More than 15 years of professional investment experience in global equities across all sectors. My investment style is fundamental, bottom-up, long-term, and quality growth-oriented. I am seeking companies specializing in niche markets, with strong growth potential, a solid management team, a sound capital allocation policy, and, most importantly, reasonable valuation. I do not chase quarterly results, nor do I follow the herd mentality. I do not use short-term stock performance as the measure of a company' ...

Financial Data and Key Metrics Changes - Credo generated revenue of $72 million in Q2, representing a 21% sequential increase and a 64% year-over-year increase [8][28] - Non-GAAP gross margin for Q2 was 63.6%, showing a sequential increase of 73 basis points [32] - Non-GAAP operating income was $8.3 million in Q2, compared to $2.2 million in Q1, with a non-GAAP operating margin of 11.5% [32] - Non-GAAP net income for Q2 was $12.3 million, up from $7 million in Q1 [33] - Cash flow from operations was $10.3 million, with a decrease in cash and equivalents to $383 million [34] Business Line Data and Key Metrics Changes - The product business generated $69.1 million in revenue for Q2, up 21% sequentially and 88% year-over-year [28] - AEC product line achieved record revenue driven by strong demand from top customers [14] - Optical DSP revenues also reached record levels, fueled by 50-gig and 100-gig per lane solutions [19][20] - Line card retimer business generated record revenue driven by 400-gig and 800-gig applications [24] Market Data and Key Metrics Changes - The company anticipates continued growth in the AEC market, driven by AI deployments and increasing customer relationships [27] - The optical DSP market is expected to present significant long-term growth opportunities, particularly with the introduction of 200-gig per lane solutions [22][20] - The company expects Q3 revenue to be between $115 million and $125 million, indicating a strong market demand [35] Company Strategy and Development Direction - Credo is focused on delivering innovative Ethernet connectivity solutions and is well-positioned as a market leader in AECs [15][9] - The company aims to maintain a non-GAAP gross margin of 63% to 65% and an operating margin of 30% to 35% in the long term [31] - Credo is actively pursuing opportunities in the PCIe market, with plans to sample PCIe products to customers in calendar '25 [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the anticipated revenue inflection point in the second half of fiscal '25, with greater momentum than initially projected [27] - The company is seeing healthy design activity across several customers and expects continued growth over time [42] - Management noted that the competitive landscape for AECs remains stable, with a focus on delivering unique, differentiated products [46] Other Important Information - The company reported a significant increase in customer diversification, with seven end customers contributing more than 5% of revenue in Q2 [31] - The company is well-capitalized to continue investing in growth opportunities while maintaining a substantial cash buffer [34] Q&A Session Summary Question: What is driving the significant upside in Q3 guidance? - Management indicated that stronger project forecasts and increased visibility into customer programs contributed to the upside [41] Question: How is the competitive landscape for AECs evolving? - Management noted that while competition exists, the market is large enough to support multiple players, and Credo aims to be first in delivering unique products [46][47] Question: What are the growth drivers for fiscal '26? - Management expects AECs to be the main driver, with optical DSP and line card retimers also contributing to growth [58] Question: How does the company view inventory levels amid growth? - Management stated that there is a high consumption rate among customers, with no significant inventory build observed [80] Question: What percentage of AEC revenues is related to AI applications? - Management confirmed that the large majority of AEC shipments are based on AI applications [112] Question: How many customers are engaged in the Optical DSP side? - Management indicated that there is broader design activity at the optical module level, with increased activity from end customers for qualifications [118]

Credo Technology Group Holding Ltd. (CRDO) came out with quarterly earnings of $0.07 per share, beating the Zacks Consensus Estimate of $0.05 per share. This compares to earnings of $0.01 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 40%. A quarter ago, it was expected that this company would post earnings of $0.04 per share when it actually produced earnings of $0.04, delivering no surprise.Over the last four quarters, the ...

Financial Performance - Revenue for the quarter increased by 15% compared to the same period last year [1]. - Net profit margin improved to 12%, up from 10% in the previous quarter [2]. - Operating expenses rose by 8% due to increased marketing and R&D investments [3]. Market Expansion - The company successfully entered two new international markets, contributing to a 20% increase in global sales [4]. - A new distribution center was opened in Europe to support the growing demand in the region [5]. - Strategic partnerships were formed with local retailers to enhance market penetration [6]. Product Development - Launched three new products, which accounted for 25% of total sales this quarter [7]. - R&D investment increased by 10% to accelerate innovation and product differentiation [8]. - Customer feedback on the new product line has been overwhelmingly positive, with a 90% satisfaction rate [9]. Operational Efficiency - Implemented new supply chain management software, reducing delivery times by 15% [10]. - Energy consumption was reduced by 5% through the adoption of sustainable practices [11]. - Employee productivity improved by 12% following the introduction of a new training program [12]. Risk Management - Identified potential supply chain disruptions and developed contingency plans to mitigate risks [13]. - Increased cybersecurity measures to protect sensitive customer data [14]. - Conducted regular financial audits to ensure compliance with regulatory standards [15]. Customer Engagement - Launched a new loyalty program, resulting in a 30% increase in repeat customers [16]. - Enhanced customer service by expanding the support team and implementing a 24/7 helpline [17]. - Social media engagement grew by 40%, driven by targeted marketing campaigns [18].

