Peraso Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 12, 2024

There are 7 speakers on the call.

Operator

to PIRASO Inc. 2nd Quarter 2024 Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference call is being recorded today, Monday, August 12, 2024. I would now like to turn the call over to your host for today's conference call, Mr.

Operator

Jim Sullivan. Please go ahead.

Speaker 1

Good afternoon and thank you for joining today's conference call to discuss Parasso's Q2 2024 Financial Results. I'm Jim Sullivan, CFO of Parazzo and joining me today is Juan Glyburi, our CEO. Today, after the market closed, we issued a press release and related Form 8 ks, which was filed with the Securities and Exchange Commission. The press release and Form 8 ks are available on Proraso's website at www.porasoinc.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 the Investor Relations webpage.

Speaker 1

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. Proraso advises caution and 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.

Speaker 1

All forward looking statements are based on information available to Parasto on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Parasa'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 Pareto's public filings with the SEC. Pareto 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.

Speaker 1

With respect to remarks on today's call involving non GAAP numbers, unless otherwise indicated, referenced amounts exclude stock based compensation expense, amortization of reported 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 ks, 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?

Speaker 2

Thank you, Jim. Good afternoon and welcome to everyone on the phone and webcast. We appreciate you taking the time to join us today. Jumping right in, we're very pleased by our continued progress during the Q2. As reported in today's press release, total revenue of 4,200,000 dollars exceeded the high end of our original guidance and represented growth over 50% sequentially and more than 70% year over year.

Speaker 2

The strong growth was driven by increased shipments of our end of life memory IC products coupled with revenue contribution from a new volume production order for our millimeter wave antenna modules. Gross margin also expanded and although reported operating expenses were up slightly due to certain charges incurred during the quarter, we continue to closely manage expenses in support of improving operating results and reducing our cash burn. Turning to Slide 4, I want to briefly highlight status of the end of life with our memory IC products. As anticipated, 2nd quarter shipments against our backlog increased sequentially to approximately $3,400,000 compared to $2,400,000 in the prior quarter. Net of the most recent $2,900,000 end of life order purchase order that we received at the end of Q1, we ended the Q2 with total remaining purchase order backlog of approximately $9,100,000 We currently expect 3rd quarter shipments of our IC memory products to be comparable to shipments in the Q2.

Speaker 2

Additionally, there have been no significant changes to our original timeline for completing the end of life of our memory IC products and we maintain on schedule to fulfill the total remaining backlog by the end of the Q1 of 2025. As discussed on previous calls, these shipments against remaining backlog will continue to contribute meaningful revenue and cash flow over the next few quarters as we work aggressively to further expand and ramp customers for our millimeter wave products. Next on Slide 5, this is an updated snapshot of our global engagement pipeline for new RF millimeter weight business as of the end of July. As a reminder, for those who might be newer to our story, PIRASO has been a leading innovator of millimeter wave technology for more than a decade. We have a multiyear track record of commercial shipments and our technology has been field proven extensively.

Speaker 2

Until more recently, our Miller Minoi business was exclusively focused on serving a small number of strategic fixed wireless access customers. Over roughly the last year and a half, we have put in place a growth strategy with the goal of establishing a larger and more diversified customer base for our Millimeter Wave business. We initially set out to achieve this objective primarily focused on the rapidly growing fixed wireless access market in North America. However, our current efforts and engagements are now equally focused on expanding market reach across diverse geographies and end market applications. We first introduced this pipeline slide in early 2023 and we believe it continues to represent a helpful leading indicator of our progress, not only in terms of customer diversification, but also the expanding growth of potential of our millimeter wave business.

Speaker 2

To highlight a few of the key takeaways from this year to date view of the pipeline. 1st, taking the top number that represents new funnel opportunities and combining it with those across the 4 progressive stages of active engagement, our pipeline comprised 95 total engagements at the end of July. For context, we are consistently pruning our account of funnel opportunities if either activity on an engagement stalls or we choose not to pursue it for commercial reasons. Additionally, once a program engagement converts to being in production, we no longer include it as part of our current pipeline, Even after accounting for both sides of both of these variables, our current number of total engagements is up more than 25% compared to this time last year. Turning to Slide 6.

