Momentum in mmWave Sales Drives Strong Q2 Results and Positive Outlook for Q3

Peraso (PRSO) delivered Q2 ’25 results ahead of our estimates and consensus. Sales of mmWave products increased 45% sequentially and over 200% versus the comparable period last year driven by continued traction in the fixed wireless access market and initial production shipments to a specialized defense contractor. Interestingly, that same defense customer now plans to test Peraso’s mmWave technology in drone applications, which we believe could dramatically expand the company’s total addressable market opportunity if successful. Additionally, management highlighted a growing pipeline, which includes three customers and seven product SKUs on the cusp of production. Below the revenue line, gross margin was higher than we modeled while non-GAAP operating expenses, which exclude stock-based compensation, were slightly lower. As a result, both adjusted EBITDA and non-GAAP EPS beat our estimates and consensus.

Looking forward, management expects another quarter of sequential growth in mmWave sales and guided Q3 revenue in line with Street expectations. Per management, near-term visibility remains strong due to the company’s existing backlog and a six-figure non-recurring engineering (NRE) deal secured in July. Our Q3 estimates remain unchanged, and we expect further improvement in Q4. That said, we lower our Q4 estimates to reflect a more conservative step-up in revenue. For FY ’26, our prior revenue and adjusted EBITDA projections remain intact. We continue to believe sustained momentum in the fixed wireless access market coupled with new production orders in the defense vertical will lead to materially higher revenue and an inflection point in profitability by year-end. We note that our non-GAAP EPS estimates move higher across our forecast horizon as the projected losses are spread over a higher share count. However, the higher share count also results in a reduction in our price target from $2.75 to $2.50, which we continue to derive based on an EV/Sales multiple of 1x but now rolled forward to our FY ’26 estimates.

We remain encouraged by the recovery in Peraso’s mmWave business and continue to see several paths to value creation. In our view, the company’s proven technology, market leadership and emerging use cases for mmWave all point to a long runway for growth. Peraso has also attracted the interest of an acquirer and is currently undertaking an evaluation of strategic alternatives. Although we recognize that liquidity concerns may remain an overhang on the stock for the foreseeable future, we expect management to address those through additional NRE deals, by leveraging an existing ATM offering and by seeking alternative sources of funding.

Exhibit I: Reported Results and Guidance Versus Expectations

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

Q2 net revenue of $2.2 million (-42.6% Y/Y) was above our $1.9 million estimate and consensus of $2.0 million. The decline in revenue from the prior year was wholly attributable to the wind down of the memory IC business, which contributed $3.4 million in the year-ago quarter. As Peraso shipped its remaining end-of-life memory IC orders in Q1, revenue in Q2 was comprised solely of mmWave product sales, which increased 45% sequentially and 226% Y/Y.

From a pipeline perspective, Peraso now has 14 customers in production and another three in pre-production. Eight other prospects are in various stages of evaluation and design. This in turn translates into 59 customer SKUs in production with another seven nearing production. Another 16 products are in the evaluation and design stages.

Gross margin of 48.3% was above our 44.0% assumption due to higher volumes. Total operating expenses were slightly below our estimate, resulting in both adjusted EBITDA and non-GAAP EPS exceeding our estimate and consensus. We note that Peraso also benefited from a $0.2 million reversal of previously accrued expenses but still would have beat expectations regardless. Cash and investments at quarter-end totaled $1.8 million.

For Q3, management’s guidance calls for revenue of $2.8-$3.1 million. Prior to revisions, we were projecting $3.1 million in revenue, while consensus stood at $3.0 million.

Exhibit II: Estimate Revisions

Source: K. Liu & Company LLC

Although we left our revenue and adjusted EBITDA estimates for Q3 unchanged, our estimates for FY ’25 decline slightly as we model a more conservative step-up in revenue exiting the year. For FY ‘26, we maintain our prior revenue and adjusted EBITDA estimates, which continue to reflect a sustained recovery in sales to the company’s existing fixed wireless access customers and new production orders from defense customers. We note that 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.