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What changed in Credo Technology Group Holding Ltd's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Credo Technology Group Holding Ltd's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+273 added−262 removedSource: 10-K (2025-07-02) vs 10-K (2024-06-24)

Top changes in Credo Technology Group Holding Ltd's 2025 10-K

273 paragraphs added · 262 removed · 222 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

49 edited+12 added−10 removed47 unchanged
Biggest changeOur Retimers, Gearboxes and MACsec/IPSEC devices facilitate PAM4/NRZ backplane and line card connectivity at up to 112G per lane. Our components enable platforms with capabilities reaching 52.1 Terabits per second (Tbps), featuring 800G ports. Dedicated and multi-mode Retimers, Gearboxes and MACsecs, each built around our low-power, high-performance SerDes IP, enable our customers to meet performance, power and price objectives.
Biggest changeLine Card PHYs: We are enabling data connectivity and security in hyperscale and enterprise data centers with leading edge, low-power line card PHY solutions. Our Retimers, Gearboxes and MACsec devices facilitate PAM4/NRZ backplane and line card connectivity at up to 112G per lane. Our components enable platforms with capabilities reaching 52.1 Terabits per second (Tbps), featuring 800G ports.
For additional information concerning regulatory compliance and a discussion of the risks associated with governmental regulations that may materially impact us, refer to Item 1A “Risk Factors” of this Annual Report on Form 10-K. Available Information Founded in 2008, Credo has an international footprint with offices in North America and Asia.
For additional information concerning regulatory compliance and a discussion of the risks associated with governmental regulations that may materially impact us, refer to Item 1A “Risk Factors” of this Annual Report on Form 10-K. Available Information 16 Founded in 2008, Credo has an international footprint with offices in North America and Asia.
Our global training and development program focuses on harassment-free workplace and diversity topics, as well as ethics and compliance. Our company-wide compensation structure is intended to align incentives with the success of Credo. We believe that this fosters collaboration within the company, as all teams are working together towards 15 the same goals.
Our global training and development program focuses on harassment-free workplace and diversity topics, as well as ethics and compliance. Our company-wide compensation structure is intended to align incentives with the success of Credo. We believe that this fosters collaboration within the company, as all teams are working together towards the same goals.
Our direct sales force is supported by marketing, business development and Field Application Engineer teams across our regions. These teams are organized to align with our product verticals. Manufacturing and Suppliers We utilize a fabless business model, working with a network of third parties to manufacture, assemble and test our connectivity products.
Our direct sales force is supported by marketing, business development and Field Application Engineer teams across our regions. These teams are organized to align with our product verticals. 13 Manufacturing and Suppliers We utilize a fabless business model, working with a network of third parties to manufacture, assemble and test our connectivity products.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Competition We believe we are the only company in our industry offering a complete suite of high-performance connectivity solutions. Our competitors typically compete with us with respect to some, but not all, of our 14 solutions.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors. Competition We believe we are the only company in our industry offering a complete suite of high-performance connectivity solutions. Our competitors typically compete with us with respect to some, but not all, of our solutions.
We cannot be sure that our pending patent applications that we have filed or may file in the future will result in issued patents, and we can give no assurance that any patents that have issued or might issue in the future will protect our current or future products, will provide us with any competitive advantage, and will not be challenged, invalidated or circumvented.
We cannot be sure 14 that our pending patent applications that we have filed or may file in the future will result in issued patents, and we can give no assurance that any patents that have issued or might issue in the future will protect our current or future products, will provide us with any competitive advantage, and will not be challenged, invalidated or circumvented.
Now in their fourth generation, Credo DSPs operating at 50G/lane and 100G/lane PAM4 offer an exceptional combination of performance, energy efficiency, and value by integrating such features as laser drivers, DSP based signal equalization, non-linear distortion compensation, transmitter signal conditioning and long reach capable host side SerDes. The Credo Seagull family of DSPs operate at 50G/lane.
Now in their fifth generation, Credo DSPs operating at 50G/lane and 100G/lane PAM4 offer an exceptional combination of performance, energy efficiency and value by integrating such features as laser drivers, DSP based signal equalization, non-linear distortion compensation, transmitter signal conditioning and long reach capable host side SerDes. The Credo Seagull family of DSPs operate at 50G/lane.
These relationships with leading hyperscalers, OEMs, ODMs and optical module manufacturers give us insight and extensive visibility into product designs, design specifications, development, production timelines, product implementations and product innovations. Our direct relationships enable us to better anticipate our customer needs and will facilitate our ability to sell multiple connectivity solutions to our customers over time.
These relationships with leading hyperscalers, OEMs, ODMs and optical module manufacturers give us insight and extensive visibility into product designs, design specifications, development, production timelines, product implementations and product innovations. Our direct relationships enable us to better anticipate our customer needs and serve to facilitate our ability to sell multiple connectivity solutions to our customers over time.
Our employees are our most valuable assets. Our core philosophy is that our employees are our most important backers, investing their time and professional reputations in the company. We continually assess our business to identify our talent needs. We have a diverse workforce that represents many cultures and we celebrate our diversity by fostering inclusion across our multinational organization.
Our employees are our most valuable assets. Our core philosophy is that our employees are our most 15 important backers, investing their time and professional reputations in the company. We continually assess our business to identify our talent needs. We have a diverse workforce that represents many cultures and we celebrate our workforce by fostering inclusion across our multinational organization.
In fiscal year 2024, we exclusively used Taiwan Semiconductor Manufacturing Company Limited (TSMC) for semiconductor wafer production. • Package, Assembly and Testing : Upon the completion of processing at the foundry, we use third-party contractors for packaging, assembly and testing, including Amkor Technology Inc. (Amkor) and Advanced Semiconductor Engineering, Inc.
In fiscal year 2025, we exclusively used Taiwan Semiconductor Manufacturing Company Limited (TSMC) for semiconductor wafer production. • Package, Assembly and Testing : Upon the completion of processing at the foundry, we use third-party contractors for packaging, assembly and testing, including Amkor Technology Inc. (Amkor) and Advanced Semiconductor Engineering, Inc.
Hyperscaler General Compute Traffic Doubles Every 2-3 Years: Our hyperscale customers began to deploy Network Interface Card (NIC) speeds of 200G in calendar year 2023 with 400G on roadmaps for calendar year 2024.
Hyperscaler General Compute Traffic Doubles Every 2-3 Years: Our hyperscale customers began to deploy front end Network Interface Card (NIC) speeds of 200G in calendar year 2023 with 400G on roadmaps for calendar year 2024.
For more details regarding our executive compensation, refer to information incorporated by reference from the information set forth under the captions “Executive Compensation” and “Compensation Discussion and Analysis” in our upcoming 2024 Proxy Statement.
For more details regarding our executive compensation, refer to information incorporated by reference from the information set forth under the captions “Executive Compensation” and “Compensation Discussion and Analysis” in our upcoming 2025 Proxy Statement.
As NIC speeds double, there is a need for higher speed east-west traffic infrastructure to support applications such as Remote Direct Memory Access (RDMA), Nonvolative Memory Express (NVMe) and other high-bandwidth applications, while maintaining high reliability and observability within the power and cost constraints of a modern data center.
As NIC speeds double, there is a need for higher speed east-west traffic infrastructure to support applications such as Remote Direct Memory Access (RDMA), Non-volatile Memory Express (NVMe) and other high-bandwidth applications, while maintaining high reliability and observability within the power and cost constraints of a modern data center.
The SEC maintains a website that contains the materials we file with or furnish to the SEC at www.sec.gov. 16
The SEC maintains a website that contains the materials we file with or furnish to the SEC at www.sec.gov. 17
We offer a combination of competitive base salary, time-based equity incentives and discretionary bonuses, generally linked to our financial performance, designed to motivate and reward our employees.
We offer a combination of competitive market-based base salary, time- and performance-based equity incentives and discretionary bonuses, generally linked to individual and company financial performance designed to motivate and reward our employees.
Our SerDes Chiplets are designed for high performance and low power from mature processes, allowing customers to fabricate their core logic in advanced processes and combine them in their MCM SoC. 12 SerDes IP: SerDes IP is designed for the easy SoC integration of tens to hundreds of SerDes lanes.
Our SerDes Chiplets are designed for high performance and low power from mature processes, allowing customers to fabricate their core logic in advanced processes and combine them in their MCM SoC. SerDes IP: SerDes IP is designed for the easy SoC integration of tens to hundreds of SerDes lanes. The IP range in performance from 1G to 112G per lane.
Our Competitive Strengths We believe our key competitive strengths include the following: Foundational Intellectual Property: We believe our technology leadership is based on our strong SerDes IP portfolio. Our purpose-built mixed-signal and DSP architectures are the foundation of our high-performance, and power-efficient connectivity solutions. We believe this IP portfolio provides us with a significant competitive advantage.
Our Competitive Strengths We believe our key competitive strengths include the following: Foundational Intellectual Property: We believe our technology leadership is based on our strong SerDes IP portfolio. Our purpose-built mixed-signal and DSP architectures are the foundation of our high-performance, and power-efficient connectivity solutions.
The IP range in performance for 1G to 112G per lane. Additionally, we developed USB4 Version 2 SerDes IP which has been adopted by a major OEM. We designed our SerDes IP to optimally balance performance, power and manufacturing process costs and risks. Our patented mixed signal and DSP architectures are the foundation of our high-performance and low-power SerDes technology.
Additionally, we developed USB4 Version 2 SerDes IP which has been adopted by a major OEM. We designed our SerDes IP to optimally balance performance, power and manufacturing process costs and risks. Our patented mixed signal and DSP architectures are the foundation of our high- 12 performance and low-power SerDes technology.
Top Industry Talent and Experienced Leadership Team: We employ an engineering-focused workforce as well as a highly technical management team with deep industry experience and connectivity expertise. Our global team included 407 engineers as of April 27, 2024, and our international footprint allows us to continue attracting talent needed to support our business.
Top Industry Talent and Experienced Leadership Team: We employ an engineering-focused workforce as well as a highly technical management team with deep industry experience and connectivity expertise. Our global team included 507 engineers as of May 3, 2025, and our international footprint allows us to continue attracting talent needed to support our business.
Product sales and product engineering services revenue comprised 85% and 83% of our total revenue in fiscal 2024 and 2023, respectively, and IP license revenue represented 15% and 17% of our total revenue in fiscal 2024 and 2023, respectively. 8 Industry Overview We believe we are well positioned to benefit from the strong secular tailwinds driving the data infrastructure market, which is being driven by several factors, including: AI/ML Drives an Explosion in Network Traffic: Our hyperscale customers are increasingly pursuing AI/ML infrastructure that requires rack scale interconnectivity densities that are significantly higher than their general compute infrastructure.
Product sales and product engineering services revenue comprised 97% and 85% of our total revenue in fiscal 2025 and 2024, respectively, and IP license revenue represented 3% and 15% of our total revenue in fiscal 2025 and 2024, respectively. 8 Industry Overview We believe we are well positioned to benefit from the strong secular tailwinds driving the data infrastructure market, which is being driven by several factors, including: AI/ML Drives an Explosion in Network Traffic: Our hyperscale customers are increasingly pursuing AI/ML infrastructure that requires back end scale out interconnectivity densities that are an order or magnitude higher than their general compute infrastructure.
We are engaged with all of the major hyperscalers, and our customer base includes over 20 blue chip clients, including more than 10 original equipment manufacturers (OEMs) and original design manufacturers (ODMs), over 10 optical module manufacturers and other leading enterprises. During fiscal 2024 and 2023, we generated $193.0 million and $184.2 million in total revenue, respectively.
We are engaged with all of the major hyperscalers, and our customer base includes over 20 blue chip clients, including a broad mix of original equipment manufacturers (OEMs), original design manufacturers (ODMs), optical module manufacturers and other leading enterprises. During fiscal 2025 and 2024, we generated $436.8 million and $193.0 million in total revenue, respectively.
Best-in-Class Technology: We believe we are at the forefront of the high-performance connectivity market. Our architectural approach enables us to design in mature fabrication processes still deliver leading edge performance and power at a significantly lower cost. Our optimized SerDes architectures achieve industry-leading power efficiency on small die areas in cost-effective mature processes.
Our architectural approach enables us to design in mature fabrication processes still deliver leading edge performance and power at a significantly lower cost. Our optimized SerDes architectures achieve industry-leading power efficiency on small die areas in cost-effective mature processes.
Our intellectual property (IP) solutions consist primarily of SerDes IP licensing. Data generation has increased dramatically over the past ten years, creating new and complicated challenges in both circuit and system design.
Our product families include integrated circuits (ICs), Active Electrical Cables (AECs) and SerDes Chiplets. Our intellectual property (IP) solutions consist primarily of SerDes IP licensing. Data generation has increased dramatically over the past ten years, creating new and complicated challenges in both circuit and system design.
We rely on a combination of intellectual property rights, including patents, trade secrets, copyrights and trademarks, and contractual protections, to protect our core technology. As of April 27, 2024, we owned 73 issued patents and 13 pending patent applications in the United States, and 31 issued patents and 35 pending patent applications in mainland China.
We rely on a combination of intellectual property rights, including patents, trade secrets, copyrights and trademarks and contractual protections, to protect our core technology. As of May 3, 2025, we owned 78 issued patents and 21 pending patent applications in the United States, and 48 issued patents and 22 pending patent applications in mainland China.
Our connectivity solutions are optimized for optical and electrical Ethernet applications, including the 100G (or Gigabits per second), 200G, 400G, 800G and emerging 1.6T (or Terabits per second) markets. Our products are based on our Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies. Our product families include integrated circuits (ICs), Active Electrical Cables (AECs) and SerDes Chiplets.
Our connectivity solutions are optimized for optical and electrical Ethernet and PCIe applications, including the 100G (or Gigabits per second), 200G, 400G, 800G and emerging 1.6T (or Terabits per second) ethernet markets and the 32G PCIe5 and upcoming 64G PCIe6 markets. Our products are based on our Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies.
The demands for increased bandwidth, improved power and cost efficiency and heightened security have simultaneously and dramatically expanded as work, education and entertainment have rapidly digitized across myriad endpoint users. We design, market and sell both product and IP solutions. We help define industry conventions and standards within the markets we target by collaborating with technology leaders and standards bodies.
The demands for increased bandwidth, improved power and cost efficiency and heightened security have simultaneously and dramatically expanded as work, education and entertainment have rapidly digitized across myriad endpoint users. We design, market and sell both product, software and IP solutions.
