Q2 2024 Peraso Inc Earnings Call

Kevin Liu: At this time, all participants are on a listen only mode. If anyone needs assistance at any time during the 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 12th, 2024. I would now like to turn the call over to your host for today's conference call, Mr. Jim Sullivan. Please go ahead.

Good afternoon and welcome to Perazzo, Inc.'s second quarter 2024 conference call. At this time all participants are in a listen-only mode. If anyone needs assistance at any time during the conference call, please press the star key followed by the zero on your touchtone phone.

As a reminder, this conference call is being recorded today, Monday, August 12, 2024.

I would now like to turn the call over to your host for today's conference call, Mr. Jim Sullivan. Please go ahead.

Jim Sullivan: Good afternoon, and thank you for joining today's conference call to discuss Peraso's second quarter 2024 financial results. I'm Jim Sullivan, CFO of Peraso, and joining me today is Juan Glibbery, our CEO. Today, after the market closed, we issued a press release and related Form 8K, which was filed with the Securities and Exchange Commission. The press release and Form 8K are available on Peraso's website at www.perasoinc.com under the Investor Relations section.

Good afternoon, and thank you for joining today's conference call to discuss Paraso's second quarter 2024 financial results. I'm Jim Sullivan, CFO of Paraso, and joining me today is Ron Glibbery, our CEO.

Speaker Change: Today, after the market closed, we issued a press release and related Form 8K, which was filed with the Securities and Exchange Commission. The press release and Form 8K are available on Proraso's website at www.prorasoinc.com under the Investor Relations section.

Jim Sullivan: 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 Investor Relations webpage. As a reminder, comments made during today's conference call may include a forward-looking statement. All statements other than statements of historical fact could be deemed as forward-looking.

Speaker Change: 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 Investor Relations webpage.

Speaker Change: 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.

Jim Sullivan: Peraso advises caution and 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, non-GAAP net loss, cash flows, or other financial items, including anticipated cost savings. 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 Peraso on the date hereof.

Speaker Change: Carasso advises caution and reliance on

Carasso: 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, non-GAAP net loss,

Carasso: cash flows, or other financial items, including anticipated cost savings.

Speaker Change: 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 PROSO on the date hereof.

Jim Sullivan: These statements involve known and unknown risks, uncertainties, and other factors that may cause Perasa's actual results to differ materially from those implied by the forward-looking statement, including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth in process public filings with the SEC.

Parasa: These statements involve known and unknown risks, uncertainties, and other factors that may cause Parasa's actual results to differ materially from those implied by the forward-looking statements, including unexpected changes in the company's business.

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

Jim Sullivan: 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. With respect to remarks on today's call involving non-GAAP numbers, unless otherwise indicated, referenced amounts exclude stock-based compensation expense, amortization of reported intangible assets, severance costs, and the change in fair value of warrant liability. These non-GAAP financial measures, definitions, and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related Form 8K, which provide additional details.

Speaker Change: Purraso 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.

Speaker Change: 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.

Speaker Change: With respect to remarks on today's call involving non-GAAP numbers, unless otherwise indicated, referenced amounts exclude stock-based compensation expense, amortization of reported intangible assets, severance costs, and the change in fair value of warrant liabilities.

Speaker Change: These non-GAAP financial measures, definitions, and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related Form 8K, which provide additional details.

Ron Glibbery: For those of you unable to listen to the entire call at this time, a recording will be available on the investor relations page of our website. Now, I would like to turn the call over to our CEO, Ron Glibbery, for his prepared remarks. Ron?

Speaker Change: For those of you unable to listen to the entire call at this time, a recording will be available on the investor relations page of our website.

Speaker Change: Now, I would like to turn the call over to our CEO, Ron Glibbery, for his prepared remarks. Ron?

Ron Glibbery: Thank you, Jim. Good afternoon and welcome to everyone on the phone and webcast. We appreciate you taking the time to join us today. Jumping right in, we're very pleased by our continued progress during the second quarter. As reported in today's press release, total revenue of $4.2 million exceeded the high end of our original guidance and represented growth over 50 percent sequentially and more than 70 percent year-over-year. Strong growth was driven by increased shipments of our end-of-life memory IC products, coupled with revenue contributions from a new volume production order for our millimeter-wave antenna modules. Gross margin also expanded, and although reported operating expenses were up slightly due to certain charges incurred during the quarter, we continue to closely manage expenses in support of improving operating results and reducing our cash burn.

Ron Glibbery: Thank you, Jim. Good afternoon and welcome to everyone on the phone and webcast. We appreciate you taking the time to join us today.

Ron Glibbery: Turning to slide 4, I want to briefly highlight the status of the end-of-life with our memory IC products. As anticipated, second quarter shipments against our backlog increased sequentially to approximately $3.4 million compared to $2.4 million in the prior quarter. Net of the most recent $2.9 million end-of-life order purchase order that we received at the end of Q1, we ended the second quarter with total remaining purchase order backlog of approximately $9.1 million.

Speaker Change: Jumping right in, we're very pleased by our continued progress during the second quarter.

Ron Glibbery: As reported in today's press release, total revenue of $4.2 million exceeded the high end of our original guidance.

Ron Glibbery: and represented growth over 50% sequentially and more than 70% year-over-year. Strong growth was driven by increased shipments of our end-of-life memory IC products, coupled with revenue contribution from a new volume production order for our mmWave antenna modules.

Speaker Change: Gross margin also expanded and although reported operating expenses were up slightly due to certain charges incurred during the quarter, we continue to closely manage expenses in support of improving operating results and reducing our cash burn.

Speaker Change: Turning to slide four, I want to briefly highlight the status of the end of life with our memory IC products. As anticipated, second quarter shipments against our backlog increased sequentially to approximately $3.4 million compared to $2.4 million in the prior quarter.

Speaker Change: Net of the most recent 2.9 million dollar end-of-life order purchase order that we received at the end of Q1 We ended the second quarter with total remaining purchase order backlog of approximately 9.1 million dollars

Ron Glibbery: We currently expect third quarter shipments of our IC memory products to be comparable to shipments in the second quarter. Additionally, there have been no significant changes to our original timeline for completing the end of life of our memory IC products, and we maintain on schedule to fulfill the total remaining backlog by the end of the first quarter of 2025. As discussed on previous calls, these shipments against remaining backlog will continue to contribute meaningful revenue and cash flow over the next few quarters as we work aggressively to further expand and ramp customers for our millimeter wave product.

Speaker Change: We currently expect third quarter shipments of our IC memory products to be comparable to shipments in the second quarter. Additionally, there have been no significant changes to our original timeline for completing the end of life of our memory IC products and we maintain on schedule to fulfill the total remaining backlog by the end of the first quarter of 2025.

Speaker Change: As discussed on previous calls, these shipments against remaining backlog will continue to contribute meaningful revenue and cash flow over the next few quarters as we work aggressively to further expand and ramp customers for our millimeter wave products.

Ron Glibbery: Next on slide five, this is an updated snapshot of our global engagement pipeline for new RF millimeter wave business as of the end of July. As a reminder for those who might be newer to our story, Peraso has been a leading innovator of millimeter wave technology for more than a decade.

Speaker Change: Next on slide 5, this is an updated snapshot of our global engagement pipeline for new RF millimeter wave business.

Speaker Change: As of the end of July. As a reminder for those who might be newer to our story, Perazoa has been a leading innovator of mmWave technology for more than a decade. We have a multi-year track record of commercial shipments and our technology has been field proven extensively.

Ron Glibbery: We have a multi-year track record of commercial shipments and our technology has been field proven extensively. Until more recently, our millimeter wave business was exclusively focused on serving a small number of strategic fixed wireless access customers. Over roughly the last year and a half, we have put in place a growth strategy with the goal of establishing a larger and more diversified customer base for our millimeter wave business. We initially set out to achieve this objective primarily focused on the rapidly growing PICS wireless access market in North America.

Speaker Change: Until more recently, our millimeter wave business was exclusively focused on serving a small number of strategic fixed wireless access customers.

Speaker Change: Over roughly the last year and a half, we have put in place a growth strategy with the goal of establishing a larger and more diversified customer base for our millimeter wave business.

Speaker Change: We initially set out to achieve this objective primarily focused on the rapidly growing fixed wireless access market in North America. However, our current efforts and engagements are now equally focused on expanding market reach across diverse geographies and end-market applications.

Ron Glibbery: However, our current efforts and engagements are now equally focused on expanding market reach across diverse geographies and end market applications. We first introduced this pipeline slide in early 2023 and we believe it continues to represent a helpful leading indicator of our progress, not only in terms of customer diversification, but also the expanding growth of potential of our millimeter wave business, to highlight a few of the key takeaways from this year-to-date view of the pipeline.

Speaker Change: We first introduced this pipeline slide in early 2023 and we believe it continues to represent a helpful leading indicator of our progress, not only in terms of customer diversification, but also the expanding growth of potential of our millimeter-weight business.

Speaker Change: to highlight a few of the key takeaways from this year-to-date view of the pipeline.

Ron Glibbery: First, taking the top number that represents new funnel opportunities and combining it with those across the four progressive stages of active engagement, our pipeline comprised 95 total engagements at the end of July. For context, we are consistently pruning our count of funnel opportunities if either activity on an engagement stalls or we choose not to pursue it for commercial reasons. Additionally, once a program engagement converts to being in production, we no longer include it as part of our current pipeline. Even after accounting for both of these variables, our current number of total engagements is up more than 25% compared to this time last year. Turn into slide six.

Speaker Change: First, taking the top number that represents new funnel opportunities and combining it with those across the four progressive stages of active engagement, our pipeline comprised 95 total engagements at the end of July.

Speaker Change: For context, we are consistently Prispruning our account of final opportunities if either activity on an engagement stalls or we choose not to pursue it for commercial reasons

Speaker Change: Additionally, once a program engagement converts to being in production, we no longer include it as part of our current pipeline. Even after accounting for both sides of both of these variables, our current number of total engagements is up more than 25% as compared to this time last year.

Ron Glibbery: As briefly mentioned in my opening remarks, during the quarter, we secured and shipped the first volume production order for our Dune platform. First introduced earlier this year, DUNE is our dense urban network environment platform solution for fixed wireless access. We specifically designed the solution to overcome the challenges associated with delivering reliable and high-speed network access in densely populated areas such as urban neighborhoods. This new volume production order for our millimeter wave antenna modules was from a South African service provider that is leveraging Peraso's DUNE platform solution for its initial deployment.

Speaker Change: Turning to slide 6, as briefly mentioned in my opening remarks, during the quarter we secured and shipped the first volume production order for our DUNE platform.

Speaker Change: First introduced earlier this year, DUNE is our dense urban network environment platform solution for fixed wireless access. We specifically designed the solution to overcome the challenges associated with delivering reliable and high-speed network access in densely populated areas, such as urban neighborhoods.

Speaker Change: This new volume production order for our millimeter wave antenna modules was from a South African service provider that is leveraging Perazo's DUNE platform solution.

Ron Glibbery: It would be difficult to imagine a better form of commercial validation for our DUNE platform and its unique ability to deliver gigabit-speed fixed wireless access in dense urban environments. As a newly established service provider in the region, we anticipate their first initial deployment will take at least several months.

Speaker Change: for its initial deployment.

Speaker Change: It would be difficult to imagine a better form of commercial validation for our DUNE platform and its unique ability to deliver gigabit-speed fixed wireless access in dense urban environment applications.

Speaker Change: As a newly established service provider in the region, we anticipate their first initial deployment will take at least several months. However, we do expect additional incremental orders from this customer as they progress on extending their deployment in the coming quarters.

Ron Glibbery: However, we do expect additional incremental orders from this customer as they progress on extending their deployment in the coming quarters. In addition to this lead customer, we are currently engaged with several other prospective customers targeting future deployments in dense urban environments. This includes our shipment of DUNE proof-of-concepts to multiple WISCs in Africa, with whom we are supporting ongoing evaluations.

Speaker Change: In addition to this lead customer, we are currently engaged with several other prospective customers targeting future deployments in dense urban environments.

Speaker Change: This includes our shipment of DUNE proof-of-concepts to multiple WISCs in Africa, with whom we are supporting ongoing evaluations.

Ron Glibbery: We also continue to believe that millimeter wave technology solutions uniquely position us to potentially participate in planned North American deployments announced by one of our long-time UIST customers. As such, we remain very optimistic about the recent commercial validation and strong expressed interest in our DOOM platform, which we believe represents the leading commercially proven fixed wireless solution for dense urban environments. Moving to slide seven, I want to take a moment to highlight the recent emerging development that we believe could potentially encourage expanded customer adoption and market opportunities for our millimeter wave solutions. For those not already familiar, BEAD is a federal grant program funded through the United States Department of Commerce.

Speaker Change: We also continue to believe that millimeter wave technology solutions uniquely position us to potentially participate in planned North American deployments announced by one of our long-time UIST customers.

Speaker Change: As such, we remain very optimistic about the recent commercial validation and strong expressed interest in our DOOM platform, which we believe represents the leading commercially proven fixed wireless solution for dense urban environments.

Speaker Change: Moving to slide seven, I want to take a moment to highlight the recent emerging development that we believe could potentially encourage expanded customer adoption and market opportunities for our millimeter wave solutions.

Ron Glibbery: BEADS stands for Broadband Equity Access and Deployment, and the program was established with the purpose of allocating $42.45 billion in direct support of broadening access to high speed internet. However, a low majority of the program's funding was initially thought to be prioritized for internet delivered over fiber optic cable. The head of NTIA, which is the agency that oversees the BEAD program, recently stated the agency is planning to provide further guidance on the types of internet delivery that are eligible for potential funding.

Speaker Change: For those not already familiar, BEAD is a federal grant program funded through the United States Department of Commerce.

Speaker Change: BEADS stands for Broadband Equity Access and Deployment and the program was established with the purpose of allocating $42.45 billion in direct support of broadening access to high-speed internet.

Speaker Change: A low majority of the program's funding was initially thought to be prioritized for internet delivery over fiber optic cable.

Speaker Change: The head of NTIA, which is the agency that oversees the BEAD program

Speaker Change: Very recently stated the agency is planning to provide further guidance

Speaker Change: on the types of internet delivery that are eligible for potential funding. More specifically, the NTIA has anticipated to provide guidance that makes funding eligible for the deployment of high-speed internet using unlicensed spectrum fixed wireless access, including millimeter-wave bands.

Ron Glibbery: More specifically, the NTIA has anticipated to provide guidance that makes funding eligible for the deployment of high-speed internet using unlicensed spectrum fixed wireless access, including millimeter-wave bands. I would emphasize that this anticipated new guidance from the NTIA has yet to be formally announced.

Speaker Change: I would emphasize that this anticipated new guidance from the NTIA has yet to be formally announced.

Ron Glibbery: However, to the extent that Internet access delivered via unlicensed fixed wireless access does become eligible for funding, this would likely motivate and benefit a large number of WISPs to deploy WISPs across America, which in turn could potentially result in a significant expanded market opportunity for Peraso. In closing, we're encouraged by the continued customer ramp of our millimeter wave solutions during the second quarter. We aim to gain further traction in the coming quarters, as we remain focused on advancing and converting existing customer engagements into production orders for our millimeter wave products and platform solutions. We also expect our ongoing shipments to fulfill remaining backlog orders for our end-of-life memory IC products will continue to contribute meaningful revenue and cash flow throughout the early next year.

Speaker Change: However, to the extent that internet access delivered via unlicensed fixed wireless access does become eligible for funding, this would likely motivate and benefit a large number of WISPs deployment across America, which in turn could potentially result in significant expanded market opportunity for Perazone.

Speaker Change: In closing, we're encouraged by the continued customer ramp over a millimeter wave solutions during the second quarter. We aim to gain further traction in the coming quarters as we remain focused on advancing and converting existing customer engagements into production orders for a millimeter wave products and platform solutions.

Speaker Change: We also expect our ongoing shipments to fulfill remaining backlog orders for our end-of-life memory IC products will continue to contribute meaningful revenue and cash flow throughout the early next year. Taken together, we anticipate total revenue for the second half of 2024 to increase over the first half of the year while also representing revenue growth year-over-year.

Ron Glibbery: Taken together, we anticipate total revenue for the second half of 2024 to increase over the first half of the year while also representing revenue growth year-over-year. With that, I'll turn the call back to Jim to review the second quarter financials, as well as our revenue outlook for the third quarter of 2024. Over to you, Jim. Thank you, Ron.

Speaker Change: With that, I'll turn the call back to Jim to review the second quarter financials, as well as our revenue outlook for the third quarter of 2024. Over to you, Jim.

Jim Sullivan: Turning to the results for the second quarter of 2024, total net revenue increased to $4.2 million, which was above the high end of our original guidance range. This compared with revenue of $2.8 million in the prior quarter, and $2.4 million for the second quarter of 2023. Product revenue from the sale of our memory integrated circuits and millimeter wave products in the second quarter was $4.1 million, compared with $2.7 million in the prior quarter and $2.2 million in the second quarter of 2023.

Jim Sullivan: Thank you, Ron. Turning to the results for the second quarter of 2024, total net revenue increased to $4.2 million, which was above the high end of our original guidance range. This compared with revenue of $2.8 million in the prior quarter.

Jim Sullivan: and $2.4 million for the second quarter of 2023.

Jim Sullivan: Product revenue from the sale of our memory integrated circuits and millimeter wave products in the second quarter was $4.1 million, compared with $2.7 million in the prior quarter and $2.2 million in the second quarter of 2023.

Jim Sullivan: Royalty and other revenue for the second quarter of 2024 was $0.1 million, consistent with the prior quarter and compared with $0.2 million in the same quarter a year ago. Gap gross margin increased to 55.5% in the second quarter from 46.4% in the prior quarter and 25.3% in the year-ago quarter.

Jim Sullivan: Royalty and other revenue for the second quarter of 2024 was 0.1 million dollars consistent with the prior quarter and compared with 0.2 million dollars in the same quarter a year ago.

Speaker Change: Gap gross margin increased to 55.5% in the second quarter from 46.4% in the prior quarter and 25.3% in the year-ago quarter.

Speaker Change: On a non-GAAP basis, excluding amortization of acquired intangible assets, gross margin increased to 68.8% for the second quarter from 66.4% in the prior quarter and compared with 45.9% in the second quarter of 2023.

Jim Sullivan: On a non-gap basis, excluding amortization of acquired intangible assets, gross margin increased to 68.8% in the second quarter from 66.4% in the prior quarter and compared with 45.9% in the second quarter of 2023. The sequential and year-over-year improvement in gross margin for the second quarter was primarily attributable to increased revenue contribution from shipments of our end-of-life memory IC products. GAAP operating expenses for the second quarter of 2024 were $6.8 million, compared with $4.9 million in the prior quarter and $5.6 million in the second quarter of 2023.

Speaker Change: The sequential and year-over-year improvement in gross margin for the second quarter was primarily attributable to increased revenue contribution from shipments of our end-of-life memory IC products.

Speaker Change: GAAP operating expenses for the second quarter of 2024 were $6.8 million, compared with $4.9 million in the prior quarter and $5.6 million in the second quarter of 2023.

Jim Sullivan: Operating expenses for the second quarter of 2024 included severance expenses of $0.4 million, which will be paid over the next 13 months, as the company completed a temporary layoff initiated in November 2023, and $1.6 million of charges for software license obligations, which will be paid over the next five quarters, non-GAAP operating expenses, which exclude stock-based compensation, amortization of intangible assets and severance costs were $4.9 million in the second quarter of 2024 compared with $3.4 million in the prior quarter and $4.1 million in the second quarter of 2023. The increase in second quarter 2024 operating expenses on a gap and non-gap basis was primarily driven by $1.6 million of charges for software license obligations recorded during the second quarter of 2024.

Speaker Change: Operating expenses for the second quarter of 2024 included severance expenses of $0.4 million.

Speaker Change: which will be paid over the next 13 months as the company completed a temporary layoff initiated in November 2023, and $1.6 million of charges for software license obligations, which will be paid over the next five quarters.

Speaker Change: non-GAAP operating expenses, which excludes stock-based compensation,

Speaker Change: amortization of intangible assets and severance costs were 4.9 million dollars in the second quarter of 2024 compared with 3.4 million dollars in the prior quarter and 4.1 million dollars in the second quarter of 2023.

Speaker Change: The increase in second quarter 2024 operating expenses on a gap and non-gap basis was primarily driven by $1.6 million of charges for software license obligations recorded during the second quarter of 2024.

Jim Sullivan: Gap's net loss for the second quarter of 2024 was $4.4 million, or a loss of $1.88 per share, compared with a net loss of $2 million, or $1.07 per share, in the prior quarter, and a net loss of $4.1 million, or $6.68 per share, in the same quarter a year ago.

Speaker Change: Gap net loss for the second quarter of 2024 was $4.4 million, or a loss of $1.88 per share, compared with a net loss of $2 million, or $1.07 per share in the prior quarter, and a net loss of $4.1 million, or $6.68 per share in the same quarter a year ago.

Jim Sullivan: On a non-GAAP basis, the net loss for the second quarter of 2024 was $2.1 million, or a loss of $0.88 per share, which excluded stock-based compensation, amortization of acquired intangibles, severance costs, and the change in fair value of warrant liability. This is compared with a non-GAAP net loss of $1.6 million, or a loss of 83 cents per share in the prior quarter, and a net loss of $3 million, or a loss per share of $4.93, in the same quarter a year ago. The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for the second quarter of 2024 was approximately 2.4 million shares.

Speaker Change: On a non-GAAP basis, net loss for the second quarter of 2024 was $2.1 million, or a loss of 88 cents per share, which excluded stock-based compensation, amortization of acquired intangibles, severance costs, and the change in fair value of warrant liabilities.

Speaker Change: This is compared with a non-GAAP net loss of $1.6 million, or a loss of 83 cents per share in the prior quarter, and a net loss of $3 million, or a loss per share of $4.93 per share in the same quarter a year ago.

Speaker Change: The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP UPS for the second quarter of 2024 was approximately 2.4 million shares.

