Peraso Q2 2025 Earnings Report

Peraso EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.44
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Peraso Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $3.05 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Peraso Announcement Details

• Quarter: Q2 2025
• Date: 8/11/2025
• Time: After Market Closes
• Conference Call Date: Monday, August 11, 2025
• Conference Call Time: 4:30PM ET

Peraso (NASDAQ:PRSO), a fabless semiconductor company, develops, markets, and sells semiconductor devices and modules. The company's products include millimeter wavelength (mmWave) ICs, including baseband IC, various mmWave radio frequency, integrated circuits, as well as associated antenna technology; and mmWave antenna modules. It also provides accelerator engine products, comprising bandwidth engine for high-performance applications where throughput is critical; and quad partition rate, which allows for parallel accesses to multiple partitions of the memory simultaneously. Its mmWave products are used for various applications, such as multi-gigabit point-to-point (PtMP) wireless links; and fixed wireless access in the 5G operating bands, as well as consumer applications, such as wireless video streaming, and untethered augmented reality and virtual reality. The company also licenses intellectual property, as well as offers non-recurring engineering services. It markets its products through direct sales personnel, as well as sells representatives and distributors. The company was formerly knowns as MoSys, Inc. and changed its name to Peraso Inc. in December 2021. Peraso Inc. was incorporated in 1991 and is based in San Jose, California.

Peraso Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Revenue from mmWave products rose 45% sequentially and over 200% year-over-year, and management expects record third-quarter guidance despite overall net revenues dipping due to EOL shipments of legacy products.
• Positive Sentiment: Paraso surpassed 2,000,000 cumulative shipments of its 60 GHz mmWave devices and secured a new win with Tachyon Networks for gigabit-speed, 3 km outdoor fixed wireless access solutions.
• Positive Sentiment: Successfully delivered initial production shipments for tactical defense applications using stealthy beamforming technology and is pursuing drone use cases alongside ongoing NRE opportunities.
• Positive Sentiment: Expanded its customer base, doubling production customers from seven to 14 and achieving a 90% increase in SKUs in production, with seven additional engagements in pre-production poised to drive near-term revenues.
• Neutral Sentiment: Achieved reduced operating expenses and improved non-GAAP losses while extending cash runway into Q4, and the board is exploring strategic alternatives and capital-raising options.

Presentation

[Operator]

Good afternoon and welcome to Paraso Inc. Second Quarter twenty twenty five Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference call is being recorded today, Monday, 08/11/2025. I would now like to turn the call over to your host for today's conference call, Mr. Jim Sullivan. Please go ahead.

[James Sullivan, Chief Financial Officer at Peraso]

Good afternoon, and thank you for joining today's conference call to discuss Paraso's second quarter twenty twenty five financial results. I'm Jim Sullivan, CFO of Paraso, and joining me today is Ron Glibery, our CEO. Today, after the market closed, we issued a press release and related Form eight ks, which was filed with the Securities and Exchange Commission. The press release and Form eight ks are available on Paraso's website at www.parasoinc.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 IR website.

[James Sullivan, Chief Financial Officer at Peraso]

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. Paraso 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 as well as any statements concerning the expected development, performance and market share or competitive performance of our products or technologies and any statements related to prospective future financing arrangements or capital transactions and the evaluation of pursuit of strategic alternatives. All forward looking statements are based on information available to Paraso on the date hereof.

[James Sullivan, Chief Financial Officer at Peraso]

These statements involve known and unknown risks, uncertainties and other factors that may cause Paraso'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 Paraso's public filings with the SEC. Paraso 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's statements during this 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.

[James Sullivan, Chief Financial Officer at Peraso]

These non GAAP financial measures, definitions and the reconciliation of these differences between them and comparable GAAP measures are presented in our press release and related to Form eight 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'd like to turn the call over to our CEO, Ron Glibery, for his prepared remarks. Ron?

