Credo's Q1 Earnings and Sales Surpass Estimates, Rise Y/Y, Stock Up

Credo Technology Group Holding Ltd CRDO reported first-quarter fiscal 2026 adjusted earnings per share (EPS) of 52 cents, which surpassed the Zacks Consensus Estimate by 48.6%. The bottom line compared favorably with 4 cents posted in the prior-year quarter.

The company’s revenues surged 273.6% year over year to $223.1 million. The increase in sales was primarily driven by strong growth in its product business. The top line also surpassed the Zacks Consensus Estimate by 17.4%.

Credo’s growth has been propelled by strong, strategic partnerships with hyperscalers and other key customers. With rising market demand for reliable, power-efficient connectivity solutions, the company anticipates sustained revenue growth along with broader diversification across customers, protocols and applications.

In response to the better-than-anticipated results and upbeat revenue guidance, shares jumped approximately 13% in the pre-market trading session today.

Segment Details

Product Sales: The company’s product business surged 278.6% year over year to $217.1 million during the quarter.

IP license: The company’s IP license sales were up 151.8% year over year to $6 million.

In the first quarter, each of the company’s top three customers contributed more than 10% to revenues. Credo expects its customer base to continue expanding over the coming quarters, and based on customer forecasts, it anticipates strong year-over-year growth.

Other Details

Non-GAAP gross profit was $150.7 million in the first quarter compared with $37.6 million in the same period last year.

Non-GAAP gross margin expanded 470 basis points (bps) to 67.6% during the quarter under review, coming in above the high end of the company’s guidance and improving 20 basis points sequentially.

Total non-GAAP operating expenses increased 54.1% year over year to $54.5 million.

Credo Technology Group Holding Ltd. Price, Consensus and EPS Surprise

Credo Technology Group Holding Ltd. price-consensus-eps-surprise-chart | Credo Technology Group Holding Ltd. Quote

Research and development expenses surged 72.5% year over year to $52.5 million.

Selling, general and administrative expenses increased 74.3% year over year to $37.2 million.

Balance Sheet and Cash Flow

As of Aug. 2, 2025, CRDO had $479.6 million of cash and cash equivalents and short-term investments compared with $431.3 million as of May 3, 2025.

The company generated a first-quarter fiscal 2025 cash flow from operating activities of $54.2 million, down $3.7 million sequentially, mainly due to higher working capital. Capital expenditures were $2.8 million, primarily for production equipment, while free cash flow totaled $51.3 million, compared with $54.2 million in the fourth quarter.

Outlook

For the second quarter of fiscal 2026, the company anticipates revenues to range between $230 million and $240 million. GAAP gross margin is projected to be between 63.5% and 65.5%, while non-GAAP gross margin is anticipated to fall 64-66.0%. GAAP operating expenses are forecasted in the range of $96 million to $98 million, with non-GAAP operating expenses expected to be between $56 million and $58 million.

For fiscal 2026, the company anticipates mid-single-digit sequential revenue growth, resulting in roughly 120% year-over-year growth. The company had earlier projected revenues to surpass $800 million, implying more than 85% year-over-year growth.

The company expects non-GAAP operating expenses to rise by less than 50% year over year in fiscal 2026. Non-GAAP net margin is projected to be around 40% both in the upcoming quarters and for the fiscal 2026.

CRDO’s Zacks Rank & Stock Price Performance

CRDO currently has a Zacks Rank #3 (Hold). Shares of the company have soared 368.2% in the past year compared with the Zacks Electronics-Semiconductors industry's growth of 46.8%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Recent Performance of Other Companies

Cirrus Logic Inc. CRUS reported first-quarter fiscal 2026 adjusted EPS of $1.51, which surpassed the Zacks Consensus Estimate by 41%. The company reported adjusted EPS of $1.12 in the prior-year quarter.
Cirrus Logic generated revenues of $407.3 million, growing 9% year over year, reflecting strong customer demand, particularly for its flagship custom boosted audio amplifier and its newly introduced 22-nanometer smart codec, both of which gained steady traction across premium smartphone models.

However, sequentially, revenues declined 4%, mainly due to a decrease in smartphone shipment volumes. The top line exceeded both management’s guidance ($330-$390 million) and the consensus mark of $364 million.

Marvell Technology, Inc. MRVL came out with second-quarter fiscal 2026 earnings of 67 cents per share, in line with the Zacks Consensus Estimate. This compares to earnings of 30 cents per share a year ago. The bottom line increased 123.3% year over year and 8.1% sequentially, driven by higher revenues and effective cost management.

MRVL’s second-quarter fiscal 2026 revenues of $2.01 billion for the quarter ended July 2025, missing the Zacks Consensus Estimate by 0.23%. This compares to year-ago revenues of $1.27 billion.

Qualcomm Incorporated QCOM reported relatively robust third-quarter fiscal 2025 results, with adjusted earnings exceeding the Zacks Consensus Estimate, driven by healthy demand trends in IoT and automotive businesses. Quarterly non-GAAP net income came in at $3.04 billion or $2.77 per share compared with $2.65 billion or $2.33 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 7 cents.

However, revenues missed the consensus estimate despite improving year over year, led by the strength of the business model, diversification initiatives and the ability to respond proactively to the evolving market scenario.

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