CRDO - Earnings call 3 2022 | Credo Technology Group Holding Ltd

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Operator

Ladies and gentlemen, thank you for standing by. [Operator Instructions] I would now like to turn the conference over to Dan O'Neil. Please go ahead, sir.

Dan O'Neil;VP, Corporate Development and Investor Relations

Good afternoon, and thank you all for joining us today on our first earnings conference call as a public company.

Joining me today from Credo are Bill Brennan, our Chief Executive Officer, and Dan Fleming, our Chief Financial Officer. I'd like to remind everyone that certain comments made in this call today may include forward-looking statements regarding expected future financial results, strategies and plans, future operations, the markets in which we operate and other areas of discussion. subject in and the our are discussed that SEC. statements detail in documents forward-looking to uncertainties risks are These filed with during risks, or on its It's to or results the of assess this those from contained the to may materially for which business, forward-looking factors in impact nor any these light may to all risks, actual from statement. In factor the differ uncertainties the materially and factors differ events those not company occur, of can all forward-looking company's discussed of call not extent could implied. the actual assumptions, and combination any anticipated results or possible adversely predict manager and cause for conform after call the to by call, changes as company important refer of company's this law. Also these date to in consider any except this an reason, measures, which results The obligation the forward-looking no undertakes or of to the required measure we during be to to to financial statements actual publicly expectations to performance. certain non-GAAP will company's statements we update performance These in in measures are financial and with to as accordance substitute financial for superior to addition a U.S. or non-GAAP not provided prepared GAAP. in call relations why the I'll now over use SX, in using of as financial our measures today which financial the the issued accessed reconciliations measures is of CEO. both be investor earnings and our to our discussion website. With A we well turn as available GAAP non-GAAP can between and non-GAAP portion release our that, we Bill?

William Brennan

like start pure Credo we first is of description public our to with call. Thanks, a a play connectivity for do. this to all brief I'd as call want joining company. speed a Dan. I company, earnings high is our thank you what Since

filter data the a fast of connection we data optical difficulty, market our high data forecasters end competition. create the bandwidth expect to leading pursuing to centers. driven center. will solutions every solutions copper by XX% expect an that exponential market And initially and market. billion Ethernet connection every increases on plus growing wired and deliver bandwidth for hyperscalers almost speed explosive We're in its of XXXX. that's is the on a large, edge driving market goal break this Ethernet for in that's the of to natural Market barriers us connectivity Ethernet enable per the growth infrastructure is grow by at curve to a the $X building degree We've Our speed year. TAM targeted high these We're and because

technology. that SerDes opportunity low demands. other high-performance about later. as data and us Core leading-edge and to Beyond more to our we is very talk exponentially to SerDes signal a centers, a expand with have a I'll that little we is increasing our design analog very experience bit technology High-speed it great speed opportunity And begin high hurdle Ethernet. platform seen for doing it markets beyond requires requires power. see processing, that

connectivity team extraordinary and and a differentiated optical deliver we designing this solutions challenge. to optimizing of type as includes engaging speeds. been our of optimized focus OEMs connectivity customer with with have ODMs This fortunate We with well as DSP, a Ethernet give module a to can in successful of With that why effectiveness solutions. networking of several major decades brief mix we've overview to are power would like manufacturers. I and hyperscalers, design the efficiency highest the broad at is base experience analog on just cost

been of pioneer solutions. are I'd first center. X or data the making more new in copper years development racks The ago, we've connections to to efforts talk way than solutions DACs. The traditional category disaggregated Active first and has Cables about set been began known We Electrical AECs. connectivity establishing the of passive like our and these Credo this of We layers switching targeted the in with in enable cables, routing as

large problem move bend support to install gig cables in speeds very signal integrity with is though XX ports front you XXX DACs. side issue you've the real to got it of tight the the to the space when is gig than Now more lane installers of especially service, DACs Also, thickness, when that DACs, huge a difficult or the within and The of and the to XXX weight single the the trying route becomes integrity with make signal very gig rack. loss either and challenge. radius XXX

and XXX some crossover see the gig others we and signal the the generation, gig DACs, XXX a but to market with to companies advantages. many move struggle as will factor Now integrity commit AECs to will due form where

we However, to DACs support firmly XXX believe single speeds are that ports, at gig dead. XXX gig lane

solutions family racks a AEC have solutions with of hyperscaler also We're innovative ToR target connections to growing our by delivering that partners. NIC server driven the highly from server switch. We the

