Credo Technology Group Holding Ltd Q3 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Credo Q3 FY2026 Earnings Summary

Record Revenue and Profitability: Revenue reached $407 million (record high), up 52% sequentially from Q2 FY2026 and more than 200% year-over-year from Q3 FY2025. Non-GAAP gross margin was 68.6% (up 92 basis points sequentially). Non-GAAP operating income was $201.8 million (vs. $124.1 million in Q2), with non-GAAP operating margin at 49.6% (up 327 basis points sequentially). Non-GAAP net income was $208.8 million (record; up 63% sequentially from $127.8 million in Q2 and 4x from Q3 FY2025). Non-GAAP net margin reached 51.3%. Operating cash flow was $166.2 million (record; up $104.6 million sequentially), with free cash flow of $139.7 million. Cash and equivalents ended at $1.3 billion (up $487.9 million sequentially, including ATM proceeds).

Key Business Highlights

  • AEC Products: Strong sequential growth driven by existing hyperscalers and new wins (including fifth hyperscaler). ZeroFlap AECs emphasized for 1,000x better reliability and ~50% lower power vs. commodity optics. Supporting 100G/lane deployments with 200G/lane (1.6T) ramp expected; PCIe Gen6 AECs sampling now, mass production H1 FY2027.
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Operator: Ladies and gentlemen, thank you for standing by. [Operator Instructions] I would now like to turn the conference over to Mr. Dan O'Neil. Please go ahead, sir. Daniel O'Neil: Good afternoon, everyone. Thank you for joining our earnings call for the third quarter of fiscal 2026. Today, I'm 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 portion of the company's website. It is not possible for the company's management to correct 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 statements. Given these risks, uncertainties and assumptions, the forward-looking events discussed during this call may not occur, and actual results could differ adversely and materially from those anticipated, implied or inferred. 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 order changes in the company's expectations except as required by law. Also, during this call, we will refer to certain non-GAAP f
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