Q2 2026 Gorilla Technology Group Inc Earnings Call

August 24, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the Gorilla Technology Group Inc. NASDAQ: GER first quarter 2026 financial results conference call.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Gorilla Technology Group Inc., NASDAQ GRRR, first quarter 2026 financial results conference call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, 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. Before we begin, we would like to read the forward-looking statement. Today's call includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and projections about future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially.

Speaker #1: As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Speaker #1: To join the question queue, you may press star, then 1, on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0.

Speaker #1: Before we begin, we would like to read the forward-looking statement. Today's call includes forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker #1: These statements reflect management's current expectations and projections about future events, and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially.

Speaker #1: Forward-looking statements often include terms such as "expects," "believes," "plans," "anticipates," "may," "should," and similar expressions. For a discussion of important factors that could affect Gorilla's results, please refer to our filings with the SEC, including the most recent annual report on Form 20-F.

Operator: Forward-looking statements often include terms such as "expects," "believes," "plans," "anticipates," "may," "should," and similar expressions. For a discussion of important factors that could affect Gorilla's results, please refer to our filings with the SEC, including the most recent annual report on Form 20-F. Except as required by law, Gorilla undertakes no obligation to update or revise any forward-looking statements made on this call, whether as a result of new information, future events, or otherwise. I would now like to turn the conference over to Jay Chandan, Chairman and Chief Executive Officer, and Bruce Bower, Chief Financial Officer. Please go ahead.

Speaker #1: Except as required by law, Gorilla undertakes no obligation to update or revise any forward-looking statements made on this call, whether as a result of new information, future events, or otherwise.

Speaker #1: I would now like to turn the conference over to Jay Chandan, Chairman and Chief Executive Officer, and Bruce Bauer, Chief Financial Officer. Please go ahead.

Speaker #2: Thank you very much. Good afternoon, everyone, and thank you for joining us. Now, the first half of 2026 marks, for me, a very decisive step forward for Gorilla.

Jay Chandan: Thank you very much. Good afternoon, everyone, and thank you for joining us. The H1 of 2026 marks for me a very decisive step forward for Gorilla. The revenue increased 99%, nearly 100% year-on-year, to about $78.4 million, effectively doubling in the first 12 months. More importantly, the momentum strengthened as the half progressed. Q2 revenues reached well over $50.1 million, which was a net increase of roughly 78% from Q1 and 138% from Q2 last year. We had originally expected as we had promised to the market, about $33 million, which we upgraded to $44 million. We have exceeded that by another $6.1 million to nearly by 14%, which principally means that all the deliverables and certain milestones were completed earlier than anticipated. Personally, that is what execution looks like.

Speaker #2: The revenue increased 99%—nearly 100% year on year—to about $74.78 million. Effectively doubling in the first 12 months. But more importantly, the momentum strengthened as the half progressed.

Speaker #2: Now, Q2 revenues reached well over $50.1 million, which was a net increase of roughly 78% on Q1, and 138% from Q2 last year. Now, we had originally expected, as we had promised to the market, about $33 million, which we upgraded to $44 million.

Speaker #2: We've exceeded that by another $6.1 million, nearly 14%, which principally means that all the deliverables and certain milestones were completed earlier than anticipated.

Speaker #2: Personally, that's what execution looks like. Now, the challenge we've also had is that the operating performance and progression at the same time were also equally significant.

Jay Chandan: The challenge we also had is that the operating performance and progression at the same time was also equally significant. Our reported operating loss narrowed from $41.1 million in Q1 to approximately $2.2 million in Q2, which was a reduction of 95%. A substantial part of the first quarter result was share-based compensation that has already been recognized, and more than 80% of the H1 share-based compensation was observed in the Q1 itself, and the quarterly charge declined by approximately, what? About 78% in Q2. In plain, simple English, Q1 carried the overwhelming majority of the burden. Q2 showed a much clearer picture of the operating momentum we needed. Our cash efficiency also improved considerably. Whilst the revenue increased by approximately 100%, operating cash consumption declined by approximately 65%, from $12.5 million in H1 of 2025 to $4.3 million in H1 of 2026.

Speaker #2: Our reported operating loss narrowed from $41.1 million in Q1 to approximately $2.2 million in Q2, which was a reduction of 95%. A substantial part of the first quarter result was share-based compensation that had already been recognized, and more than 80% of the H1 share-based compensation was observed in Q1 itself.

Speaker #2: And the quarterly charge declined by approximately 78% in Q2. In plain, simple English, Q1 carried the overwhelming majority of the burden, and Q2 showed a much clearer picture of the operating momentum we needed.

Speaker #2: Now, our cash efficiency also improved considerably. While revenue increased by approximately 100%, operating cash consumption declined by approximately 65%—from $12.5 million in H1 2025 to $4.3 million in H1 2026.

Speaker #2: Operating cash usage also fell from 31.8% of revenue to just 5.5%. Now, these are very important numbers, which we need to take into consideration.

Jay Chandan: Operating cash usage also fell from 31.8% of the revenue to just 5.5%. These are very material important numbers which we need to take into consideration. The company also recorded an overall increase in cash of approximately, what? $79.8 million during the H1, principally reflecting financing support and the expansion program together with customer collections. So we ended June with roughly around $179.4 million in cash, approximately 82% above our Q1 closing balance. That capital is not just sitting there politely in a bank and trying to get some interest rate. It is there to be deployed. What we are doing is that we are purchasing infrastructure, securing capacity, preparing sites, building teams, and funding the deposits and working capital required to deliver projects of a scale Gorilla has never previously undertaken.

Speaker #2: Now, the company also recorded an overall increase in cash of approximately $79.8 million during the first half, principally reflecting financing support and the expansion program, together with customer collection.

Speaker #2: So we ended June with roughly $179.4 million in cash, approximately 82% of our Q1 closing balance. That capital is not just sitting there politely in a bank.

Speaker #2: And trying to get some interest rate, it is there to be deployed. What we are doing is that we are purchasing infrastructure, securing capacity, preparing sites, building teams, and funding the deposits and working capital required to deliver projects of a scale Gorilla has never previously undertaken.

Speaker #2: And just for your information, we are currently preparing about five different sites in parallel, and that takes a huge effort. At the same time, we also understand that the cash balances will move between the reporting periods.

Jay Chandan: Just FYI, we are preparing currently about five different sites in parallel, and that takes a humongous effort. At the same time, we also understand that the cash balances will move between the reporting periods. Investors should distinguish between cash being consumed by an underperforming operation and capital being deliberately deployed into contracted projects and revenue-generating infrastructure. They are not remotely the same thing, however convenient it may be for some people to pretend otherwise. This investment phase also explains the current gross margin profile as well. Our gross margin had dipped, reflecting a revenue mix weighted towards hardware, initial deployment, and project mobilization. What I need to make sure is that Gorilla also deployed more than $14.1 million into property and equipment. Currently, that number is $29.4 million. We are also building the install base first.

Speaker #2: Investors should distinguish between cash being consumed by an underperforming operation and capital being deliberately deployed into contracted projects and revenue-generating infrastructure. They're not remotely the same thing.

Speaker #2: However convenient it may be for some people to pretend otherwise. Now, this investment phase also explains the current gross margin profile as well. Our gross margin has been hit, reflecting a revenue mix weighted towards hardware initial deployment and project mobilization.

Speaker #2: What I need to make sure is that Gorilla also deployed more than $14.1 million into property and equipment. Currently, that number is $29.4 million.

Speaker #2: We are also building the install base first. As the infrastructure is commissioned, customer workloads migrate, utilization increases, and we expect the revenue mix to broaden towards compute, monitoring, managed services, and all other associated services.

Jay Chandan: As the infrastructure is commissioned, customer workloads migrate, utilization increases, and we expect the revenue mix to broaden towards compute, monitoring, managed services, and all other associated services. Hardware, personally, guys, does not begin producing its full financial results the moment it leaves the factory. It must be delivered, it has to be installed, it has to be powered, it has to be tested, it has to be accepted by the customer, and more importantly, then the utilization happens. More importantly, we want to make sure that we are moving very, very quickly. In terms of updates, I think Mark has been asking me for updates for a long time. For Yotta phase 1, for example, the testing has been completed. The equipment deliveries are underway and deployment has commenced. Testing will commence by the end of this week, early next week.

