Financial Data and Key Metrics Changes - The company reported Q3 revenue of $53.1 million, which is up 20% sequentially but down 2% year-over-year [11] - Non-GAAP gross margin for the product business was 62.2%, an increase of 235 basis points sequentially [82] - Non-GAAP net income for Q3 was $6.3 million, compared to $1.2 million in the previous quarter [13] - The company expects Q4 revenue to be between $59 million and $62 million, representing a 14% sequential increase at the midpoint [14] Business Line Data and Key Metrics Changes - The IP business generated $1.3 million in Q3, down 83% sequentially and down 90% year-over-year [11] - The product business generated $51.8 million in revenue in Q3, up 41% sequentially and up 24% year-over-year [82] - Non-GAAP operating income was $2.4 million in Q3, compared to a non-GAAP operating loss of $0.7 million last quarter [83] Market Data and Key Metrics Changes - The company anticipates that U.S. hyperscalers will continue to dominate AEC demand in the foreseeable future [70] - The optical DSP market is gaining traction, with production shipments to multiple global hyperscale end customers [77] - The company is engaged with five U.S. hyperscalers and other global hyperscalers for various applications [70] Company Strategy and Development Direction - The company is focused on innovation in its SerDes technology, which is critical for high-speed connectivity solutions [74] - There is an emphasis on developing AEC solutions for both front-end and back-end networks, with expectations for significant revenue growth [76] - The company is also working on 400-gig and 800-gig AEC solutions, which are expected to yield significant future revenue [76] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the increasing market demand for high-speed connectivity driven by AI applications [69] - The company expects an inflection point in the second half of fiscal '25, indicating a positive outlook for future revenue growth [16] - Management noted that the visibility into customer projects has improved, leading to greater confidence in revenue forecasts [100] Other Important Information - The company ended the quarter with cash and equivalents of $409.1 million, an increase of $168.6 million from the previous quarter [112] - Total non-GAAP operating expenses in Q3 were $30.6 million, up 13% sequentially and up 19% year-over-year [111] - The company is well-capitalized to continue investing in growth opportunities while maintaining a substantial cash buffer [112] Q&A Session Summary Question: What is the outlook for the AEC market? - Management indicated that the AEC market is heating up, with increasing interest from customers and expectations for broader adoption in the future [47][62] Question: How does the company view the competitive landscape in the optical DSP market? - Management noted that they are agnostic to customer preferences and are focused on delivering the right connectivity solutions for each hyperscale customer [28] Question: Can you provide insights on the chiplet business? - The chiplet business is expanding, with multiple customers engaging for designs, although it is still dominated by a single customer at this point [92] Question: What are the expectations for revenue visibility moving forward? - Management expressed increased confidence in revenue visibility due to a diversified customer base and product offerings [100][150]

Credo Technology Group Holding Ltd. (CRDO) came out with quarterly earnings of $0.04 per share, beating the Zacks Consensus Estimate of $0.03 per share. This compares to earnings of $0.05 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 33.33%. A quarter ago, it was expected that this company would post earnings of $0.01 per share when it actually produced earnings of $0.01, delivering no surprise.Over the last four quarters, t ...

Credo Technology Group Holding Ltd Notes to Unaudited Condensed Consolidated Financial Statements | --- | --- | --- | --- | --- | |---------------------------------------------------------|-------|---------------------------------|-------|-----------------------------| | Computer equipment and software | $ | January 27, 2024 \n18,217 | $ | April 29, 2023 \n13,942 | | Laboratory equipment | | 17,720 | | 15,577 | | Production equipment | | 24,718 | | 19,783 | | Leasehold improvements | | 2,009 | | 2,005 | | O ...

Financial Performance - Revenue for the third quarter of fiscal year 2024 was $53.1 million, representing a 20% increase quarter over quarter[16] - GAAP gross margin was 61.4%, while non-GAAP gross margin was 62.2%[16] - GAAP operating expenses totaled $38.5 million, with non-GAAP operating expenses at $30.6 million[16] - GAAP net income was $0.4 million, and non-GAAP net income was $6.3 million[16] - GAAP diluted net income per share was $0.00, and non-GAAP diluted net income per share was $0.04[16] - Total revenue for the three months ended January 27, 2024, was $53.058 million, an increase from $44.035 million for the same period last year, representing a growth of 20.0%[25] - Product sales reached $39.975 million, up from $34.247 million year-over-year, indicating a growth of 16.0%[25] - Gross profit for the quarter was $32.558 million, compared to $26.117 million in the prior year, reflecting a gross margin improvement[25] - Operating loss for the quarter was $(5.911) million, an improvement from $(8.875) million in the same quarter last year[25] - Net income for the quarter was $428 thousand, a significant recovery from a net loss of $(6.623) million in the prior year[25] Future Guidance - Revenue guidance for the next quarter is projected between $59.0 million and $62.0 million[16] - Expected GAAP gross margin for the next quarter is between 63.2% and 65.2%, while non-GAAP gross margin is expected to be between 64.0% and 66.0%[16] - Anticipated GAAP operating expenses for the next quarter are between $44.0 million and $46.0 million, with non-GAAP operating expenses expected to be between $33.0 million and $35.0 million[16] Investment and Growth - The company attributes growth to the increasing demand for high-speed and energy-efficient connectivity solutions in the data infrastructure market[16] - Research and development expenses increased to $24.236 million from $21.736 million year-over-year, highlighting continued investment in innovation[25] - Selling, general and administrative expenses rose to $14.233 million, compared to $13.256 million in the same period last year[25] - The company reported a total operating expense of $38.469 million, up from $34.992 million year-over-year[25] - Credo's product families include integrated circuits, Active Electrical Cables, and SerDes Chiplets, optimized for high-speed connectivity solutions[23] - The company anticipates continued growth in the optical and electrical Ethernet applications market, targeting emerging 1.6T port markets[23]

