Gorilla Technology Group Reports 2022 Financial Results
--2022 Transition Year post IPO—
--Starts 2023 with Groundbreaking MENA Smart City Cybersecurity Win–
-- Clear Revenue Visibility for 2023 and 2024 --
--Initiates 2023 Revenue Guidance of
2022 Highlights:
- Strategic pivot to security convergence as complement to advanced AI video analytics
- Beefed up video analytics offering with acquisition of assets of SeeQuestor
- Greater access to capital from listing on Nasdaq via reverse merger with
Global SPAC Partners - Moved from
Taiwan -based regional supplier toLondon -based global leader - Broad upgrade of leadership with new CEO, CFO, CIO, Global HR
- Implemented financial and operational discipline by transitioning out of marginal or unprofitable projects
Subsequent Events:
- Won a significant Smart City cybersecurity implementation project in MENA valued over
$100 million - Developing next generation edge AI appliance with Hailo and Lanner Electronics
- Won first
U.K. customer for Smart Port project - Strengthening team with Dr.
Evan Medeiros on Board,Lawrence Ng as Head ofAsia - 2023 revenue guidance of
$65 to$75 million
Gorilla Chief Executive Officer
Chandan continued, “Elements of the transformation were difficult, such as our former CEO’s retirement and the exiting of many unfavorable customer accounts, which caused a significant decline in revenue. As they say, ‘no pain no gain’ and we are already seeing the ‘gain’ from our aggressive global expansion program, evidenced by our huge win of Smart City cybersecurity project in the MENA region. The aggregate project will stretch over several years, with first phase revenue of
Commenting on results, Gorilla Chief Financial Officer
Huang continued, “2023 will be our first year as a truly global business evidenced by our sizable entrance into the MENA region and new projects in
Looking forward, CEO Chandan concluded, “In November, we laid out four immediate priorities for the coming year. First, to build a world-class customer-centric team responsible for commercializing Gorilla’s technologies. Second, to globalize the company by bringing our technologies to the countries that are leading the world in Smart City adoption. Third, to build a robust sales pipeline that will complement our existing products and services, with a special focus on ethical video analytical solutions. And finally, to transform our business away from a cost-plus model and toward a value-based platform as a service model, which will bring about customer stickiness and a continuous revenue stream. I am proud of our team’s hard work to deliver on all of these objectives so rapidly and am confident we will make more progress in the months ahead. Let me reiterate, the second half of 2022 was a transition period under the new management team. I am excited and proud of the sizable growth we are poised to deliver in 2023 and beyond, driven by solid execution of our global expansion strategy via both organic and inorganic growth.”
2022 Results Overview
Unless noted otherwise, all figures are for the year ended
The following table summarizes financial results:
Year Ended | |||||||
Items | 2022 | 2021 | |||||
(in thousands) | |||||||
Revenue | $ | 22,409 | $ | 42,243 | |||
Cost of revenue | (14,072 | ) | (26,469 | ) | |||
Gross Profit | 8,337 | 15,774 | |||||
Gross Margin | 37.2 | % | 37.3 | % | |||
Operating expense | 94,844 | 23,932 | |||||
Operating loss | (86,507 | ) | (8,158 | ) | |||
Net loss | $ | (87,537 | ) | $ | (8,548 | ) | |
The following table shows our EBIT, EBITDA and adjusted EBITDA, together reconciled to the loss for the year ended
Year Ended |
|||||||
2022 | 2021 | ||||||
(in thousands) | |||||||
Loss for the year | $ | (87,537 | ) | $ | (8,548 | ) | |
Income tax expense (benefit) | 430 | (238 | ) | ||||
Financial expense, net | 599 | 628 | |||||
EBIT | $ | (86,508 | ) | (8,158 | ) | ||
Depreciation expense | 5,938 | 6,386 | |||||
Amortization expense | 1,688 | 2,361 | |||||
EBITDA | $ | (78,882 | ) | $ | 589 | ||
Transaction costs | 2,814 | - | |||||
Share Listing Expense(1) | 70,105 | - | |||||
Adjusted EBITDA | $ | (5,963 | ) | $ | 589 | ||
(1) Non-cash de-SPAC reverse merger cost.
