CRDO - Earnings call transcript Q4 2024 | 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 hand the conference over to Dan O'Neil. Please go ahead, sir.

Daniel O'Neil

Good afternoon, and thank you all for joining us today for our fiscal 2024 fourth quarter and year ending earnings call. I'm joined today by Bill Brennan, Credo's Chief Executive Officer; and Dan Fleming, Credo's 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 risks, statement. or on differ contained its It's to or results the assess the to for which business factors impact nor any in may to all actual factor the factors not those company of can any materially all company's of from extent forward-looking the combination possible predict management cause

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

William Brennan

for by Thank our see and you of results, I'll reviewing start earnings quarter I'll what joining provide we 'XX. 'XX fiscal highlights for then fiscal call. fourth our

with service and The solutions primarily connectivity market we notable revenue our with quarterly QX solutions our architecture, for workloads increasing operators connectivity accelerating and during year of line, sequential shifting that AEC Our entire most where the solution 'XX and of ranging target for to is high-speed of our cable XXX with of company, facing million a significantly Active of a as enabled QX, XXX of We our this, to center CFO, delivered range roughly we power $XXX achieved higher improved QX, leading-edge gig us relationships we portfolio. for solutions solutions, XX customers.Over SerDes QX.Credo of our driven or to gigabits Line and for replicate. up is was and range core including from our market our per leadership across unique Electrical aspect to ranging gig build suite our gig. believe single-lane our AECs, across our collaborative a fiscal connectivity connectivity of customized for AI our Chiplets executing of fiscal needs speeds become pure-play, positions differentiated terabits with detailed a results speeds the and is driven per We strong dramatically fiscal licenses technology optimized provide follow Dan Card customer-focused innovative our then design and Furthermore, changed a and the our by In XXX year a port solutions, have connectivity the AECs deliver Optical qualifying and remains Cables approach discussion that SerDes was a meet leading in solid data solutions global Fleming, providers. outlook In We this delivering across leverage the Ethernet SerDes to by of Credo will advantage. of the have approach of delivering IP supported proud PHYs, has additional X.X cycles, landscape customers software speeds fiscal to both hardware port diversified DSPs, our difficult product in features revenue. margin system-level many market efficiency, design year, during close In With revenue a record also and and Credo for bandwidth deployments AI continued combination 'XX, products. gross by competitive our of gross QX solutions $XX.X year.In this say market XX.X%. driven environment was difficult challenges by pleased value a we margin in-rack team of revenue the power growth of the demand revenue workloads.The for non-GAAP to steadily designing X/X and are AI and non-GAAP most second. and achieved million 'XX, and speed-to-market system-level for also a to numerous delivering of requirements with approach, fiscal customers, and deployments.I'm I'm Credo throughout fiscal improved our across XX.X%. differentiated. ramp quickly from performance Credo of results and and optimized second and customers key our a above. unique the delivered

DSP for on and and another AEC a we point customer, growth engagement AI of make customer AECs hyperscalers, we half new qualification solution at and strong AECs opportunity to their partner design of service signal power, fruitful that perspective, optimize was transitioned Optical to products. our 'XX AEC and that reliability, with feedback providers. to Based de a to quickly engagements a as as an embraced innovate environments. center many features inflection the our continue integrity, customer advantages saw from to Tier fiscal factor 'XX.Fiscal second of expansion a our forecasts, also form during facto the have system-level data revenue new with in expect have addition customers fiscal our ramp efficient.From was Credo In year 'XX X the centers concept include data the successful at a more clusters a hyperscale across