Jim Sullivan: Adjusted EBITDA, which we define as gap in an income or loss as reported, excluding stock-based compensation, amortization of acquired intangibles, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes, was negative $1.9 million in the second quarter, compared with a negative $1.4 million in the prior quarter, and negative $2.8 million in the prior year period. As of June 30, 2024, we had $1.9 million of cash, representing a decrease of approximately $0.6 million during the second quarter of 2024.

Speaker Change: Adjusted EBITDA, which we define as gap in net income or loss as reported, excluding stock-based compensation, amortization of acquired intangibles, severance costs,

Speaker Change: Change in Fair Value of Warrant Liabilities, Interest Expense,

Speaker Change: depreciation and amortization and the provision for income taxes

Speaker Change: was negative $1.9 million in the second quarter compared with a negative $1.4 million in the prior quarter and negative $2.8 million in the prior year period.

Speaker Change: As of June 30, 2024, we had $1.9 million of cash, representing a decrease of approximately $0.6 million during the second quarter of 2024.

Jim Sullivan: Turning to our outlook, as Ron discussed, we continue to cultivate a growing pipeline of customer engagements for our millimeter wave solutions, and we are working to convert a number of these opportunities into new production orders over the coming quarters. Looking at the second half of 2024, we continue to have a significant remaining backlog of non-cancel purchase orders for our end-of-life memory IC products. Specific to the third quarter of 2024, the company currently expects total net revenue to be in the range of $3.8 million to $4.2 million. This concludes our prepared remarks and I'll now turn the call back over to the operator to assist with the Q&A session. Operator?

Speaker Change: Turning to our outlook, as Ron discussed, we continue to cultivate a growing pipeline of customer engagements for our millimeter wave solutions and we are working to convert a number of these opportunities into new production orders over the coming quarters.

Speaker Change: Looking at the second half of 2024, we continue to have a significant remaining backlog of non-cancel purchase orders for our end-of-life memory IC products.

Speaker Change: Specific to the third quarter of 2024, the company currently expects total net revenue to be in the range of $3.8 million to $4.2 million.

Speaker Change: This concludes our prepared remarks, and I'll now turn the call back over to the operator to assist with the Q&A session. Operator?

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Speaker Change: Thank you. At this time we will be conducting a question and answer session.

Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Once again, please press star one if you have a question or comment. First question comes from David Williams with Benchmark, please proceed. Hey, good afternoon, gentlemen. Thanks for taking my question here. I guess maybe first, Ron, thanks for all the color on... Business, and you know, one of the things I think is really interesting, and your engagement.

Speaker Change: You may press star 2 if you'd like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions.

Speaker Change: Once again, please press star 1 if you have a question or comment.

Operator: Just talk a little bit about that, just the diversity of customers there, a little more color on what you're seeing there and how you think that develops, I guess, over the next several quarters. I think increased activity or the same, just any color there that would help us understand your customers or potential customers would be helpful, I think. Oh, thanks, Dave. Great. Good to speak to you.

Speaker Change: First question comes from David Williams with Benchmark. Please proceed.

David Williams: Hey, good afternoon gentlemen. Thanks for taking my question here.

David Williams: I guess maybe first, Ron, thanks for all the color on the...

Speaker Change: on the business and, you know, one of the things I think is really interesting is just the expansion.

Speaker Change: in your engagement pipeline. Can you talk a little bit about that, just the diversity of customers there, and you spoke a little bit about it, but can you give us a little more color on what you're seeing there, and how you think that develops, I guess, over the next several quarters?

Speaker Change: increased activity or the same just any color there that would help us understand your your customers

Speaker Change: or potential customers would be helpful.

Ron Glibbery: Yeah, I mean, from my perspective, obviously, we're pleased with the revenue in the margin for the quarter. But you know, what keeps me very motivated is that our design activity in millimeter wave is just going very, very strong. I'm very bullish in terms of that activity. So, you know, I would say there are a couple of points to make.

Speaker Change: I think.

Speaker Change: From my perspective, obviously we're pleased with the revenue and the margin for the quarter, but what keeps me very motivated is that our design activity in Millimeter Wave is just going very, very strong. I'm very bullish in terms of that activity.

Speaker Change: You know, I would say there's a couple of points to make. One point is that on the fixed wireless aspect of our business,

Ron Glibbery: One point is that on on the fixed wireless aspect of our business, As operators get used to millimeter wave and the benefits that we provide, i.e. the high performance and particularly our ability to operate in dense environments, I would say almost on a weekly basis we have new opportunities. So we just continue to see that growing, frankly.

Speaker Change: As operators get used to millimeter wave and the benefits that we provide, i.e. the high performance and particularly our ability to operate in dense environments,

Speaker Change: I would say almost on a weekly basis we have new opportunities. So we just continue to see that growing, frankly. Let's face it, fixed wireless is a very, very hot topic in terms of broadband communications.

Ron Glibbery: Let's face it, fixed wireless is a very, very hot topic in terms of broadband communications and we're in the heart of that, either in America, by the way, or globally. So I'm thrilled with our design activity in terms of fixed wireless access business. And again, the main drivers there are the gigabit performance combined with our ability to operate in dense environments. The other topic, Dave, that gives me optimism is our momentum in defense and military.

Operator: Good afternoon and welcome to Peraso Link's second quarter 2024 conference call. At this time, all participants are in a listen only mode. If anyone needs assistance at any time during the conference call, please press the star key followed by the zero on your touch tone phone.

Speaker Change: And we're in the heart of that, either in America, by the way, or globally. So I'm thrilled with our design activity in terms of fixed wireless access business. And again, the main drivers there are the gigabit performance combined with our ability to operate in dense environments.

Operator: As a reminder, this conference call is being recorded today, Monday, August 12, 2024. I would now like to turn the call over to your host for today's conference call.

Speaker Change: The other topic, Dave, that gives me optimism is our momentum in defense, in military. And the watchword there is a phrase called...

Ron Glibbery: And the watchword there is a phrase called low probability of detection. So as I've mentioned in past calls, as we've learned from conflicts in Ukraine as well as in the Middle East, there's a very serious problem, which is detection of traditional radio signals. And so because we use phase-rated technology and we create pencil beams, it's almost impossible for the enemy to detect.

James Sullivan: Mr. Jim Sullivan, please go ahead. Good afternoon and thank you for joining today's conference call to discuss Peraso's second quarter 2024 financial results. I'm Jim Sullivan, CFL of Peraso, and joining me today is Juan Glibbery, our CEO.

Speaker Change: low probability of detection. So as I've mentioned in past calls, as we learned from conflicts in Ukraine as well as in the Middle East,

Speaker Change: There's a very serious problem, which is detection of traditional radio signals. And so because we use phase-rate technology and we create pencil beams, it's almost impossible for the enemy to detect.

James Sullivan: Today, after the market closed, we issued a press release and related form 8K which was filed with the Securities and Exchange Commission. The press release and form 8K are available on Peraso's website at www.peraso link.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 Investor Relations webpage. As a reminder, comments made during today's conference call may include forward-looking statements.

Ron Glibbery: So this is becoming a very, very important topic in military applications. And we didn't really talk about it in the slide presentation. But another real potentially even larger area of growth for us beyond fixed wireless is our military and defense applications. So that's another area where we're seeing increased design activity. So to me, obviously, we'd love to see the increase in revenue, but we really believe that's in the pipeline. And the design activity is very strong from our perspective. So I hope that helps in terms of some color.

Speaker Change: So, this is becoming a very, very important topic in military applications and we didn't really talk about it in the slide presentation, but another potentially even larger area of growth for us beyond fixed wireless is our military and defense applications.

James Sullivan: All statements other than statements of historical fact could be deemed as forward-looking. Peraso advises caution and alignance on forward-looking statements. These statements include without limitation, any projections of revenue, margins, expenses, non-gap-ghost profit, non-gap-ghost margin, non-gap operating expenses, adjusted EBITDA, non-gap net loss, cash flows, or other financial items, including anticipated cost savings. 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 Peraso on the date hereof.

Speaker Change: another area where we're seeing increased design activity, so you know that to me obviously we'd love to see the increase in revenue, but we really believe that's in the pipeline and The design activity is very strong from our perspective

Ron Glibbery: Thanks for all that insight and information. The other thing I wanted to ask about was you had a press release out earlier that was about custom iPads for WI-FI. IEE standards.

Speaker Change: So I hope that helps in terms of some color.

Speaker Change: Yeah, very helpful. Thanks for all that insight. The other thing I wanted to ask about was, you had a press release out earlier that was about custom IP for Wi-Fi 8.

Ron Glibbery: Just kind of curious what how you think about that and and what that all entails is that a, Williams, Kevin Libby, Ronald Glibbery, Peraso, Ron Lyons, Donald Glibbery, David Williams, Kevin Libby, Ronald Glibbery, Peraso, Ronald Glibbery, David Williams, Ronald Glibbery, Well, yeah, that's a that's a great question as well. And thank you for bringing that up, because we didn't bring it up. But you know, basically, the idea there is that the IEEE, you know, determined that they'd like to include, you know, 60 gigahertz, and really 45 to 71 gigahertz in next generation, Wi Fi, or at least IEEE standards. And normally, Wi Fi adopts IEEE standards. So from our perspective, there's two ways we can play it.

Speaker Change: and future IEE standards. Just kind of curious how you think about that and what that all entails. Is that a capital expense or is it development? How do we think about the Wi-Fi 8 opportunity?

Speaker Change: development.

Speaker Change: [inaudible]

Speaker Change: Well, yeah, that's a great question as well, and thank you for bringing that up, because we didn't bring it up. But, you know, basically the idea there is that the IEEE, you know, has determined that they'd like to include, you know, 60 gigahertz, and really 45 to 71 gigahertz in next generation Wi-Fi, or at least IEEE standards.

James Sullivan: These statements involve known and unknown risks, uncertainties, and other factors that may cause Peraso's actual results to differ materially from those implied by the forward-looking statements, including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth and process public filings with the SEC. Peraso expressly describes 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.

Speaker Change: and normally Wi-Fi adopts IEEE standards. So from our perspective, there's two ways we can play it. I mean, we can use capital to develop chips on our nickel and, you know, go to market with that. Or we can collaborate with existing players. I mean, at the moment, we're thinking more along the collaboration route.

Ron Glibbery: I mean, we can use capital to develop chips on our nickel and, you know, go to market with that. Or we can collaborate with existing players. I mean, at the moment, we're thinking more along the collaboration route. You know, we're really, to be quite frank, like we're very, I'd say, fixed on fixed wireless and in the military right now. We think for consumer electronics, we can play a role there. We think, of course, that market is going to be huge, but it is a few years away still, but we're extremely well positioned from a capabilities perspective to, you know, really partner with larger players in that space. And, you know, the sky's the limit in terms of opportunity, but it's a little early to predict.

Speaker Change: You know, we're really, to be quite frank, we're very, I'd say, fixed on fixed wireless and military right now.

James Sullivan: 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 gap and non-gap. With respect to remarks on today's call involving non-gap numbers, unless otherwise indicated, referenced amounts exclude stock-based compensation expense, amortization of reported intangible assets, severance costs, and the change and fair value of warrant liabilities.

Speaker Change: We think for consumer electronics, we can play a role there.

