Gorilla Technology Group - Earnings Call - Q3 2025

Transcript

Operator (participant)

Good morning and welcome to the Gorilla Technology Group's Third Quarter 2025 Financial Results Conference Call. All participants are in a listen-only mode. After the speakers' remarks, we will conduct a question-and-answer session. To ask a question at this time, you will need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to our speakers today, Jay Chandan, Chairman and Chief Executive Officer, and Bruce Bower, Chief Financial Officer. Thank you. Please go ahead, gentlemen.

Jay Chandan (Chairman and CEO)

Thank you very much. Good morning, everyone. Q3 marks the strongest quarter in Gorilla's history, with revenue ahead of expectations, operating profit firmly positive, and the bottom line at breakeven. Now, we've delivered a clear swing in profitability. We've built a cash position of about over $119 million. We've reduced debt to a point of $15.1 million, and we've advanced our AI infrastructure programs across Southeast Asia, Latin America, and the Middle East, securing multi-billion dollar projects. At the same time, we're also creating a historic pipeline for this business. The simple message is that Gorilla is now operating about the analyst model and scaling faster than the market expected. Thank you. Bruce, anything you want to say?

Bruce Bower (CFO)

Yes. I'd just like to take a walk through some of the highlights from the quarter and then in terms of where we are overall. The first, as Jay mentioned, was it was a record quarter for us in terms of revenue. The balance sheet, as Jay mentioned, $121.4 million of cash total. That breaks down to $109 million of unrestricted free cash, and then the balance in restricted cash. Debt of $15.1 million means that we're in a significant net cash position of $106 million. This follows on the performance of the business and also in terms of the was helped by a fundraise that we did in July.

In terms of where we are as a business and how we're performing, you can see that we're on track to meet the guidance for 2025, which is in the range of $100 million-$110 million in terms of revenue. We were talking about EBITDA margins in the 20% plus range and net income margins in the 15%-20% range. We remain on track to hit all of those. The gross margins through the nine months have been a bit over 35%. That's a little bit lower than we'd expect for the full year. I think that we'll be on track to hit the 35%-40% range for the full year. At the end of the quarter, we had accounts receivable of $36 million, and I know people are looking at that and worried.

I'd just like to say that we expect the business to be collecting on some of those we've already collected on in the fourth quarter, a couple of significant outstandings in Asia, and then some remaining in the Middle East we expect to collect on. For the nine months of the year, we had operating cash flow of -$15 million, and we still expect to either have breakeven or positive operating cash flow for the total year. Another thing, speaking about going into the next year, is we issued guidance for the next year of $137 million-$200 million. I just wanted to talk a little bit more about how that works, and Jay can help me out as well.

Basically, this is how we forecast guidance is based on contractual backlog, which is the revenue that we expect to realize from signed contracts, and then also where we have delivery timelines and specified contractual milestones. In this case, we have a signed contract, and in the case of 2026, we have a large signed contract with Freyr, and we have individual deployments as part of that contract. The timing is more or less certain, but still subject to some change, which is why we opted for a wide range to reflect our conservatism in making our guidance. Nonetheless, the Freyr contract is still a large contract at $1.4 billion overall. That means over $400 million annualized. That will be when up and running, $400 million annualized. The rollout will be through 2026.

The contribution will hit starting in 2026, but it still, it won't be the full amount. Nonetheless, we also have a strong pipeline, as we alluded to, which Jay can talk about in a second, which makes us optimistic about hitting the full year guidance for 2026. A couple of other things to point out about 2026 is we have been talking to the market for a long time now about where we're going to grow, diversifying the business and de-risking it. What we've seen is that the contracts wins and then the pipeline is mostly in Southeast Asia, which would lead to us hitting our target of over 50% coming from Southeast Asia next year. It's also a good mix between government and enterprise. We'll be diversifying and reducing the government share of our revenue.

The corporates are investment grade, and the government clients that we're talking to or that we've converted are investment grade as well. We see an improving credit quality from our end customer. All of these points, I think, to an improving business mix, a diversified revenue base on all measures, and then improving client quality. The last thing I'd like to do is, Jay is a bit too modest to do this, so I'll do it for him, is the track record is now piling up to the point where I think we have many proof points. When this business went public in 2022 via de-SPAC, the revenue for that year was $22 million. The guidance for this year is $100 million-$110 million. That's obviously a significant increase in a short period of time. Looking at the guidance for next year, that marks two things.

One is it's a large absolute increase. The second is that the percentage growth rate actually for next year would be an acceleration over the percentage growth rate for 2025. It's, I think, quite a testament to the management team to see an improvement in the revenue growth rate and also after a five times increase in revenue since going public. That's not the only highlight. Several other highlights are, first of all, we have, as I mentioned, over $100 million of net cash. This is after being in net debt when we went public. We had a very painful or even toxic financing mix earlier in 2022, 2023, all of which has been cleaned up. The cap table is almost all common equity.

When we talk about winning new contracts now or executing on contracts that we have signed, looking at the balance sheet now, we have the ability to fund significant new deployments from our own resources and from project-level finance that we have on the table from several banks. We anticipate overall a good year to finish up in 2025. We are quite excited about the outlook for 2026. With that, I would like to turn it over to Jay for anything else that he would like to add about the outlook, the pipeline, etc.

