Group 1 - Credo Technology (NASDAQ: CRDO) has seen a significant stock price increase, gaining nearly 90% since June 3 and almost 187% over the past six months [1] - The company's stock surged 20% in one week following strong first-quarter earnings that exceeded Wall Street expectations, highlighting its growing role in the AI sector [3] - Credo's active cable technology is being rapidly adopted, providing more efficient connections between data center servers and network switches compared to traditional cabling [3] Group 2 - Major tech firms such as Amazon, Microsoft, and Elon Musk's xAI are now customers of Credo, each contributing over 10% to the company's revenue [4] - Analysts are optimistic about Credo's future, with TD Cowen raising its price target for CRDO from $140 to $160 [6] - The company anticipates fiscal 2026 revenue between $230 million and $240 million, projecting a year-over-year growth of approximately 120% [6]

Core Viewpoint - Credo Technology's stock surged due to its Q1 earnings report and guidance exceeding market expectations, receiving high praise from Wall Street [1][2] Group 1: Financial Performance - The company's stock price increased by 7.40% on Thursday, with a year-to-date gain approaching 100% [1] - Analysts expect revenue growth of approximately 120% for the fiscal year 2026, with sequential revenue growth anticipated in Q2 to Q4 [2] Group 2: Client Contributions - Three major clients, identified as Amazon, Microsoft, and xAI, contributed over 10% of revenue, with respective contributions of 33%, 20%, and 35% [1] - A fourth major client made a significant revenue contribution in Q1, expected to exceed 10% by fiscal year 2026 [1] Group 3: Market Position and Product Offering - Credo Technology plays a critical role in the AI data center high-speed data connection sector, with a focus on active cable technology [2] - The company has a leading position in the active cable market, which is considered more reliable and energy-efficient compared to traditional optical cables and passive copper cables [2] Group 4: Analyst Insights - Susquehanna analyst Christopher Rolland raised the target price for Credo Technology from $115 to $165 following the earnings report [1] - Needham analyst N.Quinn Bolton also raised the target price, highlighting the company's strong performance and expanding market opportunities [2]

Group 1 - Credo Technology (NASDAQ: CRDO) shares have experienced significant growth over the last five months, driven by strong market and industry sentiment along with the company's exceptional execution [2] - The Growth Stock Forum focuses on identifying attractive risk/reward situations in growth stocks, particularly in the biotech sector, and maintains a model portfolio of 15-20 stocks that is updated regularly [3] Group 2 - The article does not provide specific financial metrics or performance data for Credo Technology or the broader industry [4][5][6]

[Special Note Regarding Forward-looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-looking%20Statements) This section warns that forward-looking statements are subject to risks and uncertainties, and actual results may differ materially - This section highlights that the report contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially. It advises against undue reliance on these statements and notes no obligation to update them[8](index=8&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk) [PART I—FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements and accompanying detailed notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates | Metric | August 2, 2025 (in thousands) | May 3, 2025 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :---------------------------- | :------------------------- | :-------------------- | :--------- | | Total Assets | $905,175 | $809,257 | $95,918 | 11.85% | | Total Current Assets | $803,609 | $713,534 | $90,075 | 12.62% | | Cash and cash equivalents | $219,636 | $236,328 | $(16,692) | -7.06% | | Short-term investments | $260,010 | $195,010 | $65,000 | 33.33% | | Accounts receivable | $181,203 | $162,144 | $19,059 | 11.75% | | Inventories | $116,677 | $90,029 | $26,648 | 29.60% | | Total Liabilities | $123,794 | $127,675 | $(3,881) | -3.04% | | Total Shareholders' Equity | $781,381 | $681,582 | $99,799 | 14.64% | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net income or loss over specific periods | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended August 3, 2024 (in thousands) | % Change | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Total Revenue | $223,074 | $59,714 | 273.6% | | Product Sales Revenue | $217,059 | $57,325 | 278.6% | | IP License Revenue | $6,015 | $2,389 | 151.8% | | Gross Profit | $150,368 | $37,283 | 303.3% | | Operating Income (Loss) | $60,742 | $(14,451) | N/A | | Net Income (Loss) | $63,399 | $(9,540) | N/A | | Basic EPS | $0.37 | $(0.06) | N/A | | Diluted EPS | $0.34 | $(0.06) | N/A | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents net income or loss and other comprehensive income or loss components for specific periods | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended August 3, 2024 