Thank you for standing by. This is the conference operator. Welcome to the Gorilla Technology Group, Inc. Earnings Call for the First Quarter of 2025. Before we begin, we will read the forward-looking statement. Today's call includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and projections about future events and are subject to known and unknown risks and certainties that could cause actual results to differ materially. Forward-looking statements often include terms such as expects, believes, plans, anticipates, may, should, and similar expressions. For a discussion of important factors that could affect Gorilla's results, please refer to our filings with the SEC, including our most recent annual report on Form 20-F. Except as required by law, Gorilla undertakes no obligation to update or revise any forward-looking statements made on this call, whether as a result of new information, future events or otherwise. I would now like to turn the conference over to Jay Chandan, Chairman and Chief Executive Officer, and Bruce Bower, Chief Financial Officer. Please go ahead.

Thank you very much, Nick. Well, for everyone who's here today, first of all, welcome to our conference call. I'm delighted you all could join. This has been one of the operationally significant quarters in Gorilla's history. We are expanding across the United States, Latin America, Southeast Asia, and East Asia, converting real pipeline into delivery and deepening partnerships with some of the world's most respected institutions. Gorilla is scaling fast and executing harder. The quarter reflects exactly what we have been building towards: a strong financial performance, global expansion, and material progress across smart infrastructure, AI security, and national digital systems. What you all are seeing right now is not an early-stage growth. It's a strategic expansion. We're securing projects in ports, airports, data centers, hospitals, education, law enforcement, and all of this is now moving from negotiation to execution. Over the last 2 years, we have made a deliberate decision to focus inward, fixing the fundamentals, which is very key for our business, restructuring globally, scaling our delivery capability, hiring the right people, and proving above all that we can execute. We are not just a hype-driven company. While others were chasing headlines and inflated projections, we were securing national infrastructure contracts while deploying mission-critical systems in the public sector and more importantly, getting our financial house in order. That meant tightening our operations, rebuilding the teams, and pushing through complexity in multiple markets quietly, consistently, and without the need for a drumroll. Now, with our revenue up more than 100% year-on-year and with a positive net income and more importantly, with a $5 billion-plus pipeline and real deals being delivered across Southeast Asia, the Middle East, North Africa, Latin America and beyond, the results are loud enough, or I believe the results are loud enough on their own. We're seeing immense acceleration from Q2, Q3, Q4 going into 2026. And I couldn't be more excited to join you all on this call and let you know that we are positioned for a very strong '26 as well. Bruce, do you want to take them through the numbers on a very high level?

I want to highlight a few key points from the release. First, we achieved revenue of $18.3 million, representing a 109% growth compared to last year. We're also pleased with our adjusted EBITDA of $5.16 million, which is a 48% increase year-on-year, and an adjusted net income of $4.47 million, up 46.7%. This demonstrates that we’re effectively executing our contracts and translating that into profitability. Additionally, our balance sheet remains robust, with total cash reserves, both restricted and unrestricted, at $33.8 million at the end of the quarter, while we successfully reduced our debt from over $20 million to $18.4 million. As of today, we've further decreased our debt to $17 million, achieved in a cash-neutral manner with blocked deposits collateralizing the loan. We’re proud of our balance sheet management during this time. Regarding our capital structure, we ended the first quarter with approximately 20.15 million shares outstanding, and that figure has now slightly increased to just over 20 million due to warrant exercises. In the second quarter, following our earnings release, we conducted $1.8 million in share buybacks, bringing our total buyback expenditure over the last 12 months to $5.4 million, with an authorized total of $10 million, leaving us with $4.6 million remaining in the program. We're also focused on future investments. For instance, we invested $1.5 million in the ONE AMAZON partnership in the first quarter, followed by an additional $3.5 million in the second quarter, for a total commitment of $5 million to solidify this long-term partnership. This investment is recorded at cost on our balance sheet. As for our guidance, we maintain our 2025 revenue target of $100 million to $110 million based on secured contracts, which translates to an expected EBITDA of $20 million to $25 million and a net profit between $15 million and $20 million, excluding extraordinary items. For 2026, while we cannot provide full-year guidance, our backlog stands at $70 million, with several projects progressing to the proof-of-concept stage, and we're optimistic that this backlog will increase. Lastly, we have over $5 billion in pipeline and qualified leads. Although this figure has decreased from earlier in the year due to our MOU with the Provincial Electricity Authority in Thailand moving to the proof-of-concept stage, the overall potential contract value of our qualified leads has grown. Our strong balance sheet and cash position, along with our ongoing debt reduction, are sufficient to support our current and upcoming projects. If we pursue new projects requiring additional funding, we will prioritize project-level funding, then debt instruments, and consider equity as a last resort. We're confident in our ability to handle new projects without needing external funding, but should that situation arise, we remain committed to protecting shareholder interests. Those are the main points I wanted to cover. Jay, I'll hand it back to you or to the moderator.

