Q2 2025 Peraso Inc Earnings Call

Speaker #1: Good afternoon and welcome to Peraso Inc.'s second-quarter 2025 conference call. At this time, all participants are in listen-only mode. If anyone needs assistance at any time during the conference call, please press the star key followed by zero on your touchtone phone.

Speaker #1: As a reminder, this conference call is being recorded today, Monday, August 11th, 2025. I would now like to turn the call over to your host for today's conference call, Mr. Jim Sullivan.

Speaker #1: Please go ahead.

Speaker #3: Good afternoon and thank you joining today's conference call to discuss Peraso's second quarter 2025 financial results. I'm Jim Sullivan, CFO of Peraso, and joining me today is Ron Glibbery, our EO.

Speaker #3: Today, after the market closed, we issued a press release and related Form 8-K, which was filed with the Securities and Exchange Commission. The press release and Form 8-K are available on Peraso's website at www.perasoinc.com under the Investor Relations section.

Speaker #3: There is also a slide presentation that we will be using in conjunction with today's call, that may be accessed through the webcast link on the IR website.

Speaker #3: 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.

Speaker #3: 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, as well as any statements concerning the expected development, performance, and market share or competitive performance of our products or technologies and any statements related to prospective future financing arrangements or capital transactions and the evaluation of pursuit of strategic alternatives.

Speaker #3: All forward-looking statements are based on information available to Peraso on the date hereof. These statements involve known and unknown risks and uncertainties and other factors that may cause Peraso's actual results to differ materially from those implied by the forward-looking statements.

Speaker #3: Including unexpected changes in the company's business. More detailed information about these risk factors and additional risk factors are set forth in Peraso's public filings with the SEC.

Speaker #3: Peraso 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 #3: Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in terms 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 intangible assets, severance costs, and the change in fair value of warrant liabilities.

Speaker #3: These non-GAAP financial measures, definitions, and the reconciliation of these differences between them and comparable GAAP measures are presented in our press release and related Form 8K, which provide additional details.

Speaker #3: 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 site.

Speaker #3: Now, I'd like to turn the call over to our CEO, Ron Glibbery, for his prepared remarks. Ron?

Speaker #4: Thank you, Jim. Good afternoon and welcome to everyone on the phone and the webcast. We appreciate you joining us for today's conference call. We had a solid and productive second quarter, marked by continued market momentum and growing demand for Peraso's industry-leading mmWave technology.

Speaker #4: Revenue from our MMWave products increased 45% sequentially and more than 200% year-over-year, as we continued to ramp shipments to an expanding customer base and across multiple targeted end markets.

Speaker #4: Further highlighting the sustained market leadership of our 60-gigahertz solutions, we achieved a significant milestone, having surpassed 2 million cumulative shipments of our MMWave devices. Complementing the growth of our MMWave products, we have continued to exercise disciplined cost management, resulting in lower run-rate operating expenses and significant year-over-year improvement in our operating results for the quarter.

Speaker #4: Looking at slide four, fixed wireless access continues to represent the largest and fastest growing market opportunity MMWave technology. Due to its unique ability to deliver reliable, high-speed, and low-latency broadband connectivity to homes and businesses without the cost burden associated with fiber infrastructure, throughout the first half of the year, we have already seen a steady and broadening recovery in both market demand and customer orders for our fixed wireless access solutions.

Speaker #4: Highlighting our most recently announced win, in July, we announced one of our leading partners, Tachyon Networks, selected Peraso's MMWave modules to power its latest outdoor 60-gigahertz fixed wireless solution.

Speaker #4: Our advanced MMWave module-enabled Tachyon solution delivers fiberglass speeds at a breakthrough price point, supporting rapid broadband deployments in both dense urban and rural markets.

Speaker #4: More specifically, their latest solution offers gigabit connectivity as in over 3-kilometer range and is compatible with Tachyon's existing TNA 30 series, with the ability to support up to 48 client connections per sector.

