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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 1, 2025
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File Number: 001-41249
Credo Technology Group Holding Ltd
(Exact name of registrant as specified in its charter)
Cayman IslandsN/A
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
c/o Maples Corporate Services, Limited,
PO Box 309, Ugland House
Grand Cayman, KY1-1104, Cayman Islands
N/A
(Address of principal executive offices)(Zip Code)
(408) 664-9329
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ordinary shares, par value $0.00005 per shareCRDOThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filer
Non-accelerated filer  Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ☐    No 

The registrant had 169,801,216 ordinary shares outstanding as of February 25, 2025.



Table of Contents
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 5.
Item 6.
2


Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements relating to our expectations, projections, beliefs, and prospects, which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “anticipate,” “expect,” “intend,” “plan,” “goal,” “projects,” “believes,” “seeks,” “estimates,” "forecast," "target," “predict,” “future,” “may,” “can,” “will,” “would” or the negative of these terms or similar expressions. You should read these statements carefully because they may relate to future expectations around growth, strategy and anticipated trends in our business, contain projections of future results of operations or financial condition or state other “forward-looking” information. These statements are only predictions based on our current expectations, estimates, assumptions, and projections about future events and are applicable only as of the dates of such statements. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024 and our Quarterly Reports on Form 10-Q and other reports we file with the U.S. Securities and Exchange Commission (SEC). Factors that could cause actual results to differ materially from those predicted include, but are not limited to:
our expectations regarding our ability to address market and customer demands and to timely develop new or enhanced solutions to meet those demands;
anticipated trends, challenges and growth in our business and the markets in which we operate, including pricing expectations;
our expectations regarding our revenue, revenue mix, average selling prices, gross margin, and expenses;
our expectations regarding dependence on a limited number of customers and end customers;
our customer relationships and our ability to retain and expand our customer relationships and to achieve design wins;
our expectations regarding the success, cost, and timing of new products;
the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets;
our expectations regarding competition in our existing and future markets;
the impact a pandemic, epidemic, or other outbreak of disease may in the future have on our business, results of operations and financial condition, as well as the businesses of our suppliers and customers;
our expectations regarding regulatory developments in the United States and foreign countries;
our expectations regarding the performance of, and our relationships with, our third-party suppliers and manufacturers;
our expectations regarding our ability to attract and retain key personnel; and
the accuracy of our estimates regarding capital requirements and needs for additional financing.
The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results,
3


levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or will occur.
4


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Credo Technology Group Holding Ltd
Condensed Consolidated Balance Sheets
(unaudited, in thousands, except per share amounts)
February 1, 2025April 27, 2024
Assets
Current assets:
Cash and cash equivalents$299,208 $66,942 
Short-term investments80,000 343,061 
Accounts receivable157,133 59,662 
Inventories53,231 25,907 
Contract assets13,585 21,562 
Prepaid expenses and other current assets15,993 13,131 
Total current assets 619,150 530,265 
Property and equipment, net67,805 43,665 
Right of use assets15,346 13,077 
Other non-current assets17,615 14,925 
Total assets $719,916 $601,932 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$36,805 $13,417 
Accrued compensation and benefits9,236 9,000 
Accrued expenses and other current liabilities33,301 18,301 
Deferred revenue1,391 3,902 
Total current liabilities 80,733 44,620 
Non-current operating lease liabilities12,956 11,133 
Other non-current liabilities8,001 5,981 
Total liabilities 101,690 61,734 
Commitments and contingencies (Note 7)
Shareholders' equity:
Ordinary shares, $0.00005 par value; 1,000,000 shares authorized; 169,699 and 164,305 shares issued and outstanding at February 1, 2025 and April 27, 2024, respectively
88
Additional paid in capital738,371 676,054 
Accumulated other comprehensive loss(403)(519)
Accumulated deficit(119,750)(135,345)
Total shareholders' equity618,226 540,198 
Total liabilities and shareholders' equity$719,916 $601,932 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Revenue:
Product sales$129,371 $39,975 $247,653 $104,250 
Product engineering services2,667 11,830 10,785 16,557 
IP license2,964 1,253 8,312 11,381 
Total revenue135,002 53,058 266,750 132,188 
Cost of revenue:
Cost of product sales revenue48,835 18,912 96,602 50,126 
Cost of product engineering services revenue233 1,471 1,256 1,935 
Cost of IP license revenue8 117 171 662 
Total cost of revenue49,076 20,500 98,029 52,723 
Gross profit85,926 32,558 168,721 79,465 
Operating expenses:
Research and development36,261 24,236 98,412 68,610 
Selling, general and administrative23,471 14,233 66,973 40,032 
Total operating expenses59,732 38,469 165,385 108,642 
Operating income (loss)
26,194 (5,911)3,336 (29,177)
Other income, net
3,918 4,291 13,925 9,150 
Income (loss) before income taxes
30,112 (1,620)17,261 (20,027)
Provision (benefit) for income taxes
752 (2,048)1,666 (2,135)
Net income (loss)
$29,360 $428 $15,595 $(17,892)
Net income (loss) per share:
Basic$0.17 $ $0.09 $(0.12)
Diluted$0.16 $ $0.09 $(0.12)
Weighted-average shares:
Basic168,167 157,155 166,562 152,063 
Diluted182,464 167,160 180,495 152,063 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited, in thousands)
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Net income (loss)
$29,360 $428 $15,595 $(17,892)
Other comprehensive gain (loss):
Foreign currency translation gain (loss)
(93)241 116 (144)
Total comprehensive income (loss)
$29,267 $669 $15,711 $(18,036)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7


Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Shareholders’ Equity
(unaudited, in thousands)
Ordinary SharesAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Accumulated Deficit
Total Shareholders’ Equity
Number of SharesAmount
Balances at April 27, 2024164,305$8 676,054 $(519)$(135,345)$540,198 
Ordinary shares issued under equity incentive plans
1,697— 3,513 — — 3,513 
Tax withheld related to RSU settlement(37)— (1,071)— — (1,071)
Share-based compensation
— 16,640 — — 16,640 
Warrant contra revenue— 3,218 — — 3,218 
Total comprehensive loss— — 144 (9,540)(9,396)
Balances at August 3, 2024165,965$8 $698,354 $(375)$(144,885)553,102
Ordinary shares issued under equity incentive plans
1,228— 871 — — 871 
Tax withheld related to RSU settlement(36)— (1,179)— — (1,179)
Share-based compensation
— 16,663 — — 16,663 
Warrant contra revenue— 2,610 — — 2,610 
Total comprehensive loss— — 65 (4,225)(4,160)
Balances at November 2, 2024167,157$8 717,319$(310)$(149,110)567,907
Ordinary shares issued under equity incentive plans
2,618— 2,413 — — 2,413 
Tax withheld related to RSU settlement(76)— (4,909)— — (4,909)
Share-based compensation
— 16,190 — — 16,190 
Warrant contra revenue— 7,358 — — 7,358 
Total comprehensive income
— — (93)29,360 29,267 
Balances at February 1, 2025169,699$8 $738,371 $(403)$(119,750)$618,226 
8


