Here are my thoughts on Credo’s CRDO pre-announcement of revenue numbers,
The company gave us two new pieces of information in their February 9 press release which included their projected revenue, and details about their upcoming prospects.
Revenue is expected to land between 404 and 408M versus their guidance of 335 - 345M. Keeping in mind the prior quarter had just 268M of revenue. This means revenue was up a stunning +52% quarter over quarter, and +202% year over year.
The second bit of information about the company prospects was much trickier to parse. I’ll explain what it means technically and what I think the practical implications are. Here’s how they phrased it,
“Looking towards the end of fiscal year 2026 and into fiscal 2027, Credo expects sequential revenue growth in the mid-single digits leading to more than 200% year-over-year growth in the current fiscal year.”
Starting with the part about +200% growth in the current fiscal year. Keep in mind, this upcoming report in March for Credo is Q3 fiscal 2026. We first need to look at what revenue was in fiscal 2025 which is 437M.
We then need to take a 200% increase of 437M which is 1311M, and compare that to fiscal 2026. So far in fiscal 2026 we have two quarters booked, with the upcoming quarter expected to get 408M. The math ends up being,
1311 - (223 + 268 + 408) = 412
What management is saying there, is that revenue two quarters from now will be at least 412M, or basically more than the quarterly run-rate.
The other part of the statement was that sequential growth in fiscal 2027 will be in the mid single digits. Meaning that 3+ quarters from now the growth will be slowing to around 4-7% sequentially.
In plain english, what they are saying is the current quarter is a huge step up, but the big steps up in growth may be over. However, management told us to expect a revenue slowdown once before when quarterly revenue went from 72M to 135M over a year ago. They essentially told us that jumps of that magnitude were over, yet here we are again with revenue going from 268M to 408M.
So what changed to be able to do a second step up in revenue and grow over 50% sequentially this quarter? The company saw increased demand along with an expanding product line. Even today on February 10, they announced yet another product in their press releases. It seems like management is making their forecasts as if their current product set stays exactly as is. However, the company seems to be an innovation engine based on recent conferences where they detailed their newer products.
My overall take away is that management is cautioning that these massive revenue jumps will go back to more normal rates over the next year. While they phrased these details in an exceedingly complex way, I believe Credo is still an innovation engine that will see significant growth.