Jay Chandan (Chairman and CEO)

Thank you, Bruce. Yes, it was a very good quarter, rather, wasn't it? If anyone is still wondering whether this is structural, I would gently suggest that they may need a new pair of spectacles. Now, just to highlight on what Bruce talked about and clarifying some of the proof points to all the naysayers out there, our revenue, the consensus analyst model was roughly about $26 million, $26.2 million. Our actuals were at $26.5 million. Gross profit estimate was $9.5 million. We did about $9.9 million. Our operating income, IFRS operating income was to be at minus $6 million. We did a positive of $4.4 million. That's a big swing. Adjusted EBITDA was about $5.6 million estimated. We did $6.8 million. Adjusted net income was about $3.5 million. We completed quarter three at $6 million. Our EPS non-IFRS was $0.26.

We came in at the Gorilla actual was about $0.257, which is in line. At EPS IFRS, it was expected to be at negative $0.8. We completed it at breakeven, which is $0.00, which is 100% improvement. Our analyst-implied debt was at about $21 million. Gorilla's actual was at about $15.1 million. We are looking to reduce that substantially before the end of this year. What we also had modeled for was the unrestricted cash, the restricted cash, and the total cash position. We are predominantly on top of everything today. Why? Because we delivered profitability at an operating level, not adjusted, not sprinkled with fairy dust, not if you squint, you cannot see it, so on and so forth. This is proper profitability. We ran the business efficiently. We delivered on big projects across the region. We are delivering big projects across the region.

We controlled our costs. More importantly, we generated a real operating profit. This is not a one-off. This is what we call discipline. Second, we did this at the same time we were scaling at pace. Most companies only turn profitable when they stop investing. We turned profitable while executing national infrastructure programs across Southeast Asia, Middle East, LatAm, and so on. Anyone who has ever worked in this sector will tell you that is not just coincidence. It is pure operational muscle. Third, we have visibility. When I say visibility, I mean proper visibility. The $1.4 billion Southeast Asia data center project is not a rumor. It is not a letter of intent. It is not a whim. It is a contract, and it is underway, already flowing into our scheduling and revenue plans for 2026 and onwards, of course.

The first phase alone provides for $100 million of annual revenue for the first three years. This is the definition of structural. Now, people also ask me about the pipeline of $7 billion. I'm going to show you this is not something we found under a sofa cushion. Okay? It has come from governments, telcos, serious institutions that are designing their national AI and digital sovereignty strategy. Our role in those programs is not episodic. It is recurring, expandable, and it's increasingly indispensable. Now, our balance sheet is also a strategic weapon for us. Over $110 million of unrestricted cash, $15 million plus of debt, and working with major partners like TerraStrata with us on data centers, we are not just hoping to deliver. We are capitalizing to deliver.

Finally, with the deepening partnerships with the likes of Intel, EdgeCore, HP, and NVIDIA, and expanding our sovereign 5G local interception cybersecurity platform, we're not a one-hit wonder. These are partnerships that stick because we execute. Just to go back into the question-answer session now, we're not at a peak today. If anything, this is the foothill before the climb. Our numbers are consistent. The profitability is real. The backlog is defined. The demand curve ahead of us, particularly on AI data centers and national infrastructure programs, is significantly larger than what is formally in the guidance today. With that, I'd love to turn this over for question and answers.

Operator (participant)

Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our first question today comes from Mike Lattimore from Northland Capital Markets. Please go ahead. Your line is open.

Jay Chandan (Chairman and CEO)

Hello, Mike.

Mike Latimore (Senior Research Analyst)

Great. Yeah. Congrats on the good morning. Congrats on the great results here.

Jay Chandan (Chairman and CEO)

Thank you.

Mike Latimore (Senior Research Analyst)

In terms of the guidance for 2026, what are you assuming on this large deal contribution, kind of low-end to high-end of guidance? Or what are the factors that get you to the lower high end of that guidance?

Jay Chandan (Chairman and CEO)

That's. Mike, as I was good to hear from you. Let me anchor it with numbers first, Mike. For 2026, we've guided a revenue range of roughly around $137 million-$200 million. This is built on only two things. One is our contracted backlog with very clear delivery milestones. Number two, the first phase of the Southeast Asia data center project, which alone contributes to $100 million from 2026 to 2028. Now, there is zero revenue in the guidance from later phases of the $1.4 billion program and zero from any other new mandates that are being structured. Now, the reality is that the remaining phases of the AI data center program are much larger than the phase one. As the timelines and the side consequences are finalized with the customers, we will then extend both our 2026 and 2027 revenue base quite materially as well.

Now, on top of that, as you know, we've also built a pipeline. Inside of these are several national projects in late stage that also touch data centers, public safety, network intelligence, our 5G lawful interception programs, and so on. None of that is in the current guidance of 2026. The question you've asked me is a range we have given you is based on the backlog driven by a base case assumption. It is also dependent significantly on some of the very important issues we're facing today. One is material shortages of semiconductors, deliveries from the likes of NVIDIA, Dell, HP, Supermicro, and so on and so forth. That said, the upside from additional AI data center bases and new sovereign mandates will sit above all of these, and they will crystallize, and therefore they'll become our future guidance as well.