Balances at April 29, 2023148,651 7 454,795 (191)(106,976)347,635 
Ordinary shares issued under equity incentive plans
1,214— 3,440 — — 3,440 
Tax withheld related to RSU settlement(11)— (180)— — (180)
Share-based compensation
— 7,968 — — 7,968 
Warrant contra revenue— 436 — — 436 
Total comprehensive loss— — (162)(11,697)(11,859)
Balances at July 29, 2023149,854$7 $466,459 $(353)$(118,673)$347,440 
Ordinary shares issued under equity incentive plans
7031 637 — — 638 
Tax withheld related to RSU settlement(11)— (182)— — (182)
Share-based compensation
— 8,144 — — 8,144 
Warrant contra revenue— 354 — — 354 
Total comprehensive loss— — (223)(6,623)(6,846)
Balances at October 28, 2023150,546$8 $475,412 $(576)$(125,296)$349,548 
Issuance of ordinary share in connection with public offering, net of underwriter discounts and offering costs10,440— 173,415 — — 173,415 
Ordinary shares issued under employee share plan2,138— 1,955 — — 1,955 
Tax withheld related to RSU settlement(56)— (985)— — (985)
Share-based compensation— 8,332 — — 8,332 
Warrant contra revenue— 1,033 — — 1,033 
Total comprehensive income— — 241 428 669 
Balances at January 27, 2024163,068$8 659,162$(335)$(124,868)$533,967 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9


Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Nine Months Ended
February 1, 2025January 27, 2024
Cash flows from operating activities:
Net income (loss)
$15,595 $(17,892)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization14,281 10,085 
Share-based compensation49,493 24,444 
Warrant contra revenue13,186 1,823 
Write-downs for excess and obsolete inventory
4,353 667 
Changes in operating assets and liabilities:
Accounts receivable(97,471)4,781 
Inventories(31,677)13,849 
Contract assets7,977 (8,464)
Prepaid and other current assets(2,862)(2,721)
Other non-current assets1,628 (7,398)
Accounts payable22,343 5,281 
Accrued expenses, compensation and other liabilities13,025 3,540 
Deferred revenue(2,610)585 
Net cash provided by operating activities
7,261 28,580 
Cash flows from investing activities:
Purchases of property and equipment(32,406)(12,457)
Maturities of short-term investments376,777 169,754 
Purchases of short-term investments(113,716)(373,587)
Net cash provided by (used in) investing activities
230,655 (216,290)
Cash flows from financing activities:
Proceeds from issuance of ordinary share in connection with public offering, net of underwriter discounts and offering costs 173,636 
Payments on technology license obligations(5,394)(3,052)
Proceeds from employee share incentive plans
6,797 6,033 
Tax withheld related to RSU settlement
(7,159)(1,348)
Net cash provided by (used in) financing activities
(5,756)175,269 
Effect of exchange rate changes on cash106 (69)
Net increase (decrease) in cash and cash equivalents
232,266 (12,510)
Cash and cash equivalents at beginning of the period66,942 108,583 
Cash and cash equivalents at end of the period$299,208 $96,073 
Supplemental cash flow information:
Purchases of property and equipment included in accounts payable, accrued expenses and other liabilities
$8,841 $8,767 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
1. Description of Business and Basis of Presentation
Credo Technology Group Holding Ltd was formed as an exempted company under the laws of the Cayman Islands in September 2014. Credo Technology Group Holding Ltd directly owns Credo Technology Group Ltd., which owns, directly and indirectly, all of the shares of its subsidiaries in mainland China, Hong Kong, and the United States (U.S.). References to the “Company” in these notes refer to Credo Technology Group Holding Ltd and its subsidiaries on a consolidated basis, unless otherwise specified.
The Company’s mission is to redefine high-speed connectivity by delivering breakthrough solutions that enable the next generation of AI-driven applications. The Company is committed to enabling faster, more reliable, more energy-efficient, and scalable solutions that support the ever-expanding demands of AI, cloud computing, and hyperscale networks. The Company’s connectivity solutions are optimized for optical and electrical Ethernet applications, including the 100G, 200G, 400G, 800G and emerging 1.6T markets. The Company’s products are based on its Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies. The Company’s product families include integrated circuits (ICs), Active Electrical Cables (AECs) and SerDes Chiplets. The Company’s intellectual property (IP) solutions consist primarily of SerDes IP licensing.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States (US GAAP) applicable to interim periods, under the rules and regulations of the U.S. Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as permitted by the SEC. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s fiscal year 2024 audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 27, 2024. The unaudited condensed consolidated financial statements include all adjustments, including normal recurring adjustments and other adjustments, that are considered necessary for fair presentation of the Company’s financial position and results of operations. All inter-company accounts and transactions have been eliminated. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for the entire year.
The Company’s fiscal year is a 52- or 53-week period ending on the Saturday closest to April 30. Its fiscal year ending May 3, 2025 (fiscal year 2025) is a 53-week fiscal year. The first quarter of fiscal year 2025 ended on August 3, 2024, the second quarter ended on November 2, 2024, and the third quarter ended on February 1, 2025.
2. Significant Accounting Policies
The Company believes that other than the accounting policies as described below, there have been no significant changes to the items disclosed in Note 2, “Significant Accounting Policies,” included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 27, 2024.
Use of Estimates
The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes.
The Company bases its estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future, given the available information. Estimates are used for, but not limited to, write-down for excess and obsolete inventories, the standalone selling price for each distinct performance obligation included in customer contracts with multiple performance obligations, variable consideration from revenue contracts, the realization of tax assets and estimates of tax reserves, and impairment of long-lived assets. Actual results may differ from those estimates and such differences may be material to the financial statements. In the current macroeconomic environment, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods.
Reclassifications
Certain prior period balances were reclassified to conform to the current period’s presentation. None of these reclassifications had an impact on reported net income or cash flows for any of the periods presented.
11

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. This standard is effective for fiscal years beginning after December 15, 2024, and may be applied on a retrospective or prospective basis. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures, which requires disclosure of, in interim and annual reporting periods, additional information about certain expenses in the financial statements. This standard is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027 and may be applied on a retrospective or prospective basis. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
3. Concentrations
Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. Cash is placed in major financial institutions around the world. The Company’s cash deposits exceed insured limits. Short-term investments are subject to counterparty risk up to the amount presented on the balance sheet.
Historically, a relatively small number of customers have accounted for a significant portion of the Company’s revenue. The particular customers which account for revenue concentration have varied from period-to-period as a result of the addition of new contracts, completion of existing contracts, and the volumes and prices at which the customers have recently bought the Company’s products. These variations are expected to continue in the foreseeable future.
The following tables summarize the accounts receivable and revenue as a percentage of total accounts receivable and total revenue, respectively, for the Company’s most significant customers. In the tables below, customers are defined as the contracting entities who place purchase orders or enter into revenue contracts with the Company:
Accounts ReceivableFebruary 1, 2025April 27, 2024
Customer A88 %53 %
Customer B*23 %
Three Months EndedNine Months Ended
RevenueFebruary 1, 2025January 27, 2024February 1, 2025January 27, 2024
Customer A84 %41 %66 %37 %
Customer B*23 %*15 %
Customer C*11 %**
Customer D***12 %
* Less than 10% of total accounts receivable or total revenue.

