Credo Technology Group (CRDO) Q3 2025 earnings summary

Executive summary

• Achieved record Q3 FY25 revenue of $135 million, up 87% sequentially and 154% year-over-year, driven by major AEC product demand and hyperscaler customer ramp.

• Net income was $29.4 million for Q3 FY25, with non-GAAP net income at $45.4 million and net margin of 33.6%.

• Significant progress in customer diversification, with three hyperscalers in volume production and two more in qualification for fiscal 2026, though one customer accounted for 86% of Q3 revenue.

• Continued innovation in SerDes, IC design, and system-level solutions, expanding into PCIe and optical connectivity markets.

• Management expects continued growth across product lines and customer base due to rising demand for connectivity solutions.

Financial highlights

• Q3 product revenue reached $132 million, up 91% sequentially and 155% year-over-year; total revenue was $135 million.

• Non-GAAP gross margin was 63.8%, above guidance and up 17 basis points sequentially; GAAP gross margin was 63.6%.

• Non-GAAP operating income was $42.4 million, with a margin of 31.4%; GAAP operating income was $26.2 million, margin 19.4%.

• Cash and equivalents ended at $379.2 million, with free cash flow at negative $0.4 million due to working capital needs.

• Working capital increased to $538.4 million; net cash from operations was $7.3 million for the nine months.

Outlook and guidance

• Q4 FY25 revenue expected between $155 million and $165 million, up 19% sequentially at midpoint.

• Q4 non-GAAP gross margin guided at 63%-65%; operating expenses expected at $50-$52 million.

• Fiscal 2026 revenue growth expected to exceed 50% over fiscal 2025, with operating expenses growing at half the revenue rate.

• Management expects continued revenue growth as product adoption broadens and customer base diversifies, though customer concentration is expected to remain high in the near term.

• Existing cash and working capital are expected to be sufficient for at least the next 12 months.