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Thank you, Jim. Good afternoon, and welcome to everyone on the phone and webcast. We appreciate you joining us for today's conference call. We had a solid and productive second quarter marked by continued market momentum and growing demand for Piraza's industry leading mmWave technology. Revenue from our mmWave products increased 45% sequentially and more than 200% year over year as we continue to ramp shipments to an expanding customer base and across multiple targeted end markets.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Further highlighting sustained market leadership of our 60 gigahertz solutions, we achieved a significant milestone having surpassed 2,000,000 cumulative shipments of our MMWave devices. Complementing the growth of our MMWave products, we have continued to exercise disciplined cost management, resulting in lower run rate operating expenses and significant year over year improvement in our operating results for the quarter. Looking at slide four. Fixed wireless access continues to represent the largest and fastest growing market opportunity for mmWave technology due to its unique ability to deliver reliable, high speed and low latency broadband connectivity to homes and businesses without the cost burden associated with fiber infrastructure. Throughout the first half of the year, we have seen a steady and broadening recovery in both market demand and customer orders for our fixed wireless access solutions.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Highlighting our most recently announced win, in July, we announced one of our leading partners, Tachyon Networks, selected Paraza's MMWave modules to power its latest outdoor 60 gigahertz fixed wireless solution. Our advanced MMWave module enabled Tachyon solution to deliver fiberglass speeds at a breakthrough price point, supporting rapid broadband deployments in both dense urban and rural markets. More specifically, their latest solution offers gigabit connectivity, has an over three kilometer range, and is compatible with TACAN's existing TNA 300 series with the ability to support up to 48 client connections per sector. This win and our ongoing collaborative partnership with TACAN Networks are a testament to Paraza's recognized technology leadership for high performance mmWave solutions. Today, we remain engaged with numerous wireless Internet service providers that are utilizing Parazza's mmWave technology, improve of concepts for future fixed wireless access deployment.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

We expect these and additional new opportunities to contribute to our sustained future growth as we convert successful proof of concepts into new initial production orders. Now turning to slide five. In addition to capitalizing on the recent momentum with the fixed wireless access market, we continue to be excited about the growing interest and market opportunity for MMWave technology in next generation tactical communications and military defense applications. Following a series of early prospective discussions and initial engagement with potential customers and ecosystem partners, we have become increasingly confident that the inherent characteristics of our MMWA technology are well matched to solve a number of critical communication challenges encountered in tactical defense environments. As discussed on a previous call, we demonstrated our first commercial proof point earlier this year with a strategic contract with a specialized defense contractor to deliver mission critical wireless application to global military and defense forces.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

We have since been working in close collaboration with this lead customer to refine a jointly created and deployable system solution for a first of its kind tactical defense application. In June, we announced a significant milestone with the delivery of initial production shipments of our advanced 60 gigahertz wireless solutions in support of this jointly developed solution. More specifically, this new deployable system solution leverages Paralysis technology to provide heightened communication and situational awareness to help safeguard both military personnel and noncombatants, such as medics and humanitarian responders operating in high risk environments. As a company, we are proud to be part of enabling this next generation tactical communication solution designed to mitigate and prevent unnecessary human casualties. This notable win is also for the validation of the performance and versatility of our MMWave technology, helping to establish Piraza's commercial presence and accelerate our strategic expansion in the broader tactical defense communications market.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

