Q4 2024 Peraso Inc Earnings Call

Operator: Good afternoon and welcome to Peraso, Inc.'s fourth 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.

Good afternoon, and welcome to Perazzo Inc's fourth quarter 2024 conference call.

At this time all participants are in a listen only mode.

One needs assistance at any time during the conference call. Please press the star key followed by the zero on your Touchtone phone.

Operator: As a reminder, this conference call is being recorded today, Wednesday, March 19th, 2025.

As a reminder, this conference call is being recorded today Wednesday March 19th 2025.

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

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

James Sullivan: Good afternoon and thank you for joining today's conference call to discuss Peraso's fourth quarter and full year 2024 financial results. I'm Jim Sullivan, CFO of Peraso and joining me today is Ron Glibbery, our CEO. Today, after the market closed, we issued a press release on related Form 8K, which was filed with the SEC. The press release and Form 8K are available on Peraso's website at www.perasoinc.com under the investor relations section. There's 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 website.

Jim Sullivan: Good afternoon, and thank you for joining today's conference call to discuss process fourth quarter and full year 2024 financial results.

Speaker Change: Tim Sullivan CFO of <unk> and joining me today is Ronald Library, our CEO.

Speaker Change: Today after the market closed we issued a press release and related form 8-K, which was filed with the SEC. The press release and form 8-K are available on process website at www Dot <unk> dot com under the Investor Relations section.

Speaker Change: There's 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 website.

James Sullivan: 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. advises caution and reliance on forward-looking statements. These statements include, without limitation, any projections of revenue, margins, expenses, non-GAAP gross margin, non-GAAP gross profit, 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 technology. All forward-looking statements are based on information available to Peraso on the date hereof.

Speaker Change: As a reminder comments made during today's conference call May include forward looking statements.

Speaker Change: All statements other than statements of historical facts would be deemed as forward looking.

Speaker Change: We're also advises caution and reliance on forward looking statements. These statements include without limitation any projections of revenue margins expenses non-GAAP gross margin non-GAAP gross profit non-GAAP operating expenses adjusted EBITA non-GAAP net loss cash flows or other financial items.

Speaker Change: Including anticipated cost savings.

Speaker Change: Also any statements concerning the expected development performance and market share for.

Speaker Change: For competitive performance of our products or technologies.

Speaker Change: All forward looking statements are based on information available, but also on the date hereof.

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 in process public filings with the SEC. 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: These statements involve known and unknown risks uncertainties and other factors that may cause process actual results to differ materially from those implied by the forward looking statements.

Speaker Change: 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.

Speaker Change: <unk> 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.

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 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: 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 the remarks on todays call involving non-GAAP numbers, unless otherwise indicated referenced amounts exclude stock based compensation expense amortization of reported intangible.

Speaker Change: Assets severance costs and the change in fair value of warrant liabilities.

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

Operator: 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.

Ron: 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'd like to turn the call over to Ron.

Ronald Glibbery: Now, I'd like to turn the call over to Ron. Thank you, Jim. Good afternoon, and welcome to everyone on the phone and webcast. We appreciate you taking the time and joining us on today's conference. We closed out 2024 with continued progress across several of our key business initiatives. Fourth quarter revenue was within our expected range and represented 100% growth year over year as we continue to execute on end of life shipments of our memory IC products. Favorable product mix continued to expand gross margins, and we also realized further benefits from our previous cost reduction actions and ongoing efforts to drive higher operational efficiency.

Speaker Change: Uh huh.

Ron: Thank you Jim Good afternoon, and welcome to everyone on the phone and webcast. We appreciate you taking the time and joining us on today's conference call.

Ron: We closed out 2024 with continued progress across several of our key business initiatives fourth quarter revenue was within our expected range and represented 100% growth year over year as we continued to execute on and of late shipments of our memory IC products favorable product mix continuing to expand gross margins and we also.

Ron: <unk> further benefited from our previous cost reduction actions and ongoing effort to drive higher operational efficiencies.

Ronald Glibbery: In fact, fourth quarter operating expenses decreased 20% year over year, even with revenue doubling from fourth quarter of 2023. Taken together, we delivered significant improvement in our overall operating performance for the quarter and the full year. More importantly, we recently began seeing renewed and growing momentum over MM Wave technology, including increasing production orders from our lead customers.

Ron: In fact fourth quarter operating expenses decreased 20% year over year, even with revenue doubling from fourth quarter of 2023.

Ron: Taken together, we delivered significant improvement in our overall operating performance for the quarter and the full year more importantly, we recently began seeing renewed and growing momentum of our EM EM wave technology, including increasing production orders from our lead customers.

Ronald Glibbery: Turning to slide four, I want to provide a brief status update on the end of life of our memory IC product. During the fourth quarter, we completed $3.4 million in shipments against remaining backlog, bringing total memory IC product shipments for the full year 2024 to approximately $12.9 million. As previously outlined and anticipated, these end-of-life orders have been significant contributors to our financial performance over the last several quarters as we work past the inventory correction impacting several of our fixed wireless access customers. A year in, our remaining backlog of memory IC purchase orders was approximately $2.3 million.

Ron: Turning to slide four I want to provide a brief status update on the end of life of our memory IC products during the fourth quarter, we completed $3 $4 million in shipments against the remaining backlog.

Ron: In total the memory IC products. It means for the full year 2024 to approximately $12 $9 million.

Ron: As previously outlined and anticipated. These end of life orders have been significant contributors to our financial performance over the last several quarters.

Ron: As we were passing inventory correction impacting several of our fixed wireless access customers.

Ron: At year end, our remaining backlog the memory IC purchase ours was approximately $2 $3 million, we will complete shipments and fulfillment of these final orders during March.

Ronald Glibbery: We will complete shipments and fulfillment of these final orders during March.

Ronald Glibbery: Flipping to slide 5, we have worked aggressively over the past year to establish a growing and more diversified customer base for our MMOA-based solutions. In addition to broadening our existing penetration of the PICS wireless access market in North America, we have also focused considerable efforts towards expanding market reach across numerous new geographies and end-market applications. On the left portion of the slide is a year-over-year comparison of our new business funnel and engagement pipeline as of November, which clearly demonstrates our progress in terms of both sourcing and advancing an increasing number of product engagements. Taking the number of new funnel opportunities at the top and adding the four progressive stages of active engagement, including from formal evaluation to advanced design and engineering and prototypes, our pipeline approaching this year-end comprise over 100 total engagements.

Ron: Flipping to slide five we have worked aggressively over the past year to establish a groin and more diversified customer base for him away based solutions.

Ron: In addition to broadening our existing penetration on the fixed wireless access market in North America. We will also focus considerable efforts towards expanding market reach across numerous new geographies and end market applications.

Ron: On the left portion of this slide is a year over year comparison of our new business funnel and engagement pipeline as of November, which clearly demonstrates our progress in terms of both sourcing and advancing an increasing number of product engagements.

Ron: Taking the number of new funnel opportunities at the top and adding the for progressive stages of active engagement, including from formal evaluation to advanced design and engineering and prototypes.

Ron: Pipeline approaching this year and comprised over 100 total engagements, although the size and market potential of these engagements is unique theres still represents more than 20% increase in the number of identified commercial opportunities over the prior year.

