Q2 2022 Peraso Inc Earnings Call

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Good afternoon and welcome to Parazo Inc's second quarter 2022 conference call. At this time, all participants are in a listen-only mode.

Following the company's prepared remarks, instructions will be given for the question and answer session.

If anyone needs assistance at any time during this conference call, please press the star key followed by the zero on your touch tone phone.

As a reminder, this conference call is being recorded today, Monday, August 15, 2022.

I would now like to turn the call over to Perazzo's CFO , Jim Sullivan. Please go ahead. Good afternoon, and thank you for joining today's conference call to discuss Perazzo's second quarter 2022 financial results. I'm Jim Sullivan, CFO of Perazzo, and joining me today is Lon Glibery, our CEO .

This afternoon we issued a press release and related Form 8K, which was filed with the SEC.

The press release and Form 8K are available on Proraso's website at www.porasoinc.com under the investor relations section.

There is also a slide presentation that we will be using in conjunction with today's call that may be accessed through the webcast link on the IR website.

As a reminder, comments made during today's conference call may include forward-looking statements.

All statements other than statements of historical fact could be deemed as forward-looking.

PORASO advises caution in reliance on forward-looking statements.

These statements include, without limitation, any projections of revenue, margins, expenses, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, adjusted EBITDA, net loss.

cash flows or other financial items.

Also, any statements concerning the expected development, performance, and market share, or competitive performance of our products or technologies.

All forward-looking statements are based on information available to PIRASO on the date heroes.

These statements involve known and unknown risks, uncertainties, and other factors that may cause process actual results to differ materially than those implied by the forward looking statement.

including unexpected changes in the company's business.

More detailed information about risk factors and additional risk factors are set forth in process public filings with the SEC.

Proso expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in terms of GAAP and non-GAAP .

Included in the company's press release are definitions and reconciliations of gapped and non-gap items.

which provide additional details.

For those of you unable to listen to the entire call at this time, a recording will be available on the Investor Relations section of PRAASA's website.

Now, I would like to turn the call over to our CEO , Ron Glibory, for his prepared remarks. Ron? Ron, I want to start with you.

Thank you, Jim. Good afternoon and welcome to everyone joining us over the phone and by webcast. The timing of today's call couldn't be better as it provides a great opportunity to highlight several of the significant developments we've announced in recent weeks.

Starting now with a brief overview of our revenue results for the quarter.

Revenue in the second quarter increased 25% sequentially, and was up nearly 30% year over year. Growth in the quarter was driven by record product revenue, and more specifically, the continued ramp of Peraza's millimeter wave ICs and modules to the fixed wireless access market.

Turning first to our most recent news, last week we disclosed that Parazzo entered into a technology license and patent assignment agreement with Intel Corporation.

The agreement primarily includes the transfer of certain memory-related assets related to our MOSIS stellar packet classification platform IP.

which are not core to any of our existing lines of business.

We anticipate the transaction to result in total gross proceeds to Parazzo of up to $3.5 million.

which will add non-diluted cast to the balance sheet and also contribute to a reduction of OPEX going forward.

Additionally, as Intel introduces the licensed technology into the market, Perazo, as a gold Intel Alliance partner, stands to potentially benefit from additional design opportunities for our advanced memory products.

It has been a long-standing belief that millimeter wave technology was fundamental to providing the necessary bandwidth capacity and speed for future generations of connectivity.

As demand for wireless bandwidth continues to grow, we are seeing increasing recognition and buying across the industry that millimeter-width technology is the solution for incremental wireless bandwidth, faster access speeds, and more universal access in all geographies.

Last month, the chair of the US FCC, Jessica Rosen-Worcel, was quoted as saying current users have long surpassed the 25.3 megabit download upload standard, which has remained unchanged since implemented in 2015.

Proposals to increase the US broadband standard to 120 in the near term and 1 gigabit per second, 500 megabits per second longer term.

With existing spectrum tapped out, leading carriers such as Verizon are increasingly embracing million-weight technology to increase the speed, reach, and performance of their networks.

millimeter-weight is a global technology and solution and a growing number of large international carriers have begun deploying 5G millimeter-weight equipment.

