QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
N/A | |||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
c/o | N/A | ||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
July 29, 2023 | April 29, 2023 | ||||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable | |||||||||||
Inventories | |||||||||||
Contract assets | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Right of use assets | |||||||||||
Other non-current assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Shareholders' Equity | |||||||||||
Current Liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued compensation and benefits | |||||||||||
Accrued expenses and other current liabilities | |||||||||||
Deferred revenue | |||||||||||
Total current liabilities | |||||||||||
Non-current operating lease liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 7) | |||||||||||
Shareholders' equity: | |||||||||||
Ordinary shares, $ | |||||||||||
Additional paid in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total shareholders' equity | |||||||||||
Total liabilities and shareholders' equity | $ | $ |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Revenue: | |||||||||||
Product sales | $ | $ | |||||||||
Product engineering services | |||||||||||
IP license | |||||||||||
Total revenue | |||||||||||
Cost of revenue: | |||||||||||
Cost of product sales revenue | |||||||||||
Cost of product engineering services revenue | |||||||||||
Cost of IP license revenue | |||||||||||
Total cost of revenue | |||||||||||
Gross profit | |||||||||||
Operating expenses: | |||||||||||
Research and development | |||||||||||
Selling, general and administrative | |||||||||||
Total operating expenses | |||||||||||
Operating loss | ( | ( | |||||||||
Other income (expense), net | ( | ||||||||||
Loss before income taxes | ( | ( | |||||||||
Benefit for income taxes | ( | ( | |||||||||
Net loss | $ | ( | $ | ( | |||||||
Net loss per share: | |||||||||||
Basic and diluted | $ | ( | $ | ||||||||
Weighted-average shares: | |||||||||||
Basic and diluted |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Other comprehensive loss: | |||||||||||
Foreign currency translation loss | ( | ( | |||||||||
Total comprehensive loss | $ | ( | $ | ( |
Ordinary Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Shareholders’ Equity (Deficit) | |||||||||||||||||||||||||||||||
Number of Shares | Amount | ||||||||||||||||||||||||||||||||||
Balances at April 29, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Ordinary shares issued under equity incentive plans, net of tax withholding related to vesting of RSU | — | — | — | ||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Warrant contra revenue | — | — | — | — | |||||||||||||||||||||||||||||||
Total comprehensive loss | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
Balances at July 29, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Balances at April 30, 2022 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Ordinary shares issued under equity incentive plans | — | — | — | ||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Warrant contra revenue | — | — | — | — | |||||||||||||||||||||||||||||||
Total comprehensive loss | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
Balances at July 30, 2022 | $ | $ | $ | ( | $ | ( | $ |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Share-based compensation | |||||||||||
Warrant contra revenue | |||||||||||
Write-downs for excess and obsolete inventory | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ||||||||||
Inventories | ( | ||||||||||
Contract assets | |||||||||||
Prepaid and other current assets | ( | ||||||||||
Other non-current assets | ( | ( | |||||||||
Accounts payable | |||||||||||
Accrued expenses, compensation and other liabilities | ( | ( | |||||||||
Deferred revenue | ( | ||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Maturities of short-term investments | |||||||||||
Purchases of short-term investments | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Payments on technology license obligations | ( | ||||||||||
Proceeds from employee share incentive plans, net of tax withholding related to vesting of RSU | |||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash | ( | ( | |||||||||
Net increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at beginning of the period | |||||||||||
Cash and cash equivalents at end of the period | $ | $ | |||||||||
Supplemental cash flow information: | |||||||||||
Purchases of property and equipment included in accounts payable, accrued expenses and other liabilities | $ | $ |
Accounts Receivable | July 29, 2023 | April 29, 2023 | |||||||||
Customer A | % | % | |||||||||
Customer B | * | % |
Three months ended | |||||||||||
Revenue | July 29, 2023 | July 30, 2022 | |||||||||
Customer A | % | % | |||||||||
Customer B | * | % | |||||||||
Customer C | % | * | |||||||||
Customer D | % | * |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Mainland China | $ | $ | |||||||||
United States | |||||||||||
Hong Kong | |||||||||||
Taiwan | |||||||||||
Rest of World | |||||||||||
$ | $ |
July 29, 2023 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
Certificate of deposit | |||||||||||||||||||||||
Total cash equivalents and short-term investments | $ | $ | $ | $ |
April 29, 2023 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments: | |||||||||||||||||||||||
Certificate of deposit | |||||||||||||||||||||||
Total cash equivalents and short-term investments | $ | $ | $ | $ |
July 29, 2023 | April 29, 2023 | ||||||||||
Raw materials | $ | $ | |||||||||
Work in process | |||||||||||
Finished goods | |||||||||||
$ | $ |
July 29, 2023 | April 29, 2023 | ||||||||||
Computer equipment and software | $ | $ | |||||||||
Laboratory equipment | |||||||||||
Production equipment | |||||||||||
Leasehold improvements | |||||||||||
Others | |||||||||||
Construction in progress | |||||||||||
Less: accumulated depreciation and amortization | ( | ( | |||||||||
$ | $ |
July 29, 2023 | April 29, 2023 | ||||||||||
Accrued expenses | $ | $ | |||||||||
Current payables relating to purchases of property and equipment | |||||||||||
Income tax payable | |||||||||||
$ | $ |
July 29, 2023 | April 29, 2023 | ||||||||||
Non-current payables relating to purchases of property and equipment | $ | $ | |||||||||
Non-current deferred revenue | |||||||||||
Deferred tax liabilities | |||||||||||
$ | $ |
Fiscal Year | Purchase Commitments to Manufacturing Vendors | Technology License Fees | |||||||||
Remainder of 2024 | $ | $ | |||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
2028 | |||||||||||
Thereafter | |||||||||||
Total unconditional purchase commitments | $ | $ |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Operating lease expenses | $ | $ | |||||||||
Cash paid for amounts included in the measurement of operating lease liabilities | $ | $ |
Fiscal Year | Operating leases | ||||
Remainder of 2024 | $ | ||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: Interest | |||||
Present value of lease liabilities | $ |
RSUs Outstanding | |||||||||||||||||||||||
Number of Shares | Weighted-Average Grant Date Fair Value | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Balances as of April 29, 2023 | $ | ||||||||||||||||||||||
Granted | $ | ||||||||||||||||||||||
Vested | ( | $ | |||||||||||||||||||||
Canceled/ forfeited | ( | $ | |||||||||||||||||||||
Balances and expected to vest as of July 29, 2023 | $ | $ |
Options Outstanding | |||||||||||||||||||||||
Outstanding Share Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Balance as of April 29, 2023 | $ | ||||||||||||||||||||||
Options exercised and vested | ( | $ | |||||||||||||||||||||
Options canceled/ forfeited | ( | $ | |||||||||||||||||||||
Balance and expected to vest as of July 29, 2023 | $ | $ | |||||||||||||||||||||
Exercisable as of July 29, 2023 | $ | $ |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Cost of revenue | $ | $ | |||||||||
Research and development | |||||||||||
Selling, general and administrative | |||||||||||
$ | $ |
Three Months Ended | |||||||||||||||||
July 29, 2023 | July 30, 2022 | % Change | |||||||||||||||
Benefit for income taxes | $ | ( | $ | ( | % | ||||||||||||
Effective tax rate | % | % |
Three months ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Numerator: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Denominator: | |||||||||||
Weighted-average shares - basic and diluted | |||||||||||
Net loss per share: | |||||||||||
Basic and diluted | $ | ( | $ |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Share-based compensation awards | |||||||||||
Customer warrant | |||||||||||
Three months ended | |||||||||||
Revenue | July 29, 2023 | July 30, 2022 | |||||||||
Customer B | * | 19 | % | ||||||||
Customer C | 12 | % | * | ||||||||
Customer D | 14 | % | * | ||||||||
Customer Y | 12 | % | * | ||||||||
Customer Z | 40 | % | 49 | % |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Revenue: | |||||||||||
Product sales | $ | 30,028 | $ | 35,263 | |||||||
Product engineering services | 2,293 | 824 | |||||||||
Total product sales and product engineering services | 32,321 | 36,087 | |||||||||
IP license | 2,774 | 10,380 | |||||||||
Total revenue | $ | 35,095 | $ | 46,467 | |||||||
Gross margin: | |||||||||||
Product sales | 53.8 | % | 50.3 | % | |||||||
Product engineering services | 87.2 | % | 87.9 | % | |||||||
Total product sales and product engineering services | 56.2 | % | 51.2 | % | |||||||
IP license | 94.8 | % | 88.6 | % | |||||||
Total gross margin | 59.2 | % | 59.5 | % |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
Revenue: | |||||||||||
Product sales | 85.6 | % | 75.9 | % | |||||||
Product engineering services | 6.5 | % | 1.8 | % | |||||||
IP license | 7.9 | % | 22.3 | % | |||||||
Total revenue | 100.0 | % | 100.0 | % | |||||||
Cost of revenue: | |||||||||||
Cost of product sales revenue | 39.6 | % | 37.7 | % | |||||||
Cost of product engineering services revenue | 0.8 | % | 0.2 | % | |||||||
Cost of IP license revenue | 0.4 | % | 2.5 | % | |||||||
Total cost of revenue | 40.8 | % | 40.5 | % | |||||||
Gross margin | 59.2 | % | 59.5 | % | |||||||
Operating expenses: | |||||||||||
Research and development | 64.5 | % | 35.9 | % | |||||||
Selling, general and administrative | 35.7 | % | 24.1 | % | |||||||
Total operating expenses | 100.2 | % | 60.0 | % | |||||||
Operating loss | (41.0) | % | (0.5) | % | |||||||
Other income (expense), net | 6.2 | % | (0.5) | % | |||||||
Loss before income taxes | (34.8) | % | (0.9) | % | |||||||
Benefit for income taxes | (1.5) | % | (0.8) | % | |||||||
Net loss | (33.3) | % | (0.2) | % |
Three Months Ended | |||||||||||||||||
July 29, 2023 | July 30, 2022 | % Change | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Product sales | $ | 30,028 | $ | 35,263 | (14.8) | % | |||||||||||
Product engineering services | 2,293 | 824 | 178.3 | % | |||||||||||||
IP license | 2,774 | 10,380 | (73.3) | % | |||||||||||||
Total revenue | $ | 35,095 | $ | 46,467 | (24.5) | % |
Three Months Ended | |||||||||||||||||
July 29, 2023 | July 30, 2022 | % Change | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Cost of product sales revenue | $ | 13,868 | $ | 17,525 | (20.9) | % | |||||||||||
Cost of product engineering services revenue | 293 | 100 | 193.0 | % | |||||||||||||
Cost of IP license revenue | 144 | 1,179 | (87.8) | % | |||||||||||||
Total cost of revenue | $ | 14,305 | $ | 18,804 | (23.9) | % |
Three Months Ended | |||||||||||||||||
July 29, 2023 | July 30, 2022 | % Change | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Gross profit | $ | 20,790 | $ | 27,663 | (24.8) | % | |||||||||||
Gross margin | 59.2 | % | 59.5 | % |
Three Months Ended | |||||||||||||||||
July 29, 2023 | July 30, 2022 | % Change | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Research and development | $ | 22,638 | $ | 16,683 | 35.7 | % | |||||||||||
% of total revenue | 64.5 | % | 35.9 | % |
Three Months Ended | |||||||||||||||||
July 29, 2023 | July 30, 2022 | % Change | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Selling, general and administrative | $ | 12,543 | $ | 11,198 | 12.0 | % | |||||||||||
% of total revenue | 35.7 | % | 24.1 | % |
Three Months Ended | |||||||||||||||||
July 29, 2023 | July 30, 2022 | % Change | |||||||||||||||
(in thousands, except percentages) | |||||||||||||||||
Benefit for income taxes | $ | (537) | $ | (365) | 47.1 | % | |||||||||||
% of total revenue | (1.5) | % | (0.8) | % |
Three Months Ended | |||||||||||
July 29, 2023 | July 30, 2022 | ||||||||||
(in thousands) | |||||||||||
Net cash provided by (used in) operating activities | $ | 24,608 | $ | (12,219) | |||||||
Net cash used in investing activities | $ | (6,610) | $ | (5,258) | |||||||
Net cash provided by financing activities | $ | 534 | $ | 1,977 |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | File No. | Exhibit No. | Filing Date | Provided Herewith | ||||||||||||||||||||||||||||||||
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 Document | X | |||||||||||||||||||||||||||||||||||
101.CAL | * | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | |||||||||||||||||||||||||||||||||||
101.DEF | * | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | |||||||||||||||||||||||||||||||||||
101.LAB | * | Inline XBRL Taxonomy Extension Label Linkbase Document | X | |||||||||||||||||||||||||||||||||||
101.PRE | * | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | |||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | X |
CREDO TECHNOLOGY GROUP HOLDING LTD | |||||||||||
Date: August 29, 2023 | By: | /s/ William Brennan | |||||||||
Name: | William Brennan | ||||||||||
Title: | President and Chief Executive Officer |
Date: August 29, 2023 | By: | /s/ Daniel Fleming | |||||||||
Name: | Daniel Fleming | ||||||||||
Title: | Chief Financial Officer |
Date: August 29, 2023 | By: | /s/ William Brennan | |||||||||
William Brennan | |||||||||||
President and Chief Executive Officer | |||||||||||
(Principal Executive Officer) |
Date: August 29, 2023 | By: | /s/ Daniel Fleming | |||||||||
Daniel Fleming | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer) |
Date: August 29, 2023 | By: | /s/ William Brennan | |||||||||
William Brennan | |||||||||||
President and Chief Executive Officer | |||||||||||
(Principal Executive Officer) |
Date: August 29, 2023 | By: | /s/ Daniel Fleming | |||||||||
Daniel Fleming | |||||||||||
Chief Financial Officer | |||||||||||
(Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jul. 29, 2023 |
Apr. 29, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in US dollars per share) | $ 0.00005 | $ 0.00005 |
Common stock authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock issued (in shares) | 149,854,000 | 148,651 |
Common stock outstanding (in shares) | 149,854,000 | 148,651 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (11,697) | $ (73) |
Other comprehensive loss: | ||
Foreign currency translation loss | (162) | (96) |
Total comprehensive loss | $ (11,859) | $ (169) |
Description of Business and Basis of Presentation |
3 Months Ended |
---|---|
Jul. 29, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Credo Technology Group Holding Ltd was formed 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 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. The Company’s innovations ease system bandwidth bottlenecks while simultaneously improving on power, security and reliability. The Company’s 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. The Company’s products are based on its proprietary 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. Our 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 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 U.S. generally accepted accounting principles (“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 2023 audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 29, 2023. 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. Our fiscal year ending April 27, 2024 (“fiscal year 2024”) is a 52-week fiscal year. The first quarter of fiscal year 2024 ended on July 29, 2023, the second quarter ends on October 28, 2023 and the third quarter ends on January 27, 2024.
|
Significant Accounting Policies |
3 Months Ended |
---|---|
Jul. 29, 2023 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies The Company believes that other than the accounting policies as described below, there have been no significant changes during the three months ended July 29, 2023 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 29, 2023. 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, impairment of long-lived assets, and incremental borrowing rate used in the Company’s operating lease calculations. 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. Revenue Recognition The Company’s revenues consist of sale of its products, licensing of its IP and providing engineering services. Product sales consists of shipment of its ICs and AEC products. IP license revenue includes fees from licensing of the Company’s SerDes IP and related engineering services, support and royalties. Product engineering services revenue consists of engineering fees associated with integration of the Company’s technology solutions into its customers’ products. The Company’s customers are primarily original equipment manufacturers who design and manufacture end market devices for the communications and enterprise networks markets. The Company’s revenue is driven by various trends in these markets. The Company’s revenue is also impacted by changes in the number and average selling prices of its IC products. The Company recognizes revenue upon transfer of control of promised goods and services in an amount that reflects the consideration it expects to receive in exchange for those goods and services. Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price (“SSP”) basis. The Company determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers and the Company’s overall pricing objectives, while maximizing observable inputs. The determination of the SPP for certain of our IPs requires fair value estimate under income approach, involving the estimation of future cash flow expected to be generated from the IPs. The Company’s policy is to record revenue net of any applicable sales, use or excise taxes. Changes in the Company’s contract assets and contract liabilities primarily result from the timing difference between the Company’s performance and the customer’s payment. The Company fulfills its obligations under a contract with a customer by transferring products or services in exchange for consideration from the customer. The Company recognizes a contract asset when it transfers products or services to a customer and the right to consideration is conditional on something other than the passage of time. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. The Company recognizes deferred revenue when it has received consideration or an amount of consideration is due from the customer and it has a future obligation to transfer products or services. Product Sales - The Company transacts with customers primarily pursuant to standard purchase orders for delivery of products and generally allows customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date. The Company offers standard performance warranties of twelve months after product delivery and offers limited product return rights to certain distributors. The Company recognizes product sales when it transfers control of promised goods in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods, net of accruals for estimated sales returns and rebates. Product Engineering Services Revenue - Some product revenue contracts include non-recurring engineering services deliverables. The Company recognizes revenue from these agreements over time as services are provided or at point in time upon completion and acceptance by the customer of contract deliverables, depending on the terms of the arrangement. Revenue is deferred for any amounts billed or received prior to delivery of services. The Company believes the input method, based on time spent by its engineers, best depicts the efforts expended to transfer services to the customers. IP License Revenue - The Company’s IP license revenue consists of perpetual licenses, support and maintenance, engineering services and royalties. The Company enters into perpetual semiconductor IP license agreements, that have a fixed fee, whereby licensees pay a fixed fee for the right to incorporate the Company’s IP technologies into the licensee’s products. The IP license agreements do not typically grant the customer the right to terminate for convenience. Where such rights exist, termination is prospective, with no refund of fees already paid by the customer. IP revenue recognition is dependent on the nature and terms of each agreement. The Company recognizes license revenue at the point of time of the delivery of the IP. In connection with the license arrangements, the Company offers support to assist customers in qualifying their final product. Revenue from customer support is deferred and recognized ratably over the support period, which is typically one year. Some IP license revenue contracts also include non-recurring engineering services deliverables, which were not material for any of the periods presented. The Company recognizes revenue from these agreements similar to the method described under the caption “Product Engineering Services Revenue” above. In certain cases, the Company also charges licensees royalties related to the distribution or sale of products that use its technologies. Such royalties are reported to us on a quarterly basis. The Company estimates the sales-based royalties earned each quarter primarily based on its customers’ reporting of sales activity incurred in that quarter. The Company recognizes the estimated royalty revenue when it is probable that reversal of such amounts will not occur. Any differences between actual royalties owed by a customer and the quarterly estimates are recognized when updated information becomes available.Certain contracts may include multiple performance obligations for which the Company allocates revenue to each performance obligation based on relative SSP. The Company determines SSPs based on observable evidence. When SSPs are not directly observable, the Company uses the adjusted market assessment approach or residual approach, if applicable. The Company also considers the constraint on estimates of variable consideration when estimating the total transaction price. The Company records liabilities for amounts that are collected in advance of the satisfaction of performance obligations under deferred revenue.
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Concentrations |
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Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentrations | 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 our 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:
* Less than 10% of total accounts receivable or total revenue.
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Revenue Recognition |
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Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | 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):
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 July 29, 2023 and April 29, 2023. During the three months ended July 29, 2023, the Company recognized $1.3 million of revenue that was included in the deferred revenue balance as of April 29, 2023. During the three months ended July 30, 2022, the Company recognized $0.7 million of revenue that was included in the deferred revenue balance as of April 30, 2022. During the three months ended July 29, 2023, the decrease in contract assets of $1.4 million was primarily driven by an IP licensing arrangement and a product engineering services arrangement where certain billing milestones had been reached subsequent to the timing of revenue recognition. During the three months ended July 29, 2023, the decrease in deferred revenue of $0.9 million was primarily due to revenue recognized from a customer advance. 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 $25.1 million and the satisfied but unrecognized performance obligations was approximately $10.1 million as of July 29, 2023, which the Company expects to recognize over the next year. The amounts stated above include amounts relating to an IP licensing and development contract we entered into with a customer in September 2021, for total cash consideration of $43.5 million, which is receivable over an estimated period of three years upon meeting certain contractual milestones. As of July 29, 2023, we had billed $33.1 million and recognized revenue amounting to $33.3 million upon delivery of certain milestones of the contract. We have applied constraints on a remaining milestone due to significant uncertainty relating to the delivery of the milestone as of July 29, 2023 associated with dependency on actions by the customer. The constraints will be re-evaluated at each future reporting period. Customer Warrant During fiscal year 2022, the Company issued a warrant to Amazon.com NV Investment Holdings LLC (“Holder”) to purchase an aggregate of up to 4,080,000 of our ordinary shares at an exercise price of $10.74 per share (the “Warrant”). The exercise period of the Warrant is through the seventh anniversary of the issue date. Upon issuance of the Warrant, 40,000 of the shares issuable upon exercise of the 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 80,000 Warrant shares was vested as of both July 29, 2023 and April 29, 2023. During both the three months ended July 29, 2023 and July 30, 2022, the Company recognized $0.4 million, using a grant date fair value of $4.65, as contra revenue within the product sales revenue on the condensed consolidated statements of operations.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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. 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 a held-to-maturity security 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 July 29, 2023 and April 29, 2023 (in thousands).
