Good afternoon. Welcome to Peraso Inc.'s First Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference call is being recorded today, Monday, May 12th, 2025. I would now like to turn the call over to your host for today's conference call, Mr. Jim Sullivan. Please go ahead.

Good afternoon, and thank you for joining today's conference call to discuss Peraso's first quarter 2025 financial results. I'm Jim Sullivan, CFO of Peraso and joining me today is Ron Glibbery, our CEO. Today, after the market closed, we issued a press release and related Form 8-K, which was filed with the Securities and Exchange Commission. The press release and Form 8-K are available on Peraso's website at www.perasoinc.com under the Investor Relations section. There is also a slide presentation that we will be using in conjunction with today's call that may be accessed through the webcast link on our Investor Relations website. As a reminder, comments made during today's conference call may include forward-looking statements. All statements other than statements of historical fact could be deemed as forward-looking. Peraso advises caution in reliance on forward-looking statements. These statements include, without limitation, any projections of revenue, margins, expenses, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, adjusted EBITDA, non-GAAP net loss, cash flows or other financial items, including anticipated cost savings. Also, any statements concerning the expected development, performance and market share or competitive performance of our products or technologies. All forward-looking statements are based on information available to Peraso on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Peraso's actual results to differ materially from those implied by the forward-looking statements, including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth in Peraso's public filings with the Securities and Exchange Commission. Peraso expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in terms of GAAP and non-GAAP. With respect to remarks on today's call involving non-GAAP numbers, unless otherwise indicated, referenced amounts exclude stock-based compensation expense, amortization of intangible assets, severance costs and the change in fair value of warrant liabilities. These non-GAAP financial measures, definitions and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related Form 8-K, which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available on the Investor Relations page of our website. Now, I would like to turn the call over to our CEO, Ron Glibbery for his prepared remarks. Ron?

