Credo Technology Group Holding Ltd - 10-Q Summary
Business Context and Reporting Period
This Quarterly Report on Form 10-Q covers the period ended November 1, 2025 (Fiscal Q2 2026). Credo Technology Group Holding Ltd is a fabless semiconductor company focused on high-speed connectivity solutions (SerDes and DSP technologies) for AI, cloud computing, and hyperscale networks. The company operates as a single reportable segment.
Key Financial Metrics
| Metric | Three Months Ended Nov 1, 2025 | Six Months Ended Nov 1, 2025 |
|---|---|---|
| Total Revenue | $268.0 million | $491.1 million |
| Gross Profit | $181.0 million | $331.4 million |
| Gross Margin | 67.5% | 67.5% |
| Operating Income | $78.8 million | $139.5 million |
| Net Income | $82.6 million | $146.0 million |
| Diluted EPS | $0.44 | $0.79 |
| Cash & Equivalents | $567.6 million (as of Nov 1, 2025) | |
| Short-term Investments | $246.0 million (as of Nov 1, 2025) | |
| Working Capital | $1.103 billion (as of Nov 1, 2025) | |
| Operating Cash Flow (6mo) | $115.8 million |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased by 272.1% year-over-year (YoY) for the quarter and 272.8% for the six-month period. Product sales revenue grew 278.3% YoY, driven primarily by a significant ramp-up in Active Electrical Cable (AEC) shipments to hyperscale data center customers.
- Profitability: The company transitioned from a net loss of $4.2 million in the prior year quarter to a net income of $82.6 million. Operating income improved from a loss of $8.4 million to $78.8 million.
- Margins: Gross margin expanded by 4.3 percentage points to 67.5% due to improved economies of scale.
- Acquisition: On September 29, 2025, Credo acquired Hyperlume, Inc. for $92.0 million to expand its portfolio with microLED optical interconnect technology. This resulted in $68.9 million of goodwill and $17.1 million of intangible assets.
- Capital Raise: The company raised $384.6 million in net proceeds through an At-The-Market (ATM) offering during the quarter.
Guidance, Outlook, and Risks
- Outlook: Management expects continued revenue concentration from a limited number of customers, though this is anticipated to decrease as the customer base expands. The company believes its current cash and working capital are sufficient for at least the next 12 months.
- Customer Concentration: Revenue remains highly concentrated. For the six months ended November 1, 2025, "Customer A" accounted for 58% of revenue and "Customer B" for 25%. Based on end-customer profiles, three customers (B, C, and D) accounted for 79% of revenue.
- Risks: Key risks include dependence on a limited number of customers, supply chain constraints, the ability to retain key personnel, and the impact of macroeconomic conditions on AI infrastructure spending. The filing notes no material litigation as of the report date.
- Unusual Items: Share-based compensation expense increased significantly ($80.8 million for the six months) due to new equity awards and the Hyperlume acquisition. Inventory write-downs were $8.1 million for the six-month period.
Investor Verification Checklist
- Customer Concentration: Verify the stability of contracts with the top three customers, which collectively represent nearly 80% of revenue.
- Inventory Levels: Review the $150.2 million inventory balance (up from $90.0 million) and the $8.1 million write-down to assess potential obsolescence risks given the rapid pace of technology changes.
- Acquisition Integration: Monitor the integration of Hyperlume's microLED technology and the amortization of the $17.1 million intangible asset.
- ATM Offering: Track the remaining capacity of the $750 million ATM facility and the dilution impact of the 2.7 million shares issued in the quarter.
- Share-Based Compensation: Assess the sustainability of operating margins given the sharp increase in share-based compensation expenses ($80.8 million for six months).