Microsoft, For introduced in hitless which we a example, ToR dual a Switch AEC, enables collaborative recently the architecture. effort with

switch or is is data the DACs redundant solutions known kind possible as switch to add This Cables simply AEC to AOCs. Optical other switch. portfolio. to And when our to ToR continue time, Our Active innovation not is of with innovative port a AEC failing detect flow we're NIC to going and equally instantly ToR over ToR the able then to

to I'd solutions about Next, modules. talk like for our optical

the deployments gig all and in XXX XXX gig, the gig we first XXX module today that the gig. including products future, XXX The developed and DSPs are centers, optical in hyperscaler data cover optical

promoting and in single single XG with optical well first DSPs our the to future, In as optical solutions. week that XX infrastructure laser drivers. centers, for also the OFC to the the of as gig optical optical family our you'll channel gig see are full DSPs we're our announced market addition XX promoting DSPs This expanding demonstrating starting for lane fiber data laser we're driver also at time, market. we Diego, in Over Credo solutions San lane

These talk line like our connections. Line optimized about makers to connections would the Next, copper are by for panel card front Card PHYs. and I for switch backplane needed solutions

We the XXX Retimers, selling security as week, T We've family complete the critical. and this emerging solutions Gearboxes as applications high-speed see a that We're also port is where gig opportunity. devices, products our encryption covering well markets. X.X markets. XXX of an applications And server XXX devices gig announced and XXX MACsec port gig, for as provide we for our got gig

regarded we've markets. has various highly delivered IP Finally, end and customers license SerDes across solutions, Credo chiplet which to

to We primarily our enabling more are customers and in product us believe our N-X we IP term a reference with chosen are chiplet ] we a company, in relationships engage have While with that that to called solutions XX we industry-leading process and we're customers. to IP chiplet talk collaborative SerDes our than very solutions. When count highly strategic, [ solutions. deploy using start technology we about advantage, the competitive our

all value Credo. it differentiator die in optimizing and is advantage given process sizes where for speed, we can doing remarkable cost and a our engineer architectures results solution proposition technology. This an DSP is as any as and mature well for low cost. This gives For very a us our with wafer N-X a analog and that power more customers. development in And small on true a process

our purpose-built bring We've We mentality solutions. optimized as architectures we copper engineer many the a types well view for don't one-size-fits-all got solutions serve. different a are the as optical Next We a of links address to technology different got link to every that We've challenge. for center. different of many as optimized SerDes links. links range many the the data solutions in wide we

differentiated tightly power well we're signal optimized the mixed-signal as die especially for source at system system-level with system-level just driving fact XXX and level leading-edge We believe to that I'd developed for mentality. adds and of family company complete architectures, signal integrity. solutions. solution. gig system we and delivering very DSP We're leader architectures, speed, We've are We and both far competitive world's as beyond. The system our delivering advantage we've expertise. believe test flexibility, size. system an we're architectures our IC have versus also a [indiscernible] the of base evidence end-to-end most on gone design that speeds as mixed focus solution the our final a we in that AEC is are DSP We coupled highly point

feel delivering is XX because with our Credo, when engaged well choosing All include effectiveness. amount to huge make signal customers and of this integrity, execution, as more customer X of to decision. we success. it blue-chip as key our to down engagement ODMs their differentiation our to optimized that power many to We're transceiver our boils they're top best engage with X OEMs, of is bet validation ultimately, a cost on and Credo that We clients really platform additional of that and next-generation count than others. choose optical of efficiency the hyperscalers, the kind manufacturers our trust the takes networking This

happy very we I'm are So with where customers. with

experiencing new about speed efficiency infrastructure can the committed in are demanding high-speed and we advantages power deliver for market. where the higher Other most increasing an effectiveness. serving standards in that see talk are data connectivity We're cost markets our also that sites opportunities let's Now market beyond to higher Ethernet the within and the exponentially bandwidth. demand we same

Ethernet the deliver market, USB high-speed for and connectivity to Credo the in will So PCIe addition solutions markets.

