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Credo Technology Group Holding Ltd. (CRDO)
:CRDO
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Credo Technology Group Holding Ltd
(NASDAQ:CRDO)
Rating:68Neutral
Price Target:―
Positive Factors
Financial Performance
Credo is guiding to over 85% year-over-year revenue growth with operating expenses growing at less than half the rate of revenue.
Market Expansion
CRDO benefits from AI-driven demand in datacenters, which supports long-term growth in its AEC and Optical segments.
Revenue Growth
Credo reported better results and even stronger guidance as AEC continues to ramp with existing hyperscaler customers.
Negative Factors
Competition
There is increasing competition from MRVL and AVGO targeting similar market segments, which could lead to price erosion and potential loss of market share.
Customer Concentration
Management noted its largest customer, we believe Amazon, was 86% of revenue in the quarter--a sharp uptick in concentration from 33%/52% in the prior two quarters.
Market Risks
CRDO's recent capacity expansions expose it to risks associated with any slowdown in cloud capital expenditures.
Credo Technology Group Holding Ltd (CRDO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.44B
Dividend YieldN/A
Average Volume (3M)5.16M
Price to Earnings (P/E)285.0
Beta (1Y)3.00
Revenue Growth99.38%
EPS GrowthN/A
CountryUS
Employees500
SectorTechnology
Sector Strength84
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.35
Shares Outstanding169,801,210
10 Day Avg. Volume8,424,290
30 Day Avg. Volume5,160,807
Financial Highlights & Ratios
PEG Ratio1.28
Price to Book (P/B)3.42
Price to Sales (P/S)0.00
P/FCF Ratio-25.66
Enterprise Value/Market Cap0.08
Enterprise Value/Revenue1.11
Enterprise Value/Gross Profit5.24
Enterprise Value/Ebitda-22.22
Forecast
1Y Price Target
$86.60Price Target Upside17.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
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 Earnings Call Summary
Earnings Call Date:Jun 02, 2025
(Q4-2025)
| % Change Since: 17.30%|
Next Earnings Date:Aug 27, 2025
Earnings Call Sentiment Positive
Credo's earnings call highlighted significant revenue growth, strong gross margins, and successful customer diversification. Despite these positive results, concerns about tariffs and increased inventory levels were noted. Overall, the positive aspects notably outweigh the challenges.Q4-2025 Updates
Positive Updates
Record-Breaking Revenue and Growth
Credo achieved revenue of $437 million for fiscal '25, marking a growth of 126% year-over-year. Q4 revenue was $170 million, up 180% year-over-year and 26% sequentially.
Strong Non-GAAP Gross Margin
Fiscal '25 non-GAAP gross margin was 65%, with Q4 non-GAAP gross margin at 67.4%, up 355 basis points sequentially.
Significant Customer Diversification
Three hyperscalers each contributed over 10% of Q4 revenue, with plans to ramp two more in the second half of fiscal '26.
Optical and Retimer Business Growth
Optical DSP revenue targets were achieved, with a significant 800 gig transceiver win. Retimer business showed robust results, driven by 50 gig and 100 gig per lane Ethernet solutions.
Strong Operating Margin and Cash Flow
Fiscal '25 operating margin improved by 2,500 basis points. Q4 non-GAAP operating income was $62.5 million, and cash flow from operations was $57.8 million.
Negative Updates
Concerns Over Tariff Regime
Uncertainty around tariffs remains a concern, affecting future planning and product cost structure.
Inventory Levels
Q4 ending inventory was $90 million, up $36.8 million sequentially, suggesting potential challenges in inventory management.
Company Guidance
During the earnings call for the fourth quarter of fiscal 2025, Credo reported remarkable financial performance and provided guidance for the upcoming fiscal year. In Q4, the company achieved revenue of $170 million, marking a 26% sequential increase and a 180% rise year-over-year, with a non-GAAP gross margin of 67.4%. For the full fiscal year 2025, revenue reached $437 million, a 126% increase from the previous year, with a non-GAAP gross margin of 65%. Looking ahead to Q1 of fiscal 2026, Credo expects revenue between $185 million and $195 million and a non-GAAP gross margin of 64% to 66%. The company anticipates fiscal 2026 revenue to exceed $800 million, reflecting growth above 85% year-over-year, driven by diversification and expansion into new hyperscaler customers. Credo's strategic focus on innovative high-speed connectivity solutions and customer diversification positions the company for sustained growth, with a long-term outlook including significant contributions from its optical and advanced connectivity solutions.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 | |||||
| 14.19M | -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
73.49
Price Trends
53.86
Positive
55.66
Positive
51.99
Positive
Market Momentum
5.84
Negative
71.94
Negative
70.14
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 73.49 is above the 20-day moving average (MA) of 67.67, above the 50-day MA of 53.86, and above the 200-day MA of 51.99, indicating a bullish trend. The MACD of 5.84 indicates Negative momentum. The RSI at 71.94 is Negative, neither overbought nor oversold. The STOCH value of 70.14 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 0 New Risks
Credo Technology Group Holding Ltd Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $13.44B | 284.99 | 8.54% | ― | 99.38% | ― | |
63 Neutral | $10.43B | 102.74 | 3.71% | ― | 2.86% | -29.92% | |
62 Neutral | $11.97B | 10.29 | -7.47% | 2.99% | 7.32% | -8.06% | |
62 Neutral | $5.95B | ― | -42.79% | ― | 3.58% | -22.74% | |
60 Neutral | $2.05B | 437.14 | 0.71% | ― | 3.34% | ― | |
54 Neutral | $12.59B | ― | -88.95% | ― | ― | -85.21% | |
51 Neutral | $7.22B | ― | -1.08% | ― | -23.85% | 88.39% |
* Technology Sector Average
Performance Comparison
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.