During the revenue production domestic wins international and at hyperscalers. we material year, with achieved significant

the the become Additionally, system traction efficiency customers new has impactful enable LRO factor, by gig activity. market, module optical promise. that power we continue signal has AI standards X.XT our our We've DSP power announced combination architectural design architecture the optical solutions more X OFC, new demonstrated manufacturers, that we market interoperability.We traditional Optics drastically next-generation way few leading to and In innovative module at end a The AOC These module feel reduce engagements optical customer with expect back-end we've and DSP integrity architecture nearly made power versus LPO November, We multiple Receive both XX of network QX. lane XXX solutions optical architecture March facilitates solution. the no we driver were continued a attractive production costs. XXX has existing in off LRO level. while since And with pleased optical traction maintaining LRO encouraged solutions.As all XXX In solutions. by significant reduction DSPs. LRO and module partners of with interoperability are I'm LRO the multi-vendor lost XXX and responded gig kick progress benefits leading-edge more is strong and performance, with optical DSP market traditional momentum to products full due design seen with in critical that showing watt Credo for partners. the that sub modules. solutions. and meets per our gig months is our a transceiver industry great efficiency in module to our Optical become DSP gain DSP and volume our only OFC, specifically to even the DSP and a to with I gig for confident deployments achieve the a Linear the power, acceptance at saying designs great with

DSP category.Regarding on of goal achieve to our we engagements, our are revenue results our transition enthusiastic and performance continues 'XX power nodes our XX% market product are prospects and Line PHY Card this our we improved of in this more deliver fiscal that and future process Given leadership we growth to our efficiency. advanced revenue, date track about as optical customer to in business,

XXX to to customer Tier gig X center These we gearbox, add data have products. gig base per that our market. continued global the XXX at include year, wins X.XT retimer MACsec PHY and and serve ODMs the multiple OEMs During industry-leading lane and and

gig AI the and Card As our per fourth driving leading-edge success past, with Line products. lane have are XXX for both we had quarter, discussed gig deployments the force XX devices.In these behind we growth the in

our start lengthy have to 'XX. solutions continue will XXX in revenue solutions lane per also cycles, per to gig will lane gig XX While life our fiscal adding

contribute I'll and grow innovate speed, this overall Line delivered discuss We expect integrity, business solid invest combination results, Card and fiscal In our our licensing our licensing signal we owing 'XX market.Lastly, IP efficiency nicely chiplet offerings. to SerDes SerDes and power businesses. the will QX, and of to breadth leading to of PHY our business to business beyond in continue as and in continue

applications, During fiscal a 'XX, rates. business won process licensing and nodes range of we across lane

massive growth, our customer, lane business ranged a from from customer largest AI technology a ranging also by to to Our next-generation a future chiplet leading focus. engaged our XX who gig.Our nanometer at gig in cluster. nanometer X develop testament to rates wins deployments, XXX SerDes This our chiplet down customer-centric is significant deploys XX which to saw Chiplets led us for and

future. applications.Our innovative, forecasts with are and now, of fiscal reinforced this towards they formalize customers' and provide continue our and opportunities.In AI connectivity this solutions demand additional been and funnel 'XX shift demanding beyond on diverse details. fiscal our to summary, see and for we demand 'XX, with connectivity number foreseeable high-bandwidth, low-power, customer-centric a for CFO, a benefits into to the production accelerated strong the Dan optimized. view has plans.And has forecasters continuing most data fiscal that, into from 'XX our as wins, recent consistent now AI only and will licensing towards their quarters and point growing and the of that by deployment entering remained are due focus ramps for that We application solutions continued market generative SerDes chiplet energy-efficient Credo Industry during Fleming,

Daniel Fleming

for and Bill, 'XX.Revenue financial $XXX year-over-year. QX review on points basis record the and Thank outlook for results, QX product will discuss up a first fiscal 'XX, year for revenue our driven year at I margin was finally, summary our good Gross color up and you, grew fiscal a of by that provide our some then expectations by X% provide XXX million, for fiscal X%. year XX.X%, 'XX year year-over-year, was our afternoon.

improvement margin we of XXX as fourth operating for the opportunities million, year-over-year. in product development $X.XX hyperscale on over year.Moving up to QX, We customers. in $X.XX up $XX.X quarter, we R&D by declined basis revenue prior to and on a to Our per of support our points, focused the reported invest numerous reported continue share the sequentially across record XX% XX% earnings year,

Our remains generated revenue a business as IP pre-existing up of strategic part vary in a may IP of million contracts. year-over-year. to $XX.X quarter-to-quarter, new IP by specific results but XXX% driven QX, largely deliverables reminder, business, from our or our

