Peraso Inc. (PRSO) Q1 2023 Earnings Report, Transcript and Summary

Good morning and welcome to Peraso Inc.'s First Quarter 2023 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded today, Tuesday, May 16, 2023. I would now like to turn the call over to the host for today's program, Jim Sullivan. Please go ahead.

Good morning and thank you for joining today's conference call to discuss Peraso's first quarter 2023 financial results. I'm Jim Sullivan, CFO of Peraso and joining me today is Ron Glibbery, our CEO. Yesterday, after the market closed, we issued a press release and released 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, margins, 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 the 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 here. 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. Included in the company's press release issued yesterday our definitions and reconciliations of GAAP to non-GAAP items 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 section of our website. Now, I'd like to turn the call over to our CEO, Ron Glibbery for his prepared remarks. Ron?

Thank you, Jim. Good morning and welcome to everyone joining today on the phone and via webcast. I'm pleased to report that Peraso had a strong start to the year, highlighted by continued growth driven by record product revenues from a combination of our millimeter wave solutions for the fixed wireless access market as well as our memory IC solute products. More specifically, total revenue in the first quarter increased 29% sequentially and 48% year-over-year with product revenue coming in at $4.9 million. Our near-term focus remains on expanding Peraso's leadership a millimeter wave fixed wireless access as wireless ISP seek to aggressively deploy multi-gigabit connectivity in the unlicensed 60 gigahertz spectrum to secure market share of a rapidly growing subscriber base. Today, there are approximately 6.7 million listed subscribers in the U.S. according to the Carmel Group which is expected to grow to 12.7 million subscribers in 2025. Looking at the historical data, the trend suggests a doubling of subscribers every 5 years. Multiple large government programs designed to support universal broadband access are also helping to fuel the market's growth, especially in rural community. In addition to the momentum with WISPs', fixed wireless access continuing to capture a growing share of the broadband market. According to latest third-party market research fixed wireless access has consistently represented over 90% of the net adds by the top broadband providers in the U.S. over the past 3 quarters. As discussed on previous calls, fixed wireless access the natural extension of 5G deployments, enabling carriers to maximize available bandwidth capacity while also offering faster, lower latency and symmetrical connectivity to customers. As further validation, T-Mobile and Verizon collectively added nearly 3.2 million fixed wireless subscribers in 2022 which represented 300% growth over 2021. The market opportunity across just these 2 leading carriers is truly substantial with each having 5G fixed wireless access service that has the potential to reach tens of millions of homes. Importantly, 5G millimeter wave fixed wireless access isn't easy to North America and is increasingly recognizing around globally, leading carriers in multiple countries including Australia, Italy and India are either actively have plans to deploy 5G fixed wireless access in the 28 and 26 gigahertz bands. We are seeing this ramp in the form of prospective engagements which increased meaningfully during the first quarter. This client interest also span the entire ecosystem for major OEMs and equipment vendors to 5G baseband providers and makers of frequency converted devices. Based in part on our conversations with several prospective customers and potential partners, we believe there's clear industry recognition that Peraso's 5G beamformer is ideal for enabling cost-effective equity needed for deployment of high-speed fixed wireless access. Turning to Slide 7; I want to share something new, the recent significant progress we've been making to