Sales and Marketing We employ a two-pronged sales strategy targeting both the end users of our products, as well as the suppliers of our end users. By engaging directly with the end user, we are able to better understand the needs of our customers and cater our solutions to their most pressing connectivity requirements.
By engaging directly with the end user, we are able to better understand the needs of our customers and cater our solutions to their most pressing connectivity requirements.
We sell our products to hyperscalers and cloud infrastructure providers, as well as MNO, MSO, 5G wireless, enterprise networking, and high performance computing (HPC) customers.
We have global sales, marketing and business development teams responsible for identifying and building our customer relationships. We sell our products to hyperscalers and cloud infrastructure providers, as well as MNO, MSO, 5G wireless, enterprise networking and high performance computing (HPC) customers.
The growth of AI/ML model sizes is driving an explosion in interconnectivity traffic which enables multiple physical devices to work on the same model at high speed and low latency.
The growth of AI/ML model sizes is driving an explosion in interconnectivity traffic which enables multiple physical devices to work on the same model at high speed and low latency. Credo provides Ethernet solutions to support this type of interconnectivity, and we believe that Ethernet has now become the standard for back end scale out networks.
In some cases, this involves speed shifting functionality where lane speeds are changed (e.g., one lane of 112G becomes 2 lanes of 56G), modulation schemes are changed(e.g., PAM4 symbol becomes two non-return-to-zero (NRZ) symbols) and forward error correction is terminated and/or generated to ensure a plug and play bridge between two different speed hosts. • Credo HiWire CLOS AECs are specifically designed for high density in-rack or HPC rack-to-rack interconnect to support CLOS architectures, a type of non-blocking, multistage switching architecture that reduces the number of ports required in an interconnected fabric.
In some cases, this involves speed shifting functionality where lane speeds are changed (e.g., one lane of 112G becomes 2 lanes of 56G), modulation schemes are changed(e.g., PAM4 symbol becomes two non-return-to-zero (NRZ) symbols) and forward error correction is terminated and/or generated to ensure a plug and play bridge between two different speed hosts. • Credo HiWire SWITCH AECs enable a NIC to connect to two ToRs in an Active/Standby configuration for sub-millisecond failover that is fully network operating system managed.
Our principal competitors with respect to our products include Broadcom Ltd. (Broadcom) and Marvell Technology, Inc. (Marvell), as well as various DAC suppliers. Our principal competitors with respect to IP licensing include Synopsys, Inc. (Synopsys), Cadence Design Systems, Inc. (Cadence) and Alphawave IP Group plc (Alphawave).
Our principal competitors with respect to our products include Broadcom Ltd. (Broadcom), Marvell Technology, Inc. (Marvell) and Astera Labs, Inc. (Astera), as well as various cable suppliers.
Employees and Human Capital Resources As of April 27, 2024, approximately 407 of our 500 full-time equivalent employees were engineers. Of our employees, 137 were located in North America and 270 were located in Asia.
Employees and Human Capital Resources As of May 3, 2025, approximately 507 of our 622 full-time equivalent employees were engineers. Of our employees, 170 were located in North America and 337 were located in Asia.
We believe we can provide superior service to our customers by serving as a single point of contact for various requirements. Furthermore, our extensive knowledge and experience across a range of connectivity offerings enables us to better identify potential bottlenecks and design solutions to address them, differentiating us from competitors focused on point solutions.
Furthermore, our extensive knowledge and experience across a range of connectivity offerings enables us to better identify potential bottlenecks and design solutions to address them, differentiating us from competitors focused on point solutions. Best-in-Class Technology: We believe we are at the forefront of the high-performance connectivity market.
Once developed, these tailored solutions can generally be broadly leveraged across our portfolio and we are able to sell the part or license the IP to the broader market. We have global sales, marketing and business development teams responsible for identifying and building our customer relationships.
We develop standard solutions we can sell broadly to our end markets and also develop tailored solutions designed to address specific customer needs. Once developed, these tailored solutions can generally be broadly leveraged across our portfolio and we are able to sell the part or license the IP to the broader market.
Optical DSPs: Credo optical digital signal processors (DSPs) are a key building block inside optical transceivers that are used in AI clusters, hyperscale data centers, service provider networks, enterprise networks, and 5G wireless infrastructure.
This enables the simplicity of a single NIC-ToR connector for the server and user with reliability and convergence times that are superior to legacy link aggregation structures. 11 Optical DSPs: Credo optical digital signal processors (DSPs) are a key building block inside optical transceivers that are used in AI clusters, hyperscale data centers, service provider networks, enterprise networks and 5G wireless infrastructure.
Our Customers We sell our products to hyperscalers, OEMs, ODMs and optical module manufacturers, as well as into the enterprise and HPC markets. We work closely and have engagements with industry-leading companies across these segments. We currently rely and expect to continue to rely on a limited number of customers for a significant part of our revenue.
We work closely and have engagements with industry-leading companies across these segments. We currently rely and expect to continue to rely on a limited number of customers for a significant part of our revenue. In fiscal 2025, sales to our top 10 customers accounted for approximately 90% of our total revenue.
Comprehensive Family of Connectivity Solutions: Our extensive solutions portfolio includes HiWire AECs, Optical PAM4 DSPs, Line Card PHYs, SerDes Chiplets for Multi-Chip Module (MCM) package 9 integration and SerDes IP licensing. Our products and technologies address our customers’ various bandwidth, power, cost, security, reliability and end-to-end signal integrity requirements.
We believe this IP portfolio provides us with a significant competitive advantage. 9 Comprehensive Family of Connectivity Solutions: Our extensive solutions portfolio includes HiWire AECs, Optical PAM4 DSPs, PCIe retimers, Line Card PHYs, SerDes Chiplets for Multi-Chip Module (MCM) package integration and SerDes IP licensing.
HiWire AECs®: HiWire Active Electrical Cables (AECs) are copper interconnect cables designed for affordable, low-power operation at 100G, 200G, 400G, 800G and emerging 1.6T data speeds.
HiWire AECs®: Credo’s distinctive purple HiWire™ Active Electrical Cables (AECs) are plug-and-play copper interconnect cables designed for affordable, lossless operation at 100G, 200G, 400G,800G and emerging 1.6T data speeds. AECs offer a high-performance alternative to short, thick DACs and high power, high-cost AOCs for data center compute and AI applications.
Also included in the Seagull family is a unique product optimized for 64G Fibre Channel, used in storage networks. The Credo Dove family of DSPs operate at 100G/lane. This product family includes 4x100G and 8x100G DSPs each with a range of integrated laser driver options for silicon photonics, EMLs and VCSELs.
This comprehensive product family includes 1x50G, 2x50G, 4x50G and 8x50G product variants that enable transceivers and AOCs from 50Gb/s to 400Gb/s. Also included in the Seagull family is a unique product optimized for 64G Fibre Channel, used in storage networks. The Credo Dove family of DSPs operate at 100G/lane.
As the bandwidth of interconnects increase, the complexity of the design for signal transmission increases.
SerDes Chiplets: SerDes technology enables data transmission at high rates while minimizing the number of interconnects required. As the bandwidth of interconnects increase, the complexity of the design for signal transmission increases.
We have assembled a team of highly skilled engineers with deep signal processing expertise who are located in San Jose, California, mainland China and Taiwan. As of April 27, 2024, we employed 407 engineers. Research and development expenses for fiscal 2024 and 2023 were $95.5 million and $76.8 million, respectively.
We have committed, and plan to continue to commit, significant resources to technology and product innovation and development. We have assembled a team of highly skilled engineers with deep signal processing expertise who are located in San Jose, California, mainland China and Taiwan. As of May 3, 2025, we employed 507 engineers.
The range of laser drivers makes these DSPs suitable for both multi-mode and single-mode fiber applications operating at either 400Gb/s or 800Gb/s. The Dove 850 is the newest member of the Dove family and is the industry's first unidirectional 8x100G DSP specifically for Linear Receive Optics (LRO).
This product family includes 4x100G and 8x100G DSPs each with a range of integrated laser driver options for silicon photonics, EMLs and VCSELs. The range of laser drivers makes these DSPs suitable for both multi-mode and single-mode fiber applications operating at either 400Gb/s or 800Gb/s.
(ASE) for packaging our IC products, 13 King Yuan Electronics Company (KYEC) and Sigurd Microelectronics Corp. (Sigurd) for testing our IC products and BizLink Technology, Inc. (BizLink) and Cheng Ui Precision Industry (Foxlink) for manufacturing our AEC products.
(ASE) for packaging our IC products, King Yuan Electronics Company (KYEC) and Sigurd Microelectronics Corp. (Sigurd) for testing our IC products and BizLink Technology, Inc. (BizLink) for manufacturing our AEC products. Research and Development We view our technology as a competitive advantage and devote substantial resources to the research and development of new products and the improvement of existing products.
With up to 11 50% less power than optical solutions and up to 75% less volume than DACs, these AECs enable CLOS cabling densities up to 1,000 cables per rack. • Credo Pluggable Patch Panel P3 enables services providers and hyperscalers flexibility in deploying modern pluggable optics with new and legacy switches and routers.
With up to 50% less power than optical solutions and up to 75% less volume than DACs, these AECs enable CLOS cabling densities up to 1,000 cables per rack. • Credo HiWire SPAN AECs are a plug and play replacement of AOC for high-speed interconnects.
Our hyperscale customers have deployed 50G per lane electrical PAM4 data rates in 2023, and they have begun deployments of 100G per lane electrical PAM4 solutions in 2024. Energy efficiency is becoming a key concern for customers as increased data transfer speeds require more energy to power and cool their systems.
Our hyperscale customers have deployed 50G per lane electrical PAM4 data rates in 2023 and 100G per lane electrical PAM4 solutions in 2024.
Our Line Card PHY product families include our Bald Eagle, Black Hawk and Screaming Eagle products for Retimer and Gearboxes, as well as our Owl and Osprey products for MACsec/IPSEC applications. SerDes Chiplets: SerDes technology enables data transmission at high rates while minimizing the number of interconnects required.
Dedicated and multi-function Retimers, Gearboxes and MACsec PHYs, each built around our low-power, high-performance SerDes IP, enable our customers to meet performance, power and price objectives. Our Line Card PHY product families include our Bald Eagle, Black Hawk and Screaming Eagle products for Retimer and Gearboxes, as well as our Owl and Osprey products for MACsec applications.
We contract with a variety of manufacturing partners to build our products based on our proprietary SerDes and DSP technologies. We develop standard solutions we can sell broadly to our end markets and also develop tailored solutions designed to address specific customer needs.
We help define industry conventions and standards within the markets we target by collaborating with technology leaders and standards bodies. We contract with a variety of manufacturing partners to build our products based on our proprietary SerDes and DSP technologies.
In fiscal 2024, sales to our top 10 customers accounted for approximately 86% of our total revenue. Furthermore, we had two customers that each accounted for 10% or more of our total fiscal 2024 revenue with the two customers accounting for 39% and 15%, respectively.
Furthermore, we had one customer that accounted for 10% or more of our total fiscal 2025 (such one customer accounting for 67% of total fiscal 2025 revenue). Sales and Marketing We employ a two-pronged sales strategy targeting both the end users of our products, as well as the suppliers of our end users.
LRO is an innovative new concept that removes DSP functionality from the module receiver to dramatically improve energy efficiency in high volume AI deployments. Line Card PHYs: We are enabling data connectivity and security in hyperscale and enterprise data centers with leading edge, low-power line card PHY solutions.
The Dove 850 is the industry's first unidirectional 8x100G DSP specifically for Linear Receive Optics (LRO). LRO is an innovative new concept that removes DSP functionality from the module receiver to dramatically improve energy efficiency in high volume AI deployments. In April of 2025, Credo introduced its Lark family of DSPs.
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Item 1. Business Company Overview Credo provides innovative, secure, high-speed and power-efficient connectivity solutions. Our solutions target the data infrastructure market, where bandwidth requirements are increasing exponentially, driven by the accelerating deployment of leading edge Artificial Intelligence infrastructure and applications. Our innovations ease system bandwidth bottlenecks while simultaneously improving on power, security and reliability.
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Item 1. Business Company Overview At Credo, our mission is to redefine high-speed connectivity by delivering breakthrough solutions that enable the next generation of AI-driven applications. We are 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.
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Credo provides Ethernet solutions to support this type of interconnectivity, and we believe that as this market matures, it will migrate away from proprietary solutions and towards Ethernet as the standard solution.
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Back end scale up networks have grown from an appliance scale of 8 GPUs to rack scale of 72 GPUs in calendar 2024 and there is strong interest in growing this to scale in the coming years. Scale up networks are already 10x denser than scale up networks, a full 100x denser than front end networks.
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Credo’s low-power Screaming Eagle 112G/lane retimers and Dove800 DSPs are enabling our customers to achieve their technical objectives, as well as supporting the important ESG goals of our customers.
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Scale up network architectures are dominated by Ethernet and PCIe PHYs at layer 1 with proprietary extensions at higher levels. In calendar 2024, multiple hyperscalers show scale up networks growing beyond rack scale which will necessitate the need for retimers and/or DSPs to support high speed signaling at extended reach.
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HiWire AECs enable hyperscalers and 5G architects to accelerate the transition to Distributed, Disaggregated Chassis (DDCs) by offering a high-performance alternative to short, thick Direct Attach Cables (DACs) and higher-power, higher-cost Active Optical Cables (AOCs).
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Our products and technologies address our customers’ various bandwidth, power, cost, security, reliability and end-to-end signal integrity requirements. We believe we can provide superior service to our customers by serving as a single point of contact for various requirements.
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DDCs allow providers to pair hardware from ODMs with open-source and third-party software to address issues surrounding operating expenses, flexibility and cost in traditional chassis applications. Our ToR to NIC AEC solutions enable hardware architects to pair commodity NIC and ToR hardware with value-added AECs to address needs related to redundancy and racking plans.
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The applications for AECs in the data center can be categorized into Servers-TOR Racks and Leaf-Spine-Router Racks. Credo offers AEC cables up to 7m to enable reliable links from GPU to network switch for AI racks with liquid cooling.
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Our HiWire AEC solutions include SWITCH, SPAN, SHIFT, and CLOS AECs, and Pluggable Patch Panel P3: • Credo HiWire SWITCH AECs enable a NIC to connect to two ToRs in an Active/Standby configuration for sub-millisecond failover that is fully network operating system managed.
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The HiWire AEC solutions include CLOS, SPAN, SHIFT and SWITCH family of cables. • Credo HiWire CLOS AECs are specifically designed for high density in-rack or HPC rack-to-rack interconnect to support CLOS architectures, a type of non-blocking, multistage switching architecture that reduces the number of ports required in an interconnected fabric.
