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01/10 19:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Credo's strong financial performance, including record revenue growth and improved margins, suggests a positive outlook. Despite risks like customer concentration and competitive pressures, optimistic guidance and continued product innovation provide a strong foundation for future growth. The lack of a shareholder return plan is a slight negative, but overall, the positive financial metrics and growth potential outweigh the risks, likely resulting in a stock price increase of 2% to 8% over the next two weeks.
Q4 2025 Revenue $170 million, up 180% year-over-year due to surging demand for high-performance connectivity solutions.
Fiscal 2025 Revenue $437 million, up 126% year-over-year driven by product revenue growth of 157%.
Q4 2025 Non-GAAP Gross Margin 67.4%, up 355 basis points sequentially and up 1,289 basis points year-over-year due to increasing scale.
Fiscal 2025 Non-GAAP Gross Margin 65%, up 257 basis points year-over-year.
Q4 2025 Non-GAAP Operating Income $62.5 million, up from $42.4 million in Q3, due to leverage from 26% sequential top line growth.
Q4 2025 Non-GAAP Operating Margin 36.8%, up 538 basis points sequentially.
Q4 2025 Non-GAAP Net Income $65.3 million, compared to $45.4 million in Q3.
Q4 2025 Non-GAAP Net Margin 38.4%, well above the long-term net margin model of 28% to 33%.
Q4 2025 Cash Flow from Operations $57.8 million, up $53.6 million sequentially due to cash collection from significant product ramp.
Q4 2025 Free Cash Flow $54.2 million, an improvement of $54.6 million from Q3.
Q4 2025 Ending Cash and Equivalents $431.3 million, an increase of $52.1 million from Q3.
Q4 2025 Ending Inventory $90 million, up $36.8 million sequentially.
Revenue Growth: In Q4, Credo delivered revenue of $170 million, a 26% sequential increase and up 180% year-over-year. For fiscal '25, revenue reached $437 million, growing 126% year-over-year.
New Product Launches: Credo demonstrated PCIe Gen6 AECs at GTC, promising benefits for AI scale-up networks. They also showcased ultra-low power 100 gig per lane optical DSPs built on 5 nanometer technology.
Market Expansion: Credo's customer base diversified with three hyperscalers each contributing over 10% of revenue, strengthening market position. They secured a significant DSP win for an 800 gig transceiver.
Operational Efficiency: Non-GAAP gross margin was 67.4% in Q4, up 355 basis points sequentially. Non-GAAP operating margin was 36.8%, a sequential increase of 538 basis points.
Strategic Shift: Credo is focusing on customer-driven innovation and expanding its portfolio of differentiated solutions for global data center operators, particularly in AI-driven architectures.
Regulatory Issues: The company acknowledges that forward-looking statements are subject to risks and uncertainties, including regulatory issues that could impact business activities.
Competitive Pressures: Credo faces competitive pressures in the high-speed connectivity market, particularly from traditional direct attached cables and laser-based optical solutions.
Supply Chain Challenges: The company mentions the fluidity of the current tariff regime, which could affect supply chain operations and costs.
Economic Factors: The ongoing shift to AI workloads is driving new customer engagement, but economic factors could influence the pace and scale of this transition.
Customer Concentration Risk: Three hyperscalers contributed over 10% of revenue, indicating a risk associated with customer concentration that could impact revenue stability.
Revenue Growth: In fiscal '25, Credo achieved revenue of $437 million, representing a growth of 126% year-over-year.
Gross Margin: For fiscal '25, the non-GAAP gross margin was 65%.
Product Innovation: Credo's innovations include advanced SerDes technology and a comprehensive system-level approach, enhancing their market position.
Customer Diversification: The customer base diversified with three hyperscalers each contributing over 10% of revenue.
Market Positioning: Credo is positioned for significant innovation and time-to-market advantages in the evolving data center architectures.
PILOT Software Platform: The PILOT platform offers advanced telemetry and debugging tools, enhancing customer deployments.
Optical Innovations: Credo's optical innovations include ultra-low power 100 gig per lane optical DSPs and a significant DSP win for an 800 gig transceiver.
Retimer Business Growth: The Retimer business is expected to grow significantly due to the shift to 100 gig per lane solutions.
Q1 Fiscal '26 Revenue Guidance: Expected revenue in Q1 of fiscal '26 is between $185 million and $195 million, up 12% sequentially at the midpoint.
Fiscal '26 Revenue Outlook: Expected revenue to exceed $800 million for year-over-year growth in excess of 85%.
Non-GAAP Operating Expenses: Expected to grow at less than half the rate of revenue from fiscal '25 to fiscal '26.
Non-GAAP Net Margin: Expected to approach 40% in fiscal '26.
Shareholder Return Plan: Credo Technology Group has not announced any share buyback program or dividend program during the earnings call.
The earnings call summary and Q&A session reflect strong financial performance, optimistic guidance, and strategic growth initiatives. Credo's expectation of 120% YoY revenue growth, expanding customer base, and product line growth are positive indicators. While management avoided specific details on ASP uplift and timeline for a new 10% customer, the overall sentiment remains positive with a focus on system-level solutions and strong market positioning. The lack of market cap information limits precise impact prediction, but the positive outlook suggests a stock price increase in the short term.
Credo's earnings call highlighted strong financial performance with 126% revenue growth and a 65% gross margin. Product innovation and customer diversification, including new hyperscaler contributions, were emphasized. The Q&A session revealed optimism in addressing AI connectivity bottlenecks and expanding AEC adoption. Despite management's lack of specificity on some aspects, the overall guidance is optimistic, expecting revenue to exceed $800 million with expanding margins. The positive sentiment is bolstered by the resolution of patent lawsuits and anticipated growth in the optical DSP market, suggesting a likely stock price increase of 2% to 8%.
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