Credo Technology Group Holding Ltd

Previous wording

We sell our products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets. We work closely and have engagements with industry-leading companies across these segments. A relatively small number of customers have historically accounted for and continue to account for a significant portion of our revenue. We report revenue by customer in our financial statement disclosure based on the contracting parties who place purchase orders or sign revenue contracts with us. See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, certain of our end customers have their contract manufacturing partners place orders with us. As a result, the contract manufacturers, rather than the end customers, are reported as our customers for financial reporting purposes. As a supplement to our financial statement footnote disclosure, and to provide further insight into our end customer concentration, the following table summarizes our revenue by customer as a percentage of total revenue based on end customer profile, rather than based on the contracting parties who place purchase orders or sign revenue contracts with us:

Current wording

We sell our products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets. We work closely and have engagements with industry-leading companies across these segments. A relatively small number of customers have historically accounted for and continue to account for a significant portion of our revenue. We report revenue by customer in our financial statement disclosure based on the contracting parties who place purchase orders or sign revenue contracts with us. See Note 3 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. However, certain of our end customers have their contract manufacturing partners place orders with us. As a result, the contract manufacturers, rather than the end customers, are reported as our customers for financial reporting purposes. As a supplement to our financial statement footnote disclosure and to provide further insight into our end customer concentration, the following table summarizes our revenue by customer as a percentage of revenue based on end customer profile, rather than based on the contracting parties who place purchase orders or sign revenue contracts with us:

Previous wording

We are a product-focused business with a strong foundation in IP, pioneering comprehensive connectivity solutions that deliver bandwidth, scalability and end-to-end signal integrity for next-generation platforms. We also develop IP solutions to address the specific and complex needs of our customers. We earn revenue from these IP solutions primarily through licensing fees and royalties. Over time, we expect to generate an increased proportion of our revenue from sales of our products. We expect to see a long-term benefit from improvements in our operating leverage as our business continues to gain scale.

Current wording

We are a product-focused business with a strong foundation in IP, pioneering comprehensive connectivity solutions that deliver bandwidth, scalability and end-to-end signal integrity for next-generation platforms. We also develop IP solutions to address the specific and complex needs of our customers. We earn revenue from these IP solutions primarily through licensing fees and royalties.

Previous wording

The following table sets forth information derived from our unaudited condensed consolidated statements of operations expressed as a percentage of total revenue:

Current wording

The following table sets forth information derived from our unaudited condensed consolidated statements of operations expressed as a percentage of revenue:

Previous wording

Comparison of Three and Six Months Ended November 1, 2025 and November 2, 2024

Current wording

Comparison of Three and Nine Months Ended January 31, 2026 and February 1, 2025

Previous wording

The increase in product sales revenue for the three months ended November 1, 2025, compared to the same period in fiscal year 2025, was primarily due to a significant increase in the volume of unit shipments of AEC products which contributed over 95% of the increase in product sales revenue, compared to the same period in fiscal year 2025. The sales increase was primarily driven by the ramp-up of our AEC solutions at our hyperscale data center customers during the three months ended November 1, 2025.

Current wording

Revenue for the three and nine months ended January 31, 2026 increased by $272.0 million and $631.4 million respectively, compared to the same period in fiscal year 2025. The increase in revenue for the three and nine months ended January 31, 2026, compared to the same periods in fiscal year 2025, was primarily due to a significant increase in the volume of unit shipments of AEC products. The sales increase was primarily driven by the ramp-up of our AEC solutions at our hyperscale data center customers during the three and nine months ended January 31, 2026.

Previous wording

Cost of revenue for the three months ended November 1, 2025 increased by $60.5 million compared to the same period in fiscal year 2025, primarily due to the increased shipments of AEC products noted above. The cost of IP license revenue was not material in the periods presented.

Current wording

Cost of revenue for the three and nine months ended January 31, 2026 increased by $79.1 million and $189.8 million, respectively, compared to the same periods in fiscal year 2025, primarily due to the increased shipments of AEC products noted above.

Previous wording

Gross margin in the three months ended November 1, 2025 increased by 4.3 percentage points compared to the same period in fiscal year 2025, primarily driven by the improved economies of scale in our product sales.

