Peraso (PRSO) Q4 2025 Earnings Call Transcript

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DATE

Monday, March 16, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Ron Glibbery
• Chief Financial Officer — Jim Sullivan

TAKEAWAYS

• Total Net Revenue -- $2.9 million in the fourth quarter, down from $3.2 million in the prior quarter and $3.7 million in the comparable quarter of 2024.
• Full-Year Net Revenue -- $12.2 million for 2025, compared with $14.6 million in 2024.
• Millimeter Wave Product Revenue -- $2.4 million for the quarter, up from $0.2 million in the prior-year quarter; $9.1 million for the year, versus $1.3 million in 2024.
• Product Revenue -- $2.8 million in the quarter, compared with $3.1 million in the prior quarter and $3.7 million in the fourth quarter of 2024; attributed mainly to declining memory IC shipments offset by rising millimeter wave sales.
• GAAP Gross Margin -- 52.2% for the fourth quarter, 58.0% for the year; full-year margin improved from 51.7% in 2024.
• Non-GAAP Gross Margin -- 52.2% for the quarter and 58.0% for the year; non-GAAP margins declined from 71.6% and 67.2%, respectively, due to lower memory IC shipments.
• GAAP Operating Expenses -- $2.8 million for the quarter and $11.8 million for the year, with the annual figure reduced from $20.0 million in 2024.
• Non-GAAP Operating Expenses -- $2.7 million for the quarter, $11.3 million for the year, both down versus the comparable periods of 2024.
• GAAP Net Loss -- $1.2 million ($0.13 per share) for the quarter and $4.8 million ($0.67 per share) for the year, reflecting year over year improvement.
• Non-GAAP Net Loss -- $1.2 million ($0.13 per share) for the quarter, $4.3 million ($0.60 per share) for the year, both metrics improved versus 2024.
• Adjusted EBITDA -- Negative $1.1 million in the quarter and negative $4.0 million for the year, both metrics improved compared to the corresponding 2024 periods.
• Cash Balance -- $2.9 million as of December 31, 2025, up from $1.9 million at the end of the prior quarter, largely due to $2.1 million in proceeds from at-the-market offering sales.
• Millimeter Wave Revenue Growth -- CEO Glibbery stated, "revenue from our millimeter wave products grew approximately sixfold compared to 2024."
• Major Customer Wins -- New deployments and wins announced with Tachyon Networks, Wiliot, and MikroTik in fixed wireless access, and with Intact for tactical defense and drone identification friend-or-foe systems.
• New Market Vertical -- Successful field trials in tactical communications created what management now considers a "definitive new market vertical with high growth potential."
• Adjacent Market Milestone -- Bayaworx collaboration leverages Peraso Inc. 60 GHz modules for robotaxi fleet data offloading, supporting up to 1 terabyte per vehicle per hour, signaling a sizable opportunity outside core segments.
• Customer Engagements -- Management indicated active conversations with three to five new customers, including "Fortune 100 companies" in adjacent markets.
• Delayed Large Order -- CFO Sullivan confirmed an anticipated Q1 shipment, "more than a $500,000" order, was delayed due to customs logistics and will instead fall in Q2; Q1 2026 revenue forecast set at $1.2 million due to this shift.
• Strategic Review -- Strategic alternatives process continues with no new updates; options under consideration include merger, asset sale, or capital transactions.

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RISKS

• CEO Glibbery disclosed, "we now anticipate to have a negative impact on our top-line results for the first quarter" due to an "unexpected delay in the receipt of key materials from one of our Asia-based suppliers," resulting in an "anticipated to result in more than a $500,000 impact on our anticipated revenue for the first quarter." on Q1 revenue.
• CFO Sullivan noted, "overall visibility into future demand is lower due to a combination of irregular order patterns from our fixed wireless access customers, in addition to having multiple new customers that have yet to establish observable order patterns."

