Why is Credo's gross margin guided lower for the next quarter?

The filing guides Q4 FY2026 GAAP gross margin to 63.9% to 65.9%, versus 68.5% in Q3. It does not state the reasons. Investors should review the earnings call commentary and the 10-Q for details on product mix, pricing, or cost factors.

What is the difference between GAAP and non-GAAP results for Credo?

Non-GAAP measures exclude share-based compensation, which was $52.2 million in Q3 and $132.9 million for the nine months. For example, Q3 GAAP net income was $157.1 million versus non-GAAP net income of $208.8 million. Non-GAAP figures are supplemental, and the filing notes they should not be viewed in isolation from GAAP results.

How strong is Credo's balance sheet after the period?

Total assets grew to $2.04 billion from $809.3 million at May 3, 2025, and shareholders' equity rose to $1.85 billion. Cash and cash equivalents were $1.22 billion, and total liabilities were $188.5 million. Liquidity appears strong, though working capital has grown with inventory and receivables.

What do the new goodwill and intangible assets indicate?

Goodwill of $70.9 million and an intangible asset of $17.6 million appeared on the balance sheet, where there were none at fiscal year-end 2025. This suggests a recent acquisition, but the excerpt does not identify it. Investors should check the 10-Q for the transaction details and purchase accounting.

Is this 8-K a formal filing for securities liability purposes?

The press release is furnished under Item 2.02 rather than filed. Under the filing's terms, it is not deemed filed for Section 18 of the Exchange Act and is not incorporated by reference into other filings unless specifically stated. Forward-looking statements carry standard risk language and are subject to the risk factors in the company's 10-K.

CRDO 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed March 2, 2026. Cited figures are marked; the original filing is the authoritative source.

Credo Technology Group (CRDO) reported record fiscal Q3 2026 results for the quarter ended January 31, 2026.

Revenue was $407.0 million^a, up 51.9% sequentially and 201.5% year over year, and the company posted GAAP net income of $157.1 million ($0.82 diluted EPS) and non-GAAP net income of $208.8 million ($1.07 non-GAAP diluted EPS). GAAP gross margin was 68.5% and GAAP operating margin was 36.8%, versus 49.6% non-GAAP operating margin. Nine-month revenue reached $898.1 million, compared with $266.8 million a year earlier, and cash plus short-term investments totaled roughly $1.3 billion.

Management highlighted continued growth in active electrical cables (AECs) and integrated circuits (ICs), plus three new multi-billion-dollar TAM expansions in ZeroFlap optics, ALCs, and OmniConnect. The fiscal Q4 2026 outlook calls for revenue of $425.0 million to $435.0 million^b, implying roughly 4% to 7% sequential growth. The more notable item for investors is the guided GAAP gross margin of 63.9% to 65.9%, a meaningful step down from 68.5% in the quarter just reported.

The filing does not explain the drivers of this decline, so investors will likely focus on the earnings call for the reasons behind the margin guidance. GAAP operating expenses are guided to $125.5 million to $129.5 million^c, with non-GAAP opex of $76.0 million to $80.0 million. The balance sheet shows significant changes over the nine months.

Inventories rose to $208.0 million^d from $90.0 million at fiscal year-end 2025, and accounts receivable increased to $243.2 million from $162.1 million. Additional paid-in capital rose to $1.63 billion from $765.2 million, a change this filing does not explain in detail; it is consistent with equity issuance and stock-based compensation.

The balance sheet also includes new goodwill of $70.9 million and an intangible asset of $17.6 million, which suggests a recent acquisition not described in this excerpt. Share-based compensation is a large non-GAAP adjustment, at $52.2 million in the quarter.

02—Key points

Key Highlights

Record revenue of $407.0 million, up 51.9% quarter over quarter and 201.5% year over year, driven by AECs and ICs according to management.
GAAP net income of $157.1 million and GAAP diluted EPS of $0.82; non-GAAP net income of $208.8 million and non-GAAP diluted EPS of $1.07, excluding share-based compensation of $52.2 million.
GAAP operating margin of 36.8% (non-GAAP 49.6%), up from 19.4% (non-GAAP 31.4%) a year earlier.
Q4 FY2026 revenue guidance of $425.0 million to $435.0 million, implying about 4% to 7% sequential growth.
Q4 GAAP gross margin guidance of 63.9% to 65.9%, down from 68.5% in Q3, a key item for investors to understand.
Cash and short-term investments of about $1.3 billion at January 31, 2026, versus roughly $431 million at fiscal year-end 2025.
Inventories more than doubled to $208.0 million and receivables rose to $243.2 million since May 3, 2025, reflecting growth in working capital needs.

03—Questions

Frequently Asked Questions

Why is Credo's gross margin guided lower for the next quarter?
The filing guides Q4 FY2026 GAAP gross margin to 63.9% to 65.9%, versus 68.5% in Q3. It does not state the reasons. Investors should review the earnings call commentary and the 10-Q for details on product mix, pricing, or cost factors.
What is the difference between GAAP and non-GAAP results for Credo?
Non-GAAP measures exclude share-based compensation, which was $52.2 million in Q3 and $132.9 million for the nine months. For example, Q3 GAAP net income was $157.1 million versus non-GAAP net income of $208.8 million. Non-GAAP figures are supplemental, and the filing notes they should not be viewed in isolation from GAAP results.
How strong is Credo's balance sheet after the period?
Total assets grew to $2.04 billion from $809.3 million at May 3, 2025, and shareholders' equity rose to $1.85 billion. Cash and cash equivalents were $1.22 billion, and total liabilities were $188.5 million. Liquidity appears strong, though working capital has grown with inventory and receivables.
What do the new goodwill and intangible assets indicate?
Goodwill of $70.9 million and an intangible asset of $17.6 million appeared on the balance sheet, where there were none at fiscal year-end 2025. This suggests a recent acquisition, but the excerpt does not identify it. Investors should check the 10-Q for the transaction details and purchase accounting.
Is this 8-K a formal filing for securities liability purposes?
The press release is furnished under Item 2.02 rather than filed. Under the filing's terms, it is not deemed filed for Section 18 of the Exchange Act and is not incorporated by reference into other filings unless specifically stated. Forward-looking statements carry standard risk language and are subject to the risk factors in the company's 10-K.

04—Continue

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