As further evidence, the three largest telecom carriers in China recently commenced formal collaboration to advance the broad use of millimeter-width technology.

Leveraging Peraza's field-proven millimeter-wave technology and multi-year track record of commercial shipments of our 60 GHz solutions, in May we introduced our 5G millimeter-wave beam former IC.

As highlighted last quarter, we believe 5G millimeter wave solution is the world's most highly integrated 5G beamformer IC.

Specifically designed to initially target end-user customer premise equipment in the 5G carrier market, our beam former IC supports all FR2, 5G, NR millimeter-width bands.

Additionally, our single IC solution integrates Peraza's patented architecture and advanced 5G antenna technology to provide dual-stream MIMO support with two independent 16-channel arrays.

for 32 total channels per device.

I also want to emphasize that our ability to now target the end device market with this new 5G mmWave product represents meaningful expansion of Paracels TAM by an estimated $1.5 billion in 2025.

During the third quarter, we will demonstrate the evaluation modules based on our 5G mmWave being formalized here at both Mobile World Congress Las Vegas and the European Microwave Conference in Manhattan. City gross submit But when a group

We've also made our 5G mm-way solution available for sampling to select customers and partners, and we are focused on building a pipeline of engagements for this product throughout the second half of the year.

Turning to an update on the fixed wireless access market, Peraza continues to build on our established market tradition as a leading supplier of millimeter wave IC and modular solutions for 60 gigahertz applications.

The Tix wireless access market continues to demonstrate growing momentum.

regardless of the data points used to measure.

number of service providers, number of subscribers, or total fixed wireless connections.

Ericsson's mobility report published in June includes a series of supporting data highlighted by the forecast of over 100 million fixed wireless connections in 2022, which are then expected to double in 2027.

Wells Fargo has predicted that fixed-wildness access will account for 60% of net added connections.

primarily taking share from what otherwise would be cable modem connections.

Another compelling data point from the recent market traction

together Verizon and T-Mobile reported more than 550,000 need-fix wireless customers in the second quarter alone.

Further supporting the continuation of these current trends.

The federally funded Rural Digital Opportunity Fund, RDOF, is poised to provide $20 billion over 10 years to incentivize employment and broadband network access in rural communities across the U.S.

As demonstrated by our solid revenue growth in the second quarter, we continue to make great progress ramming our existing Tier 1 customers while also expanding Peraza's leadership position in the fixed-wildness market.

As recently announced, in July we received multiple purchase orders totaling $6.4 million for the combination of our mmW xC and model products for the fixed wireless applications.

Although we're not able to refer to them by name, I will say the collective orders came from two well-established leaders in fixed wireless access.

Also notable is that a portion of the orders was for our newly introduced millimeter-wave prospectus modules, which provide customers with comprehensive solutions that significantly reduce their time to market.

Our prospective solutions also feature multi-gigabit access and Peraus's unique point-to-multi-point capability, as well as superior range, nearly 10 times that of the competing point-to-point offerings.

We expect to begin initial fulfillment of these orders late in the third quarter with ongoing shipments through the first half of 2023.

We believe these orders serve as a strong validation of our millimeter-weight technology and product roadmap as we continue to expand our pipeline of new customer engagements and work to secure additional design links and orders in the coming quarters.

With that, I'll pass the call back to our CFO , Jim Sullivan, to review the financials and provide our guidance for third quarter.

Thank you, Ron, and good afternoon, everyone. It's great to be speaking with you again today. During my comments, I will make several references to non-GAAP numbers.

Unless otherwise indicated, referenced amounts exclude stock-based compensation expense, amortization of reported intangible assets, business combination transaction costs, and the change in fair value of warrant liability.

These non-GAAP financial measures and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related current report on Form 8K which was filed with the SEC today.

Now, for our second quarter 2022 results.

Total revenue is $4.3 million compared with $3.4 million in the first quarter of 2022 and $0.7 million during the same quarter a year ago.

