Credo Technology Group Holding Ltd Reports Fourth Quarter and Fiscal Year 2022 Financial Results

June 1, 2022 at 4:06 PM EDT

SAN JOSE, Calif., June 01, 2022 (GLOBE NEWSWIRE) -- Credo Technology Group Holding Ltd (NASDAQ: CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved power and cost efficiency as data rates and corresponding bandwidth requirements increase throughout the data infrastructure market, today reported financial results for the fourth quarter and full fiscal year, ended April 30, 2022.

Q4 Financial Highlights

  • Revenue of $37.5 million, grew by 90.0% year on year
  • GAAP gross margin of 63.3% and non-GAAP gross margin of 63.7%
  • GAAP operating expenses of $30.1 million and non-GAAP operating expenses of $21.6 million
  • GAAP net loss of $5.4 million and non-GAAP net income of $2.8 million
  • GAAP net loss per share of $0.04 and non-GAAP diluted net income per share of $0.02
  • During the quarter, Credo sold an additional three million ordinary shares in connection with its initial public offering and received net proceeds of $28.1 million after deducting underwriting discount and commission
  • Ending Cash Balance of $259.3 million

Management Commentary

Bill Brennan, Credo’s President and Chief Executive Officer, stated, “Fiscal 2022 was a year of tremendous achievement for Credo. Our highlights included completing our initial public offering in January 2022 and achieving record revenue of $106.5 million, up more than 80% from prior year. We also delivered record results in the most recent quarter, despite the complexities we faced. During our fiscal fourth quarter, we recorded revenue of $37.5 million, a 90.0% increase year over year. We had growth in every of part of our business in fiscal 2022, and we expect the same in fiscal 2023.”

First Quarter of Fiscal 2023 Financial Outlook

  • Revenue is expected to be between $43.5 million to $47.5 million, up 324% year over year at the midpoint
  • GAAP gross margin is expected to be between 58.5%-60.5% and non-GAAP gross margin is expected to be between 59.0%-61.0%
  • GAAP operating expenses are expected to be between $27.5 million to $29.5 million and non-GAAP operating expenses are expected to be between $21.5 million to $23.5 million

Conference Call

Credo will conduct a conference call on Wednesday, June 1, 2022, at 2:00 p.m. Pacific Time to discuss its financial results for the fiscal fourth quarter and fiscal year ended April 30, 2022. Interested parties may join the conference call beginning at 2:00 p.m. Pacific Time on Wednesday, June 1, 2022 via telephone by dialing 1-855-553-1968 in the U.S., or for international callers, by dialing 1-409-981-0977 and entering conference ID 4861225. A telephone replay will be available until June 8, 2022, by dialing 1-855-859-2056 in the U.S., or for international callers, 1-404-537-3406 with conference ID 4861225. A live webcast of the conference call will be available on Credo’s Investor Relations website at A replay of the webcast will be available via the web at

Discussion of Non-GAAP Financial Measures

This press release contains references to non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share. Reconciliation of these non-GAAP measures to its comparable GAAP measure is included below. This non-GAAP information should not be construed as an alternative to the reported results determined in accordance with GAAP. It is provided solely to assist in an investor’s understanding of these items on the comparability of the Company’s operations.

Non-GAAP financial measures exclude the effect of share-based compensation expenses, warrant contra revenue, asset impairment 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 per share is calculated using diluted weighted average shares outstanding.

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 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 that involve risks and uncertainties. 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; 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 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. Actual events or results may differ materially from those described in this press release due to a number of risks and uncertainties. Readers are encouraged to review risk factors and all other disclosures appearing in the Company's Prospectus as filed with the Securities and Exchange Commission (SEC) on January 26, 2022, 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, the Company’s website or the Company’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 emerging 100G (or Gigabits per second), 200G, 400G and 800G 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

Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)

 Three Months Ended Year Ended
 April 30,
31, 2022
 April 30,
 April 30,
 April 30,
Product sales$25,298  $22,706  $8,747  $73,721  $27,477 
Product engineering services 1,113   3,954   4,230   7,741   9,579 
IP license 11,115   5,022   5,722   23,309   17,273 
IP license engineering services    118   1,051   1,706   4,368 
Total revenue 37,526   31,800   19,750   106,477   58,697 
Cost of revenue:         
Cost of product sales revenue 13,646   12,230   5,135   40,082   16,071 
Cost of product engineering services revenue 111   410   874   1,918   3,168 
Cost of IP license engineering services revenue    48   377   462   1,180 
Total cost of revenue 13,757   12,688   6,386   42,462   20,419 
Gross profit 23,769   19,112   13,364   64,015   38,278 
Operating expenses:         
Research and development 15,461   10,995   8,209   47,949   34,845 
Selling, general and administrative 11,507   8,568   7,065   34,900   28,667 
Impairment charges 3,134         3,134    
Total operating expenses 30,102   19,563   15,274   85,983   63,512 
Operating loss (6,333)  (451)  (1,910)  (21,968)  (25,234)
Other income (expense), net (175)  (80)  (22)  (245)  (62)
Loss before income taxes (6,508)  (531)  (1,932)  (22,213)  (25,296)
Provision (benefit) for income taxes (1,153)  (387)  1,154   (37)  2,215 
Net loss$(5,355) $(144) $(3,086) $(22,176) $(27,511)
Net loss per share:         
Basic and diluted$(0.04) $  $(0.05) $(0.25) $(0.40)
Weighted-average shares used in computing net loss per share:         
Basic and diluted 144,501   73,815   67,719   88,398   69,099 