Speaker #2: Hardware, personally, guys, does not begin producing its full financial results the moment it leaves the factory. It must be delivered, it has to be installed, it has to be powered, it has to be tested, and it has to be accepted by the customer.

Speaker #2: And more importantly, then the utilization happens. More importantly, we want to make sure that we are moving very, very quickly. Now, in terms of updates, I think the market's been asking me for updates for a long time.

Speaker #2: For IOTA phase one, for example, the testing has been completed. Equipment deliveries are underway, and deployment has commenced. Testing will commence by the end of this week or early next week.

Speaker #2: IOTA phase two—the equipment is currently being manufactured, with completion expected over the next 25 to 30 days. In Indonesia and Batam, we're working very closely with our OEM and infrastructure partners.

Jay Chandan: Yotta phase 2, the equipment is currently being manufactured, with completion expected over the next 25 to 30 days. In Indonesia and Batam, we are working very closely with our OEM and infrastructure partners. We have, as everybody knows, secured substantial data center space, and we are targeting approximately another 200 MW of capacity with an initial ready-for-service in the middle of 2027, and a broader deployment expected to be in the H2 of 2027. At Korat in Thailand, the land has been cleared. We are advancing with the financing, the GPU procurement, the infrastructure requirements, while engaging with prospective off-takers with the objective of moving into a discussion into firm customer contracts. To be absolutely clear, megawatts are not just capacity there. More importantly, the capacity must be commissioned. It has to be contracted. It has to be utilized.

Speaker #2: We have, as everybody knows, secured substantial data center space, and we're targeting approximately another 200 megawatts of capacity, with initial ready-for-service in the middle of 2027.

Speaker #2: And the broader deployment is expected to be in the second half of 2027. At Korat in Thailand, the land has been cleared, and we're advancing with the financing.

Speaker #2: The GPU procurement, the infrastructure requirements, while engaging with prospective off-takers with the objective of moving into a discussion into firm customer contracts. Now, to be absolutely clear, megawatts are not just capacity—they're not just capacity, they're revenue.

Speaker #2: More importantly, the capacity must be commissioned, it has to be contracted, it has to be utilized. Now, our accountants remain very stubbornly unwilling to accept electricity as a payment, so unfortunately, we have to make sure that the customers pay us at any given point in time.

Jay Chandan: Our accountants remain very stubbornly unwilling to accept that electricity is a payment, so unfortunately, we have to make sure that the customers pay us at any given point of time. Alongside these major infrastructure programs, our established security and network intelligence operations remain an important part of Gorilla. They provide not just the customer relationships, they also provide a better delivery experience, cash collection, that support our broader expansion. For people thinking that we are pivoting, we are not. We are not abandoning the business that brought us here. We are using it as a platform to build something substantially larger. For Q3, we are planning revenues between $48 to $50 million, compared to the previous plan of $36 to $40 million. That represents a significant jump of about 20% to 39% than the earlier planning range.

Speaker #2: Alongside these major infrastructure programs, our established security and network intelligence operations remain an important part of Gorilla. They provide not just the customer relationships; they also provide a better delivery experience and cash collections that support our broader expansion.

Speaker #2: Now, for people thinking that we're pivoting—we're not. We're not abandoning the business that brought us here. We are using it as a platform to build something substantially larger.

Speaker #2: Now, for Q3, we're planning revenues between $48 to $50 million, compared to the previous plan of $36 to $40 million. That represents a significant jump of about 20 to 39% over the earlier planning range.

Speaker #2: For Q4, our operating plan is revenues exceeding well over $60 to $70 million. Taken together with the H1 revenue of $78.4 million, our revenue outlook for 2026 now stands at at least $200 million, which is up from the $137 to $200 million range we provided at the beginning of this year.

Jay Chandan: For Q4, our operating plan is revenues exceeding well over $60 to $70 million. Taken together with the H1 revenue of $78.4 million, our revenue outlook for 2026 now stands at at least $200 million, which is up from the $137 to $200 million range we provided at the beginning of this year. Reaching the upper end requires additional execution, including further deliveries, customer, and workload activation. We intend to earn the upper end. I want to make sure that we are not simply announcing this, but we want to make it more and more useful as we go through the quarters. Looking further ahead into 2027, we are targeting revenues of about $450 million to $500 million. That is an ambitious target that represents a quarterly revenue of roughly over $112 to $125 million. We are not expecting the calendars to produce the growth for us.

Speaker #2: Now, reaching the upper end requires additional execution, including further deliveries and customer and workload activation. We intend to earn the upper end. I want to make sure that we're not simply announcing this, but that we make it more and more useful as we go through the quarters.

Speaker #2: Now, looking further ahead into 2027, we're targeting revenues of about $450 million to $500 million. Now, that's an ambitious target that represents a quarterly revenue.

Speaker #2: Of roughly over $120 million—$112 to $125 million. Now, we're not expecting the calendars to produce the growth for us. The target depends on all of the capacity that's being installed now, the commissioning of the additional projects, the conversion of the prospective demand into contracts, and the migration of utilization of the customer workloads.

Jay Chandan: The target depends on all of the capacity that's being installed now, the commissioning of the additional projects, the conversion of the prospective demand into contracts, and the migration of utilization of the customer workloads. There has been no shortage of people barking from the sidelines. Unfortunately, that does not deliver GPUs for us, and neither does it commission data centers or collect dollars from our customers. Our answer to all this will be execution. Gorilla has entered the H2 with substantially greater revenue scale, dramatically improved quarterly performance, stronger liquidity, and a growing portfolio of major international projects. We have more work to do. We are maintaining absolute delivery discipline. We're managing capital very carefully. We're improving utilization, converting opportunity into recognized revenue. Make no mistake, the direction of the travel now is unmistakable. We're no longer explaining what Gorilla intends to become.

Speaker #2: Now, there has been no shortage of personally barking from the sidelines. Unfortunately, that does not deliver GPUs for us, nor does it commission data centers or collect dollars from our customers.

Speaker #2: Our answer to all this would be: execution. Now, Gorilla has entered the second half with substantially greater revenue scale, dramatically improved quarterly performance, stronger liquidity, and a growing portfolio of major international projects.

Speaker #2: We have more work to do. We are maintaining absolute delivery discipline. We're managing capital very carefully. We're improving utilization, and we're converting opportunity into recognized revenue.

Speaker #2: And make no mistake, the direction of travel now is unmistakable. So we're no longer explaining what Gorilla intends to become; we're beginning to demonstrate it.

Jay Chandan: We're beginning to demonstrate it. Thank you very much. Bruce, over to you.

Speaker #2: Thank you very much, Bruce. Over to you.

Speaker #1: Thank you, Jake. I think Jay hit on all of the highlights, but there are a couple of areas I want to expand on or emphasize.

Bruce Bower: Thank you, Jay. I think Jay hit on all the highlights, but there are a couple of areas I want to expand on or emphasize. The first is, of course, the H1 revenue of $78 million, 99% revenue growth. As you can hear from the guidance figures, Gorilla is in hyper-growth mode in terms of revenue. We're happy with these figures, and we expect to see this kind of growth trajectory continue. Also, as Jay mentioned, the gross profit for the H1 showed an investment into the business and also reflected a mix. As the mix improves, we expect to see an expansion of gross margins. The mix will improve in a couple of ways. The first is as Yotta 1 and the other GPU-as-a-service projects go live in the H2 of the year. Those projects generate gross margins of 75% or more.

Speaker #1: So the first is, of course, the first half revenue of $78 million, with 99% revenue growth. As you can hear from the guidance figures, Gorilla is in hyper-growth mode in terms of revenue.

Speaker #1: So we're happy with these figures, and we expect to see this kind of growth trajectory continue. Also, as Jay mentioned, the gross profit for the first half showed an investment into the business and also reflected a mix—as the mix improves.

Speaker #1: We expect to see an expansion of gross margins. The mix will improve in a couple of ways. The first is, as IOTA One and the other GPU-as-a-Service projects go live in the second half of the year, those projects generate gross margins of 75% or more.

Speaker #1: So, of course, there will be an expansion in the overall gross margin of the business as a result. That will then flow through to operating, and there will be significant operating leverage coming from that as well.