Speaker Change: We think, of course, that market is going to be huge, but it is a few years away still. But we're extremely well positioned from a capabilities perspective to really partner with larger players in that space. And, you know, sky's the limit in terms of the opportunity.

James Sullivan: These non-gap financial measures, definitions, and the reconciliation of the differences between them and comparable gap measures, are presented in a press release and related for-made case, which provide additional details, for those of you unable to listen to the entire call of this time, a recording will be available on the Investor Relations page of our website.

Speaker Change: But it's a little early to predict, but what I can predict is that

Ron Glibbery: But what I can predict is that, you know, our ability to build technology for that space is more or less unprecedented in terms of our skills. So that's how we kind of see that. But it was terrific.

Speaker Change: Our ability to build technology for that space is more or less unprecedented in terms of our skills. So that's how we kind of see that. But it was really a terrific update from our perspective to see that the IEEE is supporting 60G for future generations.

Ron Glibbery: It was really a terrific update from our perspective to see that the IEEE is supporting 60 gig for future generations, and then just kind of on the DUNE platform, shipped this quarter, it looks like you're getting a lot of interest. How quickly, I guess, can they deploy and what do you think the size of that market is? Today you're dealing, obviously, with one, but that seems like a very large opportunity, in that region, but if you were kind of thinking about how quickly they can deploy and how quickly this could turn to revenue. Any color thoughts on... Well, the good news on that, Dave, is that the boxes are ready.

Ronald Glibbery: Now I would like to turn the call over to our CEO, Ron Glibbery, for his prepared remarks. Ron? Thank you, Jim. Good afternoon and welcome to everyone on the phone and webcast. We appreciate you taking the time to join us today. Jumping right in, we're very pleased by our continued progress in the second quarter. As reported in today's press release, total revenue of 4.2 million exceeded the high end of our original guidance and represented growth over 50 percent sequentially and more than 70 percent year over year.

Speaker Change: Okay, all right, very good. And then just kind of on the Dune platform that you that you shipped this quarter, it sounds like you're getting a lot of interest there.

Speaker Change: How quickly, I guess, can they deploy and what do you think the size of that market is? Today, you're dealing, obviously, with one, but that seems like a very large opportunity just in that region. But if you were kind of thinking about how quickly they can deploy and how quickly this could turn to revenue.

Ronald Glibbery: The strong growth was driven by increased statements of our end-of-life memory IC products coupled with revenue contribution from a new volume production order for our millenium wave antenna modules. Growth margin also expanded and although reported operating expenses were up slightly due to certain charges incurred during the quarter, we continued to closely manage expenses and support of improving operating results and reducing our cash burn.

Speaker Change: Um...

Speaker Change: Any color thoughts on that?

Speaker Change: Well the good news on that Dave is that the boxes are ready like we've got you know several ODMs that are building you know the devices for that for that market so somebody brought this up the other day and so so so I think what's what's interesting about this space is that

Ron Glibbery: Like we've got, you know, several ODMs that are building, you know, the devices for that for that market. So somebody brought this up the other day. And so, so so I think what's what's interesting about this space is that, You know, this, this is really a matter of promoting this within the service providers so that service providers can buy these boxes. So in other words, really the limitation is how quickly the service providers will actually deploy. It's not a function of, oh, we have a design when we have to wait, you know, 12 months or 18 months before the, you know, the hardware is ready.

Speaker Change: This is really a matter of promoting this within the service providers so that service providers can buy these boxes. So in other words,

Ronald Glibbery: Turning to slide four, I want to briefly highlight the status of the end-of-life with our memory IC products. As anticipated, second-quarter shipments against our backlog increased sequentially to approximately $3.4 million compared to $2.4 million in the prior quarter. Net of the most recent $2.9 million end-of-life order purchase order that we received at the end of Q1, we ended the second quarter with total remaining purchase order backlog of approximately $9.1 million. We currently expect third quarter shipments of our IC memory products to be comparable to shipments in the second quarter.

Speaker Change: Really, the limitation is how quickly the service providers will actually deploy. It's not a function of, oh, we have a design when we have to wait, you know, 12 months or 18 months before the, you know, the hardware is ready. There is hardware deploying today as we speak, and when we actually

Ron Glibbery: There is hardware deploying today as we speak. And when we actually, I mean, to be quite frank, we have a growing, the manufacturers are now seeing the success of 60 gigahertz. And so we've got, you know, there's, I would say at least four or possibly even five manufacturers who are committed to building products so they can very quickly get into market.

Speaker Change: I mean, to be quite frank, we have a growing, the manufacturers are now seeing the success of 60 gigahertz. And so we've got, you know, there's

Speaker Change: I would say at least four or possibly even five manufacturers who are committed to building products so they can very quickly get into market.

Ronald Glibbery: Additionally, there have been no significant changes to our original timeline for completing the end-of-life of our memory IC products and we maintain on schedule to fulfill the total remaining backlog by the end-of-the-first quarter of 2025. At discuss on previous calls, these shipments against remaining backlog will continue to contribute meaningful revenue and cash flow over the next few quarters as we work aggressively to further expand the ramp customers for our millimeter-wave products.

Ron Glibbery: So, you know, from our perspective, our job is to make sure that the service providers understand the benefits of 60 gigabits and they can get to market quickly. It's a matter of how quickly they can roll it out and deploy it. But I mean, the good news is we're not waiting for hardware. The hardware and software, more importantly, are available from several vendors. And so really, it's just a matter of how quickly service providers, not just globally, but also in the U.S., for sure, can start to deploy this technology.

Speaker Change: You know, from our perspective, our job is to make sure that the service providers understand the benefits of 60GIG.

Ron Glibbery: And they don't have to wait for hardware. They can quickly order it from one of several manufacturers. And just one last one, if I may, you talked a little bit about the BEAT funding earlier, and that seems like a very large opportunity over time, just kind of given the magnitude of that there. But you also have a couple of others out there, RDOF being one.

Speaker Change: And they can get to market quickly. It's a matter of how quickly they can roll it out and deploy. But, I mean, so the good news is we're not waiting for hardware. The hardware and software, more importantly.

Speaker Change: is available from several vendors and so really it's just a matter of how quickly

Ronald Glibbery: Next on slide five, this is an updated snapshot of our global engagement pipeline for new RF millimeter-wave business as of the end of July. As a reminder, for those who might be new to our story, Parazo has been a leading innovator of millimeter-wave technology for more than a decade. We have a multi-year track record of commercial shipments and our technology has been feel proven extensively. Until more recently, our millimeter-wave business was exclusively focused on seven of the small number of strategic fixed wireless access customers.

Speaker Change: Service providers, not just globally, but also in the U.S. for sure, in terms of how quickly they can start to deploy this technology, and they don't have to wait for hardware. They can quickly order it from one of several manufacturers.

Speaker Change: And just one last one, if I may.

Speaker Change: You talked about the BEAT funding earlier, and that seems like a very large opportunity over time, just kind of given the magnitude of that there. But you also have a couple of other out there, RDOF being one.

Ronald Glibbery: Over roughly the last year and a half, we have put in place a growth strategy with the goal of establishing a larger and more diversified customer base for our millimeter-wave business. We initially set out to achieve this objective primarily focused on the rapidly growing fixed wireless access market in North America. However, our current efforts and engagements are now equally focused on expanding market reach across diverse geographies and end-market applications. We first introduced this pipeline slide in early 2023 and we believe it continues to represent a helpful leading indicator of our progress, not only in terms of customer diversification, but also the expanding growth of potential of our millimeter-wave business.

Ron Glibbery: We talked a little bit about potentially including fixed wireless access there. How large of an opportunity? If you were to kind of guess and... North America, how much deployment could be covered by fixed wireless access. Is there really a way to think about that, what that operation would look like?

Speaker Change: But you talked a little bit about potentially including fixed wireless access there. How large of an opportunity, if you were to kind of guess, maybe in North America, how much deployment could be covered by fixed wireless access, is there really a way to think about that, what that opportunity could be?

Ron Glibbery: Yeah, that's a good question. So I would say in North America, let's say for argument's sake, we're looking at 100 million, you know, homes. So we think the number is a good 20 million that could benefit from that, right? So let's call it 20 million homes. You know, so I'm just kind of, you know, I'm just kind of doing a very high level estimate, Dave. But I guess from my perspective, and those are the numbers that I've been used to is like, let's say 100, we think about 20%, you know, is in a region where they would definitely benefit from wireless technology access. So I think that would be kind of the number. So that, you know, that would probably put some brackets around it.

Speaker Change: Yeah, that's a good question. So I would say in North America, let's say for argument's sake, we're looking at 100 million homes. So we think the number is a good 20 million that could benefit from that, right? So let's call it 20 million homes.

Ronald Glibbery: I'll highlight a few of the key takeaways from this year-to-date view of the pipeline. First, taking the top number that represents new funnel opportunities and combining it with those across the four progressive stages of active engagement, our pipeline comprise 95 total engagements at the end of July. For context, we are consistently postponing our count of funnel opportunities. It be their activity on an engagement stalls or we choose not to pursue it Williams.

Speaker Change: So I'm just kind of doing a very, very high-level estimate, Dave. But I guess from my perspective, and those are the numbers that I've been used to, is like, let's say, we think about 20%.

Speaker Change: you know, is in a region where they would definitely benefit from wireless technology access. So I think that would be kind of the number. So that, you know, that would probably put some brackets around it.

Ronald Glibbery: Additionally, once a program engagement converts to being in production, we no longer include it as part of our current pipeline, even after accounting for both sides of both of these variables, our current number of total engagements is up more than 25% at compared to this time last year.

Ron Glibbery: But, you know, I'm just thrilled with the latest update from the NTIA, and this was last week. Basically, as I stressed in the presentation, this is not formally committed, but, you know, it was definitely spoken about by the head of NTIA, and we expect to see that in the next, you know, two to three weeks. But it was a pretty major, and basically what people were saying, it's like, oh, yeah, like, you know, fiber is a good technology.

B: But, you know, B is for

Speaker Change: I'm just thrilled with the latest update from the NCIA, and this was last week.

Speaker Change: Basically, as I stressed in the presentation, this is not formally committed, but it's definitely spoken about by the head of NTIA, and we expect to see that in the next two to three weeks.

Ronald Glibbery: Turning to slide 6, as briefly mentioned in my opening remarks, during the quarter we secured and shipped the first volume production order for our Dune platform. First introduced earlier this year, Dune is our dense urban network environment platform solution for fixed wireless access. We specifically designed the solution to overcome the challenges associated with delivery and reliable and high speed network access and density populated areas, such as urban neighborhoods. This new volume production order for a millimeter even 10 modules was from a South African service provider that is leveraging Peraso's Dune platform solution for its initial deployment.

Speaker Change: But it was a pretty major, and basically what people were saying is like, oh yeah, fiber is a good technology. It's absolutely not viable with $42 billion to give everybody in America fiber.

Ron Glibbery: It's absolutely not viable with $42 billion to give everybody in America fiber. It's as simple as that. And so they've actually recognized the absolute importance that unlicensed wireless technology is to providing everybody in America with very high speed broadband. Thanks for the color and best of luck on the, Thank you, David.

