Thank you for standing by. This is the conference operator. Welcome to the Gorilla Technology Group, Inc. Earnings Call for the First Half of 2025. Gorilla Technology Group is listed on NASDAQ under the ticker GRRR. The conference is being recorded. Before we begin, we will read the forward-looking statements. 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. 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 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. For everyone who's dialed in, thank you very much for your support and attention. Gorilla Technology has entered the second half of 2025 with more momentum and firepower and more market reach than any other time in our history. Our first half delivered about $39.3 million in revenue, which is a 90-plus percent year-on-year increase. But at the same time, we did so by executing on very large complex projects in multiple geographies. This proves that our AI-driven security, intelligence infrastructure solutions are in demand at the highest scale and that we can deliver them consistently at scale. Now financially, we have also strengthened our position on every front. We have a rock-solid CFO, who's reduced debt to $18.1 million, improved our liquidity with about $26.1 million of cash and then further added another $105 million to our kit in July through an equity raise to accelerate growth. Now these are just not numbers on the page. This is fuel for securing and delivering long-term high-value projects, which will define the future of Gorilla. Operationally, we've also signed three new projects over the last 30 days. I promised I was going to be announcing a lot more coming in the coming days in my previous call, and we will be making many announcements shortly as well. Two projects were in Taiwan, one in the U.K. The one in the U.K. was a significant extension of the existing U.K. customer we have, but the two new projects in Taiwan were new customers. These were strategic footholds for us, not one-off wins alone. What it also does is it helps us strengthen our long-term recurring revenue base with new customers so that we can increase and expand further into these markets. Now profitability remains a core discipline for Gorilla. On a normalized basis, adjusted EBITDA and adjusted net income both came at about $5.7 million, demonstrating we're not just chasing top line growth. Now we are building a profitable, sustainable business. Our model now is structurally much stronger compared to where we were last year at the same time, shifting from a very seasonal milestone heavy cycle to multiyear contracts that will deliver steady revenue alongside what we call milestone upsides going forward. We are no longer just a business of supplying technology. We are delivering national scale AI cybersecurity, data intelligence platforms that change how governments and enterprises operate. But more importantly, with the platform partnerships and global delivery capabilities we have now in place or which we have created and put in place, Gorilla is built to scale, and we're built to win and we're built to lead. I will pass it over to Bruce.