Speaker 2

As briefly mentioned in my opening remarks, during the quarter, we secured and shipped the 1st volume production order for our Dune platform. First introduced earlier this year, Dune is our dense urban network environment platform solution for fixed wireless access. We specifically designed the solution to overcome the challenges associated with delivering reliable and high speed network access in densely populated areas such as urban neighborhoods. This new volume production order for our millimeter wave antenna modules was from a South African service provider that is leveraging Pirazzo's DUNE platform solution for its initial deployment, it would be difficult to imagine a better form of commercial validation for our DUNE platform and its unique ability to deliver gigabit speed fixed wireless access in dense urban environment applications. As a newly established service provider in the region, we anticipate their first initial deployment will take at least several months.

Speaker 2

However, we do expect additional incremental orders from this customer as they progress on extending their deployment in the coming quarters. In addition to this lead customer, we are currently engaged with several other prospective customers targeting future deployments in denser environments. This includes our shipment of DUNE proof of concepts to multiple WISPs in Africa with whom we are supporting ongoing evaluations. We also continue to believe that millimeter wave technology solutions uniquely position us to potentially participate in planned North American deployments announced by one of our long time WISC customers. As such, we remain very optimistic about the recent commercial validation and strong expressed interest in our Dune platform, which we believe represents the leading commercially proven fixed wireless solution for dense urban environments.

Speaker 2

Moving to Slide 7, I want to take a moment to highlight the recent emerging development that we believe could potentially encourage expanded customer adoption and market opportunities for our millimeter wave solutions. For those not already familiar, BEAT is a federal grant program funded through the United States Department of Commerce. BEAT stands for Broadband Equity Access and Deployment and the program was established with the purpose of allocating $42,450,000,000 in direct support of broadening access to high speed Internet. Although majority of the program's funding was initially thought to be prioritized for Internet delivered over fiber optic cable, the head of NTIA, which is the agency that oversees the B program, very recently stated the agency is planning to provide further guidance on the types of Internet delivery that are eligible for potential funding. More specifically, the NTIA has anticipated to provide guidance that makes funding eligible for the deployment of high speed Internet using unlicensed spectrum fixed wireless access, including millimeter wavebands.

Speaker 2

I would emphasize that this anticipated new guidance from the NTIA has yet to be formally announced. However, to the extent that Internet access delivered via unlicensed fixed wireless access does become eligible for funding, this would likely motivate and benefit a large number of WIS deployment across America, which in turn could potentially result in significant expanded market opportunity for PIRASONE. In closing, we're encouraged by the continued customer ramp of our milliminuum solutions during the Q2. We aim to gain further traction in the coming quarters we remain focused on advancing and converting existing customer engagements into production orders for our millimeter wave products and platform solutions. We also expect our ongoing shipments to fulfill remaining backlog orders for our end of life memory IC products will continue to contribute meaningful revenue and cash flow throughout the early next year.

Speaker 2

Taken together, we anticipate total revenue for the second half of twenty twenty four to increase over the first half of the year, while also representing revenue growth year over year. With that, I'll turn the call back to Jim to review the Q2 financials, as well as our revenue outlook for the Q3 of 2024. Over to you, Jim.

Speaker 1

Thank you, Ron. Turning to the results for the Q2 of 2024. Total net revenue increased to $4,200,000 which was above the high end of our original guidance range. This compared with revenue of 2,800,000 dollars in the prior quarter $2,400,000 for the Q2 of 2023. Product revenue from the sale of our memory integrated circuits and millimeter wave products in the Q2 was $4,100,000 compared with $2,700,000 in the prior quarter and $2,200,000 in the Q2 of 2023.

Speaker 1

Royalty and other revenue for the Q2 of 2024 was $100,000 consistent with the prior quarter and compared with $200,000 in the same quarter a year ago. GAAP gross margin increased to 55.5 percent in the Q2 from 46.4 percent in the prior quarter and 25.3% in the year ago quarter. On a non GAAP basis, excluding amortization of acquired intangible assets, gross margin increased to 68.8% for the 2nd quarter from 66.4% in the prior quarter and compared with 45.9% in the Q2 of 2023. The sequential and year over year improvement in gross margin for the Q2 was primarily attributable to increased revenue contribution from shipments of our end of life memory IC products. GAAP operating expenses for the Q2 of 2024 were $6,800,000 compared with $4,900,000 in the prior quarter and $5,600,000 in the Q2 of 2023.

