As the world’s demand for data bandwidth is ever increasing, internet service providers are turning to new markets to add bandwidth and to add service to the increasingly congested standard fiber/WiFi solutions. Specifically, in highly dense markets and rural areas, fixed wireless access (FWA), i.e. long distance wireless connections instead of wired connections, is a straightforward and economically advantageous solution that can replace, aid, or even supplant fiber optic cable. We believe that Peraso Technologies has demonstrated itself to be an emerging leader in mmWave, and by extension is reasonably likely to be successful in 5G in the next few years. As such, as these markets grow, it is expected that Peraso (NASDAQ: PRSO) will benefit with increased revenues. In time, there could potentially be a revaluation of Peraso’s stock.

The Allure of 60GHz Fixed Wireless Access

FWA can be accomplished with several frequency bands, but the one generally considered as requiring the least amount of regulation is the 60GHz band (57-71GHz), which is basically globally fully unlicensed. This band lends itself well to narrow beamforming, which can almost eliminate interference issues. The main drawback is that this band runs through the apex of oxygen attenuation, so by design, it is challenging to get signals to travel far while minimizing power usage.

Network congestion can be a frustrating limiting factor in wireless data transmission, as its limited by the laws of physics as well as the mode of wireless data transmission. For instance, recent FCC complaints filed by AT&T (NYSE: T) and EchoStar (NASDAQ: SATS) against Starlink (part of SpaceX), seek to convince the FCC to deny Starlink a waiver for breaching extraneous signal noise thresholds for its supplemental coverage from space (SCS) capable satellites. Studies indicated that noise from Starlink SCS satellites (for text messaging) degraded signal downlink speed for AT&T.

This problem highlights how wireless networks can be saturated, and particularly how poorly directionalized signals can cause signal interference. These issues are almost entirely avoidable when operating in the 60GHz mmWave band and directing narrow signal beams. In addition to narrow beams, the oxygen attenuation that can be a drawback for power draw and link ranges can also serve as a benefit as it helps ensure beams don’t travel too far past their intended targets, additionally minimizing interference. In conclusion, 60GHz FWA is a desirable market solution for broadband internet with high data bandwidth potential and a lack of interference potential and regulatory burdens.

Peraso’s Recent Success in 60GHz mmWave

Peraso has been gaining traction in several 60GHz verticals including traditional residential FWA where they already have traction. In the last few weeks, the company has announced several purchase orders:

1. From a Kenyon wireless internet service provider (WISP) for its DUNE Platform which combines 60GHz FWA with internet traffic and protocol management for dense urban environments (in this case including backhaul and last-mile access).
2. From Korea for Advanced Roaming Technology (ARV) whereby nodes are placed every kilometer to provide seamless internet for high speed public transportation (trains), with expected continued expansion into China. This solution is expected to improve passenger experience as well as operational efficiencies.
3. For military use of 60GHz mmWave, where limiting battlefield clutter and interference, improving situational awareness and communication in combat, and stealth and precision are critical. Peraso had provided a prototype which apparently impressed, resulting in a first purchase order.

In the past year or two, most of the traction Peraso has gained has been by supplying their chips to leading equipment manufacturers. For instance, in June 2023, Peraso and Tachyon Networks announced production readiness of the TNA-30X product family for 60 GHz unlicensed FWA networks. Also in 2023, Ubiquiti, perhaps the unlicensed FWA (60GHz) market leader, introduced three new Wave models using Peraso’s technology. Wave is a top selling solution. Lastly, Link has expanded its deployment of Peraso-powered equipment to multiple

U.S. cities, including Las Vegas, Dallas, and Los Angeles.

Peraso offers chipsets and modules (including antennas) for these FWA applications that include advanced beamforming and beam steering technology driven by proprietary and patented phased-array and antenna designs. The company has integrated solutions for both backhaul, which is generally higher bandwidth and often longer distance Point-to-Point (PtP), and last-mile, which is a Point-to-Multipoint (PtMP) generally associated with a node providing service to several end users. An example of both configurations working together is shown below. Comparing FWA to fiber networks, main fiber lines would be equivalent to point-to-point backhaul, and individual fiber-to-the-home (FTTH) lines would be equivalent to the

point-to-multipoint solutions.