Speaker Change: It's as simple as that. And so they've actually recognized the absolute importance that unlicensed wireless technology is to providing everybody in America with very high-speed broadband.

Speaker Change: Perfect. Thanks for the color and best of luck on the quarter, gentlemen.

Ron Glibbery: Thanks Dave. The next question is from Jon Hickman with Ladenburg, please proceed. Hello, can you hear me?

Ronald Glibbery: It would be difficult to imagine a better form of commercial validation for our Dune platform and its unique ability to deliver gigabit speed fixed wireless access in dense urban environment applications. As a newly established service provider in the region, we anticipate their first initial deployment will take at least several months. However, we do expect additional incremental orders from this customer as they progress on extending their deployment in the coming quarters. In addition to this lead customer, we are currently engaged with several other prospective customers targeting future deployments in denser environments.

Dave: Thank you, Dave.

Dave: Thanks Dave.

Dave: Hello, Brock, can you hear me?

Jon Hickman: I sure can, Jon. Okay, great. So I have a couple questions. Jim, could you tell us out of the 4.1 million, how much was millimeter wave? The revenue breakdown was approximately 80% memory and 20% millimeter wave for the quarter. 80-20, okay. And then, is there seasonality in the sunlight here? Is that to me Jon or Jim? Either one, I don't care.

Brock: We sure can John

John: Okay, great. So I have a couple questions. Jim, could you tell us, out of the 4.1 million, how much was millimeter wave?

Speaker Change: The revenue breakdown was approximately 80% memory and 20% millimeter wave for the quarter.

Ronald Glibbery: This includes our shipment of Dune proof of concepts to multiple whists in Africa with whom we are supporting ongoing evaluations. We also continue to believe that millimeter wave technology solutions uniquely position us to potentially participate in planned North American deployments announced by one of our long-time whist customers. As sites, we remain very optimistic about the recent commercial validation and strong expressed interest in our Dune platform, which we believe represents the leading commercially proven fixed wireless solution for dense urban environments.

Speaker Change: 80-20, okay. And then, is there seasonality in the summer?

Speaker Change: Is that to me John or Jim? Either one, I don't care.

Ron Glibbery: I can take that. We haven't seen seasonality. Basically, people buy broadband. I can speak to the broadband side, and Jim can speak to the memory side, but on the broadband side, Jon, I would say there's no real seasonality.

Speaker Change: I can take that I mean there's

John: I, we haven't seen seasonality, like basically people by broadband, at least on the I can speak to the broadband side and Jim can speak to the memory side, but on the broadband side.

Ron Glibbery: To be frank, as we said in the press release and on the slides, we are going through this inventory correction, so that's the bigger picture issue, but from a seasonality perspective, we don't really have any specifics there that we've seen over the years in terms of any particular quarter that's better or worse. Okay, and then the B guys, did you say that you expect them to hear more out of them in the next? two to three weeks.

Ronald Glibbery: Moving to slide seven, I want to take a moment to highlight the recent emerging development that we believe could potentially encourage expanded customer adoption and market opportunities for our millimeter wave solutions. For those not already familiar, BEED is a federal grant program funded through the United States Department of Commerce. BEED stands for Broadband Equity Access and Deployment, and the program was established with the purpose of allocating 42.45 billion dollars in direct support of broadening access to high-speed internet.

John: John, I would say there's no real seasonality. I mean, you know, to be frank, as we said in the press release and on the slides,

Jim Sullivan: You know, we are going through this inventory correction, so that's kind of the bigger picture issue. But from a seasonality perspective, we don't really have any specifics there that we've seen over the years in terms of any particular quarter that's better or worse.

Ronald Glibbery: A low majority of the program's funding was initially thought to be prioritized for internet delivered over fiber off the cable. The head of NTIA, which is the agency that oversees the BEED program, very recently stated, the agency's plan is to provide further guidance on the types of internet delivery that are eligible for potential funding. More specifically, the NTIA has anticipated to provide guidance that makes funding eligible for the deployment of high-speed internet using unlicensed spectrum fixed wireless access, including millimeter wave bands.

Speaker Change: Okay, and then the BEAD guys, did you say that you expect them to hear more out of them in the next two to three weeks?

Ron Glibbery: Yes, you know, basically, there was a conference last week where the head of so so the basically the way beaded administered through the NTIA, and the head of the NTIA has said now that they they see themselves including unlicensed wireless as part of the as part of the beat funding. So that that's a very significant change in policy from our perspective, and obviously in a very positive way. You know, Bede was, or NTI, you know, to step back a little bit, like Bede was really, when approved by Congress, was supposed to be technology neutral. So it didn't matter how you got people, you know, good broadband, they were supposed to just get good people, you know, get people good broadband.

Speaker Change: Yes, basically there was a conference last week where the head of, so basically the way BEAT is administered through the NTIA.

Speaker Change: And the head of the NTA has said now that they see themselves including unlicensed wireless as part of the BEAT funding. So that's a very significant change in policy from our perspective, and obviously in a very positive way.

Ronald Glibbery: I would emphasize that this anticipated new guidance from the NTIA has yet to be formally announced. However, to the extent that internet access delivered via unlicensed fixed wireless access does become eligible for funding, this would likely motivate and benefit a large number of Whist deployment across America, which in turn could potentially result in significant expanded market opportunity for Perazone.

Speaker Change: To step back a little bit, BEAD was really, when approved by Congress, was supposed to be technology neutral, so it didn't matter how you got people good broadband, they were supposed to just get people good broadband.

Ronald Glibbery: Inclosing, we're encouraged by the continued customer ramp over a minimum of solutions during the second quarter. We aim to gain further traction in the coming quarters, as we remain focused on advancing and converting existing customer engagements into production orders for a minimum of way product products and platform solutions. We will also expect our ongoing shift to fulfill remaining backlog orders for our end-of-life memory IC products will continue to contribute meaningful revenue and cash flows throughout the early next year. Taken together, we anticipate total revenue for the second half of 2024 to increase over the first half of the year, while also representing revenue growth year-over-year.

Ron Glibbery: It got shifted a little bit when it got to the NTA, which said, well, you know what, good broadband is brought to you by fiber, and we think everybody should get fiber. But there was definitely pushback from the states because they basically said, hey, you know, we agree fiber is great, but it's just way too expensive for this budget to deploy everybody with fiber. So we need to include all technologies, which, by the way, was the original concept, uh... that uh... you know that whatever it took to solve this problem. So where we come in with millimeter wave is we're providing fiber-like speed, i.e.

Speaker Change: It got shifted a little bit when it got to the NTA, which said, well, you know what, good broadband is brought to you by fiber, and we think everybody should get fiber. But there was definitely pushback from the states, because they basically said, hey, you know, we agree fiber is great, but it's just way too expensive.

Speaker Change: for this budget to deploy everybody with fiber. So we need to include all technologies, which by the way, was the original concept.

Speaker Change: that, you know, that whatever it took to solve this problem. So where we come in with Millimeter Wave is we're providing, you know, fiber-like speeds, i.e. a gigabit.

James Sullivan: With that, I'll turn the call back to Jim to review the second quarter of financials, as well as our revenue outlet for the third quarter of 2024. Over to you, Jim. Thank you, Ron. Turning to the results for the second quarter of 2024, total net revenue increased to $4.2 million, which was above the high end of our original guidance range. This compared with revenue of $2.8 million in the prior quarter and $2.4 million for the second quarter of 2023.

Ron Glibbery: a gigabit uh... with with very low latency uh... so so we think so so so i think it's great to see that NTIA has uh... is proposing a very significant policy shift here uh... in terms of adding unlicensed wireless to the to the repertoire of tools, Okay, that sounds good. So if they when they talk, when they speak again, or do you think they're going to actually.

Speaker Change: with very low latency, so I think it's great to see that NTIA is proposing a very significant policy shift here in terms of adding unlicensed wireless to the repertoire of tools.

Speaker Change: Okay, that sounds it.

Speaker Change: So, if they, when they talk, when they speak again, or do you think they're going to actually.

James Sullivan: Product revenue from the sale of our memory integrated circuits and millimetre wave products in the second quarter was $4.1 million, compared with $2.7 million in the prior quarter and $2.2 million in the second quarter of 2023. We're looking at other revenue for the second quarter of 2024 with $0.1 million, consistent with the prior quarter and compared with $0.2 million in the same quarter a year ago. Gap growth margin increased to 55.5% in the second quarter from 46.4% in the prior quarter and 25.3% in the year ago quarter.

Ron Glibbery: They were going to allocate so much of that original budget to fixed wireless. Absolutely. Well, I mean, this is certainly their position.

Speaker Change: They were going to allocate so much of that original budget to fixed wireless?

Ron Glibbery: Yes, I completely am expecting that. It would be a major, it would be a major step back if they changed their mind at this point. It was pretty well documented.

Speaker Change: Absolutely. Well, I mean, this is certainly their position. Yes, I completely am expecting that. It would be a major step back if they changed their mind at this point. It was pretty well documented. Okay, so they'll actually put a figure on, like a percentage?

Ron Glibbery: Okay. So they'll actually put a figure on, like up for aimang, We think the way it will work is that, basically, it's more or less letting the market decide. So I'm not sure there's going to be a limitation, right? I mean, basically, the market will decide what's the best way.

Speaker Change: We think the way it will work is that it's more or less letting the market decide. I'm not sure there's going to be a limitation. Basically, the market will decide what's the best way. What we have to keep in mind is the advantage that we provide with unlicensed fixed wireless

James Sullivan: On a non-gap basis, excluding amodization of acquired and tangible assets, growth margin increased to 68.8% for the second quarter from 66.4% in the prior quarter and compared with 45.9% in the second quarter of 2023. The sequential and year-over-year improvement growth margin for the second quarter was primarily attributable to increased revenue contribution from shipments of our end-of-life memory IC products. Gap operating expenses to the second quarter of 2024 were $6.8 million compared with $4.9 million in the prior quarter and $5.6 million in the second quarter of 2023.

Ron Glibbery: And what we have to keep in mind is really the advantage that we provide with unlicensed fixed wireless is that it's very economical to deploy. But also, the other factor is it's very rapid deployment. So we don't have to trench holes for fiber to go through, which takes some time.

Speaker Change: It's very economical to deploy, but the other factor is it's very rapid deployment, so we don't have to trench holes for fiber to go through, which takes some time, so we can deploy very quickly as well.

Ron Glibbery: So we can deploy very quickly as well. So we think the market will ultimately decide. And frankly, from a cost perspective, milliliter-weight fixed wireless is a great solution. How can you want to?

Speaker Change: We think the market will ultimately decide, you know, frankly from a cost perspective, fixed wireless, millimeter rate fixed wireless is a great solution.

Speaker Change: Thank you for your time and we will see you again real soon.

Speaker Change: How can you want to.

Ron Glibbery: If you want to guesstimate about. If this goes the way you're saying. When could the market start using those? Oh, I think second half of 20, like this year, absolutely this year.

James Sullivan: Operating expenses to the second quarter of 2024 included seven expenses of $0.4 million which will be paid over the next 13 months as the company completed a temporary layout initiated in November 2023 and $1.6 million charges for software license obligations which will be paid over the next five quarters. Non-gap operating expenses which excluded stock-based compensation, amodization of intangible assets and severance costs were $4.9 million in the second quarter of 2024 compared with $3.4 million in the prior quarter and $4.1 million in the second quarter of 2023.

