Credo Technology Group Holding Ltd Ordinary Shares
CRDO · Nasdaq
Next quarter
Expected to report Nov 30, 2026 — estimated from last year’s reporting date.
Consensus is $1.03 EPS for Oct 2026 across 5 estimates, ranging $1.00 to $1.06.
CRDO Jul 2026
- 16.13%
- -20.04%
- $0.93
- $0.78
- —
- $479.00M
Reported results
- $479.00M
- $120.70M
- $129.43M
- $0.67
Highlights
- Revenue: First-quarter fiscal 2027 revenue was $479.0 million, up 9.6% sequentially and 114.7% year over year, driven primarily by a ramp in Active Electrical Cable shipments to hyperscale data centers.
- EPS miss: The supplied consensus comparison shows EPS of $0.78 versus a $0.93 expectation, a 16.13% shortfall; the filing reports GAAP diluted EPS of $0.67 and non-GAAP diluted EPS of $1.20.
- Profitability: GAAP gross margin was 64.5%, down from 68.2% in the prior quarter and 67.4% a year earlier, while non-GAAP gross margin was 68.0% versus 68.3% and 67.6%, respectively.
- Operating income: GAAP operating income was $120.7 million, down from $155.8 million in the prior quarter but nearly double the $60.7 million recorded a year earlier.
- AI connectivity concentration: More than 90% of the year-over-year revenue increase came from higher AEC unit shipments, reflecting customer ramps in hyperscale data centers.
- DustPhotonics acquisition: Credo completed the $1.3 billion DustPhotonics acquisition, funded with $769.6 million of cash, $169.1 million of stock and $310.0 million of contingent consideration, adding $895.8 million of goodwill and $361.7 million of intangible assets.
- Next-quarter outlook: Management expects second-quarter fiscal 2027 revenue of $525 million to $535 million, implying sequential growth of roughly 9.6% to 11.7%, with non-GAAP gross margin of 67.0% to 69.0%.
- Cash and investment: Cash and short-term investments totaled $764.3 million at quarter-end, after $735.6 million of net cash spending on the DustPhotonics acquisition and $90.2 million of operating cash flow.
- Customer concentration: Two contracting customers represented 43% and 28% of quarterly revenue, while end-customer profiles accounted for 33%, 28%, 13% and 10%, underscoring continued dependence on a limited number of accounts.
Analysis
Credo’s first quarter of fiscal 2027 was defined by another sharp AI infrastructure ramp, but with a sequential profitability step-down and a sizable acquisition layered onto the business. Revenue reached $479.0 million, up from $437.0 million in the prior quarter and $223.1 million a year earlier. The supplied expectations comparison indicates EPS of $0.78 versus $0.93 consensus, a 16.13% miss; the company’s filing reports GAAP diluted EPS of $0.67 and non-GAAP diluted EPS of $1.20. GAAP net income was $129.4 million, versus $169.1 million in the prior quarter and $63.4 million a year earlier.
The central operating driver was AEC volume: more than 90% of the year-over-year revenue increase came from shipments ramping at hyperscale data-center customers. That growth came with lower GAAP gross margin, primarily because of $11.6 million of amortization from acquired intangible assets, while non-GAAP margin was broadly stable at 68.0%. Credo also completed the $1.3 billion DustPhotonics acquisition, which drove $735.6 million of cash investment and materially expanded goodwill and intangible assets. Management expects revenue of $525 million to $535 million next quarter, with non-GAAP gross margin between 67.0% and 69.0%.
AEC-led revenue acceleration
Credo’s growth remained concentrated in connectivity products serving AI data-center deployments. Revenue rose $255.9 million year over year to $479.0 million, and management said more than 90% of that increase came from higher unit shipments of Active Electrical Cables. The company attributed the ramp primarily to hyperscale data-center customers.
- Geography: United States shipments generated $255.4 million, or 53% of revenue, compared with $82.8 million and 37% a year earlier. Hong Kong contributed $91.2 million, Malaysia $74.5 million and mainland China $1.1 million.