Speaker 1

Operating expenses for the Q2 of 2024 included severance expenses of $400,000 which will be paid over the next 13 months as the company completed the temporary layoff initiated in November 2023 and $1,600,000 charges for software license obligations, which will be paid over the next 5 quarters. Non GAAP operating expenses, which excludes stock based compensation, amortization of intangible assets and severance costs were $4,900,000 in the Q2 of 2024 compared with $3,400,000 in the prior quarter and $4,100,000 in the Q2 of 2023. The increase in Q2 2024 operating expenses on a GAAP and non GAAP basis was primarily driven by $1,600,000 of charges for software license obligations recorded during the Q2 of 2024. GAAP net loss for the Q2 of 2024 was $4,400,000 or a loss of $1.88 per share compared with a net loss of $2,000,000 or $1.07 per share in the prior quarter and a net loss of $4,100,000 or $6.68 per share in the same quarter a year ago. On a non GAAP basis, net loss for the Q2 of 2024 was $2,100,000 or a loss of $0.88 per share, which excludes stock based compensation, amortization of acquired intangibles, severance costs and the change in fair value of warrant liabilities.

Speaker 1

This compared with a non GAAP net loss of $1,600,000 or a loss of $0.83 per share in the prior quarter and a net loss of $3,000,000 or a loss per share of $4.93 per share in the same quarter a year ago. The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non GAAP EPS for the Q2 of 2024 was approximately 2,400,000 shares. Adjusted EBITDA, which we define as GAAP net income or loss as reported, excluding stock based compensation, amortization of acquired intangibles, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization and the provision for income taxes was negative $1,900,000 in the 2nd quarter compared with a negative $1,400,000 in the prior quarter and negative $2,800,000 in the prior year period. As of June 30, 2024, we had $1,900,000 of cash, representing a decrease of approximately $600,000 during the Q2 of 2024. Turning to our outlook.

Speaker 1

As Ron discussed, we continue to cultivate a growing pipeline of customer engagements for our millimeter wave solutions and we are working to convert a number of these opportunities into new production orders over the coming quarters. Looking at the second half of twenty twenty four, we continue to have a significant remaining backlog of non cancelable purchase orders for our end of life memory IC products. Specific to the Q3 of 2024, the company currently expects total net revenue to be in the range of $3,800,000 to $4,200,000 This concludes our prepared remarks. And I'll now turn the call back over to the operator to assist with the Q and A session. Operator?

Operator

Thank you. At this time, we will be conducting a question and answer First question comes from David Williams with Benchmark. Please proceed.

Speaker 3

Hey, good afternoon, gentlemen. Thanks for taking my question here. I guess maybe first, Ron, thanks for all the color on the business. And one of the things I think is really interesting is just the expansion in your engagement pipeline. Can you talk a little bit about that, just the diversity of customers there?

Speaker 3

And you spoke a little bit about it. But can you give us a little more color on what you're seeing there? And how you think that develops, I guess, over the next several quarters? Are you seeing increased activity or the same? Just any color there that would help us understand your customers or potential customers would be helpful, I think.

Speaker 2

Thanks, Dave. Good to speak to you. Yes, I mean, from my perspective, obviously we're pleased with the revenue and the margin for the quarter. But what keeps me very motivated is that our design activity in millimeter wave is just going very, very strong. I'm very bullish in terms of that activity.

Speaker 2

So I would say there's a couple points to make. One point is that on the fixed wireless aspect of our business, it just as operators get used to millimeter wave and the benefits that we provide, I. E, the high performance and particularly our ability to operate in dense environments, I would say almost on a weekly basis, we have new opportunities. So we just continue to see that growing, frankly. It's let's face it, fixed wireless is a very, very hot topic in terms of broadband communications.

Speaker 2

And we're in the heart of that either in America by the way or globally. So I'm thrilled with our design activity in terms of fixed wireless access business. And again, the main drivers there are the gigabit performance combined with our ability to operate in dense environments. The other topic, Dave, that gives me optimism is our momentum in defense and military. And the washword there is a phrase called low probability of detection.

