Q3 '23 Earnings Preview
Peraso (PRSO) reports Q3 ’23 results after the close on Monday, November 13. We expect the company’s results to meet our estimates at the very least and believe the fulfillment of initial end-of-life orders for Peraso’s memory IC products could produce some upside relative to our model. That said, the consensus revenue forecast, which includes just one other set of estimates, sits above ours and represents an appropriate upside scenario in our view. Specifically, our Q3 estimates include revenue of $2.5 million, adjusted EBITDA of $(2.3) million and non-GAAP EPS of $(0.09), while the consensus calls for $3.0 million, $(2.2) million, and $(0.10), respectively. Our projections continue to reflect muted sales of mmWave products due to the inventory correction underway in the semiconductor industry, partially offset by sequential improvement in memory IC sales. We assume the higher mix of memory product sales contributes to a slight uptick in gross margin, which combined with tight cost controls should result in a lower adjusted EBITDA loss relative to Q2.
Exhibit I: Our Estimates Versus Consensus
Sources: K. Liu & Company LLC; FactSet Estimates
Between the headwinds from the inventory correction cycle and uncertainty in the timing of several large deal closures, management has refrained from providing specific financial guidance in recent quarters. While we suspect that may prove to be the case once more, we believe management’s qualitative commentary on near-term trends may be relatively positive given the memory IC purchase orders highlighted in late September and the initial ramp of new mmWave production customers in Q4. Recall that Peraso has already received $11.3 million in non-cancelable purchase orders for its memory IC products, leaving the company well on track to achieve or exceed its prior guidance for $15.0-$20.0 in end-of-life orders through FY ’24. We therefore remain comfortable with our projections for a sequential uptick in the business beginning in Q4 and continuing into FY ’24. More importantly, the contribution from the memory business should also boost cash flow, particularly if Peraso moves inventory already on the balance sheet. We believe this could enhance liquidity in the immediate term and potentially allow the company to raise capital on more favorable terms. Our price target remains $1.00 based on a FY ’23 EV/Sales multiple of 2x.
Our report with model and disclosures is available here.
Disclosure(s):
K. Liu & Company LLC (“the firm”) receives or intends to seek compensation from the companies covered in its research reports. The firm has received compensation from Peraso Inc. (PRSO) in the past 12 months for “Sponsored Research.”
Sponsored Research produced by the firm is paid for by the subject company in the form of an initial retainer and a recurring monthly fee. The analysis and recommendations in our Sponsored Research reports are derived from the same process and methodologies utilized in all of our research reports whether sponsored or not. The subject company does not review any aspect of our Sponsored Research reports prior to publication.