0001628280-26-043303
SEC filingRevenue surged 205.7% to $1.3B driven by AEC hyperscale ramp, with gross margin expanding 320bps to 68%.
Credo Technology Group Holding Ltd describes itself as a company whose mission is to transform connectivity at scale through fast, reliable and energy-efficient system solutions. The Company’s high-speed copper and optical interconnect products deliver industry-leading power and performance at up to 1.6T to meet the data infrastructure demands of AI. Its product portfolio includes ZeroFlap Active Electrical Cables (AECs), ZeroFlap optical transceivers, OmniConnect memory solutions, retimers, DSPs, and the PILOT diagnostic and analytics software platform. Revenue for fiscal 2026 was $1.3 billion, up from $436.8 million in fiscal 2025.
The Business section does not disclose any formal reporting segments. The company appears to operate as a single segment, with all revenue attributed to connectivity solutions. No segment revenue breakdown is provided.
Key product families include: ZeroFlap AECs (CLOS, SPAN, SHIFT, SWITCH families) for copper interconnect; Optical PAM4 DSPs (Seagull 50G/lane, Dove/Lark/Robin 100G/lane, Bluebird 200G/lane) for optical transceivers; ZeroFlap Optical Transceivers (400G/800G/1.6T) with reliability features; OmniConnect platform including the Weaver memory fanout gearbox; SerDes Chiplets for MCM integration; Toucan PCIe Gen6 retimers; microLED solutions (Active LED Cables) for extended reach; and the PILOT software platform for link monitoring.
Credo employs a direct sales force with a two-pronged strategy: engaging both end users (hyperscalers, NeoClouds) and their suppliers (OEMs, ODMs, optical module manufacturers). The company has a sales presence in North America, Asia, and Europe. Customer concentration is high: top 10 customers accounted for approximately 90% of fiscal 2026 revenue, with two customers each exceeding 10%.
Principal competitors named are Broadcom Ltd., Marvell Technology, Inc., and Astera Labs, Inc., as well as various cable and optical transceiver suppliers. The company believes it is the only player offering a complete suite of high-performance connectivity solutions, but faces competition in specific product categories on factors such as performance, power efficiency, cost, product breadth, and timely delivery.
The company’s growth strategy focuses on four pillars: extending leadership in SerDes technologies through continued R&D; broadening the product portfolio with new solutions for evolving needs; attracting and acquiring new customers across served and adjacent markets; and deepening relationships with existing customers by selling multiple connectivity solutions.
As of May 2, 2026, Credo had 807 full-time equivalent employees, of whom 616 were engineers. The workforce is distributed with 330 in North America and 477 in Asia. None of the employees are unionized. The company emphasizes its engineering talent and experienced management team as competitive strengths.
Fiscal 2026 revenue grew 205.7% to $1.335 billion from $436.8 million in fiscal 2025, driven overwhelmingly by a ramp in Active Electrical Cable (AEC) product shipments to hyperscale data center customers. This volume surge accounted for over 99% of the revenue increase. Gross profit rose 221.1% to $908.3 million, and gross margin expanded 320 basis points to 68.0%, reflecting improved economies of scale. Operating expenses grew at a slower pace (R&D +90.2%, SG&A +86.0%) than revenue, causing operating income to swing from 8.5% of revenue in FY25 to 33.3% in FY26. Net income jumped from $52.2 million to $472.3 million, a 804.8% increase. Operating cash flow improved to $464.3 million from $65.1 million, supported by strong net income and non-cash adjustments, partially offset by working capital outflows for accounts receivable, inventory, and supplier deposits.
Geographically, North America revenue surged from 15% of total in FY25 to 58% in FY26, while revenue from the rest of the world (primarily Asia) declined from 85% to 42%. This shift reflects the concentration of hyperscale data center demand in North America for Credo's AEC solutions. Customer concentration remains high, with Customer B, D, and E accounting for 32%, 33%, and 19% of FY26 revenue, respectively. The company expects concentration to decrease as product adoption broadens.