Bruce Bower: Of course, there will be an expansion in the overall gross margin of the business as a result, and then there'll be significant operating leverage coming from that as well. That will flow through to the underlying bottom numbers as well. We mentioned some of the expense items. I would just like to highlight that this was not a normal H1. There were significant foreign exchange movements in the markets due to the Iran conflict and Freedom Day tariffs, and tariff wars even.

Speaker #1: So that will flow through to the underlying EBITDA numbers as well. We mentioned some of the expense items. I would just like to highlight that this was not a normal first half.

Speaker #1: There were significant foreign there were foreign exchange significant foreign exchange movements in the markets. Due to the Iran conflict and freedom day tariffs, and tariff wars even, as we have a significant exposure in foreign currency in the Middle East and in Southeast Asia, which were the two regions hardest hit.

Bruce Bower: As we have a significant exposure in foreign currency in the Middle East and in Southeast Asia, which were the two regions hardest hit by geopolitics and by tariffs, this did produce significant volatility in our underlying numbers. We expect that as the situation seems to have calmed down, that that will also result in a calming down of some of the below-the-line expense items that we incurred in H1. Also, as Jay mentioned, there was a stock-based compensation item. This is something that had been previously disclosed in all of our filings. It should come as no surprise to somebody. My attitude would be that this is out of the way. The H2 P&L should be quite clean from that perspective. A couple of things that I want to highlight from the balance sheet side.

Speaker #1: By geopolitics and by tariffs. This did produce significant volatility in our underlying numbers. We expect that, as the situation has seemed to have calmed down, that will also result in a calming down of some of the below-the-line expense items that we incurred in the first half.

Speaker #1: Also, as Jay mentioned, there was a stock-based compensation item. This is something that had been previously disclosed in all of our filings. It should come as no surprise to anybody.

Speaker #1: And then, my attitude would be that this is out of the way. So again, the second half P&L should be quite clean from that perspective.

Speaker #1: A couple of things that I want to highlight from the balance sheet side. One is that we finished the quarter, with the first half going into the second half, with $175 million of cash.

Bruce Bower: One is that we finished H1 going into H2 with $175 million of cash. We had $13 million of conventional debt, sort of traditional debt, bank loans, and then $107 million of long-term debt from a five-year convertible that we placed in June. We also did a convertible in July. That gives us really enough cash that we are going on offense. This is the time where we are paying for equipment and for deliveries of equipment and setting them up, and that will be converting into revenue in Q3 and then substantially in Q4. We have paid for the items for Yotta 1, for the first deployment with Yotta out of our own balance sheet, our own funds, and then a small facility that is tied directly to the project level.

Speaker #1: We had $13 million of conventional debt—sort of traditional debt, bank loans—and then $107 million of long-term debt from a five-year convertible that we placed.

Speaker #1: In June, we also did a convertible, and in July. That gives us really enough cash that we are going on offense. This is the time where we are paying for equipment, for delivery of equipment, and setting them up.

Speaker #1: And that will be converting into revenue in the third and then substantially in the fourth quarter. We have paid for the items for IOTA, for the first deployment with IOTA, out of our own balance sheet, our own funds.

Speaker #1: And then a facility, a small facility, that is tied directly to the project level. And then IOTA 2—we have paid, again, substantial prepayments out of our own balance sheet.

Bruce Bower: Yotta 2, we have paid again substantial prepayments out of our own balance sheet. We intend to fund the balance of the payments from a larger project finance facility, where I will share more details when we can. I think everyone on the line will be very happy with the terms that we've managed to get. A couple other things. When I talk about investment, you can see already, as Jay mentioned, in the CapEx investment, $14 million of investment went into H1. That number is, of course, going to be many multiples of that in H2. This is where the investment in the business is going to be showing up in the future, and that leads to revenue growth and to margin expansion.

Speaker #1: And then we intend to fund the balance of the payments from a larger project finance facility, where I will share more details when we can.

Speaker #1: But I think everyone on the line will be very happy with the terms that we've managed to get. And then a couple of other things.

Speaker #1: When I talk about investment, you can see already, as Jay mentioned, in the CapEx investment—so, $14 million of investment went into the first half.

Speaker #1: That number is, of course, going to be many, many multiples of that in the second half. But this is where the investment in the business is going to be showing up in the future.

Speaker #1: And that leads to revenue growth and to margin expansion. In spite of the large capex, I would say that the business is actually performing well on the cash flow front.

Bruce Bower: In spite of the large CapEx, I would say that the business is actually performing well on the cash flow front. Operating cash flow was -USD 4 million in H1. This was a tightening from -USD 15 million in H1 of last year. I would expect to see the operating cash flow numbers continue to improve. We're expecting large customer collections in September and October to the tune of over $20 million. The SG&A and everything else from all the other operating costs in the business will not be overwhelmed by that. That should result in a break-even or operating cash flow for the entire year.

Speaker #1: Operating cash flow was minus $4 million in the first half. This was a tightening from minus $15 million in the first half of last year.

Speaker #1: I would expect to see the operating cash flow numbers continue to improve. We're expecting large customer collections in September and October, to the tune of over $20 million.

Speaker #1: And then the SG&A and everything else from all the other operating costs in the business will not be overwhelmed by that. So, that should result in a break-even or operating cash flow for the entire year.

Speaker #1: And last but not least, I want to remind you, we have the guidance figures in the press release: $200 million-plus is our guidance for this year, and $450 to $500 million is the revenue guidance for next year.

Bruce Bower: Last but not least, I want to remind you, we have the guidance figures in the press release. USD 200 million plus is our guidance for this year. USD 450 to 500 million is the revenue guidance for next year. How we make guidance is we take what is contracted revenue, where we have an amount and a date. If we have a contract, but maybe the timing is not exactly firmed up or the amounts are not exactly firmed up, we do not include it in the guidance. We try to be under-promising and over-delivering to the market. We try to tread only based on what will not disappoint you.

Speaker #1: How we make guidance is, we take what is contracted revenue where we have an amount and a date. If we have a contract, but maybe the timing is not exactly firmed up, or the amounts aren't exactly firmed up, we don't include it in the guidance.

Speaker #1: So again, we try to be under-promising and over-delivering to the market. We try to tread only on what will not disappoint you.

Speaker #1: So, when Jay talks about the delivery schedules for IOTA One and IOTA Two, and then going out to the project in Batam, or Nutri-DC as we call it, where we have the delivery schedule firm, that has been included in guidance.

Bruce Bower: When Jay talks about the delivery schedules for Yotta 1 and Yotta 2, and then going out to the project in Batam or NeutraDC, as we call it, where we have the delivery schedule firm, that has been included in guidance. Where we do not have the delivery schedules firm, that has yet to be included in guidance. But stay on the lookout, as those delivery schedules firmed up, then the guidance might change as a result. We do not provide a gross margin forecast for next year at the moment. That will depend really on the timing of when these projects initiate. But I would just remind people that Yotta 1 and Yotta 2 and NeutraDC, we expect on those projects an average gross margin of 75%.

Speaker #1: Where we do not have the delivery schedules firm, that has yet to be included in guidance. But stay on the lookout, as those delivery schedules firm up, then the guidance might change.

Speaker #1: As a result, we don't provide a gross margin forecast for next year at the moment. That will really depend on the timing of when these projects initiate.

Speaker #1: But I would just remind people that IOTA One and IOTA Two and Nutri-DC—we expect, on those projects, an average gross margin of 75%.

Speaker #1: So, if we're talking about $450 to $500 million of revenue, then the gross margin on that would be substantial. The majority of that would be coming from GPU as a service.

Bruce Bower: If we are talking about USD 450 to 500 million of revenue, then the gross margin on that would be substantially, the majority of that would be coming from GPU-as-a-service. So I would expect you would see gross margins in the sort of 40% plus range for next year. Again, that is not official guidance, but that is just working out the figures. In terms of a financing update, I mentioned, we have an offer already on the table for financing for NeutraDC. We also have used the proceeds from the convertible for the initial part of that. For Yotta 1 and Yotta 2, we have used essentially all the proceeds from the convertible to pay for prepayments or deliveries, and then we are funding the balance of the deliveries from two different project finance facilities that we either are arranging or have arranged.

Speaker #1: So I would expect you would see gross margins in the sort of 40% plus range for next year. Again, that is not official guidance, but that's just working out the figures.

