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 of Asia
- 2023 revenue guidance of $65 to $75 million
Gorilla Chief Executive Officer Jay Chandan commented, “After consummating the merger to go public, we began a significant transformation that is already paying off. We started the year as a strong regional player in video analytics and ended the year as an emerging global leader in security convergence. The capital and visibility provided by our U.S. listing enabled meaningful and positive change. We moved our headquarters to London and started building our European operations. We expanded our marketing efforts around the world with a focus on Europe, MENA and Asia. We rationalized our existing book of business by discontinuing non-strategic or marginally profitable customer relationships. And we accelerated our technology development with both the SeeQuestor technology purchase and the development partnership for our next-gen Edge AI appliance.”
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 $100 million or more to be completed in twelve months. The second phase is likely to start later this year and should be larger in project scope. We anticipate Phase II revenue to be potentially up to twice that of Phase I. This is significant upside for a company that generated $40 million of sales a couple years ago and shows the power of the new team, products, and infrastructure we built over the past year. This large MENA project is the first of what we believe could be many similar projects around the world.”
Commenting on results, Gorilla Chief Financial Officer Daphne Huang noted, “Solid growth in Security Convergence is an early indicator of the wisdom of our product pivot, and the MENA win shows that this region can drive explosive growth in the years ahead. The revenue decline in 2022 was challenging but necessary to instill sound operational and financial discipline and reset our customer and project focus. We executed the reset well at the temporary cost of material decline in revenue during transition in 2022, and laid a sound foundation to pivot to global growth in 2023 and beyond. The bottom line was impacted by the revenue decline, by the increased G&A expense from being a public company, and by the substantial investment to transform us into a global player, which shows up mainly in operating expenses. That is money well spent, as you can see with these early project wins that are an order of magnitude greater than our operating expenses for the year.”
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 Europe and Asia. In light of the large Phase I win in the MENA region, we plan to raise debt financing to support upfront working capital needs. Looking forward, we will continue to invest heavily in growth but do expect to grow profitably over the longer-term as revenues should far exceed the investments we make.”
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.”