Current wording

Gross margin in the three and nine months ended January 31, 2026 increased by 4.9 and 4.7 percentage points, respectively, compared to the same periods in fiscal year 2025, primarily driven by the improved economies of scale in our revenue.

Previous wording

Research and development expense for the three months ended November 1, 2025 increased by $26.2 million compared to the same period in fiscal year 2025. The increase was due primarily to a $16.6 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $5.2 million increase in personnel costs as a result of new hires for product development, a $1.4 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development, and a $1.1 million increase in depreciation expense associated with an increase in R&D equipment.

Current wording

Research and development expense for the three months ended January 31, 2026 increased by $42.2 million compared to the same period in fiscal year 2025. The increase was due primarily to a $21.8 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $6.1 million increase in personnel costs as a result of new hires for product development, a $10.7 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development and a $1.1 million increase in depreciation expense associated with an increase in R&D equipment.

Previous wording

Research and development expense for the six months ended November 1, 2025 increased by $48.2 million compared to the same period in fiscal year 2025. The increase was due primarily to a $26.5 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, an $8.6 million increase in personnel costs as a result of new hires for product development, an $8.3 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development and a $1.7 million increase in depreciation expense driven by increased computer equipment and software and laboratory equipment utilized in research and development activities.

Current wording

Research and development expense for the nine months ended January 31, 2026 increased by $90.4 million compared to the same period in fiscal year 2025. The increase was due primarily to a $48.4 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $14.6 million increase in personnel costs as a result of new hires for product development, an $18.9 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development and a $2.8 million increase in depreciation expense driven by increased computer equipment and software and laboratory equipment utilized in research and development activities.

Previous wording

Selling, general and administrative expense for the three months ended November 1, 2025 increased by $22.2 million compared to the same period in fiscal year 2025. The increase was primarily due to a $12.1 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, $4.2 million increase in personnel costs as a result of higher selling, general and administrative headcount, a $5.5 million increase in external consultation fees relating to general and administrative expenses, and acquisition-related costs relating to the Hyperlume acquisition.

Current wording

Selling, general and administrative expense for the three months ended January 31, 2026 increased by $27.3 million compared to the same period in fiscal year 2025. The increase was primarily due to a $14.0 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $5.3 million increase in personnel costs as a result of higher selling, general and administrative headcount, a $6.5 million increase in external consultation fees relating to general and administrative expenses and acquisition-related costs relating to the Hyperlume acquisition.

Previous wording

Selling, general and administrative expense for the six months ended November 1, 2025 increased by $38.0 million compared to the same period in fiscal year 2025. The increase was primarily due to a $20.8 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $7.0 million increase in personnel expenses from new hires an $8.5 million increase in external consultation fees relating to general and administrative expenses and acquisition-related costs relating to the Hyperlume acquisition.

Current wording

Selling, general and administrative expense for the nine months ended January 31, 2026 increased by $65.3 million compared to the same period in fiscal year 2025. The increase was primarily due to a $34.8 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $12.3 million increase in personnel expenses from new hires a $15.0 million increase in external consultation fees relating to general and administrative expenses and acquisition-related costs relating to the Hyperlume acquisition.

Previous wording

Provision for income taxes for the three and six months ended November 1, 2025 increased by $0.8 million and $1.4 million, respectively, compared to the same period in fiscal year 2025. The increase was primarily driven by higher pre-tax income generated in tax-paying jurisdictions during the current year relative to the same period in fiscal year 2025.

Current wording

Provision for income taxes for the three and nine months ended January 31, 2026 increased by $1.2 million and $2.6 million, respectively, compared to the same period in fiscal year 2025. The increase was primarily driven by higher pre-tax income generated in tax-paying jurisdictions during the current year relative to the same period in fiscal year 2025.

Previous wording

Our activities consist primarily of selling our products, licensing our IP, providing product and IP engineering services, and conducting research and development of our products and technology. As of November 1, 2025 and May 3, 2025, we had $567.6 million and $236.3 million in cash and cash equivalents, respectively, and working capital of $1,103.1 million and $605.8 million, respectively. Our principal use of cash is to fund our operations, invest in research and development and acquisitions of complementary businesses or technologies to support our growth. See Note 8 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our cash requirements under non-cancelable purchase obligations.