Speaker #1: In terms of a financing update, I mentioned so we have an offer from already on the table for financing for Nutri-DC. We also have a we also have used the proceeds from the convertible for the initial part of that.

Speaker #1: For IOTA One, we've used—and IOTA Two, we've used—substantially all the proceeds from the convertible to pay for prepayments or deliveries. And then we're funding the balance of the deliveries from two different project finance facilities.

Speaker #1: That we either are arranging or have arranged. So again, I think you’ll see, for the future growth and the future CapEx of the business, you’ll see more of a focus on project finance or debt overall.

Bruce Bower: I think you will see for the future growth and the future CapEx of the business, you will see more of a focus on project finance or debt overall. We will have more details in the coming days about how that works. With that, I turn it back to Jay.

Speaker #1: And we'll have more details in the coming days about how that works. With that, I turn it back to Jay.

Speaker #2: Thank you very much, Bruce. We're now open for questions.

Jay Chandan: Thank you very much, Chris. We are now open for questions.

Jay Chandan: Thank you very much, Bruce. We are now open for questions.

Speaker #3: Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad.

Operator: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star and then one again. We will pause for a moment as callers join the queue. The first question comes from Brian Kinstlinger with Alliance Global Partners. Please go ahead.

Speaker #3: You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, and then one again.

Speaker #3: We will pause for a moment as callers join the queue. The first question comes from Brian Kissinger with Alliance Global Partners. Please go ahead.

Speaker #1: Great, guys. Thanks for taking my questions. There's a lot of progress and a lot of things to talk about. But Bruce, you mentioned that guidance, at least for next year and any year, is based on what's in hand—where you know how much is coming in and what projects and when.

Brian Kinstlinger: Great, guys. Thanks for taking my questions. A lot of progress and a lot of things to talk about. Bruce, you mentioned guidance at least for next year and any year is based on what is in hand, where you know how much is coming in and what projects and when. For 2027, what is on the delivery schedule? Which phases will be active, and which programs? Is it the first two phases of Yotta and the first of NeutraDC? Or just maybe take us through what is assumed versus what is not assumed.

Speaker #1: So for 2027, what is on the delivery schedule? Which phases will be active and which programs? Is it all of the first two phases of Yoda and the first of Nutri-DC, or just—maybe take us through what is assumed versus what is not assumed?

Speaker #4: Yes. So, for the first phase of the Yota contract, we have the delivery schedule, where we're taking deliveries now of the equipment. So that is assumed.

Bruce Bower: Yes. The first phase for the Yotta contract, we have the delivery schedule and we are taking deliveries now of the equipment. So that is assumed. That is $100 million annualized roughly, of incremental revenue. For the Yotta 2 contract, as we call it is split into two different batches. The first batch, we have the delivery schedule. So that is assumed. That is $250 million of incremental revenue. The last is for the NeutraDC project. We mentioned in the initial press release that there was a deployment expected of 300 servers around the September timeframe, and by the end of the year, a subsequent 700 servers. The 300 servers, the delivery schedule has firmed up. So that is included in the guidance. That would be, so 30% of about 260. So that would be an incremental $75 to $80 million a year.

Speaker #4: That is 100 million dollars annualized, roughly, of incremental revenue. For the then for the Yota, the IOTA two contract, as we call it, there it's split into two different batches.

Speaker #4: For the first batch, we have the delivery schedule, so that is assumed. That is $250 million of incremental revenue. And then, lastly, for the Nutri-DC project, we mentioned in the initial press release that there was a deployment expected of 300 servers around the September timeframe.

Speaker #4: And then, by the end of the year, a subsequent 700 servers. The 300 servers—the delivery schedule has firmed up. So that is included in the guidance.

Speaker #4: That would be, so 30% of about 260. So that would be an incremental $75 to $80 million a year. And then the balance comes from existing contracts or contracts that we've won.

Bruce Bower: The balance comes from existing contracts or contracts that we have won and not yet announced. That is how you get to the $450 to $500 million mark.

Speaker #4: I'm not yet announced. And that's how you get to the $450 to $500 million mark. So there are the 700 servers from the first phase of Nutri-DC, which are not included in the guidance.

Brian Kinstlinger: Great.

Bruce Bower: There are the 700 servers from the first phase of NeutraDC, which are not included in the guidance. The second phase of NeutraDC, which is 875 servers, quite near from them all, is also not included in the guidance. The part two of the second phase of Yotta is not included in the guidance at the moment. Obviously, we want to get the delivery schedule firmed up. GPUs are like spice in Dune. They are a very valuable commodity. It is better to have them in hand before we start talking about schedules and timing and amounts. Again, this is why we take the ultra-cautious approach in formulating guidance.

Speaker #4: The second phase of Nutri-DC, which is 875 servers—correct me if I'm wrong—is also not included in the guidance. And then the second phase, part two of the second phase of the Yota, is not included in the guidance at the moment.

Speaker #4: So, obviously, we want to get the delivery schedule firmed up. GPUs are like spice and dill, and they're a very valuable commodity. So it's better to have them in hand before we start talking about schedules, timing, and amounts.

Speaker #4: So again, this is why we take the ultra-cautious approach in formulating guidance.

Speaker #1: Great. And then a follow-up.

Brian Kinstlinger: Great. Then a follow-up.

Speaker #2: Let me ask about that.

Bruce Bower: If I may ask about this.

Jay Chandan: If I may ask about this.

Brian Kinstlinger: If you can, Roma. Of course, yeah.

Speaker #1: Of course, yeah.

Speaker #2: Sorry, Brian. See, for us, the confidence comes from the capacity and the projects we're putting in now. I think Bruce eloquently said it—we have delivery scheduled for IOTA One.

Jay Chandan: Sorry, Brian. For us, the confidence is from the capacity and the projects we are putting now. I think Bruce eloquently said, we have a delivery schedule for Yotta 1. In fact, there are a whole bunch of them on a plane right now as we speak. They are underway. We are commencing all our deployment, which effectively means the power drops are there, the connectivity is there, and the Yotta 2 equipment is also being completed and will be approximately delivered, so the deliveries will start coming in. We have a fixed timeline. That means we have to deliver the first set by the end of this month, the second set mid of next month. So between now and end of November, Yotta 1 and Yotta 2 phase 1 will be complete. You have got the big elephant, which is the NeutraDC.

Speaker #2: In fact, there are a whole bunch of them on the plane right now as we speak. They're underway. We are commencing all our deployment, which effectively means the power drops are there, the connectivity is there.

Speaker #2: And the IOTA phase two equipment is also being completed and will be approximately delivered. The deliveries will start coming in, so we have a fixed timeline.

Speaker #2: That means we have to deliver the first set by the end of this month, the second set by mid-next month, and then—so between now and the end of November—IOTA One and IOTA Two, phase one, will be complete.

Speaker #2: And then you've got the big elephant, which is the Nutri-DC. That particular one—actually, the first 300 servers have to be deployed by the end of October.

Jay Chandan: That particular one, actually, the first 300 servers have to be deployed by the end of October. Testing will take probably between 20 and 30 days. So we are looking at going operational end of November, first week of December. On top of that, we were also working towards closing the remainder of the 700 plus the 875 servers, which will obviously, once that is done, we will absolutely revise the new targets for next year. Again, the challenge we have today, just to address what the challenges are, the GPUs are in short fall, the CPUs are in short fall, memory and storage is short. You have got the cabling and everything else. On top of that, electricity seems to be a bit of a problem.

Speaker #2: Testing will probably take between 20 and 30 days. So we're looking at going operational end of November or the first week of December. Now, on top of that, we are also working towards closing the remainder of the 700, plus the 875 servers, which will obviously, once that is done, absolutely revise the targets for next year.

Speaker #2: But again, the challenge we have today, just to address what the challenges are, is that GPUs are in shortfall. CPUs are in shortfall. Memory and storage are short.

Speaker #2: Then you've got the cabling and everything else. On top of that, electricity seems to be a bit of a problem. But what we are doing is making sure that whatever we've committed today is based on the operational milestones, which we already have in place.

Jay Chandan: What we are doing is we are making sure that whatever we have committed today is basically operational milestones, which we already have in place. Whether it is equipment, capacity, customers, contract signed, workloads migrated, and all of the utilization, that is being done. Brian?