Speaker 2

So as I've mentioned in last in past calls, as we've learned from conflicts in Ukraine as well as in the Middle East, There's a very serious problem, which is detection of traditional radio signals. And so because we use phase rate technology and we create pencil beams, it's almost impossible for the enemy to detect. So this is becoming a very, very important topic in military applications and we're we didn't really talk about it in the slide presentation, but another real potentially even larger area of growth for us beyond fixed wireless is our military and defense application. So that's another area where we're seeing increased design activity. So that's to me, obviously, we'd love to see the increase in revenue, but we really believe that's in the design activity is very strong from our perspective.

Speaker 2

So I hope that helps in terms of some color.

Speaker 3

Yes, very helpful. Thanks for all that insight. The other thing I wanted to ask about was you had a press release out earlier that was about custom IP for WiFi 8 and future IE standards. Just kind of curious what how you think about that and what that all entails? Is that a capital expense or is it development?

Speaker 3

How do we think about Wi Fi 8 opportunity and development?

Speaker 2

Well, yes, that's a great question as well. And thank you for bringing that up because we didn't bring it up. But basically, the idea there is that the IEEE has determined that they'd like to include 60 gigahertz and really 45 to 71 gigahertz in next generation Wi Fi or at least IEEE standards. Normally, WiFi adapts IEEE standards. So from our perspective, there's 2 ways we can play it.

Speaker 2

I mean, we can use capital to develop chips on iron nickel and go to market with that or we can collaborate with existing players. I mean, at the moment, we're thinking more along the collaboration route. We're really to be quite frank, like we're very, I'd say, fixed on fixed wireless and military right now. We think for consumer electronics, we can play a role there. We think, of course, that market is going to be huge, but it is a few years away still, but we're extremely well positioned from a capabilities perspective to really partner with larger players in that space.

Speaker 2

And sky is the limit in terms of the opportunity, but it's a little early in product. But what I can predict is that our ability to build technology for that space is more or less unprecedented in terms of our skills. So that's how we kind of see that. But it was terrific. It was really a terrific update from our perspective to see that the IEEE is supporting 60 gig for future generations.

Speaker 3

Okay. All right. Very good. And then just kind of on the Dune platform that you shipped this quarter, it sounds like you're getting a lot of interest there. How quickly, I guess, can they deploy?

Speaker 3

And what do you think the size of that market is? Today, you're dealing obviously with 1, but that's it seems like a very large opportunity just in that region. But if you were kind of thinking about how quickly they can deploy and how quickly this could turn to revenue, Any color or thoughts on that?

Speaker 2

Well, the good news on that Dave is that the boxes are ready. Like we've got several ODMs that are building the devices that market. So somebody brought this up the other day. And so I think what's interesting about this space is that this is really a matter of promoting this within the service providers so that service providers can buy these boxes. So in other words, really the limitation is how quickly the service providers will actually deploy.

Speaker 2

It's not a function of, oh, we have a design win and we have to wait 12 months or 18 months before the hardware is ready. There is hardware deploying today as we speak. And we actually I mean, to be quite frank, we have a growing the manufacturers are now seeing the success of 60 gigahertz. And so we've got there's, I would say, at least 4 or possibly 5 manufacturers who are committed to building products, so they can very quickly get into market. So from our perspective, our job is to make sure that the service providers understand the benefits of 60 gig and they can get to market quickly.

Speaker 2

It's a matter of how quickly they can roll it out and deploy. But I mean, so the good news is we're not waiting for hardware. The hardware and software more importantly is available from several vendors. And so really it's just a matter of how quickly service providers and service providers not just globally, but also in the U. S.

Speaker 2

For sure, in terms of how quickly they will they can start to deploy this technology and they don't have to wait for hardware. They can quickly order from 1 of several manufacturers.

Speaker 3

Okay. And just one last one, if I may. You talked a little bit about you talked about the BEAT funding earlier and that seems like a very large opportunity over time just kind of given the magnitude of that there. But you also have a couple of other out there, Ardagh being 1. But you talked a little bit about potentially including fixed wireless access there.