Speaker #4: This win and our ongoing collaborative partnership with Tachyon Networks are a testament to Peraso's recognized technology leadership for high-performance MMWave solutions. Today, we remain engaged with numerous wireless internet service providers that are utilizing Peraso's MMWave technology in proofs of concept for future fixed wireless access deployment.

Speaker #4: We expect these and additional new opportunities to contribute to our sustained future growth as we convert successful proof of concepts into new initial production orders.

Speaker #4: Now, turning to slide five. In addition to capitalizing on the recent momentum with the fixed wireless access market, we continue to be excited about the growing interest and market opportunity MMWave technology in next-generation tactical communications and military defense applications.

Speaker #4: Following a series of early prospective discussions and initial engagement with potential customers and ecosystem partners, we have become increasingly confident that the inherent characteristics of our MMWave technology are well-matched to solve a number of critical communication challenges encountered in tactical defense environments.

Speaker #4: As discussed on a previous call, we did demonstrate that our first commercial proof point earlier this year was a strategic contract with a specialized defense contractor to deliver mission-critical wireless application to global military and defense forces.

Speaker #4: We have since been working in close collaboration with this lead customer to refine the jointly created and deployable system solution for our first-of-its-kind tactical defense application.

Speaker #4: In June, we announced a significant milestone with the delivery of initial production shipments of our advanced 60-gigahertz wireless solutions in support of this jointly developed solution.

Speaker #4: More specifically, this new deployable system solution leverages Peraso's technology to provide heightened communication and situational awareness to help safeguard both military personnel and non-combatants, such as medics, and humanitarian responders operating in high-risk environments.

Speaker #4: As a company, we are proud to be part of enabling this next-generation tactical communication solution designed to mitigate and prevent unnecessary human casualties. This notable win is also further validation of the performance and versatility of our MMWave technology, helping to establish Peraso's commercial presence and accelerate our strategic expansion in the broader tactical defense communications market.

Speaker #4: With increasing awareness of its inherent performance attributes and advanced capabilities, including ultra-low latency, high reliability, and stealthy multi-gigabit data transmission, we believe that 60-gigahertz mmWave technology is poised to gain substantial market traction across a broad span of mission-critical applications.

Speaker #4: As just one prominent example from our previously mentioned early discussions with prospective future customers, and ecosystem partners, we've recently observed heightened interest around leveraging the benefits MMWave from various drone-related applications.

Speaker #4: More generally, we are highly motivated by both the anticipated and growing commercial potential of mission-critical applications, as well as the associated opportunities to contribute to future positive real-world impacts.

Speaker #4: We believe Peraso's advanced mmWave technology and commercially proven solutions represent a unique strategic advantage that we can capitalize on and continue to scale over time.

Speaker #4: As such, we remain committed to expanding our market presence, collaboration with ecosystem partners, and customer engagement in a tactical defense communications market over the coming quarters.

Speaker #4: Move to slide six. Although we traditionally dedicate a majority of our quarterly calls and commentary to updates on our two largest targeted markets, I want to take the opportunity on today's call to briefly highlight both the versatility of our MMWave products and the incremental growth opportunities that exist in adjacent end markets.

Speaker #4: Kindly note, we generally separate and refer to our collective target adjacent and end markets as two distinct categories. The first being transportation and the second category we call professional video delivery.

Speaker #4: While the typical revenue contribution from both these categories is smaller relative to the fixed wireless access business, we do have a combination of current or recurring customer sales, as well as active engagements in both these adjacent markets.

Speaker #4: Having provided that background as context, the most important takeaway is that MMWave technology delivers a uniquely compelling value proposition for overcoming complex connectivity challenges across diverse applications in both our target adjacent markets.

Speaker #4: Its largely the same inherent high performance and advanced capabilities that MMWave brings to fixed wireless and tactical communications these same attributes make MMWave a ical enabler and frequently the only practical economic solution for applications requiring robust, high data rate connectivity.

Speaker #4: As a recent example, further highlighting MMWave's unique capabilities and value proposition in adjacent markets, in June, we received and have since shipped a production order of our 60-gigahertz wireless solution in support of a new customer's wireless video system for classroom environments.