solutions some will before our time we so next-generation ramp be targeting Our are it speeds, products.

that our and IP in first will for Our that's with following licensing strategy and with be IP market. major our to consumer go-to-market say leader signed industry happy an Ethernet, we've similar USB with the products. I'm strategy license, to leading

base, X billion and us in expect opportunity time TAM roughly $X markets in in and the diversity bring this more believe We XXXX our will these we frame. will add customer

over results tremendous quarter achieve Of years, goals very over We've to our we now well team our employees. course, in the third This several globally. team fiscal past organization obtainable January ended without quickly enabled none of will XXX of and people strong XX, us employ our scaled be XXXX.

delivered quarter, to quarter call our January $XX.X that on more this to revenue During recent approximately I'd introduction, our approximately in and like results. turn provide we at details most over now the CFO, margins XX%. With achieved Fleming, gross to million Dan

Daniel Fleming

fiscal and and outlook 'XX. QX Bill, our review I will QX results our afternoon. you, fiscal for Thank discuss first 'XX then good

on This year-over-year. of year-over-year. million revenue our a revenue reminder, will reached XX% up sequentially discussed share up result to up of noted. I'm $XX.X As that with be strong we achieved pleased record $XX.X largely following driven a you the basis, and also XXX% unless XXX% up for record products, XX% sequentially a which by and non-GAAP otherwise was financials million, record growth quarter, the of

product to ramp This our revenue by focused. focused revenue being product shifts Our inflection our products, first to is shift being as point AEC from driven center customer. at hyperscale an our which at first revenue mix continue mix ramp IP data is

was with largest of customer which XX% revenue, ramp. AEC Our this total was the associated quarter in

We ramp large this revenue to as in continues. their expect quarters coming customer portion of a our remain the AEC

of QX, to IP year-over-year. strategic in million up part our deliverables remain Our quarter-to-quarter, business, revenue largely will but will a IP from generated XX% vary of specific business preexisting results contracts. $X.X IP driven by our

our points mix which While basis time, the slightly sequentially to XX for XX% will margin and IP, supply challenging in our XX% over above revenue. any revenue gross XX% of team is of mix given of basis delivered Against long-term chain a in environment, year-over-year. the up revenue QX our XX.X%, and points IP up backdrop fluctuate was XX quarter product of IP, expectation

driving as Our based XXX up was quarter growth, organization the income points QX, up in to project-related growth. Total points in a in basis basis slipped as product were slightly just margin our QX. percentage operating QX. by points we R&D percentage XXX and business. operating leverage testament We and hovers certain in year-over-year but sequentially sequentially $X.X into expenses strong below scaled largely third XX% of and million, up the year-over-year net gross our IP generally Net on delivered margin from down for leverage XX.X% expanded the are gross $XX.X year-over-year, XX million XX points the spending XXX%, sequentially income product we

the This $X.XX CapEx IPO million of year-over-year. ended our quarter flow $X.X from increase Our and equivalents quarter quarter of an proceeds was earnings per successful January. operations improvement of an We $X increase year-over-year. the year-over-year. free million, up million of and flow million of share million, completed in the $X.X in came cash increase the cash from $XXX.X an over second with in in was net negative QX, was Cash million was $X.X $X.X million, in cash third the $XXX.X quarter. $X.XX

to sequentially outstanding declined Our balance XX accounts receivable down days, declined $XX.X XXX to days days QX. from while sales in million, XX%

sequentially ramp. inventory ending million, we was as QX our Our $X.X million continue $XX.X up sequential product

turning million, up the currently We revenue Now midpoint. for guidance $XX fiscal million to at quarter. 'XX expect and the fourth between be to in XX% our QX $XX year-over-year

We expect margin QX XX% of be a within XX%. gross to range to

QX and project-related that $XX from expect it be $XX R&D slipped weighted million spend million expenses up be between open will approximately we that, We the including I questions. finally, XXX QX. operating count to average diluted share to to And expect shares. And with QX million,

Operator

with America. from of Vivek Instructions] comes Bank line [Operator Our Arya first the question of

Vivek Arya

a the And tough time during for congratulations on milestone achieving market. the such IPO

a for few So you.

larger and at the be incremental previously Marvell thought, and heard OFC growth size others. heard maybe the AEC but show, on the we of First, some we what from the competition seems could recent of trade than market market, also from

of you is give us you how large maybe So a see emerging Where it competition? today? over how time? can do go perspective this AEC for And

William Brennan

a that's great appreciate Very it. question. much Yes,

saw OFC San Let at in me down what -- talk the about you Diego.