Speaker Change: you want to guesstimate about if this goes the way you're saying when could when could the market start using those funds?

Speaker Change: Oh, I think second half of 20th, like this year. Absolutely this year, for sure.

Ron Glibbery: Oh, this year? For sure. Yeah. Okay. So if I was the, Broadband Suppliers. And I went to do a project and I wanted to, so I do the project.

Speaker Change: OK.

Speaker Change: So if I was a

Speaker Change: broadband supplier and I want to do a project and I wanted so I I do the project and submit it to bead for financing

Ron Glibbery: Submitted to, Bede for financing? Yes. Yeah, you can include in your plan minimum of the way fixed wireless, for sure. Yeah, but then, okay, and then these. Does DEED reimburse the, for the provider.

Speaker Change: Yes.

Speaker Change: Yeah, you can include in your plan minimum of the way to fix wireless, for sure.

James Sullivan: The increase in second quarter of 2024 operating expenses on a gap and non-gap basis was primarily driven by $1.6 million of charges for software license obligations recorded during the second quarter of 2024. Gap net loss of the second quarter of 2024 was $4.4 million or loss of $1.88 per share compared with a net loss of $2 million or $1.7 per share in the prior quarter and a net loss of $4.1 million or $6.68 per share in the same quarter of on a non-gap basis, net loss for the second quarter of 2024 was $2.1 million, or a loss of 88 cents per share, which excluded stock-based compensation, amortization of acquired intangibles, severance costs, and the change in fair value of warrant liabilities.

Speaker Change: Yeah, but then, okay.

Speaker Change: and then Deed, does Deed reimburse the...

Speaker Change: . . . you're the provider? . . .

Ron Glibbery: Effectively, it subsidized. I'd have to like, like research exactly what the mechanics are, Jon, but I mean, ultimately, you know, the BEAT underwrites the deployment for sure, right? Like, so it's essentially the deployment of those deployments, and then can you elaborate any more on the military side like, Are you shipping products to Militoo? where people train it out.

John: effectively it subsidized I'd have to like like research exactly what the mechanics are John but I mean ultimately you know the bead underwrites the deployment for sure right like so it's essentially a deployment of those of those deployments

John: Okay.

Speaker Change: And then, can you elaborate any more on the military side? Like, are you shipping products to military?

Ron Glibbery: Where are you in that? Well, we've actually, we did announce, you know, a prior deal for proof of concept. And, you know, we have some further, you know, some further commercial engagements that I could say broadly, I mean, and you can understand that the military is highly confidential. But what I can share is that, you know, the, you know, the, there's some really key features that we provide to the military. So not the least of which is because we use phased array technology, and we create pencil beams, it's very difficult to detect in the battlefield.

Speaker Change: where people train it out. Where are you in that process?

Speaker Change: Well, we've actually, we did announce, you know, a prior deal for proof of concept.

James Sullivan: This compared with a non-gap net loss of $1.6 million, or a loss of 83 cents per share in the prior quarter, and a net loss of $3 million, or a loss per share of $4.93 per share in the same quarter a year ago. The weighted average number of basic and diluted shares outstanding for purposes of calculating both gap and non-gap EPS for the second quarter of 2024 was approximately 2.4 million shares.

Speaker Change: And, you know, we have some further, you know, some further commercial engagements.

Speaker Change: that I could say broadly, and you can understand that the military is highly confidential.

Speaker Change: But what I can share is that, you know, there's some really key features that we provide to the military. So not the least of which is because we use phased array technology and we create pencil beams.

James Sullivan: Adjusted EBITDA, which we define as gap net income or loss as reported, is including stock-based compensation, amortization of acquired intangibles, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes was negative $1.9 million in the second quarter, compared with a negative $1.4 million in the prior quarter and negative $2.8 million in the prior year period. As of June 30th, 2024, we had $1.9 million of cash, representing a decrease of approximately $0.6 million during the second quarter of 2024.

Ron Glibbery: So that's what I've talked about already. Believe it or not, you know, another important feature about 60 gig is that it's normally unlicensed in most jurisdictions. So when the military goes in, like whatever military goes into a certain theater, they don't have to worry about screwing up people's, you know, cellular frequencies, which are which are actually licensed. So the fact it's unlicensed, is is actually important to the military. And even another benefit to the military is that actually there is a certain level of oxygen absorption for our technology.

Speaker Change: It's very difficult to detect in the battlefield, so that's what I've talked about already. Believe it or not, you know, another important feature about 60 gig is that it's not, it's...

Speaker Change: normally unlicensed in most jurisdictions so when the military goes in like whatever military goes into a certain theater they don't have to worry about screwing up people's you know cellular frequencies which are which are actually licensed so the fact it's unlicensed

Speaker Change: is

Speaker Change: is actually important to the military. And even another benefit to the military is that, you know, actually there's a certain level of oxygen absorption for our technology. So again,

James Sullivan: Turning to our outlook, as we're on discuss, we continue to cultivate a growing pipeline of customer engagements for our millimeter wage solutions, and we are working to convert a number of these opportunities into new production orders over the coming quarters. Looking at the second half of 2024, we continue to have a significant remaining backlog of non-cancelled purchase orders for our end-of-life memory IC products. Specific to the third quarter of 2024, the company currently expects total net revenue to be in the range of $3.8 million to $4.2 million.

Ron Glibbery: So again, the enemy's ability to detect our signals after a certain distance becomes very, very limited. So the net-net is that it's a very stealth technology, and this is the key attribute and it's really starting to become a real factor in terms of the value proposition for military deployments. And frankly speaking, when we speak to military engagements, I mean, basically these deployments we speak of on kind of almost a per-soldier level.

Speaker Change: you know, the enemy's ability to detect our signals.

Speaker Change: after a certain distance becomes very, very limited. So, you know, the net-net is that it's a very stealth technology. And, you know, this is the key attribute. And, you know, it's really starting to become a real factor in terms of...

Speaker Change: you know, in terms of the value proposition for military deployments. And frankly speaking...

Operator: This concludes our prepared remarks, and I'll now turn the call back over to the operator to assist with the Q&A session. Operator? Thank you.

Speaker Change: You know, when we speak to military engagements, I mean, basically, you know, these deployments we speak of on kind of almost a per-soldier level, so the volumes are extensive beyond even what we're talking about on fixed wireless.

Ron Glibbery: So the volumes are extensive beyond even what we're talking about on fixed wireless, so we're seeing the military and defense applications are really a strong part of our growth opportunity. Okay, just one more question for Jim. Sure. So the game, the software license, and severance, That's an accrual that you're taking. So there will not be further expenses for those items going forward. Yes, on the severance.

Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tunnel indicate your line is in the question Q. You may press star two if you'd like to remove your question from the Q. For participants using speaker equipment, it may be necessary to pick up your hand set before pressing the star keys. One moment please, while we pull for questions. Once again, please press star one if you have a question or comment.

Speaker Change: We're seeing the military and defense applications as really a strong part of our growth opportunity.

Speaker Change: okay just one more question for Jim sure so that the game the software license and severance

Speaker Change: That's an accrual that you're taking, so there will not be...

Speaker Change: further expenses for those items going forward.

David Williams: First question comes from David Williams with Benchmark. Please proceed. Hey, good afternoon, gentlemen. Thanks for taking my question here. I guess maybe first, Ron, thanks for all the color on the business. And you know, in your engagement pipeline, can you talk a little bit about that, just the diversity of customers there, and you spoke a little bit about it. But can you give us a little more color on what you're seeing there, and how you think that develops, I guess, over the next several quarters.

Jim Sullivan: Yes, on the severance, that's correct. The severance obligation, you know, which was, you know, just over 400k, those amounts will be paid out, you know, over a 13-month period, you know, starting July 1, 2024. And that was just the resolution of the temporary layoff we had initiated back in November 2023 in Canada, and taking those positions off the payroll back then. The other piece, the software obligations, there is still, some of the licenses will be expensed going forward, but, you know, that amount, you know, was a $1.6 million of expense, and there's about $1.55 million of cash that will be paid over the next kind of five quarters. So there will still be some license expense going forward in the P&L.

Jim Sullivan: Yes, on the severance.

Jim Sullivan: yes on the the severance that's that's correct

Speaker Change: the severance obligation, you know, which was, you know, just over $400,000.

Speaker Change: Those amounts will be paid out, you know, over a 13-month period, you know, starting July 1, 2024.

Speaker Change: and that was just the resolution of the temporary layoff we had initiated back in November 2023 in Canada and taking those positions off the payroll back then.

Speaker Change: The other piece, the software obligations, there is still, some of the licenses will be expensed going forward, but, you know, that amount, you know, is a $1.6 million of expense, and there's about $1.55 million of cash that will be paid over the next kind of five quarters.

David Williams: Are you seeing increased activity, or the same, just any color there that would help us understand your customers, or potential customers, be helpful, I think. Oh, thanks, David. Good to speak to you. Yeah, I mean, from my perspective, you know, the obviously we're pleased with the revenue and the margin for the quarter, but you know, what keeps me very motivated is that our design activity and millimeter wave is just going very, very strong.

Speaker Change: So there'll still be some license expense going forward in the P&L, but I don't expect any more, you know, charges, you know, accelerated charges in that manner going forward for those items.

Jim Sullivan: But I don't expect any more, you know, charges, you know, accelerated charges in that manner going forward for those items. Okay. Okay, that's it for me. Thank, Thanks, Jon.

David Williams: I'm very bullish in terms of that activity. So, you know, I would say there's a couple of points to make. One point is that on the fixed wireless aspect of our business, you know, it just, as operators get used to millimeter wave and the benefits that we provide, IE, the high performance and particularly, you know, our ability to operate in dense environments. You know, I would say almost on a weekly basis, we have new opportunities.

Speaker Change: Okay.

Speaker Change: Okay, that's it for me. Thanks.

Operator: If there are any remaining questions, please indicate so by pressing star 1. The next question comes from Kevin Liu with K-Liu and Company. Please proceed. Hi, good afternoon.

John: Thanks, John.

Speaker Change: If there are any remaining questions, please indicate so by pressing star 1. The next question comes from Kevin Liu with KLU and company. Please proceed

Kevin Liu: Ron, just wanted to start on the DUN platform as well. You mentioned during your script that you have a large bandwidth provider in North America that could also start deploying that. I'm wondering if you could put some parameters around when that could start and kind of the size of that opportunity in North America.

Kevin Liu: Hi, good afternoon. Ron, I just wanted to start on the DUNE platform as well. You know, you mentioned during your script that you have the large WISC provider in North America that could also start deploying that. I'm wondering if you could put some parameters around when that could start and kind of the size of that opportunity in North America. And then going back to your progress in Africa, I'm just wondering how quickly you could expand from kind of this first customer to the next one.

David Williams: So, we just continue to see that growing frankly. It's, you know, the basic fixed wireless is a very, very hot topic in terms of broadband communications. And we're in the heart of that other in America, by the way, or globally. So, I'm thrilled with that with our design activity in terms of fixed wireless access business. And again, the main drivers are the gigabit performance combined with our ability to operate in dense environments.

