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Credo Technology Group Holding Ltd Reports First Quarter of Fiscal Year 2024 Financial Results

SAN JOSE, Calif., Aug. 24, 2023 (GLOBE NEWSWIRE) -- Credo Technology Group Holding Ltd (NASDAQ: CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved power and cost efficiency as data rates and corresponding bandwidth requirements increase throughout the data infrastructure market, today reported financial results for the first quarter of fiscal year 2024, ended July 29, 2023.

First Quarter of Fiscal Year 2024 Financial Highlights

  • Revenue of $35.1 million, grew by 9% quarter over quarter
  • GAAP gross margin of 59.2% and non-GAAP gross margin of 59.8%
  • GAAP operating expenses of $35.2 million and non-GAAP operating expenses of $27.4 million
  • GAAP net loss of $11.7 million and non-GAAP net loss of $4.7 million
  • GAAP diluted net loss per share of $0.08 and non-GAAP diluted net loss per share of $0.03
  • Ending cash and short-term investment balance of $237.6 million

Management Commentary

Bill Brennan, Credo’s President and Chief Executive Officer, stated, “For the fiscal quarter ended July 29, 2023, Credo reported revenue of $35.1 million, an increase of 9% compared to the prior quarter. Credo’s position as a market leader for high speed connectivity solutions has been years in the making, and the technology acceleration towards high bandwidth solutions with more networking density plays into our strengths. As a result, we continue to expect sequential growth throughout fiscal 2024. We believe our growth will be led by multiple customers across our range of connectivity solutions, which would result in a more diversified revenue base as we exit fiscal 2024.”

Second Quarter of Fiscal 2024 Financial Outlook

  • Revenue is expected to be between $42.0 million and $44.0 million
  • GAAP gross margin is expected to be between 57.8% and 59.8%, and non-GAAP gross margin is expected to be between 58.0% and 60.0%
  • GAAP operating expenses are expected to be between $35.0 million and $37.0 million, and non-GAAP operating expenses are expected to be between $27.0 million and $29.0 million

Conference Call

Credo will conduct a conference call on Thursday, August 24, 2023, at 1:15 p.m. Pacific Time to discuss its financial results for the first quarter of fiscal year 2024, ended July 29, 2023. Interested parties may join the conference call by registering online at After registering, a confirmation will be sent through email, including dial-in details and unique conference call codes for entry. It is recommended that participants register and dial in for the call at least 10 minutes before the start of the call. A live webcast of the conference call will be available on Credo’s Investor Relations website at A replay of the webcast will be available via the web at

Discussion of Non-GAAP Financial Measures

This press release contains references to the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating income (loss) margin, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share. Reconciliation of these non-GAAP measures to their comparable GAAP measures is included below. This non-GAAP information should not be construed as an alternative to the reported results determined in accordance with GAAP. The non-GAAP financial measures that Credo presents may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.

Non-GAAP financial measures exclude the effect of share-based compensation expenses, asset impairment and related charges (if applicable), and the related tax effect adjustment to the provision for income taxes.

Credo uses a full-year non-GAAP tax rate to compute the non-GAAP tax provision. This full-year non-GAAP tax rate is based on Credo’s annual GAAP income, adjusted to exclude non-GAAP items, as well as the effects of significant non-recurring and period-specific tax items which vary in size and frequency. Credo’s non-GAAP tax rate is determined on an annual basis and may be adjusted during the year to take into account events that may materially affect the non-GAAP tax rate, such as tax law changes, significant changes in Credo’s geographic mix of revenue and expenses or changes to Credo’s corporate structure.

GAAP diluted net income (loss) per share is calculated using basic weighted average shares outstanding when there is a GAAP net loss, and calculated using diluted weighted average shares outstanding when there is a GAAP net income. Non-GAAP diluted net income (loss) per share is calculated using basic weighted average shares outstanding when there is a non-GAAP net loss, and calculated using non-GAAP diluted weighted average shares outstanding when there is a non-GAAP net income. Non-GAAP adjustment for the number of shares used in the diluted per share calculations excludes the impact of share-based compensation expenses expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.

