Credo Technology's Q4 Earnings and Sales Beat Estimates, Rise Y/Y

Credo Technology Group Holding Ltd CRDO reported fourth-quarter fiscal 2025 adjusted earnings per share (EPS) of 35 cents, which surpassed the Zacks Consensus Estimate by 29.6%. The bottom line compared favorably with 7 cents posted in the prior-year quarter.The company’s revenues surged 179.7% year over year to $170 million. The increase in sales was primarily driven by strong growth in its product business. The top line also surpassed the Zacks Consensus Estimate by 6.27%.CRDO achieved record financial performance for fiscal 2025, with revenues rising 126% year over year to $436.8 million. The top-line growth was driven by strong demand for its innovative, and energy-efficient high-performance connectivity solutions. Demand continues to accelerate, particularly among hyperscaler customers supporting advanced AI services. For fiscal 2025, the company reported adjusted EPS of 70 cents compared with 9 cents in fiscal 2024.In response to the better-than-anticipated results, shares jumped approximately 15% in the pre-market trading session today.(See the Zacks Earnings Calendar to stay ahead of market-making news.)Credo Technology Group Holding Ltd. Price, Consensus and EPS Surprise Credo Technology Group Holding Ltd. price-consensus-eps-surprise-chart | Credo Technology Group Holding Ltd. QuoteSegment DetailsProduct Sales: The company’s product business surged 303.3% year over year to $164.5 million during the quarter.Product engineering services: The company’s product engineering services fell 60% year over year to $1.3 million.IP license: The company’s IP license sales were down 75% year over year to $4.2 million.In the fourth quarter, each of the company’s top three customers contributed more than 10% to revenues. Credo Technology expects three to four customers to exceed 10% of revenues in the upcoming quarters and fiscal year, driven by increasing volumes from existing hyperscalers and the expected ramp-up of two new hyperscale customers in the second half of fiscal 2026.Other DetailsNon-GAAP gross profit came to $114.5 million in the fourth quarter compared with $40.2 million in the same period last year.Non-GAAP gross margin expanded 130 basis points (bps) to 67.4% during the quarter under review. The figure also exceeded the top end of the company’s guidance and increased 355 bps sequentially.Total non-GAAP operating expenses increased 58.9% year over year to $52 million.Research and development expenses surged 76.7% year over year to $47.6 million.Selling, general and administrative expenses increased 58.4% year over year to $32 million.Balance Sheet and Cash FlowAs of May 3, 2025, CRDO had $431.3 million of cash and cash equivalents and short-term investments compared with $410 million as of April 27, 2024.The company generated a fourth-quarter fiscal 2025 cash flow from operating activities of $57.8 million, up $53.6 million sequentially, driven by strong cash collections from the product ramp. Capital expenditure totaled $3.7 million, mainly for production equipment, resulting in a free cash flow of $54.2 million, up $54.6 million from the third quarter.OutlookFor the first quarter of fiscal 2026, the company expects revenues between $185 million and $195 million, up 12% at the midpoint. Non-GAAP gross margin is projected at 64–66%, with operating expenses between $54 million and $56 million and a diluted share count of approximately 188 million. These estimates assume the current tariff regime.For fiscal 2026, Credo Technology anticipates revenues to surpass $800 million, implying more than 85% year-over-year growth. Non-GAAP operating expenses are expected to grow at less than half the revenue growth rate, driving non-GAAP net margin to nearly 40%. Strong AI-driven demand and solid execution supported its fiscal 2025 performance and continue to fuel momentum.CRDO’s Zacks Rank & Stock Price PerformanceCRDO currently has a Zacks Rank #3 (Hold). Shares of the company have soared 153.8% in the past year compared with the Zacks Electronics-Semiconductors industry's growth of 25%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.Image Source: Zacks Investment ResearchRecent Performance of Other Companies in Broader SpaceCadence Design Systems CDNS reported first-quarter 2025 non-GAAP earnings per share (EPS) of $1.57, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 34.2% year over year, exceeding management’s guided range of $1.46-$1.52. Revenues of $1.242 billion topped the Zacks Consensus Estimate by 0.3% and increased 23% year over year. CDNS’s top line was driven by broad-based demand for its solutions amid robust design activity.In the past year, shares of CDNS have inched up 1.9%.SAP SAP reported first-quarter 2025 non-IFRS EPS of €1.44 ($1.51), which increased 79% from the year-ago quarter. The Zacks Consensus Estimate was pegged at $1.39. Driven by momentum in the cloud business, SAP reported total revenues on a non-IFRS basis of €9.01 billion ($9.48 billion), which increased 12.1% year over year (up 11% at constant currency or cc). The Zacks Consensus estimate was pegged at $9.78 billion.In the past year, shares of SAP have soared 65.4%.Simulations Plus, Inc. SLP second-quarter fiscal 2025 adjusted earnings of 31 cents per share, which fell 3% year over year. However, the figure surpassed the Zacks Consensus Estimate of 25 cents per share. Quarterly revenues jumped 23% year over year to $22.4 million, driven by increasing momentum across its software and services business segments. The growing uptake of its flagship solutions, including GastroPlus, MonolixSuite and ADMET Predictor, fueled the top-line expansion.In the past six months, shares of SLP have decreased 15.3%.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report SAP SE (SAP): Free Stock Analysis Report Simulations Plus, Inc. (SLP): Free Stock Analysis Report Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report Credo Technology Group Holding Ltd. (CRDO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks