Earnings call transcript: Peraso Q4 2024 sees revenue growth, stock climbs

Peraso Inc. reported significant revenue growth in the fourth quarter of 2024, doubling its year-over-year performance to $3.7 million. The company’s stock saw a notable aftermarket surge, rising by 3.74% to $0.86, reflecting investor optimism. With a current market capitalization of just $3.02 million, InvestingPro analysis indicates the stock is trading below its Fair Value, though analysts have set price targets ranging from $3.00 to $3.75. Despite a GAAP net loss of $1.6 million, Peraso’s strategic initiatives and expanding market presence are driving positive sentiment.

Key Takeaways

• Peraso’s Q4 2024 revenue doubled year-over-year to $3.7 million.
• Stock price increased by 3.74% in aftermarket trading.
• Operating expenses decreased by 20% year-over-year.
• The company introduced the Dune MMA platform for urban networks.
• Peraso is expanding into military communication applications.

Company Performance

Peraso demonstrated robust performance in Q4 2024, with total net revenue reaching $3.7 million, representing a 100% increase from the same period last year. The full-year revenue for 2024 was $14.6 million, up from $13.7 million in 2023. While InvestingPro data shows the company is trading at a low revenue multiple, it also reveals the company is quickly burning through cash - one of 13 key insights available to Pro subscribers. This growth is attributed to the successful deployment of new products and expansion into new markets, including tactical defense.

Financial Highlights

• Revenue: $3.7 million in Q4 2024, 100% YoY growth
• Full Year Revenue: $14.6 million, up from $13.7 million in 2023
• GAAP Gross Margin: 56.3% in Q4, up from 47% in the prior quarter
• Non-GAAP Gross Margin: 71.6% in Q4
• GAAP Net Loss: $1.6 million or $0.37 per share in Q4
• Cash and Cash Equivalents: $3.3 million as of December 31, 2024

Outlook & Guidance

Peraso projects Q1 2025 revenue between $3.6 million and $4.0 million, with expectations for significant growth in its MMA product line. The company anticipates that Q1 2025 MMA revenue will surpass that of the entire year of 2024. Additionally, revenue from military applications is expected to commence in 2026. InvestingPro’s comprehensive analysis, including its Financial Health Score of 1.73 (WEAK), suggests investors should closely monitor the company’s execution of these growth initiatives. Get access to the full Pro Research Report for deeper insights into Peraso’s financial health and growth prospects.

Executive Commentary

CEO Ron Glibbery highlighted the company’s strategic progress, stating, "We’re seeing indications that the tide may finally be turning back in our favor." He emphasized efforts to expand the customer base and noted the positive impact of new governmental broadband initiatives.

Risks and Challenges

• Supply Chain Disruptions: Ongoing global supply chain issues could impact product delivery.
• Market Competition: Increasing competition in the wireless access market may pressure margins.
• Economic Uncertainty: Macroeconomic factors could affect customer spending.
• Regulatory Changes: Potential changes in government policies could influence market dynamics.

Peraso’s recent performance and strategic initiatives suggest a promising trajectory, though the company must navigate various challenges in the evolving technology landscape.

Full transcript - Peraso Inc (PRSO) Q4 2024:

Conference Call Operator: and welcome to PIRAZULINK’s Fourth Quarter twenty twenty four Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference call is being recorded today, Wednesday, 03/19/2025. I would now like to turn the call over to your host for today’s conference call, Mr. Jim Sullivan.

Please go ahead.

Jim Sullivan, CFO, Parraso: Good afternoon, and thank you for joining today’s conference call to discuss Parraso’s fourth quarter and full year twenty twenty four financial results. I’m Jim Sullivan, CFO of Parraso, and joining me today is Ron Glibbery, our CEO. Today, after the market closed, we issued a press release and related Form eight ks, which was filed with the SEC. The press release and Form eight ks are available on Paraso’s website at www.parasoinc.com under the Investor Relations section. There is also a slide presentation that we will be using in conjunction with today’s call that may be accessed through the webcast link on the Investor Relations website.

As a reminder, comments made during today’s conference call may include forward looking statements. All statements other than statements of historical fact could be deemed as forward looking. Proraso 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 technologies.