SUMMARY

Peraso Inc. (NASDAQ:PRSO) reported a sixfold increase in millimeter wave product revenue, despite year-over-year declines in total and product revenue caused by the sunset of legacy memory ICs. Management confirmed that disciplined expense reductions drove significant improvements in gross margin and net loss. Large customer wins across fixed wireless access, defense, and edge AI highlight ongoing expansion beyond historical markets. Tactical communications, now validated as a high-growth vertical following initial field trials and commercial milestones with Intact, could drive future diversification. The company reinforced its focus on converting design wins and adjacent opportunities into production revenue, particularly with Fortune 100 prospects in robotaxi, AI, and military applications.

• Incremental production orders from proof-of-concept deployments are positioned to support year-over-year growth in millimeter wave sales if converted.
• Management expects nonrecurring engineering revenue to shift toward production revenue in the tactical market's second half of 2026.
• Customer co-funding continues to underwrite most new R&D, reducing Peraso Inc.'s upfront risk in new product development.
• CEO Glibbery noted rising defense demand tied to "we definitely are seeing kind of an explosion—no pun intended—of interest in terms of that solution for friend-or-foe identification, which is a classic problem, frankly." in drone identification, reflecting evolving battlefield requirements.
• Management anticipates order replenishment from key fixed wireless customers through the remainder of 2026, with material Q1 revenue impact limited to the deferred MikroTik shipment.

INDUSTRY GLOSSARY

• NRE (Non-Recurring Engineering): One-time engineering and development charges paid by customers for custom product adaptations prior to recurring production purchases.
• Fixed Wireless Access (FWA): Technology delivering broadband connectivity via wireless links, as opposed to fiber or cable infrastructure, typically using point-to-point or point-to-multipoint networks.
• Millimeter Wave (mmWave): High-frequency radio spectrum between 30 GHz and 300 GHz, used for ultra-fast, low-latency wireless transmission over short distances.

Full Conference Call Transcript

Jim Sullivan: Good afternoon, and thank you for joining today's conference call. To discuss Peraso Inc.'s fourth quarter and full year 2025 financial results. I am Jim Sullivan, CFO of Peraso Inc., and joining me today is Ron Glibbery, our CEO. Today, after the market closed, we issued a press release and a related Form 8-K, which was filed with the Securities and Exchange Commission. The press release and Form 8-Ks are available on Peraso Inc.'s website at www.perasoinc.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. Peraso Inc. advises caution in reliance on forward-looking statements. These statements include, without limitation, any projections of revenue, margins, expenses, non-GAAP gross profit, adjusted EBITDA, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net loss, cash flows, or other financial items, including anticipated cost savings, as well as any statements concerning the expected development, performance, and market share or competitive performance of our products or technologies, and any statements related to future financing arrangements or capital transactions and the evaluation or pursuit of strategic alternatives.

All forward-looking statements are based on information available to Peraso Inc. on the date hereof. These statements involve known and unknown risks, uncertainties, and other factors that may cause Peraso Inc.'s actual results to differ materially from 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 Peraso Inc.'s public filings with the Securities and Exchange Commission. Peraso Inc. 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 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, severance costs, amortization of intangible assets, 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 8-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 page of our website.

I will now turn the call over to our CEO, Ron Glibbery, for his prepared remarks. Ron?

Ron Glibbery: Thank you, Jim. Good afternoon, and welcome to everyone on the phone and webcast. We appreciate you joining today's conference call. We closed out 2025 with a solid fourth quarter that was in line with our guidance range and supported by continued year-over-year growth in millimeter wave product shipments. For the full year, revenue from our millimeter wave products grew approximately sixfold compared to 2024. Together with healthy gross margins and our disciplined approach to expense management, this contributed to a meaningful improvement in our bottom-line results for the year. I continue to be pleased with our team's execution over the past several.