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 July 29, 2023 and April 29, 2023, there were no unrealized loss or gains associated with the Company’s financial instruments. Interest income recognized for the three month period ending July 29, 2023 was $2.6 million, and an immaterial amount of interest income was recognized for the three month period ending July 30, 2022.
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Supplemental Financial Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Supplemental Financial Information Inventories Inventories consisted of the following (in thousands):
Property and Equipment, Net Property and equipment consisted of the following (in thousands):
Depreciation and amortization expense for the three months ended July 29, 2023 and July 30, 2022 was $3.0 million and $1.6 million, 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. Construction in progress and production equipment primarily includes mask set costs capitalized relating to the Company’s new 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):
Other Non-current Liabilities Other non-current liabilities consisted of the following (in thousands):
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Non-cancelable Purchase Obligations Total future non-cancelable purchase obligations as of July 29, 2023 are as follows (in thousands):
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 July 29, 2023, 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 $3.5 million. Such purchase commitments are included in the preceding table. The Company entered into a manufacturing supply capacity reservation agreement with an assembly subcontractor during the fiscal year ended April 29, 2023. Under this arrangement, the Company agreed to pay 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. The Company currently estimates that it has made purchase level commitments of at least $35.5 million for the remainder of fiscal year 2024 through fiscal year 2028 under the capacity reservation agreement. Such purchase commitments are included in the preceding table. In addition, refundable deposits of $7.1 million were paid as of July 29, 2023, and refundable deposits payable under this arrangement are $1.7 million during the remainder of fiscal year 2024. Warranty Obligations The Company’s products generally carry a standard one-year warranty. The Company’s warranty expense has not been material in the periods presented. Indemnifications In the ordinary course of business, the Company has made certain indemnifications 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, 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 indemnifications 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 clauses. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnifications. Accordingly, the Company has no liabilities recorded for these agreements as of July 29, 2023 and April 29, 2023. Legal Proceedings From time to time, the Company may be a party to various litigation claims in the normal 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 Company was not subject to any litigation. No accruals for loss contingencies or recognition of actual losses have been recorded in any of the periods presented.
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Leases |
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Leases | Leases The Company leases office space, domestically and internationally, under operating leases. The Company’s leases have remaining lease terms generally between one year and eight 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):
The aggregate future lease payments for operating leases as of July 29, 2023 are as follows (in thousands):
As of July 29, 2023, the weighted average remaining lease term for the Company's operating leases is 6.54 years and the weighted average discount rate used to determine the present value of the Company's operating leases is 5.80%.
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Share Incentive Plan |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Incentive Plan | Share Incentive Plan Share Issuances Subject to Repurchase The Company has issued ordinary shares to certain employees that are subject to vesting periods pursuant to the respective share purchase agreements (“Restricted Share Awards” or “RSAs”). In addition, the Company allows early exercise for unvested ordinary share options granted under its 2015 Stock Plan. In regard to the ordinary shares purchased, but not vested, the Company has the right to repurchase shares at the original issue price in the event of termination of services. As of July 29, 2023 and April 29, 2023, 79,584 shares and 98,631 shares, respectively, from share option early exercises remained subject to the Company’s repurchase rights. These shares are excluded from ordinary shares outstanding. Restricted Stock Unit (“RSU”) Awards A summary of information related to RSU activity during the three months ended July 29, 2023 is as follows:
Share Option Awards A summary of information related to share option activity during the three months ended July 29, 2023 is as follows:
Employee Stock Purchase Plan (“ESPP”) During the three months ended July 29, 2023, 204,761 shares were issued 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):
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Income Taxes |
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income TaxesThe 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 our 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. Benefit for income taxes for the three months ended July 29, 2023 and July 30, 2022 was as follows (in thousands except percentages):
Our effective tax rate for the three months ended July 29, 2023 differs from the same periods in the prior year primarily due to excluding zero rate jurisdictions from our annual effective tax rate calculation and an increase in tax benefit of share-based compensation. During the three months ended July 29, 2023, there were no material changes to the total amount of unrecognized tax benefits and we do not expect any significant changes in the next 12 months.
