Credo Technology Group Holding Ltd Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vivek Arya - Bank of America - Analyst : Thank you for taking my, questions. First set of question is on the AEC market. If you could quantify how large each of your 10% customers were if they were the same as you had in the prior quarter? And then will if I zoom out the market for you is now run rating closer to $1 billion or so. How large do you think this market is over time? And do you think this market is cannibalizing traditional copper? Or do you think at some point, it is even cannibalizing optical transceivers?

Question: Vivek Arya - Bank of America - Analyst : Got it. And from my follow-up, Bill, I actually have a question for both you and -- what is the next big thing for Credo? Is it optical DSP, if yes, how large can it be for you? And I asked that because it's great to see that you have this tremendous operating leverage. You're guiding every quarter sales are up $15 million, $20 million and OpEx hardly goes up. So are you investing enough in diversifying beyond AECs and -- right? So just what is the next big thing for Credo? And are you investing adequately in that?

Question: Vivek Arya - Bank of America - Analyst : Okay, thank you.

Question: Tom O'Malley - Barclays Services Corp - Analyst : Hey guys, thanks for taking my question. I wanted to follow up on the optical DSP business. We're getting on the brink of a more material 1.6 transition. Could you talk about what your feelings are about your competitiveness at that node? And maybe give us a little bit of insight into the three nanometer platform, when you'll be in volume and how you think you're positioned versus the 800G generation?

Question: Tom O'Malley - Barclays Services Corp - Analyst : Helpful. And then you spent a lot of time in the preamble talking about PCIe retimers. Today, that's the large GPU manufacturer and then also one large hyperscaler who's really started off their efforts there. When you talk about the opportunity in the future. Are you thinking that, that is concentrated amongst those two customers? Or do you see PCIe proliferation amongst other hyperscalers as well? Thank you.

Question: Joshua Buchalter - TD Cowen - Analyst : Hey guys, excuse me, thank you for taking my question and congrats on the results. Maybe a follow-up to Tom's first one there. I think you've demonstrated the LRO at 800 gig with your Dove 850 platform. But it sounds like a lot of the industry research and maybe you guys think 1.6T is more of a catalyst for LRO. Maybe you could speak to the near to medium term, like how we should expect the adoption curve to ramp for the LRO solutions? Thank you.

Question: Joshua Buchalter - TD Cowen - Analyst : Got it. Thank you. I just had a question. In the prepared remarks, you mentioned, I think, something about your customer is not necessarily ramping linearly. Your guidance is obviously very strong and somewhat linear off of the strong. Maybe you could elaborate on those comments and bigger picture, how you feel about the visibility into the ramps as your expanding customer base scale? Thank you.

Question: Joshua Buchalter - TD Cowen - Analyst : Thank you. and congratulations again.

Question: Tore Svanberg - Stifel, Nicolaus & Company Inc - Analyst : Yes, thank you and congratulations on the record results. Bill, I was hoping to get just a little bit more color on the use cases for the AEC business. I think Credo is a pretty unique position, especially in rowscale. So just hoping to get a little bit more color on the size or where we are with rowscale networking. I assume it's still early days, but any color you could share with us would be great.

Question: Tore Svanberg - Stifel, Nicolaus & Company Inc - Analyst : That's really helpful. And I had a follow-up question on the customer concentration and drivers for fiscal '26. So I think Dan mentioned that your largest customer will still be a significant growth driver in fiscal '26. But that particular customer, I think, was sort of down the last two quarters. So is that customer sort of just pausing a ramp? Or are the use cases going to expand with that particular customer in fiscal '26?

Question: Tore Svanberg - Stifel, Nicolaus & Company Inc - Analyst : Yeah, no, that's great color. Thank you and congrats again. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 9:00PM, CRDO.OQ - Q1 2026 Credo Technology Group Holding Ltd Earnings Call

Question: Christopher Rolland - Susquehanna Financial Group LLLP - Analyst : Hey guys, congrats on the results, and thanks for the question. And this will probably be for Bill. So I guess, first of all, for 1.6T, I believe there are some supply constraints that appear to be emerging for 1.6T optical and lasers in particular. So I have two questions here. The first one is, do you think this affects your optical DSP outlook? And then secondly, do you think that these optical constraints could actually accelerate your AEC business?