Speaker #2: But whether it's equipment, capacity, customers' contracts signed, workloads migrated, and all of the utilization that is being done. Right?

Speaker #1: Great, that's super helpful. Yep, a follow-up—I think the Nutri-DC, those are data centers that were already built, if my memory serves me. But on Yoda, do you have any construction you have to do?

Brian Kinstlinger: Great. That's super helpful.

Jay Chandan: Yeah.

Brian Kinstlinger: A follow-up. I think NeutraDC, those are data centers that were already built, if my memory serves me. But on Yotta, do you have any construction you have to do?

Speaker #2: No, none whatsoever. Yota is a phenomenal constructor. They build it themselves, so they have done it all by themselves. And by the way, all of the Yota data centers are fully ready for service.

Jay Chandan: No, none whatsoever. Yotta is a phenomenal construction. They build it themselves, so they have done it all by themselves. By the way, all of the Yotta data centers are fully ready for service. All the floors are ready for service. All we're doing now is getting the power drops in and getting the GPUs to be tested.

Speaker #2: All the floors are ready for service. All we're doing now is getting the power drops in and getting the GPUs to be tested.

Speaker #1: Great. And then on the project financing, last quarter you had mentioned you had offers, and you made similar offers on the table, and you had similar comments here.

Brian Kinstlinger: Great. On the project financing, last quarter, you had mentioned you had offers, and you made similar offers on the table, and you had similar comments here. What has been the biggest obstacle in securing the project financing?

Speaker #1: What has been the biggest obstacle in securing the project financing?

Speaker #4: Brian, to be very careful, I didn't say we had offers. I said, in one case, we have arranged, and in the other case, we're close to completing.

Bruce Bower: Brian, be very careful. I didn't say we had offers. I said in one case we have arranged, and in the other case, we're close to completing. The obstacles has been, first of all, us fighting for the best terms possible. There were some initial offers that were not conducive to shareholders, so we said, "No, we're not going to accept that." The second thing has been, more recently, when there's been shift in some of the delivery schedules. The shift actually was one where they wanted us to pay, the vendors wanted us to pay more quickly. So we had to make people hurry up and meet different delivery schedules, and thus we do some things. But in general, I'm very happy with where we are.

Speaker #4: The obstacles have been, first of all, us fighting for the best terms possible. There were some initial offers that were not conducive to shareholders.

Speaker #4: So we said, "No, we're not going to accept that." And then the second thing has been more recently, when there has been a shift in some of the delivery schedules.

Speaker #4: The shift actually was one where they wanted us to pay—the vendors wanted us to pay—more quickly. So, we had to make people hurry up and meet different delivery schedules, and thus redo some things.

Speaker #4: But in general, I'm very happy with where we are. I'm very happy not just with the project finance story, but also with how we are with the debt markets overall.

Bruce Bower: I'm very happy with not just with the project finance story, but also with how we are with the debt markets overall. I would say, we said earlier that we are pursuing a credit rating, so I'd stay tuned on that front.

Speaker #4: And then I would say, as we mentioned earlier, we are pursuing a credit rating. So I'd stay tuned on that front.

Speaker #2: Yes.

Jay Chandan: Yeah.

Speaker #3: Your next question comes from the line of Alex Latimer with Northland Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Michael Latimore with Northland Capital Markets. Please go ahead.

Operator: Your next question comes from the line of Alex Latimore with Northland Capital Markets. Please go ahead.

Michael Latimore: Hey, Jay. Hey, Bruce. Thanks for having me on. I'm glad to see everything's evolving well here. I was curious about the terminal value of the GPUs. Are you looking to sell them after five years? If so, what would that residual value be? Also, alternatively, is there an opportunity to keep operating the GPUs for a sixth year?

Alex Latimore: Hey, Jay. Hey, Bruce. Thanks for having me on. I'm glad to see everything's evolving well here. I was curious about the terminal value of the GPUs. Are you looking to sell them after five years? If so, what would that residual value be? Also, alternatively, is there an opportunity to keep operating the GPUs for a sixth year?

Speaker #5: Hey, Jay. Hey, Bruce. Thanks for having me on. I'm glad to see everything's evolving well here. I was curious about the terminal value of the GPUs.

Speaker #5: Are you looking to sell them after five years? If so, what would that residual value be? And then also, alternatively, is there an opportunity to keep operating the GPUs for a sixth year?

Jay Chandan: That's a great question. Michael, good to hear from you. Hope all is well. Yes. If you look at various sources today, B300s and GV300s, they still have residual value at the end of the fifth year. You're looking at roughly around between 20% and 25%. That's today, Michael. We don't know what's going to happen in five years' time. At the end of the day, we will continue to operate those GPUs. We've already received offers, just FYI, from various either institutional investors or from data center operators saying, "Look, I'm happy to sign an agreement with you at the end of the fifth year.

Jay Chandan: That's a great question. Alex, good to hear from you. Hope all is well. Yes. If you look at various sources today, B300s and GV300s, they still have residual value at the end of the fifth year. You're looking at roughly around between 20% and 25%. That's today, Alex. We don't know what's going to happen in five years' time. At the end of the day, we will continue to operate those GPUs. We've already received offers, just FYI, from various either institutional investors or from data center operators saying, "Look, I'm happy to sign an agreement with you at the end of the fifth year.

Speaker #2: That's a great question, and good to hear from you. I hope all is well. So yes, if you look at various sources today, B300s and GB300s still have residual value at the end of the fifth year.

Speaker #2: You're looking at roughly around 20 to 25 percent. But that's today. However, we don't know what's going to happen in five years' time.

Speaker #2: But at the end of the day, we will continue to operate those GPUs. We've already received offers, just FYI, from various either institutional investors or from data center operators, saying, "Look, I'm happy to sign an agreement with you at the end of the fifth year."

Speaker #2: We'll take it off, and here's what we'll do: we will get it evaluated by a top-tier firm, like Ernst & Young or PwC or KPMG, and then we will put an assigned value to it.

Jay Chandan: We'll take it off, and we will get it evaluated by a top-tier firm like Ernst & Young or PwC or KPMG, and then we will put an assigned value to it." Gorilla's intent is to continue working as the models evolve. You're evolving from training workloads to inferences. Edge will make a meaningful entry towards the beginning of next year. We are looking at deploying at scale in these regions. The other things you should also look at is Sovereign AI. Each of these countries where we are present today, whether it's the Middle East, parts of Europe, parts of Asia, they are very actively sourcing GPUs. They're looking to secure their future, especially the governments and so on and so forth. We can deploy it at that point of time.

Speaker #2: But the Gorilla's intent is to continue working. As the models evolve, you're evolving from training workloads to inferences. Edge will become a meaningful kind of will make a meaningful entry towards the beginning of next year.

Speaker #2: We're looking at deploying at scale in these regions. The other thing you should also look at is Sovrin AI. In each of these countries where we are present today—whether it's the Middle East, parts of Europe, or parts of Asia—they are very actively sourcing GPUs and looking to secure the future, especially the governments, and so on and so forth.

Speaker #2: And we can deploy it at that point in time. So, net-net, either it's revenue-based incremental workings towards the next three or four years after, or there's an immediate liquidity post-sale to an existing data center provider.

Jay Chandan: Net-net, either it's revenue-based, incremental, working towards the next three or four years after, or there's an immediate liquidity post-sale to an existing data center provider.

Speaker #5: Great. Understood.

Michael Latimore: Great. Understood.

Alex Latimore: Great. Understood.

Speaker #4: And can I add to that? Alex, can I add to that? So, for accounting purposes, we'll depreciate the equipment over five years. So, that's the assumed life—just, I mean, the major reason is that some of the contracts, most of the contracts, we're signing are for five years.

Bruce Bower: Alex, let me add to that. For accounting purposes, we will depreciate the equipment over five years. That is the assumed life. The major reason is that most of the contracts we are signing for five years. I would emphasize that first of all, what Jay mentioned, that there is a couple of ways to monetize them later. I would also point out that this has been a story that we have heard discussed numerous times. What is the useful life of a GPU? Some other players on the market are putting A100 into service for seven, eight, nine years running now, and still generating revenue and a very decent yield on cost. Obviously, the A100 do not rent for the same thing that they would five years ago, but it is still a very healthy return, and very favorable economics.