Speaker 3

How large of an opportunity, if you were to kind of guess on maybe in North America, how much deployment could be covered by fixed wireless access? Is there really a way to think about that, what that opportunity could be?

Speaker 2

Yes, that's a good question. So I would say in North America, let's say for argument's sake, we're looking at 100,000,000 homes. So we think the number is a good $20,000,000 that could benefit from that, right? So let's call it 20,000,000 homes. So I'm just kind of doing a very, very high level estimate, Dave.

Speaker 2

But I guess from my perspective and those are the numbers that I've been used to, like let's say 100 we think about 20% is in a region where they would definitely benefit from wireless technology access. So I think that would be kind of the number. So that would probably put some brackets around it. But B is I'm just thrilled with the latest update from the NTIA and this was last week. Basically, as I stressed in the presentation, this is not formally committed, but it was definitely spoken about by the head of NTIA and we expect to see that in the next 2 to 3 weeks.

Speaker 2

But it is a pretty major and basically what people were saying is like, oh, yes, fiber is a good technology. It's absolutely not viable with $42,000,000,000 to give everybody in America fiber. It's as simple as that. And so they've actually recognized the absolute importance that unlicensed wireless technology is to providing everybody in America with very high speed broadband.

Speaker 3

Perfect. Thanks for the color and best of luck on the quarter, gentlemen.

Speaker 2

Thank you, Dave.

Speaker 4

Thanks, Dick.

Operator

The next question is from Jon Hickman with Ladenburg. Please proceed.

Speaker 5

Hello. Brock, can you hear me?

Speaker 2

I sure can, John.

Speaker 5

Okay, great. So I have a couple of questions. Jim, could you tell us out of the $4,100,000 how much was millimeter wave?

Speaker 4

The revenue breakdown was approximately 80% memory and 20% millimeter wave for the quarter.

Speaker 5

80%, 20%. Okay. And then is there seasonality in the summer here?

Speaker 2

Is that Tamidjan or Jim?

Speaker 5

Either one and I don't care.

Speaker 2

I can take that. I mean, there's I we haven't seen seasonality like basically people buy broadband. At least I can speak to the broadband side and Jim can speak to the memory side. But on the broadband side, John, I would say it's there's no real seasonality. I mean, to be frank, I mean, as we said in the press release and on the slides, we did we are going through this inventory correction.

Speaker 2

So that was that's kind of the bigger picture issue. But from a seasonality perspective, I don't we don't really have any specifics there that we've seen over the years in terms of any particular quarter that's better or worse.

Speaker 5

Okay. And then the bead guys, did you say that you expect them to hear more out of them in the next 2 to 3 weeks?

Speaker 2

Yes. Basically, there was a conference last week where the head of so basically, the way BEAT is administered through the NTIA and the head of the NTIA has said now that they see themselves including unlicensed wireless as BEED funding. So that's a very significant change in policy from our perspective and obviously in a very positive way because Bead was or NTI to step back a little bit like Bead was really when approved by Congress was supposed to be technology neutral. So it didn't matter how you got people, good broadband, they were supposed to just get good people get people good broadband. It got shifted a little bit when it got to the NTA, which said, well, you know what, good broadband is brought to you by fiber and we think everybody should get fiber.

Speaker 2

But there was definitely pushback from the states because they basically said, hey, we agree fiber is great, but it's just way too expensive for this budget to deploy everybody with fiber. So we need to include all technologies, which by the way was the original concept that whatever it took to solve this problem. So where we come in with millimeter wave is we're providing fiber like speeds, I. E. A gigabit with very low latency.

Speaker 2

So we think so I think it's great to see that NTIA is proposing a very significant policy shift here in terms of adding unlicensed wireless to the repertoire of tools.

Speaker 5

Okay. That sounds good. So if they when they speak again, do you think they're going to actually say we're going to allocate so much of that original budget to fixed wireless?

Speaker 2

Absolutely. Well, I mean, this is certainly their position, yes. I completely that. It would be a major step back if they change their mind at this point. It was pretty well documented.

Speaker 5

Okay. So they'll actually put a figure on like a percentage?