The year-over-year expansion in millimeter wave revenue underscores the growing commercial traction of our 60 gigahertz solutions in multiple targeted end markets. It also reflects a combination of increased product shipments as well as the ramp of newly secured design wins across both new and existing customers. Notably, we have achieved this while maintaining tight control over operating expenses. Turning to slide four. Fixed wireless access remains our largest and longest-served end market. Not only was it the primary driver for our millimeter wave revenue growth in 2025, but we believe that fixed wireless access will continue to be a sizable ongoing market opportunity for our 60 gigahertz millimeter wave technology.

We saw a broad recovery in customer demand and order trends throughout the year, which included notable traction for our fully integrated Dune platform as well as our prospective 60 gigahertz millimeter wave modules. Specific to our Dune platform, we have seen sustained uptake by customers for deployments of high-speed wireless broadband in dense urban environments. The fundamental performance benefits of the integrated platform, including lower cost deployment, low power, long range, and point-to-point-to-point capabilities, continue to resonate with a growing list of wireless Internet service providers that span North America as well as Africa. More broadly, I want to briefly reiterate two significant fixed wireless access customer wins that we secured in 2025.

First, in July, we announced that Tachyon Networks had selected Peraso Inc.'s prospective modules for their latest outdoor 60 gigahertz gigabit wireless solution, supporting up to 48 client connections per sector and targeted for cost-effective deployments in both dense urban and rural environments. Then in September, we announced our renewed collaboration with Wiliot to accelerate cost-effective deployments of a multi-gigabit mesh architecture for business and consumers in dense urban neighborhoods across multiple major U.S. cities. We believe these customer wins position us well for continued growth over coming years. Most recently, in early March at Mobile World Congress, MikroTik launched its next-generation 60 gigahertz wireless NRAY point-to-point product incorporating Peraso Inc. technology.

Given this customer's substantial market share of wireless Internet service providers globally, we believe this product launch has the potential to reinforce our position as a leading provider of 60 gigahertz semiconductors for the fixed wireless access market. Today, we continue to support a wide span of ongoing proof of concepts utilizing Peraso Inc.'s 60 gigahertz technology with a diverse group of wireless Internet service providers. If additional proof of concepts are converted into deployments, we would expect incremental production orders to support sustained year-over-year growth of the millimeter wave product revenue. Moving to slide five.

Beyond fixed wireless access, we have continued to see increased market awareness of 60 gigahertz technology extending to additional end markets, most notably tactical communications. In fact, 2025 marks a significant step forward for Peraso Inc. as we successfully transitioned an initial prospective customer engagement on a conceptual military defense application from an emerging adjacent opportunity to what we now view as a definitive new market vertical with high growth potential. In April, we achieved the first major milestone toward commercialization within the tactical communications market. This was highlighted by our announced contract to incorporate Peraso Inc.'s 60 gigahertz wireless technology into a leading specialized defense contractor's innovative and first-of-its-kind deployable system solution for enhanced situational awareness on the battlefield.

We delivered initial production shipments in support of our joint solution with this defense customer in June, and then we were pleased to report in November the successful completion of initial field trials. Notably, this initial customer engagement has served to further validate the robust performance of our technology while also demonstrating why our millimeter wave solutions are particularly well suited for these environments. Traditional wireless communications are highly susceptible to enemy detection and jamming. In contrast, 60 gigahertz millimeter wave can offer stealthy communication characteristics thanks to narrow beamforming, dynamic beam steering, and oxygen attenuation.

These characteristics are designed to provide low probability of detection, low probability of interception, and strong anti-jamming characteristics, all while operating in an unlicensed frequency band and avoiding interference with licensed spectrum. Today, the jointly developed solution for enhanced situational awareness is undergoing additional planned field trials with our lead defense contractor. The collective feedback from these trials has been consistently positive, and we continue to believe this solution and partnership could represent a meaningful long-term revenue opportunity for Peraso Inc. Having said that, the progress we achieved over the past year established a strong foundation for broader engagement with our lead customer and for an expanded presence in the tactical communications market.