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net income (loss) | $63,399 | $(9,540) | | Foreign currency translation gain | $9 | $144 | | Total comprehensive income (loss) | $63,408 | $(9,396) | [Condensed Consolidated Statements of Shareholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) This section outlines changes in shareholders' equity, including share issuance and comprehensive income, over specific periods | Metric | Balances at August 2, 2025 (in thousands) | Balances at May 3, 2025 (in thousands) | | :-------------------------- | :---------------------------------------- | :------------------------------------- | | Total Shareholders' Equity | $781,381 | $681,582 | | Ordinary shares issued under equity incentive plans | $4,648 | N/A | | Share-based compensation | $35,455 | N/A | | Total comprehensive income | $63,408 | N/A | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports cash inflows and outflows from operating, investing, and financing activities for specific periods | Cash Flow Activity | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended August 3, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by (used in) operating activities | $54,168 | $(7,236) | | Net cash provided by (used in) investing activities | $(67,821) | $42,482 | | Net cash provided by (used in) financing activities | $(2,970) | $1,604 | | Net increase (decrease) in cash and cash equivalents | $(16,692) | $36,958 | | Cash and cash equivalents at end of the period | $219,636 | $103,900 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the unaudited condensed consolidated financial statements [1. Description of Business and Basis of Presentation](index=12&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes the company's business, its focus on high-speed connectivity solutions, and the basis of financial statement presentation - Credo Technology Group Holding Ltd, formed in 2014, focuses on high-speed connectivity solutions for AI-driven applications, cloud computing, and hyperscale networks. Its products include ICs, AECs, and SerDes Chiplets, with IP solutions primarily from SerDes IP licensing. The financial statements are prepared under US GAAP for interim periods[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [2. Significant Accounting Policies](index=12&type=section&id=2.%20Significant%20Accounting%20Policies) This note outlines the critical accounting estimates and assumptions used in preparing the financial statements and recent accounting pronouncements - The preparation of financial statements requires management to make estimates and assumptions, particularly for inventory write-downs, revenue recognition, tax assets, and long-lived asset impairment. Recent accounting pronouncements (ASU 2023-09, ASU 2024-03, ASU 2025-05) are being evaluated for their impact[33](index=33&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk) [3. Concentrations](index=13&type=section&id=3.%20Concentrations) This note details concentrations of credit risk in cash, investments, and accounts receivable, and significant customer revenue concentrations - The company faces credit risk concentrations in cash, short-term investments, and accounts receivable. A small number of customers consistently account for a **significant portion of revenue and accounts receivable**[39](index=39&type=chunk)[40](index=40&type=chunk) | Metric | August 2, 2025 | May 3, 2025 | | :---------------- | :------------- | :---------- | | Customer A (A/R) | 68 % | 86 % | | Customer B (A/R) | 21 % | * | | Customer A (Revenue) | 50 % | 56 % | | Customer B (Revenue) | 35 % | * | * Less than 10% of total accounts receivable or total revenue. [4. Revenue Recognition](index=14&type=section&id=4.%20Revenue%20Recognition) This note explains the company's revenue recognition policies, contract assets, deferred revenue, and remaining performance obligations | Geography | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended August 3, 2024 (in thousands) | | :---------- | :--------------------------------------------- | :--------------------------------------------- | | Hong Kong | $74,885 | $29,272 | | United States | $82,828 | $10,800 | | Mainland China | $51,781 | $9,748 | | Rest of World | $13,580 | $9,894 | | **Total** | **$223,074** | **$59,714** | - Contract asset balance increased by **$0.9 million to $10.8 million** as of August 2, 2025, primarily from IP license revenue where billing milestones were not met. Deferred revenue balance increased by **$1.6 million to $3.1 million** due to an advance from a customer. Remaining performance obligations were approximately **$3.4 million** contracted but unsatisfied and **$0.7 million** satisfied but unrecognized[45](index=45&type=chunk)[46](index=46&type=chunk)[48](index=48&type=chunk) [5. Fair Value Measurements](index=14&type=section&id=5.