Credo Technology Group Holding Ltd

1. Description of Business and Basis of Presentation

Credo Technology Group Holding Ltd was formed as an exempted company under the laws of the Cayman Islands in September 2014. Credo Technology Group Holding Ltd directly owns Credo Technology Group Ltd., which owns, directly and indirectly, all of the shares of its subsidiaries in mainland China, Hong Kong, Singapore, Canada, Israel and the United States (U.S.). References to the “Company” in these notes refer to Credo Technology Group Holding Ltd and its subsidiaries on a consolidated basis, unless otherwise specified.

The Company’s mission is to transform connectivity at scale through fast, reliable and energy-efficient system solutions. The Company’s high-speed copper and optical interconnect technologies deliver industry-leading power and performance from chip to cluster to meet the ever-expanding data infrastructure demands of AI. The Company’s vertical integrated connectivity product portfolio includes flagship purple ZeroFlap (ZF) Active Electrical Cables (AECs) and ZF optical transceivers; optical components including silicon photonics-based photonic integrated circuits (SiPho PICs) and DSPs; OmniConnect AI memory and chip-to-chip interconnect; and retimers for Ethernet and PCIe—supported by the PILOT diagnostic and analytics software platform. The Company’s innovations enable our customers to connect the systems that connect the world.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States (US GAAP) applicable to interim periods, under the rules and regulations of the U.S. Securities and Exchange Commission (the SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as permitted by the SEC. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s fiscal year 2026 audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 2, 2026. The unaudited condensed consolidated financial statements include all adjustments, including normal recurring adjustments and other adjustments, that are considered necessary for fair presentation of the Company’s financial position and results of operations. All inter-company accounts and transactions have been eliminated. Operating results for the periods presented herein are not necessarily indicative of the results that may be expected for the entire year.

The Company’s fiscal year is a 52- or 53-week period ending on the Saturday closest to April 30. Its fiscal year ending May 1, 2027 (fiscal year 2027) is a 52-week fiscal year. The Company’s fiscal year ended May 2, 2026 (fiscal year 2026) was a 52-week fiscal year.

2. Significant Accounting Policies

The Company believes that other than the accounting policies as described below, there have been no significant changes to the items disclosed in Note 2, “Significant Accounting Policies,” included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 2, 2026.

Contingent Consideration

Certain of the Company’s acquisition agreements include contingent earn-out arrangements, which are generally based on the achievement of future financial metrics. The fair values of these earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. For each transaction, the Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability or an equity on the consolidated balance sheets. The Company reviews and re-assesses the estimated fair value of contingent consideration liabilities on a quarterly basis, and the updated fair value could be materially different from the initial estimates or prior amounts. Changes in the estimated fair value of its contingent earn-out liabilities and adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in other income, net on the Company’s consolidated statements of operations.

Use of Estimates

The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes.

The Company bases its estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future, given the available information. Estimates are used for, but not limited to, write-down for excess and obsolete inventories, variable consideration from revenue contracts, determination of the fair value of share-based awards valued under Monte Carlo simulation, determination of the probability of achieving performance conditions for performance-based share-based awards, the realization of tax assets and estimates of tax reserves, valuation of acquired intangible assets and contingent consideration, and impairment of long-lived assets and goodwill (as applicable). Actual results may differ from those estimates and such differences may be material to the financial statements. In the current macroeconomic environment, these estimates require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, these estimates may change materially in future periods.

Reclassifications

Certain prior period balances were reclassified to conform to the current period’s presentation. None of these reclassifications had an impact on reported net income or cash flows for any of the periods presented.

Accounting Pronouncement Recently Adopted

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses for Accounts Receivable and Contract Assets, providing all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This ASU is effective for annual reporting periods beginning after December 15, 2025 and interim periods within the fiscal year beginning after December 15, 2025. The Company adopted this guidance in the first quarter of fiscal year 2027 and the adoption did not have a material impact to the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures, which requires disclosure of, in interim and annual reporting periods, additional information about certain expenses in the financial statements. This standard is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and may be applied on a retrospective or prospective basis. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.

3. Concentrations

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments and accounts receivable. Cash is placed in major financial institutions around the world. The Company’s cash deposits exceed insured limits. Short-term investments are subject to counterparty risk up to the amount presented on the balance sheet.

Historically, a relatively small number of customers have accounted for a significant portion of the Company’s revenue. The particular customers which account for revenue concentration have varied from period-to-period as a result of the volumes and prices at which the customers have recently bought the Company’s products. These variations are expected to continue in the foreseeable future.