Thank you, Jim. Good afternoon, and welcome to everyone on the phone and webcast. We appreciate you taking the time and joining us on today's conference call. I'm pleased to share that we kicked off 2025 with strong momentum. More specifically, our first quarter results demonstrated continued progress and year-over-year revenue growth, as we ramped orders for our mmWave products and completed the final end-of-life shipments for our memory IC products. As further evidence of our recent momentum, first quarter mmWave revenue exceeded our total mmWave revenue for the full-year of 2024. Coupled with our disciplined approach to expense management, we also delivered significant improvement in our bottom line results for the first quarter. Since the start of the new year, we have achieved a number of notable technology, product and customer milestones that we will cover as part of today's call. Collectively, these achievements not only underscore the growing market opportunities for our mmWave technology, but they also serve as validation and a testament to our team's dedication and effort. Although Peraso initially pioneered the development of mmWave technology more than a decade ago, we believe that we are still in the early innings of realizing the full potential market opportunity for our high performance mmWave solutions. Turning to Slide 4. This real time snapshot of our engagement pipeline as of early April, visually captures one of the reasons we believe we have only begun to scratch the surface in terms of the market potential for Peraso's mmWave technology. Taking the number of identified new funnel opportunities at the top, then adding each of the four stages of active engagement, starting with formal hardware evaluation and the progression to preproduction samples, our current pipeline comprises nearly 120 total engagements. Comparing that number against the 10 engagements converted to production since we began sharing these metrics publicly, we believe our existing pipeline represents substantial market potential. The other notable comparison on this slide is a meaningful expansion of our total pipeline, including both funnel opportunities and active engagements over the last 12 months. We have grown our total number of identified commercial opportunities by over 25%. Lastly, looking at the right of the slide, I want to quickly highlight our biggest picture progress with respect to market penetration. These are a small sample of customers' end products that incorporate Peraso's industry-leading mmWave solutions. Today, our technology is being utilized to enable at least 68 products in commercial production across 14 unique customers. Collectively, these customer products are currently being deployed across numerous regions around the world. Flipping to Slide 5. As a company initially founded with the purpose of pioneering brand new technology, we are always seeking to push the boundaries of mmWave technology and deliver cutting-edge solutions. We also believe that sustainable success in any area of technology requires new innovation. As such, Peraso remains deeply committed to continuous innovation to further expand our portfolio of mmWave solutions, as well as adapt our existing mmWave products to address new applications. This slide highlights two recent examples of our ongoing efforts to bring innovative mmWave solutions to the market. First, in April, we announced a major upgrade to our PERSPECTUS product family that increases the number of supported endpoint devices or users per access point from 32 to 48. Our prospective modules are currently used by wireless Internet service providers to provide fixed wireless access service using the unlicensed 60 gigahertz spectrum, increasing the number of served end users by 50% for a single access point benefits the broader FWA market, but is particularly valuable in dense urban environments. In addition to reducing the required amount of deployed hardware, it improves the total cost of network ownership versus competing technologies by using less power. And importantly, it also maintains a capability for data rates up to two gigabits per second. Then earlier this month, we introduced the latest product addition to our prospective family of mmWave modules, the PRM2141X-D, built around our existing X720 60 gigahertz chipset. This new module integrates dual-polarized antenna arrays, supports dynamic switching and polarization diversity to deliver reliable and robust connectivity in complex network environments. More specifically, this solution is ideal for overcoming the challenges in high-mobility deployments such as body-mounted applications. Lastly, I also want to briefly mention our recently received notice of allowance from the U.S. Patent and Trademark Office for a patented application. The newly allowed patent application addresses Peraso's solution for modern wireless local area networks that are frequently served by a large number of access points. In short, our technology enables seamless reintegration of recovered or newly added access points, eliminating the need for a full network reset. We currently expect this patent to be formally issued later this year, and this is merely another example of Peraso's commitment to continuous innovation. On Slide 6, acknowledging that we discussed the innovative capabilities and benefits of Peraso's DUNE platform on previous calls, the continued traction and customer engagement we are seeing for this solution merits brief mention again on today's call. We believe the market is recognizing the core value proposition of DUNE, which is its ability to overcome the challenges associated with delivering reliable and high-speed connectivity in densely populated areas. Together with DUNE's other fundamental benefits such as low cost deployment, low power, long range, and point to multi-point capabilities, WISPs are equally attracted to the solution for high-density fixed wireless deployments, whether they be in Los Angeles or concentrated urban communities in Africa. More broadly across the fixed wireless access, we continue to see indications of demand recovering. As highlighted on our previous conference call, in March, we received a $3.6 million purchase order for mmWave devices from a leading fixed wireless access and wireless networking system provider. Shipments in support of this customer are anticipated to commence during the second quarter and be completed over the remainder of 2025. Additionally, today our mmWave fixed wireless access solutions are continued to be utilized in ongoing proof-of-concepts by numerous wireless Internet service providers, each of which represent realistic prospects for incremental growth over the coming quarters. With further increased awareness of mmWave technology and its benefits as well as Peraso's market-leading products and solutions for reliable multi-gigabit per second wireless connectivity in the unlicensed 60 gigahertz spectrum, we expect fixed wireless access to continue to be a large and sustained driver of our future revenue growth. Moving to Slide 7, I want to reiterate the growing market opportunity for mmWave technology in tactical communications and military defense applications. Both the commercial opportunity and real world positive impact that we can bring to this market are well displayed by our disclosed win in this space. Last month, we announced the execution of a new strategic contract to deliver mission-critical wireless applications to global military and defense forces, opening a significant new revenue opportunity for Peraso. Our collaboration with this leading specialized defense contractor will result in jointly created and deployable system solutions that provide heightened communications to safeguard both military personnel and noncombatants, such as medics, peacekeepers, and journalists operating in high-risk environments. This first-of-a-kind system solution leverages the inherently stealthy nature of 60 GHz communications, which contributes to a very low probability of detection on the battlefield as well as strong immunity to jamming. We are both proud and excited to be involved with such innovation with the intent of supporting those on the frontlines and addressing critical battlefield challenges. We believe this strategic contract represents a major milestone and also has significant commercial potential with what we believe is a minimum addressable market of at least 3.4 million active military personnel. We currently expect to commence initial production shipments during the second quarter of this year. With mmWave's advanced capabilities, including high data rates, ultra-low latency, and low probability of intercept, we believe that we are increasingly well-positioned to continue gaining market traction with Peraso's leading mmWave technology in tactical communications and defense applications. In summary, we are very pleased with our continued progress as demonstrated by our first quarter results. Looking ahead, we remain focused on expanding our customer base, growing our future order backlog and ramping production shipments to an expanding number of customers. Based on recent momentum, including increased demand and purchase orders from our fixed wireless access customers, we expect to deliver sequential revenue growth for our mmWave solutions throughout 2025.

