I love this explosive chart and wait until you read the story.
Credo’s mission is to deliver high-speed solutions to break bandwidth barriers on every wired connection in the data infrastructure market. We provide innovative, secure, high-speed connectivity solutions that deliver improved power efficiency as data rates and corresponding bandwidth requirements increase exponentially throughout the data infrastructure market.
Credo Technology, website
Credo makes a unique cable product called an active electrical cable (AEC), which connects data centre servers to networking switches. The company claims its AECs take up 75pc less space than Direct Attach Copper (DAC) cables and offer 50pc more power efficiency versus active optical cable (AOC) alternatives.
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The business is on fire.
In the second quarter, Credo generated revenue of $72m, up 21pc sequentially and up 64pc year-over-year. Q2 non-GAAP gross margin was 63.6pc. The second quarter was our most successful to date. We marked record revenue across our three main product lines and began to see the uptick in shipments that marks the beginning of the revenue inflection point we’ve discussed in past quarters.
Today, Credo offers a suite of innovative and differentiated Ethernet connectivity solutions, including active electrical cables or ADCs, optical DSPs, line card retimers, SerDes chiplets and SerDes IP licenses for port speeds ranging from 100 gig up to 1.6 terabits per second. We are also developing a suite of PCIe connectivity solutions, including retimers and ADCs, which we announced and demonstrated at the OCP Summit in October.
AI cluster architectures are evolving rapidly, driven by advancements in processing, cooling and power sourcing. These advancements enable increasingly dense and scalable clusters where back-end network reliability has become paramount.
In this environment, addressing or eliminating link lapse, which are momentary disruptions in network links as well as managing power and costs are essential to achieving operational reliability. This rapid evolution is creating significant opportunities for high-speed connectivity solutions, which are crucial in supporting the seamless implementation and operation of these cutting-edge architectures.
Credo’s AECs represent a market solution that highlights the company’s fundamental differentiation in addressing customer challenges. Built around Credo’s expertise in SerDes technology. AECs excel in maintaining signal integrity, optimizing power efficiency and delivering unparalleled reliability as data speeds continue to increase. This innovation exemplifies Credo’s ability to deliver substantial ROI [return on investment] for customers by solving critical pain points.
Bill Brennan, CEO, Credo Technologies, Q2 2025, 2 December 2024
Even more exciting than the latest results is what the company has to say about prospects.
While we’re proud of our achievements, we are also optimistic about the future of our AEC [active electrical cable] business. We believe that we are still in the early stages of widespread market adoption, and we are well positioned as the market leader.
Building on the adoption and engagements highlighted earlier, our second half revenue growth will be driven by our AEC products. Furthermore, we anticipate continued growth beyond fiscal ’25 as market adoption expands across the data center ecosystem.
For several quarters, we’ve anticipated an inflection point in our revenues during the second half of fiscal ’25. I’m pleased to share that this turning point has arrived, and we are seeing even greater momentum than initially projected.
Bill Brennan, CEO, Credo Technologies, Q2 2025, 2 December 2024
Credo is playing with the big boys.
Our top three end customers were each greater than 10pc of revenue in Q2. We had another four end customers that were each between 5pc and 10pc of revenue. While customer mix will vary from quarter to quarter, the fact that Credo had seven end customers at greater than 5pc of revenue in the second quarter strongly reinforces how we are diversifying our customer base.
Dan Fleming, CFO, Credo Technologies, Q2 2025, 2 December 2024
Most exciting of all the company expects incredible growth in the year ahead.
As we enter the second half of fiscal year ’25, we expect double-digit sequential revenue growth from Q3 to Q4. And from fiscal year ’24 to fiscal year ’25, we expect year-over-year revenue growth of 100pc or more. We expect non-GAAP operating expenses to grow at less than half the rate of revenue from fiscal year ’24 to fiscal year ’25. As a result, we look forward to driving operating leverage throughout the year.
Dan Fleming, CFO, Credo Technologies, Q2 2025, 2 December 2024
The good times are expected to continue.
Furthermore, we anticipate continued growth beyond fiscal ’25 as market adoption expands across the data centre ecosystem.
Bill Brennan, CEO, Credo Technologies, Q2 2025, 2 December 2024
Share Recommendations (4 December 2024)
Credo Technologies CRDO
After the company announced these results, the shares leapt by nearly 50pc, with some analysts increasing their earnings projections by as much as 200pc. The only thing restraining my enthusiasm for the shares is that, as with Applovin, I struggle to understand what they do. Hopefully, I will learn more as time passes.
The founders, Laurence Chang and Job Lam are chief technology officer and chief operating officer respectively which makes for an impressive senior team.
After such a leap it is anyone’s guess what the shares will do next but with both chart and fundamentals looking this exciting I see substantially higher levels ahead.
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