%20Fair%20Value%20Measurements) This note describes the fair value hierarchy used for financial instruments and details cash equivalents and short-term investments - The company measures financial instruments using a three-tier fair value hierarchy, with money market funds classified as Level 1 and certificates of deposit as Level 2. Total cash equivalents and short-term investments increased by **$61.6 million to $469.8 million** as of August 2, 2025[51](index=51&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) | Category | August 2, 2025 (in thousands) | May 3, 2025 (in thousands) | | :-------------------------------- | :---------------------------- | :------------------------- | | Money market funds (Level 1) | $149,424 | $148,036 | | Certificates of deposit (Level 2) | $320,360 | $260,147 | | **Total cash equivalents and short-term investments** | **$469,784** | **$408,183** | [6. Supplemental Financial Information](index=16&type=section&id=6.%20Supplemental%20Financial%20Information) This note provides additional details on inventories, property and equipment, depreciation, and other current and non-current liabilities | Inventories (in thousands) | August 2, 2025 | May 3, 2025 | | :------------------------- | :------------- | :---------- | | Raw materials | $16,065 | $12,734 | | Work in process | $28,746 | $24,583 | | Finished goods | $71,866 | $52,712 | | **Total** | **$116,677** | **$90,029** | | Property and Equipment, Net (in thousands) | August 2, 2025 | May 3, 2025 | | :--------------------------------------- | :------------- | :---------- | | Production equipment | $45,208 | $44,789 | | Computer equipment and software | $29,044 | $27,901 | | Laboratory equipment | $24,117 | $21,944 | | Construction in progress | $16,611 | $9,687 | | **Total, Net** | **$69,444** | **$63,631** | - Depreciation and amortization expense was **$5.5 million** for the three months ended August 2, 2025, up from **$4.2 million** in the prior year. Other current liabilities increased to **$40.3 million**, while other non-current liabilities decreased to **$3.1 million**[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk) [7. Commitments and Contingencies](index=17&type=section&id=7.%20Commitments%20and%20Contingencies) This note discloses the company's purchase commitments, technology license fees, manufacturing agreements, and warranty obligations | Fiscal Year | Purchase Commitments to Manufacturing Vendors (in thousands) | Technology License Fees (in thousands) | Total (in thousands) | | :------------------ | :------------------------------------------------------- | :------------------------------------- | :------------------- | | Remainder of 2026 | $32,397 | $5,913 | $38,310 | | 2027 | $6,400 | $6,700 | $13,100 | | 2028 | $4,851 | $350 | $5,201 | | 2029 | — | $350 | $350 | | **Total** | **$43,648** | **$13,313** | **$56,961** | - The company has approximately **$28.1 million** in non-cancelable purchase orders payable within the next year. A manufacturing supply capacity reservation agreement includes commitments of at least **$15.5 million** for FY26-FY29, with **$7.9 million** in refundable deposits. Warranty obligations and legal proceedings are **not material**[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) [8. Leases](index=18&type=section&id=8.%20Leases) This note details the company's operating lease obligations, weighted-average lease term, discount rate, and lease expenses | Fiscal Year | Operating Leases (in thousands) | | :---------- | :------------------------------ | | 2026 | $3,056 | | 2027 | $3,590 | | 2028 | $3,573 | | 2029 | $3,512 | | 2030 | $2,913 | | Thereafter | $1,252 | | **Total lease payments** | **$17,896** | | Less: Interest | $(2,288) | | **Present value of lease liabilities** | **$15,608** | - The weighted-average remaining lease term for operating leases was **4.8 years**, and the weighted-average discount rate was **6.4%** as of August 2, 2025. Operating lease expenses for the three months ended August 2, 2025, were **$1.145 million**[69](index=69&type=chunk) [9. Share Incentive Plan](index=19&type=section&id=9.%20Share%20Incentive%20Plan) This note provides information on outstanding RSUs, PSUs, and share options, along with share-based compensation expense - As of August 2, 2025, **9.2 million RSUs** were outstanding (weighted average grant date fair value **$38.16**), **1.0 million PSUs** were outstanding (weighted average grant date fair value **$59.27**), and **2.8 million share options** were outstanding (weighted average exercise price **$2.20**)[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) | Share-based Compensation Expense (in thousands) | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Cost of revenue | $356 | $281 | | Research and development | $19,158 | $9,170 | | Selling, general and administrative | $15,941 | $7,189 | | **Total** | **$35,455** | **$16,640** | [10. Income Taxes](index=20&type=section&id=10.%20Income%20Taxes) This note details the provision for income taxes, effective tax rate, and factors influencing tax expense, including unrecognized tax benefits | Metric | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | % Change | | :---------------------- | :-------------------------------- | :-------------------------------- | :------- | | Provision for income taxes | $1,289 | $622 | 107.2% | | Effective tax rate | 2 % | (7)% | 9 % | - The increase in tax provision was primarily driven by **higher pre-tax income** generated in tax-paying jurisdictions. No material changes to unrecognized tax benefits are expected in the next 12 months, and the OBBBA is **not expected to have a material impact**[76](index=76&type=chunk)[77](index=77&type=chunk)[79](index=79&type=chunk) [11. Net Income (Loss) Per Share](index=21&type=section&id=11.