Thank you, Ron. Turning now to the results for the first quarter of 2025. Total net revenue for the first quarter was $3.9 million, compared with $3.7 million for the prior quarter and $2.8 million for the first quarter of 2024. Product revenue from the sale of our memory integrated circuits and millimeter wave products in the first quarter was $3.8 million compared with $3.7 million in the prior quarter and $2.7 million in the first quarter of 2024. The increases in product revenues for the first quarter of 2025 compared with the comparable periods of 2024 were primarily attributable to increased shipments of our millimeter wave IC and module products. Millimeter wave product revenues were $1.5 million for the first quarter compared with $0.2 million in the prior quarter and $0.3 million in the first quarter of 2024. GAAP gross margin increased to 69.3% in the first quarter from 56.3% in the prior quarter and 46.4% in the year-ago quarter. The increase in GAAP gross margin for the first quarter of 2025 was primarily attributable to reduced amortization expense recorded to cost of goods sold related to intangible assets fully amortized in 2024, combined with favorable revenue mix across shipments and millimeter wave products. On a non-GAAP basis, gross margin for the first quarter was also 69.3% compared with 71.6% in the prior quarter and compared with 66.4% in the first quarter of 2024. GAAP operating expenses for the first quarter of 2025 were $3.2 million compared with $3.7 million in the prior quarter and $4.9 million in the first quarter of 2024. The sequential and year-over-year decrease in operating expenses on a GAAP basis was primarily attributable to reduced stock-based compensation expense and amortization expense related to intangible assets fully amortized in 2024. Non-GAAP operating expenses, which exclude stock-based compensation and amortization of intangible assets, were $3.1 million in the first quarter compared with $3.2 million in the prior quarter and $3.5 million in the first quarter of 2024. The year-over-year decrease in operating expenses on a non-GAAP basis was primarily attributable to a combination of previously implemented cost reductions and ongoing cost containment initiatives. GAAP net loss for the first quarter of 2025 was $0.5 million, or a loss of $0.10 per share compared with a net loss of $1.6 million or a loss of $0.37 per share in the prior quarter, and compared with a net loss of $2 million or loss of $1.07 per share in the same quarter a year-ago. On a non-GAAP basis, which excludes stock-based compensation, amortization of intangible assets and change in fair value of warrant liabilities, net loss for the first quarter of 2025 was $0.4 million or a loss of $0.08 per share. This compared with a non-GAAP net loss of $0.5 million or loss of $0.13 per share in the prior quarter, and a net loss of $1.6 million or a loss per share of $0.83 per share in the same quarter a year-ago. The weighted average number of basic and diluted shares outstanding for the purposes of calculating both GAAP and non-GAAP EPS for the first quarter of 2025 was approximately 4.8 million shares. Adjusted EBITDA, which we define as GAAP net income or loss as reported excluding stock-based compensation, amortization of intangible assets, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes was negative $0.3 million in the first quarter of 2025 compared with negative $0.4 million in the prior quarter and negative $1.4 million for the first quarter of 2024. With regard to the balance sheet, as of March 31st, 2025, the company had $2.8 million of cash and equivalents compared with $3.3 million at December 31, 2024. The sequential decrease primarily reflects operating cash burn of approximately $0.9 million, partially offset by approximately $0.4 million generated from sales into the company's at-the-market offering program during the first quarter of 2025. As of today's call, the company has approximately 5.1 million total shares of common stock and exchangeable shares outstanding. Now, turning to our outlook. As Ron previously mentioned, we are continuing to see positive momentum for our millimeter wave solutions. Although total revenue for the second quarter will reflect the anticipated roll off of end-of-life memory IC shipments, we expect solid double-digit sequential growth in millimeter wave revenue for the second quarter. Based on the current backlog, the company expects total net revenue for the second quarter of 2025 to be in the range of $1.8 million to $2 million. This concludes our prepared remarks, and we thank you for your time this afternoon. Operator, please commence the Q&A session.

Certainly. The floor is now open for questions. Your first question is coming from Kevin Liu with K. Liu & Company. Please pose your question. Your line is live.

Hi. Good afternoon, guys, and congrats on the strong start to the year.

Thanks, Kevin.

Thanks, Kevin.

Maybe if we could start with this kind of the millimeter wave side of the business. Obviously good to hear that you guys expect sequential revenue growth there throughout the year. Can you talk about the level of visibility you already have from some of the deals you’ve announced previously, as well as, anything exciting that you expect to contribute further to that as we make our way through the year?

Do you want to start with that, Jim?

With regards to the existing business, we have backlog. Obviously, we’re comfortable almost halfway through May here with Q2. But we have, I would say, so far this year, much better visibility with backlog on the existing customers, including one in South Africa. And then we’ll make the initial shipments, as Ron talked about, with the defense application this quarter. Obviously, we also have the Ubiquiti purchase order that we announced back in our Q4, I think just prior to our Q4 call, which we have kind of shipping, we started shipping on that and that will continue through the end of the year. So definitely pleased with the visibility, still have more to put on the backlog for Q3 and Q4, but much better than we’ve historically been in that note.

That’s great to hear. And then maybe an obligatory question on tariffs, since that’s the topic of the day, but just any sort of impact that you see from tariffs on either your cost of goods or in terms of how your customers are reacting to them potentially?

