Credo Technology Posts Record Q1 Revenue of $479M but Margin Outlook Sends Stock Down Nearly 20%

Credo Technology Group reported record Q1 fiscal 2027 revenue of $479 million, up 115% year over year and 10% sequentially, marking the company's seventh consecutive quarter of triple-digit annual growth. Non-GAAP net income also hit a record $236.3 million, with a non-GAAP operating margin of 48.2% and a non-GAAP gross margin of 68%, landing at the midpoint of prior guidance.

Despite the strong headline numbers, shares fell sharply, dropping roughly 10% in premarket trading before extending losses to about 19% by the time U.S. markets opened, as investors focused on the margin outlook. For Q2 fiscal 2027, the company guided revenue of $525 million to $535 million with a non-GAAP gross margin of 67% to 69%, a range some in the market read as a ceiling rather than an expansion signal.

For the full fiscal year 2027, Credo raised its growth outlook to more than 85% year-over-year revenue growth and projected over $600 million in optical revenue, with its ZeroFlap Optics, Silicon Photonics PICs, and Optical DSPs each expected to contribute more than $100 million individually. The company attributed the acceleration to hyperscaler data center demand. Cash and equivalents stood at $764.3 million at quarter end, down roughly $679 million from the prior quarter, reflecting the company's acquisition of DustPhotonics during the period.