Core Insights - Credo Technology Group Holding Ltd (CRDO) is strategically focusing on its Active Electrical Cable (AEC) product line, which has shown double-digit sequential growth in fiscal Q4 2025, with three hyperscalers contributing over 10% to quarterly revenues, indicating a growing market for Credo's solutions [1][2] Group 1: AEC Product Line - The AECs are becoming the "de-facto standard for intra-rack applications" in data centers, driven by their reliability, which is over 100 times better than laser-based optical solutions, and improved signal integrity compared to traditional direct attached cables (DACs) [2][11] - Credo's integrated system-level approach, encompassing SerDes IP, Retimer ICs, and system-level design, enhances innovation cycles and cost efficiency, positioning AECs as a growth engine for future revenues [3] Group 2: Revenue Projections - For fiscal 2026, Credo anticipates revenues to exceed $800 million, reflecting an over 85% year-over-year growth [4][11] - The company's shares have increased by 28.7% over the past month, outperforming the Electronics-Semiconductors industry, which grew by 9.9% [10] Group 3: Competitive Landscape - Competitors like Broadcom and Marvell Technology are also experiencing growth, with Broadcom reporting a 20% revenue increase driven by AI semiconductors, and Marvell expecting revenues of approximately $2 billion for Q2 fiscal 2026, indicating a 57% year-over-year growth [6][9]

Financial Data and Key Metrics Changes - In Q4, the company reported revenue of $170 million, a 26% sequential increase and up 180% year over year [5][23] - For fiscal year 2025, total revenue reached $437 million, representing a growth of 126% year over year [6][22] - Non-GAAP gross margin for Q4 was 67.4%, and for fiscal year 2025, it was 65%, reflecting an increase of 257 basis points year over year [6][22] - Non-GAAP operating income in Q4 was $62.5 million, compared to $42.4 million in Q3, indicating significant leverage from revenue growth [25] Business Line Data and Key Metrics Changes - The Active Electrical Cable (AEC) product line maintained a steep growth trajectory, with significant contributions from three hyperscalers, each contributing over 10% of revenue [10][24] - The optical business achieved strong momentum, with revenue growth targets met, including a significant win for an 800 gig transceiver expected to deploy in fiscal 2026 [13][14] - The retimer business also showed robust results, driven by 50 gig and 100 gig per lane Ethernet solutions, reflecting growing adoption in AI-driven architectures [17][18] Market Data and Key Metrics Changes - The company anticipates increasing customer diversification across copper and optical connectivity for various applications in AI networks [10][21] - The demand for high-speed connectivity solutions is expected to continue growing among hyperscaler customers, driven by advanced AI services [21] Company Strategy and Development Direction - The company is focused on customer-driven innovation and has successfully capitalized on a predicted inflection point in demand for high-performance connectivity solutions [7][8] - The strategy includes a holistic innovation approach that integrates advanced technology, integrated circuit design, and system-level solutions [9][10] - The company aims to capture significant opportunities in the global AI infrastructure investment wave, positioning itself for sustained growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained revenue growth driven by strong customer forecasts and new design wins [12][19] - The company expects revenue for Q1 of fiscal 2026 to be between $185 million and $195 million, with year-over-year growth exceeding 85% anticipated for the full year [27][28] - Management highlighted the importance of flexibility in navigating tariff risks and the evolving macroeconomic environment [56] Other Important Information - The company ended Q4 with cash and equivalents of $431.3 million, an increase of $52.1 million from Q3, indicating strong financial health [26] - CapEx for Q4 was $3.7 million, primarily for production equipment purchases, with expectations for CapEx to double in fiscal 2026 to support growth [26][82] Q&A Session Summary Question: Can you quantify the revenue contribution from the largest customers? - The largest customer accounted for 61% of revenue, with two others contributing 12% and 11% respectively, and diversification is expected to continue in fiscal 2026 [34][35] Question: What are the expectations for gross margin in fiscal 2026? - Gross margin is expected to be at or above the high end of the long-term model, with guidance for Q1 set at 65% [36][38] Question: Can you discuss the use cases for large customers, especially regarding AEC? - The main use cases include connecting servers with switches, with a significant focus on scale-out networks [44][45] Question: What is the competitive landscape for AEC products? - The competitive environment has not changed significantly, and the company aims to maintain its leadership by delivering innovative solutions quickly [88][90] Question: What are the expectations for scale-up revenues? - Design wins are expected to materialize in calendar 2026, with significant growth anticipated in the following years [79] Question: Are there any supply chain bottlenecks? - The company has shown the ability to ramp production quickly, with lead times primarily affected by silicon supply [102]