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This enables the simplicity of a single NIC-ToR connector for the server and user with reliability and convergence times that are superior to legacy link aggregation structures. • Credo HiWire SPAN AECs are a plug and play replacement of AOC for high-speed interconnects.
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The Lark 800 is a high-performance, high-reliability, low-power DSP designed to enable a new generation of full retimed 800G transceivers destined for deployment in the exceedingly challenging power and cooling envelopes of the world’s largest and most dense AI data centers. The Lark 850 is specifically designed for 800G LROs, with power consumption under 10W.
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The HiWire P3 is a single rack unit (1RU), 32 port QSFP-DD appliance that allows standard pluggable optics to directly connect to an AEC without the use of a switch chip, providing power, cooling, and control plane access.
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PCIe Retimers: Toucan PCI Express (PCIs) Gen6.x/CXL 3.x retimers, powered by Credo’s low latency, low-power DSPs and SerDes technology, are designed to extend PCIe trace lengths between root-complex and endpoint devices such as GPUs, SMART NICs, NVMe SSDs, and CXL memory.
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This comprehensive product family includes 1x50G, 2x50G, 4x50G and 8x50G product variants that enable transceivers and AOCs from 50Gb/s to 400Gb/s applications. Credo’s 50G/lane transimpedance amplifier (TIA) complements this family of devices and creates a compelling bundled solution of DSP, laser driver and TIA for new 50G/lane module designs.
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Built using the 7nm process node, these retimers are optimized for cost-efficient production while delivering the highest performance, supporting cloud-scale datacenters and the growing demands of modern infrastructure with low latency and best-in-class signal integrity. • Our PCIe Retimer devices are designed with our low power, industry-leading SerDes IP which has been optimized for low-latency PCIe. • Built using the 7nm process node, these retimers are optimized for cost-efficient production while delivering the highest performance, supporting cloud-scale datacenters and the growing demands of modern infrastructure with low latency and best-in-class signal integrity. • Enabled by our Toucan family of retimers, Credo’s OSFP-XD PCIe AECs provide extended range up to 7m with lossless end-to-end x16 Gen6 PCIe connectivity, allowing for transfer rates of up to 1Tb/sec.
Removed
Research and Development We view our technology as a competitive advantage and devote substantial resources to the research and development of new products and the improvement of existing products. We have committed, and plan to continue to commit, significant resources to technology and product innovation and development.
Added
PILOT Software Platform: Credo’s proprietary Predictive Integrity, Link Optimization and Telemetry (PILOT) software empowers network administrators to detect, diagnose, and resolve signal degradation before it impacts workloads—dramatically reducing link flaps and minimizing costly system maintenance and down-time.
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PILOT was released for evaluation on Credo’s Toucan PCIe retimers in the first quarter of fiscal 2026 and Credo expects to make PILOT available across Credo’s SerDes, retimers and system level AECs during fiscal year 2026. Our Customers We sell our products to hyperscalers, OEMs, ODMs and optical module manufacturers, as well as into the enterprise and HPC markets.
Added
Research and development expenses for fiscal 2025 and 2024 were $146.0 million and $95.5 million, respectively.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

109 edited+28 added−19 removed397 unchanged
Biggest changeIn addition, as we are a fabless company, global market trends such as a shortage of capacity to fulfill our fabrication needs also may increase our raw material costs and thus decrease our gross margin. 26 We rely on the ability to use and the success of third-party technologies to develop our products, and our inability to use such technologies in the future would harm our ability to remain competitive.
Biggest changeMoreover, our suppliers may pass the increase in raw materials and commodity costs onto us, which would further reduce the gross margin of our products. In addition, as we are a fabless company, global market trends such as a shortage of capacity to fulfill our fabrication needs also may increase our raw material costs and thus decrease our gross margin.
For example, prior to purchasing our products, our customers require that both our products and our third-party contractors undergo extensive qualification processes, which involve testing of our products in the customers’ systems, as well as testing for reliability. This qualification process may continue for several months or more.
For example, prior to purchasing our products, our customers may require that both our products and our third-party contractors undergo extensive qualification processes, which involve testing of our products in the customers’ systems, as well as testing for reliability. This qualification process may continue for several months or more.
Due to the interdependence of various components in the systems within which our products and the products of our competitors operate, customers are unlikely to change to another design, once adopted, until the next generation of a technology.
Due to the interdependence of various components in the systems within which our products and the products of our competitors operate, customers are unlikely to change to another design, once adopted, until the next generation of a technology.
Market conditions and changing circumstances, some of which may be beyond our control, could impair our ability to access our existing cash, cash equivalents and investments and to timely pay key vendors and others.
Market conditions and changing circumstances, some of which may be beyond our control, could impair our ability to access our existing cash, cash equivalents and investments and to timely pay key vendors and others.
Failure or inability by our shareholders or beneficial owners who are PRC residents or by our executive officers and other employees who are PRC citizens or residents and who have been or will be granted incentive shares or options to comply with SAFE regulations, failure by us to conduct or amend the foreign exchange registrations of our PRC subsidiaries, or failure to disclose or a misrepresentation of the controller(s) or ultimate shareholders of the foreign invested enterprise that is established through round trip investment, could subject us to fines or legal sanctions, such as restrictions on our overseas or cross-border investment activities or our PRC subsidiaries’ ability to make distributions or pay dividends to us.
Failure or inability by our shareholders or beneficial owners who are PRC residents or by our executive officers and other employees who are PRC citizens or residents and who have been or will be granted incentive shares or options to comply with SAFE regulations, failure by us to conduct or 42 amend the foreign exchange registrations of our PRC subsidiaries, or failure to disclose or a misrepresentation of the controller(s) or ultimate shareholders of the foreign invested enterprise that is established through round trip investment, could subject us to fines or legal sanctions, such as restrictions on our overseas or cross-border investment activities or our PRC subsidiaries’ ability to make distributions or pay dividends to us.
The trading price and volume of our ordinary shares is likely to be volatile and could fluctuate significantly in response to numerous factors, many of which are beyond our control, including but not limited to: • actual or anticipated fluctuations in our results of operations due to, among other things, changes in customer demand, product life cycles, pricing, ordering patterns and unforeseen operating costs; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts or industry analysts to initiate or maintain coverage of us, publish negative research or reports, changes in financial estimates or ratings by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; • announcements by our significant customers of changes to their product offerings, business plans or strategies; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in the data infrastructure or semiconductor industry; • timing and seasonality of the end-market demand; • cyclical fluctuations in the data infrastructure market and semiconductor industry; • price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; 49 • new laws or regulations or new interpretations of existing laws, or regulations applicable to our business; • changes in our management; • general economic and market conditions; • lawsuits threatened or filed against us; and • other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
The trading price and volume of our ordinary shares is likely to be volatile and could fluctuate significantly in response to numerous factors, many of which are beyond our control, including but not limited to: • actual or anticipated fluctuations in our results of operations due to, among other things, changes in customer demand, product life cycles, pricing, ordering patterns and unforeseen operating costs; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts or industry analysts to initiate or maintain coverage of us, publish negative research or reports, changes in financial estimates or ratings by any securities analysts who follow us or our failure to meet these estimates or the expectations of investors; • announcements by our significant customers of changes to their product offerings, business plans or strategies; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of other technology companies generally, or those in the data infrastructure or semiconductor industry; • timing and seasonality of the end-market demand; • cyclical fluctuations in the data infrastructure market and semiconductor industry; • price and volume fluctuations in the overall stock market from time to time, including as a result of trends in the economy as a whole; • actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; • new laws or regulations or new interpretations of existing laws, or regulations applicable to our business; • changes in our management; • general economic and market conditions; • lawsuits threatened or filed against us; and 51 • other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
In addition, as part of their corporate social and environmental responsibility programs, as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act, which imposes disclosure requirements regarding the use in components of products of “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries, whether the components of such products are manufactured by them or third parties, an increasing number of OEMs are seeking to source products that do not contain minerals sourced from areas where proceeds from the sale of such minerals are likely to be used to fund armed 35 conflicts, such as in the Democratic Republic of Congo.
In addition, as part of their corporate social and environmental responsibility programs, as well as the Dodd-Frank Wall Street Reform and Consumer Protection Act, which imposes disclosure requirements regarding the use in components of products of “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries, whether the components of such products are manufactured by them or third parties, an increasing number of OEMs are seeking to source products that do not contain minerals sourced from areas where proceeds from the sale of such minerals are likely to be used to fund armed conflicts, such as in the Democratic Republic of Congo.
Any acquisition involves a number of risks, many of which could harm our business, including: • difficulty in integrating the operations, technologies, products, existing contracts, accounting and personnel of the acquired company or business; • not realizing the anticipated benefits of any acquisition; • difficulty in transitioning and supporting customers of the acquired company; • difficulty in transitioning and collaborating with suppliers of the acquired company; • diversion of financial and management resources from existing operations; • the risk that the price we pay or other resources that we devote to the acquisition may exceed the value we realize, or the value we could have realized if we had allocated the purchase price or other resources to another opportunity; 52 • potential loss of key employees, customers and strategic alliances from either our current business or the acquired company’s business; • inability to successfully bring newly acquired products to market or achieve design wins with such products; • fluctuations in industry trends that change the demand or purchasing volume of newly acquired products; • assumption of unanticipated problems or latent liabilities, such as problems with the quality of the acquired products; • inability to generate sufficient revenue to offset acquisition costs; • the dilutive effect on our ordinary shares as a result of any acquisitions financed through the issuance of equity; • inability to successfully complete transactions with a suitable acquisition candidate; and • in the event of international acquisitions, risks associated with accounting and business practices or regulatory requirements that are different from applicable U.S. practices and requirements.
Any acquisition involves a number of risks, many of which could harm our business, including: • difficulty in integrating the operations, technologies, products, existing contracts, accounting and personnel of the acquired company or business; • not realizing the anticipated benefits of any acquisition; • difficulty in transitioning and supporting customers of the acquired company; • difficulty in transitioning and collaborating with suppliers of the acquired company; • diversion of financial and management resources from existing operations; • the risk that the price we pay or other resources that we devote to the acquisition may exceed the value we realize, or the value we could have realized if we had allocated the purchase price or other resources to another opportunity; • potential loss of key employees, customers and strategic alliances from either our current business or the acquired company’s business; • inability to successfully bring newly acquired products to market or achieve design wins with such products; 54 • fluctuations in industry trends that change the demand or purchasing volume of newly acquired products; • assumption of unanticipated problems or latent liabilities, such as problems with the quality of the acquired products; • inability to generate sufficient revenue to offset acquisition costs; • the dilutive effect on our ordinary shares as a result of any acquisitions financed through the issuance of equity; • inability to successfully complete transactions with a suitable acquisition candidate; and • in the event of international acquisitions, risks associated with accounting and business practices or regulatory requirements that are different from applicable U.S. practices and requirements.
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, breach of fiduciary duty, unconscionable behavior or behavior which falls within the broad stable of conduct identifiable as ‘equitable’ fraud on the part of the director or officer in question.
Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against willful default, willful neglect, breach of fiduciary duty, unconscionable behavior or behavior which falls within the broad stable of conduct identifiable as ‘equitable’ fraud on the part of the 50 director or officer in question.
We may not at all times be fully informed of the identities of all the PRC residents holding direct or indirect interests in our company, and we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities, or all of our executive officers and other employees who are PRC citizens or residents and who have been or will be granted incentive shares or options, have 40 complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations.
We may not at all times be fully informed of the identities of all the PRC residents holding direct or indirect interests in our company, and we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities, or all of our executive officers and other employees who are PRC citizens or residents and who have been or will be granted incentive shares or options, have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable 52 under the circumstances, as described in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources.
We expect competition will increase as our market grows, connectivity technology advances and existing competitors 19 improve or expand their product offerings. In addition, new companies could enter our market, creating additional competition in the future. Our ability to compete successfully depends, in part, on factors that are outside of our control, including industry and general economic trends.
We expect competition will increase as our market grows, connectivity technology advances and existing competitors improve or expand their product offerings. In addition, new companies could enter our market, creating additional competition in the future. Our ability to compete successfully depends, in part, on factors that are outside of our control, including industry and general economic trends.
Industry consolidation may lead to increased competition. Our competitors may also establish cooperative relationships among themselves or with third parties or may acquire companies that provide 20 similar products to ours. As a result, new competitors or alliances may emerge that could capture significant market share. There has been a trend toward industry consolidation in our markets for several years.
Industry consolidation may lead to increased competition. Our competitors may also establish cooperative relationships among themselves or with third parties or may acquire companies that provide similar products to ours. As a result, new competitors or alliances may emerge that could capture significant market share. There has been a trend toward industry consolidation in our markets for several years.
Such a transition would likely result in increased production costs and require a qualification process by our customers or their end customers. None of TSMC, BizLink, Foxlink, or our third-party manufacturers or other suppliers have provided contractual assurances to us that adequate capacity will be available to us to meet our anticipated future demand for our solutions.
Such a transition would likely result in increased production costs and require a qualification process by our customers or their end customers. None of TSMC, BizLink or our third-party manufacturers or other suppliers have provided contractual assurances to us that adequate capacity will be available to us to meet our anticipated future demand for our solutions.
U.S. laws could also directly conflict with PRC laws, forcing businesses to choose between compliance with conflicting legal regimes. For example, in January 2021, the Ministry of Commerce of the People’s Republic of China (MOFCOM) issued MOFCOM Order No. 1 of 2021 on Rules Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (Order No. 1).
U.S. laws could also directly conflict with PRC laws, forcing businesses to choose between compliance with conflicting legal regimes. For example, in January 2021, the Ministry of 38 Commerce of the People’s Republic of China (MOFCOM) issued MOFCOM Order No. 1 of 2021 on Rules Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (Order No. 1).
Any of these factors, alone or in combination with others, could lead to an increase in pricing pressure, more variability in our operating results, a loss of market share and could harm our business, financial condition, and results of operations. We may incur substantial expenses to develop, market, and qualify products that may not generate any revenue.
Any of these factors, alone or in combination with others, could lead to an increase in pricing pressure, more variability in our operating results, a loss of market share and could harm our business, financial condition and results of operations. 22 We may incur substantial expenses to develop, market and qualify products that may not generate any revenue.
After our products are qualified, it can take several months or more before the customer commences volume production of components or systems that incorporate our products. Despite these uncertainties, we devote substantial resources, including design, engineering, 21 sales, marketing and management efforts, to qualify our products with customers in anticipation of sales.