Product revenue from the sale of our integrated circuits and modules was $4.1 million, compared with $3.2 million in the prior quarter and $0.6 million in the second quarter of 2021.

The sequential and year-over-year growth was primarily driven by the continued ramp and shipments of our millimeter wave modules for the fixed wireless access market.

Loyalty and other revenue for the second quarter of 2022 was $0.2 million and comprised royalty revenues from licensees.

Royalty and other revenue generally consists of NRE services provided to mmWave customers and royalties related to our memory technology.

Gap gross margin was 34.7% in the second quarter compared with 42.8% in the prior quarter and 37.6% in the year ago quarter.

On a non-GAAP basis, excluding amortization of reported intangible assets, gross margin for the second quarter was 43%, compared with 53.3% in the first quarter of 2022 and 37.6% in the year-ago quarter.

The decrease in gross margin over the previous quarter primarily reflected increased volume shipments of our millimeter wave modules which carry higher average selling prices, but lower gross margins than our IC products.

Product gross margin was 32.1% in the second quarter compared with 39.2% in the prior quarter and 27.1% in the second quarter of 2021.

As we progress through 2022 and into next year, our corporate gross margin target continues to approximate 50%.

We expect revenue growth will contribute to higher levels of scale and enable us to capture additional production cost reductions on our millimeter wave modules, while also realizing benefits from the anticipated ongoing sales of our high margin memory IC products.

More generally, I would also add that in the immediate term, we are continuing to see and navigate some of the same inflationary costs in the supply chain that have been cited broadly by other companies across the industry.

We've experienced increased prices from our suppliers due to supply chain disruption, inflation or a mix of both, and for certain products we have increased prices to our customers to mitigate the impacts. Although to date in 2022 the impacts of these price increases have been minimal.

We have and continue to experience longer lead times for certain components used to manufacture our products, and therefore have increased lead times for our customers.

Gap operating expenses for the second quarter were $8.5 million, compared with $8.2 million in the prior quarter and $4.7 million in the year-ago period.

Total operating expenses for the second quarter of 2022 on a non-GAAP basis, which excludes stock-based compensation and amortization of reportable intangible assets, were $6.6 million compared with $6.9 million in the prior quarter and $2.8 million in the same quarter a year ago.

GAP net loss for the second quarter of 2022 was $7 million, or loss of 33 cents per share, compared with a net loss of $6.8 million, or 34 cents per share in the prior quarter, and a net loss of $5.4 million, or loss per share of $1.03 in the same quarter a year ago.

On a non-GAAP basis, net loss to the second quarter of 2022 was $4.8 million, or a loss of 23 cents per share, which excluded stock-based compensation and amortization of reported tangibles.

This compared with non-GAAP net loss of $5.1 million or loss per share of 25 cents in the prior quarter.

and a net loss of $3.5 million or loss per share of 68 cents in the same quarter a year ago.

The weighted average number of basic undiluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for the second quarter of 2022 was 21.6 million shares.

In terms of adjusted EBITDA, which we define as gap net income or losses reported, excluding stop rates compensation, amortization of reported intangibles, interest expense, depreciation and amortization, and the provision for income taxes.

Adjusted EBITDA for the second quarter of 2022 was negative $4.5 million compared with negative $4.3 million in the prior quarter and negative $2.5 million in the prior year period.

Turning to the balance sheet, as of June 30, 2022, our cash and investments balance was $6 million compared to a $12.2 million on March 31, 2022.

The burn of $6.2 million for the second quarter of 2022 was primarily attributable to the negative EBITDA of $4.5 million.

payments of $0.6 million of tape-out related costs for our 5G Beam former chip, which were expensed in the first quarter of 2022, and timing of collection of $1.1 million of accounts receivables that were immediately received after the end of the quarter.

