Credo（CRDO）2027年度第1四半期決算説明会：光関連事業の加速で売上高が115％急増

要点

• Credoは2027年度第1四半期の売上高が前四半期比10%増、前年同期比115%増の4億7,900万ドルとなり、過去最高を更新したと発表しました。前年同期比での3桁の売上成長は7四半期連続となります。
• Non-GAAP粗利益率は68%、Non-GAAP営業利益率は48.2%に達しました。Non-GAAP純利益は前年同期比140%増の2億3,630万ドルとなり、過去最高を記録しました。
• アクティブ・エレクトロニカル・ケーブル（AEC）は、5社のハイパースケーラーとの関係やネオクラウド顧客との取引拡大に支えられ、引き続きCredoの最大の事業となりました。また、光DSPおよびリタイマーの売上高も過去最高を更新しました。
• 経営陣は、2027年度第2四半期の売上高を5億2,500万ドル〜5億3,500万ドル、Non-GAAP粗利益率を67%〜69%と見込んでいます。
• Credoは、2027年度通期の総売上高成長率85%以上、光関連売上高6億ドル以上という見通しを維持しました。ZeroFlap Optics、シリコンフォトニクスPIC、および光DSPは、それぞれ1億ドル以上の貢献が見込まれています。
• 顧客集中度は引き続き高い水準にあります。Credoの大手顧客上位4社は、それぞれ四半期売上高の約3分の1、28%、13%、10%を占めました。

主要財務実績

事業・営業業績

AECが引き続き最大の事業

Credoが既存顧客への浸透を深め、新たな案件を獲得する中で、アクティブ・エレクトロニカル・ケーブル（AEC）は成長を続けました。同社は現在、5社のハイパースケーラーと深い関係を築いており、ネオクラウド顧客との採用も増加しています。

経営陣は、データレートの高速化が新たな成長要因になると期待しています。Credoは2027年度下半期に1.6T AEC製品からの一定の貢献を見込んでおり、2028年度にはさらに本格的な拡大を見込んでいます。同社によると、1.6T AECポートフォリオは最大6.5メートルの伝送距離に対応可能です。

光関連ポートフォリオが第2の主要成長エンジンに

1レーンあたり50Gbpsおよび100Gbps製品の展開に伴い、光DSPの売上高は過去最高を記録しました。Credoは800Gポートに対する需要が長期的に続くと見込んでおり、2027年度後半には初の1.6T DSP売上高の計上に向けた準備を進めています。

また、DustPhotonicsの買収に伴い、同社は初のシリコンフォトニクスPIC売上高を計上しました。初期の獲得案件は800Gおよび1.6T光トランシーバーをカバーしています。経営陣は、2027年度終盤に開始され、2028年度に本格化が見込まれる2つの主要な次世代PICデザインウィンを開示しました。これらの初期案件にはCredoのDSPが含まれていないため、将来的なDSPとPICのセット販売の可能性があります。

ZeroFlap Opticsの量産出荷が進行中です。このプラットフォームは、光学ハードウェア、Pilotソフトウェア、スイッチレベルの統合を組み合わせ、リンク状態を監視して潜在的な不安定さを軽減します。経営陣は、2027年度においてハイパースケーラーおよびネオクラウド顧客での採用がさらに拡大すると見込んでいます。

Credoは、Open CPX MSAコンソーシアムを通じてニアパッケージオプティクス（NPO）の追求も進めています。初期のアプローチではシリコンフォトニクスPICに重点を置き、将来的には完全なオプティカルエンジンの提供を視野に入れています。

リタイマー売上高が過去最高を更新

第1四半期のリタイマー売上高は過去最高を記録しました。1レーンあたり100GbpsのScreaming Eagleが成長を牽引し、1レーンあたり200GbpsのBlue Heron製品も貢献を開始しました。また、CredoはPCIe Gen 6の採用拡大に伴うToucanや、EthernetおよびUALinkアーキテクチャにおけるScreaming EagleやBlue Heronの機会にも期待しています。

2028年度に向けた新たな機会

Credoは、10月のOCPにおいてマイクロLEDベースのアクティブ・エレクトロニカル・ケーブル（ALC）ソリューションの実演を計画しており、2028年度における初期のALC売上計上を引き続き目指しています。これらの製品は、最大30メートルの伝送距離に対応するよう設計されています。

経営陣はまた、OmniConnectの売上計上が2028年度に始まると予測しています。SerDesおよびWeaverギアボックスプラットフォームは、次世代AI推論システムにおけるメモリファンアウトの制約に対処するものです。Credoは、このソリューションがGPU1基あたり数千ドル規模の構成額に相当する可能性があると考えています。

経営陣のガイダンス

経営陣は、2027年度の成長が下半期に一段と加速すると見込んでいます。光関連の見通しは、ZeroFlap Optics、シリコンフォトニクスPIC、光DSPのそれぞれが1億ドル以上の売上高を創出することを前提としています。第2四半期のガイダンスは現在の関税制度に基づいており、経営陣は流動的であると説明しました。

リスクおよび注視事項

• 顧客集中度：Credoはハイパースケーラー、ネオクラウド、その他の顧客への分散化に取り組んでいるものの、今後数四半期および通期を通じて、3〜4社の顧客が売上高の10%以上を占め続ける見通しです。
• 光関連の立ち上げ実行力：2027年度の見通しは、ZeroFlap Optics、シリコンフォトニクスPIC、光DSPにおける急速な量産立ち上げにかかっています。
• サプライチェーンの要件：経営陣は、18〜24ヶ月前から出荷量拡大の準備を進めており、運転資本投資を拡大していると述べました。棚卸資産は前四半期比で6,220万ドル増加しました。
• 運転資本の変動性：営業キャッシュフローは、主に運転資本の変動により前四半期比で9,200万ドル減少しました。
• 関税を巡る不透明感：第2四半期の見通しは現在の関税制度を前提としており、変更される可能性があります。
• 競争環境における実行力：Credoは、SerDes、DSP、PIC、ファームウェア、ソフトウェアスタックの自社保有が主要な差別化要因であるとしつつも、光学コンポーネント市場における競合の存在を認識しています。

アナリスト質疑応答のハイライト

• 2027年度以降の光関連の成長：経営陣は2027年度を光関連事業の足がかりと位置づけました。Credoは顧客の要望に応じてコンポーネントを単体販売する一方で、統合トランシーバーやシステムレベルの光ソリューションも推進する計画です。
• ZeroFlapの規模拡大：供給および生産能力に関する質問に対し、経営陣はCredoが最大2年前からサプライチェーンの準備を進めており、下半期およびそれ以降の年度において出荷量の増加に対応できる確信があると述べました。
• AECと光関連の成長比較：経営陣はAEC売上高の拡大が続くと予想する一方で、光関連売上高はより小さなベースからより速いペースで成長すると見込んでいます。長期的には、Credoはメタル（銅線）と光接続製品のよりバランスの取れた製品ミックスを見込んでいます。
• Pilotテレメトリ機能：Credoによると、Pilotは詳細なリンクレベルのデータを継続的に監視し、障害発生前にリンク接続の品質低下を特定します。経営陣は、蓄積されたテレメトリデータが将来の製品の最適化に役立ち、静電気放電による損傷やほこりの混入などの問題を検知できると期待しています。
• 推論分野における機会：経営陣は、主要な新興推論向けプラットフォームとしてOmniConnectを挙げました。このアーキテクチャは、メモリ容量と帯域幅を拡大し、顧客がXPUを再設計することなく、ギアボックスを変更するだけでLPDDR5からLPDDR6へと移行できるように設計されています。
• 垂直統合：Credoは、光スタック全体をコントロールすることで、システムのパフォーマンス、電力効率、信頼性、製造歩留まりを向上させながら、製品コストの削減と差別化された価格設定の両方を実現できると述べました。

決算説明会 文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Ladies and gentlemen, thank you for standing by. [Operator Instructions]

I would now like to turn the conference over to Dan O'Neil, Treasurer and VP of Investor Relations. Please go ahead, sir.

Daniel O'Neil

Good afternoon. Thank you all for joining our First Quarter Fiscal 2027 Earnings Call. Today, I am joined by Bill Brennan, Credo's Chief Executive Officer; and Dan Fleming, Credo's Chief Financial Officer.

During this call, we will make certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties discussed in detail in our documents filed with the SEC. These documents can be found in the Investor Relations portion of the company's website. It is not possible for the company's management to predict all risks nor can the company assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements.

