Everyone, welcome to today's fireside chat with Gorilla Technology . I'm your host, John Roy. I cover technology companies at Water Tower Research . Today, I'm joined by Jay Chandan. He's the CEO of Gorilla Technology , along with Bruce Bower, the CFO. Hi guys, how are you doing?
Very well, thank you, John. Thank you for having us.
I should mention that Gorilla's safe harbor statements can be found on their website. With that, welcome, and let's get started. Bruce, maybe you can give us the highlights of the strong first quarter of 2025 and maybe some key takeaways.
Sure, thanks, John. First quarter for us was a real banger of a quarter. I think the top line was the first thing we'd like to highlight, where it was $18.3 million. That was up 100% year- over- year. Second thing was the profitability. We were happy with all of the metrics. Adjusted EBITDA reached $5.16 million, and that was up significantly from last year, where it was $3.5 million. That's about a 47% increase. Similarly, adjusted net income was $4.47 million, up about 46.7%. This also means an adjusted EPS of $0.23 per share. First of all, that's a turnaround from a negative number, and we're quite happy with that as a per share number. A couple of other things I'd like to highlight would be, first of all, at the end of the first quarter, we saw a $33.8 million cash balance.
That is broken down between $20.8 million in unrestricted cash, and then the balance in restricted cash, which is used for either customer guarantees or deposits that are pledged against certain bank facilities. Overall, a very, very strong cash haul. The last thing I'd like to highlight would be that we reduced debt. At the end of the year, it was $21.4 million, and now it's down to about $18.4 million at the end of the first quarter. For us, it's a really strong testament to the growth in the business that we can grow the business and we can keep cash high at the same time we're reducing debt. One of the reasons why is because the debt had deposits pledged against it, and basically we're able to pay off the debt, some of the principal, and then release the deposit that's trapped against it.
Net-net, it doesn't affect the unrestricted cash balance. The last thing I would highlight is that, on a reported basis, there were some one-off losses. Those were driven mostly by the conversion of warrants. We have private warrants outstanding as part of a financing we had done in 2023 and 2024. Almost all of those warrants are expired, so I don't expect to see those financing-related losses continue or repeat. That was first quarter, and hopefully onwards and upwards with the other quarters of this year.
Right. No, that's really interesting. Now, I know you focus a lot on the profitability and improving the balance sheet. Can you give us some color on, maybe milestones or steps you might be taking in the future? What's your focus there?
The focus there is still to be very capital efficient and very focused on, you know, holding the purse strings tight when it comes to cash. The second thing is the way we drive profitability is through existing and through new projects, keeping a very disciplined metrics that we target. The first thing is in the past, we were looking at 35%- 40% gross margins for new projects. Now it's 40%- 45% is the yardstick. As the business has grown, as, you know, sort of people come to us instead of us doing outreach, we've been able to tighten that up. I hope that, you know, in a year or two, I can report it's 45%- 50% is the gross margin target. We're going to keep dragging that upwards.
The second is, as a function of the higher gross margin, we're also looking at a higher EBITDA margin. This year we're targeting 20%- 25% EBITDA margins. This is a function of two things. One, the higher gross profit, as I mentioned, but second is that there's some operating leverage in the business. A lot of the senior people are already in place. There is an element of efficiency already. We don't need to hire, you know, wads of people in order to service, you know, double the revenue. It would only be a few key hires and then several support roles. The other thing is that in a lot of the growth markets for us, we've been adding headcount already in anticipation of growth.
For instance, in India, we've added a lot of R&D and customer success roles, and then in Egypt, and then also in Taipei, and sorry, in Thailand, we've announced an acquisition where that will bring us about 70 people overall. We have the teams in place to really service a much larger, a much larger growth and revenue base, and thus that will do to higher EBITDA margins over time.
If I may add to that, sorry.
Go ahead.
If I may add to that, one of the things we're also changing as the business is changing quite significantly for us is the way we are structuring our long-term contracts. When we go to long-term contracts with customers, we're not just talking about three-year deals. We're now talking about three-year deals plus two-year, you know, maintenance and warranties. We're also changing the way we operate as a business. We're going from OpEx-led deals to CapEx-led deals. Sorry, my apologies, from CapEx-led deals to OpEx-led deals. For example, data centers, where we might do better because we're not just the landlord collecting rent, but we're actually giving them the service, the AI platforms, and so on and so forth, so that they can actually pay us a fee for a much longer duration.
For example, we're currently working on some data center projects where we're actually talking to them about, you know, 11, 12-year deals. These would typically have been, you know, CapEx deals where the customer comes and funds it in a one-time go. We were maintaining it for about a couple of years, done a build-to-operate transfer in about three years. Now we've extended the life of that to about 10 to 12 years. Once you, you know, you sunk your key to the customer, guess what? He's not, he's not moving anywhere. We're not just kind of, you know, in the business of building, you know, what I call multi-billion dollar projects for the sake of building it, but we're actually making sure that we actually hold those margins as well over a longer period of time.
Right. No, that makes sense. In reference to getting ready for growth, you guys recently did, what, a $105 million raise. Maybe you can give us some insights and color on that, whatever you can say.
Sure. We raised $105 million in July. That was done as an equity raise, but that had several advantages. The first is that we had about 1.45 million shares in treasury that we were able to sell. The overall number of shares that we issued to do this transaction was 1.1 million shares. The balance of that is in pre-funded warrants where we have received the cash, or 99.8% of the cash, but the shares have yet to be issued. Over time, those shares will be issued, we expect, but right now they haven't been issued. That is a good way of keeping the outstanding share count under control. With that capital, we expect a few things. The first is that we have an enormous pipeline, and some of it is very new, dated, you know, we're talking in the coming months.