After our products are qualified, it can take several months or more before the customer commences volume production of components or systems that incorporate our products. Despite these uncertainties, we devote substantial resources, including design, engineering, sales, marketing and management efforts, to qualify our products with customers in anticipation of sales.
Our revenue or revenue growth rate may decline in the future because of a variety of factors, including increased competition, reduced demand for our products and the maturation of our 18 business. You should not consider our historical revenue growth or operating expenses as indicative of our future performance. Additionally, we also expect our costs to increase in future periods.
Our revenue or revenue growth rate may decline in the future because of a variety of factors, including increased competition, reduced demand for our products and the maturation of our business. You should not consider our historical revenue growth or operating expenses as indicative of our future performance. Additionally, we also expect our costs to increase in future periods.
If we are unable to comply, or are unable to cause our suppliers to comply, with such policies or provisions or meet the requirements of our customers and our investors, it could harm our reputation, such customers may stop purchasing products from us, which would harm our revenue and results of operations, or such investors may sell their shares, which could cause the trading price of our ordinary shares to decline.
If we are unable to comply, or are unable to cause our suppliers to comply, with such policies or provisions or meet the requirements of our customers and our investors, it could harm our reputation, such customers may stop purchasing products from us, 36 which would harm our revenue and results of operations, or such investors may sell their shares, which could cause the trading price of our ordinary shares to decline.
We currently outsource all of our IC manufacturing to TSMC, with the assembly and testing processes outsourced to other subcontractors primarily in Asia. We also use third-party contract manufacturers for a significant majority of our assembly and test operations, including Amkor, ASE, KYEC, and TeraPower for our IC products, and BizLink and Foxlink for our AEC products.
We currently outsource all of our IC manufacturing to TSMC, with the assembly and testing processes outsourced to other subcontractors primarily in Asia. We also use third-party contract manufacturers for a significant majority of our assembly and test operations, including Amkor, ASE, KYEC and TeraPower for our IC products, and BizLink for our AEC products.
Changing requirements relating to the materials composition of our semiconductor products, including the restrictions on lead and certain other substances in electronic products sold in various countries, including the United States, the PRC and Japan, and in the European Union, increase the complexity and costs of our product design and procurement operations and may require us to re-engineer our products.
Changing requirements relating to the materials composition of our semiconductor products, including the restrictions on lead and certain other substances in electronic products sold in various countries, 31 including the United States, the PRC and Japan, and in the European Union, increase the complexity and costs of our product design and procurement operations and may require us to re-engineer our products.
If we are unable to continue to develop or maintain these relationships, our products and solutions would become less desirable to our customers, our sales would suffer and our competitive position could be harmed. 27 Average selling prices of our products generally decrease over time, which could negatively impact our revenue and gross margins.
If we are unable to continue to develop or maintain these relationships, our products and solutions would become less desirable to our customers, our sales would suffer and our competitive position could be harmed. Average selling prices of our products generally decrease over time, which could negatively impact our revenue and gross margins.
Many of the companies with which we compete for experienced personnel have greater resources than we have. If 53 we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources.
Many of the companies with which we compete for experienced personnel have greater resources than we have. If we hire employees from competitors or other companies, their former employers may attempt to assert that these employees or we have breached legal obligations, resulting in a diversion of our time and resources.
Customer demand for our products may be impacted by weak economic conditions, inflation, stagflation, recessionary or lower-growth environments, rising interest rates, equity market volatility, geopolitical tensions, war, trade restrictions and sanctions or other negative economic factors in the U.S. or other nations.
Customer demand for our products may be impacted by weak economic conditions, inflation, stagflation, recessionary or lower-growth environments, rising interest rates, equity market volatility, geopolitical tensions, war, trade restrictions, tariffs and sanctions or other negative economic factors in the U.S. or other nations.
Our business depends on continued capital expenditures by data center service providers and is subject to the cyclicality of such expenditures. If the demand for our customers’ products declines or fails to increase, as a result of lower capital expenditures by service providers or any other factors, demand for our products will be similarly affected.
Our business depends on continued capital expenditures by data center service providers and is subject to the cyclicality of such expenditures. If the demand for our customers’ products declines or fails to increase, as a result of lower capital expenditures by service providers or any other factors, demand for 34 our products will be similarly affected.
Further, changes in immigration policies may negatively impact our ability to attract and retain personnel, including personnel with specialized technical expertise. If we fail to attract new personnel or fail to retain or motivate our current personnel, our business, financial condition and results of operations could be adversely affected. Catastrophic events may disrupt our business.
Further, changes 55 in immigration policies may negatively impact our ability to attract and retain personnel, including personnel with specialized technical expertise. If we fail to attract new personnel or fail to retain or motivate our current personnel, our business, financial condition and results of operations could be adversely affected. Catastrophic events may disrupt our business.
Many of our competitors are substantially larger, have greater financial, technical, marketing, distribution, customer support, government support and other resources, are more established than we are and have significantly better brand recognition and broader product offerings, and may be able to bundle their products to gain market share.
Many of our competitors are substantially larger, have greater financial, technical, marketing, distribution, customer support, government support and other resources, are more established than we are and have better brand recognition and broader product offerings, and may be able to bundle their products to gain market share.
The complexity of our products could result in undetected defects; we may be subject to warranty claims and product liability, which could result in a decrease in customers and revenue, unexpected expenses and loss of market share, and our product liability insurance may not adequately cover our costs arising from product defects or otherwise.
The complexity of our products could result in undetected defects; we may be subject to warranty claims and product liability, which could result in a decrease in customers and revenue, 25 unexpected expenses and loss of market share, and our product liability insurance may not adequately cover our costs arising from product defects or otherwise.
We cannot assure you that any patents from any pending or future patent applications will be issued, and even if our pending patent applications are granted, the scope of the rights granted to us may not be meaningful, may not provide us with a commercial advantage and may be subject to reinterpretation after issuance.
We cannot assure that any patents from any pending or future patent applications will be issued, and even if our pending patent applications are granted, the scope of the rights granted to us may not be meaningful, may not provide us with a commercial advantage and may be subject to reinterpretation after issuance.
Any future change in export or import regulations, economic sanctions or related legislation, or change in the countries, governments, persons or technologies targeted by such regulations, could 38 result in decreased use of our products and solutions by, or in our decreased ability to export or sell products and solutions to, existing or potential customers with international operations.
Any future change in export or import regulations, economic sanctions or related legislation, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our products and solutions by, or in our decreased ability to export or sell products and solutions to, existing or potential customers with international operations.
We may not accurately anticipate market trends and changing industry standards, and if we fail to develop and introduce products to adequately address these trends or prevailing industry 24 standards on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed.
We may not accurately anticipate market trends and changing industry standards, and if we fail to develop and introduce products to adequately address these trends or prevailing industry standards on a timely basis, our ability to attract and retain customers could be impaired and our competitive position could be harmed.
If audits result in payments or assessments, our future results may include unfavorable adjustments to our tax liabilities, and we could be adversely affected. Any significant changes to the tax system in the jurisdictions where we operate could adversely affect our business, financial condition and results of operations.
If audits result in payments or assessments, our future results may include unfavorable adjustments to our tax liabilities, and we could 32 be adversely affected. Any significant changes to the tax system in the jurisdictions where we operate could adversely affect our business, financial condition and results of operations.
Claims that our products, processes or technology infringe, misappropriate or otherwise violate third-party intellectual property rights, regardless of their merit or resolution, could be time-consuming or costly to defend or settle and could divert the efforts and attention of our management and technical personnel.
Claims that our products, processes or technology infringe, misappropriate or otherwise violate third-party intellectual property rights, regardless of their merit or resolution, could be time-consuming or costly 43 to defend or settle and could divert the efforts and attention of our management and technical personnel.
In addition to the time and expense required for us to supply support or indemnification to our customers, any such litigation could severely disrupt or shut down the business of our customers or vendors, which in turn could hurt our relations with them and cause the sale of our products to decrease.
In addition to the time and expense required for us to supply support or indemnification to our customers, any such litigation could severely disrupt or shut down the business of our customers or vendors, which in turn could hurt our relations with them and cause the 44 sale of our products to decrease.
In addition, our competitors or others may design around our protected patents or other intellectual property rights. Effective intellectual property protection may be unavailable or more limited in foreign jurisdictions relative to those protections available in the United States, or may not be applied for in one or 43 more relevant jurisdictions.
In addition, our competitors or others may design around our protected patents or other intellectual property rights. Effective intellectual property protection may be unavailable or more limited in foreign jurisdictions relative to those protections available in the United States, or may not be applied for in one or more relevant jurisdictions.
In that event, we may be required to expend significant time and resources to redesign our technology, products or the methods for manufacturing them or to develop 44 or license replacement technology, all of which may not be feasible on a technical or commercial basis.
In that event, we may be required to expend significant time and resources to redesign our technology, products or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis.
Any disputes with our licensing partners with respect to such agreements could narrow what we believe to be the scope of our rights to the relevant intellectual property, increase our obligations under such agreements or restrict our ability to develop and market our current or new products and services.
Any disputes with our licensing partners with respect to such agreements could narrow what we believe to be the scope of our rights to the relevant intellectual property, increase our obligations under such 46 agreements or restrict our ability to develop and market our current or new products and services.
If we 25 inaccurately forecast demand for our products, we may be unable to obtain adequate and cost-effective foundry or assembly capacity from TSMC or our other third-party manufacturers or suppliers to meet our customers’ delivery requirements, or we may accumulate excess inventories.
If we inaccurately forecast demand for our products, we may be unable to obtain adequate and cost-effective foundry or assembly capacity from TSMC or our other third-party manufacturers or suppliers to meet our customers’ delivery requirements, or we may accumulate excess inventories.
In addition, various countries regulate the import and export of certain encryption and other technology, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our products and solutions or could limit our users’ ability to access our products and solutions in those countries.
In addition, various countries regulate the import and export of certain encryption and other technology, including import and export permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our products and solutions or could limit our users’ ability to access 39 our products and solutions in those countries.
In other cases, customer products are delayed due to incompatible deliverables from other vendors. We incur significant design and development costs 23 in connection with designing our products for customers’ products that may not ultimately achieve market acceptance.
In other cases, customer products are delayed due to incompatible deliverables from other vendors. We incur significant design and development costs in connection with designing our products for customers’ products that may not ultimately achieve market acceptance.
Any impairment of the technologies or of our relationship with these third parties could harm our business. We may not be able to meet manufacturing yields that allow us to meet customer demand and maintain our gross margins.
Any impairment of the technologies or of our relationship with these third parties could harm our business. 28 We may not be able to meet manufacturing yields that allow us to meet customer demand and maintain our gross margins.
Because we do not operate our own manufacturing or assembly facilities or most of our testing facilities, we may not be able to reduce our costs as rapidly as companies that operate their own facilities, and our costs may even increase, which could further reduce our gross margins.
Because we do not operate our own manufacturing or assembly facilities or most of our testing facilities, 29 we may not be able to reduce our costs as rapidly as companies that operate their own facilities, and our costs may even increase, which could further reduce our gross margins.
We may also in the future be subject to claims by our 41 suppliers, employees, consultants or contractors asserting an ownership right in our patents or patent applications, as a result of the work they performed on our behalf.
We may also in the future be subject to claims by our suppliers, employees, consultants or contractors asserting an ownership right in our patents or patent applications, as a result of the work they performed on our behalf.
In particular, other customers that are larger and better financed than us or that have long-term agreements with TSMC or our assembly and test vendors may cause TSMC or our assembly and test vendors to reallocate capacity to those customers, decreasing the capacity available to us.
In particular, other customers that are larger and better financed than us or that have long-term agreements with TSMC or our assembly and test vendors may cause TSMC or our assembly and test vendors to reallocate capacity to those 27 customers, decreasing the capacity available to us.
Any delay in our ability to access our cash, cash equivalents and investments (or the loss of some or all of such funds) or to timely pay key vendors and others could have a material adverse effect on our operations and cause us to need to seek additional capital sooner than planned. 54 If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
Any delay in our ability to access our cash, cash equivalents and investments (or the loss of some or all of such funds) or to timely pay key vendors and others could have a material adverse effect on our operations and cause us to need to seek additional capital sooner than planned. 56 If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
To compete successfully, we must design, develop, market and sell new or enhanced products that provide increasingly higher levels of performance and reliability while meeting industry standards and the cost expectations of our customers.
To compete successfully, we must design, develop, market and sell new or enhanced products that provide increasingly higher levels of performance and reliability while meeting industry standards and the 26 cost expectations of our customers.
If any such claims were to succeed, we might be forced to pay damages on behalf of our customers or vendors that could increase our expenses, disrupt our ability to sell our solutions and reduce 42 our revenue.
If any such claims were to succeed, we might be forced to pay damages on behalf of our customers or vendors that could increase our expenses, disrupt our ability to sell our solutions and reduce our revenue.
President also issued Executive 39 Order 13936 pursuant to which existing license exceptions and preferential status for Hong Kong under relevant U.S. export control laws and regulations were revoked.
President also issued Executive Order 13936 pursuant to which existing license exceptions and preferential status for Hong Kong under relevant U.S. export control laws and regulations were revoked.
While we have certain sustainability initiatives at the Company there can be no 30 assurance that regulators, customers, investors, and employees will determine that these programs are sufficiently robust.
While we have certain sustainability initiatives at the Company there can be no assurance that regulators, customers, investors and employees will determine that these programs are sufficiently robust.
These factors cause companies across the semiconductor industry to reduce spending and tighten inventory controls, which could negatively impact our business, financial condition, and results of operations.
These factors cause companies across the semiconductor industry to reduce spending and tighten inventory controls, which 21 could negatively impact our business, financial condition and results of operations.
Our revenue and operating results have, and could in the future, fluctuate materially and have, and could in 17 the future, be materially and disproportionately impacted by the purchasing decisions of our customers, especially our larger customers.
Our revenue and operating results have, and could in the future, fluctuate materially and have, and could in the future, be materially and disproportionately impacted by the purchasing decisions of our customers, especially our larger customers.
While we believe generative AI presents significant opportunities for our connectivity solutions, there are inherent risks and challenges that could hinder our success in this domain, including but not limited to: • Uncertain Commercial Viability: The development and adoption of generative AI technologies are still in their early stages, and their commercial viability is uncertain.
While we believe generative AI presents significant opportunities for our connectivity solutions, there are inherent risks and challenges that could hinder our success in this domain, including but not limited to: • Uncertain Commercial Viability: The development and adoption of generative AI technologies are still in their early stages, and their commercial viability remains uncertain.
