Credo Technology Group Holding Ltd Earnings Update: A quick look
Credo Technology Group Holding Ltd (CRDO) just released its financial report for its fourth quarter of fiscal 2026. We will take a closer look below.
Full disclosure: I am not currently L/S CRDO.
Overview
Credo Technology Group (CRDO) delivered impressive financial results for fiscal year 2026, characterised by a 206% year-over-year revenue increase to $1.33 billion.
This performance was driven by a fundamental shift in AI infrastructure, where connectivity reliability and power efficiency have become the primary bottlenecks for scaling GPU clusters.
Credo’s vertically integrated strategy, spanning SerDes, silicon, and system-level solutions, has allowed the company to capitalise on the transition from compute-constrained to connectivity-constrained data centre architectures.
By positioning itself as a foundational network architecture partner, Credo has successfully scaled its business while maintaining strong margins and operational discipline.
Fourth Quarter of Fiscal Year 2026 Financial Highlights
Revenue: $437.0 million grew by 7.4% quarter over quarter and 157.0% year over year. Fiscal 2026 revenue reached $1.335 billion,
Margins: GAAP gross margin of 68.2% and non-GAAP gross margin of 68.3%
Operating Expenses: GAAP operating expenses of $142.2 million and non-GAAP operating expenses of $81.7 million
Net Income:
GAAP net income of $169.1 million and non-GAAP net income of $226.7 million
GAAP diluted net income per share of $0.88 and non-GAAP diluted net income per share of $1.16
Cash Position: Ending cash and short-term investment balance of $1.4 billion, supported by record quarterly operating cash flow of $182.2 million
Financial Guidance and Outlook
For the first quarter of fiscal 2027, Credo expects revenue between $465 million and $475 million, with non-GAAP gross margins remaining in the 67%-69% range.
For the full fiscal year 2027, the company anticipates more than 80% YOY revenue growth, driven by a mid-single-digit sequential growth pattern in the first half followed by a significant inflection in the second half as the optical portfolio scales.
While operating expenses are expected to increase by approximately 50% to support R&D, the company maintains a target non-GAAP net margin of approximately 50%, demonstrating the inherent operating leverage in its business model.
Key Takeaways
Strategic Inflection in Optics:
Fiscal 2027 should be an inflection point for the optical business, with the company expecting over $600 million in total revenue from this segment.
This growth is supported by three pillars: optical DSPs, silicon photonics (PICs) from the recently acquired DustPhotonics, and the ZeroFlap Optics platform.
Reliability as a Differentiator:
Credo has established “network reliability” as its North Star.
The ZeroFlap AECs and optics are specifically designed to mitigate link instability, which can cost hyperscalers millions in downtime during cluster bring-up.
Market Expansion:
The company is successfully diversifying its customer base beyond the top hyperscalers into the “neo cloud” ecosystem.
Management estimates these neo cloud providers could eventually represent approximately 20% of total revenue.
Future Growth Vectors:
The company is preparing for production ramps in fiscal 2028 for its OmniConnect family (including the “Weaver” gearbox for memory bandwidth) and next-generation AEC solutions utilizing microLED technology.
Final thoughts:
CRDO delivered a very robust set of numbers. Given that the stock had a very sharp run into the print, almost tripling from its March 31 low, some profit-taking was not totally unexpected. Overall, the thesis remains intact for CRDO.
The valuation remains rich, but if the company continues to deliver such numbers, it may quickly grow into the multiple.
I will leave you with this quote from CEO Bill Brennan:
“Fiscal 2026 marked another defining year for Credo. For the year, revenue more than tripled to $1.3 billion, and non-GAAP net income increased more than five times to $662 million. As we enter into fiscal 2027, Credo expects to achieve continued strong financial performance with our innovative and vertically integrated approach that enables customers to accelerate cluster time-to-stability, maximise GPU utilisation, improve network reliability, and reduce overall infrastructure power and operating costs.
Thank you for reading and see you for the next one!
Long this name and will buy more is we go very much before 200, great print market react is wrong here