Matt in AEC entering one. So and a he's important way, big market think I'll [ track that is good a the in decisions, ] announcement we an for the and say we record is made for this have an Marvell making this good made team think another strong and that they're that general. market thing his AEC great.

been of dismissive world several optical. a as become AEC the that the have For many evangelizing potential exclusively our opportunity, as competitors far market of years, going even to past will

future, their and that see facto validation short and for we belief gig. so the that connections beyond others in-rack great AECs deliver great And go speeds announcement become a long-held as as a Marvell advantages in with agree really solution will our especially XXX de

this our at where solutions, we're so OFC, is including the demonstrating And gig. AEC XXX

you, a because interest honest and with And announcement huge Marvell's it at couldn't come I'd booth. excitement our be drove better time in

with we we've invest reflect system approach. the And product solution. big as took our Credo belief approach. way. that talked of kind were so a to focuses exclusively first a We the our system-level internally category. built really really We've this at in AEC result, And on bit about a a pioneering team And on a

we all for our taking of And quality We're definition, behind full so with we are our including reliability standing fully execution, our responsibility responsibility the AECs. qualification, take aspects, and solutions. And customers.

success approach we And our far, increasing intending so time. think over this has been critical and investment our thus to on we're

range as the Now the the we've XXXX of $X in market, is billion frame as in being time that a market far this annually. the about size talked

of market their as towards think you kind now. I and move centers different It's in the peg see hard to Now faster speeds that layer routing as in right switching well as server data racks, it in that size. may increase

as focused really think, come of of the us XXX% we're couple we're we're comfortably front large I on in with first I that's market volume. opportunity gate generally, in out high of the the share years. But during next really a that think the sitting to

Vivek Arya

missing that, And if gross to gross margin for us follow-up, this side? just you by And you gross clarify take I'm there, that but one How your get year? and just something part on clarify as non-GAAP you if on you perspective how more my I Maybe quarters see in reported the next perhaps margin. help you because evolution not divide could changes Dan, as when XX.X%. gross several margin the of the that give your me for evolves gross and of XX.X% maybe, mix margins margin, simple the COGS the product I XX.XXX for could [indiscernible] do actually it just

Daniel Fleming

have Vivek, great reconciliation, is revenue you warrant -- Yes. item. That's the is noticed your might a of out, -- glad ours. I'm a non-GAAP number done, I We way that contra had reporting in more you pointed than because the because like there our

back purposes, non-GAAP add that for contra So we revenue.

the gross you're calculation. make your to in that margin, back you sure when you add to denominator So calculating need

between and So that's the difference the XX.X%. the XX.X%

me revenue, margin From sorry, product. calculate while that, more new significantly sequentially the XXX really outlook since we a to So year, AEC let it's But few recognize your have expansion. on from these our broader expanded but QX this these of we if as products, revenue has scale this margin, not that's changed on in last there -- highlight expect you -- contra margins purely approach. Getting to gross fiscal linear actually our And things. been a largely spoke. expect 'XX, From quarter. and to expand continue don't we our on to gross it basis of this point is points, ramp each by years, QX gross product be we'll or a warrant this expansion more upcoming we question, outstanding recognize we conservative nice increasing to now forward driven especially than a the --

variation some total course will customers the ramping there over But of time. So view margin be next different over as different gross a relatively quarter-to-quarter years, by a really kind gain in longer and of of products as if fixed continue what COGS is portion the we scale. margins we from the product we're look that's few COGS. to our driven expand smaller And will percentage of becomes

changes will well. the drive mix product to continue years as expansion these upcoming addition, In over margin

we point we last FY market expansion of -- on get favorable when it's and to margin different dynamics. currently 'XX. And very in at that optical the of just a expansion, our the that because will where 'XX just dynamics FY view, 'XX, AEC market, that's larger XXX cables, instance, then a a mention is story contributor margin ramp market become revenue there's AEC in in I'll For thing believe to the gig starting