expand our engagement pipeline. Keeping in mind that Peraso historically been focused on supporting a very constant group of core customers. Late last year, we began a strategic initiative to extend our commercial reach and diversify our customer base. This included the appointment of Mark Lanford, who is fundamental to our online efforts to expand Peraso's new business pipeline. And this slide is a simple diversion of one of the tools we use internally to measure both the breadth and projected economic value of our existing pipeline. Although we've removed the implied economic values that we use internally, the number of engagements indicated on this slide represent our current pipeline. Therefore, this shows that our combined full and active engagements have grown from 60 in the first quarter to 75 as of May 2023. In addition, this slide shows the progression of customer engagement phases through to preproduction. As of May 2023, you can see that increasing number of customers in the technical design process which includes comatocapture, layout, design, prototyping, test verification and early pre-production. So not only do we see the overall level of customer engagement increasing, we also see an increasing level of the status of those engagements as well. Switching gears, I want to review an important update related to our memory IC business. which, as a reminder, Peraso acquired as part of the business combination with MoSys in late 2021. This all foundry for our memory devices at TSMC. They recently informed us that the manufacturing process used to fabricate wafers for our memory ICs would be discontinued in the second half of 2021. Given these are legacy products and require a unique nonstandard process which is not easily transferable to another foundry, we've begun multiplying customers of end-of-life on our memory devices. As part of the EOL, we requested our customers to provide us with a forecast and purchase orders for last time buys by the end of 2020. We currently expect to fulfill last-time buy POs primary IC through next year 2024. That said, the timing of EOL shipments will ultimately depend on both delivery time lines from our suppliers as well as the scheduling related by our customers. Although it is too early to forecast the size and linearity of customers' last time purchase orders, we do anticipate the implemented UL to reset a potential pull forward of future demand and revenue related to our memory IC products as we fulfill customers' POs during 2024. We now turn back to our core [indiscernible] silicon business which is placed to become the primary driver of Peraso's growth. As I previously mentioned, the resilient of the fixed wireless access market has been impressive, especially considering the ongoing macroeconomic uncertainty. Our focus to 2023 is to further capitalize on Peraso's existing leadership position in the unlicensed 60 gigahertz segment of the fixed wireless market where risks are aggressively growing subscribers for multi-gigabit connectivity. In addition, our highly integrated 5G beam former product positions us well for emerging opportunities in the licensed fixed wireless market as well, including 5G CPE applications and 5G millimeter wave in the carriers market. Longer term, we believe there's significant incremental opportunities for our technology next-generation applications such as ARV on connectivity as well as future Wi-Fi standards. In closing, we believe we are well positioned with leading technology and a strong product portfolio in our millimeter wave business and we continue to be encouraged by the sustained momentum in the fixed wireless market. Acknowledging the current macro environment, we continue to prudently manage expenses and cash as we begin to realize the benefits from previously taken actions to streamline our organization. Looking ahead, we are focused on driving an expanding pipeline of new business engagements both domestically and abroad as well as diversification of our customer base in support of future growth. With that, I'll turn the call back to Jim to review the first quarter financials and speak to our outlook for the second quarter.