Speaker #4: This customer chose to incorporate Peraso's 60-gigahertz wireless MMWave technology to enable its solution for the reliable delivery of high performance, low latency video and high density school environments, while also operating completely independent of schools frequently congested existing Wi-Fi infrastructure.

Speaker #4: Also notable, this was our first-ever production shipment in support of a solution specifically tailored for education. Therefore, it reflected an expansion of our served addressable market.

Speaker #4: Looking now at slide seven. Borrowing from the layout that we utilized to show our overall pipeline in previous quarters, we recently introduced this new pipeline slide in order to specifically track and visualize the progression of our customer base over time.

Speaker #4: Noting the timeframe between the two respective funnels from Q4 2023 to Q2 2025, representing approximately 18 months, we are very pleased with the substantial progress we made toward expanding our customer base over this relatively short period.

Speaker #4: Especially when viewed in the context of how time- and resource-intensive it can often be to acquire a single new customer, and then successfully advance engagement on a specific program plan initial evaluation, through the design process, and ultimately see a customer's finished product be released to production. Although doubling our number of customers that are now in production from 7 to 14 hopefully speaks for itself.

Speaker #4: There's another potentially more subtle takeaway that I want to highlight. In addition to successfully attracting and securing new customers, this slide also demonstrates our ability to effectively advance a growing number of funnel opportunities and program engagements across an increasingly diverse group of end market applications.

Speaker #4: Turning to slide eight. This is another view our pipeline over the same 18-month period ending in June, but shown in terms of the number of SKUs or individual device models, irrespective of whether an individual SKU is associated with a new or existing customer.

Speaker #4: The overall trajectory is definitively positive and, similar to the prior slide, demonstrates our substantial progress in advancing a sizable number of engagement opportunities into finished customer products released into production.

Speaker #4: The other two takeaways that I want to briefly highlight are, first, the number of customer SKUs that are now currently in production have increased 90% over the last 18 months. This metric alone reflects a dramatically more diversified base of existing products with the potential for revenue contributions.

Speaker #4: Lastly, as of quarter end, we had seven additional engagements in the pre-production stage representing potential incremental revenue contribution in the relatively near future as customers release these products into production.

Speaker #4: In summary, we are pleased with our demonstrated growth and market momentum through the first half the year, as we've continued to ramp production shipments of our MMWave solutions in support of an expanding and increasingly diverse customer base.

Speaker #4: Combined with our ongoing commitment to disciplined expense management, we have meaningfully improved our operating results and significantly reduced our quarterly cash burns. Looking forward, we have good visibility into near-term orders for our MMWave solutions, with an existing backlog that supports continued sequential growth.

Speaker #4: In fact, we currently expect record quarterly revenue contribution from our MMWave products in the third quarter, having said that, we continue to be diligently focused on converting our healthy pipeline of existing customer engagements into new designs and incremental production orders in support of sustained growth in 2026 and beyond.

Speaker #4: I'll now turn the call back over to Jim to review the financials and provide our current revenue outlook for the third quarter of 2025.

Speaker #3: Thank ou, Ron. Turning now to the results for the second quarter 2025. Total net revenue for the second quarter was $2.2 million, compared with $3.9 million for the prior quarter and $4.2 million for the second quarter 2024.

Speaker #3: Product revenue in the second quarter was $2.2 million, compared with $3.8 million in the prior quarter and $4.1 million in the second quarter of 2024.

Speaker #3: The decreases in product revenues for the second quarter of 2025 compared with the prior quarter and comparable period of 2024 were attributable to the previous completion of EOL shipments of memory IC products during the first quarter of 2025.

Speaker #3: Specific to sales of millimeter wave products, revenues were $2.2 million in the second quarter of 2025, compared to $1.5 million in the prior quarter and $0.7 million in the second quarter of 2024.

