CRDO - Earnings call transcript Q1 2023 | Credo Technology Group Holding Ltd

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

Daniel O’Neil

Good afternoon and thank you all for joining us today for our Fiscal 2023 First Quarter Ending Earnings Call.

Credo Fleming, Brennan, our from Officer; Chief today Dan and Chief me are our Bill Executive Joining Financial Officer. remind may regarding operate and to this operations, the strategies like everyone areas which comments future certain I'd we in made and call plans, today future of include expected statements other markets forward-looking financial results, that on discussion. documents risks discussed in These are filed the forward-looking that with statements and are uncertainties SEC. subject in our to detail risks the its cause It's or the management extent company's nor not from all of on can factors actual assess predict factors to for materially statements. differ business those impact the may possible to combination of factor company in to contained forward-looking the results which all any or any

Bill? filings the website. turn prepared Relations to that, of financial assumptions, performance well our during in and today release reason for of earnings from by be adversely no company portion of discussion CEO. and not uncertainties events we over date to the accessed and the now obligation important use as as financial non-GAAP forward-looking update occur not addition accordance to risks, as using The financial to this which conform except in statements GAAP. These may provided for non-GAAP reconciliations issued performance. Investor available measures are anticipated results actual company's these is can measures be substitute could any or in measures to to this I'll between materially call expectations our discussed we company's changes the actual SEC statements publicly our undertakes after superior financial both non-GAAP financial or to with the implied. as Given and differ call those and the required or GAAP which certain these to measure Also why a the we results With of and will in during measures call, refer A in call an consider law. our this U.S. to non-GAAP forward-looking we

William Brennan

to Thank afternoon you, Dan. for thank joining call. everybody and the Good you

call, this be high-speed our data Officer, expectations data review moving our exponentially. progress results in barriers Dan When deliver Financial we bandwidth is mission forward. I of Credo's power connection about that and share detailed fiscal why solutions plans I'll QX cost efficiency as During bandwidth review secure, Fleming, to We our improved results excited connectivity financial moving then a and to every infrastructure solutions continue the break requirements wired will high-speed and deliver forward. our market. our and conclude, provide innovative, increase to provide and on rates Chief

per and the built with proprietary gigabits connectivity Our applications, electrical and second, DSP for optimized XXX technologies. are solutions including markets. optical our port our SerDes XXX All XXX gig, gig XXX Ethernet both products are and

or families integrated product electrical ICs, SerDes chiplets. active or Our AECs cables circuits and include

our primarily property sequentially. I'm report million strong from in an quarter, increase last execution, SerDes that July licensing. intellectual solutions continued to $XX.X XX% happy IP up revenue, the consist we the or Our quarter, in achieving million of from IP $XX.X

connectivity new IP like strong on indicator showing up a SerDes our making with sequentially, product provide key high-speed represent products. Starting Our progress AEC now XX% update we active on cables, category, licensing to our I would product is AEC closely, a an pioneered. our which update businesses. and track revenue Credo product the the solutions ramping electrical was we're an

and half have Optical integrity prohibitive AECs achieving in-rack or better As the connection offer and AOCs rugged connections and power the size physical passive due reliability speeds with compelling power, half design obsolete than to become more AOCs. signal increase, challenges DACs cost. a solutions, cost or copper challenges. with cables severe

continue We and more gig, including we've to XX customer-first and sold due ports. solutions To customers, date, ingenuity XXX traction gig to AECs XXX engineering XXX than XXX gig, mindset. our for to gain XX gig,

target ecosystem. include ODMs centers, others as networking customers as carriers, OEMs and in the XG well data Our Ethernet

During to ramp X our programs QX, we continued center first data customer. the major at first

disruptions we to and this ramp supply our towards fully the chain first that in future. to of We We expect we to shortfall first at also this supplier regards shutdowns in AEC encouraged had pleased solution I'm the COVID continue this major customer, on fiscal shipping happen by remain inventory the to make any manufacturing of QX qualification our nature share a buffer customer will customer demand the our our center program. the preproduction revenue help units that last shipments by for next-generation recovered quarter, to the caused customer, second to while in meeting from progress, of to With of initial year. we've the their impact same continue prior minimize building ramp. successfully prospects end the China given a innovative that to third AEC data

port verified server We applications. needs multiple delivered leading our to data to and solutions rack per both our XXX well To customers their meet customers, closely in port SerDes the address XXX-gig networking disaggregated innovative ecosystem and rack additional AEC solutions continue invest the to to lane this as switch aggressively technology. as OEMs with partners. AEC We've end, gig working center we've future with our opportunities AEC for next-generation XXX-gig been with solutions multiple

both and TIAs. for solutions optical Now turning disruptive customers laser center closely In to deliver to DSPs, drivers this optical and manufacturers optical our solutions. work data market, we module with

model, key production module center in optical JDM, manufacturers customers such a in Credo development with optical optical through specify DSP. data joint or numerous in our our center X components are used data be where customers We to as modules, the

we number very this a data in growth leader data engaged a with will that XXX-gig, OEM XG We growing strong leading for center, our optical the QX, channel. here Ethernet channel future. several we XX beyond also data to now quickly began the solutions And significantly of gig to continue XXX-gig report fiber to applications optical Line and power XXX-gig laser lane for deliver with customer as PON, are for are with production our on that well. we encryption including applications, expect and with networking our XXX-gig across directly module. With deployments. optical including and now solutions significantly fiber second solutions next-generation become recently solution. our this manufacturers requiring SerDes XXX-gig modules and We applications in a our provide various major remain disruptive driver integrated DSP optical progress, we Notably, during high progress optical efficiency XXX-gig Credo a announced MAXsec XXX-gig MACsec the the technology. we to has combination of is continue contribute port Card cost growing business. and are We XXX-gig pleased production performance, Credo same and lane to our PHYs, per high-security the in deploying in bullish a center with these on advantages per position see the market the moving to future security. strong with towards We're happy trend for next-generation ramping solutions

from networking make production. well. are our ODM port currently OEM continue transitioning to We strong customers qualification with progress Black XXX-gig and Hawk retimer to mass Numerous solution as

solutions, higher for will PHY announced on speeds, we the XXX-gig solutions, as at platforms. by to Card of trends retimer lane. next-generation performance, next-generation has Line per market they the this port theme develop gearbox As customers the signal first positioned Credo power per I'm XXX-gig we challenges delivering and solutions see is say adopted been same toward our driven given disruptive and their cost. efficiency XXX-gig year, continue Card increasing integrity to demand our XXX-gig well that Credo Earlier Line happy several lane generation and already by

gig our with we contribution IP IP last and licensing we've first IP with another will SerDes the lead consumer on next-generation announcements strong SerDes important strong Since is quarter. designs. made in X we is revenue for market consumer quarter and SerDes industry's SerDes clear IP a Finally, the our This IP making X partner, announced We next-generation for PAM had done This offerings. SerDes business. choice for significant our us leveraged earnings work very chiplet XX the a had strategic our consumer we designs. call, be which our from

Credo that delivering power of and range also short XXX-gig smaller talked core benchmark competitive announced longest than again say of deployments this that product Line dB recently IP SerDes expensive in options Credo. we on We PHY This is next-generation more to compared X-nanometer SerDes We and while and our new refer our believe to requirements, power our great We the and and family advantage. as for using a extended move SoC to advantage we've partners loss with sizes of to a reach to designs. combination this deliver module our solutions links expect X IP a the lower our competition. processes. products nanometer X-nanometer the other mature X providers We Credo required walking about from to power delivering of deploy links across less customer Credo more walk XSR and optical an in our technology availability and nanometer. XX I with more die will deployments. IP X will Card set to process all we've to to LR+ TSMC's develop span best Serdes reach process to and process believe N-X broad a for lowest in the unique in performance in X- in expensive comprehensive need and than licensing IP IP advanced and industry benefit this In processes that becomes PSP also past, right we've since is and IP Credo's X advantage AEC, be same and our X- competition our for N-X step solutions. product multi-chip will with

were an to in per June their Tesla XXX-gig recently provided second partner building on the as Technology X.X industry-leading [ph] relationships Regarding their market their excited to deepen our connectivity of per for Also SerDes with efforts, progress new prospects chiplets. from represent the IP solutions Near to based production also UCIe-contributing their summary, customer chiplet chiplets. least more customers. SerDes as our two would about we TSMC's 'XX where achieve we $XXX term, our fiscal remain annual we member, in our XXX-gig by we current in than a of Dojo mentioned continue encouraged Credo by our terabits and we engagement. results for be delivering honored growth notable, at next-generation supercomputer we momentum continue and strong X.X leading-edge strong XX%. IP SerDes be In feedback Symposium as key lane to we customers and revenue XSR design, terabit became and at as on million per our focused XSR commitments on We're expect receive second which

I'll Fleming, Dan more quarter the over to and give CFO, our turn guidance on on our first to provide to Now call details QX.