Current wording

Our activities consist primarily of selling our products, licensing our IP, providing product and IP engineering services and conducting research and development of our products and technology. As of January 31, 2026 and May 3, 2025, we had $1,220.5 million and $236.3 million in cash and cash equivalents, respectively, and working capital of $1,621.4 million and $605.8 million, respectively. Our principal use of cash is to fund our operations, invest in research and development and acquisitions of complementary businesses or technologies to support our growth. See Note 8 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our cash requirements under non-cancelable purchase obligations.

Previous wording

During the three months ended November 1, 2025, the Company received $384.6 million in net proceeds through the issuance of 2.7 million ordinary shares under the At-The-Market Offering. See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our arrangement under the At-The-Market Offering. We believe our existing cash and cash equivalents and other components of working capital will be sufficient to meet our needs for at least the next 12 months and in the longer term. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, customer demand and the continuing market acceptance of our solutions. In the event that we need to borrow funds or issue additional equity, we cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations and financial condition would be adversely affected.

Current wording

During the nine months ended January 31, 2026, the Company received $736.3 million in net proceeds through the issuance of 4.8 million ordinary shares under the At-The-Market Offering. See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a further discussion of our arrangement under the At-The-Market Offering. We believe our existing cash and cash equivalents and other components of working capital will be sufficient to meet our needs for at least the next 12 months and in the longer term. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, customer demand and the continuing market acceptance of our solutions. In the event that we need to borrow funds or issue additional equity, we cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations and financial condition would be adversely affected.

Previous wording

Net cash provided by operating activities was $115.8 million for the six months ended November 1, 2025. The cash inflows from operating activities for the six months ended November 1, 2025 were primarily due to net income of $146.0 million adjusted for the following non-cash items: share-based compensation expense of 80.8 million, depreciation and amortization of $12.0 million and write-downs for excess and obsolete inventory of $8.1 million. This was offset by $131 million of cash outflows from working capital for the six months ended November 1, 2025, which was primarily driven by (a) increase in accounts receivable of $83.1 million primarily due to large billings from customers not due yet in the six months ended November 1, 2025; (b) an increase in inventory of $66.4 million to support unfulfilled backlog and related new product ramps; and (c) an increase in accounts payable and other current liabilities of $18.5 million due to timing of payments for inventory purchases and ATM fees to bankers.

Current wording

Net cash provided by operating activities was $282.1 million for the nine months ended January 31, 2026. The cash inflows from operating activities for the nine months ended January 31, 2026 were primarily due to net income of $303.2 million adjusted for the following non-cash items: share-based compensation expense of 132.9 million, depreciation and amortization of $18.8 million and write-downs for excess and obsolete inventory of $11.8 million, partially offset by $184.7 million of cash outflows from working capital purposes. The cash outflows from working capital for the nine months ended January 31, 2026 were primarily driven by (a) an increase in accounts receivable of $81.1 million primarily due to large billings from customers not due yet in the nine months ended January 31, 2026; (b) an increase in inventory of $127.9 million to support unfulfilled backlog and related new product ramps; and (c) an increase in other non-current assets of $20.8 million primarily relating to payments of refundable deposits for a manufacturing supply capacity reservation agreement These cash outflows were offset by cash inflows relating to an increase in accounts payable and other current liabilities of $48.8 million due to timing of payments for inventory and IP license purchases.

Previous wording

Net cash provided by operating activities was $3.0 million for the six months ended November 2, 2024. The cash inflows from operating activities for the six months ended November 2, 2024 were primarily due to $50.6 million of non-cash items, partially offset by $33.7 million of cash outflows for working capital purposes and $13.8 million of net loss. The cash outflows from working capital for the six months ended November 2, 2024 were primarily driven by (a) an increase in accounts receivable of $22.1 million primarily due to large billings from customers not due yet in the six months ended November 2, 2024; (b) an increase in inventory of $12.6 million to support unfulfilled backlog and related new product ramps; and (c) a decrease in deferred revenue of $2.0 million due to satisfaction of performance obligations over the passage of time.

