Research Reports

Prepared Highlights

Q3 FY2026 revenue of $407M, a record, up 52% sequentially and >200% YoY (CEO, CFO)
Non-GAAP gross margin 68.6%, above guidance high end, up 92 bps sequentially (CFO)
Non-GAAP net income $208.8M, a record, up 63% sequentially and quadrupled YoY (CFO)
Non-GAAP operating margin 49.6%, up 327 bps sequentially (CFO)
Cash from operations $166.2M, a record; free cash flow $139.7M (CFO)
CapEx $26.5M, driven by production mask sets (CFO)
Ending cash $1.3B, up $487.9M sequentially from ATM and FCF (CFO)
Ending inventory $208M, up $57.8M sequentially (CFO)
Top 3 end customers each >10% of Q3 revenue; 3–4 customers expected >10% in coming quarters (CFO)
AEC product line: strong growth from existing customers and a fifth hyperscaler; ZeroFlap AECs deliver up to 1,000x better reliability than commodity laser-based optics at roughly half the power (CEO)
IC portfolio: strong optical DSP growth expected in FY2026 driven by 100G per lane; PCIe Gen6 retimers on track with FY2026 design wins converting to production in FY2027 (CEO)
ZeroFlap Optics: production shipments began with Neocloud customer Tensor Way; in qualification with 3 additional customers; significant production ramp expected in Q1 FY2027 (CEO)
ALCs: sampling and qualification expected in FY2027, production ramp in FY2028 (CEO)
OmniConnect (Weaver): first customer Pozitron; production ramp expected in FY2028 (CEO)

Official Guidance (Q4 FY2026):

Revenue: $425M–$435M (CFO)
Non-GAAP gross margin: 64%–66% (CFO)
Non-GAAP OpEx: $76M–$80M (CFO)
Diluted share count: ~197M shares (CFO)
FY2027: sequential revenue growth mid-single digits, leading to >50% YoY growth (CFO)

Mgmt Quotes:

"Our recent performance reflects the most accelerated growth phase in Credo's history." (CEO)
"AECs are now the de facto standard for intra-rack and rack-to-rack connectivity up to 7 meters, increasingly displacing laser-based optical modules." (CEO)
"Our ZeroFlap AECs deliver up to 1,000x better reliability than commodity laser-based optics, while consuming roughly half the power." (CEO)
"We now expect to see a significant production ramp beginning in first quarter of fiscal '27 and continuing throughout the year." (CEO, on ZeroFlap Optics)
"In an environment where execution matters as much as innovation, operational excellence is a differentiator." (CEO)

Prepared Metrics

Metric	Value	Speaker/Context
Revenue (Q3 FY2026)	$407M	Record, +52% QoQ, >200% YoY (CFO)
Non-GAAP Gross Margin	68.6%	Above guidance high end, +92 bps QoQ (CFO)
Non-GAAP Operating Income	$201.8M	Up from $124.1M in Q2 (CFO)
Non-GAAP Operating Margin	49.6%	+327 bps QoQ (CFO)
Non-GAAP Net Income	$208.8M	Record, +63% QoQ, quadrupled YoY (CFO)
Non-GAAP Net Margin	51.3%	(CFO)
Cash from Operations	$166.2M	Record, +$104.6M QoQ (CFO)
Free Cash Flow	$139.7M	Up >$100M from Q2 (CFO)
CapEx	$26.5M	Driven by production mask sets (CFO)
Cash & Equivalents	$1.3B	+$487.9M QoQ (CFO)
Inventory	$208M	+$57.8M QoQ (CFO)
Revenue Guidance (Q4 FY2026)	$425M–$435M	(CFO)
Non-GAAP Gross Margin Guidance (Q4)	64%–66%	(CFO)
Non-GAAP OpEx Guidance (Q4)	$76M–$80M	(CFO)
Diluted Share Count Guidance (Q4)	~197M	(CFO)

Q&A Batch (1-5 of 5)

Q1 — Thomas O'Malley

Topic: ZF Optics ramp timing and customer engagement comparison vs. AEC
Key points:
- ZF Optics ramp now expected to start in Q1 fiscal '27, pulled forward from prior guidance of second half fiscal '27.
- Production units have already been shipped; products have completed internal qualification before customer qualification.
- First customer Tensor Wave announced for both AECs and ZF Optics; also in discussions with hyperscalers and other neophytes.
Mgmt stance: Bullish — pull-forward of ramp timing and early customer engagement signal strong confidence in a significant ramp throughout fiscal '27.

