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): May 31, 2023

_________________________

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)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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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 May 31, 2023, Credo Technology Group Holding Ltd (the "Company") issued a press release announcing its financial results for the fiscal year ended April 29, 2023. 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 May 31, 2023
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: May 31, 2023	By:	/s/ Daniel Fleming
		Daniel Fleming
		Chief Financial Officer

Document

Exhibit 99.1

Credo Technology Group Holding Ltd Reports Fourth Quarter and Fiscal Year 2023

Financial Results

San Jose, Calif. (May 31, 2023) - 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 2023, ended April 29, 2023.

Fourth Quarter of Fiscal Year 2023 Financial Highlights

•Revenue of $32.1 million, decreased by 14.5% year over year

•GAAP gross margin of 57.9% and non-GAAP gross margin of 58.2%

•GAAP operating expenses of $35.0 million and non-GAAP operating expenses of $27.2 million

•GAAP net loss of $15.9 million and non-GAAP net loss of $5.7 million

•GAAP diluted net loss per share of $0.11 and non-GAAP diluted net loss per share of $0.04

•Ending cash and short-term investment balance of $217.8 million

Management Commentary

Bill Brennan, Credo’s President and Chief Executive Officer, stated, “In fiscal 2023, Credo achieved just over $184M in revenue, a 73% increase compared to fiscal 2022. Most recently, the hyperscale landscape has shifted swiftly and dramatically. Compute is now facing a new horizon – generative AI. We see this shift accelerating the demand for energy-efficient connectivity solutions that perform at the highest speeds, which is exactly where Credo excels. We believe this technology acceleration increases the degree of difficulty and will naturally slim the field of market participants. We remain confident that our technology innovation and market leadership will fuel our growth as these opportunities materialize.”

First Quarter of Fiscal Year 2024 Financial Outlook

•Revenue is expected to be between $33.0 million and $35.0 million

•GAAP gross margin is expected to be between 57.8% and 59.8%, and non-GAAP gross margin is expected to be between 58.0% and 60.0%

•GAAP operating expenses are expected to be between $34.0 million and $36.0 million, and non-GAAP operating expenses are expected to be between $26.0 million and $28.0 million

Webcast and Conference Call Information

Credo will conduct a conference call on Wednesday, May 31, 2023, at 2:00 p.m. Pacific Time to discuss its financial results for the fourth quarter and fiscal year 2023, ended April 29, 2023. Interested parties may join the conference call by registering online at https://register.vevent.com/register/BI2ecd39448de04c82b9f4003b106b134a. After registering, a confirmation will be sent through email, including dial-in details and unique conference call codes 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.

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; 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 8, 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, 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						Year Ended
	April 29, 2023		January 28, 2023		April 30, 2022		April 29, 2023		April 30, 2022
Revenue:
Product sales	$	23,830	$	38,033	$	25,298	$	141,475	$	73,721
Product engineering services	2,571		3,635		1,113		10,780		7,741
IP license	5,265		11,715		11,115		29,444		23,309
IP license engineering services	422		887		—		2,495		1,706
Total revenue	32,088		54,270		37,526		184,194		106,477
Cost of revenue:
Cost of product sales revenue	13,127		21,833		13,646		75,143		40,082
Cost of product engineering services revenue	226		228		111		972		1,918
Cost of IP license revenue	—		—		—		1,179		—
Cost of IP license engineering services revenue	150		222		—		706		462
Total cost of revenue	13,503		22,283		13,757		78,000		42,462
Gross profit	18,585		31,987		23,769		106,194		64,015
Operating expenses:
Research and development	21,403		20,530		15,461		76,774		47,949
Selling, general and administrative	13,574		11,936		11,507		48,248		34,900
Impairment charges	—		2,407		3,134		2,407		3,134
Total operating expenses	34,977		34,873		30,102		127,429		85,983
Operating loss	(16,392)		(2,886)		(6,333)		(21,235)		(21,968)
Other income (expense), net	1,703		2,530		(175)		3,321		(245)
Loss before income taxes	(14,689)		(356)		(6,508)		(17,914)		(22,213)
Provision (benefit) for income taxes	1,248		(3,179)		(1,153)		(1,367)		(37)
Net income (loss)	$	(15,937)	$	2,823	$	(5,355)	$	(16,547)	$	(22,176)
Net income (loss) per share:
Basic	$	(0.11)	$	0.02	$	(0.04)	$	(0.11)	$	(0.25)
Diluted	$	(0.11)	$	0.02	$	(0.04)	$	(0.11)	$	(0.25)
Weighted average shares used in computing net income (loss) per share:
Basic	148,212		146,908		144,501		147,145		88,398
Diluted	148,212		156,519		144,501		147,145		88,398

