Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later we'll conduct a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to Dan O'Neil. sir. ahead, go Please

Dan O'Neil

thank call joining for and first on quarter earnings fiscal you afternoon, us for our Good XXXX.

Fleming. Chief Joining our me Officer, our Chief are Dan Financial Executive Officer, today Bill Brennan; from Credo and

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

reason any changes call actual the results as by law. undertakes uncertainties, to occur and not discussed in except obligation this or events during assumptions, those required materially The forward-looking statements forward-looking or adversely the these statements publicly the may update anticipated for date this to conform of implied. after company risks, to could from to actual call and company's results and these expectations differ no Given

in use measures of the discussion be earnings Relations our accordance the accessed can our to of reconciliations A in prepared call, available using and release performance financial consider non-GAAP non-GAAP the why as GAAP. These this between addition during in measures issued we website. refer which non-GAAP company's is certain of to provided or substitute we for not measures U.S. today, Also will measures which to financial we GAAP are superior and a Investor financial to important financial financial non-GAAP and with we be measures, performance. portion

over now turn call I'll the to CEO. Bill? our

Bill Brennan

you call. for our thank Thank earnings you, joining fiscal and 'XX QX Dan, all

I'll see my fiscal results fiscal discussion going to our of for with begin our follow QX of the would will a results. quarter. outlook We what into we highlight our happy 'XX. detailed and share questions. by providing I'll Dan CFO an remarks then then be Fleming, overview forward take QX the second financial

Credo reported QX, of For revenue million. $XX.X

we reported margin gross Additionally, XX.X%. non-GAAP of

driven opportunity Our QX solutions. results growth high-speed market for are by and connectivity accelerating future the

ranging second and solutions electrical speeds up Our gigabits XX performance per second. port connectivity to per optical X.X of from terabits delivered leading

we exponentially. increases to Ethernet While other primarily into today, continue and market more power-efficient the serve standard-based for the center markets need data as we speed higher extend connectivity

driving and changing AI of are This Credo's bandwidth workloads strengths. in center networking. specifically the onset applications The demand with higher directly generative plays higher-density for to the regards data the to in

Credo's leverage solutions, which IP licensing. active and AECs, Card DSPs, drivers Chiplets, efficiency our continues technology of with in customer to optical include solutions to solutions SerDes laser deliver Credo and IP secure see unique benefits and Line SerDes cables across significant high-speed engagements connectivity PHYs, increasing customer-focused and and design All enabling our electric power Credo approach, cost. products optimized, core our or TIAs, SerDes

review give now to I'll overall our perspective. more business

analysts remains port Credo intra-rack connectivity. speeds First, forecast the as penetration for AEC pioneer business. increase a Industry AEC our regarding in market increasing AEC market.

at higher poor signal cost. both Our physically integrity cumbersome benefits AEC higher to which or solutions attached active power compared offer direct optical cables, cables higher and speeds, are and and copper significantly AOCs significant are which passive

compute and for our deploys Today, our both customer AECs general applications. AI largest

second gig per hyperscaler to their fiscal customer, deployments, internally on At our and next-generation for continue including programs with general AI ramp throughout developed AI year solve our continued remains expectations to first for production design compute 'XX. track custom growth we our this for XXX both Additionally, deployment. AEC and solutions lane fiscal

also receiving from attribute per programs. to gig to market. platforms much XXX Credo make of our commitments We on lane our approach AEC progress to with multiple existing their continue next-generation success system-level the our AEC customers We to

Our specific us approach innovative customers' AEC to enables requirements. solutions our to to deliver feature-rich respond quickly requests and tailored customers'

our are led has a number also seen hyperscalers additional various Credo further AEC and X who us solutions. qualification providers making and approach of center data in Tier progress growing adopting with of of This AECs. evaluation stages operators service to We've

these from grow meaningful this category expect revenue customer and future. We have customers to to date earned the in

we're XX-gig and In accelerating for progress in-rack for customers we're demand and our with the XXX-gig with market summary, by happy rates connectivity. lane encouraged

and applications Regarding port our leverage within through combination DSPs, a transceivers XX-gig to and of remain solutions, this performance, customer-specific core we AOCs. technology optical power, disruptor. market, XXX-gig TIAs cost. SerDes including We for drivers, deliver our approach compelling a optical comprise Credo's solutions laser optical and and

expect drive during back-end transceivers opportunity I'm the or RDMA pleased we started our QX, deployments the optical XXX-gig a a U.S. hyperscaler. We large in the with within rack-to-rack for network high-density AI AOCs optical optical that DSP connections ramp-up to cluster. of given a

hyperscaler. AI XXX-gig this partner an is manufacturing solutions Our delivering deployment AOC at optical for

our We fiscal fiscal 'XX. 'XX production will throughout ramp and expect the continue into

from restart seeing in also demand data centers China. We're

with expectations, Credo market. to manufacturers and next-generation this meaningful While targeting ongoing and has we XXX-gig programs progress stands XXX-gig in hyperscalers Credo early to too expect production spending winning benefit several as in progress in optical and designs create returns commitments.

