Peraso Inc. Q1 FY2026 earnings call

• Overall Q1 2026 results matched revised expectations; top-line revenue was negatively impacted by a large delayed order caused by material shortages from a single Asia-based supplier. The order was shipped in Q2 2026, and the company has implemented steps to reduce reliance on single suppliers. The supply chain issue is fully resolved.
• Core Fixed Wireless Access (FWA) Segment: FWA remains Perasso's largest and most mature 60 GHz end market. Near-term demand and purchase activity are subdued due to industry-wide memory chip shortages and memory price increases, but the company expects to benefit from a demand recovery once market conditions stabilize. The company secured a key design win with MicroTeek for its next-generation 60 GHz N-ray point-to-point product, which is expected to drive incremental FWA deployments. The fully integrated DUNE platform is gaining traction with operators seeking high-performance, cost-effective urban wireless deployments, with multiple ongoing proof-of-concept evaluations with wireless ISPs globally.
• Tactical Communications (Defense) Segment: This new high-growth adjacent market is positioned to be a major future revenue driver. 60 GHz millimeter wave technology's inherent attributes (narrow directional beams, dynamic steering, oxygen attenuation, unlicensed spectrum) deliver stealthy, low-detection, low-interception, anti-jamming connectivity uniquely suited for mission-critical battlefield applications. In Q1 2026, the company achieved a key milestone with defense contractor Intact: the company delivered initial limited production shipments of optimized modules for Intact's next-generation drone identification friend or foe (IFF) system built for contested electronic warfare environments. A jointly developed situational awareness solution is scheduled for additional field trials in August 2026. Increased visibility from this engagement has generated inbound interest from multiple additional prospective defense customers. The company expects volume orders to begin in late 2026, with full production ramping in H1 2027.
• Edge AI and Autonomous Devices Adjacent Segment: Perasso is pursuing opportunities in edge AI applications including robo-taxis, autonomous vehicles, drone swarms, and factory robots, where 60 GHz technology's narrow directional beams eliminate the co-channel interference that plagues traditional Wi-Fi for dense fleets of high-bandwidth devices. Multiple customer evaluations are ongoing, and NRE work to optimize the company's technology for this segment was completed in Q1 2026, with additional optimization work expected through 2026. Successful conversion to design wins will expand the company's served market and diversify its revenue base.

Perasso Inc reported total net revenue of $1 million for Q1 2026, down from $2.9 million in Q4 2025 and $3.9 million in Q1 2025. Product revenue was $0.7 million (70% of total Q1 2026 revenue), down from $2.8 million in the prior quarter and $3.8 million in the year-ago quarter. Millimeter wave product revenue, the company's core technology segment, was $0.6 million (60% of total Q1 2026 revenue), down from $2.4 million in Q4 2025 but up from $1.5 million in Q1 2025. Legacy memory IC product revenue saw a significant year-over-year reduction following the previously announced product end-of-life, contributing 10% of total Q1 2026 revenue. Non-recurring engineering (NRE) revenue, which contributed 30% of total Q1 2026 revenue, drove the sequential gross margin increase to 61.5%, up from 52.2% in Q4 2025, but down from 69.3% in Q1 2025 (the year-over-year decline reflected the loss of higher-margin legacy memory IC sales).

• The company expects total net revenue for Q2 2026 to be approximately $1.2 million, factoring in the delayed Q1 large order that shipped in Q2.
• Gross margin is expected to decline from Q1 2026's 61.5% to the 50% range, as revenue mix shifts back to a higher proportion of product revenue from NRE services.
• Management expects near-term demand visibility to remain low due to irregular, lumpy customer order patterns and ongoing industry memory chip supply/price pressures. The company hopes memory market conditions will stabilize by Q3 2026.
• The company's primary near-term priorities are securing new purchase orders and increasing conversion of ongoing customer engagements to design wins to return to top-line growth.

• Near-term demand visibility is significantly reduced due to irregular customer order patterns and broader industry headwinds from memory chip shortages and price increases, which are negatively impacting customer purchasing.
• The company had only $2.7 million in cash as of March 31, 2026, with a GAAP net loss of $2.5 million in Q1 2026. The company relies on its at-the-market offering program to raise operating capital.
• While the single-supplier material shortage that delayed the Q1 large order has been resolved, the incident exposed a prior supply chain vulnerability that the company has only recently mitigated with alternative suppliers.
• The timing and magnitude of revenue from new adjacent markets (tactical communications and edge AI) remains uncertain, even as customer engagement grows.
• The ongoing strategic review process for potential transactions (merger, asset sale, or other strategic alternatives) has no new updates to disclose.

Q: Did the Q1 supply chain shortage affect any orders beyond the large delayed shipment, and are there ongoing spillover risks? / A: While the affected component was used across a broad product line, only one major customer's order experienced a meaningful delay. The issue, caused by incorrect parameter testing by the component manufacturer, has been fully resolved. The company has added alternative suppliers to eliminate this single-point vulnerability, and does not expect similar disruptions going forward.

Q: What factors are driving low visibility for fixed wireless access demand? / A: The primary headwind is industry-wide memory chip shortages and elevated memory pricing, which has slowed customer purchasing, a dynamic confirmed by multiple Perasso customers. Occasional minor ramp-up delays from new customers also contribute, but these issues are typically resolved quickly. Management expects improved FWA performance for the remainder of 2026 once memory market conditions stabilize.

Q: What is the expected order cadence for the new tactical communications/defense business, and how large is this market opportunity? / A: Initial limited production shipments for the Intact IFF program are complete, with additional field trials scheduled for August 2026. Management expects NRE revenue from new defense programs to begin in late 2026, with volume production ramping in the first half of 2027. Perasso views the military tactical communications market as at least as large as its core FWA market, and potentially much larger, driven by urgent demand for non-jammable, GPS-independent stealth communications amid modern battlefield requirements.

Q: What is the source of Q1 2026 NRE revenue, and will this level of NRE continue? / A: Q1 NRE revenue came from two key segments: optimization of 60 GHz modules for tactical communications clients (focused on reducing size, weight, and power consumption for battery-operated battlefield systems) and optimization of systems for edge AI use cases. Management expects NRE activity to continue in both segments through the rest of 2026 as more customers engage in product evaluations and development.