Executive Summary / Key Takeaways

• Strategic Pivot Driving Growth: Peraso is undergoing a critical transformation, shedding its legacy memory business to focus entirely on high-growth millimeter-wave (mmWave) technology. This pivot is yielding significant results, with mmWave product revenue increasing 45% sequentially and over 200% year-over-year in Q2 2025.
• Differentiated Technology & Expanding Markets: Peraso's proprietary mmWave solutions, featuring stealthy beamforming and fiber-like speeds, are gaining traction in Fixed Wireless Access (FWA) and emerging tactical military communications, including drone applications. Product upgrades, like the PERSPECTUS module supporting 50% more users, enhance its competitive edge.
• Strong Outlook Amidst Liquidity Concerns: The company projects Q3 2025 total net revenue between $2.8 million and $3.1 million, with record quarterly mmWave contribution. However, Peraso faces substantial liquidity challenges, operating under a "going concern" warning, necessitating ongoing capital raises and a strategic review process.
• Competitive Niche in a Giant's World: While competing with industry titans like Qualcomm (QCOM) and Broadcom (AVGO), Peraso carves out a niche with specialized, cost-effective mmWave solutions for specific high-performance, low-latency applications, particularly where stealth and rapid deployment are critical.
• Catalysts for Future Growth: Regulatory shifts favoring technology-neutral BEAD funding for FWA and increasing demand for secure, high-speed communications in military and drone applications are significant tailwinds that could accelerate mmWave adoption and Peraso's market penetration.

The Millimeter-Wave Frontier: Peraso's Strategic Rebirth

Peraso Inc. (NASDAQ:PRSO) stands at a pivotal juncture, having shed its historical identity to embrace a future defined by millimeter-wave (mmWave) wireless technology. Incorporated in 1991 and reincorporated in 2000, the company underwent a transformative acquisition of Peraso Technologies Inc. in December 2021, marking its full commitment to mmWave. This strategic pivot has reshaped its business model, moving away from legacy memory ICs to focus on high-speed, low-latency wireless solutions.

The industry landscape for wireless connectivity is rapidly evolving, driven by insatiable demand for bandwidth, particularly in underserved areas and mission-critical applications. Peraso operates as a fabless semiconductor company, specializing in the 24-300 GHz frequency band. Its overarching strategy is to become a profitable, IP-rich leader in mmWave, leveraging its technological differentiators to capture market share in Fixed Wireless Access (FWA) and tactical communications.

Peraso's competitive positioning is unique. While it operates in the shadow of semiconductor giants like Qualcomm, Broadcom, Intel (INTC), and Analog Devices (ADI), Peraso has carved out a specialized niche. These larger competitors offer broad, integrated solutions across diverse markets, benefiting from immense scale, R&D budgets, and established ecosystems. Peraso, in contrast, focuses on specific mmWave implementations where its specialized technology can offer distinct advantages, often at a breakthrough price point for targeted applications.

Technological Edge: Peraso's mmWave Moat

Peraso's core differentiated technology lies in its mmWave integrated circuits (ICs) and antenna modules, particularly for the unlicensed 60 GHz spectrum and the 28-39 GHz bands for 5G. This technology is designed to deliver reliable, high-speed, and low-latency broadband connectivity. A key differentiator is its proprietary high-volume mmWave IC production test methodology, which uses standard, low-cost equipment, addressing operational challenges in high-volume markets.

The tangible benefits of Peraso's technology are significant and quantifiable. Its PERSPECTUS product family, for instance, received a major upgrade in April 2025, increasing the number of supported endpoint devices or users per access point from 32 to 48. This 50% increase in capacity is particularly valuable in dense urban deployments, reducing required hardware, improving the total cost of network ownership, and maintaining data rates up to 2 gigabits per second. Furthermore, the newly introduced PRM2141X-D dual-polarized module in May 2025 is designed for high-mobility deployments, integrating dual-polarized antenna arrays for robust connectivity in complex network environments.

In tactical communications, Peraso's mmWave technology offers an inherently stealthy nature. The company has developed custom beamformers that create a very narrow signal, making it "essentially impossible for any to detect" and providing "strong immunity to jamming." This capability is critical for battlefield applications, enhancing situational awareness and communications for military personnel and noncombatants. The company also received a Notice of Allowance for a U.S. patent in April 2025, covering seamless WLAN access point recovery technology, which enables reintegration of recovered or newly added access points without a full network reset, further solidifying its IP.

