Credo Technology (CRDO) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In fiscal Q4, the company reported record revenue of $60.8 million, up 15% sequentially and up 89% year-over-year [23][50] - For fiscal year 2024, total revenue reached$ 193 million, a 5% increase year-over-year, with product revenue growing by 8% [49] - Non-GAAP gross margin for Q4 was 66.1%, exceeding guidance and up 391 basis points sequentially [53] - Non-GAAP operating income was a record $7.5 million in Q4, with an operating margin of 12.3%, a sequential increase of 771 basis points [55] Business Line Data and Key Metrics Changes - The AEC product line continued to lead the market, with significant customer engagement and a transition from concept to a de facto solution in many data centers [24][27] - The Optical DSP products achieved material production revenue, with significant wins at hyperscalers [28] - The SerDes licensing business performed well, with solid results driven by speed and power efficiency [35] Market Data and Key Metrics Changes - Approximately three-quarters of total revenue in Q4 was driven by AI workloads, indicating a strong market demand for high bandwidth and energy-efficient connectivity solutions [20][60] - The company expects AI revenue to double year-over-year from Q4 fiscal 2024 to Q4 fiscal 2025 [60] Company Strategy and Development Direction - The company aims to increase product margins and operating leverage as it scales, focusing on innovative, low-power, customer-centric connectivity solutions [22][38] - The strategy includes deepening customer relationships and enhancing speed-to-market for customized solutions [25][96] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for AI-related products and the company's ability to capitalize on this trend [37][60] - The company anticipates an inflection point in AEC revenue growth during the second half of fiscal 2025, driven by customer feedback and forecasts [27] Other Important Information - The company ended Q4 with cash and equivalents of$ 410 million, maintaining a strong capital position for future investments [57] - Non-GAAP operating expenses in Q4 were $32.7 million, reflecting a 7% sequential increase due to R&D and SG&A investments [54] Q&A Session Summary Question: Can you provide details on the revenue mix from your largest customers? - The company had four customers contributing over 10% of revenue in Q4, including two AEC hyperscalers and a large consumer company [64][65] Question: What is the status of the third hyperscaler customer? - The third hyperscaler is engaged in a switch rack program at 50 gig per lane, with additional programs for AI appliance racks at 100 gig per lane expected to ramp in the second half of the fiscal year [70] Question: How is AI revenue expected to grow in the next fiscal year? - AI revenue is expected to double year-over-year, with significant contributions from production scale programs across multiple customers [60][75] Question: What is the outlook for non-AI revenue? - Non-AI revenue is expected to see modest year-over-year growth, with AI programs driving the majority of growth in fiscal 2025 [74] Question: How is the company addressing competition in the AEC market? - The company has not seen significant changes in the competitive environment and continues to focus on being first to deliver and qualify products [45]