Daniel Fleming

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

the reached fundamental the revenue of a continue As continued record million, a non-GAAP QX, our our be growth sequentially. with will in by of XX% and quarter to I'm strong to up another was Sequential a for economic HSDC quarter, an record AEC unless product in wave that financials in guidance products place highest was driven our noted. geopolitical of by growth, million in speeds driver product-focused. above mix the discussed also growth revenue focused reminder, up growth $XX.X the share This otherwise of outlook midpoint The landscape. sequentially. the range basis, of from of of strong will a we IP our product $XX.X you being pleased face which led achieved revenue revenue following at and transition remains XX% expansion adoption uncertain a that at to on

preexisting QX. $XX.X a our as generated business strategic contracts. from IP our driven revenue business million by specific IP but of part largely quarter-to-quarter, of results may Our remains to in a deliverables vary IP reminder,

was of principally the in revenue margin for and revenue which of midpoint revenue. quarter, mix IP vary this to IP our changes. product was XX.X% our XXX gross XX% a strong With mix delivered result of down is QX guidance. This expectation in above the by XX% of points IP, revenue above we quarter sequentially, basis time, given will our driven product While mix long-term over XX% any

from and QX XX.X up and in This XX.X% up points percentage was due is guidance quarter were organization in XX% Total growth. our as product to at margin midpoint basis year-over-year. margin the points our gross quarter, the expansion the XX.X% in gross the of IP our scale Our leverage $XX.X principally operating product strong product expenses we for gross up margin sequentially growth. million was year-over-year XXX and

to continue to the leverage expect deliver We in business. considerable

to OpEx innovative Our increase solutions. was year-over-year to resources continue a as the we invest driven by deliver increase in XX% R&D in

up was build to SG&A infrastructure. operating up year-over-year public Our XX% we continue income in XXX% of delivered as company million We sequentially. $X.X out QX,

sequentially. driven $XX.X in free net of quarter, spending $X.X We million equivalents of million our in quarter million quarter-over-quarter income $X.X points the quarter. of a production operations flow up in revenue from cash to was CapEx million as quarter ended. year-over-year. ended fourth our $XX.X up the quarter flow million the in a in large capital after investments week negative decrease we to negative as Our of $XX.X the was basis million, cash with continue of delivered continued sequentially The cash of decrease a by leverage. from the operating a working support $X.X in the margin first came result XXX $XX.X was decrease and $XX.X line gain was cash QX, a of receivable $XXX.X million XX% top quarter, was growth. XX.X% million, We mask and This million, decrease operating

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

minimize Our million building disruptions any sequentially we impact successfully as up QX the inventory future. manufacturing was ending $XX million, to of ramp the in product buffer our $X.X while continue inventory AEC

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

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

operating QX approximately share we XXX be expenses finally, US$XX.X We shares. million diluted average expect And expect to US$XX.X to million. between QX weighted and million be count

I'll year. As for Thank Bill 'XX. it fiscal in will revenue in our you. fiscal up leverage we $XXX to achieve And growth to And deliver to coupling expect our Session open that, full mentioned, operating million with we business remain the track with year least strong a at double-digit margin the discipline, of on continue and questions. generate for Question-and-Answer

Operator

Instructions] question America. from [Operator Arya comes of Vivek Your of Bank first

Vivek Arya

and have X fiscal optical, between year. But And how you that I’m now to earnings recent of a are all mix evolved? The months has how ago, larger versus perspective X you macro peers any about have or a thought thinking curious, the mix AEC, from Line pushback number at IP headwinds you pointed or Card their what calls? your that in PHYs seen

