Sep 1, 2026 earnings call — Optics expansion and record quarter
Record revenue of $479 million, up 10% sequentially, with non-GAAP gross margin of 68%.
Revenue $0.5B (est $0.5B) · EPS $1.20 (est $1.17) · Next-quarter revenue outlook $0.5B–$0.5B
Key quotes
"As we move forward through fiscal year 27, we continue to expect an inflection in the second half driven by more than $600 million in optical revenue, with zero-flap optics, silicon-photonics PICs, and optical DSPs each contributing more than $100 million."
"Starting with AECs, AECs remain our largest business and continues to grow. We now have deep relationships with 5 hyperscalers, and our engagement with Neo Cloud customers continues to expand."
"Zero Flap Optics combines optimized optical hardware pilot software, and switch level SDK integration to continuously monitor link health and identify and mitigate issues when link instabilities become likely."
Analyst Q&A 13
Optical business mix and timing
Q (Tore Svanberg · Stifel): How should we expect the $600 million to split across optical components, NPO, and system-level NPO in fiscal 2027 and 2028?
A: He said the company is broadening its optical portfolio with component-level DSP wins and progress at ZF Optics. He expects design wins with two major players to ramp in fiscal 28 and views fiscal 2027 as a stepping stone for the optical business.
"Fiscal 2027, I think, is just a stepping stone for where we are going with our optical business." — William J. Brennan (CEO)
OpenCPX role and solutions
Q (Quinn Bolton · Needham): What does joining the OpenCPX consortium mean for Credo — PICs only or full optical engines? Are these laser-based or micro LED?
A: He said Credo will be agnostic to form-factor and will follow customer direction for scale-up solutions. He said they will lead with silicon photonics PICs but may supply full optical engines over time.
"Of course, with all of the NPO solutions, including CPX, we will lead with the silicon photonics PIC, but we will also look at doing the complete optical engine long term as we add more functionality to our portfolio." — William J. Brennan (CEO)
Scaling ZF Optics supply and demand
Q (Tom O'Malley · Barclays): What supply challenges do you face scaling ZF Optics and why are you confident you can reach the big revenue ramps?
A: He said they prepared the supply chain over the past 18–24 months and have increased working capital to support higher volumes. He said he feels great about their ability to supply increasing volumes in the second half and the next couple of fiscal years, while continuing to drive demand through customer engagement.
"I feel great about our ability to supply to supply increasing volumes in our second half and then throughout the next couple of fiscal years." — William J. Brennan (CEO)
Customer concentration and product mix
Q (Sean O'Loughlin · TD Cohen): Can you list the 3–4 customers over 10% this quarter and say if product mix is diversifying across them?
A: He gave the customer percentages: largest 33%, second 28%, then 13% and 10%, with the top three similar to the prior quarter and the fourth changing. He said product mix is broadening across those customers and it is not just ADCs they are buying.
"So our largest customer was a third of our revenue at 33%; second largest, 28%; and then followed by 13% and 10%." — Daniel Fleming (CFO)
1.6T SerDes and AEC timing
Q (Jefferies): What is the timing and design traction for 1.6T SerDes compared with 800-gig AECs and when will AEC revenue ramp?
A: He said the AEC portfolio will ramp on a similar market timeline and that AECs represent the 1–7 meter segment of the pluggable transceiver market. He said they are bullish on the AEC opportunity and expect some contribution in the second half of fiscal 27 and much bigger contribution in fiscal 28.
"So as it relates to the what I think the setup looks like for 1.6T, we are quite bullish about the AEC opportunity." — William J. Brennan (CEO)
Inference opportunity and OmniConnect
Q (Joseph Cardoso · JPMorgan): How is Credo positioned for inference workloads and which products matter most versus training?
A: He said OmniConnect targets inference and is expected to contribute revenue in fiscal 28 to address the memory fan-out limit. He described licensing a high-speed SerDes with 10-inch reach and low power plus gearboxes (Weaver) to convert to LPDDR5 and later LPDDR6, with Positron as a first customer and the potential to enable much larger memory capacity.
