Enters New Chapter with Solid Results and Guidance

Peraso’s (PRSO) Q4 ‘24 results largely tracked our expectations and reflected a significant improvement over the prior year period. Revenues doubled from a year ago and were approximately in line with our estimate and consensus as another strong quarter of end-of-life (EOL) memory IC shipments offset some lingering softness in mmWave sales. Gross margin compared favorably with our assumption due to the favorable mix of memory revenue, while operating expenses were consistent with our model. Both adjusted EBITDA and non-GAAP EPS were in line with our estimates and beat consensus.

Consistent with its original timeline, management expects to ship the remaining backlog of EOL memory IC orders in Q1 ’25, after which all revenue will be derived from mmWave product sales. As such, we were pleased to hear that the inventory overhang that has dampened sales of mmWave products for the past two years has mostly cleared. As evidence, Peraso recently announced receipt of a $3.6 million purchase order from a leading provider of wireless networking systems. Additionally, another customer significantly upsized an existing purchase order leveraging Peraso’s mmWave modules for military applications. Despite expectations for shipments associated with both of these orders to commence in Q2 and beyond, management still guided Q1 revenue ahead of our estimate, implying mmWave sales are already trending above our prior forecast. While no formal outlook was provided for the full year, management hopes to replace the EOL memory IC revenues recorded last year with new mmWave sales this year. If achieved, this would outpace our prior and current expectations for FY ’25, which are effectively unchanged. Our price target remains $2.75 based on an unchanged FY ’25 EV/sales multiple of 1x.

We believe Peraso remains a compelling, albeit speculative, play on the rollout of fixed wireless access services, which could see a significant boost from BEAD funding as the new administration advocates for a technology neutral approach to disbursing grants. Moreover, Peraso’s mmWave solutions appear well suited to a number of emerging military and defense applications that could meaningfully expand the company’s addressable market opportunity. Given these factors and the large purchase orders received of late, we are more optimistic in the company’s ability to raise the capital necessary to fund its growth aspirations. At present, we continue to believe Peraso has sufficient cash to operate through 1H ’25.

Exhibit I: Reported Results and Guidance Versus Expectations

Sources: Peraso; K. Liu & Company LLC; FactSet Estimates

Q4 net revenue of $3.7 million (+100.8% Y/Y) was within management’s guidance for $3.6-$4.0 million and approximately in line with our estimate and consensus of $3.8 million. Memory IC sales of $3.5 million were above our $3.3 million projection, while mmWave sales of $0.2 million were shy of our $0.5 million estimate. Peraso ended Q4 with $2.3 million in remaining backlog associated with EOL memory IC orders.

Non-GAAP gross margin of 71.6% was above our 68.5% assumption due to the favorable mix of higher margin memory IC revenues. Total operating expenses were generally in line with our estimate, and adjusted EBITDA was also in line with our projection while exceeding consensus. Non-GAAP EPS beat both our estimate and consensus, in part due to a higher outstanding share count that allowed the losses to be spread over a wider base. Cash and investments at quarter-end totaled $3.3 million.

Management’s Q1 guidance calls for revenue of $3.6-$4.0 million. Prior to revisions, we were projecting $3.4 million in revenue, while consensus stood at $3.6 million. Given that the remaining backlog of EOL memory IC orders expected to ship in Q1, management’s guidance implies ~$1.5 million in mmWave sales at the midpoint, exceeding our prior forecast for mmWave sales of $0.8 million.

Exhibit II: Estimate Revisions

Source: K. Liu & Company LLC

Aside from some fine-tuning between quarters, our revenue and adjusted EBITDA estimates remain unchanged for FY ’25 and increase slightly for FY ‘26. Our EPS estimates increase across our forecast horizon as the projected losses are now spread over a higher outstanding share count. 

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.