With increasing awareness of its inherent performance attributes and advanced capabilities, including ultra low latency, high reliability, and stealthy multi gigabit data transmission, we believe that 60 GHz mmWave technology is poised to gain substantial market traction across a broad span of mission critical applications. As just one prominent example from our previously mentioned early discussions with prospective future customers and ecosystem partners, we've recently observed heightened interest around leveraging the benefits of MMWAY for various drone related applications. More generally, we are highly motivated by both the significant and growing commercial potential of mission critical applications as well as the associated opportunities to contribute to future positive real world impacts. We believe Pirazo's advanced MMWA technology and commercially proven solutions represent the unique strategic advantage that we can capitalize on and continue to scale over time. As such, we remain committed to expanding our market presence, collaboration with ecosystem partners, and customer engagement in the tactical defense communications market over the coming quarters.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Move to slide six. Although we traditionally dedicate a majority of our quarterly calls and commentary to updates on our two largest target end markets, I wanted to take the opportunity on today's call to briefly highlight both the versatility of our MMWA products and the incremental growth opportunities that exist in adjacent end markets. Kindly note, we generally separate and refer to our collective target adjacent end markets as two distinct categories, the first being transportation and the second category we call professional video delivery. While the typical revenue contribution from both these categories is smaller relative to fixed wireless access business, we do have a combination of current or recurring revenue customers, sales, as well as active engagements in both these adjacent markets. Having provided that background as context, the most important takeaway is that mmWave technology delivers a uniquely compelling value proposition for overcoming complex connectivity challenges across diverse applications in both our target and adjacent markets.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

It's largely the same inherent high performance and advanced capabilities that MMWave brings to fixed wireless and tactical communications. These same attributes make MMWave a critical enabler and frequently the only practical economic solution for applications requiring robust, high data rate connectivity. As a recent example further highlighting MMWave's unique capability and value proposition in adjacent markets, in June, we received and have since shipped a production order of our 60 gigahertz wireless solution in support of a new customer's wireless video system for classroom environments. This customer chose to incorporate Parazo's 60 gigahertz wireless MMWave technology to enable its solution for the reliable delivery of high performance, low latency video, and high density school environments while also operating completely independent of schools' frequently congested existing Wi Fi infrastructure. Also notable, this was our first ever production shipment in support of a solution specifically tailored for education and therefore reflected an expansion of our served addressable market.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Looking now at slide seven. Boring from the layout that we utilized to show our overall pipeline in previous quarters, we recently introduced this new pipeline slide in order to specifically track and visualize the progression of our customer base over time. Noting the time frame between the two respective funnels from q four twenty twenty three to q two twenty twenty five, representing approximately eighteen months, we are very pleased with the substantial progress we made towards expanding our customer base over this relatively short period, especially when viewed in the context of how time and resource intensive it can often be to acquire a single new customer and then successfully advance engagement on a specific program from initial evaluation through the design process and ultimately see a customer's finished product be released to production. Although doubling our number of customers that are now in production from seven to 14 hopefully speaks for itself, there's another potentially more subtle takeaway that I want to highlight. In addition to successfully attracting and securing new customers, this slide also demonstrates our ability to effectively advance a growing number of funnel opportunities and program engagements across an increasingly diverse group of end market applications.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Turning to slide eight. This is another view of our pipeline over the same eighteen month period ending in June, but shown in terms of the number of SKUs or individual device models, irrespective of whether an individual SKU is associated with a new or existing customer. The overall trajectory is definitively positive and similar to the prior slide also demonstrates our substantial progress on advancing a sizable number of engagement opportunities and to finish customer products released into production. The other two takeaways that I want to briefly highlight are: first, the number of customer SKUs that are now currently in production have increased 90% over the last eighteen months. This metric alone reflects a dramatically more diversified base of existing products with the potential for revenue contribution.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Lastly, as of quarter end, we had seven additional engagements in the preproduction phase, representing potential incremental revenue contribution in the relatively near future as customers release these products into production. In summary, we are pleased with our demonstrated growth and market momentum through the first half of the year as we've continued to ramp production shipments of our MMWave solutions in support of an expanding and increasingly diverse customer base. Combined with our ongoing commitment to disciplined expense management, we have meaningfully improved our operating results and significantly reduced our quarterly cash burn. Looking forward, we have good visibility into near term orders for MMWave solutions with an existing backlog that supports continued sequential growth. In fact, we currently expect record quarterly revenue contribution from our MMORP products in the third quarter.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Having said that, we continue to be diligently focused on converting our healthy pipeline of existing customer engagements into new designs and incremental production orders in support of sustained growth in 2026 and beyond. I'll now turn the call back over to Jim to review the financials and provide our current revenue outlook for the 2025.

