Credo Technology Group Holding Ltd Q2 FY2026 earnings call

Bill Brennan mentioned Q2 record results, highlighted transformative developments since last call, and shared forward outlook. AEC product line grew healthily with 4 domestic hyperscale customers each >10% of revenue. Daniel Fleming reviewed Q2 financials, including revenue of $268M, non-GAAP gross margin 67.7%, non-GAAP net income $127.8M, and provided Q3 guidance.

In the second quarter, the company achieved record revenue of $268 million, a 20% sequential growth and 272% year-over-year increase. Non-GAAP gross margin was 67.7% and non-GAAP net income was approximately $128 million. The AEC product line is the fastest-growing segment, with revenue growing strongly driven by increasing customer diversity. 4 hyperscalers each contributed over 10% of total revenue in Q2. The IC business, including retimers and optical DSPs, performed strongly. New growth pillars like Zero Flap optics, ALCs, and OmniConnect gearboxes were introduced, each representing significant multibillion-dollar market opportunities.

Expect Q3 fiscal '26 revenue between $335M - $345M, up 27% at midpoint. Q3 non-GAAP gross margin 64%-66%, non-GAAP operating expenses $68M - $72M. Fiscal '26 end to '27 expect mid-single digits sequential revenue growth, non-GAAP net margin ~45%, net income more than quadrupling year-over-year.

Potential supply constraints, especially in advanced node wafer foundry capacity as demand increases, which could impact production of IC solutions.

Q: So you're seeing an expansion of the AEC market...

A: I think it's a combination of both the quantity as well as ASPs...; Q: Yes. Congratulations on the solid results...

A: Yes. So we've been very consistent in talking about our intent to continue to expand our portfolio at the system level...; Q: Bill, which applications are your 4 customers using AECs for today?...

A: The different applications that we've talked about in the past have been, number one, front-end network connections...