What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-07-02 compared with 2024-06-24 · 262 added, 310 removed, 599 unchanged (49% of the section changed)

5 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Convertible Preferred Shares and Shareholders’ Equity (Deficit)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements Shareholders’ Equity

Consolidated Statements of Cash Flows

3 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Credo Technology Group Holding Ltd (the Company) as of April 27, 2024 and April 29, 2023, the related consolidated statements of operations, comprehensive loss, convertible preferred shares and shareholders' equity (deficit) and cash flows for each of the three years in the period ended April 27, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 27, 2024 and April 29, 2023, and the results of its operations and its cash flows for each of the three years in the period ended April 27, 2024, in conformity with U.S.

We have audited the accompanying consolidated balance sheets of Credo Technology Group Holding Ltd (the Company) as of May 3, 2025 and April 27, 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended May 3, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at May 3, 2025 and April 27, 2024, and the results of its operations and its cash flows for each of the three years in the period ended May 3, 2025, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 27, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated June 24, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of May 3, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated July 1, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

11 unchanged sentences

Description of the Matter

The Company’s inventories totaled $25.9 million as of April 27, 2024, representing 4.3% of total assets.

As explained in Note 2 to the consolidated financial statements, the Company values inventories at the lower of standard cost (which approximates actual cost determined on a first-in first-out basis) and net realizable value in each reporting period.

The Company’s inventories totaled $90.0 million as of May 3, 2025, representing 11.1% of total assets.

As explained in Note 2 to the consolidated financial statements, the Company values inventories at the lower of cost and net realizable value in each reporting period.

Excess and obsolete inventory is written down to its estimated net realizable value if less than cost.

Auditing management’s estimates for excess and obsolete inventory involved subjective auditor judgment because management’s assessment of whether a write down is required and the measurement of any excess of cost over net realizable value is judgmental and considers a number of qualitative factors that are affected by market and economic conditions outside the Company’s control.

In particular, the excess and obsolete inventory calculations are sensitive to significant assumptions, including demand for the Company’s products, which considers adjustments to sales forecasts for specific product considerations, including but not limited to new product launches and expected industry sales growth.

Auditing management’s estimates for net realizable value of excess and obsolete inventory involved subjective auditor judgment because management’s assessment of whether a write down is required and the measurement of any excess of cost over net realizable value is judgmental and considers qualitative factors that are affected by market and economic conditions outside the Company’s control.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess and obsolete inventory write-down process.

This included controls over management’s assessment of inventory valuation, including the determination of forecasted usage of inventories.

Our audit procedures included, among others, evaluating the significant assumptions stated above and testing the completeness and accuracy of the underlying data used in management’s excess and obsolete inventory valuation assessment.

This included controls over management’s assessment of net realizable value, including the determination of forecasted usage of inventories.

Our audit procedures included, among others, evaluating the product demand assumptions stated above and testing the completeness and accuracy of the underlying data used in management’s excess and obsolete inventory valuation assessment.

We evaluated inventory levels compared to forecasted product demand, historical sales and specific product considerations.

We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses over the significant assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions.

We also assessed the historical accuracy of management’s estimates and performed sensitivity analyses over the product demand assumptions to evaluate the changes in the excess and obsolete inventory estimates that would result from changes in the underlying assumptions.

/s/ Ernst & Young LLP

1 unchanged sentence

San Jose, California

June 24, 2024

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Opinion on Internal Control Over Financial Reporting

We have audited Credo Technology Group Holding Ltd’s internal control over financial reporting as of April 27, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Credo Technology Group Holding Ltd (the Company) maintained, in all material respects, effective internal control over financial reporting as of April 27, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of April 27, 2024 and April 29, 2023, the related consolidated statements of operations, comprehensive loss, convertible preferred shares and shareholders' equity (deficit) and cash flows for each of the three years in the period ended April 27, 2024, and the related notes and our report dated June 24, 2024 expressed an unqualified opinion thereon.

We have audited Credo Technology Group Holding Ltd’s internal control over financial reporting as of May 3, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Credo Technology Group Holding Ltd (the Company) maintained, in all material respects, effective internal control over financial reporting as of May 3, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of May 3, 2025 and April 27, 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended May 3, 2025, and the related notes and our report dated July 1, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk

that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

San Jose, California

June 24, 2024

Credo Technology Group Holding Ltd

1 unchanged sentence

(in thousands, except per share amounts)

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Current assets:

3 unchanged sentences

Inventories 90,029 25,907

Contract assets 21,562 9,445

Prepaid expenses and other current assets 13,131 5,412

Other current assets 30,023 34,693

Total current assets

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Accrued compensation and benefits 16,097 9,000

Accrued expenses and other current liabilities 18,301 14,454

Deferred revenue 3,902 4,040

Other current liabilities 35,456 22,203

Total current liabilities 107,711 44,620

6 unchanged sentences

1,000,000 shares authorized;

164,305 and 148,651 shares issued and outstanding at April 27, 2024 and April 29, 2023, respectively

171,169 and 164,305 shares issued and outstanding at May 3, 2025 and April 27, 2024, respectively

Additional paid in capital 765,173 676,054

7 unchanged sentences

(in thousands, except per share amounts)

April 27, 2024 April 29, 2023 April 30, 2022

May 3, 2025 April 27, 2024 April 29, 2023

Product sales $ 412,177 $ 145,048 $ 141,475

13 unchanged sentences

Total operating expenses 245,785 156,489 127,429

Operating loss ( 37,058 ) ( 21,235 ) ( 21,968 )

Other income (expense), net 14,313 3,321 ( 245 )

Loss before income taxes ( 22,745 ) ( 17,914 ) ( 22,213 )

Operating income (loss) 37,124 ( 37,058 ) ( 21,235 )

Other income, net 17,746 14,313 3,321

Income (loss) before income taxes 54,870 ( 22,745 ) ( 17,914 )

Provision (benefit) for income taxes 2,687 5,624 ( 1,367 )

Net loss $ ( 28,369 ) $ ( 16,547 ) $ ( 22,176 )

Net loss per share:

Basic and diluted $ ( 0.18 ) $ ( 0.11 ) $ ( 0.25 )

Weighted-average shares used in computing net loss per share:

Basic and diluted 155,091 146,556 88,398

Net income (loss) $ 52,183 $ ( 28,369 ) $ ( 16,547 )

Net income (loss) per share:

$ 0.31 $ ( 0.18 ) $ ( 0.11 )

$ 0.29 $ ( 0.18 ) $ ( 0.11 )

Weighted-average shares used in computing net income (loss) per share:

167,505 155,091 146,556

181,158 155,091 146,556

The accompanying notes are an integral part of these consolidated financial statements.

Credo Technology Group Holding Ltd

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

April 27, 2024 April 29, 2023 April 30, 2022

Net loss $ ( 28,369 ) $ ( 16,547 ) $ ( 22,176 )

Other comprehensive loss:

Foreign currency translation loss ( 328 ) ( 214 ) ( 204 )

Total comprehensive loss $ ( 28,697 ) $ ( 16,761 ) $ ( 22,380 )

May 3, 2025 April 27, 2024 April 29, 2023

Net income (loss) $ 52,183 $ ( 28,369 ) $ ( 16,547 )

Other comprehensive income (loss):

Foreign currency translation income (loss) 82 ( 328 ) ( 214 )

Total comprehensive income (loss) $ 52,265 $ ( 28,697 ) $ ( 16,761 )

The accompanying notes are an integral part of these consolidated financial statements.

