Credo Technology Group Q1 Earnings Call Highlights

Credo Technology Group Q1 Earnings Call Highlights

Record growth continued: Credo reported fiscal Q1 2027 revenue of $479 million, up 115% year over year, with non-GAAP net income more than doubling to $236.3 million. Management expects Q2 revenue of $525 million to $535 million and more than 85% full-year revenue growth.

Optics is becoming a major growth engine: Credo reiterated its forecast for more than $600 million in optical revenue during fiscal 2027, supported by optical DSPs, silicon photonics products acquired through DustPhotonics, and ZeroFlap Optics.

Investment and concentration remain key considerations: Operating expenses are expected to rise about 55% this year as Credo funds product development, while four customers accounted for 84% of first-quarter revenue despite ongoing efforts to diversify its customer base.

Credo Technology Group NASDAQ: CRDO reported record fiscal first-quarter 2027 revenue of $479 million, up 10% sequentially and 115% from a year earlier, as demand for AI infrastructure connectivity products continued to expand. Chief Executive Officer Bill Brennan said the company’s growth has been supported by rising AI cluster sizes, faster data rates and increasing requirements for reliable, power-efficient connectivity. Credo recorded its seventh consecutive quarter of triple-digit year-over-year revenue growth, according to management.

“AECs continue to grow. Optics is growing faster,” Brennan said, referring to active electrical cables and the company’s expanding optical portfolio.

Profitability and second-quarter outlook Chief Financial Officer Dan Fleming said non-GAAP gross margin was 68% in the first quarter, while non-GAAP operating income totaled $230.6 million and non-GAAP operating margin was 48.2%. Non-GAAP net income reached a record $236.3 million, up 4% sequentially and more than doubling from the prior-year period. Non-GAAP net margin was 49.3%. Cash flow from operations was $90.2 million, while capital expenditures were $7.3 million, resulting in free cash flow of $82.9 million.

The company ended the quarter with $764.3 million in cash and equivalents, down $679 million from the prior quarter primarily because of the cash outlay for its DustPhotonics acquisition. Ending inventory rose $62.2 million sequentially to $313.1 million.

For the fiscal second quarter, Credo forecast: Revenue of $525 million to $535 million. Non-GAAP gross margin of 67% to 69%. Non-GAAP operating expenses of $100 million to $105 million. Diluted weighted-average share count of about 200 million shares.

Fleming said the outlook is based on the current tariff regime, which he described as fluid. For fiscal 2027, the company continues to expect more than 85% year-over-year total revenue growth, non-GAAP gross margin broadly in line with fiscal 2026 levels, and non-GAAP net margin near 50%.

Optics targeted as a new growth engine Management reiterated its expectation for more than $600 million in optical revenue during fiscal 2027. The company expects its optical digital signal processors, silicon photonics PICs and ZeroFlap Optics offerings to each contribute more than $100 million during the year. Credo’s optical DSP business generated record first-quarter revenue, including deployments of 50G- and 100G-per-lane products. Brennan said the company expects initial 1.6T DSP revenue later in fiscal 2027 and sees a continuing market for 800G ports during the transition to higher speeds. The company also recognized its first silicon photonics PIC revenue f...