Financial Data and Key Metrics Changes - In Q4, the company reported revenue of $170 million, a 26% sequential increase and up 180% year over year [5][23] - For fiscal year 2025, total revenue reached $437 million, representing a growth of 126% year over year [6][22] - Non-GAAP gross margin for Q4 was 67.4%, and for fiscal year 2025, it was 65% [6][22] - Non-GAAP operating income in Q4 was $62.5 million, compared to $42.4 million in Q3, reflecting significant leverage from revenue growth [25] Business Line Data and Key Metrics Changes - The Active Electrical Cable (AEC) product line maintained a steep growth trajectory, with significant contributions from three hyperscalers, each contributing over 10% of revenue in Q4 [10][24] - The optical business achieved strong momentum, with revenue growth targets met, including a significant win for an 800 gig transceiver expected to deploy in fiscal 2026 [13][14] - The retimer business also showed robust results, driven by 50 gig and 100 gig per lane Ethernet solutions, with expectations for strong growth in fiscal 2026 [17][18] Market Data and Key Metrics Changes - The company anticipates increasing customer diversification across copper and optical connectivity for various applications, particularly in AI networks [10][21] - The demand for high-speed connectivity solutions is expected to continue growing among hyperscaler customers [21] Company Strategy and Development Direction - The company is focused on customer-driven innovation and has successfully capitalized on a predicted inflection point in demand for high-performance connectivity solutions [8][19] - The strategy includes a holistic innovation approach that integrates advanced technology, system-level solutions, and a robust software platform [9][10] - The company aims to capture significant opportunities in the global AI infrastructure investment wave, positioning itself for sustained growth [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained revenue growth driven by strong customer forecasts and new design wins [12][19] - The company expects revenue for Q1 of fiscal 2026 to be between $185 million and $195 million, with a year-over-year growth expectation exceeding 85% for the full year [27][28] - Management highlighted the importance of flexibility in navigating tariff risks and the evolving macroeconomic environment [56] Other Important Information - The company ended Q4 with cash and equivalents of $431.3 million, an increase of $52.1 million from Q3, indicating strong financial health [26] - CapEx for Q4 was $3.7 million, with expectations for CapEx to double in fiscal 2026 to support growth initiatives [22][82] Q&A Session Summary Question: Can you quantify the revenue contribution from the largest customers? - The largest customer accounted for 61% of revenue, with two others contributing 12% and 11% respectively, and diversification is expected to continue in fiscal 2026 [34][35] Question: What are the expectations for gross margin and EBIT margin? - Gross margin is expected to be around 65% for Q1, with EBIT margin expected to follow improvements in net margin [36][39] Question: Can you discuss the use cases for large customers, especially regarding AEC? - The main use cases include connecting servers with switches, with a significant focus on scale-out networks [44][45] Question: What is the competitive landscape for AEC products? - The competitive environment remains stable, with the company focused on delivering innovative solutions quickly to maintain leadership [88] Question: How is the company positioned for optical growth? - The company expects to double or exceed its optical revenue in fiscal 2026, with strong traction in 100 gig per lane designs [69][70] Question: Are there any supply chain bottlenecks? - The company has shown the ability to ramp production quickly, with silicon lead times being the longest, but overall supply chain management is strong [101][103]

Financial Data and Key Metrics Changes - In Q4, the company reported revenue of $170 million, a 26% sequential increase and up 180% year over year [4][22] - For fiscal year 2025, total revenue reached $437 million, representing a growth of 126% year over year [5][21] - Non-GAAP gross margin for Q4 was 67.4%, and for fiscal year 2025, it was 65% [5][21] - Non-GAAP operating income in Q4 was $62.5 million, compared to $42.4 million in Q3, reflecting significant leverage from revenue growth [24] Business Line Data and Key Metrics Changes - The Active Electrical Cable (AEC) product line maintained a steep growth trajectory, with significant contributions from three hyperscalers, each contributing over 10% of revenue [9][22] - The optical business achieved strong momentum, with revenue growth targets met and significant wins in 50 gig and 100 gig per lane optical DSPs [12][15] - The retimer business also delivered robust results, driven by 50 gig and 100 gig per lane Ethernet solutions [15] Market Data and Key Metrics Changes - The company noted increasing customer diversification across copper and optical connectivity for various applications, particularly in AI networks [8][20] - The demand for high-speed connectivity solutions is growing among hyperscaler customers, driven by the need for advanced AI services [20] Company Strategy and Development Direction - The company is focused on customer-driven innovation and has positioned itself as a leader in high-speed connectivity solutions, particularly in the AI landscape [6][18] - The strategy includes expanding the AEC market and enhancing optical connectivity solutions, with a commitment to energy efficiency and reliability [14][19] - The company anticipates significant growth opportunities in the optical market, particularly with the introduction of new products [14][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained revenue growth, driven by increasing customer diversification and the anticipated ramp-up of new hyperscale customers [9][33] - The company expects revenue for Q1 of fiscal 2026 to be between $185 million and $195 million, indicating a 12% sequential growth at the midpoint [26] - For fiscal year 2026, the company projects revenue to exceed $800 million, with year-over-year growth exceeding 85% [27] Other Important Information - The company ended Q4 with cash and equivalents of $431.3 million, an increase of $52.1 million from Q3 [25] - Capital expenditures (CapEx) are expected to double in fiscal year 2026 to support growth initiatives [78] Q&A Session Summary Question: Can you quantify the contribution of the largest customers? - The largest customer accounted for 61% of revenue, with two others contributing 12% and 11% respectively [32] Question: What are the expectations for gross margin in the upcoming quarters? - Gross margin is expected to trend around 65% for Q1, with potential for further expansion as scale increases [34][36] Question: Can you elaborate on the use cases for large customers? - The primary use cases include connecting servers with switches, focusing on both front-end and back-end networks [42] Question: What is the competitive landscape for AEC products? - The competitive environment has not changed significantly, and the company aims to maintain its leadership by delivering innovative solutions quickly [84][86]

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]