Operator

comes line next Toshiya question the of Sachs. Our from with Goldman Hari

Toshiya Hari

your gotten And hoping the there difficult, the strong feeling things wanted over quarter. more update you expressed and there. what a the equation. or for secure It supply Bill, I I supply I in for Obviously, feels challenging about very your call bit IPO on little Congrats wafers couple past be during address of outlook on the and an confidence execution in have substrates tricky couple next, or have you to it everyone how ability got to of bit the think you ask the little to times you. out follow-up. the for process are get X was side of more whole quarters. about the process, next But your to whether then months? to supply, quick ability like it, a I've months. a demand the And XX the

William Brennan

deep points Sure. deeply believe out strategically you, has Sure. when kind XXXX really it the really relationships I strength starting forming. A team Thank supply we that when to experienced lot to operations over really for several We've a We -- the time years. another question and treat chain. chain as of of seeing frame we've the were this thanks we've built the that last we question. supply was built love company team go within that back because people got I the tightness. the first started

plan our in our approach. supply terms forecast of very chain. And business always so stayed our with a and close we've We've taken strategic

much really And to more structured planning approach. a long-term formed XX so ago, we really months about XX

And where about so we feel I very are. good

with the no that quick our very issues ramp. even next supporting see beyond of couple think I quarters, I

customer-facing out deeply point to like experienced we've a that is got I'd thing team. Another

approach gone more have we've sense end our customer supply planning the challenges bringing it. to that so a with And on something base structured of that chain of a in been

it the here well as think closer believe has to to so or that customer And not, supply base. tightness us drawn closer us our I drawn as chain our

point to this at not going disruptions. confident feel I So see we're that

Toshiya Hari

and in is had my within think you had of and In talk that a that AEC doing well. business a the back AEC. sort that specifically business over specific question the of customer customer on the next in couple the you to I you guys in base a you're And in But helpful. customer you AEC as majority be mentioned obviously, then of having your vast How with this lot should the the customers, That's customer we years? and can if about term. a great. I your as broadening remarks, the be prepared near design-in little would forth AEC, super about XX% of the your follow-up, with suspect quarter, bit Again, activity

William Brennan

right. Right,

Another good question.

generally, overall potential, that happy customer, and the the let ramp it say AEC of me about really growth AEC so opportunity. speaks we're with to the market that And overall really

of a you market. is so can I ultimately this first product a one. the being going market, by fast-growing at truly new mover always to categories in be a innovative disruptive proven think look the this the There's And and kind company to adopted of first small, that really nature as brought

small so really number that players, company with market fast-growing limited a see And this high a customer scales. validation. revenue a from expected a -- unavoidable it's we as really of perspective, the to our concentration entering And a is it's

believe, server layers or racks, or especially in really will switching routing long and in speeds in And AECs some increase. we form the the as fashion, that all use whether term, hyperscalers singling so

going question with in our the the are that's you say second engaged have second big we that that and quickly. progressed to we will coming upcoming very ask when we're the deeply so ramp customer. And think things And hyperscaler is I quarters.

architectural discussions again, about also deployments. for level next-generation their this the in is, several This engaged hyperscalers AECs. entering quite category sense We're with that really a is conversation product we're unique so with And it's in whole validation. the into other customers more

more second over to customer. opportunity is, really within ramp time, really I then large the see And answer our I quarters, we'll see question your expanding the So upcoming broadly. the

Operator

Needham. Our Bolton next question comes Quinn from of with the line

Quinn Bolton

the follow-up I AEC wanted and successful on post. congratulations the again, Bill, quarter on market. IPO my to, offer first I'll the

OFC, today competitors serve of to looking you XXX mentioned, could As AEC AEC that seeing source your think, to you're And you customer. margin you dramatically. just perspective, timing the you higher-speed to get sense give ramping the your question, AECs, Dan are at switch a Can do follow-up gig profile I when to a first develop walked as second and mentioned, AEC, line? think start then ship some a AECs the gig XXX a at gig you product you of as increases AEC floor us any XXX a gig XXX from the you the versions? especially

William Brennan

Yes. I'll make one correction.

