On November 29, 2023, Credo Technology Group Holding Ltd (CRDO, Financial) released its 8-K filing, detailing the financial results for the second quarter of fiscal year 2024, which ended on October 28, 2023. The company, known for its innovative high-speed connectivity solutions, reported a significant quarter-over-quarter revenue growth of 25%, reaching $44.0 million. This growth underscores the increasing market demand for bandwidth and CRDO's ability to deliver cutting-edge technology.
Financial Highlights and Management Commentary
CRDO's financial performance in the second quarter reflects a solid trajectory, with a GAAP gross margin of 59.3% and a non-GAAP gross margin of 59.9%. The company's GAAP operating expenses were $35.0 million, while non-GAAP operating expenses were lower at $27.1 million. Despite a GAAP net loss of $6.6 million, CRDO achieved a non-GAAP net income of $1.2 million, translating to a non-GAAP diluted net income per share of $0.01.
President and CEO Bill Brennan expressed optimism about CRDO's future, citing the 25% revenue growth and the company's unique position in providing high-speed connectivity solutions. Brennan stated,
We remain enthusiastic about our business given the market demand for exponentially increasing bandwidth. This plays directly to Credo’s strengths, and we are one of few companies providing the necessary breadth of connectivity solutions at these speeds while also optimizing for energy efficiency and system cost."
Forward-Looking Financial Outlook
Looking ahead to the third quarter of fiscal 2024, CRDO anticipates revenue to be between $51.0 million and $53.0 million. The company expects GAAP gross margin to range from 58.8% to 60.8%, with non-GAAP gross margin slightly higher at 59.0% to 61.0%. Operating expenses are projected to increase, with GAAP operating expenses estimated between $37.0 million and $39.0 million, and non-GAAP operating expenses between $28.0 million and $30.0 million.
Balance Sheet and Income Statement Summary
CRDO's balance sheet as of October 28, 2023, shows a healthy liquidity position with $128.9 million in cash and cash equivalents and $111.5 million in short-term investments. Total current assets stood at $328.3 million. The company's total liabilities were $56.3 million, resulting in a solid shareholders' equity of $349.5 million.
The condensed consolidated statements of operations reveal that product sales contributed the most to revenue at $34.2 million, followed by IP license revenue at $7.3 million, and product engineering services at $2.4 million. The cost of product sales revenue was the largest expense at $17.3 million, leading to a total gross profit of $26.1 million for the quarter.
Non-GAAP Financial Measures
CRDO's non-GAAP financial measures exclude share-based compensation expenses and other adjustments, providing an alternative view of the company's performance. For instance, non-GAAP operating expenses were $7.9 million lower than GAAP operating expenses due to the exclusion of share-based compensation. These non-GAAP measures are intended to supplement the GAAP results by providing additional insight into the underlying operational performance of the company.
In summary, CRDO's second quarter of fiscal year 2024 results demonstrate a strong demand for its high-speed connectivity solutions, with significant revenue growth and a positive non-GAAP net income. The company's forward-looking statements indicate continued growth and an optimistic outlook for the upcoming quarter. Investors and stakeholders can expect CRDO to leverage its technological strengths to capitalize on the growing need for bandwidth in the data infrastructure market.
Explore the complete 8-K earnings release (here) from Credo Technology Group Holding Ltd for further details.
