Credo Technology (CRDO)

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Credo Technology Group Holding Ltd. (CRDO) Soars 8.3%: Is Further Upside Left in the Stock?
Zacks Investment Research· 2024-01-22 17:06
Credo Technology Group Holding Ltd. (CRDO) shares ended the last trading session 8.3% higher at $20.78. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.6% loss over the past four weeks.The surge in price can be attributed to the company's projected growth in revenues and gross margin, as outlined in its guidance. Additionally, the company's actual performance, aligning with its projections, serves as another fact ...
Credo Technology (CRDO) - 2024 Q2 - Earnings Call Transcript
2023-11-30 02:50
Credo Technology Group Holding Ltd (NASDAQ:CRDO) Q2 2024 Earnings Call Transcript November 29, 2023 4:30 PM ET Company Participants Dan O'Neil - VP-Corporate Development and IR Bill Brennan - CEO Dan Fleming - CFO Conference Call Participants Toshiya Hari - Goldman Sachs Thomas O'Malley - Barclays Tore Svanberg - Stifel Karl Ackerman - BNP Paribas. Vijay Rakesh - Mizuho Suji Desilva - ROTH MKM Richard Shannon - Craig-Hallum Capital Group Quinn Bolton - Needham and Company Operator Ladies and gentlemen, than ...
Credo Technology (CRDO) - 2024 Q2 - Quarterly Report
2023-11-29 16:00
PART I—FINANCIAL INFORMATION [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended October 28, 2023, highlighting a significant increase in net loss to **$18.3 million** for the six-month period [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported **$44.0 million** in revenue and a **$6.6 million** net loss for the quarter, with a **$18.3 million** net loss for the six-month period Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Oct 28, 2023 | Three Months Ended Oct 29, 2022 | Six Months Ended Oct 28, 2023 | Six Months Ended Oct 29, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $44,035 | $51,369 | $79,130 | $97,836 | | **Gross Profit** | $26,117 | $27,959 | $46,907 | $55,622 | | **Operating Loss** | $(8,875) | $(1,739) | $(23,266) | $(1,957) | | **Net Loss** | $(6,623) | $(3,360) | $(18,320) | $(3,433) | | **Net Loss Per Share (Basic & Diluted)** | $(0.04) | $(0.02) | $(0.12) | $(0.02) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of October 28, 2023, total assets increased to **$405.8 million**, with cash at **$129.0 million**, while total liabilities rose to **$56.3 million** Balance Sheet Summary (in thousands) | Account | October 28, 2023 | April 29, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $328,316 | $328,232 | | **Total Assets** | $405,805 | $397,289 | | **Total Current Liabilities** | $37,235 | $31,032 | | **Total Liabilities** | $56,257 | $49,654 | | **Total Shareholders' Equity** | $349,548 | $347,635 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$29.6 million** for the six months, a significant improvement from the prior year's cash usage, ending with **$129.0 million** in cash Cash Flow Summary for Six Months Ended (in thousands) | Cash Flow Activity | October 28, 2023 | October 29, 2022 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $29,616 | $(10,462) | | **Net cash used in investing activities** | $(9,655) | $(60,925) | | **Net cash provided by financing activities** | $664 | $2,723 | | **Net increase (decrease) in cash** | $20,403 | $(68,780) | | **Cash and cash equivalents at end of period** | $128,986 | $190,542 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business, accounting policies, and financial components, highlighting revenue concentration, geographical shifts, and significant purchase obligations - The company provides **high-speed connectivity solutions**, including **integrated circuits (ICs)**, **Active Electrical Cables (AECs)**, **SerDes Chiplets**, and **SerDes IP licensing**[58](index=58&type=chunk) Revenue Concentration by Customer | Customer | Three Months Ended Oct 28, 2023 | Six Months Ended Oct 28, 2023 | | :--- | :--- | :--- | | Customer A | 29% | 34% | | Customer E | 15% | 15% | Revenue by Geography (in thousands) | Region | Three Months Ended Oct 28, 2023 | Three Months Ended Oct 29, 2022 | | :--- | :--- | :--- | | Mainland China | $5,425 | $31,423 | | United States | $7,837 | $6,422 | | Hong Kong | $18,612 | $2,281 | - The company has a warrant agreement with an affiliate of Amazon.com to purchase up to 4,080,000 ordinary shares, with vesting tied to global payments made