Speaker #3: GAAP gross margin decreased to 48.3% in the second quarter from 69.3% in the prior quarter and 55.5% in the year-ago quarter. The decrease in GAAP gross margin for the second quarter of 2025 from the prior comparable periods was primarily attributable to revenue being comprised entirely of millimeter wave products.

Speaker #3: On a non-GAAP basis, gross margin for the second quarter was also 48.3%, compared with 69.3% in the prior quarter and compared with 68.8% in the second quarter of 2024.

Speaker #3: GAAP operating expenses for the second quarter of 2025 were $2.9 million, compared with $3.2 million in the prior quarter and $6.8 million in the second quarter of 2024.

Speaker #3: The year-over-year decrease in operating expenses on an AAP basis was primarily attributable to reduced stock-based compensation expense and $2 million in charges for software license obligations and severance costs incurred during the second quarter of 2024.

Speaker #3: And amortization expense related to intangible assets fully amortized in 2024. Non-GAAP operating expenses, which exclude stock-based compensation, amortization of intangible assets, and severance costs, were $2.7 million in the second quarter, compared with $3.1 million in the prior quarter and $5 million in second quarter of 2024.

Speaker #3: The year-over-year decrease in operating expenses on a non-GAAP basis was primarily attributable to a $1.6 million charge for software license obligations recorded in the prior year, as well as previously implemented cost reductions and ongoing cost containment initiatives.

Speaker #3: GAAP net loss for the second quarter 2025 was $1.8 million, or a loss of $0.31 per share, compared with a net loss of $0.5 million, or a loss of $0.08 per share in the prior quarter.

Speaker #3: And compared with a net loss of $4.4 million, or a loss of $1.88 per share in the same quarter a year ago. Non-GAAP net loss, which excludes stock-based compensation, amortization of intangible assets, severance costs, and change in fair value of warrant liabilities, for second quarter of 2025 was $1.7 million, or a loss of $0.28 per share.

Speaker #3: This compares with a non-GAAP net loss of $0.4 million, or a loss of $0.07 per share in the prior quarter, and a net loss of $2.1 million, or a loss per share of $0.88 in the same quarter a year ago.

Speaker #3: 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 2025 was approximately 6 million shares.

Speaker #3: Adjusted EBITDA, which we define as GAAP net income or loss as reported, excluding stock-based compensation, amortization of intangible assets, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes, was negative $1.6 million in the second quarter 2025, compared with negative $0.3 million in the prior quarter and negative $1.9 million in the second quarter 2024.

Speaker #3: With regard to the balance sheet, as of June 30, 2025, the company had approximately $1.8 million of cash and equivalents. The net change in the company's cash and equivalent balance for the second quarter was approximately $1 million and included approximately $1.1 million of net proceeds from the company's at-the-market offering program during the quarter.

Speaker #3: As of today's call, the company has approximately 6.2 million shares of common stock and exchangeable shares outstanding. Lastly, before discussing our outlook, I wanted to briefly acknowledge the recently announced decision by our board of directors to explore potential strategic alternatives, including a merger, sale of assets, or other similar transaction.

Speaker #3: As well as various potential sources of additional capital. As previously disclosed, we have retained a financial advisor to assist with the exploration process. Which includes evaluation of the unsolicited non-bonding proposal received in June.

Speaker #3: Aside from confirming that a formal review process is currently underway, there are no related updates to be shared today. Now, turning to our outlook, as Ron previously discussed, we are seeing positive market momentum for our millimeter wave solutions, as evidenced by ramp of production shipments to an expanding customer base.

Speaker #3: Based on the current backlog, we anticipate continued sequential growth and record revenue contribution from our millimeter wave solutions in the September quarter. More specifically, the company expects total net revenue for the third quarter of 2025 to be in the range of $2.8 million to $3.1 million.

Speaker #3: This concludes our prepared remarks, and we thank you for your time this afternoon. Operator, please commence the Q&A session.

Speaker #1: Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time.

Speaker #1: We do ask, while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press *1 on your phone.

Speaker #1: Your first question is coming from David Williams from Benchmark. Your line is live.

