Credo Technology Group Holding Ltd plans to release its latest quarterly earnings report on December 1, 2025 (after the U.S. stock market closes), with the market focusing on the recovery in high-speed connectivity demand for data centers and the pace of the company's profit recovery.

Market Expectations

The market consensus for this quarter (the company's latest to-be-disclosed quarter) expects a revenue of approximately $234.9 million, with a year-over-year growth rate of about 2.52%; EBIT of approximately $95.72 million, with a year-over-year growth rate of about 17.01%; and adjusted EPS of approximately $0.492, with a year-over-year growth rate of about 8.28%. The forecast range released by the company last quarter is not included in our collection. The main business centers on "product sales," with last quarter's product sales revenue at $217.06 million and "intellectual property licensing fees" revenue at $6.015 million. The company's current highlights are active cables for data centers and high-speed interconnection, AEC-related ASIC/SerDes solutions, driven by AI training clusters and switches migrating to higher rates, the sales structure improvement provides support for sustaining a high gross margin. The largest existing business prospects still lie in high-speed active cables and related chip solutions, with last quarter’s corresponding product sales revenue being $217.06 million. Although the structural upgrade during the same period led to order recovery, specific year-over-year data is not disclosed in this information collection.

Previous Quarter Review

Last quarter, the company's revenue was $223.07 million, up 2.74% year-over-year; the gross margin was 67.41%; net profit attributable to the parent company was $63.399 million, the year-on-year growth rate showed a strong recovery rate of 73.28%; net profit margin was 28.42%; adjusted EPS was $0.52, up 12% year-over-year. The operational highlights last quarter included cost efficiency and product portfolio optimization, which together contributed to maintaining a high gross margin and significantly improved profit margins. In the main business structure, product sales revenue was $217.06 million and intellectual property licensing fees were $6.015 million; product sales driven by AI data centers and high-speed interconnect demand accounted for approximately 97.30%, showing strong business resilience, though year-over-year breakdowns were not provided in this information.

Current Quarter Outlook

High-Speed Interconnection and AI Cluster Upgrade in Data Centers

• Market expectations indicate that this quarter’s revenue and profits will continue a moderate year-over-year growth, with the core driver being the recovery of demand for high-speed, long-distance interconnections from AI training and inference clusters. New rounds of capital expenditure from major cloud service providers are more inclined to build higher bandwidth, lower latency connections for GPU clusters, and AEC solutions find a balance between cost and performance, presenting upward potential in penetration.

• Last quarter’s company gross margin reached 67.41%, often associated with an optimal product structure. If the share of AI-related high-speed cables and SerDes solutions continues to rise this quarter, gross margins are expected to remain relatively stable. Pairing this with market expectations for an EBIT year-over-year growth rate of approximately 17.01%, the profit elasticity surpasses revenue growth, reflecting the combined effects of operational leverage and product mix.

• Risks lie in the uncertainty of large customers' shipment pace and platform iterations, as slower-than-expected new platform transitions could cause short-term order fluctuations, thus demanding higher requirements for revenue recognition and inventory management. Regarding stock price impact, order visibility and the concentration of single large customers are key variables.

Transition Pace to 400G/800G High-Speed Rates

• The global upgrade from 400G to 800G Ethernet is underway in key data center loads, with some leading customers beginning to assess transitions to higher bandwidths. For manufacturers providing related active cables, interfaces, and signal integrity chips, new rates bring higher prices and more complex technical thresholds, benefiting long-term value enhancement.

• If the company maintains a supply advantage in 800G-related link and cable solutions, order structure this quarter may further tilt towards high-value products, aligning with market expectations for EPS improvement of +8.28% year-over-year. Given last quarter’s high net profit margin of 28.42%, once higher speed products ramp up, profit margins have room to stabilize and slightly improve.

• Attention should be paid to possible disruptions in short-term shipments due to certification cycles and yield ramp-ups in transitioning to higher speeds, as well as varying interconnect architecture choices among cloud vendors, which requires more flexibility in the company’s product roadmap and customer coverage to smoothly utilize production capacity.

Synergy between Product Sales and IP Licensing

• Last quarter’s product sales revenue was $217.06 million, accounting for approximately 97.30%, while IP licensing was $6.015 million, accounting for approximately 2.70%. Although IP licensing volume is small, it holds strategic significance in consolidating customer ecosystems and accelerating the rapid integration of new platforms, particularly in high-speed SerDes and other core modules, where licensing and cooperation can speed up ecological binding.

• If new platform customers adopt more cooperative development or licensing methods in the early stages this quarter, the marginal contribution to revenue might be limited in the short term, but it aids subsequent product sales volume. Coupling market expectations for moderate revenue and EBIT growth this quarter, this "first license, later mass production" approach will focus more on the certainty of volume expansion for the coming year.

• Regarding stock price, the market focuses more on the scale realization of product sales, while changes in the pace of IP licensing may affect short-term fluctuation expectations, nonetheless, favoring technological moat and customer stickiness in the medium term.

Continuity of Cost and Profit Recovery

• Last quarter the company achieved a net profit attributable to the parent of $63.399 million with a net profit margin of 28.42%, and a year-on-year growth rate of 73.28%, showing improvements in operational efficiency and scale effects. If revenue this quarter remains around the market expectation of $234.9 million, the marginal changes in the cost rate will determine whether EPS can meet the consensus of $0.492.

• The company's actual EBIT value last quarter of $96.197 million surpassed the market estimate for the season, reflecting positive impacts from cost control and gross margin structure. Continuing to this quarter, if R&D and sales investments are orderly and the share of high gross margin products is maintained, the goal of EBIT year-over-year growth of +17.01% has a basis for realization.

• Attention should be given to the disturbances of the dollar exchange rate and supply chain costs on gross margin, especially changes in the cost of high-speed cable materials and the utilization rate of contract manufacturing capacity; if raw material or capacity prices fluctuate greatly, it may compress short-term profit elasticity.

Analyst Opinions

We have not retrieved clear public conclusions from major institutions on whether they have explicitly upgraded, downgraded, or maintained target prices for Credo in the past six months. The market perspective this quarter is more focused on the recovery of data center capital expenditure and the pace of AI interconnect upgrades. The consensus expectation reflects judgments of moderate revenue growth and profit improvement. Marginal changes in investor sentiment still depend on the company's guidance for revenue, gross margin, and profit this quarter, as well as the update of order visibility from major cloud customers.