Q1 '24 Earnings Preview

Peraso (PRSO) reports Q1 ’24 results after the close on Monday, May 13. Given that management provided Q1 revenue guidance late in the quarter and the company’s large backlog of end-of-life (EOL) memory IC orders, we expect the results to meet our expectations, which are generally in line with consensus. Subsequent to quarter-end, Peraso announced the receipt of an additional EOL purchase order valued at $2.88 million, bringing total bookings under the EOL program to $16.9 million. Recall that management had previously guided for total EOL purchase orders of $15.0-$20.0 million. In addition, the company announced that Panasonic has introduced a new 60GHz WLAN solution leveraging Peraso’s X710 chipset, which we view as further validation of the company’s leading mmWave technology. Taken together, these developments leave us comfortable with management’s ability to deliver sequential growth throughout FY ’24, which in turn is expected to return Peraso to double-digit revenue growth for the year. As such, we anticipate Q2 revenue guidance will encompass our estimate and consensus, and we expect management to reaffirm its growth target for the year. Our price target remains $4.00 based on a FY ’24 EV/Sales multiple of 1x.  

Exhibit I: Our Estimates Versus Consensus

Sources: K. Liu & Company LLC; FactSet Estimates

Our Q1 estimates include revenues of $2.6 million, adjusted EBITDA of $(1.9) million and non-GAAP EPS of $(1.26), largely consistent with consensus of $2.7 million, $(2.1) million and $(1.33), respectively. We assume sales of memory ICs will comprise the lion’s share of revenue in the quarter, while sales of mmWave products rebound sequentially from the muted levels seen in Q4. As Peraso already had a sizeable backlog of $12.0 million remaining EOL memory IC orders expected to ship over the next 12-15 months entering the year, we expect the company to meet Street expectations for Q1. We note that the additional EOL purchase order received after quarter-end represents potential upside to our estimates, but we will await further clarity on the timing of the shipment before including it in our model. That said, the increased backlog coupled with signs that the inventory correction overhang affecting the semiconductor industry may be thawing leave us comfortable with our prior expectations for sequential growth throughout the year. In this regard, we expect Q2 revenue guidance to bracket our $3.5 million estimate and the Street’s $3.9 million and for management to reaffirm its double-digit growth target for FY ‘24.

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.