Ron Glibbery: And then going back to, you know, your progress in Africa, just wondering how quickly you could expand from kind of this first customer to the next one. Sure, so in North America, the opportunity, you know, and we've confirmed with the supplier that, you know, we are participating in, you know, we're not revealing what portion of the program we are participating in, but we announced last quarter that it was deployment in Los Angeles, so that was 280,000 And so, I mean, Frankly, we didn't bring it up this time because we brought it up last time, Kevin.

Speaker Change: Sure, so in North America, the opportunity, you know, and we've

Speaker Change: We've confirmed with the supplier that, you know, we are participating You know, we're not we're not revealing what portion of the of the program But it's the we announced last quarter. It was deployment in Los Angeles. So I was 280,000 subscribers

David Williams: The other topic, Dave, that, you know, gives me optimism is our is a momentum in defense and military. And, you know, the washwood there is a phrase called low probability of detection. So, as I mentioned in past calls, as we learned from, you know, conflicts in Ukraine as well as in the least. You know, there's a very serious problem, which is detection of traditional radio signals. And so, because we use, you know, phase rate technology, and we create pencil beams, it's almost impossible for the enemy to detect.

Speaker Change: And so that, I mean, frankly, we didn't bring it up this time because we brought it up last time, Kevin, but basically,

Ron Glibbery: But basically, the idea there is, again, like our ability to deploy in dense urban environments, it's just extremely important. And so the real issue with traditional unlicensed wireless is congestion. And, you know, every single customer we're engaged with is limited in their deployment by the congestion caused by traditional Wi-Fi signals. So, Los Angeles is the first deployment in North America, and we're hoping for others. In Africa, you know, and I know Africa has a lot of people, we have eight, at least eight trials underway beyond the one that we discussed.

Speaker Change: The idea there is, again, our ability to deploy in dense urban environments, it's just extremely important. So the real issue with traditional unlicensed wireless...

Speaker Change: is congested, and every single customer we're engaged with is limited in their deployment by the congestion caused by traditional Wi-Fi signals.

David Williams: So, this would become a very, very important topic in military applications. And we're, you know, we didn't really talk about it in a slide presentation. But, you know, another really potentially even larger area of growth for us beyond fixed wireless is our military and defense application. So, that's another area we're seeing increased design activity. So, you know, that's, to me, obviously we'd love to see the increase in revenue, but we really believe that's on the pipeline. And the design activity is very strong from our perspective. So, I hope that helps in terms of some color.

Speaker Change: So Los Angeles is the deployment in North America and we're hoping for others.

Speaker Change #100: in Africa, you know, and I know Africa has a lot of people.

Speaker Change #100: We have at least eight trials underway beyond the one that we discussed, so stay tuned for that. We hope to have on the next call some hard purchase orders from those deployments.

Ron Glibbery: So stay tuned for that. We hope to have on the next call, like some hard purchase orders from those deployments. But yeah, so again, it all boils down in those cases. Well, there's probably two major things.

David Williams: Yeah, very helpful. Thanks for, I think, for all that insight.

Speaker Change #100: Yeah, so this again, it all boils down in those cases, well there's probably two major things. First of all,

David Williams: The other thing I wanted to ask about was you had a press release out earlier that was about custom IP for Wi-Fi 8 and future IE standards. Just kind of curious what, how you think about that and, and what that all entails. Is that a capital expense or is it development? How do we think about the Wi-Fi 8, opportunity and development? Well, yeah, that's a great question as well and thank you for bringing that up because we didn't bring it up.

Ron Glibbery: First of all, you know, the price points of Millimeter Wave are absolutely competitive with any technology. But second of all, again, we solve the density problem and traditional wireless Wi-Fi has pretty severe, quite severe congestion issues. And because of our beamforming capability, we solve those problems.

Speaker Change #101: His, you know, the price points of Millimeter Wave are absolutely competitive with any technology.

Speaker Change #101: But second of all, again, we solved the density problem. Traditional wireless Wi-Fi has quite severe congestion issues, and because of our beamforming capability, we solved those problems.

Ron Glibbery: So stay tuned, but we continue to see growth there every single quarter. It's good to hear and maybe just on the millimeter wave inventory correction, can you talk about what you're hearing from your largest customers there? Do you feel like they've digested through most of that and you could see where there's ramp up here in the second half or do you think it's still a couple quarters away before they're kind of at normal levels? Yeah, I mean, they're quite cagey, Kevin, in terms of what they're sharing.

David Williams: But, you know, basically the idea there is that the IEEE, you know, has determined that they'd like to include, you know, 60 gigahertz and really 45 to 71 gigahertz in next generation Wi-Fi or at least IEEE standards. And normally, Wi-Fi adapts, IEEE standards. So, from our perspective, there's two ways we can play it. I mean, we can use capital to develop chips on our nickel and, you know, go to market with that.

Speaker Change #101: So stay tuned, but we continue to see growth there every single quarter.

Speaker Change #102: It's good to hear and maybe just on the millimeter wave inventory correction, can you talk about what you're hearing from your largest customers there? Do you feel like they've digested through most of that and you could see where there's ramp up here in the second half or do you think it's still a couple quarters away before they're kind of at normal levels?

Ron Glibbery: But what I do know, and I think what was an important kind of metric, in fact, is that their sales are quite extensive, right? So there's no, you know, I would say, I would say one of the primary ways that we track user satisfaction is through just through simply through chat groups, right, through internet provider chat groups. And I mean, the feedback is overwhelmingly positive.

Speaker Change #102: Yeah, I mean, they're quite cagey, Kevin, in terms of what they're sharing. But what I do know, and I think what is an important kind of metric, in fact, is that

David Williams: Or we can collaborate with existing players. I mean, at the moment, we're thinking more along the collaboration route. You know, we're really, to be quite frankly, we're very, I'd say, fixed on fixed wireless and military right now. We think we're consumer electronics. You know, we can play a role there. We think, of course, that market is going to be huge, but it is a few years away still. But we're extremely well positioned from a capability perspective to, you know, to really partner with larger players in that space.

Speaker Change #102: their sales through are quite extensive, right? So there's no.

Speaker Change #103: You know, I would say one of the primary ways that we track user satisfaction

Speaker Change #103: is simply through chat groups, right? Through internet provider chat groups. And, I mean, the feedback is overwhelmingly positive.

Ron Glibbery: In terms of specific timing, you know, we're hoping later in the fourth quarter and early in the first quarter we start to see that turnaround. It could be sooner, it could be a little later, but the customers are very cagey in terms of the specific timing. What we do know is their sales are increasing. And so that's good news. So in other words, the inventory correction, like it's not a function of, you know, sales slowing down. We're quite optimistic that sales are ramping up. But the timing is a little bit of a question mark, for sure. We're hoping later this year.

Speaker Change #104: In terms of specific timing, you know, we're hoping later in the, you know, in the fourth quarter and early first quarter we start to see that turnaround. It could be sooner, it could be a little later, but

David Williams: And, you know, sky's a limit in terms of the opportunity, but it's a little early product. But what I can predict is that, you know, our ability to build technology for that space is more or less unprecedented. In terms of our skills. So that's how we kind of see that. But it was, it was terrific. It was really a terrific update from our perspective to see that the IEEE is supporting 60 gig for future generations.

Speaker Change #105: The customers are very cagey in terms of the specific timing. What we do know is their sales are increasing and so that's good news.

Speaker Change #105: So, in other words, inventory correction is not a function of, you know, sales slowing down. We're quite optimistic that sales are ramping, but the time is a little bit of a question mark for sure. We're hoping later this year.

Ron Glibbery: Got it. And just one follow-on from the Wi-Fi comments you guys made earlier. Are there any specific kinds of investments within R&D or other parts of your cost structure that you'll need to invest in to support that? Or do you see opportunities for, say, NRE deals or other types of partnerships where you could limit your own investment dollars?

Speaker Change #106: Got it. Just one follow-on on the Wi-Fi date comments you guys made earlier. Are there any specific kind of investments within R&D or other

Speaker Change #107: Parts of your cost structure that you'll need to invest in to support that. Will you see opportunities for say NRE deals or other types of partnerships where you could limit your own investment dollars?

David Williams: James Sullivan, David Williams, Kevin Liu, Jon Hickman, Ronald Glibbery, David Williams, Kevin Liu, Jon Hickman, Ronald Glibbery,[inaudible] You know, service providers not just globally but also in the US for sure in terms of how quickly they will, you know, they can start to deploy this technology and they don't have the way for hardware they can quickly order from one of several manufacturers.

Ron Glibbery: So I would humbly submit that we have the greatest millimeter wave RF team on the planet. So but, you know, kidding aside, we see it as a revenue generating opportunity here in the short term is the simple fact. We're not going to, you know, we're not going to spend capital resources on, you know, on specific product development.

Speaker Change #108: So, I would humbly submit that we have the greatest millimeter-wave RF team on the planet. But kidding aside, we see it as a revenue-generating opportunity here in the short term.

Ron Glibbery: Although, as Jim mentioned, you know, the tools, you know, we are paying for this, you know, the EDA tools associated with tip development, but we're obliged to those anyway. So, from our perspective, our initial participation in Wi-Fi Aid, certainly over the next couple of years, will be revenue-generating, not revenue spending, or at least operating expenses spending versus revenue-generating. But for now, we see it as a revenue-generating opportunity.

Speaker Change #109: you know, on specific product development, although, as Jim mentioned, you know, the tools, you know, we are paying for this, you know, the EDA tools associated with with tip development, but we're obliged to those anyway.

Speaker Change #109: So, from our perspective, our initial participation in Wi-Fi 8

Speaker Change #110: Certainly, over the next couple of years, we'll be revenue generating, not revenue spending acts, or at least operating expenses.

Speaker Change #110: versus revenue generating. So that's how we see WiFiA playing out for us for the next couple of years. After that, we'll see, but for now we see it as a revenue generating opportunity.

Ron Glibbery: Great, thanks for taking the questions and good luck during the third quarter. Yeah, my pleasure. My pleasure, Kevin. Thank you. Thanks, Kevin. I can see that there are no further questions in queue at this time. That will conclude today's conference call. Thank you for your participation, and you may now disconnect. Thank you.

Speaker Change #110: Great, thanks for taking the questions and good luck during the third quarter. Yeah, my pleasure. My pleasure, Kevin. Thank you. Thanks, Kevin.

Speaker Change #111: I show there are no further questions in queue at this time. That will conclude today's conference call. Thank you for your participation and you may now disconnect.

Speaker Change #112: Thank you.

David Williams: Okay, and just one last one if I may.

David Williams: You talked a little bit about you talked about the beat funding earlier and that's like a very large opportunity over time just kind of given the magnitude of that there.

David Williams: But you also have a couple of other out there hard off being one but you talked a little bit about the about potentially including fixed wireless access there how large of an opportunity if you were to kind of guess and on maybe in North America how much deployment could be covered by fixed wireless access is there is there really a way to think about that what that opportunity could be? Yeah, that's a good question.

