Credo Technology Group Holding Ltd is a provider of high‑speed connectivity semiconductor and optical interconnect products with a capital‑light balance sheet and a recent shift from losses to positive reported earnings.
The company shows clear strengths in gross profitability and balance-sheet conservatism: gross margin was 61.9% on the trailing‑twelve‑month basis, and the latest diluted EPS reversed to $0.28 after prior negative prints, with year‑over‑year EPS growth of 283.9% (period ended 2025‑05‑03) — see EPS Diluted & Revenue per Share and Revenue & EPS Growth. Liquidity and leverage metrics are robust, with a current ratio of 7.4143 and debt‑to‑equity of 0.0186, supporting operational flexibility while revenue moved higher to $223.1M in the most recent quarter from $193.0M a year earlier — see Revenue & Net Income.
Material concerns remain around earnings quality and margin conversion. Operating cash flow on a TTM basis was $32.7M versus a TTM net income of $52.2M, indicating cash generation still trails reported earnings and raising timing/quality questions — see Earnings Quality Analysis. Investing cash flow also swung from −$249.5M (period ending 2024‑04‑27) to +$112.0M (period ending 2025‑05‑03), evidencing large one‑off shifts in cash allocation, and prior TTM operating and net margins were −19.2% and −14.7% respectively (period ending 2024‑04‑27) even as net income later turned positive — see Strategic Capital Allocation and Profit Margin Trends. Valuation comparators show a trailing P/E of 172.0x in the latest quarter, which is notably elevated relative to conventional multiples — see Price-to‑Earnings (PE) Ratio Trend.
Key fundamental metrics to monitor going forward are operating cash flow versus net income (TTM OCF $32.7M vs TTM net income $52.2M) and whether operating margin moves from the prior −19.2% toward sustained positive territory, revenue trends around the most recent $223.1M quarterly run‑rate, the trajectory of diluted EPS (latest $0.28) and ROE (most recent 7.7%) — see Earnings Quality Analysis, Profit Margin Trends, Revenue & Net Income, EPS Diluted & Revenue per Share and Return on Equity (ROE). Tracking the evolving P/E print (172.0x) alongside those operational improvements is also important — see Price-to‑Earnings (PE) Ratio Trend.
The foundation of business quality and long-term value creation
Credo Technology Group Holding Ltd's reported revenue shows a rising pattern across the quarterly snapshots provided: $184.2M (2023-04-29), $193.0M (2024-04-27) and most recently $223.1M (2025-08-02). The most recent revenue figure sits above the earlier two reported periods, indicating higher top-line receipts in the latest quarter included in the series.
Net income moved from periodic losses and small profits in earlier quarters to materially positive results in 2025. Notable inflection points include a loss of -$22.2M on 2024-04-27 and a reversal to positive net income of $29.4M on 2025-02-01, followed by $22.8M on 2025-05-03 and a further increase to $82.6M on 2025-11-01. The most recent quarterly revenue was $223.1M and the most recent net income was $82.6M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Apr 2023 to Apr 2024, Credo Technology Group Holding Ltd converts approximately 62¢ of every revenue dollar into gross profit (gross margin: 61.9%).After accounting for operating expenses and taxes and expenses, the company retains -14.7% as net profit margin, resulting in $-0.03B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Apr 2023 to Apr 2024
Analyzing long-term margin stability and competitive positioning
Credo Technology Group Holding Ltd's trailing-twelve-month margins through the period ending 2024-04-27 show a high gross margin alongside negative operating and net margins. Gross margin is 61.9%, while operating margin is -19.2% and net profit margin is -14.7%, reflecting positive gross profitability but negative results after operating expenses and all items.
The available multi-period data show a deterioration in net profitability: net profit margin moved from -9.0% in the period ending 2023-04-29 to -14.7% in the most recent period, a decline of 5.7 percentage points. The most recent gross margin was 61.9%, the most recent operating margin was -19.2%, and the most recent net profit margin was -14.7%.
Understanding Profit Margins
Between Apr 2023 and Apr 2024, Credo Technology Group Holding Ltd converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Credo Technology Group Holding Ltd's trailing twelve-month net income shows a clear inflection from cumulative losses to a positive result. Net income was negative across the earlier reported TTMs (‑$22.2M in 2022, ‑$16.5M in 2023 and ‑$28.4M as of 2024-04-27) and then moved to a positive $52.2M in the most recent TTM ending 2025-05-03, representing a material turnaround in reported earnings.
Operating cash flow on a TTM basis is reported as positive $32.7M for the period ending 2024-04-27; that is the latest operating-cash-flow figure in the dataset. Comparing the most recent observations, the latest Net Income TTM ($52.2M, period end 2025-05-03) exceeds the latest Operating Cash Flow TTM ($32.7M, period end 2024-04-27). The most recent Net Income (TTM) was $52.2M. The most recent Operating Cash Flow (TTM) was $32.7M.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Credo Technology Group Holding Ltd's trailing twelve-month Return on Equity moved from negative territory across 2022–2024 (−6.6% in the period ending 2022-04-30, −4.8% in 2023-04-29, and −5.3% in 2024-04-27) to a positive reading in the most recent quarter. The series shows a persistent negative ROE for three consecutive annual periods followed by a clear inflection in the 2025 period.
The latest reported quarter (period ending 2025-05-03) records a ROE of 7.7%, an improvement of 13.0 percentage points versus the prior period's −5.3%. The most recent trailing twelve-month Return on Equity was 7.7%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Credo Technology Group Holding Ltd’s trailing twelve-month investing cash flow shows a clear inflection in the most recent period. Investing CF moved from a large negative position of -$249.5M (period ending 2024-04-27) to a positive $112.0M in the period ending 2025-05-03, indicating a reversal in net investing cash flows between those reporting dates. Operating cash flow on the most recent available TTM basis is positive but modest at $32.7M (period ending 2024-04-27), based on the dataset provided.
On financing, Credo’s TTM financing cash flow is positive and has declined from $204.2M (period ending 2022-04-30) to $175.3M (period ending 2024-04-27) in the available history. The most recent reported TTM values are: Operating Cash Flow (TTM) $32.7M, Investing Cash Flow (TTM) $112.0M, and Financing Cash Flow (TTM) $175.3M.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Across the four quarterly periods provided, Credo Technology Group Holding Ltd has a single numeric P/E reported in the most recent quarter (period ending 2025-05-03). The three prior quarters in the dataset (periods ending 2024-04-27, 2023-04-29 and 2022-04-30) show no numeric P/E value in the supplied data, so a multi-quarter trend cannot be measured from the dataset as given. The notable inflection in the series is the appearance of a numeric P/E in the latest period where prior periods are blank.
The current level shown in the dataset is a P/E of 172.0x for the most recent quarter. Latest PE_RATIO: 172.0x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.