SAN JOSE, Calif., Dec. 02, 2024 (GLOBE NEWSWIRE) -- Credo Technology Group Holding Ltd (Nasdaq: CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved energy efficiency as data rates and corresponding bandwidth requirements increase through the data infrastructure market, today reported financial results for the second quarter of fiscal year 2025, ended November 2, 2024. Second Quarter of Fiscal Year 2025 Financial Highlights Revenue of $72.0 million, grew by 20.6% ...

I gave Credo Technology Group (NASDAQ: CRDO ) a buy rating on the 24th of June this year. My key thesis was that CRDO is well positioned to benefit from growing needs for faster data transmission, given its I'm a passionate investor with a strong foundation in fundamental analysis and a keen eye for identifying undervalued companies with long-term growth potential. My investment approach is a blend of value investing principles and a focus on long-term growth. I believe in buying quality companies at a disc ...

Taxes - Provision for income taxes increased by $1.2 million to $622 thousand for the three months ended August 3, 2024, compared to a benefit of $537 thousand in the same period of fiscal year 2023, representing a 215.8% change[90] Cash and Cash Equivalents - Cash and cash equivalents increased to $103.9 million as of August 3, 2024, up from $66.9 million as of April 27, 2024, while working capital decreased slightly to $472.9 million from $485.6 million[91] - The company believes its existing cash and cash equivalents, along with other working capital components, will be sufficient to meet its needs for at least the next 12 months[92] Operating Activities - Net cash used in operating activities was $7.2 million for the three months ended August 3, 2024, primarily due to $21.5 million in working capital outflows and $9.5 million in net loss, partially offset by $23.8 million in non-cash items[94] Investing Activities - Net cash provided by investing activities was $42.5 million for the three months ended August 3, 2024, driven by $162.1 million in maturities of certificates of deposit, offset by $113.7 million in purchases of certificates of deposit and $5.9 million in property and equipment purchases[97] Financing Activities - Net cash provided by financing activities was $1.6 million for the three months ended August 3, 2024, primarily due to $2.4 million from employee share option exercises and ESPP issuances, offset by $0.8 million in payments for long-term technology license obligations[99] Accounts Receivable - Accounts receivable increased by $12.2 million for the three months ended August 3, 2024, primarily due to large customer billings not yet due[94] Inventory - Inventory increased by $5.4 million for the three months ended August 3, 2024, to support unfulfilled backlog and new product ramps[94] Contract Assets - Contract assets increased by $2.8 million for the three months ended August 3, 2024, due to unmet billing milestones in product engineering services and IP licensing arrangements[95] Accounts Payable - Accounts payable increased by $5.8 million for the three months ended August 3, 2024, due to higher external consultation fees for general and administrative services and R&D[95]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [2]. Core Insights - The company reported a revenue of $59.71 million for FY25Q1, representing a 70% year-over-year increase. The GAAP gross margin was 62.4%, up 3.2 percentage points year-over-year but down 3.4 percentage points quarter-over-quarter. The GAAP net loss was $9.54 million, while the Non-GAAP gross margin was 62.9%, also showing a year-over-year increase of 3.1 percentage points [1]. - For FY25Q2, the company guides revenue between $65 million and $68 million, with GAAP gross margins expected to be between 61.3% and 63.3% [1]. - The company anticipates accelerated quarter-over-quarter growth in the second half of FY25 [1]. Revenue and Client Analysis - The AEC product line is experiencing significant growth, with two major clients contributing over 10% to revenue. The first large cloud vendor client accounts for 10% of revenue, while the second accounts for 52%. The company expects substantial demand growth from these clients in FY25 [2]. - The company is also set to introduce a new client in FY25Q2, which is expected to exceed a 10% revenue contribution [2]. - Revenue from Microsoft has returned to historical levels, and Amazon is projected to be a key driver of revenue growth moving forward [2]. Product Development and Market Position - The optical module DSP business is progressing steadily, with the 1.6T DSP set to tape out soon. The company expects this segment to contribute at least 10% to FY25 revenue [2]. - The company plans to enter the 64G PAM4 PCIe 6.0 market this year, offering retimer and AEC solutions [2]. - The long-term guidance for IP revenue is maintained at 10% to 15% [2]. Financial Projections - Revenue projections for FY25 to FY27 are $321 million, $439 million, and $565 million, respectively. GAAP net profits are projected to be -$16.83 million, -$8.60 million, and $5.01 million for the same periods [2]. - The current stock price corresponds to price-to-sales (P/S) ratios of 18, 13, and 10 for FY25 to FY27 [2].