Credo believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Credo’s financial condition and results of operations. While Credo uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Credo does not consider these measures to be a substitute for, or superior to, financial measures calculated in accordance with GAAP. Consistent with this approach, Credo believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance.

Externally, management believes that investors may find Credo’s non-GAAP financial measures useful in their assessment of Credo's operating performance and the valuation of Credo. Internally, Credo's non-GAAP financial measures are used in the following areas:

  • Management’s evaluation of Credo’s operating performance;
  • Management’s establishment of internal operating budgets; and
  • Management’s performance comparisons with internal forecasts and targeted business models.

Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Credo’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Credo’s results as reported under GAAP. The exclusion of the above items from our GAAP financial metrics does not necessarily mean that these costs are unusual or infrequent.

Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to, any statements regarding: launches of new or expansion of existing products or services; technology developments and innovation; our plans, strategies or objectives with respect to future operations; future financial results; expectations regarding the markets and industries in which Credo conducts business; and assumptions underlying any of the foregoing. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “seeks,” “estimates,” “can,” “may,” “will,” “would,” “outlook,” “forecast,” “targets” and similar expressions, or their negatives, may identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties that may cause actual events or results to differ materially from those described in this press release. Readers are encouraged to review risk factors and all other disclosures appearing in Credo’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on June 23, 2023, as well as Credo’s other filings with the SEC, for further information on risks and uncertainties that could affect Credo’s business, financial condition and results of operation. Copies of these filings are available from the SEC, Credo’s website or Credo’s investor relations department. Forward-looking statements speak only as of the date they are made. Credo assumes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.

About Credo

Our mission is to deliver high-speed solutions to break bandwidth barriers on every wired connection in the data infrastructure market. Credo is an innovator in providing secure, high-speed connectivity solutions that deliver improved power and cost efficiency as data rates and corresponding bandwidth requirements increase exponentially throughout the data infrastructure market. Our innovations ease system bandwidth bottlenecks while simultaneously improving on power, security and reliability. Our connectivity solutions are optimized for optical and electrical Ethernet applications, including the 100G (or Gigabits per second), 200G, 400G, 800G and emerging 1.6T (or Terabits per second) port markets. Our products are based on our proprietary Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies. Our product families include integrated circuits (ICs), Active Electrical Cables (AECs) and SerDes Chiplets. Our intellectual property (IP) solutions consist primarily of SerDes IP licensing.

Investor Relations Contact:

Dan O’Neil

Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)

 Three Months Ended
 July 29, 2023 April 29, 2023 July 30, 2022
Product sales$30,028  $23,830  $35,263 
Product engineering services 2,293   2,571   824 
IP license 2,774   5,687   10,380 
Total revenue 35,095   32,088   46,467 
Cost of revenue:     
Cost of product sales revenue 13,868   13,127   17,525 
Cost of product engineering services revenue 293   226   100 
Cost of IP license revenue 144   150   1,179 
Total cost of revenue 14,305   13,503   18,804 
Gross profit 20,790   18,585   27,663 
Operating expenses:     
Research and development 22,638   21,403   16,683 
Selling, general and administrative 12,543   13,574   11,198 
Total operating expenses 35,181   34,977   27,881 
Operating loss (14,391)  (16,392)  (218)
Other income (expense), net 2,157   1,703   (220)
Loss before income taxes (12,234)  (14,689)  (438)
Provision (benefit) for income taxes (537)  1,248   (365)
Net loss$(11,697) $(15,937) $(73)
Net loss per share:     
Basic and diluted$(0.08) $(0.11) $ 
Weighted-average shares used in computing net loss per share:     
Basic and diluted 149,277   148,212   145,077 

Credo Technology Group Holding Ltd
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)

