Peraso Inc. (NASDAQ:PRSO) Q1 2024 Earnings Call Transcript

Peraso Inc. (NASDAQ:PRSO) Q1 2024 Earnings Call Transcript May 13, 2024

Operator: Good afternoon and welcome to Peraso Inc.’s first quarter 2024 conference call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded today, Monday, May 13th, 2024. I would now like to turn the call over to the host for today’s program, Mr. Jim Sullivan. Please go ahead.

Jim Sullivan: Good afternoon, and thank you for joining today’s conference call to discuss Peraso’s first quarter 2024 financial results. I’m Jim Sullivan, CFO of Peraso, and joining me today is Ron Glibbery, our CEO. Today, after the market closed, we issued a press release and related Form 8-K, which was filed with the SEC. The press release and Form 8-K are available on Peraso’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 advises caution and reliance on forward-looking statements. These statements include, without limitation, any projections of revenue, margin, expenses, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, adjusted EBITDA, non-GAAP net loss, cash flows, or other financial items, including anticipated cost savings, also, any statements concerning the expected development, performance, and market share, or competitive performance of our products or technologies. All forward-looking statements are based on information available to Peraso on the date hereof. These statements involve known and unknown risks, uncertainties, and other factors that may cause Peraso’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’s public filings with the SEC. Peraso 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, amortization of reported 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-K, which provide additional details. For those of you unable to listen to the entire call at this time, a recording will be available on the investor relations page of our website. Now I’d like to 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 us. I want to start with a few brief comments on the first quarter and the current outlook, then I’ll get into more detail on the key developments and progress we’ve been making since our last conference call. First quarter revenue increased sequentially and was above the midpoint of our guidance. As customer demand for our mmWave products improved and we had increased shipments of our memory IC products in fulfillment of our backlog and end-of-life orders, combined with positive market indicators we began to see our mmWave business, we’re increasingly confident in our expectation for 2024 to be a year of solid growth for Peraso.

Turning to Slide 4, I want to provide a brief update on the end-of-life of our memory IC products. Shipments against backlog orders increased to $2.4 million in the first quarter. We also received an additional $2.9 million end-of-life order late in the quarter, which increased our total remaining purchase order backlog to approximately $12.6 million at March 31st, 2024. We anticipate shipments of our memory IC products to increase sequentially in the second quarter, and we expect to fulfill the total remaining backlog by the end of the first quarter of 2025. Collectively, these shipments will contribute meaningful revenue and cash flow in support of the continued execution of our growth initiative to expand our mmWave customer base. Flipping to Slide 5, as I’ve stated in the past, one of our key strategic initiatives continues to be building a larger and more diversified customer base for our mmWave business.

And again, we’re approaching this both from a geographical perspective and in terms of end market applications. Although it’s been a relatively short period since our last earnings call, we continue to make progress on culminating new engagements while advancing existing opportunities in the sales funnel. A number of these new engagements continue to be targeted outside of North America to further expand Peraso’s global reach. I’ll discuss a few of our most recent successes and secure design wins in the next few slides. Turning to Slide 6, I want to profile one of Peraso’s more notable recent design wins. In April, we announced Panasonic’s adoption of our X710 mmWave chipset in its newly introduced 60 gigahertz WLAN solution. This was a significant win for our team and it serves as further validation of our leading mmWave technology.

Panasonic’s wireless LAN solution achieves high-speed, low-latency communications that’s equivalent to wired LAN performance over distances of hundreds of meters. The solution is easy to install and operate thanks to its use of unlicensed interference-free 60 gigahertz band coupled together with Peraso’s narrow beam directional antenna control. As I’ve discussed on previous calls, the 60 gigahertz unlicensed band provides extensive RF spectrum, which is ideal for fixed wireless applications delivering multi-gigabit data service. Now looking at Slide 7, as further proof points of our focused efforts and initial success towards diversification, I want to briefly highlight some of our examples of our recent activity. First, Peraso’s mmWave solutions are now a key enabler of a 60 gigahertz radio for high-speed train-to-station communications for a Chinese rail system.