Speaker #5: Hey, good afternoon, gentlemen, and thanks for taking my question. I guess, maybe first, lots of nice progress there across the space, and especially in the tactical comms segment.

Speaker #5: And Ron, I think you ioned, being engaged on some drone, opportunities there. And, and we've heard that at least this, earnings, season, a couple of folks have talked specifically about just the demand, they're seeing develop in that space.

Speaker #5: So I'm wondering if you could give us maybe a little more color on the number of engagements or just kind of what you're seeing in the opportunities in that military space.

Speaker #5: Thanks.

Speaker #4: Thanks, Dave. thanks for getting on the call. Yeah, so basically the, you know, the fundamental concept to keep in mind is, is stealth. So when we communicate on the battlefield, there's, it can, it's very difficult or impossible for the enemy to, to, to, to, to detect our al.

Speaker #4: so basically, we, we've got a customer engagement today whereby we use that on the ground with, with the, with the battalions. And infantry, but, those, those, that same, company is now looking to, move that concept to drones.

Speaker #4: So the idea is, you move the concept to drones whereby, when, when you're using drone for, some kind of attack, you, you make, you, you determine whether the, the target is, is friend or foe.

Speaker #4: So, that's what our opportunities are on the drone side of things. Does that make sense?

Speaker #5: Yes. yes, it does. And, and what are the other things they've ind of brought up was, the targeting on the battlefield from the RF communication.

Speaker #5: And just wondering if you were kind of envelope or your, your, our precision in s of the, the, the, the signal, does that give you an portunity maybe to participate there where they're concerned with maybe picking up that RF signal and targeting those, those infantrymen?

Speaker #4: Well, that's exactly the point, Dave, because the, we, as you know, we use a concept called beamforming, and we can create very, and we've developed some custom beamformers for this application whereby we have a very, very narrow signal.

Speaker #4: And that signal is essentially impossible for the enemy to detect. So that's really what, what we've been doing on the battlefield side of things.

Speaker #4: This can be also applied not just, not just that application, but also on just strict standard communication, like, signal communications. so, but the, the core concept remains the same, which is this ability to operate on the battlefield within a stealthy capability.

Speaker #5: Okay. that's, no, that's, that's at. a-and then maybe, secondly here, I, I know you probably can't discuss or comment much here on the acquisition, but the press release seemed a little sloppy, at least in our opinion, and, and had multiple misstatements, believe.

Speaker #5: But first, I just want to see if you could confirm that that was a legitimate offer. And two, any updates in terms of how you're thinking about the business, given your balance sheet and just kind of where you're positioned.

Speaker #5: Lots of opportunities, but the balance sheet is a little strained here. So just anything around that would be helpful. Thanks.

Speaker #4: That, to me, it's a gem, Dave.

Speaker #5: the, the whomever?

Speaker #3: Sure. I mean, I can

Speaker #4: comment on, on the, you know, on the balance sheet. you know, from our perspective right now, you know, we have cash into the fourth quarter of this year.

Speaker #4: You know, we'll have an updated disclosure in our, you know, 10-Q that will be filed here by Thursday. You know, in the previous 10-Q, we had said we had cash into the third quarter, so we've obviously extended our runway.

Speaker #4: you ow, as we disclosed on the call, we've been, you know, had done some trading under our ATM program to bring in additional capital.

Speaker #4: We remain, you know, in pursuit of various opportunities to raise capital and, you know, first and foremost, attempting to do it non-dilutively. You know, we did sign an NRE agreement in the month of July.

Speaker #4: you know, of a, of a, a good amount for us, but a modest ount overall, and are pursuing other engagements and, you know, those NRE engagements are, not requiring engineering.

Speaker #4: It's a great way for us to, bring in additional capital and offset, you ow, offset costs, etc. you know, we pro continue to pursue all, you know, all activities, you know, on the, on the financing front.

Speaker #4: And, you know, remain pleased with our execution and, you know, in with, our outlook for Q3 and in particular our visibility towards that outlook, which is, as frankly as, as good as it's been based on our, on our backlog.

