Credo Technology’s Earnings Call Highlights Robust Growth

Credo Technology Group Holding Ltd. ((CRDO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Credo Technology Group Holding Ltd.’s recent earnings call conveyed a predominantly positive sentiment, underscored by impressive revenue growth, robust gross margins, and successful customer diversification. While the company acknowledged challenges such as tariffs and rising inventory levels, the overall outlook remains optimistic, with positive aspects significantly outweighing the concerns.

Record-Breaking Revenue and Growth

Credo reported a remarkable revenue of $437 million for fiscal year 2025, representing a 126% increase year-over-year. The fourth quarter alone saw revenue of $170 million, marking a 180% rise compared to the previous year and a 26% sequential increase. This record-breaking growth highlights the company’s strong market position and successful strategies.

Strong Non-GAAP Gross Margin

The company achieved a non-GAAP gross margin of 65% for fiscal 2025, with the fourth quarter reaching 67.4%, up 355 basis points sequentially. This improvement in gross margin reflects Credo’s efficient cost management and ability to maintain profitability amidst growing revenues.

Significant Customer Diversification

Credo’s customer base diversification strategy paid off, with three hyperscalers each contributing over 10% of the fourth quarter’s revenue. The company plans to further expand this diversification by ramping up two additional hyperscalers in the second half of fiscal 2026.

Optical and Retimer Business Growth

Credo’s optical DSP revenue targets were successfully met, highlighted by a significant 800 gig transceiver win. The retimer business also showed strong results, driven by 50 gig and 100 gig per lane Ethernet solutions, underscoring the company’s innovation in high-speed connectivity solutions.

Strong Operating Margin and Cash Flow

The fiscal 2025 operating margin improved by 2,500 basis points, with fourth-quarter non-GAAP operating income reaching $62.5 million. Additionally, cash flow from operations was $57.8 million, indicating strong financial health and operational efficiency.

Concerns Over Tariff Regime

Despite the positive financial performance, uncertainty around tariffs remains a concern for Credo, potentially affecting future planning and product cost structures. The company is closely monitoring this situation to mitigate any adverse impacts.

Inventory Levels

Credo ended the fourth quarter with an inventory level of $90 million, up $36.8 million sequentially. This increase suggests potential challenges in inventory management, which the company needs to address to maintain its growth trajectory.

Forward-Looking Guidance

Looking ahead, Credo provided optimistic guidance for fiscal 2026, expecting first-quarter revenue between $185 million and $195 million, with a non-GAAP gross margin of 64% to 66%. The company anticipates fiscal 2026 revenue to exceed $800 million, reflecting growth above 85% year-over-year. This growth is expected to be driven by diversification and expansion into new hyperscaler customers, alongside a strategic focus on innovative high-speed connectivity solutions.

In summary, Credo Technology Group Holding Ltd.’s earnings call painted a positive picture of the company’s financial health and growth prospects. With record-breaking revenue, strong margins, and successful customer diversification, Credo is well-positioned for sustained growth. While challenges such as tariffs and inventory levels exist, the company’s strategic focus and innovative solutions provide a solid foundation for future success.