Credo Technology Group Holding Ltd

Consolidated Statements of Convertible Preferred Shares and Shareholders’ Equity (Deficit)

(in thousands, except share amounts)

Convertible Preferred Shares Ordinary Shares Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shareholders’ Equity (Deficit)

Number of Shares Amount Number of Shares Amount

Consolidated Statements of Shareholders’ Equity

(in thousands)

Ordinary Shares Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shareholders’ Equity

Number of Shares Amount

Balances at April 30, 2022 144,755 $ 7 $ 424,562 $ 23 $ ( 90,429 ) $ 334,163

Issuance of Series D convertible preferred shares, net of issuance costs 1,251 7,245 — — — — — —

Conversion of preferred shares into ordinary shares ( 52,060 ) ( 205,210 ) 52,060 3 205,207 — — 205,210

Issuance of ordinary shares in connection with initial public offering, net of offering costs — — 21,384 1 194,204 — — 194,205

Ordinary shares issued under employee share incentive plans 3,896 — 5,497 — — 5,497

1 unchanged sentence

Warrant contra revenue — — 1,220 — — 1,220

Total comprehensive gain (loss) — — — — — ( 204 ) ( 22,176 ) ( 22,380 )

Total comprehensive loss — — — ( 214 ) ( 16,547 ) ( 16,761 )

Balances at April 29, 2023 148,651 $ 7 $ 454,795 $ ( 191 ) $ ( 106,976 ) $ 347,635

Issuance of common stock in connection with secondary public offering, net of offering costs 10,440 1 173,415 — 173,416

Ordinary shares issued under employee share incentive plans

5,329 — 7,055 — — 7,055

Tax withheld related to RSU settlement ( 115 ) ( 2,158 ) ( 2,158 )

Share-based compensation

3 unchanged sentences

Balances at April 27, 2024 164,305 $ 8 $ 676,054 $ ( 519 ) $ ( 135,345 ) $ 540,198

Convertible Preferred Shares Ordinary Shares Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shareholders’ Equity (Deficit)

Number of Shares Amount Number of Shares Amount

Issuance of common stock in connection with secondary public offering, net of offering costs — — 10,440 1 173,415 — — 173,416

Ordinary shares issued under employee share incentive plans 7,057 — 7,831 — — 7,831

2 unchanged sentences

Warrant contra revenue — — 13,186 — — 13,186

Total comprehensive loss — — — — — ( 328 ) ( 28,369 ) ( 28,697 )

Balances at April 27, 2024 — $ — 164,305 $ 8 $ 676,054 $ ( 519 ) $ ( 135,345 ) $ 540,198

Total comprehensive income — — — 82 52,183 52,265

Balances at May 3, 2025 171,169 $ 8 $ 765,173 $ ( 437 ) $ ( 83,162 ) $ 681,582

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(in thousands)

April 27, 2024 April 29, 2023 April 30, 2022

May 3, 2025 April 27, 2024 April 29, 2023

Cash flows from operating activities:

Net loss $ ( 28,369 ) $ ( 16,547 ) $ ( 22,176 )

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss) $ 52,183 $ ( 28,369 ) $ ( 16,547 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization 21,938 13,771 9,514

6 unchanged sentences

Inventories ( 70,470 ) 15,762 ( 24,379 )

Contract assets ( 12,117 ) 1,609 ( 4,673 )

Prepaid and other current assets ( 7,719 ) 512 2,808

Other current assets 4,596 ( 19,836 ) 2,121

Other non-current assets 2,089 ( 654 ) ( 7,977 )

Accounts payable 41,930 8,806 ( 3,843 )

Accrued expenses, compensation and other liabilities 5,703 491 9,601

Deferred revenue ( 391 ) 3,186 ( 2,882 )

Accrued compensation and other liabilities 15,933 5,312 3,677

Net cash provided by (used in) operating activities 65,083 32,737 ( 24,615 )

3 unchanged sentences

Maturities of short-term investments 406,777 169,754 50,000

Net cash used in investing activities ( 249,485 ) ( 130,941 ) ( 17,580 )

Net cash provided by (used in) investing activities 111,990 ( 249,485 ) ( 130,941 )

Cash flows from financing activities:

3 unchanged sentences

Tax withheld related to RSU settlement ( 9,253 ) ( 2,158 ) —

Proceeds from issuance of convertible preferred shares, net of issuance costs — — 7,245

Net cash provided by financing activities 175,276 4,885 204,181

Net cash provided by (used in) financing activities ( 7,728 ) 175,276 4,885

Effect of exchange rate changes on cash 41 ( 169 ) ( 68 )

5 unchanged sentences

Purchases of property and equipment included in accounts payable, accrued expenses and other liabilities $ 8,877 $ 8,287 $ 10,909

Conversion of convertible preferred shares into ordinary shares upon initial public offering $ — $ — $ 205,210

The accompanying notes are an integral part of these consolidated financial statements.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Description of Business and Basis of Presentation

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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 is an innovator in providing secure, high-speed connectivity solutions that deliver improved power and cost efficiency.

The Company’s mission is to redefine high-speed connectivity by delivering breakthrough solutions that enable the next generation of AI-driven applications.

The Company is committed to enabling faster, more reliable, more energy-efficient, and scalable solutions that support the ever-expanding demands of AI, cloud computing, and hyperscale networks.

The Company’s connectivity solutions are optimized for optical and electrical Ethernet applications, including the 100G, 200G, 400G, 800G and emerging 1.6T markets.

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All intercompany balances and transactions have been eliminated in consolidation.

Effective May 1, 2022, the Company changed its fiscal year to a 52- or 53-week period ending on the Saturday closest to April 30.

The Company’s fiscal year is a 52- or 53-week period ending on the Saturday closest to April 30.

The additional week in a 53-week year is added to the first quarter, making such quarter consist of 14 weeks.

Accordingly, every fifth or sixth fiscal year will have a 53-week period.

Our fiscal year ended April 27, 2024 (fiscal year 2024) is a 52-week fiscal year.

Fiscal year 2025, ending May 3, 2025, is a 53-week fiscal year.

The fiscal years ended April 27, 2024 (fiscal year 2024) and April 29, 2023 (fiscal year 2023) were both 52-week fiscal years.

The fiscal year ended May 3, 2025 (fiscal year 2025) was a 53-week fiscal year.

Reclassifications

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None of these reclassifications had an impact on reported net loss or cash flows for any of the periods presented.

Public Offering of Shares

On January 31, 2022, the Company completed an initial public offering (the “IPO”) of 20,000 thousand of its ordinary shares, par value $ 0.00005 per share (the “Shares”), at a public offering price of $ 10.00 per share.

The Company sold 18,384 thousand Shares and certain existing shareholders sold an aggregate of 1,616 thousand Shares.

The Company received net proceeds of $ 171.9 million after deducting underwriting discounts and commissions.

Immediately prior to the Closing, all of the Company’s outstanding Series A convertible preferred shares, Series B convertible preferred shares, Series C convertible preferred shares, Series D convertible preferred shares and Series D+ convertible preferred shares (collectively, the “Preferred Shares”) automatically converted into ordinary shares on a one -for-one basis, and such Preferred Shares were cancelled, retired and eliminated from the shares that the Company is authorized to issue and shall not be reissued by the Company.

In connection with the IPO, the underwriters were granted a 30-day option to purchase from the Company up to an additional 3,000 thousand of the Company’s ordinary shares at the public offering price, less underwriting discounts and commissions.

On February 7, 2022, the underwriters exercised the option to purchase additional shares in full, which purchase closed on February 10, 2022.

The Company received net proceeds of $ 28.1 million after deducting underwriting discounts and commissions.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Company incurred total IPO offering costs of $ 5.7 million, which were recorded as a reduction in additional paid-in capital as of April 30, 2022.

On December 8, 2023, the Company completed a public offering of 11,500 thousand of its ordinary shares, par value of $ 0.00005 per share, at $ 17.50 per share.

The Company sold 10,440 thousand shares and certain existing shareholders sold an aggregate of 1,060 thousand shares.

The Company received net proceeds of $ 173.4 million after deducting offering costs.

Significant Accounting Policies

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Actual results may differ from those estimates and such differences may be material to the financial statements.

As new events continue to evolve and additional information becomes available, any changes to these estimates and assumptions will be recognized in the consolidated financial statements as soon as they become known.

As new events continue to evolve and additional information becomes available, any

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

changes to these estimates and assumptions will be recognized in the consolidated financial statements as soon as they become known.

Foreign Currency

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Gains or losses from foreign currency transactions are included in the consolidated statements of operations as part of ‘other income (expense), net’.

Translation gains and losses are recorded in accumulated other comprehensive income as a component of shareholders' equity (deficit).

Translation gains and losses are recorded in accumulated other comprehensive income as a component of shareholders' equity.

Cash, Cash Equivalents and Short-term Investments

6 unchanged sentences

These investments are recorded at amortized cost basis.

If the cost of an individual investment exceeds its fair value, we evaluate, among other factors,

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment.

If the cost of an individual investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment.

Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established.

4 unchanged sentences

To manage credit risk, management performs ongoing credit evaluations of the customers’ financial condition, monitors payment performance, and assesses current economic conditions, as well as reasonable and supportable forecasts of future economic conditions, that may affect collectability of the outstanding receivables.

Management does not believe that an allowance for credit losses is needed as of April 27, 2024 or April 29, 2023 based on review of credit worthiness of the customers and their payment histories.

Management does not believe that an allowance for credit losses is needed as of May 3, 2025 or April 27, 2024 based on review of credit worthiness of the customers and their payment histories.

The Company values its inventory, which includes raw materials, assembly and test, and other manufacturing costs, at the lower of cost and net realizable value.

2 unchanged sentences

The Company regularly reviews inventory quantities on hand and records write-downs for excess and obsolete inventory based primarily on the shipment history and its estimated forecast of product demand.

These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction.

These factors are impacted by market and economic conditions,

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

technology changes, new product introductions and changes in strategic direction.

If the future demand for the Company’s services and products is less favorable than the Company’s forecasts, the value of the inventories may be required to be reduced, which could result in additional expense to the Company and affect its results of operations.

6 unchanged sentences

Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets.

Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the assets.

Useful lives by asset category are as follows:

1 unchanged sentence

Computer equipment and software 3

Furniture and fixtures 3

Laboratory equipment 5

Production equipment 2 - 7

Leasehold improvements

5 or remaining lease term

The Company determines if an arrangement is a lease at inception.

Operating lease right-of-use (ROU) assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

Operating lease ROU assets also include any initial direct

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

costs and prepayments less lease incentives.

Operating lease ROU assets also include any initial direct costs and prepayments less lease incentives.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

6 unchanged sentences

Fair value is determined based on the present value of estimated expected future cash flows using a discount rate commensurate with the risk involved, quoted market prices or appraised values, depending on the nature of the asset.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Revenue Recognition

The Company’s revenues consist of sale of its products, licensing of its IP and providing product and IP license engineering services.

Product sales consists of shipment of its ICs and AEC products.

The Company’s revenues consist of sales of its products, licensing of its IP and providing product and IP license engineering services.

Product sales consist of shipments of its ICs and AEC products.

IP license revenue includes fees from licensing of the Company’s SerDes IP and related support and royalties.

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The Company recognizes revenue upon transfer of control of promised goods and services in an amount that reflects the consideration it expects to receive in exchange for those goods and services.

Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price (SSP) basis.

The Company determines the SSP based on an observable standalone selling price when it is available, as well as other factors, including the price charged to customers and the Company’s overall pricing objectives, while maximizing observable inputs.

When SSPs are not directly observable, the Company uses the adjusted market assessment approach or residual approach, if applicable.

The determination of the SSP for certain of the Company’s IP requires an estimate of the fair value under the income approach, involving the estimation of future cash flow expected to be generated from the IP.

The Company also considers the constraint on estimates of variable consideration when estimating the total transaction price.

3 unchanged sentences

The Company recognizes a contract asset when it transfers products or services to a customer and the right to consideration is conditional on something other than the passage of time.

Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional.

The Company recognizes deferred

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

revenue when it has received consideration or an amount of consideration is due from the customer and it has a future obligation to transfer products or services.

Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional other than the passage of time.

The Company recognizes deferred revenue when it has received consideration or an amount of consideration is due from the customer and it has a future obligation to transfer products or services.

Product Sales - The Company transacts with customers primarily pursuant to standard purchase orders for delivery of products and generally allows customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date.

1 unchanged sentence

The Company recognizes product sales when it transfers control of promised goods in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods, net of accruals for estimated sales returns and rebates.

As of April 27, 2024 and April 29, 2023, the sales returns and rebate reserves were not material.

As of May 3, 2025 and April 27, 2024, the sales returns and rebate reserves were not material.

Product Engineering Services Revenue - Some product revenue contracts include non-recurring engineering services deliverables.

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Some IP license revenue contracts also include non-recurring engineering services deliverables, which were not material for any of the periods presented.

The Company recognizes revenue from these agreements similar to the method described under the caption “Product Engineering Services Revenue” above.

The Company recognizes revenue from these

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

agreements similar to the method described under the caption “Product Engineering Services Revenue” above.

In certain cases, the Company also charges licensees royalties related to the distribution or sale of products that use its technologies.

5 unchanged sentences

The Company accounts for the warrant issued to Amazon.com NV Investment Holdings LLC as an equity instrument, based on the specific terms of the warrant agreement.

When management determines that it is probable that a tranche of the warrant will vest and we recognize the related revenue, the grant date fair value of the associated tranche will be recognized in shareholders’ equity (deficit) and the underlying expense will be amortized as a reduction of revenue in proportion to the amount of related revenue recognized.

When management determines that it is probable that a tranche of the warrant will vest and we recognize the related revenue, the grant date fair value of the associated tranche will be recognized in shareholders’ equity and the underlying expense will be amortized as a reduction of revenue in proportion to the amount of related revenue recognized.

Cost of Revenue

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

assurance, warranty cost, amortization of intellectual property purchased from third-parties, write-down of inventories, and amortization and impairment of production equipment no longer in use.

Cost of revenue includes cost of materials, including wafers processed by third-party foundries, cost associated with packaging and assembly, testing and shipping, cost of personnel, including share-based compensation, depreciation of equipment associated with manufacturing support, logistics and quality assurance, warranty cost, amortization of intellectual property purchased from third-parties, write-down of inventories, and amortization and impairment of production equipment no longer in use.

Cost of revenue includes cost of product sales revenue, cost of product engineering services revenue and cost of IP license revenue.

2 unchanged sentences

Research and Development

Research and development expenses consist of costs incurred in performing research and development activities and includes salaries, share-based compensation, employee benefits, occupancy costs, pre-production engineering mask costs, overhead costs and prototype wafer, packaging and test costs.

Research and development costs are expensed as incurred.

Convertible Preferred Shares

The Company recorded all shares of convertible preferred shares at their respective fair values less issuance costs on the dates of issuance.

Share-Based Compensation

1 unchanged sentence

This guidance requires that all share-based compensation be recognized as an expense in the consolidated financial statements and that such cost be measured at the fair value of the award.

The Company amortizes share-based compensation expense under the straight-line attribution method over the vesting period of the share-based award.

The Company generally amortizes share-based compensation expense under the straight-line attribution method over the vesting period of the share-based award.

For performance-based awards, the Company amortizes share-based compensation expense under the graded vesting method over the vesting period of the award.

The Company has elected to use the Black-Scholes option pricing model to determine the fair value of ordinary share options on the dates of grant.

