Credo Technology Group Holding Ltd Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Financial Highlights

  • Revenue: Record $268 million, +20% sequentially from Q1 FY2026 and +272% year-over-year from Q2 FY2025. Product revenue was $261.3 million (+20% seq, +278% YoY).
  • Non-GAAP Gross Margin: 67.7% (product margin 66.8%), up 11 basis points sequentially from Q1 and up 469 bps YoY.
  • Non-GAAP Operating Income: $124.1 million (+29% from $96.2 million in Q1), with operating margin at 46.3% (up 319 bps seq from 43.1% in Q1).
  • Non-GAAP Net Income: Record $127.8 million (+30% from $98.3 million in Q1), net margin 47.7%.
  • Cash & Operations: Operating cash flow $61.7 million (+$7.5M seq); free cash flow $38.5 million; ended quarter with $813.6 million cash (up $333.9M seq, largely from ATM offering). Inventory $150.2 million (+$33.5M seq).

Business Performance & Customer Mix

  • AEC segment (fastest growing) achieved new records with strong double-digit sequential growth, driven by 4 hyperscalers each >10% of total revenue; fifth hyperscaler began initial revenue contributions. Customer diversity increasing.
  • IC business (retimers, optical DSPs) strong; Ethernet and PCIe retimers progressing with design wins expected in FY2026 and production revenue in FY2027.
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Operator: Ladies and gentlemen, thank you for standing by. [Operator Instructions] I'd now like to turn the conference over to Dan O'Neil. Please go ahead, sir. Daniel O'Neil: Good afternoon. Thank you for joining our earnings call for the second quarter of fiscal 2026. Today, I'm 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. The 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's not possible for the company's management to predict all risks nor can the company 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 contained in any forward-looking statement. Given these risks, uncertainties and assumptions, the forward-looking events discussed during this call may not occur, and actual results could differ materially and adversely from those anticipated or implied. The company undertakes no obligation to publicly update forward-looking statements for any reason after the date of this call to conform these statements to actual results or to changes in the company's expectations, except as required by law. Also, during this call, we will refer to certain non-GAAP financial measures, which w
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