Given these risks, uncertainties and assumptions, the forward-looking events discussed during this call may not occur, and actual results could differ materially and adversely from those anticipated, implied or inferred. The company undertakes no obligation to publicly update forward-looking statements for any reason after the date of this call. To conform these statements to changes in the company's expectations or to actual results, except as required by law.

Also, during this call, we will refer to certain non-GAAP financial measures, which we consider to be important measures of the company's performance. These non-GAAP financial measures are provided in addition to and not as a substitute for or superior to financial performance prepared in accordance with U.S. GAAP. A discussion of why we use non-GAAP financial measures and reconciliations between our GAAP and non-GAAP financial measures is available in the earnings release we issued today, which can be accessed using the Investor Relations portion of the website.

I will now turn the call over to our CEO. Bill?

William Brennan

Thanks, Dan, and thank you, everyone, for joining our first quarter fiscal '27 earnings call. The first quarter was another strong quarter for Credo. Revenue reached a record $479 million, increasing 10% sequentially and more than doubling year-over-year. Non-GAAP gross margin was 68%, and non-GAAP net income exceeded $236 million, up 140% year-over-year.

Credo has been growing at a pace that very few semiconductor companies have achieved, all while expanding profitability. At the heart of the growth is 7 consecutive quarters of triple-digit year-over-year growth. We continue to see outsized growth in fiscal '27, with our optical business growing at the fastest pace. AI infrastructure investment continues to grow rapidly. Cluster sizes are increasing, data rates are moving higher, and connectivity requirements are becoming more challenging as these systems scale connectivity is about much more than bandwidth, reliability, power efficiency, signal integrity, telemetry and serviceability all matter. We also believe AI infrastructure will become increasingly heterogeneous. There will not be 1 architecture, 1 protocol or 1 physical medium that is chosen for every connection. Future AI systems will combine optical and copper interconnects across different reaches, protocols and topologies with customers choosing the right technology to optimize their architecture.

This is where Credo shines. While network reliability remains Credo's North Star, our ability to innovate, execute, qualify and deploy across the wide range of customers' needs is core to our differentiation.

Our focus is on helping customers bring clusters up faster, maximize processor utilization and maintain reliable operation at scale. Our portfolio now spans connectivity from millimeters to kilometers, with solutions across optics and copper.

Let me walk through each of these areas in more detail. Starting with AECs. AECs remain our largest business and continues to grow. We now have deep relationships with 5 hyperscalers and our engagement with neo cloud customers continues to expand. Within our existing customers, we continue to see increased AEC penetration as deployment scale. Higher data rates provide another growth vector with the transition to 200 gig per lane 1.6T ports ahead. AECs have always been a system-level product for Credo. We provide the complete solution and optimize the silicon firmware, manufacturing test and system qualifications together.

Our system-level approach has been fundamental to our differentiation since we created the category. As AI clusters get larger, the value proposition remains straightforward, high reliability and low power for short-reach connectivity were both become increasingly important at scale. We continue to see a healthy growth trajectory for AECs, driven by deeper penetration with existing and new customers and with increasing bandwidth in next-generation clusters.

Now turning to optics. Our optical business is progressing very well and includes optical DSPs, silicon photonics PICs and 0 flat optical transceivers. Our optical DSP business delivered record revenue in Q1. Revenue included deployments across our 50-gig and 100-gig per lane solutions. We see a long tail for 800 gig ports even as we begin the transition to 1.6T solutions. At 200 gig per lane, customer engagement with our 1.6T DSP is strong across both fully retimed and LRO solutions. Our first 1.6T DSP revenue remain on track for later this fiscal year.

During the quarter, we also recognized our first silicon photonics PIC revenue following the DustPhotonics acquisition. Our initial wins are in 800 gig and 1.6T optical transceivers, and we expect these products to ramp throughout the year. More importantly, silicon photonics PICs add another important technology to our optical platform. We now optimize the DSP and PIC together and combine them with our firmware, telemetry and pilot software. This level of integration creates opportunities to improve reliability, power, signal integrity and diagnostics. It also positions us well as scale-up architectures move toward near package optics. We're seeing increasing customer activity around NPO for scale-up networks, with confirmed design wins expected to begin ramping in our fiscal 2018.

As part of the open CPX MSA consortium, we'll bring many of the advantages of today's pluggable ecosystem including telemetry, interoperability and serviceability.