%20Net%20Income%20(Loss)%20Per%20Share) This note explains the calculation of basic and diluted net income per share, including weighted-average shares outstanding and dilutive securities | Metric | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | | :---------- | :-------------------------------- | :-------------------------------- | | Basic EPS | $0.37 | $(0.06) | | Diluted EPS | $0.34 | $(0.06) | - Weighted-average shares outstanding used in basic calculation increased to **171,927 thousand**. Dilutive securities were included in the diluted EPS calculation for the current period but excluded in the prior period due to their anti-dilutive effect[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, condition, business model, operational results, liquidity, and critical accounting estimates [Overview](index=22&type=section&id=Overview) This section provides an overview of Credo's mission, high-speed connectivity solutions, product offerings, and key financial highlights for the period - Credo's mission is to redefine high-speed connectivity for AI-driven applications, cloud computing, and hyperscale networks, offering solutions optimized for various Ethernet and PCIe markets. Products are based on proprietary SerDes and DSP technologies, including ICs, AECs, and SerDes Chiplets, with IP solutions primarily from SerDes IP licensing[82](index=82&type=chunk)[83](index=83&type=chunk) | Metric | Three Months Ended August 2, 2025 (in millions) | Three Months Ended August 3, 2024 (in millions) | | :------------ | :-------------------------------------------- | :-------------------------------------------- | | Total Revenue | $223.1 | $59.7 | | Net Income (Loss) | $63.4 | $(9.5) | - Product sales revenue comprised **97.3% of total revenue** in Q1 FY26, up from **96.0%** in Q1 FY25. A significant portion of revenue is derived from a **limited number of customers**, a trend expected to continue[86](index=86&type=chunk)[87](index=87&type=chunk) [Our Business Model](index=23&type=section&id=Our%20Business%20Model) This section describes Credo's product-focused, fabless business model, proprietary IP, sales strategy, and revenue concentration by customer - Credo operates a product-focused, fabless business model, leveraging its proprietary IP to deliver comprehensive connectivity solutions. The company aims to increase product sales revenue over time and expects improved operating leverage as it scales. A two-pronged sales strategy targets both end-users and their suppliers[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) | Revenue by End Customer Profile (Three Months Ended August 2, 2025) | | :------------------ | :------------- | | Customer B | 35 % | | Customer C | 33 % | | Customer D | 20 % | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenue, cost of revenue, gross profit, and operating expenses | Metric (% of Total Revenue) | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Product sales revenue | 97.3 % | 96.0 % | | IP license revenue | 2.7 % | 4.0 % | | Total revenue | 100.0 % | 100.0 % | | Cost of revenue | 32.6 % | 37.6 % | | Gross margin | 67.4 % | 62.4 % | | Research and development | 23.5 % | 50.9 % | | Selling, general and administrative | 16.7 % | 35.7 % | | Total operating expenses | 40.2 % | 86.6 % | | Operating income (loss) | 27.2 % | (24.2)% | | Net income (loss) | 28.4 % | (16.0)% | [Revenue](index=24&type=section&id=Revenue) This section analyzes the significant increase in total revenue, driven primarily by product sales and IP license revenue - Total revenue surged by **273.6% to $223.1 million** for the three months ended August 2, 2025, primarily driven by a **278.6% increase in product sales revenue**, largely due to higher unit shipments of AEC products to hyperscale data center customers. IP license revenue also saw a significant increase of **151.8%** from a new customer[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) [Cost of Revenue](index=24&type=section&id=Cost%20of%20Revenue) This section discusses the increase in cost of revenue, primarily attributed to higher product shipments aligning with sales growth - Cost of revenue increased by **224.1% to $72.7 million** for the three months ended August 2, 2025, primarily due to the significant increase in AEC product shipments, aligning with the substantial growth in product sales[98](index=98&type=chunk)[99](index=99&type=chunk) [Gross Profit and Gross Margin](index=25&type=section&id=Gross%20Profit%20and%20Gross%20Margin) This section analyzes the increase in gross profit and improvement in gross margin, reflecting enhanced economies of scale - Gross profit increased by **303.3% to $150.4 million**, and gross margin improved by **5.0 percentage points to 67.4%** for the three months ended August 2, 2025, reflecting improved economies of scale in product sales[100](index=100&type=chunk) [Research and Development](index=25&type=section&id=Research%20and%20Development) This