What happened
Week to date, shares of Gorilla Technology Group (GRRR -3.05%) were up 48% as of 10:25 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
The provider of artificial intelligence-based edge video analytics and cybersecurity announced that a Middle Eastern government agency is looking to use the company's technology for one or more smart cities under development.
So what
Gorilla stock started trading in July after combining with Global SPAC Partners -- a special purpose acquisition company. The transaction provided about $45 million for Gorilla to put together a management team and begin going after opportunities in the video analytics and cybersecurity markets, which have been exploding as organizations deal with escalating threats.
The news about the government agency considering its technology is expected to lead to a contract that will be implemented in the first half of 2023. Gorilla expects the deal to be a significant contributor to its revenue next year.
Now what
While revenue through the first half of 2022 was down almost 9% year over year, Gorilla reported robust growth within its security convergence segment, with segment revenue advancing 64% year over year. This offset the decline in its video Internet of Things segment, which is part of management's strategy to shift more resources toward more attractive cybersecurity opportunities.
With a major government agency coming on board, Gorilla Technology should see significant growth in 2023. This is why the stock jumped following the news, but it could be the beginning of more customer wins.
Gorilla has already won about $20 million in new projects since August, and management expects this momentum to swing the company to a profit in the near term.
