Executive Summary
In the second quarter of fiscal 2025, Credo Technology Group Holding Ltd (NASDAQ: CRDO) achieved a remarkable revenue of $72 million, representing a 64% year-over-year increase and a 21% sequential growth. This success was largely attributed to the strong demand for the company's innovative Ethernet connectivity solutions, particularly active electrical cables (AECs). Management highlighted an inflection point in revenues driven by increased shipments and improving customer relationships, particularly within the AI and hyperscaler markets. The company’s commitment to maintaining high gross margins and improving efficiency in operations has positioned it favorably for sustained growth.
Key Performance Indicators
QoQ: 41.82% | YoY:-42.23%
QoQ: 55.71% | YoY:-1 087.15%
QoQ: 56.06% | YoY:-1 040.74%
Key Insights
1. **Revenue**: Reported at $72 million with a YoY growth of 64% and a sequential increase of 21%.
2. **Gross Profit**: $45.5 million, with a gross margin of 63.6%, an improvement from previous quarters.
3. **Operating Income**: Operating losses of $8.4 million; indicating challenges in controlling operational costs despite revenue growth.
4. **Net Income**: Reported net loss of $4.2 million, with an EPS of -$0.0254.
5. **Current Ratio**: An impressive 10.84, indicating strong liquidity.
6. **Ca...
Financial Highlights
1. Revenue: Reported at $72 million with a YoY growth of 64% and a sequential increase of 21%.
2. Gross Profit: $45.5 million, with a gross margin of 63.6%, an improvement from previous quarters.
3. Operating Income: Operating losses of $8.4 million; indicating challenges in controlling operational costs despite revenue growth.
4. Net Income: Reported net loss of $4.2 million, with an EPS of -$0.0254.
5. Current Ratio: An impressive 10.84, indicating strong liquidity.
6. Cash Flow: Operating cash flow of $10.3 million, free cash flow of -$11.7 million, reflecting heavy reinvestment into growth initiatives.
7. Cash Position: Strong cash reserves of $383 million, down slightly from last quarter, but still robust for future investments.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
72.03M |
35.76% |
20.63% |
| Gross Profit |
45.51M |
56.09% |
22.07% |
| Operating Income |
-8.41M |
-42.23% |
41.82% |
| Net Income |
-4.23M |
-1 087.15% |
55.71% |
| EPS |
-0.03 |
-1 040.74% |
56.06% |
Key Financial Ratios
operatingProfitMargin
-11.7%
operatingCashFlowPerShare
$0.06
freeCashFlowPerShare
$-0.07
priceEarningsRatio
-398.29
Management Commentary
Growth Momentum: Bill Brennan, CEO, stated, "The second quarter showcased record revenue across our three main product lines and marked the beginning of the revenue inflection point we've discussed in past quarters."
Market Adoption: "We believe that we are still in the early stages of widespread market adoption, and we are well-positioned as the market leader. AI-driven demand for high-speed, power-efficient, and reliable connectivity is accelerating," emphasized Brennan.
"We are seeing the anticipated revenue inflection point in the second half of fiscal '25... with demand fueled by AI deployments and deepening customer relationships," - Bill Brennan, CEO.
— Bill Brennan
"We expect Q3 non-GAAP gross margin to be within a range of 61% to 63%... we look forward to driving operating leverage throughout the year," - Dan Fleming, CFO.
— Dan Fleming
Forward Guidance
Management provided a positive outlook for Q3 2025 with expected revenue between $115 million and $125 million, indicating a growth of 67% sequentially at the midpoint. The anticipated operational leverage and continued emphasis on research and development positions Credo to expand its market share significantly in the latter half of fiscal 2025. Key factors to monitor include the performance of AEC products and the impact of ongoing AI deployments.