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

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

excluding services, up engineering million X% generated in revenue of QX, product $XX.X product Our business, sequentially.

margin in the high XX.X%, team end top revenue our greater range were of end QX and XX% each than XXX enabled a gross Our delivered non-GAAP strong the basis contribution quarter. in of sequentially, points above guidance by our QX.Our IP of customers X up

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

below revenue.Total change non-GAAP sequentially. year-over-year. X% gross quarter, product in up due the up XX.X% services XXX our expenses midpoint basis and was the to sequentially basis margin XXX fourth operating engineering quarter non-GAAP and range million, The in product sequential guidance of $XX.X a Our down were in the was points points decline

increase strong solutions as a continue we of to was as we OpEx customers deliver our year-over-year in Our public company innovative operating non-GAAP compared a XX% hyperscale million million income income year-over-year in performance, operating a coupled and $X.X SG&A invest $X.X leverage. quarter gross in result QX line in a increase the top continue to last for R&D non-GAAP in of to to increase to due margin XX% record was invest resources infrastructure.Our with

in margin of million the net in million from year-over-year.We from non-GAAP basis million income $X.X quarter in fourth of to net margin of by of driven R&D income third equipment to cash remain a non-GAAP million compared cash Our flow $XX.X an increase opportunities, well XX.X% ended increase last maintaining to quarter of CapEx quarter, at million million. equivalents our was substantial growth was XXX spending. reported a sequential the X.X% operations the And $XX.X in flow $XXX.X record non-GAAP capitalized was of with We million, of quarter cash $X operating also $X.X operating and continue million, buffer. was last quarter.Cash QX compared non-GAAP quarter, a quarter. in points.We a $X.X the free investing while increase an the $X.X

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

expect million million 'XX be sequentially.Now, in to between million, down our $XX currently and ending Our we the $X.X turning midpoint. at $XX.X of QX inventory down fiscal guidance, $XX X% sequentially QX revenue million, was to

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

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

fiscal approximately million $X The in a first expenses 'XX so XX-week included quarter extra in the forecast quarter, week. this of is for is

fiscal year. new count expect expected. workloads had be pleased and as to rapid engagement, were weighted drove XXX AI customer see approximately shares.We we to the deliver well out shift broad-based million throughout to growth average QX sequential 'XX We and share The executed play the we forecast to diluted year

of expect AI accelerate across approximately through that X/X 'XX, revenue of expect number total fiscal to half to prior the growth scale. of reach through customers we in year.As we dramatically estimate In AI of fiscal Our From the the QX year-over-year QX QX, up 'XX as second revenue revenue, production was year. year we to sequential revenue the mix double a fiscal programs of move forward from 'XX, swiftly transitioned we year.

as We expand expect of range XX% fiscal year margins XX% non-GAAP within a margin scale. increasing to to due gross 'XX to be gross product

expect We top line at to rate grow fiscal expenses of 'XX year operating non-GAAP the half growth.

we throughout up open I result, will look year.And for questions. a As driving forward leverage with it operating the that, to

Operator

Our first from Quinn line Bolton of Needham. from comes [Operator question the Instructions]

Quinn Bolton

the us results questions. AI wanted the to customers? just on different Congratulations of and Or your or the nice of of guess, housekeeping I percent Can see were quantifying Dan, you lines? starting see among to consolidation back from couple revenue. start customer to with And Bill give sort top sort you to across of are revenue X largest they AECs product X all you that base? a

Daniel Fleming

on me Yes. let Quinn, Yes, This is comment Dan. that.

discussed So, as plus company consumer AEC in chiplet end X remarks, that They QX. we've customer. I had mentioned our customers in X our XX% our we previously, large and hyperscalers were lead a prepared