and opportunities optical we Beyond with the OEMs hyperscalers, providers. see networking service additional

Card Channel, many seems our Line Fibre aim PHY calendar second. in of our We market business, and port turned our year solutions solutions at we're have with our the market last couple this for leader OTN, and Card up for optical terabits later announce Line upcoming remain X.X solutions we Within about new engaged quarters. shows optical to The established customers demonstrate per applications. business. the speeds trade optical optimistic for and prospective prospects PON corner remain to with optical XG, partners PHY We and an to

as more accelerating market deployments. value compelling XXX-gig We becomes think now lane the our overall per even is proposition for

During combination terabit achieved the our ODMs. X.X per increasing engagements feedback networking commitments stronger have had We've design of again OEMs leading we've customer saw success a design we performance, signal we second PHYs. efficiency specifically with first and in already Screaming quarter, from leading winning that and Eagle and integrity, power

per development significant requiring leadership second next-generation our made well encryption. X.X believe PHY, into for also We've extend MACsec our applications terabits will with we which the future progress customer-sponsored MACsec

technology leader as category with differentiation well to and networking collaborative ODMs, expect we this a deep in hyperscalers OEMs directly. forward, relationships Going remain as leading and our given core

to Regarding licensing quarter-to-quarter XXX-gig our AI, of we and from chiplets SerDes well speeds and of our nodes for other revenue X-nanometer wide IP include SerDes wins consistently IP in business, SerDes networking, XX-gig remained process see including funnel strong. and End licensing XG, as traction seen customer our applications. lane business, in a We've and while breadth category, ranging XX-nanometer. applications this as a range variability

IP, solutions is production, In we've Credo developed reaching in see two fiscal lead revenue to high-profile customers 'XX. with to addition beginning SerDes our meaningful chiplets also

delivering is from receiving additional increased supports Credo Dojo connectivity. that which SerDes an important lead the DX customers and their chiplets publicly in and chiplets Tesla SerDes ASIC SerDes industry supercomputer will and future connectivity interest our IP presented is our We're designs. role customers of for partner for their for they've play prospects, as expectations One their off-tiled in chiplets highest-performance

balance high-speed for low we're leader sum networking the strengths. has with about acceleration QX for fiscal been plays happy of making the position with the Credo's solutions market at beyond. more power connectivity towards and density our up, demand years encouraged as To into the we're solutions our and drivers results in year and bandwidth in market high a

We range by expect will our fiscal result sequential 'XX. We 'XX. connectivity of across as revenue would exit which continue growth to in base multiple a solutions, diversified led believe our fiscal customers growth more we be throughout

our details. the who additional Fleming, Thank provide now CFO, will I'll over hand to you. Dan call

Dan Fleming

and Bill, you, afternoon. Thank good

fiscal then first will QX 'XX. and I for our QX results discuss outlook of our review

be down following year-over-year. unless noted. million, a financials $XX.X reminder, non-GAAP on As a QX, In discussed XX% revenue the of up and will sequentially we reported otherwise basis X%

million down down sequentially Our XX% XX% and $X.X of QX, IP revenue in generated year-over-year. business

strategic deliverables to specific business, results but IP our vary our a largely of contracts. Driven remains may part reminder, by as quarter. preexisting IP from a quarter to

which While our time, is of of vary revenue IP, IP will to revenue XX% mix product X% IP, over the was mix given XX% and long-term revenue. in for expectation quarter QX below our in any

We as a expect long-term our come expectations for in within revenue of 'XX. percentage fiscal to IP

business generated sequentially XX% in revenue product $XX.X up million and year-over-year. XX% down of QX, Our

sequentially points the QX guidance high XXX margin our delivered basis mix. due up gross team at range end to XX.X% Our and of product of

XX.X% gross IP and near Our hovers XXX% generally was QX. margin in

margin points year-over-year, gross in XX.X% basis was XXX basis due product to the up mix. XXX principally points Our and quarter, up product sequentially

Total were and expenses first range in X% within year-over-year. operating our the sequentially guidance XX% million up $XX.X and quarter

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

we public up was SG&A Our infrastructure. built X% year-over-year out as company

million Our operating ago. loss was a to compared income QX year of operating in $X.X $X.X million