Speaker 2

We think the way it will work is that basically it will be it's more or less letting the market decide. So I'm not sure there's going to be a limitation, right? I mean basically the market will decide what's the best way. And what we have to keep in mind is really the advantage that we provide with unlicensed fixed wireless is that it's very economical to deploy, but also the other factors, it's very rapid deployment. So we don't have to trench holes for fiber to go through, which takes some time.

Speaker 2

So we can deploy very quickly as well. So we think the market will ultimately decide. And frankly, from cost perspective, fixed wireless Miller and the NewWave fixed wireless is a great solution.

Speaker 5

So how do you want to guesstimate about if this goes the way you're saying, when could the market start using those funds?

Speaker 2

I think second half of twenty twenty like this year, absolutely this year. This year? For sure. Yes.

Speaker 5

Okay. So if I was a broadband supplier and I want to do a project and I want to so I do the project and submit it to deed for financing?

Speaker 2

Yes. Yes, you can include in your plan, milling with the Wave Fixed Wireless for sure.

Speaker 5

Yes, but then okay. And then these does these reimburse the provider?

Speaker 2

Effectively, it's subsidized. I'd have to like research exactly what the mechanics are, John. But I mean ultimately the BEAT underwrites the deployment for sure, right? Like so it's essentially underwrites the deployment of those deployments.

Speaker 5

Okay. And then can you elaborate any more on the military side? Like are you shipping products to where people trying it out? Where are you in that process?

Speaker 2

Well, we've actually we did announce a prior deal for proof of concept. And we have some further commercial engagements that I could say broadly. I mean, and you can understand that the military is highly confidential. But what I can share is that there's some little key features that we provide to the military. So not the least of which is because we use phased array technology and we create pencil beams, it's very difficult to detect in the battlefield.

Speaker 2

So that's what I've talked about already. Believe it or not, another important feature about 60 gig is that it's normally unlicensed in most jurisdictions. So when the military goes in, like whatever military goes into a certain theater, they don't have to worry about screwing up people's cellular frequencies, which are actually licensed. So the fact it's unlicensed is actually important to the military. And even another benefit to the military is that actually there's a certain level of oxygen absorption for our technology.

Speaker 2

So again, the enemy's ability to detect our signals after a certain distance becomes very, very limited. So the net net is that it's a very stealth technology and this is the key attribute and it's really starting to become a real factor in terms of the value proposition for military deployments. And frankly speaking, when we speak to military engagements, I mean, basically, these deployments we speak of on kind of almost a per soldier level. So the volumes are extensive beyond even what we're talking about on fixed wireless. So we're seeing the military and defense applications is really a strong part of our growth opportunity.

Speaker 5

Okay. Just one more question for Jim. Sure. So the software license and severance, that's an accrual that you're taking, so there will not be further expenses for those items going forward?

Speaker 4

Yes. So on the severance, that's correct. The severance obligation, which was just over $400,000 those amounts will be paid out over a 13 month period starting July 1, 2024. And that was just the resolution of the temporary layoff we had initiated back in November 2023 in Canada and taken those positions off the payroll back then. The other piece, the software obligations, there is still some of the licenses will be expensed going forward, but that amount was a $1,600,000 of expense and there's about 1 point $55,000,000 of cash that will be paid over the next kind of 5 quarters.

Speaker 4

So there'll still be some license expense going forward in the P and L, but I don't expect any more charges, accelerated charges in that manner going forward for those items.

Speaker 5

Okay. Okay, that's it for me. Thanks.

Speaker 2

Thanks, John.

Operator

The next question comes from Kevin Liu with K. Liu and Company. Please proceed.

Speaker 6

Hi, good afternoon. Ron, just wanted to start on the Dune platform as well. You mentioned during your script that you have the large Wix provider in North America that could also start deploying that. Wondering if you could put some parameters around when that could start and kind of the size of that opportunity in North America? And then going back to your progress in Africa, just wondering quickly you could expand from kind of this first customer to the next one?

Speaker 2

Sure. So in North America, the opportunity and we've confirmed with the supplier that we are participating. We're not reviewing what portion of the program, but as we announced last quarter, it was deployment in Los Angeles. So that was 280,000 subscribers. And so that I mean, frankly, we didn't bring it up this time because we brought it up last time, Kevin.