Source: Peraso Technologies materials

FWA Market Analysis: The Promise of 60GHz mmWave for Global Connectivity

As high-speed internet continues to expand globally, the unlicensed 60GHz (57-71 GHz) millimeter-wave (mmWave) spectrum presents significant opportunities for affordable and easily deployed wireless communication. This is particularly crucial for areas that are underserved by conventional broadband methods, such as fiber optics.

FWA Value Proposition

The deployment costs associated with building out fiberoptic broadband networks are often a barrier to accessibility, especially in rural areas. Estimates suggest that the cost of fixed wireless access (FWA) deployment can be as low as 10% compare to broadband deployment. Adding to that, long term FWA costs can be as low as 30% of the long-term costs of fiberoptic in similar locations. Even in non-rural settings, FWA costs can still be 50-60% lower than fiberoptic broadband. While FWA does incur higher power expenses compared to fiber, Peraso’s solutions are designed for energy efficiency, featuring low power consumption and optimized beamforming that enhance power transmission efficiency. In urban scenarios, the value proposition for FWA includes the ease of deployment, but high bandwidths and interference mitigation are also highly important—both of these are significant advantages of the 60GHz spectrum.

Historically, acquiring devices capable of delivering effective 60GHz communications has posed challenges. However, design improvements enabled by companies including Peraso have enabled the mass production of viable 60GHz solutions. These solutions are timely for FWA industry growth, as frequency bands traditionally used for WiFi (2.4 and 5GHz) and 4G cellular become increasingly congested.

60GHz mmWave technology has great potential for continued adoption by internet service providers due to its unique properties: it does not penetrate physical obstacles well, leading to rapid signal attenuation. While this characteristic seems like a negative, it can in fact be

advantageous. 60GHz spectrum is able to be effectively directed in narrow beams using phased array systems. Thus, “Fixed 5G” in the unlicensed V-band becomes a strong candidate particularly for high-capacity backhaul solutions, offering a viable alternative to fiber optic connections. Significant attenuation over distances along with narrow beamforming capabilities helps make 60GHz solutions almost impervious to unintentional interference.

The unlicensed 60GHz V-band is rich in bandwidth, providing an ample amount of contiguous spectrum that enables gigabit-per-second data rates. Initially, mmWave technology was intended for indoor applications only, primarily due to line-of-sight limitations and the absorption caused by oxygen in the 57-71GHz range, particularly near 60GHz.

Source

Despite its tendency to attenuate over distance, this limitation can be strategically advantageous for short-range, high-speed applications like home broadband, office networks, and IoT systems. The nature of mmWave technology brings its own set of challenges, particularly regarding line-of-sight. Obstacles like walls and even vegetation can significantly diminish signal strength. However, these challenges are not insurmountable as will be discussed later in this article.

Peraso provides mmWave solutions, but these fall into different, sometimes overlapping subcategories when compared with FWA; that is, mmWave can be used for FWA but is not synonymous with FWA. For instance, FWA can be accomplished with various frequency bands, including:

• 2.4 GHz and 5 GHz. These are common bands for FWA, and many FWA base stations are compatible with Wi-Fi equipment. T-Mobile acquired about 90% of 2.5GHz licenses in 2022 for $304 million.
• Mid-band 5G spectrum (2 GHz–6 GHz). This is considered ideal for FWA because it has better spectral efficiency and up to 100 MHz of channel bandwidth.
• Millimeter wave (mmWave) spectrum (24 GHz–39 GHz (aka high band 5G), and 57–71GHz). This spectrum offers exceptional capacity and multi-Gigabit broadband speeds. However, signals in these frequencies are more susceptible to path loss due to obstacles.
• 5725 MHz–5850 MHz (Band C). This band can be used for FWA services, especially in areas where broadband is unavailable through standard delivery platforms. Verizon spent $52 billion to access the entire (140 MHz of contiguous spectrum) C-band in 2021.