Earlier this month, we were pleased to both name Intact as our lead defense contractor customer and also announced that Intact selected Peraso Inc.'s 60 gigahertz millimeter wave technology for use in its next-generation drone identification friend-or-foe system. Given the significance of this latest win and new application for our technology, I will turn to the next slide to review additional details. To further highlight this recent win and its validation of our 60 gigahertz millimeter wave technology for mission-critical defense applications, I want to briefly talk about the capabilities that we are enabling for our Israeli defense contractor customer.

Intact selected Peraso Inc. technology to serve as the core communications backhaul for its next-generation drone identification friend-or-foe system, engineered specifically for highly contested electronic warfare environments. With the rapid proliferation of drones on the battlefield, secure identification systems are becoming essential to prevent friendly fire incidents and enable safe coordination between unmanned and manned forces. This innovative platform enables secure, real-time, mutual authentication between friendly drones and ground forces, allowing counter-drone systems and battlefield operators to rapidly distinguish friend from foe in today's increasingly crowded skies. A fundamental characteristic of our 60 gigahertz millimeter wave technology is its secure and directional communications channel.

Additionally, our beamforming wireless transceivers deliver low-power links with extremely low probability of detection, all of which makes our technology ideal for dense battlefield environments where traditional radio frequency signals can easily be jammed or compromised. Lastly, I want to emphasize that this recently announced milestone is a result of an ongoing multi-project collaboration with Intact over the past two years, during which we have consistently demonstrated the readiness of Peraso Inc.'s millimeter wave technology to enable diverse mission-critical military communications applications. Turning to slide seven. While fixed wireless access and tactical communications remain our primary focus areas, we continue to see compelling incremental opportunities in adjacent markets.

Many of these adjacent market opportunities originate with a prospective customer approaching us looking for a solution, and the significant versatility of our 60 gigahertz millimeter wave technology allows us to solve connectivity challenges they have not been able to overcome using traditional wireless technology. One example that I highlighted on a previous conference call was our first-ever production shipment around 60 gigahertz millimeter wave's unique combination of multi-gigabit data rates for high-resolution video streaming, ultra-low latency for real-time performance, and exceptional power efficiency, which is critical for battery-operated edge AI devices. To highlight another recent milestone, during the fourth quarter, we announced our collaboration with Bayaworx.

We are supplying our latest 60 gigahertz prospective modules to power their VX60 platform, enabling multi-gigabit wireless connectivity, specifically designed for robotaxi fleet vehicles and physical AI applications. This partnership directly addresses one of the biggest bottlenecks in autonomous vehicle operations: the need to rapidly offload terabytes of telemetry and high-resolution camera data when vehicles return to depots for charging, while simultaneously delivering software updates. Conventional Wi-Fi and 5G solutions can easily become oversaturated under these demands. The VX60 system delivers breakthrough performance, supporting up to 1 terabyte of data transfer per vehicle per hour, which we believe can surpass the capabilities of traditional alternatives.

As I stated in our announcement, this is exactly the kind of challenge our 60 gigahertz products were designed to solve. Autonomous vehicles and the AI systems that power them process tremendous amounts of data and require immense bandwidth, and that is what our technology does extremely well. This robotaxi application could represent one of the largest-scale uses of our millimeter wave solutions to date and further validates the unique value we bring to customers across diverse edge AI applications. Bayaworx and its robotaxi platforms are a perfect example of how adjacent opportunities expand our served addressable market and help diversify our revenue base beyond fixed wireless access and tactical communications.

In closing, we are encouraged by the growing market awareness of 60 gigahertz wireless technology and its unique ability to deliver high bandwidth and secure connectivity in congested operating environments. Our focus for 2026 remains on broadening our customer base and pipeline of design wins across fixed wireless access and tactical communications while selectively pursuing high-growth opportunities in adjacent markets such as edge AI. Combined with our ongoing commitment to disciplined expense management, we believe we are well positioned to deliver continued year-over-year growth in millimeter wave revenue in our operating results over the coming year.