Thank you, Jay, for the kind words, and thank you also for the overview. Jay gave you the headline financial numbers. What I wanted to do is to dive into a few items and really highlight certain things. So the first is, as Jay mentioned, the first half revenue surged to $39.3 million. That is obviously a great start, up 90% year-over-year. One of the things you might notice is that the gross margin is in the low 30s. This is skewed lower compared to last year because of the mix. Last year was essentially service revenue, which is higher margin. Nonetheless, we still maintain our full-year forecast for gross margins in the 40% range, and that's given basically the mix that we see in the second half of the year. A couple of other things you noticed that there are two one-off adjustments or losses that show up, and I wanted to explain those. So the first is a financing-related loss. This is primarily due to the exercise of warrants by warrant holders in the first half of the year. This is basically a pure accounting item. There's no cash impact, and that's essentially the loss or the difference between the exercise price of the warrants, which was $5.60 a share and the prevailing market price, which was higher. So we just have to book that for accounting purposes as a loss. There's also FX-related losses. So as we note, this is due to the lagged impact of the devaluation from the Egyptian pound in 2024. So what happens is there is certain work that was performed that went into the contract assets or the unbilled revenue. And then this revaluation carried through to now when we recognize it. I would note that the Egyptian pound has strengthened substantially in the last few weeks, so from over 50 to almost 48. So we would expect this effect to be a little bit muted or even turn around in the future. Moving on to the balance sheet items. So we ended the first half with $26.1 million in cash. As we mentioned, we did an equity offering of $105 million of gross proceeds. So where that leaves us at the moment is we have about $114 million of unrestricted cash, and we have $11.3 million of restricted cash. You'll notice that the restricted cash figure now is much lower than at the end of the first half. That is because we had a bid bond or a guarantee that was released. So that returned about $4.9 million. And then going forward, we also expect to see this, the restricted assets drop even further. This is due to the release of a customer guarantee to the tune of $2 million to $3 million in the upcoming weeks. And also, we continue our debt paydown strategy. So we should be able to net about $1 million from paying down a loan facility and getting restricted assets released from that. The debt position is $18.1 million at the end of the first half. We're happy because this is down from $21.4 million at the end of 2024. We continue to selectively pay down debt where we can release deposits that are tied to the debt. Overall, we don't want to pay off all of the debt because it's at 3% in dollars. It's quite cheap and it gives us financial flexibility. A couple of other things to note. After the equity offering that we did, the shares outstanding right now are 22.9 million. This is because we sold treasury shares and issued about 1 million shares in addition to that. One of the advantages of the equity offering is that we have 3.47 million prefunded warrants, and this is where we have collected almost all of the cash, but we have not issued the shares yet. Those shares will only be issued when the prefunded warrant holder wants them to be issued. In terms of the outlook, the first thing is I want to confirm that the backlog for this year, when we came into the year, it was $93 million. And of course, we've delivered $39 million of revenue. So that is taken out of the backlog. We've added $4 million or $5 million to the backlog. So the backlog remains around $59 million for the end of the year. We are still confident in our guidance for this year of $100 million to $110 million revenue for the total year and targeting EBITDA margins of 20% plus and also targeting operating cash flow positive with the current contracts and structure. So that leaves us on track for full-year numbers. You can see from the way that we’ve spoken to in the past, we will continue to speak to, we don't stick our finger in the air and make guidance that way. We build it from our backlog, which is confirmed orders, signed contracts that we are either working on or about to implement. We don't look at our pipeline and take a guess. For the next year, we can confirm that we have a backlog of $70 million. Once we firm up that backlog, then we will get to the market with a more formal guidance. Stay tuned on that front. We have several near-term opportunities, which we anticipate making some announcements about in the coming couple of months. Hopefully, that will give you a better idea of the backlog for 2026 and also what the guidance is. We also talked about the funding strategy for future projects. When we do announce those future projects, what are we doing? The first step is obviously to look for project-level funding where there is another entity that is friendly to Gorilla or that is an SPV or otherwise, it's a customer that is funding a project; we look for that as a first step. The second thing is we look for debt. Third is equity. As you know, we raised equity. The sequencing was important there. We saw basically a need for equity to do two things. The first is to have that ready so that we could say to the customers, yes, we're ready to go. We have cash right here right now, we're ready to start. The second thing is that the availability and the terms that you get for debt improve. We are now looking for debt. We've engaged the bank, and we're looking for debt right now. In the future, I anticipate that we'll be making more announcements about how we fund projects and it will be with an emphasis on project level funding and on debt. With that, I conclude. Jay, unless you have anything else, we can move on to Q&A.

Absolutely. Let's move on to Q&A.

The first question today comes from Mike Latimore with Northland Capital Markets.

All right. Congrats on the strong growth this year so far.

Thank you, Mike.

Jay, maybe can you just highlight or summarize which customers or projects or regions were the main revenue drivers half of the year? And which do you expect to be kind of key to the second half of the year?

In the first half of the year, we have actively focused on Taiwan. In the second half, a significant portion of our revenue will come from Taiwan, Thailand, and the Middle East. By 2026, we expect an almost equal distribution of revenue between the U.S. and Southeast Asia.

Great. Great. So getting nice and diverse sources, it sounds like.

Yes. As we had promised a couple of years ago, sorry, I apologize, we promised a couple of years ago to derisk our business, not just in terms of territories and geographies, but also in terms of business segments. So that's where we are today. And that we have managed to kind of derisk it.

Can you provide some details on the ONE AMAZON projects you mentioned previously, specifically regarding the rollout timeline and the number of sensors planned? Additional clarity on this would be appreciated.

Absolutely, this will take a bit of time, so please bear with me. Our project is advancing significantly and has been successful even before implementation. We have key milestones, starting with the official showcase at New York Climate Week in September 2025, where global leaders will discuss the ONE AMAZON project. The next important date is the completion and launch of tokenization at COP30 in November 2025, coinciding with the release of the ONE AMAZON tokens. On the technology front, our teams in Taiwan and India are developing sensor technology for field deployment, environmental monitoring, and IoT devices tailored for forest health, biodiversity tracking, and anti-deforestation alerts. We are also actively engaged in our pilot projects for satellite mapping, utilizing multilayer imaging and AI-based land use mapping for real-time monitoring and verification. Our Internet of Forest initiative, which is part of our technology solution, is focused on providing connectivity, edge AI, and cloud analytics to process environmental data at scale. We are collaborating with a prominent university to democratize our data, and we recently signed an agreement to establish an innovation lab that will support the development of language models in the region. Additionally, we are conducting a cost per hectare analysis to optimize resource allocation and project return on investment. Regarding blockchain and tokenization, we are building a platform in partnership with leading blockchain infrastructure providers, and we are also working on tracking carbon credits and environmental assets linked to data from our sensors. We've deployed sensors not only in the Amazon rainforest but in other areas for comparison. A positive update is that we have signed a land use agreement for over 130,000 hectares with the state of Mato Grosso, which will be publicly announced at New York Climate Week. This agreement will help us negotiate with other territories to secure large-scale conservation and restoration efforts. Our role is clear: we are the exclusive technology backbone for data capture, ensuring connectivity, security, and system integration. Importantly, we aim for ONE AMAZON to be a measurable, verifiable, and commercially viable climate technology initiative. I hope this clarifies your question.