Ronald Glibbery: Although the size and market potential of each engagement is unique, this still represents more than a 20% increase in the number of identified commercial opportunities over the prior year. Also keep in mind that these pipeline measures do not include prior program engagements that have converted to customer production. In fact, today Perasa's MMWave solutions are enabled at least 60 different commercial products that are now in production across 11 different customers. Pictured on the right side of the slide are a series of these customer end products that are currently in production and incorporate our industry-leading MMWave technology.

Ron: Also keep in mind that these pipeline managers do not include prior program engagements that have converted to customer production. In fact today prizes and then more of a solutions are unable to at least 60 different commercial products that are now in production across 11 different customers pictured on the right side of the slide our a series of these customer and products that are.

Ron: Currently in production and incorporate our industry, leading M M wave technology.

Ronald Glibbery: Turning to slide 6, I want to briefly highlight the most recent and projected ongoing momentum that is underway across the broader fixed wireless access market. As the demand for high-speed Internet connectivity continues to grow, especially in underserved areas, fixed wireless access is increasingly becoming the go-to alternative over legacy wireline and cable Internet. With the advancements and improved reliability of 5G technology, fixed wireless access can now offer comparable performance to traditional fiber, yet also have the advantage of being significantly cheaper to deploy. This slide highlights several excerpts from a recently published report by Erickson, which validates and further emphasizes these current market dynamics.

Ron: Turning to slide six I wanted to briefly highlight the most recent and projected ongoing momentum that is underway across the broader fixed wireless access market as the demand for high speed Internet connectivity and continues to grow, especially in underserved areas fixed wireless access is increasingly becoming the go to alternative.

Ron: Over legacy wireline and cable Internet.

Ron: With the advancements and improve reliability of <unk> technology. This wireless access can now offer comparable performance to traditional fiber. It also have the advantage of being significantly cheaper to deploy.

Ron: This slide highlights several excerpts from our recently published report by Ericsson, which validates and further emphasizes these current market dynamics.

Ronald Glibbery: First, not only is the total number of FWA connections globally projected to increase dramatically over the next five years to 280 million connections, but 5G fixed wireless access is forecast to represent the lion's share of the market by 2028. Equally notable is the graph on the bottom left, which clearly shows that North American fixed wireless access has already become the majority of all broadband net ads. And since 2021, the three largest carriers in the U.S. have collectively added an estimated 10.4 million FWA connections. The one key takeaway here is the current market momentum and a 5G PIX wireless access is poised to capture a significant and growing share of the market over the next five years.

Ron: Not only is the total number of FW de connections globally are projected to increase dramatically over the next five years to 280 million connections with <unk> fixed wireless access is forecast to represent the lion's share of the market by 2028.

Ron: Equally notable is the graph on the bottom left was clearly shows that north American fixed wireless access has already become the majority of all broadband net ads and since 2021 and the three largest carriers in the U S have collectively added an estimated $10 4 million of FW and connections.

Ron: The one key takeaway here is the current market momentum and it takes five G picks wireless access is poised to capture a significant and growing share of the market over the next five years.

Ronald Glibbery: Next on slide seven, I want to provide an update on the current market dynamics that we are seeing, as well as speak to a few notable recent business highlights. For those of you that have been following Peraso, we have been candid about the extended inventory correction impacting our fixed wireless access customers. Today, I am pleased to report that we are seeing indications that the tide may finally be turning back in our favor, most notably in the form of renewed customer demand and purchase orders in support of the existing FWA deployment. Although a large portion of this positive shift can be attributed to market cycles, I would be hesitant not to mention that Peraso now also has the broadest portfolio of MMOA solutions in the company's history.

Speaker Change: Next on slide seven I wanted to provide an update on the current market dynamics, we are seeing as well as speak to a few notable recent business highlights for those of you that have been falling for auto we have been candid about the extended inventory correction impacting our fixed wireless access customers today.

Speaker Change: Today I'm pleased to report that were seeing the indications of the tide may finally be turning back in our favor.

Speaker Change: Most notably in the form of renewed customer demand and purchase orders in support of our existing <unk> deployments.

Speaker Change: Although a large portion of this positive ship can be attributed to market cycles I would be hesitant not to mention that PRASM. Now also has the broadest portfolio of innovative solutions in the company's history.

Ronald Glibbery: Looking back, we've introduced our new FWA solution designed for dense urban network environments around this time last year, which was likely near the peak of the broader market inventory correction. Today, however, we are seeing our unique DUNN-MMA platform for dense urban applications gaining meaningful traction with both existing and new prospective customers. As a reminder, our DOOM platform was specifically designed to overcome the challenges associated with delivering reliable and high-speed connectivity in densely populated areas, such as urban neighborhoods. As a fully integrated hardware and software solution, incorporating Peraso's perspective series of MMOA modules, the platform offers low-cost deployment, low-power, long-range, and point-to-multipoint capabilities.

Speaker Change: Looking back we introduced our new <unk> solution designed for dense urban network environments around this time last year, which is likely near the peak of the broader market inventory correction.

Speaker Change: Today. However, we are seeing our unique dual EM wave platform for dense urban applications, gaining meaningful traction with both existing and new prospective customers.

Speaker Change: As a reminder, our dual platform was specifically designed to overcome the challenges associated with delivering a reliable and high speed connectivity in densely populated areas such as urban neighborhoods.

Speaker Change: As a fully integrated hardware and software solution incorporating prizes perspective shows with Emily modules. The platform offers low cost deployment low power long range and point to Multipoint capabilities.

Ronald Glibbery: These distinct benefits are equally important to wireless internet service providers, or WISPs, whether they are deploying a fixed wireless access network in Los Angeles, rural North America, or densely populated urban centers in South Africa. In addition to the growing traction of our DUNE platform, we are seeing renewed demand for our other MWAVE solutions.

Speaker Change: These distinct benefits are equally important to wireless internet service providers or wisps, whether they are deploying our fixed wireless access network in Los Angeles Rural North America, our densely populated urban centers in South Africa.

Speaker Change: In addition to the growing traction of our existing platform. We are seeing renewed demand for our other airline solutions. Most notable earlier this week, we announced receipt of a $3 6 million dollar purchase order from a long time strategic customer and leading provider of network and systems used for fixed wireless access.

Ronald Glibbery: Most notable, earlier this week we announced receipt of a $3.6 million purchase order from a long-time strategic customer and leading provider of networking systems used for fixed wireless access. This new and significant purchase order, which we expect to fulfill during calendar 2025, serves as further validation of Peraso's MMWave technology while also signifying the improving dynamics and expanding momentum across the broader FWA market. Consistent with these observations, our MWA solutions are currently being utilized in ongoing approval context by numerous WITs targeting future FWA components across diverse geographies.

Speaker Change: This new insignificant purchase order, which we expect to fulfill during calendar 2025 serves as further validation of paralysis and then we have technology, while also seem to find the improving dynamics and expanding momentum across the broader absolutely in any market.

Speaker Change: System with these observations are MMA solutions are currently being utilized and ongoing approval context by numerous with targeting future SWA compliance across diverse geographies.