by Amazon. As of October 28, 2023, 80,000 shares under this warrant were vested[110](index=110&type=chunk) - As of October 28, 2023, the company had total non-cancelable purchase obligations of $44.1 million, comprising $32.7 million for manufacturing and $11.4 million for technology license fees[153](index=153&type=chunk) [Management's Discussion and Analysis (MD&A)](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue decreased **14.3%** year-over-year to **$44.0 million** due to lower product sales, offset by increased IP license revenue, while operating expenses rose, widening the operating loss [Overview & Business Model](index=22&type=section&id=Overview%20%26%20Business%20Model) Credo provides high-speed connectivity solutions for data infrastructure, utilizing a fabless model and expanding its Active Electrical Cable engagements with hyperscalers - The company's business is centered on providing **secure, high-speed connectivity solutions (ICs, AECs, SerDes Chiplets, IP)** for data infrastructure markets like hyperscale data centers, AI/ML, and 5G[168](index=168&type=chunk) - Credo utilizes a **fabless business model**, partnering with third parties for manufacturing, which allows it to focus on its core competencies in engineering and design[193](index=193&type=chunk) - A key business strategy involves **engaging directly with end-users** to tailor solutions, which in turn can lead to those end-users requiring their suppliers (OEMs, ODMs) to use Credo's products[175](index=175&type=chunk)[194](index=194&type=chunk) - In 2023, the company expanded its **Active Electrical Cable (AEC) engagements** to include **all seven of the world's leading hyperscalers**[189](index=189&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Total revenue decreased **14.3%** due to lower product sales, partially offset by a **124.9%** surge in IP license revenue, leading to an expanded gross margin but wider operating loss Revenue Breakdown (in thousands) | Revenue Source | Three Months Ended Oct 28, 2023 | Three Months Ended Oct 29, 2022 | % Change | | :--- | :--- | :--- | :--- | | Product sales | $34,247 | $44,349 | (22.8)% | | IP license | $7,354 | $3,270 | 124.9% | | **Total Revenue** | **$44,035** | **$51,369** | **(14.3)%** | - The decrease in product sales was primarily due to **reduced demand and lower shipment volumes of AEC cables** by one of the company's largest customers[201](index=201&type=chunk) - Gross margin for Q2 FY24 increased to **59.3%** from **54.4%** in the prior year, mainly because of the **higher proportion of high-margin IP license revenue** in the overall revenue mix[224](index=224&type=chunk) Operating Expenses (in thousands) | Expense Category | Three Months Ended Oct 28, 2023 | Three Months Ended Oct 29, 2022 | % Change | | :--- | :--- | :--- | :--- | | Research and development | $21,736 | $18,158 | 19.7% | | Selling, general and administrative | $13,256 | $11,540 | 14.9% | [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position with **$129.0 million** in cash, generating **$29.6 million** in operating cash flow for the six months, sufficient for future needs - As of October 28, 2023, the company had **$129.0 million** in cash and cash equivalents and working capital of **$291.1 million**[71](index=71&type=chunk) - Net cash provided by operating activities was **$29.6 million** for the six months ended October 28, 2023, compared to net cash used of **$10.5 million** in the prior-year period[74](index=74&type=chunk)[76](index=76&type=chunk) - The positive operating cash flow was primarily driven by a decrease in accounts receivable (**$16.8 million**) and inventory (**$9.6 million**), along with non-cash charges like share-based compensation (**$16.1 million**)[36](index=36&type=chunk)[74](index=74&type=chunk) - Management believes that existing cash and working capital are **sufficient to fund operations for at least the next 12 months**[72](index=72&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the company's market risk disclosures from its prior annual report - There were **no material changes** to the company's market risk assessment during the three and six months ended October 28, 2023[82](index=82&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of the end of the period, the company's disclosure controls and procedures were **effective at the reasonable assurance level**[85](index=85&type=chunk) - There