Gorilla Technology Group Inc. (GRRR) Earnings

Management highlights

- Core Financial Performance Highlights * Total H1 2026 revenue reached $78.4 million, nearly doubling year-over-year, exceeding the upgraded guidance of $44 million by $6.1 million (14%) due to earlier-than-expected milestone completion on projects. * Q2 2026 operating loss narrowed 95% to $2.2 million from $41.1 million in Q1 2026, as over 80% of H1 2026 share-based compensation was recognized in Q1, leading to a 78% QoQ decline in this charge. * Operating cash consumption fell 65% year-over-year to $4.3 million in H1 2026, dropping from 31.8% of revenue to just 5.5% of revenue. The company ended H1 with $179.4 million in cash, an 82% increase from the end of Q1. - Key Infrastructure Project Milestones * Yotta Phase 1: Testing is complete, equipment deliveries are underway, deployment has commenced, and full testing will start by early next week. All infrastructure is already built and ready by Yotta, with only GPU installation and testing remaining. * Yotta Phase 2: Equipment manufacturing is in progress, expected to be completed in 25-30 days, with first batch deliveries starting by the end of October 2026. Yotta 1 and the first phase of Yotta 2 will be fully completed by the end of November 2026. * NeutraDC (Batam, Indonesia): 300 servers are on track for deployment by the end of October 2026, with testing completed and operations starting by the end of November/early December 2026. The project targets 200 megawatts of total capacity, with initial service ready in mid-2027 and full deployment in H2 2027. * Korat, Thailand: Land clearing is complete, and the company is advancing financing, GPU procurement, and offtake discussions to finalize firm customer contracts. - Balance Sheet and Capital Deployment * The company ended H1 with $179.4 million in cash, $13 million in conventional bank debt, and $107 million in long-term convertible debt from a June 2026 issuance. Capital is being actively deployed to purchase infrastructure, secure capacity, prepare project sites, expand teams, and fund working capital for large-scale projects, with 5 major sites currently in parallel development. * Total CapEx in H1 2026 was $14.1 million, with much larger CapEx planned for H2 2026 to support infrastructure buildout. The company expects to use project-level debt financing for future expansion to fund the majority of new project costs, with details to be released shortly. - Legacy Business Update * Gorilla is not pivoting away from its legacy security and network intelligence business. This segment continues to provide stable customer relationships, reliable cash collections, and operational expertise that supports the new AI infrastructure expansion, and the company is actively pursuing new large projects in this segment.

Guidance

- The 2026 full-year revenue guidance has been raised to a minimum of $200 million, up from the initial 2026 guidance range of $137 million to $200 million. The company intends to deliver the upper end of this target with strong execution. - Q3 2026 revenue guidance is set to $48 million to $50 million, representing a 20% to 39% increase from the prior planning range of $36 million to $40 million. Q4 2026 revenue is expected to exceed $60 million to $70 million. - 2027 full-year revenue is targeted at $450 million to $500 million. This guidance only includes projects with firm delivery schedules and contracted revenue: Yotta 1, the first batch of Yotta 2, and the first 300 servers of the NeutraDC project, plus revenue from existing unannounced contracted projects. Additional capacity (the remaining 700 servers of the first NeutraDC phase, the full 875-server second phase of NeutraDC, and the second batch of Yotta 2) are not included in current guidance and will be added once delivery schedules are finalized. - Management expects 2027 gross margins to reach at least 40% (this is not formal guidance, just a preliminary projection), driven by high-margin GPU-as-a-Service revenue that averages 75% gross margin across the new projects. - Management expects full-year 2026 operating cash flow to reach breakeven, supported by over $20 million in expected customer collections in September and October 2026.

Segment performance

Gorilla Technology Group operates two primary business segments: legacy security and network intelligence, and new GPU-as-a-Service (GPUaaS) / AI data infrastructure. In the first half of 2026, total consolidated revenue was $78.4 million, representing 99% year-over-year growth. Q2 2026 revenue alone reached $50.1 million, which is 78% higher than Q1 2026 and 138% higher than Q2 2025. For the half, the revenue mix was weighted toward lower-margin hardware, initial deployment and project mobilization activities for the new GPUaaS segment, which pulled down overall company gross margin. Once operational, the GPUaaS projects (Yotta 1, Yotta 2, NeutraDC) are expected to deliver gross margins of 75% or higher, which will expand the company's overall gross margin over time. The legacy security and network intelligence segment contributed steady, recurring revenue and positive cash flow to support the company's infrastructure expansion, and remains a core part of Gorilla's business. The legacy segment also contributed operational expertise (such as SOC/NOC services) that is leveraged across the new GPUaaS data center business.