Our opportunity here includes both optical components and complete system-level solutions. This is an important evolution for Credo. We've historically been very successful solving connectivity problems at the semiconductor and the AEC system level. We're now applying that same approach to optics.

Our ZeroFlap optics business continues to progress. ZeroFlap Optics combines optimized optical hardware, pilot software and switch level STK integration to continuously monitor Link health and identify and mitigate when Link instabilities become likely. The objective is to improve cluster break-up time and long-term network availability, both of which deliver significant financial advantages and end customer outcomes. Production shipments are underway, and we expect additional customer ramps during fiscal '27 across both 800 gig and with both hyperscalers and neo clouds.

With DSPs, PICs and ZeroFlap optics, we now address much more of the optical link. That changes the opportunity for Credo. We sell components where that's preferred by customers. But more importantly, we also integrate those components with hardware, firmware and software to deliver a complete optical transceiver with unprecedented system-level reliability.

Taken together, the momentum across DSPs, PICs and ZeroFlap optics keeps us firmly on track to deliver more than $600 million of optical revenue in fiscal '27.

Now turning to retimers. Our retailer business also delivered record revenue in Q1. Growth was primarily driven by scale-up deployments using our Screaming Eagle retimer at 100-gig per lane and with our Blue Heron retimer beginning to contribute a 200 gig per lane. We continue to see opportunities for the Toucan retimer as PCIe Gen 6 adoption increases and for Screaming Eagle and Blue Heron across Ethernet and UA Link.

Scale-up architectures are developing quickly with customers making different choices around protocols, topology and connectivity. And our ability to support multiple protocols allows us to successfully participate across these architectures.

Now I'll discuss 2 important emerging growth areas. We also continue to make progress with both active LED cables or ALCs and our Omni Connect gearbox solutions. Our ALC solutions use micro emitters to combine many of the reliability and power advantages of copper with reach of up to 30 meters. Customer engagement continues to increase, and we plan to demonstrate ALC solutions at OCP in October. We remain on target for initial revenue in fiscal '28.

We're also seeing strong engagement around our OmniConnect innovation. Our OmniConnect SerDes and Weaver gearboxes address the fan-out issues that come with increasing memory bandwidth and capacity requirements of next-generation AI architectures. This is especially relevant for inference for memory capacity, bandwidth, packaging and costs are becoming increasingly important architectural constraints. We believe OmniConnect solutions can represent thousands of dollars of credo content per GPU with revenue beginning in fiscal '28.

In conclusion, Q1 was another strong quarter for Credo, and customer engagement across the business remains very strong. AECs continue to grow as we expand with existing customers, add new customers and move to higher data rates. Our retimer and optical DSP businesses also delivered record revenue. At the same time, the scope of our optical business is expanding. We believe that the system level approach will become increasingly important as AI networks move to 1.6T and 3.2T solutions and a scale-up architectures drive greater use of near package optics. AEC has helped take Credo to the scale we've achieved today, and we continue to see growth ahead for that business. What's different today is that we're adding optics as another major growth engine from a much larger base and as an established player in the industry. Our optical opportunity now extends from DSPs and silicon photonic PIC to complete ZeroFlap optics and NPO solutions. Our content opportunity expands significantly as we solve a broader set of challenges for our customers. AECs continue to grow. Optics is growing faster. And based on the customer engagements and ramps underway across the portfolio, we remain confident in the outsized growth we expect to deliver in fiscal '27. The common thread across all these products remains reliability. As AI infrastructure scales, our job is to provide connectivity that works reliably, uses less power, provides visibility into the network and keeps expensive processes operating at high utilization. That's what we're focused on, and we're very excited about what lies ahead.

With that, I'll turn the call over to Dan.

Daniel Fleming

Thank you, Bill, and good afternoon. I will first review our Q1 results and then discuss our outlook for Q2 of fiscal year '27. In Q1, we reported revenue of $479 million, up 10% sequentially and above the high end of our guidance range. Year-over-year, revenue grew 115%. Q1 marks another revenue record driven by substantial year-over-year growth across 4 domestic customers and marks our seventh consecutive quarter of triple-digit revenue growth year-over-year.