1 unchanged sentence

The Company estimates the expected life of options granted based on the simplified method.

The Company estimates the volatility of its ordinary shares on the date of grant based on the Company’s historical stock price volatility.

The Company estimates the volatility of

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

its ordinary shares on the date of grant based on the Company’s historical stock price volatility.

The Company has not paid and has no current plans to pay dividends.

2 unchanged sentences

The fair value of each share issued under the Company’s employee share purchase plan is estimated based on the Black-Scholes option pricing model.

Prior to the IPO, the absence of an active market for the Company’s ordinary shares required its board of directors, the members of which the Company believed had extensive business, finance and venture capital experience, to determine the fair value of its ordinary shares for purposes of granting options and for calculating share-based compensation expense for the periods presented.

The Company obtained contemporaneous third-party valuations to assist the board of directors in determining fair value.

These contemporaneous third-party valuations used the methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

All options granted were intended to be exercisable at a price per share not less than the fair value of the shares underlying those options on their respective dates of grant.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

The Company is subject to income taxes in the United States and certain foreign jurisdictions.

8 unchanged sentences

Interest and penalties related to uncertain tax positions are classified in the consolidated financial statements as income tax expense.

Net Loss Per Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period.

Diluted net loss per share is computed using the weighted average number of ordinary and potentially dilutive shares outstanding during the period using the treasury stock method.

Under the treasury stock method, the effect of equity awards outstanding is not included in the computation of diluted net loss per share for periods when their effect is anti-dilutive.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average number of ordinary shares outstanding during the period.

Diluted net income (loss) per share is computed using the weighted average number of ordinary and potentially dilutive shares outstanding during the period using the treasury stock method.

Under the treasury stock method, the effect of equity awards outstanding is not included in the computation of diluted net income (loss) per share for periods when their effect is anti-dilutive.

Segment Information

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Consequently, the Company has determined it operates and manages its business in one operating and one reportable segment.

See “Note 14 — Segment and Geographic Information” for the Company’s revenue by country and location of long-lived assets.

Recent Accounting Pronouncements Not Yet Adopted

See “Note 13.

Segment and Geographic Information” for the Company’s revenue by country and location of long-lived assets.

Accounting Pronouncement Recently Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis.

This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company is evaluating the impact that this new standard will have on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures , which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

This standard is effective for fiscal years beginning after May 4, 2025, and may be

This standard is effective for fiscal years beginning after December 15, 2023,

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

applied on a retrospective or prospective basis.

and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements.

The Company adopted this guidance in the fourth quarter of fiscal year 2025 on a retrospective basis.

The adoption did not have a material impact to the Company’s consolidated financial statements.

Refer to ‘Note 13.

Segment and Geographic Information’ for further details.

Recent Accounting Pronouncements Not Yet Adopted

This standard is effective for fiscal years beginning after December 15, 2024, 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.

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.

Concentrations

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The following table summarizes the significant customers’ accounts receivable and revenue as a percentage of total accounts receivable and total revenue, respectively:

Accounts Receivable April 27, 2024 April 29, 2023

Accounts Receivable May 3, 2025 April 27, 2024

Customer A 86 % 53 %

Customer B * 23 %

Customer C * 22 %

Revenue April 27, 2024 April 29, 2023 April 30, 2022

Revenue May 3, 2025 April 27, 2024 April 29, 2023

Customer A 67 % 39 % 46 %

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Customer D * * 12 %

Customer E * 13 % 18 %

Customer F * * 10 %

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

The Company believes that the concentration of credit risk in its trade receivables is substantially mitigated by the high level of credit worthiness of its customers and the relatively short collection terms.

The Company performs ongoing credit evaluations of its customers’ financial conditions and limits the amount of credit extended when deemed necessary based upon payment history and the customer’s current credit worthiness, but generally require no collateral.

The Company performs ongoing credit evaluations of its customers’ financial conditions and limits the

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

amount of credit extended when deemed necessary based upon payment history and the customer’s current credit worthiness, but generally require no collateral.

The Company currently outsources all of its integrated circuit manufacturing to Taiwan Semiconductor Manufacturing Company Limited with the remaining assembly and testing processes outsourced to other subcontractors primarily in Asia.

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Contract Balances

The contract assets are primarily related to the Company’s fixed-fee IP licensing arrangements and rights to consideration for performance obligations delivered but not billed as of April 27, 2024 and April 29, 2023.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

During the year ended April 27, 2024, the Company recognized $ 4.1 million of revenue that was included in the deferred revenue balance as of April 29, 2023.

Contract assets are presented within the “Other current assets” caption on the Consolidated Balance Sheet.

The Company had a contract asset balance of $ 9.9 million as of May 3, 2025, compared to $ 22.3 million as of April 27, 2024.

The decrease in contract assets of $ 12.4 million was primarily driven by IP licensing and engineering services arrangements where certain billing milestones were reached during fiscal 2025 while the criteria for recognition of revenue had previously been met.

Deferred revenue is presented within the “Other current liabilities” and “Other non-current liabilities” captions on the Consolidated Balance Sheet.

The Company had a deferred revenue balance of $ 1.5 million as of May 3, 2025, compared to $ 4.0 million as of April 27, 2024.

The decrease in deferred revenue of $ 2.5 million was primarily due to revenue recognized from a customer advance.

During the year ended May 3, 2025, the Company recognized $ 3.9 million of revenue that was included in the deferred revenue balance as of April 27, 2024.

During the year ended April 27, 2024, the Company recognized $ 4.1 million of revenue that was included in the deferred revenue balance as of April 29, 2023.

During the year ended April 29, 2023, the Company recognized $ 1.2 million of revenue that was included in the deferred revenue balance as of April 30, 2022.

During the year ended April 27, 2024, the increase in contract assets of $ 12.9 million was primarily driven by IP licensing and engineering services arrangements where certain billing milestones were reached during fiscal 2024 while the criteria for recognition of revenue had previously been met.

During the year ended April 27, 2024, the decrease in deferred revenue of $ 0.4 million was primarily due to revenue recognized from a customer advance.

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 obligation was approximately $ 11.6 million and the satisfied but unrecognized performance obligations was approximately $ 1.5 million as of April 27, 2024, which the Company expects to recognize over the next fiscal year.

The Company applied a performance constraint on the satisfied but unrecognized performance obligation due to uncertainty around the collectability of milestone payments.

The Company had previously applied performance constraints on certain milestones relating to an IP licensing and development contract for a total cash consideration of $ 43.5 million, executed in fiscal 2022.

As of April 27, 2024, the Company released the constraint on the last milestone, resulting in recognition of $ 10.0 million of revenue in the year ended April 27, 2024.

The contracted but unsatisfied performance obligation was approximately $ 4.8 million and the satisfied but unrecognized performance obligations was approximately $ 1.1 million as of May 3, 2025, which the Company expects to recognize over the next fiscal year.

The Company applied constraints on the satisfied but unrecognized performance obligations due to uncertainty around the collectability of milestone payments.

Customer Warrant

During fiscal year 2022, the Company issued a warrant to Amazon.com NV Investment Holdings LLC (Holder) to purchase an aggregate of up to 4,080 thousand of our ordinary shares at an exercise price of $ 10.74 per share (the “Customer Warrant”).

During fiscal year 2022, the Company issued a warrant to Amazon.com NV Investment Holdings LLC (Holder) to purchase an aggregate of up to 4.1 million of our ordinary shares at an exercise price of $ 10.74 per share (the “Customer Warrant”).

The exercise period of the Warrant is through the seven th anniversary of the issue date.

Upon issuance of the Warrant, 40 thousand of the shares issuable upon exercise of the Warrant vested immediately and the remainder of the shares issuable will vest in tranches over the contract term based on the amount of global payments by Holder and its affiliates to us, up to $ 201.0 million in aggregate payments.