For investors, these technological advancements are crucial. They form the bedrock of Peraso's competitive moat, enabling it to offer solutions that are either more cost-effective, more performant in specific scenarios, or uniquely capable (like stealth communications) compared to broader offerings from larger rivals. This differentiation supports its market positioning and is fundamental to its long-term growth strategy, allowing it to command a premium in niche, high-value markets.

Strategic Pivot and Market Expansion

Peraso's journey has been marked by a decisive shift. The company completed the end-of-life (EOL) shipments of its legacy memory IC products in March 2025, a segment that represented approximately 86% of revenues for the six months ended June 30, 2024. This transition, while impacting near-term revenue, has allowed Peraso to fully concentrate on its mmWave portfolio. This focus is evident in its expanding customer base, which has doubled from 7 to 14 customers in production over the last 18 months, alongside a 90% increase in customer SKUs in production.

The Fixed Wireless Access (FWA) market is Peraso's largest and fastest-growing opportunity. Management notes a "steady and broadening recovery" in FWA demand, with previous chipset vendors like Qualcomm "gone by the wayside" in this specific niche. Peraso's DUNE platform, designed for dense urban environments, offers low-cost deployment, low power, long range, and point-to-multipoint capabilities. This has resonated with Wireless Internet Service Providers (WISPs) globally, including in South Africa and Kenya, where it's replacing existing 5 GHz systems that struggle with customer density. The company secured a significant $3.6 million purchase order for mmWave devices from a leading FWA provider in March 2025, with shipments expected through 2025.

Tactical communications and military defense represent another "exciting and rapidly expanding opportunity." Peraso commenced initial production shipments of its stealthy 60 GHz wireless solutions for defense applications in June 2025, leveraging a strategic contract with a specialized defense contractor. This market, with a minimum addressable base of 3.4 million active military personnel, is increasingly interested in mmWave for drone-related applications, such as transmitting high-speed video without detection. While military adoption can be slow, this initial win demonstrates rapid market entry for critical needs.

Peraso is also exploring adjacent markets. It secured its first production order for a 60 GHz wireless video system for classroom environments in June 2025, providing high-performance, low-latency video independent of congested Wi-Fi networks. Additionally, an initial purchase order for High-Velocity Roaming (HVR) technology in South Korea aims to enhance high-speed internet connectivity on moving trains and subways. These diverse applications underscore the versatility and broad applicability of Peraso's mmWave technology.

Financial Performance: A Transition in Progress

Peraso's financial performance reflects a company in a critical transition phase. For the second quarter ended June 30, 2025, total net revenue was $2.2 million, a decrease from $4.2 million in Q2 2024. This decline is directly attributable to the cessation of memory IC product shipments, which were completed in March 2025. However, the underlying mmWave product revenue showed robust growth, increasing to $2.2 million in Q2 2025, a 45% sequential rise and over 200% year-over-year. For the six months ended June 30, 2025, mmWave product revenue reached $3.737 million, a substantial increase from $0.961 million in the prior year period.

Gross profit decreased to $1.073 million in Q2 2025 from $2.351 million in Q2 2024, with GAAP gross margin falling to 48.3% from 55.5%. This shift is primarily due to revenue now being entirely comprised of mmWave products, which historically had lower profit margins than the discontinued memory ICs. Management expects initial mmWave-only margins to normalize in the 40% range, with a long-term corporate target of 50%. The cost of net revenue decreased due to the full amortization of developed technology intangible assets by December 31, 2024, and the sale of previously written-down mmWave inventory (approximately $0.2 million in Q2 2025).

Operating expenses have seen significant reductions, reflecting the company's cost containment initiatives. GAAP operating expenses for Q2 2025 were $2.9 million, down sharply from $6.8 million in Q2 2024. This reduction was driven by lower stock-based compensation, the absence of a $1.6 million charge for software license obligations incurred in Q2 2024, and reduced amortization of intangible assets. The net loss for Q2 2025 was $1.8 million, compared to $4.4 million in Q2 2024, indicating improved operational efficiency despite the revenue transition.

Comparing Peraso's TTM financial ratios to its larger competitors highlights its current stage. Peraso's TTM Gross Profit Margin of 56.06% is comparable to Qualcomm (56%) and Analog Devices (57%), but its Operating Profit Margin (-50.29%) and Net Profit Margin (-48.30%) are significantly lower than these profitable giants (QCOM Operating: 26%, Net: 26%; ADI Operating: 22%, Net: 17%). Intel, also in a challenging transition, shows negative operating and net margins, but its scale provides a different context. Peraso's smaller scale and ongoing transition mean it lags in overall financial resilience and cash flow generation compared to its larger, more diversified rivals.