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Net Loss Per Share |
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share The Company reports both basic net income (loss) per share, which is based on the weighted-average number of shares of common stock outstanding during the period, and diluted net income (loss) per share, which is based on the weighted-average number of shares of common stock outstanding and potentially dilutive shares outstanding during the period. Net loss per share was determined as follows (in thousands, except per share amounts):
Potential dilutive securities include dilutive ordinary shares from share-based awards attributable to the assumed exercise of stock options, restricted stock units and employee stock purchase plan 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 months ended July 29, 2023 and July 30, 2022:
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | |
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Jul. 29, 2023 |
Jul. 30, 2022 |
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Pay vs Performance Disclosure | ||
Net loss | $ (11,697) | $ (73) |
Insider Trading Arrangements |
3 Months Ended |
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Jul. 29, 2023
shares
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Trading Arrangements, by Individual | |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Yat Tung (Job) Lam [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On July 13, 2023, Yat Tung (Job) Lam, our Chief Operating Officer and a member of our board of directors, adopted a Rule 10b5-1 Trading Plan ("the 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) 120,000 of our ordinary shares held directly by Mr. Lam may be sold between December 11, 2023 and November 11, 2024, (ii) 2,400,000 of our ordinary shares held by Chung (BVI) Co Ltd may be sold between November 20, 2023 and November 11, 2024, (iii) 1,500,000 of our ordinary shares held by Zhan (BVI) Co Ltd may be sold between November 20, 2023 and November 11, 2024 and (iv) 60,000 of our ordinary shares held by the Evelyn Job and April Foundation may be sold between December 11, 2023 and November 11, 2024. The Plan terminates on the earlier of: (i) November 11, 2024, (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. Lam and his spouse share voting and investment power over the shares held by each of Zhan (BVI) Co Ltd, Chung (BVI) Co Ltd and the Evelyn Job and April Foundation, which is a tax-exempt 501(c)(3) charitable institution. |
Name | Yat Tung (Job) Lam |
Title | Chief Operating Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | July 13, 2023 |
Arrangement Duration | 357 days |
Mr. Lam Rule Trading Arrangement, Ordinary Shares [Member] | Yat Tung (Job) Lam [Member] | |
Trading Arrangements, by Individual | |
Aggregate Available | 120,000 |
Mr. Lam Rule Trading Arrangement, Ordinary Shares Held By Chung (BVI) Co Ltd [Member] | Yat Tung (Job) Lam [Member] | |
Trading Arrangements, by Individual | |
Aggregate Available | 2,400,000 |
Mr. Lam Rule Trading Arrangement, Ordinary Shares Held By Zhan (BVI) Co Ltd [Member] | Yat Tung (Job) Lam [Member] | |
Trading Arrangements, by Individual | |
Aggregate Available | 1,500,000 |
Mr. Lam Rule Trading Arrangement, Ordinary Shares Held By Evelyn Job And April Foundation [Member] | Yat Tung (Job) Lam [Member] | |
Trading Arrangements, by Individual | |
Aggregate Available | 60,000 |
Significant Accounting Policies (Policies) |
3 Months Ended |
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Jul. 29, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe accompanying unaudited condensed consolidated financial statements are presented in accordance with 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 U.S. generally accepted accounting principles (“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 2023 audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 29, 2023. 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. |
Use of Estimates | 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, impairment of long-lived assets, and incremental borrowing rate used in the Company’s operating lease calculations. 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.
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Reclassifications | ReclassificationsCertain 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. |
Revenue Recognition | Revenue Recognition The Company’s revenues consist of sale of its products, licensing of its IP and providing engineering services. Product sales consists of shipment of its ICs and AEC products. IP license revenue includes fees from licensing of the Company’s SerDes IP and related engineering services, support and royalties. Product engineering services revenue consists of engineering fees associated with integration of the Company’s technology solutions into its customers’ products. The Company’s customers are primarily original equipment manufacturers who design and manufacture end market devices for the communications and enterprise networks markets. The Company’s revenue is driven by various trends in these markets. The Company’s revenue is also impacted by changes in the number and average selling prices of its IC products. The Company recognizes revenue upon transfer of control of promised goods and services in an amount that reflects the consideration it expects to receive in exchange for those goods and services. Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price (“SSP”) basis. The Company determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers and the Company’s overall pricing objectives, while maximizing observable inputs. The determination of the SPP for certain of our IPs requires fair value estimate under income approach, involving the estimation of future cash flow expected to be generated from the IPs. The Company’s policy is to record revenue net of any applicable sales, use or excise taxes. Changes in the Company’s contract assets and contract liabilities primarily result from the timing difference between the Company’s performance and the customer’s payment. The Company fulfills its obligations under a contract with a customer by transferring products or services in exchange for consideration from the customer. The Company recognizes a contract asset when it transfers products or services to a customer and the right to consideration is conditional on something other than the passage of time. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional. The Company recognizes deferred revenue when it has received consideration or an amount of consideration is due from the customer and it has a future obligation to transfer products or services. Product Sales - The Company transacts with customers primarily pursuant to standard purchase orders for delivery of products and generally allows customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date. The Company offers standard performance warranties of twelve months after product delivery and offers limited product return rights to certain distributors. The Company recognizes product sales when it transfers control of promised goods in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods, net of accruals for estimated sales returns and rebates. Product Engineering Services Revenue - Some product revenue contracts include non-recurring engineering services deliverables. The Company recognizes revenue from these agreements over time as services are provided or at point in time upon completion and acceptance by the customer of contract deliverables, depending on the terms of the arrangement. Revenue is deferred for any amounts billed or received prior to delivery of services. The Company believes the input method, based on time spent by its engineers, best depicts the efforts expended to transfer services to the customers. IP License Revenue - The Company’s IP license revenue consists of perpetual licenses, support and maintenance, engineering services and royalties. The Company enters into perpetual semiconductor IP license agreements, that have a fixed fee, whereby licensees pay a fixed fee for the right to incorporate the Company’s IP technologies into the licensee’s products. The IP license agreements do not typically grant the customer the right to terminate for convenience. Where such rights exist, termination is prospective, with no refund of fees already paid by the customer. IP revenue recognition is dependent on the nature and terms of each agreement. The Company recognizes license revenue at the point of time of the delivery of the IP. In connection with the license arrangements, the Company offers support to assist customers in qualifying their final product. Revenue from customer support is deferred and recognized ratably over the support period, which is typically one year. Some IP license revenue contracts also include non-recurring engineering services deliverables, which were not material for any of the periods presented. The Company recognizes revenue from these agreements similar to the method described under the caption “Product Engineering Services Revenue” above. In certain cases, the Company also charges licensees royalties related to the distribution or sale of products that use its technologies. Such royalties are reported to us on a quarterly basis. The Company estimates the sales-based royalties earned each quarter primarily based on its customers’ reporting of sales activity incurred in that quarter. The Company recognizes the estimated royalty revenue when it is probable that reversal of such amounts will not occur. Any differences between actual royalties owed by a customer and the quarterly estimates are recognized when updated information becomes available.Certain contracts may include multiple performance obligations for which the Company allocates revenue to each performance obligation based on relative SSP. The Company determines SSPs based on observable evidence. When SSPs are not directly observable, the Company uses the adjusted market assessment approach or residual approach, if applicable. The Company also considers the constraint on estimates of variable consideration when estimating the total transaction price. The Company records liabilities for amounts that are collected in advance of the satisfaction of performance obligations under deferred revenue.