 July 29, 2023 April 29, 2023
Current Assets:   
Cash and cash equivalents$127,045  $108,583 
Short-term investments 110,526   109,228 
Accounts receivable 27,967   49,541 
Inventories 40,793   46,023 
Contract assets 8,048   9,445 
Prepaid expenses and other current assets 6,271   5,412 
Total current assets 320,650   328,232 
Property and equipment, net 44,473   40,222 
Right of use assets 14,157   14,860 
Other non-current assets 16,425   13,975 
Total assets$395,705  $397,289 
Liabilities and Shareholders' Equity
Current Liabilities:   
Accounts payable$7,921  $6,067 
Accrued compensation and benefits 4,933   6,471 
Accrued expenses and other current liabilities 15,077   14,454 
Deferred revenue 3,278   4,040 
Total current liabilities 31,209   31,032 
Non-current operating lease liabilities 12,200   12,869 
Other non-current liabilities 4,856   5,753 
Total liabilities 48,265   49,654 
Shareholders' equity:   
Ordinary shares 7   7 
Additional paid in capital 466,459   454,795 
Accumulated other comprehensive loss (353)  (191)
Accumulated deficit (118,673)  (106,976)
Total shareholders' equity 347,440   347,635 
Total liabilities and shareholders' equity$395,705  $397,289 

Credo Technology Group Holding Ltd
Reconciliations from GAAP to Non-GAAP (Unaudited)
(In thousands, except percentages and per share amounts)

 Three Months Ended
 July 29, 2023 April 29, 2023 July 30, 2022
GAAP gross profit$20,790  $18,585  $27,663 
Reconciling item:     
Share-based compensation 189   83   304 
Total reconciling item: 189   83   304 
Non-GAAP gross profit (A)$20,979  $18,668  $27,967 
GAAP gross margin 59.2%  57.9%  59.5%
Non-GAAP gross margin 59.8%  58.2%  60.2%
Total GAAP operating expenses$35,181  $34,977  $27,881 
Reconciling item:     
Share-based compensation (7,779)  (7,827)  (5,242)
Total reconciling item: (7,779)  (7,827)  (5,242)
Total Non-GAAP operating expenses (B)$27,402  $27,150  $22,639 
GAAP operating loss$(14,391) $(16,392) $(218)
Non-GAAP operating income (loss) (A-B)$(6,423) $(8,482) $5,328 
GAAP operating loss margin (41.0)%  (51.1)%  (0.5)%
Non-GAAP operating income (loss) margin (18.3)%  (26.4)%  11.5%
GAAP net loss$(11,697) $(15,937) $(73)
Reconciling items:     
Share-based compensation 7,968   7,910   5,546 
Pre-tax total reconciling item 7,968   7,910   5,546 
Other income tax effects and adjustments (992)  2,299   (424)
Non-GAAP net income (loss)$(4,721) $(5,728) $5,049 
GAAP weighted average shares - basic 149,277   148,212   145,077 
GAAP weighted average shares - diluted 149,277   148,212   145,077 
Non-GAAP adjustment       13,256 
Non-GAAP weighted average shares - diluted 149,277   148,212   158,333 
GAAP diluted net income (loss) per share$(0.08) $(0.11) $ 
Non-GAAP diluted net income (loss) per share$(0.03) $(0.04) $0.03 

Credo Technology Group Holding Ltd
Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates
(In millions, except percentages)

 Outlook for Three Months
Ended October 28, 2023
 Low High
GAAP gross margin 57.8%  59.8%
Reconciling item:   
Share-based compensation 0.2%  0.2%
Total reconciling item: 0.2%  0.2%
Non-GAAP gross margin 58.0%  60.0%
Total GAAP operating expenses$35.0  $37.0 
Reconciling item:   
Share-based compensation 8.0   8.0 
Total reconciling item: 8.0   8.0 
Total Non-GAAP operating expenses$27.0  $29.0 

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