Q1 2027 Credo Technology Group Holding Ltd Earnings Call Transcript
Key Points
- Record Q1 FY2027 revenue of $479 million, up 10% sequentially and 115% year-over-year, marking the seventh consecutive quarter of triple-digit growth.
- Non-GAAP gross margin remained strong at 68%, with non-GAAP net income reaching a record $236.3 million, up 140% year-over-year.
- Optical business is expanding rapidly, with record Optical DSP revenue, first Silicon Photonics PIC revenue, and a confirmed $600 million+ optical revenue target for FY2027.
- AEC business continues to grow with deep relationships at five hyperscalers and expanding neocloud engagements, supported by the transition to 200 gig per lane and 1.6T ports.
- Emerging growth areas like Active LED Cables (ALC) and OmniConnect gearbox solutions are gaining traction, with revenue expected to begin in fiscal 2028, potentially adding thousands of dollars of content per GPU.
- Strong customer diversification with four customers each contributing at least 10% of revenue, and continued progress in broadening the revenue base across hyperscalers, neoclouds, and other customers.
- The company is well-capitalized with $764.3 million in cash, enabling continued investment in R&D and growth opportunities despite the DustPhotonics acquisition cash outlay.
- Customer concentration remains high, with the top four customers each accounting for at least 10% of revenue, and the largest customer representing 33% of revenue.
- Operating expenses increased 16% sequentially to $95.2 million, above the high end of guidance, due to heavy R&D investment, and are expected to rise approximately 55% year-over-year.
- Cash flow from operations declined to $90.2 million in Q1, down $92.0 million sequentially, primarily due to changes in working capital.
- Inventory levels increased by $62.2 million sequentially to $313.1 million, reflecting supply chain investments that could pose a risk if demand softens.
- The company faces potential supply chain challenges and tariff uncertainties, which could impact margins and the ability to meet the aggressive second-half revenue inflection.
- Optical revenue growth is heavily dependent on the successful ramp of ZeroFlap Optics, Silicon Photonics PICs, and Optical DSPs, each expected to contribute over $100 million in FY2027, which carries execution risk.
- The transition to 1.6T solutions and new technologies like NPO and ALCs is still in early stages, with revenue contributions not expected until fiscal 2028, creating a gap in near-term growth drivers.
Ladies and gentlemen, thank you for standing by. (Operator Instructions)
I would now like to turn the conference over to Dan O'Neil, Treasurer and VP of Investor Relations. Please go ahead, sir.
' -
Good afternoon. Thank you all for joining our first quarter fiscal 2027 earnings call. Today I am joined by Bill Brennan, Credo's Chief Executive Officer; and Dan Fleming, Credo's 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. These documents can be found in the Investor Relations portion of the company's website. It is not possible for the company's management to predict all risks, nor can they assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those
| Access to All Earning Calls and Stock Analysis | |
| 30-Year Financial on one screen | |
| All-in-one Stock Screener with unlimited filters | |
| Customizable Stock Dashboard | |
| Real Time Insider Trading Transactions | |
| 8,000+ Institutional investors’ 13F holdings | |
| Powerful Excel Add-in and Google sheets Add-on | |
| All data downloadable | |
| Quick customer support | |
| And much more... |
Trustpilot
We'd love to learn more about your experiences on GuruFocus.com and how we can improve!
Take Survey