More specifically, our partner, Jaguar Wave, is deploying a 60 gigahertz mmWave radio system that utilizes Peraso’s X720 chipset to provide up to 2 gigabits per second for high-speed data communications as trains approach 1 kilometer of a station. Separately, we have now shipped proof of concepts of our new DUNE platform to multiple WISP providers targeting deployments across Africa. Additionally, MilliWave, a South Korean equipment manufacturer, recently announced a new fixed wireless product line using Peraso’s X720 chipset. Lastly, we also continue to gain traction in defense applications with the introduction of our new mmWave solutions for battlefield communication, which I’ll expand on in a minute. Collectively, these examples demonstrate the progress we continue to make expanding our market reach both geographically and by application.

Turning to Slide 8, I wanted to go a layer deeper on DUNE, our dense urban network environment platform for fixed wireless access that we launched earlier this year. DUNE addresses the network access problems experienced in sprawling urban neighborhoods where conventional connectivity solutions are too costly, physically impractical or saturated. Many technologies simply weren’t designed to work well in densely concentrated population centers, especially those found in emerging markets such as India, South America and Africa. As previously mentioned, in recent months, we have shipped proof of concepts to multiple WISPs in Africa. Peraso’s DUNE platform originated from our firsthand engagement with numerous WISPs and equipment suppliers to understand the specific deployment challenges they face in these environments.

In addition to significant upfront infrastructure and deployment costs, Wi-Fi technology, for example, struggles with the wireless congestion and interference resulting from high numbers and the density of connected devices. Moreover, electricity can often be limited and less reliable in these emerging markets. In order to avoid service interruptions, infrastructure equipment must be able to remain operational for extended periods or utilize alternative power sources such as solar and battery. Having said that, I want to emphasize the need for dense urban environment solutions is not exclusive to emerging markets. DUNE’s benefits and the challenges that it solves are equally relevant in other geographies, including here in North America. As one prominent example and potential use case, Los Angeles County has announced plans to deploy its own high-speed wireless broadband service targeted at serving low-income residents.

Los Angeles recently contracted a well-known WISP to lead the project which is expected to leverage a 60 gigahertz millimeter-wave fixed wireless solution to deliver 2 gigabits per second wireless connectivity to qualify residents for as low as $25 per month. Regardless of this geography, these types of urban fixed wireless deployments are exactly what DUNE was designed to enable. Broadly speaking, we’re very encouraged by the initial positive feedback of our DUNE platform, and we expect further engagements and expansions of these opportunities in the coming quarters. Shifting to Slide 9, I wanted to briefly touch on our recent success in the aerospace and defense sector as we believe it’s a market that is ideally suited for mmWave technology solutions.

Our advanced integrated antenna technology allows for communications using unique, narrow, and focused beams, which make it more difficult to intercept and even detect sensitive data communications. In March, we released our PRM2136 platform for stealthy tactical communications. This platform solution offers support for high bandwidth, low latency applications using unlicensed mmWave spectrum and guarantees a reliable high throughput connection between users. All of Peraso’s 60 gigahertz modules enable multi-gigabit data transfer rates, which can be mission critical in military operations that require sharing data in real time. Additionally, the PRM2136 incorporates a proprietary adaptive beamforming and narrow pencil beams capability that allow for highly directional communications, which are inherently stealthy and lower probability of interception and detection.

Acknowledging that it takes some additional time to cultivate and realize material revenue in the market due to typically longer evaluation and design cycles, it’s clear that mmWave dispense applications represent an incremental market opportunity with significant potential. In closing, with our expanding engagement pipeline for mmWave solutions across an increasingly diverse customer base and market applications, as well as initial indications of renewed customer demand for fixed wireless access, we feel highly confident in the company’s outlook for strong growth in 2024. Additionally, we expect the backlog of our EOL shipment IC products to provide meaningful revenue and cash flow to improve our financial position and outlook as we continue to execute on our strategic initiatives to expand the customer base for our mmWave products, we believe there is a large opportunity to realize significant growth over the coming years.

With that, I’ll turn the call back to Jim to review the first quarter financials, as well as our revenue expectation for the second quarter of 2024.

Jim Sullivan: Thank you, Ron. Turning to the results for the first quarter of 2024, total net revenue was $2.8 million and above the midpoint of our guidance, compared with $1.8 million in the prior quarter and $5 million during the same quarter a year ago. Product revenue from the sale of our memory integrated circuits and millimeter wave integrated circuits and antenna modules in the first quarter was $2.7 million, compared with $1.5 million in the prior quarter and $4.9 million in the first quarter of 2023. Royalty and other revenue for the first quarter of 2024 was $0.1 million, compared with $0.4 million in the prior quarter and $0.1 million in the same quarter a year ago. GAAP gross margin increased to 46.4% in the first quarter compared with a negative 147.3% in the prior quarter, which reflected the impact of $3 million of inventory write downs and gross margin of 38.3% in the year-ago quarter.

