8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 8-K

_________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 4, 2024

_________________________

Credo Technology Group Holding Ltd

(Exact name of registrant as specified in its charter)

_________________________

Cayman Islands	001-41249		N/A
(State or other jurisdiction <br>of incorporation)	(Commission <br>File Number)		(IRS Employer <br>Identification No.)
c/o Maples Corporate Services, Limited,<br><br>PO Box 309, Ugland House<br><br>Grand Cayman, KY1-1104, Cayman Islands		N/A
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (408) 664-9329

N/A

(Former name or former address, if changed since last report)

_________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
---	---
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
---	---
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
---	---

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading<br><br>Symbol(s)	Name of each exchange<br><br>on which registered
Ordinary shares, par value $0.00005 per share	CRDO	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).                    Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02    Results of Operations and Financial Condition.

On September 4, 2024, Credo Technology Group Holding Ltd (the "Company") issued a press release announcing its financial results for the fiscal quarter ended August 3, 2024. A copy of the press release is furnished herewith as Exhibit 99.1.

The information in Item 2.02 of this current report on Form 8-K, including the accompanying Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description of Exhibit
99.1	Press Release dated September 4, 2024
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Credo Technology Group Holding Ltd
Date: September 4, 2024	By:	/s/ Daniel Fleming
		Daniel Fleming
		Chief Financial Officer

Document

Exhibit 99.1

Credo Technology Group Holding Ltd Reports First Quarter of Fiscal Year 2025

Financial Results

San Jose, Calif. (September 4, 2024) - Credo Technology Group Holding Ltd (Nasdaq: CRDO), an innovator in providing secure, high-speed connectivity solutions that deliver improved energy efficiency as data rates and corresponding bandwidth requirements increase through the data infrastructure market, today reported financial results for the first quarter of fiscal year 2025, ended August 3, 2024.

First Quarter of Fiscal Year 2025 Financial Highlights

•Revenue of $59.7 million, grew by 70% year over year

•GAAP gross margin of 62.4% and non-GAAP gross margin of 62.9%

•GAAP operating expenses of $51.7 million and non-GAAP operating expenses of $35.4 million

•GAAP net loss of $(9.5) million and non-GAAP net income of $7.0 million

•GAAP diluted net loss per share of $(0.06) and non-GAAP diluted net income per share of $0.04

•Ending cash and short-term investment balance of $398.6 million

Management Commentary

Bill Brennan, Credo’s President and Chief Executive Officer, stated, “For the first fiscal quarter ended August 3, 2024, Credo reported revenue of $59.7 million. This total included record product revenues of $57.3 million, an increase of 30% compared to the prior quarter. Our customers’ AI infrastructure deployments remain the catalyst for our recent and expected growth. Going forward in fiscal 2025 and beyond, we expect contributions from our entire suite of innovative, power and cost-efficient, high-speed connectivity solutions.”

Second Quarter of Fiscal 2025 Financial Outlook

•Revenue is expected to be between $65.0 million and $68.0 million

•GAAP gross margin is expected to be between 61.3% and 63.3%, and non-GAAP gross margin is expected to be between 62.0% and 64.0%

•GAAP operating expenses are expected to be between $51.3 million and $53.3 million, and non-GAAP operating expenses are expected to be between $36.0 million and $38.0 million

Conference Call

Credo will conduct a conference call on Wednesday, September 4, 2024, at 2:00 p.m. Pacific Time to discuss its financial results for the first quarter of fiscal year 2025, ended August 3, 2024. Interested parties may join the conference call by registering online at https://register.vevent.com/register/BIdb1b1dd41c9144fa8f424eb3f53fa7f1. After registering, a confirmation will be sent through email, including dial-in details and a unique conference call code for entry. It is recommended that participants register and dial in for the call at least 10 minutes before the start of the call. A live webcast of the conference call will be available on Credo’s Investor Relations website at http://investors.credosemi.com. A replay of the webcast will be available via the web at http://investors.credosemi.com.

Discussion of Non-GAAP Financial Measures

This press release contains references to the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating income (loss) margin, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share. Reconciliation of these non-GAAP measures to their comparable GAAP measures is included below. This non-GAAP information should not be construed as an alternative to the reported results determined in accordance with GAAP. The non-GAAP financial measures that Credo presents may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.

Non-GAAP financial measures exclude the effect of share-based compensation expenses, asset impairment and related 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 (loss) per share is calculated using basic weighted average shares outstanding when there is a non-GAAP net loss, and calculated using non-GAAP diluted weighted average shares outstanding when there is a non-GAAP net income. Non-GAAP adjustment for the number of shares used in the diluted per share calculations excludes the impact of share-based compensation expenses expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.