Ronald Glibbery: Turning to slide 8, it has become almost impossible to have a conversation about delivering high-speed internet in North America without talking about bees. As a brief recap, for those who might be less familiar with BEAD, BEAD is a U.S. government program that was initially established with the goal of improving access to high-speed Internet by providing grants of up to $42 billion to fund new infrastructure and consumer adoption initiatives. Although technically funded by the U.S. Department of Commerce, the National Telecommunications and Information Administration, or NTIA, is responsible for management and oversight of the program. As discussed on our previous conference call late last year, the latest emerging development was that the NTIA had formally updated its guidance to make high-speed internet using unlicensed spectrum fixed wireless access, including the MMOA bands, eligible for program funding, keeping in mind that the NTIA's original guidance strongly favored broadband internet access via fiber-based deployment.

Speaker Change: Turning to slide eight it has become almost impossible to have a conversation about delivering high speed Internet and North America without talking about bead.

Speaker Change: As a brief recap for those who might be less familiar with B b as a U S. Government program that was initially established with the goal of improving the access to high speed Internet by providing grants about $242 billion to find new infrastructure and consumer adoption initiatives.

Speaker Change: Although technically funded by the U S Department of Commerce, the National Telecommunications and information administration or NTIA is responsible for management and oversight of the program.

Speaker Change: As discussed on our previous conference call late last year. The latest immersion development was that the NTIA has formally updated its guidance to make high speed internet using unlicensed spectrum fixed wireless access, including the I remember we've been eligible for program funding keeping in mind that the N T I as.

Speaker Change: General guidance strongly favorite broadband internet access via fiber based deployments.

Ronald Glibbery: So at that time, we viewed this as an indirect win and potentially expanded opportunity for alternative technologies, such as MMWave and in turn, Peraso. As we have seen following the newly elected administration in the U.S., government policy has and continues to change and evolve rapidly. However, despite certain elements of ongoing uncertainty related to how the BEAD program will be handled, the most recent indications appear to be an incremental positive for fixed wireless access and, in turn, MMI solutions. More specifically, the newly nominated leader of the NTIA, Ariel Roth, has publicly conveyed support for technology-neutral BEAD funding.

Speaker Change: So at that time, we view this as an indirectly in and potentially expanded opportunity for alternative technologies, such as M M wave and in turn PRASM.

Speaker Change: As we have seen following the news of the elected administration in the U S.

Speaker Change: One of them and policy has and continues to change and evolve rapidly. However, despite certain elements of ongoing uncertainty related to how the program will be handled the most recent indications appear to be an incremental positive for fixed wireless access and Internet mineralized solutions.

Speaker Change: More specifically the newly nominated later the NTIA aerial Rod is publicly conveyed support for technology neutral bead funding. Additionally, Howard Lutnick the newly confirmed Chief of Commerce Department was recently quoted as saying the department has read that I mean, the bead program to take it tech neutral approach that as Ray.

Ronald Glibbery: Additionally, Howard Lutnick, the newly confirmed Chief of Commerce of the Department, was recently quoted as saying, The Department is revamping the BEAD program to take a tech-neutral approach that is rigorously driven by outcomes, so states can provide Internet access for lower costs. Acknowledging that the future direction and resulting impacts of the BEAM program still remain to be seen, we continue to believe that a decisive, technology-neutral approach that also emphasizes low-cost deployments could contribute to meaningful expansion and acceleration of use of the MMWave spectrum and customer adoption of Peraso's MMWave solution.

Speaker Change: Obviously, driven by outcomes. So states can provide internet access for lower cost.

Speaker Change: Acknowledging that the future direction, and resulting impacts of being programs still remain to be seen we continue to believe that a decisive technology neutral approach that also emphasizes low cost deployments could contribute to meaningful expansion and acceleration of use of the mill and then waves spectrum and customer adoption of <unk>.

Speaker Change: Prizes M M wave solutions.

Ronald Glibbery: Turning to slide nine, I wanted to shift to the other exciting and rapidly expanding opportunity for MMOA technology, which is tactical defense and military application. As a result of the proliferation of new technologies on the modern battlefield, including smart weapons, advanced drones, and other forms of digital surveillance, there is an obvious need for secure communications. However, perhaps less obvious is the simple awareness of a signal could allow for an enemy to triangulate the precise locations from which signals are being sent or received. Increased recognition of this major vulnerability has led to growing demand for tactical communication platforms that are both highly secure but also very difficult to detect.

Speaker Change: Turning to slide nine I wanted to shift to the other exciting and rapidly expanding the opportunity for EM EM wave technology, which is tactical defense and military applications.

Speaker Change: As a result of the proliferation of new technologies on the modern battlefield, including smart weapons advanced drones and other forms of digital surveillance. There is an obvious need for secure communications. However, perhaps less obvious is a simple awareness of a signal to allow for the enemy to triangulate the precise locations from which signals are being set.

Speaker Change: Oh received.

Speaker Change: Increased recognition of this major vulnerability has led to growing demand for types of communication platforms that are both highly secure but also very difficult to detect.

Ronald Glibbery: Not only is MMWave bandwidth more inherently stealthy than other frequently used spectrum for communication We have now demonstrated through an extensive series of customer-led trial and evaluations that Peraso's 60 GHz MMWave technology is fully capable of meeting the unique demands of mission-critical comms and defense applications. As further recent evidence, during the fourth quarter, one of our lead military defense customers upsized a previously secured initial production order for our prospective module product. We expect to commence initial cements and recognize revenue associated with these orders towards the middle of the year. Keeping in mind that it was less than a year and a half ago when we secured our first commercial engagement for our military defense application, we are pleased with the pace of our progress and initial success in the market.

Speaker Change: Not only is M M wave bandwidth more inherently stealthy than other frequently use spectrum for communications.

Speaker Change: But we have now demonstrated through an extensive series of customer led trial and evaluations that PRASM 60 gigahertz MMA technology is fully capable of meeting the unique demands of mission critical comms and defense applications.

Speaker Change: As further recent evidence during the fourth quarter, one of our lead military defense customers Upsize of previously secured initial production of our from our perspective modular products.

Speaker Change: We expect to commence initial shipments and recognize revenue associated with these orders towards the middle of the year.

Speaker Change: Keeping in mind that it was less than a year and a half ago and we secured our first commercial engagements where our military defense application. We are pleased with the pace of our progress and initial success in the market.

Ronald Glibbery: Today, we now have additional active engagements underway on tactical communication applications with other prospective customers.

Speaker Change: Today, we have now have additional active engagements underway on tactical communication applications with other prospective customers.

Ronald Glibbery: Moving to slide 10.

Speaker Change: Moving to slide 10 prior to the 'twenty 'twenty four we viewed type of communications as a potential of adjunct, but mostly niche application for MMO and technology. However, our early success demonstrated over the past year on our initial customer engagement has since opened the door to what we believe is a significant and complementary.

Ronald Glibbery: Prior to 2024, we viewed tactical communications as a potential adjunct but mostly niche application for MMI technology. However, our early success demonstrated over the past year on our initial customer engagement has since opened the door to what we believe is a significant and complementary market opportunity for Peraso. I wanted to share this slide as a high-level overview of what we now view to be full potential breadth and scope for MMWave applications across this market vertical. For additional context, the customer and production orders that I spoke about on a previous slide are primarily targeted at enhancing situational awareness and communications for deployed soldiers engaged in combat operations.