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Concentrations (Tables) |
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Customers' Accounts Receivable and Revenue | The following tables summarize the accounts receivable and revenue as a percentage of total accounts receivable and total revenue, respectively, for our 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:
* Less than 10% of total accounts receivable or total revenue.
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Revenue Recognition (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition and Deferred Revenue [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Disaggregated by Primary Geographical Market | 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):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurements, Recurring | The following tables present the fair value of the financial instruments measured on a recurring basis as of July 29, 2023 and April 29, 2023 (in thousands).
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Supplemental Financial Information (Tables) |
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory | Inventories consisted of the following (in thousands):
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Schedule of Property and Equipment, Net | Property and equipment consisted of the following (in thousands):
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Schedule of Accrued Expenses | Accrued expenses and other current liabilities consisted of the following (in thousands):
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Schedule of Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands):
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Schedule of Other Noncurrent Liabilities | Other non-current liabilities consisted of the following (in thousands):
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Commitment and Contingencies (Tables) |
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Non-Cancelable Purchase Obligations | Total future non-cancelable purchase obligations as of July 29, 2023 are as follows (in thousands):
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Leases (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Expense and Supplemental Cash Flow Information | Lease expense and supplemental cash flow information are as follows (in thousands):
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Aggregate Future Lease Payments, ASC 842 | The aggregate future lease payments for operating leases as of July 29, 2023 are as follows (in thousands):
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Share Incentive Plan (Tables) |
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Information Related to RSU Activity | A summary of information related to RSU activity during the three months ended July 29, 2023 is as follows:
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Summary of Information Related to Share Option Activity | A summary of information related to share option activity during the three months ended July 29, 2023 is as follows:
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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):
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Income Taxes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Provisions for Income Taxes | Benefit for income taxes for the three months ended July 29, 2023 and July 30, 2022 was as follows (in thousands except percentages):
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Net Loss Per Share (Tables) |
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Jul. 29, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Loss Per Share, Basic and Diluted | Net loss per share was determined as follows (in thousands, except per share amounts):
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Schedule of Potentially Dilutive Securities Outstanding | The following potentially dilutive securities outstanding (in thousands) have been excluded from the computations of diluted weighted average shares outstanding for the three months ended July 29, 2023 and July 30, 2022:
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Concentrations (Details) - Customer Concentration Risk |
3 Months Ended | |
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Jul. 29, 2023 |
Jul. 30, 2022 |
|
Accounts Receivable | Customer A | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 57.00% | 54.00% |
Accounts Receivable | Customer B | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 22.00% | |
Revenue | Customer A | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 41.00% | 42.00% |
Revenue | Customer B | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 19.00% | |
Revenue | Customer C | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 12.00% | |
Revenue | Customer D | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 14.00% |
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
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Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 35,095 | $ 46,467 |
Mainland China | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 16,081 | 22,757 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 6,415 | 12,072 |
Hong Kong | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,990 | 4,765 |
Taiwan | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 5,346 | 67 |
Rest of World | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 5,263 | $ 6,806 |
Fair Value Measurements (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
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Fair Value Disclosures [Abstract] | ||
Interest income | $ 2,600,000 | $ 0 |
Supplemental Financial Information - Schedule of Inventory (Details) - USD ($) $ in Thousands |
Jul. 29, 2023 |
Apr. 29, 2023 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 16,312 | $ 17,456 |
Work in process | 6,321 | 7,200 |
Finished goods | 18,160 | 21,367 |
Inventories | $ 40,793 | $ 46,023 |
Supplemental Financial Information - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands |
Jul. 29, 2023 |
Apr. 29, 2023 |
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Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 65,260 | $ 58,239 |
Less: accumulated depreciation and amortization | (20,787) | (18,017) |
Property and equipment, net | 44,473 | 40,222 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 16,834 | 13,942 |
Laboratory equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 16,017 | 15,577 |
Production equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 23,123 | 19,783 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,964 | 2,005 |