X is out to those end see XX% a list, see that represented. them you our enough. kind you broad since soon and had when lay of the So saying products diversification we for see you'll the full weeks, K I'll I'll by And year, add can of for you'll filed that few by that next in customers

lead largest chiplet last XX% Our second year. is we've years, AEC hyperscale AEC our was second third XX% -- came customer, customer the at had our customer -- which XX%. first talked Then few the our was customer at the we the which for the AEC about Microsoft And in They that hyperscaler. at was XX%. over an

was a well. year materialized some FY FY go year in you customer back really us, additional Hopefully, both and product been FY which quarters, for that perspective though, this takeaway, revenue color, this last you a diversification gives key few saying for the from and we've as perspective the the So versus Quinn. was 'XX, 'XX to if 'XX

Quinn Bolton

AI and speed Is give then, Yes. That's engagement? application? I I it NIC-to-TOR? I Is a think talked give that lane third of ramping customer switch? sort you a guess, then on speed second the cable great, it your a Dan. or sense it if Can could total the qualifying us within if Wondering any of third hyperscaler. about Bill, hyperscaler. bit third detail of script, you a you us on Is a And got just little per prepared AEC

William Brennan

Sure.

first seen experience hyperscaler about design, and and fiscal XX racks, with this ports. X: talked relationship per with XXX in we're lane. that the road point getting additional the And mentioned, program, way in see develop in a with additional gig at plan gig programs rack. the them time AI that is we've customer mention And program is this It's a gig ramp really on are we're first now we'll similar So frame. after first half a on lane past engaged the map. XXX from the the that programs switch we're AECs, the the working that a we've start I with and third a this year I'll to appliance this second is these rack, program switch first for per now at single

inflection So contribute has that Dan that the point to will referenced.

Operator

line from And question Stifel. our next the comes Tore Svanberg of from

Tore Svanberg

Yes. on had Dan, fiscal question comment your AI revenue a I for about 'XX. the Congratulations revenue. record on, QX

about revenue progress How over So, XX about revenue over million be it sounds that other the my for [ AI words, the like based XX on in months? we QX next months? $XX non-AI ] how math, Or million. the should 'XX, next in revenue non-AI will think $XX would that

Daniel Fleming

Yes.

expect to our definitively full understand to a year, to we grow fiscal revenue And you our bit framing 'XX for as the QX been provide we to on revenue, you framework more how didn't we've specific say, growth QX year. provide the based to we comments, throughout but So 'XX. revenue AI wanted guidance XXX%, little a

assume non-AI year-over-year or are would at driving It's of half can look what say year. ramping modest programs is our in That's that not the growth growth. the can year. the these assume piece, you revenue in the you what's we really AI I If second largely

that's we things why framed So did. as we

that The kind other add just our of I'll bit is We're little more giving overall specificity. has to fiscal changed. 'XX comment not outlook year a

by to continue shortly, is and be that us programs. point in expect we So half fast meaningful AI year, inflection growth -- driven will here upon the second that these

Tore Svanberg

Bill. great No, a for Yes. that's perhaps And you, question color.

to So business is finally starting it looks like PAMX off. your DSP take

You're fiscal 'XX. targeting XX%,

could And business? bit DSP within talked PAMX First we fiscal of little that growth talk that several the all, in was are much hyperscalers You for how you base diversified North But 'XX? talking the have international a growth? in revenue you about America. driving that customer and about North of America,

William Brennan

Yes.

hadn't close So we XX% for in to we fiscal an fiscal 'XX, all, first number as but not pretty -- had we of did came that it. objective 'XX,

And are for feel beyond. and so, would like fiscal drivers. up lined multiple things we well say I 'XX there's

also months, in building. see second we And solutions last a Of that will spending hyperscaler return X production. really fiscal growing with looking these for DSP time seeing the U.S. considered that new are bridges course, that's non-U.S. we've qualification. mention got with that that in we're talking leaders that spending industry. of first back got promising that sure. momentum partners well say for -- X that we've ] course, the in of And I lot positioned spent and architecture 'XX. on. we've hyperscalers, contributors additional will a that We've at to We're full interested with of I are momentum a say lot we've LRO really primary about with hyperscalers and the LRO that very commented partners, would optical will got [ in addition the a module are in turns that in these in Credo.I new the And and engagements architecture the when in we're

color So you're hopefully, looking that that gives you for. the

Operator

Barclays. next will the question Thomas from come Our from line O'Malley of

Thomas O'Malley

to guidance, wanted I on the AI follow obviously. up

QX numbers. quarter. big was to just of comment kind that extrapolate take wanted on AI year in related revenue that and in you to pretty If gets to of this the But X/X to zoom the next I

customer, who related. had we So know of which non-AI customers, one XX% you is a X was consumer

kind entirely business of rest just you would that if imply that your of that So the was AI do math.