were **no material changes** in the company's internal control over financial reporting during the quarter ended October 28, 2023[86](index=86&type=chunk) PART II—OTHER INFORMATION [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is **not presently a party to any litigation that is expected to have a material adverse effect**[90](index=90&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's previously disclosed risk factors - As of the date of this report, there have been **no material changes** from the risk factors previously disclosed in the company's most recent Form 10-K[91](index=91&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) This section discloses the adoption of Rule 10b5-1 trading plans by two executive officers, including the CFO and CTO - On June 26, 2023, CFO Daniel Fleming adopted a Rule 10b5-1 Trading Plan to potentially sell up to **90,000 ordinary shares** between September 2023 and September 2024[92](index=92&type=chunk) - On September 7, 2023, CTO Chi Fung (Lawrence) Cheng adopted a Rule 10b5-1 Trading Plan to potentially sell up to **2,000,000 ordinary shares** between January 2024 and December 2024[93](index=93&type=chunk)
Credo Technology (CRDO) - 2024 Q1 - Quarterly Report
2023-08-28 16:00
FORM 10-Q (408) 664-9329 Registrant's telephone number, including area code Securities registered pursuant to Section 12(b) of the Act: Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth Large accelerated filer Non-accelerated filer Indicate by check mark whe ...
Credo Technology (CRDO) - 2024 Q1 - Earnings Call Transcript
2023-08-25 01:53
Credo Technology Group Holding Ltd (NASDAQ:CRDO) Q1 2024 Earnings Conference Call August 24, 2023 4:15 PM ET Company Participants Dan O'Neil - VP-Corporate Development and IR Bill Brennan - CEO Dan Fleming - CFO Conference Call Participants Toshiya Hari - Goldman Sachs Quinn Bolton - Needham & Company Matt Ramsay - TD Cowen Karl Ackerman - BNP Paribas Suji Desilva - ROTH MKM Tore Svanberg - Stifel Brett Simpson - Arete Research Vijay Rakesh - Mizuho Richard Shannon - Craig-Hallum Capital Group Operator Ladi ...
Credo Technology (CRDO) - 2023 Q4 - Annual Report
2023-06-22 16:00
Currency and Dividend Risks - The company's PRC subsidiaries generate revenue in Renminbi, which is not freely convertible, potentially limiting their ability to pay dividends due to currency exchange restrictions and a withholding tax rate of up to 10% on dividends payable to non-PRC resident enterprises[407] - The company is subject to foreign exchange control systems that could prevent it from obtaining sufficient foreign currencies to satisfy demands, potentially impacting its ability to pay dividends in foreign currencies[382] - The company does not intend to pay cash dividends on its ordinary shares for the foreseeable future, and any future dividends will depend on various factors, including business prospects and financial condition[463] - The company's cumulative undistributed earnings subject to withholding taxes were $12.3 million as of April 29, 2023, with the intention to reinvest these earnings indefinitely[866] Political and Legal Risks - The company faces potential political, legal, and economic instability in Hong Kong, which could adversely affect its business and results of operations[377][379] - The company may face challenges in enforcing U.S. court judgments in the Cayman Islands, where it is incorporated, due to differences in legal systems[452] - The company's intellectual property rights may be challenged or invalidated, and it may face difficulties in enforcing these rights in jurisdictions with weak legal protections[415] - The company may be subject to cybersecurity review requirements under PRC laws, and violations could result in administrative penalties, including fines and service suspension[398] - The company is subject to cybersecurity reviews in China if it processes personal information of over one million users and seeks foreign stock exchange listings[446] Operational and Financial Risks - The company relies on dividends and other distributions from its subsidiaries to fund cash and financing requirements, but there is no assurance that subsidiaries will be able to make such payments[380] - The company’s operations could be disrupted by natural disasters, power outages, or geopolitical events, particularly as its headquarters and key suppliers are located in active earthquake