12

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
4. Revenue Recognition
The following table summarizes revenue disaggregated by primary geographical market based on destination of shipment and location of contracting entity, which may differ from the customer’s principal offices (in thousands):
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Hong Kong$93,337 $28,393 $152,695 $48,885 
Mainland China25,263 798 48,535 22,415 
United States7,626 15,436 40,281 29,688 
Taiwan1,080 3,482 2,255 13,730 
Rest of World7,696 4,949 22,984 17,470 
$135,002 $53,058 $266,750 $132,188 
Contract Balances
The contract assets are primarily related to the Company’s fixed fee IP licensing arrangements and rights to consideration for performance obligations delivered but not billed as of February 1, 2025 and April 27, 2024.
During the nine months ended February 1, 2025, the Company recognized $3.7 million of revenue that was included in the deferred revenue balance as of April 27, 2024.
During the nine months ended February 1, 2025, the decrease in contract assets of $8.7 million was primarily driven by billings for certain milestones that had been met.
Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. The contracted but unsatisfied performance obligation was approximately $1.1 million and the satisfied but unrecognized performance obligation was approximately $1.1 million as of February 1, 2025 which the Company expects to recognize over the next 12 months. The Company applied a performance constraint on the satisfied but unrecognized performance obligation due to uncertainty around the collectability of milestone payments.
Customer Warrant
In fiscal year 2022, the Company issued a warrant to Amazon.com NV Investment Holdings LLC (Holder) to purchase an aggregate of up to 4,080 thousand of the Company’s ordinary shares at an exercise price of $10.74 per share (the Customer Warrant). The exercise period of the Customer Warrant is through the seventh anniversary of the issue date. Upon issuance of the Customer Warrant, 40 thousand of the shares issuable upon exercise of the Customer Warrant vested immediately and the remainder of the shares issuable will vest in tranches over the contract term based on the amount of global payments by Holder and its affiliates to us, up to $201 million in aggregate payments. A total of 4,080 thousand and 1,080 thousand of the shares issuable upon exercise of the Customer Warrant were deemed vested as of February 1, 2025 and April 27, 2024, respectively.
Using a grant date fair value of $4.65, the Company recognized $7.4 million and $13.2 million for the three and nine months ended February 1, 2025, respectively, and $1.0 million and $1.8 million for the three and nine months ended January 27, 2024, respectively, as contra revenue within product sales revenue on the condensed consolidated statements of operations.
5. Fair Value Measurements
Fair value is an exit price representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 - Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.
13

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
Level 2 - Other inputs that are directly or indirectly observable in the marketplace.
Level 3 - Unobservable inputs that are supported by little or no market activity.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The Company measures the fair value of money market funds using Level 1 inputs. The Company’s certificates of deposit are classified as held-to-maturity securities as the Company intends to hold until their maturity dates. The certificates of deposit are valued using Level 2 inputs. Pricing sources may include industry standard data providers, security master files from large financial institutions, and other third-party sources used to determine a daily market value.
The following tables present the fair value of the financial instruments measured on a recurring basis as of February 1, 2025 and April 27, 2024 (in thousands).
February 1, 2025
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds
$228,332 $ $ $228,332 
Certificates of deposit
 65,428  65,428 
Short-term investments:
Certificates of deposit
 80,000  80,000 
Total cash equivalents and short-term investments$228,332 $145,428 $ $373,760 
April 27, 2024
Level 1Level 2Level 3Total
Cash equivalents:
Money market funds$57,175 $ $ $57,175 
Short-term investments:
Certificates of deposit
 343,061  343,061 
Total cash equivalents and short-term investments$57,175 $343,061 $ $400,236 
The carrying amount of the Company’s financial instruments, including cash equivalents, short-term investments, accounts receivable and accounts payable, approximate their respective fair values because of their short maturities. As of February 1, 2025 and April 27, 2024, there were no unrealized losses or gains associated with the Company’s financial instruments.
Interest income recognized for the three and nine months ended February 1, 2025 was $4.2 million and $14.7 million, respectively. Interest income recognized for the three and nine months ended January 27, 2024 was $4.4 million and $9.9 million, respectively.
6. Supplemental Financial Information
Inventories
Inventories consisted of the following (in thousands):
February 1, 2025April 27, 2024
Raw materials$13,228 $9,415 
Work in process17,306 7,470 
Finished goods22,697 9,022 

$53,231 $25,907 
14

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
Property and Equipment, Net
Property and equipment consisted of the following (in thousands):
February 1, 2025April 27, 2024
Production equipment$34,474 $27,608 
Computer equipment and software28,250 18,271 
Laboratory equipment24,028 19,840 
Leasehold improvements2,880 2,525 
Others616 534 
Construction in progress20,420 3,616 
110,668 72,394 
Less: Accumulated depreciation and amortization(42,863)(28,729)
$67,805 $43,665 
Depreciation and amortization expense was $5.1 million and $14.3 million for the three and nine months ended February 1, 2025, respectively and $3.4 million and $10.1 million for the three and nine months ended January 27, 2024, respectively. Computer equipment and software primarily includes technology licenses for computer-aided design tools relating to the Company’s R&D design of future products and intellectual properties. Production equipment and construction in progress primarily include mask set costs capitalized relating to the Company’s products already introduced or to be introduced.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
February 1, 2025April 27, 2024
Accrued expenses$23,652 $9,610 
Current payables relating to purchases of property and equipment6,470 5,950 
Current portion of operating lease liabilities3,179 2,741 

$33,301 $18,301 
Other Non-current Liabilities
Other non-current liabilities consisted of the following (in thousands):
February 1, 2025April 27, 2024
Non-current payables relating to purchases of property and equipment$7,064 $4,950 
Other non-current liabilities937 1,031 