Speaker #4: with regard to the proposal we received, yes, we can confirm that that, you know, is a valid proposal and, you know, we don't have, more to say other than, you know, what I said on the call and what's been included in our, SEC filings.

Speaker #5: Okay, fantastic. I appreciate the color there. And, just, Jim, I guess as you kind of think about the growth that you're seeing here, your inventory had a nice step down this quarter as well.

Speaker #5: Obviously, that's, that's beneficial on the cash side. how do you think that inventory level's gonna trend and do you feel like we burned through much of the ventory digestion that we had been kind of struggling with the last several quarters?

Speaker #4: Yes, absolutely. we're definitely seeing, you know, movement, not with all, all customers, but in particular, it's, you know, evidenced by the large purchase order we announced earlier this year, from you, from our largest, you know, internet, equipment, customer.

Speaker #4: You know, we still have one or two other customers there that are still working through their inventory. But we're in a position now where the inventory we have in hand is basically spoken for on future shipments.

Speaker #4: And we've had to go ahead and start replenishing. certain other products that go in the, in the chipset. So, you ow, I not, not everyone's through it, but enough, enough are that we're seeing things turn, you know, turn back on and, and burning through the inventory that, you know, that we had and have started placing, you know, new orders.

Speaker #5: Great. And one last, if I may, sorry to, to take time here, but, did want to ask on, on opportunities, on the military side, it, it seems like you've got such a, an interesting and unique capability here that this would be an area of opportunity, especially for maybe defense NREs or to, to work with maybe the DOD or some of the others.

Speaker #5: Is that, are you seeing any traction there? Do you think they're aware of what you're doing? And is that an opportunity, maybe, to drive some near-term NRE or other revenue?

Speaker #4: Oh, we, you know, Dave, we are driving NRE. Like, this is actually a very custom design. And so what we're finding with the military is it's not fixed wireless.

Speaker #4: It's not your, you know, father's fixed wireless solution. So, NRE is definitely a, a, a part of our, our strategy moving forward. The thing to keep in mind with that, I would say we have like three, maybe, maybe three levers including software, the modules, and our antennas.

Speaker #4: And so we can, we can adjust all of those. So for example, the, the, the example I gave earlier whereby we, these extra antennas to create this very narrow beam on the battlefield.

Speaker #4: It's a very, very strong advantage for us. So, you ow, you can see that our, our ability to adjust some of those parameters on our products through, through NRE, as you suggest, is a very powerful tool for us.

Speaker #4: So that's something we're, we're executing on. that's a, it's a terrific point. And so we're, so we've got our first NREs in the bag.

Speaker #4: We just didn't publicly announce them, but, but NRE is gonna play a big role in the next year and a half. And we're, we're hoping to build that beyond where we're at today.

Speaker #5: Thanks so much for the color, Jim. I certainly appreciate it. Best of luck in the quarter.

Speaker #4: All right. Well, thanks. Thanks, David, for the question.

Speaker #1: Thank ou. Your next question is coming from Kevin Liu from Keiluan Company. Your line is live.

Speaker #6: Hi, good noon, guys, and nice progress here on the millimeter wave side.

Speaker #4: Yeah.

Speaker #6: No, I know you guys talked little bit about some of the, wins you've had with Tachyon and, and others in the quarter. with the seven pre-production wins in the pipeline, just wondering if you can, add in more color to some of the other wins that ou have there.

Speaker #6: and when you would expect some of those to start contributing to, to your revenue stream.

Speaker #4: I, I could say that basically a lot of that is fixed wireless. And, I think what we're eing in the market is a lot of the previous, you know, chipset vendors like Qualcomm, and others, just kind of gone by the wayside.

Speaker #4: I'd say that our, our, our thesis that we're becoming the dominant player in fixed wireless is, is coming true, Kevin. So a lot of that is in the fixed wireless side of things.

Speaker #4: Just because, you know, we've got so many customers, so much credibility in that space that, you know, basically that we continue to grow and dominate that space.