These factors include: • complexity and costs of managing international operations, including manufacturing, assembly and testing of our products and associated costs; • compliance with local laws and regulations and unanticipated changes in local laws and regulations, including tax laws and regulations; • reduced protection of intellectual property rights and heightened exposure to intellectual property theft; • trade and foreign exchange restrictions and higher tariffs, including the ongoing trade tensions between the United States and the PRC that has resulted in higher tariffs on certain semiconductor products; • timing and availability of import and export licenses and other governmental approvals, permits and licenses, including export classification requirements; • restrictions, including economic sanctions, imposed by the U.S. government or foreign governments on our ability to do business with certain companies or in certain countries as a result of international political conflicts, war, climate change or the COVID-19 pandemic, and the complexity of complying with those restrictions; • transportation delays and other consequences of limited local infrastructure, and disruptions, such as large scale outages or interruptions of service from utilities or telecommunications providers; • difficulties in staffing international operations; • changes in immigration policies which may impact our ability to hire personnel; 36 • local business and cultural factors that differ from our normal standards and practices; • differing employment practices and labor relations; • heightened risk of wars or undeclared armed conflict, terrorist acts, civil disturbances or political instability; • regional health issues and the impact of public health epidemics on employees and the global economy, such as the worldwide COVID-19 pandemic; • power outages and natural disasters; • changes in political, regulatory legal or economic conditions, particularly in locations where we have substantial assets and where conditions could rapidly change; • disruptions of capital and trading markets; • difficulty funding and providing liquidity to our international operations, particularly in light of stringent PRC regulations; • difficulty securing payment obligations from our PRC subsidiaries in the event we rely on our subsidiaries to fund financing requirements; and • difficulty in obtaining distribution and support.
These factors include: • complexity and costs of managing international operations, including manufacturing, assembly and testing of our products and associated costs; • compliance with local laws and regulations and unanticipated changes in local laws and regulations, including tax laws and regulations; • reduced protection of intellectual property rights and heightened exposure to intellectual property theft; • trade and foreign exchange restrictions and higher tariffs, including the ongoing trade tensions between the United States and the PRC that has resulted in higher tariffs on certain semiconductor products; • timing and availability of import and export licenses and other governmental approvals, permits and licenses, including export classification requirements; • restrictions, including economic sanctions, imposed by the U.S. government or foreign governments on our ability to do business with certain companies or in certain countries as a 37 result of international political conflicts, war, climate change or public health epidemics, and the complexity of complying with those restrictions; • transportation delays and other consequences of limited local infrastructure, and disruptions, such as large scale outages or interruptions of service from utilities or telecommunications providers; • difficulties in staffing international operations; • changes in immigration policies which may impact our ability to hire personnel; • local business and cultural factors that differ from our normal standards and practices; • differing employment practices and labor relations; • heightened risk of wars or undeclared armed conflict, terrorist acts, civil disturbances or political instability; • regional health issues and the impact of public health epidemics on employees and the global economy, such as the worldwide COVID-19 pandemic; • power outages and natural disasters; • changes in political, regulatory legal or economic conditions, particularly in locations where we have substantial assets and where conditions could rapidly change; • disruptions of capital and trading markets; • difficulty funding and providing liquidity to our international operations, particularly in light of stringent PRC regulations; • difficulty securing the ability of our PRC subsidiaries to pay dividends or make other distributions to us in the event we rely on our subsidiaries to fund financing requirements, considering restrictions under PRC regulations; and • difficulty in obtaining distribution and support.
Supply of raw materials may be negatively impacted by an unfavorable macroeconomic environment, including as a result of increased tensions between the United States and its trading partners, particularly the PRC.
Supply of raw materials may be negatively impacted by an unfavorable macroeconomic environment, including as a result of increased tensions and tariff measures between the United States and its trading partners, particularly the PRC.
We cannot predict whether there will be escalation of the tensions between mainland China and Taiwan, which would lead to new bans or tariffs on exports or even conflict.
We cannot predict whether there will be escalation of the tensions between mainland China and Taiwan, which may lead to new bans or tariffs on exports or even conflict.
Moreover, laws, regulations or industry standards that develop in response to generative AI technologies may be burdensome or may prohibit the deployment of generative AI technologies for one or more uses, any of which could result in lower than anticipated demand from hyperscalers for connectivity solutions in the AI/ML infrastructure market. 34 • Ethical Considerations and Public Perception: Generative AI technologies raise ethical concerns related to privacy, transparency, fairness, and potential misuse.
Moreover, laws, regulations or industry standards that develop in response to generative AI technologies,like the EU AI Act, may be burdensome or may prohibit the deployment of generative AI technologies for one or more uses, any of which could result in lower than anticipated demand from hyperscalers for connectivity solutions in the AI/ML infrastructure market. • Ethical Considerations and Public Perception: Generative AI technologies raise ethical concerns related to privacy, transparency, fairness, and potential misuse.
Relying on third-party manufacturing, assembly and testing presents significant risks to us, including the following: • failure by us, our customers or their end customers to qualify a selected supplier; • capacity shortages during periods of high demand; 22 • reduced control over delivery schedules and quality; • shortages of materials; • third parties infringing, misappropriating or otherwise violating our intellectual property rights; • impairment of the operation or security of our products if errors or other defects occur in the third-party technologies we use, and difficulties correcting such errors or defects because the development and maintenance of those technologies is not within our control; • limited warranties on wafers or products supplied to us; and • potential increases in prices or reduced yields.
Relying on third-party manufacturing, assembly and testing presents significant risks to us, including the following: • failure by us, our customers or their end customers to qualify a selected supplier; • capacity shortages during periods of high demand; • reduced control over delivery schedules and quality; • shortages of materials; • third parties infringing, misappropriating or otherwise violating our intellectual property rights; • impairment of the operation or security of our products if errors or other defects occur in the third-party technologies we use, and difficulties correcting such errors or defects because the development and maintenance of those technologies is not within our control; • limited warranties on wafers or products supplied to us; and • potential increases in prices or reduced yields. 24 The ability and willingness of our third-party contractors to perform is largely outside our control.
Except for our agreements with BizLink and Foxlink for the manufacture of certain AEC products, we do not maintain long-term supply contracts with TSMC or generally with any of our third-party contract manufacturers or other suppliers. We make substantially all of our purchases on a purchase order basis.
Except for our agreement with BizLink for the manufacture of certain AEC products, we do not maintain long-term supply contracts with TSMC or generally with any of our third-party contract manufacturers or other suppliers. We make substantially all of our purchases on a purchase order basis.
The delays inherent in these lengthy sales cycles increase the risk that a customer will decide to cancel, curtail, reduce or delay its product plans or adopt a competing design from one of our competitors, which could cause us to lose anticipated revenue if we continue development but are unable to secure a new design win.
The delays inherent in a lengthy sales cycle increases the risk that a customer will decide to cancel, curtail, reduce or delay its product plans or adopt a competing design from one of our competitors, which could cause us to lose anticipated revenue if we continue development but are unable to secure a new design win.
Our business is dependent on us winning competitive bid selection processes, known as “design wins.” We are focused on securing design wins that enable us to sell our products and solutions.
Our business can be dependent on us winning competitive bid selection processes, known as “design wins.” We are focused on securing design wins that enable us to sell our products and solutions.
In addition, in fiscal 2024, sales to our top 10 customers accounted for approximately 86% of our total revenue. We believe our operating results for the foreseeable future will continue to depend on sales to a relatively small number of customers.
In addition, in fiscal 2025, sales to our top 10 customers accounted for approximately 90% of our total revenue. We believe our operating results for the foreseeable future will continue to depend on sales to a relatively small number of customers.
For example, in February 2023, we announced that our largest customer reduced its demand forecast for certain of our products for reasons we understand are unrelated to our performance, which negatively impacted our fiscal 2023 fourth quarter revenue and our fiscal 2024 revenue expectations.
For example, in February 2023, we announced that our largest customer at the time reduced its demand forecast for certain of our products for reasons we understand were unrelated to our performance, which negatively impacted our fiscal 2023 fourth quarter revenue and our fiscal 2024 revenue expectations.
Based on the manner in which we currently conduct our business, our current and expected composition of our income and assets and the estimated value of our assets, we believe that we were not a PFIC for our taxable year ending on April 27, 2024.
Based on the manner in which we currently conduct our business, our current and expected composition of our income and assets and the estimated value of our assets, we believe that we were not a PFIC for our taxable year ending on May 3, 2025.
These provisions include, among other things: • a classified board of directors with staggered three-year terms; • the authorization of the issuance of “blank check” preferred shares that our board of directors could use to implement a shareholder rights plan; • restrictions on the ability of our shareholders to call meetings or make shareholder proposals; • our amended and restated memorandum and articles of association may only be amended by a vote of shareholders representing at least two-thirds of the outstanding ordinary shares or by a unanimous written consent; • shareholders are not permitted to increase the size of our board, fill vacancies on our board or remove directors without cause; and • the ability of our board of directors, without action by our shareholders, to issue 50,000,000 preferred shares and to issue additional ordinary shares that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change in control. 51 These provisions could deter, delay or prevent a third party from acquiring control of us in a tender offer or similar transactions, even if such transaction would benefit our shareholders.
These provisions include, among other things: • a classified board of directors with staggered three-year terms; • the authorization of the issuance of “blank check” preferred shares that our board of directors could use to implement a shareholder rights plan; • restrictions on the ability of our shareholders to call meetings or make shareholder proposals; • our amended and restated memorandum and articles of association may only be amended by a vote of shareholders representing at least two-thirds of the outstanding ordinary shares or by a unanimous written consent; • shareholders are not permitted to increase the size of our board, fill vacancies on our board or remove directors without cause; and • the ability of our board of directors, without action by our shareholders, to issue 50,000,000 preferred shares and to issue additional ordinary shares that could have the effect of impeding the success of an attempt to acquire us or otherwise effect a change in control.
We generated 36% of our revenue in Hong Kong in fiscal 2024, and 19% of our assets (by book value) were held in Hong Kong as of fiscal 2024. Accordingly, political and economic conditions in Hong Kong and the surrounding region may directly affect our business.
We generated 56% of our revenue in Hong Kong in fiscal 2025, and 43% of our assets (by book value) were held in Hong Kong as of fiscal 2025. Accordingly, political and economic conditions in Hong Kong and the surrounding region may directly affect our business.
Accordingly, our business and operating results are impacted by worldwide economic conditions. Uncertainty about current global economic conditions, which has been characterized by rising interest rates and inflation, geopolitical instability, continuing risk from the COVID-19 pandemic and public health measures related to it, and supply chain uncertainty, has caused, and may continue to cause, businesses to postpone or reduce spending.
Accordingly, our business and operating results are impacted by worldwide economic conditions. Uncertainty about current global economic conditions, which has been characterized by rising interest rates and inflation, tariffs, geopolitical instability, public health crises, such as the COVID-19 pandemic and supply chain uncertainty, has caused, and may continue to cause, businesses to postpone or reduce spending.
Our executive officers, directors and their affiliates, if they choose to act together, have the ability to control or significantly influence all matters submitted to shareholders for approval. As of April 27, 2024, our executive officers, directors and their affiliates, in the aggregate, beneficially owned approximately 17% of our outstanding ordinary shares.
Our executive officers, directors and their affiliates, if they choose to act together, have the ability to control or significantly influence all matters submitted to shareholders for approval. As of May 3, 2025, our executive officers, directors and their affiliates, in the aggregate, beneficially owned approximately 12.5% of our outstanding ordinary shares.
The ability and willingness of our third-party contractors to perform is largely outside our control. If one or more of our contract manufacturers or other outsourcers fails to perform its obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer.
If one or more of our contract manufacturers or other outsourcers fails to perform its obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer.
If additional financing is not available when required or is not available on acceptable terms, we may have to scale back our operations or limit our production activities, and we may not be able to expand our business, develop or enhance our products or solutions, take advantage of business opportunities or respond to competitive pressures, which could negatively impact our business, financial condition and results of operations.
If additional financing is not available when required or is not available on acceptable terms, we may have to scale back our operations or limit our production activities, and we may not be able to expand our business, develop or enhance our products or solutions, take advantage of business opportunities or respond to competitive pressures, which could negatively impact our business, financial condition and results of operations. 30 We may not be able to effectively manage our growth without incurring significant expenditures necessary to address the additional operational and control requirements of our growth.
Due to the evolving nature of these cybersecurity threats, we cannot predict the potential impact of any future incident. 45 While we take measures to protect the security of, and prevent unauthorized access to, our information technology systems and personal and proprietary information, the cybersecurity controls for our information technology systems, or those of our vendors, suppliers or customers, as well as other cybersecurity practices we follow, may not prevent unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of or loss of our data or the data of others (including personal information and proprietary information).
While we take measures to protect the security of, and prevent unauthorized access to, our information technology systems and personal and proprietary information, the cybersecurity controls for our information technology systems, or those of our vendors, suppliers or customers, as well as other 47 cybersecurity practices we follow, may not prevent unauthorized access to, damage to, disablement or encryption of, use or misuse of, disclosure of, modification of, destruction of or loss of our data or the data of others (including personal information and proprietary information).
As of April 27, 2024, we had an accumulated deficit of $135.3 million. We cannot assure you that we will generate sufficient revenue to offset the cost of growing our business in the future.
As of May 3, 2025, we had an accumulated deficit of $83.2 million. We cannot assure you that we will generate sufficient revenue to offset the cost of growing our business in the future.
As of April 27, 2024, we had outstanding a total of 164,305 thousand ordinary shares. All of these shares are freely tradable in the public market without restriction, except for any shares held by one of our existing “affiliates,” as that term is defined in Rule 144 under the Securities Act.
As of May 3, 2025, we had outstanding a total of 171.2 million ordinary shares. All of these shares are freely tradable in the public market without restriction, except for any shares held by one of our existing “affiliates,” as that term is defined in Rule 144 under the Securities Act.
If our actual performance does not meet or exceed our guidance or investor expectations, the trading price of our ordinary shares is likely to decline. 50 If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares.
If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares.
Even if foreign patents are granted, effective enforcement in foreign countries may not be available. The failure of our patents to adequately protect our technology might make it easier for our competitors to offer similar products or technologies, and our business, financial condition and operations could be adversely affected. Monitoring unauthorized use of our intellectual property is difficult and costly.
The failure of our patents to adequately protect our technology might make it easier for our competitors to offer similar products or technologies, and our business, financial condition and operations could be adversely affected. 45 Monitoring unauthorized use of our intellectual property is difficult and costly.
