Peraso Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Peraso is a fabless semiconductor company focused on mmWave products and also sells memory ICs and related technology. The December 2021 acquisition of Peraso Technologies was accounted for as a reverse acquisition; reported Q1 2021 results reflect Peraso Technologies only, so year-over-year comparisons are not fully like-for-like. The filing provides unaudited Q1 2021 pro forma results as a reference.
Financial performance
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $3.403 million | $1.101 million |
| Gross profit / margin | $1.813 million / 53% | $0.482 million / 44% |
| Operating expenses | $8.549 million | $4.094 million |
| Operating loss | $(6.736) million | $(3.612) million |
| Net loss | $(6.754) million | $(4.157) million |
| Net loss per share, basic and diluted | $(0.34) | $(0.79) |
| Net cash used in operations | $(5.740) million | $(1.252) million |
Product revenue was $3.204 million, up 205%; license and other revenue was $0.199 million, up 298%. Management attributed growth primarily to a full-quarter contribution from memory products and increased mmWave module shipments. Cost of revenue rose 157%, slower than revenue growth. The filing’s financial statements show gross profit increased; MD&A contains an inconsistent sentence saying it decreased.
Balance sheet and liquidity
- Cash and cash equivalents were $3.791 million; short- and long-term investments totaled $8.392 million, for combined cash and investments of $12.183 million, versus $18.088 million at year-end 2021.
- Working capital was approximately $13.7 million. Total assets were $41.948 million and stockholders’ equity was $36.440 million.
- Total liabilities were $5.508 million, including $0.833 million of lease liabilities. The prior SRED loan and other loans described in the filing had been repaid in 2021; no debt balance is shown at March 31, 2022.
- Operating cash use was $5.740 million; investing activities provided $3.647 million, mainly from investment maturities. Cash declined by $2.102 million during the quarter.
Changes, outlook and risks
- R&D expense increased 115% to $6.003 million, and SG&A increased 95% to $2.546 million. Management cited the inclusion of a full quarter of former MoSys operations; Q1 2021 also included Canadian wage and rent subsidies that reduced expenses.
- Management expects 2022 revenue to increase, citing expected mmWave sales growth and a full-year contribution from memory products. It also expects R&D expense to rise and does not expect government subsidies to reduce expenses in 2022.
- The company expects cash expenditures to exceed receipts in 2022, but stated that available liquidity should meet short- and long-term needs for at least 12 months. It also cautioned that it may need additional capital and that financing may be unavailable or dilutive; failure to raise funds could require spending reductions.
- Customer concentration was significant: two customers represented 61% of Q1 revenue (37% and 24%); three customers represented 67% of accounts receivable at quarter-end.
- Management cited longer component lead times and uncertainty related to COVID-19, supply chains, customer programs and capital markets. Inventory increased to $4.521 million; the company recorded $0.114 million of inventory write-downs.
- Management reported effective disclosure controls as of March 31, 2022, no material change in internal control over financial reporting, and no material change to the risk factors in its 2021 Form 10-K. It reported no legal proceedings believed likely to have a material adverse effect.
Important facts for investors to verify
- Assess cash runway against the $5.740 million quarterly operating cash outflow and management’s stated expectation that 2022 cash expenditures will exceed receipts.
- Review the reverse-acquisition accounting and pro forma comparison: Q1 2021 reported revenue and net loss were $1.101 million and $4.157 million, while pro forma figures assuming the acquisition occurred January 1, 2021 were $2.439 million and $5.526 million.
- Monitor customer concentration, component availability, inventory levels and gross margins as module shipments grow.
- Consider potential dilution or financing constraints if additional capital is required; the filing notes an effective shelf registration statement.