Credo Technology Group (CRDO) Q1 2025 earnings summary

Executive summary

• Q1 FY25 revenue reached $59.7M, up 70% year-over-year, driven by record product sales and strong AI infrastructure deployments, with AEC products ramping at hyperscale data center customers.

• Product revenue hit a record $57.3M, up 30% sequentially, and product and engineering services comprised 96% of revenue.

• Net loss narrowed to $9.5M from $11.7M in the prior year quarter, while non-GAAP net income was $7.0M.

• Customer concentration remains high, with the top two customers accounting for 62% of revenue, and a new 10% customer expected in Q2.

• Strong momentum in AEC and optical DSP businesses, with AECs becoming the de facto solution for high-speed in-rack connectivity.

Financial highlights

• Non-GAAP gross margin was 62.9%, up from 59.8% year-over-year, while GAAP gross margin was 62.4%.

• Product revenue (excluding engineering services) was $53.8M, up 32% sequentially and 21% above the previous record.

• Non-GAAP operating income was $2.2M (3.7% margin), and GAAP net loss was $(9.5)M.

• Free cash flow was -$13.1M, with cash and equivalents at $398.6M, down $11.4M sequentially.

• Inventory ended at $31.6M, up $5.7M sequentially.

Outlook and guidance

• Q2 FY25 revenue expected between $65M and $68M, up 11% sequentially at midpoint.

• Q2 non-GAAP gross margin guided at 62%-64%; non-GAAP OpEx expected at $36M-$38M.

• Sequential growth expected to accelerate in the second half of FY25, with OpEx growth at half the rate of revenue.

• Management expects continued high customer concentration but anticipates diversification as adoption grows.

• Existing cash and working capital are expected to be sufficient for at least the next 12 months.