Thank you, Ron and good morning, everyone. It's great to speak with you again today. During my remarks, I'll make several references to non-GAAP numbers. Unless otherwise indicated, referenced amounts exclude stock-based compensation expense, amortization of recorded intangible assets, impairment of goodwill and the change in fair value of warrant liability. These non-GAAP financial measures and the reconciliation of the differences between them and comparable GAAP measures are presented in our press release and related Form 8-K which was filed yesterday with the SEC. Turning to our first quarter 2020 financial results. Total revenue in the first quarter increased to $5 million and $3.9 million in the fourth quarter of 2022 and compared with $3.4 million during the same quarter a year ago. Product revenue from the sale of our integrated circuits and millimeter wave integrated antenna solutions in the first quarter was $4.9 million compared with $3.8 million in the prior quarter and $3.2 million in the first quarter of 2022. The sequential growth of first quarter product revenue was primarily attributable to increased sales of millimeter wave integrated solutions. The significant year-over-year growth was driven by increased shipments of both millimeter wave products and memory ICs. Royalty and other revenue comprised $0.1 million of royalty revenues from licenses of our memory technology in the first quarter of 2023. GAAP gross margin was 38.3% in the first quarter compared with 44.2% in the prior quarter and 42.8% in the year ago quarter. On a non-GAAP basis, excluding amortization of acquired intangible assets, gross margin for the first quarter was 45.4% compared with 53.4% in the prior quarter and 53.3% in the first quarter of 2022. Non-GAAP product gross margin decreased to 43.8% in the first quarter compared with 52.6% in the prior quarter and 50.4% in the first quarter of 2022. The sequential and year-over-year decreases in GAAP and non-GAAP gross margins for the first quarter were primarily the result of revenue mix, reflecting increased revenue contribution from our millimeter wave integrated solutions. Although gross margin was lower in the first quarter of 2023, we continue to target a corporate non-GAAP gross margin of approximately 50% and through a combination of the benefits from increased scale and reduced production costs on our millimeter wave integrated solutions as well as the contribution from sales of our higher-margin memory IC products. GAAP operating expenses for the first quarter were $5.7 million which included a $0.4 million gain on a previously completed license and asset sale. This is compared with $16.2 million in the prior quarter which included a $9.9 million noncash charge for the impairment of goodwill and $8.2 million in the first quarter of 2022. Total operating expenses for the first quarter of 2023 on a non-GAAP basis which excludes stock-based compensation and amortization of reported and intangible assets were $4.3 million compared with $4.8 million in the prior quarter and $6.9 million in the same quarter a year ago. In February 2023, we announced that we had implemented cost reduction initiatives to reduce operating losses and streamline operations which collectively are expected to decrease our operating expenses by approximately $5 million on an annualized basis. As reflected by our results, we began to realize the initial benefits from these targeted expense reductions during the first quarter. We continue to anticipate realizing further benefit from these actions over the coming quarters. GAAP net loss for the first quarter of 2023 was $3.1 million or a loss of $0.15 per share compared with a net loss of $14.6 million or $0.71 per share in the prior quarter and compared with a net loss of $6.8 million or $0.34 per share in the same quarter a year ago. On a non-GAAP basis, net loss for the first quarter of 2023 was $2 million or a loss of $0.09 per share which excludes stock-based compensation, amortization of acquired intangibles and a recorded gain for the change in fair value of warrant liability. This compares with a non-GAAP net loss of $2.8 million or $0.13 per share in the prior quarter. and a net loss of $5.1 million or a loss per share of $0.25 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 2023 was 21.6 million shares which excludes 1.8 million shares of our common stock and exchangeable shares that are escrowed pursuant to the terms of an escrow agreement related to the December '21 business combination between Peraso and MoSys and subject to an earnout based on achievement of certain stock price targets. Adjusted EBITDA which we define as GAAP net income or losses reported excluding stock-based compensation, amortization of reported intangibles, change in fair value of warrant liability, goodwill impairment charges, interest expense, depreciation and amortization and the provision for income taxes with negative $1.8 million in the first quarter compared with negative $2.5 million in the prior quarter and negative $4.8 million in the prior year period. From a balance sheet perspective, during the first quarter of 2023, we collected approximately $2 million previously outstanding from a lead customer and recognized approximately $1.1 million of revenue as a result of the collections. The company has no past due amounts from this customer. On March 31, 2023, we had approximately 23.4 million shares of common stock and exchangeable shares outstanding. This amount includes 1.8 million shares subject to escrow as noted previously. Regarding our business outlook. There are currently 2 unrelated customer sales transactions that we are actively working to close. The ultimate outcome and timing are uniquely difficult to predict and either one or both of these pending agreements could potentially have a meaningful impact on anticipated revenue for the second quarter. As such, today, we are not in a position to provide specific guidance for the current quarter. To the extent the outcome of one or both of these pending transactions becomes more certain, we will consider providing future potential updates regarding our expectations for the second quarter. This concludes our prepared remarks. Operator?