We wanted to make sure that we had the capital in place where we could perform on any contracts that we anticipate being awarded or signing. We have debt term sheets in place, but we didn't want to take the completion risk on those. The other thing is that, for raising funding later in the form of debt or project-level financing, it helps to have the equity in place on the balance sheet. Instead of waiting to raise the equity later, we raise it up front. Now the focus is really going to be on funding projects through project-level finance and raising debt at the company level or at a project level. As I mentioned, we have term sheets on the table for up to $200 million of debt or preferred equity, which functions like debt. The goal really is to use that to fund the next leg of growth.
With respect to the project-level finance, Jay will talk a little bit about O.N.E. Amazon , but O.N.E. Amazon we anticipate raising a funding round there that is significant, which will be one of the project-level funding sources with collaboration or a strategic partnership with Terra Strata. That is going to be another project level. We are in discussions with many parties, such as development banks for project-level finance as well. That is not an idle discussion. That is something we've already delivered on, and we are going to continue to work on.
That was good. Speaking of what's coming up, Jay, maybe you can give us a little bit more of a view into what you see coming in 2025 and maybe anything you see happening in 2026 and beyond.
That's my book. It's a book I keep every day with me, and I keep writing on it. Every single time I meet a customer, this is what I put out there. I'm sorry, I couldn't help it because it was literally sitting on my table. Listen, look, the outlook for 2025 and 2026 is probably the most exciting it's ever been for Gorilla. We're standing at the, you know, what I think is the cusp of a major inflection point. Over the past 12 months, or maybe even 15, we've put in the hard, hard, hard yards, as they call it. We've built the pipeline. We've raised the capital. We've hired the heavy hitters. We've secured the tech stack. We've built our products and perfected our products. We've built partnerships with the likes of HP and Nvidia. We're in the process of building some very large, significant POCs.
We've deepened our local teams across Thailand, India, Latin America, Taipei, and now soon in Miami, we'll be opening up an office along with our O.N.E. Amazon team as well. This, it's about converting all of that into execution for us. For 2025, you're going to see a shift from us being primarily in final negotiations and contract structuring to actually signing and delivering these multi-year, multi-jurisdictional contracts. We've roughly got about $1.3 billion of potential projects we target to close by the mid of next year. That's culminating from our $5.6 billion pipeline, which will probably grow even further before the end of this year. With a long tail of revenues, which I talked to you about previously, are between three and 15-year contracts. That's foundational. It means that we are locking in cash flows that are going to anchor Gorilla's growth well into the next decade as well.
We're not thinking about 2025 and 2026. We're thinking 2027 to 2030. What happens next? Operationally, 2025 is also when O.N.E. Amazon will start generating revenues, our first revenues, which is going to be significant because not only does that open up an entirely new category for us, it helps build our AI-driven environmental intelligence whilst we are talking about recurring revenue streams being tied into biodiversity, carbon credits, tokenized natural assets, and so on. That itself could actually redefine how people think of our business going forward. Moving into 2026, for me, I see Gorilla evolving even more clearly into what we've been positioning for, not just as a tech solutions vendor, but as an AI-native infrastructure operator. By then, we will have had multiple multi-jurisdiction contracts. We would have built multiple sovereign data centers, either construction or underway.
We will have had long-term OPEX contracts with these customers because we're now starting to move from the CAPEX to the OPEX model with these governments and enterprises. These enterprises have been starved of budgets in the past, so they're looking at us as their white knight. We're building environmental platforms that are actually monetizing natural assets at scale. If you look at the foundation, for me, I call it rock solid. We talked about the cash. We've got a little over $108 million in cash, very low interest debts of about under $16 million today, another $150 million- $200 million in potential non-dilutive financing. We can draw it on the cash as and when it's needed.
This means that we're going from what we call a massive ramp-up with a balance to actually a very structured support system, which means we're no longer dancing at the edge waiting for money to come in. We've got the money, and we're just waiting to build on the successes which we're going to be signing over the next few quarters. Culturally, which I think is also as important, we have built a global team, and that's truly, genuinely world-class today. Whether it's people like Satish who come from Cognizant or Bala who came from Cognizant, or people like Nam who came from Cognizant as well, and Jackie who came from our partner, Lena, who just joined us about two weeks ago, and dozens of local hires right from Taipei to Cairo. We're not just sending in consultants.
We're actually building local leadership who will own these markets long-term for us as well. In short, John, 2025, 2026, expect Gorilla to go from signing these mega contracts to delivering them at scale, but at the same time with healthy gross margins, and that's going to be our mantra, multi-year, multi-jurisdiction revenue streams that are fundamentally transforming the business. That's what I believe is going to happen to us over the next couple of years. I'll keep this book with me all the time.
That sounds great. Unfortunately, we're going to have to leave it there. We're about out of time. Jay, Bruce, thanks so much for joining us today's fireside chat. To learn more about Gorilla Technology , please visit their website or access our research on WTR's website. That's www.watertowerresearch.com. Thank you, everyone, for joining us. The views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research LLC and are provided for informational purposes only. This fireside chat may not be distributed or reproduced without the consent of Water Tower Research and should not be considered research or a recommendation. WTR is an investor relations firm, not a licensed broker, broker-dealer, market-maker, investment banker, underwriter, or investment advisor. Additional disclaimers can be found at watertowerresearch.com.
Thank you, bud.