$8,001 $5,981 
7. Commitments and Contingencies
Non-cancelable Purchase Obligations
Total future non-cancelable purchase obligations as of February 1, 2025 are as follows (in thousands):
15

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
Fiscal Year Purchase Commitments to Manufacturing Vendors Technology License Fees Total
Remainder of 2025$36,509 $4,080 40,589 
20265,427 9,392 14,819 
20276,177 8,035 14,212 
20284,682 350 5,032 
2029 350 350 
Total unconditional purchase commitments$52,795 $22,207 $75,002 
Technology license fees include the liabilities under agreements for technology licenses between the Company and various vendors.
Under the Company’s manufacturing relationships with its foundry partners, cancellation of outstanding purchase orders is allowed but requires payment of all costs and expenses incurred through the date of cancellation.
As of February 1, 2025, the total value of non-cancelable purchase orders payable within the next one year that were committed with the Company’s third-party subcontractors was approximately $35.2 million. Such purchase commitments are included in the preceding table.
The Company has a manufacturing supply capacity reservation agreement with an assembly subcontractor as of February 1, 2025. Under this arrangement, the Company has paid refundable deposits to the supplier in exchange for reserved manufacturing production capacity over the term of the agreement, which approximates five years. In addition, the Company committed to certain purchase levels that were in line with the capacity reserved. If the Company does not meet the purchase level commitment, the agreement requires the Company to pay a fee equal to the difference between the actual purchase and the purchase commitment, up to the value of refundable deposits made. In the fiscal quarter ended November 2, 2024, the agreement was amended to change the purchase commitment measurement from a dollar amount to a quantity amount throughout the remaining periods. The Company estimated a dollar cost per unit using actual billings from the assembly subcontractor for the most recent calendar quarter and calculating a weighted-average cost per unit. Based on this calculation, the Company currently estimates that it has made purchase level commitments of at least $17.6 million for the remainder of fiscal year 2025 through fiscal year 2028 under the capacity reservation agreement. Such purchase commitments are included in the preceding table. In addition, the Company had refundable deposits of $8.4 million of which $1.8 million was recorded in prepaid expenses and other current assets and $6.6 million was recorded in other non-current assets on the unaudited condensed consolidated balance sheet.
Warranty Obligations
The Company’s products generally carry a standard one-year warranty. The Company’s warranty expense was not material in the periods presented.
Indemnifications
In the ordinary course of business, the Company has entered into agreements that contain certain indemnification obligations of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters, including, but not limited to, certain losses arising out of the Company’s breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. These indemnification obligations may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss limitations. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification obligations. Accordingly, the Company had no liabilities recorded for these agreements as of February 1, 2025 and April 27, 2024.
Legal Proceedings
From time to time, the Company may be a party to various litigation claims in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with legal counsel, the need to record a liability for litigation and contingencies. Accrual estimates are recorded when and if it is determined that such a liability for litigation and contingencies are both probable and reasonably estimable. As of the date of issuance of these unaudited condensed consolidated financial statements, the
16

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
Company was not subject to any material litigation. No accruals for loss contingencies or recognition of actual losses have been recorded in any of the periods presented.

8. Leases
The Company leases office space, in the United States and internationally, under operating leases. The Company’s leases have remaining lease terms generally between one year and six years. Operating leases are included in right of use assets, accrued expenses and other current liabilities, and non-current operating lease liabilities on the Company’s unaudited condensed consolidated balance sheets. The Company does not have any finance leases.
Lease expense and supplemental cash flow information are as follows (in thousands):
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Operating lease expenses$1,047 $983 $3,084 $2,814 
Cash paid for amounts included in the measurement of operating lease liabilities$946 $847 $2,862 $2,541 
Right-of-use assets obtained in exchange for lease obligation
$947 $739 $4,478 $739 
The aggregate future lease payments for operating leases as of February 1, 2025 are as follows (in thousands):
Fiscal Year
Operating Leases
2025$1,159 
20263,834 
20273,289 
20283,293 
20293,394 
Thereafter4,009 
Total lease payments18,978 
Less: Interest 2,842 
Present value of lease liabilities$16,136 
As of February 1, 2025, the weighted-average remaining lease term for the Company's operating leases was 5.3 years and the weighted-average discount rate used to determine the present value of the Company's operating leases was 6.3%.

9. Share Incentive Plan
Restricted Stock Unit (RSU) Awards
A summary of information related to RSU activity during the nine months ended February 1, 2025 is as follows:
RSUs Outstanding
Number of Shares (in thousands)
Weighted-Average Grant Date Fair ValueWeighted-Average Remaining Contractual Term
Aggregate Intrinsic Value (in millions)
Balance as of April 27, 202410,139$16.111.52$188.2 
Granted1,028$41.11
Vested(3,091)$15.57
Canceled/ forfeited(543)$20.28
Balance and expected to vest as of February 1, 20257,533$19.471.26$527.5 
17

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
Share Option Awards
A summary of information related to share option activity during the nine months ended February 1, 2025 is as follows:
Options Outstanding
Outstanding Share OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Term
Aggregate Intrinsic Value (in millions)
Balance as of April 27, 20246,421$1.975.30$106.5 
Options vested and exercised(2,230)$1.65
Options canceled/ forfeited(13)$4.58
Balance exercisable and expected to vest as of February 1, 20254,178$2.144.94$283.6 
Employee Stock Purchase Plan (ESPP)
The Company issued 56 thousand and 195 thousand shares during the three and nine months ended February 1, 2025, respectively, and 76 thousand and 281 thousand shares during the three and nine months ended January 27, 2024, respectively, under the ESPP.
Summary of Share-based Compensation Expense
The following table summarizes share-based compensation expense included in the unaudited condensed consolidated statements of operations (in thousands):
Three months endedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Cost of revenue$226 $458 $838 $897 
Research and development8,511 4,697 26,073 14,093 
Selling, general and administrative7,453 3,177 22,582 9,454 
$16,190 $8,332 $49,493 $24,444 
10. Income Taxes
The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, excluding zero rate jurisdictions, and adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in accurately predicting its pre-tax income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in tax laws, the applicability of special tax regimes, changes in how we do business, and discrete items.
Provision (benefit) for income taxes for the three and nine months ended February 1, 2025 and January 27, 2024 was as follows (in thousands except percentages):
Three Months Ended
Nine Months Ended
February 1, 2025January 27, 2024% ChangeFebruary 1, 2025January 27, 2024% Change
Provision (benefit) for income taxes
$752 $(2,048)(136.7)%$1,666 $(2,135)(178.0)%
Effective tax rate2.5 %126.4 %9.7 %10.7 %
The Company’s effective tax rate for the three and nine months ended February 1, 2025 differed from the same period in the prior fiscal year primarily due to the tax benefit of share-based compensation expense being offset by a full valuation allowance on deferred tax assets in the U.S. entity in fiscal year 2025.
18

Credo Technology Group Holding Ltd
Notes to Unaudited Condensed Consolidated Financial Statements
During the three and nine months ended February 1, 2025, there were no material changes to the total amount of unrecognized tax benefits and the Company does not expect any significant changes in the next 12 months.
11. Net Income (Loss) Per Share
The Company reports both basic net income (loss) per share, which is based on the weighted-average number of ordinary shares outstanding during the period, and diluted net income (loss) per share, which is based on the weighted-average number of ordinary shares outstanding and potentially dilutive shares outstanding during the period. Net income (loss) per share for the three and nine months ended February 1, 2025 and January 27, 2024, respectively, was determined as follows (in thousands, except per share amounts):
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Numerator:
Net income (loss)
$29,360 $428 $15,595 $(17,892)
Denominator:
Weighted-average shares - basic
168,167 157,155 166,562 152,063 
Effect of dilutive shares
Share-based compensation awards
10,919 9,827 10,966  
Customer Warrant
3,378 179 2,968  
Weighted-average shares - diluted
182,464 167,160 180,495 152,063 
Net income (loss) per share:
Basic
$0.17 $ $0.09 $(0.12)
Diluted
$0.16 $ $0.09 $(0.12)
Potential dilutive securities include dilutive ordinary shares from the Customer Warrant, share-based awards attributable to the assumed exercise of share options and vesting of RSUs and ESPP shares using the treasury stock method. Under the treasury stock method, potential ordinary shares outstanding are not included in the computation of diluted net income per share if their effect is anti-dilutive. The following potentially dilutive securities outstanding (in thousands) have been excluded from the computations of diluted weighted-average shares outstanding for the three and nine months ended February 1, 2025 and January 27, 2024:
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Share-based compensation awards175 3,921 242 13,747 
Customer Warrant
 3,901  4,080 
175 7,822 242 17,827 
12. Subsequent Events
On March 7, 2025, the Compensation Committee of the Board of Directors of the Company (Compensation Committee) approved annual refresh grants to the Company’s certain current named executive officers in the form of performance-based restricted stock units (PSUs) under the Company’s 2021 Long-Term Incentive Plan (the Plan). Refer to the section titled “Annual PSU Refresh Grants” within Item 5. Other Information for further details.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended April 27, 2024 included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 27, 2024. Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties as described under the heading “Special Note Regarding Forward-Looking Statements” of this Quarterly Report on Form 10-Q.
Overview
At Credo, our mission is to redefine high-speed connectivity by delivering breakthrough solutions that enable the next generation of AI-driven applications. We are committed to enabling faster, more reliable, more energy-efficient, and scalable solutions that support the ever-expanding demands of AI, cloud computing, and hyperscale networks. 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) markets. Our products are based on our 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.
Data generation has increased dramatically over the past ten years, creating new and complicated challenges in both circuit and system design. Our proprietary SerDes and DSP technologies enable us to achieve similar performance to leading competitors’ products but at a lower cost and more highly available legacy node (n-1 advantage). Beyond power and performance, Credo continues to innovate to address customers’ system level requirements. We partner with Microsoft on our HiWire Switch AEC and open-source implementation that helps realize Microsoft’s vision for a highly reliable network-managed dual-Top-of-Rack (ToR) architecture (a network architecture design in which computing equipment located within the same or an adjacent rack are, for redundancy, connected to two in-rack network switches, which are, in turn, connected to aggregation switches via fiber optic cables), overcome complex and slow legacy enterprise approaches, simplify deployment and improve connection reliability in the data center.
The multibillion-dollar data infrastructure market that we serve is driven largely by hyperscale data centers (hyperscalers), as well as general compute, AI/ML infrastructure, multi-service operators (MSOs), and mobile network operators (MNOs). The demands for increased bandwidth, improved power and cost efficiency and heightened security have simultaneously and dramatically expanded as work, education and entertainment have rapidly digitized across myriad endpoint users.
We design, market and sell both product and IP solutions. We help define industry conventions and standards within the markets we target by collaborating with technology leaders and standards bodies. We contract with a variety of manufacturing partners to build our products based on our proprietary SerDes and DSP technologies. We develop standard solutions we can sell broadly to our end markets and also develop tailored solutions designed to address specific customer needs. Once developed, these tailored solutions can generally be broadly leveraged across our portfolio and we are able to sell the part or license the IP to the broader market.
During the three and nine months ended February 1, 2025, we generated $135.0 million and $266.8 million in total revenue, respectively, and during the three and nine months ended January 27, 2024, we generated $53.1 million and $132.2 million in total revenue, respectively. Product sales and product engineering services revenue comprised 97.8% and 96.9% of our total revenue in the three and nine months ended February 1, 2025 and 97.6% and 91.4% in the three and nine months ended January 27, 2024, respectively. IP license revenue represented 2.2% and 3.1% of our total revenue in the three and nine months ended February 1, 2025 and 2.4% and 8.6% in the three and nine months ended January 27, 2024, respectively. During the three and nine months ended February 1, 2025, we generated $29.4 million and $15.6 million in net income, respectively, and during the three and nine months ended January 27, 2024, we generated $0.4 million net income and $17.9 million in net losses, respectively.
We derive the substantial majority of our revenue from a limited number of customers. We anticipate we will continue to derive a significant portion of our revenue from a limited number of customers for the foreseeable future. We expect that as our products are more widely adopted and as our number of customers increase, customer concentration will decrease.
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We sell our products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets. We work closely and have engagements with industry-leading companies across these segments. A relatively small number of customers have historically accounted for and continue to account for a significant portion of our revenue. We report revenue by customer in our financial statement disclosure based on the contracting parties who place purchase orders or sign revenue contracts with us. See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, certain of our end customers have their contract manufacturing partners place orders with us. As a result, the contract manufacturers, rather than the end customers, are reported as our customers for financial reporting purposes. As a supplement to our financial statement footnote disclosure, and to provide further insight into our end customer concentration, the following table summarizes our revenue by customer as a percentage of total revenue based on end customer profile, rather than based on the contracting parties who place purchase orders or sign revenue contracts with us:
Three Months EndedNine Months Ended
RevenueFebruary 1, 2025January 27, 2024February 1, 2025January 27, 2024
Customer E86 %19 %64 %13 %
Customer F*28 %*31 %
Customer B*23 %*15 %
Customer D***12 %
* Less than 10% of total revenue.
Our Business Model
We are a product-focused business with a strong foundation in IP, pioneering comprehensive connectivity solutions that deliver bandwidth, scalability and end-to-end signal integrity for next-generation platforms. We also develop IP solutions to address the specific and complex needs of our customers. We earn revenue from these IP solutions primarily through licensing fees and royalties. In addition to product sales and IP license revenue, we also generate revenue from providing engineering services as part of our product and license arrangements with certain customers. Over time, we expect to generate an increased proportion of our revenue from sales of our products. We expect to see a long-term benefit from improvements in our operating leverage as our business continues to gain scale.
We utilize a fabless business model, working with a network of third parties to manufacture, assemble and test our connectivity products. This approach allows us to focus our engineering and design resources on our core competencies and to control our fixed costs and capital expenditures.
We employ a two-pronged sales strategy targeting both the end users of our products, as well as the suppliers of our end users. By engaging directly with the end user, we are able to better understand the needs of our customers and cater our solutions to their most pressing connectivity requirements.
This strategy has enabled us to become the preferred vendor to a number of our customers who, in turn, in some cases, require their suppliers, OEMs, ODMs and optical module manufacturers to utilize our solutions.
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Results of Operations
Three and Nine Months Ended February 1, 2025 and January 27, 2024
The following table sets forth information derived from our unaudited condensed consolidated statements of operations expressed as a percentage of total revenue:
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024February 1, 2025January 27, 2024
Revenue:
Product sales95.8 %75.3 %92.8 %78.9 %
Product engineering services2.0 %22.3 %4.0 %12.5 %
IP license2.2 %2.4 %3.1 %8.6 %
Total revenue100.0 %100.0 %100.0 %100.0 %
Cost of revenue:
Cost of product sales revenue36.2 %35.7 %36.2 %37.9 %
Cost of product engineering services revenue0.2 %2.8 %0.5 %1.5 %
Cost of IP license revenue— %0.2 %0.1 %0.5 %
Total cost of revenue36.4 %38.6 %36.7 %39.9 %
Gross margin63.6 %61.4 %63.3 %60.1 %
Operating expenses:
Research and development26.9 %45.7 %36.9 %51.9 %
Selling, general and administrative17.4 %26.8 %25.1 %30.3 %
Total operating expenses44.2 %72.5 %62.0 %82.2 %
Operating loss19.4 %(11.1)%1.3 %(22.1)%
Other income, net
2.9 %8.1 %5.2 %6.9 %
Loss before income taxes22.3 %(3.1)%6.5 %(15.2)%
Benefit for income taxes
0.6 %(3.9)%0.6 %(1.6)%
Net income (loss)
21.7 %0.8 %5.8 %(13.5)%
Comparison of Three and Nine Months Ended February 1, 2025 and January 27, 2024
Revenue
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024
% Change
February 1, 2025January 27, 2024% Change
(in thousands, except percentages)(in thousands, except percentages)
Product sales$129,371 $39,975 223.6 %$247,653 $104,250 137.6 %
Product engineering services2,667 11,830 (77.5)%10,785 16,557 (34.9)%
IP license2,964 1,253 136.6 %8,312 11,381 (27.0)%
Total revenue$135,002 $53,058 154.4 %$266,750 $132,188 101.8 %
Total revenue for the three months ended February 1, 2025 increased by $81.9 million, compared to the same period in fiscal year 2024, primarily due to an increase in product sales revenue of $89.4 million and IP license revenue of $1.7 million. This was offset by a decrease in product engineering services revenue of $9.2 million.
The increase in product sales revenue for the three months ended February 1, 2025, compared to the same period in fiscal year 2024, was primarily due to a significant increase in the volume of unit shipments of AEC products to a hyper-scaler customer which contributed over 95% of the increase in product sales revenue, compared to the same period in fiscal year 2024.
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The increase in IP license revenue for the three months ended February 1, 2025, compared to the same period in fiscal year 2024, was primarily due to increased royalty revenue in which the royalty component of an existing agreement had begun.
The decrease in product engineering services revenue for the three months ended February 1, 2025, compared to the same period in fiscal year 2024, was primarily due to completion of certain product engineering services arrangements resulting in a decrease in engineering time of 87%.
Total revenue for the nine months ended February 1, 2025 increased by $134.6 million, compared to the same period in fiscal year 2024, primarily due to an increase in product sales revenue of $143.4 million offset by a decrease in product engineering services revenue of $5.8 million and IP license revenue of $3.1 million.
The increase in product sales revenue for the nine months ended February 1, 2025, compared to the same period in fiscal year 2024, was primarily due to a significant increase in the volume of unit shipments of AEC and Optical products which contributed over 95% of the increase in product sales revenue. The sales increase was primarily driven by new design wins and increased diversification of our customer base across the product lines.
The decrease in product engineering services revenue for the nine months ended February 1, 2025, compared to the same period in fiscal year 2024, was primarily due to the completion of certain product engineering services arrangements resulting in a decrease in engineering time of 47%.
The decrease in IP license revenue for the nine months ended February 1, 2025, compared to the same period in fiscal year 2024, was primarily due to fewer contracts entered into in the period as compared to the same period in fiscal year 2024.
Cost of Revenue
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024
% Change
February 1, 2025January 27, 2024% Change
(in thousands, except percentages)(in thousands, except percentages)
Cost of product sales revenue$48,835 $18,912 158.2 %$96,602 $50,126 92.7 %
Cost of product engineering services revenue233 1,471 (84.2)%1,256 1,935 (35.1)%
Cost of IP license revenue117 (93.2)%171 662 (74.2)%
Total cost of revenue$49,076 $20,500 139.4 %$98,029 $52,723 85.9 %
Cost of revenue for the three months ended February 1, 2025 increased by $28.6 million compared to the same period in fiscal year 2024, primarily due to an increase in cost of product sales revenue of $29.9 million. The increase was primarily due to the increased shipments of AEC products noted above.
Cost of revenue for the nine months ended February 1, 2025 increased by $45.3 million compared to the same period in fiscal year 2024, primarily due to an increase in cost of product sales revenue of $46.5 million. The increase was primarily due to the increased shipments of AEC products noted above.
Gross Profit and Gross Margin
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024
% Change
February 1, 2025January 27, 2024% Change
(in thousands, except percentages)(in thousands, except percentages)
Gross profit$85,926 $32,558 163.9 %$168,721 $79,465 112.3 %
Gross margin63.6 %61.4 %63.3 %60.1 %
Gross margin in the three months ended February 1, 2025 increased by 2.2 percentage points compared to the same period in fiscal year 2024, primarily driven by the improved economies of scale in our product sales. Our product sales gross margin increased by 9.6 percentage points for the three months ended February 1, 2025, compared to the same period in the prior year, driven primarily by the increased shipments of higher gross margin AEC products, partially offset by a $2.2 million increase of write-downs for excess and obsolete inventory.
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Gross margin in the nine months ended February 1, 2025 increased by 3.2 percentage points compared to the same period in fiscal year 2024, primarily driven by the improved economies of scale in our product sales. Our product sales gross margin increased by 9.1 percentage points for the nine months ended February 1, 2025, compared to the same period in the prior fiscal year, driven primarily by the increase shipments of higher gross margin AEC products, partially offset by a $3.7 million increase of write-downs for excess and obsolete inventory.
Research and Development
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024
% Change
February 1, 2025January 27, 2024% Change
(in thousands, except percentages)(in thousands, except percentages)
Research and development$36,261 $24,236 49.6 %$98,412 $68,610 43.4 %
% of total revenue26.9 %45.7 %36.9 %51.9 %
Research and development expense for the three months ended February 1, 2025 increased by $12.0 million compared to the same period in fiscal year 2024. The increase was due primarily to a $3.6 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $3.2 million increase in personnel costs as a result of new hires for product development, a $3.1 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development and a $0.9 million increase in depreciation expense associated with increase in R&D equipment.
Research and development expense for the nine months ended February 1, 2025 increased by $29.8 million compared to the same period in fiscal year 2023. The increase was due primarily to an $11.9 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, an $8.3 million increase in personnel costs as a result of new hires for product development, a $6.4 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development and a $2.6 million increase in depreciation expense driven by increased computer equipment and software, and laboratory equipment utilized in research and development activities.
Selling, General and Administrative
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024
% Change
February 1, 2025January 27, 2024% Change
(in thousands, except percentages)(in thousands, except percentages)
Selling, general and administrative
$23,471 $14,233 64.9 %$66,973 $40,032 67.3 %
% of total revenue17.4 %26.8 %25.1 %30.3 %
Selling, general and administrative expense for the three months ended February 1, 2025 increased by $9.2 million compared to the same period in fiscal year 2024. The increase was primarily due to a $4.3 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $2.3 million increase in personnel costs as a result of higher selling, general and administrative headcount, a $1.5 million increase in external consultation fees relating to general and administrative expenses, a $0.4 million increase in depreciation and software license expense driven by increased computer equipment and software utilized in selling, general and administrative activities and a $0.2 million increase in logistic expenses related to selling activities.
Selling, general and administrative expense for the nine months ended February 1, 2025 increased by $26.9 million compared to the same period in fiscal year 2023. The increase was primarily due to a $13.1 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $6.2 million increase in personnel expenses from new hires, a $4.3 million increase in external consultation fees relating to general and administrative expenses, a $0.9 million increase in depreciation and software license expense driven by increased computer equipment and software utilized in selling, general and administrative activities, a $0.8 million increase in logistic expenses related to selling activities, a $0.7 million increase in general building management expenses due to increased headcount and a $0.3 million increase in tradeshow expenses driven by increased tradeshow participation.

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Provision (Benefit) for Income Taxes
Three Months EndedNine Months Ended
February 1, 2025January 27, 2024
% Change
February 1, 2025January 27, 2024% Change
(in thousands, except percentages)(in thousands, except percentages)
Provision (Benefit) for income taxes
$752 $(2,048)(136.7)%$1,666 $(2,135)(178.0)%
% of total revenue0.6 %(3.9)%0.6 %(1.6)%
Provision for income taxes for the three and nine months ended February 1, 2025 increased by $2.8 million and $3.8 million, respectively, compared to the same period in fiscal year 2024. The fluctuation was primarily due to the tax benefit of share-based compensation expense being offset by a full valuation allowance on deferred tax assets in the U.S. entity in fiscal year 2025.

Liquidity and Capital Resources
Our activities consist primarily of selling our products, licensing our IP, providing product and IP engineering services, and conducting research and development of our products and technology. As of February 1, 2025 and April 27, 2024, we had $299.2 million and $66.9 million in cash and cash equivalents, respectively, and working capital of $538.4 million and $485.6 million, respectively. Our principal use of cash is to fund our operations and invest in research and development to support our growth. See Note 7 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our cash requirements under non-cancelable purchase obligations.
We believe our existing cash and cash equivalents and other components of working capital will be sufficient to meet our needs for at least the next 12 months and in the longer term. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, customer demand and the continuing market acceptance of our solutions. In the event that we need to borrow funds or issue additional equity, we cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations and financial condition would be adversely affected.
The following table summarizes our cash flows for the periods indicated.
Nine Months Ended
February 1, 2025January 27, 2024
(in thousands)
Net cash provided by operating activities
$7,261 $28,580 
Net cash provided by (used in) investing activities
$230,655 $(216,290)
Net cash provided by (used in) financing activities
$(5,756)$175,269 
Cash Flows Provided by Operating Activities
Net cash provided by operating activities was $7.3 million for the nine months ended February 1, 2025. The cash inflows from operating activities for the nine months ended February 1, 2025 were primarily due to $15.6 million in net income and $81.3 million of non-cash items, partially offset by $89.6 million of cash outflows for working capital purposes. The cash outflows from working capital for the nine months ended February 1, 2025 were primarily driven by (a) an increase in accounts receivable of $97.5 million primarily due to large billings from customers not due yet in the nine months ended February 1, 2025 and (b) an increase in inventory of $31.7 million to support unfulfilled backlog and related new product ramps. These cash outflows were offset by cash inflows relating to (a) an increase in accounts payable of $22.3 million and (b) an increase in accrued expenses of $13.0 million, both relating to increased inventory purchases.
Net cash provided by operating activities was $28.6 million for the nine months ended January 27, 2024. The cash inflows from operating activities for the nine months ended January 27, 2024 were primarily due to $9.5 million of cash inflows for working capital purposes and $37.0 million of non-cash items, partially offset by $17.9 million in net loss. The cash inflows from working capital for the nine months ended January 27, 2024 were primarily driven by (a) a
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decrease in accounts receivable of $4.8 million primarily due to collection of large customer invoices in the fiscal quarter ended January 27, 2024; (b) a decrease in inventory of $13.8 million primarily driven by tightened production management and increased product sales compared to the fiscal quarter ended April 29, 2023; (c) an increase in accounts payable of $5.3 million due to amounts payable relating to increased research and development spending. These cash inflows were offset by cash outflows relating to an increase in other non-current assets of $7.4 million primarily relating to payments of refundable deposits for a manufacturing supply capacity reservation agreement.
Cash Flows Provided by (Used in) Investing Activities
Net cash provided by investing activities of $230.7 million in the nine months ended February 1, 2025 was primarily attributable to maturities of certificates of deposit for $376.8 million, offset by purchases of the same for $113.7 million and purchases of property and equipment of $32.4 million. Purchases of property and equipment primarily related to mask set costs capitalized relating to the Company’s products already introduced or to be introduced, and third-party IP licenses and computer equipment and software used for research and development purposes.
Net cash used in investing activities of $216.3 million in the nine months ended January 27, 2024 was attributable to purchases of property and equipment of $12.5 million and net outflow from certificates of deposit of $203.8 million from maturities of certificates of deposit for $169.8 million and purchases of the same for $373.6 million. Purchases of property and equipment primarily related to mask sets purchases for new products introduced or in process of being introduced, and computer equipment and software used for research and development purposes.
Cash Flows Provided by (Used in) Financing Activities
Net cash used in financing activities of $5.8 million for the nine months ended February 1, 2025 was primarily attributable to $5.4 million in payments for long-term technology license obligations and $7.2 million tax withheld related to RSU settlement, offset by $6.8 million in proceeds from exercises of employee share options.
Net cash provided by financing activities of $175.3 million for the nine months ended January 27, 2024 was solely attributable to $4.7 million in proceeds from exercises of employee share options and issuances of shares under the ESPP offset by $3.1 million in payments for long-term technology license obligations.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates during the three and nine months ended February 1, 2025, as compared to those disclosed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024. In the current macroeconomic environment, our estimates could require increased judgment and carry a higher degree of variability and volatility. We continue to monitor and assess our estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of market risks, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024. During the three and nine months ended February 1, 2025, there were no material changes or developments that would materially alter the market risk assessment performed as of April 27, 2024.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
