Credo Technology Group Holding Ltd Reports Third Quarter of Fiscal Year 2026 Financial Results
SAN JOSE, Calif.--( BUSINESS WIRE)--Credo Technology Group Holding Ltd (Credo) (Nasdaq: CRDO), an innovator in providing connectivity at scale through fast, reliable, and energy-efficient system solutions, today reported financial results for the third quarter of fiscal year 2026, ended January 31, 2026.
Third Quarter of Fiscal Year 2026 Financial Highlights
Management Commentary
Bill Brennan, Credo’s President and Chief Executive Officer, stated, “In the third quarter Credo once again delivered record results with revenue of $407.0 million, an increase of more than 50% sequentially and 200% year over year. With continued growth in AECs and ICs and the announcement of three new multi-billion dollar TAM expansions through ZeroFlap optics, ALCs, and OmniConnect, we remain confident in our ability to innovate and grow in the expanding AI infrastructure landscape.”
Fourth Quarter of Fiscal 2026 Financial Outlook
Conference Call
Credo will conduct a conference call on Monday, March 2, 2026, at 2:00 p.m. Pacific Time to discuss its financial results for the third quarter of fiscal year 2026, ended January 31, 2026. Interested parties may join the conference call beginning at 2:00 p.m. Pacific Time on Monday, March 2, 2026, by dialing (800) 715-9871 (toll-free) or +1 (646) 307-1963 (international). The conference ID for the call is 5251802. It is recommended that participants dial in to the call at least 10 minutes before the start of the call. A live webcast of the conference call will be available on Credo’s Investor Relations website at http://investors.credosemi.com. A replay of the webcast will be available via the web at http://investors.credosemi.com.
Discussion of Non-GAAP Financial Measures
This press release contains references to the non-GAAP financial measures of non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income (loss), non-GAAP operating income (loss) margin, non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share. Reconciliation of these non-GAAP measures to their comparable GAAP measures is included below. This non-GAAP information should not be construed as an alternative to the reported results determined in accordance with GAAP. The non-GAAP financial measures that Credo presents may not be comparable to similarly titled measures of other companies and other companies may not calculate such measures in the same manner as we do.
Non-GAAP financial measures exclude the effect of share-based compensation expenses, asset impairment and related charges (if applicable), and the related tax effect adjustment to the provision for income taxes.
Credo uses a full-year non-GAAP tax rate to compute the non-GAAP tax provision. This full-year non-GAAP tax rate is based on Credo’s annual GAAP income, adjusted to exclude non-GAAP items, as well as the effects of significant non-recurring and period-specific tax items which vary in size and frequency. Credo’s non-GAAP tax rate is determined on an annual basis and may be adjusted during the year to take into account events that may materially affect the non-GAAP tax rate, such as tax law changes, significant changes in Credo’s geographic mix of revenue and expenses or changes to Credo’s corporate structure.
GAAP diluted net income (loss) per share is calculated using basic weighted average shares outstanding when there is a GAAP net loss, and calculated using diluted weighted average shares outstanding when there is a GAAP net income. Non-GAAP diluted net income (loss) per share is calculated using basic weighted average shares outstanding when there is a non-GAAP net loss, and calculated using non-GAAP diluted weighted average shares outstanding when there is a non-GAAP net income. Non-GAAP adjustment for the number of shares used in the diluted per share calculations excludes the impact of share-based compensation expenses expected to be incurred in future periods and not yet recognized in the financial statements, which would otherwise be assumed to be used to repurchase shares under the GAAP treasury stock method.
Credo believes that the presentation of non-GAAP financial measures provides important supplemental information to management and investors regarding financial and business trends relating to Credo’s financial condition and results of operations. While Credo uses non-GAAP financial measures as a tool to enhance its understanding of certain aspects of its financial performance, Credo does not consider these measures to be a substitute for, or superior to, financial measures calculated in accordance with GAAP. Consistent with this approach, Credo believes that disclosing non-GAAP financial measures to the readers of its financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of its financial and operational performance.