Speaker #4: But I would emphasize, first of all, what Jay mentioned—that there are a couple of ways to monetize them later. I would also point out that this is a story we've heard discussed numerous times.

Speaker #4: What is the useful life of a GPU? Some other players in the market are putting A100s into service for seven, eight, nine years running now, and they’re still generating revenue.

Speaker #4: And it's a very decent yield on cost. Obviously, the A100s don't rent for the same amount that they did five years ago, but it's still a very healthy return and very favorable economics.

Speaker #4: So, all the evidence is pointing to the fact that the service life might actually be much longer than five years.

Bruce Bower: All the evidence is pointing to the fact that the service life might actually be much longer than five years.

Speaker #5: Awesome. Another question. For your CapEx forecast for India and Indonesia, does that include maintenance CapEx, or is that additional? And if it is, how should we think about the sequencing or the cadence of that maintenance CapEx?

Michael Latimore: Awesome. Another question. For your CapEx forecast for India and Indonesia, does that include maintenance CapEx, or is that additional? If it is, how should we think about the sequencing or the cadence of that maintenance CapEx?

Alex Latimore: Awesome. Another question. For your CapEx forecast for India and Indonesia, does that include maintenance CapEx, or is that additional? If it is, how should we think about the sequencing or the cadence of that maintenance CapEx?

Speaker #4: Yeah, I'll take that. So the CapEx forecast we've given for the upfront CapEx—the upfront CapEx really covers networking equipment, GPUs, servers, cabling, setup—everything that you would need to get up and running.

Bruce Bower: Yeah, I will take that. The CapEx forecast we have given are for the upfront CapEx. The upfront CapEx really covers networking equipment, GPUs, servers, cabling, setup, everything that you would need to get up and running. The maintenance CapEx, we are taking as an expense. There are a couple of reasons for that. The first is that most of it will be labor, actually. We are doing an RMA service where we have people, they are going to be servicing the equipment and then also repairing it. Secondly, a lot of the equipment will be covered by warranty by the vendor. We will spend a little bit to repair or to swap out spare parts, et cetera, but the big CapEx that would be needed in case an overall server breaks would not be with us. It would sit with the vendor.

Speaker #4: The maintenance CapEx, we are taking as an expense. There are a couple of reasons for that. The first is that most of it will be labor, actually.

Speaker #4: So we're doing RMA service, where we have people who are going to be servicing the equipment and then also repairing it. And then secondly, a lot of the equipment will be covered by warranty by the vendor.

Speaker #4: So, we will spend a little bit to repair or to swap out spare parts, etc. But the big CapEx that would be needed in case a machine breaks or an overall server breaks would not be with us.

Speaker #4: It would sit with the vendor. So basically, when you look at the forecast and our gross margin, we put in the gross margin all of the costs of spare parts and labor.

Bruce Bower: Basically, when you look at the forecast and our gross margin, we put in the gross margin all of the cost of spare parts and labor. It is not broken out separately as maintenance CapEx.

Speaker #4: It's not broken out separately as maintenance CapEx.

Speaker #2: Yep. Awesome.

Michael Latimore: Yes. Awesome. Thank you, Bruce. One more. Could you describe the debt financing for Indonesia? Just a few questions to run through. What is the interest rate? Is the customer financing portions of it? If so, how much? What percent of the financings are complete there?

Alex Latimore: Yes. Awesome. Thank you, Bruce. One more. Could you describe the debt financing for Indonesia? Just a few questions to run through. What is the interest rate? Is the customer financing portions of it? If so, how much? What percent of the financings are complete there?

Speaker #5: Thank you, Bruce. One more. Could you describe the debt financing for Indonesia? Just a few questions to run through. What is the interest rate?

Speaker #5: Is the customer financing portions of it? If so, how much? And then, what percent of the financings are complete there?

Speaker #4: We have an offer. We disclosed in the press release about the project: 70% of the project will be financed this way. The balance will come from the Gorilla balance sheet, and then from customer prepayments.

Bruce Bower: We have an offer, and we disclosed in the press release about the project for 70% of the project. The balance will come from the Gorilla balance sheet and from customer prepayments. So, so far, how it works is if we are deploying 30% of the project up front, so 300 out of 1,000 servers, then that comes out of customer prepayments and out of Gorilla's pocket. The debt portion would fund the 700 servers to come at the end of the year. That is what I can share about the financing arrangements for that project. The first deliveries are coming, basically, out of Gorilla's pocket and drawing on customer prepayment.

Speaker #4: So, so far, how it works is if we're deploying 30% of the project upfront—so, 300 out of 1,000 servers—then that comes out of customer prepayments and out of Gorilla's pocket.

Speaker #4: And then the debt portion would fund the 700 servers to come at the end of the year. So that's what I can share about the financing arrangements for that project.

Speaker #4: So the first deliveries are coming basically out of Gorilla's pocket, and then drawing on customer prepayment.

Michael Latimore: Sweet. Awesome. That is all for me. Thank you, guys.

Alex Latimore: Sweet. Awesome. That is all for me. Thank you, guys.

Speaker #5: Sweet. Awesome. That's all from me. Thank you, guys.

Bruce Bower: Thank you.

Speaker #2: Thank you.

Speaker #3: Your next question comes from the line of John Roy with Water Tower Research. Please go ahead.

Operator: Your next question comes from the line of John Roy with Water Tower Research. Please go ahead.

Speaker #2: Great, thanks for taking my call. Congratulations, gentlemen. I wanted to maybe take a step back real quick and think about what could go wrong next year.

John Roy: Great. Thanks for taking my call. Congratulations, gentlemen. I wanted to maybe take a step back real quick and think about what could go wrong next year. What do you think is your biggest risk? Is it people? Is it power? Is it building facilities? Is it acquiring equipment? What are you most worried about?

Speaker #2: What do you think is your biggest risk? Is it people? Is it power? Is it building facilities? Is it acquiring equipment? What are you most worried about?

Speaker #1: Great question, John. Good to hear from you again. So let me classify that into three principal risks. One is the hardware timing. The second one I would categorize as site and power readiness.

Jay Chandan: Great question, John. Good to hear from you again. Let me classify that into three principal risks. One is the hardware timing. The second one is the, I would categorize, site and power readiness, and the third one is customer acceptance with the workload migration. We have been ordering early. Just for FYI, all of the equipment which are supposed to be delivered in end of September have been delivered now, so it is about five weeks early. Yotta 2, it is about eight weeks early in terms of manufacturing and so on. So we are ordering early, testing before the deployment, staging deliveries with our OEMs, and our integration partners. Then more importantly, we are making sure that all the sequencing matters. Second, we are gating the deployment against what I call confirmed power and readiness, site readiness. Engineering is working actively 24/7 on this.

Speaker #1: And the third one is customer acceptance with the workload migrations. Now, we've been ordering early. Just for your information, all of the equipment which was supposed to be delivered at the end of September is being delivered now.

Speaker #1: So it's about five weeks early. Year two, it's about eight weeks early in terms of manufacturing and so on. So we're ordering early, testing before the deployment, and planning deliveries with our OEM and integration partners.

Speaker #1: Then, more importantly, we're making sure all these sequencing matters. Second, we're gating the deployment against what I call power-confirmed power and readiness, site readiness. Engineering is working actively 24/7 on this. Networking and installation work teams are running in parallel. Our teams are sitting on the sites in different parts of the world.

Jay Chandan: Networking and installation work teams are running in parallel. Our teams are sitting on the sites in different parts of the world. Unfortunately, electricity has an inconvenient habit of being very essential. On top of that, customer testing and workload migration has to begin before full commission. That allows us to resolve all of the integration issues progressively. What we are doing is we are making sure that the paying workload works better. We have scheduled buffers in each of these phases, phase deployment plans, and then more importantly, the ability to resequence work where appropriate. We also have to build our own internal processes. You will see that we have almost doubled our size in terms of human resources, and we are also making sure that contingency plans, which is both for the operational preparation as well as all of the hardware as well.

Speaker #1: Now, unfortunately, electricity has an inconvenient habit of being very essential. So, on top of that, customer testing and workload migration have to begin before full commission.

Speaker #1: Now, that allows us to resolve all of the integration issues progressively. So, what we are doing is making sure that the paying workload works better.