Lastly, before turning the call over to Jim, I want to acknowledge a unique challenge that we recently became aware of and which we now anticipate to have a negative impact on our top-line results for the first quarter. Due to an unexpected delay in the receipt of key materials from one of our Asia-based suppliers, which, as of today, we believe is stuck in customs, we are unlikely to be able to fulfill a significant order that was previously scheduled for shipment during the first quarter. Although we do expect to fulfill this order during the second quarter, the delayed shipment is anticipated to result in more than a $500,000 impact on our anticipated revenue for the first quarter.

While we clearly are disappointed by the delayed shipment, I want to emphasize that this is largely reflective of a temporary supplier logistics issue, and we remain optimistic about the future prospects of Peraso Inc.'s overall business. With that, I will hand the call over to Jim to review the financials and provide our revenue outlook for the first quarter.

Jim Sullivan: Thank you, Ron. Turning now to the results for 2025. Total net revenue for the fourth quarter was $2.9 million compared with $3.2 million for the prior quarter and $3.7 million for the fourth quarter of 2024. Full year 2025 net revenue was $12.2 million compared with $14.6 million in the prior year. Product revenue in the fourth quarter was $2.8 million compared with $3.1 million in the prior quarter and $3.7 million in the fourth quarter of 2024. The decrease in product revenues for the fourth quarter of 2025 from the comparable period of 2024 was primarily attributable to the reduction in shipments of memory IC products due to previously announced end-of-life of the products.

This was partially offset by a year-over-year increase in shipments of millimeter wave products in 2025. Full year 2025 product revenue was $11.8 million compared with $14.2 million in 2024. Specific to sales of millimeter wave products, revenues were $2.4 million in the fourth quarter of 2025 compared with $3.0 million in the prior quarter and $0.2 million in the fourth quarter of 2024. Total sales of millimeter wave products for full year 2025 increased to $9.1 million from $1.3 million in 2024. GAAP gross margin was 52.2% in the fourth quarter, down from 56.2% in the prior quarter and compared with 56.3% in the year-ago quarter.

GAAP gross margin for full year 2025 was 58.0% compared with 51.7% in the prior year. The increase in GAAP gross margin for full year 2025 compared with 2024 was primarily attributable to increased millimeter wave margins due to increased shipments, and an increase in memory IC product margins due to reduced amortization expense related to intangible assets, which were fully amortized as of 12/31/2024. On a non-GAAP basis, gross margin for the fourth quarter was 52.2%, compared with 56.2% in the prior quarter and 71.6% in the fourth quarter of 2024. Full year 2025 non-GAAP gross margin was 58.0% compared with 67.2% in 2024.

The decreases in non-GAAP gross margin for the fourth quarter and full year 2025 compared with the comparable periods of 2024 were primarily attributable to reduced shipments of our memory IC products. GAAP operating expenses for the fourth quarter of 2025 were $2.8 million compared with $3.0 million in the prior quarter and $3.7 million in the fourth quarter of 2024. GAAP operating expenses for full year 2025 were $11.8 million compared with $20.0 million in the prior year.

The decrease in operating expenses on a GAAP basis from the comparable period of 2024 was primarily attributable to reduced stock-based compensation expense and amortization expense related to intangible assets fully amortized in 2024, as well as a $2.3 million decrease in severance and software license obligation costs. Non-GAAP operating expenses, which exclude stock-based compensation, severance costs, and amortization of intangible assets, were $2.7 million in the fourth quarter compared with $2.9 million in the prior quarter and $3.2 million in the fourth quarter of 2024. Non-GAAP operating expenses for full year 2025 were $11.3 million compared with $14.9 million in 2024.