[James Sullivan, Chief Financial Officer at Peraso]

Thank you, Ron. Turning now to the results for the 2025. Total net revenue for the second quarter was $2,200,000 compared with $3,900,000 for the prior quarter and 4,200,000 for the 2024. Product revenue in the second quarter was $2,200,000 compared with $3,800,000 in the prior quarter and $4,100,000 in the 2024. The decreases product revenues for the 2025 compared with the prior quarter and comparable period of 2024 were attributable to the previous completion of EOL shipments of memory IC products during the 2025.

[James Sullivan, Chief Financial Officer at Peraso]

Specific to sales of millimeter wave products, revenues were $2,200,000 in the 2025 compared with $1,500,000 in the prior quarter and $700,000 in the 2024. GAAP gross margin decreased to 48.3 percent in the second quarter from 69.3% in the prior quarter and 55.5% in the year ago quarter. The decrease in GAAP gross margin for the 2025 from the prior comparable periods was primarily attributable to revenue being comprised entirely of millimeter wave products. On a non GAAP basis, gross margin for the second quarter was also 48.3%, compared with 69.3% in the prior quarter and compared with 68.8% in the 2024. GAAP operating expenses for the 2025 were $2,900,000 compared with $3,200,000 in the prior quarter and $6,800,000 in the 2024.

[James Sullivan, Chief Financial Officer at Peraso]

The year over year decrease in operating expenses on a GAAP basis was primarily attributable to reduced stock based compensation expense and $2,000,000 of charges for software license obligations and severance costs incurred during the 2024 and amortization expense related to intangible assets fully amortized in 2024. Non GAAP operating expenses, which exclude stock based compensation, amortization of intangible assets, and severance costs, were $2,700,000 in the second quarter compared with $3,100,000 in the prior quarter and $5,000,000 in the 2024. The year over year decrease in operating expenses on a non GAAP basis was primarily attributable to a $1,600,000 charge for software license obligations recorded in the prior year, as well as previously implemented cost reductions and ongoing cost containment initiatives. GAAP net loss for the second quarter of twenty twenty five was $1,800,000 or a loss of $0.31 per share compared with a net loss of $500,000 or a loss of $08 per share in the prior quarter and compared with a net loss of $4,400,000 or a loss of $1.88 per share in the same quarter a year ago. Non GAAP net loss, which excludes stock based compensation, amortization of intangible assets, severance costs and change in fair value of warrant liabilities, for the 2025 was $1,700,000 or a loss of $0.28 per share.

[James Sullivan, Chief Financial Officer at Peraso]

This compared with a non GAAP net loss of $400,000 or a loss of $07 per share in the prior quarter and a net loss of $2,100,000 or a loss per share of $0.88 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 2025 was approximately 6,000,000 shares. Adjusted EBITDA, which we define as GAAP net income or loss as reported, excluding stock based compensation, amortization of intangible assets, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes, was negative $1,600,000 in the 2025, compared with negative $300,000 in the prior quarter and negative $1,900,000 in the 2024. With regard to the balance sheet, as of 06/30/2025, the company had approximately $1,800,000 of cash and equivalents. The net change in the company's cash and equivalent balance for the second quarter was approximately $1,000,000 and included approximately $1,100,000 of net proceeds from the company's at the market offering program during the quarter.