Some of these bands/frequencies are considered 5G spectrum, and some are considered mmWave, but all are capable of being used for FWA.

The 5G spectrum includes:

• Frequency range 1 (FR1): 410 MHz to 7.125 GHz, also known as the sub-6 GHz range
• Frequency range 2 (FR2): 24.25 GHz to 52.6 GHz, also known as millimeter-wave (mmWave)

Wells Fargo predicts FWA services will capture 80-90% of industry-wide net broadband subscriber additions through 2024, which helps prove the quality of FWA services as well as the lucrative opportunity they provide for internet service providers.

• FWA is expected to grow to 12-13% of the overall US broadband market by 2025.
• The global fixed wireless access market size was estimated at USD 143.61 billion in 2023 and is projected to grow at a CAGR of 19.8% from 2024 to 2030.

Needless to say, the FWA market is certainly big enough to enable a small company like Peraso to grow to multiple times its current size. Internet service providers or mobile network operators (MNOs), like T-Mobile (NASDAQ: TMUS), AT&T (NYSE: T), Comcast (NASDAQ: CMCSA), Charter (NASDAQ: CHTR) and Verizon (NYSE: VZ) may also be interested in Peraso-powered FWA modules to improve their offerings with FWA without paying for extra spectrum or saturating existing LTE/5G spectrum, especially where fiberoptic is not economically viable. Boston Consulting Group (BCG) notes that there are several value propositions for FWA depending on the situation; these additional tools could help MNOs or other competing organizations grow their top and bottom line:

BCG: FWA Value Propositions

Indeed, Wells Fargo (NYSE: WFC) forecasted that the FWA services will account for at least 80% of the entire broadband industry’s subscriber additions through 2024, growing to 12-13% of the total market by 2025 (including 10% of the residential market), which stands in contrast to the 2018-2021 period where almost all subscriber additions were connected with cable. The

As rural and smaller broadband markets constitute 40% of the US in terms of population, its expected that the next segment of FWA market growth will occur in those suburban and rural markets that often only have one high-speed ISP offering broadband service. Wireless providers should have substantial excess wireless capacity in those markets and lower population densities make it unlikely that they will saturate their spectrum soon; even in that case, unlicensed 60GHz is always an option.

Peraso’s Products and Solutions: 60GHz Fixed Wireless Access

Peraso has distinguished itself in the market by developing chipsets and integrated modules that support point-to-point (PtP) distances of up to 20 kilometers (approximately 12.5 miles). This advancement has been achieved through a combination of innovative beamforming techniques and the utilization of the entire unlicensed V-band, allowing for workarounds to overcome oxygen-related attenuation. While many competitors struggle with producing reliable chips for the 66-71GHz band, Peraso has honed this capability through extensive experience.

Peraso offers its X720 chipset, which is specifically designed for FWA. The chip supports the entire band’s range (from 57-71GHZ), with the 66-71 GHz (802.11ay channels 5 and 6) frequencies, allowing the chips to avoid the impact of atmospheric oxygen absorption that limits

range in a great portion of the lower part of the band. The 14GHz of spectrum from 57-71 GHz also enables multi-Gbps throughput.

With respect to other forms of attenuation, Peraso’s solutions generally perform well in serious weather conditions, with rain attenuation generally not being problematic under 2km links.

Attenuation due to oxygen, which peaks at 60GHz, is avoided by supporting frequencies from 66-71 GHz (802.11ay channels 5 and 6). On top of that, Peraso’s customers such as Ubiquiti have a 5GHz backup in case of weather interference. Typically customers use worst case scenarios in their link budget calculations, which is why having hardware providing superior ranges is critical for success in this market. In fact, The X720 chipset from Peraso is the only IEEE802.11ad-complaint chip set that includes both a baseband and mmWave phased array device from a single vendor and supports the full V-band frequency range of 57 GHz to 71 GHz, with the combined solution (advanced beamforming and higher V-band frequency support) having achieved link distances of 28kms

Phased Array Concept Graphic

To avoid interference due to real-time changes, Peraso’s products are engineered to address these issues with adaptive beamforming technology that dynamically adjusts the beam direction to always maximize signal strength, compensating for interference caused by physical barriers. As an example, growing foliage might obstruct a fixed beam, but the adaptive beamforming is able to react to these environmental changes.