The revenue decline reflects the shift in emphasis to security convergence and a substantial paring of unprofitable or marginally profitable customer accounts. The table below highlights the building traction in convergence while video analytics is rationalized.
Year Ended |
Change | Change | |||||||||||||||||
2022 | 2021 | $ | % | ||||||||||||||||
Dollars in Thousands | Percentage of Net Revenue | Dollars in Thousands | Percentage of Net Revenue | ||||||||||||||||
Security Convergence | $ | 12,711 | 56.7 | % | $ | 12,055 | 28.5 | % | $ | 656 | 5.4 | % | |||||||
Video IoT | $ | 9,698 | 43.3 | % | $ | 30,188 | 71.5 | % | $ | (20,490 | ) | -67.9 | % | ||||||
Total | $ | 22,409 | 100.0 | % | $ | 42,243 | 100.0 | % | $ | (19,834 | ) | -47.0 | % | ||||||
The gross profit decline tracked the decline in revenue. Gross margin percentage was unchanged versus the previous year. We expect our heightened operational and financial discipline to drive gross profit improvement over time.
Operating expense growth reflected investment in transforming Gorilla into a global cybersecurity leader, increased cost of being a public company, one-time expenses related to the SPAC merger, and one-time transaction expenses mainly related to the public listing and the SeeQuestor asset acquisition. 2023 operating expenses should be higher than 2021, reflecting growth of the business and increased public company annual cost, but lower than 2022 as the one-time listing expenses are not repeated. One-time listing expenses in 2022 were
Excluding transaction cost and share listing expense, adjusted net loss, a non-GAAP financial measure, was
Outlook
With outstanding visibility from the MENA project, Gorilla expects substantial growth versus both 2022 and 2021. Full year 2023 revenue is anticipated to be in a range of
About
Gorilla, headquartered in
Gorilla places an emphasis on offering leading technology, expert service, and precise delivery, and ensuring top-of-the-line, intelligent and strong edge AI solutions that enable clients to improve operational performance and efficiency. With continuous core technology development, Gorilla will deliver edge AI solutions to managed service providers, distributors, system integrators, and hardware manufacturers. For more information go to Gorilla-Technology.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Gorilla’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “might” and “continues,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, statements regarding our Nasdaq listing improving our ability to attract the attention of customers and investors alike, our ability to fund operations as we execute a strategic shift to pursue the larger and higher margin opportunities in Security Convergence, our expectations to swing to profit in the quarters ahead, our immediate priorities, Gorilla’s strategic shift to enable it to pursue larger projects with better revenue visibility, along with those other risks described under the heading “Risk Factors” in the prospectus Gorilla filed with the
Non-GAAP Measures
Certain of the measures included in this press release are non-GAAP financial measures, including adjusted EBITDA and adjusted net loss. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Gorilla are not reported by all of their competitors and may not be comparable to similarly titled amounts used by other companies.
We believe that the non-GAAP measures such as adjusted EBITDA provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. We present adjusted EBITDA in order to provide more information and greater transparency to investors about our operating results.
Adjusted EBITDA represents EBITDA excluding transaction costs and share listing expenses which are one-off expenses for professional services related to the Business Combination, asset acquisition and SOX 404 implementation project which are considered as non-recurring corporate development events, which are added back for calculation of adjusted EBITDA.