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Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There was no change in our “internal control over financial reporting,” as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the quarter ended February 1, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Credo have been detected.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we are involved in various legal proceedings arising in the ordinary course of our business. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on us. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors.
Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024, which could adversely affect our business, financial condition, results of operations, cash flows and the trading price of our ordinary shares. As of the date of this Quarterly Report on Form 10-Q there have been no material changes from the risk factors previously disclosed in our in the Annual Report on Form 10-K for the fiscal year ended April 27, 2024.
Item 5. Other Information.
Rule 10b5-1 Trading Plans
On December 26, 2024, David Zinsner, a member of our board of directors, adopted a Rule 10b5-1 Trading Plan, intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act, pursuant to which a maximum amount of 50,000 of our ordinary shares held directly by Mr. Zinsner may be sold between April 26, 2025 and September 11, 2025. The plan terminates on the earlier of: (i) September 11, 2025, (ii) the first date on which all trades set forth in the plan have been executed or (iii) such date as the plan is otherwise terminated according to its terms.
On January 10, 2025, William J. Brennan, our Chief Executive Officer and a member of our board of directors, adopted a Rule 10b5-1 Trading Plan, intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act, pursuant to which a maximum amount of: (i) 200,000 of our ordinary shares held directly by Mr. Brennan may be sold between May 1, 2025 and April 30, 2026 and (ii) 500,000 of our ordinary shares held by The Brennan Family Trust, DTD 09/06/2002 may be sold between May 1, 2025 and April 30, 2026. The plan terminates on the earlier of: (i) April 30, 2026, (ii) the first date on which all trades set forth in the plan have been executed or (iii) such date as the plan is otherwise terminated according to its terms. Mr. Brennan is a joint trustee with shared voting and investment power over the shares held by The Brennan Family Trust, DTD 09/06/2002.
Annual PSU Refresh Grants
On March 7, 2025, the Compensation Committee approved annual refresh grants to the Company’s certain current named executive officers in the form of PSUs under the Plan (the Refresh PSUs), reflecting the implementation of a change to the award mix under the Company’s long-term equity incentive compensation program, which was previously granted entirely in the form of time-based restricted stock units. The Compensation Committee believes that the incorporation of a performance component into the Company’s executive compensation program will strengthen the Company’s commitment to its pay for performance philosophy and more closely align executive compensation with shareholder value creation.
The Refresh PSUs will be eligible to become earned between 0% and 200% of target levels based on the Company’s achievement of specified revenue goals for the fiscal year ending May 2, 2026. At the end of such fiscal year, the Compensation Committee will measure the achievement of such goals and determine the number of Refresh PSUs that have become earned based on performance (the Achievement PSUs). The Achievement PSUs will then be subject to a service-based vesting requirement over an additional three-year period, with 25% on the number of Achievement PSUs vesting on each of June 10, 2026, June 10, 2027, June 10, 2028 and June 10, 2029. In the event of a termination of service due to an executive’s death or disability, any unvested PSUs will vest in full as of the date of termination with respect to the number of Achievement PSUs (or target PSUs, if the number of Achievement PSUs has not yet been determined).
For 2025, 100% of the current named executive officers’ annual refresh equity grant was made in the form of Refresh PSUs with respect to the target number of Ordinary Shares set forth in the table below. The closing price per Ordinary Share on the grant date was $43.70.
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NameRefresh PSUs (#)
William (Bill) Brennan
President, Chief Executive Officer and Director
100,000
Dan Fleming
Chief Financial Officer
60,000
Yat Tung (Job) Lam
Chief Operating Officer
25,000
Chi Fung (Lawrence) Cheng
Chief Technology Officer
25,000
The description of the Refresh PSUs set forth above is qualified in its entirety by the terms of the award agreement governing the Refresh PSUs, a copy of which is filed as an exhibit to this Quarterly Report on Form 10-Q for the quarter ended February 1, 2025, and incorporated herein by reference.
Changes to 2025 Cash Compensation
The Compensation Committee also undertook a review of the cash compensation levels of its current named executive officers, including a review of peer company compensation levels, and determined that the following adjustments to base salaries were appropriate: (i) for Mr. Brennan, a base salary increase from $500,000 to $650,000; (ii) for Mr. Fleming, a base salary increase from $400,000 to $430,000; (iii) for Mr. Lam, a base salary increase from $330,750 to $400,000; and (iv) for Mr. Cheng, a base salary increase from $385,875 to $400,000. Each of these increases is effective as of January 1, 2025.
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Item 6. Exhibits.
Incorporated by Reference
Exhibit NumberExhibit DescriptionFormFile No.Exhibit No.Filing DateProvided Herewith
10.1**X
10.2**
X
31.1*X
31.2*X
32.1**X
32.2**X
101.INS*Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document)
101.SCH*Inline XBRL Taxonomy Extension Schema DocumentX
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase DocumentX
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase DocumentX
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase DocumentX
104Cover Page Interactive Data File (embedded within the Inline XBRL document)X
*Filed herewith
**Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CREDO TECHNOLOGY GROUP HOLDING LTD
Date: March 10, 2025
By:/s/ William Brennan
Name:William Brennan
Title:President and Chief Executive Officer
Date: March 10, 2025
By:/s/ Daniel Fleming
Name:Daniel Fleming
Title:Chief Financial Officer
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