12/01/2025 – 04:05 PM
SAN JOSE, Calif.–(BUSINESS WIRE)–
Credo Technology Group Holding Ltd (Credo) (Nasdaq: CRDO), an innovator in providing reliable, energy-efficient, system-level connectivity solutions for the next generation of AI-driven applications, cloud computing and hyperscale networks, today reported financial results for the second quarter of fiscal year 2026, ended November 1, 2025.
Second Quarter of Fiscal Year 2026 Financial Highlights
- Revenue of $268.0 million, grew by 20.2% quarter over quarter and 272.1% year over year
- GAAP gross margin of 67.5% and non-GAAP gross margin of 67.7%
- GAAP operating expenses of $102.3 million and non-GAAP operating expenses of $57.3 million
- GAAP net income of $82.6 million and non-GAAP net income of $127.8 million
- GAAP diluted net income per share of $0.44 and non-GAAP diluted net income per share of $0.67
- Ending cash and short-term investment balance of $813.6 million
Management Commentary
Bill Brennan, Credo’s President and Chief Executive Officer, stated, “In the second quarter Credo delivered revenue of $268.0 million, an increase of 20% sequentially and an extraordinary 272% increase year-over-year. These are the strongest quarterly results in Credo’s history, and they reflect the continued build-out of the world’s largest AI training and inference clusters. Looking forward, the combination of continued growth in our core AEC and IC franchises, plus the upcoming ramps of our recently announced ZeroFlap Optics, ALCs, and OmniConnect gearbox solutions, gives us an outlook with strong revenue growth and profitability through fiscal 2026 and beyond.”
Third Quarter of Fiscal 2026 Financial Outlook
- Revenue is expected to be between $335.0 million and $345.0 million
- GAAP gross margin is expected to be between 63.8% and 65.8%, and non-GAAP gross margin is expected to be between 64.0% and 66.0%
- GAAP operating expenses are expected to be between 116.0 million and 120.0 million, and non-GAAP operating expenses are expected to be between $68.0 million and $72.0 million
Conference Call
Credo will conduct a conference call on Monday, December 1, 2025, at 2:00 p.m. Pacific Time to discuss its financial results for the second quarter of fiscal year 2026, ended November 1, 2025. Interested parties may join the conference call beginning at 2:00 p.m. Pacific Time on Monday, December 1, 2025 by dialing 800-715-9871 (toll-free) or +1 646-307-1963 (international). The conference ID for the call is 5251802. It is recommended that participants dial in to the call at least 10 minutes before the start of the call. A live webcast of the conference call will be available on Credo’s Investor Relations website at http://investors.credosemi.com. A replay of the webcast will be available via the web at http://investors.credosemi.com.
Discussion of Non-GAAP Financial Measures
This press release contains references to the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating income (loss) margin, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share. Reconciliation of these non-GAAP measures to their comparable GAAP measures is included below. This non-GAAP information should not be construed as an alternative to the reported results determined in accordance with GAAP. The non-GAAP financial measures that Credo presents may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.
Non-GAAP financial measures exclude the effect of share-based compensation expenses, asset impairment and related charges (if applicable), and the related tax effect adjustment to the provision for income taxes.
Credo uses a full-year non-GAAP tax rate to compute the non-GAAP tax provision. This full-year non-GAAP tax rate is based on Credo’s annual GAAP income, adjusted to exclude non-GAAP items, as well as the effects of significant non-recurring and period-specific tax items which vary in size and frequency. Credo’s non-GAAP tax rate is determined on an annual basis and may be adjusted during the year to take into account events that may materially affect the non-GAAP tax rate, such as tax law changes, significant changes in Credo’s geographic mix of revenue and expenses or changes to Credo’s corporate structure.
GAAP diluted net income (loss) per share is calculated using basic weighted average shares outstanding when there is a GAAP net loss, and calculated using diluted weighted average shares outstanding when there is a GAAP net income. Non-GAAP diluted net income (loss) per share is calculated using basic weighted average shares outstanding when there is a non-GAAP net loss, and calculated using non-GAAP diluted weighted average shares outstanding when there is a non-GAAP net income. Non-GAAP adjustment for the number of shares used in the diluted per share calculations excludes the impact of share-based compensation expenses expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.
Credo believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Credo’s financial condition and results of operations. While Credo uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Credo does not consider these measures to be a substitute for, or superior to, financial measures calculated in accordance with GAAP. Consistent with this approach, Credo believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance.