As Ron previously highlighted, subsequent to quarter-end, we completed a technology license and patent assignment agreement with Intel, involving certain non-core memory-related assets related to our most-stellar packet classification platform IP. The transaction is expected to result in total gross proceeds to PROSSO of approximately $3.5 million, of which just over $3 million is payable immediately, with the remaining $0.4 million of consideration expected to be received.

within no more than six months from the closing date. In addition to serving as a non-dilutive source of capital that adds cash to the balance sheet, in connection with the agreement, four PeroSato employees have accepted employment with Intel and we've also terminated the services of six full-time equivalent consultants.

Collectively, these actions and the elimination of certain associated overhead costs are anticipated to contribute to a $2.7 million annualized reduction in our run rate operating expenses.

I would also re-emphasize that all of the IP and patents included as part of the agreement were non-core and the associated technology was non-revenue generating.

As Ron discussed, entering the third quarter, we have significant backlog that extends well into the first half of 2023, which positions us for growth.

The company expects total net revenue for the third quarter of 2022 to be in the range of $4.3 million to $4.5 million.

This concludes our prepared remarks and we will now open the call to questions.

Operator, please initiate the Q&A session.

Absolutely. Thank you. Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please indicate so by pressing star one on your touch tone phone.

Pressing star 2 will remove you from the queue should your question be answered. And lastly, while posing your question, please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Once again, that's star 1 if you have a question or a comment.

Okay, and the first question is coming from David Williams with Benchmark. Your line is live.

Hey, good afternoon. Thanks for taking the question and congrats on all the progress. You guys are definitely gaining a lot of momentum here.

Thanks, David. Yeah, and forgive me if I missed something. I've got a couple of calls in the background, so I might be a little confused. But just forgive me if I ask something ludicrous. But I guess first I wanted to ask, and you talked a little bit about this on the call, but just kind of the capex deployment of the fixed wireless access, kind of what you're seeing there and what your thoughts are. It sounds like there's a lot of activity going on there, lots of subscribers being added. But generally, I mean it seems like we're in the very early stages. And how do you think about that trend?

there was significant momentum and actually they took many of those subscribers away from the cable modem business. So I think we're part of this overall trend. I mean what we're seeing is this idea that in the fixed wireless market obviously there's a lot of unhappy people with the current internet situation and so you know we happen to be tapping into that. I mean so obviously you know from our perspective you know we had a great second quarter of bookings for July I think reflected that trend of 6.4 million.

And so, as Jim mentioned, we've got great momentum going into Q3, Q4, and into Q1. So I guess from our perspective on the fixed wireless side, we just think there's a broad trend in fixed wireless growth. We certainly saw it with the big carriers. We're seeing it on our bookings. And so we think we're just really at the beginning of that wave. Please tell your network partners about your indexes, and maybe discuss disaster advance picture- nods and those reviews. So question or answer a problem that the busy network is factors, kineticLA, Meanwhile joy

That was fantastic color. And I've heard recently a couple of folks that have spoken about the fixed wireless access and kind of needing to be the very first in line to sign up for that in the neighborhood or in your area because it just can't support the significant bandwidth I guess that some of the Internet has. It sounds like maybe the millimeter wave and your 32 channels, it sounds like you might be able to help on...

Resolves some of that bottleneck. Is that is that fair to say or or is that a problem elsewhere perhaps?

Well, we've got on our perspective chipset close to 3 gigabits per second of bandwidth. We support the concept of point-to-multi-point, so multiple users will dilute that, but on peak rates for people is in the gigabit range. Clearly people aren't really using that, but they're certainly using the hundreds of megabits per second, and we satisfy that. Just the beauty of millimeter wave is that we can...

support these very high data rates and we're tapping into that. So, you know, it's really a confluence of issues here that we're seeing. It's the increase of, and as the FCC is saying, they want to increase the rates to over 100 megabits per second. It's the ability for millimeter wave to provide that, those data rates, and it's really the demand from the user base of going from their 10 or 20 megabits per second up to 100 plus megabits per second.

So it's really the confluence of several things coming together here for us. That's fantastic. And maybe Jim, if you kind of think about maybe the Intel agreement here, what does that do in terms of it sounds like it's non-core existing lines of business. So there's OpEx and maybe a revenue component, not a revenue component, but a sales component there. So straight through the balance sheet some. It helps you kind of buffer some of the costs.