zones[473] - The company’s success depends on retaining key personnel, including executive officers and engineering teams, as it lacks long-term employment agreements with them[471] - The company’s share price may be volatile due to factors such as changes in customer demand, product life cycles, and economic conditions[458] - The company may issue equity or equity-linked securities for acquisitions, potentially diluting shareholder ownership[470] Regulatory and Compliance Risks - The company faces risks related to export control regulations, including potential violations of U.S. export control laws, which could result in criminal prosecution or administrative sanctions[368] - The company operates in multiple countries and is subject to anti-corruption laws, such as the U.S. Foreign Corrupt Practices Act, and any violations could result in substantial fines and penalties[372] - Compliance with data privacy laws, including GDPR and CCPA, could result in regulatory fines of up to $2,500 per violation and $7,500 for willful violations, increasing compliance costs[445] Shareholder and Corporate Governance Risks - The company has the ability to issue 50,000,000 preferred shares and additional ordinary shares without shareholder approval, which could impede acquisition attempts or changes in control[443] - Anti-takeover provisions, such as the issuance of "blank check" preferred shares, may discourage acquisitions, potentially limiting shareholder opportunities to sell shares at a premium[464][465] - As of April 29, 2023, the company had 148,651,394 outstanding ordinary shares, with warrants and options covering an additional 20,748,004 shares, all potentially tradable in the public market[483] Tax and Financial Reporting - The company's total current tax expense for the year ended April 29, 2023, was $740,000, with a total deferred tax benefit of $2.107 million[864] - The company's total tax expense (benefit) for the year ended April 29, 2023, was $(1.367) million[864] - Unrecognized tax benefits as of April 29, 2023, were $2.9 million, which, if recognized, would affect the effective tax rate[867] - The company's unrecognized tax benefits as of April 30, 2022, were $1.8 million[867] - The company recognized $1.2 million of revenue in the year ended April 29, 2023, that was included in the deferred revenue balance as of April 30, 2022[783] Leasing and Facilities - The company's total leased facilities as of April 29, 2023, amount to 182,281 square feet, with the United States accounting for 89,727 square feet, Mainland China for 66,929 square feet, Taiwan for 18,537 square feet, and Hong Kong for 7,088 square feet[478] - Total lease payments for operating leases are projected at $18.815 million, with a present value of lease liabilities at $15.5 million[862] - The company's leases have remaining terms generally between one year and eight years, with no finance leases[860] - The company's operating lease expenses for fiscal year 2024 are projected at $3.456 million[862] Intellectual Property and Trade Secrets - The company's trade secrets and proprietary information are at risk of misappropriation, particularly in the semiconductor industry, which experiences high employee turnover[418]
Credo Technology (CRDO) - 2023 Q4 - Earnings Call Transcript
2023-06-01 02:04
Credo Technology Group Holding Ltd (NASDAQ:CRDO) Q4 2023 Earnings Conference Call May 31, 2023 5:00 PM ET Company Participants Dan O'Neil - Vice President-Corporate Development & Investor Relations Bill Brennan - Chief Executive Officer Dan Fleming - Chief Financial Officer Conference Call Participants Tore Svanberg - Stifel Quinn Bolton - Needham & Company Suji Desilva - Roth Capital Karl Akerman - BNP Vivek Arya - Bank of America Operator Good day, and thank you for standing by. Welcome to the Credo Q4 Fi ...
Credo Technology (CRDO) - 2023 Q3 - Earnings Call Transcript
2023-03-02 03:05
Credo Technology Group Holding Ltd (NASDAQ:CRDO) Q3 2023 Earnings Conference Call March 1, 2023 5:00 PM ET Company Participants Dan O'Neil - Vice President-Corporate Development & Investor Relations Bill Brennan - Chief Executive Officer Dan Fleming - Chief Financial Officer Conference Call Participants Toshiya Hari - Goldman Sachs Quinn Bolton - Needham & Company Tore Svanberg - Stifel Suji Desilva - ROTH Capital Vivek Arya - Bank of America Karl Ackerman - BNP Paribas Operator Ladies and gentlemen, thank ...
