Credo Technology Stock Tanks Despite Sales More Than Double

Credo Technology Stock Tanks Despite Sales More Than Double

Credo Technology Group CRDO shares fell about 7% Wednesday even after the semiconductor connectivity provider posted triple-digit revenue growth and earnings above expectations.

Revenue for the fiscal first quarter jumped 114.7% year over year to $479 million, while non-GAAP earnings per share reached $1.20. GAAP net income was $129.4 million, compared with an operating profit of $120.7 million.

Investors instead appeared focused on profitability trends. GAAP gross margin declined to 64.5% from 67.4% a year earlier, while operating expenses rose to $188.4 million from $89.6 million. Operating margin fell to 25.2% from 27.2%.

For the fiscal second quarter, Credo projects revenue of $525 million to $535 million. The company expects GAAP gross margin of 62.9% to 64.9% and operating expenses of $199 million to $204 million.

What it means for the stock: Faster sales growth may be competing with concerns about rising expenses and thinner margins.