Q2 — Tore Svanberg

Topic: AEC use case drivers and CPO narrative
Key points:
- AECs are becoming de facto for intra-rack and rack-to-rack connections within 7 meters, driven by network reliability and power efficiency.
- Growth opportunity from increasing 100G-per-lane deployments and shift to 200G-per-lane, which offers stronger value proposition and ASP uplift.
- CPO forecasters show low single-digit share in the switching market over the next 3 years; deployments limited until NPO/TPO solutions deliver bulletproof reliability.
Mgmt stance: Neutral — AEC growth drivers intact; CPO is part of a heterogeneous mix but not an immediate threat due to reliability requirements.

Q3 — Joseph Cardoso

Topic: Composition of 50%-plus growth in fiscal '27
Key points:
- Fiscal '27 will see a different composition between copper and optical, specifically as ZF Optics ramps.
- Growth expected in AECs, ICs, and new wave from ZeroFlap optics; IC and AEC will include PCIe business.
- Fiscal '28 expected to layer in active LED cables (ALCs) and first gearbox (OmniConnect family).
Mgmt stance: Bullish — broadening portfolio contribution with optical becoming material in fiscal '27, followed by new products in fiscal '28.

Q4 — Vivek Arya

Topic: Q3 upside drivers and AEC vs. optical competitive dynamics
Key points:
- (Question directed to Dan Fleming on upside drivers; response not included in provided text.)
Mgmt stance: (Insufficient information to determine stance from provided excerpt.)

Q5 — William Brennan (continuation of Q4)

Topic: AEC vs. optical complementarity and NVIDIA's copper stance
Key points:
- NVIDIA has stated "where you can use copper, you will use copper"; AEC chosen over laser-based optics for reliability, power efficiency, and TCO.
- At 200G-per-lane 1.6T deployments, AEC reach expected to decrease slightly from 7 meters to 5 meters.
- Active LED cables (ALC) to deliver a new optical product category with copper-like reliability, energy efficiency, and cost, with reach initially up to 10 meters, then 30 meters.
Mgmt stance: Bullish — fundamental advantages of AEC unchanged; differentiated optical approach (ZF Optics, ALC) positions company well in a heterogeneous connectivity world.

Q&A Batch (6-10 of 12)

Q6 — Quinn Bolton

主题：Blue Heron DSP与OmniConnect ALC-CPO产品进展
关键点：
- AI营收目前主要来自scale out，无scale up营收
- Blue Heron为200 gig per lane，支持UALink、ESUN、Ethernet
- OmniConnect可扩展至VSR转micro LED gearbox
- 该方案功耗低于laser-based CPO
管理层立场：中性偏积极，因产品组合完整且可靠性高

Q7 — Sean O'Loughlin

主题：第四家hyperscale客户营收占比与OpEx指引
关键点：
- 上季度预期第四家客户占FY26全年营收超10%
- 本季度OpEx环比基本持平
管理层立场：中性，待进一步说明

Q8 — Quinn Bolton

主题：Chimera收购对产品路线图影响
关键点：
- 自2022年起为IP合作伙伴
- 涵盖protocol IP、error correction及security IP
- 加速端到端connectivity路线图
管理层立场：积极，因可提供完整系统级解决方案

Q9 — Sebastien Cyrus Naji

主题：供应链风险评估
关键点：
- 晶圆覆盖12nm、7nm、5nm、3nm工艺
- 封装层面已与供应链伙伴对齐
- OmniConnect Weaver支持DDR替代HBM
管理层立场：积极，因已锁定2027年及以后需求

Q10 — James Schneider

主题：光学产品FY27营收占比建模
关键点：
- FY26全年营收指引超13亿美元
- FY27营收同比增长50%至近20亿美元
- AEC FY26至FY27持续增长，ZF optics将成为FY27重要组成部分
管理层立场：中性偏积极，因客户导入持续推进

Q&A Batch (11-12 of 12)

Q11 — Sujeeva De Silva

Topic: ZF Optics客户数量及OmniConnect gearbox机会
Key points:
- 财政'27年ZF Optics ramp客户预计超过4家（当前已有4家）
- 客户组合包括hyperscalers与Neoclouds
- OmniConnect基于VSR SerDes，支持DDR5 gearbox首发，后续LPDDR6及200/400 gig per lane升级
Mgmt stance: 偏乐观，强调客户组合扩张及同一架构支持训练与推理的灵活性

Q12 — Christopher Rolland

Topic: AEC网络应用位置及毛利率指引
Key points:
- AEC最强应用于scale-out网络，支持前沿速度与集群稳定性
- 亦见于front-end及switch racks/disaggregated chassis
- Q3毛利率68.6%（环比升92 bps），长期目标63%-65%，指引下行约360 bps为保守预测
- AEC TAM 50亿美元，主要为scale-out，front-end占比约20%-25%
Mgmt stance: 毛利率中性偏谨慎，因产品mix及保守预测；AEC应用偏乐观，聚焦scale-out可靠性优势