Peraso Inc. (PRSO) Earnings Call Transcript & Summary

Thanks for being here this afternoon for our call covering Peraso's financial results for the third quarter of 2026. I'm Kevin Liu, and I'm stepping in as Peraso's Interim CFO; Ron Glibbery, our CEO, is joining me today. Earlier today, once the market had closed, we put out a press release along with the related Form 8-K, which has been filed with the Securities and Exchange Commission. You can find both the press release and the Form 8-K in the Investor Relations section of Peraso's website, www.perasoinc.com. We also have a slide presentation that accompanies today's call, and you can reach it through the webcast link posted on the IR website. Just a quick note before we start: anything said on today's call could contain forward-looking statements as defined under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any statement that isn't strictly a historical fact may be treated as forward-looking. Peraso urges you to exercise caution and to rely on forward-looking statements with that in mind. This covers things like revenue, margin, and expense projections, along with non-GAAP gross profit and gross margin figures, non-GAAP operating expenses, adjusted EBITDA, non-GAAP net loss, cash flows, and other financial measures — anticipated cost savings included. It also takes in statements about how our products or technologies are expected to develop, perform, and hold market share or compete, statements on whether the company's capital resources will suffice, statements on customer demand forecasts and concentration risk, and statements about possible future financing arrangements or capital transactions, plus the valuation or pursuit of strategic alternatives. Every forward-looking statement rests on information Peraso had available as of today's date. These statements involve known and unknown risks, uncertainties and other factors that might cause the actual results of Peraso to differ materially from those implied by the forward-looking statements, including unexpected changes in the business of the company. More detailed information about these risk factors, as well as additional risk factors, appears in the public filings Peraso has made with the SEC. Peraso expressly disclaims any obligation to update or alter its forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable law. In addition, the press release of the company and management statements made during this conference call will include discussions of certain measures and financial information presented on a GAAP and non-GAAP basis. About the non-GAAP figures mentioned on today’s call: unless we say otherwise, the amounts cited leave out stock-based compensation expense and the change in fair value of warrant liabilities. You can find these non-GAAP financial results, their definitions, and the reconciliation showing how they differ from comparable GAAP measures in our press release and the related Form 8-K, which have more detail. Anyone who can’t hear the full call live will be able to access a recording on the Investor Relations page of our website. I’ll hand things over now to our CEO, Ron Glibbery, who has prepared remarks. Ron?