year. you kind quite base, walk for rounding Or understand quarters' but dollar nicely, the some that's obviously could AI thinking just that it X should me the should like is it amount? just just how of you're be color to through, help grow if about Because want sounds I growing entire giving on So revenue? what like the

Daniel Fleming

We a ended didn't utilize how for is because number in we it's products. to customers us fair for Yes. amount XX% a that our estimate, of But cases, X/X our that, some we precise certainty QX. have end hard give where or

-- of that's with kind caveat. we just of a kind So

'XX how and as that, use would best versus -- expect fiscal 'XX. to you looking exited is So it's exit really we framework we fiscal

they know, and these ramps a out take large as can you at these push can they customers So, time can in, so. production pull or quarter

why that's year-end. framing kind of we're to fiscal fiscal So year-end it

Thomas O'Malley

but just guide in then, IP know Got product wanted product guys color drastically a by the just last you. to -- because over worn you side it's of segment, the the And quarters. pretty couple I on ask I little don't

with can you July? staying that higher mix growth? give side us revenue it there of us? the So margins guidance, is is you Or the of IP the rates QX? kind -- Is big with these being color obviously, most sequentially. Does on a any would into you bit the any give just better well, than is a stay Could of there maybe any assume July down, bit gross the that the product with expected, elevated at fiscal IP color the of kind midpoint there but after

Daniel Fleming

Yes, sure.

guidance QX. margin for really kind XX%, XX% of a to so for just for of sequential from modest reiterate had So QX, we just to what said gross decline

few One will a sequentially revenue driven is quarter-over-quarter. really it's things. decline IP So by

that So, will happen.

we of kind look that's kind QX, averages, which were of -- in you quarter-over-quarter. historic assume NRE, if However, you at should flat so at we're

of a really product increasing as road drive kind be this we of exclusive there revenue map the as where will of services of of a the of return to due we fiscal increase in And bit do 'XX really a and margin it's well. mix leverage increasing scale margin. There's margin, product part theme as product So gross margin lot engineering scale. operating to dynamic that gross we

Operator

will Rakesh the question from of next line from Mizuho. Vijay come Our

Vijay Rakesh

good Dan, and quarter Bill here.

a quick the LRO Just question on side.

the mentioned consumption, engagement LRO, watt gig and You XXX your this. with XX the sub power

So, with those I'm just do And shipping you revenues how that I working wondering you're many CSPs on into 'XX, how ramping see product? guess, calendar 'XX?

William Brennan

So with primarily now. right more being the manufacturers. that We've handful is on work working done a now than optical got module are designs

We to have we first this continuing customer, that samples the first potential quarter. delivered hyperscale and throughout see

-- fiscal as possibility So, in looking as But that's first much at ramp in. we that have a there we'll really a there's forecasted it's what revenue possibility built 'XX we're goes, significant but this don't in fiscal yet, year. far is something not really

Vijay Rakesh

Got it.

bit. is obviously a be chiplet proportionately? customer should your your up chiplet on CapEx And starting Like, growing do you increasing the that quite well? as pick that customer, So, And traction is to incremental. see

William Brennan

Yes.

one the So in customer we've see the business talked that got we that really ongoing. first about, production, we've

Again, we're continue the to if But on got in we designed not much chiplets participation a built different be segment. with in-house, -- fiscal that Now, bullish But on we'll they're the multiple the We've general. be have big future. bullish are 'XX, that's right coming additional but in speaking, customers cluster in, generally they've a that in in definitely paths now. the see spend on pursuing that. got that online will they increase

