Financial Data and Key Metrics Changes - The company reported record revenue of $268 million for Q2 2026, representing a 20% sequential growth and a 272% increase year over year [5][17]. - Non-GAAP gross margin was 67.7%, with non-GAAP net income reaching approximately $128 million, marking the strongest quarterly results in the company's history [5][19]. - Non-GAAP operating income was $124.1 million, reflecting a significant increase due to over 20% sequential top-line growth [19]. - Cash flow from operations was $61.7 million, with ending cash and equivalents of $813.6 million, an increase of $333.9 million from Q1 [20]. Business Line Data and Key Metrics Changes - The Active Electrical Cables (AEC) product line continued to be the fastest-growing segment, with revenue driven by increasing customer diversity, including four hyperscalers contributing over 10% of total revenue [6][17]. - The Integrated Circuit (IC) business, including retimers and optical DSPs, also showed strong performance, with significant growth expected in fiscal 2026 [9]. Market Data and Key Metrics Changes - The company noted that the AECs have become the de facto standard for inter-rack connectivity, displacing traditional optical connections [6][7]. - The total addressable market (TAM) for AECs and IC solutions is projected to exceed $10 billion, more than tripling from 18 months ago [15][16]. Company Strategy and Development Direction - The company is focused on expanding its product offerings with three new growth pillars: Zero-flap Optics, Active LED Cables (ALCs), and OmniConnect gearboxes, each representing multi-billion dollar market opportunities [11][12][13]. - The strategy emphasizes delivering high-reliability and power-efficient solutions tailored to the needs of AI training and inference clusters [5][6]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth through fiscal 2026 and beyond, driven by the ramp-up of new product categories and existing AEC and IC businesses [16]. - The company anticipates significant year-over-year growth from its top customers and expects to strengthen revenue diversification [21][22]. Other Important Information - The company is well-capitalized to invest in growth opportunities, with a substantial cash buffer and plans for continued innovation in connectivity solutions [20]. - The management highlighted the importance of reliability and power efficiency in their product offerings, which are critical for the evolving demands of AI infrastructure [30][31]. Q&A Session Summary Question: Expansion of the AEC market and ALC market potential - Management indicated that the ALC market could be double the AEC TAM, driven by both quantity and average selling price (ASP) increases [24]. Question: Customer revenue contributions - The largest customer contributed 42% of revenue, followed by others at 24%, 16%, and 11%, with expectations for continued growth and diversification [26][27]. Question: Focus on system-level products - The company is committed to expanding its portfolio at the system level, with a focus on delivering non-commodity solutions that exceed industry standards [28][29]. Question: AEC supply constraints - Management does not foresee concerns regarding AEC production capacity, citing a strong partnership with manufacturing providers [41][42]. Question: Transition to higher-speed connections - The company confirmed that it is in production with 25, 50, and 100 gig per lane solutions, with expectations for future transitions to 200 gig per lane [45][46]. Question: Licensing of AEC IP - The decision to license AEC IP reflects the company's established competitive position and the need to protect its innovations in a growing market [60].

Financial Data and Key Metrics Changes - Credo reported revenue of $135 million for Q3 2025, representing an 87% sequential increase and a 154% year-over-year increase [8][32] - Non-GAAP gross margin was 63.8% for Q3, with product gross margin (excluding product engineering services) at 62.4%, up over 200 basis points sequentially and over 900 basis points year-over-year [32][66] Business Line Data and Key Metrics Changes - The AEC product line achieved strong triple-digit sequential growth, contributing significantly to the overall revenue increase [33][18] - The product business generated $132 million in revenue, up 91% sequentially and 155% year-over-year, while the IP business generated $3 million [32][34] Market Data and Key Metrics Changes - The largest customer accounted for 86% of revenue in Q3, with expectations of diversifying the customer base in the coming quarters [35][39] - The total addressable market (TAM) for PCIe retimers is expected to exceed $1 billion by 2027, indicating significant growth potential [28] Company Strategy and Development Direction - Credo's multi-tiered innovation strategy focuses on SerDes technology, integrated circuit design, and system-level solutions, which are expected to drive future growth [11][14] - The company plans to expand its solutions to the PCIe protocol, addressing a larger connectivity opportunity with AI scale-out and scale-up networks [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the expanding market opportunity for high-speed connectivity driven by AI investments [29][30] - The company anticipates continued revenue growth based on customer forecasts, new qualifications, and design engagements [19][28] Other Important Information - Credo is actively engaged with multiple hyperscalers, achieving volume production with three and in qualification with two additional customers [18][44] - The company is set to demonstrate its PCIe AECs at NVIDIA's GTC show, indicating ongoing innovation and customer engagement [19] Q&A Session Summary Question: What is the size of the largest customer and the adoption of AEC? - The largest customer accounted for 86% of revenue, and AEC opportunities are expanding significantly [39][40] Question: How does the company view customer concentration and future growth? - Q3 was an outlier, and the company expects to see diversification with 3 to 4 customers contributing over 10% of revenue in the future [40][41] Question: What is the outlook for the PCIe switching ecosystem? - The company sees potential in moving into the PCIe switching market as a natural progression from retimers [48][51] Question: How does the company view competition in the AEC space? - Credo focuses on being the best partner to customers, emphasizing innovation and reliability over competition [125][126] Question: What is the expected ramp for new customers? - The company anticipates significant ramping for new customers in fiscal '26, with multiple projects across the customer base [96][135]