Kevin, thank you — and good afternoon to all of you joining by phone or webcast. We appreciate the time you're spending with us. As we said in this afternoon's press release, our third quarter results showed the headwinds we'd warned about earlier, driven by fixed wireless access market dynamics. Even so, we've begun to observe tangible evidence that customer demand is picking up again, and we expect an initial recovery, with revenue rising sequentially in the fourth quarter. While broader market conditions have been tough across the last few quarters, our attention has remained on the areas of the business we can control. Specifically, we've maintained our operational discipline and kept overhead costs tightly controlled, and we've also taken action to make our supply chain more resilient. Beyond that, we've kept making substantial headway in broadening and moving forward new customer engagements that we think will be crucial to opening up fresh growth down the road. Turning to Slide 4. For anyone new to our story, and by way of reminder, we identify 3 main target end markets that we believe have a clear need and opportunity to gain from Peraso's 60 gigahertz technology. Fixed wireless access comes first—still our biggest, most developed market, and one in which we keep a leading role thanks to technology already validated in commercial settings. Second is defense and tactical communications, where 60 gigahertz's inherent stealth and jam resistance are attracting growing interest for airborne as well as ground-based uses. Finally, there's autonomous edge AI, which requires high-bandwidth, low-interference connectivity to serve dense groupings of robots and other autonomous platforms. Across all those markets and use cases, 60 gigahertz millimeter-wave technology is able to get past basic constraints that standard wireless approaches in lower frequency bands run into — particularly in situations where capacity, interference, reliability or security are essential to overall performance. As of today, we have active engagements spanning a mix of new and existing opportunities that draw on Peraso’s proven 60 gigahertz technology across all 3 of these expanding end markets. Moving on to Slide 5. Fixed wireless access remains our biggest and most commercially established market. Peraso has been delivering to customers in this market for over a decade. As I noted at the start, fixed wireless clients have placed orders less consistently than normal for the bulk of 2026. Higher memory costs, plus limited availability of other parts required to manufacture and deliver completed units, largely explain this. Although we expect current market conditions to need at least a few quarters before they settle down completely, evidence of customers returning has begun to emerge. Specifically, during October we booked a manufacturing order exceeding $2 million tied to our clients' 60 gigahertz fixed wireless access rollout. This is the biggest fixed wireless order we've booked in six quarters, and it supports our belief that demand from customers is starting to come back. Shipments to fulfill this customer's order should continue through mid-2027, and further orders may follow after that. Because our 60 gigahertz technology has long been widely accepted in the market for fixed wireless access deployments, we're confident more renewed demand will show up in the quarters ahead, as additional network operators and service providers look to capitalize on cost-effective substitutes for fiber when delivering multi-gigabit broadband in dense urban and suburban settings. On a broader note, I'd like to briefly highlight recent public remarks from a major U.S. a carrier, which lends added support to the longer-term promise of millimeter-wave spectrum for fixed wireless access. To cite one example, Verizon's CEO noted during the company's latest earnings call that it had come up with an innovative method of employing its sizable millimeter-wave spectrum holdings to provide 1 gigabit per second fixed wireless service across metro areas. Verizon ultimately aims to expand, in increments of 10 million to 15 million, how many premises can get 1 gigabit speeds via fixed wireless access. Later, the CTO backed this up, saying millimeter wave has gotten a second wind in support of fixed wireless access goals, and its part is anticipated to remain significant well into the future. I don't mean to suggest anything particular regarding possible upcoming work with this carrier, but I want to highlight those remarks, since they show wider industry acknowledgment that higher-capacity millimeter wave is able to complement mid-band spectrum and fiber too, as operators seek denser, higher-performing networks. For 60 gigahertz technology, the related value proposition is even greater when it comes to connectivity in crowded, capacity-limited settings. Now let's turn to Slide 6. In addition to fixed wireless access, we're seeing more interest and larger engagements around using 60 gigahertz technology for unmanned aerial systems and defense communications more broadly. Today's UAV operations demand links with high capacity and low latency that can carry command and control, high-definition video, sensor data, and coordination between drones, while still being hard to detect, intercept, or jam in contested environments. Meeting all of those requirements at once is tough from the start, yet it becomes extraordinarily hard when you're working within the constraints of conventional sub-6 gigahertz radio links. By contrast, 60 gigahertz millimeter-wave technology is well suited to tackling these combined challenges, thanks to its highly directional adaptive beam-forming capabilities. By concentrating communication signals into slim, steerable energy beams instead of broadcasting a wide signal, these links can achieve multi-gigabit throughput while inherently having a low chance of interception detection and/or jamming. In addition, absorption by atmospheric oxygen keeps the signal further confined, restricting propagation past the intended route; because of these traits, 60 gigahertz is uniquely well suited to a broad range of tactical defense uses, from secure command and control and Identification Friend or Foe, or IFF, to more complex mission objectives needing resilient connectivity in GPS denied or electronic warfare environments. In the quarter, we formally introduced our PRM2145 jam-resistant communications module. This new module was built with UAV and defense platforms in mind, and it takes Peraso's proven 60 gigahertz platform and puts it into a compact, lower power form factor that's optimized for the size, weight and power constraints you typically see in airborne systems. The solution is specifically engineered to support robust command and control links, high-definition video transport, ISR data, IFF comms and drone-to-drone networking. We were excited to showcase these capabilities at the Annual UAV Technology Conference in September, where the team saw heightened interest in jam resistance and high-capacity wireless solutions for next-generation unmanned systems. More broadly, and as this slide illustrates, we believe 60 gigahertz has an expanding role within hybrid UAV network architectures. So that covers pairing 60-gigahertz high-speed connections with additional transport layers — LEO satellite backhaul, fiber where it's selectively deployed, or alternative RF routes — and the result is resilient connectivity from one end to the other. Depending on the mission, these networks can be configured in ways nobody else can match, tuned for range, capacity, and survivability. The visual you're seeing shows a control drone or a ground station holding a high-capacity, jam-resistant link to several client drones or fixed-wing platforms. From there, satellite or other layers carry those communications out to beyond-line-of-sight reach.

