Executive Summary
Credo Technology Group Holding Ltd (CRDO) reported robust financial results for the first quarter of fiscal 2025, with revenues reaching $59.7 million, marking an impressive year-over-year increase of 70% despite a slight sequential decline of 2%. Driven primarily by the demand for active electrical cables (AECs) amidst the rapid adoption of artificial intelligence (AI) technologies, Credo has positioned itself favorably in the high-speed connectivity sector. Notably, product revenues of $57.3 million set a new record for the company, reflecting a 30% sequential growth. However, operational challenges persist, as management reported an operating loss of $14.4 million, emphasizing the need for continued focus on efficiency and scalability as the company looks to leverage its innovation in product development.
Key Performance Indicators
QoQ: -103.08% | YoY:-62.83%
Key Insights
1. **Revenue Performance**: Total revenue was $59.7 million; product revenue was $57.3 million (up 30% QoQ, up 77% YoY).
2. **Profitability**: Gross profit margin of 62.9%, non-GAAP operating margin fell to 3.7% from 12.3% in the previous quarter.
3. **Losses**: Operating loss of $14.4 million and a net loss of $9.54 million due to high R&D costs of $30.4 million.
4. **Liquidity Ratios**: Current ratio of 7.81 and cash equivalents of $103.9 million provide a solid liquidity position....
Financial Highlights
1. Revenue Performance: Total revenue was $59.7 million; product revenue was $57.3 million (up 30% QoQ, up 77% YoY).
2. Profitability: Gross profit margin of 62.9%, non-GAAP operating margin fell to 3.7% from 12.3% in the previous quarter.
3. Losses: Operating loss of $14.4 million and a net loss of $9.54 million due to high R&D costs of $30.4 million.
4. Liquidity Ratios: Current ratio of 7.81 and cash equivalents of $103.9 million provide a solid liquidity position.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
59.71M |
35.61% |
-1.76% |
| Gross Profit |
37.28M |
42.75% |
-6.71% |
| Operating Income |
-14.45M |
-62.83% |
-103.08% |
| Net Income |
-9.54M |
-44.04% |
8.94% |
| EPS |
-0.06 |
-31.07% |
9.69% |
Key Financial Ratios
operatingProfitMargin
-24.2%
operatingCashFlowPerShare
$-0.04
freeCashFlowPerShare
$-0.08
priceEarningsRatio
-109.62
Management Commentary
- Market Trends: Bill Brennan, CEO, highlighted the accelerating demand for AECs driven by AI deployments, stating, "Our product revenues... were driven by rapidly expanding AI deployments."
- Future Opportunities: The company expects to enter 64 gig PAM4 PCIe Gen 6 with new products, showcasing innovation. Brennan noted, "We think our approach of offering system-level products... is crucial to maintaining our competitive edge."
- Customer Growth: Credo anticipates a new 10% customer contributing significantly in Q2, emphasizing growing engagement with emerging hyperscalers.
"We see a group of emerging hyperscalers deploying an increasing amount of infrastructure to take advantage of opportunities presented by AI."
— Bill Brennan, CEO
"...we expect a new 10% customer in Q2...our AECs will play a crucial role in driving growth in fiscal '25 and beyond."
— Bill Brennan, CEO
Forward Guidance
For Q2 fiscal 2025, Credo expects revenue between $65 million and $68 million, representing a sequential growth of 11%. Management anticipates non-GAAP gross margin to remain stable at approximately 62-64%, indicating confidence in maintaining profitability amidst rising demand. The company aims to continue accelerating its growth trajectory into the second half of the fiscal year, capitalizing on new customer relationships and product innovations.