Others | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 644 | 632 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 6,678 | $ 6,300 |
Supplemental Financial Information - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Depreciation and amortization | $ 2,950 | $ 1,636 |
Supplemental Financial Information - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Jul. 29, 2023 |
Apr. 29, 2023 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued expenses | $ 6,153 | $ 6,595 |
Current payables relating to purchases of property and equipment | 5,019 | 4,269 |
Current portion of operating lease liabilities | $ 2,639 | $ 2,630 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Income tax payable | $ 1,266 | $ 960 |
Accrued expenses and other current liabilities | $ 15,077 | $ 14,454 |
Supplemental Financial Information - Schedule of Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands |
Jul. 29, 2023 |
Apr. 29, 2023 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Non-current payables relating to purchases of property and equipment | $ 4,108 | $ 5,049 |
Non-current deferred revenue | 292 | 380 |
Deferred tax liabilities | 456 | 324 |
Other non-current liabilities | $ 4,856 | $ 5,753 |
Commitment and Contingencies - Schedule of Non-Cancelable Purchase Obligations (Details) $ in Thousands |
Jul. 29, 2023
USD ($)
|
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Manufacturing Vendors | |
Long-term Purchase Commitment [Line Items] | |
Remainder of 2024 | $ 7,516 |
2025 | 6,763 |
2026 | 8,131 |
2027 | 9,282 |
2028 | 7,319 |
Thereafter | 0 |
Total unconditional purchase commitments | 39,011 |
Technology License Fees | |
Long-term Purchase Commitment [Line Items] | |
Remainder of 2024 | 2,045 |
2025 | 6,371 |
2026 | 2,288 |
2027 | 350 |
2028 | 350 |
Thereafter | 350 |
Total unconditional purchase commitments | $ 11,754 |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
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Jul. 29, 2023 |
Apr. 29, 2023 |
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Long-term Purchase Commitment [Line Items] | ||
Purchase obligations, term | 5 years | |
Product warranty | 1 year | |
Manufacturing Vendors | ||
Long-term Purchase Commitment [Line Items] | ||
Purchase obligations within the next one year | $ 3.5 | |
Purchase commitments to be paid, remainder of fiscal year 2024 through 2028 | 35.5 | |
Refundable deposits paid | $ 7.1 | |
Refundable deposits payable, remainder of fiscal year | $ 1.7 |
Leases - Narrative (Details) |
Jul. 29, 2023 |
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Lessee, Lease, Description [Line Items] | |
Weighted average remaining lease term | 6 years 6 months 14 days |
Weighted average discount rate used for operating leases | 5.80% |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease term | 8 years |
Leases - Lease Expense and Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
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Leases [Abstract] | ||
Operating lease expenses | $ 921 | $ 889 |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 836 | $ 766 |
Leases - Aggregate Future Lease Payments (Details) $ in Thousands |
Jul. 29, 2023
USD ($)
|
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Leases [Abstract] | |
Remainder of 2024 | $ 2,689 |
2025 | 2,823 |
2026 | 2,342 |
2027 | 2,212 |
2028 | 2,194 |
Thereafter | 5,785 |
Total lease payments | 18,045 |
Less: Interest | 3,206 |
Present value of lease liabilities | $ 14,839 |
Share Incentive Plan - Narrative (Details) - shares |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Apr. 29, 2023 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share repurchase program, remaining authorized amount (in shares) | 79,584 | 98,631 |
ESPP | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares issued during period (in shares) | 204,761 |
Share Incentive Plan - Summary of Information Related to RSU Activity (Details) - RSUs $ / shares in Units, $ in Thousands |
3 Months Ended |
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Jul. 29, 2023
USD ($)
$ / shares
shares
| |
Number of Shares | |
Beginning balance (in shares) | shares | 7,798,349 |
Granted (in shares) | shares | 257,000 |
Vested (in shares) | shares | (339,102) |
Canceled/ forfeited (in shares) | shares | (185,250) |
Ending balance (in shares) | shares | 7,530,997 |
Weighted-Average Grant Date Fair Value | |
Beginning balance (in US dollars per share) | $ / shares | $ 11.66 |
Granted (in US dollars per share) | $ / shares | 10.77 |
Vested (in US dollars per share) | $ / shares | 11.64 |
Canceled/ forfeited (in US dollars per share) | $ / shares | 11.43 |
Ending balance (in US dollars per share) | $ / shares | $ 11.63 |
Weighted-Average Remaining Contractual Term | |
Weighted-Average Remaining Contractual Term | 1 year 5 months 26 days |
Aggregate Intrinsic Value | |
Aggregate intrinsic value, options outstanding | $ | $ 127,274 |
Share Incentive Plan - Summary of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
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Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | $ 7,968 | $ 5,546 |
Cost of revenue | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | 189 | 304 |
Research and development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | 4,732 | 2,862 |
Selling, general and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Share-based compensation expense | $ 3,047 | $ 2,380 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
|
Income Tax Disclosure [Abstract] | ||
Benefit for income taxes | $ (537) | $ (365) |
Effective income tax rate reconciliation, change in enacted tax rate, percent | 47.10% | |
Effective tax rate | 4.00% | 139.00% |
Net Loss Per Share - Schedule of Net Loss Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
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Numerator: | ||
Net loss | $ (11,697) | $ (73) |
Denominator: | ||
Weighted-average shares - basic (in shares) | 149,277,000 | 145,077,000 |
Weighted-average shares - diluted (in shares) | 149,277,000 | 145,077,000 |
Net loss per share: | ||
Basic (in US dollars per share) | $ (0.08) | $ 0 |
Diluted (in US dollars per share) | $ (0.08) | $ 0 |
Net Loss Per Share - Schedule of Potentially Dilutive Securities Outstanding (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jul. 29, 2023 |
Jul. 30, 2022 |
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Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 19,732 | 18,833 |
Share-based compensation awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 15,652 | 14,753 |
Customer warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4,080 | 4,080 |