[James Sullivan, Chief Financial Officer at Peraso]

As of today's call, the company has approximately 6,200,000.0 shares of common stock and exchangeable shares outstanding. Lastly, before discussing our outlook, I wanted to briefly acknowledge the recently announced decision by our Board of Directors to explore potential strategic alternatives, including the merger, sale of assets, or other similar transaction, as well as various potential sources of additional capital. As previously disclosed, we have retained a financial advisor to assist with the exploration process, which includes evaluation of the unsolicited nonbonding proposal received in June. Aside from confirming that a formal review process is currently underway, there are no related updates to be shared today. Now turning to our outlook.

[James Sullivan, Chief Financial Officer at Peraso]

As Ron previously discussed, we are seeing positive market momentum for our millimeter wave solutions, as evidenced by the ramp of production shipments to an expanding customer base. Based on the current backlog, we anticipate continued sequential growth and record revenue contribution from our millimeter wave solutions in the September. More specifically, the company expects total net revenue for the 2025 to be in the range of $2,800,000 to $3,100,000 This concludes our prepared remarks, and we thank you for your time this afternoon. Operator, please commence the QA session.

[Operator]

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, Your first question is coming from David Williams from Benchmark. Your line is live.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Hey, good afternoon gentlemen and thanks for taking my question. I guess, maybe first, lots of nice progress there across the space and especially in the tactical comms segment. Ron, I think you mentioned being engaged on some drone opportunities there. Heard that at least this earnings season, a couple of folks have talked specifically about just the demand they're seeing develop in that space. So I'm wondering if you could give us maybe a little more color on the number of engagements or just kind of what you're seeing in the different opportunities in that military space. Thanks.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Thanks, Dave. Thanks for being on the call. Yeah. So basically, you know, the fundamental concept to keep in mind is is stealth. So when we communicate on the battlefield, there's it can it's very difficult or impossible for the enemy to to to to detect our signal.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

So, basically, we we got a customer engagement today whereby we use that on the ground with with the with the battalions and infantry, but that that same company is now looking to move that concept to drones. So the idea is, you move the concept to drones whereby, when when you're using a drone for, some kind of attack, you make you can determine whether the the target is is friend or foe. So that's that's one of the opportunities on the drone side of things. Does that make sense?

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Yes. Yes. It does. And and one of the other things they've kinda brought up was, the targeting on the battlefield from the RF communication. Just I'm wondering if you're kind of envelope or your precision in terms of the signal, does that give you an opportunity maybe to participate there where they're concerned with maybe picking up that RF signal and targeting those instruments?

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Well, that's exactly the point there because we, as you know, we use a concept called beamforming, and we can create very and we've developed some custom beamformers for this application whereby we have a very, very narrow signal, and that signal is essentially impossible for any to detect. So that's really what, what we've been doing on the battlefield side of things. This can be also applied to not just not just that application, but also on this strict standard communicate like, communication. So but the the core concept remains the same, which is this ability to operate on the battlefield with in a stealthy capability.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Okay. That's, no. That's that's great. And then maybe, secondly here, I know you probably can't discuss or comment much here on the acquisition, but the press release seemed a little sloppy, at least in our opinion, and and had multiple misstatements, I believe. But first, I just want to see if you could confirm that that was a legitimate offer.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

And two, any updates in terms of how you're thinking about the business given your balance sheet and just kind of where you're positioned today. Lots of opportunities, but the balance sheet is a little constrained here. So just anything around that would be helpful. Thanks.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Is that to me, is it Jim, Dave?

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

The the whomever.

[James Sullivan, Chief Financial Officer at Peraso]

Sure. Mean, can comment on the balance sheet. From our perspective right now, we have cash into the fourth quarter of this year. We'll have an updated disclosure in our, you know, 10 q that will be filed here by Thursday. You know, in the previous 10 q, we had said we had cash into the third quarter.

[James Sullivan, Chief Financial Officer at Peraso]

So we've obviously extended our runway. You know, as we disclosed on the call, we've been, you know, had done some trading under our ATM program to bring in additional capital. We remain, you know, in pursuit of various opportunities to raise capital and, you know, first and foremost, attempting to do it non dilutive late. You know, we did sign an NRE agreement in in the month of July, you know, of a of a good amount for us, but a modest amount overall and are pursuing other engagements. And, those NRE engagements are non recurring engineering is a great way for us to bring in additional capital and offset costs, etcetera.