section details the increase in R&D expense, driven by share-based compensation, personnel costs, and new product development - Research and development expense increased by **72.5% to $52.4 million** for the three months ended August 2, 2025, driven by a **$10.1 million increase in share-based compensation**, a **$3.5 million increase in personnel costs**, and a **$6.8 million increase in engineering activities** for new product development[101](index=101&type=chunk) [Selling, General and Administrative](index=25&type=section&id=Selling,%20General%20and%20Administrative) This section discusses the increase in SG&A expense, primarily due to share-based compensation, personnel costs, and external consultation fees - Selling, general and administrative expense increased by **74.3% to $37.2 million** for the three months ended August 2, 2025, primarily due to an **$8.8 million increase in share-based compensation**, a **$2.9 million increase in personnel costs**, and a **$3.1 million increase in external consultation fees**[102](index=102&type=chunk) [Provision for Income Taxes](index=25&type=section&id=Provision%20for%20Income%20Taxes) This section explains the increase in income tax provision, primarily due to higher pre-tax income in tax-paying jurisdictions - The provision for income taxes increased by **107.2% to $1.3 million** for the three months ended August 2, 2025, primarily due to **higher pre-tax income** generated in tax-paying jurisdictions compared to the prior year[103](index=103&type=chunk)[104](index=104&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's cash position, working capital, sufficiency of capital resources, and cash flow activities - As of August 2, 2025, the company had **$219.6 million in cash and cash equivalents** and **$695.2 million in working capital**. Management believes existing capital resources are **sufficient for at least the next 12 months and the longer term**, with primary cash uses being operations and R&D[105](index=105&type=chunk)[106](index=106&type=chunk) | Cash Flow Activity | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended August 3, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by (used in) operating activities | $54,168 | $(7,236) | | Net cash provided by (used in) investing activities | $(67,821) | $42,482 | | Net cash provided by (used in) financing activities | $(2,970) | $1,604 | - Operating cash flow improved due to net income, offset by increases in accounts receivable and inventory. Investing cash flow was used due to purchases of short-term investments and property/equipment. Financing cash flow was used due to payments on technology license obligations, partially offset by employee share incentive plans[109](index=109&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) [Critical Accounting Estimates](index=27&type=section&id=Critical%20Accounting%20Estimates) This section notes no material changes to critical accounting estimates but highlights increased judgment due to the macroeconomic environment - There have been **no material changes** to the company's critical accounting estimates during the three months ended August 2, 2025. However, the current macroeconomic environment requires **increased judgment** and carries a **higher degree of variability and volatility** for these estimates[116](index=116&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states there were no material changes to market risk disclosures compared to the prior annual report - **No material changes** to market risk assessment as of August 2, 2025. Refer to Item 7A of the FY25 10-K for market risk discussion[117](index=117&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting - Disclosure controls and procedures were **effective at the reasonable assurance level** as of August 2, 2025. **No material changes** in internal control over financial reporting occurred during the quarter ended August 2, 2025. Control systems provide reasonable, not absolute, assurance due to inherent limitations and resource constraints[119](index=119&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk) [PART II—OTHER INFORMATION](index=29&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This part provides additional information on legal proceedings, risk factors, other disclosures, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section states the company is not involved in any material litigation and has not recorded accruals for loss contingencies - **Not a party to any litigation with a material adverse effect**. Legal fees and costs are expensed as incurred. **No accruals for loss contingencies recorded**[124](index=124&type=chunk)[67](index=67&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section states there have been no material changes to the risk factors previously disclosed in the company's annual report - **No material changes** to risk factors as of the date of this 10-Q. Refer to Part I, Item 1A of the FY25 10-K for detailed risk factors[125](index=125&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) This section discloses Rule 10b5-1 Trading Plans adopted by the Chief Financial Officer and Chief