All forward looking statements are based on information available to Barossa on the date hereof. These statements involve known and unknown risks, uncertainties and other factors that may cause Process’s actual results to differ materially than 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 Parasso’s public filings with the SEC. Parasso expressly disclaims any obligation to update or alter its forward looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Additionally, the company’s press release and management’s statements during this conference call will include discussions of certain measures and financial information in terms of GAAP and non GAAP.

With respect to remarks on today’s call involving non GAAP numbers, unless otherwise indicated, referenced amounts exclude stock based compensation expense, amortization of reported intangible assets, severance costs and the change in fair value of warrant liabilities. 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 eight ks, which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available on the Investor Relations page of our website. Now, I would like to turn the call over to Ron. Ron?

Ron Glibbery, CEO, Parraso: 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. 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 efficiencies. In fact, fourth quarter operating expenses decreased 20% year over year, even with revenue doubling from fourth quarter of twenty twenty three. 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 Wave technology, including increasing production orders from our lead customers. 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 $3,400,000 in shipments against remaining backlog, bringing total memory IC product shipments for the full year 2024 to approximately $12,900,000 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 were past the inventory correction impacting several of our fixed wireless access customers. At year end, our remaining backlog of memory IC purchase orders was approximately $2,300,000 We will complete shipments and fulfillment of these final orders during March. Flipping to Slide five, we have worked aggressively over the past year to establish a growing and more diversified customer base for our MMA based solutions. In addition to broadening our existing penetration of the Pyx wireless access market in North America, we will also focus 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. Although the size and market potential of each engagement is unique, this still represents more than 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, PIRAZA’s NMwave 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 Wave technology.

Turning to Slide six, 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 five gs 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 exos from a recently published report by Ericsson, which validates and further emphasizes these current market dynamics. First, not only is the total number of FWA connections globally projected to increase dramatically over the next five years to two eighty million connections, but five gs 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 adds. And since 2021, the three largest carriers in The U. S. Have collectively added an estimated 10,400,000 FWA connections. The one key takeaway here is the current market momentum and the fixed five gs fixed wireless access is poised to capture a significant and growing share of the market over the next five years.

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 PIRAZO, we have been candid about the extended inventory correction impacting our fixed wireless access customers. Today, I’m pleased to report that we’re 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 deployments. Although a large portion of this positive shift can be attributed to market cycles, I would be hesitant not to mention that PIRASA now also has the broadest portfolio of MMA solutions in the company’s history. 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 Dune MMA platform for dense urban applications gaining meaningful traction with both existing and new prospective customers. As a reminder, our Dune 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 PIRAZA’s prospective series of MMOA modules, the platform offers low cost deployment, low power, long range and point to multipoint capabilities. 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 MWF solutions.

Most notable, earlier this week, we announced receipt of a $3,600,000 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 twenty twenty five, serves as further validation of PIRAZO’s Wave technology, while also signifying the improving dynamics and expanding momentum across the broader FWA market. Consistent with these observations, our MMwave solutions are currently being utilized in ongoing approval context by numerous risks targeting future FWA compliance across diverse geographies. Turning to Slide eight, it has become almost impossible to have a conversation about delivering high speed Internet in North America without talking about BEAD. 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 $42,000,000,000 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 deployments. So at that time, we view this as an indirect win and potentially expanded opportunity for alternative technologies such as MMAWADE and Internparazo. 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 B program will be handled, the most recent indications appear to be an incremental positive for fixed wireless access and in turn MMY solutions.

More specifically, the newly nominated leader of the NTIA, Ariel Roth, has publicly conveyed support for technology neutral BEED funding. Additionally, Howard Lutnick, the newly confirmed Chief of Commerce Department, was recently quoted as saying, the department is revamping the B 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 B 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 PIROSA’s Wave solutions. Turning to Slide nine, I want to shift to the other exciting and rapidly expanding opportunity for our Wave technology, which is tactical defense and military applications. 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’s an obvious need for secure communications.

However, perhaps less obvious is the simple awareness of a signal could allow for an enemy to triangulate 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. Not only is Wave bandwidth more inherently stealthy than other frequently used spectrum for communications, but we have now demonstrated through an extensive series of customer led trial and evaluations that Paraza’s sixty gigahertz 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, ’1 of our lead military defense customers upsized a previously secured initial production order for our prospective module products. We expect to commence initial shipments 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. Today, we have now have additional active engagements underway on tactical communication applications with other prospective customers. Moving to Slide 10. Prior to 2024, we viewed tactical communications as a potential adjunct, but mostly niche application for MMWA technology. However, our early success demonstrated over the past year on an initial customer engagement has since opened the door to what we believe is a significant and complementary market opportunity for PIRASO.

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 owners that I spoke about on a previous slide are primarily targeted at enhancing situational awareness and communications for deployed soldiers engaged in combat operations. 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 Paraza’s Wave technology. 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.

In conclusion, we are pleased with our continued growth and encouraged by the growing momentum for our Wave 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 MMA revenue for the first quarter of twenty twenty five to exceed comparable revenue for the full year of 2024. 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 twenty twenty five.

Jim Sullivan, CFO, Parraso: 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 $3,700,000 compared with $3,800,000 for the prior quarter and $1,800,000 for the fourth quarter of twenty twenty three. Full year 2024 total net revenue was $14,600,000 compared with $13,700,000 for the prior year. Product revenue from the sale of our memory integrated circuits and millimeter wave products in the fourth quarter was $3,700,000 compared with $3,800,000 in the prior quarter and $1,500,000 in the fourth quarter of twenty twenty three.

For the full year 2024, product revenue was $14,200,000 compared with $12,900,000 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 increased shipments of our memory IT products to fulfill end of life orders. Royalty and other revenues for the full year 2024 was $300,000 compared with $900,000 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. 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.

For the full year 2024, GAAP 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 twenty twenty three. 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 twenty twenty three include write downs of $3,200,000 GAAP operating expenses for the fourth quarter of twenty twenty four were $3,700,000 compared with $4,500,000 in the prior quarter and $5,500,000 in the fourth quarter of twenty twenty three. For the full year 2024, GAAP operating expenses were $20,000,000 compared with $22,500,000 for the prior year.

Non GAAP operating expenses, which exclude stock based compensation and amortization of intangible assets were 3,200,000 in the fourth quarter compared with $3,300,000 in the prior quarter and $4,000,000 in the fourth quarter of twenty twenty three. Non GAAP operating expenses for the full year 2024 were $14,900,000 compared with $16,400,000 for the prior year. 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. GAAP net loss for the fourth quarter of twenty twenty four was $1,600,000 or loss of $0.37 per share compared with a net loss of $2,700,000 or loss of $0.98 per share in the prior quarter and compared with a net loss of $8,900,000 or $12.48 per share in the same quarter a year ago. For the full year 2024, GAAP net loss was $10,700,000 or a loss of $3.57 per share compared with a net loss of $16,800,000 or $26 per share for full year 2023.

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 was 500,000 or loss of $0.13 per share. This compared with a non GAAP net loss of $900,000 or loss of $0.34 per share in the prior quarter and a net loss of $6,100,000 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 $5,100,000 or a loss of $1.71 per share compared with a net loss of $12,200,000 or $18.9 per share for full year 2023. 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 twenty twenty four was approximately 4,300,000.0 shares. Adjusted EBITDA, which we define as GAAP 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 and amortization and the provision for income taxes was negative $400,000 in the fourth quarter of twenty twenty four compared with negative $800,000 in the prior quarter and negative $5,900,000 in the fourth quarter of twenty twenty three.

For the full year 2024, adjusted EBITDA was negative $4,500,000 compared with negative $11,200,000 for the prior year. As of 12/31/2024, the company had $3,300,000 of cash and cash equivalents compared with $1,300,000 at the end of the third quarter. The sequential increase primarily reflected the aggregate gross proceeds of the company from financing activities of approximately $2,800,000 including approximately $2,600,000 of proceeds from the exercise of Series B warrants during the fourth quarter and zero point two million dollars of sales under our ATM program. Excluding the proceeds from financing activities, operating cash burn was approximately $800,000 for the fourth quarter of twenty twenty four compared with $700,000 for the prior quarter. Now turning to our outlook.

As Ron previously highlighted in his remarks, we continue to have a diverse pipeline of customer engagements to utilize Parasyz millimeter wave solutions for targeted market we anticipate total revenue to increase year over year in the first quarter. We anticipate total revenue to increase year over year in the first quarter. More specifically, the company expects total net revenue for the first quarter of twenty twenty five to be in the range of $3,600,000 to $4,000,000 This concludes our prepared remarks and we thank you for your time this afternoon. Operator, please commence the Q and A session.

Conference Call Operator: Our first question comes from David Williams with Benchmark. Please proceed.

David Williams, Analyst, Benchmark: Hey, good afternoon, gentlemen. Thanks for taking the question and congrats on the progress here all around the performance and the new orders there.

Ron Glibbery, CEO, Parraso: Thanks, David. Thank you. Thanks, Dave.

Conference Call Operator: I’ve got a couple of questions here, but

David Williams, Analyst, Benchmark: I think one of the first ones for me is really on the order that you received this quarter, dollars 3,600,000.0. 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 players in this year?

Ron Glibbery, CEO, Parraso: It’s reasonably linear with really little weight into the second half, only because of our ability to ship it. Does that make sense? The customer wants a linear and we’re trying to make it linear as possible. But yes, it’s going to be a little back, but I’m not talking like September, October, I’m talking July, August, right, in terms of when I say second half. So, yes, that’s how I would look at it.

David Williams, Analyst, Benchmark: Okay, great.

Conference Call Operator: And then just kind of as you start to get

David Williams, Analyst, Benchmark: through this inventory issue and you’ve got the CPO coming in, How do you think that your other customers are trending and looking

Conference Call Operator: at your inventory, it’s in pretty good position relative.

David Williams, Analyst, Benchmark: I guess, you seem fairly optimistic just about those orders, but

Conference Call Operator: are there other things in

David Williams, Analyst, Benchmark: the pipeline that you would expect to see this year in terms of orders that should come in?

Ron Glibbery, CEO, Parraso: Oh, definitely, yes. I mean, we had a couple of years ago, David, just to recap, we had a couple of primary issues and one was the inventory situation. The other was really concentration of customers. We had two basically two customers, I would say two years ago. We’ve done a put a lot of effort into actually increasing our customer base.

So we probably got, I don’t know, call it five times the customers now that we’re leveraging over, which makes them 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 well, we know it is over, certainly based on this order and two, we’ve got a much more diverse customer base. Not to mention the fact, by the way, is when we’re moving into the military, we’re going to be shipping our first volume of military components in Q2. So 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.

David Williams, Analyst, Benchmark: Okay. Fantastic. 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?

Ron Glibbery, CEO, Parraso: Yes, that’s a good question. I mean, I would say broadly that was all of the potential applications. Probably we’re focused on maybe a third of those today materially in terms of just literally working with customers on some of those. And I think we’ve said in the past, for example, the first application we actually are we have revenue from is this concept of just very simple kind of bone to humvee tactical link, right, if you will, but tactical but secure link. So very, very simple, but undetectable by the enemy, which is obviously the key here.

We’ve got some there’s this we’re doing some experiments with some of our customers on drone applications, for example. 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 gets in high resolution gets transmitted back to a receiver and not again, not detectable by the enemy. Those are some of the obvious applications.

We’re actually doing some applications that are actually confidential, classified. I can 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.

David Williams, Analyst, Benchmark: Okay, fantastic. And then maybe just one more on the product side there. 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 could benefit from that? It seems like there’s a lot of areas that need to have connectivity that necessarily can’t have FiberLAN to it today. Are you seeing people start to talk about that or seeing applications develop kind of around that or maybe more smart cities type applications, but really for AI at the edge?

Ron Glibbery, CEO, Parraso: Where we’re seeing that specifically is in an enterprise environment. So for example, really with people’s 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 pending applications for AI support.

And so as we all know, the real issue for one of the main issues for AI is actually the data rates. And so because of our large data rates in an office environment and in enterprise environment, we help solve that problem. So I would say our first instantiation of that concept is in enterprise environment.

David Williams, Analyst, Benchmark: Great. Thanks so much for the time. I’ll jump back into you. Thanks, gentlemen.

Ron Glibbery, CEO, Parraso: My pleasure, David.

Conference Call Operator: The next question comes from Kevin Liu with Kailu and Company. Please proceed.

Kevin Liu, Analyst, Kailu and Company: Hi, good afternoon guys and let me add my congratulations on the results and outlook here.

Ron Glibbery, CEO, Parraso: Thanks Kevin. Good to talk to you.

Kevin Liu, Analyst, Kailu and Company: First question I had here was just, 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 what sort of run rate you can reach for millimeter wave later in the year?

Ron Glibbery, CEO, Parraso: I’ll defer to Jim on that one. He’s more he’s closer to the numbers, but Jim, you want to tackle that? Sure.

Jim Sullivan, CFO, Parraso: Obviously, we’re pleased to basically with the first the guidance for the first quarter, 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. 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, recognizing that the first quarter, we expect to I think we’ve got one shipment, it may have even gone in the last day or so, complete the memory shipments and move on from there that we’re trying to keep revenues kind of flat year over year. There is some lumpiness from quarter to quarter. And as Ron mentioned with the new large order, which will ship between Q2 and Q4 this year, more backend loaded to the second half of the year. We’re in the process now of using inventory we have on hand and then placing new orders.

So we expect a good increase year over year.

Kevin Liu, Analyst, Kailu and Company: Yes. 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 where you expect gross margin to normalize once the Boltco sales are all millimeter wave and you no longer have that benefit from memory?

Jim Sullivan, CFO, Parraso: Yes. Obviously, the memory and particularly the last couple of quarters had popped pretty high in high 60s, low 70s as we cleared out the last of the shipments. The challenge had been over the last few quarters in millimeter wave with stops and starts and the lower revenue levels kind of getting to a steady production state. We’re looking, we’re not, we don’t achieve the margins we have on the memory. We’ve always said our corporate target is a 50% gross margin.

It’s going to take us some time to get there. We’d like to see the margins initially kind of in 40% range. One of the things with the new order, there are some moving pieces there as to which specific devices the customer will take. And one of the aspects is we have a fair amount of inventory. As you may recall, we recorded a large inventory write down in fourth quarter of calendar twenty twenty three.

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 to the extent we are able to ship written down inventory. But 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, our COO and I were signing purchase orders to get production for these new customer order that Ron talked about, as well as other expected orders. I think we’ll see that margin improvement in the second half of the year. So 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 will end up shipping.

Kevin Liu, Analyst, Kailu and Company: Got it. No, that’s helpful. And then maybe going back to Ron just on the military side of things, you guys got your first meeting full customer in a production, 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?

Ron Glibbery, CEO, Parraso: I’d classify them more as 2026. I mean generally the military does move a bit slow, but obviously for us it’s a long term investment. So we were thrilled with this first engagement. It’s a very, very pressing application, needs to get to market as soon as possible. It’s going to save people’s lives.

So it’s so we need to move very quickly. And so that’s been a real winner for us and 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 timescale, if you will. But it should be we should start to see the revenue early twenty six, but luckily for this first application, we move very, very quickly, less than a year.

Kevin Liu, Analyst, Kailu and Company: Yes, understood. And if I could sneak just one more in on Bede, you had the highlight of the number of applications coming in March of twenty twenty five. Are you expecting Bede to start to contribute more so this year or is that also more of a 2026 event?

Ron Glibbery, CEO, Parraso: As Jim said, this is a bit of a moving target. The right now, I would say the appetite in Washington to move beat is very aggressive. So we probably should have spent more time talking about that. So certainly, we’re thrilled with this initiative to move towards tech neutral. Obviously, it’s very biased toward fiber.

Now those days are over. I think the new administration is saying no, we just want everybody to get high speed broadband. So that’s the 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 kind of do a little bit of research, what you’ll find is that the administration is also trying to accelerate BEAT.

So we’re hoping that we start to see the effect of that this year, of course, right. 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 high speed Internet out to the masses. Everybody in America has high speed Internet. So that’s what we’re really counting on ASAP.

Kevin Liu, Analyst, Kailu and Company: All right, great. Thank you so much for taking the question.

Ron Glibbery, CEO, Parraso: My pleasure, Kevin.

Conference Call Operator: This concludes today’s conference and you may disconnect your lines at this time.

Ron Glibbery, CEO, Parraso: Thank you, everyone.

Conference Call Operator: Thank you for your participation.

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