On a non-GAAP basis, excluding amortization of acquired intangible assets, gross margin for the first quarter was 66.4%, compared with negative 116.6% in the prior quarter, which again reflected the previously mentioned inventory write-down, and non-GAAP gross margin of 45.4% in the first quarter of 2023. The improvement in gross margin for the first quarter of 2024 was attributable to increased revenue contribution from memory IC products. GAAP operating expenses for the first quarter of 2024 were $4.9 million, compared with $5.5 million in the prior quarter, which included $0.2 million of asset write-downs and $5.7 million in the first quarter of 2023. Non-GAAP operating expenses, which exclude stock-based compensation and amortization of intangible assets, were $3.5 million compared with $4 million in the prior quarter and $4.3 million in the same quarter a year ago.

The sequential and year-over-year reduction of first quarter operating expenses were the result of previously implemented cost reductions and cost containment actions taken by the company beginning in the second half of 2022. GAAP net loss for the first quarter of 2024 was $2 million or loss of $1.07 per share compared with a net loss of $8.9 million, or $12.48 per share in the prior quarter, and a net loss of $3.1 million, or $5.54 per share in the same quarter a year ago. On a non-GAAP basis, net loss for the first quarter of 2024 was $1.6 million, or a loss of $0.83 per share, which excluded stock-based compensation, amortization of acquired intangibles, and the change in fair value of warrant liabilities. This compared with non-GAAP net loss of $6.1 million, or a loss of $8.52 per share in the prior quarter, and a net loss of $2 million, or a loss per share of $3.49 per share in the same quarter a year ago.

The weighted average number of basic and diluted shares outstanding for purposes of calculating both GAAP and non-GAAP EPS for the first quarter of 2024 was approximately 1.9 million shares, which excludes approximately 45,000 shares of our common stock and exchangeable shares that are currently escrowed. Adjusted EBITDA, which we define as GAAP net income or loss as reported, excluding stock-based compensation, amortization of acquired intangibles, change in fair value of warrant liabilities, interest expense, depreciation and amortization, and the provision for income taxes was negative $1.4 million in the first quarter compared with negative $5.9 million in the prior quarter and negative $1.8 million in the prior year period. From an equity perspective, in February we completed an underwritten public offering of common stock and warrants, generating net proceeds of approximately $3.4 million.

As of today, May 13, 2024, the company has 2,690,236 shares of common stock and exchangeable shares outstanding. In addition, as of today, 116,190 pre-funded warrants with an exercise price of $0.001 per share remained outstanding from the public offering completed in February 2024. Turning to our outlook, as Ron discussed, we’ve begun gaining traction on multiple new customer engagements for our millimeter wave solutions, which we expect to incrementally ramp throughout the year. We also have a significant remaining backlog of non-cancellable purchase orders for our end-of-life memory IC products. The company currently expects total net revenue for the second quarter of 2024 to be in the range of $3.7 million to $4 million. This concludes our prepared remarks, And I’ll now turn the call back over to the operator to assist with the Q&A session.

Operator?

Q&A Session

Operator: [Operator Instructions] First question today is coming from David Williams from Benchmark. David, your line is live.

David Williams: Good afternoon, gentlemen, and congrats on the progress here. It’s really great to see the development on the millimeter wave side and the memory side, so congrats.

Ron Glibbery: Thanks, David.

Jim Sullivan: Thanks, David.

David Williams: Yeah, so I guess, Ron, maybe first, if you think about the magnitude of demand that’s being generated within millimeter wave and kind of the proof of concepts that you’re shipping to today and maybe what you have coming up the pipeline, what do you think the volumes could look like as you get ramped here? Just trying to think about maybe not even this year, but maybe more so for next year. What should we think about those volumes looking like?

Ron Glibbery: Well, thanks, Dave. Good to have you on the call. We’ve got third-party research reports that indicate the overall market of, let’s say, focus on certain amount of fixed wireless of about 4 million units a year. And we’re really trying to ramp our business to at least a quarter of that. So, our goal is to really take a quarter of the market share in terms of unlicensed fixed wireless is really what the simple metrics boils down to, frankly. So this is all just, basically based on market research. And so it gives us, but it gives us some nice metrics in terms of what our goals are over the next 12 to 18 months. I don’t know if that helps answer your question.