[Operator Instructions] And the first question today is coming from David Williams from Benchmark.

But I wanted to see there are a couple of things here that are definitely interacting that I wanted to touch on. One is on the memory pull forward? I know, Ron, you said it's too early to tell within the life potential pull forward could be. But as you kind of think about the working capital period in terms of that impact, how do you think that the revenue projections could be from this? Do you think that all of the revenue you would have expected to capture over the next years will be pull forward and levers by next year?

Dave, thanks for dialing in. The answer to your question is yes. I mean, that's the hope. We're just in the midst of that process now in terms of understanding from the customers what those requirements are. But yes, it's essentially the fold that outline revenue into 2024. From a capital perspective, this situation where we're looking to the customers to participate in that cash process, right? I mean it just was the message is, hey, we -- our foundry has discontinued this process. We're going to try to keep it going as long as possible in order to purchase the inventory necessary to satisfy your requirements; we'll need essentially a prepayment for that.

Okay. Okay, very helpful. And then maybe second on just the customers you talked about the scripted deal, any more color around that? You talked about 2 of them that are distinct from one another? Is there anything -- is this related to the NRE? And maybe if you could give us any more color on that NRE if that's moving forward and maybe how what big a portion next bras?

Yes. No, absolutely. It involves the -- there is NRE licensing components. And as such, given the complexity, the revenue recognition rules around it and timing of payments, etcetera, we just felt it was very challenging to kind of put a number out there. Obviously, for example, a $5 million number in Q1, it doesn't take much to kind of move that and create a miss or put us out a balance. So we just felt the prudent thing to do particularly in this market with the inventory situation across the industry right now and even on the product side because there is no potential for some pushouts pull-ins right up to the last day of the second month of the quarter, we just felt it was prudent to hold off on the guidance number at this time. We certainly -- as we said in our comments, I would like to provide an update when we can, albeit revenue recognition always has to be the company's conclusions need to be signed off by the auditors, etcetera which can be tough to get ahead of the timing of the quarterly review which would happen in July. That said, these transactions and I think as we've mentioned out there would have a meaningful impact on our liquidity. When you look at the balance sheet, so they will definitely key to our revenue and liquidity having these transactions close.

Okay. All right. Fantastic. Certainly appreciate the color there and understandable on the booking of that revenue. I guess maybe from a broader perspective, fixed model back debt and just kind of the rest of the business and feel pretty comfortable with non-activity. And Ron, maybe you can speak to kind of if that's accelerated or kind of what you said outside, maybe a little more color from what you provided new script.

Of course, my pleasure. Yes. So I think there's a theme moving forward for Peraso which is really to last November, we were -- our theme is really to diversify customers. I mean, so to eliminate the.

I'm here for something else.

Can you hear me, Dave?

I can, I can, sorry.

So our team is really to diversify our customer base and we really pretty limited in our ability to do that to last November. If you brought Mark Lunsford on board and Mark's goal is, as you can see from our pipeline is to really diversify that customer base and even from Q1 to Q2, we've seen a substantial increase, not only in in the pipeline but also in the salient status of the pipeline. So yes, we -- by our estimate right now, we've got about 75 engagements up from about 60 in Q1. And so we're just really, really focused on the commercial side of diversification of that customer base. And so far, so good, Mark has done an amazing job. Well, frankly, the whole team has done an amazing job and we're seeing that design activity increase substantially. But -- and again, just to kind of maybe close that up. Certainly, fixed wireless is a big part of that. But also, we're seeing lines kind of stage of progress in things like high-speed video. So that market, we've got a lot of intellectual properties for things like the low latency wireless video, be it VR or be it educational systems or be it docking stations, so more -- even though we've been -- of course, is wireless is our focus but we are starting to see some diversification in terms of the applications as well which, of course, we're pleased with. So we're just really focused on really diversifying that customer base so that we're not really reliant on a couple of customers but really the whole industry.

And the next question is coming from Kevin Liu from K Liu & Co.

I wanted to also ask a question on the memory business first. Just in terms of the actual production, can you talk a little bit about when TSMC would actually stop producing any more product? Just to give us kind of a sense for how far in the '24 customers going to wait for their orders. And then beyond that, when you look at your memory business today, just curious if the revenue you do on kind of an annual or a quarterly basis, how many months of inventory or years of inventory are your customers typically purchasing in a given quarter or year.

Do you want to speak to that, Jim? Or do you would like me to?

If you want to go first, Ron, I can chime in.

Why don't I start and then hand over the inventory side of things. So basically, I guess at some level, the TSMC timing is confidential, proprietary information to TSMC, Kevin. So -- but suffice it to say, we've got -- we're -- we've got in the order of, let's call it, 6 quarters of flexibility there, not counting any inventory. So this is not going to happen overnight. But those are kind of the broad time frame is kind of late 2024 for production and then presumably, there will be some carryover in terms of the inventory. So that's kind of the broad -- I would say, the broad timing of this situation. However, we'd like to give our customers a lot of time they've invested a lot of money in these products and so we want to make sure they get at full value. I'm not as close to the inventory situation, Jim, maybe you could step in on that side of the things.

Yes. Sure, Ron. Our customers, like everyone, our peers out there or others in the industry, we always seek to certain exactly how much inventory the customers are holding certainly would make our forecasting a lot easier. Most customers keep that pretty tightly held. We generally ship direct to customers or -- in the case of one customer in Japan, we go through a local Disty, although they do not stock inventory. So we don't have Disty's holding inventory out and in the channel but it's difficult to get a handle on inventory. I will say the memory business is seeing the -- we are seeing the impact the inventory management issues everyone is hanging having out there and have seen some pushouts of orders, etcetera. So we are certainly not -- our size is not immune to that. But yes, hard to have visibility. I mean as we announced, we expect to see the impact from the EOL in 2024. as we do expect customers, I think as Ron answered initially on David's question, we hope, expect us in forward-looking verb to see pull as customers need to pull in future demand to ensure they're adequately stocked.