Peraso further enhances its product portfolio with an integrated module including its baseband, 60GHz phased array RFICs, and on-board antennas. These modules, the VERSATUS and PERSPECTUS series, allow customers to source the baseband, phased array, and antenna along with firmware and software support, all from one supplier. In urban environments, where obstructions are commonplace, Peraso’s PERSPECTUS modules utilize signal reflections and diffractions to maintain strong connections, even around corners.

Peraso offers additional improvements to its FWA offerings in dense urban environments through an internet protocol it developed called DUNE. This program improves data distribution among many users by optimizing traffic in congested areas. DUNE traffic management can increase point-to-multipoint (PtMP) network capacity by almost 50% compared with traditional CSMA (downlink for PtMP) and improved single-user peak capacity compared with TDMA, all while keeping low (1-4ms) latency. Peraso’s ability to efficiently backhaul up to 32 user access points (APs) through its PtMP solutions (i.e. customer hardware powered by Peraso’s chips, modules, and DUNE) allows for scalability and cost-effective performance as user demand grows.

Competitive Profile of Peraso-Powered FWA Products

Peraso’s recent announcement of its first purchase order for the DUNE-powered PERSPECTUS solution this year marks a significant step forward in providing mmWave connectivity to underserved communities. Market-leading FWA provider Ubiquiti and other suppliers are increasingly choosing Peraso’s solutions to incorporate into their equipment offerings due to Peraso’s solutions having superior performance. A comparative analysis of Peraso’s PERSPECTUS line against competitors highlights its market leadership:

Ultimately, while specifications are important, field performance is the ultimate test; this includes reliability, user experience, and economic viability. Many competitors have struggled to match Peraso’s offerings in the 60GHz FWA sector, and much of this is attributed to Peraso’s products’ reliability. As carriers spend billions on traditional frequency bands that are becoming increasitly congested, the appeal of interference-free, unlicensed 60GHz mmWave technology is likely to grow, solidifying Peraso’s position as a leader in this promising market.

Peraso’s Products and Solutions: Military Communications

Peraso’s soutions are also ideal for military usage, particularly in tactical communications. Higher efficiency allows for operation at 12W, which enables use with lightweight batteries. The beamforming and beamsteering capabilities allow communications to avoid detection, interception, and jamming (in the lower frequencies in the V band due to oxygen attenuation), with the stealthy aspect of beamformed mmWave driving the value proposition. In the battlefield this keeps soldiers safe as the beamformed signals avoid tracking and being triangulated, so that their locations are not exposed. Lastly, the narrow beamforming helps eliminate multipath distortion, where atmospheric ducting, ionospheric reflection and refraction, and reflection from water bodies and terrestrial objects such as mountains and buildings can cause the same signal to be received at different times through different physical paths. This can create interference and phase shifting, where destructive interference causes fading of the signal.

Peraso tested its PRM2136 module in a proof of concept development contract last year to enable high-speed, seamless mmWave communications between vehicles and soldiers. This module is based on their PRS1145 and PRS4601 integrated circuits (ICs), which utilize a

low-cost, low-power, high-performance SuperSpeed USB 3.0 to IEEE 802.11ad 60 GHz system. This technology is applicable beyond secure tactical networking, such as with wireless AR/VR, displays, docking, and access to the cloud.

Peraso secured an initial purchase order for its military communications equipment in September 2024. At scale, the revenue opportunity for Peraso is likely about $10 million, with a potential budget of over $100 per soldier.

Peraso’s Products and Solutions: Transportation

Peraso’s beamsteering capabilities have enabled it to provide unique solutions for creating connectivity in the transportation sector, which includes public transportation but also applications in autonomous vehicles, traffic management and smart infrastructure, airports and planes, railways, drones/UAS, and shipping and ports.