XX.X% year-over-year, was Cash year. million an the negative to to reported $XX.X $X.X in quarter of flow reduced a increase margin in last due million large loss quarter. the million last compared of operating leverage. due year largely QX to Our in to top-line of $X.X in compared quarter income operations collected net We receivables from the was net XX.X% $XX.X million, first

This quarter collected of the $XX.X free equivalents cash equipment of in CapEx of quarter. the an million, the large result million, was million million was and flow $X.X was quarter. cash And the of We spending. a driven $XX.X from million positive an previous $XX.X increase R&D increase quarter in receivables with year-over-year. by during $XXX.X cash increase ended

growth a well maintaining to our opportunities investing cash in We while remain capitalized buffer. continue substantial

while sales to Our sequentially days XXX receivables. to decreased XX.X% outstanding QX several collection of balance from XX to decreased accounts down due large in $XX.X million days days receivable

sequentially. was inventory QX $X.X Our down $XX.X million, ending million

currently revenue $XX million at fiscal XX% and be Now up sequentially guidance. $XX our to We to turning midpoint. QX of expect the in between million, 'XX

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

expenses We $XX and expect QX million. $XX operating be between million to

to basic million to as XXX expected. QX We're to see count average be share approximately weighted expect continue out shares. We FY 'XX play pleased

to AI customer upside to near-term broad-based see expectations, has the shift some rapid engagement. workloads and prior our driven we new While

to throughout fiscal We as to. beyond alluded expect will shift revenue this our and 'XX Bill enable rapid that us year diversify

However, and fiscal until as add ramp, of forecasts. visibility about year the half existing customers new programs we cautious remain into our new back better gain we

expect scale and increasing growth as to mix, margins in year through move modest expenses. In due fiscal sequential summary, improving 'XX, we revenue sequential we forward expanding product gross operating growth, and

leverage operating and to driving As double-digit to margins we returning a result, QX. operating look forward by

And I questions. open will it with up for that,

Operator

you. Instructions] our [Operator from Goldman first comes Sachs. Thank And from question Hari Toshiya

Your now line open. is

Toshiya Hari

Hi, much the good so question. afternoon. taking Thank for you

Bill, was drivers Just current revenue one from talk about the hoping me. you quarter. can question for I the

You're sequential well. guiding the see XX%. to you up It's really nice growth back guys in reiterate as the half revenue

your customer, good on optical. AEC your up your And then about the X you well. to as extensively seem number talked business there You talk you obviously largest customers quite two customer Tier sounded

rank into So was you Thank the could about you current you. what go you're for basis, order, the the I sequential a half? drivers most quarter again excited and on second hoping as

Bill Brennan

you to that business fact year, for at if thus we've think big really to SerDes that period things really us optical I We reduction year, had in really our even the we customer they product Line generally our lines due we've that got rank direction. current that's positive in the board is - to that time. not say to in can look I a say and grow see So clear of the AECs with a hard forecast strength Card largest for a far to moving AEC been order going things PHYs, short such the It's the from all chiplets. of that that pretty across I'll say seeing have this to year. see the we're

growing said, other that our quite lines. business as rapidly product AEC other our well With is as

significant see subtract we we year-over-year growth so, largest customer. And the number from if our

So feel pretty up. good the we way demand about that is shaping

visibility really impacting And rates growing again, And got businesses. us see our benefiting it's lane of we've year. with the in think I this really acceleration positively generally. I all for

Toshiya Hari

Thank you follow-up. that, quick one Bill. Sorry, for

DSP optical the business. Just

ramp production You through with about gig the in U.S. the talked opportunity the XXX and 'XX. XX fiscal hyperscaler

DSP think You back business months from Thank little over you small about also but bit. if Again, know you. it's contribution it your of the talked your XX should call - we a can about China how XX a I the business coming today, percentage months? to relatively next,

Bill Brennan

Right.

achieve that one when the in this of past that of are would FY hyperscalers I our said, feel don't So do we are in is and for returns that overall at good qualified ramp, life to see the signaled will we all this executing I that business expect China, to got market fact of where see the we're but that said revenue that the 'XX. we multiple we're activity With that my benchmarks there, have we've suggest, I've that happen in of year, spending in we we'll signs and about seeing as benefit. we XX%

approaching do we're year got track number XX% it's as then built-in a for for year. I Dan small good that we're But China, job think what we'll in next number. this think Now, the - big far and has relatively as not for it's a threshold, year, I on

Toshiya Hari

you. Thank

Operator

Thank Quinn Needham question our Company. next you. next comes from question. our Bolton for one And moment And & from

now line is Your open.

