By Brian Lantier, CFA
NASDAQ: GRRR
READ THE FULL GRRR RESEARCH REPORT
WHAT’S NEW
After the market closed on August 24, Gorilla Technology Group (NASDAQ: GRRR) released its second-quarter results for 2026, which continue to show that Gorilla is executing on its existing contracts successfully. Below are some of the key items worth noting:
Revenues: The company continued to execute on its existing contracts, and meeting deliverables enabled the company to report impressive quarterly revenue of $50.1 million, up 77% sequentially from Q1 and roughly 13% ahead of our forecast of $44.3 million.
Gross Margins: The company reported a gross profit of roughly $6 million in Q1, so the total gross profit of $3.8 million for the first six months of 2026 implies that the company actually recorded a gross loss on its sales of $2.1 million (negative 4.2% gross margin) unless there were undisclosed adjustments to Q1 costs of goods sold. This was obviously well below our assumption of 31% gross margins, as we believe the majority of the company's first half revenues were actually hardware sales ($52.5 million of $78.4 million total), which carry a razor-thin (or possibly negative) margin compared to service revenues when the company deploys assets under its GPUaaS model.
Outlook: While the current quarter's results will likely be viewed as disappointing, the company's guidance for the balance of 2026 and 2027 should offer long-term investors reason for optimism. The company now projects 2026 revenue of at least $200 million, and it offered its first official 2027 revenue guidance of $450-$500 million. The new revenue range for 2027 of $450-$500 million compares with our previous estimate of $280 million, which we noted at the time was likely conservative. There are two important considerations in determining the value of Gorilla – the proportion of equipment sales versus the proportion of higher-margin GPUaaS revenues.
Valuation: For our analysis, we have significantly boosted our sales forecast from $280 million to $436 million for 2027, but as a result of our assumption that a portion of those revenues will be low margin equipment sales, we now assign a lower Enterprise Value-to-Sales multiple of 1.7x to those total sales, which allows us to maintain our target valuation of $24/share for Gorilla Technology.
As the company completes additional financings, we think the market may reduce the discount applied to its valuation, which provides upside to this target.
We would encourage interested investors to read our updated research report, which includes a more complete analysis of the quarterly results.
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