David Williams: So I would say in North America let's let's say for argument's sake we're looking at 100 million you know homes so we think the number is a good 20 million that could could could benefit from that right so let's let's call it 20 million homes you know so I'm just kind of you know I'm just kind of doing a very high level estimate day but I guess from my perspective of those of them with that I've been used to like let's say 100 we think about 20% you know is in a region where they would definitely benefit from from wireless technology access so I think that would be kind of the numbers so that you know that would that would probably put some some brackets around it. But you know be because I'm just thrilled with this with the latest update from the from the NTIA and this was this was last week basically as I stress in the presentation this is not formally committed but you know it's definitely spoken about by the head of NTI and we expect to see that in the next you know 2 to 3 weeks but it was a pretty major and basically what people were saying it's like oh yeah like you know fiber is a good technology it's absolutely not viable with $42 billion to give everybody in America fiber it's as simple as that and so they've actually recognized the absolute importance that on licensed wireless technology is to providing everybody in America with very high speed broadband, and.

David Williams: Perfect. Thanks for the color, and best luck on the quarter, gentlemen. Yeah, thank you, Dave. Thanks, Eric.

Jon Hickman: The next question is from Jon Hickman with Laddenberg. Please proceed. Hello. Can you really? Sure can, Jon. Okay, great. So, I have a couple questions. Jim, could you tell us out of the 4.1 million, how much was milling your weight? The revenue breakdown was approximately 80% memory and 20% will be the weight for the quarter. 80, 20, okay. And then is there a seasonality in the summer here? Is that to me, Jon or Jim from either one?

Jon Hickman: I can take that. I mean, there's. I, we haven't seen she's inality, like basically people by broadband. I can speak to the broadband side and Jim can speak to the MSI, but on the broadband side, Jon, I would say it's, there's no real seasonality. I mean, you know, to be frank, I mean, as we said in the press release and on the slides, you know, we did, we do, we are going through this inventory corrections.

Jon Hickman: So, that was that's kind of a bigger picture issue, but from a seasonality perspective, I don't, you know, we don't really have any specifics there that we've seen over the years in terms of any particular quarter that's that's better or worse. Okay. And then the feed guys, you did you say that you expect them to hear more out of them in the next two to three weeks? Yes, you know, basically, there was a conference last week where the head of, so the basically the way B did administer to the NTIA and the head of the NTIA has said now that they, they see themselves including unlicensed wireless as part of the, as part of the B funding.

Jon Hickman: So that's a very significant change in policy from our perspective and obviously in a very positive way because we'll be with or NTI, you know, to step back a little bit, like B was really when approved by Congress was supposed to be technology neutral, so it didn't matter how you got people, you know, good broadband. And they're supposed to just get good people, you know, get people good broadband. It got shipped a little bit when it got to the NTIA, which said, well, you know what, good broadband is because brought to you by fiber and we think everybody should get fiber, but it was definitely pushed back from the states because they basically said, hey, you know, we agree fiber is great, but it's just way too expensive for this budget to deploy everybody with fiber, so we need to include all technologies, which by the way was the original concept.

Jon Hickman: That, you know, that whatever it took to solve this problem, so, so where we come in with millimeter wave is we're providing, you know, fiber like speed, i.e, a gigabit with very low latency, so, so we think so, so, so I think it's great to see that NTIA has is proposing a very significant policy shift here in terms of adding unlicensed wireless to the repertoire of tools. Okay, so if they, when they talk when they speak again, or do you think they're going to actually say we're going to allocate so much of that original budget to fix wireless?

Jon Hickman: Absolutely. Well, I mean, this is certainly their position, yes, completely I'm expecting that it would be a major step back if they change their mind at this point and was pretty well documented Okay, so they'll actually put a figure on like a percentage? You know, we think the way it will work is that basically it will be, it's more or less letting the market decide, so I'm not sure there's going to be a limitation, right?

Jon Hickman: I mean, basically the market will decide what's the best, what's the best way and you know, what we have to keep in mind is really the advantage that we provide with unlicensed fixed wireless is that it's very economical to deploy, but the other stock is it's very rapid deployment, so we don't have to trench holes for fiber to go through, which takes some time, so we can deploy very quickly as well, so we think the market will ultimately decide, frankly from a cost perspective, fixed wireless is a great solution. So, how do you want to, you want to guess to me about, if this goes the way you're saying, when could you, when could the market start using those funds?

Jon Hickman: Oh, I think second half of 20s like this year, absolutely this year, for sure, yeah, so if I was a broadband supplier and I wanted to do a project and I wanted to, so I do the project and submit it to be for financing, yes, yeah, you can, you can include in your plan, in the way fixed wireless for sure, yeah, but then, okay, and then be the first provider, effectively subsidize, I'd have to like, research exactly what the mechanics are, but I mean, ultimately, the beat underwrites to deployment for sure, right, so it's essentially the deployment of those, of those deployments, okay, and then, can you elaborate any more on the military side, like, are you shipping products for military, where people train it out, where are you in that process? Well, we've actually, we did announce a prior deal for proof of concept, and we have some further, some further commercial engagements that I could say broadly, and you can understand that the military is highly confidential, but what I can't, what I can share is that, there's some side to the military, so not the least of which is because we use space array technology, and we create pencil beans, it's very difficult to be tracked in the battlefield, so that's what I've talked about already.

Jon Hickman: Believe it or not, you know, another important feature about 60 gig is that it's normally unlicensed in most jurisdictions, so when the military goes in, like, whatever military goes into a certain theater, they don't have to worry about screwing up people's cellular frequencies, which are actually licensed, so the fact is unlicensed and you know, is actually important to the military. And even another benefit to the military is that, you know, actually there's a certain level of oxygen absorption for our technology.

Jon Hickman: So again, you know, the enemy's ability to detect our signals after, you know, a certain distance becomes very, very limited. So, you know, the net net is that it's a very stealth technology. And you know, this is the key attribute. And you know, it's really, it's really starting to become a real factor in terms of, you know, in terms of the value proposition for for military deployments. And frankly speaking, you know, when we speak to military engagements, I mean, basically, you know, these deployments we speak of on kind of almost a per soldier level.

Jon Hickman: So the volumes are extensive beyond even what we're talking about on takes wireless. So, what we're seeing in the military and defense applications is really a strong part of our growth opportunity. Okay. Just one more question for Jim. Sure. So the game, the software license and severance that's in a cruel way you're taking so there will not be further expenses for those items going for it. Yes, on the severance. Yes, on the severance that's that's correct.

Jon Hickman: The severance obligation, you know, which was, you know, just over 400 K, those amounts would paid out, you know, over a 13 month period, you know, starting July 1, 2024. And that was just the resolution of the temporary layoff. We had initiated back in November 2023 in Canada and taken those positions off the payroll back then. The other piece, the software obligations, there is still some of the licenses will be expense going forward.

Jon Hickman: But, you know, that, that amount, you know, was a 1.6 million of expense. And there's about 1.55 million of cash that will be paid over the next kind of five quarters. So there'll still be some license expense going forward in the P&L. But I don't expect any more, you know, charges, you know, accelerated charges in that manner going forward for those items. Okay. Okay, that fit for me. Thanks. Thanks, John. If there are any remaining questions please indicate so by pressing star one.

Jon Hickman: The next question comes from Kevin Liu with K Liu and company. Please proceed.

Kevin Liu: Hi, good afternoon. Ron, I just wanted to start on the Dune platform as well. You know, you mentioned during your skirt that you have the large width provider in North America that could also start deploying that. I'm wondering if you could put some parameters around when that could start and kind of the size of that opportunity in North America. And then going back to, you know, your progress in Africa just wondering how quickly you could expand from kind of this first customer to the next one?

Kevin Liu: Sure. So in North America, the opportunity, and we've confirmed with the supplier that we are participating. We're not revealing what portion of the program, but we announced last quarter, it was deployment in Los Angeles. So I was 280,000 subscribers, and so that, I mean, frankly, we didn't bring it up this time because we brought it up last time, Kevin, but basically, the idea there is, again, like, our ability to deploy in denser than environments.

Kevin Liu: It's just extremely important. So the real issue with traditional unlicensed wireless is congestion. And, you know, every single customer were engaged with, you know, is limited in their deployment by the congestion caused by traditional Wi-Fi signals. So a lot of the end of this is the deployment in North America and we're hoping for others.

Kevin Liu: In Africa, you know, in Africa, there's a lot of people. You know, we have eight, at least eight trials on the way beyond the one that we discussed. So stay tuned for that. We hope to have on the next call, like some hard purchase orders from those deployments. But, yeah, so this, again, it all boils down in those cases. Well, there's probably two major things. First of all, you know, the price points of no one in a way are absolutely competitive with any technology.

Kevin Liu: But second of all, again, we solved the density problem. And traditional wireless Wi-Fi has pretty severe congestion issues. And because of our being-forming capability, we solve those problems. So stay tuned, but we continue to see growth there every single quarter. It's good to hear.

Kevin Liu: And maybe to some of the no-meter-wave inventory correction, can you talk about what you're hearing from your largest customers there? Do you feel like they've digested through most of that? And you could see what there's ramp up here in the second half, or do you think it's still a couple quarters away before they're kind of at normal levels? Yeah, I mean, they're quite cagey, Kevin, in terms of what they're sharing. But what I do know, and I think what was an important kind of metric in fact, is that their sales who are quite expensive, right?

Kevin Liu: So there's no, you know, I would say one of the primary ways that we track user satisfaction is through simply through through track groups, right? Through through internet provider track groups. And I mean, the feedback is overwhelmingly positive. In terms of specific timing, you know, we're hoping later, you know, in the fourth quarter, in the early first quarter, we start to see that turnaround. It could be sooner, it could be a little later, but the customers are very cagey in terms of the specific timing.

Kevin Liu: What we do know is their sales are increasing. And so that's good news. So in other words, the inventory correction is not a function of, you know, sales slowing down. We're quite optimistic that sales are ramping, but the time is a little bit of a question for sure. We're hoping later this year. Got it.

Kevin Liu: I just want to follow on on the Wi-Fi day comments you guys made earlier. Sure. Are there any specific kind of investments within R&D or other parts of your cost structure that you'll need to invest in to support that? We'll do you see opportunities for, say, an R&D over other types of partnerships where you could limit your own investment dollars. Oh, I would humbly submit that we have the greatest, you know, let me the wave, our F team on the planet.

Kevin Liu: So, but, you know, kidding aside, we see it as a revenue-generating opportunity here in the short term. The simple fact, we're not going to, you know, we're not going to spend capital resources on, you know, on specific product development, although as Jim mentioned, you know, the tools, you know, we are paying for the, you know, the EDA tools associated with, with tip development, but we're obliged those anyway. So, from our perspective, our, our initial participation, Wi-Fi 8, certainly over the next couple years we'll be revenue-generating, not revenue-spending acts, or at least operating expenses, spending versus revenue-generating. So, that's how we see Wi-Fi 8 playing out for us for the next couple years, after that we'll see, but for now, we see there's a revenue-generating opportunity.

Kevin Liu: Great, thanks for taking the questions, and good luck, you're in the third place. Yeah, my pleasure, my pleasure, Kevin, thank you. Thanks, Kevin.

Operator: I show there are no further questions in Q at this time, that will conclude today's conference call. Thank you for your participation, and you may now disconnect. Thank you.