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. 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; financial outlook; 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, or their negatives, may 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 that may cause actual events or results to differ materially from those described in this press release. Readers are encouraged to review risk factors and all other disclosures appearing in Credo’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on June 24, 2024, 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, Credo’s website or Credo’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 100G (or Gigabits per second), 200G, 400G, 800G and emerging 1.6T (or Terabits per second) 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

IR@credosemi.com

Credo Technology Group Holding Ltd

Condensed Consolidated Statements of Operations (Unaudited)

(In thousands, except per share amounts)

	Three Months Ended
	August 3, 2024		April 27, 2024		July 29, 2023
Revenue:
Product sales	$	53,839	$	40,798	$	30,028
Product engineering services	3,486		3,341		2,293
IP license	2,389		16,643		2,774
Total revenue	59,714		60,782		35,095
Cost of revenue:
Cost of product sales revenue	21,884		20,372		13,868
Cost of product engineering services revenue	452		290		293
Cost of IP license revenue	95		154		144
Total cost of revenue	22,431		20,816		14,305
Gross profit	37,283		39,966		20,790
Operating expenses:
Research and development	30,409		26,921		22,638
Selling, general and administrative	21,325		20,161		12,543
Impairment charges	—		765		—
Total operating expenses	51,734		47,847		35,181
Operating loss	(14,451)		(7,881)		(14,391)
Other income, net	5,533		5,163		2,157
Loss before income taxes	(8,918)		(2,718)		(12,234)
Provision (benefit) for income taxes	622		7,759		(537)
Net loss	$	(9,540)	$	(10,477)	$	(11,697)
Net loss per share:
Basic and diluted	$	(0.06)	$	(0.06)	$	(0.08)
Weighted-average shares used in computing net loss per share:
Basic and diluted	165,140		163,677		149,277

Credo Technology Group Holding Ltd

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

	August 3, 2024		April 27, 2024
Assets
Current assets:
Cash and cash equivalents	$	103,900	$	66,942
Short-term investments	294,716		343,061
Accounts receivable	71,859		59,662
Inventories	31,557		25,907
Contract assets	24,400		21,562
Prepaid expenses and other current assets	15,921		13,131
Total current assets	542,353		530,265
Property and equipment, net	70,241		43,665
Right of use assets	15,860		13,077
Other non-current assets	16,411		14,925
Total assets	$	644,865	$	601,932
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	38,473	$	13,417
Accrued compensation and benefits	7,808		9,000
Accrued expenses and other current liabilities	20,218		18,301
Deferred revenue	2,917		3,902
Total current liabilities	69,416		44,620
Non-current operating lease liabilities	13,530		11,133
Other non-current liabilities	8,817		5,981
Total liabilities	91,763		61,734
Shareholders' equity:
Ordinary shares	8		8
Additional paid in capital	698,354		676,054
Accumulated other comprehensive loss	(375)		(519)
Accumulated deficit	(144,885)		(135,345)
Total shareholders' equity	553,102		540,198
Total liabilities and shareholders' equity	$	644,865	$	601,932

Credo Technology Group Holding Ltd

Reconciliations from GAAP to Non-GAAP (Unaudited)

(In thousands, except percentages and per share amounts)

	Three Months Ended
	August 3, 2024			April 27, 2024			July 29, 2023
GAAP gross profit	$	37,283		$	39,966		$	20,790
Reconciling item:
Share-based compensation	281			234			189
Total reconciling item:	281			234			189
Non-GAAP gross profit (A)	$	37,564		$	40,200		$	20,979
GAAP gross margin	62.4		%	65.8		%	59.2		%
Non-GAAP gross margin	62.9		%	66.1		%	59.8		%
Total GAAP operating expenses	$	51,734		$	47,847		$	35,181
Reconciling item:
Share-based compensation	(16,359)			(14,344)			(7,779)
Impairment charges	—			(765)			—
Total reconciling item:	(16,359)			(15,109)			(7,779)
Total Non-GAAP operating expenses (B)	$	35,375		$	32,738		$	27,402
GAAP operating loss	$	(14,451)		$	(7,881)		$	(14,391)
Non-GAAP operating income (loss) (A-B)	$	2,189		$	7,462		$	(6,423)
GAAP operating loss margin	(24.2)		%	(13.0)		%	(41.0)		%
Non-GAAP operating income (loss) margin	3.7		%	12.3		%	(18.3)		%
GAAP net loss	$	(9,540)		$	(10,477)		$	(11,697)
Reconciling items:
Share-based compensation	16,640			14,578			7,968
Impairment charges	—			765			—
Pre-tax total reconciling item	16,640			15,343			7,968
Other income tax effects and adjustments	(61)			6,940			(992)
Non-GAAP net income (loss)	$	7,039		$	11,806		$	(4,721)
GAAP weighted-average shares - basic	165,140			163,677			149,277
GAAP weighted-average shares - diluted	165,140			163,677			149,277
Non-GAAP adjustment	15,894			15,463			—
Non-GAAP weighted-average shares - diluted	181,034			179,140			149,277
GAAP diluted net income (loss) per share	$	(0.06)		$	(0.06)		$	(0.08)
Non-GAAP diluted net income (loss) per share	$	0.04		$	0.07		$	(0.03)

Credo Technology Group Holding Ltd

Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates

(In millions, except percentages)

	Outlook for Three Months Ended November 2, 2024
	Low			High
GAAP gross margin	61.3		%	63.3		%
Reconciling item:
Share-based compensation	0.7		%	0.7		%
Total reconciling item:	0.7		%	0.7		%
Non-GAAP gross margin	62.0		%	64.0		%
Total GAAP operating expenses	$	51.3		$	53.3
Reconciling item:
Share-based compensation	15.3			15.3
Total reconciling item:	15.3			15.3
Total Non-GAAP operating expenses	$	36.0		$	38.0