Speaker #1: So, we have scheduled buffers in each of these phases, phase deployment plans, and then, more importantly, the ability to resequence work where appropriate. We also have to build our own internal processes.

Speaker #1: You will see that we have actually almost doubled our size in terms of human resources. And we're also making sure that there are contingency plans, which are both for the operational preparation as well as all of the hardware as well.

Speaker #1: So all of the RMAs, all of the RFSs—all of them have to be done well before the schedule. So that is something we believe are some of the important risks we are looking at in the H2 ramp for ourselves.

Jay Chandan: All of the RMAs, all of the RFSs, all of them have to be done well before the scheduled. That is something we believe are some of the important risks we are looking at in H2 ramp for ourselves. But we do have contingencies for every single one of them. John.

Speaker #1: But we do have contingencies for every single one of them. John?

Speaker #2: Great. Thank you so much.

John Roy: Great. Thank you so much.

Speaker #3: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Barath Naraji with Cantor Fitzgerald.

Operator: As a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. Your next question comes from the line of Bharath Nagaraj with Cantor Fitzgerald. Please go ahead.

Speaker #3: Please go ahead.

Speaker #2: Thank you. Thanks for taking my questions. Previously, you referenced aggressive hiring across Thailand, India, Taiwan, etc., targeting more than 1,000 people, I think.

Bharath Nagaraj: Thank you. Thanks for taking my questions. Previously, you referenced hiring across, aggressive hiring, I should say, across Thailand, India, Taiwan, targeting 1,000-plus people, I think, Thailand alone, maybe. What is the current headcount, and what is the monthly OpEx run rate exiting Q2 at this stage? Thank you. That is the first one.

Speaker #2: Thailand alone, maybe. What's the current headcount, and what's the monthly opex run rate exceeding Q2 at this stage? Thank you. That's the first one.

Speaker #1: Good question. So, Barath, good to hear from you again. We have, I think, on a full-time resource basis, about 300-plus people, and on a contractor basis as well.

Jay Chandan: Yeah, sure. Bharath, good to hear from you again. We have, I think, on a full-time resource basis, I think we are about 300-plus people. On a contractor basis, we are already at about 300, 350. As you can imagine, we are going through various stages now. We are going through land assessment, power readiness, water readiness, EPC certifications, and so on and so forth, both in Thailand and in Indonesia. That will involve probably another 400 to 500 people, but we are going through the whole RFP process right now as we speak. As we are going forward, we would see that number specifically expand significantly. I can tell you at the peak, let us say by mid-2027, we will be at about 2,000 people. Currently, we are at about 300 plus another 350, so about 650 people. Yes, we are expanding rapidly.

Speaker #1: We're already at about 300, 350. We're going to the, as you can imagine, we're going to various phases now. We're going through land assessment, power readiness, water readiness, EPC certifications, and so on and so forth for the Thailand and in Indonesia.

Speaker #1: That will involve probably another 400 to 500 people. But we're going through the whole RFP process right now as we speak. As we go forward, we would see that number specifically expand significantly.

Speaker #1: So, I can tell you, at the peak—let's say by mid-2027—we'll be at about 2,000 people. Currently, we're at about 300, plus another 350, so about 650 people.

Speaker #1: So yes, we are expanding rapidly. Bruce, do you want to take the second half?

Jay Chandan: Bruce, do you want to take the second half?

Speaker #4: Yes. It's about $2.7 million a month in SG&A. So that is more than just the people costs. We expect that to go up by the end of next year to sort of a $38 to $40 million annualized range.

Bruce Bower: Yes. It is about $2.7 million a month is the SG&A, so that is more than just the people costs. We expect that to go up by the end of next year to sort of $38 million to $40 million annualized range. As Jay mentioned, there is a significant headcount expansion, but just keep in mind the geographies, right? India, Thailand, it is not Silicon Valley, right? So that explains why the cost increase would not be so large. Then we think that in order to operate projects generating hundreds of millions of gross margin, I think that that is a worthwhile trade-off.

Speaker #4: Now, as Jay mentioned, there's significant headcount expansion, but just keep in mind the geographies, right? India, Thailand, etc., are not—it's not Silicon Valley, right?

Speaker #4: So that explains the why the cost increase would not be so large. And then we think that that's in order to operate projects generating hundreds of millions of gross margin, I think that that's a worthwhile trade-off.

Speaker #2: Understood. Thank you. The second question I have is on the GPU spot prices, given how volatile they are. Are Gorilla's contracted take-or-pay agreements fixed price, or are they indexed to the spot?

Bharath Nagaraj: Understood. Thank you.

Bharath Nagaraj: Yeah.

Bruce Bower: Yeah.

Bharath Nagaraj: The second question I have is on the GPU spot prices, given how volatile they are. Are Gorilla's contracted take-or-pay agreements fixed price or is it indexed to the spot? For example, if things change and supply catches up next year and you have a multi-year agreement, is Gorilla taking the margin risk or how does it work?

Speaker #2: For example, if things change and supply catches up next year and you have a multi-year agreement, is Gorilla taking the margin risk, or how does it work?

Jay Chandan: That is a very good question. We are basically, all our hardware are fixed cost today. There is no, what I call, indexed or pass-through pricing, which transfers some of the volatility to the customers. All of our agreements, for example, the power agreements, are fixed. There is no change in the power prices. All of our prices for water and the connectivity are fixed as well. We are not trying to either pass on the risk to the customers or keep the risk to ourselves. Everything has been defined very clearly. Our customers have also been very understanding. There is a higher charge up front, and we are basically telling, "Look, this is the risk today. This is the cost of memory. It has gone up 40%, 50%, 60% over the last four or five months.

Speaker #1: That's a very good question. So basically, all our hardware is at a fixed cost today. There is no, what I call, indexed or pass-through pricing that transfers some of the volatility to the customers.

Speaker #1: All of our agreements—for example, the power agreements—are fixed. There is no change in the power prices. All of our prices for water and connectivity are fixed as well.

Speaker #1: So, we're not trying to either pass on the risk to the customer or keep the risk to ourselves. Everything has been defined very clearly.

Speaker #1: Our customers have also been very understanding. So there's a higher charge up front, and we are basically telling them, "Look, this is the risk today."

Speaker #1: This is the cost of memory—it's gone up 40, 50, 60 percent over the last four or five months. Here is the upgraded cost. And we're making sure that we are intending to protect all of the project economics—we're not just relying solely on unhedged spot pricing or anything like that.

Jay Chandan: Here is the upgraded cost." We are making sure that we are intending to protect all of the project economics. We are not just relying solely on unhedged spot pricing or anything like that. That said, we have gone to every single vendor personally. We have sat down with every single one of them and made sure that the prices are fixed. Whatever they deliver between now and December are all fixed price basis. It does not carry any risk for us.

Speaker #1: That said, we have gone to every single vendor. Personally, we haven't—we've sat down with every single one of them and made sure that the prices are fixed.

Speaker #1: So, whatever they deliver between now and December are all on a fixed price basis. It does not carry any risk for us.

Speaker #2: Okay, very clear, thank you. Just a couple more from me, if that's all right — just quick ones. I know you gave us project-level attribution for your guidance for 2027.

Bharath Nagaraj: Okay. Very clear. Thank you. Just a couple more from me, if that's all right. Just quick ones. I know you gave us a project-level attribution for your guidance for 2027. I just wanted to understand what kind of utilization assumptions underpin the guidance, maybe even for 2026 and for 2027 as well. A separate question is around Egypt, Taiwan, and Thailand. What kind of contribution has it made in H1? Thank you.

Speaker #2: I just wanted to understand what kind of utilization assumptions underpin the guidance—maybe even for '26 and for '27 as well. And then, a separate question is around Egypt, Taiwan, and Thailand.

Speaker #2: What kind of contribution has it made in H1? Thank you.

Speaker #1: No, that's a great question. So, Barath, I'm going to break it down into two parts. There is no project-level guidance or attribution when using the attribution, because these are take-or-pay.

Jay Chandan: No, that's a great question. Bharath, I'm going to break it down into two. There is no project-level guidance or usage attribution because these are take-or-pay. The customer chooses to use it, the customer doesn't choose to use it. It's basically an identified customer, not customer demand.

Speaker #1: Okay? The customer chooses to use it. The customer doesn't choose to use it. It's basically an identified customer, not customer demand. Okay? So the mix for us is commission. GPU capacity utilization is 100%.