Those same directional and beam-forming properties that make defensive communications more secure can also be used to support coordinated, high-density drone swarm operations free of co-channel interference. It is our belief that Peraso's 60 gigahertz technology, with capabilities already proven in real-world settings, is well positioned to matter a great deal in offensive as well as defensive drone use, as military and security organizations keep seeking communication solutions that are more resilient, higher performing and secure. At present we stay closely engaged with several prospective partners and customers on these fast-moving UAV applications, which we expect will open up complementary growth later on in tactical defense markets. Now to Slide 7. Beyond the wide-ranging UAV applications we are actively pursuing, I'd like to touch briefly on one more opportunity area for our technology in defense, namely secure ground-based communications linking tactical defense assets. Of course, the very attributes that make our 60 gigahertz technology appealing for airborne platforms, among them narrow beams that are hard to detect and jam, high data rates and support for mesh networking, are just as relevant and valuable for ground networks that must be deployed rapidly. Such multipoint secure communication links can be spread across a mix of supporting vehicles, forward operating positions and other manned or unmanned assets; with what we believe are late-stage evaluations now in progress with several prospective customers, we increasingly see ad hoc ground-based networks as a realistic near-term revenue opportunity inside the larger defense and tactical communications market. On to Slide 8. We are also seeing continued growth in inbound interest and engagements around autonomous edge AI applications. During October we showed high-speed 60 gigahertz connectivity linking a humanoid robot with an edge AI server. Today's robotics and other autonomous platforms produce substantial amounts of sensor and video data and often must exchange large AI models. In dense settings, conventional lower frequency wireless generates considerable co-channel interference. Directional 60 gigahertz links are built to handle multiple simultaneous multi-gigabit connections with low latency and minimal interference, delivering the high-bandwidth connectivity needed to offload compute-intensive processing while keeping platforms lightweight and power efficient. We regard this as an emerging yet complementary opportunity next to our core fixed wireless access and tactical defense markets. This use case, along with others that are emerging, further underscores the differentiated advantages of Peraso's 60 gigahertz millimeter-wave platform. Chief among them are its inherently stealthy anti-jamming and high bandwidth capacity characteristics, with numerous applications spanning fixed wireless access, defense, tactical, UAV and autonomous edge AI. To wrap up, we believe the breadth of our current customer engagements and the growing recognition of 60 gigahertz technology put Peraso in position for a return to growth in the fourth quarter. What's more, the recently completed $10 million strategic investment from Nant Capital meaningfully strengthens our financial position and lets us speed up development and commercialization, especially for advanced drone and defense communication solutions, while still keeping a disciplined approach to capital allocation. For the near term, we remain focused on turning an increasing number of opportunities into design wins and production orders, which will help drive sustained top line growth going forward; with that said, I'll turn the call back over to Kevin so he can go over the third quarter financial results.

Appreciate that, Ron. Turning now to how we performed this quarter. Net revenue overall for Q3 landed at $0.3 million, compared with $1.3 million last quarter and $3.2 million during Q3 of 2025. Product revenue for the third quarter was $0.3 million, against $1.2 million in the preceding quarter and $3.1 million in Q3 of 2025. The sequential drop in product revenue for Q3 2026 came from fewer millimeter-wave product shipments. Gross margin for the third quarter was 78.5%, an increase from 63.7% the quarter before and from 56.2% in the same quarter a year earlier. The third-quarter 2026 gains, both versus the prior quarter and versus a year earlier, came primarily from a better mix of millimeter-wave product revenue plus a one-time boost of about $55,000 tied to reversing an inventory accrual. On a GAAP basis, operating expenses in Q3 2026 were $2.9 million, compared with $3.1 million the quarter before and $3.0 million in the third quarter of 2025. Non-GAAP operating expenses, which leave out stock-based compensation, came to $2.7 million in the third quarter, versus $2.9 million in each of the prior and year-ago quarters. Looking at Q3 2026, our GAAP net loss came to $2.7 million — that's $0.18 per share on a loss basis. In the quarter before, we posted a net loss of $2.2 million, equal to $0.16 per share of loss, while the comparable quarter last year showed a net loss of $1.2 million, or $0.17 per share of loss. For Q3 2026, our non-GAAP net loss — a figure that leaves out stock-based compensation as well as fair-value swings on warrant liabilities — came to $2.5 million, equating to a loss of $0.16 per share. That stacks up against a non-GAAP net loss of $2.1 million, or $0.15 per share lost, during the previous quarter, and a net loss of $1.1 million, or a loss of $0.15 per share, in the comparable quarter last year. When working out both GAAP and non-GAAP EPS for Q3 2026, the weighted average count of basic and diluted shares outstanding stood at roughly 15.2 million. Looking at adjusted EBITDA — our measure that takes GAAP-reported net income or losses and strips out stock-based compensation, the change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes — it came in at negative $2.4 million for the third quarter of 2026. That compares with negative $2.0 million the quarter before and negative $1.0 million in the third quarter of 2025. Turning to the balance sheet, the company held roughly $0.6 million in cash as of September 30, 2026, versus $3.3 million on June 30, 2026. The drop in our cash balance was driven primarily by cash consumed by operations this quarter and by settling deferred costs tied to the equity facility, partly offset by money received under the committed equity facility. As we've noted previously, the company has been exploring potential strategic alternatives — among them a merger, asset sales, or a comparable transaction — as well as a range of other possible avenues for raising additional capital. During our prior call, we noted that back in June we established a committed equity facility alongside Roth Principal Investments. Through it, we have the option to draw up to $25 million in equity capital, which would fund working capital as well as continued product development. From that facility, we received net proceeds of approximately $0.1 million in the third quarter of 2026, plus roughly $1 million following the close of that quarter. More recently, Nant Capital made a $10 million strategic investment in us. Management intends to direct the proceeds toward working capital and general corporate purposes, and those uses are anticipated to encompass work on advanced communication solutions for drone applications. Following the completion of that strategic investment in late October, and counting up through today's call, we have roughly 20.9 million common and exchangeable shares outstanding. Now that Nant Capital's strategic investment has given us a stronger financial position and more operational runway, we've concluded the review of strategic alternatives that we had disclosed earlier. That brings our prepared remarks to a close, and we appreciate your time this afternoon. Operator, please open the Q&A session.

Thank you very much.