Credo Technology (CRDO) - 2023 Q3 - Quarterly Report
2023-03-01 16:00
25 Technology Development We continue to evaluate trends within the industry that affect our business performance. We design and develop highspeed connectivity solutions that deliver improved power and cost efficiency for the data infrastructure market. This market is driven by hyperscalers, HPC and 5G infrastructure. Accordingly, our revenue and business performance are influenced by the deployment and timing of broader market adoption of next generation technologies in data centers, particularly by hypers ...
Credo Technology (CRDO) - 2023 Q2 - Earnings Call Transcript
2022-12-01 01:24
Financial Data and Key Metrics Changes - Credo achieved record revenue of $51.4 million in Q2 2023, representing a 94% increase year-over-year and an 11% increase sequentially [8][25] - Product revenue reached $48.1 million, up 33% sequentially and 143% year-over-year, driven by strong AEC adoption [25] - Gross margin for the quarter was 54.9%, with product gross margin at 52.6%, up 80 basis points sequentially and 4.8 percentage points year-over-year [27][30] - Operating income was $3.4 million, an improvement of $5.6 million year-over-year, but down 41% sequentially [29] - Net income for Q2 was $2.4 million, an increase of $5.7 million year-over-year, but down 55% sequentially [30] - Cash and equivalents at the end of the quarter were $240.5 million, a decrease of $3.2 million from the previous quarter [32] Business Line Data and Key Metrics Changes - AECs continued to show strong execution, with expectations for significant growth in the coming years as the market for AECs is forecasted to grow to a multi-billion dollar market [10][12] - The optical solutions category saw new product announcements, including several new 100 gig per lane products, which received positive customer feedback [14][15] - Line Card PHY solutions established leadership at 50 gig and 100 gig per lane speeds, with increasing demand for MACsec PHYs due to security needs [18][19] Market Data and Key Metrics Changes - The company is engaged with multiple hyperscale customers, with expectations for revenue ramps from these engagements in fiscal 2024 [11][12] - The AEC market is projected to grow significantly, driven primarily by hyperscalers, but also with potential contributions from enterprise markets as they move to higher speeds [70][71] Company Strategy and Development Direction - Credo is focused on high-speed connectivity solutions, expanding its product families and intellectual property offerings to meet increasing market demands [7][8] - The company aims to maintain its competitive edge by delivering optimized, secure, and high-speed solutions with better power efficiency and cost [8][20] - The strategy includes engaging in joint development models with optical module manufacturers to enhance market penetration [15][75] Management's Comments on Operating Environment and Future Outlook - Management noted a reduction in CapEx and delays among Chinese hyperscale customers, but U.S. hyperscalers continue to show strong demand [44][46] - The company remains optimistic about its growth trajectory, expecting to achieve at least $200 million in revenue for fiscal 2023, representing over 88% growth compared to fiscal 2022 [22][33] - Management highlighted the importance of next-generation technologies and the competitive landscape, emphasizing the need for continuous innovation [46][82] Other Important Information - The company is actively working on diversifying its supply chain to mitigate risks associated with potential disruptions in China [79] - Credo is positioned as an early leader in the chiplet market, with significant opportunities anticipated as the industry moves towards standardization [21][82] Q&A Session Summary Question: Growth in AEC business and switch applications - Management discussed the dual opportunities for AECs within server racks and switch racks, noting a significant market potential [36] Question: Competitive landscape for NIC to ToR applications - Management acknowledged the desire for multiple sources among data center customers but emphasized their competitive advantages and ongoing innovations [39][40] Question: Changes in customer behavior and project timelines - Management observed a reduction in CapEx among Chinese customers but noted that U.S. hyperscalers continue to show strong demand without significant project delays [44][46] Question: Revenue recognition for the second customer in AEC business - Management expressed confidence in the ramp-up of revenue from the second customer, highlighting the strategic importance of the project [48][84] Question: Strength in product revenue and market segments - Management confirmed that the strength in product revenue was primarily driven by AECs, particularly with their lead customer [73] Question: Future opportunities in PCIe and USB markets - Management outlined plans to enter the PCIe market significantly with the move to Gen 6 and similar timelines for USB opportunities [64][65]