I personally believe that we published a very sensible conservative number, and that's why we've deliberately left the rest out of them for now.

Mike Latimore (Senior Research Analyst)

Yeah. All right. Perfect. Thanks. Any color on EBITDA margins, what you think they might do in 2026 here?

Jay Chandan (Chairman and CEO)

Sure. Bruce, do you want to take that?

Bruce Bower (CFO)

Sure. So we would guide for a sort of 15%-25% range.

Mike Latimore (Senior Research Analyst)

Okay. Great. I guess just last one for me. Can you provide a little more detail on the deliverables on this large contract in 2026? What is the fourth thing you're going to be delivering in the first quarter and throughout 2026?

Jay Chandan (Chairman and CEO)

Mike, that's a good question. The right way, Mike, to see the first $100 million as the run-rated bills, personally, I know for me, I think most people expect that you find a $1.4 billion contract, it's a light switch, and the revenue starts flowing in. No, it doesn't work that way. I'm sure you know data centers very well. We've been communicating on this for quite some time. The first one is basically about 6 MW-8 MW. That's several hundred high-density AI racks. We do not light them all in one day, as you can imagine. They come online in planned waves as the power, cooling, all of the network zones are commissioned. Revenue ramps up in each batch as they are energized. Second, when you look at the GPU capacity, that becomes a very important factor as it follows into these waves.

As the racks go live, for example, we drop in the clusters through our NVIDIA and partner ecosystem, which drives up the GPU as a service usage line. Now, on top of that, we stack our services over a period of time. Not all at once. You cannot just do a big bang approach. It is video intelligence, say, for example, for cities, transport, and borders, big data analytics, building your large language models for both the government and telco, building your inference engines, and so on, your cybersecurity, your network appliances, and intelligence platforms, and things like even the environmental intelligence and smart policing. As the national workloads move into the platform and the utilization grows, typically from 30%, 40% all the way up to, let's say, 70%, 80%, that deepens our revenue at the same time at the same levels as the physical capacity.

Just to take a leaf from what Bruce said earlier, if you want us to be doing about $300 million-$400 million steady-state revenue, the GPUs all need to be in motion and be syncing harmoniously at the same time. The path to that is a controlled ramp, as I said, it is not a big bang. We are anticipating, again, working very closely with NVIDIA on this, we are anticipating that we will get all of this commissioned and to go live by the end of 2026. I hope that answers your question, Mike.

Mike Latimore (Senior Research Analyst)

Yep. Perfect. Thanks a lot. Best of luck rest of the year.

Jay Chandan (Chairman and CEO)

Thank you, sir.

Operator (participant)

Our next question comes from David Williams from Benchmark. Please go ahead. Your line is open.

David Williams (Equity Research Analyst)

Hey, good morning. Congratulations on the progress and success here, gentlemen.

Jay Chandan (Chairman and CEO)

Thank you, David.

David Williams (Equity Research Analyst)

I guess maybe one of the first questions is kind of around the guidance. Obviously, you talked about this a bit earlier, but it feels like there is some potential upside there. I guess if you kind of think about the risks in the market and maybe from the supply side and just the market dynamics, what do you think? I mean, how would you gauge that from the midpoint of the guidance up to the upper end? I would suspect that there's more upside opportunity than downside risk. Is that fair to assume?

Jay Chandan (Chairman and CEO)

David, it is absolutely fair to assume. There is more upside. Why? Because see, let me give you the risks to the guidance. I think there are two parts to your question. First is the timing of the customer deployment. Large AI infrastructure and data center programs rely on client-side readiness. There has to be site access, as you know the market very well, power allocation, import clearances, customer procurement cycles. They can all shift from one quarter to the other. Even a slight change in a week or two changes that significantly. Number two, your supply chain constraints are also a big challenge today. You look at the demand, and there is a high demand for GPU servers, not just in the United States, but across the globe, right? If you are looking at things like networking equipment, they can also create longer lead times.

I don't know if you've seen recently, the price of memory has shot up 40% in the last two months. Then you've got things like regulatory and compliance approvals. You've got things like project phasing on multi-year platforms. You'll have to take into account even geopolitical sensitivities in certain regions like Southeast Asia, Middle East, Latin America, and so on and so forth. If you're looking at the upside for us, I did talk about it previously. For us, it's about when these programs come live. Our aim is to get all of these live by 2026 and make sure that we drop all of these clusters through our NVIDIA partnership and our partner ecosystem and make sure that we drive the GPU as a service usage line. Once we have driven that, and remember, these are all purpose-built data centers.

That means there is one customer occupying 100% occupancy. Okay? That means our revenue would hit scale as soon as the switch is switched on. What we are trying to do is we are working very closely. I mean, I did mention to you the risks, but taking all those risks into mind, we are also looking at the upside. We want to make sure that our upside actually helps negate the risks on the lower end. I hope that answers your question.

David Williams (Equity Research Analyst)

Okay. It did. Thanks so much.

Bruce Bower (CFO)

Can I add something too?