The decrease in operating expenses on a non-GAAP basis for full year 2025 compared with 2024 was primarily attributable to a $1.8 million decrease in software license obligation costs and the benefits realized from previously implemented cost reductions and ongoing cost containment initiatives. GAAP net loss for the fourth quarter of 2025 was $1.2 million, or a loss of $0.13 per share, compared with a net loss of $1.2 million, or a loss of $0.17 per share, in the prior quarter and compared with a net loss of $1.6 million, or a loss of $0.37 per share, in the same quarter a year ago.

Full year 2025 GAAP net loss was $4.8 million, or a loss of $0.67 per share, compared with a net loss of $10.7 million, or a loss of $3.57 per share, in 2024. Non-GAAP net loss, which excludes stock-based compensation, amortization of intangibles, severance costs, and changes in fair value of warrant liabilities, for the fourth quarter of 2025 was $1.2 million, or a loss of $0.13 per share. This compared with a non-GAAP net loss of $1.1 million, or a loss of $0.15 per share, in the prior quarter and a net loss of $0.5 million, or a loss per share of $0.13, in the same quarter a year ago.

Full year non-GAAP net loss for 2025 was $4.3 million, or a net loss of $0.60 per share, compared with a net loss of $5.1 million, or a net loss of $1.71 per share, in 2024. 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 2025 was approximately 9.2 million shares.

Adjusted EBITDA, which we define as GAAP net income or loss as reported, excluding stock-based compensation, amortization of intangible assets, severance costs, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes, was negative $1.1 million in the fourth quarter of 2025, compared with negative $1.0 million in the prior quarter and negative $0.4 million in the fourth quarter of 2024. Full year 2025 adjusted EBITDA was negative $4.0 million compared with negative $4.5 million in 2024. With regard to the balance sheet, as of 12/31/2025, the company had approximately $2.9 million of cash, compared with $1.9 million as of 09/30/2025.

The net increase of approximately $1.0 million in the company's cash balance for the fourth quarter reflected approximately $2.1 million in net proceeds from sales under the company's at-the-market offering program during the fourth quarter. As of today's call, the company has approximately 12.0 million shares of common stock and exchangeable shares outstanding. As previously disclosed, the company has been exploring potential strategic alternatives, including a merger, sale of assets, or other similar transaction, as well as various potential sources of additional capital. Aside from confirming that the strategic review process continues to be ongoing, in coordination with the company's financial adviser, there are no related updates to share on today's call from what we have previously disclosed.

Now turning to our outlook. We remain optimistic about the breadth of customer engagements for our millimeter wave solutions across fixed wireless access, tactical military communications, and other markets. However, as Ron previously discussed, a large order that was previously planned for shipment in the first quarter is now expected to be shipped in 2026. Given the size of the order, this delay is expected to have a meaningfully negative impact on our revenue forecast for the first quarter. Unrelated to this order, overall visibility into future demand is lower due to a combination of irregular order patterns from our fixed wireless access customers, in addition to having multiple new customers that have yet to establish observable order patterns.

Based on revenue recognized year to date, and assuming no contribution from the previously mentioned delayed order shipment, the company currently expects total net revenue for the first quarter of 2026 to be approximately $1.2 million. This concludes our prepared remarks, and we thank you for your time this afternoon. Operator, please commence the Q&A session.

Operator: Thank you. At this time, we will be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. And the first question today is coming from David Williams from Benchmark. David, your line is live.

David Williams: Hey. Good afternoon, gentlemen. Thanks so much for taking my questions, and congratulations on the progress.

Ron Glibbery: Thanks, Dave.

David Williams: Yeah. Maybe, Ron, first, if you kind of think about that Intact deal, when should we think about the revenues from that begin to start coming in? And is there any way to maybe size the total revenue opportunity for what you see in front of you here now?