The following tables summarize the accounts receivable and revenue as a percentage of total accounts receivable and total revenue, respectively:

• Less than 10% of total accounts receivable or total revenue.

4. Revenue Recognition

The following table summarizes revenue disaggregated by primary geographical market based on destination of shipment for revenue, which may differ from the customer’s principal offices (in thousands):

Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. The contracted but unsatisfied performance obligations as of August 1, 2026 were approximately $4.2 million, which the Company expects to recognize over the next 12 months.

5. Business Combination

DustPhotonics

On May 28, 2026, the Company acquired 100% of the equity interest of DustPhotonics Ltd. (DustPhotonics), a developer of Silicon Photonics Photonic Integrated Circuit technology for optical transceivers, for a total purchase consideration of $1.3 billion. This acquisition was primarily intended to position the Company with a vertically integrated connectivity stack spanning SerDes, DSP, Silicon Photonics and system integration for scale out and scale up networks — addressing both electrical and optical interconnects across the full AI infrastructure build-out.

The factors contributing to the recognition of goodwill were based upon the Company’s conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition. Goodwill recorded for the DustPhotonics acquisition is not expected to be deductible for tax purposes. The Company hasone reportable segment and accordingly, there is no goodwill assignment based on reporting units.

In accordance with U.S. GAAP requirements for business combinations, the Company allocated the fair value of the purchase consideration to the tangible assets, liabilities and intangible assets, generally based on their estimated fair values. The excess purchase price over those fair values is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable intangible asset and amortized over the asset’s estimated useful life. The Company’s valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets and contingent consideration.

The Company estimates the fair value of contingent earn-out payments in cash and the Company’s ordinary shares as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability of $10.0 million and equity of $300.0 million on the condensed consolidated balance sheets.

Acquisition-related costs are expensed in the periods such costs are incurred and were not material for the periods presented. Pro forma results of operations for both acquisitions have not been presented because the effect of the acquisitions was not material to the Company’s financial results.

The fair values assigned to assets acquired and liabilities assumed are preliminary and based on management’s estimates and assumptions which may be subject to change as additional information is received. The primary areas that remain preliminary relate to the fair values of certain intangible assets acquired, contingent consideration as of the acquisition date, income tax, including deferred taxes, and residual goodwill. The Company expects to finalize the valuation no later than one year from the acquisition date.

Comira

On February 25, 2026, the Company acquired 100% of the equity interest of CoMira Solutions, Inc. (Comira), a high-speed connectivity IP innovator, for a total cash consideration of $35.1 million. This acquisition was primarily intended to bring specialized link layer, error correction and security semiconductor IP to support the development of new and advanced system-level solutions for scale-up and scale-out AI architectures.

The factors contributing to the recognition of goodwill were based upon the Company’s conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition. Goodwill recorded for the Comira acquisition is not expected to be deductible for tax purposes. The Company hasone reportable segment and accordingly, there is no goodwill assignment based on reporting units.

Acquisition-related costs are expensed in the periods such costs are incurred and were not material for the periods presented. Pro forma results of operations for both acquisitions have not been presented because the effect of the acquisitions was not material to the Company’s financial results.

Hyperlume

On September 29, 2025, the Company acquired 100% of the equity interest of Hyperlume, Inc. (Hyperlume), a developer of miniature light-emitting diode (microLED)-based optical interconnect technology for chip-to-chip communication, for a total purchase consideration of $92.0 million. Total purchase consideration is attributable to cash consideration of $88.7 million and cash settlement of vested share-based payment awards of $3.3 million by Hyperlume. This acquisition was primarily intended to expand the Company’s comprehensive portfolio of end-to-end system-level connectivity solutions with Hyperlume’s cutting-edge microLED technology to address the future of artificial intelligence-driven data infrastructure deployments.

The factors contributing to the recognition of goodwill were based upon the Company’s conclusion that there are strategic and synergistic benefits that are expected to be realized from the acquisition. Goodwill recorded for the Hyperlume acquisition is not expected to be deductible for tax purposes. The Company hasone reportable segment and accordingly, there is no goodwill assignment based on reporting units.

Acquisition-related costs are expensed in the periods such costs are incurred and were not material for the periods presented. Pro forma results of operations have not been presented because the effect of the acquisition was not material to the Company’s financial results.

6. Goodwill and Intangible Assets, Net

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in business combinations. The carrying value of goodwill as of August 1, 2026 and May 2, 2026 was $986.4 million and $92.8 million, respectively.