William Brennan

track the Thanks for with appreciate right X on mix months we're the ago. question. what From I I that. expected perspective, X to we think

revenue our that from Long into follows Line is optical Card we going TAM followed next. our product AEC and then that expect Of long to turn mix market term, in term, Line a largest by business followed by will and course, our AEC we we've be then match to the expect a our sense standpoint. Card. seen largest optical be quickly business, revenue really

then generally. really I very So a macro And there. level, on think in we're good no position a changes

engagements new on all really our next-generation deliver technology with in our really at If necessary is look really leading bandwidth their the edge the that for you requirements. customers that forefront are deployments

the our And quantity that still the volumes and customers large ramping and we deployments, on. programs made to of for by so if we're are rate slow see decisions

impact of macro given level positioning. not So we're I just seeing say our business, our the same would to kind that

Vivek Arya

in adoption the up, a is the large of process Do is customer you you ramp? you lead I’m for I’m ports are And of any are product where the my we largest determine total do too Or on phase? your of of right. in the in digestion should AEC All innings and you Because you the adoption which adoption digestion expecting of and follow your kind trying at at your Bill, topic in? phase? your Just whether deployed your to look that high-speed customer? at adoption phase? AEC, it would look early expect where customer, curious be we number being If at think

William Brennan

Sure. Sure. would again. the question. Thanks I for we're the middle ramp. the say innings in of that initial first

will significantly quarter. is expectation through next So that continue this it's the ramp really fact reflected so grew quarters. that our in we the And

Vivek Arya

Do year you as well? to expect it grow next

William Brennan

at the our deployed opportunity matches Well, of that one are really got that the generally hyperscale of each speaking, servers number we've customers.

say I NICs at as programs they multiple their interface level. server engaged so card in we're network change would And technology that for the also, or

And a after customer to hard our first our frame. I expect to the 'XX so for we've ultimately, volume we fully that mix But then the were that increase more volumes ramp will the to that significant fiscal we will add got continue. with me customers It's to believe time ramped. be continue from will say, standpoint, in

Operator

Hari question comes Goldman Toshiya next of Our Sachs. from

Toshiya Hari

some you had was in customer about two engagements qualitatively. your optical job Bill, as Dan. guidance I quantitative your guess could front. did and talking for think terms hoping one solutions business, I I I in you questions well, on a one Bill for great the give of perhaps

of beyond growth should You for How talked over about think and it solutions? fiscal optical years. we contributor about being next the a couple 'XX big

William Brennan

we're is, strong. that the think, I very Well, I making think progress

be. expected base would I say the growing small. is think we're right on from that track we with that I we're where to

out see we're markets will years trends perspective it rounds. XXX. some see I we where increasing, products others percentage the than adopting adopted see we gig forecasters that that's surprising that going it is believe the XXX-gig, is XXX up was the hyperscaler fastest still until from But the some first we the end optical where much, generation back that going in say every the really module volume see to market X X.X that really T. X we the is this promoting. much higher look gig, not market there in as of a hyperscaler next we something towards the major showed the is XXX a growth ago. So be percentage of be different by small will or

at look and we general, in pursuing independent So hyperscaler we’re different opportunities. the really market how an that’s every as

got in the XXX gig T. markets fire irons port early we many XXX many about we’ve on across So and on really the conversations from even industry gig different have through going X.X

Toshiya Hari

Got it.

assume stand just as of on to today, long-term that to to still a fair optical it of track the kind follow-up, the commentary medium the your provided of at hit So IPO that Bill, numbers DSP? is some time you in you're

William Brennan

Yes, we track. believe on we're

Toshiya Hari

Dan. for it. nicely, were got as year-over-year Okay, question sequentially my in quarter. the then, gross margins and Product And up second both

As the next several we we of And from should gross about about as X over it, your How customer, the largest your a AEC end your ramp quarters? product think next, year. your not call comes starts at you evolving second fiscal DSP business the ramp. continue the margins toward in quarters, couple, customer to if to low base, think

