EX-99.1 2 credoq32025ex-991.htm EX-99.1 Document

Exhibit 99.1
 


Credo Reports Third Quarter of Fiscal Year 2025
Financial Results


San Jose, Calif. (March 4, 2025) - Credo Technology Group Holding Ltd (Nasdaq: CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved energy efficiency as data rates and corresponding bandwidth requirements increase through the data infrastructure market, today reported financial results for the third quarter of fiscal year 2025, ended February 1, 2025.

Third Quarter of Fiscal Year 2025 Financial Highlights

•Revenue of $135.0 million, grew by 87.4% quarter over quarter and 154.4% year over year
•GAAP gross margin of 63.6% and non-GAAP gross margin of 63.8%
•GAAP operating expenses of $59.7 million and non-GAAP operating expenses of $43.8 million
•GAAP net income of $29.4 million and non-GAAP net income of $45.4 million
•GAAP diluted net income per share of $0.16 and non-GAAP diluted net income per share of $0.25
•Ending cash and short-term investment balance of $379.2 million

Management Commentary

Bill Brennan, Credo’s President and Chief Executive Officer, stated, “During the third quarter ended February 1, 2025 Credo generated revenue of $135.0 million, up 87% sequentially and 154% year over year. We achieved record revenue in the third quarter, driven by our AEC product line, as we experienced the inflection point in our business that we had expected. Going forward, we expect continued growth across our product lines and customer base as market demand for innovative connectivity solutions continues to grow.”



Fourth Quarter of Fiscal 2025 Financial Outlook
 
•Revenue is expected to be between $155.0 million and $165.0 million
•GAAP gross margin is expected to be between 62.7% and 64.7%, and non-GAAP gross margin is expected to be between 63.0% and 65.0%
•GAAP operating expenses are expected to be between $73.0 million and $75.0 million, and non-GAAP operating expenses are expected to be between $50.0 million and $52.0 million



Conference Call

Credo will conduct a conference call on Tuesday, March 4, 2025, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal year 2025, ended February 1, 2025. Interested parties may join the conference call by dialing 888-596-4144 (toll-free) or +1 646-968-2525 (international). The conference ID for the call is 5251802. It is recommended that participants register and dial in for the call at least 10 minutes before the start of the call. A live webcast of the conference call will be available on Credo’s Investor Relations website at http://investors.credosemi.com. A replay of the webcast will be available via the web at http://investors.credosemi.com.

Discussion of Non-GAAP Financial Measures

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

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

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

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

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

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

•Management’s evaluation of Credo’s ongoing operating performance;
•Management’s establishment of internal operating budgets; and
•Management’s performance comparisons with internal forecasts and targeted business models.
 
Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Credo’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Credo’s results as reported under GAAP. The exclusion of the above items from our GAAP financial metrics does not necessarily mean that these costs are unusual or infrequent.


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

This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to, any statements regarding: launches of new or expansion of existing products or services; technology developments and innovation; our plans, strategies or objectives with respect to future operations; financial outlook; future financial results; expectations regarding the markets and industries in which Credo conducts business; and assumptions underlying any of the foregoing. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “seeks,” “estimates,” “can,” “may,” “will,” “would,” “outlook,” “forecast,” “targets” and similar expressions, or their negatives, may identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties that may cause actual events or results to differ materially from those described in this press release. Readers are encouraged to review risk factors and all other disclosures appearing in Credo’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on June 24, 2024, as well as Credo’s other filings with the SEC, for further information on risks and uncertainties that could affect Credo’s business, financial condition and results of operation. Copies of these filings are available from the SEC, Credo’s website or Credo’s investor relations department. Forward-looking statements speak only as of the date they are made. Credo assumes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.


About Credo

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

Investor Relations Contact:

