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Credo Technology Group Holding Ltd (CRDO)
NASDAQ:CRDO
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Credo Technology Group Holding Ltd
(NASDAQ:CRDO)
Rating:68Neutral
Price Target:―
Positive Factors
Market Potential
Credo's advanced DSP solution is transferable to optical transceivers, enhancing its market potential.
Revenue Growth
Credo's AEC franchise is driving a revenue inflection as the company delivered another material beat/raise on top-line strength.
Negative Factors
Customer Concentration
Management noted its largest customer, Amazon, was 86% of revenue in the quarter, leading to concerns about revenue concentration.
Investor Concern
Customer concentration with Amazon accounting for 86% of total spooked investors.
Credo Technology Group Holding Ltd (CRDO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.49B
Dividend YieldN/A
Average Volume (3M)3.49M
Price to Earnings (P/E)4509.5
Beta (1Y)3.03
Revenue Growth99.38%
EPS GrowthN/A
CountryUS
Employees500
SectorTechnology
Sector Strength78
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.25
Shares Outstanding169,801,210
10 Day Avg. Volume3,800,683
30 Day Avg. Volume3,493,916
Financial Highlights & Ratios
PEG Ratio14.35
Price to Book (P/B)13.82
Price to Sales (P/S)0.00
P/FCF Ratio-356.69
Enterprise Value/Market Cap0.80
Enterprise Value/Revenue8.48
Enterprise Value/Gross Profit39.98
Enterprise Value/Ebitda-141.05
Forecast
1Y Price Target
$66.13Price Target Upside7.04% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Credo Technology Group Holding Ltd Business Overview & Revenue Model
Company DescriptionCredo Technology Group Holding Ltd provides various high-speed connectivity solutions for optical and electrical Ethernet applications in the United States, Mexico, Mainland China, Hong Kong, and internationally. Its products include integrated circuits, active electrical cables, and SerDes chiplets that are based on its serializer/deserializer and digital signal processor technologies. The company also offers intellectual property solutions consist of SerDes IP licensing. The company was founded in 2008 and is headquartered in San Jose, California.
How the Company Makes MoneyCredo Technology Group Holding Ltd generates revenue primarily through the sale of its semiconductor products and solutions. The company designs and markets integrated circuits and components that facilitate high-speed data transmission across various networking environments. Revenue streams include product sales to data center operators, original equipment manufacturers (OEMs), and networking companies that require advanced connectivity solutions to support growing data traffic and bandwidth needs. Key partnerships with industry leaders in telecommunications and data infrastructure sectors also play a crucial role in driving Credo's earnings by expanding its market reach and adoption of its technologies.
Credo Technology Group Holding Ltd Financial Statement Overview
Summary
Credo Technology Group shows strong revenue growth and prudent financial leverage, but faces challenges in converting revenue to profit due to high operating expenses. Cash flow management remains an area for improvement, with negative free cash flow indicating potential liquidity concerns. The company is on a positive trajectory but needs to focus on improving profitability and cash flow generation.Income Statement
Credo Technology Group Holding Ltd has demonstrated impressive revenue growth, increasing from $106.5M in 2022 to $327.5M in TTM (Trailing-Twelve-Months). The Gross Profit Margin is 63.7%, showing efficiency in managing production costs. However, EBIT and EBITDA margins are negative, indicating challenges in managing operating expenses. The net profit margin has turned positive to 1.56% in TTM, a positive sign compared to previous losses.72
Positive
Balance Sheet
The company exhibits a strong equity position with an Equity Ratio of 85.9%, implying robust asset backing. The Debt-to-Equity ratio is low at 0.02, reflecting minimal leverage and financial risk. ROE is slightly positive at 0.83% for TTM, indicating room for improved shareholder returns.68
Positive
Cash Flow
Operating cash flow has improved, but free cash flow remains negative in TTM, at -$24.18M. The Operating Cash Flow to Net Income Ratio is 2.23, suggesting healthy cash generation relative to net income. However, consistent negative free cash flow poses a risk to liquidity.65
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 327.53M | 192.97M | 184.19M | 106.48M | 58.70M | 53.84M | Gross Profit |
| 208.69M | 119.43M | 106.19M | 64.02M | 38.28M | 46.11M | EBIT |
| -3.78M | -37.06M | -21.23M | -18.83M | -25.23M | 2.07M | EBITDA |
| 9.20M | -22.52M | -9.31M | -14.04M | -23.02M | 3.88M | Net Income Common Stockholders |
| 5.12M | -28.37M | -16.55M | -22.18M | -27.51M | 1.33M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 379.21M | 410.00M | 217.81M | 259.32M | 103.76M | 73.91M | Total Assets |
| 719.92M | 601.93M | 397.29M | 375.69M | 155.49M | 108.04M | Total Debt |
| 16.14M | 13.87M | 12.87M | 17.19M | 197.97M | 98.62M | Net Debt |
| -283.07M | -53.07M | -95.71M | -242.13M | 94.21M | 24.71M | Total Liabilities |
| 101.69M | 61.73M | 49.65M | 41.53M | 210.92M | 117.45M | Stockholders Equity |
| 618.23M | 540.20M | 347.63M | 334.16M | -55.43M | -9.41M |
| Cash Flow | Free Cash Flow | ||||
| -24.18M | 17.09M | -46.33M | -48.41M | -48.42M | -19.09M | Operating Cash Flow |
| 11.42M | 32.74M | -24.61M | -30.83M | -42.36M | -10.25M | Investing Cash Flow |
| 197.46M | -249.49M | -130.94M | -17.58M | -6.06M | -8.83M | Financing Cash Flow |
| -5.75M | 175.28M | 4.88M | 204.18M | 77.89M | 61.21M |
Credo Technology Group Holding Ltd Technical Analysis
Positive
61.78
Price Trends
46.33
Positive
56.35
Positive
49.09
Positive
Market Momentum
4.85
Negative
72.12
Negative
75.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRDO, the sentiment is Positive. The current price of 61.78 is above the 20-day moving average (MA) of 53.55, above the 50-day MA of 46.33, and above the 200-day MA of 49.09, indicating a bullish trend. The MACD of 4.85 indicates Negative momentum. The RSI at 72.12 is Negative, neither overbought nor oversold. The STOCH value of 75.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRDO.