The final table which shows our EBIT, EBITDA and adjusted EBITDA, together reconciled to the loss for the year ended
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Consolidated Statements of Comprehensive Loss
(Unaudited)
(Expressed in
Items | For the year ended |
For the year ended |
For the year ended |
||||||
Revenue | $ | 22,408,808 | $ | 42,242,863 | $ | 45,412,589 | |||
Cost of revenue | (14,071,902 | ) | (26,468,662 | ) | (26,857,201 | ) | |||
Gross profit | 8,336,906 | 15,774,201 | 18,555,388 | ||||||
Operating expenses | |||||||||
Selling and marketing expenses | (3,644,316 | ) | (4,961,639 | ) | (5,331,150 | ) | |||
General and administrative expenses | (9,191,505 | ) | (3,430,230 | ) | (2,932,144 | ) | |||
Share listing expenses | (70,104,989 | ) | - | - | |||||
Research and development expenses | (14,110,408 | ) | (15,053,175 | ) | (14,342,826 | ) | |||
Expected credit losses | - | (404,210 | ) | - | |||||
Other income | 983,932 | 43,819 | 59,198 | ||||||
Other gains (losses) – net | 1,222,885 | (127,025 | ) | (1,702,379 | ) | ||||
Total operating expenses | (94,844,401 | ) | (23,932,460 | ) | (24,249,301 | ) | |||
Operating loss | (86,507,495 | ) | (8,158,259 | ) | (5,693,913 | ) | |||
Non-operating income and expenses | |||||||||
Interest income | 235,912 | 37,869 | 159,275 | ||||||
Finance costs | (835,273 | ) | (666,349 | ) | (461,118 | ) | |||
Total non-operating income and expenses | (599,361 | ) | (628,480 | ) | (301,843 | ) | |||
Loss before income tax | (87,106,856 | ) | (8,786,739 | ) | (5,995,756 | ) | |||
Income tax (expense) benefit | (430,368 | ) | 238,445 | 74,903 | |||||
Loss for the year | $ | (87,537,224 | ) | $ | (8,548,294 | ) | $ | (5,920,853 | ) |
Other comprehensive (loss) income | |||||||||
Components of other comprehensive income that may not be reclassified to profit or loss | |||||||||
Remeasurement of defined benefit plans | $ | 7,409 | $ | 13,087 | $ | (7,589 | ) | ||
Components of other comprehensive (loss) income that may be reclassified to profit or loss | |||||||||
Exchange differences on translation of foreign operations | $ | (1,672,040 | ) | $ | 453,007 | $ | 778,758 | ||
Other comprehensive (loss) income for the year, net of tax | $ | (1,664,631 | ) | $ | 466,094 | $ | 771,169 | ||
Total comprehensive loss for the year | $ | (89,201,855 | ) | $ | (8,082,200 | ) | $ | (5,149,684 | ) |
Loss per share | |||||||||
Basic loss per share | $ | (1.78 | ) | $ | (0.29 | ) | $ | (0.20 | ) |
Diluted loss per share | $ | (1.78 | ) | $ | (0.29 | ) | $ | (0.20 | ) |
Consolidated Balance Sheets
(Unaudited)
(Expressed in
Items | |||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 22,996,377 | $ | 9,944,748 | |||
Financial assets at fair value through profit or loss - current | 1,073,229 | - | |||||
Financial assets at amortized cost - current | 6,871,187 | 9,008,499 | |||||
Contract assets | 725,441 | 1,639,893 | |||||
Accounts receivable | 14,041,611 | 34,821,818 | |||||
Inventories | 68,629 | 152,227 | |||||
Prepayments - current | 1,266,442 | 231,531 | |||||
Other receivables | 648,617 | 19,930 | |||||
Other current assets | 61,803 | 5,971 | |||||
Total current assets | 47,753,336 | 55,824,617 | |||||
Non-current assets | |||||||
Financial assets at amortized cost - non-current | - | 50,578 | |||||
Property, plant and equipment | 16,132,567 | 34,395,070 | |||||
Right-of-use assets | 16,675 | 123,375 | |||||
Intangible assets | 56,342 | 3,419,469 | |||||
Deferred income tax assets | 29,905 | 410,203 | |||||
Prepayments - non-current | 612,982 | - | |||||
Other non-current assets | 659,071 | 707,391 | |||||
Total non-current assets | 17,507,542 | 39,106,086 | |||||
Total assets | $ | 65,260,878 | $ | 94,930,703 | |||