Ron Glibbery: Yeah. Good question. I mean, really, that revenue is comprised of two components. One is what we call nonrecurring engineering, which is NRE, of course, a onetime payment, and the other is what we call production revenue. We are seeing, you know, I would say 90% NRE right now, 10% product revenue. I am not sure, you know, Dave. We have not split it out specifically. Maybe I will leave it to Jim to explicitly talk about it. But we see the real shift to what I would call production revenue. As a matter of fact, I just got off with them earlier today. I am sorry.

The real production is going to shift to be in the second half of 2026. So that is kind of what we are looking at right now. We do expect more nonrecurring engineering revenue. You know, primarily, it is just really adapting this. One of the primary goals for us is just really getting kind of the power consumption down, as it has taken a lot of effort. But so, you know, I would say right now, the meaningful revenue, I would say 90% what we call NRE, and in 2026 that will shift into product revenue, and we have real visibility into that. Sorry. Are you still there?

David Williams: Yeah. Sorry. Sorry about that. Thanks for the color. I could not get my phone off mute. Alright. Ron, so you had also talked about the adjacent market opportunities and clearly a lot of benefits there. But is there a way to quantify the number of customers that you are in active conversations with? And maybe just provide a little color on the different segments where you think that could move pretty quickly into an order or potentially production?

Ron Glibbery: So, you know, the number of customers there, you know, we are really looking at maybe in the order of three to five. But the difference is they are really more household names, I would say. You know, again, confidentiality prevents me from explicitly saying, but, you know, certainly Fortune 100 companies, if you will. You know, I guess the feedback to us is the sooner, the better. I mean, you know, take the robotaxi situation, for example. Again, you know, these vehicles collect information all day long. They get back. They have to recharge.

They have got one hour to download a terabit of data, and then go down to the data center, process it, and then send new algorithms back up to the vehicle. Now if it was just one vehicle, sure. That is one thing. But it is, you know, 100 vehicles, for example. And the real challenge is, and what we have to keep in mind, is it is really the aggregate throughput here, not just one vehicle, but it is hundreds of vehicles. You know, to answer your question, this customer would take our existing silicon. I could see us being in production at the end of this year, frankly.

But, you know, we could even see ourselves going into next-generation chips with this customer because, basically, the feedback from the customer is the demand is limitless. So, yeah. We are really hoping that we can get these devices into production later this year, early 2027. Now the other thing I will mention is, I really want to shout out to this customer that we did a press release with called Bayaworx. They have got a very, very sophisticated software solution that we have been working on for several years, frankly, like probably three, four years. And,you know, they are a key partner for us.

And I think what we have done a very good job of is those partnerships where we do not have to reinvent, or we do not have to invent, the entire system, and we work with smart partners to facilitate some of these opportunities. But, you know, that would be a really good example of how I would summarize a) the demand for very high data rate systems, and b) doing that in a congested environment. And so our existing silicon addresses that, and I could see us get into production at the end of this year and into 2027. Hope that answers your question.

David Williams: Yeah. It does. Thanks again. And let me just ask one more question if you do not mind. Just kind of given the state of current affairs and the current conflict, I am just curious if you are seeing inbound interest there, and it seems like maybe the technologies that we are using today could do some advancing. It seems like you might have a solution that could be very beneficial for us, especially on the drone application. So just curious if you are seeing that and then maybe talk about your go-to-market strategy in that market. How you are going to the market, if you are waiting for those to come to you.

Just kind of maybe that development there. Thanks.

Ron Glibbery: You know, I have to say I was very—when we did the last press release last week with our drone partner, it was a company in Israel called Intact, and Intact, you know, again, a value-added partner who has developed, in conjunction with us, this friend-or-foe identification system. And, you know, frankly, one of the main, I guess, one of the main evolutions we have seen in warfare over the last two years is this idea of drone swarm, and the sky is getting cluttered with drones. And so, basically, you know, militaries need to identify friend or foe, and they do not want to be shooting their own drones out of the sky.

