If I may there are no obstacles the only issue being that we're going through a very very stringent.
Speaker Change: M P O C with a customer the issue being that we're talking about the the customer jumped the gun. Okay. What he's looking to do he wants to sign the entire 10 faces with one party, which is us.
Speaker Change: The issue being that we have to make sure that the technical design.
Speaker Change: Vacations, the milestone based payment the deployment the software the network integration timelines the approvals.
Speaker Change: <unk> deployments and all of the technical audits need to be defined before we can put into the paper.
Speaker Change: The S O W alone and Raj and I are working with this along with our team is a little over 900 pages by the time, we can get this over the hurdle with these guys. It's taking a much longer time than I'd anticipated. It was a simple $460 million contract I think we would have signed it and we would have started moving forward the problem.
Speaker Change: We have today is that the customer now wants to actually move forward with the entire budget and and just FYI their budgets for phase two and phase III have already been approved as well by the Parliament.
Speaker Change: So with the 900, yeah, yeah that answers it but I'm going to ask a second with this large document.
Speaker Change: As well as the P O. She.
Speaker Change: Can you help frame for investors, what a reasonable timeframe are we six months away from going.
Speaker Change: Going through the POC and getting that sign is it much shorter or is it is it longer just help set expectations for investors if you could.
Speaker Change: Absolutely.
Speaker Change: So Raj I think you should take it since youre very close to the project on the ground. If you if you want it.
Raj Natarajan: No absolutely. So if I were to look into Microsoft ball I would say that the best guess estimate at the moment would be somewhere just south of six months.
Raj Natarajan: And that's a good estimate for us to keep in mind and track are we are you know.
Speaker Change: A rapidly trying to influence the customer to get there even quicker.
Raj Natarajan: But.
Raj Natarajan: I would say a good news on this particular front is that while the paperwork is long and arduous the proof of concept is actually progressing pretty well.
Raj Natarajan: We finished a bunch of surveys over there we've got some of our foundational systems already running.
Raj Natarajan: You're just staying true to our ability to deliver value quickly.
Raj Natarajan: And I think that that that differentiation is actually helping US you know who win the hearts of the customers are even more if he can so all in all it's on the up and up.
Raj Natarajan: Great. Thanks for those comments.
Speaker Change: If I can move to one Amazon.
Speaker Change: I'm listening to your commentary accurately theres a lot that has to happen before you start generating revenue.
Speaker Change: We all should understand that the win two weeks ago, you've come out with a press release that suggests that $100 million has been raised I think or who've been allocated for one Amazon on the technology side. What are you trying to communicate to the market because I don't think that changed the timeframe.
Speaker Change: So help us understand of what you want to communicate the meaning to gorilla in the near term for that or long term.
Speaker Change: I'll take I'll take one off of that question Raj you may want to talk about the technology side of it once I kind of addressed it.
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Speaker Change: So Brian the one Amazon project is free.
Speaker Change: Pretty much on track in fact, it is ahead of track.
Speaker Change: Why because they have received commitments from a number of very very large sovereign wealth funds and foundations and institutional investors.
Speaker Change: I mean, I'd want to deploy capital now as you know Rodrigo below so is it is it.
Speaker Change: It is dynamic he he's looking at raising anything between $100 billion to $750 billion over the course of the next 20 years. So that he can help support the Amazon of course being Brazilian it's very close to his heart.
Speaker Change: Now.
Speaker Change: What we have when I said $100 million. It was a it was basically the capital that was needed to initially run the proof of concept and I'll, let Raj feeling once it completed this.
Speaker Change: The proof of concept is basically deployed across a few hundred hectares to figure out the topology mapping to figure out whether it be using lidar, but they'll be using biodegradable sensors, what kind of data I'll be going to generate how do we clean up that data what kind of analytics is quite how do we democratize access.
Speaker Change: Democratize their data and I think you asked the question as to how much of that money is going to go into gorilla.
Speaker Change: Now as the per the agreement we have with them. It's between 25 and 30% is what we have agreed to $400 million, that's waste, but that said the first $100 million most of that if not all of that will go into the proof of concept to gorilla directly as well.
Speaker Change: Because this is a very very important proof of concept because you've got all the other investors sitting on the sidelines waiting to see what comes out.
Speaker Change: Russ.
Speaker Change: Yeah, Thanks for clarifying that on the business side from a technical perspective.
Speaker Change: Think of them as Jay pointed out we've actually made significant progress on that particular front.
Speaker Change: Well first of all the core data analytics engine and that's something that we already have.
Speaker Change: That's been running for many governments all of our cyber security infrastructure portfolio.
Speaker Change: For almost 15 years now and it's been growing from strength to strength. So all we need to do now is to button up some additional sensors onto that particular pipeline. We have the system from a functional end to end in our in our R&D labs, both in India and in Taiwan and currently.
Speaker Change: But what we're really working towards is identifying the right mix of us sensors for ground truth.