Dan gig lane meant being the an to where think really speeds. it's we from I say shift And XXX single XXX opportunity. is XX to see really shifting a speeds gig single lane gig,

the of please that so disaggregated X And way distinct racks. view the well. and we note then think NIC -- ToR is chassis is the to market the as switch And server one disaggregated other opportunity really in The there's or that. routers racks One that is markets. make I with

customers -- These not decision we've They're to really a adopt technology. make are shipping customers. had but that's smaller. top so X, quick our we're the very to customers And very,

a XXX so material it's gigs. shipping first in of comparing ToR our production customer. not And NIC to we're But in to for it sense

data really and it's function make architectural of they decision. center, comes ultimately so when it really a to down the each an And conversion

XXX gig. is to see start during in think I for that we'll the a what XX we'll shipping next, say, months, XX bigger much And the way so

Quinn Bolton

competition that the this to you wise switch AEC provide? on anything And

William Brennan

is center of customers, they the This rules course, of sources. for them. our part the of want multiple course, of Well, road data

we've we're competitors couple had to so AEC shipping the up come And of switch try in a that production. with

there's they're I of possibly that think But process build delivered of solution. the get longer and to samples in of has think another end to one the the the and hit company road, trying is competitors the I no trying qualified.

Quinn Bolton

moving card just ICs. to line the then And

you You sense guys you but is production, in gearboxes sampling revenue ramp least one shipping at a and just Heron a already or us us them can of of on sense, retimers week. new the the and this those currently timing give I think the solutions? Sparrow maybe give introduced for Can

William Brennan

going on gig when gig it's -- start XXX switches -- XXX shipping. really it's based Well, be line to single the the

so And we're encouraged. I think, generally,

nice us. drive the faster is business stable growth that very will first card very and that in it's speed the a steady. market ramped line business for we on It's towards we was market. think opportunity, not but Our maybe and business singling the It largest the switches trend

really hard think I for we're going to that more to It's guess, when to market months now. well but that say off. be positioned X very So XX maybe takes me from would it's I than

Operator

question of next comes from Stifel. Tore Our Svanberg with line the

Jeremy Kwan

card AEC I in for side? calling there your actually retime, the in the Jeremy the are the advantages Tore. the side for up and on is following This question, there on Heron the Is any A guess, specifically pairing and it or -- -- line on wire on Sparrow Heron. with high AECs, whether

William Brennan

Yes.

it's gig some on with gig per the switches ports. go also note will that X XXX a front RU lane use of that's they'll the panel and factor I'll interesting. So -- XXX form

to for available. try to And to wait having so that's without gig be market to in get an quickly XXX solutions effort to

Heron shift speed can switch part, the to XXX the from gig receive a it XXX gig XX where can mode lanes it gig then the so gearbox modules. lanes And for there's and

And so IEEE building industry whole of going we're naturally, is towards if building -- a But extremely the straightforward you're interop. be products, combination to standard. there's again, using an

that wouldn't features not if we're standards. secret And the a huge in expect so advantage. following building I We're there's

connecting but advantage. straightforward that expect maybe more be very with would straightforward, I would solution, another So no huge it than

Jeremy Kwan

you first you kind opportunities the see consumer then USB, for ramping PCIe tell terms And as first? you time, to the of customer with over look specifically side. and in what's Can applications between balance and the then can beyond of and we Ethernet, you USB on mentioned PCIe tell us, TAM? us the what And USB

William Brennan

Good question.

folks that that know the first the tablets that that I typically be every And USB we speed space fastest follow the expect so standards will the think in adopted laptops, And there's speeds. that generation. the doubling application of a

you then to really that need And even I speed, Because a take in applications bandwidth. take peripherals is active tablets that are as cabling that solution same think some advantage cables to sort the advantage the in that expect plug large We laptops for the speed less. X go of or a that for of well. there's will that there to market to want have to feet of to or over necessity

expect bandwidth high are And other first follow. drive I those that we ramp. the think that markets will will So be applications to there will

Jeremy Kwan

terms in of expectations TAM And versus USB PCIe.

