Initiating Coverage: Gorilla Going Global
Gorilla Technology Group, Inc. (GRRR) is a leading smart city, full technology suite integrator. Growth is being driven by global expansion into new markets across the Middle East and North Africa (MENA), Southeast Asia, and the UK. The company’s strength is its project lifecycle management, with continued support and unique problem-solving capabilities. Gorilla reported a very strong FY23, with adjusted EBITDA of $29.0 million versus ($6.0) million in FY22. Revenue jumped 189% to $64.7 million, while gross margin increased nearly 30 points to 69.1%. FY23 net income of $19.9 million was also a turnaround from the $87.5 million loss in FY22. The flip in adjusted EBITDA to $29 million from a loss of $6 million is a strong indicator of the company’s strong operating results. The profit turnaround was driven by: (1) a focus on expense management driven by improving operational efficiency; (2) a commitment to innovation, including the use of artificial intelligence (AI); and (3) an emphasis on closing profitable deals. With CEO Jay Chandan leading the charge to expand globally and close deals in multiple markets, Gorilla expects a 2024 sale pipeline of more than $1 billion. This is partly driven by the company’s expected expansion deals within current operating regions of MENA, Thailand, South America, and the UK. It has already successfully won sales of ~$300 million. Gorilla expects its next phase of growth to be driven by leveraging its current project relationships (Egypt, Taiwan, Latin America) as well as entry into new markets (the UK, MENA extended) and capitalizing on the estimated $1 billion sales pipeline with won sales of ~$300 million. Comparables include hardware, software, and services companies of a similar size that sell into the smart cities market. The comps have a median P/S of 14.2x, while Gorilla trades at a significant discount of 0.5x. Read our reports on Gorilla on our website.
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