Q3 '24 Earnings Preview

Peraso (PRSO) reports Q3 ’24 results after the close on Tuesday, November 12. We remain comfortable with our estimates for the quarter, and we surmise the likely scenario is for upside versus our estimates and consensus given the purchase orders announced of late. In particular, Peraso’s recently announced $1.4 million follow-on purchase order for its DUNE platform by a South African wireless internet service provider (WISP) suggests mmWave sales in Q3 could be 3x or more than our projection for Q3. The deal comes on the heels of earlier announcements of a DUNE purchase order by a WISP in Kenya, a purchase order for the company’s high-velocity roaming technology to be used in Korea’s public transportation system and a purchase order for its Perspectus modules to secure communications on the battlefield. Interestingly, management estimated that its initial opportunity for battlefield communications could generate $15mm alone over the next two years during a recent presentation at the LD Micro conference. All told, we are increasingly confident in Peraso’s ability to deliver 2H ’24 results at or above our current expectations and show meaningful traction in mmWave sales in FY ‘25.

Exhibit I: Our Estimate Versus Consensus

Sources: K. Liu & Company LLC; FactSet Estimates

Our Q3 estimates include revenues of $4.0 million, adjusted EBITDA of $(0.2) million and non-GAAP EPS of $(0.17), generally in line with consensus of $4.0 million, $(0.3) million and $(0.19), respectively. We assume end-of-life memory IC sales will contribute $3.5 million to the revenue line with the remainder coming from sales of mmWave products. As stated earlier, the company’s announced purchase orders suggest our mmWave forecast is too conservative but considering our assumption that mmWave sales would ramp through year-end, we will await commentary on how the timing of orders impacts Q4 and FY ’25 before adjusting our model. Our price target therefore remains $3.50 based on a FY ’25 EV/Sales multiple of 1x. We note, however, that Peraso recently induced holders of a portion of its outstanding Series B warrants to exercise 2,246,030 warrants at a reduced price of $1.30 per share and issued new Series C and Series D warrants, both allowing for the purchase of up to 2,246,030 shares at an exercise price of $1.61 per share with expiration dates in six months and five years, respectively, to those holders. All else equal, the resulting dilution would reduce our price target from $3.50 to $2.75. We plan to update our price target in conjunction with any modeling changes after the print.

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.