Externally, management believes that investors may find Credo’s non-GAAP financial measures useful in their assessment of Credo's operating performance and the valuation of Credo. Internally, Credo's non-GAAP financial measures are used in the following areas:
Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of Credo’s business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of Credo’s results as reported under GAAP. The exclusion of the above items from our GAAP financial metrics does not necessarily mean that these costs are unusual or infrequent.
Forward-Looking Statements under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to, any statements regarding: launches of new or expansion of existing products or services; technology developments and innovation; our plans, strategies or objectives with respect to future operations; financial outlook; future financial results; expectations regarding the markets and industries in which Credo conducts business; and assumptions underlying any of the foregoing. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “seeks,” “estimates,” “can,” “may,” “will,” “would,” “outlook,” “forecast,” “targets” and similar expressions, or their negatives, may identify such forward-looking statements. These statements are not guarantees of results and should not be considered as an indication of future activity or future performance. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties that may cause actual events or results to differ materially from those described in this press release. Readers are encouraged to review risk factors and all other disclosures appearing in Credo’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on July 2, 2025, as well as Credo’s other filings with the SEC, for further information on risks and uncertainties that could affect Credo’s business, financial condition and results of operation. Copies of these filings are available from the SEC, Credo’s website or Credo’s investor relations department. Forward-looking statements speak only as of the date they are made. Credo assumes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date herein.
About Credo
Credo’s mission is to transform connectivity at scale through fast, reliable and energy-efficient system solutions. Our high-speed copper and optical interconnect products deliver industry-leading power and performance at up to 1.6T to meet the ever-expanding data infrastructure demands of AI.
Our product portfolio includes ZeroFlap (ZF) Active Electrical Cables (AECs) and ZF optical transceivers, OmniConnect memory solutions, and a suite of retimers and DSPs for optical and copper Ethernet and PCIe, all leveraging the PILOT diagnostic and analytics software platform. Credo innovations enable our customers to connect the systems that connect the world.
For more information, please visit https://www.credosemi.com.
Credo and the Credo logo are registered trademarks of Credo Technology Group Limited in the United States and other jurisdictions. All other trademarks referenced herein are the property of their respective owners.
Credo Technology Group Holding Ltd
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
Nine Months Ended
January 31, 2026
November 1, 2025
February 1, 2025
January 31, 2026
February 1, 2025
Revenue
407,012
268,027
135,002
898,113
266,750
Cost of revenue
128,144
86,981
49,076
287,831
98,029
Gross profit
278,868
181,046
85,926
610,282
168,721
Operating expenses:
Research and development
78,483
57,916
36,261
188,847
98,412
Selling, general and administrative
50,763
44,334
23,471
132,275
66,973
Total operating expenses
129,246
102,250
59,732
321,122
165,385
Operating income
149,622
78,796
26,194
289,160
3,336
Other income, net
9,459
4,889
3,918
18,294
13,925
Income before income taxes
159,081
83,685
30,112
307,454
17,261
Provision for income taxes
1,939
1,049
752
4,277
1,666
Net income
$
157,142
$
82,636
$
29,360
$
303,177
$
15,595
Net income per share:
Basic
$
0.86
$
0.47
$
0.17
$
1.72
$
0.09
Diluted
$
0.82
$
0.44
$
0.16
$
1.62
$
0.09