Daniel Fleming

out, you're question. over scale. changed. product will fundamentally, obviously, from product as 'XX fiscal A you the of points discussions expanded as margins margin and now recall, highlighting, Yes, has fiscal our these to just more couple that’s throughout trajectory that starting demonstrated we've gross a gain through nothing into if 'XX year last gross to we And than kind of had all QX. expand quarters, as of XXX gross point we our laid things basis QX out really And our margin great

expansion expect of just to scale we're to we because the So over continue attaining the next quarters. X that fundamentally X

those revenue we the will margin. believe, will trends fiscal before, gross year had mix over what there Beyond stories 'XX that year that and years fiscal that, further 'XX expand help be, some similar are to we favorable described

ports some And expansion when predominant kind will contribute of AEC the the are dynamics margin of also XXX market in gig that the ports. to

different of we've we So there's to in described trends past a described we've seen, that believe we've past. that the we that as in see, expect lot the

Operator

Mizuho. question next from Rakesh of comes Vijay Our

Vijay Rakesh

the transceiver Or slowly the with? and Bill mean, ramp optical 'XX, and customers starting side, you ramping fiscal gig are many just 'XX? then on Are you going how Dan, into engaging basically one would you customers? XX other with be with seeing I ones multiple

William Brennan

Good question.

so main our OEM. large a networking partner And is

lane We that to from working are we're shipping partners these are multiple that comes that the with. fulfilling optical DSPs, the networking XX single optical OEM that demand gig

Vijay Rakesh

to I you guys Got as et buffer improved you have probably the supply assurance and inventory been least? logistics bit. but giving side, on there have what how it. can inventory building little is as chain you And a the side that your forecast doing you’re you to your of et know why supply talk up at a cetera supply customer can But in securing securing talk supply cetera, well, terms

William Brennan

in a standpoint, we that's in say I find Yes, than we shape had much a issue with a China. good sure. from the when past the quarter shutdowns ourselves were now Sure, in we very the right question. would better supply

our at. so supply different of And elements chain that we there's look

them. up. are on well. by foreseeable with supply AEC about any wafers and we tick inventory And exactly conversation you regular are built chain in of We see partners, in better our Of good see that's to for caused we a the do are China, last feel position planning said what in from June inventory position very partners our COVID partners. those today to very no then with as actively having avoid that's now. another discussion chain why call we and our future did we near-term disruptions were supply the we have a TSMC ourselves finally, We much the kind course, we're Packaging very that with find X We substrates issues we with with frequent there. going

working be. on Longer time wanted having we're from starting to we we're to also geographic during supply to be So supply have perspective. going term, that track but we're good towards It's shape discussions. it's Generally, Generally, the partner going think with surprised; chain partner right good mentioned in Yes. those and with progress quarter progress a where making we we're made I a from we shape diversity. last absolutely in perspective. I chain think not in

Operator

comes Our from of next Suji Desilva question ROTH.

Suji Desilva

asking with a trend Just discussion differently any ramp the that Maybe initial cabling gave to you question along more little customers higher to Should up. with expect going to be are features? customer helpful margin for we pricing already or similar us. the the indication there would the

William Brennan

That's not say one is Sure. I a the would of question. we're good that every that AECs similar. building

think that point. the increasing And variance as, on move we're AECs different we the that we'll some will well the there from I it's towards for be increase speed. really would I opportunity towards now, say And develop type we is the so shipping, there specification, based are current that to ASPs right as be ASPs. built as as shipping with AECs of a in AECs

products we're are cable shipping first market. The that passive to the really tethered

so a that over real there's And solutions. these premium copper our a are passive AECs perception

we've or XXX been we're gig our the XXX discussions a to XXX And it so in gig bit a when sense AECs. relates when or having gig tethered

be will the looking in gig, the As passive conversation. future, at we cables not start copper XXX

pricing power and where really to solutions is better be standpoint. from this so a And going much to in ours. that a We're are alternatives position much, the

as will result. rise expect in we naturally we a will and so sense, that that ASPs point be at a untethered And

higher. particular, I will at a is much would and near So the ramping as customer cable cable, because bit we that in more look be look our second that that 'XX say at fiscal complex building we're ASPs term, we a the

just the to fact on And we're more up that shipping that heavier so complex we'll are a AECs see content. cost it with based trending build

Suji Desilva

will Dan, whether Appreciate helpful. And when X-nanometer whether then a of in? with overall the come might sense color R&D products the detailed can you be timing there costs of give maybe X-nanometer very be for there. or the up And coming, CapEx a that us mask budget? there and on will the absorbed bump the That's

Daniel Fleming

that cost, from of becomes production us. fixed asset for a perspective, Much assets Yes. course, of