Operator

question will from America. from line Vivek of Bank of Arya next Our come the

Unknown Analyst

to customer in This the the here? your you're to qualification Obviously, AEC is the of line. are customer. on and [indiscernible] back launching A because in their second Marvell third seeing half. products you also second are just behalf product I ramping Astera dynamic want go Vivek. How also just competitive

William Brennan

level, competitive At a environment. high seen not in significant we a the have change

this with we has So a been be organized. job done way really would objective I to first and our we've good first all competitively and I of advantage is objective on one that our to we're say deliver think qualify, the that always to big have customers.

our that drives than with And are this deliver to to software this production, qualification, first includes to includes and hardware and qualify more team success people dedicated have We support. fulfillment and AEC objective that XXX business, first. on really development. the be and able That

we for more think that really say number requests are active that as see a customized of an working would deeper software. with from XX relationship, from in hardware perspective. I different I on of today, number and standpoint we're go increasing development is we of number that the customer And than So SKUs each the the SKU

that the solution, involved complexity of we're to of responsible. So got like this sense really doing, satisfaction.When Credo of complexity groups it's for it. but the aspects do competitively, contact, being really the full ultimately same we're with And different take with and there's responsible customers. competition, having when no work and of I party to would our one really for of companies more say, relationships responsibility greater And suppliers we're a unique one need in that we're you've that having shortcut really than far multiple single drives aspects we point all talk the competing their about I specifically

regarding to I so, don't said, feedback This and driving I with be future. And always X you quickly, serving guess see specific is ultimately to growing and market competitive that the competitors the goal have our potential And mentioned. But and we raising our well sourcing satisfaction. is second very bar their natural. expect that the the ultimately, in customers is do

Unknown Analyst

for switch then, and could a as connectivity. market, implications course. potentially as And this is some a that standard Of entering follow-up, just given also have on AEC NVIDIA Ethernet

done any interoperability So I was with there, solutions or the well. testing NVIDIA wondering have as any if you've color if you

William Brennan

to clear Ethernet really been a when talk desire to long the move hyperscalers, about We've there Sure. term. we U.S. is

of as it that's discussion there with that and NICs business. and no And and done as positive lot standpoint for this of from surprise comes us I we've We've a think seen out our so, NVIDIA the around a testing We everybody switches. view Ethernet.

be really And confident for so, that that U.S. this we our don't inter-rack opportunity the view for again, will really in AECs as this feel there And connectivity. driving quite surprise direction. are hyperscalers we an a

Operator

question line the will of from come Our next from Craig-Hallum. Richard Shannon

Richard Shannon

can expect I call apologize touched now? Bill, much late your of terms just on or be your expect increasing of here But there, maybe do there got commodity material if comments going here. on this you a requests that profile Or of regarding [indiscernible] the and more on you up has versus kind what business Is before. I following of custom now you soon? forward cables been contributor any and going standard. the on that in custom to of characterize

William Brennan

Well, deeply open that standpoint, the software open with every respond we've door for what time engage we positively. we're seen really seeing we'll basically, a to from standpoint. And -- hardware I special that what customer a and from requests or is that we're customers is think innovation, a we firmware

we've on So organized able to them. to requests be receive really and these deliver

special. think think be the future, ship a customer-specific. more being X an nothing very like large that see we solutions a volume be with AEC will percentage the large market, standard So I into majority smaller connectors more gig the look to market, of really But say, customer-specific. just a and we I we that what XXX will for as gig of XXX connectivity somewhat There and

Richard Shannon

other the past -- historically. front-end on back-end fourth built to you from which on following doubling into to fourth quarter about and been degree the Maybe here this at is quarter characterize can the network AI revenues question all kind are NIC-to-TOR versus up second at this here. applications and comments your next of you've revenues My Okay.