William Brennan

to would XX% We see that PCIe. USB I of said driven number potential. be down that break then it that maybe USB I for larger would the balance probably TAM by XX% has be and the would to

Jeremy Kwan

Congrats great quarter. on a

Operator

comes next Mizuho. of line the Our question from Rakesh with Vijay

Vijay Rakesh

and Bill IPO solid on a and add I'll good quarter here. my Hello, congratulations first a Dan,

-- on into wondering, your the have peers your visibility half. talked strong visibility. I about very was Just on first

And -- So was. follow-up. just the looks like as a backlog you have visibility well? if how wondering how I And your

William Brennan

Yes.

just understood we to So make sure that your question.

about asking visibility half in first well You're our as as… the

Vijay Rakesh

you look Yes, as out.

William Brennan

Yes.

we've their a supply of before, customers our be. possible So at as is due challenges chain profile to look what I get the demand the process mentioned gone with through part far that will as to really

visibility And we've now. is that that we critical we're sure can right very customer got so refresh supply. we've make And would a say got that basis, I our It to regular that trying visibility to products on good with base.

prior was better our of than So chain that it to is tightness. the visibility kind I supply probably now think

Vijay Rakesh

much in speed portfolio are get this years SerDes also cable shift And think right? So with as probably the before. obviously you of Marvell X-plus -- for significant much I with noted and question, this Amphenol. took in that a doing I with that on [indiscernible] have they and it. shouldn't feet pretty proprietary where a to phase -- you But And going you goes But back have know you and moat going integrated sync broader a is, kind it qualify your out be steps. more That's forward? the differentiate on the is that it,

William Brennan

that speaking game. partner off development I it towards solutions What forward, speak our if starting to approach approach. to I was the straightforward competitor's device hand as these question. we feel provide It's firmware that a a a in even were I take as not to point. partner AEC playing is found good And to we expect and great very a Yes. a it can and on our don't about

that's to so pair assemble quickly every cables. decided of used our we of for We firmware that We the we way signal internally the equipment We to And integrity part test. test, defined for process. through team firmware are own manufacturing qualification. every wrote on side. wrote step. that's test the defining the all our of wires the the single the all We our why But of as cable ownership the design, took optimize all every aspect

each at it And be can't felt single was our It's with go not full approach, my to the responsibility happens pointing so and behind problem. IC really throat the customer we choke base similar very wrong, mentality. saying, standing like you to If taking other the right it's to solutions. our something

our that hurdles of overcome trying this so couldn't divide It's say others our like is responsibility. and success. And we And was the to divide critical feel not work the it for to approach. the

Operator

Our Capital. with Instructions] of ROTH Desilva comes line Suji next from [Operator the question

Sujeeva De Silva

Hello, Dan. Bill, hello,

about So or that's ramp of it forward, here. this the going Can terms ramping in initially? customer Dan, an that's initial be up steady there's whether in you customer talk whether lead volume kicked initial should

Daniel Fleming

engagements really of Yes. can't Unfortunately, we about specifics that detail. like talk at that level customer about

William Brennan

ramp. of early in stages I the would probably add that we're the

continue We go even that trying the of really months. to plan. in close we're we're time ramp to out forecasts getting own and it's stay And to their as to a XX order expect ultimately, of as possible, it year. function And that's the calendar throughout

see And think you'll continuing ramp. it's so to I something

Sujeeva De Silva

that And then qualification going are transitioning would just that that Or for the around you in? the customers what on average? the us would driven remind it bring other And on, customers to is can following of right be coming, the length Any various platforms there more helpful. is by now? distinction is cycle you

William Brennan

Sure.

have of really the of for can a XXX very it's switching some quickly. ship routing gig really when a solutions. we're decides they They cables, So targeting the cables thing. at cables gig layers. customer production them great We we qualify straightforward look the to These is a it to the And because or interesting. it's qualify very some rack. build If and and begin enough they solution, that XXX rack, the are

be start to as could is this a production because from So short X as months baked fully solution.

card first maker When of stages switch we're line you big laying the PCB. their out design, involved a at in a get looking

of effort XX-plus takes production. it the on to from order months first sometimes to go And

the can the and it done it's because qualified. system on nice, so solution And it quickly is work really very before a be has AEC,

our helping first a was had, problems The successful. the listening this one This them to to kind really effort. of and customers, that core concept solve them where ramp making values are was we've of collaborative

in And possible. order an you that "Do for that And was fact and opportunity there's seen production been this active real approach have start is earned we like of to an XX us taken credibility enough case. approach this solution months have. before we make from really on But so innovation because again, customer opportunities this where never the is that to evidence to think nobody is the of our say, has

comes solve again, we've got where listening our And so helping type that they're is second up say in from problems. and engagement underway, the picking standard developed. of similar we've a something It's that customers effort that the engagement, not their a -- will them I an idea to cable that it's that's, a second

going the initial is quickly. to we'll upcoming so But quarters, And so not ramp. ramp in see I that would one say the