What are the other benefits? Do you think you get out of Intel or agreement? And maybe how do you think about maybe other opportunities for similar types of agreements?

Yeah, no great question David. Obviously, first off, a non-dilutive source of capital for the company. If you look back and look back, the company has had a track record, the advantage of being an IP rich, fabulous company. And obviously when we joined the companies together here back in December , really pursuing an IP play is not on the...

You know the agenda our R&D dollars are going towards our millimeter wave product efforts and and new module project Products and obviously now the 5gb informer chip, which we're very excited about So number one a great way to monetize some some technology, you know to on the business side You know we have you know memory IC products And at this stage you know as others in the industry have I would say curtailed their roadmap of high-performance memory products

we've found some new life for our products and I think having this technology in the hands of

You know Intel going forward could lead to additional opportunities for our memory chips Because they are optimized to run on our silicon. So, you know, stay stay tuned there or we'll see how that plays out You know, obviously as I said putting cash on balance sheets always a good thing, you know But last we estimate this takes out about two point seven million dollars of opex, you know non gap opex

So we'll see it benefit immediately here to our financials, call it, in the first full third quarter of that savings. And obviously we're pleased that the team members who worked very hard on that technology and built something that obviously Intel valued, we're glad to see them join Intel in various capacities. As far as the accounting for the transaction, we've got to work through that with our auditors for the future.

for the third quarter here, so stay tuned. Our guidance number does not assume any revenue from that transaction. It's just purely our products and some of our regular royalties, et cetera. But I think it was just a win-win, and we continued to evaluate other opportunities, and particularly as Ron said, this was technology that had been, to date, really non-revenue generating. So we were quite pleased, and as I said, we were very pleased.

you know, the company has always had a track record of being alert to these types of transactions. So we're always in tune to opportunities, and particularly with the focus on selling, you know, selling products. You know, the IP was, you know, we kept any rights we needed related to our memory products, but you know, trying to have it in the hands of, obviously much larger reputable company that can push it forward.

No doubt you guys have done a good job just driving that IP and creating valuable assets. So it's great to see that monetization.

And maybe just a last one for me here, and I know you touched on this briefly on the call, but just on the balance sheet, you've announced a lot of really great deals, you know, the revenue and the Intel deal. And there just seems like you've got a lot of momentum in the business. And just kind of wondering how you are thinking about the balance sheet, and what your level of comfort is with the working capital and cash. And just is it restraining your ability any at all? Because it seems like the momentum is just...

we got we obviously as you can see from the growth and inventory kind of built up some inventory so we're carrying you know adequate inventory especially during these you know challenging supply chain times in the industry we have not had you know certainly on the memory side have not had any hiccup in being able to deliver parts timely and on the millimeter wave it's been really minimal and maybe in order to push a week or two and you know frankly the customer was not didn't cause any issues so we've been very fortunate there so

You know, obviously by keeping the inventory, we also have obviously long customer relationships. We haven't had any discussions around the balance sheet with customers on that front. But obviously we're going to look opportunistically at the balance sheet. This Intel deal will help in the short run, but be alert for opportunities there. I mean, the capital markets are certainly challenging right now.

you know, we're in such an early stage of showing our story here. You know, again, just having completed the business combination right at the end of 2021 and really trying to, you know, put up a, you know, putting up some numbers on the board so people can see, you know, which way we're headed, you know, obviously. And we're intending that to be up and to the right. You know, we've kind of started that trend. And I think, you know, pointing to the press release we announced last week and as Ron reiterated in his remarks.

you know, we've got a good, a great amount of backlog, which gives us excellent visibility into the, you know, the first, at least through the first quarter of 2023, as far as what we're targeting to do.