Speaker 2

But basically, the idea there is, again, like our ability to deploy in dense urban environments, it's just extremely important. And so the real issue with traditional unlicensed wireless is congested. And every single customer we're engaged with is limited in their deployment by the congestion caused by traditional Wi Fi signals. So Los Angeles is the deployment in North America and we're hoping for others. In Africa, I know Africa is a lot of people.

Speaker 2

We have 8 at least 8 trials underway beyond the one that we discussed. So stay tuned for that. We hope to have on the next call like some hard purchase orders from those deployments. But yes, so this again, it all boils down in those cases. There's probably 2 major things.

Speaker 2

First of all, the price points of Millimeter Wave are absolutely competitive with any technology. But second of all, again, we solved the density problem in traditional wireless Wi Fi has pretty severe quite severe congestion issues. And because of our beamforming capability, we solve those problems. So stay tuned, but we continue to see growth there every single quarter.

Speaker 6

That's good to hear. And maybe just on the millimeter wave inventory correction. Can you talk about what you're hearing from your largest customers there? Do you feel like they've digested through most of that and you could see whether it's ramp up here in the second half? Or do you think it's still a couple of quarters away before they're kind of at normal level?

Speaker 2

Yes. I mean, they're quite cagey, Kevin, in terms of what they're sharing. But what I do know and I think what was is an important kind of metric in fact is that their sales through are quite expensive, right? So there's no I would say one of the primary ways that we track user satisfaction is through just through simply through chat groups, right, through Internet provider chat groups. And I mean, the feedback is overwhelmingly positive.

Speaker 2

In terms of specific timing, we're hoping later in the Q4 and early Q1, we start to see that turnaround. It could be sooner, it could be a little later, but the customers are very cage in terms of the specific timing. What we do know is their sales are increasing. And so that's good news. So in other words, the inventory correction like is not a function of sales slowing down.

Speaker 2

We're quite optimistic that sales are ramping, but the timing is a little bit of a question mark for sure. We're hoping later this year.

Speaker 6

Got it. And just one follow on on the WiFi comments you guys made earlier. Are there any specific kind of investments within R and D or other parts of your cost structure that you'll need to invest in to support that? Or do you see opportunities for, say, NRE deals and other types of partnerships where you could limit your own investment dollars?

Speaker 2

So I would humbly submit that we have the greatest millimeter wave RF team on the planet. So but kidding aside, we see it as a revenue generating opportunity here in the short term is the simple fact. We're not going to spend capital resources on specific product development. Although as Jim mentioned, the tools we are paying for the EDA tools associated with tip development, but we're obliged to those anyway. So from our perspective, our initial participation in Wi Fi 8, certainly over the next couple of years will be revenue generating, not revenue spending or at least operating expenses spending versus revenue generating.

Speaker 2

So that's how we see Wi Fi 8 playing out for us for the next couple of years. After that, we'll see. But for now, we see there's a revenue generating opportunity.

Speaker 6

Great. Thanks for taking the questions and good luck during the Q3.

Speaker 2

Yes, my pleasure. My pleasure, Kennen. Thank you. Thanks, Kevin.

Operator

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

Speaker 2

Thank you.

Operator

Thank you, gentlemen.

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Key Takeaways

  • Total revenue in Q2 2024 was $4.2 million, beating the high end of guidance and rising over 70% year-over-year and 50% sequentially.
  • Secured the first volume production order for its DUNE millimeter-wave platform and expanded the global engagement pipeline to 95 active opportunities, up more than 25% year-over-year.
  • Held a $9.1 million end-of-life memory IC backlog with Q3 shipments expected to match Q2 levels, keeping strong revenue and cash-flow support through Q1 2025.
  • GAAP net loss widened to $4.4 million (or $1.88 per share) in Q2 and cash fell to $1.9 million as operating expenses and software license obligations increased.
  • Anticipated BEAD program guidance from the NTIA to include unlicensed fixed wireless access could unlock significant federal funding and boost demand for its millimeter-wave solutions.
AI Generated. May Contain Errors.
Earnings Conference Call
Peraso Q2 2024
00:00 / 00:00