- Record Q2 Revenue: $268 million, 20% sequential growth, 272% year-over-year.
- AEC Segment Growth: Driven by 4 hyperscalers contributing >10% of total revenue each.
- New Growth Pillars: $10 billion combined market opportunity from Zero Flap optics, ALCs, and OmniConnect gearboxes.
- Q3 Guidance: Revenue $335–$345 million (27% sequential growth), non-GAAP gross margin 64–66%.
- ASP Uplift: Transition to 100Gig per lane drives higher average selling prices, with 112Gig VSR SerDes as best-in-class.
Growth Drivers and Product Expansion
The company has added three new growth pillars: Zero Flap optics, active LED cables (ALCs), and OmniConnect gearboxes, which are expected to provide a combined total market opportunity exceeding $10 billion. Credo's IC business is also expected to drive significant growth, driven by 50-gig and 100-gig per lane deployments. The company's diverse customer base, with five hyperscalers using its products at a significant scale, is expected to continue driving growth.
Outlook and Guidance
For Q3 fiscal 2026, Credo expects revenue between $335 million and $345 million, up 27% sequentially. Non-GAAP gross margin is expected to be between 64% and 66%. The company expects sequential revenue growth in the mid-single digits for the remainder of fiscal 2026, leading to more than 170% year-over-year growth. Analysts estimate next year's revenue growth at 126.8%, indicating a strong growth trajectory.
Valuation and Metrics
With a P/E Ratio of 140.16 and an EV/EBITDA of 130.87, Credo's valuation suggests that the market is pricing in significant growth expectations. The company's ROE of 25.18% and ROIC of 14.95% indicate strong profitability. The P/S Ratio of 37.18 also reflects the market's expectations for the company's revenue growth.
Operational Highlights
Credo is taking a vertically integrated approach to manufacturing, particularly with its AEC product line, where it produces cable solutions in-house. The company is also investing in new technologies, such as its 112-gig VSR SerDes technology, which it believes is best-in-class. As Credo continues to expand its product offerings and customer base, its strong financial performance and guidance suggest a positive outlook for the company.