Ron, what would you like to add? Yeah, I think you hit the key, Jim. I think, and so David, again, to your point, I mean, July with the bookings we had in July , the $6.4 million, and of course that was on top of all the existing backlog we had already. So the timing is obviously terrific for us because now it gives us visibility well into 2023, even to the second quarter of 2023. So that's kind of an input.

a reasonably important position to be in. Not to mention from a design perspective, we keep racking them up. For example, we just booked a...

last week from a customer who actually got first samples in June . So it was really the quickest.

kind of sampling to early production order in our history anyway at Perazzo. So all those things combined I think bode well for showing up the balance sheet over the next several months.

Well, best of luck to you. You've got a phenomenal story and I think the millimeter wave is going to be a very large driver here going forward in the next couple of quarters. So congrats and looking forward to seeing the continued progress.

Thanks very much, David. It was great having you on the call.

to having you on the call. Yeah, appreciate it, David.

Once again, if there are any remaining questions or comments, please indicate so by pressing star 1 on your touch tone phone.

Okay, we have a question coming from

Eb Geagenlooper

With K.Loo and company, your line is live. Hey, good afternoon, guys, and let me add my congrats on your progress as well.

Maybe if we could just start with the 6 million plus in orders you booked during July . I know you can't share the specific customer names, but can you talk a little bit more about whether these were kind of new or existing customers to you guys? And how should we think about kind of the revenue contribution over the course of this year versus next year? founders, you mentioned that you're doing manufacturing because of government, why didn't it go online so easily?

I can speak to that Tim. Kevin, thank you very much for joining the call today Kevin. Much appreciated. The way you can think about it is those are existing customers, two different classes. One customer is an equipment supplier and another customer is actually a service provider.

So it's actually quite interesting because, at least from my perspective, is because I think we've shared in the past, we're actually seeing service providers now making their own equipment in some cases because it kind of helps their overall business model. So it was nice to see orders from both because it kind of implies both sides of the equation are healthy. In terms of, for the rest of this year certainly it will, at least on the fixed-wildest side, constitute...

I would say the bulk of our business. And look, I'm someone who believes in focus and I believe that by focusing on these accounts, it's really, really allowed us to be successful. I mean, we have a direct line into both of these R&D organizations. Any issues that come up, we immediately are on top of. And that's paying off now in terms of business because we've really...

paid our dues with these customers and frankly, they're doing very, very well from a deployment perspective. Now, having said that, starting now in the third quarter and certainly into the fourth quarter, we really plan to expand our customer base because now we've got the beauty of our module product and I had just described earlier on the call that we had taken really sampling in May or June timeframe We're settled.

to early production now. The beauty of our module business is that we can engage new customers very quickly. By the way, that was the other news that we had in the second quarter. We brought on, we have a deal with Richardson for distribution of our modules. This is yet another confluence that's working in the positive vein for Paraza. We've got module products that really take the guesswork out of millimeter wave.

and really provides a very turnkey solution. So look, the $6.4 million in orders was concentrated around a couple of customers, but now that the modules are fleshed out and working well, we really see that pushing out to a much more substantial customer base over the rest of the year.

That's great to hear. And I know you're also bringing a lot of products to market to support kind of licensed 5G millimeter wave spectrum. You talked about some of that sampling beginning in this current quarter. Maybe if you could provide a little bit more detail around just the number of partners that you expect to be testing those solutions by year end. And how do you think about when you get more material revenue contribution from those folks that may move forward?

Well, the 5G story, we announced the silicon at the start of Q2. We're genuinely thrilled with this silicon. We will be showing it, as we mentioned, at European Microwave and also at Mobile World Congress in Las Vegas. In terms of, really, in my view, limited by not so much...

the number of potential people to work with. It's actually our ability to support those designs. And it really goes back to what we are doing with the Perspectives modules which now is we have a couple of great customers. They are really turned on. I think when it comes to 5G it won't be unlimited customers, but we will focus on, it will be a waterfall. So we will focus on the 20% of the customers that provide 80% of the revenue. So that's how you can see that rolling out over the rest of this year.

But I think frankly, the great news on 5G millimeter wave is obviously we've seen Verizon continues to support millimeter wave. They just announced four new cities supporting millimeter wave. We're seeing very strong continued support of Japan. And now we've been told that in China, as of about two weeks ago, the three top carriers are focused on really collaborating and making sure millimeter wave is deployed in China. So we're seeing it as a global deployment.