First and foremost, Peraso has developed a high-velocity roaming (HVR) mode for its 60GHz modules. This allows for seamless connectivity for applications such as high-speed trains, where connections can be handed off along the track (make before break) so that there is no disruption. Furthermore, carriage-to-carriage connections are enabled with beamsteering at carriage ends such that no physical connections have to be made and added or removed carriages do not require maintenance associated with mechanical connections. Lastly, as the 60GHz connections are high bandwidth (up to 3Gbps), large amounts of accumulated data from devices such as security cameras can be offloaded in a short amount of time at train stops.

Also, none of these 60GHz solutions interfere with WiFi or mobile data spectrum which may not be the case with other wireless solutions.

Peraso recently announced a first purchase order for the Korean public transportation system to demonstrate their advanced roaming system for internet service provision. From Korea for Advanced Roaming Technology (HVR) whereby nodes are placed every kilometer to provide seamless internet for high speed public transportation (trains), with expected continued expansion into China. This solution is expected to improve passenger experience as well as operational efficiencies.

In the automotive sector, with vehicles increasingly becoming autonomous or self-driving, more and more telemetry, video systems, wired and wireless communication devices, internet service. and other systems will be required to communicate with vehicles and traffic control infrastructure. Highly directionalized and attenuated-over-distance 60GHz radio equipment with high bandwidth and low latency is ideal for this application where otherwise congestion and interference problems might compromise telecommunications performance. Therefore, Peraso has potential to break into this market.

Peraso’s Products and Solutions: Virtual Reality and Professional Video Delivery

Peraso is also engaged with consumer and enterprise customers for advanced video applications, as mmWave overcomes inherent impediments of other wireless solutions, including latency and interference. For instance, for virtual reality (VR), high performance GPUs transmit video via USB to a headset, and this is expensive, requiring headset-embedded GPUs (by the likes of Meta (NASDAQ: FB)) which sacrifice performance. Higher-end VR headsets with beautiful video quality utilizing GPUs located on the desktop such as those manufactured by Nvidia (NASDAQ: NVDA) require high bandwidth to the headset. This is achievable with 3Gbps bandwidth, <5ms latency Peraso equipment, while eliminating the use of a USB cable, which people do not prefer.

FWA Competitive Landscape

Peraso primarily sells their parts to wireless equipment manufacturers, not directly to consumers. For instance, Ubiquiti (NYSE: UI), the market leader in unlicensed mmWave equipment, and who has outcompeted its peers such as Cambium Networks (NASDAQ: CMBM), is a large customer of Peraso’s. While Peraso’s current market traction is entirely within

the unlicensed 60GHz mmWave market, they also have products for the licensed FWA mmWave market (i.e. other frequency bands), where they were included in an R&D project with some industry titans. As of now, the leading carriers (i.e. T-Mobile (NASDAQ: TMUS), Verizon (NYSE: VZ), AT&T (NYSE: T)), etc. have not fully committed in rapidly advancing these projects.

In mmWave, especially the 60GHz market, Peraso, as resultant aftermath of its innovative technological market leadership, has left in its wake a significant number of defeated competitors.

For instance, the original vendors of 60GHz equipment sales for Qualcomm (NASDAQ: QCOM) were left in the dust. They released a product from their acquired company which had poor performance, but they took some market share. Since then, due to issues transmitting across rooms and finnick requirements with equipment positioning, among other issues, the excitement of and market acceptance supporting 60GHz using Qualcomm’s solutions fizzled out. Since then the industry has moved forward with 8 channel MIMO, 300-500m distance with quadrupled bandwidth (802.11ay), a next-generation 60GHz framework where Peraso has key technology claims and which is applicable for outdoor commercial use rather than indoor consumer use.

This new framework left Qualcomm’s initial endeavor mostly unused and outdated. Its possible that Qualcomm could have success in the future using 60GHz technology in its Snapdragon processors, but for now they seemed to have misapplied the technology to a suboptimal market, whereas Peraso appears to have chosen a more lucrative market to initially apply 60GHz technologies. Additionally, their primary advantages over Qualcomm and other competitors in 60GHz FWA include 1) support for higher frequency bands from 66-71GHz which improves signal distance due to less oxygen attenuation, and 2) integration of USB 3.0 and associated software resources into their products, enabling wireless versions of various USB-connected devices.