‘XX be a there beyond. cash and so point FY tape-outs before from that that We’ve And But into overly really OpEx they’re material time. forecast will perspective. that’s and our consumption got they’re in but engineering baked of not

Operator

Our comes Cowen. next question of Ramsay from Matt

Unidentified Analyst

sort Matt. question and is ask center taking exposure. that IO [ph] This there in irrelevant been any well-documented on Or my about behalf upgrade DDRX. wanted line the customers congrats to your I There is CPU CPU upgrades the results. your to your Duran of on for upgrade between Thanks data drawing to should this have some upgrades? cycles we be have and exposure Is that of at it standpoint? delays

William Brennan

per ramped These Good say with and the we've first front. for lane on that gig question. are continue our mix that that customer I XX would with, connectivity. with we to ramp there's really nothing

then generation, look view per there's upgrades from of connectivity we series lanes per gig lanes it. They'll a be that XX standpoint really is the lane. will next at we the a XXX-gig to moving and of of As way lane

and are servers shipping. going we're NICs new until so not AECs And these ship to

And that specific And through deployments. can't the ramp. on there. why is we next-generation dependence and It's really the based their customers with that's we're development some the go on be too their our planning so of there getting best timing as feedback

Unidentified Analyst

mentioned license with the is flat remain margin XX%. or is we, guidance? to guess, than near quarter a consumer by but know made or is licensing up that away be product elevated layering been piece helpful. very How you then improving term? I higher I don't of Should margins it scale? is you gross if as just in to know Tesla XX% sort the there revenue expect in the IP should Dojo And square supercomputer I down the going licensing next the target how there, it's to for we That's that running has Understood. expected

Daniel Fleming

Yes, let me address that.

can So vary license comes Bill when very the part great quite quarter-to-quarter. recognition one business. strategic as bit a about question. IP, our from revenue thing of to it revenue mentioned, And considered process is is it a

quarter-over-quarter overall challenging degree we full what as to going that So a have high revenue figure whereas out to year, results, look at confidence it's we a fiscal see. bit more you mix over a that is of little mix revenue our overall the be, in

revenue standpoint, our Long of So in XX% QX from said revenue in XX%. XX% our see be we term, IP from it you QX. XX% to went about to will that

we So over helpful. get we'll get of years, variability there's from the as But that's to range course but few to going quarter-to-quarter some be the next that there. hopefully,

William Brennan

we’re some end, There’s of difficulty. hearing sort not anything. our On

Operator

Svanberg, your unmute. phone Mr. please sure is make

Tore Svanberg

I I Tore hear yes, didn't is Yes. Svanberg Stifel. either. But anything from this assume,

on So sort question mix. I had your revenue of a

So obviously, about and lot businesses on selectively are you've the and infrastructure here you greenfield got of new softness of data there, ramping. side a even hearing we some things. have But obviously opportunities

could you data the may the for quantify much of us infrastructure So on side? subject business softness how be to

William Brennan

Sure. as it's manufacturers. we networking and good partners and well data products, It's really optical question. OEMs data so supply end as centers, ODMs a Ethernet look customer of for our If at centers chain

market a dependence And so general. in the center is definitely, on there high data

everybody deployments ramping that much term, impacted the an are many really our development, be on in bandwidth we're customers us, by near our that we planned. For we're as necessary really that within new are to customer. really technology happen technology can. in they that ramp that as with programs are deliver given of we new And players, changes next-generation ramping the the programs as fast And stage because that increases group we're not that of going first now we a because expect early ramp company going has to

than to to ramps, planned. what decide originally a us, spend large a they're may compared ultimately that's see slightly they it a as gives down they although had spend what less is so rate us, planned, new greenfield little whether or we at less ramp. To you said, And was volume

our So within that the on near next for really base technology our term expect end track to years, going changes we're two with business, of of the customer we're kind I spectrum. any the new meaning don't since year,

Tore Svanberg

is My other perspective. great on a That's question supply.

diversifying further you. also some You talk you're supply now disruptions I know your chain. did behind about the on of working being

you there? on to when us bit was AEC especially would a you I a more update components? detail And diversified So the have hoping could more expect, side little with

William Brennan

Good question, good question.