A total of 1,080 thousand and 80 thousand Warrant shares were vested as of April 27, 2024 and April 29, 2023, respectively.

The shares issuable vest in tranches over the contract term based on the amount of global payments by Holder and its affiliates to the Company, up to $ 201.0 million in aggregate payments.

A total of 4.1 million and 1.1 million Warrant shares were vested as of May 3, 2025 and April 27, 2024, respectively.

The grant date fair value of the Warrant share was determined at $ 4.65 per share using the Black-Scholes option pricing model.

The grant date fair value of the Warrant share was estimated using the following assumptions:

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

At Grant Date

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Fair value per ordinary share $ 10.74

During the fiscal years ended April 27, 2024, April 29, 2023 and April 30, 2022, the Company recognized $ 3.9 million, $ 1.2 million and $ 0.6 million, respectively, as contra revenue within the product sales revenue on the consolidated statements of operations.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

During the fiscal years ended May 3, 2025, April 27, 2024 and April 29, 2023, the Company recognized $ 13.2 million, $ 3.9 million and $ 1.2 million, respectively, as contra revenue within the product sales revenue on the consolidated statements of operations.

The contra revenue impact associated with the Warrant has been fully amortized as of May 3, 2025.

Fair Value Measurements

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Pricing sources may 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 as of April 27, 2024 and April 29, 2023 (in thousands).

April 27, 2024

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 May 3, 2025 and April 27, 2024 (in thousands).

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Level 1 Level 2 Level 3 Total

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Money market funds $ 148,036 $ — $ — $ 148,036

Certificates of deposit

— $ 65,137 — $ 65,137

Short-term investments:

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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 April 27, 2024 and April 29, 2023, there were no unrealized loss or gains associated with the Company’s financial instruments.

The interest income recognized during the years ended April 27, 2024 and April 29, 2023 was $ 15.3 million and $ 4.7 million, respectively.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

As of May 3, 2025 and April 27, 2024, there were no unrealized loss or gains associated with the Company’s financial instruments.

The interest income recognized during the years ended May 3, 2025, April 27, 2024 and April 29, 2023 was $ 18.8 million, $ 15.3 million and $ 4.7 million, respectively.

Supplemental Financial Information

Inventories consisted of the following (in thousands):

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Raw materials $ 12,734 $ 9,415

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$ 90,029 $ 25,907

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Property and Equipment, Net

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

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Production equipment $ 44,789 $ 27,608

Computer equipment and software 27,901 18,271

Laboratory equipment 21,944 19,840

Production equipment 27,608 19,783

Leasehold improvements 3,222 2,525

4 unchanged sentences

$ 63,631 $ 43,665

Depreciation and amortization expense, excluding the assets impairment charges, for the years ended April 27, 2024, April 29, 2023 and April 30, 2022, was $ 13.8 million, $ 9.5 million, and $ 4.8 million, respectively.

Depreciation and amortization expense, excluding the asset impairment charges, for the years ended May 3, 2025, April 27, 2024 and April 29, 2023, was $ 21.9 million, $ 13.8 million, and $ 9.5 million, respectively.

Construction in progress and production equipment primarily includes mask set costs capitalized relating to the Company’s products.

During the years ended April 27, 2024, April 29, 2023 and April 30, 2022, the Company recorded impairment charges of $ 0.8 million, $ 2.4 million and $ 4.9 million, respectively.

During the years ended May 3, 2025, April 27, 2024 and April 29, 2023, the Company recorded impairment charges of $ 0.9 million, $ 0.8 million and $ 2.4 million, respectively.

Generally, the impairment charges were related to impairment of property and equipment or third-party IP licenses for future products that did not reach production qualification.

Accrued Expenses and Other Current Liabilities

Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Accrued expenses $ 12,202 $ 8,832

Accruals relating to inventory purchases 10,164 778

Current payables relating to purchases of property and equipment 8,420 5,950

Current portion of operating lease liabilities 3,342 2,741

Other 1,328 3,902

$ 35,456 $ 22,203

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Other Non-current Liabilities

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

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Non-current payables relating to purchases of property and equipment $ 5,762 $ 4,950

Non-current deferred revenue 128 380

Other non-current liabilities 1,509 1,031

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Non-Cancelable Purchase Obligations

Total future non-cancelable purchase obligations as of April 27, 2024 were as follows (in thousands):

Total future non-cancelable purchase obligations as of May 3, 2025 were as follows (in thousands):

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Fiscal Year Purchase Commitments to Manufacturing Vendors Technology License Fees Total

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2029 — 350 350

2029 2,153 350 2,503

Thereafter — — —

Total unconditional purchase commitments $ 43,488 $ 20,723 $ 64,211

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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.

As of April 27, 2024, the total value of non-cancelable inventory purchase orders payable within the next one year that were committed with the Company’s third-party subcontractors was approximately $ 39.6 million.

As of May 3, 2025, the total value of non-cancelable inventory purchase orders payable within the next one year that were committed with the Company’s third-party subcontractors was approximately $ 30.3 million.

Such purchase commitments are included in the preceding table.

Additionally, the Company has committed purchases of production mask sets amounting to $ 27.0 million, relating to future products yet to be released, which will be capitalized into product equipment when they are received.

The Company has a manufacturing supply capacity reservation agreement with an assembly subcontractor as of April 27, 2024.

The Company has a manufacturing supply capacity reservation agreement with an assembly subcontractor as of May 3, 2025.

Under this arrangement, the Company has paid refundable deposits to the supplier in exchange for reserved manufacturing production capacity over the remaining term of the agreement, which approximates five years .

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Such purchase commitments are included in the preceding table.

In addition, the Company had refundable deposits of $ 8.6 million as of April 27, 2024, of which $ 0.4 million was recorded in prepaid expenses and other

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

current assets and $ 8.2 million was recorded in other non-current assets on the consolidated balance sheets.

In addition, the Company had refundable deposits of $ 8.1 million as of May 3, 2025, of which $ 2.2 million was recorded in other current assets and $ 5.9 million was recorded in other non-current assets on the consolidated balance sheets.

Warranty Obligations

The Company has contractual commitments to various customers, which could require the Company to incur costs to repair an epidemic defect with respect to its products outside of the normal warranty period if such defect were to occur.

The Company’s products carry a standard one-year warranty.

The Company’s products generally carry a standard one-year warranty.

The Company’s warranty expense has not been material in the periods presented.

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The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnifications.

Accordingly, the Company has no liabilities recorded for these agreements as of April 27, 2024 and April 29, 2023.

Accordingly, the Company has no liabilities recorded for these agreements as of May 3, 2025 and April 27, 2024.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Legal Proceedings

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No accruals for loss contingencies or recognition of actual losses have been recorded in any of the periods presented.

Convertible Preferred Shares

The Company had previously issued Series A convertible preferred shares, Series B convertible preferred shares, Series C convertible preferred shares, Series D convertible preferred shares and Series D+ convertible preferred shares (collectively, the “Preferred Shares”).

Immediately prior to the completion of the IPO, all of the then outstanding 52,060 thousand shares of the Company’s convertible Preferred Shares were automatically converted into an aggregate 52,060 thousand shares of ordinary share on a one -for-one basis, and such Preferred Shares were cancelled, retired and eliminated from the shares that the Company is authorized to issue and shall not be reissued by the Company.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

A summary of the preferred shares prior to the conversion into ordinary shares consisted of the following:

Series Shares Authorized (in thousands) Shares Issued and Outstanding (in thousands) Per Share Liquidation Preference Aggregate Liquidation Preference (in thousands)

Series A 8,313 8,313 $ 1.00 $ 8,313

Series B 8,593 8,593 2.10 18,000

Series C 5,245 5,245 4.29 22,500

Series D 20,028 20,028 4.99 100,000

Series D+ 9,881 9,881 5.81 57,361

52,060 52,060 $ 206,174

The rights, privileges, and preferences of the Series A, Series B, Series C, Series D, and Series D+ convertible preferred shares were as follows:

Conversion Rights - Each preferred share was convertible, at the option of the holder, at any time, and without the payment of any additional consideration, into such number of fully paid ordinary share as was determined by dividing the applicable original issue price for each such series of preferred shares by the applicable conversion price in effect at the time of the conversion.