[James Sullivan, Chief Financial Officer at Peraso]

We continue to pursue all activities on the financing front and remain pleased with our execution and in particular with, our outlook for Q3 and in particular our visibility towards that outlook, which is as frankly as good as it's been based on backlog. With regard to the proposal we received, yes, we can confirm that that is a valid proposal and we don't have, more to say other than what I said on the call and what's included in our SEC filings.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Okay. Fantastic. I appreciate the color there. And just Jim, I guess, you kind of think about your the growth that you're seeing here, your inventory had a nice step down this quarter as well. Obviously, that's beneficial on the cash side.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

How do you think that inventory level is going to trend? And do you feel like we burned through much of the inventory digestion that we had been kind of struggling with the last several quarters?

[James Sullivan, Chief Financial Officer at Peraso]

Yes. Absolutely. We're definitely seeing, you know, movement. Not with all all customers, but in particular, it's, you know, evidenced by the large purchase order we announced earlier this year, from you from our largest, you know, Internet, equipment, customer. You know, we still have one or two other customers there that are still working through their inventory.

[James Sullivan, Chief Financial Officer at Peraso]

But we're in a position now where the inventory we have in hand is is basically spoken for on future shipments, and we've had to go ahead and start replenishing, certain other products that go in the, in the chipset. So, you know, I not not everyone's through it, but enough enough are that we're seeing things turn back on and burning through the inventory that we had and have started placing new orders.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Great. And one last one, I may. Sorry to take the time here. I just want to ask on opportunities on the military side. It seems like you've got such an interesting and unique capability here that this would be an area of opportunity, especially for maybe defense NREs or work with maybe the DoD or some of the others.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Is that, are you seeing any traction there? Do you think they're aware of what you're doing? And and is that an opportunity maybe to to drive some some near term, NRE or other revenue?

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Oh, you you know, Dave, we are driving NREs. Like, this is actually a very custom design. And so what we're finding with the military is it's not it's not fixed wireless. It's not your, you know, father's fixed wireless solution. So NRE is definitely a part of our our strategy moving forward.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

The thing to keep in mind, we have I would say we have, like, three maybe three levers, including software, the modules, and our antennas. And so we can we can adjust all of those. So for example, the the the example I gave earlier whereby we use extra antennas to create this very narrow beam on the battlefield is a very, very strong advantage for us. So, you know, you can see that our ability to adjust some of those parameters on our products through through NRE, as you suggest, is a very powerful tool for us. So that's something we're we're executing on.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

So that's a it's a terrific point. And so so we've got our first NREs in the bag. We just didn't publicly announce them, but but NREs gonna play a big role in the next year and a half, and we're we're hoping to build that beyond where we're at today.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Thanks so much for the color Jim. I certainly appreciate it and best of luck on the quarter.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Thanks David. The question.

[Operator]

Thank you. Your next question is coming from Kevin Liu from K. Liu and Co. Co. Your line is live.

[Kevin Liu, Founder & CEO at K. Liu & Company LLC]

Hi. Good afternoon, guys, and nice progress here on the millimeter wave side. I know you guys talked a little bit about some of the, wins you've had with tachyon and others in the quarter. With the seven preproduction wins in the pipeline, just wondering if you can, add in more color to some of the other wins that you have there, and when you would expect some of those to start contributing to to your revenue stream?

