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CRDO Nasdaq· Credo Technology Group Holding Ltd
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CRDO Nasdaq· Credo Technology Group Holding Ltd
Earnings report Q4 2023

Credo Technology Group Holding Ltd Reports Decline in Revenue for the Latest Quarter

Segments of Revenue

Credo Technology Group Holding Ltd reported total revenue of $44.04 million for the three months ended October 28, 2023. The revenue was generated from three main segments: product sales, product engineering services, and IP license.

  • Product sales accounted for $34.25 million, representing the largest portion of revenue. This segment experienced a decline compared to the same quarter last year, where it generated $44.35 million. The decrease in product sales revenue can be attributed to various factors, such as changes in customer demand or market conditions.

  • Product engineering services contributed $2.43 million to the total revenue, while IP license revenue amounted to $7.35 million. Both segments showed mixed performance compared to the previous year. Product engineering services revenue decreased slightly from $3.75 million, while IP license revenue increased from $3.27 million.

Strengths

Despite the decline in overall revenue, Credo Technology Group Holding Ltd demonstrated several strengths in its financial performance. The company's gross profit for the quarter was $26.12 million, resulting in a gross profit margin of approximately 59.3%. This indicates that the company effectively managed its cost of revenue and maintained a healthy level of profitability.

Additionally, the management commented that the decline in product sales revenue was primarily due to a temporary slowdown in customer demand, which they expect to recover in the upcoming quarters. This suggests that the decrease in revenue may be a short-term challenge rather than a long-term concern.

Challenges

One of the challenges faced by Credo Technology Group Holding Ltd in the latest quarter was the increase in operating expenses. The company's research and development expenses rose to $21.74 million, compared to $18.16 million in the same quarter last year. Similarly, selling, general, and administrative expenses increased to $13.26 million from $11.54 million.

These higher operating expenses put pressure on the company's profitability and resulted in a net loss for the quarter. The management should closely monitor and control these expenses to ensure sustainable financial performance.

Noteworthy

It is worth noting that Credo Technology Group Holding Ltd experienced a significant shift in its revenue distribution across different geographical markets. Mainland China remained the largest market, contributing $5.43 million in revenue. However, the United States showed a notable increase in revenue, reaching $7.84 million compared to $6.42 million in the same quarter last year. This suggests potential growth opportunities in the US market for the company.

Summary

Credo Technology Group Holding Ltd faced a decline in revenue for the latest quarter, primarily driven by a decrease in product sales revenue. However, the company demonstrated strengths in maintaining a healthy gross profit margin and management's expectation of a recovery in customer demand. The increase in operating expenses poses a challenge to the company's profitability, which should be carefully managed. The notable increase in revenue from the United States market presents a potential growth opportunity for Credo Technology Group Holding Ltd. Overall, the company's financial performance in the latest quarter reflects a mix of strengths and challenges that require attention for future growth and profitability.

Source documents

Form 10-Q  filed on Nov 30, 2023
6 pages scanned

Reference data

Company financials Q4 revenue 44M
Analyst estimates Q4 EPS missed by -403.03%
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