David Williams (Equity Research Analyst)

Yeah.

Bruce Bower (CFO)

A couple of other things, David, to keep in mind. The first is the data center opportunity or the data center contract we have is an umbrella contract with Freyr. When we announced it, the $1.4 billion was based on the schedule of deployments that we had then. There is always the possibility that there are more deployments added to that. That would be another source of potential upside. The second thing is, of course, while we're talking about the contractual backlog and we talked about the data center side, we haven't talked about anything else. Gorilla is still actively bidding for government contracts. We've put in several bids recently, and we're staying tuned for good news from a couple of governments in Asia.

The other thing is that we've talked many times about One Amazon and some of the MOUs that we've signed with government customers in the past. None of those are in the guidance now because they haven't yet turned into a date and an amount. As soon as we know and have crystal clear vision on the date and the amount, then those would also be added to the guidance for next year. It is not just about delivering everything from the data center contract, although that's the biggest mover. There are many ways for Gorilla to win next year.

David Williams (Equity Research Analyst)

Yep. Fantastic. Great color. Sorry. Go ahead.

Jay Chandan (Chairman and CEO)

No, no. Please go ahead, David.

David Williams (Equity Research Analyst)

Okay. Thanks. Maybe, Bruce, is there a way to decide kind of the magnitude of your backlog? You've talked about a few things. You don't have the amounts or maybe even dates too. If we were kind of thinking about your total backlog and kind of what you're anticipating for next year, how should we size that?

Bruce Bower (CFO)

The backlog for us is we go with a strict definition. $85 million is the backlog for 2026 where we have the exact date and time, and it's signed, and it's being implemented now. We have, as we mentioned, the data center contract where it's signed, it's being implemented, but the exact timing of the deployments is still we have a good idea, but it's not definite yet. As Jay mentioned, there are some ducks that we have to get in a row, or there are other people that we have to work with before we can define that. The pipeline is where we have a qualified lead where we think that they'll make a decision in the next three to six months where they have budgets, but that doesn't have a signed contract or with an amount and a date next to it.

There are two parts. One is the backlog is very strict. The pipeline for us is really about converting from customer either where it is signed, but it is not amount and dated, or where they sign up and then they sign a contract, and we know the amounts and the dates and can then move that into the backlog.

David Williams (Equity Research Analyst)

Okay.

Jay Chandan (Chairman and CEO)

I hope that answers your question.

David Williams (Equity Research Analyst)

Yeah.

Jay Chandan (Chairman and CEO)

Question. I'm sorry to interrupt David as well. The pipeline has grown rather enthusiastically, if I may. If it grows any faster, I think I might need to send a congratulatory card for myself. That said, the deals are also very mature. If you look at what we did a couple of years ago and where we were last year, we were building POCs, we were signing MOUs, and so on and so forth, whether it was smart education in the U.K. or the Middle East last time and so on and so forth. The data center project has accelerated beyond our expectations. I do not want people to think that we're only building the data centers. There is a lot of ancillary support services we provide on top of that as well. The $1.4 billion, for example, was only a catalyst.

Once governments and telcos saw that we could deliver sovereign-grade AI infrastructure, that basically kind of triggered a surge of interest. Now, without giving names, the demand wave behind the Freyr is significantly larger than Freyr itself. That is one of the primary reasons why our pipeline is well north of $7 billion. If you look at the GPU infrastructure, it has moved away from ambition for us to urgency. Through our engagements with the likes of NVIDIA and EdgeCore, and including our own appliances within kind of the government, we're seeing that strategic infrastructure as an essential, not optional. What has happened is we've also started working with the likes of TerraStrata in Brazil who's providing capital and looking to build some seriously large data centers as well. These are all kind of whole country platforms as opposed to just incremental pilots.

Then finally, what we are doing is that we're making sure that we can formally count a large portion, let's say, even if it's 20%-30% of the $7 billion, to be signed very quickly in 2026. That allows us to actually be much more confident of our multi-year expansion. In short, David, the opportunity is pretty comfortably substantial for us, but it's also growing at the same time. It's not definitely a single-year anomaly.

David Williams (Equity Research Analyst)

Okay. One more, if I may here. Just if you kind of think about your competitors in the market and the 800-pound gorilla, so to speak, you're competing against there. Why are they choosing Gorilla? What gives you the edge, and why are you winning? Thanks.

Jay Chandan (Chairman and CEO)

That's a good question. Why are we winning? I think we've proven ourselves, okay, to where we are today. We believe that we work with governments to make sure that we understand what their requirements are, what their commission requirements are, what their ecosystem requirements are, and then we help them build national workloads. Now, Gorilla has been in the space for a very long time. As you can imagine, we've been here for 24 years. We're going to be celebrating 25 next year, right? We are a full-stack AI operator. I think I kind of talked about this in my first speech at the NASDAQ, and I said we want to be an AI stack operator. We design the architecture, we build the data centers, we integrate the GPU stacks, we operate the platform, and we stay as a long-term partner for the governments and telcos.

