Credo Revenue Surges 114.7%, Shares Fall 19.83% After First-Quarter Results
Key Facts
Credo reported results for the first quarter of fiscal 2027 on September 1, 2026, posting revenue of 479 million dollars, up 114.7% from the same period a year earlier and 9.6% from the previous quarter. Revenue topped analysts’ consensus of 470.38 million dollars, while diluted non-GAAP earnings per share came to 1.20 dollars, compared with an estimate of 1.16 dollars. The stock’s response was negative, however, falling 19.83% to 165.66 dollars by 12:53 p.m. on September 2. Investing.com’s analysis linked the decline to margin pressure, despite the results beating expectations. The results covered the quarter ended August 1, as the market focused on the company’s ability to sustain growth while maintaining its margins.
On profitability, Credo reported net income of 129.4 million dollars under GAAP and 236.3 million dollars on its non-GAAP measure. Diluted earnings per share were 0.67 dollars under GAAP, compared with 1.20 dollars on the other measure, a difference reflecting the distinct accounting treatment between the two measures. GAAP gross margin was about 64.5%, down from 68.2% in the previous quarter. GAAP operating expenses also rose to 188.4 million dollars during the quarter. These figures help explain the market’s cautious reaction, as rapid revenue growth coincided with a decline in gross margin and higher operating expenses.
The company set second-quarter fiscal 2027 revenue at between 525 and 535 million dollars, above analysts’ consensus of 516.50 million dollars. The range is consistent with continued revenue growth, but it did not keep investors from focusing on profitability expectations. Credo forecast GAAP gross margin of between 62.9% and 64.9%, and between 67.0% and 69.0% on its non-GAAP measure. The company reported first-quarter GAAP gross margin of 64.5%. It also forecast operating expenses of between 199 and 204 million dollars under GAAP, and between 100 and 105 million dollars on its non-GAAP measure.
In a brief summary of a Seeking Alpha report, its author was said to have upgraded Credo to “Buy” after the results and guidance, while noting the stock’s 38% decline since the previous “Hold” recommendation. The summary presents this as an analytical opinion, while the financial figures and guidance remain company-issued or attributed to analyst estimates. The reference to “raising expectations” was not annual guidance announced by Credo; the official range available here concerns second-quarter revenue. On liquidity, cash and short-term investments stood at 764.3 million dollars at quarter-end. Chief Executive Bill Brennan said the company’s portfolio includes fiber and copper connectivity solutions, adding: “Our portfolio now spans millimeters to kilometers, with solutions across optics and copper.”
Investing.com’s analysis also conveyed a forward outlook calling for annual revenue growth to exceed 85% in fiscal 2027, with optical-fiber products accelerating in the second half. The analysis also cited expectations for optical products revenue to exceed 600 million dollars during the fiscal year, and for ZeroFlap Optics, optical digital signal processors and PICs each to surpass 100 million dollars in revenue. Initial revenue from 1.6T digital signal processors is expected to begin later in fiscal 2027, with a larger contribution expected in fiscal 2028. This puts growth in optical connectivity products among the drivers the market is watching alongside second-quarter guidance. The next quarter’s results, including revenue and margins, will be the next test of whether sales growth will come alongside stable profitability.