Externally, management believes that investors may find Credo’s non-GAAP financial measures useful in their assessment of Credo’s operating performance and the valuation of Credo. Internally, Credo’s non-GAAP financial measures are used in the following areas:
- Management’s evaluation of Credo’s ongoing operating performance;
- Management’s establishment of internal operating budgets; and
- Management’s performance comparisons with internal forecasts and targeted business models.
Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Credo’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Credo’s results as reported under GAAP. The exclusion of the above items from our GAAP financial metrics does not necessarily mean that these costs are unusual or infrequent.
Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to, any statements regarding: launches of new or expansion of existing products or services; technology developments and innovation; our plans, strategies or objectives with respect to future operations; financial outlook; future financial results; expectations regarding the markets and industries in which Credo conducts business; and assumptions underlying any of the foregoing. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “seeks,” “estimates,” “can,” “may,” “will,” “would,” “outlook,” “forecast,” “targets” and similar expressions, or their negatives, may identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties that may cause actual events or results to differ materially from those described in this press release. Readers are encouraged to review risk factors and all other disclosures appearing in Credo’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on July 2, 2025, as well as Credo’s other filings with the SEC, for further information on risks and uncertainties that could affect Credo’s business, financial condition and results of operation. Copies of these filings are available from the SEC, Credo’s website or Credo’s investor relations department. Forward-looking statements speak only as of the date they are made. Credo assumes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.
About Credo
Credo’s mission is to redefine high-speed connectivity by delivering breakthrough solutions that enable the next generation of AI-driven applications. We are committed to enabling faster, more reliable, more energy-efficient, and scalable solutions that support the ever-expanding demands of AI, cloud computing, and hyperscale networks. Our innovations ease system bandwidth bottlenecks while simultaneously improving on power, security, and reliability. Our connectivity solutions are optimized for optical and electrical Ethernet applications, including the emerging 100G (or Gigabits per second), 200G, 400G, 800G and the emerging 1.6T (or Terabits per second) port markets. Credo products are based on our proprietary Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies. Our product families include Integrated Circuits (ICs) for the optical and line card markets, Active Electrical Cables (AECs) and SerDes Chiplets. Our intellectual property (IP) solutions consist primarily of SerDes IP licensing.
For more information, please visit https://www.credosemi.com.
Credo and the Credo logo are registered trademarks of Credo Technology Group Limited in the United States and other jurisdictions. All other trademarks referenced herein are the property of their respective owners.
Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Six Months Ended
November
1, 2025
August 2,
2025
November
2, 2024
November
1, 2025
November
2, 2024
Revenue:
Product sales revenue
$
261,293
$
217,059
$
69,075
$
478,352
$
126,400
IP license revenue
6,734
6,015
2,959
12,749
5,348
Total revenue
268,027
223,074
72,034
491,101
131,748
Cost of revenue
86,981
72,706
26,522
159,687
48,953
Gross profit
181,046
150,368
45,512
331,414
82,795
Operating expenses:
Research and development
57,916
52,448
31,742
110,364
62,151
Selling, general and administrative
44,334
37,178
22,177
81,512
43,502
Total operating expenses
102,250
89,626
53,919
191,876
105,653
Operating income (loss)
78,796
60,742
(8,407
)
139,538
(22,858
)
Other income, net
4,889
3,946
4,474
8,835
10,007
Income (loss) before income taxes
83,685
64,688
(3,933
)
148,373
(12,851
)
Provision for income taxes
1,049
