Peraso Inc. — 2021 Q2 Form 10-Q summary
Issuer mismatch: The supplied filing is for MoSys, Inc. (ticker MOSY), not Peraso Inc. It covers the quarter and six months ended June 30, 2021, and was filed August 12, 2021. Verify the issuer and filing before relying on this summary.
Business context and period
MoSys described itself as a fabless semiconductor company selling integrated circuits (ICs) and licensing intellectual property. Its products included Bandwidth Engine and Programmable HyperSpeed Engine ICs; its developing Virtual Accelerator Engine (VAE) line comprises software, firmware and IP for license. The unaudited results compare Q2 and first-half 2021 with the corresponding 2020 periods.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Net revenue | $1.168 million | $1.968 million | $2.506 million | $3.228 million |
| Gross profit | $0.724 million | $1.364 million | $1.567 million | $2.094 million |
| Gross margin | 62% | 69% | 63% | 65% |
| Operating expenses | $2.509 million | $1.949 million | $4.739 million | $4.045 million |
| Loss from operations | $1.785 million | $0.585 million | $3.172 million | $1.951 million |
| Net loss | $1.205 million | $0.639 million | $2.574 million | $2.044 million |
| Net loss per share, basic and diluted | $0.18 | $0.32 | $0.44 | $0.88 |
Q2 product revenue fell 39% year over year to $1.017 million; royalty and other revenue fell 48% to $0.151 million. For the first half, product revenue declined 20% to $2.195 million and royalty and other revenue declined 35% to $0.311 million. Management attributed the product decline mainly to lower Bandwidth Engine 2 and LineSpeed IC sales, and the royalty decline to lower royalties and non-recurring license revenue in Q2 2020.
R&D expense rose 24% in Q2 and 22% in the first half, primarily from higher personnel and VAE development consulting costs. SG&A rose 34% in Q2 and 12% in the first half, mainly from legal, consulting and professional fees. The lower reported loss per share primarily reflects a larger weighted-average share count following equity issuances.
At June 30, 2021, cash and cash equivalents were $13.475 million, short- and long-term investments totaled $9.575 million, and working capital was $19.9 million. Total liabilities were $1.797 million, including lease liabilities; the company reported no debt after repaying its convertible notes and receiving forgiveness of its PPP loan. Total assets were $25.414 million and stockholders’ equity was $23.617 million.
First-half operating cash use was $2.754 million, compared with $1.165 million in 2020. Investing cash use was $9.590 million, mostly purchases of investments. Financing provided $19.930 million, principally from two stock offerings and warrant exercises, partly offset by repayment of convertible notes. Cash increased $7.586 million to $13.475 million; cash plus investments were $23.1 million.
Material changes, outlook and risks
- Revenue and gross profit declined year over year, while operating expenses increased, widening the operating loss.
- MoSys raised approximately $18.8 million net from February and June 2021 registered direct stock offerings and received $4.2 million from warrant exercises. Common shares outstanding increased from 3.554 million at year-end 2020 to 8.660 million at June 30, 2021. These transactions strengthened liquidity but materially diluted existing holders.
- The company repaid the remaining convertible-note balance in March 2021 and recorded a $0.579 million gain when the $0.579 million PPP loan was forgiven in May. Q2 other income included $0.580 million; these items are unusual and are not operating revenue.
- Management said cash expenditures were expected to exceed receipts in 2021, but believed available liquidity would meet short- and long-term needs for the foreseeable future. No quantified revenue or earnings guidance was provided.
- Management expected COVID-19 to continue negatively affecting revenue for the remainder of 2021, without quantifying the effect. It cited component shortages and longer lead times, although it said operations were then positioned to meet expected demand. The filing also identifies potential supplier disruption, uncertain customer demand, capital-raising and dilution risks.
- Management expected 2021 R&D expense to increase versus 2020 due to VAE IP development and SG&A to remain relatively consistent for the rest of 2021. The company reported an accumulated deficit of $245.2 million and a long history of operating losses, and said sustainable profitability requires substantially higher revenue.
- Revenue was highly concentrated: two customers represented 77% of Q2 2021 revenue; four customers accounted for 95% of accounts receivable at quarter-end. The corporate facility lease expires in July 2022.
Important facts for investors to verify
- Confirm whether this MoSys filing, rather than a Peraso filing, is the intended source.
- Review subsequent filings for revenue trends, VAE licensing progress, customer concentration and the effects of supply constraints.
- Verify cash burn, investment liquidity and whether available capital remained sufficient as revenue declined.
- Assess dilution from the 2021 stock offerings and warrant exercises, and reconcile share counts across filings.
- Check the treatment and recurrence of PPP forgiveness, debt-settlement gains and other income when evaluating underlying operating performance.