Items | |||||||
Liabilities and Equity | |||||||
Liabilities | |||||||
Current liabilities | |||||||
Short-term borrowings | $ | 13,492,935 | $ | 22,968,092 | |||
Contract liabilities | 58,475 | 20,194 | |||||
Notes payable | 602 | 668 | |||||
Accounts payable | 6,674,528 | 8,060,501 | |||||
Other payables | 3,620,998 | 4,532,628 | |||||
Provisions - current | 88,469 | 152,778 | |||||
Lease liabilities - current | 16,981 | 54,588 | |||||
Warrant liabilities | 2,042,410 | - | |||||
Long-term borrowings, current portion | 2,108,896 | 2,077,634 | |||||
Other current liabilities, others | 152,373 | 129,356 | |||||
Total current liabilities | 28,256,667 | 37,996,439 | |||||
Non-current liabilities | |||||||
Long-term borrowings | 8,251,788 | 10,751,630 | |||||
Provisions - non-current | 61,057 | 105,542 | |||||
Deferred income tax liabilities | 148,183 | 78,402 | |||||
Lease liabilities - non-current | - | 69,587 | |||||
Total non-current liabilities | 8,461,028 | 11,005,161 | |||||
Total liabilities | 36,717,695 | 49,001,600 | |||||
Equity | |||||||
Equity attributable to owners of parent | |||||||
Share capital | |||||||
Ordinary share | 7,136 | 6,191,100 | |||||
Preference share | - | 5,844,892 | |||||
Advance receipts for share capital | - | 33,720 | |||||
Capital surplus | |||||||
Capital surplus | 154,730,389 | 41,301,738 | |||||
Retained earnings | |||||||
Accumulated deficit | (96,984,380 | ) | (9,454,565 | ) | |||
Other equity interest | |||||||
Financial statements translation differences of foreign operations | 370,178 | 2,042,218 | |||||
(29,580,140 | ) | (30,000 | ) | ||||
Equity attributable to owners of the parent | 28,543,183 | 45,929,103 | |||||
Total equity | 28,543,183 | 45,929,103 | |||||
Significant contingent liabilities and unrecognized contract commitments | |||||||
Total liabilities and equity | $ | 65,260,878 | $ | 94,930,703 | |||
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in
Year ended 2022 |
Year ended 2021 |
Year ended 2020 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Loss before tax | $ | (87,106,856 | ) | $ | (8,786,739 | ) | $ | (5,995,756 | ) |
Adjustments | |||||||||
Adjustments to reconcile profit (loss) | |||||||||
Expected credit losses | - | 404,210 | - | ||||||
Depreciation expenses | 5,938,167 | 6,385,999 | 5,307,581 | ||||||
Amortization expenses | 1,687,618 | 2,361,009 | 2,897,975 | ||||||
Loss (gain) on disposal of property, plant and equipment | 70,698 | (459 | ) | 856 | |||||
Impairment loss | - | - | 1,238,548 | ||||||
Loss on lease modification | 48,488 | - | - | ||||||
Share listing expenses | 70,104,989 | - | - | ||||||
Share option expenses | 346,122 | 375,941 | 142,416 | ||||||
Interest expense | 835,273 | 666,349 | 461,118 | ||||||
Interest income | (235,912 | ) | (37,869 | ) | (159,275 | ) | |||
Gains on reversal of accounts and other payables | (960,564 | ) | - | (25,523 | ) | ||||
Loss on disposal of subsidiaries | 69,335 | - | 124,441 | ||||||
Gains on financial assets and liabilities at fair value through profit or loss | (405,008 | ) | - | - | |||||
Changes in operating assets and liabilities | |||||||||
Changes in operating assets | |||||||||
Contract assets | 914,452 | (158,970 | ) | (972,189 | ) | ||||
Notes receivable | - | 0 | 3,074,266 | ||||||
Accounts receivable | 3,580,932 | (1,579,304 | ) | (5,060,026 | ) | ||||
Inventories | 83,598 | (62,449 | ) | 68,568 | |||||
Prepayments | (1,245,559 | ) | 344,354 | (108,164 | ) | ||||
Other receivables | (628,687 | ) | (187,708 | ) | 79,218 | ||||
Other current assets | (55,832 | ) | - | (21,840 | ) | ||||
Other non-current assets | 55,361 | (30,235 | ) | (18,657 | ) | ||||
Changes in operating liabilities | |||||||||