David Williams: No, it absolutely does. Thanks for the quantification there. I guess if I look across the landscape, there doesn’t seem to be a lot of competitors, at least domestically. What do you see in terms of your competitive or your competition in these other markets as we think about Africa and India? Are there any others that are out there that you’re maybe locally that you’re competing with?

Ron Glibbery: Well in the 60 gigahertz specifically, I think we really are taking on a dominant position. And from my perspective, what gives me comfort is the more we win, the stronger we get because people just get more and more comfortable with the technology and the company. And I think frankly, the Panasonic design win underscores that. I mean Panasonic is a very conservative old Japanese company. So for them to go to market swith our technology, I think speaks volumes in terms of just the confidence they have. And it took a long time, but due to the confidence they have in our technology and the company itself. So I think from a competitive perspective, what you’ll find is every quarter, you’re going to find that we really are the absolute dominant player in 60 gigahertz technology.

And just one final follow-up comment on that. I mean, certainly over the last year, Dave, what we found is that compared to maybe another competitor which is like 5 and 6 gigahertz technology, where we’re winning there, where we’ve won in places like Africa and now we’ve seen 60 gigahertz penetrate Los Angeles is against this concept of dense urban environments, right? Like this idea that in large cities with very, very high dense populations, 60 gig is a superior technology than traditional Wi-Fi technology because of its ability to handle that density. So I think both within the 60 gigahertz market and within the unlicensed market generally, we’re really taking on a dominant position, if you will.

David Williams: Okay, great. And just one last one here, if I may, then I’ll jump back in the queue. But just kind of wondering if you could talk through your go-to-market strategy. It seems like you have a lot of shots on goal here that have developed here fairly quickly, especially thinking about the aerospace and defense, and that’s historically been a challenging market to penetrate, but just kind of curious how you’re thinking about your go-to-market strategy, how that’s developing, and maybe what other opportunities are out there today that maybe as an investor we’re not yet seeing.

Ron Glibbery: Well, I mean, look, I think we talked about fixed wireless, so just basically gigabit broadband Internet for a long time. And that’s really our bread and butter frankly right now. The military, unfortunately what’s been driving that over the last couple of years is real conflicts where militaries have discovered that traditional wireless technology is easy to triangulate. And so that really has been a function of actual war zone feedback which says the beauty or the advantage of millimeter wave technology is the very focused transmissions that allow it to be stealthy, if you will, in those environments. So that — we’ve always kind of liked the military, but now we’re really — the proof is in the pudding where we’re seeing these design wins because of regional, very specific conflicts.

I think another, if you will, another aspect to our growth is, and again, it comes down to the same concept versus Wi-Fi, is in consumer electronics we are seeing some really nice traction in video, in wireless video. And the problem we are solving there again is congestion. Every phone in the world has Wi-Fi on it. So there’s a lot of people using Wi-Fi, but when you want to have kind of mission critical specific applications like video, it’s a very challenging environment with traditional Wi-Fi. So we’re some — so I think specifically high performance video in consumer electronics is kind of the third pillar, if you will, that we see over the next 12 to 18 months.

David Williams: Lots of great color there. Thanks so much.

Ron Glibbery: My pleasure.

Operator: Thank you. The next question is coming from Kevin Liu from K. Liu & Company. Kevin, your line is live.

Kevin Liu: Hi. Good afternoon, guys, and good to see the sequential improvement in the business here. Maybe just starting on the millimeter wave side, can you talk about kind of the inventory levels you think still persist at your largest customers, has that largely been absorbed and you’re now capable of seeing sequential improvement there or is there still some sort of overhang that you have to get through?

Ron Glibbery: Yeah, I mean, there was a lot of inventory buildups. So we’re certainly seeing green shoots of improvement. We’re starting to get some orders. We really think that momentum, Kevin, will be late third quarter into the fourth quarter this year just in terms of what we are seeing and what we are hearing from our customers. I think the good news again though is our historic customers are actually — it really is an inventory situation. Actually, they are seeing terrific sales which they are feeding back to us. So we really see it as the second half of 2024. But I guess what helps our outlook is that the sales of 60 gig, from what we’re hearing from our customers, is actually improving significantly. So that’s, so we hope to lead into, out of that inventory and into new orders later this year.

