Business context and reporting period
Peraso Inc. is a fabless semiconductor company focused on millimeter-wave (mmWave) wireless ICs and antenna modules, engineering services and IP licensing. This Form 10-K covers the fiscal year ended December 31, 2023, compared with 2022. The company is winding down its memory IC line and focusing development on mmWave products. Per-share and share-count data reflect the 1-for-40 reverse split effective January 2, 2024.
Key financial results and position
| Metric | 2023 | 2022 |
|---|---|---|
| Total revenue | $13.749 million | $14.868 million |
| Gross profit (margin) | $1.872 million (14%) | $5.953 million (40%) |
| Operating loss | $20.625 million | $32.312 million |
| Net loss | $16.795 million | $32.398 million |
| Cash used in operating activities | $4.690 million | $16.020 million |
- Revenue comprised $12.853 million of product sales and $896,000 of royalty and other revenue. Memory IC sales were $8.446 million; mmWave ICs, $2.726 million; and mmWave modules, $1.677 million.
- At year-end, cash and cash equivalents were $1.583 million, with no short-term investments, versus cash and investments of $2.906 million at December 31, 2022. Current assets were $5.540 million and current liabilities $4.534 million, or approximately $1.006 million of working capital.
- Total liabilities were $6.631 million, including $1.748 million of warrant liabilities and $719,000 of lease liabilities. The filing does not report conventional borrowings at year-end. Inventory was $2.606 million, down from $5.348 million.
- Accumulated deficit was $166.392 million; stockholders’ equity was $4.083 million.
Material changes versus 2022
- Revenue declined 8%, principally as lower mmWave IC and module shipments outweighed higher memory IC shipments and royalty and engineering revenue.
- Gross profit fell 69% and gross margin contracted from 40% to 14%. The company recorded $3.558 million of inventory write-downs in 2023, compared with approximately $420,000 in 2022; most of the 2023 charge related to mmWave inventory.
- Research and development expense declined 27% to $14.398 million and SG&A declined 23% to $8.505 million, mainly due to lower personnel, consulting and discretionary costs. The 2022 results also included a $9.946 million goodwill impairment charge.
- Net loss improved, partly reflecting lower operating expenses and a $3.493 million non-cash gain from the change in fair value of warrant liabilities. Cash used in operations also decreased, but remained significant.
- Customer concentration remained high: three customers accounted for 75% of revenue in 2023, versus 63% in 2022. The filing identifies Nokia at 35%, F5/Flextronics at 22% and Alltek at 18% in 2023.
Outlook, risks and unusual items
- Going concern and funding: The auditor and management report substantial doubt about the company’s ability to continue as a going concern. Management expects operating losses and cash expenditures to exceed receipts for at least the next 12 months and says further capital may be needed. A February 2024 public offering raised approximately $3.3 million net in the financial-statement note; other filing text gives approximately $3.4 million. Management said the offering proceeds and year-end cash were expected to fund needs through at least the fourth quarter of 2024.
- Memory product end-of-life: TSMC is discontinuing the process used to manufacture the company’s memory ICs, and Peraso says it cannot transition production to another foundry. Memory products represented over 60% of 2023 revenue. By March 1, 2024, the company reported approximately $14.0 million of EOL orders, of which $3.7 million had shipped in 2023; the financial-statement note expected approximately $10.3 million of additional shipments over the 12–15 months beginning January 1, 2024. Shipment timing depends on customer schedules and supplier deliveries.
- Management outlook: Peraso expects 2024 revenue to increase, citing memory EOL orders and anticipated mmWave production by new customers. It also expects lower R&D and SG&A expense following cost reductions. These are expectations, not formal financial guidance; the filing provides no specific revenue or earnings targets.
- Liquidity actions and dilution: The company reduced staff, temporarily laid off 16 Canadian positions and estimated annualized savings of up to approximately $2.2 million if impacted employees are not recalled. Potential severance-related claims may increase costs. The February offering included substantial warrant coverage and may dilute existing holders if exercised. The reverse split followed a Nasdaq bid-price deficiency; Nasdaq confirmed regained compliance on January 18, 2024.
- Other risks and contingencies: Customer and receivable concentration, long design-to-volume cycles, dependence on third-party foundries, inventory obsolescence, competition, and access to capital are significant risks. The company disclosed employee severance claims related to Canadian temporary layoffs, but stated it was not party to a legal proceeding it believed likely to have a material adverse effect. The 2023 results also included a $406,000 gain on a license and asset sale.
Most important facts for investors to verify
- Whether the February 2024 financing, subsequent warrant exercises and cash burn provide adequate liquidity beyond the stated fourth-quarter 2024 runway.
- Whether customers take delivery of and pay for the remaining memory EOL orders, and whether the associated shipments generate cash and margin before product supply ends.
- Whether mmWave customers move from design wins or sampling into sustained volume shipments, and whether mmWave sales can replace declining memory revenue.
- The extent of future inventory write-downs, gross-margin recovery and operating-cost reductions.
- The exact net proceeds of the February offering and the potential dilution from outstanding warrants; the filing gives approximately $3.3 million in one section and $3.4 million in another.
- Customer identities and concentration disclosures: the MD&A names customers, while the financial-statement note presents customer labels. Verify the underlying customer mix and collection risk.