Again, from our perspective, over the next six months, you can see us really engaging on a, I would say, selective in the sense that we are going out to the customers who will provide the most paying for the buck in terms of revenue.

So that's really where we see the 5G product going over the next six months.

Understood. And it sounds like you guys are still fairly confident in getting to a higher gross margin target by year end. Could you just talk about some of the assumptions underlying that, whether it's predicated on just continued ramp on the millimeter wave side or what sort of operational improvements or cost inflation easing? Do you see contributing to that?

There's some nuts and bolts stuff in there. For example, this fundamental yield test time, we are going to see some price increases commensurate with the price increases we're seeing. Certainly, as the volumes go up, that really gets prices down. It's really the traditional vectors that you can see on increasing margins. We definitely have quite a few vectors and I think all of those things are being looked at.

and executed upon simultaneously. So we actually feel quite good. So I can just give you one example. In our test facility, we are doubling the capacity. So we are reducing our test time. That leads directly to reduced margins. So we are doing those kinds of things. And there is an array of strategies we are undertaking to reduce our costs, and of course to increase our gross margins.

Really over the frankly over the next 18 months not just over the sick next six months And just lastly for me It sounds like much of the cost savings from this Intel agreement are going to flow through and in the near term Do you expect that to remain the case for the? Reminder of the or do you plan to reinvest some of those savings as we make our way into 23?

You know right now we would ex- go ahead Ron.

And maybe the CEO and CFO have different perspectives. I don't think so either. I'm being facetious. It's been a long day already. From my perspective, we plan to take advantage of those savings and reduce our OpEx across our memory millimeter-weight businesses. Right now, as Ron said, our 5GB Informer chip is ready for sampling.

So we have cut back some of the expenditures around that now that we have a chip that we're comfortable sampling. We had a tape-out expense for that in Q1. We did some minor follow-on items this quarter, but we'd look to take the OPEX savings.

Yeah, Jim, the only thing I was going to say, and I actually completely agree, but I just want to point out that.

and I called it. You know, the bulk, for pretty much 100% now of our R&D dollar is towards wireless.

And so, you know, that, so we, you know, I guess one reason behind this decision on licensing and psychology is, you know, $2.7 million is a pure reduction, as Jim said.

but it also allows us to...

to focus on wireless and not dilute that between wireless and the memory. But that's kind of where we've ended up here. Yeah, it's just really going to go towards cost savings.

Well, I appreciate you guys taking the questions this afternoon and good luck in the second year!

Thank you very much. Thanks Kevin.

Okay, thank you. We have no further questions in queue. I'd like to turn the call back to management for closing remarks.

Well, I will jump in with that, Jim.

Just for everyone on the call, I hope that our enthusiasm for fixed wireless and...

millimeter wave and our modular strategy is all coming through because we didn't really saw the confluence of all those...

The $6.4 million in bookings in July really is a huge step forward.

The $6.4 million in bookings in July really means the fitting of...

of those vectors in a positive way. I was really thrilled last week with the order we got, which is a combination of some like...

early sampling in the May-June timeframe and I think that really really underscores the

benefit of our model strategy. Our 5G chips are you know just really continued.

continued success that we've been seeing on the 60 GHz modules. Stay tuned for that. We really plan to recreate the success we're seeing in 60 GHz in the 5G bands, in the 28 and 39 bands. So I guess from Peraza's perspective, we appreciate everyone dialing in today and listening to our story, but we're just really at the early stages here and we really hope to plan to see continued growth over the next several quarters.

Jim, any further comments?

No, I think you summarized it well, Ron. We appreciate everyone's time and we look forward to speaking to you in about three months time.

Thank you.

Thank you ladies and gentlemen, this does conclude today's conference call.

Thank you ladies and gentlemen this does conclude today's conference call you may disconnect. Thank you very much

Have a wonderful day. Thank you for your participation.