Contract liabilities | 38,281 | 20,194 | - | ||||||
Notes payable | (66 | ) | (35,835 | ) | (5,850,712 | ) | |||
Accounts payable | (1,378,916 | ) | 1,371,017 | 3,102,523 | |||||
Other payables | 9,129 | 1,163,036 | 31,344 | ||||||
Provisions | (108,794 | ) | 837 | 103,850 | |||||
Other current liabilities | 23,017 | 28,566 | (64,222 | ) | |||||
Cash (outflow) inflow generated from operations | (8,320,734 | ) | 2,241,944 | (1,643,660 | ) | ||||
Interest received | 235,912 | 37,869 | 159,275 | ||||||
Interest paid | (686,841 | ) | (655,673 | ) | (461,118 | ) | |||
Tax paid | (2,174 | ) | (1,167 | ) | - | ||||
Net cash flows (used in) from operating activities | (8,773,837 | ) | 1,622,973 | (1,945,503 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Acquisition of financial assets at fair value through profit or loss | (1,105,540 | ) | - | - | |||||
Acquisition of property, plant and equipment | (2,935,249 | ) | (7,496,271 | ) | (4,121,887 | ) | |||
Proceeds from disposal of property, plant and equipment | - | 459 | 6,180 | ||||||
Acquisition of intangible assets | (73,093 | ) | (899,005 | ) | (1,404,192 | ) | |||
Disposal in financial assets at amortized cost | 2,187,890 | 135,937 | 26,483 | ||||||
Investment in financial assets at amortized cost | - | (1,579,329 | ) | (2,245,333 | ) | ||||
Decrease (increase) in guarantee deposits | 368 | (72,142 | ) | 5,087 | |||||
Net cash flows used in investing activities | (1,925,624 | ) | (9,910,351 | ) | (7,733,662 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Proceeds from short-term borrowings | 12,492,935 | 5,000,000 | 3,508,961 | ||||||
Repayments of short-term borrowings | (20,089,523 | ) | (327,098 | ) | - | ||||
Proceeds from long-term borrowings | 3,447,526 | 6,146,341 | 1,184,469 | ||||||
Repayments of long-term borrowings | (4,899,022 | ) | (4,933,134 | ) | (900,682 | ) | |||
Principal repayment of lease liabilities | (90,549 | ) | (33,864 | ) | (29,716 | ) | |||
Exercise of share options | - | 135,520 | 112,004 | ||||||
Payment of transaction cost | (292,416 | ) | - | - | |||||
Proceeds from capital reorganization | 32,324,004 | - | - | ||||||
Exercise of warrants | 714,230 | - | - | ||||||
Net cash flows from financing activities | 23,607,185 | 5,987,765 | 3,875,036 | ||||||
Effect of foreign exchange rate changes | 143,905 | 91,105 | 324,900 | ||||||
Net increase (decrease) in cash and cash equivalents | 13,051,629 | (2,208,508 | ) | (5,479,229 | ) | ||||
Cash and cash equivalents at beginning of year | 9,944,748 | 12,153,256 | 17,632,485 | ||||||
Cash and cash equivalents at end of year | $ | 22,996,377 | $ | 9,944,748 | $ | 12,153,256 | |||
The following table shows our EBIT, EBITDA and adjusted EBITDA, together reconciled to the loss for the year ended
Year Ended |
|||||||
2022 | 2021 | ||||||
(in thousands) | |||||||
Loss for the year | $ | (87,537 | ) | $ | (8,548 | ) | |
Income tax expense (benefit) | 430 | (238 | ) | ||||
Financial expense, net | 599 | 628 | |||||
EBIT | $ | (86,508 | ) | (8,158 | ) | ||
Depreciation expense | 5,938 | 6,386 | |||||
Amortization expense | 1,688 | 2,361 | |||||
EBITDA | $ | (78,882 | ) | $ | 589 | ||
Transaction costs(1) | 2,814 | - | |||||
Share Listing Expense(2) | 70,105 | - | |||||
Adjusted EBITDA | $ | (5,963 | ) | $ | 589 | ||
(1) Transaction costs are one-off expenses for professional services related to the Business Combination, asset acquisition and SOX 404 implementation project which are considered as one-off corporate development events and added back for calculation of adjusted EBITDA.
(2) Share listing expense represents non-cash IFRS 2 charges recorded in connection with the consummation of the SPAC merger.
Source: Gorilla Technology Group Inc.