Weighted-average shares used in computing net income per share:
Basic
182,222
175,307
168,167
176,490
166,562
Diluted
192,023
187,659
182,464
186,598
180,495
Credo Technology Group Holding Ltd
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
January 31, 2026
May 3, 2025
Assets
Current assets:
Cash and cash equivalents
$
1,220,464
$
236,328
Short-term investments
81,000
195,010
Accounts receivable
243,213
162,144
Inventories
207,958
90,029
Other current assets
33,958
30,023
Total current assets
1,786,593
713,534
Property and equipment, net
105,989
63,631
Right-of-use assets
15,517
15,234
Goodwill
70,859
—
Intangible asset
17,624
—
Other non-current assets
40,757
16,858
Total assets
$
2,037,339
$
809,257
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
$
93,822
$
56,158
Accrued compensation and benefits
14,419
16,097
Other current liabilities
56,951
35,456
Total current liabilities
165,192
107,711
Non-current operating lease liabilities
12,616
12,693
Other non-current liabilities
10,645
7,271
Total liabilities
188,453
127,675
Shareholders' equity:
Ordinary shares
9
8
Additional paid in capital
1,626,787
765,173
Accumulated other comprehensive income (loss)
2,075
(437
)
Retained earnings (accumulated deficit)
220,015
(83,162
)
Total shareholders' equity
1,848,886
681,582
Total liabilities and shareholders' equity
$
2,037,339
$
809,257
Credo Technology Group Holding Ltd
Reconciliations from GAAP to Non-GAAP (Unaudited)
(In thousands, except percentages and per share amounts)
Three Months Ended
Nine Months Ended
January 31, 2026
November 1, 2025
February 1, 2025
January 31, 2026
February 1, 2025
GAAP gross profit
$
278,868
$
181,046
$
85,926
$
610,282
$
168,721
Reconciling item:
Share-based compensation
354
354
226
1,064
838
Total reconciling item:
354
354
226
1,064
838
Non-GAAP gross profit (A)
$
279,222
$
181,400
$
86,152
$
611,346
$
169,559
GAAP gross margin
68.5
%
67.5
%
63.6
%
68.0
%
63.3
%
Non-GAAP gross margin
68.6
%
67.7
%
63.8
%
68.1
%
63.6
%
Total GAAP operating expenses
$
129,246
$
102,250
$
59,732
$
321,122
$
165,385
Reconciling item:
Share-based compensation
(51,806
)
(44,970
)
(15,964
)
(131,875
)
(48,655
)
Total reconciling item:
(51,806
)
(44,970
)
(15,964
)
(131,875
)
(48,655
)
Total Non-GAAP operating expenses (B)
$
77,440
$
57,280
$
43,768
$
189,247
$
116,730
GAAP operating income
$
149,622
$
78,796
$
26,194
$
289,160
$
3,336
Non-GAAP operating income (A-B)
$
201,782
$
124,120
$
42,384
$
422,099
$
52,829
GAAP operating income margin
36.8
%
29.4
%
19.4
%
32.2
%
1.3
%
Non-GAAP operating income margin
49.6
%
46.3
%
31.4
%
47.0
%
19.8
%
GAAP net income
$
157,142
$
82,636
$
29,360
$
303,177
$
15,595
Reconciling items:
Share-based compensation
52,160
45,324
16,190
132,939
49,493
Pre-tax total reconciling item
52,160
45,324
16,190
132,939
49,493
Other income tax effects and adjustments
(509
)
(172
)
(172
)
(1,254
)
(416
)
Non-GAAP net income
$
208,793
$
127,788
$
45,378
$
434,862
$
64,672
GAAP net income margin
38.6
%
30.8
%
21.7
%
33.8
%
5.8
%
Non-GAAP net income margin
51.3
%
47.7
%
33.6
%
48.4
%
24.2
%
GAAP weighted-average shares - basic
182,222
175,307
168,167
176,490
166,562
GAAP weighted-average shares - diluted
192,023
187,659
182,464
186,598
180,495
Non-GAAP adjustment
2,878
2,896
2,028
3,103
3,335
Non-GAAP weighted-average shares - diluted
194,901
190,555
184,492
189,701
183,830
GAAP diluted net income per share
$
0.82
$
0.44
$
0.16
$
1.62
$
0.09
Non-GAAP diluted net income per share
$
1.07
$
0.67
$
0.25
$
2.29
$
0.35
Credo Technology Group Holding Ltd
Reconciliation of GAAP Forward-Looking Estimates to Non-GAAP Forward-Looking Estimates
(In millions, except percentages)
Outlook for Three Months Ending May 2, 2026
Low
High
GAAP gross margin
63.9
%
65.9
%
Reconciling item:
Share-based compensation
0.1
%
0.1
%
Total reconciling item:
0.1
%
0.1
%
Non-GAAP gross margin
64.0
%
66.0
%
Total GAAP operating expenses
$
125.5
$
129.5
Reconciling item:
Share-based compensation
49.5
49.5
Total reconciling item:
49.5
49.5
Total Non-GAAP operating expenses
$
76.0
$
80.0