Now, apart from that, we offer these customers of ours, both enterprise as well as the government level, sovereign control and predictable economics. That is very, very, very important because our customers know exactly who runs their infrastructure, who carries the responsibility for their uptime and performance. Finally, it is about capability. Now, as you know, we have been delivering national cybersecurity infrastructures. We have built four data centers in Egypt for our $270 million contract. We are executing multimillion-dollar projects, national projects across Southeast Asia, Middle East, LatAm, and so on. What has happened is we are moving faster than our competitors. Our speed of execution, our ability to structure these projects, and our operational discipline is making us the preferred partners where you understand this probably better than most people do. AI infrastructure cannot fail. It cannot fail. It just cannot fail.

It has to be with people who can have a very strong operational discipline. I think that's the responsibility we take. We will build, operate, and manage responsibly. Think about it this way. Everybody's trying to sell buildings and servers. We're trying to sell outcomes. That's it. That's as simple as that.

Bruce Bower (CFO)

One thing to add on to that as the numbers guy is when I was investigating why we win, to prepare some investment materials, all of that came out. The other thing is that given our history and our relationships with hardware vendors in Taiwan, and then using our own software to create appliances out of the hardware, we actually deliver a significant cost savings over a competitor. I mean, obviously, the biggest cost item will be NVIDIA GPUs, and there's not much flexibility. On items where there's flexibility, we can deliver like a 30%, 540% cost savings with better performance. That will reduce the overall cost of the data center by 5%-7%. 5%-7% may not sound like much, but when you're talking a billion-dollar data center, that's a significant cash savings.

Not only is it sort of everything that the customer is looking for in terms of sovereign data infrastructure and faster time to market, but it's also cheaper. In the end, there's enough that stacks up. It becomes very difficult to look at a competitor by comparison.

Jay Chandan (Chairman and CEO)

Fair point.

David Williams (Equity Research Analyst)

Great. Thank you so much for the time, gentlemen, and looking forward to seeing your success. Thank you so much.

Jay Chandan (Chairman and CEO)

Thank you so much.

Operator (participant)

Our next question comes from John Roy from Water Tower Research. Please go ahead. Your line is open.

John Roy (Senior Research Analyst)

Thank you. Jay and Bruce, obviously, a lot of discussion around 2026. I want to step back for half a second and look beyond that. These questions are related. One is, do you need to grow your sales team to turn that pipeline into backlog? Can you give us some color on the pipeline beyond 2026? The last thing is, what are you going to plan to do with all that cash? Is it for growth? What is it for? Just kind of curious.

Jay Chandan (Chairman and CEO)

That's a really, really good. No, no, no. That's a good question. You caught me off guard there. No, but listen, I can tell you that my pipeline is $7 billion, and I can sign all of these deals, and it's all going to be hunky-dory. It is not. It is going to take its own challenge. It's got its own challenges. Am I going to expand my sales team? Our sales teams are already well established. We have more than, what, 250-plus people today, full-time. We have more than 200-plus contractors. So we're stretching our bars right now.

The sales guy, there's one sales guy who gets everything done, which is myself. I make sure that I'm there in front of every single customer, every single project. Doesn't matter whether it's a million-dollar project or a billion-dollar project. I make sure that I'm there so that I can give them the confidence and the guidance. Where are we aiming for? I think you kind of touched upon this as to what the future looks like. For me, personally, right, if the programs and partnerships in front of us land the way I expect it to be in the next, let's say, three to six months, I would like us to be—and this is my personal target, please do not assume that this is going to be the company's target—around $500 million of annual revenue by 2027.

That's not a formal guidance, by the way. This is my target for what the platform is capable of delivering. Now, that's what I am focused on. I want to get there, but we need to make sure that we've built all the Lego blocks in place to make sure that we're no longer a project shop, make sure that our pipeline is real and growing, make sure that we can have more cash and that it meets our ambition. More importantly, it talks about what kind of acquisitions we're also able to do so that we are able to support. We need teams. We need people. Just to give you the scale, we've gone on a massive hiring spree in Taiwan. Thailand's almost, what, 60-plus people. We are looking at India. We've got about 150-plus new recruits going on in India.

We are looking at acquisitions as well for the first time in India as well as in the U.S. Keep your eyes peeled, and I'm sure we'll be able to provide you more updates into your course.

John Roy (Senior Research Analyst)

No, that sounds good. The cash, maybe Bruce can give us some highlights onto where that cash might be headed.

Bruce Bower (CFO)

Yes. For all of the major contracts, there is a capital need from Gorilla side. Sometimes with government customers, that can be for performance guarantees and for working capital. For some of these data center projects, we have to fund the CapEx upfront and then deliver it to the customer. In this case, we are in active negotiations with banks. I mean, Jay and myself are in New York this week meeting with banks. We have term sheets on the table from lenders, which will finance the vast majority of it. Just like getting a mortgage for a house, there is an equity component, and the equity component would come from the balance sheet. We anticipate that we have more than enough cash on balance sheet now to fund the first deployment or two, and hopefully even more than that.

Like I mentioned, the business should generate substantial cash in the fourth quarter. That will see us into much higher revenue numbers in the coming three to six months.

Jay Chandan (Chairman and CEO)

Yep.

John Roy (Senior Research Analyst)

Great. Thanks so much, and congratulations on a great quarter.