Quinn Bolton

AI share on I on compute change back opportunity, you for that front? with the only And on in Hi, little they I remarks, a to color 'XX wondering see you your AEC caught even your there? mentioned what bit time? Congratulations February. nice really Wondering if more more also give forecast going largest not customers some have customer. largest forecasts you prepared maybe at calendar on I'm since fairly think calendar have it results. if Bill. thought largest is Obviously, in more could I the your at opportunity AEC if held wondering AI things customer. if if a stable of 'XX details AECs that could the big And I a general but pulled you right had in the just see wanted so

Bill Brennan

we a that current customer, The work got. that there. our we've still at recent to information to We're they're hard good backlog forecast our switch that at our AECs, deployments that talked generally cable we've for using that how largest we're network. doing of the front-end the add at So we've AI and using certainly this executing generation and as learned of got as networks job there customer need about are are front-end also with employments part

today applications portion of it AECs to the we're are AI general going addition said, so into significant that shipping And relatively in compute.

their secret has no over a I big that the think been spend months. it's in we've last seen pretty that shift there six

well rack compute talked And it and to general use as from and you to know, of AECs internally look program the gig both we've [interact] is long-term, year for the top more I lanes, XXX between of the the AI. I've for working that's on an a a about moving than straight we're they're positioned network. going that been their appliances this switches connectivity back-end for and think lot standpoint program developed

the XX of as those solutions. that and with participate so AEC back-end move I well speeds, compute, gig we're us front-end - think in next-generation I deployed. they And clusters for aligned are customer both general this on to to then And lane expect network

Quinn Bolton

was share two any what And calendar internally timing? clarifications quick can 'XX, of because early kind quarter? should And revenue maybe there. we 'XX AI customer you that be guys still developed Was in just largest rack July update calendar in of of thinking that's later the kind on or AI percent the

Bill Brennan

answer I'll that. let Dan

Dan Fleming

Yes.

was had history. remained So of see customers. customer that The Q that XX% largest customer when a file the over three of days largest XX% customer largest is has and basis, so from recent a you'll in which XX% we what our we couple

still contributor are there mix. material to overall obviously revenue our So a

Bill Brennan

timing about I prioritized customer far say new that these executing highly down. active then your that programs very can really to is the as And as question qualification. timing, hard within and on we're on very, and nail very in design our it's

for more possible happen part the that around. the really year, we've signaled overall 'XX to fiscal think And of fiscal so a ramp but within this to I - for it's of it early it's

Quinn Bolton

at gross quarter. the Dan. being for especially the of range mix Congratulations Okay. on low high fairly And end with margins, then this IP the coming the

AECs You that Can But to pretty, what's like group? color product it talked about sounds give more margins pretty margin benefiting you strength from driving are contribution us any mix. revenues. product on significant within product the still

Dan Fleming

to Well, it emphasizing in are current trends really theme the here seeing picking is. a of spoke lines. for XX% us. XX lot contributed - uptick which the up though even were performer that and the need strong both be out the the in mix It to gig not you'll goes benefit always is call the back that product our chiplets of We a might overall lanes been to we're be across optical XXX few card I revenue quarter, has if really all gig they on materially of line a for and

So just QX. overall favorable our out, only and achieved our mix. of was rightly And margin as broad-based IP point we we was within product gross revenue while experienced you that mix there's X% XX% that

we're pleased that. operations organization the performance achieve quite entire of to and with So our the group

Quinn Bolton

job. Yes. Nice Thank you.

Operator

next question And for you. And our one next comes from Ramsay thank from our And Cowen. TD moment Matt question.

is line now Your open.

Matt Ramsay

The consensus it of the last Good first guys. for picked much. guess expectation in it the for things sort question, above of fiscal grow I that - my and remainder very commentary what was you a XX guidance the customers. year. the different afternoon, three Thank pretty positive being my up lot seems to of there's the minutes, over XX%

being Maybe grow you lot should but of And a gave, flat this 'XX? then easily maybe bit the now and with was other the be that helpful. I reset and Are expectation for little of able a year, guess little in kind And in here the expecting the more back happened you could of more happened to if could be momentum the wondering a you so half know you February the more a sort I'm little if a over new of in that that have have has year just of of for some sort the fiscal you Bill, Thanks. grow A) year to there kind commentary like describing for it set would bit when you year caution it parts seems you of bit unpack guys I a 'XX detail ballpark since. you're business.

Dan O'Neil

him. of a Yes, with me hyperscale for to - remain on the us ramp. in opportunity new say or a new in new But quickly mentioned customers We of my how to cautious actually, that impact having as lot customers and programs that's difficult in lot we success spend that address the that let because as given a center Thanks you so programs AI, for back customers half existing the do to of they shift happened the engage exactly question. lot it's prepared customers I remarks pinpoint we're it's really ramp, as these will in. are and always data

cautious as we're half back we that in half. get in to better So clarity back the remain continuing

at that math, that did. the what QX bit giving guidance were if So latter this boil we're there if the upside we further half not previously. for had a is of But expectation kind over was of year. little the simple down of guide, what the we you point, in the to midpoint of we you take the said QX did to

Matt Ramsay

maybe guess, around in a optical you my hyperscale have could guys bit talking the that in other time moving some advantage optical? to through N-X. sort you. I'd two The the bit interested to apply as understand little Thank the wanted on about little to of particularly No. in hear you those the have you if it. Does parts. more spend exciting I the competitive dig that One, Got a win that things. advantage follow-up in there. products, be parts. I And more

the customer need of And points to you the big scaling hit optical second, limitations like ramped what that to are you support that's sort you really check I'm the trying of wins, need ahead something that I projects these And because - there it large to guess on really to and you. need or just capabilities there. on of quickly. kind to the if scale business Thank might seems that the

Dan O'Neil

Sure.

we've commodity is So that good would N-X job position done business. In say the incumbent we're customers have a In we optical about disrupter of is that the to for has a proposition. that talked to and optical. factor so to business is difficult and excellent market value the performance, and somewhat with definitely what in the strong end market, that that role excellent they've very in our industry reality, Marvell this built, disruptive There the is this sense very power, I with compete and we offer applies a play disruptor. a the of

been advantage why feel N-X air very of we a we've terms of to performance process that coming with competitive got. prove in power, expected It's we've absolute been the much delivering we've welcomed. that this of kind and been time able that's I with disruption competitive that bit are great long rates, where And products. the about absolutely generation we

could think Dominos a one see of And fall by we customers why that's start production with achieves so lot hyperscalers. I the of standpoint as one our The activity. from will And to capacity, This expected. any of that issues. expect be question of pretty a no ramping really your straightforward kind I team. for manufacturing to our volumes in about is challenge no issues

used is partners packaging much units team from to millions of wafer very a our perspective. we're from ready a and and from a and substrate building test with and My supply

kind we the seeing. potentially be volumes hit to could ability our with of issues no see I So that

Matt Ramsay

Really Dan. it. appreciate Thanks,

Operator

Paribas. moment our our question next from One comes BNP question. Ackerman Karl you. next And for Thank from

now line open. is Your

Karl Ackerman

thank if I Yes, gentlemen. questions Two may. you,

but validates incremental a sort for cluster. that peers how Ethernet are the progress First, landscape same really AEC at opportunity market, it guess about some thinking AI checks competitive growing captures suggest as that of I I because portion of of asked the made our time have the you in AECs? your it

would So on your that helpful. super thoughts be

Dan O'Neil

Sure.

that to think going naturally, make we're I progress. see competition

feel very got trying compete they about more organized every companies us. than a to organized people One with vertical AEC come day, the to is work good of we're things that system in comparison work, to the that in way We're XXX the I've are solutions. of that groups they on and fashion, I

in So sense, the IC of development a customers really they're our team.

And that and do enables is years be be ago, that end. so products standard a then what of XXX thought respond would us market very, thinking we standard each first quickly we that flexible we'd achieving. it special would to type gig five standard very very about to more requests from than When XXX where customers. market of would were on a each together type a a be of kind gig it IEEE be connector we on end, put And this

have all programs that But the talked implemented. have them of this, high-volume the that features go you about that deeper I we've can that tell with all of been special we

dual-core the customer delivering the - and intelligent the base so And Microsoft AEC at about that we work for solution. an enabling length we've did architecture talked

differentiated others The there's our the much high-volume of compete, and that make is of one more features trend relationships, achieve achieve every rack try for discussions, source every that and understand so that engineers sole continued, their qualification program team our design others that of and high-volume one valuable. those an innovation our opportunity fact is, organized to to well we're never

be advantage to for us and long-term it's that's be continue going competitive a moat. going a think I to to

that's a part of but an volume it start As putting gig where XXX AEC, we're going XXX to think kind make relates to again, AEC seeing of I gig market. the competition or standard together smaller think progress, standard I a that's

Karl Ackerman

Yes. No, Bill. I appreciate that,

of For active the DSPs the business and but optical are discrete seems broadening couple ramps implications you. margin it gig front XXX your just DSP your Thank is the next discrete for cable in optical can opportunity my I'm as over follow-up, you curious, solutions, - address quarters? of what optical

Dan O'Neil

expect - product be with higher and term haven't of long you've the portfolio. how tracked we've the at given the we the standalone seen our what spectrum, in and past margin the too to the our optical optical Yes, companies products guidance Not in of to near lay regard we in past. that gross across end dissimilar from kind

PHY Our like of chiplets category that Line AEC in target margin. some as and a these it's business, below emerging is as the right of generally kind our product groups other speaking spot Card sweet

And just for setting, model. no there been our long-term level has to change target

Our long-term our XX% margin and to plans, XX% of and to mature is lines XX% the product IP contributing these with execute XX% that's product of gross we overall as our mix. to as expectation,

Karl Ackerman

Thank you.

Operator

And thank you. Desilva And One question. moment for next Suji from comes our question MKM. our next ROTH from

line Your is open. now

Suji Desilva

hyperscale your customers, gen-AI and customers? are And making you you Hi, newer wanted to just to a referring is some or progress. - the you comments two it want had six cloud Dan. customers, AI latter, to second-tier you're prepared around, four, clarify in or first it is understand I beyond Bill. of traditional remarks three, applications? referring five, customers if type Hi, the to think I X I said Tier

Dan O'Neil

that, success before are are that mentioned multiple Tier X we've using our AECs hyperscalers we've not well. would with with and also these and considered customers as be So service engaged we've these providers had

And very product in When becomes comes I automatic category becoming that looking is new decision size basic it almost manage becomes with really decision. copper, you power optical and and or is physical passive the different equation just it on an solutions, think solidified. just customer easy our we signal based a can't mentioned effective like and integrity is because quite really the that on so the price, so double just at a fact the double power

a at. that that's announcements on the GaudiX to make was decision with us kind or customer. rack in AECs. to our did that these of we've we example made connections, done it's of video for is and of with type look cluster and they've type month customer that so intra-rack that and That's on the developed their with this there work the And of great one example One that connections a Habana quickly website the rack a of they last to the Intel three-meter made you

need what the their racks that infrastructure, got very Credo to continue progress. AECs. examples, Comcast hyperscalers and implement These we the continue big they've We've you past their a of switch with consider infrastructure easy are look we but in would are for of and to talked routers part about them for became within the the with decision to at and the types if work make you

of evaluation but I stages development, we're point where adding large stages at different So that can different not the engagement, customer. of at third report,

Suji Desilva

definitely sort then That's and some there. clarify the some of there is And out Okay. be notion some landscape into I or serve expect guys InfiniBand might is share is some - versus that point at wouldn't Ethernet to where mean, Ethernet you InfiniBand that just selling you're take market certainly there - thanks. to opportunity a helpful, there the you just the InfiniBand. future and

Thanks. - color color Just help us. basic definitely here would some

Dan Fleming

Yes, like just sure I'm too seen job. reported. they what many fantastic quarters I a not has you've think done that if NVIDIA back-to-back

many said, back-end clusters. seeing the InfiniBand which we're within networks near-term this next-generation of great the involved NVIDIA so, many, And Ethernet. AI With deployments, there's no is in all success are the that question that for

on coexistence rely clear you term. Ethernet forecasters, if InfiniBand very see think I long market they And the and a between

I the next in exceed Ethernet number you measure sometime InfiniBand think can few that of also of measure ports is you dollars, the that the and it ports by to is can think I by going expectation years. in

to satisfied surprise activity. remain we question with is not bullish the the So on there's no And provider. that in AI clusters, going market I Ethernet think that about source sense amount no the sole be the of within very there's

InfiniBand, from said, standpoint ability do no that our limitations. With the to there's of

the say and work to in Ethernet can develop for I a we be companies go, are as AEC we leap standard So there's that feel would those cables, it optical far a opportunity. delivering space, like wouldn't huge the as solutions. with us both And InfiniBand market

Suji Desilva

Thank Bill. helpful, Very Okay. you.

Operator

And moment Svanberg our question. from Stifel. Tore you. next comes thank And one our next from And question for

Your line open. is now

Tore Svanberg

industry because right, on is kind and market we in Yes, DSP It's XXX XXX from days. thank that XXX keep is the But gig topic. hearing the Bill, now still you, on interesting, ramping. its that congratulations gig early of win.

bit So what that's going obviously, ramps you've got little XXX ramp. win that to contribute revenues? more and when this about meaningfully mean I wins design talk a would XXX, to could in you your your start But now about gig there? to one

Dan Fleming

think it down I break between to at So we maybe need back-end the front-end opportunity overall networks. and and look

for AI opportunity. are that the 'XX perspective, be us XXX still type networks So that for and of going see from are network speeds as on popular slower for moving I the We to rates to probably gig a at while. in so lane back-end XXX that an think a FY clusters moving market the expectation see we gig is port XXX very the front-end

Tore Svanberg

a caution just kind these just Obviously, your And customer. the wondering, thinking Great. Any there is you of largest to sort mean question how I the Thanks. digests? ramps on that lot fire grow that really for more in quarters 'XX. fiscal a here, could it further the a had for I be next especially follow-up of about about of add it's of great. I'm there's second and caution the you lot go would tied are color half going the few to concerned and second then I'm AEC irons

Bill Brennan

to I smile cautiousness to as big we the and level picked set or we an of the thinking reset. if because about we exceptional kind expectation I back so the they're out that talking larger about think at quarter-to-quarter growth look we than pretty prior equal climbed Yes, level rates,

So now. how look and rate, feel good the I that we plenty of I we growth to think about think beginning year, maintain a just kind had right challenge of I

about where fact on make take I more diversified, kind what basis, line feel expectations a smiled we an good just that the point us high. year, exiting too because I this of expect the on I to is but also to we that a story so sped and get customer basis, be treadmill exceptional doesn't are up can sure not got to the product

So incredible in story cautiousness wrapped that I quarter-to-quarter. really fast is would say growth of just an very

Tore Svanberg

Great. second AEC ramps. customer then the And on

main come ramp or of said a already Is the part now later? does you I production. sort the bit think of that's that little in

Bill Brennan

as stages significant there's It in qualification included like we've And it's it FY signaled production much we've as These various been and of shape production in somewhat this ramp. larger little bit programs, then 'XX really comes pilot later. a early looks ramp. what a up measured and we've year going to be to a

Tore Svanberg

Thanks the for color. good. Sounds it. appreciate Really

Bill Brennan

Sure.

Operator

Brett one question our our next comes Simpson Arete moment And from question. thank for Research. from And And you.

Your open. line now is

Brett Simpson

and Credo about Tesla you SerDes just initial the chiplets. you bit six Yes, sort this thanks in get publicly a how I for Credo you talking that to within Bill, and or looking ask Thank I you. and to customer just for customers starting involved specifically talk here? about IO much. Can think over about about they've just maybe SOIC called of of next talk launch couple now here SerDes chiplet the And years? you landscape cluster a is talk bit Can little been more five more maybe is think of on particularly AI the a installing what I how sort next is extra project see quarters. at flop very more see that wanted over And doing XXX you TSMC broadly just Chiplets.

Bill Brennan

Sure.

gig in per the and start been we've we've we're the XXX licensed XXX of those with lanes. one So with relationship chips SerDes first got that them. of they that with the working XXX happy our Tesla. integrated each I'll years This gig multiple they've that lane with been has fact IP DX

were working per we for DX long think attracted so that's terabits that total we is even advanced to XX.X was it This when of and a each was throughput, second about something on so ASICs. their why So ago. one time

we this the our example work per leading can When type XX.X team of of design expected IP some second SerDes so great time do a about from that switches, a that's team. still talk and think I is not the standpoint, for about edge with terabits talk we in collaborating

that is there's of on lane gig there's titles. longer tile of And activity surrounding and sort at If matrix and dotted chiplets and of reach. per side, a XX their per then XX you is are connectivity X.X off-tile five-by-five longer are design, a one second XSR the DX tile reach on their our to chiplets the XXX off-chip really is look terabits in side icon of each one or manage also the the each off title ASICs

public And ramping. talking been and have so they about

meaningful we see where revenue. that's so And

bus their is Intel is in did them per call for was reach production we between what second BOW second, terabits for we was connection package of and wires that longer they different then bit which The customer interconnect a a switch, X.X white XX.XT the a with bunch and worked die. design it, on chiplet off also die-to-die XXs. now a also This little

very really about lots interest. we connectivity. in feel We're of of we good seeing chiplets. there's general, So customer specializing When business kinds about that. the talk chiplet different more in We're

be So it's and see our to really it generally large chiplets that target opportunity. we expect a are SerDes we

the Internally the underway. managed whether see about Gen that things X. a compute their past efforts effort well is opportunity We servers or is is for within AI. that with standard. big PCIe the we've network the in of One talked PCIe our That

explosion bandwidth that's a is inside there happening so And the box.

we well people so be as being package talked would retimers for the a a UCIe die-to-die PCIe interconnect-off chiplets large opportunity And and have as as about see standard PCIe.

going in to be market definitely we're So long-term. that

Brett Simpson

I stage? do what of talk architectures And a from some Thanks. next-gen sorts next on for projects compute you main for you where about with these follow-up their out of of these you bit a position Credo? that How main the architectures? are for accelerator. of means they just engaging any separating at this Can IO talking a chipmakers this. - physically are lot AI mean about And