Nick, I'm happy to take questions so that we can respond and get some more time to respond to all the questions both the analysts and the shareholders may have.

Your first question today will come from Brian Kinstlinger with Alliance Global Partners.

Nice results. I'm hoping we can dig. I thought I heard your comment that helped clarify, but I want to make sure I understand. For the Royal Thai Tourist Police contract that you had, originally talked about $50 million to $60 million. Can you remind us, is this a signed purchase order? Did you just say you were going into POC? And just maybe I'd like to hash out if details have already been completed or where you are in that process?

Brian, first of all, thanks for joining in. The Royal Thai project has actually exceeded our expectations. We started out with a simple proof-of-concept. As I'm not sure if you've seen, the National Daily put out a press release about Gorilla recommending our AI surveillance system. What we've helped them do, as soon as we finished the proof of concept, was to apprehend a little more than 200 suspects every week, which has been a real success. Now that, for me, in a real world speaks for itself. Now we are closely working with their leadership to expand and deepen the platform capabilities nationwide. So we have now been asked to actually work on a multitude of projects because of the success of this. As you can see, tourism is growing quite significantly in Thailand; they've gone from having 32 million tourists to 43 million tourists this year. What we're doing is integrating the Royal Thai Police with the Royal Thai Tourist Police and working with the AOT. Finally, we are going to work with the individual provinces of each of those key islands, including Phuket, Krabi, Similan, James Bond, Ko Phi Phi, Phang Nga Bay, and so on. What they're asking us to do is not just deploy surveillance systems, but they're also asking us to build connectivity across these key islands, so that they could keep in touch and allow each of these tourists to travel safely across all these islands without getting lost. This is also helping them connect to the emergency services at any given point in time where they're going to use an RFID tag or their mobile phones if they're stranded or lost. And that would be Gorilla's technology as well. I hope that answers your question.

I just want to clarify. The $50 million to $60 million we discussed, is that the total opportunity with the Thai Police and the islands? Is it based on a signed contract? I believe there are questions surrounding your contracts, so please explain what has been signed and what the opportunity looks like.

Perfect. So the one that is being signed is to a tune of $50 million to $60 million. What we are now going towards or headed towards is where we've actually got a teaming agreement with them which I can confirm. We will be looking at a total size of between $500 million to $550 million for the entirety of the project, but this is spread over 5 to 6 years, just for your information.

That's the addressable opportunity. Got it. Yes. I have a few more questions. I may ask one and then return to the queue because I have several. Can you provide an update on the large $400 million opportunity for the smart education contracts? I believe there was a memorandum of understanding, and we are six months into the process. What progress has been made toward a formal agreement?

So Brian, I understand that it's been a little over 6 months, and the world has been in turmoil with governments facing constant challenges. This has made decision-making quite complex. However, we haven't let that deter us; we've been actively pushing forward. I'm pleased to report that we are currently in the late-stage negotiation process for two of the education projects. One of these is focused on smart education, and they've recently added over $80 million for Smart Cloud Infrastructure related to the same educational project. As I mentioned, we're working to secure their final support for both projects, which are highly transformative. If you can give me a little more time, perhaps a few weeks, I will be able to provide a more solid update by then. But I can assure you that we are right at the final stage as we speak.