the working with different closely over years as past partners, So been this several market. we've X really very pioneered we've

those supplier one of the now. ramp second in near the upcoming term couple And will production the We in mainly are in really with suppliers of quarters.

have as nice diversity fiscal we'll So look we 'XX. at

Tore Svanberg

Great.

talked the than Just of next some any higher DSO But quarters, you one the few being especially the usual. question Dan, will capital about DSOs, read last dynamics Dan. and with that how trend? the over working for

Daniel Fleming

certainly. down, come to it expect would we Yes,

AR received X we of larger have bit the and after we ended. our quarter control. we just one, have of As become one invoices little AR, is customers And timing particular sometimes mentioned, a more out our the much as ramping specific days

metrics, start actually balance you impact that when significant sheet calculating has So a on things.

even days expect we’re DPOs DSOs, over out quarter-over-quarter, payables accruals. the in next to these term, will inventory over capital so. smooth we year fluctuations other some So normalize going and of the and and or including see But working will items, long it

Operator

next question Needham comes Janoskie from Company. of & Our Trevor

Trevor Janoskie

you any see Bolton. fiscal at wondering, and hyperscale This customers? have that sole you supplier AEC the is solutions through for designing begin do on competitors compete could ‘XX? your Or seen second opportunities Credo Trevor first as I’m with the Quinn

William Brennan

Good question.

beginning think why at we've on customer high really investments customer so And indicator that's And driven in would to priority anybody space. of based that start business, great a for investing I an that it's sure, in new make seen perspective end and competitors that's a demand. this

the seen there companies are to We that that begin deliver field. products would haven't in large we know are making really several investments. But see we competitors that

are relates just think it customer as to our we And through, be ramps So of a I'm single first we go we to would with I the in we'll that is never never competitively. we that like couple that comfortable going situation. where for base comfortable that with uncomfortable say anything feel take supplier, granted. same

we that forecast I we've to from feel I predictable. standpoint got, the expect in And that confident think forecast. in will very quite say I so the And demand be the the near term, demand it of

Trevor Janoskie

your past Does that providing at forecast in And middle all? extend XX still large you with the that your order comments, large come of customer innings being that Or visibility that that customer. in is mentioned the in months? mean has ramp

William Brennan

Yes.

And say we Our relationship a the time outlook. I sense. they extended first been for is give outlook, And customer another us everything makes the get can that there's with frequently XX-month one every I XX-month where think date, to month no surprises.

they positioned our as into next-generation the programs down well 'XX to next-generation program into ramp as technology would and one. through we're maybe that and for going is calendar ramp So this expectation 'XX. given the is that deployment well run But

working So the that that has every that's customer team well with. this engaged as we're goal really customer other as with in our

Operator

Our [indiscernible] of next Hallum. question Craig

Unidentified Analyst

diversified quick you've AEC. diversification geography, from think, the, an Is A regarding out it earlier of I on Is Shanghai China? the diversification been a by follow-up by or of this meaning also supplier? supply area out question

William Brennan

see The question. with diversification term near partners. Good is that we'll supply

from a production, That production. Geographically, 'XX. later. having in in bit X having will go come we'll So in that one calendar will later be

as track. expected, just right on So we're

in and China we'll both diversity suppliers following building will short be build that. to So term look geographically then

Unidentified Analyst

follow-up Okay, guys that to? the know applications you the AECs. the talk partner. question on perfect. first Can I you're products specific My about with referring is and

that? happening? span two first you we when TOR your see approach like seeing are I into and second to So maybe at here. other the expansion similar I like or a switch start the categories least Are any two your is that NIC or anything AEC do think also the customer think

William Brennan

Sure.

are that gig. also these the look talked layer You're are AECs about, for rack we've are both these our or primarily two right the TOR see as We customers first switching applications. two looking to XXX adopt we as that But that well. NIC and do routing And customers server or be are disaggregated shipping next I this that racks. rack quite switch application. a per in I to at to year it's we'll term, say, XXX gig server with year, going gig near and think choose those be AECs predominantly think But lane, XXX that customers fiscal for go common

Operator

Thank this This conference today's time. you. I'm showing no call. further conclude at does questions

disconnect. great Q&A may day. Have a now End of You

William Brennan

Thank you.

Credo Technology Group Holding (CRDO) 1 Sep 222023 Q1 Earnings call transcript