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Peraso(PRSO) - 2024 Q3 - Earnings Call Transcript
PRSOPeraso(PRSO)2024-11-12 23:14
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Financial Data and Key Metrics - Total net revenue for Q3 2024 was 3.8million,downfrom3.8 million, down from 4.2 million in Q2 2024 and 4.5millioninQ32023[35]−ProductrevenuefrommemoryICsandmillimeter−waveproductswas4.5 million in Q3 2023 [35] - Product revenue from memory ICs and millimeter-wave products was 3.8 million in Q3 2024, compared to 4.1millioninQ22024and4.1 million in Q2 2024 and 4.3 million in Q3 2023 [35] - GAAP gross margin decreased to 47% in Q3 2024 from 55.5% in Q2 2024 and 45.4% in Q3 2023 [36] - Non-GAAP gross margin was 61.7% in Q3 2024, down from 68.8% in Q2 2024 and 58% in Q3 2023 [37] - GAAP operating expenses decreased to 4.5millioninQ32024from4.5 million in Q3 2024 from 6.8 million in Q2 2024 and 5.6millioninQ32023[38]−Non−GAAPoperatingexpenseswere5.6 million in Q3 2023 [38] - Non-GAAP operating expenses were 3.3 million in Q3 2024, down from 4.9millioninQ22024and4.9 million in Q2 2024 and 4 million in Q3 2023 [38] - GAAP net loss for Q3 2024 was 2.7million,or2.7 million, or 0.98 per share, compared to a net loss of 4.4million,or4.4 million, or 1.88 per share, in Q2 2024 and a net loss of 0.6million,or0.6 million, or 0.87 per share, in Q3 2023 [39] - Non-GAAP net loss for Q3 2024 was 0.9million,or0.9 million, or 0.34 per share, compared to a net loss of 2.1million,or2.1 million, or 0.88 per share, in Q2 2024 and a net loss of 1.1million,or1.1 million, or 1.56 per share, in Q3 2023 [40] - Adjusted EBITDA was negative 0.8millioninQ32024,comparedtonegative0.8 million in Q3 2024, compared to negative 1.9 million in Q2 2024 and negative 0.9millioninQ32023[42]BusinessLineDataandKeyMetrics−MemoryICshipmentsincreasedsequentiallyto0.9 million in Q3 2023 [42] Business Line Data and Key Metrics - Memory IC shipments increased sequentially to 3.7 million in Q3 2024 from 3.4millioninQ22024[10]−Thecompanyhasaremainingpurchaseorderbacklogof3.4 million in Q2 2024 [10] - The company has a remaining purchase order backlog of 5.7 million for memory ICs, expected to be fulfilled by Q1 2025 [10] - The company has 82 new funnel opportunities and 23 active engagements in the millimeter-wave solutions pipeline [14] - Nine prior design engagements have been converted to in-production wins [15] - Recent wins include SAF TEHNIKA's FreeMile 60 radio and Miliwave's MWC-932 product, both utilizing Peraso's millimeter-wave modules [16][17] - A follow-on purchase order of 1.4millionwassecuredfromaSouthAfricanWISPfortheDUNEmillimeter−waveplatform[21]−AnotherDUNEorderwasannouncedfromaWISPinKenya,targetingimprovedinternetservicesfor22.7millionusers[23]MarketDataandKeyMetrics−Thecompanyisfocusingonfixedwirelessaccessandtacticalmilitarycommunicationsmarkets[9]−RecentcustomerwinshavebeenannouncedinAfrica,Asia,andotherglobalregions[13]−TheDUNEplatformisbeingdeployedindenseurbanenvironments,particularlyinAfrica,wherereliablelow−powerconnectivityisessential[20][22]−Thecompanyisparticipatinginthe2024AfricaTechFestivaltopromotemillimeter−wavesolutions[25]−Thecompanysecuredaninitialpurchaseorderfromamilitarycustomerformillimeter−wavemodules,withshipmentsexpectedinQ12025[27][28]CompanyStrategyandIndustryCompetition−Thecompanyisfocusedonreducingcostsandincreasingefficiencies,resultingina201.4 million was secured from a South African WISP for the DUNE millimeter-wave platform [21] - Another DUNE order was announced from a WISP in Kenya, targeting improved internet services for 22.7 million users [23] Market Data and Key Metrics - The company is focusing on fixed wireless access and tactical military communications markets [9] - Recent customer wins have been announced in Africa, Asia, and other global regions [13] - The DUNE platform is being deployed in dense urban environments, particularly in Africa, where reliable low-power connectivity is essential [20][22] - The company is participating in the 2024 Africa Tech Festival to promote millimeter-wave solutions [25] - The company secured an initial purchase order from a military customer for millimeter-wave modules, with shipments expected in Q1 2025 [27][28] Company Strategy and Industry Competition - The company is focused on reducing costs and increasing efficiencies, resulting in a 20% year-over-year decrease in operating expenses [8] - The company is expanding its sales funnel across diverse geographies and applications, with a focus on converting engagements into production orders [12][33] - The company is leveraging the US government's BEAD program, which provides 42 billion in grants for high-speed internet infrastructure, to expand market opportunities for its millimeter-wave technology [31][32] - The company is targeting tactical defense and military applications, with a focus on secure, high-speed communication platforms [26][29] Management Commentary on Operating Environment and Future Outlook - The broader macro environment and prolonged inventory adjustments remain challenges, but the company is making progress in customer engagements [9] - The company expects total revenue for the second half of 2024 to increase over the first half and represent double-digit growth over the prior year period [33] - For Q4 2024, the company expects total net revenue to be in the range of 3.6millionto3.6 million to 4 million [48] Other Important Information - The company had 1.3millionincashandequivalentsasofSeptember30,2024,withacashburnof1.3 million in cash and equivalents as of September 30, 2024, with a cash burn of 0.6 million from the prior quarter [44] - The company raised $2.9 million through the exercise of Series B warrants [45] Q&A Session Summary Q: When will the design wins translate into revenue? - The company expects to see an inflection point in Q1 2025, with shipments resuming as backlog builds [50] Q: Is inventory being worked through in North America? - Inventory adjustments are being seen both in North America and with other customers, with green shoots expected in Q4 and new customers coming online in Q1 [52][53] Q: Are fixed wireless access deployments coming from existing providers or startups? - Over 95% of the company's engagements are with experienced WISPs, many of whom are replacing 5G systems due to congestion issues [55] Q: Will there be a transition from 5G to 60 GHz in North America? - The company believes the transition is likely, especially with the BEAD program potentially adopting a tech-neutral approach that includes millimeter-wave solutions [56][57] Q: Is BEAD funding being spent on fiber now? - BEAD funding is still in the early stages, with funds expected to trickle out in 2025 and 2026 [59] Q: What is the size of the military contract and when will shipments begin? - The military contract is material to the company's business, with volume shipments expected in Q2 2025 [61][63]