10-KPeriod: FY2024

Credo Technology Group Holding Ltd Annual Report, Year Ended Apr 27, 2024

Filed June 24, 2024For Securities:CRDO

Summary

Credo Technology Group Holding Ltd (CRDO) reported a fiscal year 2024 revenue of $193.0 million, a slight increase from $184.2 million in fiscal year 2023. The company, a provider of high-speed and power-efficient connectivity solutions for the data infrastructure market, saw growth in product engineering services and product sales, although IP license revenue saw a decline. Despite revenue growth, the company incurred a net loss of $28.4 million in fiscal year 2024, an increase from a net loss of $16.5 million in fiscal year 2023, primarily due to significant investments in research and development. The company continues to benefit from secular tailwinds in the data infrastructure market, driven by AI/ML and increasing network traffic, positioning it to capitalize on future demand. Financially, Credo ended fiscal year 2024 with $66.9 million in cash and cash equivalents and a working capital of $485.6 million. The company's growth strategy focuses on extending its leadership in SerDes technologies, broadening its product portfolio, acquiring new customers, and deepening relationships with existing ones. A key risk remains the high customer concentration, with the top 10 customers accounting for 86% of revenue in fiscal year 2024, including two customers representing 39% and 15% respectively.

Financial Highlights

49 data points
Beta

Revenue

$192.97M

61.9% Gross Margin

Net Income

-$28.37M

-14.7% Net Margin

EPS (Diluted)

$-0.18

Total Assets

$601.93M

Cash & Equivalents

$66.94M

Free Cash Flow

$17.09M

Financial Statements
Beta
Revenue$192.97M
Cost of Revenue$73.54M
Gross Profit$119.43M
R&D Expenses$96.30M
SG&A Expenses$60.19M
Operating Expenses$156.49M
Operating Income-$37.06M
Net Income-$28.37M
EPS (Basic)$-0.18
EPS (Diluted)$-0.18
Shares Outstanding (Basic)155.09M
Shares Outstanding (Diluted)155.09M

Key Highlights

  • 1Revenue grew 4.8% year-over-year to $193.0 million in fiscal year 2024, driven by strong performance in product engineering services and product sales.
  • 2The company reported a net loss of $28.4 million in fiscal year 2024, an increase from $16.5 million in fiscal year 2023, attributed to increased R&D and SG&A expenses, including share-based compensation.
  • 3Gross margin improved by 4.2 percentage points to 61.9% in fiscal year 2024, primarily due to a higher mix of high-margin product engineering services and improved product sales gross margins.
  • 4Research and Development (R&D) expenses increased by 24.4% to $95.5 million, representing 49.5% of revenue, highlighting the company's investment in innovation and future growth.
  • 5Selling, General, and Administrative (SG&A) expenses also rose by 24.8% to $60.2 million, reflecting increased headcount and share-based compensation.
  • 6The company ended the fiscal year with $66.9 million in cash and cash equivalents and $485.6 million in working capital, indicating a solid liquidity position.
  • 7Customer concentration remains a significant factor, with the top 10 customers accounting for 86% of total revenue in fiscal year 2024.

Frequently Asked Questions

Credo Technology Group Holding Ltd provides innovative, secure, high-speed, and power-efficient connectivity solutions. Their primary market focus is the data infrastructure sector, driven by the increasing demands of Artificial Intelligence infrastructure and applications, hyperscale data centers, and other data-intensive industries.

In fiscal year 2024, Credo generated $193.0 million in revenue, a slight increase from $184.2 million in fiscal year 2023. However, the company reported a net loss of $28.4 million, an increase from $16.5 million in the prior year, primarily due to increased investments in research and development and higher operating expenses.

Credo's growth is primarily driven by the exponential increase in bandwidth requirements within the data infrastructure market, fueled by the accelerating deployment of AI/ML infrastructure and the general growth in hyperscale data center traffic. The company's SerDes and DSP technologies are well-positioned to capitalize on these trends.

A significant risk for Credo is customer concentration, with a large portion of revenue coming from a few key customers. The company also faces intense competition, is subject to the cyclical nature of the semiconductor industry, and relies on third-party manufacturers. Additionally, risks related to R&D investment, product development delays, and the lengthy sales cycles are noted.