Jay Chandan (Chairman and CEO)

Thank you.

Bruce Bower (CFO)

Thank you, John.

Operator (participant)

Our next question comes from Brian Kintzlinger from Alliance Global Partners. Please go ahead. Your line is open.

Brian Kinstlinger (Senior Technology Analyst)

Great. Thanks. Congrats on all the business development achievements over the last few months. As it relates to the Freyr contract, hi, Jay. As it relates to the Freyr contract, I'm curious, or I assume the margins are substantially higher than the operating margin of your existing business. The offset is the CapEx side. So the cash returns maybe aren't what the EBITDA margins are, but the EBITDA margins are super high. I just want to see if my assumption is right.

Jay Chandan (Chairman and CEO)

You're right, Brian. First of all, good to hear from you. First of all, Freyr is not a construction gig. For me, it's a long-term AI infrastructure relationship across Indonesia, Malaysia, Thailand, Vietnam, Philippines, and so on. Now, what we are doing is we're designing, building, operating, and monetizing it over the years. Now, once our data center is live, we're not just there to host the racks. We're also layering a lot of services on top of it. Video intelligence, like I said, big data analytics for government, cybersecurity platforms, smart policing, and so on and so forth. For me, Freyr is the doorway. The real value is what we sell on top of it and everything inside that footprint. When you look at it from that perspective, yes, you're absolutely right. It carries a higher margin. Your EBITDA is much higher.

In terms of cash generation, it might actually, because of the CapEx, extensive investment of the CapEx, it's going to be slightly full cycle. What we will do is we will then deploy our own operations team. More importantly, we will also deploy our own stack of our solutions on top of them, helping them go from building large language models to inference engines and moving up the value chain, going from H100 to H200 to GB200, GB300, and what comes after. Look at it this way. For me, building data centers is only one part of it. Think of us as creating, curating, hosting, and protecting your data. That's what we do.

Brian Kinstlinger (Senior Technology Analyst)

Great. Thank you. As we enter 2026, regarding your first large contract, which was the Egypt Smart City contract, how do you see the economics change in 2026 versus 2025 in terms of revenue? Are we increasing, declining, kind of steady state? How does the mix change from 2026 compared to 2025?

Jay Chandan (Chairman and CEO)

That's a really good question. If you recollect about a couple of years ago, Brian, when we first spoke, I said my first job was to de-risk the business. It was to de-risk our delivery profile in three ways. I mentioned this to you, and I'm going to stick to my guns here. First, we secured the contracted program. Once we did the technical validation with the government of Egypt, we then scored our revenues and so on and so forth. As you know, 95% of our revenues came from government customers. What we did was we wanted to move away from projects to long-term milestone-based predictable collections so that our cash exposure is limited. It took us about a year and a half to build that.

Today, we're seeing that we're able to strengthen our balance sheet, but more importantly, we're able to reduce debt. Now, what has happened, and this has allowed us to give us a breathing space to re-engineer our business and to build our, what I call, capabilities at the same time. Look at it from having project-based schedules and programs to a full-fledged deployment. These factors kind of helped us reduce our execution risk, revenue timing, and financial risk. Going into 2026, I can say with confidence that we are able to now have a more predictable, more stable quarter upon quarter as opposed to what we had previously. I hope that answers your question. Yep.

Brian Kinstlinger (Senior Technology Analyst)

Yeah, somewhat. I'll take some of it offline. I'm curious, you had a number of MOUs, including Amazon one. There's a Smart City contract. Any updates on your progress? I don't need to go over each one of them, but maybe where you're seeing more progress headed towards the finish line of any of the MOUs that are very large.

Jay Chandan (Chairman and CEO)

Yes. The One Amazon project is going full steam ahead. As you know, we've already completed a proof of concept in Panama, and now we're running into Marco Grosso. You saw the signing happen sometime last month. There is an initial $100 million program where we are expected to receive a good chunk of that in tech deployment. Now, of course, there are lots of issues we need to worry about because we have to worry about the sensors, the way they're deployed, how every actor has been monitored, how it becomes a stream of environment and health intelligence, and so on and so forth. These are monetized for decades. We've already started work on that. It's growing, and that is not part of our guidance for 2026. We've also signed, as I said, with our MOUs with the likes of TerraStrata, for example.

This is not a single site. We're talking about 120-plus megawatts to be done over the next 24 months. Tie that to our Freyr project and so on and so forth. We're expecting that to also convert into a portfolio of other AI infrastructure projects, which are repeatable. We're also working very closely with the projects, and I know what is on the tip of the tongue of everybody. In Thailand, for example, we are working very closely with the government. To give you some confidence that we are sure that there would be an outcome and light at the end of the tunnel over the next few months.

In terms of the overall One Amazon and the other MOUs, which we've already signed, our team is working day in and day out, and we're making sure that each of the platform builds the digital backbone and makes sure that we are sitting on top of their infrastructure plate. Again, all these are not included in the guidance for 2026.

Brian Kinstlinger (Senior Technology Analyst)

Great. My last question, that was helpful. You highlighted, Jay, accurately that you invest to grow. You made a comment about that, and you've done that. Given the solid awards, the growing pipeline, are there any key investments you need to make now in terms of personnel, staff, facilities to take advantage of the opportunities in front of you? Anything meaningful that you can talk about or can quantify?