On the other hand, a Swedish company called Sivers Communications (STO: SIVE) has a very competitive 60GHz FWA product on paper that hasn’t worked quite as well in practice, and had high power consumption. Sibers advertised significant theoretical data rates, often claiming speeds in the gigabit range using the entire 57-71GHz spectrum, emphasizing low latency.

Allegedly, in real-world environments, the performance often fell short of its advertisement, with inconsistencies in connection stability and data rates. Practical deployment in various settings revealed that achieving the advertised speeds required ideal conditions that were not always replicable in typical use cases. In contrast, Peraso’s solutions included more effective beamforming and dynamic channel management, which provided better performance in diverse environments compared to Sibers.

The other companies competing with Peraso directly in 60GHz are Ceragon Networks (NASDAQ: CRNT) and Ignitenet, and their technology is compared with Peraso’s in the table in an above section. Peraso, through Ubiquiti, generally has superior equipment. There are other FWA market participants that do not offer 60GHz communications but nonetheless compete with Peraso.

Tarana Wireless is another key competitor in the FWA market. The company provides long range FWA broadband using its G1 platform. Tarana’s G1 platform uses massive MIMO with extensive noise cancellation and perfect multipath integration, which allow them to use

256-QAM on lower GHz channels to distribute data across greater distances with high bandwidth. In 2022 they recorded nearly $100m in revenue after raising a total of $220 million over the past two years. With the company worth over $1 billion and G1 deployed in 19 countries and 41 states in the United States, they’re a significant competitor to Ubiquiti and SpaceX (Starlink). G1 requires being close to a tower and also requires a significantly expensive tower installation, and a relatively expensive installation (similar to Starlink’s cost) in each home. They’re more of a competitor with Ubiquiti than Peraso, but the company provides FWA broadband at different frequencies, so its success ultimately affects Peraso.

Smaller FWA competitors include Starry and Eolo. Notably, Starry emerged from bankruptcy in late 2023.

Growth Avenues: Industry Collaborations and Customers

Like Ubiquiti, certain competitors in the FWA market are actually customers that may offer growth avenues for Peraso. This includes Japan Nippon Telegraph And Telephone Corp. (OTCMKTS: NPPXF), and Panasonic which introduced a new mmWave WiFi solution based on Peraso’s chips; this took 5 years to get this product to market, marking a significant milestone for Peraso that greatly vets their technology. However, the revenue opportunity for these backhaul units are not fully characterized yet.

Another large company Peraso is collaborating with is Murata Manufacturing, specifically their subsidiary, pSemi. The companies are using Peraso’s new beamformer radio-frequency integrated circuit (RFIC) in conjunction with pSemi’s up-down converter for 5G mmWave.

Furthermore, Jaguar Wave and Peraso have worked with China Unicom to test Jaguar’s Peraso-powered units. They received China Unicom’s corporate seal, enabling them to provide 5G backhaul solutions for China Unicom’s network. These collaborations with large companies could result in significant revenue for Peraso.

Peraso’s 5G mmWave Solutions

Peraso mmWave Advantages

Peraso has developed a highly integrated 5G mmWave beamformer for frequency bands in the 24-43 GHz range. This device is designed for the end device rather than simply infrastructure requirements, and when 5G mmWave investments pick up steam, its expected that this product will be in demand. This could happen in the next few years as existing spectrum allocated to 5G could saturate. According to a report published by the Brattle Group:

“In five years, by the end of 2027, the US is expected to have a capacity deficit of over 10 exabytes/month. In 10 years, by 2032, this deficit could grow to approximately 17 exabytes/month.

[…]

Absent any new spectrum, by 2027, the US is expected to have a spectrum deficit of nearly 400 megahertz; this deficit could more than triple to approximately 1,400 megahertz by 2032.”

