Peraso Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparisons are with Q1 2023 unless stated otherwise. Peraso is a fabless semiconductor company focused on mmWave products and memory ICs. Amounts below are in U.S. dollars.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 / prior date |
|---|---|---|
| Revenue | $2.816 million | $5.033 million |
| Gross profit / margin | $1.306 million / 46% | $1.927 million / 38% |
| Operating loss | $3.631 million | $3.796 million |
| Net loss | $2.031 million | $3.148 million |
| Operating cash used | $2.550 million | $1.414 million |
| Cash and cash equivalents | $2.435 million | $1.583 million at Dec. 31, 2023 |
| Working capital | $3.1 million | Not provided in the filing excerpt |
Product revenue was $2.676 million, down 45%; royalty and other revenue was $0.140 million, down 3%. Gross margin improved mainly because memory IC shipments, which have higher margins than mmWave products, made up a larger share of sales. Operating expenses were $4.937 million, versus $5.723 million; Q1 2023 included a $0.406 million gain from a license and asset sale.
Cash from financing was $3.402 million, primarily net proceeds of approximately $3.4 million from the February public offering. Investing cash flow was zero. The balance sheet showed $0.605 million of lease liabilities and $0.158 million of warrant liabilities; no conventional borrowing balance was listed. Non-cancelable purchase orders totaled approximately $3.2 million for inventory and $2.2 million for CAD software.
Changes and notable items
- Revenue fell 44%, principally because mmWave IC and module shipments declined. Memory IC revenue rose to $2.383 million from $2.181 million, partly offsetting the mmWave decline.
- The $1.591 million gain from a decrease in the fair value of warrant liabilities materially reduced reported net loss; it is non-cash. Operating cash use nevertheless increased year over year.
- R&D expense declined 27% to $2.835 million, mainly reflecting lower salary and consulting costs after workforce and contractor reductions. SG&A declined 6% to $2.102 million.
- In February, the company completed an offering of common stock and warrants for approximately $3.4 million in net proceeds. Common shares outstanding were 2.289 million at March 31, versus 0.673 million at December 31, 2023. The filing also reports 8.518 million equity-classified warrants outstanding at quarter-end. Share amounts reflect the January 2024 1-for-40 reverse split.
Outlook, risks and contingencies
- Management expects 2024 revenue to rise versus 2023, citing memory IC end-of-life orders and anticipated mmWave production by new customers during 2024. It expects R&D expense to decrease and SG&A to remain flat or decline slightly. These are expectations, not guaranteed outcomes.
- TSMC is discontinuing the process used to manufacture Peraso’s memory ICs. The company is winding down those products, reports a $12.6 million non-cancelable order backlog at March 31, and expects final shipments by March 31, 2025. Fulfillment depends on customer orders, supplier deliveries and requested schedules.
- Management says existing cash plus forecast receipts should fund planned operations into the first half of 2025, but also says additional funding or significant spending reductions will be needed before the end of 2024 to continue operations beyond the current forecast. Recurring losses and cash burn raise substantial doubt about the company’s ability to continue as a going concern within one year of issuance. Additional financing may be unavailable or dilutive; the statements include no adjustments for this uncertainty.
- Customer concentration is high: Customers A and B accounted for 51% and 28% of Q1 revenue, respectively. Management cites shipment and collection variability, supply-chain and inventory exposure, and access to capital markets as risks.
- No material legal proceedings were reported. Management concluded disclosure controls and procedures were effective as of March 31, 2024; no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Whether the $12.6 million memory IC backlog converts to shipments and cash collections on the expected schedule, given the product end-of-life and sole-foundry discontinuation.
- Cash runway and financing needs: reconcile the stated runway into the first half of 2025 with the stated need for financing or significant expense reductions before year-end 2024.
- Potential dilution from the offering warrants and other outstanding warrants, including exercise terms, expirations and subsequent exercises.
- Progress toward new mmWave customer production and revenue growth, and whether customer concentration changes.
- Inventory valuation and purchase commitments, especially if demand, delivery timing or memory IC end-of-life plans change.