Q3 2025 Credo Technology Group Holding Ltd Earnings Call Transcript
Key Points
- Credo Technology Group Holding Ltd (CRDO) reported record revenue of $135 million for Q3, marking an 87% sequential increase and a 154% year-over-year growth.
- The company achieved a non-GAAP gross margin of 63.8%, which is above the high end of their guidance range.
- Credo's AEC product line experienced strong triple-digit sequential growth, achieving new record revenue levels.
- The company is expanding its market opportunity with the introduction of PCIe products, which are expected to significantly increase their total addressable market (TAM).
- Credo has achieved volume production with three hyperscalers and is in qualification with two additional hyperscalers, indicating strong future revenue diversification.
- The largest customer accounted for 86% of Credo's revenue in Q3, indicating a high level of customer concentration risk.
- Cash flow from operations was $4.2 million, down sequentially due to working capital increases driven by the significant product ramp.
- Free cash flow was negative $0.4 million, although this was an improvement from the previous quarter.
- The company's inventory increased by $16.9 million sequentially, which could indicate potential future write-downs if demand forecasts are not met.
- There is a risk of potential air pockets in revenue if large customer projects conclude without immediate follow-up projects.
Ladies and gentlemen, thank you for standing by. (Operator Instructions) And I would now like to turn the conference over to Dan O'Neil. Please go ahead, sir.
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Good afternoon. Thank you for joining our earnings call for the third quarter of fiscal 2025. Today, I am joined by Bill Brennan, Credo's Chief Executive Officer; and Dan Fleming, our Chief Financial Officer. During this call, we will make certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties discussed in detail in our documents filed with the SEC, which can be found in the Investor Relations section of the company's website.
It is not possible for the company's management to predict all risks nor can the company assess the impact of all factors on its business of the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking
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