The conversion price per share for each series of preferred share shall initially be equal to the original issue price of such series, which means $ 1.00 per share for Series A, $ 2.10 per share for Series B, $ 4.29 per share for Series C, $ 4.99 per share for Series D and $ 5.81 per share for Series D+.

The conversion price shall be subject to adjustment in order to adjust the number of ordinary shares into which the preferred shares are convertible.

Each share of Series A, B, C, D and D+ convertible preferred share automatically converted into the number of ordinary shares at the conversion rate at the time in effect upon the closing of a public offering of ordinary shares which results in at least $ 25.0 million of proceeds to the Company at a per share price not less than $ 9.99 or with the vote or written consent of the holders of a majority of the then outstanding preferred shares, voting as a separate class, to convert their preferred shares at the then‐effective Conversion Price.

Dividends - The holders of preferred shares were entitled to receive noncumulative dividends when and if declared by the Company’s board of directors.

The holders of preferred shares were entitled to receive dividends prior and in preference to any payment of any dividend on ordinary shares in an amount equal to 8 % of the original issue price per share of such preferred share.

After payment of such dividends, any additional dividends shall be distributed among all holders of ordinary shares and preferred shares in proportion to the number of ordinary shares that would be held by each such holder if all preferred shares were converted to ordinary shares at the then effective conversion rate.

no dividends had been declared by the board of directors from inception through the date of conversion into ordinary shares.

Liquidation Rights - In the event of any sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company or the exclusive license of all or substantially all of the Company’s intellectual property used in generating all or substantially all of the Company’s revenues, reorganization, consolidation, acquisition, merger, liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of preferred shares shall be entitled to receive in preference to the holders of ordinary shares, an amount per share equal to the liquidation preference, plus any declared but unpaid dividends.

After payment of the liquidation preference to holders of preferred shares, the remaining assets of the Company were available for distribution on a pro rata basis to the holders of ordinary shares.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Voting Rights - The holders of the convertible preferred shares were entitled to the number of votes equal to the number of ordinary shares into which such convertible preferred shares could be converted on the record date.

Ordinary Shares

In connection with the consummation of the IPO, the Company filed the Amended and Restated Memorandum of Association with Cayman Islands, which authorized 1,000,000 thousand ordinary shares, par value $ 0.00005 per share and 50,000 thousand convertible preferred shares.

The Company filed the Amended and Restated Memorandum of Association with Cayman Islands, which authorized 1,000 million ordinary shares, par value $ 0.00005 per share and 50 million preferred shares.

Each ordinary share is entitled to one vote per share.

The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors, subject to the prior rights of holders of all other classes of shares outstanding.

Share Issuances Subject to Repurchase

The Company has issued ordinary shares to certain employees that are subject to vesting periods pursuant to the respective share purchase agreements (Restricted Share Award or RSA).

In addition, the Company allows early exercise for unvested ordinary share options under its 2015 Stock Plan (as defined in Note 10 to the consolidated financial statements).

In regard to the ordinary shares purchased, but not vested, the Company has the right to repurchase shares at the original issue price in the event of termination of services.

As of April 27, 2024, 17 thousand shares from share option early exercises remained subject to the Company’s repurchase rights.

As of April 29, 2023, 99 thousand shares from share option early exercises remained subject to the Company’s repurchase rights.

These shares are excluded from ordinary shares outstanding.

Share Incentive Plan

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As of January 27, 2022, the 2015 Plan has ceased to be available for grants of new awards.

Prior to the aforementioned cessation of the 2015 Plan for new grants and as of April 30, 2022, 26,000 thousand ordinary shares were authorized for issuance under the 2015 Plan.

Prior to the aforementioned cessation of the 2015 Plan for new grants and as of April 30, 2022, 26.0 million ordinary shares were authorized for issuance under the 2015 Plan.

Options under the 2015 Plan may be granted for periods of up to ten years and at prices no less than 100 % of the estimated fair value of the shares on the date of grant as determined by the Company’s Board of Directors.

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A summary of information related to share option activity, excluding options early exercised, is as follows:

Outstanding Share Options (in thousands) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in millions)

Outstanding Share Options (in millions) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in millions)

Balances as of April 30, 2022 11.4 $ 1.94 7.12 $ 103.4

Options granted 702

Options exercised and vested ( 2.2 ) $ 1.48

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Options canceled/ forfeited — $ 4.58

Balances as of April 27, 2024 6,421 $ 1.97 5.30 $ 106.5

Vested or expected to vest as of April 27, 2024

Balances as of May 3, 2025 3.5 $ 2.23 4.79 $ 162.8

Vested or expected to vest as of May 3, 2025

3.5 $ 2.23 4.79 $ 162.8

Exercisable as of April 27, 2024

Exercisable as of May 3, 2025

3.5 $ 2.21 4.78 $ 161.6

During the years ended April 27, 2024, April 29, 2023 and April 30, 2022, the total intrinsic value of options exercised, including options early exercised, was $ 36.2 million, $ 22.2 million and $ 28.4 million, respectively.

The weighted-average grant date fair value of options vested was $ 1.52 , $ 1.41 and $ 1.36 per share for the years ended April 27, 2024, April 29, 2023 and April 30, 2022, respectively.

The total grant date fair value of share options that vested was $ 13.3 million, $ 15.6 million and $ 4.5 million as of April 27, 2024, April 29, 2023 and April 30, 2022, respectively.

As of April 27, 2024, the total unrecognized compensation cost was $ 2.0 million related to share options, which are expected to be recognized over a weighted-average period of 0.72 years.

The Company estimated the fair value of share options using the Black-Scholes option-pricing model.

The fair value of employee share options is amortized on a straight-line basis over the requisite service period of the awards.

The fair values of the employee share options granted in the years presented were estimated using the following weighted-average assumptions:

April 30, 2022

Expected volatility 41.29 % - 42.31 %

Weighted-average expected term (in years) 5.96

Risk-free interest rate 0.69 % - 1.23 %

Dividend yield — %

Weighted-average grant date fair value per share $ 6.26

During the years ended May 3, 2025, April 27, 2024 and April 29, 2023, the total intrinsic value of options exercised was $ 130.5 million, $ 36.2 million and $ 22.2 million, respectively.

The weighted-average grant date fair value of options vested was $ 1.64 , $ 1.52 and $ 1.41 per share for the years ended May 3, 2025, April 27, 2024 and April 29, 2023, respectively.

The total grant date fair value of share options that vested was $ 6.8 million, $ 13.3 million and $ 15.6 million as of May 3, 2025,April 27, 2024 and April 29, 2023, respectively.

As of May 3, 2025, the total unrecognized compensation cost was $ 0.1 million related to share options, which are expected to be recognized over a weighted-average period of 0.21 years.

2021 Long-Term Incentive Plan

In December 2021, the Company adopted the 2021 long-term incentive plan (the 2021 Plan).

Upon the adoption, the 2021 Plan had 19,907 thousand ordinary shares reserved for issuance.

Awards granted under the 2021 Plan may include, but are not limited to, options and restricted share units (RSU).

Options granted under the 2021 Plan generally have a term of 10 years and generally must be issued at prices equal to the fair market value of the share on the date of grant.

RSU awards are denominated in ordinary

Upon the adoption, the 2021 Plan had 19.9 million ordinary shares reserved for issuance.

Awards granted under the 2021 Plan may include, but are not limited to, options, time-based restricted share units (RSUs) and performance-based restricted share units (PSUs).

RSU and PSU awards are denominated in ordinary shares, but may be settled in cash or shares upon vesting, as determined by the Company at the time of grant.

None of the awards granted under the 2021 Plan as of May 3, 2025 allowed cash settlement.

Awards under the 2021 Plan generally vest over 4 years.

As of May 3, 2025, 18.9 million shares remained available for future issuance under the 2021 Plan.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

shares, but may be settled in cash or shares upon vesting, as determined by the Company at the time of grant.

None of the awards granted under the 2021 Plan as of April 27, 2024 allowed cash settlement.

Awards under the 2021 Plan generally vest over 4 years.

A summary of RSU activity is as follows:

Number of shares (in thousands)

A summary of time-based RSU activity is as follows:

Number of shares (in millions)

Weighted-Average Grant Date Fair Value Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (in millions)

10 unchanged sentences

10.1 $ 16.11 1.52 $ 188.2

Expected to vest as of April 27, 2024

Granted 3.9 $ 59.10

Vested ( 4.0 ) $ 15.53

Canceled/ forfeited ( 0.6 ) $ 20.05

Balances as of 5/03/2025

9.5 $ 33.88 1.39 $ 458.1

As of April 27, 2024, 22,309 thousand shares remained available for future issuance under the 2021 Plan.

As of April 27, 2024, unamortized compensation expense related to RSUs was $ 151.9 million.

Expected to vest as of May 03, 2025

9.5 $ 33.88 1.39 $ 458.1

As of May 3, 2025, unamortized compensation expense related to RSUs was $ 318.6 million.

The unamortized compensation expense for RSUs will be amortized on a straight-line basis and is expected to be recognized over a weighted-average period of 2.66 years.

During fiscal year 2025, the Company granted 0.2 million PSUs to certain named executive officers which will be eligible to become earned between 0 % and 200 % of target levels based on the Company’s achievement of specified revenue goals for the fiscal year ending May 2, 2026.

At the end of such fiscal year, the Compensation Committee will measure the achievement of such goals and determine the number of Refresh PSUs that have become earned based on performance (the Achievement PSUs).

The Achievement PSUs will then be subject to a service-based vesting requirement over an additional three-year period, with 25 % on the number of Achievement PSUs vesting on each of June 10, 2026, June 10, 2027, June 10, 2028 and June 10, 2029.

In the event of a termination of service due to an executive’s death or disability, any unvested PSUs will vest in full as of the date of termination with respect to the number of Achievement PSUs (or target PSUs, if the number of Achievement PSUs has not yet been determined).

As of May 3, 2025, the PSUs remain unvested and there were no cancellations/forfeitures.

The weighted-average grant date fair value of the PSUs was $ 43.70 with a weighted-average remaining contractual term of 2.5 years and aggregate intrinsic value of $ 10.1 million As of May 3, 2025, unamortized compensation expense related to PSUs was $ 17.1 million.

Employee Stock Purchase Plan

In January 2022, the Company adopted the Employee Stock Purchase Plan (ESPP).

Under the ESPP, a total of 3,801 thousand shares have been authorized for the grant of shares and participants can purchase the Company’s ordinary shares using payroll deductions, which may not exceed 15 % of their total cash compensation.

Under the ESPP, a total of 3.8 million shares have been authorized for the grant of shares and participants can purchase the Company’s ordinary shares using payroll deductions, which may not exceed 15 % of their total cash compensation.

Pursuant to the terms of the ESPP, the “look-back” period for the share purchase price is 24 months.

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Participants will be granted the right to purchase ordinary shares at a price per share that is 85 % of the lesser of the fair market value of the shares at (i) the participant’s entry date into the two-year offering period or (ii) the end of each six-month purchase period within the offering period.

During the years ended April 27, 2024 and April 29, 2023, 281 thousand and 247 thousand shares were issued under the ESPP, respectively.

No shares were issued during the year ended April 30, 2022.

As of April 27, 2024, 6,207 thousand shares remained available for future issuance under the ESPP.

The following weighted-average assumptions to calculate the fair value of ordinary shares to be issued under the ESPP on the date of grant using the Black-Scholes option pricing model in the periods presented:

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

April 27, 2024 April 29, 2023 April 30, 2022

Estimated fair value 6.04 4.27 4.56

During the years ended May 3, 2025, April 27, 2024 and April 29, 2023, 0.2 million, 0.3 million and 0.2 million shares were issued under the ESPP, respectively.

As of May 3, 2025, 6.0 million shares remained available for future issuance under the ESPP.

May 3, 2025 April 27, 2024 April 29, 2023

Grant date fair value 10.51 6.04 4.27

Expected volatility 74.99 % 56.13 % 34.00 %

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The following table summarizes share-based compensation cost included in the consolidated statements of operations (in thousands).

April 27, 2024 April 29, 2023 April 30, 2022

May 3, 2025 April 27, 2024 April 29, 2023

Cost of revenue $ 1,194 $ 1,131 $ 634

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The Company's leases include office space located in the United States and other international locations, which are all classified as operating leases.

The Company’s leases have remaining lease terms generally between one year and eight years .

Operating leases are included in right of use assets, accrued expenses and other current liabilities, and non-current operating lease liabilities on the Company’s consolidated balance sheets.

The Company’s leases have remaining lease terms generally between 1 year and 6 years.

Operating leases are included in right of use assets, other current liabilities, and non-current operating lease liabilities on the Company’s consolidated balance sheets.

The Company does not have any finance leases.

Lease expense and supplemental cash flow information are as follows (in thousands):

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Operating lease expenses $ 4,186 $ 3,855

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Notes to Consolidated Financial Statements

The aggregate future lease payments for operating leases as of April 27, 2024 are as follows (in thousands):

The aggregate future lease payments for operating leases as of May 3, 2025 are as follows (in thousands):

Fiscal Year Operating leases

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Present value of lease liabilities $ 16,035

As of April 27, 2024, the weighted average remaining lease term for the Company's operating leases was 5.89 years and the weighted average discount rate used to determine the present value of the Company's operating leases was approximately 5.96 %.

As of May 3, 2025, the weighted average remaining lease term for the Company's operating leases was 4.97 years and the weighted average discount rate used to determine the present value of the Company's operating leases was approximately 6.34 %.

Income (loss) before provision (benefit) for income taxes consists of the following (in thousands):

April 27, 2024 April 29, 2023 April 30, 2022

May 3, 2025 April 27, 2024 April 29, 2023

United States $ 13,795 $ 8,611 $ 4,469

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The components of income tax expense (benefit) are summarized as follows (in thousands):

April 27, 2024 April 29, 2023 April 30, 2022

May 3, 2025 April 27, 2024 April 29, 2023

Federal $ — $ 2 $ ( 24 )

State 3 2 ( 25 )

International 2,253 1,484 762

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The tax effects of significant items comprising the Company’s deferred taxes are as follows (in thousands):

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Deferred tax assets:

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A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized.

As of April 27, 2024, the Company recorded $ 23.3 million of valuation allowance.

As of May 3, 2025, the Company recorded $ 69.5 million of valuation allowance.

In fiscal year 2025, the valuation allowance increased by $ 46.2 million.

The Company continues to maintain a valuation allowance on its U.S.

R&D credits and recorded an increase to its valuation allowance of $ 6.7 million.

During the fourth quarter of fiscal year 2024, the Company determined that utilization of its net deferred tax assets in the U.S.

was limited and accordingly recorded an increase to its valuation allowance of $ 7.3 million.

