8-K: Peraso Inc. Reports Mixed Q4 and Full Year 2023 Results, Anticipates Revenue Growth in 2024

Peraso Inc. announced its Q4 and full year 2023 financial results, showing a revenue decline due to inventory corrections and end-of-life product shipments, but anticipates a return to growth in 2024.

Summary

• Peraso Inc. reported a decrease in revenue for the fourth quarter of 2023, with total net revenue at $1.8 million, down from $4.5 million in the previous quarter and $3.9 million in the same quarter of the previous year.
• Product revenue for Q4 2023 was $1.5 million, compared to $4.3 million in the prior quarter and $3.8 million in the same quarter of 2022.
• The company experienced a negative GAAP gross margin of 147.3% in Q4 2023, primarily due to a $3.0 million inventory write-down.
• Non-GAAP gross margin was also negative at 116.6% for the same period.
• GAAP net loss for Q4 2023 was $8.9 million, or ($12.48) per share, compared to a net loss of $0.6 million in the prior quarter.
• Non-GAAP net loss for Q4 2023 was $6.1 million, or ($8.52) per share.
• Adjusted EBITDA for Q4 2023 was negative $5.9 million.
• For the full year 2023, total net revenue was $13.7 million, down from $14.9 million in 2022.
• GAAP gross margin for 2023 was 13.6%, compared to 40.1% in 2022.
• GAAP net loss for 2023 was $16.8 million, or ($26.00) per share.
• The company expects total net revenue for the first quarter of 2024 to be in the range of $2.6 million to $2.9 million.
• Peraso completed a public offering after year-end, resulting in net proceeds of approximately $3.4 million.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to poor Q4 results, including negative gross margins and significant losses. However, there are some positive signs, such as the anticipation of revenue growth in 2024 and new product orders, which prevent a lower score.

Positives

• Peraso anticipates revenue growth to resume in the first quarter and for the full year of 2024.
• The company has a remaining total order backlog of over $12 million for its memory IC products.
• New orders for mmWave products targeting fixed wireless access applications are being received, including from their largest customer.
• There has been an increase in customer engagement activity with wireless Internet service providers.
• Peraso secured the first commercial order for its newly launched DUNE product platform in January 2024.
• The company has strengthened its cash position by completing a public offering, raising $3.4 million.

Negatives

• Total net revenue for Q4 2023 decreased to $1.8 million, down from $4.5 million in the prior quarter and $3.9 million in the same quarter of the previous year.
• Product revenue for Q4 2023 was $1.5 million, a decrease from $4.3 million in the prior quarter and $3.8 million in the same quarter of 2022.
• GAAP gross margin for Q4 2023 was a negative 147.3%, primarily due to a $3.0 million inventory write-down.
• Non-GAAP gross margin for Q4 2023 was also negative at 116.6%.
• GAAP net loss for Q4 2023 was $8.9 million, or ($12.48) per share.
• Non-GAAP net loss for Q4 2023 was $6.1 million, or ($8.52) per share.
• Adjusted EBITDA for Q4 2023 was negative $5.9 million.
• The company had cash and cash equivalents of approximately $1.6 million as of December 31, 2023.

Risks

• The company's ability to continue as a going concern is a risk.
• There is a risk associated with the company's ability to raise additional capital to fund operations.
• The timing of customer orders and product shipments can impact financial results.
• The COVID-19 pandemic may have an adverse impact on the company's business and financial results.
• Inflationary risks could affect the company's costs and profitability.
• Customer concentrations and lengthy sales cycles pose risks to revenue.
• The company relies on manufacturing partners for production.
• The end-of-life of memory products impacts revenue.
• Intellectual property protection and litigation are ongoing risks.

Future Outlook

The company expects total net revenue for the first quarter of 2024 to be in the range of $2.6 million to $2.9 million and anticipates revenue growth to resume in the first quarter and for the full year.

Management Comments

• Ron Glibbery, CEO of Peraso, stated that product revenue for the fourth quarter reflected the ongoing inventory correction in the market for mmWave products and the non-linear timing of end-of-life shipments for memory IC products.
• The CEO also noted that these headwinds have begun to moderate since the beginning of the new year.
• Management is optimistic about the company's outlook for 2024 due to the expanding engagement pipeline for mmWave solutions and initial indications of renewed customer demand.

Industry Context

The results reflect challenges in the mmWave technology market, including inventory corrections and the end-of-life of certain products. However, the company's focus on fixed wireless access and new product launches like the DUNE platform align with the growing demand for high-speed wireless connectivity, particularly in international markets.

Comparison to Industry Standards

• The negative gross margins in Q4 2023 are significantly below industry averages for semiconductor companies, which typically aim for gross margins above 40%.
• The inventory write-down of $3.0 million is a substantial factor in the poor gross margin performance, indicating potential issues with inventory management or demand forecasting.
• The company's non-GAAP adjustments, while common, should be carefully evaluated against GAAP results to understand the true financial picture.
• Companies like Qualcomm and Broadcom, which are also involved in wireless technology, generally report much higher revenue and profitability, highlighting Peraso's smaller scale and current challenges.
• The company's focus on fixed wireless access (FWA) is a growing market segment, but competition is intense, with companies like Cambium Networks and Ubiquiti also vying for market share.

Stakeholder Impact

• Shareholders experienced a significant loss in Q4 2023, with a net loss of $8.9 million.
• The company's employees may be impacted by cost containment actions.
• Customers may be affected by the company's inventory write-down and product transitions.
• Suppliers may be impacted by changes in the company's production and demand.

Next Steps

• The company will focus on growing the customer base for its mmWave products.
• Peraso will continue to execute its business plan.
• The company will monitor the market for mmWave products and the demand for its memory IC products.
• Management will continue to analyze the historical consolidated results of operations and comprehensive income (loss) and adjusted EBITDA to assess the business and compare operating results to the company's performance objectives.

Key Dates

Keywords

mmWave technology, wireless, 5G, fixed wireless access, FWA, memory IC, DUNE platform, financial results, revenue, gross margin, net loss, EBITDA, public offering