Operating Officer for ordinary share sales - CFO Daniel Fleming adopted a Rule 10b5-1 Trading Plan on June 19, 2025, for up to **105,000 ordinary shares** between Oct 8, 2025, and Sep 30, 2026. COO Yat Tung (Job) Lam adopted a Rule 10b5-1 Trading Plan on July 2, 2025, for up to **600,000 shares** held by Zhan (BVI) Co Ltd and **30,000 shares** held by Evelyn Job and April Foundation, between Oct 1, 2025 / Oct 15, 2025 and Oct 8, 2026[126](index=126&type=chunk)[127](index=127&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and various Inline XBRL documents - Includes certifications (31.1, 31.2, 32.1, 32.2) from CEO and CFO. Includes Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[128](index=128&type=chunk) [Signatures](index=31&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers, certifying the filing of the report - This section contains the required signatures of the registrant's authorized officers, specifically the President and Chief Executive Officer, and the Chief Financial Officer, certifying the filing of the report on September 4, 2025[131](index=131&type=chunk)

Core Insights - Credo Technology Group Holding Ltd (CRDO) reported first-quarter fiscal 2026 adjusted earnings per share (EPS) of 52 cents, exceeding the Zacks Consensus Estimate by 48.6% and significantly up from 4 cents in the prior-year quarter [1][8] - Revenues surged 273.6% year over year to $223.1 million, driven primarily by strong growth in the product business, and also surpassed the Zacks Consensus Estimate by 17.4% [1][8] Revenue and Growth - The product business sales increased 278.6% year over year to $217.1 million, while IP license sales rose 151.8% year over year to $6 million [3] - Each of the company's top three customers contributed over 10% to revenues, indicating a strong customer base with expectations for continued expansion [3][8] - The company anticipates sustained revenue growth due to strategic partnerships with hyperscalers and rising market demand for reliable, power-efficient connectivity solutions [2] Profitability and Expenses - Non-GAAP gross profit reached $150.7 million, compared to $37.6 million in the same period last year, with a non-GAAP gross margin expansion of 470 basis points to 67.6% [4] - Total non-GAAP operating expenses increased 54.1% year over year to $54.5 million, with research and development expenses surging 72.5% to $52.5 million [4][5] Cash Flow and Balance Sheet - As of August 2, 2025, CRDO had $479.6 million in cash and cash equivalents and short-term investments, up from $431.3 million as of May 3, 2025 [6] - The company generated cash flow from operating activities of $54.2 million in the first quarter, with free cash flow totaling $51.3 million [7] Future Outlook - For the second quarter of fiscal 2026, revenues are expected to range between $230 million and $240 million, with GAAP gross margin projected between 63.5% and 65.5% [9] - For fiscal 2026, the company anticipates mid-single-digit sequential revenue growth, resulting in approximately 120% year-over-year growth, with non-GAAP operating expenses expected to rise by less than 50% year over year [10] Stock Performance - CRDO shares have increased by 368.2% over the past year, significantly outperforming the Zacks Electronics-Semiconductors industry's growth of 46.8% [11]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% in the next 6-12 months [9]. Core Insights - The company is projected to achieve significant revenue growth, with FY26 revenue expected to reach $985 million, representing a 125.5% year-over-year increase. For FY27 and FY28, revenues are forecasted at $1.362 billion and $1.710 billion, respectively, with growth rates of 38.3% and 25.6% [5][9]. - The company has diversified its customer base, with three customers contributing over 10% of revenue in FY26Q1, and anticipates additional large cloud vendor clients entering the market [8]. - The AEC (Application-Specific Integrated Circuit) solutions are expected to benefit from the growing demand in AI and cloud services, leading to increased sales and market share [9]. Financial Summary - For FY24, the company is expected to generate revenue of $193 million, with a projected EBITDA of -$8.97 million. By FY26, revenue is expected to reach $985 million with a positive EBITDA of $286.78 million [5][12]. - The company is expected to turn profitable by FY26, with a projected net profit of $250 million, increasing to $458 million by FY28 [5][12]. - The projected earnings per share (EPS) for FY26 is $1.45, increasing to $2.65 by FY28 [5]. Performance Analysis - In FY26Q1, the company reported revenue of $223 million, a 274% increase year-over-year, and a GAAP net profit of $63.4 million, indicating a turnaround from previous losses [7]. - The company expects continued revenue growth in FY26Q2, with guidance of $230 to $240 million [7]. Market Position - The company is positioned as a leader in the AEC market, with expectations of benefiting from the increasing demand for high-speed data solutions driven by AI and cloud computing [9]. - The growth in GPU and ASIC shipments is anticipated to further enhance the demand for the company's AEC products [9].