Yes, understood. And you mentioned kind of the industry-wide inventory correction is going on currently. From your perspective, are you guys seeing that only within your memory business here? Or is there any sort of question that needs to happen on millimeter wave. Just wondering what you're seeing from a customer standpoint across your products?

We're seeing it up both sides of the business, neither one is immune. We're definitely seeing some desire. In the case of our memory, the purchase orders do you have within a window push out. So we have not seen any cancellations on the memory side of purchase orders. So we've seen some push outs, although we're optimistic, they're pulled in. I mean, again, being a relatively smaller provider, it's meaningful to us but the challenges, the contract manufacturers, the algorithm to push out and it's machine-driven and then we can get a pull in a couple of weeks later to bring it back. Very difficult to measure; we're also seeing it on the millimeter wave but there's been a little bit of a knee jerk let's push things out and then just pull them back in later. There's not as much flexibility for our customers on the millimeter wave side, generally, those POs are not reschedulable. So we will ship what we have. And in some cases, if it's due to the mutual benefit kind of work with the customers on that. Yes, we are also seeing that customers are taking longer to pay holding our usual issue where customers will hold the receivables at quarter end and we'll do quite well in collections in the first half or the first month of the subsequent quarter.

Got it. And just on the 2 large customer transactions that you referenced. Any sense you can give us on how far along in the process this is? Are these both expected to close in Q2 and it's more the revenue recognition that's kind of not as visible or would either of these potentially close later earlier?

Expected to close in Q2, in the case of one of them has taken a little longer than expected but we do expect it to come in. And as I said, it's we'll have a beneficial impact on our balance sheet. Obviously, when you have different components involved, as I mentioned the various deliverables, it's always tough to determine the revenue recognition and the impacts, again, at our size. So we just felt it prudent to kind of hold off. But we do expect those to close and certainly we're always subject to customer confidentiality, etcetera but would expect to press release, at least one, if not both and give that kind of message out there that it's in the books.

Great. And then you guys highlighted some of the fixed wireless access subscriber growth to even for kind of the licensed 5G spectrum. Just on the licensed 5G side, could you talk about whether you guys expect to see more demand or more wins coming initially domestically or internationally there? Any sort of update in terms of when you could start to see your first major customer win there.

Well, that's a good question. I mean I think the first message, Kevin, as we all know, 5G fixed wireless millimeter wave, was slow in 2022 because of the mid-band deployment. But what we're seeing, again, now we're seeing over the last few weeks and months, just really a spike in activity in terms of our engagements. And I mean we're talking -- we're talking like top self-partners, customers and partners here. So still a bit hard to judge, like, I think globally in terms of the deployments initially with Verizon and Verizon to shipping but you see other signs of life, like NBN in Australia has deployed well basically countrywide. Well, Italy is more of a 28 gigahertz, a very substantial presence of fixed wireless but probably what's driving a lot of activity right now is in. And I think we all know that India has licensed the little bit 26 and 28 gigahertz for fixed wire fiber is just not that popular in India. So it looks like mostly in these kind of go fixed wireless. So we're seeing -- that's where we're really seeing momentum. And I mean, again, very significant conversation going on there. And specifically, what we're finding is that our thesis that the way fixed wireless is successful is with really cost-effective equipment. And so, unlike most of our competitors we designed a 5G to absolutely focused on reducing the cost of consumer premise equipment. And so there's a very, very strong interest in that chip. So we're thrilled with the progress there. Actually, we're even starting to see some activity in North America, really and globally on our own SATCOM, like 5G to SATCOM. So that's a market that we're starting to see percolate as well. So we're involved and it's the exact same premise which is, again, the ground equipment or the end user equipment has to be cost effective. And so we initially all the millimeter wave, I think design wins mostly were in the base station now vendors are looking at who's got the right answer for the end equipment. And so we're definitely seeing some nice activity there. So I would summarize it for you, Kevin, is kind of globally, the service providers that I suggested now and starting to see some activity on the SATCOM side of things as well. So I would say for Q1 and now into Q2 is the 5G market millimeter wave takes wireless is starting to heat up for us. So that's -- so we're pretty happy with that.