Risks & headwinds

- Key near-term risks to execution include hardware delivery delays due to global component shortages: GPUs, CPUs, memory, and storage are all in short supply globally, which can impact project timelines if unforeseen delays occur. * Site and power readiness is a critical risk: reliable electricity supply is essential for data center operations, and any delays to power infrastructure or grid connections can push out project commissioning dates. * Customer acceptance and workload migration risk: any integration issues that slow customer testing and workload onboarding can delay revenue recognition. * Geopolitical and foreign exchange volatility: the company has significant exposure in the Middle East and Southeast Asia, and recent geopolitical tensions (including the Iran conflict and tariff volatility) created material foreign exchange losses in H1 2026, though volatility has calmed in recent periods. * GPU residual value risk: while current market data shows 20-25% residual value for modern GPUs after 5 years, future residual values are uncertain, though management notes that older generation GPUs (like A100s) remain in revenue-generating operation for 7-9 years, and there is ongoing demand for used GPUs from governments and secondary operators. * Project financing execution risk: the company is negotiating terms for multiple project finance facilities, and unfavorable terms or delayed closing can impact the pace of expansion.

Analyst Q&A

• Q: What is included and excluded from the 2027 revenue guidance, and how is the total $450M-$500M broken out by project? /

  A: Yotta 1 (with a $100M annualized incremental revenue run rate) and the first batch of Yotta 2 ($250M annualized incremental) are fully included. The first 300 servers of the NeutraDC project, contributing $75M-$80M annualized incremental revenue, are also included. The remaining 700 servers of the first NeutraDC phase, the full 875-server second NeutraDC phase, and the second batch of Yotta 2 are not included, as their delivery schedules have not been finalized due to component shortages. Management will update guidance once these schedules are confirmed.

• Q: What is the expected residual value of GPUs after 5 years, and can they continue operating longer? /

  A: Current market data points to a 20-25% residual value for modern GPUs after 5 years, though future values are uncertain. The company accounts for a 5-year depreciation life aligned with the 5-year term of most customer contracts. Management expects GPUs can operate for far longer than 5 years: existing A100 GPUs have been in revenue service for 7-9 years, and there is ongoing demand for older GPUs for inference workloads and sovereign AI projects from governments. Gorilla intends to continue operating GPUs after 5 years or sell them to third parties, so residual value will be a positive incremental benefit.

• Q: What do management see as the biggest risks to hitting 2027 targets? /

  A: The top three risks are hardware delivery timing, site and power readiness, and customer workload migration. To mitigate these, the company orders equipment far in advance (current deliveries are already 5-8 weeks ahead of schedule), gates deployment on confirmed power and site readiness, runs engineering and installation work streams in parallel with on-site teams, and builds buffers into project timelines to accommodate delays. Headcount has nearly doubled to support the ramp, and contingency plans are in place for all key risk areas.

• Q: Are Gorilla's customer GPU contracts fixed price, or indexed to spot GPU prices? Who bears margin risk if spot prices fall? /

  A: All Gorilla's costs (hardware, power, connectivity) are fixed under existing contracts, and all customer agreements are also fixed-price. There is no pass-through of price volatility to customers, and Gorilla retains all margin risk (and upside) from price changes. The company has locked in fixed pricing with all vendors for all deliveries through the end of 2026, so there is no near-term price risk for planned projects.

• Q: What are current headcount and monthly operating expense, and how will these grow? /

  A: At the end of Q2 2026, Gorilla has ~300 full-time employees and ~350 contractors, for a total of ~650 total personnel. Headcount is expected to grow to ~2,000 by mid-2027 to support full project ramp-up. Monthly SG&A run rate is currently $2.7 million, and is expected to grow to an annualized $38 million-$40 million by the end of 2027. Costs remain moderate because most new hires are in low-cost geographies (India, Thailand) rather than expensive regions like Silicon Valley.