Reports Strong Start to FY '25

Peraso (PRSO) reported Q1 ‘25 results ahead of our estimates and consensus. Revenues increased sequentially and grew significantly versus the same period last year driven by a rebound in mmWave sales for fixed wireless access applications and the final quarter of end-of-life (EOL) memory IC shipments. Worth noting, mmWave sales in Q1 outpaced the total generated in all of last year, and management anticipates sequential growth throughout FY ’25. Gross margin also outpaced our assumption, and non-GAAP operating expenses, which exclude stock-based compensation, were in line with our estimates. As a result, both adjusted EBITDA and non-GAAP EPS beat our estimates and consensus.

With the remaining backlog of EOL memory IC orders fulfilled in Q1, all revenue going forward will be derived from mmWave sales. As such, management’s Q2 guidance reflects a sequential decline in total revenue, as expected, but assumes a sequential increase in mmWave sales. Prior to revisions, our Q2 revenue estimate matched the high-end of management’s guidance range, while consensus was slightly higher. More importantly, Peraso already has a solid backlog of mmWave orders to support the anticipated growth in Q2 and the remainder of FY ‘25. Recall that shipments against a $3.6 million purchase order from a large existing customer and another order from a defense contractor leveraging the company’s PERSPECTUS modules for secure battlefield communications, which we believe could exceed $10 million over time, will commence this quarter. Given the current backlog and a growing pipeline, we think Peraso could plausibly achieve total revenues this year commensurate with last year’s level despite the wind down of the memory business while potentially doubling mmWave revenue next year. That said, we continue to model more conservatively at this juncture.

Although we made some minor adjustments to our assumptions, our revenue and adjusted EBITDA estimates remain intact for this year and next. We also maintain our price target of $2.75 based on an unchanged FY ’25 EV/Sales multiple of 1x. We believe the company’s cash on hand remains sufficient to support operations through Q2, and we expect management to leverage its existing ATM offering to further bolster the balance sheet as needed. Additionally, Peraso’s entry into the military and defense space opens the door to potential non-recurring engineering (NRE) deals, which would provide a non-dilutive source of financing, and of course, the company’s liquidity will naturally benefit as the existing backlog of orders is fulfilled.

Exhibit I: Reported Results and Guidance Versus Expectations

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

Q1 net revenue of $3.9 million (+37.4% Y/Y) was above our $3.8 million estimate and consensus of $3.6 million. Both memory IC sales of $2.4 million and mmWave sales of $1.5 million were generally consistent with our estimates. As of April 2025, the company’s mmWave pipeline included 119 engagements versus 94 a year ago. Within the pipeline, 36 engagements are already in various stages of hardware evaluation, engineering design and prototyping as compared to 24 a year ago.

Non-GAAP gross margin of 69.3% was well above our 58.3% assumption due a favorable mix of mmWave products shipped in the quarter. Total operating expenses were generally in line with our estimate, resulting in both adjusted EBITDA and non-GAAP EPS exceeding our estimate and consensus. Cash and investments at quarter-end totaled $2.8 million.

Management’s Q2 guidance calls for revenue of $1.8-$2.0 million. Prior to revisions, we were projecting $2.0 million in revenue, while consensus stood at $2.3 million. Beyond Q2, management expects mmWave sales to grow sequentially throughout the remainder of FY ‘25.

Exhibit II: Estimate Revisions

Source: K. Liu & Company LLC

Although we made some minor adjustments to our underlying assumptions, our FY ’25 and FY ’26 revenue and adjusted EBITDA estimates remain unchanged. However, our EPS estimates increase slightly for both years as the projected losses are spread over a higher outstanding share count. 

Our report with model and disclosures is available here.

Disclosure(s):

K. Liu & Company LLC (“the firm”) receives or intends to seek compensation from the companies covered in its research reports. The firm has received compensation from Peraso Inc. (PRSO) in the past 12 months for “Sponsored Research.”

Sponsored Research produced by the firm is paid for by the subject company in the form of an initial retainer and a recurring monthly fee. The analysis and recommendations in our Sponsored Research reports are derived from the same process and methodologies utilized in all of our research reports whether sponsored or not. The subject company does not review any aspect of our Sponsored Research reports prior to publication.