Credo Technology (CRDO)2025-03-05 02:01Financial Data and Key Metrics Changes - Credo reported revenue of 132 million in revenue for Q3, up 91% sequentially and 155% year-over-year, with AECs becoming the de facto standard for intra-rack connections [32][36] - The optical DSP business is on track to meet growth objectives, with revenue driven by 50-gig and 100-gig designs for AOC and transceiver applications [20][22] Market Data and Key Metrics Changes - The total addressable market (TAM) for PCIe retimers is expected to exceed $1 billion by 2027, with Credo well-positioned to capture market share [28][28] - The demand for faster, more reliable, and energy-efficient connectivity solutions is rapidly expanding, particularly in AI workloads [10][29] Company Strategy and Development Direction - Credo's multi-tiered innovation strategy focuses on SerDes technology, integrated circuit design, and system-level solutions, which are critical for addressing bandwidth challenges [11][12][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][30] 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 - The largest customer accounted for 86% of revenue in Q3, with expectations of diversifying the customer base in the coming quarters [35][41] - Credo has achieved volume production with three hyperscalers and is in qualification with two additional hyperscalers [18][44] 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 the shift towards inference in AI? - The inference market presents a larger opportunity for AEC due to increased deployments [45][46] Question: Are there plans to move into the switching ecosystem? - Moving into PCIe switching is a natural progression, but the focus remains on retimers and AECs for now [48][51] Question: What is driving the uptick in gross margins? - The increase in gross margins is primarily driven by scale and the roll-off of contra revenue associated with Amazon [64][66] Question: How does the company view competition in the AEC space? - Credo focuses on being the best partner to customers, emphasizing innovation and reliability [125][127] Question: What is the outlook for new customers and their ramp-up? - New customers are expected to ramp up in fiscal '26, with multiple projects anticipated [96][135]