While the near-term prospects for Peraso’s 5G mmWave solutions are small, the longer term potential for the company is large as the companycurrently is the only vendor offering a

dual-band (28/39 GHz) RF FWA solution. The company’s FWA-specific products optimize cost, performance, and power consumption for the FWA market, and when the 5G FWA markets take off, the company should be well-positioned for a smooth entrance into this closely-related market.

Intellectual Property

Peraso has submitted 50 mmWave patent applications and 40 of those patents have been granted. These patents include several (9) essential claims for the IEEE 802.11ay (i.e. 60GHz WiFi WLAN) standard as well as claims in device implementation, with an emphasis on

high-performance, cost-efficient devices—as Peraso’s FWA products have improved range and power efficiency compared with competitors’ similar products. Such claims fall into categories such as effective beam directionalization with low latency, or the use of higher (66-71GHz) frequency bands, which is difficult to design and manufacture without mistakes/reduced yield. Competitors wishing to sell products utilizing IEEE 802.11ay with improved range and power efficiency will have difficulty matching Peraso’s level of performance and reliability without licensing technology from Peraso.

Management and Insider Ownership

Peraso has a suite of seasoned executives leading the company, with a wide range of experience spanning large and small chips/wireless/electronics companies (including NXP (NASDAQ: NXPI), LSI Logic, Canada (TSX: LSI), Broadcom (NASDAQ: AVGO), and AMD

(NASDAQ: AMD)), and consulting, which poises the company for success as a small vendor of critical wireless semiconductor parts in a rapidly growing and evolving industry, where the products are often sold to larger, more established companies in B2B transactions.

The main drawback with management for investors’ interests is insider ownership. The company’s most recent 10-K (2023) reveals that the executives receive large severance packages, significant executive compensation that is weighed towards cash and not stock options, with low (<10%) insider ownership. Undoubtedly, executive compensation directly linked with the success of a business and shareholder reward would be a more shareholder friendly plan. This is something that the board and compensation committee should consider adjusting to better align executives’ goals with long-term shareholder returns.

Financials

The company’s financial statements do not currently show a growing top line because they have two product lines, the new mmWave solutions and legacy memory chips, which are going through end of life, being phased out. Additionally, there was a mmWave inventory correction which will improve.

In 2025, Peraso will have a transition as mmWave grows and memory chips are completely phased out. The company could hit cash flow neutrality in 2025 with mmWave products picking up steam again.

To support the company’s path to profitability, Peraso conducted an offering in February 2024 which included exercise of an overallotment option for a total of $4.172 million with warrants exercisable at $2.25/share. The company is trading for a small fraction of the amount of funds it has used to develop its technology over the past decade; for instance, the company raised $42 million in a single financing in 2019.

The company also updated its S-3 in July 2024 and it has an ATM in place to use strategically. Depending on the company’s near term growth, they may not need additional capital due to revenue growth and/or warrant exercise. The company will announce Q3 2024 financial results on November 12, 2024, after market close, and this could be a significant catalyst for shares as the FWA market headwinds (inventory correction) dissipate.

While investors should not necessarily expect significant total revenue growth until the new mmWave products offset revenue decline from the memory product line that is being retired, the FWA product lines are expected to grow. As such, it’s possible that the company logs ~$17 million in revenue for 2024, and between $17-25 million in 2025. Peraso has provided a guide for their model of revenue over the near and medium term that will help investors navigate the company’s transition from its legacy business fully into the growing FWA market.

Peraso non-GAAP Revenue Model, Investor Presentation

Its estimated that the FWA market will require 3-4 million units per year as the market grows. As a leading equipment provider in the FWA market which is dominated by 60GHZ spectrum license-free solutions, Peraso could reach sales of 1 million units per year with an estimated ASPU of $50. Thus, its estimated that the FWA market will eventually bring Peraso $50 million revenue with a 25% market share.

Adding in the compay’s prospects in public transportation, tactical communications, virtual reality headsets, and high quality wireless video, we forecast a ramp to $70 million in revenue in 2030, which is reasonable given $160 million was used in developing Peraso’s products and technology.