Speaker Change: The opportunity for Perazzo.

Speaker Change: I wanted to show this slide as a high level overview of what we now view to be full potential breadth and scope for embedded applications across this market vertical.

Speaker Change: For additional context, the customer in production of ours that I spoke about on a previous slide are primarily targeted at enhancing situational and their awareness and communications for deployed soldiers engaged in combat operations How's.

Ronald Glibbery: However, this represents only a single application and use case. As outlined on the slide, there are numerous other mission-critical applications spanning both military infrastructure and transportation-related communications that can benefit from high bandwidth, low latency, and directional beamforming capabilities of Peraso's MMWave technology.

Speaker Change: However, this represents only a single application and use case as outlined on this slide there are numerous other mission critical applications spanning both military infrastructure and transportation related communications that can benefit from high bandwidth low latency and directionally be employment capabilities, our browsers M M wave technology.

Ronald Glibbery: Needless to say, we are excited about several of these future incremental market opportunities and their potential to contribute towards increased diversification of our customer base and market applications.

Speaker Change: Needless to say we are excited about several of these future incremental market opportunities and their potential to contribute towards increased diversification of our customer base and market applications.

Ronald Glibbery: In conclusion, we are pleased with our continued growth and encouraged by the growing momentum for our mmWave technology. With the renewed demand and increasing purchase orders from our fixed wireless access customers, we anticipate significant growth of our mmWave revenue throughout 2025 driven by increasing order backlog and ramping customer production. Most notably, we currently expect MMWay revenue for the first quarter of 2025 to exceed comparable revenue for the full year of 2024.

Speaker Change: In conclusion, we are pleased with our continued growth and encouraged by the growing momentum for our M. M wave technology with the renewed demand and increasing purchase orders from our fixed wireless access customers. We anticipate significant growth in memory revenues rose 2025, driven by increasing order backlog and ramping customer production.

Speaker Change: Sure.

Speaker Change: Most notably we currently expect MMA revenue for the first quarter of 2025 to exceed comparable revenue for the full year of 2024.

James Sullivan: With that, I'll turn the call back to Jim to review the financials, as well as provide our revenue outlook for the first quarter of 2025. Thank you, Ron. Turning now to the results for the fourth quarter and full year of 2024. Total net revenue for the fourth quarter was $3.7 million, compared with $3.8 million for the prior quarter and $1.8 million for the fourth quarter of 2023. Full year 2024 total net revenue was $14.6 million compared with $13.7 million for the prior year. Product revenue from the sale of our memory integrated circuits and millimeter wave products in the fourth quarter was $3.7 million, compared with $3.8 million in the prior quarter and $1.5 million in the fourth quarter of 2023.

Jim Sullivan: With that I'll turn the call back to Jim to review the financials as well as provide our revenue outlook for the first quarter of 2025.

Jim Sullivan: Thank you Ron turning now to the results for the fourth quarter and full year of 2024.

Jim Sullivan: Total net revenue for the fourth quarter was $3 $7 million compared with $3 $8 million for the prior quarter at $1.8 million for the fourth quarter of 2023.

Jim Sullivan: Full year 'twenty 'twenty four total net revenue was $14 $6 million compared with $13 $7 million for the prior year.

Jim Sullivan: Product revenue from the sale of our memory integrated circuits and millimeter wave products in the fourth quarter with $3 $7 million compared with $3 $8 million from the prior quarter and $1 $5 million in the fourth quarter of 2023.

James Sullivan: For the full year 2024, product revenue was $14.2 million compared with $12.9 million in the prior year. The increases in product revenues for the fourth quarter and full year 2024, compared with the comparable periods of 2023, were attributable to increase shipments of our memory IC products to fulfill end-of-life orders. Royalty and other revenues for the full year 2024 was $0.3 million, compared with $0.9 million in 2023. The decreases in royalty and other revenues were primarily the result of reduction in memory royalties attributable to the foundries and the life of the process, combined with a decrease in non-recurring engineering services related to our millimeter wave technology.

Jim Sullivan: For the full year 2024 product revenue was $14 $2 million compared with $12 $9 million in the prior year.

Jim Sullivan: The increases in product revenues for the fourth quarter and full year 2024, compared with the comparable periods of 2023 were attributable to increased shipments of our memory I T products to fulfill end of life orders.

Jim Sullivan: Royalty and other revenue for the full year 2024 was zero point $3 million compared with zero point $9 million in 2020 three.

Jim Sullivan: The decreases in royalty and other revenues were primarily the result of reduction in memory royalties attributable to the foundries and the life of the process combined with a decrease in nonrecurring engineering services related to our millimeter wave technology.

James Sullivan: Gap gross margin increased to 56.3% in the fourth quarter from 47% in the prior quarter and negative 147.3% in the year ago quarter. For the full year 2024, gap gross margin was 51.7% compared with 13.6% in the prior year. On a non-GAAP basis, gross margin for the fourth quarter was 71.6%, compared with 61.7% in the prior quarter, and compared with negative 116.6% in the fourth quarter of 2023. For the full year 2024, non-GAAP gross margin was 67.2%, compared with 28% for the prior year. The increases in both GAAP and non-GAAP gross margin for the fourth quarter and full year 2024 were primarily attributable to increased sales of our memory IC products and the reduction in inventory write-downs, as the fourth quarter of 2023 included write-downs of $3.2 million.

Jim Sullivan: GAAP gross margin increased to 56, 3% in the fourth quarter from 47% in the prior quarter and negative 147, 3% in the year ago quarter.

Jim Sullivan: For the full year of 'twenty 'twenty four GAAP gross margin was 51, 7% compared with 13, 6% in the prior year.

Jim Sullivan: On a non-GAAP basis gross margin for the fourth quarter was 71, 6% compared with 61, 7% in the prior quarter and compared with negative 116, 6% in the fourth quarter of 2023.

Jim Sullivan: For the full year 'twenty 'twenty four non-GAAP gross margin was 67, 2% compared with 28% for the prior year the.

Jim Sullivan: The increases in both GAAP and non-GAAP gross margin for the fourth quarter and full year 2024 were primarily attributable to increased sales of our memory IC products and the reduction in inventory write downs as the fourth quarter of 2023 include the write downs of $3 $2 million.

James Sullivan: GAAP operating expenses for the fourth quarter of 2024 were $3.7 million compared with $4.5 million in the prior quarter and $5.5 million in the fourth quarter of 2023. The full year 2024 GAAP operating expenses were $20 million compared with $22.5 million for the prior year. non-GAAP operating expenses, which exclude stock-based compensation and amortization of intangible assets, were $3.2 million in the fourth quarter compared with $3.3 million in the prior quarter and $4 million in the fourth quarter of 2023. Non-GAAP operating expenses for the full year 2024 were $14.9 million compared with $16.4 million for the prior year.

Jim Sullivan: GAAP operating expenses for the fourth quarter of 2024 were $3 $7 million compared with $4 $5 million in the prior quarter and $5 $5 million in the fourth quarter of 2023.

Jim Sullivan: For the full year of 2024, GAAP operating expenses were $20 million compared with $22 $5 million for the prior year.