Intangible Assets, Net

As of August 1, 2026 and May 2, 2026, the net carrying amounts are as follows (in thousands, except for weighted-average remaining amortization period):

The weighted-average amortization period for developed technology and customer relationships is 5 years. Amortization for intangible assets was $11.6 million during the three months ended August 1, 2026.

The aggregate future amortization expense for the amortizable intangible assets as of August 1, 2026 is as follows (in thousands):

7. Fair Value Measurements

Fair value is an exit price representing the amount that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2 - Other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs that are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company measures the fair value of money market funds using Level 1 inputs. The Company’s certificates of deposit are classified as held-to-maturity securities as the Company intends to hold until their maturity dates. The certificates of deposit are valued using Level 2 inputs. Pricing sourcesmay include industry standard data providers, security master files from large financial institutions and other third-party sources used to determine a daily market value.

The following tables present the fair value of the financial instruments measured on a recurring basis, or measured at amortized cost which approximates fair value, as of August 1, 2026 and May 2, 2026 (in thousands).

The carrying amount of the Company’s financial instruments, including cash equivalents, short-term investments, accounts receivable and accounts payable, approximate their respective fair values because of their short maturities. As of August 1, 2026 and May 2, 2026, there were no unrealized losses or gains associated with the Company’s financial instruments. The interest income recognized for the three months ended August 1, 2026 and August 2, 2025 was $7.9 million and $4.3 million, respectively.

8. Supplemental Financial Information

Inventories

Inventories consisted of the following (in thousands):

Property and Equipment, Net

Property and equipment consisted of the following (in thousands):

Depreciation and amortization expense was $8.6 million and $5.5 million for the three months ended August 1, 2026 and August 2, 2025, respectively. Computer equipment and software primarily includes technology licenses for computer-aided design tools relating to the Company’s R&D design of future products and intellectual properties. Production equipment and construction in progress primarily include mask set costs capitalized relating to the Company’s products already introduced or to be introduced.

Other Current Assets

Other current assets consisted of the following (in thousands):

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

9. Commitments and Contingencies

Non-cancelable Purchase Obligations

Total future non-cancelable purchase obligations as of August 1, 2026 are as follows (in thousands):

Technology license fees include the liabilities under agreements for technology licenses between the Company and various vendors. Under the Company’s manufacturing relationships with its foundry partners, cancellation of outstanding purchase orders is allowed but requires payment of all costs and expenses incurred through the date of cancellation.

The Company has multiple manufacturing supply capacity reservation agreements with certain assembly subcontractors as of August 1, 2026. The agreements require the Company to make upfront deposits to the subcontractors in exchange for reserved manufacturing capacity over the agreement term, which ranges from 2 to 6 years. The deposits are refundable through future purchases upon meeting certain volume requirements. As of August 1, 2026, the Company had refundable deposits of $88.4 million of which $62.9 million was recorded in other current assets and $25.5 million in other non-current assets on the condensed consolidated balance sheet.

Subsequent to August 1, 2026, the Company entered into an additional manufacturing supply capacity reservation agreement with an assembly subcontractor and will pay $102.4 million of refundable deposits within fiscal 2027.

Warranty Obligations

The Company’s products generally carry a standardone-year warranty. The Company’s warranty expense was not material in the periods presented.

Indemnifications

In the ordinary course of business, the Company has entered into agreements that contain certain indemnification obligations of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees and other parties with respect to certain matters, including, but not limited to, certain losses arising out of the Company’s breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. These indemnification obligations may survive termination of the underlying agreement and the maximum potential amount of future payments the Company could be required to make under these indemnification provisions may not be subject to maximum loss limitations. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification obligations. Accordingly, the Company had no liabilities recorded for these agreements as of August 1, 2026 and May 2, 2026.

Legal Proceedings

From time to time, the Company may be a party to various litigation claims in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with legal counsel, the need to record a liability for litigation and contingencies. Accrual estimates are recorded when and if it is determined that such a liability for litigation and contingencies is both probable and reasonably estimable. As of the date of issuance of these unaudited condensed consolidated financial statements, the Company was not subject to any material litigation. No accruals for loss contingencies or recognition of actual losses have been recorded in any of the periods presented.