Yes. Excellent. Excellent. And I guess just last one for me. The Smart School program in Thailand, maybe can you provide a sort of quick update there? And once that starts getting deployed, what kind of revenue might you be able to see in the first year?

Sure. Mike, we are currently in deep negotiations with the government. The project, as I mentioned previously, has already expanded in scope. It's not just the smart education; there is a smart cloud infrastructure as well as the database integration project, the AI database integration project at the same time. We are in active discussion both in terms of scoping with the customer and agreeing on some contractual terms as well. I want to be a little careful so that I don't comment on any specific details such as the commercial model, delivery schedule and so on. But the size and scope of the project has only expanded, not reduced. When there's a formal contract and a public announcement, we will definitely share the details over the course of the next few weeks.

The next question comes from Brian Kinstlinger with Alliance Global Partners.

This is Kevin for Brian. Could you provide an update or a little bit more of an update on any of the large MOUs that you've discussed and the progress of signing contracts? And while you've had a few MOUs, is there one do you think is closest to getting signed? And if so, which one?

Sure. The Wan Hai Port in Taiwan and the ADE are both in the MOU phase, and we have already closed them. We will be implementing our AI port logistics safety and operational efficiencies at the Wan Hai Port over the next few months. The ADE is a more complex project that will incorporate our AI-based analytics to monitor and disrupt financial crime networks. This is the first initiative of its kind that we are developing specifically for the blockchain platform. We are also in the final stages of other contracts we are working on, and we will make announcements once they are finalized. We are on track, and to be candid, closing multimillion multiyear AI infrastructure contracts with governments is not something that happens overnight. The MOUs we have discussed are at an advanced stage. For instance, the project with the Thai Police in Thailand, which we previously mentioned, has already had its proof of concepts completed and deployed. The customer is very pleased with the results. For those outside the market, if they were to look, they would see our solutions actively running in various locations, including Pattaya, Chiang Mai, Ayutthaya, Lopburi, and others. The opportunity remains, and we are currently engaged; once we move from proof of concepts to contracts, they will evolve into broader national programs as well. We are still committed to the projection that this will become a $50 million to $60 million project. I hope that answers your question.

If I could add a couple of points, not all projects that Gorilla undertakes have the same life cycle. Some go through a lengthy process where we discuss the initial terms, sign an MOU, and complete a proof of concept, which can take months to refine and execute properly. However, some projects skip these steps and go straight into the contracting phase right after discussing an idea. Some opportunities mentioned earlier in the call are like that; there is no MOU, and we are focused solely on final signed contracts. Additionally, the reason we are cautious about forecasting revenue and emphasize backlog instead of vague forecasts is that timelines can shift. A proof of concept might take longer and could require reworking. As Jay mentioned, in some projects, the scope has expanded, and while we are happy to extend the project timeline for a larger scope, it complicates accurate forecasting, leading us to take a conservative approach. MOUs are the beginning of a relationship that takes time to build and grow into a business. We allow this process to unfold naturally without rushing it, ensuring we manage market expectations appropriately and communicate only when the relationship is more developed.

Great. And then could you talk a little bit more about the primary uses of the capital raise? Will there be any significant increases in expenses that can help drive top line growth or near-term M&A opportunities? Or is it just to kind of have a solid cash balance that makes winning new contracts easier given your financial positioning?