Currently, our competitors range from large, international companies offering a wide range of semiconductor products to smaller companies specializing in narrow markets. Our principal competitors with respect to our products include Broadcom and Marvell as well as various DAC suppliers. Our principal competitors with respect to IP licensing include Synopsys and Alphawave.
Currently, our competitors range from large, international companies offering a wide range of semiconductor products to smaller companies specializing in narrow markets. Our principal competitors with respect to our products include Broadcom Ltd. (Broadcom), Marvell Technology, Inc. (Marvell) and Astera Labs, Inc. (Astera), as well as various cable suppliers.
We also may seek to expand operations in emerging market jurisdictions where legal systems are less developed or familiar to us. 37 In addition, there can be no assurance that the laws or administrative practices relating to taxation (including the current position as to income and withholding taxes), foreign exchange, export controls, economic sanctions or otherwise in the jurisdictions where we have operations will not change.
In addition, there can be no assurance that the laws or administrative practices relating to taxation (including the current position as to income and withholding taxes), foreign exchange, export controls, economic sanctions or otherwise in the jurisdictions where we have operations will not change.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, could result in additional cost and liability to us, damage our reputation, 46 inhibit sales and have a material adverse effect on our business, results of operations, and financial condition.
Any inability, or perceived inability, to adequately address privacy and data protection concerns, or to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, could result in additional cost and liability to us, damage our reputation, inhibit sales and have a material adverse effect on our business, results of operations and financial condition. 48 We use certain software governed by open-source licenses, which under certain circumstances could materially adversely affect our business, financial condition, operating results and cash flow.
The loss of, or a significant reduction in sales to, one or more of our major customers could negatively impact our revenue and operating results. In fiscal 2024, we had two customers that each accounted for 10% or more of our total revenue. These customers accounted for 39% and 15% of our total revenue in fiscal 2024, respectively.
The loss of, or a significant reduction in sales to, one or more of our major customers could negatively impact our revenue and operating results. In fiscal 2025, we had one customer that accounted for 10% or more of our total revenue (such one customer accounting for 67% of total fiscal 2025 revenue).
These events could also damage our reputation, and result in increased costs or loss of sales. 32 Risks Related to Our Industry Our target customer and product markets may not grow or develop as we currently expect. Within the data infrastructure industry, our target markets include networking OEMs, optical module OEMs, hyperscalers, 5G communications, IoT, HPC and artificial intelligence markets.
Risks Related to Our Industry Our target customer and product markets may not grow or develop as we currently expect. Within the data infrastructure industry, our target markets include networking OEMs, optical module OEMs, hyperscalers, 5G communications, IoT, HPC and artificial intelligence markets.
However, such rights are not available in respect of the shares of any class for which an open market exists on a recognized stock exchange or recognized interdealer quotation system at the expiry date of the period allowed for written notice of an election to dissent where, upon the merger or the consolidation, the shareholder receives, amongst other things, either: (a) shares of a surviving or consolidated company, or depository receipts in respect thereof; or 47 (b) shares of any other company, or depository receipts in respect thereof, which shares or depository receipts at the effective date of the merger or consolidation, are either listed on a national securities exchange or designated as a national market system security on a recognized interdealer quotation system or held of record by more than two thousand holders.
However, such rights are not available in respect of the shares of any class for which an open market exists on a recognized stock exchange or recognized interdealer quotation system at the expiry date of the period allowed for written notice of an election to dissent where, upon the merger or the consolidation, the shareholder receives, amongst other things, either: (a) shares of a surviving or consolidated company, or depository receipts in respect thereof; or (b) shares of any other company, or depository receipts in respect thereof, which shares or depository receipts at the effective date of the merger or consolidation, are either listed on a national securities exchange or designated as a national market system security on a recognized interdealer quotation system or held of record by more than two thousand holders. 49 As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as shareholders of a corporation incorporated in a jurisdiction in the United States.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, are reasonably likely to materially affect our company, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this annual report on Form 10-K , including the risk factors entitled “Cybersecurity breaches, cyberattacks, and other disruptions to information technology systems could disrupt our operations, compromise the confidentiality of our data or our intellectual property, and adversely affect our business, reputation, operations, and financial results” and “Our business may be impacted by information technology system failures or network disruptions, and lack of redundancy.” Governance Our Board considers cybersecurity risk as part of its overall risk oversight function and has delegated to the Nominating and Corporate Governance Committee of the Board (the NCG Committee) overall oversight of cybersecurity matters and other policies and internal controls regarding cybersecurity risks.
Biggest changeSee Item 1A, “Risk Factors,” in this annual report on Form 10-K , including the risk factors entitled “Cybersecurity breaches, cyberattacks and other disruptions to information technology systems could disrupt our operations, compromise the confidentiality of our data or our intellectual property, and adversely affect our business, reputation, operations and financial results” and “Our business may be impacted by information technology system failures or network disruptions and lack of redundancy” in this Annual Report on Form 10-K for additional information about our cybersecurity-related risks.
Our IT management team supervises both our internal cybersecurity personnel and any retained external 56 cybersecurity consultants. Our Director of IT has served in various roles in information technology and information security for over 15 years.
Our IT management team supervises 58 both our internal cybersecurity personnel and any retained external cybersecurity consultants. Our Director of IT has served in various roles in information technology and information security for over 15 years.
The Audit Committee of the Board (the Audit Committee) is responsible for oversight of disclosure controls with respect to potential cybersecurity incidents as well as the Company’s compliance with SEC rules applicable to cybersecurity risk management. In fiscal 2024 the Audit Committee received reports on our cybersecurity risk management initiatives.
The Audit Committee of the Board (the Audit Committee) is responsible for oversight of disclosure controls with respect to potential cybersecurity incidents as well as the Company’s compliance with SEC rules applicable to cybersecurity risk management. In fiscal 2025 the Audit Committee and the NCG Committee received reports on our cybersecurity risk management initiatives.
The IT management team has primary responsibility for our overall cybersecurity risk management program, including monitoring the prevention, detection, mitigation, and remediation of cybersecurity incidents, and works in partnership with our other business leaders, including our Chief Legal Officer, Vice President of Systems Engineering, and internal audit function, as needed.
The IT management team has primary responsibility for our overall cybersecurity risk management program, including monitoring the prevention, detection, mitigation and remediation of cybersecurity incidents, and works in partnership with our other business leaders, including our Chief Legal Officer, Chief of Staff and internal audit function, as needed.
Our cybersecurity incident response process is designed to escalate significant cybersecurity incidents to a team of business leaders, including, but not limited to, our Vice President of Systems Engineering, Chief Legal Officer, and Chief Financial Officer.
Our cybersecurity incident response process is designed to escalate significant cybersecurity incidents to a team of business leaders, including, but not limited to, our Chief of Staff, Chief Legal Officer and Chief Financial Officer.
Added
As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Added
Cybersecurity Governance Our Board considers cybersecurity risk as part of its overall risk oversight function and has delegated to the Nominating and Corporate Governance Committee of the Board (the NCG Committee) overall oversight of cybersecurity matters and other policies and internal controls regarding cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The following table presents the approximate square footage of our significant leased facilities as of April 27, 2024: (Square Feet) Locations Primary Use Leased Facilities (1) United States Research and design, sales and marketing, administration and operations 88,896 Mainland China Research and design, administration and operations 66,929 Taiwan Research and design, administration and operations 52,057 Hong Kong Administration and operations 7,088 Total 214,970 (1) Lease terms expire in various years from 2024 through 2030, and generally include renewals at our option.
Biggest changeProperties The following table presents the approximate square footage of our significant leased facilities as of May 3, 2025: (Square Feet) Locations Primary Use Leased Facilities (1) United States Research and design, sales and marketing, administration and operations 88,896 Mainland China Research and design, administration and operations 85,446 Taiwan Research and design, administration and operations 69,150 Hong Kong Administration and operations 7,088 Total 250,580 (1) Lease terms expire in various years from 2025 through 2030, and generally include renewals at our option.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures Not Applicable. 57 PART II
Biggest changeMine Safety Disclosures Not Applicable. 59 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph below compares the cumulative total return on our ordinary shares with the cumulative total return of the NASDAQ Composite Index and the Philadelphia Semiconductor Index during the period from January 27, 2022 to April 27, 2024.
Biggest changeThe graph below compares the cumulative total return on our ordinary shares with the cumulative total return of the NASDAQ Composite Index and the Philadelphia Semiconductor Index during the period from January 27, 2022 to May 3, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Since our initial public offering in January 2022, our ordinary shares have been traded on the Nasdaq Global Select Market under the symbol “CRDO”. Prior to that time, there was no public market for our ordinary share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Since our initial public offering in January 2022, our ordinary shares have been traded on the Nasdaq Global Select Market under the symbol “CRDO”. Prior to that time, there was no public market for our ordinary shares.
The graph compares a $100 investment on January 27, 2022 in our ordinary shares with a $100 investment on January 27, 2022 in each index and assumes that any dividends were reinvested. Shareholder returns over the indicated periods should not be considered indicative of future share prices or shareholder returns. Recent Sales of Unregistered Securities None.
The graph compares a $100 investment on January 27, 2022 in our ordinary shares with a $100 investment on January 27, 2022 in each index and assumes that any dividends were reinvested. Shareholder returns over the indicated periods should not be considered indicative of future share prices or shareholder returns. Recent Sales of Unregistered Securities 60 None.
Holders On June 17, 2024, there were 73 shareholders of record holding our ordinary shares. We cannot estimate the number of beneficial owners since many brokers and other institutions hold our ordinary shares on behalf of shareholders.
Holders On June 13, 2025, there were 58 shareholders of record holding our ordinary shares. We cannot estimate the number of beneficial owners since many brokers and other institutions hold our ordinary shares on behalf of shareholders.
Removed
Use of Proceeds 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 58 shares and certain existing shareholders sold an aggregate of 1,060 thousand shares.
Added
Issuer Purchases of Equity Securities None. Item 6. [Reserved]
Removed
All of the shares sold were registered under the Act pursuant to a registration statement on Form S-3 (File No. 333-275894), which became effective on December 5, 2023. The Company received net proceeds of $173.4 million after deducting offering costs.
Removed
There has been no material change in the planned use of the proceeds from our follow-on offering as described in our final prospectus filed with the SEC on December 5, 2023. Issuer Purchases of Equity Securities None. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Years Ended April 27, 2024 and April 29, 2023 63 The following table sets forth information derived from our consolidated statements of operations expressed as a percentage of total revenue: Year Ended April 27, 2024 April 29, 2023 Revenue: Product sales 75.2 % 76.8 % Product engineering services 10.3 % 5.9 % IP license 14.5 % 17.3 % Total revenue 100.0 % 100.0 % Cost of revenue: Cost of product sales revenue 36.5 % 40.8 % Cost of product engineering services revenue 1.2 % 0.5 % Cost of IP license revenue 0.4 % 1.0 % Total cost of revenue 38.1 % 42.3 % Gross margin 61.9 % 57.7 % Operating expenses: Research and development 49.5 % 41.7 % Selling, general and administrative 31.2 % 26.2 % Impairment charges 0.4 % 1.3 % Total operating expenses 81.1 % 69.2 % Operating loss (19.2) % (11.5) % Other income (expense), net 7.4 % 1.8 % Loss before income taxes (11.8) % (9.7) % Provision (benefit) for income taxes 2.9 % (0.7) % Net loss (14.7) % (9.0) % Comparison of Years Ended April 27, 2024 and April 29, 2023 Revenue Year Ended % Change April 27, 2024 April 29, 2023 (in thousands, except percentages) Product sales $ 145,048 $ 141,475 2.5 % Product engineering services 19,898 10,780 84.6 % IP license 28,024 31,939 (12.3) % Total revenue $ 192,970 $ 184,194 4.8 % Revenue for fiscal 2024 increased by $8.8 million primarily due to increases in product engineering services revenue of $9.1 million.
Biggest changeResults of Operations Years Ended May 3, 2025 and April 27, 2024 64 The following table sets forth information derived from our consolidated statements of operations expressed as a percentage of total revenue: Year Ended May 3, 2025 April 27, 2024 Revenue: Product sales 94.4 % 75.2 % Product engineering services 2.8 % 10.3 % IP license 2.9 % 14.5 % Total revenue 100.0 % 100.0 % Cost of revenue: Cost of product sales revenue 34.9 % 36.5 % Cost of product engineering services revenue 0.3 % 1.2 % Cost of IP license revenue — % 0.4 % Total cost of revenue 35.2 % 38.1 % Gross margin 64.8 % 61.9 % Operating expenses: Research and development 33.4 % 49.5 % Selling, general and administrative 22.6 % 31.2 % Impairment charges 0.3 % 0.4 % Total operating expenses 56.3 % 81.1 % Operating income (loss) 8.5 % (19.2) % Other income (expense), net 4.1 % 7.4 % Income (loss) before income taxes 12.6 % (11.8) % Provision (benefit) for income taxes 0.7 % 2.9 % Net income (loss) 11.9 % (14.7) % Comparison of Years Ended May 3, 2025 and April 27, 2024 Revenue Year Ended % Change May 3, 2025 April 27, 2024 (in thousands, except percentages) Product sales $ 412,177 $ 145,048 184.2 % Product engineering services 12,122 19,898 (39.1) % IP license 12,476 28,024 (55.5) % Total revenue $ 436,775 $ 192,970 126.3 % Revenue for fiscal 2025 increased by $243.8 million compared to fiscal 2024 primarily due to increases in product sales revenue of $267.1 million, offset by reductions in product engineering services revenue and IP license revenue of $7.8 million and $15.5 million, respectively.
In the event that we need to borrow funds or issue additional equity, we cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations and financial condition would be adversely affected.
In the event that we need to borrow funds or issue additional equity, we 67 cannot be assured that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, our business, results of operations and financial condition would be adversely affected.
The cash inflows from operating activities for fiscal 2024 were primarily due to a net loss of $28.4 million adjusted for the following non-cash items: share-based compensation expense of $39.0 million, depreciation and amortization of $13.8 million, and other non-cash items of $9.0 million. This was offset by $0.7 million of cash outflows for working capital purposes.
The cash inflows from operating activities for fiscal 2024 were primarily due to $28.4 million of net loss adjusted for the following non-cash items: share-based compensation expense of $39.0 million, depreciation and amortization of $13.8 million and other non-cash items of $9.0 million. This was offset by $0.7 million of cash outflows for working capital purposes.