10. Share Incentive Plan

Restricted Stock Unit (RSU) Awards

A summary of information related to RSU activity during the three months ended August 1, 2026 is as follows:

Performance-based Restricted Stock Unit (PSU) Awards

A summary of information related to PSU activity during the three months ended August 1, 2026 is as follows:

Share Option Awards

A summary of information related to share option activity during the three months ended August 1, 2026 is as follows:

Summary of Share-based Compensation Expense

The following table summarizes share-based compensation expense included in the unaudited condensed consolidated statements of operations (in thousands):

In connection with the Hyperlume acquisition, the Company issued 87 thousand RSUs under its 2021 long-term incentive plan in replacement for the unvested options under Hyperlume’s equity incentive plan. The RSUs retain the same vesting conditions as the unvested options that they replaced. The Company also issued 132 thousand restricted shares of the Company to one of the founders of Hyperlume and 132 thousand restricted shares of a newly formed subsidiary of the Company that are exchangeable into restricted shares of the Company to the other founder of Hyperlume. The restricted shares were issued in exchange for the founders’ outstanding equity interests in Hyperlume and vest on a quarterly basis, subject to continued employment with the Company over the next 3 years.

Both RSUs and restricted shares were measured at the acquisition date’s fair value of $146.01 per share and the fair value of those shares represent post-acquisition share-based compensation expense that will be recognized as these employees provide service over the remaining vesting periods of up to 4 years.

In connection with the DustPhotonics acquisition, the Company issued 254 thousand RSUs under its 2021 long-term incentive plan in replacement for the unvested options under DustPhotonics’ equity incentive plan. The RSUs retain the same vesting conditions as the unvested options that they replaced. The RSUs were measured at the acquisition date’s fair value of $222.35 per share and the fair value of those shares represent post-acquisition share-based compensation expense that will be recognized as these employees provide service over the remaining vesting periods of up to 4 years.

11. Income Taxes

The Company’s tax provision for interim periods is determined using an estimate of its annual effective tax rate, excluding zero rate jurisdictions and adjusted for discrete items, if any, that arise during the period. Each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company makes a cumulative adjustment in such period. The Company’s quarterly tax provision, and estimate of its annual effective tax rate, is subject to variation due to several factors, including variability in accurately predicting its pre-tax income or loss and the mix of jurisdictions to which they relate, intercompany transactions, changes in tax laws, the applicability of special tax regimes, changes in how we do business and discrete items.

Provision for income taxes for the three months ended August 1, 2026 and August 2, 2025 was as follows (in thousands except percentages):

The Company’s effective tax rate for the three months ended August 1, 2026 differed from that of the corresponding period in the prior year primarily due to the tax impact of acquired intangible assets and related purchase accounting adjustments arising from the DustPhotonics acquisition.

During the three months ended August 1, 2026, there were no material changes to the total amount of unrecognized tax benefits and we do not expect any significant changes in the next 12 months.

In connection with the DustPhotonics acquisition, the Company recognized a deferred tax liability of $48.0 million related to the acquired intangible assets and acquired tax attributes.

12. Net Income Per Share

The Company reports both basic net income per share, which is based on the weighted-average number of ordinary shares outstanding during the period and diluted net income per share, which is based on the weighted-average number of ordinary shares outstanding and potentially dilutive shares outstanding during the period. Net income per share for thethree months ended August 1, 2026 and August 2, 2025, respectively, was determined as follows (in thousands, except per share amounts):

The Customer Warrant relates to an agreement entered in fiscal year 2022 that was fully vested and exercised in fiscal year 2026.

Potential dilutive securities include dilutive ordinary shares from the share-based awards attributable to the assumed exercise of share options, restricted stock units, performance-based restricted stock units and employee stock purchase plan shares using the treasury stock method. Under the treasury stock method, potential ordinary shares outstanding are not included in the computation of diluted net income per share if their effect is anti-dilutive. The following potentially dilutive securities outstanding (in thousands) have been excluded from the computations of diluted weighted-average shares outstanding for thethree months ended August 1, 2026 and August 2, 2025:

13. Segment Information

The Company’s Chief Operating Decision Maker (CODM) manages the Company’s business activities as a single reportable segment at the consolidated level. Accordingly, the CODM uses net income or loss for the purposes for making operating decisions, allocating resources and evaluating financial performance. The measure of segment assets is reported on the condensed consolidated balance sheet as total assets, although the CODM does not evaluate asset information of purposes of allocating resources or evaluating performance. The table below provides information about the Company’s revenue, significant segment expenses and other segment expenses (in thousands):

*Other segment items primarily include lease expense, external professional service expenses, depreciation and amortization, interest income and tax provision.