William Brennan

from that the networks AI. about increase driving a right the general say and Yes. in I revenue, on that's standpoint are that really statement would the you're back-end

also course, the Of connected AI networks network, small of number front-end but in are to the is comparison. connections

by I'll say performance the of really to executing in on AI a in density So those But the driven And are desire we're market as generally, road also continued combination in connections there's utilization. the that seeing the the map. increase GPU increased GPU of increase that it's clusters.

utilization average that they of OpenAI, is a GPU document Some said published the a roughly out there XX%. that like

going the And that back-end there's or connections, to scale-up parallelism. really really so, increased And big density a specifically density networks. drives larger a of with the opportunity number more in in

Some in even What or the So many clusters that connections and have GPU, actually increase from are we GPU. many platforms per ramping scale-up. how X half will GPU? that of or on working and X the second scale-out the higher connections per possible to per standpoint we're of means number next-generation AEC talked that will X of that back-end connections, about AECs we're how

is it to take an appliance future. This And XX close think I of And a the growth level, rack if reach expect per today a likely as level, we're to we to per AI between in so, well. XX say, XXX this fuel will seeing something number rack density that rack. you AECs rack and AECs the

Operator

from Our Paribas. next question will Ackerman come of from Karl line the BNP

Karl Ackerman

July IP quarter? for I revenue have revenue licensing fiscal end I for do XX% range half? the to you in Dan, finer XX% it the you in put long-term cut your a suppose, of point remaining Like, 'XX? upper And toward IP is the question, X. see first on could

Daniel Fleming

Yes.

to for it near So, be fiscal that we XX% again internally expect is of which high to revenue. overall long-term model, end XX% 'XX, of the

if And were QX, amount And a in would X/X your margin so, that's range should near that annual to of do that you QX. if to this, shoes within kind in -- you of of assume solve I model that, gross kind for helpful. our I from if it's

Karl Ackerman

for a network. where and can the see. DSPs discussion be been half-retimed Bill. confusion has in I question about you, used Perhaps much There

copper the question for NICs AOC and/or row -- use inter-rack primary switches. to and either middle require TOR of active connections? AECs retimed case example, Do AOCs cable AEC for a connecting use For being for my full is, used or AI connectivity, are DSP all of while do networks

William Brennan

the eliminating That industry. effort So at about much ago, there really topic started discussed a discussion a a think of a this in big DSP. is solution. the I the year the And when pursuing idea OFC, -- in of lot was

companies momentum many come generally, that there's really the pursued market no So companies, with in, no DSP. I solutions DSP. for many in now with no and module there's And the jury optical designs think basically, has

and that the OFC, showing right largest the optical we're multiple now, really the being what entire feasible, way, in And partners. the see successfully LPO, X partners. that world for by quite of of that LRO So the was is solution reduces is And the objective X seeing these we Lumentum we're was demonstrated at with solution the of We power. power that reduce to connections.

watts, to deliver gig modules so, the a to we're is interoperability. the as really fully reduction what's XX% which for as can solutions.And key that go well typical probably is retimed standards, LRO able sub-XX XX% compared in And shown industry with we so, we've to that with partners market maintain XXX that

to that literally and can you there's special use LRO need so, solution, do. And an you nothing

we connections clusters, the to especially transceivers. AOCs are meters, especially see see is that, solutions. power that's, these likely LRO for say, so, that and are market by XX But these -- be XX could shorter connections, we shorter And and cluster, also in so that, critical entire addressed for that

to going will But volume idea we're solutions obviously with it's no large a there DSP, from strategy. customers the customer to be longer the that really Now, talking that a think their to. given that be I and of exists no up

Operator

line Desilva comes question from Suji next Our ROTH. from the of

Sujeeva De Silva

Congrats on progress the here.

part AI customers comments number versus back? is AI of traditional on GPU those anticipated? the needs increasing, are coming stable cloud in ago? of the I'm curious, Just, Bill, Or already is is traditional the area on kind -- your just increasing line per of months the your versus cloud in X -- the forecasting general, AECs cloud And that