Don't commit to weeks. When it happens, it happens. You'll update us thank you, and I'll get back in the queue and ask two more when I'm back.

If I just chip in one thing. So when we announced an initial MOU or something along those lines with clients, that's usually based on the proposal that we've made, all sides understand the proposal, the scope, etc., and we move forward on that basis. But governments when it's dealing with critical national infrastructure and security, they don't just say, let's go and do everything at once. There's usually a proof-of-concept phase. We test it. We make sure that everything works as planned, the economics are as planned, etc., and then it moves into a rollout phase where it's more copy-paste and scale over. So typically, when we announce an agreement like this, for instance, with the Royal Thai Tourist Police, the initial scope, we have to go through a proof-of-concept phase that takes months and for larger opportunities may even take a year or more. The whole purpose of that is to make sure it works properly. Then it moves into a binding agreement where all sides are happy with the scope, who's going to do what, time frames, milestones, billing cycles, etc. So the timing may be a little frustrating for investors where things take longer than they would like, but that's the only way that it's going to happen.

And your next question today will come from John Roy with Water Tower Research.

I was curious as to what definitive steps you're taking to sustain the growth? Obviously, this kind of growth is amazing, but it's difficult to continue. I was wondering if you could give us some color as to the steps you're taking to continue the growth?

John, great question. Good to hear from you. So there are 5 to 6 key steps we are taking today. First of all, as you know, we've built a strong foundation. We're scaling towards what we call position. First step, we're converting pipeline into revenue. Now we have a significant qualified pipeline. What we are doing in Q2 and Q3 is we're laser-focused on converting these large deals, which are in late-stage negotiation. Bruce touched upon it. It is frustrating for shareholders. It is frustrating for us, but we have not lost sight of it. These are across public safety, education, energy in regions such as Southeast Asia, Latin America, Middle East, North Africa, and the United States. And this is not just a pipeline for the sake of PR, as many have alluded to, it is actively progressing and tied to national outcomes. Second, we are actively working across major deployments in progress. For example, we are now entering into multi-year contracts; none of our contracts are 1-year contracts. The minimum is 3, 5, I think the average is about 7 to 10 years now. We are working with national stakeholders to get them to understand the difference between an OpEx model and a CapEx model, making sure that these deployments will show up meaningfully for Gorilla at the same time, not just in Q2, Q3 and Q4, but in '26, '27 and '28. We are looking at new markets and new partnerships. That's number three. We expect to announce new market entry including further expansion into the regions I just mentioned. At the same time, we're also advancing our discussions with very well-known household name partners, typically around energy, AI, hardware integration, and these alliances are only helping us scale faster while we maintain capital discipline. The fourth most important approach is our financial discipline. We could be going out willy-nilly and spending a lot of money trying to bring growth. We're focused on profitable growth. We're not chasing it for the sake of it. More importantly, we're scaling with structure. What is important to us, margin, EBITDA, cash flow, they remain core to our key performance indicators. The fifth most important point is we are keeping a keen eye on media and market visibility. We are ensuring that investors are taking note; they're starting to pay attention to Gorilla. With earnings, new partnerships, and global projects in motion, we hope that Q2 and Q3 will be more a period of increased exposure and momentum building. Last, to round it off, John, we're also pursuing strategic acquisitions in Southeast Asia. We are currently finalizing an acquisition in Thailand that will allow us to get operational depth and local scale. This will allow us to consolidate regional operations and turn Gorilla into a dominant AI infrastructure player, not just in Thailand but also across the entire ASEAN region. We expect to close that sometime in Q2 and begin the integration in Q3. I hope that answers your question.

Yes, does a great job. Maybe this is one for Bruce as a follow-up. I mean what is the state of your pipeline or backlog? And maybe if you could give us some color on what is in that and what is not in that, if you know what I mean?

