Credo Technology (US:CRDO)2025-03-05 02:01Financial 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]