Dan O’Neil
IR@credosemi.com


Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
 
Three Months EndedNine Months Ended
February 1, 2025November 2, 2024January 27, 2024February 1, 2025January 27, 2024
Revenue:
Product sales$129,371 $64,443 $39,975 $247,653 $104,250 
Product engineering services2,667 4,632 11,830 10,785 16,557 
IP license2,964 2,959 1,253 8,312 11,381 
Total revenue135,002 72,034 53,058 266,750 132,188 
Cost of revenue:
Cost of product sales revenue48,835 25,883 18,912 96,602 50,126 
Cost of product engineering services revenue233 571 1,471 1,256 1,935 
Cost of IP license revenue8 68 117 171 662 
Total cost of revenue49,076 26,522 20,500 98,029 52,723 
Gross profit85,926 45,512 32,558 168,721 79,465 
Operating expenses:
Research and development36,261 31,742 24,236 98,412 68,610 
Selling, general and administrative23,471 22,177 14,233 66,973 40,032 
Total operating expenses59,732 53,919 38,469 165,385 108,642 
Operating income (loss)
26,194 (8,407)(5,911)3,336 (29,177)
Other income, net3,918 4,474 4,291 13,925 9,150 
Income (loss) before income taxes
30,112 (3,933)(1,620)17,261 (20,027)
Provision (benefit) for income taxes752 292 (2,048)1,666 (2,135)
Net income (loss)
$29,360 $(4,225)$428 $15,595 $(17,892)
Net income (loss) per share:
Basic
$0.17 $(0.03)$— $0.09 $(0.12)
Diluted
$0.16 $(0.03)$— $0.09 $(0.12)
Weighted-average shares used in computing net income (loss) per share:
Basic
168,167 166,487 157,155 166,562 152,063 
Diluted
182,464 166,487 167,160 180,495 152,063 



Credo Technology Group Holding Ltd
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
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 assets619,150 530,265 
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 liabilities80,733 44,620 
Non-current operating lease liabilities12,956 11,133 
Other non-current liabilities8,001 5,981 
Total liabilities101,690 61,734 
Shareholders' equity:
Ordinary shares
8 8 
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 


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

Three Months EndedNine Months Ended
February 1, 2025November 2, 2024January 27, 2024February 1, 2025January 27, 2024
GAAP gross profit$85,926 $45,512 $32,558 $168,721 $79,465 
Reconciling item:
Share-based compensation226 331 458 838 897 
Total reconciling item:226 331 458 838 897 
Non-GAAP gross profit (A)$86,152 $45,843 $33,016 $169,559 $80,362 
GAAP gross margin63.6 %63.2 %61.4 %63.3 %60.1 %
Non-GAAP gross margin63.8 %63.6 %62.2 %63.6 %60.8 %
Total GAAP operating expenses$59,732 $53,919 $38,469 $165,385 $108,642 
Reconciling item:
Share-based compensation(15,964)(16,332)(7,874)(48,655)(23,547)
Total reconciling item:(15,964)(16,332)(7,874)(48,655)(23,547)
Total Non-GAAP operating expenses (B)$43,768 $37,587 $30,595 $116,730 $85,095 
GAAP operating income (loss)
$26,194 $(8,407)$(5,911)$3,336 $(29,177)
Non-GAAP operating income (loss) (A-B)$42,384 $8,256 $2,421 $52,829 $(4,733)
GAAP operating income (loss) margin
19.4 %(11.7)%(11.1)%1.3 %(22.1)%
Non-GAAP operating income (loss) margin31.4 %11.5 %4.6 %19.8 %(3.6)%
GAAP net income (loss)
$29,360 $(4,225)$428 $15,595 $(17,892)
Reconciling items:
Share-based compensation16,190 16,663 8,332 49,493 24,444 
Pre-tax total reconciling item16,190 16,663 8,332 49,493 24,444 
Other income tax effects and adjustments(172)(183)(2,438)(416)(3,788)
Non-GAAP net income (loss)
$45,378 $12,255 $6,322 $64,672 $2,764 
GAAP weighted-average shares - basic
168,167 166,487 157,155 166,562 152,063 
GAAP weighted-average shares - diluted
182,464 166,487 167,160 180,495 152,063 
Non-GAAP adjustment2,028 15,769 4,218 3,335 14,567 
Non-GAAP weighted-average shares - diluted
184,492 182,256 171,378 183,830 166,630 
GAAP basic net income (loss) per share
$0.17 $(0.03)$— $0.09 $(0.12)
GAAP diluted net income (loss) per share
$0.16 $(0.03)$— $0.09 $(0.12)
Non-GAAP diluted net income (loss) per share
$0.25 $0.07 $0.04 $0.35 $0.02 




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

Outlook for Three Months Ending May 3, 2025
LowHigh
GAAP gross margin62.7 %64.7 %
Reconciling item:
Share-based compensation0.3 %0.3 %
Total reconciling item:0.3 %0.3 %
Non-GAAP gross margin63.0 %65.0 %
Total GAAP operating expenses$73.0 $75.0 
Reconciling item:
Share-based compensation23.0 23.0 
Total reconciling item:23.0 23.0 
Total Non-GAAP operating expenses$50.0 $52.0