Key Takeaways
- Shares initially plunged 14% in after-hours trading before settling down 4.2% to $226.10 on Monday’s close
- Fourth-quarter revenue soared 157% from the prior 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 failed to satisfy bullish market expectations
- The company finalized its $750 million acquisition of DustPhotonics, enhancing its optical connectivity capabilities
Shares of Credo Technology experienced a volatile session on Monday, initially tumbling 14% after the closing bell before paring losses to finish 4.2% lower at $226.10. The decline came despite the semiconductor company delivering impressive fiscal fourth-quarter earnings that exceeded analyst forecasts, with disappointing forward guidance being the culprit.
Credo Technology Group Holding Ltd, CRDO
The stock remained approximately 2% lower in premarket trading Tuesday. Even with the recent pullback, CRDO has climbed 58% in 2025 and has skyrocketed 157% from its March 30 bottom.
Fourth-quarter sales reached an all-time high of $437 million, representing a 157% year-over-year increase and topping the Street’s $431.8 million projection. Non-GAAP profit per share totaled $1.16, significantly exceeding the $1.02 consensus and marking a substantial improvement from $0.35 in the same period last year.
For the complete fiscal 2026 period, sales climbed to $1.3 billion — representing 206% annual growth. Adjusted net income jumped more than five times to $662 million. The company generated $177.5 million in free cash flow during the quarter and maintained a cash position of $1.4 billion at period end.
Chief Executive Bill Brennan characterized fiscal 2026 as “another defining year,” highlighting that fourth-quarter sales alone surpassed the company’s entire fiscal 2025 revenue.
Forward Outlook Falls Short of Lofty Expectations
For the first quarter of fiscal 2027, Credo projected sales in the range of $465 million to $475 million. While this exceeds the analyst consensus of $461.3 million, it fell short of elevated market expectations.
Full-year fiscal 2027 sales are anticipated to expand by more than 80% year-over-year. Company leadership indicated that approximately half of the growth will stem from optical products, with the remainder coming from copper-based solutions including Active Electrical Cables and retimer products.
Non-GAAP net profit margins are projected to remain around 50% throughout the fiscal year.
Major clients include Microsoft, Amazon, and Meta. The top four customers each represented at least 10% of fourth-quarter sales, with the largest single customer accounting for 34%.
DustPhotonics Acquisition Finalized
In recent days, Credo finalized its purchase of DustPhotonics for $750 million in cash plus 920,000 shares of CRDO stock. The transaction enhances Credo’s capabilities in silicon photonics and photonic integrated circuit technologies.
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 utilizes fewer laser components, potentially reducing expenses and enhancing system reliability.
Credo anticipates its optical product portfolio — encompassing optical DSPs, silicon photonics PICs, and ZeroFlap Optics — will deliver over $600 million in fiscal 2027 revenue. Each of the three product categories is projected to individually contribute more than $100 million.
ZeroFlap Optics is anticipated to become the leading optical revenue driver due to superior average selling prices — three-digit ASPs compared to two-digit pricing for discrete components.
Brennan indicated that mid-single-digit sequential growth is anticipated during the first half of fiscal 2027, with acceleration expected in the second half fueled by optical product momentum.
Looking toward fiscal 2028, Credo projects production increases for its AEC and OmniConnect product lines, alongside its Weaver gearbox solution designed to address emerging inference memory bottlenecks.
Chief Financial Officer Dan Fleming stated the company has no intentions to pursue additional capital raises or stock repurchase programs following the DustPhotonics cash expenditure.
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