The MD&A indicates continued investment in R&D to support growth, with expectations for absolute dollar increases. Cash and equivalents stood at $1.2 billion, bolstered by $736.3 million in net proceeds from an ATM offering during FY26. The company believes current liquidity is sufficient for at least 12 months. No specific forward guidance is provided, but management highlights the ramp of AEC solutions as the primary driver and anticipates continued expansion in the data infrastructure market fueled by AI and ML workloads.
As of May 2, 2026, the company holds $1,164.95M in cash and equivalents plus $278.33M in short-term investments, totaling $1,443.29M in liquid assets. Total shareholders' equity is $2,063.61M, with no outstanding debt (excluding operating lease liabilities of $25.45M). Inventory increased to $250.83M from $90.03M a year ago, reflecting growth and pre-building for demand. Goodwill and intangible assets from acquisitions total $122.06M.
The company has $359.95M in non-cancelable purchase obligations as of May 2, 2026, primarily to manufacturing vendors and foundry partners ($337.75M) and technology licenses ($22.21M). Of this, $346.06M is due within one year. Additionally, $71.0M in refundable deposits are recorded for capacity reservation agreements, with purchase commitments of at least $188.6M through fiscal 2028. A subsequent agreement added $13.1M in deposits and $43.7M in purchase commitments.
No share repurchases or dividends were declared. The company financed growth primarily via an ATM offering yielding $736.3M in net proceeds. Capital expenditures totaled $57.3M (4.3% of revenue), up from $36.1M in the prior year, reflecting investment in production equipment and construction in progress. Debt remains zero. Post year-end, the DustPhotonics acquisition for $770M cash and shares will draw on cash reserves.
The company operates as a single reportable segment. Revenue is heavily concentrated in the United States ($768.1M, 57.5%) and Hong Kong ($378.2M, 28.3%), with the remainder in Mainland China, Taiwan, and rest of world. Customer concentration is high: Customer A accounted for 49% of revenue and 53% of accounts receivable; Customer B accounted for 32% of revenue.
Credo relies heavily on a small customer base: two customers each >10% of FY2026 revenue, and top 10 customers ~90%. Loss of a key customer could severely impact revenue. Additionally, sales are on purchase orders without long-term commitments, allowing customers to cancel with short notice, creating volatility.
All ICs are manufactured exclusively at TSMC, with assembly/test outsourced to several Asian subcontractors (Amkor, ASE, KYEC, Sigurd, BizLink). Only BizLink has a long-term contract; others are on purchase orders. Capacity constraints, natural disasters, or geopolitical tensions (e.g., Taiwan-China) could disrupt supply, leading to revenue loss.
The company faces risks from tariffs (US-China trade war), inflation, and global economic slowdown. US export controls and the Outbound Investment Rule restrict certain investments in China, potentially impacting Credo's subsidiaries and capital access. Operations in Taiwan, Hong Kong (28% revenue), and mainland China expose the company to political instability, sanctions, and regulatory changes.
The semiconductor market is intensely competitive with Broadcom, Marvell, and Astera Labs. Design wins are critical but lengthy (2-3 years), and failure to secure them can result in lost revenue for generations. Rapid technological change (e.g., AI/ML) demands continuous innovation; market shifts toward new standards could render products obsolete.
After years of losses, Credo posted net income of $472.3M in FY2026 but still has an accumulated deficit of $83.2M. Gross margins may fluctuate due to product mix, pricing pressure, and yield issues. The company is investing heavily in R&D ($279.4M in FY2026) and may need additional financing.
Cybersecurity threats are rising, especially with AI tool usage. Privacy laws (GDPR, CCPA, China's PIPL) add compliance costs. Intellectual property infringement claims could result in significant damages or loss of rights. Being a Cayman Islands company may limit shareholder protections and enforceability of US judgments.
Overall, the risk factors emphasize heavy dependencies on a few customers and TSMC, heightened geopolitical exposure, and the uncertainties of the AI market.
No cash flow statement data is present in the provided excerpt. The document includes the audit report and a note on inventory valuation but does not display the Consolidated Statements of Cash Flows table. Therefore, analysis of CFO vs Net Income, capex intensity, FCF coverage, or working capital swings cannot be performed. To complete the analysis, the actual cash flow statement figures for the three years ended May 2, 2026 are required.