Jay Chandan (Chairman and CEO)

Absolutely. I think I touched upon this, Brian. This is very, very, very important because I think most people think that, "Oh, no, we're a small company. We don't have the means to do what we do." What we are doing right now, and just give it to you straight, right? These are all numbers back. We are focused heavily on our M&A story as well because that brings in deep execution legs for us. At the same time, we're also looking at how we expand ourselves into some of the fastest-growing economies in the world. First, India. Now, if you look at the India AI market today, and I may be slightly off on these numbers, but we're looking at about $9.5 billion today. It is expected by 2032, I think, or 2033, it is going to be about $130 billion.

There's a tenfold expansion of the AI market. The country is also—I was there recently. The country is also doubling its data center capacity from 940 MW-950 MW to roughly around 1,800 MW-2,000 MW by 2026. We are talking about a transformational change. This is a massive national shift when it comes to AI, compute, cloud, and digital sovereignty. Our investment into India is not cosmetic. Our acquisition, potentially, is also not very cosmetic. It positions us in a triple-digit billion-dollar economy and where we are building our own local team, our own regulatory posture. More importantly, we are looking at sovereign-grade projects at scale today. India is one big market for us going forward. The second market, which we talked about and which is also going to give us scale and people to help deploy in the local market, is the United States.

Now, the U.S., as everybody knows, is the largest AI market on the planet, represents roughly around 36%-38% of the global AI spend today. That said, it is also where public safety, digital infrastructure, your GPU demand, defense, and so on and so forth are all running into tens of billions of dollars apart from the data center market and the AI market. For me, the acquisition there we're pursuing is very deliberate. It gives us established platform. It gives us huge customer credentials. More importantly, it gives us execution depth. That's something you'd ask me to talk about as well, to deliver—can I deliver real AI infrastructure and public safety programs in a country like the United States or India? This is how we're going to do it.

The U.S., for us, becomes what we call a second engine for Gorilla for the next two to three years, not just a side project. Look at it this way. We're not buying revenue. We're buying capability. That gives us scale. India gives us scale in a hyper-growth market. U.S. gives us credibility in the world's most mature AI and law enforcement ecosystem.

Brian Kinstlinger (Senior Technology Analyst)

Great. That was super helpful. Thanks for taking my questions.

Jay Chandan (Chairman and CEO)

Absolutely, Brian. Anytime.

Operator (participant)

Our last question comes from Barrett Boone from RedChip. Please go ahead. Your line is open.

Barrett Boone (VP, Global Markets)

Jay, Bruce, congratulations on a great quarter.

Jay Chandan (Chairman and CEO)

Thank you, sir.

Barrett Boone (VP, Global Markets)

I just have a few questions here. First, we know you now design, build, and operate AI data centers, provide GPUs as a service, and you're rolling out your own branded AI GPU platforms with partners like EdgeCore and Intel. At the same time, you're deepening your relationship with NVIDIA and the wider GPU ecosystem. How should investors think about the unified flywheel you're building and Gorilla's strategic role inside the next wave of AI compute infrastructure?

Jay Chandan (Chairman and CEO)

That's a very interesting question. I'll keep it short. The short answer to that is that we're not playing in one corner of the AI infrastructure. I think the market needs to understand that. Why? Because we're building the whole engine. The data centers are just an anchor about it. We design them. We build them. We run them. We sit on them because they're long-term hosting and power and capacity contracts and so on and so forth. On top of that, we stack the GPU as a service using our NVIDIA-based platforms with our partners. That gives us usage-based recurring revenue as the workload scale. This is a very important term which the market needs to understand. As we scale, we will scale as well. As our customers scale, our revenues will scale automatically.

That term is called usage-based recurring revenue as the workload scale. Now, on top of that, we talked about the flywheel. The flywheel is very simple. Data centers drive GPU demand. Your GPU demand pulls through our software. The software then locks in longer and deeper national engagements. Think of it as a three-pronged approach. How should someone see us, whether it's investors or customers? They should see us as a sovereign-grade AI operator, not just as a project contributor or a box shifter. We're surely not a box shifter about it.

Barrett Boone (VP, Global Markets)

Thank you, Jay. I think that adds a lot of color there. Now, shifting away from the data center conversation, you've spoken about Quantum Safe Networks and the Intelligent Network Director platform for lawful interception and network intelligence. How should we think about these as commercial gateways into larger sovereign infrastructure and national security programs rather than standalone products, right? How do they all work together?

Jay Chandan (Chairman and CEO)

The quantum question. I love that. Barrett, let me keep this tight. I know we're running short on time. This is one of the most misunderstood parts of our business. First of all, the market is enormous. Post-quantum cryptography alone is expected to cross $100 billion-$150 billion globally over the next decade as governments upgrade everything from national networks to their financial systems to their defense communications and so on and so forth. Now, look at this. Every country will need this, not want, but they will need it. That's an absolute must. Our Intelligent Network Director is never just a product. What we do is when a country lets you monitor its entire network flows, your lawful interception, your cyber postures, they're not just trialing a tool. They're effectively handing you the keys of their national nervous system. This is what the market has misunderstood.