Jay Chandan: The mix for us is commissioned GPU capacity. Utilization is 100%. That's how we consider it. Obviously, there are some RMA issues, so the customers ask us for a 99.95 delivery. More importantly, we are making sure that all of these recurring compute service revenues are part of the established business. When I tell you I'm billing, just to give you an example, USD 1 for this customer, that is not going to go down to 0.9, and it's not going to go up to 101. It is actually USD 1. That would be something which we will be billing for the next five years. Now, we model a phase commission. The commissioning is what will chair. There'll be an onboarding customer curve. Utilization will increase as the workloads will migrate. What would happen is the customer testing will happen.

Speaker #1: That's how we consider it. Obviously, there are some RMA issues. So, a customer has asked us for a 99.95% delivery. But more important, we are making sure that all of these recurring compute service revenues are part of the established business.

Speaker #1: So when I tell you I'm billing—just to give you an example—$1 for this customer, that is not going to go down to $0.90.

Speaker #1: It's not going to go up to 101. It is actually $1. And that would be something which we will be billing for the next five years.

Speaker #1: Now, we model a phased commission. The commissioning is what will—there'll be an onboarding customer curve, as the utilization will increase as the workloads will migrate.

Speaker #1: So what would happen is the customer testing will happen. The first 300 servers will go live, then the next 700 will go live, and then the next 875 will go live.

Jay Chandan: The first 300 servers will go live, the next 700 will go live, then the next 875 will go live. That is the onboarding curve which we have. In terms of the payment, the customer is actually paying us a flat fee for that. Yotta is obviously a big contributor as the phases go through. India and Indonesia are poised to become very aggressive. It's going to be a huge part of our revenues going forward. At the same time, on Egypt, Taiwan, and Thailand, we have already had, as Bruce alluded to, we've established already a security network intelligence, public sector operations, and so on. We're not giving up on that. In fact, we're bidding for some very large projects as we speak, and we're going through the motions of closing them as and when. We will make the necessary announcement there.

Speaker #1: That is the onboarding curve which we have. But in terms of the payment, the customer is actually paying us a flat fee for that.

Speaker #1: Now, Yota is obviously a big contributor. As the phases go through, India and Indonesia are poised to become very aggressive, as they're going to be a huge part of our revenues going forward.

Speaker #1: But at the same time, in Egypt, Taiwan, and Thailand, we have already had, as Bruce alluded to, we've established already a security network, intelligence, public sector operations, and so on.

Speaker #1: We're not giving up on that. In fact, we're bidding for some very large projects as we speak, and we're going through the motions of closing them as and when.

Speaker #1: So, we will make the necessary announcement then. They remain, for us, a very important source of revenue—customer collections. But more importantly, they provide technical credibility to help support our AI infrastructure.

Jay Chandan: They remain, for us, a very important source of revenue, customer collections, but more important, technical credibility to help support our AI infrastructure. For people who don't understand how we actually do this, all of our network intelligence, all of our established security, all of our radio, our data intelligence platforms, our building management solutions, and so on and so forth, are part of our data center. Our SOC and NOC, which we helped build for Egypt, has actually become a part of our business, and now we are providing the same for our data centers. At the same time, we made an investment in a company called Astrikos in Bangalore in India. They are helping us integrate our SOC, NOC, and our BMS solutions and providing us even more robust technological infrastructure, which we are personally using for some of the data centers.

Speaker #1: Now, for people who don't understand how we actually do this, all of our network intelligence, all of our established security, all of our radio, our data intelligence platforms, our building management solutions, and so on and so forth, are part of our data center—our SOC and NOC—which we have built for Egypt and has actually become a part of our business.

Speaker #1: And now we are providing the same for our data centers. At the same time, we made an investment in a company called Astrocos in Bangalore, India.

Speaker #1: They are helping us integrate our SOC, NOC, and BMS solutions, and providing us with an even more robust technological infrastructure, which we are personally using for some of our data centers.

Speaker #1: So if you look at Korat, for example, as and when we build it, almost 90% of all the technology provided will come from Gorilla or Gorilla white-label solutions.

Jay Chandan: If you look at Korat, for example, as and when we build it, almost 90% of all the technology provided will come from Gorilla or Gorilla white label solutions. Bharath.

Speaker #2: That's very helpful, thank you. That's useful detail, thank you. I didn't appreciate that fully. Thanks very much.

Bharath Nagaraj: That's very helpful. Thank you. That's a useful detail. Thank you. I didn't appreciate that fully. Thanks very much.

Speaker #1: Thanks, Barath.

Jay Chandan: Thanks, Bharath.

Operator: And that concludes our question and answer session. I would now like to turn the conference back over to management for any closing comments.

Speaker #3: That concludes our question and answer session. I would now like to turn the conference back over to management for any closing comments.

Speaker #1: Thank you very much. I mean, thanks. Thank you, everybody, for being part of this. I want to thank everyone who actually stood by Gorilla when the numbers were smaller or explanations occasionally required a map sometimes.

Jay Chandan: Thank you very much. Thank everybody for being part of this. I want to thank everyone who actually stood by Gorilla when the numbers were smaller. Our explanations occasionally required a map sometimes. People questioned where these certain countries were, sometimes a calculator and probably even a strong shot of whiskey. In the next 12 months, what we have done after that, we have doubled our H1 revenue. We have reduced our operating loss by approximately 95% from Q1. I would love to take credit, but unfortunately the people who did the actual work are actually listening to this call, so I am not taking credit for that. My wife recently asked me something. She said, "Hey, what are you thinking about?" I said, "Power distribution." Personally, I do not think the romance is dead. It only requires a substation. That is what we are building.

Speaker #1: People question where these certain countries were. Sometimes the calculator, then probably even a strong shot of whiskey. In the next 12 months—now, what we've done after that—we've doubled our first half of our revenue.

Speaker #1: We've reduced our operating loss by approximately 95% from Q1. Now, I'd love to take credit, but unfortunately, the people who did the actual work are actually listening to this call.

Speaker #1: So I'm not taking credit for that. Now, Mike, my wife recently asked me something. She said, "Hey, what are you thinking about?" I said, "Power distribution." Personally, I don't think it's a romance just yet.

Speaker #1: It only requires a substation, and that's what we're building. So, as CEO, I provide the optimism. Bruce patiently explains that, "Hey, the optimism is still not recognized under the IFRS." I've asked him twice.

Jay Chandan: As CEO, I provide the optimism. Bruce patiently explains that, "Hey, the optimism is still not recognized under the IFRS." I have asked him twice. Unfortunately, he does not blink. So I am asking all of you to judge us by the contracts we have signed, equipment we have delivered, revenue we are recognizing, and cash we are collecting. To all our shareholders, customers, and partners, and all of our extraordinary employees, both old and new, I really thank you. We intend to make your patience personally look less like fate and more like excellent judgments. I know sometimes the market can come and berate and they will say, "You know what? Oh my God, this CEO is trying to make a fool of you." That is fine. It is okay. Gorilla is only getting started. You can say all you want.

Speaker #1: Unfortunately, he doesn't blink. So I'm asking all of you to judge us by the contracts we've signed, the equipment we've delivered, the revenue we're recognizing, and the cash we're collecting.

Speaker #1: To all our shareholders, customers, and partners, and all of our extraordinary employees, both old and new, I really thank you. We intend to make your patience personally look less like fate and more like excellent judgment.

Speaker #1: I know sometimes the market can come and parade, and they'll say, "You know what? Oh my God, this CEO is trying to make a fool of you." That's fine.

Speaker #1: It's okay. Gorilla is only getting started. You can say all you want. And when it all goes to plan—I'm saying this very clearly—when it all goes to plan, not if.

Jay Chandan: When all goes to plan, and I am saying this very clearly, when all goes to plan, not if, my family will eventually invite me back to the dinner table, which I left. I promise you that we will be talking about GPUs and megawatts at the door. Till then, patience. Thank you very much indeed for your time, and thanks for your support. Cheers.

Speaker #1: My family will eventually invite me back to the dinner table, which I left, and I promise you there will be talking about GPUs and megawatts at the door.

Speaker #1: So, till then, patience. Thank you very much indeed for your time, and thanks for your support. Cheers.

Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.