SAN JOSE, Calif., Feb. 12, 2024 (GLOBE NEWSWIRE) -- Credo Technology Group Holding Ltd ("Credo") (NASDAQ:CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved power efficiency, today announced it will hold a conference call on Tuesday, February 27, 2024, at 2:00 p.m. Pacific Time to discuss its financial results for the fiscal third quarter ended January 27, 2024. The news release announcing the third quarter fiscal year 2024 financial results will be disseminated ...

SAN JOSE, Calif.--(BUSINESS WIRE)--Credo Technology Group Holding Ltd (“Credo”) (Nasdaq: CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved power efficiency as data rates and corresponding bandwidth requirements increase throughout the data infrastructure market, will be exhibiting in booth 316 at the Chiplet Summit Conference and Exhibition taking place February 6-8, at the Santa Clara Convention Center. The summit is an excellent platform for Credo representa ...

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 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 ...

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)

Financial Performance - For the three months ended July 29, 2023, the net loss was $11,697 thousand, compared to a net loss of $73 thousand for the same period in 2022[70]. - Total revenue for the three months ended July 29, 2023, was $35.1 million, a decrease of 24.5% compared to $46.5 million for the same period in 2022[103]. - Product sales revenue decreased by 14.8% to $30.0 million from $35.3 million year-over-year[92]. - IP license revenue fell by 73.3% to $2.8 million from $10.4 million, primarily due to a high-dollar IP license recognized in the prior year[92][93]. - The company reported a net loss of $11.7 million for the three months ended July 29, 2023, compared to a net loss of $0.1 million in the same period last year[103]. - Total revenue for the three months ended July 29, 2023, decreased by $11.4 million, primarily due to a decrease in product sales revenue of $5.2 million and a decrease in IP license revenue of $7.6 million[142]. - Gross profit for the three months ended July 29, 2023, was $20.8 million, representing a gross margin of 59.2%, compared to a gross profit of $27.7 million and a gross margin of 59.5% for the same period in the previous year[144]. Expenses - Research and development expenses increased to $4.7 million, up 65.5% from $2.9 million in the prior year[94]. - Total operating expenses increased to 100.2% of revenue, up from 60.0% in the prior year, indicating a significant rise in costs relative to revenue[116]. - Research and development expenses represented 64.5% of total revenue for the three months ended July 29, 2023, compared to 35.9% for the same period in the previous year[145]. - Selling, general and administrative expenses increased by $1.3 million, primarily due to higher personnel costs and share-based compensation[146]. - Research and development expenses increased by $5.96 million to $22.64 million, accounting for 64.5% of total revenue, up from 35.9% in the prior year[145]. Cash Flow - Net cash provided by operating activities was $24.6 million for the three months ended July 29, 2023, driven by cash inflows from working capital and non-cash items, partially offset by a net loss of $11.7 million[150]. - Net cash provided by operating activities was $24.6 million for the three months ended July 29, 2023, driven by a decrease in accounts receivable of $21.6 million and a decrease in inventory of $5.0 million[150]. - Net cash used in investing activities was $6.6 million for the three months ended July 29, 2023, primarily related to purchases of property and equipment[151]. Customer Concentration - The company anticipates continued revenue concentration from a limited number of customers, with Customer Z contributing 40% of revenue for the three months ended July 29, 2023, down from 49% in the same period of 2022[77]. Business Model and Operations - The company operates a fabless business model, allowing it to focus on engineering and design while controlling fixed costs and capital expenditures[80]. - The company has developed a proprietary SerDes architecture that scales from 25Gbps/lane to 100Gbps/lane, with significant milestones achieved since its founding in 2008[72]. Taxation - The effective tax rate for the three months ended July 29, 2023, was 4%, significantly lower than 139% in the same period last year[96]. - The company reported a benefit for income taxes of $(537,000) for the three months ended July 29, 2023, compared to $(365,000) in the same period in 2022, representing an increase of 47.1%[147]. Market Conditions - The company is facing uncertainty due to rising interest rates, inflation, and geopolitical instability, which may negatively impact business operations[139].