Credo Technology Group Holding Ltd

Credo reported Q1 fiscal 27 revenue of $479 million, up 10% sequentially and 115% year over year. Non-GAAP gross margin was 68%, non-GAAP operating income was $230.6 million, and non-GAAP net income was $236.3 million, up 140% year over year. Cash flow from operations was $90.2 million, capex was $7.3 million, free cash flow was $82.9 million, and cash and equivalents ended at $764.3 million after the Dust Photonics acquisition; inventory was $313.1 million. For Q2 fiscal 27, Credo expects 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, and diluted weighted average share count of about 200 million. For fiscal 27, management still expects more than $600 million of optical revenue, more than 85% year-over-year total revenue growth, gross margin broadly consistent with fiscal 26, operating expenses up about 55% year over year, and non-GAAP net margin in the vicinity of 50%.

Bill Brennan framed the quarter as evidence that Credo is scaling across a broader set of interconnect products, not just AECs. He stressed that AI infrastructure is becoming more demanding and heterogeneous, and said Credo’s differentiation comes from reliability, power efficiency, telemetry, and system-level integration across copper and optical. His tone was confident and expansive, repeatedly describing optical, NPO, ALC, and OmniConnect as the next major growth engines.

Daniel Fleming highlighted the operating leverage in the model, pointing to Q1 non-GAAP operating income of $230.6 million and non-GAAP net margin of 49.3% despite higher R&D spending. He said operating expenses were $95.2 million, above the high end of guidance because of strong R&D investment, and noted cash flow from operations of $90.2 million and free cash flow of $82.9 million. He also flagged that cash fell to $764.3 million mainly due to the Dust Photonics acquisition, while inventory rose to $313.1 million and Q2 guidance assumes the current tariff regime.

Analysts pressed management on how the $600 million-plus optical target breaks down across DSPs, PICs, and zero-flap optics, and Brennan said the business is broadening, with DSP momentum, two major design wins from Dust that do not yet include the DSP, and more customer ramps expected in fiscal 28. Questions also focused on OpenCPX/NPO, where Brennan said Credo will be agnostic to form factor and will lead with silicon-photonics PICs while potentially offering complete optical engines over time. On ZF Optics scaling, he said working capital is increasing as the company leans into supply chain readiness, and on customer concentration, Fleming disclosed the top four customers were 33%, 28%, 13%, and 10% of revenue.