Announces $2.45 Million Registered Direct Offering

Before the open yesterday, Peraso (PRSO) announced that the company has agreed to sell 2.45 million shares of its common stock to an institutional investor at a price of $1.00 per share, a 26% discount to PRSO’s last close price prior to disclosure of the planned offering. In lieu of common stock, the investor may purchase 2.45 million pre-funded warrants at $0.99 per pre-funded warrant with each warrant immediately exercisable at $0.01 per share. Either way, gross proceeds from the offering are expected to be $2.45 million. Peraso has also entered into a concurrent private placement with the same investor in which the company will issue warrants to purchase up to 3.675 million shares of common stock at an exercise price of $1.36 per share. The private placement warrants have a five-year life and may be exercised beginning six months after the date of issuance.

Although we had hoped to see Peraso raise capital at a higher valuation, ensuring that the company has adequate financing to remain a going concern is of more importance at this juncture. Aside from buying some time, the registered direct offering also brings aboard an institutional investor that may provide additional capital should Peraso require further funding down the line. In the interim, we believe the equity raise provides Peraso with some breathing room as the company addresses payment delays from a large customer and pursues other commercial opportunities that could produce non-dilutive capital. We have updated our model to include the higher share count and incremental cash from the offering. Due to greater dilution from the offering than we had previously anticipated, our price target declines from $3.50 to $2.75. We note that we continue to derive our price target based on a FY ’23 EV/Sales multiple of approximately 3x, and we assume that another influx of capital will be required to fund Peraso’s operations over the next twelve months.

Our report with model and disclosures is available here.

Disclosure(s):

K. Liu & Company LLC (“the firm”) receives or intends to seek compensation from the companies covered in its research reports. The firm has received compensation from Peraso Inc. (PRSO) in the past 12 months for “Sponsored Research.”

Sponsored Research produced by the firm is paid for by the subject company in the form of an initial retainer and a recurring monthly fee. The analysis and recommendations in our Sponsored Research reports are derived from the same process and methodologies utilized in all of our research reports whether sponsored or not. The subject company does not review any aspect of our Sponsored Research reports prior to publication.