Product Sales - We transact with customers primarily pursuant to standard purchase orders for delivery of products and generally allow customers to cancel or change purchase orders within limited 61 notice periods prior to the scheduled shipment date. We offer standard performance warranties of twelve months after product delivery and offer limited product return rights to certain distributors.
Product Sales - We transact with customers primarily pursuant to standard purchase orders for delivery of products and generally allow customers to cancel or change purchase orders within limited notice periods prior to the scheduled shipment date. We offer standard performance warranties of twelve months after product delivery and offer limited product return rights to certain distributors.
We enter into perpetual semiconductor IP license agreements that have a fixed fee, whereby licensees pay a fixed fee for the right to incorporate our IP technologies into the licensee’s products. The IP license agreements do not typically grant the customer the right to terminate for convenience.
We enter into perpetual semiconductor IP license 62 agreements that have a fixed fee, whereby licensees pay a fixed fee for the right to incorporate our IP technologies into the licensee’s products. The IP license agreements do not typically grant the customer the right to terminate for convenience.
Provision for Income Taxes Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and net operating loss and credit carryforward.
Provision for Income Taxes Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and net operating loss and credit carryforwards.
When we determine that it is probable that a tranche of the warrant will vest and we recognize the related revenue, the grant date 68 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.
When we determine that it is probable that a tranche of the warrant will vest and we recognize the related revenue, the grant date 69 fair value of the associated tranche will be recognized in shareholders’ equity and the underlying expense is amortized as a reduction of revenue in proportion to the amount of related revenue recognized.
Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors.” A discussion regarding our financial condition and our results of operations for the fiscal year ended April 27, 2024 compared to the fiscal year ended April 29, 2023 is presented below.
Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors.” A discussion regarding our financial condition and our results of operations for the fiscal year ended May 3, 2025 compared to the fiscal year ended April 27, 2024 is presented below.
Cash Flows Used in Investing Activities Net cash used in investing activities of $249.5 million in fiscal 2024 was attributable to purchases of property and equipment of $15.7 million and investments in certificates of deposit of $169.8 million, partially offset by maturities of investment in certificates of deposit of $403.6 million.
Net cash used in investing activities of $249.5 million for fiscal 2024 was attributable to purchases of property and equipment of $15.7 million and investment in certificates of deposit of $403.6 million, partially offset by maturities of investment in certificates of deposits of $169.8 million.
Components of Our Operating Results Revenue Our revenues consist of sale of our products, licensing of and providing engineering services related to our IP and providing product engineering services. Product sales primarily consists of shipment of our ICs and AEC products. IP license revenue includes fees from licensing of our SerDes IP and related engineering and support fees and royalties.
Components of Our Operating Results Revenue Our revenues consist of sales of our products, licensing of and providing engineering services related to our IP and providing product engineering services. Product sales primarily consist of shipments of our ICs and AEC products. IP license revenue includes fees from licensing of our SerDes IP and related engineering and support fees and royalties.
A discussion regarding our results of operations for the fiscal year ended April 29, 2023 compared to the fiscal year ended April 30, 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended April 29, 2023, filed with the SEC on June 23, 2023.
A discussion regarding our results of operations for the fiscal year ended April 27, 2024 compared to the fiscal year ended April 29, 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended April 27, 2024 , filed with the SEC on June 24, 2024.
Cash Flows Provided by Financing Activities Net cash provided by financing activities of $175.3 million for fiscal 2024 was primarily attributable to $173.4 million proceeds from issuance of ordinary shares in connection our follow-on public offering, net of offering costs, $7.1 million in proceeds from exercises of employee share options and the issuance of 67 shares under our employee share purchase plan, offset by $3.1 million in payments for long-term technology license obligations.
Net cash provided by financing activities of $175.3 million for fiscal 2024 was primarily attributable to $173.4 million proceeds from issuance of ordinary shares in connection with our follow-on public offering, net of offering costs, $7.1 million in proceeds from exercises of employee share options and the issuance of shares under our employee share purchase plan, offset by $3.1 million in payments for long-term technology license obligations and $2.2 million tax withheld related to RSU settlement.
The increase was primarily due to the establishment of a full valuation allowance to offset U.S. deferred tax assets in fiscal 2024. Liquidity and Capital Resources Our activities consist primarily of selling our products, licensing our IP, providing IP customization services and conducting research and development of our products and technology.
The decrease was primarily due to the tax expense related to the establishment of a full valuation allowance in the U.S. in fiscal 2024. Liquidity and Capital Resources Our activities consist primarily of selling our products, licensing our IP, providing IP customization services and conducting research and development of our products and technology.
The accounting policies discussed in this section are those that we consider to be the most critical. We consider an accounting policy to be critical if the policy is subject to a material level of judgment and if changes in those judgments are reasonably likely to materially impact our results.
We consider an accounting policy to be critical if the policy is subject to a material level of judgment and if changes in those judgments are reasonably likely to materially impact our results.
A relatively small number customers have historically accounted for and continue to account for a significant portion of our revenue. We report revenue by customer in our financial statement disclosure based on the contracting parties who place purchase orders or sign revenue contracts with us.
We work closely and have engagements with industry-leading companies across these segments. A relatively small number customers have historically accounted for and continue to account for a significant portion of our revenue. We report revenue by customer in our financial statement disclosure based on the contracting parties who place purchase orders or sign revenue contracts with us.
Impairment Charges Year Ended % Change April 27, 2024 April 29, 2023 (in thousands, except percentages) Impairment charges $ 765 $ 2,407 (68.2) % % of total revenue 0.4 % 1.3 % Impairment charges incurred in fiscal 2024 and 2023 were primarily related to the impairments on property and equipment, and third-party IP license that did not reach production qualification.
Impairment Charges Year Ended % Change May 3, 2025 April 27, 2024 (in thousands, except percentages) Impairment charges $ 873 $ 765 14.1 % % of total revenue 0.3 % 0.4 % Impairment charges incurred in fiscal 2025 and 2024 were primarily related to the impairments of property and equipment and third-party IP license that did not reach production qualification.
Over time, we expect to generate an increased proportion of our revenue from sales of our products. We expect to see a long-term benefit from improvements in our operating leverage as our business continues to gain scale. We utilize a fabless business model, working with a network of third parties to manufacture, assemble and test our connectivity products.
We expect to see a long-term benefit from improvements in our operating leverage as our business continues to gain scale. 61 We utilize a fabless business model, working with a network of third parties to manufacture, assemble and test our connectivity products.
This was offset by a decrease in inventory of $15.8 million primarily driven by tightened production management and increased product sales compared to fiscal 2023. Net cash used in operating activities was $24.6 million for fiscal 2023.
This was offset by a decrease in inventory of $15.8 million primarily driven by tightened production management and increased product sales compared to fiscal 2023.
As of April 27, 2024 and April 29, 2023, we had cash and cash equivalents of $66.9 million and $108.6 million, respectively, and working capital of $485.6 million and $297.2 million, respectively. Our principal use of cash is to fund our operations and invest in research and development to support our growth.
As of May 3, 2025 and April 27, 2024, we had cash and cash equivalents of $236.3 million and $66.9 million, respectively, and working capital of $605.8 million and $485.6 million, respectively. Our principal use of cash is to fund our operations and invest in research and development to support our growth.
Our intellectual property (IP) solutions consist primarily of SerDes IP licensing. Data generation has increased dramatically over the past ten years, creating new and complicated challenges in both circuit and system design.
Our product families include integrated circuits (ICs), Active Electrical Cables (AECs) and SerDes Chiplets. Our intellectual property (IP) solutions consist primarily of SerDes IP licensing. Data generation has increased dramatically over the past ten years, creating new and complicated challenges in both circuit and system design.
We partner with Microsoft on our HiWire Switch AEC and open-source implementation that helps realize Microsoft’s vision for a highly reliable network-managed dual-Top-of-Rack (ToR) architecture (a network architecture design in which computing equipment located within the same or an adjacent rack are, for redundancy, connected to two in-rack network switches, which are, in turn, connected to aggregation switches via fiber optic cables), overcome complex and slow legacy enterprise approaches, simplify deployment and improve connection reliability in the data center. 59 The multibillion-dollar data infrastructure market that we serve is driven largely by hyperscale data centers (hyperscalers), as well as general compute, AI/ML infrastructure, multi-service operators (MSOs), and mobile network operators (MNOs).
We partner with Microsoft on our HiWire Switch AEC and open-source implementation that helps realize Microsoft’s vision for a highly reliable network-managed dual-Top-of-Rack (ToR) architecture (a network architecture design in which computing equipment located within the same or an adjacent rack are, for redundancy, connected to two in-rack network switches, which are, in turn, connected to aggregation switches via fiber optic cables), overcome complex and slow legacy enterprise approaches, simplify deployment and improve connection reliability in the data center.
The increase was due primarily to a $2.6 million increase in personnel costs as a result of higher selling, general and administrative headcount, a $7.0 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $1.1 million increase in legal expenses and a $0.6 million increase in software licenses.
The increase was due primarily to a $17.7 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $10.3 million increase in personnel costs as a result of higher selling, general and administrative headcount and a $5.6 million increase in external consultation fees relating to general and administrative expenses.
Our connectivity solutions are optimized for optical and electrical Ethernet applications, including the 100G (or Gigabits per second), 200G, 400G, 800G and emerging 1.6T (or Terabits per second) markets. Our products are based on our Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies. Our product families include integrated circuits (ICs), Active Electrical Cables (AECs) and SerDes Chiplets.
Our connectivity solutions are optimized for optical and electrical Ethernet and PCIe applications, including the 100G (or Gigabits per second), 200G, 400G, 800G and emerging 1.6T (or Terabits per second) ethernet markets and the 32G PCIe5 and upcoming 64G PCIe6 markets. Our products are based on our Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies.
The demands for increased bandwidth, improved power and cost efficiency and heightened security have simultaneously and dramatically expanded as work, education and entertainment have rapidly digitized across myriad endpoint users. We design, market and sell both product and IP solutions. We help define industry conventions and standards within the markets we target by collaborating with technology leaders and standards bodies.
The demands for increased bandwidth, improved power and cost efficiency and heightened security have simultaneously and dramatically expanded as work, education and entertainment have rapidly digitized across myriad endpoint users. We design, market and sell both product, software and IP solutions.
Provision (benefit) for Income Taxes Year Ended % Change April 27, 2024 April 29, 2023 (in thousands, except percentages) Provision (benefit) for income taxes $ 5,624 $ (1,367) (511.4) % % of total revenue 2.9 % (0.7) % Provision for income taxes in fiscal 2024 increased by $7.0 million compared to the same period in fiscal 2023.
Provision for Income Taxes Year Ended % Change May 3, 2025 April 27, 2024 (in thousands, except percentages) Provision for income taxes $ 2,687 $ 5,624 (52.2) % % of total revenue 0.7 % 2.9 % Provision for income taxes in fiscal 2025 decreased by $2.9 million compared to the same period in fiscal 2024.
Actual results may differ from those estimates and such differences may be material to the financial statements. We continue to monitor and assess our critical estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods.
We continue to monitor and assess our critical estimates in light of developments, and as events continue to evolve and additional information becomes available, our estimates may change materially in future periods.
Research and Development Year Ended % Change April 27, 2024 April 29, 2023 (in thousands, except percentages) Research and development $ 95,531 $ 76,774 24.4 % % of total revenue 49.5 % 41.7 % Research and development expenses for fiscal 2024 increased by $18.8 million compared to fiscal 2023.
Research and Development Year Ended % Change May 3, 2025 April 27, 2024 (in thousands, except percentages) Research and development $ 145,994 $ 95,531 52.8 % % of total revenue 33.4 % 49.5 % Research and development expenses for fiscal 2025 increased by $50.5 million compared to fiscal 2024.
Geographically, 31% of our total revenue in both fiscal 2024 and 2023 was generated from customers in North America, and 69% of our total revenue in both fiscal 2024 and 2023 was generated from customers in the rest of the world, primarily in Asia. During fiscal 2024 and 2023, we generated $28.4 million and $16.5 million of net loss, respectively.
Geographically, 15% and 31% of our total revenue in fiscal 2025 and 2024 was generated from customers in North America, and 85% and 69% of our total revenue in fiscal 2025 and 2024 was generated from customers in the rest of the world, primarily in Asia.
As a supplement to our financial statement footnote disclosure, and to provide further insight into our end customer concentration, the following table summarizes our revenue by customer as a percentage of total revenue based on end customer profile, rather than based on the contracting parties who place purchase orders or sign revenue contracts with us: Year Ended April 27, 2024 April 29, 2023 Revenue: Customer Z 26 % 55 % Customer Y 20 % * Customer B 15 % * Customer C * 12 % Customer E * 13 % * Less than 10% of total revenue. 60 Our Business Model We are a product-focused business with a strong foundation in IP, pioneering comprehensive connectivity solutions that deliver bandwidth, scalability, and end-to-end signal integrity for next-generation platforms.
As a supplement to our financial statement footnote disclosure, and to provide further insight into our end customer concentration, the following table summarizes our revenue by customer as a percentage of total revenue based on end customer profile, rather than based on the contracting parties who place purchase orders or sign revenue contracts with us: Year Ended May 3, 2025 April 27, 2024 Revenue: Customer E 63 % 20 % Customer F * 26 % Customer B * 15 % * Less than 10% of total revenue.
This was offset by increases in accounts payable of $3.8 million and accrued expenses, compensation and other liabilities of $0.5 million due to amounts payable relating to increased purchases of inventory to support growing demand for our products.
This was offset by increases in accounts payable of $41.9 million and accrued compensation and other liabilities of $15.9 million due to increased purchases of inventory to support growing demand for our products. Net cash used in operating activities was $32.7 million for fiscal 2024.
Product sales and product engineering services revenue comprised 85% and 83% of our total revenue in fiscal 2024 and 2023, respectively, and IP license and IP license engineering services revenue represented 15% and 17% of our total revenue in fiscal 2024 and 2023, respectively.
During fiscal 2025 and 2024, we generated $436.8 million and $193.0 million in total revenue, respectively. Product sales and product engineering services revenue comprised 97% and 85% of our total revenue in fiscal 2025 and 2024, respectively, and IP license revenue represented 3% and 15% of our total revenue in fiscal 2025 and 2024, respectively.
Net cash used in investing activities of $130.9 million in fiscal 2023 was attributable to purchases of property and equipment of $21.7 million and investment in certificates of deposit of $159.2 million, partially offset by maturities of investment in certificates of deposits of $50.0 million.