Question: Christopher Rolland - Susquehanna Financial Group LLLP - Analyst : Am I to accelerate your AEC if there are supply constraints?

Question: Christopher Rolland - Susquehanna Financial Group LLLP - Analyst : Excellent. And for a second question, Bill, I think there's some progress here on your fourth hyperscaler for sure. Any more color on when the fifth could be a 10%. And then I know we're running out of hyperscalers, but any more color on any other engagements, including the big GPU guy, is there any possibility of landing them for branded cables? Or do you think they have their own initiative here?

Question: Christopher Rolland - Susquehanna Financial Group LLLP - Analyst : Thanks for the color, Bill.

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Yeah. Hi, Bill, Dan, congratulations on a pretty good quarter and guide here as well. So on the fourth CSP, it looks like a pretty nice lap there. is going up a lot faster than your prior ramps. Just wondering, is that driven by multiple engagements, multiple cable was you have within there? Or are you seeing a nice pickup on ASPs as we go to 100 gig per in?

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Yeah, the ramp with the fourth customer seems to be, a pretty nice accelerated ramp. Are you seeing, is that driven by a much higher content on 100 gig per lane, or, what is diving the pretty axelated pick up there I guess.

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Got it. And then on the margin guide, I think I know you mentioned some impact from -- is it really true that the impact is potentially more from the talent side or is there some product mix in there?

Question: Vijay Rakesh - Mizuho Securities Co Ltd - Analyst : Got it. Thanks.

Question: N. Quinn Bolton - Needham & Company LLC - Analyst : Hey guys, thanks for squeezing me and I guess maybe, Dan and Bill, the first question I had the fourth hyperscaler that first program, is that rack-to-rack or is that intra-rack? And do you see other opportunities at that hyperscaler ramping so that you ultimately will have both intra-rack

Question: N. Quinn Bolton - Needham & Company LLC - Analyst : Okay. And are there multiple programs at that customer you expect to ramp over time?

Question: N. Quinn Bolton - Needham & Company LLC - Analyst : Excellent. And then a second question for me, over the last, I think, month or so, you guys have announced two patent lawsuit settlements, I believe, with Amphenol and Volex. I know you can't get into specifics of either of those agreements. But is there anything you can say about whether you've granted licenses that could generate royalties going forward? And just any thoughts you have now that perhaps you've settled loss with two of the four cable vendors, how do you see competition going forward? Are you effectively enabling greater competition by granting those licenses or signing this patent settlement agreements with other suppliers now with AECs?

Question: N. Quinn Bolton - Needham & Company LLC - Analyst : Thanks for that perspective, Bill.

Question: Suji Desilva - Roth Capital Partners LLC - Analyst : Hi Bill, Dan, congrats on the progress here. Trying to ask Quinn's question maybe a little different way. Just trying to -- with the spirit of understanding how broadly inter-rack is being adopted. You have five customers you're working with. Do they all have programs that are going to be inter-rack cables along with three meter rack solutions? Or is it more of a niche with specific architectures? Just trying to get a feel for that dynamic though? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 03, 2025 / 9:00PM, CRDO.OQ - Q1 2026 Credo Technology Group Holding Ltd Earnings Call

Question: Suji Desilva - Roth Capital Partners LLC - Analyst : Okay. That's helpful color, Bill. And then you made a comment earlier about disaggregated architectures being slower to take up than you would have thought. Any color there? Any upcoming catalysts that would shift that transition to market inflection? And most importantly, with that -- what kind of Credo addressable market multiplier might that create?

Question: Suji Desilva - Roth Capital Partners LLC - Analyst : Okay. Thanks, Bill.