Current wording

Net cash provided by operating activities was $7.3 million for the nine months ended February 1, 2025. The cash inflows from operating activities for the nine months ended February 1, 2025 were primarily due to $15.6 million in net income and $81.3 million of non-cash items, partially offset by $89.6 million of cash outflows for working capital purposes. The cash outflows from working capital for the nine months ended February 1, 2025 were primarily driven by (a) an increase in accounts receivable of $97.5 million primarily due to large billings from customers not due yet in the nine months ended February 1, 2025; (b) an increase in inventory of $31.7 million to support unfulfilled backlog and related new product ramps. These cash outflows were offset by cash inflows relating to (a) an increase in accounts payable of $22.3 million and (b) an increase in accrued expenses of $13.0 million, both relating to increased inventory purchases.

Previous wording

Net cash used in investing activities of $159.6 million in the six months ended November 1, 2025 was primarily attributable to purchases of property and equipment of $26.0 million, purchases of certificates of deposit for $115.0 million, and net cash payment for Hyperlume acquisition of $82.6 million, offset by maturities of certificates of deposit for $64.0 million. Purchases of property and equipment primarily related to mask set costs capitalized relating to the Company’s products already introduced or to be introduced, and third-party IP licenses and computer equipment and software used for research and development purposes.

Current wording

Net cash used in investing activities of $21.1 million in the nine months ended January 31, 2026 was primarily attributable to purchases of property and equipment of $52.5 million, purchases of certificates of deposit for $115.0 million,and net cash payment for Hyperlume acquisition of $82.6 million, offset by maturities of certificates of deposit for $229.0 million. Purchases of property and equipment primarily related to mask set costs capitalized relating to the Company’s products already introduced or to be introduced and third-party IP licenses and computer equipment and software used for research and development purposes.

Previous wording

Net cash provided by investing activities of $171.5 million in the six months ended November 2, 2024 was primarily attributable to maturities of certificates of deposit for $313.1 million, offset by purchases of the same for $113.7 million and purchases of property and equipment of $27.8 million. Purchases of property and equipment primarily related to mask sets costs capitalized relating to the Company’s products already introduced or in process of being introduced, and third-party IP licenses and computer equipment and software used for research and development purposes.

Current wording

Net cash provided by investing activities of $230.7 million in the nine months ended February 1, 2025 was primarily attributable to maturities of certificates of deposit for $376.8 million, offset by purchases of the same for $113.7 million and purchases of property and equipment of $32.4 million. Purchases of property and equipment primarily related to mask sets costs capitalized relating to the Company’s products already introduced or in process of being introduced and third-party IP licenses and computer equipment and software used for research and development purposes.

Previous wording

Net cash provided by financing activities of $374.9 million for the six months ended November 1, 2025 was primarily attributable to $5.2 million in proceeds from exercises of employee share options and net proceeds from the At-The-Market Offering of $384.6 million and offset by $4.8 million in payments for long-term technology license obligations and $10.1 million tax withheld related to RSU settlement.

Current wording

Net cash provided by financing activities of $723.0 million for the nine months ended January 31, 2026 was primarily attributable to $6.6 million in proceeds from exercises of employee share options and net proceeds from the At-The-Market Offering of $736.3 million and offset by $5.7 million in payments for long-term technology license obligations and $14.3 million tax withheld related to RSU settlement.

Previous wording

Net cash used in financing activities of $2.4 million for the six months ended November 2, 2024 was primarily attributable to $4.6 million in payments for long-term technology license obligations and $2.3 million tax withheld related to RSU settlement, offset by $4.4 million in proceeds from exercises of employee share options.

Current wording

Net cash used in financing activities of $5.8 million for the nine months ended February 1, 2025 was primarily attributable to $5.4 million in payments for long-term technology license obligations and $7.2 million tax withheld related to RSU settlement, offset by $6.8 million in proceeds from exercises of employee share options.

Previous wording

Except for the accounting policy for business combinations that was updated as a result of our acquisition of the Hyperlume business, there have been no material changes to our critical accounting estimates during the three and six months ended November 1, 2025, as compared to those disclosed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended May 3, 2025. In the current macroeconomic environment, our estimates could require increased judgment and carry a higher degree of variability and volatility. We continue to monitor and assess our estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

Current wording

Except for the accounting policy for business combinations that was updated as a result of our acquisition of the Hyperlume business, there have been no material changes to our critical accounting estimates during the three and nine months ended January 31, 2026, as compared to those disclosed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended May 3, 2025. In the current macroeconomic environment, our estimates could require increased judgment and carry a higher degree of variability and volatility. We continue to monitor and assess our estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods.