Credo Technology (CRDO) Q3 FY2026 Earnings Call — March 2, 2026

Source: Motley Fool transcript (published Mar 2, 2026) + Yahoo Finance/Quartr transcript.

Bill Brennan (CEO): Thanks, Daniel. And thank you all for joining our third quarter fiscal 2026 earnings call. In the third quarter, we delivered record revenue of $407 million, a sequential increase of 52% and more than 200% from Q3 last year. We delivered non-GAAP gross margin of 68.6% and generated approximately $209 million of non-GAAP net income.

Our recent performance reflects the most accelerated growth phase in Credo's history. From fiscal 2024 to fiscal 2025, we more than doubled revenue, and from fiscal 2025 to fiscal 2026, we expect to triple revenue on top of that. Our purpose-built SerDes, NICs, vertically integrated system model, and deep hyperscaler partnerships win at scale. We established leadership in high-reliability copper connectivity and built strong positions in optical DSPs and retimers.

Our AEC product line once again delivered strong growth, driven by existing customers and new wins, including our fifth hyperscaler. Demand is accelerating across both hyperscalers and emerging neocloud providers. AECs are now the de facto standard for intra-rack and rack-to-rack connectivity up to seven meters. Our Zero-Flat AECs deliver up to 1,000 times better reliability than commodity laser-based optics while consuming roughly half the power.

I am pleased to report that our progress with Zero-Flat Optics is ahead of schedule. We began production shipments with our first neocloud customer, TensorWave, and we are in qualification with three additional customers, including hyperscalers and neocloud operators. Based on strong customer traction, we now expect to see a significant production ramp beginning in 2027 and continuing throughout the year.

Daniel Fleming (CFO): In Q3, we reported revenue of $407 million, up 52% sequentially and more than tripling year over year, and at the high end of our revised guidance range. Our top three end customers were each greater than 10% of revenue in Q3. Q3 non-GAAP gross margin was 68.6%, above the high end of our guidance range and up 92 basis points sequentially. Our non-GAAP operating income was $201.8 million, and our non-GAAP operating margin was 49.6% in the quarter, up 327 basis points sequentially. Our non-GAAP net income was $208.8 million, a record high and a 63% sequential increase, with a net margin of 51.3%.

Cash flow from operations was a record $166.2 million, and free cash flow was $139.7 million, up more than $100 million from the second quarter. We ended the quarter with cash and equivalents of $1.3 billion. Q3 ending inventory was $208 million.

For Q4 of fiscal 2026, we expect revenue to be between $425 million and $435 million, and non-GAAP gross margin within a range of 64% to 66%. As we look ahead to fiscal 2027, we expect sequential revenue growth in the mid-single digits leading to more than 50% year-over-year growth.

Q&A Highlights (condensed from full transcript)

• Q (Tom O'Malley, Barclays): ZF Optics ramp and customer engagement? A: ZF Optics has been in development for ~2 years; products fully vetted internally before customer qualification; first customer TensorWave; four in qualification (hyperscalers + neoclouds); ramp now expected to start in Q1 of FY27 (pulled in from 2H).
• Q (Tore Svanberg, Stifel): AEC use cases and CPO narrative? A: AECs are near-de-facto in inter-rack and rack-to-rack; drivers are reliability, power efficiency, TCO; scale-out is where we're strongest; CPO/NPO reliability questions limit near-term share — our focus is bulletproof reliability across copper AND optical.
• Q (Joseph Cardoso, JPM): FY27 composition? A: Different composition between copper and optical in FY27 as ZF Optics ramps; AECs and ICs grow, plus new ZF Optics wave; PCIe is really FY28.
• Q (Vivek Arya, BofA): What drove the upside? A: Strength across all hyperscale customers; top-3 all grew sequentially — 39%, 32%, 17% of revenue (largest customer same as Q1).
• Q (Quinn Bolton, Needham): Blue Heron and OmniConnect/CPO? A: Scale-up is a small market today; Blue Heron is a 200G/lane retimer for UALink/ESUN/Ethernet (first customer Upscale AI); OmniConnect gearboxes extend VSR to DDR and microLED, enabling near-package optics with much lower power.
• Q (Vijay Rakesh, Mizuho): 1.6T ramp — copper vs CPO? A: 200G/lane market will be addressed by AECs and laser-based modules plus our ALCs; CPO is further out; NVIDIA leads with Vera Rubin, others follow slower.
• Q (Jim Schneider, Goldman): Optical revenue contribution by end FY27? A: ~$1.3B this year; 50% growth gets to ~$2B next year; ZF Optics will be a material component of FY27.
• Q (Chris Rolland, Susquehanna): Where is AEC strongest? A: Scale-out, plus front-end; a couple of customers deploying in switch racks/disaggregated chassis; front-end ~20-25% of scale-out.
• Q (Karl Ackerman, BNP): GM guide down ~360bps? A: Long-term range 63-65%; we're at/above the high end; conservative forecasting, mix differences; not a change in long-term view.
• Q (Suji Desilva, ROTH): ZF ramp customers? A: Four in qualification now (hyperscalers + neoclouds), expect to add more; driven by customer pull for reliability.
• Q (Sebastien Naji, William Blair): Supply chain / memory? A: Aligned with supply partners on wafers (12/7/5/3nm) and packaging; we can support plan plus upside; memory is tight industry-wide — our Weaver enables DDR over HBM.