Jim Sullivan: non-GAAP operating expenses, which exclude stock based compensation and amortization of intangible assets were $3 $2 million in the fourth quarter compared with $3 $3 million in the prior quarter and $4 million in the fourth quarter of 2023.

Jim Sullivan: non-GAAP operating expenses for the full year of 2024 were $14 $9 million compared with $16 $4 million for the prior year.

James Sullivan: The sequential and year-over-year decrease in operating expenses on a GAAP and non-GAAP basis was primarily attributable to a combination of previously implemented cost reductions and the company's ongoing cost containment initiative. Gap net loss for the fourth quarter of 2024 was $1.6 million or loss of $0.37 per share compared with a net loss of $2.7 million or loss of $0.98 per share in the prior quarter and compared with a net loss of $8.9 million or $12.48 per share in the same quarter a year ago. For the full year 2024, GAAP net loss was $10.7 million, or a loss of $3.57 per share, compared with a net loss of $16.8 million, or $26 per share for full year 2023.

The sequential and year over year decrease in operating expenses on a GAAP and non-GAAP basis was primarily attributable to a combination of previously implemented cost reductions and the company's ongoing cost containment initiatives.

Jim Sullivan: GAAP net loss for the fourth quarter of 2024, it was $1.6 million or a loss of 37 cents per share compared with a net loss of $2.7 million or a loss of 98 cents per share in the prior quarter and compared with a net loss of $8 $9 million or $12 48 per share the same quarter a year ago.

Jim Sullivan: For the full year of 'twenty 'twenty four GAAP net loss was $10 $7 million or a loss of $3 57 per share compared with a net loss of $16 $8 million or $26 per share for full year 2023.

James Sullivan: On a non-GAAP basis, which excludes amortization of acquired intangibles, stock-based compensation, and severance costs, net loss for the fourth quarter of 2024 was $0.5 million, or a loss of $0.13 per share. This compared with a non-GAAP net loss of $0.9 million, or a loss of $0.34 per share in the prior quarter, and a net loss of $6.1 million, or a loss per share of $8.52 per share in the same quarter a year ago. Full year 2024 non-GAAP net loss was $5.1 million, or a loss of $1.71 per share, compared with a net loss of $12.2 million, or $18.90 per share for full year 2023.

Jim Sullivan: On a non-GAAP basis, which excludes amortization of acquired intangibles stock based compensation and severance costs net loss for the fourth quarter of 'twenty 'twenty, four with zero point $5 million or a loss of 13 cents per share.

Jim Sullivan: This compared with a non-GAAP net loss of zero point $9 million or a loss of 34 cents per share in the prior quarter and a net loss of $6 $1 million or a loss per share of $8 52 per share the same quarter a year ago.

Jim Sullivan: Full year of 'twenty, 'twenty, four and non-GAAP net loss was $5 $1 million or a loss of $1 71 per share compared with a net loss of $12 $2 million or $18 90 per share for full year 2023.

James Sullivan: The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for the fourth quarter of 2024 was approximately 4.3 million shares. Adjusted EBITDA, which we define as gap net 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 amortization, and the provision for income taxes, was negative $0.4 million in the fourth quarter of 2024, compared with negative $0.8 million in the prior quarter, and negative $5.9 million in the fourth quarter of 2023.

Jim Sullivan: The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for the fourth quarter of 2024 was approximately $4 3 million shares.

Jim Sullivan: Adjusted EBITDA, which we define as GAAP net income or losses 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 zero point $4 million.

Jim Sullivan: In the fourth quarter of 2024.

Jim Sullivan: Compared with negative zero point $8 million in the prior quarter and negative $5 $9 million in the fourth quarter of 2023.

James Sullivan: Thank you. For the full year 2024, adjusted EBITDA was negative $4.5 million, compared with negative $11.2 million for the prior year. As of December 31st, 2024, the company had $3.3 million of cash and cash equivalents compared with $1.3 million at the end of the third quarter. The sequential increase primarily reflected the aggregate gross proceeds to the company from financing activities of approximately $2.8 million, including approximately $2.6 million of proceeds from the exercise of Series B warrants during the fourth quarter, and $0.2 million of sales under our ATM program. Excluding the proceeds from financing activities, operating cash burn was approximately $0.8 million for the fourth quarter of 2024, compared with $0.7 million for the prior quarter.

Jim Sullivan: For the full year 2024, adjusted EBITDA was negative $4 $5 million compared with negative $11 $2 million for the prior year.

Jim Sullivan: As of December 31, 2024, the company had $3 $3 million of cash and cash equivalents compared with $1 $3 million at the end of the third quarter.

Jim Sullivan: The sequential increase primarily reflected the aggregate gross proceeds to the company from financing activities of approximately $2 $8 million.

Jim Sullivan: Approximately $2 $6 million of proceeds from the exercise of series B warrants during the fourth quarter.

Jim Sullivan: Zero point $2 million of sales under our ATM program.

Jim Sullivan: Excluding the proceeds from financing activities operating cash burn was approximately zero point $8 million for the fourth quarter of 2024.

Jim Sullivan: Paired with zero point $7 million for the prior quarter.

James Sullivan: Now turning to our outlook.

Jim Sullivan: Now turning to our outlook as Ron previously highlighted in his remarks, we continue to have a diverse pipeline of customer engagements to utilize process millimeter wave solutions for targeted market applications across both fixed wireless access.

James Sullivan: As Ron previously highlighted in his remarks, we continue to have a diverse pipeline of customer engagements to utilize Peraso's millimeter wave solutions for targeted market applications across both fixed wireless access and tactical military communication. Based on the combination of new production orders for our millimeter wave IC products, as well as contributions from shipments against the final backlog orders for our end-of-life memory IC products, we anticipate total revenue to increase year-over-year in the first quarter.

Jim Sullivan: And tactical military communications.

Jim Sullivan: Based on the combination of new production orders for a millimeter wave IC products as well as contribution from shipments against the final backlog orders for in the life memory IC products, we anticipate total revenue to increase year over year in the first quarter.

James Sullivan: More specifically, the company expects total net revenue for the first quarter of 2025 to be in the range of $3.6 million to $4 million.

Jim Sullivan: Specifically the company expects total net revenue for the first quarter of 2025 to be in the range of $3 $6 million to $4 million.

James Sullivan: This concludes our prepared remarks, and we thank you for your time this afternoon.

Jim Sullivan: This concludes our prepared remarks and we thank you for your time. This afternoon operator, please commence the Q&A session.

Operator: Operator, please commence the Q&A session. 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 tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Once again, please press star one if you have a question or a comment.

Jim Sullivan: 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 tone will indicate your line is in the question queue.

Jim Sullivan: You May press star two if you'd like to remove your question from the queue.

Jim Sullivan: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Jim Sullivan: One moment, please while we poll for questions.

Jim Sullivan: Once again, please press star one if you have a question or comment.

Speaker Change: Our first question comes from David Williams with benchmark. Please proceed.

David Williams: and David Williams with Ben Shapiro. Hey, good afternoon gentlemen. Thanks for taking the question and congrats on the progress here all around the performance and the and the new orders there. Thanks David. Thank you. Thanks Dave.

David Williams: Hey, good afternoon, gentlemen, thanks for taking my question and congrats on the progress here are all around Amazon.