- Customer exposure: Contracting customers A and B represented 43% and 28% of revenue, respectively. On an end-customer basis, customers D, C, E and F represented 33%, 28%, 13% and 10%.
Margins and earnings
The revenue increase did not translate into sequential GAAP earnings growth. GAAP operating income fell to $120.7 million from $155.8 million in the prior quarter, reducing operating margin to 25.2% from 35.7%. Year over year, however, operating income nearly doubled from $60.7 million. Non-GAAP operating income increased to $230.6 million from $216.7 million sequentially, although non-GAAP operating margin declined to 48.2% from 49.6%.
- Gross margin: GAAP gross margin was 64.5%, versus 68.2% in the prior quarter and 67.4% a year earlier. The company attributed the year-over-year decline primarily to $11.6 million of amortization of acquired intangible assets.
- Expense growth: GAAP operating expenses increased to $188.4 million from $142.2 million sequentially and $89.6 million a year earlier. Research and development was $114.5 million, including $45.0 million of share-based compensation; selling, general and administrative expense was $73.9 million, including $37.3 million of share-based compensation.
- Non-GAAP earnings: Non-GAAP net income was $236.3 million, up from $226.7 million in the prior quarter and $98.3 million a year earlier. Non-GAAP diluted EPS was $1.20, compared with $1.16 and $0.52, respectively.
DustPhotonics integration
The quarter included the May 28 acquisition of DustPhotonics, intended to give Credo a more vertically integrated optical connectivity stack spanning SerDes, DSP, silicon photonics and system integration. The deal was not material to reported revenue in the quarter, but it materially changed the balance sheet and cost structure.
- Purchase price: Total consideration was $1.251 billion in the preliminary purchase-price allocation, comprising $769.6 million of cash, $169.1 million of ordinary shares, $2.5 million of replacement awards and $310.0 million of contingent consideration.
- Accounting impact: Credo recorded $895.8 million of goodwill and $361.7 million of acquired intangible assets. Amortization of acquired intangibles was $11.6 million in the quarter and reduced GAAP gross margin.
- Integration costs: Acquisition and integration-related costs were $10.4 million in the quarter, while acquisition-related amortization added another $0.6 million to operating expenses.
Capacity and liquidity
Credo generated $90.2 million of operating cash flow, but cash declined substantially because of the DustPhotonics purchase and investment in inventory and manufacturing capacity. Management said existing cash, short-term investments and working capital should support operations for at least the next 12 months.
- Cash position: Cash and cash equivalents were $466.9 million, down from $1.165 billion at fiscal year-end, while short-term investments increased to $297.4 million. Combined cash and short-term investments were $764.3 million.
- Working capital investment: Accounts receivable increased to $288.8 million from $233.4 million, and inventory rose to $313.1 million from $250.8 million to support unfulfilled backlog and new product ramps.
- Supply commitments: Credo had $88.4 million of refundable manufacturing-capacity deposits at quarter-end and subsequently agreed to pay an additional $102.4 million of refundable deposits during fiscal 2027. Unconditional purchase commitments totaled $222.2 million.
Second-quarter outlook
Management’s second-quarter forecast calls for continued sequential expansion, although the margin range remains below the first quarter’s GAAP level. The outlook implies that the AEC-led demand ramp is continuing into the October quarter.
- Revenue: Credo expects $525 million to $535 million of revenue for the quarter ending October 31, 2026, representing approximately 9.6% to 11.7% sequential growth from $479.0 million.
- Gross margin: GAAP gross margin is expected at 62.9% to 64.9%, while non-GAAP gross margin is expected at 67.0% to 69.0%.
- Expenses: GAAP operating expenses are expected at $199 million to $204 million, including $97 million of share-based compensation and $2 million of acquisition and integration costs. Non-GAAP operating expenses are expected at $100 million to $105 million.
