Credo Technology Earnings Beat Estimates

Credo Technology Group Holding Ltd said in a press release on Dec. 1, 2025, that its Q2 earnings topped estimates and management raised its outlook, citing strength in core analog equalization circuits (AEC) and integrated circuit (IC) franchises alongside upcoming ramps of new optics and gearbox products.

Quarter Results, Margins, and Cash Position

For the quarter ended Nov. 1, 2025, Credo reported revenue of $268 million, a 272.1% increase year-over-year and a 20.2% sequential rise, exceeding consensus estimates by about 14%. Gross profit reached $181 million, with GAAP and non-GAAP gross margins of 67.5% and 67.7%, respectively, reflecting a 297.8% year-over-year gain. GAAP operating income was $79 million, or a 29.4% margin, while adjusted operating income was $124 million, or 46.3%. GAAP net income totaled $83 million, and adjusted net income was $128 million. Adjusted diluted earnings per share (EPS) of $0.67 surpassed the $0.49–$0.50 consensus by roughly 37%, while GAAP diluted EPS rose to $0.44 from $0.07 a year earlier.

Operating expenses totaled $102 million on a GAAP basis and $57 million adjusted, with research and development spending at $58 million and selling, general, and administrative costs at $44 million. The company ended the quarter with $568 million in cash and cash equivalents and $246 million in short-term investments, totaling $814 million in cash and near-cash holdings. Operating cash flow was $54 million, and free cash flow was positive. Product sales accounted for $261 million of revenue, while intellectual property license revenue was $7 million, about 2.5% of total sales, down from 4.6% a year earlier.

Guidance and Growth Drivers

Credo guided Q3 revenue to a range of $335 million to $345 million, implying roughly 159% year-over-year growth. This outlook reflects continued demand in its core AEC and IC franchises and the anticipated ramp-up of ZeroFlap Optics, analog line cards (ALCs), and OmniConnect gearbox solutions. The company expects GAAP gross margins between 63.8% and 65.8%, and non-GAAP gross margins between 64.0% and 66.0%. GAAP operating expenses are forecast between $116 million and $120 million, with adjusted operating expenses of $68 million to $72 million.

For fiscal 2026, management projects about 170% revenue growth and an implied net margin near 45%, indicating a multiple-fold increase in earnings compared with the prior year. The company identified five growth pillars: AECs, retimers, ZeroFlap Optics, ALCs, and OmniConnect gearbox solutions. Management cited a connectivity market exceeding $10 billion, which would more than triple Credo’s addressable opportunity as hyperscaler AI training and inference clusters expand.

The press release disclosed no regulatory approvals, SEC actions, mergers, or material litigation and referenced the Form 10-K filed July 2, 2025, for risk factors and forward-looking disclaimers.