Credo Technology Group Holding Ltd Risk Analysis
Credo Technology Group Holding Ltd disclosed 64 risk factors in its most recent earnings report. Credo Technology Group Holding Ltd reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Q1, 2025
Credo Technology Group Holding Ltd Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $10.49B | 4,509.49 | 0.89% | ― | 99.38% | ― | |
68 Neutral | $11.40B | 148.61 | 2.76% | ― | -7.29% | -64.31% | |
61 Neutral | $11.28B | 10.16 | -6.88% | 2.97% | 7.41% | -8.93% | |
60 Neutral | $2.03B | 432.86 | 0.71% | ― | 3.34% | ― | |
58 Neutral | $5.26B | ― | -42.79% | ― | 3.58% | -22.74% | |
54 Neutral | $7.91B | ― | -88.95% | ― | ― | -85.21% | |
48 Neutral | $5.68B | ― | -1.08% | ― | -23.85% | 88.39% |
* Technology Sector Average
Performance Comparison
CRDO
Credo Technology Group Holding Ltd
61.78
41.05
198.02%
CIEN
Ciena
80.22
30.72
62.06%
SATS
Echostar
19.76
1.30
7.04%
LITE
Lumentum Holdings
75.77
30.89
68.83%
VIAV
Viavi Solutions
9.09
1.74
23.67%
ASTS
AST SpaceMobile
24.10
18.77
352.16%
Credo Technology Group Holding Ltd Earnings Call Summary
Earnings Call Date:Mar 04, 2025
(Q3-2025)
| % Change Since: 13.73%|
Next Earnings Date:Jun 02, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong positive sentiment with record-breaking revenue growth and significant advancements across Credo's product lines, particularly in connectivity solutions and PCIe product introductions. However, there are concerns about high customer concentration and dependence on a single hyperscale customer. Despite these concerns, the overall outlook remains positive with expectations of diversifying revenue streams in the coming quarters.Q3-2025 Updates
Positive Updates
Record-Breaking Revenue Growth
Credo reported revenue of $135 million, up 87% sequentially and up 154% year-over-year.
Strong Gross Margin Performance
Non-GAAP gross margin was 63.8%, benefiting from scale and the roll-off of contra revenue associated with a warrant with Amazon.
Hyperscale Customer Expansion
Credo achieved volume production with 3 hyperscalers and is in qualification with 2 additional hyperscalers, expecting production in fiscal '26.
Innovation in Connectivity Solutions
Credo's multi-tiered innovation in SerDes technology, integrated circuit design, and system-level approach drives competitive advantage.
PCIe Product Line Introduction
Credo will soon introduce a full suite of PCIe products, expanding their total addressable market (TAM) with AI scale-out and scale-up networks.
Advancements in Optical DSP Business
Credo's optical DSP business is on track with opportunities across a global customer base and recent advancements in 3-nanometer tape-out for leading-edge opportunities.
Positive Feedback for PCIe Retimers
Credo received the first platform commitment from a large AI server ODM for PCIe retimers and foresees production revenue in calendar year 2026.
Negative Updates
High Customer Concentration Risk
The largest end customer was 86% of revenue, which is higher than typical and highlights concentration risk.
Dependence on a Single Hyperscale Customer
Significant revenue dependence on a single hyperscale customer, raising concerns about future revenue diversification.
Company Guidance
During the earnings call for the third quarter of fiscal 2025, Credo reported a record revenue of $135 million, marking an 87% sequential increase and a 154% year-over-year growth. The company's non-GAAP gross margin was 63.8%, with the AEC product line experiencing strong triple-digit sequential growth. Credo's largest customer accounted for 86% of revenue, although a diversification in the customer base is expected as more hyperscalers ramp up. The company detailed its multi-tiered innovation strategy, emphasizing its competitive advantages in SerDes technology, IC design, and system-level solutions. Credo is expanding its offerings to include PCIe products and anticipates significant revenue opportunities in scale-up networks. As of the call, Credo has achieved volume production with three hyperscalers and is in qualification with two more, expecting production in fiscal 2026. The company remains confident in its ability to scale revenue and diversify its customer base across more accounts in the coming quarters and years.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.