Credo Technology Group Holding Ltd

Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)

  April 30, 2022 April 30, 2021
Current Assets:    
Cash and cash equivalents $259,322  $103,757 
Accounts receivable  29,524   13,645 
Inventories  27,337   7,104 
Contract assets  10,071   4,562 
Prepaid expenses and other current assets  5,923   8,731 
Total current assets  332,177   137,799 
Property and equipment, net  21,844   14,231 
Right of use assets  16,954    
Other non-current assets  4,714   3,460 
Total assets $375,689  $155,490 
Liabilities, Convertible Preferred Shares and Shareholders' Equity (Deficit)
Current Liabilities:    
Accounts payable $8,487  $3,590 
Accrued compensation and benefits  4,713   1,549 
Accrued expenses and other current liabilities  12,063   3,277 
Deferred revenue  1,234   4,116 
Total current liabilities  26,497   12,532 
Non-current operating lease liabilities  14,809    
Other non-current liabilities  220   424 
Total liabilities  41,526   12,956 
Convertible preferred shares     197,965 
Shareholders' equity (deficit):    
Ordinary shares  7   3 
Additional paid in capital  424,562   12,592 
Accumulated other comprehensive income  23   227 
Accumulated deficit  (90,429)  (68,253)
Total shareholders' equity (deficit)  334,163   (55,431)
Total liabilities, convertible preferred shares and shareholders' equity (deficit) $375,689  $155,490 

Credo Technology Group Holding Ltd

Reconciliations from GAAP to Non-GAAP (Unaudited)
(In thousands, except percentages and per share amounts)

 Three Months Ended Year Ended
 April 30,
31, 2022
 April 30,
 April 30,
 April 30,
GAAP gross profit$23,769  $19,112  $13,364  $64,015  $38,278 
Reconciling items:         
Warrant contra revenue 233   407      640    
Share-based compensation 40   46   46   220   183 
Total reconciling items: 273   453   46   860   183 
Non-GAAP gross profit$24,042  $19,565  $13,410  $64,875  $38,461 
GAAP gross margin 63.3%  60.1%  67.7%  60.1%  65.2%
Non-GAAP gross margin 63.7%  60.7%  67.9%  60.6%  65.5%
Total GAAP operating expenses$30,102  $19,563  $15,274  $85,983  $63,512 
Reconciling item:         
Share-based compensation (5,328)  (1,392)  (872)  (8,968)  (13,723)
Impairment charges (3,134)        (3,134)   
Total reconciling items: (8,462)  (1,392)  (872)  (12,102)  (13,723)
Total Non-GAAP operating expenses$21,640  $18,171  $14,402  $73,881  $49,789 
GAAP net loss$(5,355) $(144) $(3,086) $(22,176) $(27,511)
Reconciling items:         
Warrant contra revenue 233   407      640    
Share-based compensation 5,368   1,438   918   9,188   13,906 
Impairment charges 3,134         3,134    
Pre-tax total reconciling items 8,735   1,845   918   12,962   13,906 
Other income tax effects and adjustments (611)  700   (121)  (1,049)  (300)
Non-GAAP net income/(loss)$2,769  $2,401  $(2,289) $(10,263) $(13,905)
GAAP weighted average shares - basic 144,501   73,815   67,719   88,398   69,099 
GAAP weighted average shares - diluted 144,501   73,815   67,719   88,398   69,099 
Non-GAAP adjustment 13,732   10,373          
Non-GAAP weighted average shares - diluted 158,233   84,187   67,719   88,398   69,099 
GAAP diluted net loss per share$(0.04) $  $(0.05) $(0.25) $(0.40)
Non-GAAP diluted net income/(loss) per share$0.02  $0.03  $(0.03) $(0.12) $(0.20)

Credo Technology Group Holding Ltd

Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates
(In millions, except percentages)

  Three Months Ended July 30, 2022
  Low High
GAAP gross margin  58.5%  60.5%
Reconciling items:    
Warrant contra revenue  0.4%  0.4%
Share-based compensation  0.1%  0.1%
Total reconciling items:  0.5%  0.5%
Non-GAAP gross margin  59.0%  61.0%
Total GAAP operating expenses $27.5  $29.5 
Reconciling item:    
Share-based compensation  6.0   6.0 
Total reconciling items:  6.0   6.0 
Total Non-GAAP operating expenses $21.5  $23.5