Speaker Change: And then the new orders there.

Speaker Change: Thanks, David Thank you thanks, Dave.

David Williams: Yeah, you know, I've got a couple of questions here, but I think one of the first one for me is really on the order that you received this quarter, $3.6 million, and you talked about that being fulfilled through 2025. Is there a way we should think about that? Is it fairly linear throughout the year? Or do you have any indication on whether that's a 2Q or 3Q? Just kind of how do you think that revenue layer is in this year? It's reasonably linear with really little weight into the second half, only because of our ability to ship it.

Speaker Change: Yeah, I've got a couple of questions here, but I think one of the first one for me is really.

Speaker Change: On the the order that you received this quarter $3 $6 million.

Speaker Change: And you talked about that being fulfilled 320 25 is there a way we should think about that is it fairly linear throughout the year or do you have any indication on whether that's our T. G were three huge kind of how do you think that revenues are players in this year.

Speaker Change: It's a reasonably linear with really.

Speaker Change: A little weighted to the second half only because of our ability to ship it.

Ronald Glibbery: does that make sense?

Speaker Change: Does that makes sense.

Ronald Glibbery: The customer wants it linear and we're trying to make it linear as possible but it's uh but yeah it's going to be a little back like but I'm not talking like you know September October I'm talking July August right in terms of when I say second half so yeah it's uh that's how I would look at it.

Speaker Change: If the customer wants a linear and what we were trying to make ends meet.

Speaker Change: Many of you as possible, but it's but yeah, it's going to be a little back like.

Speaker Change: I'm talking like September October I'm talking in July August right in terms of when I say second half. So yeah. It's a that that's how I would look at it.

David Williams: Okay, great.

Speaker Change: Okay great.

David Williams: And then just kind of as you start to get through this inventory issue and you've got this new PO coming in, how do you think that your other customers are trending and looking at your inventory, some pretty good, pretty good position relative? I guess you seem fairly optimistic just about those orders, but are there other things in the pipeline that you would expect to see this year in terms of orders that should come in? Oh, definitely. Yeah. I mean, you know, we had a couple of years ago, David, you know, just to recap, we had a couple of primary issues.

Speaker Change: Can you just kind of as you start to see this inventory issue and you've got the CPO coming in how do we see.

Speaker Change: Is that your other customers are trending and what your inventory is in pretty good pretty good position relative.

Speaker Change: I guess you seem very optimistic.

Speaker Change: But are there other things in the pipeline that you would expect to see this year in terms of orders they should come in.

Speaker Change: Oh, Yeah definitely yeah.

Speaker Change: And you know we had.

Speaker Change: A couple of years ago, David you know.

Speaker Change: Just to recap we had a couple of primary issues and one was you know the.

Ronald Glibbery: And one was, you know, the inventory situation. The other was really concentration of customers. We had to, you know, basically two customers, right, I would say two years ago, we've done a put a lot of effort into actually increasing our customer base. So, you know, we probably got, I don't know, we call it five times the customers now that we're leveraging over, which makes them much, much less dependent on any particular customer. So I think the two things are coming into play, which we're optimistic about 2025, which is, A, the inventory crisis seems to be what we know is over, certainly based on this order.

Speaker Change: Tori situation, Yeah, there was really concentration of customers we had to you know.

Speaker Change: Basically two customers, let's say two years ago, we've done to put a lot of effort into actually increase in AR.

Speaker Change: Customer base. So you know, we've probably got I don't know call. It five times the customers know that we're leveraging over which makes it much much less dependent on any particular customers. So I think the two things are coming into play, which we're optimistic about a 2025, which is a the inventory credits it seems to be well you know is over.

Ronald Glibbery: And two, we've got a much more diverse customer base.

Speaker Change: Certainly based on this order and two we've got a much more diverse customer base not to mention that back by the way as we move into the military.

Ronald Glibbery: Not to mention the fact, by the way, as we move into the military, we'll be shipping our first volume of military components in Q2. So, You know, obviously that kind of fits into the overall expansion of our customer base, but that's more of an application expansion as well. So I think all of those factors are helping us out this year. Fantastic.

Speaker Change: We shipped our first of all in with military components in Q2 so.

Speaker Change: You know, obviously that kind of fits into the overall expansion of our customer base, but that's more of an application expansion as well. So I'd say all of those factors are helping us out this year.

Speaker Change: Okay Fantastic and then maybe on that the comps are military side.

David Williams: And then maybe on that, the comms, military side, you listed quite a few applications there. So I guess I'm curious, are you seeing development or seeing engagement on each of those applications? Or are those just areas that you think you could potentially benefit from or applications you can work in?

Speaker Change: Quite a few applications there. So I guess I'm curious are you seeing development, we're seeing engagement on each of those applications. Although just areas that you think you could potentially benefit from more or especially you can go.

Ronald Glibbery: Yeah, that's a good question. I mean, I would say broadly, that was all of the potential applications. Probably we're going to focus on maybe a third of those today. Materially, in terms of just literally working with customers on some of those. And I think we said in the past, for example, the first application we actually have revenue from is this concept of just very simple kind of phone to Humvee tactical link, if you will, tactical but secure link. So very, very simple, but undetectable by the enemy, which is obviously the key here. We're doing some experiments with some of our customers on drone applications, for example.

Speaker Change: Yeah. That's a good question I mean, I would say broadly that was all of the potential applications are.

Speaker Change: Probably were little.

Speaker Change: Focus on maybe a third of those today materially in terms of just literally working with customers on some of those you know and I think we've said in the past for example.

Speaker Change: The first application, we actually Oh, you know we have a revenue from is this concept of just didn't know very simple you know kind of phone to to be now.

Speaker Change: Tactical link right, if you will but see tactical but secure length. So very very simple, but you know undetected whereby the enemy, which is obviously the key here.

Speaker Change: Got some there's this you know where we're doing some experiments with some of our customers on Undrawn obligations. For example, so that's one of the one of the applications. We decided now in the zone in the case of the Jones. For example, we can transmit high speed video you can imagine in drones flying over a battlefield in the video gets in.

Ronald Glibbery: So that's one of the applications we cited now on the drone. In the case of the drones, for example, we can transmit high-speed video. You can imagine a drone flying over a battlefield, and the video in high resolution gets transmitted back to a receiver, and again, not detectable by the enemy. Those are some of the obvious applications.

Speaker Change: And high resolution gets translated back to a receiver and not again not detectable by the they're the enemy. Those are some of the obvious applications were actually doing some obstacle applications that are actually you know confidential classified.

Ronald Glibbery: We're actually doing some applications that are actually confidential, classified. I can't share today, so pretty fascinating stuff that the military is using our technology for. So hopefully at a later date, I can share those. So there's even some that we're doing that are not on that list that we showed in our slide presentation.

Speaker Change: I can share today, so pretty fascinating stuff that the military is using our technology for so hopefully at a later date I can show those so theres, even some that are that we're doing that are not on that list that we showed in our slide presentation.

David Williams: Fantastic.

Speaker Change: Okay, and then maybe just one more on the launch out there just kind of thinking about the.

David Williams: And then maybe just one more on the product side there.

