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Credo Technology Group Holding 8-K Report, Financial Results (Sep 4, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed September 4, 2024
Period End
September 4, 2024
Security
CRDO
In the record · 2022–202610-K610-Q148-K38

CRDO filed 6 annual reports (10-K), 14 quarterly reports (10-Q) and 38 current reports (8-K) between 2022 and 2026.

  1. Leadership change8-K · Apr ’24Apr ’24
  2. Leadership change8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 8-K filed September 4, 2024. Cited figures are marked; the original filing is the authoritative source.

Credo Technology Group (CRDO) reported first-quarter fiscal 2025 results for the quarter ended August 3, 2024.

Revenue was $59.7 milliona, up 70% year over year from $35.1 million, driven by product sales of $53.8 million (up roughly 79% year over year). Management cited AI infrastructure deployments as the main catalyst and described product revenue of $57.3 million (product sales plus product engineering services) as a record. On a sequential basis, total revenue was roughly flat to slightly down from $60.8 million, because IP license revenue fell sharply from $16.6 million to $2.4 million.

Product revenue rose about 30%b sequentially, which offset the drop in licensing. Profitability was mixed. GAAP gross margin was 62.4%, down from 65.8% in the prior quarter but up from 59.2% a year earlier.

GAAP operating expenses rose to $51.7 millionc, and GAAP net loss widened to $(9.5) million, or $(0.06) per share, compared with a $(10.5) million loss in the prior quarter. Share-based compensation of $16.6 million was the main reason GAAP results trailed non-GAAP results, which showed net income of $7.0 million ($0.04 per diluted share). Cash and short-term investments totaled $398.6 million at quarter end, and the balance sheet expanded as property and equipment rose from $43.7 million to $70.2 million and accounts payable rose from $13.4 million to $38.5 million.

For fiscal Q2 2025, management guided revenue of $65.0 million to $68.0 milliond, which implies roughly 9% to 14% sequential growth. Guidance also calls for GAAP gross margin of 61.3% to 63.3% and GAAP operating expenses of $51.3 million to $53.3 million. Investors will likely focus on whether product revenue growth can sustain the sequential trajectory, whether licensing revenue stabilizes, and whether operating expenses and share-based compensation can be kept in check as the company scales.

02—Key points

Key Highlights

  1. Revenue of $59.7 million, up 70% year over year, but roughly flat sequentially (down from $60.8 million) as IP license revenue fell from $16.6 million to $2.4 million.
  2. Record product revenue of $57.3 million (product sales plus engineering services), up about 30% sequentially, attributed to AI infrastructure deployments.
  3. GAAP gross margin of 62.4% (down from 65.8% last quarter, up from 59.2% a year ago); non-GAAP gross margin of 62.9%.
  4. GAAP net loss of $(9.5) million, or $(0.06) per share, versus non-GAAP net income of $7.0 million, or $0.04 per diluted share; the gap is primarily share-based compensation of about $16.6 million.
  5. GAAP operating expenses rose to $51.7 million from $47.8 million sequentially, with R&D up to $30.4 million and SG&A up to $21.3 million.
  6. Cash and short-term investments of $398.6 million at quarter end, but down from $410.0 million the prior quarter, as capital spending rose (property and equipment up about $26.6 million).
  7. Q2 FY2025 guidance calls for revenue of $65.0 million to $68.0 million, GAAP gross margin of 61.3% to 63.3%, and GAAP operating expenses of $51.3 million to $53.3 million.

03—Questions

Frequently Asked Questions

  1. Why did revenue stay flat sequentially despite a 30% jump in product revenue?

    Total revenue was $59.7 million versus $60.8 million in the prior quarter. Product sales rose to $53.8 million from $40.8 million, but IP license revenue fell from $16.6 million to $2.4 million. Licensing is lumpy and can swing sharply, so the decline offset the product growth. Investors should look at product revenue as the more durable indicator of the trend.

  2. Is Credo profitable?

    On a GAAP basis, no. The company reported a net loss of $(9.5) million, or $(0.06) per share, for the quarter. On a non-GAAP basis, which excludes share-based compensation and certain other items, net income was $7.0 million, or $0.04 per diluted share. The gap is large, with share-based compensation of about $16.6 million in the quarter, so GAAP results are the more conservative measure to track.

  3. What does the Q2 guidance imply for growth?

    Revenue guidance of $65.0 million to $68.0 million implies sequential growth of about 9% to 14% from $59.7 million. Guidance also implies GAAP gross margin of 61.3% to 63.3%, slightly below the 62.4% reported this quarter, and GAAP operating expenses of $51.3 million to $53.3 million, which is roughly flat to modestly higher.

  4. What drove the increase in working capital and capital spending?

    Property and equipment, net, increased to $70.2 million from $43.7 million, indicating significant capital investment. Accounts payable rose to $38.5 million from $13.4 million, and accounts receivable increased to $71.9 million from $59.7 million, reflecting higher activity in the quarter. Cash and short-term investments fell to $398.6 million from $410.0 million. The filing does not explain the purpose of the capital spending, so investors should review the earnings call and 10-Q for details.

04—Continue

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