Kevin Liu: Yeah, and I mean you alluded to one of your customers winning a deal in LA County. I mean would you assume that’s kind of incremental to your business this year or is that product that they may have had already that they can ship as they start to ramp up against that engagement?

Ron Glibbery: Well, I mean, that customer is actually — I mean, there’s really no public information on who the ship supplier is for that deal. But speculation — from a speculation perspective, I would say, certainly later this year, but very much so into 2025.

Kevin Liu: Understood. And then maybe this one’s for Jim, but looking at the gross margin, that improved quite a bit. I know you guys pointed to the memory side of the business there. So I wanted to understand how sustainable the gross margin is as we go into Q2 and the back half of the year, given you’ll continue to see a high mix of memory sales there?

Jim Sullivan: Yeah, Kevin. Thank you for the question. Certainly our gross margin profile will benefit from that. Our corporate targets, 50% and higher. Obviously the memory stuff runs in the high 60s, maybe even pop 70 at times. So that will certainly help the — keep the margins higher as we look for — at a higher level as we move forward through 2024. As we said on the call we’ll see the expect — current expectation is to complete those memory shipments by the first quarter of ‘25. But we obviously expect continued ramping in our millimeter wave business. And frankly, on the millimeter wave side, it’s just been the stops and starts associated with the inventory correction, just not having a consistent production flow has made it challenging to get over that 50% level. But we’re obviously pushing towards that and obviously have the benefit of the memory stuff for the next year to kind of help us on that front.

Kevin Liu: Yeah, sounds good. And then just lastly, with the ramp-up that you guys will have on the memory business as well as just improvements on millimeter waves, I’m just curious if we should expect you guys to start to build more inventories here, or if the current inventory levels you have on the balance sheet should be able to sustain your current business or revenue level?

Jim Sullivan: Yeah, we should be able to sustain with what we have. There was a slight increase at March 31, up from December 31, which was all memory related. We obviously have a fair amount of millimeter wave inventory on the books. Some of that’s at different stages of production needs to be built out. On the memory side, we’ve got some more wafers to order. And the exact number is a function of yields, et cetera. So we are — we did have at least a couple of wafer purchases in Q1. I think we’ve already done one here in May. There’s probably another one coming. So definitely to fulfill those orders, we’ll be building more on the memory. On the millimeter wave side, it’s really — we build based on the specific order on some of the new customers.

Kevin Liu: Yep, understood. Thanks for taking the questions, and good luck on Q2.

Ron Glibbery: Thank you.

Jim Sullivan: Thanks, Kevin.

Operator: Thank you. And we did have a follow-up come in from David Williams from Benchmark. David, your line of live.

David Williams: Hey guys, thanks again. I felt like I should have asked Jim a question on previously. I just want to come back and get one into you. But just kind of thinking about the cash flow as we work our way through the memory, is there — do you expect some of that memory to be maybe more back-end loaded into the first, maybe into the first quarter? Or will it be more linear you think through the year?

Jim Sullivan: I think it will be fairly linear for the rest of ‘24. And then, Q1 ‘25 will go down. Right now, we booked that new order here in late March, the $2.88 million order. Right now, I’d say of that order, 25% to 30% of it will be shipped in the fourth quarter and the rest would — or at least the dollar equivalent value, maybe it’s not that much of a customer, would ship in Q1. So I think we’ll be pretty linear on the memory side across the next three quarters or so. And then it will decline in Q1. And right now we’re projecting, subject to receipt of additional orders, which is still in play, we’ll expect a decline in Q1 ‘25.

David Williams: Okay. And do you think there’s — if you were going to try to handicap the potential for additional EOL orders, do you think there’s a good chance or just a moderate chance there?

Jim Sullivan: I think there’s a good chance, at least in the million dollar range. Right now the foundry, I think the orders don’t need to be in until the end of August or September, somewhere in that late summer timeframe. So there’s still time here. And obviously, we saw that additional large order in March. And the customer just wants to be certain on its design. And we’re optimistic we would see that come in. And that’s for, that one that I’m at least very optimistic on is for a Bandwidth Engine 3 product for which we have adequate inventory to fulfill against. So, it might be frankly tickle pink because I wouldn’t have to go build it, buy anything, just complete the build out. But we’ll wait and see. We’ve got time.