Yes, we have not had any impact. Given we don’t generally – our shipments into the United States are limited. And most of our production is done in Asia or locally in Canada or in Europe. So far, we haven’t seen the impact. I don’t think anyone won’t be surprised if that changes because it seems to be constantly moving. But so far, we haven’t had to have those discussions with our customers.

Great. And then just in terms of some of the innovation that you’ve just announced in the past couple months here. For the upgraded PERSPECTUS modules for fixed wireless access, I’m just wondering, how quickly you think those can be deployed by your existing customers. Is the upgrade cycle more so kind of next year, or could you even see some potential revenue early this year?

Oh, no, Kevin, it’s a software upgrade, so we can see the benefit of that pretty immediately. But it really is more so from our, of course, from our customers’ perspective because now they can deploy more – more endpoints per cell tower. So it’s just generally like a good feature for our customers to have, and it’s something they can take – literally take advantage of this quarter even, right? So the effect will be immediate.

All right. Great. Thanks so much for taking the questions.

Our pleasure.

Your next question is from David Williams with Benchmark. Please go ahead with your question. Your line is live.

Hey. Good afternoon. Can you guys hear me okay?

We can, David.

Yes, sir.

Good. Well, forgive me, I’m jumping on a little bit late here, but if these have already been asked, but just kind of curious, I know that you’d mentioned the defense beginning to ship, but just generally speaking, we’ve talked about before how the available or the capability that that brings and it seems like that could be something adopted more, maybe more broadly. Are you seeing more interest, I guess, from the military side or defense? And just how do you see that segment maybe picking up through the next several quarters?

Sure, I can speak to that. So basically, just to reiterate, David, the core value proposition there is a couple of things. Because we use this beamforming technology, it makes it very difficult to detect their technology on the battlefield. So that’s really the core value. Not just detect it, but also to jam it. So either way is both good features to have for the military. So that’s the core value proposition. And from our perspective, to be quite frank on the fixed wireless side of things, I would say we’re really the dominant player in that market, and that market is almost becoming self-fulfilling now. It’s like we’ve got our design wins. We’re getting new design wins as new customers. But from a technology perspective, we’re really starting to focus more on the military side of things because there is that core interest based on the stealth capability of our technology. So we’re going to be shipping some believe it or not, like, our first volume this quarter, and that was very, very quickly into an application that hopefully, over the course of the next few weeks and months, we can shed more light on. But generally, it’s really – we refer to it as tactical communications. So this is the idea on the battlefield. Our allies can speak to each other wirelessly, but without any detection by the enemy. That’s the core value proposition. And I mean, this can be from a drone to the ground. It can be from the ground to a drone. It can be between Humvees on the battlefield. It can be soldier-to-soldier. So many, many scenarios where you want battlefield communications to be stealth. So obviously, sometimes it takes longer with the military. Luckily, we’ve got one account that’s coming to fruition this quarter. So there’s really a mix, but that’s really the next generation for Peraso is battlefield communications.

Great. And have you seen more interest? I guess, this is still relatively early on, but when would you expect that they might see other, either agencies or countries that could have an interest in this type of application?

Oh, we’re already seeing it. I mean, we announced a contract, well, I guess, going over a year ago where we had an application of soldiers to their personal vehicles. And we are quoting on other opportunities like hopefully this quarter or the next quarter. So we’re starting to see not just America, but in Europe and the Middle East and even in Asia. So we’re seeing kind of a global interest in this technology, and it’s all – but it’s all for the same reason. It’s our ability to be stealth – provide stealth communications in a battlefield environment.

Okay. Great. And then maybe just lastly on the BEAD funding and maybe some of the RDOF. Are you seeing anything there that just kind of given that it’s more of a net new growth kind of approach there in terms of the technology? Are you seeing interest maybe inbound from customers that may have an interest in deploying fixed wireless access, whereas before they maybe were looking at fiber or other technologies?

Well, that’s a great question. I mean, I would say, I think there’s more of a top-down sentiment at this point, and we are very optimistic that we’re going to see progress there. But it takes a while to trickle through this marketplace, if you will. So as Jim mentioned, we saw a very large order from Ubiquiti. They’re one of the main suppliers in the rural environment in America. So we don’t really know if that’s why they provide this order, but we absolutely believe that over the course of the next 12 months, the BEAD will have a very positive impact on our business. But it takes a little bit of time for the ship to turn, if you will, right? So we haven’t seen that direct. We don’t believe a very direct benefit yet, but we expect in the second half of this year to see some very direct benefit from improved BEAD terms, if you will.

Perfect. Thanks so much. I certainly appreciate the time and best of luck on the quarter.

Pleasure, Dave.

I show there are no further questions in queue at this time. That will conclude today’s conference call. Thank you all for your participation and you may disconnect.