1,289
292
2,338
914
Net income (loss)
$
82,636
$
63,399
$
(4,225
)
$
146,035
$
(13,765
)
Net income (loss) per share:
Basic
$
0.47
$
0.37
$
(0.03
)
$
0.84
$
(0.08
)
Diluted
$
0.44
$
0.34
$
(0.03
)
$
0.79
$
(0.08
)
Weighted-average shares used in computing net income (loss) per share:
Basic
175,307
171,927
166,487
173,623
165,789
Diluted
187,659
184,577
166,487
185,465
165,789
Credo Technology Group Holding Ltd
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
November 1,
2025
May 3, 2025
Assets
Current assets:
Cash and cash equivalents
$
567,575
$
236,328
Short-term investments
246,000
195,010
Accounts receivable
245,197
162,144
Inventories
150,194
90,029
Other current assets
34,457
30,023
Total current assets
1,243,423
713,534
Property and equipment, net
85,994
63,631
Right-of-use assets
15,666
15,234
Goodwill
68,875
—
Intangible asset
17,131
—
Other non-current assets
18,183
16,858
Total assets
$
1,449,272
$
809,257
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
$
64,097
$
56,158
Accrued compensation and benefits
19,347
16,097
Other current liabilities
56,927
35,456
Total current liabilities
140,371
107,711
Non-current operating lease liabilities
12,811
12,693
Other non-current liabilities
10,017
7,271
Total liabilities
163,199
127,675
Shareholders’ equity:
Ordinary shares
9
8
Additional paid in capital
1,223,823
765,173
Accumulated other comprehensive loss
(632
)
(437
)
Retained earnings (accumulated deficit)
62,873
(83,162
)
Total shareholders’ equity
1,286,073
681,582
Total liabilities and shareholders’ equity
$
1,449,272
$
809,257
Credo Technology Group Holding Ltd
Reconciliations from GAAP to Non-GAAP (Unaudited)
(In thousands, except percentages and per share amounts)
Three Months Ended
Six Months Ended
November 1,
2025
August 2,
2025
November 2,
2024
November 1,
2025
November 2,
2024
GAAP gross profit
$
181,046
$
150,368
$
45,512
$
331,414
$
82,795
Reconciling item:
Share-based compensation
354
356
331
710
612
Total reconciling item:
354
356
331
710
612
Non-GAAP gross profit (A)
$
181,400
$
150,724
$
45,843
$
332,124
$
83,407
GAAP gross margin
67.5
%
67.4
%
63.2
%
67.5
%
62.8
%
Non-GAAP gross margin
67.7
%
67.6
%
63.6
%
67.6
%
63.3
%
Total GAAP operating expenses
$
102,250
$
89,626
$
53,919
$
191,876
$
105,653
Reconciling item:
Share-based compensation
(44,970
)
(35,099
)
(16,332
)
(80,069
)
(32,691
)
Total reconciling item:
(44,970
)
(35,099
)
(16,332
)
(80,069
)
(32,691
)
Total Non-GAAP operating expenses (B)
$
57,280
$
54,527
$
37,587
$
111,807
$
72,962
GAAP operating income (loss)
$
78,796
$
60,742
$
(8,407
)
$
139,538
$
(22,858
)
Non-GAAP operating income (A-B)
$
124,120
$
96,197
$
8,256
$
220,317
$
10,445
GAAP operating income (loss) margin
29.4
%
27.2
%
(11.7
)%
28.4
%
(17.3
)%
Non-GAAP operating income margin
46.3
%
43.1
%
11.5
%
44.9
%
7.9
%
GAAP net income (loss)
$
82,636
$
63,399
$
(4,225
)
$
146,035
$
(13,765
)
Reconciling items:
Share-based compensation
45,324
35,455
16,663
80,779
33,303
Pre-tax total reconciling item
45,324
35,455
16,663
80,779
33,303
Other income tax effects and adjustments
(172
)
(573
)
(183
)
(745
)
(244
)
Non-GAAP net income
$
127,788
$
98,281
$
12,255
$
226,069
$
19,294
GAAP weighted-average shares – basic
175,307
171,927
166,487
173,623
165,789
GAAP weighted-average shares – diluted
187,659
184,577
166,487
185,465
165,789
Non-GAAP adjustment
2,896
4,289
15,769
3,373
16,087
Non-GAAP weighted-average shares – diluted
190,555
188,866
182,256
188,838
181,876
GAAP diluted net income (loss) per share
$
0.44
$
0.34
$
(0.03
)
$
0.79
$
(0.08
)
Non-GAAP diluted net income per share
$
0.67
$
0.52
$
0.07
$
1.20
$
0.11
Credo Technology Group Holding Ltd
Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates
(In millions, except percentages)
Outlook for Three Months
Ending January 31, 2026
Low
High
GAAP gross margin
63.8
%
65.8
%
Reconciling item:
Share-based compensation
0.2
%
0.2
%
Total reconciling item:
0.2
%
0.2
%
Non-GAAP gross margin
64.0
%
66.0
%
Total GAAP operating expenses
$
116.0
$
120.0
Reconciling item:
Share-based compensation
48.0
48.0
Total reconciling item:
48.0
48.0
Total Non-GAAP operating expenses
$
68.0
$
72.0
View source version on businesswire.com: https://www.businesswire.com/news/home/20251201598056/en/
Investor Relations Contact:
Dan O’Neil
IR@credosemi.com
Source: Credo