David Williams: Just kind of thinking about the AI trends and this intelligent edge and the real move to push AI to the edge. How do you think you can benefit from that? It seems like there's a lot of areas that need to have connectivity that necessarily can't have fiber ran to it today.

Speaker Change: The AI trends and this intelligent edge and the real need to push it out to the edge.

Speaker Change: It fits in that it seems like Theres a lot of areas that need to have connectivity didn't necessarily can't have Ida arrangement. Today are you seeing people start to talk about that are seeing applications develop kind of a brown bag or maybe more a smart city type applications, but really for AI at the edge.

Ronald Glibbery: Are you seeing people start to talk about that or seeing applications develop kind of around that for maybe more smart cities type applications, but really for AI at the edge? where we're seeing that specifically is in an enterprise environment. So for example, you know, really with people's, you know, kind of laptop, let's say an AI-enabled laptop. So in that case, they need to get data on and off their network very quickly. As you know, our chips can do this at several gigabits per second. So really today, we're seeing literally, you know, pending applications for AI support.

Speaker Change: We're always seeing that specifically is in the enterprise environment. So for example.

Speaker Change: You know really with peoples, you know kind of laptop, let's say an AI enabled laptop. So in that case, they need to get data on and off their network very quickly are as you know our chips can do this at several gigabits per seconds. So really today, we're still we're seeing literally.

Speaker Change: You know pending applications for a I support and so as we all know there's a real issue for the one of the main issues for AI is actually the the data rates and so because of our hours our large data rates in an office environment in an enterprise environment are we you know we help solve that problem. So I would say our first instantiation.

Ronald Glibbery: And so as we all know, one of the main issues for AI is actually the data rates. And so because of our large data rates in an office environment, in an enterprise environment, we help solve that problem.

David Williams: So I would say our first instantiation of that concept is in an enterprise environment. Great.

Speaker Change: And of that concept is in an enterprise environment.

David Williams: Thanks so much for the time.

Speaker Change: Great. Thanks, so much and Tom I'll jump back in queue. Thank you.

Operator: I'll jump back into you. Thanks, everyone.

Operator: My pleasure, David. Once again, if you have a question or a comment, please indicate so by pressing star 1 on your touch screen.

Tom: My pleasure David.

Speaker Change: Once again, if you have a question or comment please indicate so by pressing star one on your Touchtone phone. The next question comes from Kevin Liu with K Lou and company. Please proceed.

Kevin Liu: and Kevin Liu with K-Liu and Company. Hi, good afternoon, guys, and let me add my congratulations on the results and outlook here. Thanks, Kevin. Good to talk to you.

Kevin Liu: Hey, good afternoon, guys and let me add my congratulations on the results and outlook here.

Speaker Change: Thanks, Kevin good to talk to you.

Kevin Liu: First question I had here was just, you know, it looks like your millimeter wave sales start to ramp again here in the first quarter, but with some of the large orders on FWA and then also the upsized military order, any indication you can give us in terms of how materially that starts to scale, kind of in Q2 and beyond, or any sort of indication where you think, you know, what sort of run rate you can reach for millimeter wave later in the year? I'll defer to Jim on that one.

Speaker Change: First question I had here was just you know it looks like your millimeter wave sales start to ramp again here in the first quarter, but with some of the large orders in our on SWA and then also the Upsized military order and any indication you can give us in terms of how materially that start to scale kind of in Q2 and beyond or any sort of indication where you think.

Speaker Change: What sort of run rate you can reach for millimeter wave her later in the year.

Jim Sullivan: Oh, I'll defer to Jim on that when he was more he's closer to the numbers, but Jim do you want to tackle that.

Ronald Glibbery: He's more, he's closer to the numbers, but Jim, you want to tackle that? Sure, you know, um... Yeah, obviously, we're pleased to, you know, basically, with the first, you know, the guidance for the first quarter, you can, you can, and Ron's comment, you can obviously tell where we're going to do as much and more in the first quarter as we did all of last year. You know, we've been trying to keep the message that we'd like to keep kind of revenue kind of flat as we make this transition, you know, recognizing that, you know, the first quarter, you know, we expect to, you know, I think we've got one shipment, it may have even gone in the last day or so, you know, complete the memory shipments and move on from there that we're trying to keep.

Jim Sullivan: Sure you know.

Jim Sullivan: Yeah, obviously, we're pleased to you know basically with the first.

Jim Sullivan: The guidance for the first quarter you can you can and Ron's comment you can obviously tell where we're going to do as much in more in the first quarter. As we did all of last year. You know we've been trying to keep the message that we'd like to keep kind of revenue kind of flat as we make this transition.

Jim Sullivan: Recognizing that you know the first quarter.

Jim Sullivan: We expect to you know I think we've got one shipment that may have even gone on the last day or so.

Jim Sullivan: You know complete the memory shipments and move on from there that we're trying to keep.

James Sullivan: you know, revenues kind of flat year over year. You know, there is some lumpiness, you know, from quarter to quarter. And as, you know, Ron mentioned with the new large order, which will ship, you know, between Q2 and Q4 of this year, you know, more backend loaded to the second half of the year. You know, we're in the process now of, you know, using inventory we have on hand and then, you know, placing new orders. So we expect, you know, a good. you know, a good increase year over year.

Jim Sullivan: Revenue was kind of flat year over year.

Jim Sullivan: You know there is some lumpiness.

Speaker Change: From quarter to quarter and as you know Ron.

Speaker Change: Ron mentioned with the new large order, which will ship you know between Q2 and Q4 this year.

Speaker Change: You know more backend loaded to the second half of the year.

Speaker Change: You know we're in the process now of you know using using inventory we have on hand, and then you know placing new orders.

Speaker Change: So we expect a good.

Speaker Change: You know a good increase year over year.

James Sullivan: Yeah, no, certainly if you guys are able to hold revenue flat, given the runoff of the memory business, that would be pretty impressive for millimeter wave. And Jim, while I have you on the line, maybe if you could talk about, you know, where you expect gross margin to normalize once, you know, the book sales are all millimeter wave, and you no longer have that benefit from from memory. Yeah, you know, obviously the memory and particularly the last couple of quarters had popped pretty high in the, you know, high 60s, low 70s as we cleared out the last of the, you know, of the shipments.

Speaker Change: Yeah, No certainly if you guys are able to hold revenue flat given the run off of the memory business that'd be pretty impressive for millimeter wave.

Speaker Change: And Jim while I have you on the line maybe if you could talk about you know where you expect gross margin to normalize once you know the bulk of sales are all of the millimeter wave and you no longer have that benefit from from memory.

Speaker Change: Yeah, Yeah, you know, obviously, the memory and particularly the last couple of quarters had had popped pretty high in the high Sixty's low seventy's as we cleared out the last of the you know the shipments you know that.

James Sullivan: You know, the challenge had been, you know, over the last few quarters in millimeter wave with the stops and starts and the lower revenue levels kind of getting to a steady production state. You know, we're looking, you know, we're not, you know, we don't achieve the margins we have on the memory. You know, we've always said our corporate target is a 50% gross margin. It's going to take us some time to get there. You know, we'd like to see the margins. you know, initially kind of in the 40% range. You know, one of the things with the new order, there are some moving pieces there as to, you know, which specific devices the customer will take.