William Brennan

there's is information at would ago. programs that in bandwidth really for look X additional next-generation more the I more say we and say sharing months that the as AI change that cluster we're that no talked designs. this performance really I'd seeing today is Yes, need we're about something we

connections a about as growth.Now, that's front-end that that information the they're relates per And and of more drive connected it AI doubling to number course, is and of will than all back-end new doubling, to networks. obviously so, of front-end the GPU even And talk networks network. clusters, or bit -- we

hard for But because both the from same appliances, breaks future.If general I versus perspective, see AI, from to huge generally that return we that. third used have relates in what's which share talk still that out And trade-off server say, see, compute how if AECs a really the that we a about AI it's racks. us the market compute general forecasting course, AI, a real for there's is, of benefit from the As in would from when We're for momentum a market are for compute we'll used momentum, general to, amount both. and about front-end that the I foreseeable the question lane, perspective. a for network say standpoint, us of talk there's really we no swim

both moves racks. popularity swim being gig that are talked as as lane these server about the in growing So third towards lane see speeds. especially racks, We and switch we well, the per XXX market

Sujeeva De Silva

Or cables, a [ thinking that. does in rack of That's opportunity, customization it. more very kind color, Bill. well? like GPU, more And Y opportunity helpful per just introduce those the ] increase Got standard them? but staying old that this as are AECs I'm on of things then,

William Brennan

say none standard. these Yes. I'd are of

application, designed or appliance standard X products now. what AI are right is being that the seeing there's little we're in So maybe that

connectors say with X cables even connectors, X So, and connectors, delivering them special all we're that have of features. X X connectors. I will

-- appliance efficient. it's design entire to going you give rack what their much the we're so, just very to see designers creative racks, these when rack, it's -- the there's really come they're making fun up with, And and to more open of

Operator

a Needham. have of the line follow-up Quinn from We from Bolton

Quinn Bolton

seems popped OFC, its to kind AEC going as a of to to looking be use ACCs case NVLink you is ACCs Bill, just result Do think after growing of are of the wondering if versus up that, of really you address NVIDIA sort limited see, ACCs? use have as do you in perhaps going fabric. could ACC forward? adoption debate that Or

William Brennan

We described see limited. what case you don't the than ACCs at anywhere NVIDIA. Use other market in

Operator

Tore Stifel. our from And will question Svanberg from line next of come

Tore Svanberg

just it's Yes, two Svanberg. follow-ups.

in Is So, first pretty of to technologies market implemented product your a to talked remarks, or quicker? with engagements to have result you meaningfully. Bill, speed any that like Or you internally really get of that all, about your the new anything market the accelerating prepared customers?

William Brennan

think things we way way the number I that really with in our the that to we've customers. due work of organized it's a also and

a really teams engineering Credo if between it's of our We've interaction level. daily, think customer. I from got on standpoint the different our to ability collaborate, weekly, our and not at

mean? about we've then, to when relates that so, moving And qualification of with configuration we've are there's ownership that are qualified test deliver run got doing customers means to more than planning directly want And ability or samples. our that. XX constant to chambers taken they thermal what that that, production, use. what think on that talk We they're we production. that the ship appliances about we and And of us taking in be the complete our switches levels for And first into to does that different we something qualification, when That many there? So them.

of varying doing it's upfront. voltage. them we're live temperature, And a the So traffic, lot varying for work

that we've data ship because that qualification we're predictable they they when is into so, delivered know us tests give their on that what go they equipment based a And prescriptive highly they mode, us. final with delivering already the

from our the the lot of so, respond delivering organized taking that's quickly. to first, really a Qualifying we're And a up it's first, for customers, standpoint notch. and being doing about work it of

Tore Svanberg

sure to this but I last clear I that got clarification. it Great. make is I mean, -- And think I just to is sure I right, my want question everybody. just want to a make just

that quarters, product you is the So expect to AI number revenue, and revenue, that that QX X and 'XX? double includes licensing fiscal year-over-year

William Brennan

That is correct.

Operator

to Brennan, questions you. at I'll Mr. there call turn no this time. are over further And back the

William Brennan

for really participation, We everybody conversation on the continued Thank forward callbacks. appreciate you. and the to to thanks the questions. So, look the we

Operator

And this call. concludes today's conference

now may day. great disconnect. Everyone, You a have

Credo Technology Group Holding (CRDO) 29 May 242024 Q4 Earnings call transcript