Credo Technology Group Q4 Earnings Call Highlights

Key Points

• Credo Technology Group posted record fiscal Q4 and full-year results, with revenue topping $1.3 billion for fiscal 2026, up more than 200% year over year, and Q4 revenue hitting a record $437 million.
• Management said AI data center connectivity demand is driving growth, especially for Active Electrical Cables, as hyperscale and neo cloud customers scale larger GPU clusters and need better reliability and efficiency.
• Credo guided for more than 80% revenue growth in fiscal 2027, with a major ramp expected from its optical portfolio and DustPhotonics acquisition, while saying full-year gross margin should stay roughly in line with fiscal 2026.

Credo Technology Group NASDAQ: CRDO reported record fiscal fourth-quarter and full-year results, with management pointing to strong demand for artificial intelligence data center connectivity and forecasting another year of rapid growth.

Chief Executive Officer Bill Brennan said fiscal 2026 was “another defining year” for the company, as revenue exceeded $1.3 billion, more than tripling from the prior year. Non-GAAP net income rose more than fivefold to $662 million. In the fourth quarter, revenue reached a record $437 million, exceeding the company’s total revenue for all of fiscal 2025, Brennan said.

“Very few semiconductor companies have scaled at this pace while sustaining product leadership, strong margins, and operational execution,” Brennan said on the earnings call.

Fourth-Quarter Results Top Guidance

Chief Financial Officer Dan Fleming said fourth-quarter revenue rose 7% sequentially and 157% year over year, coming in above the high end of Credo’s guidance range. Non-GAAP gross margin was 68.3%, also above the company’s guidance range.

Non-GAAP operating income was $216.7 million, compared with $201.8 million in the prior quarter. Non-GAAP net income reached $226.7 million, up 9% sequentially and more than tripling year over year. Fleming said the company’s non-GAAP net margin was 51.9% in the quarter.

Credo generated record cash flow from operations of $182.2 million in the quarter. Capital expenditures were $4.8 million, resulting in free cash flow of $177.5 million. The company ended the quarter with $1.4 billion in cash and equivalents, up $141.8 million from the third quarter.

For the full fiscal year, Fleming said revenue was $1.3 billion, up 206% year over year. Non-GAAP gross margin was 68.1%, up 310 basis points, while earnings per share were $3.46, an improvement of $2.76 from the prior year.

AI Connectivity Demand Drives Growth

Brennan said Credo’s results reflect a broader shift in AI infrastructure, where connectivity has become a critical constraint as clusters scale from tens of thousands to hundreds of thousands of GPUs. He said reliability, power efficiency, signal integrity and telemetry are increasingly important in AI network design.

“Today’s AI infrastructure is increasingly constrained not by compute, but by the reliability and efficiency of the connectivity fabric tying these systems together,” Brennan said.

Credo’s Active Electrical Cable, or AEC, business remains a core growth engine, according to Brennan. He said AECs are becoming the preferred solution for in-rack connectivity and many multi-rack deployments up to seven meters. The company is seeing adoption across hyperscale and neo cloud operators at 100G per lane and emerging 200G per lane deployments.

Fleming said fourth-quarter revenue growth was driven by substantial year-over-year gains across four domestic customers. The company’s top four end customers each accounted for at least 10% of revenue in the quarter, with the largest contributing 34%, followed by customers at 27%, 16% and 10%. Fleming said Credo expects three to four customers to remain above 10% of revenue in coming quarters while the company continues to diversify across hyperscalers, neo clouds and other customers.

Optical Portfolio Expected to Ramp in Fiscal 2027

Management emphasized optics as a major growth area for fiscal 2027. Brennan said the year represents an “inflection point” for Credo’s optical business, including optical DSPs, silicon photonics PICs and the company’s ZeroFlap Optics platform.

Credo recently closed its acquisition of DustPhotonics, which Brennan said expands the company’s position in silicon photonics. He said DustPhotonics brings design win momentum across 800G and 1.6T products, along with a roadmap to 3.2 terabits per second and beyond. Brennan also said its architecture enables optical designs with fewer lasers, which may improve reliability, power efficiency and cost while easing supply chain constraints.

Credo expects each of its optical DSPs, silicon photonics PICs and ZeroFlap Optics to contribute more than $100 million of revenue in fiscal 2027. In total, Brennan said the optical portfolio is expected to generate more than $600 million in revenue, with the ramp accelerating in the second half of the year.

During the question-and-answer portion of the call, Brennan clarified that ZeroFlap Optics is expected to be the largest contributor within the optical portfolio because of its higher average selling prices. He said discrete components such as optical DSPs and silicon photonics PICs typically carry two-digit ASPs, while ZeroFlap Optics carries three-digit ASPs.

Fiscal 2027 Guidance Calls for More Than 80% Revenue Growth

For the first quarter of fiscal 2027, Credo guided for revenue between $465 million and $475 million. The company expects non-GAAP gross margin between 67% and 69%, non-GAAP operating expenses between $86 million and $90 million, and diluted weighted average shares of approximately 199 million.

Fleming said Credo expects mid-single-digit sequential growth in the first half of fiscal 2027, followed by an inflection in the second half. For the full year, management expects total revenue to grow more than 80% year over year. Fleming said about half of the expected absolute dollar growth is expected to come from the optical portfolio, with the other half from existing copper products, primarily AECs and retimers.

Credo expects fiscal 2027 non-GAAP gross margin to be broadly consistent with fiscal 2026 levels. Non-GAAP operating expenses are expected to rise about 50% year over year, below the projected revenue growth rate, as the company continues to invest in research and development. Fleming said Credo expects non-GAAP net margin to be near 50%.

Management Highlights Neo Clouds, Retimers and Emerging Products

Brennan said Credo is encouraged by the growth of neo cloud providers, which are building AI infrastructure platforms for model developers, enterprises, sovereign AI, inference workloads and agentic applications. He said these customers “move very quickly” and place emphasis on network performance, reliability and time to deployment. Asked whether neo clouds could represent 10% or 20% of revenue over the next few years, Brennan said that, collectively, the group could be “on the order of 20%.”

The company also reported momentum in retimers, including 100G and 200G per lane products and PCIe 6.0 retimers. Brennan said Credo’s Blue Heron 200G per lane retimer supports a range of protocols, including Ethernet, UALink and Ethernet SAN.

Looking further ahead, Brennan said Credo expects production ramps for its AEC and OmniConnect product families beginning in fiscal 2028. He said the company’s Weaver gearbox product is aimed at memory bandwidth and density challenges, particularly in next-generation inference designs.

On capital allocation, Fleming said Credo has no current plans to raise additional capital or repurchase shares. He said the DustPhotonics acquisition resulted in about $750 million of net cash going out in the first quarter, while the company remains in a strong cash flow position.

About Credo Technology Group NASDAQ: CRDO

Credo Technology Group, Inc NASDAQ: CRDO is a fabless semiconductor company that develops high‑speed connectivity solutions for cloud, enterprise and telecommunications infrastructure. The company focuses on semiconductors and related IP that enable reliable, low‑latency movement of large volumes of data between servers, switches and optical modules in data centers and network equipment.

Credo's product portfolio centers on high‑speed analog and mixed‑signal devices designed to preserve signal integrity and extend reach over copper and optical links.

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