Key Takeaways
- Shares declined 14% in after-hours trading before settling down 4.2% at $226.10 during Monday’s session
- Fourth-quarter revenue climbed 157% year-over-year to reach $437 million, surpassing analyst projections of $431.8 million
- Non-GAAP earnings per share of $1.16 exceeded Wall Street’s $1.02 forecast; annual revenue crossed $1.3 billion, representing 206% growth
- First-quarter fiscal 2027 outlook of $465M–$475M topped consensus estimates but fell short of market expectations
- The company finalized its $750 million DustPhotonics acquisition to bolster optical connectivity capabilities
Shares of Credo Technology experienced a 14% decline in after-hours trading Monday before rebounding to finish the regular session down 4.2% at $226.10, following the release of robust fiscal fourth-quarter earnings that were overshadowed by forward guidance that disappointed the market.
Credo Technology Group Holding Ltd, CRDO
The shares continued their decline with a roughly 2% drop in premarket trading Tuesday. Nevertheless, CRDO maintains a 58% gain year-to-date and has climbed 157% from its March 30 bottom.
Fourth-quarter revenue reached an all-time high of $437 million, representing a 157% year-over-year increase and exceeding the analyst consensus of $431.8 million. Non-GAAP earnings per share totaled $1.16, substantially above the $1.02 projection and a significant leap from the $0.35 reported in the prior-year period.
For fiscal year 2026 overall, revenue climbed to $1.3 billion — marking a 206% year-over-year expansion. Non-GAAP net income increased more than five times to $662 million. The quarter generated free cash flow of $177.5 million, with the company finishing the period with $1.4 billion in cash reserves.
Chief Executive Officer Bill Brennan characterized fiscal 2026 as “another defining year,” highlighting that fourth-quarter revenue alone surpassed the company’s combined revenue for the entire fiscal 2025.
Forward Outlook Falls Short of Market Hopes
For the first quarter of fiscal 2027, Credo projected revenue in the range of $465 million to $475 million. While this exceeded the Wall Street consensus estimate of $461.3 million, it failed to satisfy investors anticipating stronger guidance.
Full-year fiscal 2027 revenue is projected to expand by more than 80% year-over-year. Company leadership indicated that approximately half of this expansion will stem from its optical product portfolio, while the remaining growth will come from copper-based products including Active Electrical Cables and retimer solutions.
Non-GAAP net margin is anticipated to remain around 50% throughout the fiscal year.
Major customers include Microsoft, Amazon, and Meta. The company’s four largest clients each represented at least 10% of fourth-quarter revenue, with the largest single customer accounting for 34%.
DustPhotonics Acquisition Finalized
Last week, Credo finalized its purchase of DustPhotonics for $750 million in cash plus 920,000 shares of CRDO stock. This transaction introduces silicon photonics and photonic integrated circuit capabilities to Credo’s product portfolio.
Company executives noted that DustPhotonics contributes 800G and 1.6T design victories along with a development roadmap extending to 3.2 terabits per second. The technology’s architecture requires fewer lasers, potentially reducing costs while enhancing reliability.
Credo anticipates its optical portfolio — encompassing optical DSPs, silicon photonics PICs, and ZeroFlap Optics — will deliver over $600 million in revenue during fiscal 2027. Each of the three product categories is projected to contribute more than $100 million independently.
ZeroFlap Optics is anticipated to be the leading optical revenue generator due to higher average selling prices — triple-digit ASPs compared to double-digit pricing for discrete components.
Brennan projected mid-single-digit sequential growth during the first half of fiscal 2027, with acceleration expected in the second half fueled by optical portfolio expansion.
Looking ahead to fiscal 2028, Credo anticipates production ramps for its AEC and OmniConnect product lines, alongside its Weaver gearbox product designed to address next-generation inference memory challenges.
Chief Financial Officer Dan Fleming confirmed the company has no plans for additional capital raises or stock buyback programs following the DustPhotonics cash transaction.