Operator

comes Richard the from with of Shannon Craig-Hallum. question line Our next

Richard Shannon

for guidance of question just Dan on quarter Maybe first quick the the out a on gate the Congratulations here. ask tactical I'll here.

remarks driver suggesting I here. the cables your of will kind from the think sequential be big you're prepared that

So Is to I of being safe concentration of growth quarter then also just product customer you're and quarter. think in wanted just growth, this about the as April to And the to a high well? conclusion check to expecting a IC kind is in right that, if it last to see XX% talked grow. corollary you at least IC as that that with if

Daniel Fleming

question, driving customers now. are are we through growth of yes, in all in going is last a as -- astute similar in is, our as concentration really We expect that ramp AEC. Yes, guidance, And really in correct it type you're those QX would the far It what's right as QX questions. your assessment.

our be And healthy expect IP well. yes, you're as We generally speaking, to accurate. revenue relatively

You're correct.

Richard Shannon

on heard here. ramps Bill, here question a I optical had since you, for question your a

latest and goes side? get as of real volumes a especially your to production on for your team thought want expecting OFC you're Just in process and the through timing your see update, to when ramp-up DSP TAM

William Brennan

like are amount Not us that San shipments been it's got and but little for a We've a Diego. number of because our and several qualification this engagements we feel fiscal customers. in our the I'm in team to qualifications a material to through upcoming will year position is product in longer great the the large week in ramping 'XX. revenue quarters Yes, revenue got at expect down to in design that got big production small, large that bit they've of nature to get to is development on optical products, material our generate say with production Sure. we've we're do a OFC. that It's happy hyperscalers. get yet. get started We we've through with to a customers,

cover market. market interesting. XX well the got as And the per that We've so lambda as gig also it's XXX lambda solutions per gig

is many decision years lambda only and And market stone, the We've going we're that's saying market XXX to Channel. the gig, to gig multiple X market gig in also cast was the so, and basically was or industry coming, now XX XX was disruptor. market Ultimately for XX playing X the for that made we lambda. And the -- XXX and per engagements, that new XXX should lambda gig including that in the believe of I forecasters watchers you gig per although singling fibre target. or gig, the XX back role were per got XG invest

be leading opportunity there's in And the that markets. so edge, it on it's great important shows existing to although still

with going major module And architecture. X gig for I are think data centers everybody XXX aware ramping is a their that approach next-generation

for design OFC XXX per XXX [ both us XXX a week. CIG with big engagements also broad including this demonstrating I XXX and described. our note Accelink, partners products played single week, Hisense, that including solutions, We XXX ONET gig. the modules all gig set [ demonstrations. being XXX helping have Credo-based I'll gig as this of gig, we're gig, our Down several II-VI, as that are demonstrated at provided lane ] lambda, and module a Luxshare ], role in well

bit a more So think little I it. on

cost. key I how this this can doing break your make in and is. driving or best performance on market it with best to power with think efficiency is market, cost-effective best the depending possible the It customers solution

approach. for say confident we We're the on approach. N-X little conservative gig in And to really really never probably And just solution. going I'm based we're deliver have are I'll cost-effective going that the press more we're on win and our But competition so demonstrating process performance But sure, that that's we'll releases. power. bit equal OFC at XXX a better our to in most or

Operator

like in for back now turn questions to further Bill call remarks. the no closing I over showing queue. to would I'm the

William Brennan

Yes.

So We everybody, you, participating ongoing call. appreciate for thank actively much very participating our your Credo. -- in in first interest earnings

So with we next that the until talk. care I'll say take time

Operator

you conference Ladies gentlemen, call. and concludes today's your participation. this Thank for

now disconnect. You may

Credo Technology Group Holding (CRDO) 9 Mar 222022 Q3 Earnings call transcript