"First thing is we license a highly optimized high speed SerDes that is got a very small form factor, very low power, and that is got reach of 10 inches." — William J. Brennan (CEO)
AEC vs optics growth split
Q (Given Arya · BofA): How much of the second-half growth is optics versus AEC, and how should AEC growth look longer term?
A: He said growth is happening across all products but optics will grow faster this year because it is starting from a smaller base. He said AECs have already driven strong growth in prior years and will continue to grow, but optics will show faster near-term growth while long-term there should be a balance between copper and optical solutions.
"But in a sense, I think we are you know, we are looking at clearly a slower growth overall compared to the fact that we are growing into such a large market with optics." — William J. Brennan (CEO)
Pilot telemetry and competitive edge
Q (William Blair): Is the link-level telemetry from Pilot becoming a competitive advantage for failure detection and DSP design optimization?
A: He said Pilot provides continuous, link-level telemetry beyond simple up/down status and can detect degrading link integrity before failures. He said this data enables mitigation actions, richer failure snapshots (including slight ESD damage and dust detection), faster cluster bring-up, and higher uptime for customers.
"And so when we are sensing this continuously, we can sense when the link integrity is decreasing." — William J. Brennan (CEO)
Customer mix: hyperscalers vs module suppliers
Q (Karl Ackerman · BNP): Are component sales moving more toward direct hyperscaler customers and does that increase visibility and stickiness?
A: He said the optical components business is core and that offering DSPs, PICs, and system-level options helps deliver better system performance, power, and yield. He noted module customers often work directly with hyperscalers who specify components, so component and module sales are complementary and both important long term.
"Many times, our module customers are working directly with hyperscalers the hyperscalers are active in you know, basically pointing to the components that they want to be put together within the modules that our module customers offer." — William J. Brennan (CEO)
Outlook for fiscal 28 and ALCs
Q (Vijay Rakesh · Mizuho): With AEC, ZF Optics, SiPho and ALCs ramping, how should we think about fiscal 28 growth?
A: He said the first ALC uses MicroLED to extend reach to 30 meters while matching AEC reliability and efficiency, making ALC a third differentiated pluggable solution. He said ALCs, scale-up opportunities, and OmniConnect are multibillion-dollar opportunities and they expect another year of outsized growth in fiscal 28 as they address several large markets.
"The bottom line is I looked at that pluggable transceiver market, and I think that is just step 1 for ALCs and the micro emitter technology." — William J. Brennan (CEO)
Go-to-market: optics vs AEC
Q (Evercore): How does prosecuting the optics market differ from how you built the AEC market, and what are the business model implications?
A: He said AECs were developed as a copper extension and grew by adding innovative features and rigorous qualification with customers, which hardened the solution. He said the same playbook applies to ZF Optics, but AI cluster needs made the optics reliability problem more urgent, so the market is taking off faster this time.
"With AECs, we imagined this product as being an extension to Copper, basically addressing the issues that our customers were facing as they were going to faster speeds." — William J. Brennan (CEO)
Competition and differentiation
Q (Suji Desilva · Roth Capital): How do competitors compare and can they match Credo’s feature-driven approach?
A: He said owning the full stack (SerDes, DSP, PIC) gives vertical integration advantages for system performance and COGS and supports differentiated feature-led solutions. He said Credo aims to be the pace-setter in optical innovation, is working with standards groups, and expects owning the stack to drive similar success as with AECs.
"I do think that long term, we are now the pacesetter on innovation in the optical space." — William J. Brennan (CEO)
Dust team design wins and DSP integration
Q (Christopher Rolland · Susquehanna): Do the two Dust design wins include DSP integration and what are the economics and implications?
A: He said they cannot name specific partners but confirmed the first two major design wins do not include the DSP, leaving upside potential. He said the Dust team has strong traction and that co-marketing DSP and PICs long term could bring more customer benefits.
"I will say that these first 2 major design wins that we are talking about do not include the DSP." — William J. Brennan (CEO)