Credo Technology Group Reports 70.1% Revenue Growth, Improved Profitability in Q3 2024

Credo Technology Group Holding Ltd reported significant financial developments for the three months ended August 3, 2024, showcasing a robust increase in revenue and improvements in profitability metrics compared to the same period in the previous fiscal year.

Total revenue for the quarter reached $59.7 million, a 70.1% increase from $35.1 million in the prior year. This growth was primarily driven by a substantial rise in product sales, which amounted to $53.8 million, up 79.3% from $30.0 million. The increase in product sales was largely attributed to a higher volume of unit shipments of Active Electrical Cables (AEC) products, particularly due to the ramp-up of AEC solutions at a key hyperscale data center customer. Product engineering services also contributed to revenue growth, reflecting a 110% increase in engineering time spent on these arrangements.

Gross profit for the quarter was $37.3 million, compared to $20.8 million in the same period last year, resulting in a gross margin of 62.4%, an improvement from 59.2%. Total operating expenses increased to $51.7 million from $35.2 million, primarily due to higher share-based compensation and personnel costs associated with increased headcount. Despite the rise in expenses, the operating loss improved to $(14.4) million, down from $(35.3) million, indicating better operational efficiency.

The net loss for the quarter was $9.5 million, a reduction from a net loss of $11.7 million in the previous year. This improvement was reflected in the basic and diluted net loss per share, which decreased to $(0.06) from $(0.08).

On the balance sheet, cash and cash equivalents increased significantly to $103.9 million from $66.9 million as of April 27, 2024. Total current assets rose to $542.4 million, while total assets reached $644.9 million. Shareholders' equity also improved, totaling $553.1 million, up from $540.2 million.

The company continues to focus on its core business of high-speed connectivity solutions, targeting the multibillion-dollar data infrastructure market, including hyperscale data centers and mobile network operators. Credo operates a fabless business model, outsourcing manufacturing while concentrating on engineering and design.

In terms of strategic developments, Credo issued a customer warrant to Amazon.com NV Investment Holdings LLC, allowing for the purchase of up to 4.08 million ordinary shares, which has already generated $3.2 million in revenue for the quarter. The company remains committed to enhancing its product offerings and expanding its market presence, leveraging its proprietary technologies in the optical and electrical Ethernet applications.