This determination was made after evaluating both the positive and negative evidence regarding the recoverability of the Company’s net U.S.

deferred tax assets.

The Company considers all available evidence such as its earnings history including the existence of cumulative income or losses, reversals of taxable temporary differences, projected future taxable income, and tax planning strategies and determined that negative evidence overweighted positive evidence with respect to the ability to realize its net U.S.

deferred tax assets.

The Company continues to maintain a full valuation allowance on its U.S.

net deferred tax assets.

The Company will continue to assess the future realization of its deferred tax assets in each applicable jurisdiction and adjust the valuation allowance accordingly.

As of April 27, 2024, the Company had U.S.

As of May 3, 2025, the Company had U.S.

federal and state net operating loss carryforwards of approximately $ 130.7 million and $ 15.4 million, respectively.

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The state net operating loss carryforwards will begin to expire in fiscal 2043.

As of April 27, 2024, the Company had U.S.

As of May 3, 2025, the Company had U.S.

federal and state research credits of $ 29.2 million and $ 19.0 million, respectively.

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The state research credits have no expiration date.

As of April 27, 2024, the Company had no foreign tax credit carryover.

As of May 3, 2025, the Company had no foreign tax credit carryover.

Internal Revenue Code Section 382 limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company.

1 unchanged sentence

A summary activity of the valuation allowance is as follows (in thousands):

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

April 27, 2024 April 29, 2023 April 30, 2022

May 3, 2025 April 27, 2024 April 29, 2023

Beginning valuation allowance

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Foreign earnings may be subject to withholding taxes in local jurisdictions if they are distributed.

The amount of cumulative undistributed earnings that are permanently reinvested that could be subject to withholding taxes were $ 25.7 million as of April 27, 2024.

The amount of cumulative undistributed earnings that are permanently reinvested that could be subject to withholding taxes were $ 47.1 million as of May 3, 2025.

The Company intends to reinvest these earnings indefinitely.

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subsidiaries.

The applicable statutory rate in Cayman Islands is zero for the Company for the years ended April 27, 2024, April 29, 2023 and April 30, 2022.

The applicable statutory rate in Cayman Islands is zero for the Company for the years

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

ended May 3, 2025, April 27, 2024 and April 29, 2023.

For purposes of the reconciliation between the provision for income taxes at the statutory rate and the effective tax rate, a U.S.

statutory tax rate of 21% for the years ended April 27, 2024, April 29, 2023 and April 30, 2022 is applied as follows:

April 27, 2024 April 29, 2023 April 30, 2022

statutory tax rate of 21% for the years ended May 3, 2025, April 27, 2024 and April 29, 2023 is applied as follows:

May 3, 2025 April 27, 2024 April 29, 2023

Statutory federal tax expense rate 21 % 21 % 21 %

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A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Beginning gross unrecognized tax benefits $ 4,574 $ 2,865

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The Company recognizes the tax effects of an uncertain tax position only if it is more likely than not to be sustained based solely on such position’s technical merits as of the reporting date and only in an amount more likely than not to be sustained upon review by the tax authorities.

Included in the balance of unrecognized tax benefits as of April 27, 2024 and April 29, 2023 were potential benefits of $ 4.6 million and $ 2.9 million, respectively, which if recognized, would potentially affect the effective tax rate.

Included in the balance of unrecognized tax benefits as of May 3, 2025 and April 29, 2024 were potential benefits of $ 9.4 million and $ 4.6 million, respectively, which if recognized, would potentially affect the effective tax rate.

If the unrecognized tax benefits were recognized, it would result in additional deferred tax assets, which are expected to require a full valuation allowance based on the Company’s current valuation allowance position.

Unrecognized tax benefits are not expected to significantly increase or decrease within the next 12 months.

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

For the years ended April 27, 2024, April 29, 2023 and April 30, 2022, the Company’s current tax provision was not impacted by interest and penalties.

For the years ended May 3, 2025, April 29, 2024 and April 29, 2023, the Company’s current tax provision was not impacted by interest and penalties.

The Company files U.S.

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For the Company’s international subsidiaries, the tax years that remain open to examination vary based on the year that each entity began operating.

Net Loss Per Share

Net loss per share was determined as follows for the years presented (in thousands, except per share amounts):

April 27, 2024 April 29, 2023 April 30, 2022

Net loss $ ( 28,369 ) $ ( 16,547 ) $ ( 22,176 )

Weighted-average shares outstanding used in basic and diluted calculation 155,091 146,556 88,398

Net loss per share attributable to ordinary shareholders

Basic and diluted $ ( 0.18 ) $ ( 0.11 ) $ ( 0.25 )

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Net Income (Loss) Per Share

Net income (loss) per share was determined as follows for the years presented (in thousands, except per share amounts):

May 3, 2025 April 27, 2024 April 29, 2023

Net income (loss) $ 52,183 $ ( 28,369 ) $ ( 16,547 )

Weighted-average shares outstanding used in basic calculation 167,505 155,091 146,556

Effect of dilutive shares

Share-based compensation awards 10,611 — —

Customer Warrant 3,042 — —

Weighted-average shares outstanding used in diluted calculation 181,158 155,091 146,556

Net income (loss) per share attributable to ordinary shareholders

Basic $ 0.31 $ ( 0.18 ) $ ( 0.11 )

Diluted $ 0.29 $ ( 0.18 ) $ ( 0.11 )

Potential dilutive securities include dilutive ordinary shares from share-based awards attributable to the assumed exercise of share options, restricted share 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 loss per share if their effect is anti-dilutive.

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding for the years ended April 27, 2024, April 29, 2023 and April 30, 2022 because such securities have an anti-dilutive impact due to losses reported:

April 27, 2024 April 29, 2023 April 30, 2022

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding for the years ended May 3, 2025, April 27, 2024 and April 29, 2023 :

May 3, 2025 April 27, 2024 April 29, 2023

Share-based compensation awards 3,349 16,777 15,194

1 unchanged sentence

3,349 20,857 19,274

Segment and Geographic Information

As discussed in “Note 2.

Significant Accounting Policies,” the Company operates in one reportable segment.

The CODM uses net income or loss for the purposes of making operating decisions, allocating resources and evaluating financial performance.

The measure of segment assets is reported on the consolidated balance sheet as total assets, although the CODM does not evaluate asset information for

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Segment and Geographic Information

As discussed in “Note 2 — Significant Accounting Policies,” the Company operates in one reportable segment.

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):

May 3, 2025 April 27, 2024 April 29, 2023

Revenue $ 436,775 $ 192,970 $ 184,193

Cost of revenue 153,866 73,538 78,000

Personnel related expenses 95,269 69,630 59,089

Share-based compensation 76,160 37,890 22,883

Other segment items* 59,297 40,281 40,768

Net income (loss) $ 52,183 $ ( 28,369 ) $ ( 16,547 )

*Other segment items primarily include lease expenses, external professional services expenses, depreciation and amortization, interest income and tax provision (benefit).

The following table summarizes revenue disaggregated by primary geographical market based on destination of shipment for products, and location of contracting entity for IP and engineering services, which may differ from the end customer’s principal offices (in thousands):

April 27, 2024 April 29, 2023 April 30, 2022

May 3, 2025 April 27, 2024 April 29, 2023

Hong Kong $ 243,727 $ 70,162 $ 9,646

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The following table presents long-lived assets information based on the physical location of the assets by geographic region (in thousands):

April 27, 2024 April 29, 2023

May 3, 2025 April 27, 2024

Property and equipment, net:

4 unchanged sentences

$ 63,631 $ 43,665

Credo Technology Group Holding Ltd

Notes to Consolidated Financial Statements

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data