Liquidity and Capital Strategy: A Tightrope Walk

Despite operational improvements, Peraso faces substantial liquidity challenges. The company reported net losses of $2.3 million for the six months ended June 30, 2025, and an accumulated deficit of $179.4 million. This history of losses and negative cash flows has led to a "going concern" warning from management and its independent auditors. As of June 30, 2025, cash and cash equivalents stood at $1.8 million. Management believes this cash will meet capital needs "into the fourth quarter of 2025," but expects cash expenditures to exceed receipts for at least the next 12 months.

To address these needs, Peraso has actively pursued financing. Net cash provided by financing activities was $1.47 million for the six months ended June 30, 2025, primarily from $1.5 million in net proceeds from at-the-market (ATM) stock sales. In November 2024, a warrant inducement offering generated approximately $2.6 million in net proceeds. The company also implemented workforce reductions (19 full-time equivalent positions in 2023-2024) and other cost-cutting measures to conserve cash.

A key part of Peraso's capital strategy involves non-recurring engineering (NRE) agreements. These are viewed as a way to bring in additional capital and offset engineering costs, with the strategic mandate that all NRE projects must lead to future production orders. This approach aims to fund R&D while building a pipeline for future revenue.

Outlook and Growth Catalysts: The Path Ahead

Peraso's outlook is characterized by cautious optimism, driven by the momentum in its mmWave segment. 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. Management anticipates "record quarterly revenue contribution from our mmWave products in the third quarter," with good visibility from existing backlog. They also expect sequential mmWave revenue growth throughout 2025.

Several catalysts could accelerate Peraso's growth. The FWA market is projected to expand dramatically, with global connections reaching 280 million by 2028, and 5G FWA dominating this growth (Ericsson). Critically, the National Telecommunications and Information Administration (NTIA) has updated its guidance, making unlicensed spectrum FWA eligible for the $42 billion BEAD funding program. Management believes this shift towards a technology-neutral approach, emphasizing cost-effective deployment over fiber, will have a "very positive impact" on Peraso's business, with direct benefits expected in the second half of 2025.

In tactical communications, the initial production shipments for military applications in Q2 2025 are a significant milestone. While broader military opportunities are expected to convert to revenue in early 2026 due to longer cycles, the urgent need for stealthy, high-speed communications on the modern battlefield, particularly for drone applications, positions Peraso favorably. The company's pipeline of customer engagements, including 7 additional preproduction opportunities, further supports its growth trajectory.

Risks to the Thesis: Hurdles on the Horizon

Despite the promising outlook, significant risks temper Peraso's investment thesis. The primary concern remains its "going concern" status. The company's recurring losses and negative cash flows mean its ability to continue operations is dependent on raising additional capital, which may not be available on acceptable terms or at all. Failure to secure financing could force further cost reductions, impacting its long-term business plan.

The unsolicited acquisition proposal from Mobix Labs, Inc. (MOBX) and the subsequent exploration of strategic alternatives introduce considerable uncertainty. This process could divert management's attention, incur significant costs, and disrupt business operations, potentially affecting employee morale, customer relationships, and stock price volatility. There is no assurance that this review will result in a favorable transaction.

Peraso also faces the ongoing risk of Nasdaq delisting, having only recently regained compliance with the minimum bid price requirement in June 2025. Failure to maintain compliance could adversely affect stock liquidity and the ability to raise future capital. Furthermore, the workforce reductions implemented to conserve cash carry the risk of unintended consequences, such as loss of institutional knowledge, decreased morale, and difficulty pursuing new opportunities. International trade policies, including tariffs, also pose a threat by potentially increasing costs and harming competitive positioning.

Conclusion

Peraso Inc. is undergoing a profound transformation, pivoting from a legacy memory business to a specialized leader in millimeter-wave technology. The core investment thesis centers on its differentiated mmWave solutions, which offer unique advantages in high-growth markets like Fixed Wireless Access and tactical military communications. Recent financial performance, particularly the robust growth in mmWave revenue, underscores the potential of this strategic shift.

However, this high-growth narrative is intertwined with significant financial risks, primarily the company's "going concern" status and the need for continuous capital infusion. The ongoing strategic review and the Mobix Labs proposal add a layer of uncertainty, but also potential for value realization. Peraso's technological leadership, demonstrated through innovations like enhanced PERSPECTUS modules and stealthy beamforming, positions it to capitalize on favorable industry trends such as BEAD funding and the increasing demand for secure battlefield communications. For investors, Peraso represents a high-stakes opportunity, where successful execution of its mmWave strategy and adept management of its liquidity challenges will dictate its long-term viability and potential for substantial returns.