All right. That's great to hear. And one last question for me. Just in terms of the OpEx savings. Could you just talk about how much more you expect to be able to say kind of on a sequential basis heading into Q2?

Sure, Kevin. We're -- we obviously announced that mid-February and made some employee reductions we had actually started leaning out expenses and some consultants kind of beginning in the fourth quarter continuing through Q1 as contracts ended. We're looking to see kind of additional benefit, hopefully, in the kind of the at least 10% range over where we were in Q1, obviously subject to other movements and also subject to the -- these kind of revenue transactions and some incremental costs that may be associated with those which could offset that but obviously, would more than offset that. But obviously, it takes some time to have the full benefit kick in, particularly when there are headcount reductions since obviously, your termination payments, etcetera.

And the next question is coming from Tim Savageaux from Northland Capital Markets.

I had a couple of questions. I wanted to follow up on the kind of pending agreements that you mentioned and asked whether those are new or extended agreement with current customers and also trying to relate that to the pipeline slide that you put up, I think you showed 2 customers going into preproduction and a few more moving through the pipeline kind of above that, should we relate those 2 developments, or are those separate? And I'll follow up from there as well as the courage or new customer question.

I can speak to that, Jim. So one of them is not related to that. It's an existing customer. So the thing to clarify, Tim, on the pipeline side is that it doesn't show -- it doesn't fill customers seeing production already. It's like people pending production and then production is something; so one of the customers does not show up on that pipeline slide. And then the other one does. So that would be the summary of how those 2 customers relate to what's on the pipeline slide.

Great. And I know you indicated you removed the economic value but I wonder if you might have any color on kind of the, whether in the aggregate or anything else, just from a total funnel perspective or for the ones that you're farther along on, what sort of market opportunity you see there and given the uptick in the funnel, would you attribute that? Obviously, there's been a lot of company-specific activity. But have you seen an uptick in overall activity across the fixed wireless access market is contributing to some of that because some will expand.

Well, definitely, it's overall engagement like. We're actually -- I'm calling from Washington today because we're actually in Washington with the wireless ISP organization speaking to Congress or congressional members about the benefits that takes wireless, especially with regards to the $44 billion big [ph] funding. So there's a lot of money there. And I think in parallel with that, so we're working on were actually I've said in the past, we're working with WISPs to really promote millimeter wave technology in that market. Kind of the key benefit that we're -- or the message that we're bringing to that market is Peraso's technology brings gigabit links is highly competitive with fiber. It's the symmetrical in so low latency. So that's starting non-painted that's starting to resonate with those customers and we have some early wireless piece, we are embracing that fully and just basically saying, well, fiber is a good solution but fiber is expensive, it takes long. Just think about even the installation time, I mean, for millimeter wave devices, less than an hour cost $30. So we're -- so a big part of our pipeline now is the take wireless opportunities primarily at the OEM level but even at the service provider level, where they're using our technology to get to gigabit links, I mean another kind of message we received from the WISP [ph] is, of course, people with 10 megabits are happy with 50 megabits. But our view is if you provide a gigabit, you're good for 10 years. I mean nobody is -- that's a link at least a 10-year cycle in terms of your -- in terms of your installation time. So or install time with that customer. So that's kind of the message we're bringing to Congress is that wireless is absolutely a central part of the B program because companies like Peraso, are providing these giga it links at a very, very aggressive price point under $200 for the box. So to speak specifically to your question, that constitutes a significant portion of the pipeline takes wireless access from where we were back in November. But -- and I think more broadly, I mean the pipeline does include some indoor high-speed wireless, also some -- quite a bit of defense and also some transportation. So we are just broadening our markets but certainly fixed wireless, I would say, the cornerstone of the anchor. And by the way, in 5G, it's all -- that's all [indiscernible] it takes a while. There's really -- that's really the sweet spot for 5G, as I think fixed wireless. So does that answer your question, Tim?

Absolutely. Really helpful. Thanks very much.

Great.

Thank you. There are no other questions in queue at this time. And this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.