David Williams: Fantastic. Well, Ron, Jim, thanks again for the time and the best of luck on the quarter.

Ron Glibbery: Thank you so much, Dave.

Operator: Thank you. And the next question is coming from Jon Hickman from Ladenburg. Jon, your line is live.

Jon Hickman: Hey, I might have missed this and maybe you didn’t even say it, but did you break down the product revenue between millimeter wave and memory?

Jim Sullivan: We did not. We generally break that out in the — there’s tables in the 10-Q which we’re going to file probably after market close, maybe before market opens tomorrow. On a high level, we had in the first quarter about $2.68 million of product revenue. About $2.38 of that was memory, and the remaining $300,000 or so was millimeter wave ICs and modules.

Jon Hickman: Okay, thank you. And then could you give us an idea of on the millimeter wave side kind of current number of customers you’ve shipped to recently and what the pipeline looks like as far as numbers of different widths for separate customers?

Jim Sullivan: Yeah, I think in the first quarter we shipped, I want to say in the range of 8 to 10 customers.

Jon Hickman: Okay.

Jim Sullivan: Different [volume] (ph). Obviously, none of them were too big based on the revenue number I gave you. And looking forward, I think we’d expect to stay kind of in that range, Ron. Maybe, I mean, we had one of the new DUNE, what I consider kind of on the DUNE front, we had an initial shipment to that customer and are targeting a larger one in June, but is that a kind of a fair way to put it, Ron?

Ron Glibbery: I think we’ve got five DUNE customers that improve the concept. So we expect to be shipping those in the second half. So there’s five additional there, right? So yeah, I mean, we hope to grow from eight to 10, maybe from 10 to 15 in the second half. But yeah, I mean, I think we’re obviously trying to diversify that customer base for sure.

Jon Hickman: So, and then the LA thing that you mentioned, is that an RFP or did you win that business?

Ron Glibbery: Well, just to be clear, like, we can’t really say, Jon, but it is public information. It is available if you want to look it up. It’s like highly visible. But what we don’t know is like the ISP uses various vendors. But one thing that is public for sure is that it’s a 60 gigahertz design win. And what’s important about that in our mind is that it’s again, emphasizing this advantage that 60 gigahertz has in urban environments. It’s just this ability to really speak to, well, I think that what some of the analysts say is that the number of past residents is about 280,000. So that’s really the advantage of our 60 gigahertz technology is its ability to provide advantages in those denser of an environment because of the beamforming technology. So I think first and foremost, that’s an important message for that program. But it’s not an RFP, it’s been awarded, by the way.

Jon Hickman: Okay, it’s been awarded. Okay.

Ron Glibbery: Yes.

Jon Hickman: So, I have to do some digging. And then on the military side, is the technology mobile? Like, can I put this on a truck and go from one battlefield to the next or a mile away and set it back up?

Ron Glibbery: So, the use case that we’ve described is soldiers connecting to their Humvees. And so typically the range there is call it, maybe at the most, I don’t think the soldiers want to be too far away from their Humvees, so call it 100, 200 meters. So And then the Humvee itself would probably be backhauled through a satellite link. But there’s a lot of information on the Humvee itself, and in a server on the Humvee. So let’s say they want to download maps of an area. The 1 gigabit links that we have with using our technology can quickly get those maps downloaded to essentially the mobile. So the devices the soldiers use are mobile actually. So they are mobile and they can leave their Humvee and be within, let’s call it 200 meters of the Humvee. But that is the use case for that application that we’ve described.

Jon Hickman: Okay. And then, are you — one last question, sorry.

Ron Glibbery: Sure, no problem.

Jon Hickman: The Panasonic deal, are you currently shipping to them or is that to come?

Ron Glibbery: No, we’re shipping to them. Yeah, no, absolutely. Like we’ve been working on it. I don’t want to say how long we’ve been working on it, but it’s been several years, right? These guys are very, very careful, so — but we are actually shipping. It’s in full production.

Jon Hickman: Okay. Well, thank you for the information. Appreciate it.

Ron Glibbery: Our pleasure. And thank you for joining the call today.

Operator: Thank you. There were no other questions in queue at this time, and this does conclude today’s conference. Thank you for your participation. You may disconnect your lines at this time.

Ron Glibbery: Thank you.