分组1 - Credo Technology Group Holding Ltd. reported quarterly earnings of $0.52 per share, exceeding the Zacks Consensus Estimate of $0.35 per share, and showing a significant increase from $0.04 per share a year ago, resulting in an earnings surprise of +48.57% [1] - The company achieved revenues of $223.07 million for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 17.41%, compared to $59.71 million in the same quarter last year [2] - Credo Technology Group has consistently outperformed consensus EPS estimates over the last four quarters, with a total of four earnings surprises [2] 分组2 - The stock has gained approximately 84.9% since the beginning of the year, significantly outperforming the S&P 500's gain of 9.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.36 on revenues of $198.25 million, and for the current fiscal year, it is $1.48 on revenues of $811.4 million [7] - The Zacks Industry Rank for Electronics - Semiconductors is currently in the bottom 18% of over 250 Zacks industries, indicating potential challenges for the sector [8]

Financial Data and Key Metrics Changes - The company reported revenue of $223 million, an increase of 31% sequentially and 274% year over year [5][19] - Non-GAAP gross margin was 67.6%, with non-GAAP net income reaching nearly $100 million [5][19] - Non-GAAP operating income was $96.2 million, up from $62.5 million in the previous quarter, reflecting strong operational leverage [21] - Non-GAAP net margin was 44.1%, indicating significant leverage in the business [21][22] - Cash flow from operations was $54.2 million, with a slight decrease due to increases in working capital [22][23] Business Line Data and Key Metrics Changes - The product business generated $217.1 million in revenue, up 31% sequentially and 279% year over year [19] - The AEC product line continued to grow, achieving record revenue levels [19][20] - The company expects continued diversification in its customer base, with three to four customers projected to exceed 10% of revenue in upcoming quarters [20][25] Market Data and Key Metrics Changes - The demand for high-speed connectivity solutions is driven by investments in AI infrastructure by hyperscalers and data center operators [6][17] - The company anticipates significant year-over-year growth based on customer forecasts, with a focus on expanding its market presence [9][10] - The optical market is expected to double revenue in fiscal 2026, with strong momentum in optical DSP solutions [12][13] Company Strategy and Development Direction - The company is focused on delivering innovative connectivity solutions that enhance reliability, energy efficiency, and performance [8][17] - A strategic emphasis is placed on diversifying product offerings and customer engagements, particularly in the AEC and optical markets [14][17] - The company aims to leverage its unique position in the industry to capitalize on growth opportunities in AI-driven infrastructure [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential driven by evolving network architectures and the demand for innovative connectivity solutions [17][18] - The company is well-capitalized to invest in growth opportunities while maintaining a substantial cash buffer [23] - Management highlighted the importance of reliability and power efficiency as key drivers for customer adoption of AECs [11][70] Other Important Information - The company expects revenue for Q2 to be between $230 million and $240 million, with a non-GAAP gross margin range of 64% to 66% [24][25] - The company is actively pursuing additional system-level opportunities in both copper and optical connectivity solutions [14][17] Q&A Session Summary Question: Adoption of AECs by new hyperscalers - Management confirmed that recent ramps have been at 100 gig per lane, with multiple programs in flight across hyperscalers [29][30] Question: Competitive advantages of AECs - Management believes AECs offer significant advantages for both inter rack and rack to rack applications, particularly as the market transitions to higher speeds [32][34] Question: Market size and cannibalization of traditional solutions - Management indicated that the AEC market is still in early stages and is expanding, with potential to replace both copper and optical solutions [38][42] Question: Future growth opportunities - Management sees multiple growth pillars driven by AI and connectivity bottlenecks, with significant investments in R&D for optical projects [46][50] Question: Customer concentration and growth drivers - Management expects the largest customer to remain a significant growth driver, with diversification across additional hyperscalers [73][74] Question: Impact of optical supply constraints on AEC business - Management believes that supply constraints in optical will not affect the AEC business, as customers will choose AECs based on their reliability and performance [78][82] Question: Upcoming customer engagements - Management is optimistic about the potential for the fifth hyperscaler to become a 10% customer, with ongoing engagements with major GPU manufacturers [84][86]

