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

SAN JOSE, Calif., Feb. 27, 2024 (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 third quarter of fiscal year 2024, ended January 27, 2024.

Third Quarter of Fiscal Year 2024 Financial Highlights

  • Revenue of $53.1 million, grew by 20% quarter over quarter
  • GAAP gross margin of 61.4% and non-GAAP gross margin of 62.2%  
  • GAAP operating expenses of $38.5 million and non-GAAP operating expenses of $30.6 million
  • GAAP net income of $0.4 million and non-GAAP net income of $6.3 million
  • GAAP diluted net income per share of $0.00 and non-GAAP diluted net income per share of $0.04
  • Ending cash, cash equivalents and short-term investment balance of $409.1 million

Management Commentary

Bill Brennan, Credo’s President and Chief Executive Officer, stated, “In the third fiscal quarter ended January 27, 2024, Credo achieved revenue of $53.1 million, an increase of 20% compared to the prior quarter. This growth, and our future business expectations, continue to be driven by the accelerating opportunity for high-speed and energy-efficient connectivity solutions throughout the data infrastructure market. Credo’s SerDes technology expertise combined with our system-level, customer-centric design approach has led to our success with a diverse and growing set of industry-leading customers.”

Fourth Quarter of Fiscal 2024 Financial Outlook

  • Revenue is expected to be between $59.0 million and $62.0 million
  • GAAP gross margin is expected to be between 63.2% and 65.2%, and non-GAAP gross margin is expected to be between 64.0% and 66.0%
  • GAAP operating expenses are expected to be between $44.0 million and $46.0 million, and non-GAAP operating expenses are expected to be between $33.0 million and $35.0 million

Conference Call

Credo will conduct a conference call on Wednesday, February 27, 2024, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal year 2024, ended January 27, 2024. 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 a unique conference call code 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. Reconciliations of these non-GAAP measures to their comparable GAAP measures are 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 adjustments 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 net income (loss), 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 GAAP basic weighted-average shares outstanding when there is a GAAP net loss, and calculated using GAAP diluted weighted-average shares outstanding when there is a GAAP net income. Non-GAAP diluted net income (loss) per share is calculated using GAAP 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 net income (loss) 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 Nine Months Ended
 January 27,
 October 28,
 January 28,
 January 27,
 January 28,
Product sales$39,975  $34,247  $38,033  $104,250  $117,645 
Product engineering services 11,830   2,434   3,635   16,557   8,209 
IP license 1,253   7,354   12,602   11,381   26,252 
Total revenue 53,058   44,035   54,270   132,188   152,106 
Cost of revenue:         
Cost of product sales revenue 18,912   17,346   21,833   50,126   62,016 
Cost of product engineering services revenue 1,471   171   228   1,935   746 
Cost of IP license revenue 117   401   222   662   1,735 
Total cost of revenue 20,500   17,918   22,283   52,723   64,497 
Gross profit 32,558   26,117   31,987   79,465   87,609 
Operating expenses:         
Research and development 24,236   21,736   20,530   68,610   55,371 
Selling, general and administrative 14,233   13,256   11,936   40,032   34,674 
Impairment charges       2,407      2,407 
Total operating expenses 38,469   34,992   34,873   108,642   92,452 
Operating loss (5,911)  (8,875)  (2,886)  (29,177)  (4,843)
Other income, net 4,291   2,702   2,530   9,150   1,618 
Loss before income taxes (1,620)  (6,173)  (356)  (20,027)  (3,225)
Provision (benefit) for income taxes (2,048)  450   (3,179)  (2,135)  (2,615)
Net income (loss)$428  $(6,623) $2,823  $(17,892) $(610)
Net income (loss) per share:         
Basic$  $(0.04) $0.02  $(0.12) $ 
Diluted$  $(0.04) $0.02  $(0.12) $ 
Weighted-average shares used in computing net income (loss) per share:         
Basic 157,155   150,232   146,908   152,063   146,000 
Diluted 167,160   150,232   156,519   152,063   146,000 