The company has a healthy active sales pipeline with growing leads and a slowly-but-steadily increasing production count.

Peraso’s Sales Pipeline

With FWA as the company’s beachead market, revenue could grow multiplicatively with market expansion into video conferencing, metaverse (AR/VR), consumer electronics, and other opportunities.

The company had cash of $1.9 million as of Q2 2024 (end of June), and accounts receivable of

$1.5 million. TTM revenue as of Q2 was roughly flat over the past two years, and cash burn from operations was $0.7 million with an operating loss of $2.1 million (non GAAP – see model above) in Q2. These numbers suggest the company may need a financing in the near term, but since the company just announced several deals worth millions of dollars, and inventory surpluses may correct, its possible they will not need to conduct another financing in the immediate term.

Valuation

Given Peraso’s early stage and negative earnings, the company value estimation will be based on future forecasted earnings discounted to the present. This valuation will be supplemented with a comparison to peer companies using an enterprise value per sales ratio.

We forecast the company will reach revenue of $75 million in 2029, with a gross margin of 45% and operating expenses of $25 million, resulting in $8.75 million in net income. Estimating $5 million in earnings, discounted at a rate of 20% for 6 years, and using a 20x P/E ratio we arrive

at a $33.5 million valuation. Using the estimated fully diluted share count of 10.76 million shares (according to Note 13 of Peraso’s 2023 10-K), the value is estimated to be $3.11/share.

Notes:

*Swedish Krona converted to United States Dollar based on exchange rate as of November 1, 2024.

⁺Sivers’ acquisition of MixComm implied a 4.8x EV/S multiple.

Sivers appears to be the closest competitor in terms of technology (RFIC TRXBF01: 57-71GHz bands 1-6 support, long range, high bandwidth). Additionally, the company

also has a small market capitalization. Peraso’s products, on paper, appear comparable to Sivers’, but with high bandwidth potential at significantly longer ranges.

Peraso’s EV/S multiple of 0.3 compared with the peer group average of 3.69 suggests that the company is undervalued by ~12x (8.1% of fair value). This suggests a price of $23.12/share using the current shares outstanding. However, using the estimated fully diluted share count of

10.76 million shares (according to Note 13 of Peraso’s 2023 10-K), the resultant share valuation is significantly lower: $4.60/share (~150% upside). This is roughly in-line with our discounted future earnings estimation. The valuation certainly is reasonable compared to company purchases, where Ceragon bought Siklu for $13-15 million, and Sivers bought MixComm for

$135-155 million, and compared to total investment in Peraso’s technology which totals about

$160 million.

Catalysts

There are several catalysts that may result in a rerating of PRSO shares. First the company may announce its own (or integration with) new products and features. Aside from product related announcements or new customer related announcements, there are potential partnerships to ink (such as in VR). Lastly, each upcoming quarterly earnings should inform investors as to how well the business is growing, in line with the overall FWA market growth, and with respect to the company’s operational expenditures and potential profitability.

Risks

There are two primary significant risks associated with investing in Peraso’s common stock. First, if the stock does not appreciate and the company needs to acquire more capital to continue operations, the above-market-price warrants may not be exercised and the company will have a difficult time raising a significant amount of capital without a large amount of dilution. Second, it is unclear what robust incentives management has to execute in a manner that is accretive for shareholders.

While there are other risks such as competition from larger companies, we believe Peraso’s products and approach are very solid and that it remains a market leader in its part of the FWA, 5G and 60GHz markets.

Conclusion

Peraso Inc. presents a high-risk, high-reward investment opportunity in the rapidly growing FWA market. The company’s technological leadership in 60GHz mmWave, strong partnerships, and potential for expansion into other markets such as the 5G market position it well for future growth. While significant risks exist, including the need for additional funding and execution challenges, we believe the potential rewards outweigh risks at current valuation levels, and that the company is significantly undervalued compared to its peers. If the company can show within the next few quarters that its FWA revenues are more than enough to offset its end-of-life legacy business and that it is on a path to profitability, the shares could more than double.