I can answer that, Bruce. We raised about $105 million to advance some significant projects. It's important for us to achieve our ambitious targets, and without the necessary capital, we can't be realistic about that. For instance, a government requested a cash-based bid bond for a major project, which amounted to around $20 million. We want to avoid any limitations. We're not raising funds just for the sake of it; every dollar raised is linked to a specific, high-return opportunity. While equity was a good choice at that time, we're also exploring debt and other strategic funding options to minimize dilution and maximize growth. Currently, we're actively working with CNS and CAN, and we're also exploring opportunities in India, aiming to establish a center with between 750 to 2,000 people for rapid growth. Additionally, we may pursue an acquisition in the United States. All of our ongoing projects are strategic, and we have a range of new R&D products in the pipeline. You can expect several developments in the coming months.

The next question comes from John Roy with Water Tower Research.

Great. First of all, congratulations on a great first half. I wanted to ask about gross margins. Obviously, they tend to be down. Bruce, maybe you can give us some color on when that might stabilize in the future? Or is that unlikely?

Well, first of all, the gross margins, as I mentioned, in the first half of last year and the first half of this year are influenced really by the mix of the revenue mix. Last year, we had a couple of large projects in Taiwan and the Middle East, which were really primarily service and software, so higher margin, whereas in the first half of this year, there were significantly more hardware deliveries in that mix, which as part of filling one contract, took the margins down. I would say that for the year, we expect the margins to move up towards the target that we announced given the mix. As Jay was talking about with some of the contracts that we have announced and are working on in the Middle East, in Taiwan and Thailand, etc., we expect that mix to bring it to a 40% gross margin for the year, and then looking forward; we expect, given the current contract mix, a similar margin profile in the future for the full year. Given that these are governments, the timing can kind of shift around, and the timing of the recognition of revenue for hardware or for services can move around. So any one quarter might be volatile. But over the full year, they should be stabilized and hopefully, over the next few years, drifting up. Does that help?

That definitely helps. No, Go ahead, Jay.

Sorry to add to that, but Bruce made a very valid point. We've transitioned from a milestone-driven revenue model to a more predictable one. If you examine the last two quarters and the next two quarters, you will see it becoming more predictable. Importantly, we are shifting from these inconsistent projects to sustainable long-term revenue, which involves signing multi-year agreements. Over time, as we navigate this transition, we expect to see its effects in the latter part of this year and the first half of next year. While there may be some revenue spikes and fluctuations in gross margins, it's essential to focus on the annual figures at the end of the day. The yearly results will be more managed, less volatile, with greater visibility and a stronger foundation for growth, allowing us to capitalize on all the upsides from our successes. For example, the projects we have in Southeast Asia, including Thailand, Singapore, Jakarta, Malaysia, and Taiwan, are all multi-year contracts ranging from three to eight years. These are not merely maintenance contracts; they are substantial, long-term, recurring agreements. This will contribute to our stability rather than inconsistency.

That's really helpful. And one quick question on your U.S. efforts. I know you were talking about possible acquisition. Are you still working with AECOM significantly in the U.S.?

Yes, yes, we are. For us, it's AECOM, Cisco, ONE AMAZON, of course, which is now moving its tokenization strategy to the United States just FYI, will be amazing. But more importantly, we will also be working very closely with the likes of HPE, whom we signed a global OEM relationship with and with NVIDIA in the near future as well.

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

Thank you very much. Some questions which you probably need answering, but I'm happy to respond to people who are sending us messages at any given point in time. What I wanted to let people know is that our business is moving forward in what we call as real-world implementation. We are managing country risk, sovereign risk, procurement risk, implementation risk and making sure that we can get paid on time and can deliver on time. That is actually something I think most of you have seen today that our customers are paying us. They're not just holding their money back. Our largest customer has already paid us this quarter, as you've seen from the press release this morning. But what we are making sure also is that we reduce our overall accounts receivable and make sure that we're able to run a complex global organization. For a company of our size, it's very unique that we are positioned in so many different countries. At the same time, we want to make sure that our cash conversion stays on the money, no pun intended. Ensuring payments flowing in line with the project milestones is very essential for us for maintaining liquidity and funding expansion. What we are doing is that we are having a multi-sourcing, multi-localization procurement program. But at the same time, we're making sure that strict payment protection and contractual safeguards are also put in place. We're dealing with government. It always slips. We want to make sure that before we make any major capital outlays, we ensure that we are protected and ensure our cash flow. The reality is, we all know that sometimes executions can slip. We also know that the design of our contracts and some operational plans take those risks off the table before they become a problem. We are still delivering growth in a very volatile global market today. I appreciate all your patience, and I'm really thankful for everyone being very supportive of Gorilla. Thank you very much indeed.

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