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

 January 27, 2024 April 29, 2023
Current assets:   
Cash and cash equivalents$96,073  $108,583 
Short-term investments 313,061   109,228 
Accounts receivable 44,760   49,541 
Inventories 31,507   46,023 
Contract assets 17,909   9,445 
Prepaid expenses and other current assets 8,133   5,412 
Total current assets 511,443   328,232 
Property and equipment, net 44,899   40,222 
Right of use assets 13,634   14,860 
Other non-current assets 22,490   13,975 
Total assets$592,466  $397,289 
Liabilities and Shareholders' Equity
Current liabilities:   
Accounts payable$10,294  $6,067 
Accrued compensation and benefits 6,913   6,471 
Accrued expenses and other current liabilities 18,268   14,454 
Deferred revenue 4,722   4,040 
Total current liabilities 40,197   31,032 
Non-current operating lease liabilities 11,601   12,869 
Other non-current liabilities 6,701   5,753 
Total liabilities 58,499   49,654 
Shareholders' equity:   
Ordinary shares 8   7 
Additional paid in capital 659,162   454,795 
Accumulated other comprehensive loss (335)  (191)
Accumulated deficit (124,868)  (106,976)
Total shareholders' equity 533,967   347,635 
Total liabilities and shareholders' equity$592,466  $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 Nine Months Ended
 January 27,
 October 28,
 January 28,
 January 27,
 January 28,
GAAP gross profit$32,558  $26,117  $31,987  $79,465  $87,609 
Reconciling item:         
Share-based compensation 458   250   98   897   551 
Total reconciling item: 458   250   98   897   551 
Non-GAAP gross profit (A)$33,016  $26,367  $32,085  $80,362  $88,160 
GAAP gross margin 61.4%  59.3%  58.9%  60.1%  57.6%
Non-GAAP gross margin 62.2%  59.9%  59.1%  60.8%  58.0%
Total GAAP operating expenses$38,469  $34,992  $34,873  $108,642  $92,452 
Reconciling item:         
Share-based compensation (7,874)  (7,894)  (5,071)  (23,547)  (15,055)
Impairment charges       (4,151)     (4,151)
Total reconciling item: (7,874)  (7,894)  (9,222)  (23,547)  (19,206)
Total Non-GAAP operating expenses (B)$30,595  $27,098  $25,651  $85,095  $73,246 
GAAP operating loss$(5,911) $(8,875) $(2,886) $(29,177) $(4,843)
Non-GAAP operating income (loss) (A-B)$2,421  $(731) $6,434  $(4,733) $14,914 
GAAP operating loss margin(11.1)% (20.2)% (5.3)% (22.1)% (3.2)%
Non-GAAP operating income (loss) margin 4.6% (1.7)%  11.9% (3.6)%  9.8%
GAAP net income (loss)$428  $(6,623) $2,823  $(17,892) $(610)
Reconciling items:         
Share-based compensation 8,332   8,144   5,169   24,444   15,606 
Impairment charges       4,151      4,151 
Pre-tax total reconciling item 8,332   8,144   9,320   24,444   19,757 
Other income tax effects and adjustments (2,438)  (358)  (4,952)  (3,788)  (4,732)
Non-GAAP net income$6,322  $1,163  $7,191  $2,764  $14,415 
GAAP weighted-average shares - basic 157,155   150,232   146,908   152,063   146,000 
GAAP weighted-average shares - diluted 167,160   150,232   156,519   152,063   146,000 
Non-GAAP adjustment 4,218   14,664   3,837   14,567   13,088 
Non-GAAP weighted-average shares - diluted 171,378   164,896   160,356   166,630   159,088 
GAAP diluted net income (loss) per share$  $(0.04) $0.02  $(0.12) $ 
Non-GAAP diluted net income per share$0.04  $0.01  $0.04  $0.02  $0.09 

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 April 27, 2024
 Low High
GAAP gross margin 63.2%  65.2%
Reconciling item:   
Share-based compensation 0.8%  0.8%
Total reconciling item: 0.8%  0.8%
Non-GAAP gross margin 64.0%  66.0%
Total GAAP operating expenses$44.0  $46.0 
Reconciling item:   
Share-based compensation 11.0   11.0 
Total reconciling item: 11.0   11.0 
Total Non-GAAP operating expenses$33.0  $35.0 


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