Credo Technology Group Holding Ltd

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

	April 29, 2023		April 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	108,583	$	259,322
Short-term investments	109,228		—
Accounts receivable	49,541		29,524
Inventories	46,023		27,337
Contract assets	9,445		10,071
Prepaid expenses and other current assets	5,412		5,923
Total current assets	328,232		332,177
Property and equipment, net	40,222		21,844
Right-of-use assets	14,860		16,954
Other non-current assets	13,975		4,714
Total assets	$	397,289	$	375,689
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	6,067	$	8,487
Accrued compensation and benefits	6,471		4,713
Accrued expenses and other current liabilities	14,454		12,063
Deferred revenue	4,040		1,234
Total current liabilities	31,032		26,497
Non-current operating lease liabilities	12,869		14,809
Other non-current liabilities	5,753		220
Total liabilities	49,654		41,526
Shareholders' equity:
Ordinary shares	7		7
Additional paid-in capital	454,795		424,562
Accumulated other comprehensive income (loss)	(191)		23
Accumulated deficit	(106,976)		(90,429)
Total shareholders' equity	347,635		334,163
Total liabilities and shareholders' equity	$	397,289	$	375,689

Credo Technology Group Holding Ltd

Reconciliations from GAAP to Non-GAAP Results (Unaudited)

(In thousands, except percentages and per share amounts)

	Three Months Ended									Year Ended
	April 29, 2023			January 28, 2023			April 30, 2022			April 29, 2023			April 30, 2022
GAAP gross profit	$	18,585		$	31,987		$	23,769		$	106,194		$	64,015
Reconciling item:
Share-based compensation	83			98			40			634			220
Total reconciling item	83			98			40			634			220
Non-GAAP gross profit (A)	$	18,668		$	32,085		$	23,809		$	106,828		$	64,235
GAAP gross margin	57.9		%	58.9		%	63.3		%	57.7		%	60.1		%
Non-GAAP gross margin	58.2		%	59.1		%	63.4		%	58.0		%	60.3		%
Total GAAP operating expenses	$	34,977		$	34,873		$	30,102		$	127,429		$	85,983
Reconciling items:
Share-based compensation	(7,827)			(5,071)			(5,328)			(22,882)			(8,968)
Impairment and related charges	—			(4,151)			(3,134)			(4,151)			(3,134)
Total reconciling items	(7,827)			(9,222)			(8,462)			(27,033)			(12,102)
Total Non-GAAP operating expenses (B)	$	27,150		$	25,651		$	21,640		$	100,396		$	73,881
GAAP operating loss	$	(16,392)		$	(2,886)		$	(6,333)		$	(21,235)		$	(21,968)
Non-GAAP operating income (loss) (A-B)	$	(8,482)		$	6,434		$	2,169		$	6,432		$	(9,646)
GAAP operating loss margin	(51.1)		%	(5.3)		%	(16.9)		%	(11.5)		%	(20.6)		%
Non-GAAP operating income (loss) margin	(26.4)		%	11.9		%	5.8		%	3.5		%	(9.1)		%
GAAP net income (loss)	$	(15,937)		$	2,823		$	(5,355)		$	(16,547)		$	(22,176)
Reconciling items:
Share-based compensation	7,910			5,169			5,368			23,516			9,188
Impairment and related charges	—			4,151			3,134			4,151			3,134
Pre-tax total reconciling items	7,910			9,320			8,502			27,667			12,322
Other income tax effects and adjustments	2,299			(4,952)			(611)			(2,433)			(1,049)
Non-GAAP net income (loss)	$	(5,728)		$	7,191		$	2,536		$	8,687		$	(10,903)
GAAP weighted average shares - basic	148,212			146,908			144,501			147,145			88,398
GAAP weighted average shares - diluted	148,212			156,519			144,501			147,145			88,398
Non-GAAP adjustment	—			3,837			13,732			13,838			—
Non-GAAP weighted average shares - diluted	148,212			160,356			158,233			160,983			88,398
GAAP diluted net income (loss) per share	$	(0.11)		$	0.02		$	(0.04)		$	(0.11)		$	(0.25)
Non-GAAP diluted net income (loss) per share	$	(0.04)		$	0.04		$	0.02		$	0.05		$	(0.12)

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 29, 2023
	Low			High
GAAP gross margin	57.8		%	59.8		%
Reconciling item:
Share-based compensation	0.2		%	0.2		%
Total reconciling item	0.2		%	0.2		%
Non-GAAP gross margin	58.0		%	60.0		%
Total GAAP operating expenses	$	34.0		$	36.0
Reconciling item:
Share-based compensation	8.0			8.0
Total reconciling item	8.0			8.0
Total non-GAAP operating expenses	$	26.0		$	28.0