Cash Flows Provided by (Used in) Investing Activities Net cash provided by investing activities of $112.0 million for fiscal 2025 was attributable to maturities of investment in certificates of deposit of $406.8 million, partially offset by purchases of property and equipment of $36.1 million and investments in certificates of deposit of $258.7 million.
The preparation of financial statements in accordance with GAAP requires certain estimates, assumptions and judgments to be made that may affect our consolidated financial statements. Accounting policies that have a significant impact on our results are described in Note 2 to our consolidated financial statements included elsewhere in this filing.
Critical Accounting Estimates We prepare our financial statements in conformity with GAAP. The preparation of financial statements in accordance with GAAP requires certain estimates, assumptions and judgments to be made that may affect our consolidated financial statements.
Estimates are used for, but not limited to, write-down for excess and obsolete inventories, the SSP for each distinct performance obligation included in customer contracts with multiple performance obligations, variable consideration from revenue contracts, determination of the fair value of share awards and customer warrant, valuation of ordinary shares and the realization of tax assets and estimates of tax reserves.
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 awards, and the realization of tax assets and estimates of tax reserves. Actual results may differ from those estimates and such differences may be material to the financial statements.
We believe that continued investments in our products are important to our future growth and, as a result, we expect our research and development expenses to continue to increase in absolute dollars. 62 Selling, General and Administrative Expenses Selling expenses consist of personnel costs including salaries, benefits and share-based compensation expense, field application engineering support, samples to customers, shipping costs and travel and entertainment costs.
Selling, General and Administrative Expenses Selling expenses consist of personnel costs including salaries, benefits and share-based compensation expense, field application engineering support, samples to customers, shipping costs and travel and entertainment costs.
The following table summarizes our cash flows for the periods indicated. 66 Year Ended April 27, 2024 April 29, 2023 (in thousands) Net cash provided by (used in) operating activities $ 32,737 $ (24,615) Net cash used in investing activities $ (249,485) $ (130,941) Net cash provided by financing activities $ 175,276 $ 4,885 Cash Flows Provided by (Used in) Operating Activities Net cash provided by operating activities was $32.7 million for fiscal 2024.
Year Ended May 3, 2025 April 27, 2024 (in thousands) Net cash provided by operating activities $ 65,083 $ 32,737 Net cash provided by (used in) investing activities $ 111,990 $ (249,485) Net cash provided by (used in) financing activities $ (7,728) $ 175,276 Cash Flows Provided by Operating Activities Net cash provided by operating activities was $65.1 million for fiscal 2025.
When SSPs are not directly observable, we use the adjusted market assessment approach or residual approach, if applicable. We also consider the constraint on estimates of variable consideration when estimating the total transaction price. Our policy is to record revenue net of any applicable sales, use or excise taxes.
Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price (SSP) basis. We also consider the constraint on estimates of variable consideration when estimating the total transaction price. Our policy is to record revenue net of any applicable sales, use or excise taxes.
We also develop IP solutions to address the specific and complex needs of our customers. We earn revenue from these IP solutions primarily through licensing fees and royalties. In addition to product sales and IP license revenue, we also generated revenue from providing engineering services as part of our product and license arrangements with certain customers.
In addition to product sales and IP license revenue, we also generated revenue from providing engineering services as part of our product and license arrangements with certain customers. Over time, we expect to generate an increased proportion of our revenue from sales of our products.
Once developed, these tailored solutions can generally be broadly leveraged across our portfolio and we are able to sell the part or license the IP to the broader market. During fiscal 2024 and 2023, we generated $193.0 million and $184.2 million in total revenue, respectively.
We develop standard solutions we can sell broadly to our end markets and also develop tailored solutions designed to address specific customer needs. Once developed, these tailored solutions can generally be broadly leveraged across our portfolio and we are able to sell the part or license the IP to the broader market.
The cash outflows from working capital for fiscal 2023 were primarily driven by (a) an increase in accounts receivable of $20.0 million primarily due to increased sales in the fiscal 2023 compared to fiscal 2022 and timing of collection; (b) an increase in inventory of $24.4 million to better support unfulfilled backlog and related new product ramps; (c) and an increase in contract assets of $1.6 million primarily driven by certain IP licensing and engineering services arrangements where certain billing milestones had not yet been reached but the criteria for revenue had been met.
The cash outflows from working capital for fiscal 2025 were primarily driven by (a) an increase in accounts receivable of $102.5 million primarily due to increased sales in the fiscal 2025 compared to fiscal 2024 and timing of collection; (b) and an increase in inventory of $70.5 million to support unfulfilled backlog and related new product ramps.
We sell our products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets. We work closely and have engagements with industry-leading companies across these segments.
We expect that as our products are more widely adopted and as our number of customers increase, customer concentration will decrease. We sell our products to hyperscalers, original equipment manufacturers (OEMs), original design manufacturers (ODMs) and optical module manufacturers, as well as to companies in the enterprise and HPC markets.
The increase was due primarily to a $7.0 million increase in personnel costs primarily as a result of new hires for product development, an $8.0 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $2.2 million increase in depreciation expense driven by increased computer equipment and software and laboratory equipment utilized in research and development activities, and a $1.5 million increase in information technology and facilities costs.
The increase was due primarily to a $20.6 million increase in share-based compensation expense driven by increased amortization expense from new equity awards granted to employees, a $13.3 million increase in personnel costs primarily as a result of new hires for product development, a $10.0 million increase in design activities and higher engineering activities relating to testing and laboratory supplies for new product development and a $3.6 million increase in depreciation expense driven by increased computer equipment and software and laboratory equipment utilized in research and development activities. 66 Selling, General and Administrative Year Ended % Change May 3, 2025 April 27, 2024 (in thousands, except percentages) Selling, general and administrative $ 98,918 $ 60,193 64.3 % % of total revenue 22.6 % 31.2 % Selling, general and administrative expenses for fiscal 2025 increased by $38.7 million compared to fiscal 2024.
Revenue Recognition We recognize revenue upon transfer of control of promised goods and services in an amount that reflects the consideration we expect 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.
Revenue Recognition We recognize revenue upon transfer of control of promised goods and services in an amount that reflects the consideration we expect to receive in exchange for those goods and services. Our policy is to record revenue net of any applicable sales, use or excise taxes.
We derive the substantial majority of our revenue from a limited number of customers. We anticipate we will continue to derive a significant portion of our revenue from a limited number of customers for the foreseeable future. We expect that as our products are more widely adopted and as our number of customers increase, customer concentration will decrease.
During fiscal 2025 and 2024, we generated $52.2 million of net income and $28.4 million of net loss, respectively. We derive the substantial majority of our revenue from a limited number of customers. We anticipate we will continue to derive a significant portion of our revenue from a limited number of customers for the foreseeable future.
The cash outflows from operating activities for fiscal 2023 were primarily due to $16.5 million of net loss and $50.4 million of cash outflows for working capital purposes, partially offset by $42.4 million of non-cash items.
The cash inflows from operating activities for fiscal 2025 were primarily due to net income of $52.2 million adjusted for the following non-cash items: share-based compensation expense of $77.4 million, depreciation and amortization of $21.9 million and other non-cash items of $22.0 million. This was offset by $108.4 million of cash outflows for working capital purposes.
Gross Profit and Gross Margin Year Ended % Change April 27, 2024 April 29, 2023 (in thousands, except percentages) Gross profit $ 119,431 $ 106,194 12.5 % Gross margin 61.9 % 57.7 % Gross margin increased by 4.2 percentage points in fiscal 2024 primarily driven by (a) an increase in our high-margin product engineering services revenue as a percentage of overall revenue; and (b) an increase of product sales gross margin as noted above.
Gross Profit and Gross Margin Year Ended % Change May 3, 2025 April 27, 2024 (in thousands, except percentages) Gross profit $ 282,909 $ 119,431 136.9 % Gross margin 64.8 % 61.9 % Gross margin increased by 2.9 percentage points in fiscal 2025 primarily driven by our product sales business gaining scale from the improvements in our operating leverage.
We contract with a variety of manufacturing partners to build our products based on our proprietary SerDes and DSP technologies. We develop standard solutions we can sell broadly to our end markets and also develop tailored solutions designed to address specific customer needs.
We help define industry conventions and standards within the markets we target by collaborating with technology leaders and standards bodies. We contract with a variety of manufacturing partners to build our products based on our proprietary SerDes and DSP technologies.
As a result, the product mix was more diverse in fiscal 2024 than in fiscal 2023. 64 Cost of Revenue Year Ended % Change April 27, 2024 April 29, 2023 (in thousands, except percentages) Cost of product sales revenue $ 70,498 $ 75,143 (6.2) % Cost of product engineering services revenue 2,225 972 128.9 % Cost of IP license revenue 816 1,885 (56.7) % Total cost of revenue $ 73,539 $ 78,000 (5.7) % Cost of revenue decreased by $4.5 million primarily due to $4.6 million decrease in cost of product sales revenue.
Cost of Revenue Year Ended % Change May 3, 2025 April 27, 2024 (in thousands, except percentages) Cost of product sales revenue $ 152,381 $ 70,498 116.1 % Cost of product engineering services revenue 1,314 2,225 (40.9) % Cost of IP license revenue 171 816 (79.0) % Total cost of revenue $ 153,866 $ 73,539 109.2 % Total cost of revenue increased by $80.3 million primarily due to an $81.9 million increase in cost of product sales revenue.
Impairment Charges Impairment charges consist primarily of impairment on property and equipment for assets no longer in service. Other Income and Expense, Net Other income and expense, net consists primarily of interest income from significant financing components related to IP license revenue contracts, and foreign exchange gains and losses.
Impairment Charges Impairment charges consist primarily of impairment of property and equipment and third-party IP licenses for assets no longer in service or for future products that did not reach production qualification. 63 Other Income and Expense, Net Other income and expense, net consists primarily of interest income from cash and cash equivalents and short-term investments and interest expense relating to certain purchases of computer equipment and software.
Net cash provided by financing activities of $4.9 million in fiscal 2023 was primarily attributable to $5.5 million in proceeds from exercises of employee share options and the issuance of shares under our employee share purchase plan. Critical Accounting Estimates We prepare our financial statements in conformity with GAAP.
Purchases of property and equipment primarily relate to mask sets purchases for new products introduced or in process of being introduced and computer equipment and software used for research and development purposes. 68 Cash Flows Provided by (Used in) Financing Activities Net cash used in financing activities of $7.7 million for fiscal 2025 was primarily attributable to $9.3 million tax withheld related to RSU settlement and $6.3 million in payments for long-term technology license obligations, offset by $7.8 million in proceeds from exercises of employee share options and the issuance of shares under our employee share purchase plan.
The increase in product engineering services revenue was primarily due to Credo entering into two new non-recurring engineering contracts, one of which was entered into in fiscal 2024 and which saw significant ramp-up in the year, resulting in revenue recognition of $15.5 million.
The decrease in product engineering services revenue was due to the completion of certain product engineering services arrangements resulting in a decrease in engineering time of 55%. 65 The decrease in IP license revenue was primarily due to fewer contracts entered into during fiscal 2025 as compared to fiscal year 2024.
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Overview Credo provides innovative, secure, high-speed and power-efficient connectivity solutions. Our solutions target the data infrastructure market, where bandwidth requirements are increasing exponentially, driven by the accelerating deployment of leading edge Artificial Intelligence infrastructure and applications.
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Overview At Credo, our mission is to redefine high-speed connectivity by delivering breakthrough solutions that enable the next generation of AI-driven applications. We are 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.
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Where an arrangement includes multiple performance obligations, the transaction price is allocated to these on a relative standalone selling price (SSP) basis. We determine 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 our overall pricing objectives, while maximizing observable inputs.
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The multibillion-dollar data infrastructure market that we serve is driven largely by hyperscale data centers (hyperscalers), as well as general compute, AI/ML infrastructure, multi-service operators (MSOs) and mobile network operators (MNOs).
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The increase in product sales revenue was driven by growth in Chiplet and Optical products, offset by a modest decline in AEC products.
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Our Business Model We are a product-focused business with a strong foundation in IP, pioneering comprehensive connectivity solutions that deliver bandwidth, scalability and end-to-end signal integrity for next-generation platforms. We also develop IP solutions to address the specific and complex needs of our customers. We earn revenue from these IP solutions primarily through licensing fees and royalties.
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The decrease was driven by improvement of our product sales gross margin from 46.9% in fiscal 2023 to 51.4% in fiscal 2024 as a result of increased product sales that drove the economies of scales.
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We believe that continued investments in our products are important to our future growth and, as a result, we expect our research and development expenses to continue to increase in absolute dollars.
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Selling, General and Administrative Year Ended % Change April 27, 2024 April 29, 2023 (in thousands, except percentages) Selling, general and administrative $ 60,193 $ 48,248 24.8 % % of total revenue 31.2 % 26.2 % 65 Selling, general and administrative expenses for fiscal 2024 increased by $11.9 million compared to the same period in fiscal 2023.
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The increase in product sales revenue was primarily due to a significant increase in volume unit shipments for AEC products which contributed over 95% of the increase in product sales revenue.
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Purchases of property and equipment primarily relate to mask sets purchases for new products introduced or in process of being introduced, and computer equipment and software used for research and development purposes.
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The increase was driven by the significant increase of unit shipments for our AEC products discussed above.
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We determine 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 our overall pricing objectives, while maximizing observable inputs.
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The following table summarizes our cash flows for the periods indicated.
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The determination of the SSP for certain of our 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. Our policy is to record revenue net of any applicable sales, use or excise taxes.
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Accounting policies that have a significant impact on our results are described in Note 2 to our consolidated financial statements included elsewhere in this filing. The accounting policies discussed in this section are those that we consider to be the most critical.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIf the U.S. dollar weakened by 10%, our operating expense in fiscal 2024 would have increased by approximately 2%. 69 Interest Rate Risk We maintain an investment policy that requires minimum credit ratings and diversification of credit risk. We invest our excess cash primarily in money market mutual funds and time deposits.
Biggest changeIf the U.S. dollar weakened by 10%, our operating expense in fiscal 2025 would have increased by approximately 2%. 70 Interest Rate Risk We maintain an investment policy that requires minimum credit ratings and diversification of credit risk. We invest our excess cash primarily in money market mutual funds and time deposits.
The fair market value of fixed-rate securities may be adversely impacted due to a rise in interest rates, while floating-rate securities may produce less income than predicted if interest rates fall. 70
The fair market value of fixed-rate securities may be adversely impacted due to a rise in interest rates, while floating-rate securities may produce less income than predicted if interest rates fall. 71

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