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

I could say that, basically, a lot of that is fixed wireless. And I think what we're seeing in the market is a lot of the previous, you know, chipset vendors like Qualcomm and others just kinda gone by the wayside. I'd say our our our thesis that we're becoming the dominant player in fixed wireless is is coming true, Kevin. So a lot of that is in the fixed wireless side of things just because, you know, we've got so many customers, so much credibility in that space that, know, basically, that we continue to grow and dominate that space. But, obviously, we've got design wins on the military side of things as well.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

And as as Dave said previously, our ability to operate in stealth mode, and that is the the ability to operate without really being detected by the enemy is just extremely important characteristic of our technology on the defense side of things. So I'd say out of the seven, most of it's fixed wireless. Some of it's military. We have other you know, video is certainly a kind of an interesting area for us, But, you know, I would say face, wireless, and defense are the main the main areas of growth for us right now.

[Kevin Liu, Founder & CEO at K. Liu & Company LLC]

That's good to hear. And just as it relates to your backlog as you come into q three, and and obviously, you're gonna see some nice sequential growth here. Just wondering how strong that backlog is. Have you guys fully shipped everything against some of the larger orders you received earlier in the year and have you continued to build upon that? And just anything you can share in terms of your visibility for the remainder of this year would be helpful.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Jim, do you want

[James Sullivan, Chief Financial Officer at Peraso]

to Yes, add think as I mentioned in my response to David, we have excellent visibility on third quarter. We're very comfortable with our backlog relative to the revenue number that we provided for guidance. No, not all of that has been shipped. So there's always the possibility for shipments not to go, etcetera, that anyone has, but we're very comfortable with where we sit. It's probably for being where we're at in one of the best shapes it's been kind of halfway through the quarter.

[James Sullivan, Chief Financial Officer at Peraso]

We're still filling in for fourth quarter, still expecting some additional orders. And obviously, as I mentioned in response to David's question, still waiting for a few customers to run through inventory and check back on. But definitely pleased from where we sit right now. I feel very good with Q3. We still have a little more work to do on Q4.

[James Sullivan, Chief Financial Officer at Peraso]

As I also mentioned and Ron mentioned, we did secure one nonrecurring engineering deal in July. So we've kind of gone through the revenue recognition and talked to the auditors, kind of put a modest amount in 3Q and expect more of that in 4Q. But right now, we've been modest on 3Q. So pleased with with where we sit, and, you know, we even have, you know, fair amount into the into early twenty six. So definitely seeing better visibility there.

[Kevin Liu, Founder & CEO at K. Liu & Company LLC]

Sounds good. And just on the nonrecurring engineering deal, I know it's early and you haven't quite figured out all the accounting behind it. But, conceptually, how should we think about, you know, the implications from that? Does that provide you guys with, you know, a revenue stream that could contribute, you know, all the way through the next year and a half, or would it be fairly lumpy in terms of the periods you get that? And then also just from an extent expense standpoint, do you need to make some investments on the R and D side to, you know, to to staff up to to handle those, types of arrangements?

[James Sullivan, Chief Financial Officer at Peraso]

I'll I'll do the question on a LIFO basis. Modest, modest expense. It's only a, you know, a finance person could answer it. You know, modest Any expense adjustments are pretty modest. Didn't need to go out and add headcount.

[James Sullivan, Chief Financial Officer at Peraso]

You know, it's it's, supporting an existing customer. So right now, I would say, you know, we need to, you know, make modifications to satisfy the needs for the customer's application. So, you know, something that's certainly in the forecast. You know, obviously, we are pursuing additional, you know, NRE opportunities. Know, obviously, the goal for companies like us is, obviously, again, you you get the cash.

[James Sullivan, Chief Financial Officer at Peraso]

It offsets your engineering expense. And then, you know, ideally, you come out come out of it with a a future product to offer to others. Often the way I've seen these, whoever pays for the NRE may get some exclusivity, etcetera, depending on how it's negotiated, you know, features, exclusive, etcetera. And then but you obviously look to add another, you know, set of SKUs in our in our toolkit for, you know, sell to other customers. But hard for me to say on the on the revenue recognition.

[James Sullivan, Chief Financial Officer at Peraso]

We obviously didn't you know, it's a, you know, modest, you know, modest 6 figure amount. So, you know, hard hard to say. We've just been racing on the current quarter, and it was a a July transaction. So

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Well, I was I was I'm sorry.

[James Sullivan, Chief Financial Officer at Peraso]

Racing on the the q two quarter, I should say, not the current quarter.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Would jump in on I think in in terms of your question regarding whether it's lumpy, Kevin, like, I guess my takeaway, knowing that it's certainly focused on one customer right now, my my kind of guidance would be that there's gonna be it's gonna be an ongoing NRE for, you know, for at least a year and a year and a half, I would say. And so not so lumpy, kind of steady state. But I would also make the point is I think it's very important is when we you know, a, think Jim's point was very important, which is we're not adding a lot of our even any new expense. So this is all, you know, it's consistent engineering talent. The other thing is that anytime we do NRE, it's for production.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Like, we get, you know, we get paid on the engineering side of things, but we will not do NRE if it's not leading to production. For us, production is the most important metric, frankly. So I think that's really important to make, a point to make for us is that all of this is leading to, you know, what we consider significant production. So that's kind of the model we have right now is that we're trying to do is ongoing NRE that kind of pays for engineering with programs that lead to production.

[Kevin Liu, Founder & CEO at K. Liu & Company LLC]

Yep. Understood. Well, congrats again on on the progress, and thanks for taking the questions.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

My pleasure. Thank

[Operator]

you. Your next question is coming from David Williams from Benchmark. Your line is live.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

You couldn't get nothing, Dave?

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

No. No. Thanks for taking my

[James Sullivan, Chief Financial Officer at Peraso]

Get back. He's trying to avoid going out in the Dallas East.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

That's that's exactly right. Well, I I didn't I don't wanna go over all the time and give give some time to others, but I did wanna ask, on the the BEAT funding, and we've got some clarification. I know there are some changes there in terms of the it was, you know, more technology neutral. And just curious if you're hearing anything from your customers in terms of, is that a benefit yet, and, do you think it will be over time as as now for that Bead funding may roll into, fixed wireless access?

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

I'd say there's two two things in the regulatory front we should we should highlight. One is Bead. We haven't it's been it's been a it's a little early. I mean, bead was for, like, a couple of years very fiber focused, and so people got into that kind of mode of operation. So I think people are just trying to understand now how it's gonna change for PixWireless.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Obviously, it's a benefit to us. Right? I I don't know if it's obvious, but it is obvious. I mean, the main benefit we have over over fiber, frankly, is is just the cost of the rollout and the time. There's two major factors there.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

One is the cost, so no trenching, and the time. It's it's there's not that many trenching machines, for example. Right? So it's so so we have a very strong advantage when it comes to fixed wireless in in in those environments. So so we're hearing from customers that they're very happy with the changes that they're seeing will be.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

The other point I think we made on the presentation was that in the big beautiful bill, for lack of a better term, that was recently passed, there's a real chance that a lot of the open and unlicensed spectrum is gonna get auctioned off except for ours. So that helps us as well. So from a regulatory perspective, that's kind of a net bonus for us. So a lot of people aren't aware of that, but that's kind of a positive regulatory update for us as well.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Okay. Great. And just one last one. Did you feel funny saying, big beautiful bill? Thanks.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

I don't.

[David Williams, Equity Research Analyst at The Benchmark Company LLC]

Again, thanks for thanks for the time.

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Thank you. I thought that someone was calling. Sorry.

[Operator]

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

[Ronald Glibbery, Co-Founder, CEO & Director at Peraso]

Thank you.

Participants

Executives

• James Sullivan, Chief Financial Officer
• Ronald Glibbery, Co-Founder, CEO & Director

Analysts

• David Williams, Equity Research Analyst at The Benchmark Company LLC
• Kevin Liu, Founder & CEO at K. Liu & Company LLC