Speaker #4: But obviously, we've got designers on the military side of things as well. As Dave indicated previously, our ability to operate in stealth mode—and that is the ability to operate without really being detected by the enemy—is just an extremely important characteristic of our technology on the defense side of things.

Speaker #4: So I'd out of the seven, most of it's fixed ireless. Some of it's military. We have other, you ow, video is certainly, and kind of an interesting area for us.

Speaker #4: but, you know, I would say fixed wireless and defense are the main, the main areas of growth for us right now.

Speaker #6: That's good to hear. And just as it relates to your backlog, as you come into Q3, you're going to see some nice sequential growth.

Speaker #6: Just wondering how strong that backlog is on, you know, have you guys fully shipped everything? Again, some of the larger orders you received earlier in year, and have you continued to build upon that?

Speaker #6: And just anything you can share in terms of, you ow, your visibility for the remainder of this year would be helpful.

Speaker #4: Jim, do you wanna start?

Speaker #6: Yeah, I think I'll, I'll . you know, I think

Speaker #4: Yep.

Speaker #6: I, I mentioned in, my response to David, we have, excellent visibility on, on, third quarter. we're very comfortable with our backlog, backlog relative to the, you know, revenue number that we provided for guidance.

Speaker #6: no, not all of that has been shipped. So, you know, there's always, you know, the possibility for, shipments not to go, etc., that anyone has.

Speaker #6: But, we're very comfortable with where we sit. 's probably, you know, for being where we're at, you ow, in one of the best shapes it's been, you know, kind of halfway through the quarter.

Speaker #6: we're still filling in for, you know, fourth quarter. still expecting some additional orders and, and obviously, you know, as I mentioned in response to David's question, you know, still waiting for a ew customers to burn through inventory and turn back on.

Speaker #6: But, you ow, definitely pleased from where we, we sit right now. I've, you know, feel very good with Q3. We still have a ittle more work to do on, you know, on Q4.

Speaker #6: As I, you know, also mentioned and Ron mentioned, we did secure one, non-recurring engineering, deal in, in July. you know, till we've kind of gone through the revenue recognition and talked to the auditors, kind of put a, a modest amount in 3Q.

Speaker #6: and expect more of that in 4Q. but right now, 've been modest on 3Q. So pleased with, with where we sit and, you know, we even have, you know, a fair amount into the, into early '26.

Speaker #6: So definitely seeing better visibility there. Sounds good. and just on the non-recurring engineering deal, I know it's early and you haven't quite figured out all the accounting behind it, but, conceptually, how should we think , you know, the implications from that?

Speaker #6: Does that provide you guys with, you know, a revenue stream that could contribute, you know, all the way through the next year and a half?

Speaker #6: or would it be fairly lumpy in s of the periods you get that? and then also just from an exten, expense standpoint, do you need to make some investments on the R&D side to, you ow, to, to staff up to, to handle those, types of arrangements?

Speaker #4: I'll, I'll do the question on a LIFO basis.

Speaker #6: Mm-hmm.

Speaker #4: Modest, modest expenses. It's only, you know, a finance person could answer it. You know, modest, any expense adjustments are pretty modest. Didn't need to go out and add headcount.

Speaker #4: you ow, it's, it's, supporting an existing customer. so right now, I would say, ou know, we need to, you know, make modifications to satisfy the needs for the customer's application.

Speaker #4: So, you know, something that's certainly in the forecast. You know, obviously, we are pursuing additional, you know, NRE opportunities and, you ow, obviously, the goal for companies like us is obviously again, you, you get the cash.

Speaker #4: It offsets your engineering expense. And then, you know, ideally, you come out, come out of it with a, a future product to offer to others.

Speaker #4: Often, the way I've seen these, whoever pays for NRE may get some exclusivity, etc., depending on how it's negotiated—features, exclusives, etc.

Speaker #4: And then, but you obviously look to add another, you know, set of SKUs in our, in our toolkit for, you know, sell to other customers.

Speaker #4: But hard for me to say on the revenue recognition. We obviously didn't, you know, it's, you know, a modest, you know, modest six-figure amount.