Financial Data and Key Metrics Changes - The company reported Q1 revenue of $223 million, representing a 31% sequential increase and a 274% year-over-year increase [4][18] - Non-GAAP gross margin was 67.6%, with non-GAAP net income reaching nearly $100 million [4][20] - Non-GAAP operating income was $96.2 million, up from $62.5 million in the previous quarter, reflecting strong operational leverage [20] - Cash flow from operations was $54.2 million, with a slight decrease attributed to increases in working capital [21] Business Line Data and Key Metrics Changes - The product business generated $217.1 million in revenue, up 31% sequentially and 279% year-over-year [18] - The AEC product line achieved record revenue levels, continuing robust growth driven by a diverse customer base [18][19] - The optical business is on track to double revenue in fiscal 2026, with strong momentum in DSP solutions [11][12] Market Data and Key Metrics Changes - The company noted significant demand from hyperscalers and data center operators, particularly in AI-driven infrastructure [5][16] - The adoption of AECs is expanding, with increasing interest in both inter-rack and rack-to-rack solutions [10][71] - The market for AECs is expected to grow significantly, with the potential for copper to replace optical connections in certain applications [42][71] Company Strategy and Development Direction - The company is focused on innovation in high-speed connectivity solutions, leveraging strategic partnerships with hyperscalers [5][6] - A three-tiered innovation framework is being employed to enhance product offerings and customer engagement [5][11] - The company is prioritizing optical solutions as a key part of its product roadmap, anticipating a growing total addressable market (TAM) [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth opportunities driven by evolving network architectures and AI infrastructure demands [16][17] - The company expects to see diversification in customer base and revenue sources, with additional hyperscalers ramping up [19][23] - Future growth is anticipated to be supported by advancements in both AEC and optical technologies [46][49] Other Important Information - The company ended the quarter with cash and equivalents of $479.6 million, providing a strong capital position for future investments [21] - Inventory levels increased to $116.7 million, reflecting ongoing demand and production scaling [22] Q&A Session Summary Question: Adoption of AECs by new hyperscalers - Management confirmed that recent ramps have been at 100 gig per lane, with multiple programs in flight across customers [26][27] Question: Competitive advantages of AECs - Management believes AECs offer significant advantages for both inter-rack and rack-to-rack applications, particularly as the market shifts to higher speeds [29][30] Question: Market size and cannibalization of traditional solutions - Management indicated that the AEC market is still in early stages, with significant growth potential as it replaces passive copper cables [36][40] Question: Future opportunities beyond AECs - Management highlighted ongoing investments in optical projects and the potential for system-level opportunities in various protocols [46][49] Question: Customer concentration and growth drivers - Management noted that the largest customer will continue to be a significant growth driver, with expectations for diversification across the customer base [72][74] Question: Impact of optical supply constraints on AEC business - Management stated that supply constraints in optical will not affect the AEC business, as customers will choose AECs based on their reliability and performance [78][80] Question: Progress with the fourth hyperscaler - Management confirmed that the fourth hyperscaler is ramping quickly, with expectations for it to become a 10% customer by the end of the fiscal year [82][84]

Exhibit 99.1 Credo Technology Group Holding Ltd Reports First Quarter of Fiscal Year 2026 Financial Results San Jose, Calif. (September 3, 2025) - Credo Technology Group Holding Ltd (Credo) (Nasdaq: CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved reliability and energy efficiency for the next generation of AI-driven applications, cloud computing and hyperscale networks, today reported financial results for the first quarter of fiscal year 2026, ended August 2 ...