Financial Data and Key Metrics Changes - For Q1 fiscal 2025, Credo reported revenue of $59.7 million, down 2% sequentially but up 70% year-over-year [13] - Non-GAAP gross margin was 62.9%, down 323 basis points sequentially due to lower IP contribution [14] - Non-GAAP operating income was $2.2 million, compared to $7.5 million in the previous quarter [15] - Non-GAAP net income was $7 million, down from $11.8 million in the last quarter [15] - Cash flow used in operations was $7.2 million, primarily due to changes in working capital [16] - Ending cash and equivalents were $398.6 million, a decrease of $11.4 million from the previous quarter [16] Business Line Data and Key Metrics Changes - Product revenues reached $57.3 million, up 30% sequentially and 77% year-over-year, establishing a new quarterly record [14] - The AEC product line continued to be the main source of revenue, expected to drive growth in fiscal 2025 and beyond [5][6] - The Optical DSP business is projected to contribute at least 10% of fiscal 2025 revenue, with ongoing customer engagements [7][8] - Line Card PHY business contributed significantly to overall product revenue growth, driven by strong demand for 400 gig and 800 gig solutions [10] - SerDes licensing and chiplet businesses are expected to see growth opportunities, although quarterly variability is anticipated [11] Market Data and Key Metrics Changes - The data center market is evolving rapidly, with increased spending observed from emerging hyperscalers [4][5] - Credo is targeting both leading hyperscalers and the next tier of data center operators, indicating a broadening market focus [4] - The company plans to enter the 64 gig PAM4 PCIe Gen 6 market, optimizing for signal integrity and cost-effectiveness [5] Company Strategy and Development Direction - Credo aims to extend its reach into new markets as data rates rise, particularly in AI deployments [5][12] - The company is focused on maintaining a competitive edge through system-level products that blend customized hardware and software [6] - Future growth is anticipated in the Optical DSP category, with innovations like Linear Receive Optics (LRO) being adopted [8][9] - The company is committed to advancing its range of solutions to meet the growing demand for high-speed connectivity driven by AI [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth prospects of the AEC business, driven by increasing rack power densities and liquid cooling migrations [7] - The company expects an inflection point in the second half of fiscal 2025, supported by existing and new customer engagements [12] - Management highlighted the importance of network quality and reliability in driving customer preferences towards AEC solutions [19][53] Other Important Information - The company ended Q1 with an inventory of $31.6 million, up $5.7 million sequentially [16] - Credo's strategy includes a focus on energy efficiency and power optimization in its product offerings [9][12] Q&A Session All Questions and Answers Question: What are the key drivers for the acceleration in growth in the AEC business? - Management noted broad adoption of AECs, with potential expansion into rack-to-rack connectivity as rack densities increase, leading to a shift towards high reliability solutions [19] Question: What are the market share aspirations for the Optical DSP business? - Management indicated that they are on track to achieve at least 10% of revenue from Optical DSPs in fiscal 2025, with significant growth expected in fiscal 2026 and beyond [21] Question: Can you elaborate on the timing of entering the PCIe market? - Management explained that entering the PCIe Gen 6 market allows them to deliver compelling benefits similar to those in Ethernet, with plans to accelerate to Gen 7 [26] Question: How does the company view the licensing revenue for fiscal 2025? - Management reaffirmed expectations for licensing revenue to be in the long-term range of 10% to 15% for the full year, despite variability in quarterly contributions [35] Question: Can you clarify the contributions from the two 10% customers? - Management confirmed that the first AEC hyperscale customer remained at 10% of revenue, while the second AEC hyperscale customer contributed 62% [50]

Credo Technology Group Holding Ltd. (CRDO) came out with quarterly earnings of $0.04 per share, in line with the Zacks Consensus Estimate. This compares to loss of $0.03 per share a year ago. These figures are adjusted for non-recurring items. A quarter ago, it was expected that this company would post earnings of $0.05 per share when it actually produced earnings of $0.07, delivering a surprise of 40%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Credo Technolog ...