Speaker Change: And we're also talking to a bunch of satellite imagery providers in order for us to figure out what the truth from the Sky is going to be so there is an amalgamation of data points that we need to collect synthesize.
Speaker Change: And summarize in order for our customers to kind of be able to digest the value behind the declines that are being created but it's it's some things that the whole team.
Speaker Change: The Gorilla is really excited about and it's full steam ahead from our perspective.
Speaker Change: Okay.
Speaker Change: My last question is is management still committed to reporting results on a quarterly basis going forward should we expect for for four separate earnings reports this quarter this year.
Speaker Change: Absolutely, yes, Brian we are.
Speaker Change: Okay. Thank you so much.
Speaker Change: No sure, but just FYI, Brian we actually built a very very strong team, which is now going to be working in tandem on a quarterly basis Brooks's team you know the finance team now spans across the globe and I think we're working tirelessly day in and day night to steam is going to be delivering on a quarterly basis.
Speaker Change: And I think we owe it to the market, but more importantly has to be transparent and I think we're going to stick to our guns.
The next question comes from John Roy with water calorie search. Please go ahead.
John Roy: Great. Thank you kind of wanted to step back a little bit certainly every company on the planet is saying you know, we're an AI company and we're doing a lot in AI Raj I Wonder if you could give us some color.
John Roy: 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.
Speaker Change: Thank you Jon So that's the third question I completely understand that we live in a very crowded space I like simple analogies in the simplest way that I can put it is that we build AI that actually works where it matters.
Speaker Change: The net net is that we are not trying to O. G. P. T. Anyone we are certainly not trying to chase academic benchmarks are focuses on real world impact and.
Speaker Change: More importantly, we focus on environments, where traditional AI just doesn't cut it like on the edge and smart cities and secure and often offline deployments right.
Speaker Change: Specialize in edge AI, which is built from ground up and the idea is to run unconstrained hardware.
Speaker Change: And wherever there is real time processing.
Speaker Change: That's on a camera a pull on the router and the feel of the rugged device in the factory.
Speaker Change: We are there and that is essentially where we focus on especially in areas, where the agency actually matters.
And our strength is that we optimize for the edge you don't know optimized for the cloud and this gives us a huge advantage in the market specifically in markets like public safety transportation critical infrastructure places, where you can just call great round.
Speaker Change: On the cloud to pink.
Speaker Change: And if you think about it from a smart city perspective, the most important aspect that we've been trying to convey.
Speaker Change: This last dollar is like we're not merely trying to do demos right. We had actually powering actual infrastructure, maybe traffic systems access controls and called monitoring all our environmental insights with regards to one Amazon. So we're actually working very closely with the government integrators.
Speaker Change: In such a way that that is purposeful AI being developed to actually solve real world problems. So the way I think about it is that correlates AI is built for the edge. It's tested on the field and it's scaled for real world.
Speaker Change: It's not just smart grade that's practical it's harder than it is delivering value today and delivering value today in real time, and ensuring that our customers no matter, who they are governments or cities are enterprises. They see that return on investment in weeks not in quarters, that's always our goal and.
Speaker Change: I think our agility and the simplicity behind our AI solving very complex problems is what's actually helping those leapfrog in the industry today.
Speaker Change: Great.
Speaker Change: It's good to hear one of the other things that you guys have done as you said, some pretty significant and transparent expectations for 25 and 26.
Speaker Change: And I heard one kind of milestone along the way, which is six months signing coming up I'm wondering what are the kind of milestones might investors look for along the way to see that you are going to you know what you hopefully you know I'm going to hit in 'twenty five 'twenty six.
Speaker Change: John is that for me Jay.
John Roy: Yeah, our offer Bruce.
Speaker Change: Okay.
Speaker Change: I can take it so.
Speaker Change: Go for it.
Speaker Change: Okay.
Speaker Change: Yeah, So as I mentioned the.
Speaker Change: The biggest milestones that we would be focused on would.
Speaker Change: It would be basically at the contracts that we've mentioned Getty.
Speaker Change: Getting a more concrete precise idea of when the revenues arriving at how much.
Speaker Change: We the process is multiple steps. So you start with an Mou or some kind of earlier commercial agreement then you move into the scope of work proof of concept you iron out all the details and then you move into a definitive contract.
Speaker Change: The contract includes the milestones you know the timing the payment amounts et cetera. So I think that we have a very very robust pipeline of qualified leads and also signed Mou's and work. That's in progress in terms of scope of work et cetera, and I think it's really just the passage of time.
Speaker Change: And working closely with our clients to iron out. Okay. This is exactly what we're gonna do win them.
Speaker Change: That's what will get us to two to the right numbers and knowing when we will be achieving those numbers, but I think that in between.
Speaker Change: Does that work.
Speaker Change: Starting with the ramping up and also the business that we have in the backlog.
Speaker Change: I think that the.
Speaker Change: The forecast that we've just set out are quite achievable.
Speaker Change: Right. Okay. So Bruce we trade, we expect to hear poor updates to the backlog as you report quarterly going forward is that something you hopefully will do.
