Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Some of the key observations there are, if we go back just about a year ago today to when we had that Microsoft reset, I think we've done a very good job at executing to what we had laid out at that point in time |
| We're gaining better visibility with these customers into their near-term product ramps, and we're also engaged in a range of AEC solutions to address longer term roadmaps |
| And then the - quickly on that LRO side, it's very encouraging to see how fast you came to market with that - with the receiver side DSP |
| And I can say that we feel great about the fact that we've got more irons in the fire than ever before |
| In summary, we're pleased with our results for fiscal Q3, and we're optimistic about the increasing market demand for high-speed connectivity |
| We remain well capitalized to continue investing in our growth opportunities while maintaining a substantial cash buffer |
| Last quarter, our chiplet business was highlighted by a win with significant NRE at one of our leading customers for a next-generation, five nanometer chiplet solution which speaks loudly regarding our differentiated SerDes portfolio |
| And so, we're feeling quite good about the efforts that we've made over the last several years in not only developing customer relationship, but also just developing a core capability |
| This plays directly to Credo's strength and underpins our growth expectations |
| In the quarter, I guess even if you exclude the increase in NRE revenue, your product gross margins I thought were pretty good on a sequential basis, they improved quite nicely |
| Credo's competitive advantage is driven by our focus and execution on our core SerDes technology, and that leads Credo to being one of few companies capable of delivering the necessary breadth of connectivity solutions at the highest speeds, while optimizing for energy efficiency and system cost |
| Our funnel for SerDes licensing opportunities remains strong, bolstered by the increased opportunity on ASICs with high-speed SerDes for data center applications |
| In summary, we were very pleased with our AEC progress in Q3, and due to our expanding customer base and focus on innovation, we expect further progress in Q4, fiscal '25 and beyond |
| Our product non-GAAP gross margin was 61.5% in the quarter, up 877 basis points sequentially, due to a large increase in product NRE revenue, and up 1,420 basis points year-over-year |
| For these reasons, we expect continued long-term growth across a diversified customer base, and a diversified set of connectivity applications |
| We have close working relationships and our design wins typically have long lifecycles once they ramp to production, contributing nicely to our overall results |
| We think we're well on track for attaining our long term gross margin expectation, which is again 63% to 65% within the next two years |
| As a group, these customers represent a meaningful and growing revenue opportunity |
| And the trend there has been very favorable to us due to product mix and increasing scale |
| We expect to generate meaningful future revenue as the P3 enables AECs to be easily utilized in a more broad set of operational opportunities, thereby expanding our addressable market |
| These results and our future growth expectations continue to be driven by the accelerating opportunity for high speed and energy efficient connectivity solutions throughout the data infrastructure market |
| Overall, we remain optimistic about the prospects of the chiplet category, given our results to date, and due to our belief that chiplets will be a key enabler in the most advanced system solutions |
| We are pleased to see fiscal year '24 playing out as expected |
| Our team delivered Q3 non-GAAP gross margin of 62.2% above the high-end of our guidance range and up 235 basis points sequentially |
| Our first 800-gig LRO DSP partner has built and tested 800-gig optical modules, and the results are exactly as expected, successfully delivering on the promise of much reduced power and great signal integrity while overcoming the shortfalls of the aspirational LPO architecture |
| Our product business generated $51.8 million of revenue in Q3, up 41% sequentially and up 24% year-over-year |
| We believe our AEC leadership derives from our comprehensive systems level approach to the AEC market |
| Credo SerDes technology expertise, combined with our system-level, customer-focused design approach has led to our success with a diverse and growing set of industry-leading customers |
| Now, regarding our optical solutions, Credo continues to gain traction in the optical DSP market |
| So you could expect Q4 to be very strong in terms of IP deliverables, which again, we recognize revenue upon those deliverables of IP databases under ASC 606 |
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| Our IP business generated $1.3 million of revenue in Q3, down 83% sequentially, and down 90% year-over-year |
| In Q3, we reported revenue of $53.1 million, up 20% sequentially, and down 2% year-over-year |
| While the mix of IP and product revenue will vary in any given quarter over time, our revenue mix in Q3 was 2% IP, below our long-term expectations for IP, which is 10% to 15% of the revenue |
| And so there's different approaches, but I think there's always going to be some signal loss as it relates to multiple parties trying to respond to urgent needs within the customer base |
| Our Q3 ending inventory was $31.5 million, down $4.3 million sequentially |
| I mean, obviously, the AI pivot was way more severe in magnitude and timing than I think anybody in the market really anticipated 12 months ago |
| And free cash flow was negative $6.1 million, an increase of $3.1 million year-over-year |
| And so, we saw a big reduction in the forecast, which would clearly imply that they made a huge pivot towards AI |
| So, nothing - no seasonal weakness, I would say |
| I don't know if I would characterize anything as sequential weakness |
| There is a possibility that, that will see some contribution in the second half as well in '25, although we don't have good visibility on when they're exactly going to deploy |
| So some programs as programs ramp, they become large, there might be pauses in certain things, just speaking generically around programs of this nature |
| Could you give us a little color on where you may be seeing some sequential weakness, that would be super helpful |
| But since you happen to sell primarily into front end traditional server market applications, I'm curious to hear whether you are seeing a cyclical recovery in traditional servers as new data centers are being built to really ameliorate the power limitation of installing GPUs, and therefore you are seeing that happen in ramp now |
| Given these risks, uncertainties and assumptions, the forward-looking events discussed during this call may not occur and actual results could differ materially and adversely from those anticipated or implied |
| I think the churn that you see, the polarizing opinions in the market, those are really observers that are - or participants trying to create some momentum |
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