Speaker #4: So, you know, hard, hard to say. We've just been racing on the current quarter, and it was a, a July transaction, so. But I was, I , I'm sorry, racing on the, the Q2 quarter, I should say, not the current quarter.

Speaker #4: I would jump in on that. I, I think in, in terms of the other question regarding whether it's lumpy, Kevin, like, I guess my takeaway, knowing that it's certainly the focus on one customer right now, and my, my kind of guidance would be that, there's gonna be, it's gonna be an ongoing NRE for, you know, for at least a year and a year and a half, I would say.

Speaker #4: And so not so lumpy, kind of steady state. but I would also make the point is I think it's very important is when we, you ow, A, as I thought Jim's was very important, which is we're not adding a lot of or even any new expense.

Speaker #4: So this is all, you know, it's existing engineering talent. The other thing is that anytime we do NRE, it's for production. Like, get, you know, we get paid on the engineering side of things, but we will not do NRE if it's not leading to production.

Speaker #4: For us, that production is the most important metric, frankly. so I think that's really important to make, a point to make for us is that all of this is leading to, you know, we, we consider significant production as well.

Speaker #4: So, that's kind of the model we have right now: we're trying to do ongoing NRE that kind of pays for engineering with programs that lead to good production.

Speaker #6: Yep. Understood. Well, congrats again on, on the progress, and thanks for taking the questions.

Speaker #4: Our pleasure.

Speaker #1: Thank you. Your next question is coming from David Williams from Benchmark. Your line is live.

Speaker #4: You couldn't get nothing, Dave.

Speaker #5: No, no. You didn't take my tracks. Hey, he's trying to avoid me going out in the Dallas heat. Yeah, yeah, that's exactly right.

Speaker #5: Well, I, I didn't, I didn't na bog our all the time and give, give some time to others, but, I did wanna ask, on the, the BEAD funding, and we've got some clarification.

Speaker #5: I know there are changes, there in terms of the, it was, you know, more technology neutral. And just curious if you're hearing anything from your customers in terms of, is that a, benefit yet?

Speaker #5: And, do you think it will be over time as, as now for BEAD funding may roll into, fixed wireless access?

Speaker #4: I'd say there's two, two things in regulatory problem we should, we should highlight. One is the BEAD. We haven't, it's en, it's been a, it's a little early.

Speaker #4: I mean, BEAD was for, like, a couple of years very fiber-focused, and so the people got into that kind of mo-m-mode of operation. So I think people are just trying to understand now what how it's gonna change for fixed ireless.

Speaker #4: Obviously, it's a benefit to us, right? I, I don't know if it's obvious, but it is obvious. I mean, the main benefit we have over, over fiber, frankly, is, is just the cost of the rollout and the time.

Speaker #4: There's two major factors there. One is the cost. So no trenching. And the time. It's, it's, there's not that many trenching machines, for example, right?

Speaker #4: So it's, so, so we have a very, very strong advantage when it comes to fixed wireless in, , in those environments. So, so we're hearing from customers of they're very happy with the changes that they're eing in BEAD.

Speaker #4: The other point I think we made in the presentation was that, in the big, beautiful bill for lack of a better term, that was recently passed, there's a real chance that a lot of the open and the unlicensed spectrum is going to get auctioned off.

Speaker #4: Except for ours. So that helps us as well. So from a regulatory perspective, that's, that's kind of a net bonus for us. So I was, a lot of people aren't aware of that, but that's, kind of a positive regulatory update for us as well.

Speaker #5: Okay. Great. And just one last thing. Did you feel funny saying, "big, autiful bill"? Thanks.

Speaker #4: I don't.

Speaker #5: Again, thanks, thanks for the time.

Speaker #1: Thank you.

Speaker #4: I thought I should, I thought that's what was called. It's all right.

Speaker #1: Thanks. Certainly. I show that there are no further questions in the queue at this time. That will conclude today's conference call. Thank you for your participation.

Speaker #1: You may now disconnect.