Yes, absolutely.
Speaker Change: As things as timelines get more precise.
Speaker Change: We are quite conservative in how we forecast so.
Speaker Change: When I come out with guidance, it's not me sticking my finger in the air right. It's me, saying, Okay. We're very sure that these contracts are going to deliver this revenue under state this timeline.
Speaker Change: And that's the only time that we started putting things into the guidance. So as we get a much firmer idea then we'll be able to do that but you know.
Speaker Change: The discussion about one Amazon that you heard right. So there's funding there.
Speaker Change: From one Amazon we know how much funding is there we know that the timeline will take several months, but we know that maybe in 'twenty six maybe in 'twenty seven.
Speaker Change: There is a decent chunk of revenue that will start to appear.
Speaker Change: It's a similar situation with in Thailand, with the P E smart electricity grid.
Speaker Change: That's a mammoth contracts, we know that it takes time to get it right you know from the customer side from our side.
Speaker Change: So it could be.
Speaker Change: The revenue starts to flow in earnest in 'twenty 'twenty early 'twenty 'twenty six late 2026.
Speaker Change: We just don't know and we're not going to rush, we're not going to over promise and under deliver but that's not our style.
Speaker Change: Great and then.
Speaker Change: You bet.
John Roy: John Sorry, My apologies, let me interrupt there no problem, so want to add something right.
John Roy: Let me be blunt if someone believes that you know we get an AI powered smart grid or a sovereign digital infrastructure plan and that can be switched slipped on like a light switch.
John Roy: Then they do not understand the space we operate it okay. We're building long term high margin recurring revenues, which are deeply embedded infrastructure.
John Roy: So the commercial floor basically from my perspective is structured predictable and lay it what we're trying to build which I think you know a lot of the market doesn't seem to understand is that we are building a pipeline for the next 20 years. So when I go and tell you that I am going to close my deal with the Ministry of Education project, we're not.
Just talking about rolling out the entire solution design architecture, and so what we have to make sure that you have to understand their legacy systems as well, but that takes time.
John Roy: Secondly, when you look at projects like for example, we're working on airports across the Latin America, We're building smart cities and are in Santa Monica and got the Hana.
John Roy: We have a lot of political headwinds.
John Roy: Headwinds to deal with as well, it's not just about coming in and dealing with the project. It's also about creating the economic catapult. So now you are very familiar with our model as to how we move forward. We're not just investing in do you know into our project Gorilla is very unique and that's why you know today. This morning, as well then be but having a conversation with one of the states of the year.
John Roy: To state the Secretary of State was that how do you think you could benefit the local market. They know they're talking to us about projects, they're talking to us about economic development of these weak now what we are trying to do is we're trying to make sure that we are able to sustain our growth, but at the same time make sure that before.
John Roy: Focused on key Kpis, Okay, now when we talk execution across we track four different core dimensions.
John Roy: Revenue conversion.
John Roy: We focus on delivery milestones cash flow and client satisfaction. So we monitor revenue velocity, we make sure.
John Roy: How do we measure how quickly out of contract sign but what is our active billing looked like and more importantly, what does our pipeline conversion. That's number one number two we make sure that every single project, but that's a POC whether it's at a high level integration testing and so what we try to project delivery milestones down to the cut.
John Roy: Tree level to their clients.
John Roy: Then comes the responsibility falls on Bruce and his team on the financial side, where we look at cash collection cycle, what kind of payment realization needs to be happening what is closely monitored we have teams and so on and so forth right and more importantly, when you realize that this is not this is not a sprint it's a marathon.
John Roy: Means we have to now operate across multiple constantly countries multiple jurisdiction multiple political and tribal issues. We have to work with and then finally client success.
John Roy: Every single customer has a different client satisfaction indicators. So we have to make sure that we are working very closely with them. So to do that today. I'm also you know I think one of the things, which we haven't mentioned that the market is that we internally set a what we call a strategic office of impact group.
John Roy: Group led by a Lady called Deborah Hudson Who's being hired recently that allows us to track all these kpis very very effectively and make sure that when we deliver these numbers to the market and to the analyst we make sure that they are SPIC and span two the lofty.
John Roy: Sure.
John Roy: Great that's it.
John Roy: Very good thank you so much.
John Roy: Thank you.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to management for any closing remarks. Please go ahead.
Speaker Change: Well first of all thanks, everybody for for attending the earnings call.
Speaker Change: Yeah, I am I am Super excited about the future of gorilla.
Speaker Change: And all I'm going to say is that we are building a digital backbone for the modern world you know, we would love for our investments to continue being with us.
Speaker Change: Best with us.
Speaker Change: More importantly, we made sure that all of our employees and shareholders I needed to win so thank you once again for for being the backbone of our business and I will continue to work on me and my team will continue to work hard to make sure we deliver thank you everyone.
Speaker Change: This brings to a close today's conference call you.
Speaker Change: You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Yeah.
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Speaker Change: Uh huh.
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Speaker Change: Yeah.
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Speaker Change: Yeah.
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