In 2025, our guidance indicates that we have a backlog of $93 million for this year, primarily due to existing contracts and clients. This includes three large clients and several smaller ones. For next year, the backlog is currently at $70 million, which comprises a couple of existing clients and several smaller new contracts set to begin at the end of 2025, with most of the financial benefits realized in 2026.

Your next question today will come from Mike Latimore with Northland Capital Markets.

This is Aditya on behalf of Michael Latimore. So could you give some color on if you expect sequential revenue growth each quarter this year? And also some color on the gross margins?

Did you say sequential revenue growth?

Sequential revenue growth. Yes.

Bruce, do you want to take that?

Yes. So our guidance is for the full year. We don't guide to any particular quarter. That's just because some of the government clients and sometimes the timing could slip by a week or something. So we don't want to risk the quarter by saying that every quarter will be a stair step up. But it's obvious from the full year guidance compared to the first quarter that the second half will be stronger than the first half in terms of top line. In terms of gross margin, we guide to 40% to 45% for this year. Jay mentioned our financial discipline, and I think that's a good point. The first is that we have basically a cutoff for new projects of 40%. The other thing is that given the scale of the number of qualified leads and the number of new opportunities that are coming our way every day, we're tightening up the terms that we accept. Like Jay mentioned, in terms of margins, in terms of length of contract duration, etc., the aim is to see the gross margin drift higher over the next 2 to 3 years, hopefully towards closer to the 45% to 50% range.

Got it. And what is the current headcount? And what might that be by the year-end?

Great question. So we're currently north of about 200 employees, and contractors will be a little over 100. With the acquisition closing, we'll be at about 300 full-time employees. By the end of this year, we should be between 300 to 400 full-time employees and probably between 100 to 200 contractors. As you can see, Aditya, we've been hiring quite significantly in India, Egypt, and in Thailand. What we are going to do is scale for growth.

And your next question today is coming from Brian Kinstlinger with Alliance Global Partners with a follow up.

Three quick questions. The first on the Amazon contract. You've spent $5 million in terms of investments. What is it that you're investing? Where is that money going towards? And how much more investment is needed?

Bruce, do you want to talk about the agreement and then...

Yes. We have a SAFE agreement, which means we are involved with ONE AMAZON, a company that does two things. We hold an equity stake in it. For those who are not familiar, SAFE stands for Simple Agreement for Future Equity. This means that when they conduct a priced funding round, we will be issued equity at that time. Currently, this agreement guarantees us equity when that event occurs. ONE AMAZON, which Jay will explain in further detail, is not related to the token; it pertains to the parent company that oversees the token and the impact investments. Essentially, this is the parent company.

Okay, so that gives you financial interest, got it.

It does and that's why they brought Gorilla onto the company's board. The ONE AMAZON project, as you may know, is a 30-year initiative focused on environmental monitoring throughout the Amazon Basin. On the capital side, we are deeply engaged in discussions with prominent family offices, institutional investors, and development banks in the U.S. and Latin America. This endeavor is not merely an environmental data project; we are positioning it as a new financial framework for valuing and protecting nature, or natural capital, utilizing real-time AI-driven intelligence. Our current activities revolve around three main objectives. First, we are collaborating with strategic partners to establish global validation. We have allies including AECOM, Goldman Sachs, MIT, and Media Labs, and we anticipate this partnership will set a benchmark for climate-aligned finance. Second, we are assessing the possibility of deploying our own constellation of low-orbit satellites, which would allow us to offer sovereign environmental intelligence over the Amazon while reducing reliance on costly third-party services and enabling us to manage our own data economy. This is significant because it means Gorilla, alongside ONE AMAZON, will launch its own low-orbit satellite. We are currently evaluating whether to purchase these satellites or acquire the company itself. Third, we are developing a model that goes beyond simply creating value for the token; we are also generating value from the data produced. We are actively collaborating with companies that may invest in ecotourism, renewable energy, agroforestry, biodiversity, credit monetization, and more. As I mentioned earlier, 25% of every dollar raised is allocated to Gorilla for technology deployment, positioning us well to enhance the intrinsic token value and establish long-term recurring revenue from data. This strategy allows us to control our own data economy. I hope that clarifies your question.

