CFOの2025戦略ビジョンインタビュー

(00:01) [Music] hello today we have Bruce Bower the interm Chief Financial Officer of gorilla Technology Group trading on the NASDAQ under the ticker grrr Bruce welcome thank you Craig pleasure to be here as CFO Bruce how do you approach aligning gorilla's Financial strategy with its rapid growth and involving Market opportunities yes so the most important thing is that we need cash in order to grow the business so the priority has been to keep a a large cash buffer so a minimum of 15 million of unrestricted cash that allows us to take

(00:46) on new contracts and then it also allows us to have exess uh to invest in New Market opportunities you know so exploring uh sales Marketing in new areas and also spending on Innovation that cash Reserve is quite large more than $40 million Bruce what is your strategy for balancing Capital allocation between growth initiatives Innovation and shareholder returns yeah so uh we look at basically the business development pipeline uh right now it's over1 and a half billion dollars and we judge from that what we think are

(01:21) near-term potential wins and basically how much cash you would have to set aside in order to win those contracts and deliver on them um when when we have $40 million in cash reserves it it's a little bit lower today but about high 30s um what we're thinking is that most of that will be allocated towards growth and then uh we have six $6 million buyback allocated and then the rest we're going to put into R&D in the future we'll keep the same discipline where the vast majority of it will go into growth anything

(01:55) excess will go first to Innovation to R&D to keep the product portfolio growing and then you know as as in when we'll allocate it to shareholder inss Bruce you also have substantial contract assets and financial Assets Now how do you manage those to support your operational and strategic goals yeah um just to Define them contract assets really mean unbuild revenue and we're going to report them as such in the future uh basically we perform work we recognize the revenue as we perform it it goes into contract assets what we're trying to do is really

(02:31) to Bill as fast as possible as soon as the milestones in our contracts permit us to Bill uh that starts the the cycle where that contract asset gets converted into cash in terms of the financial assets the the vast majority of those financial assets have been and will continue to be guarantees in front of our customers so you know the financial assets number will expand over time as we invest in new guarantees you know towards new contracts TRS um on the other hand we like to keep it uh we like to smooth it and and manage it down

(03:06) where possible because that releases cash that goes into the business uh and that's actually the cycle we're in right now at the end of 2024 beginning 2025 Guerilla improvements Bruce in gross margin and operating profit are noticeable how are you working to sustain and build on these achievements as you scale so in terms of operating profit uh we're really seeing the operating leverage kick in where we have the infrastructure necessary to Ser us double the the business that we're doing now so the key becomes really winning

(03:39) new contracts and then getting the gross margin up in terms of the gross margin we we have a lot of financial discipline that we're now um putting or or reasserting into the contracts that we look at and that we win so that includes you know a revised rate card to make sure uh that we're charging Market rates a ized uh Contracting approach where we have certain Targets in terms of Revenue size you know gross margin etc etc that we expect to see out of contracts uh and together along with an improved product

(04:14) mix you know shifting towards software they should keep our gross margins expanding I want to turn now to that share buyback program Brew $6 million share buyback program undeniably reflecting confidence in Guerilla valuation how do you balance these initiatives with investments in future growth yes so in September we we had up to $40 million of free cash unrestricted cash and we judged that we didn't need all of that in order to serveice new business we also thought that the the share price was quite undervalued and we

(04:53) wanted to send a message to the market that we weren't issuing new shares rather we would prefer to buy them back so that reflects confidence in the valuation being low and and our our prospects um but basically when we judge that the share price is low and also that it doesn't in any way compromise future growth in the business that's when we allocated and that's when we will allocate in the future money to to return to shareholders give us some of the key initiatives you've got going right now to optimize cash flow while maintaining

(05:27) that focus on scaling and of course innovation it comes down to the the discipline for how we manage existing contracts and new contracts so for existing contracts it means billing as soon as we can uh those contract assets or unbuild Revenue to turn that into into build revenue and then collecting on the receivables it also means managing our payables um our prepayments and our payables on those contracts you know so that we get as much float as possible for new contracts we're really looking at two things one

(05:59) is the timing of investment from our side so obviously if we can minimize or or delay the cash going out from our side and then also when we expect customers to to pay us the other thing is that we're looking at at new initiatives basically to minimize the cash that goes out to service new contracts one is for instance using shy bonds instead of cash guarantees it costs a little bit more on the p&l but it saves a tremendous amount of cash okay Bruce we have covered a lot of financial metrics in this interview in

(06:34) your opinion what are the most important indicators that investors should be monitoring to understand gorilla's progress and potential yes so so the ones that you would monitor in in any growing technology business so it would be the the growth metrics and it would also be uh the gross margin and the operating margin or the E margin the last one that we pay a lot of attention to is cash flow and can be both free cash flow and then uh operating cash flow as a percentage of evaa in 2025 um we expect due to the release of

(07:09) some guarantees to our end clients that our Eva to free cash or to operating cash FL conversion will be greater than 100% um and that's the kind of that that means that the business is growing in a very cash generative fashion so that's that's what we like to focus on sounds compelling Bruce thanks for explaining everything to us today thanks for having me it's been a pleasure and uh yeah happy to talk about gorilla anytime