Alternatively, they do not want drones shooting their own people on the ground. So we are seeing that is the real traction. I mean, this really started out as an infantry solution, but, you know, clearly, the drone interest is kind of exploded here. And, frankly, you know, again, without getting into detail, we definitely are seeing kind of an explosion—no pun intended—of interest in terms of that solution for friend-or-foe identification, which is a classic problem, frankly. But, again, it looks like we have come a long way in solving that.

David Williams: Thanks, and best of luck.

Ron Glibbery: My pleasure.

Operator: Thank you. And once again, it will be star one if you wish to ask your question today. The next question will be from Kevin Liu from K. Liu and Company. Kevin, your line is live.

Kevin Liu: Hi. Good afternoon, guys. Maybe just starting with your—just wanted to start with your FWA business. You guys kind of talked about, you know, the resurgence you saw in sales to customers last year. I am curious, as you talk to them, you know, where do you think inventory levels are with those customers? And when would you expect to see some more kind of growth or return of orders from those folks? Got it. And just with respect to that large order you referenced, I am curious if kind of the delay in timing from Q1 to Q2, does that impact kind of order patterns for the remainder of this year?

Or was this a fairly significant order, and then so would it kind of cover the full year anyway?

Ron Glibbery: You know, frankly speaking, you know, we obviously were seeing—we were hoping for this large shipment in Q1 with MikroTik. But, really, we—you know, for many of our customers, we really are expecting to see those orders get replenished in Q3 and Q4, so we are standing by for that. So I would say, you know, many of our customers, that is kind of the timing that we are looking for. Well, obviously, it is almost Q2 now, so, you know, we really expect to see those orders come through in Q2 and Q3 and the rest of this year.

You know, it will just, I think, get into queue and kind of make an orderly push with our orders for the rest of the year. So I think it will have an impact. But, you know, really, unfortunately, we are only looking at a couple of weeks, so it is not going to be an extremely material impact. But, you know, we are looking at probably two to three weeks in terms of our order pipeline throughout the year.

Kevin Liu: Understood. And with some of these newer opportunities you are winning, particularly with Intact, just curious if there is any sort of increase in investment you guys plan to make either on the R&D side or elsewhere, and then just how kind of the ramp-up might affect your gross margins as those do move to production?

Ron Glibbery: You know, we have really had a policy over the last couple of years, Kevin, I think, as you know, to really just charge the customer. We do not make a lot of profit on the engineering, but, you know, basically, our view is if the customer wants the solution, they have got to really pay for it. We are not in a position to really bet on the come. So these projects, you know, I would say almost—I cannot think of one where the customer really is not making significant contribution to the engineering, the R&D effort. So I really see that continue. We are just not in a position where we can really bet on the come.

And it is good because it also, at the same time, validates the market because if a customer is obviously financing that, he believes in the market himself. So that is our operating strategy right now. We see ourselves continuing with that.

Jim Sullivan: Yeah. Yeah. And, obviously, that is, you know, funding our R&D expense and personnel costs, etc. You know, also, we generally come out of it with another product or another version of the product to bring to market. If the NRE combined with production orders are large enough, in some cases, the customer has exclusivity, although we work with the customer on that because they also want to see us sell it elsewhere to bring down pricing, you know, rather than just to them. But if they obviously do not hit numbers, etc., then we address it.

You know, that is the other area where we kind of work on that, and anything we can do there to expand our product portfolio and have contribution from a customer is worthwhile.

Kevin Liu: Okay. Appreciate all the color there. It sounds like there is a lot of good traction in some of these new markets, so good luck as you make your way through the year.

Jim Sullivan: Thank you.

Operator: Thank you. I show there are no further questions in the queue at this time. We will conclude today's conference call. Thank you for your participation, and you may now disconnect.

Jim Sullivan: Thank you very much, everyone. Bye-bye.

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