Bill Brennan

involved think that what it and by We off-chip we're go with I advantages referring to of to everything bring a part do can way that opportunity are to We're just being with driven same we've is perceive defining think right - that standard That's is to. my it. you're think you approach to group. where connectivity better maybe I ways. and is what in of standard is off-package But and that that's the been about the connectivity chip-to-chip which We're faster I UCIe fast can that efficiency. different Intel. this active the connections going power spoke that understanding Yes, is I that's with that then manage we've brought this you kind

Brett Simpson

one. final a just maybe Dan, And,

in to USB these I for of of Are licensors from for quarter, Thanks. current the of or quarter for terms licensors for the not? ask any your revenues you some VX. the guide royalty guiding next In wanted just some about

Bill Brennan

year. No, that's the all - kind of year fiscal beyond current fiscal the

yet. haven't given that We guidance on

Brett Simpson

Okay, you. thank

Operator

next Thank And one our question. next Vijay for you. And from question moment comes our Rakesh Mizuho. from

open. now is line Your

Vijay Rakesh

hi. and Dan. Yes, Thanks, Bill,

question a on AI the Just side.

on AMD then high. as as maybe Just go And you do of AI on in as bigger your how thoughts to talked on content any on opportunities wondering, go or look the times per side. you about with Habana - see well? I know AI you idea 'XX, talked into MIXXX the now Any also et getting the percent only ramp - rack cetera what cables we but is out 'XX, XX you servers ramp about X

Bill Brennan

Anything we a that broad Ethernet, that's us. say as opportunity. think the can big see for I that is opportunity I

As high-volume detailed me to relates a ramp. their of is those eventually solutions way. the It's question and project expectation buy without at our customers for in hard that stages in one your it for overall with production that my both percentages now, lined customer, to a platforms significant forecasts, of really will about up right got we're we've really second is early AI but

will for rates XXX in lane cables I would so AI be will And you'll future. that continue at general the of large to us, gig where compute say, really think near see our but think I be I the bulk ultimately

Vijay Rakesh

smoothly calendar diversifying now, guys you [X%, had are there the see on going level in optical, like see on a in? ramp and I but models probably to big things a how IC optical it that think good looks customers is I the do look it had see I that And it. side could you ramp 'XX should engagement XX%] or get question at of and given side, treat we most DSP pulled Got flat 'XX, the a the

Bill Brennan

what we're past. with I in think discussed we've comfortable Yes, the

traction to that think that overall our right expect think change we FY got commitments. seeing And the is production is it's I We're that begin. expectation production 'XX really say I leading that significant, wouldn't kind to I revenue. XX% ramps of of would we've to I milestone really the talked get the allow is activity hit now I about us that where which would

Vijay Rakesh

Got it. Great. Thanks a lot.

Operator

And And comes Richard our Group. question Capital thank moment Shannon question. next And you. from from one Craig-Hallum our next for

line now open. Your is

Richard Shannon

question. Thanks question guess for of on my here. both I side probably DSP optical taking my guys. great, Well,

there? customer your talked with and either kind of a with we two position additional early leader of questions degree or fast that You've do what here along ramp stage single get or What additional you follower You're of about kind share then with here. here? are seeing designs hyperscaler. I've to sense some hyperscalers ramping a follow

Dan O'Neil

Yes.

give we've I the think future think of of and And we're board to really significant. say to the will front-end first that this across And again DSP. others, at back-end be hyperscaler. But share with for activity I think would that. going more for we're to networks. partners For it me hyperscaler, color that their position it's I the in have we'll one Hard a for and I lot what on got say be optical in

Richard Shannon

question I'm on Okay, follow to going up fair another DSPs well. on enough. topic as

it Tore's was DSP. think XXX gig I question by

response along the calendar or into there? Should happens? next wins in the revenue I to that 'XX or of more before on was going is 'XX is mean that fiscal that. it What about better quarter think two does about that in your be in visibility from of something that we hear terms lines having somewhere expected

Dan O'Neil

appreciated we're working we'll Yes, to really color, in I goal, something and but many right give more we've that think give many to that got on on we make opportunities report. shots I we're locked to speak, so when we've updates now. want got I that that's many, when significant know sure

Richard Shannon

Look all those Okay, Thanks. to enough. That's updates. Bill. from fair forward me,

Operator

this to the further call questions no Thank over turn are will at you. time. you. There Mr. back Brennan, I

Bill Brennan

and appreciate look the So the forward thank up the questions. We following very backs. participation you call you. Thank much really for to on we

Operator

conference today's concludes call. This

disconnect. You may now

Credo Technology Group Holding (CRDO) 24 Aug 232024 Q1 Earnings call transcript