We're not trying to sell a product. We're actually managing their national nervous system. Now, that becomes a gateway into data centers, into sovereign cloud, into your public safety modernization, your AI workloads, and your full national security stacks, and so on and so forth. Now, as we move forward, right, the Quantum Safe Networks opens the door even wider for us. Why? If you look at the way we protect countries' backbone communications, we're automatically in the room. I mean, whether it's Taiwan, whether it's Thailand, whether it's Egypt, whether it's LatiAm, doesn't matter where it is. We are in that room for the next phases of their data centers, their GPU infrastructure, all of their national analytics, all of their secure workloads, and all of their critical infrastructure protection. We signed two projects, as you know. These were 5G lawful interception protecting national critical infrastructure.

Now, these technologies are the starting point for the programs that run into hundreds of millions of dollars over their lifetime. What is Gorilla doing? We're sitting in that room. We're negotiating. We may sign tens of millions of dollars today, but my aim is to convert that into hundreds of millions of dollars over their lifetime. Think of it this way. Whether it's your Intelligent Network Director or your Quantum Safe, we're not standalone. Think of them as a handshake that pulls us together over larger sovereign-scale national infrastructure programs. That's how I look at it from our IND perspective.

Barrett Boone (VP, Global Markets)

Thanks, Jay. That's very helpful. I just have one more question to leave you with.

Jay Chandan (Chairman and CEO)

Sure.

Barrett Boone (VP, Global Markets)

Over the past few years, you've gone from survival mode to a position where you have record revenue, strong profitability, a multi-year AI data center mandate, and a multi-billion dollar pipeline. What do you think the market is missing about Gorilla's trajectory when you look at the next two, three years?

Jay Chandan (Chairman and CEO)

Are you putting me on the spot there, Barrett? Okay. First of all, I want everybody to understand this. We're no longer a project shop. We are becoming the sovereign AI infrastructure operator, right? Our phase one, for example, just in Southeast Asia, we're talking hundreds of billions of revenue per year. Later phases are just larger in scope. And the duration, and none of that is in the guidance as yet. Again, I want to repeat that. It's not in the guidance. Secondly, our pipeline is growing. We're now sitting on a pipeline about, what, $7 billion across telcos, law enforcement, infrastructure, and governments. These are multi-year national platforms. Now, once we have proven that we can deliver, you're rarely a one-contract supplier. The market knows that. Now, if you look at the third part of it, balance sheet.

I think there have been quite a few questions on that. We have more than, like I said, $119 million plus of unrestricted cash. I'm sorry, $107 million of unrestricted cash and a total of about $120 million of total cash left on the books. That means we can go fund serious data center builds without even blinking. A year ago, and you said it very rightfully, we were managing survival. Today, we're designing national architectures. We're also making very clear we're trying to make sure that we do not dilute our shareholders as a default. We're exploring a very wide range of creative structures with our partners from project-level vehicles to revenue sharing and other funky options that let us scale hard without handing away the company to them. I did talk about my ambition. Again, this is my personal ambition.

This is not in guidance. This is not target. I would like to see that the way things are moving forward and all the partnerships in front of us, I would like to be operating at about $500 million of annual revenue by 2027 and increasing from there going forward as well. Finally, I think Brian talked about the flywheel question previously, and so did you, Barrett. Every data center for us brings in long-term GPU and hosting revenue. On top of that, as we evolve, the more infrastructure we operate, the more software intelligence we can pull through. What is the market missing? I think that was your question. The market is missing the fact that Gorilla is shifting from a small-cap story of survival into a multi-region sovereign AI operator with long duration of contracts, expanding margins, and a very serious revenue ambition.

Most people are looking at it as the Gorilla of yesterday. That yesterday was when we were at $22 million of revenue. Trust me, when I hit 20, I mean, if my personal ambition is fulfilled, I'm fulfilled, and we hit $500 million, that's an exponential growth which not many people have seen before. The Gorilla they will meet in the next year will be a very different animal, Barrett. That is what the market is missing.

Barrett Boone (VP, Global Markets)

Thank you, Jay.

Operator (participant)

We have no further questions. I'd like to turn the call back over to management for any closing remarks.

Jay Chandan (Chairman and CEO)

Thank you very much. Thank you, everybody, for taking your time and listening to us. To our institutional and retail investors, I'm going to say this out loud, and I haven't written this or practiced the speech before. Your conviction has carried us from survival to scale. Now, people ask me about survival. This is very important. You stood with me, Bruce, and the rest of the team through every single battle we have fought to get here. Now we enter a new phase. We're not just winning contracts. We're building the AI infrastructure of nations. Your belief has shaped this company, and it will definitely define everything we've been building in the years ahead. Most importantly, I want to thank every single one of you, naming people like Sam, people like Christian, people like Gunther, who actually stood by me while the world was still playing catch-up.

I intend to repay the trust with performance. Thank you. Thanks, everybody, for listening in. Have a lovely day.

Operator (participant)

This concludes today's conference call. Thank you for your participation. You may now disconnect.