Speaker Change: <unk> had been you know over the last few quarters and millimeter wave with stops and starts and the lower revenue levels kind of getting to a steady production state.

Speaker Change: Yeah, we're looking we're not.

Speaker Change: Don't achieve the margins we have on the memory you know we've always set our corporate target is a 50% gross margin.

Speaker Change: Gonna take us some time to get there you know we'd like to see the margins.

Speaker Change: Initially kind of in the.

Speaker Change: 40% range, Yeah, one of the things with the new order.

Speaker Change: There are some some moving pieces there as to you know which specific.

Speaker Change: Devices, the customer will take.

James Sullivan: And one of the aspects is, you know, we have a fair amount of inventory. You know, as you may recall, we recorded, you know, a large inventory of Wrightown. in the fourth quarter of calendar 2023. You know, recognizing a write-down is not the same as scrapping the inventory. So we have a fair amount of inventory and we'll see some benefit to the margins here over the next couple of quarters as we, you know, to the extent we are able to ship written-down inventory. But you know, as we kind of get the production flow going and can get now to a steady state, and actually, I can just tell you yesterday, you know, our COO and I were signing purchase orders to get production for these, you know, for this new customer order that Ron talked about, as well as other expected orders, you know, I think we'll see that, you know, that margin improvement, you know, in the second half of the year.

Speaker Change: And one of the aspects as you know we have a fair amount of inventory you know as you may recall, we recorded you know a large inventory write down.

Speaker Change: In the fourth quarter of a calendar 2023.

Speaker Change: You know recognizing a right time and it's not the same as scrapping the inventory. So we have a fair amount of inventory.

Speaker Change: And we'll see some benefit to the margins here over the next couple of quarters as we.

Speaker Change: To extent, we are able to ship a written down inventory.

Speaker Change:

Speaker Change: But you know as we kind of get the production flow going in and can get now to a steady state and actually.

Speaker Change: I can just tell you yesterday, you know are our CFO and our restart purchase orders to get production for these you know for this new customer to that Ron talked about as well as other expected orders you know I think we will see that you know that margin improvement you know in the second half of the year the.

James Sullivan: Hopefully I answered your question there. It's just some moving pieces right now. on this order, as Ron said, on timing. And again, there is some. question as to which devices we'll end up shipping. Got it. No, that's helpful.

Speaker Change: Hopefully I know hopefully I answered. Your question. There is just some moving pieces right now.

Speaker Change: On this on this order as Ron said on timing and again there is some.

Speaker Change: Question as to which devices will end up shipping.

Speaker Change: Got it no. That's helpful and then maybe going back to Ron just on the military side of things you know you guys got a meaningful customer.

Ronald Glibbery: And then maybe going back to Ron, just on the military side of things, you know, you guys got your first meeting full customer in a production, you know, I would say fairly quickly with the ones you have in the pipeline today. Do you expect that some of those could convert to production, you know, by the end of this year, or are these more so kind of 2026 events? I classify them more 2026. I mean, generally the military does move a bit but obviously for us, it's a long term investment. So we were thrilled with this first engagement.

Speaker Change: I would say fairly quickly with the ones you have in the pipeline today do you expect that some of those could convert to production by the end of this year or are these more so kind of 2026 events.

Speaker Change: Classify them more of a 'twenty 'twenty six.

Speaker Change: The military does move a bit slow, but honestly for us. It's a long term investment. So we were thrilled with this first engagement it's a very.

Ronald Glibbery: It's a very very pressing application needs to get to market as soon as possible. It's going to, you know, save people's lives. So it's, so we need to move very quickly. And, and so that's, that's been a real winner for us. Very out of the norm, I think, generally for military applications. I would say generally, you know, the rest of the opportunities are kind of in the traditional timescale, if you will. But it should be, we should start to see the revenue early 26. But, but luckily for this, this first application that we moved very, very quickly, less, less than a year.

Very pressing application needs to get to market as soon as possible, it's going to save People's lives. So it's a so we need to move very quickly and and so that's that's been a real winner for us in a very out of the norm I think generally for military applications I would say generally the rest of the opportunities are kind of in the traditional.

Speaker Change: Time scale, if you will.

Speaker Change: But it shouldn't be we shouldn't start to see the revenue early 'twenty six but you know, but luckily for this this is Bruce application that we moved very very quickly less less than a year.

Kevin Liu: Yeah, understood.

Ronald Glibbery: And if I could sneak just one more in on Bede, you had the highlight of the number of applications coming in in March of 2025. Are you expecting Bede to start to contribute more so this year? Or is that also more of a 26 event? You know, as Jim said, this is this is a bit of a moving target. The right now, I would say the the appetite in Washington to move beat is very aggressive. So so we probably we probably should have spent more time talking about that. So certainly we're thrilled with with this initiative to move towards tech neutral.

Speaker Change: Yeah understood and if I could sneak just one more in on beta you had the highlight of the number of applications coming in in March of 2025 are you expecting them to start to contribute more so this year or is that also more of a 26 events.

Speaker Change: You know.

Jim Sullivan: It is as Jim said. This is this is a bit of a moving target. The right now I would say the appetite in Washington to me being very aggressive. So so there we were probably we probably should have spent more time talking about that so certainly we're thrilled with the with this and our initiatives to me.

Speaker Change: Move towards Tech neutral.

Ronald Glibbery: You know, obviously, it's very biased towards fiber. And now those days are over. I think the new administration say, no, we just want everybody to get high speed broadband. So that's the you know, we don't care how they get it right. Whatever is the best way to provide that. But part of this now, and if you if you kind of do a little bit of research, what you'll find is that the administration is also trying to accelerate the. So, we're hoping that, you know, we start to see the effect of that this year, of course, right?

Speaker Change: You know obviously was very biased towards fiber and are those days are over I think the new administration's day now we just want everybody to get high speed broadband. So that's the you know we don't care, how they get it right [laughter] whatever is the best way to provide that but part of this now and these you you'd be kind of do a little bit of research what you'll find is that the administration is also trying to accelerate.

Speaker Change: <unk>.

Speaker Change: So we're hoping that our you know we started to see the effects of that this year of course, right, where we're obviously almost thinking some of these orders are related to that a little bit that's pure conjecture, frankly, but we're really hoping to beat starts to show those effects. This year based on I think in administrations desire to get you know get high speed Internet.

Ronald Glibbery: We're obviously almost thinking some of these orders are related to that a little bit. That's pure conjecture, frankly, but we're really hoping that BEAT starts to show those effects this year. Based on, I think, the administration's desire to get, you know, get high-speed Internet out to the masses. You know, everybody in America has high-speed Internet, so that's what we're really counting on ASAP.

Speaker Change: Now to the masses, you know everybody in America as high speed Internet. So that's what we're really counting on in our age out.

Kevin Liu: All right, great, thank you so much for taking the questions. My pleasure, Kevin.

Speaker Change: All right great. Thank you so much for taking the questions.

Kevin Liu: Sure Kevin.

Operator: This concludes today's conference. Disconnect your lines. Thank you everyone.

Speaker Change: This concludes today's conference and you may disconnect your lines at this time.

Kevin Liu: Thank you everyone.

Kevin Liu: Thank you for your participation.