It does. My last two-part question for Bruce, I think it's a numbers question. First, the gross margin in the quarter was about 500 points below your target. I assume that's more hardware deliveries and that the remainder of the year will be less weighted towards hardware. That's my first question. Is that true? Or is that what you're thinking? And then second, on the cash flow, you would have been cash flow positive, but you've got this large unbilled receivable, a very large outflow. Maybe just speak to that and how that might reverse itself, so you'll be generating cash for the remainder of the year maybe?

Yes. So on the first one, that is absolutely correct. There was a disproportionate amount of hardware more than what we expect for the full year in the mix in the first quarter, and that is one of the reasons. The second thing is that the overall margins for the company in the first quarter are usually the slowest. We also carry higher SG&A costs, and there's usually some other kind of costs at the same time. Yes, those are the two reasons why the margins both, gross and EBITDA margins would be a little weaker in the first quarter, and we expect that to normalize over the full year. Like I mentioned, we target the full year, not an individual quarter because things can move around. Regarding your second question, I apologize, I'm blanking on it...

You have an $18 million outflow for unbilled. So I assume you haven't invoiced yet, but maybe just take us through the dynamics of that in collections.

Yes. So there are two components to it. One is what we need to bill and the second is what we need to collect. In the second quarter so far, we haven't raised any substantial new invoices. We will do that in the next 2 weeks, and then we have collected on the receivables that were there. We've collected about $7 million on the receivables that were there at the end of the first quarter; $5 million on the receivables and $2 million was a release of the guarantee. The receivables that were there at the end of the first quarter, the cash is moving in the right direction. We anticipate collecting on some of the other receivables either before the end of June or in July. It is trending in the right direction.

The $18 million outflow you didn't invoice yet for your work. Is that right?

That's correct. So we didn't really invoice in the first quarter. The second thing is that we performed a lot of work or we delivered a lot of goods. So that's why.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you, Nick. Everybody who's listening and shareholders, I've been awfully quiet and that's with a purpose. It has been a phenomenal period of momentum and expansion for Gorilla. As I've mentioned to Brian and the rest of the team, John, and so on, we are scaling rapidly. We're currently engaged in projects across infrastructure, ports, seaports, data centers and so on. We're expanding very rapidly across Asia. As I mentioned, we're in the final contracting stages for quite a number of projects. The ONE AMAZON project is moving forward at a pace. We are really, really kicking it out there. As you all know, we've also recently signed an OEM agreement with Hewlett Packard Enterprise. This is not a logo partnership, as many have alluded to. It's an operational venture. I'm actually meeting with their CEO and senior leadership next week in Las Vegas, where we'll be showing Gorilla's full stack to their global partners. This also marks a major leap in our global scale-up strategy and validates our strength of technology and execution, unlike others may lead you to believe. We are also very actively engaged in scaling up our core intelligence platform. For example, we didn't talk about it, but we have been actively engaged with one of our current large clients in scaling up their 5G lawful interception in Taiwan. Being an existing customer and moving to the next phase of deployment, we're also in active discussions to introduce the same solution in the Middle East, where there's high demand, especially for secure, high integrity 5G interception infrastructure, which is growing very quickly. So across the regions and sectors, Gorilla is no longer just participating; we are absolutely leading. And the reason I've been quiet is not because of some reports. I've been quiet because I've been working, pushing the boundaries, and we're all coming together to ensure that we're able to deliver success to our customers and stakeholders. That is my only objective. Now we are solving national problems with speed, precision, and confidence. More importantly, this next phase of growth is all about converting that momentum into lasting infrastructure and long-term impact. Thank you for believing in us. Thank you for believing in me, and we will make this happen. This is just the beginning. Thank you once again, everybody.

This concludes today's conference call. You may now disconnect your lines. Thank you for participating, and have a pleasant day.