Our top 4 end customers each came in at or greater than 10% of revenue in Q4. As a reminder, customer mix will vary from quarter-to-quarter. We continue to expect that 3 to 4 customers will be greater than 10% of revenue in the coming quarters and fiscal year, and we continue to make progress in diversifying our revenue base across hyperscalers, neo clouds and other customers.

Our team delivered Q1 non-GAAP gross margin of 68% at the midpoint of our guidance range. Total non-GAAP operating expenses in the first quarter were $95.2 million, above the high end of our guidance range due to our strong R&D investment and up 16% sequentially. Our non-GAAP operating income was $230.6 million in Q1 compared to non-GAAP operating income of $216.7 million in Q4. Our non-GAAP operating margin was 48.2% in the quarter.

Our bottom line once again demonstrated the substantial leverage we are delivering in the business, even with our continued heavy investment in R&D. Our non-GAAP net income was $236.3 million in the quarter, a record high and a 4% sequential increase compared to non-GAAP net income of $226.7 million in Q4.

Our Q1 non-GAAP net income more than doubled year-over-year clearly demonstrating the magnitude of our top line growth, strong gross margins and disciplined approach to managing operating expenses.

Our non-GAAP net margin was 49.3% in the quarter.

Cash flow from operations in the first quarter was $90.2 million, down $92.0 million sequentially due primarily to changes in working capital.

CapEx was $7.3 million in the quarter and free cash flow was $82.9 million.

We ended the quarter with cash and equivalents of $764.3 million, a decrease of $679 million from the fourth quarter due primarily to the cash outlay for our acquisition of DustPhotonics. We remain well capitalized to continue investing in our growth opportunities while maintaining a substantial cash buffer.

Our Q1 ending inventory was $313.1 million, up $62.2 million sequentially.

Now turning to our guidance. We currently expect revenue in Q2 of fiscal '27 to be between $525 million and $535 million. We expect Q2 non-GAAP gross margin to be within a range of 67% to 69%. We expect Q2 non-GAAP operating expenses to be between $100 million and $105 million. And we expect Q2 diluted weighted average share count to be approximately 200 million shares. These expectations are based on the current tariff regime, which remains fluid.

As we move forward through fiscal year '27, we continue to expect an inflection in the second half driven by more than $600 million in optical revenue with ZeroFlap optics, silicon photonics PICs and optical DSPs, each contributing more than $100 million, resulting in more than 85% year-over-year total revenue growth for the full year. We expect non-GAAP gross margin in fiscal year '27 to be broadly consistent with fiscal year '26 levels. We expect non-GAAP operating expenses to increase approximately 55% year-over-year, well below our revenue growth rate as we continue to invest in R&D to support the new product development and address the significant growth opportunities ahead. As a result, we expect our non-GAAP net margin to be in the vicinity of 50%.

And with that, I will open it up for questions.

Operator

[Operator Instructions] Your first question comes from the line of Tore Svanberg.

質疑応答

Tore Svanberg

Congrats on the record quarter. Bill, I was hoping you could unpack a little bit the position in optical right now. You did reiterate the $600 million plus, but now you also talked about NPL and maybe even doing some system-level NPL. So as we think about that $600 million both in fiscal '27 and fiscal '28, how should we expect the mix to look like in terms of all the various different components?

William Brennan

Sure. I think we feel great about the broadening portfolio that we're bringing to market. As we've indicated, the optical DSP business for us is doing quite well at a component level. The team that came in to Credo from Dust brought a lot of momentum. And in fact, after just a few months, the momentum has picked up, and we're happy to be able to say that we've got design wins with 2 major players for next-generation ramps that will occur in fiscal '28, and maybe starting in the late part of this fiscal year.

ZF optics, we continue to make progress. We're engaged with multiple customers, both hyperscalers and neo clouds. And we feel good about the way that the year is shaping up.

I think -- as I think about the overall optical opportunity, and you did mention CPX, and I think you may have all seen the press release earlier that we have joined the consortium, and we plan on pursuing solutions for the scale up market that's developing, really across the board, CPX is, I think, an important development in the industry. That's 1 way of solving the challenge of going to 10x more density than what you're seeing in scale-out. And we'll pursue this market the same way. We'll pursue component sales where that makes sense with customers, and we'll also pursue system-level solutions that we'll talk about over time.

But you bring it up at important point. Fiscal '27, I think, is just a stepping stone for where we're going with our optical business. And if we think about the market forecasters, specifically the ones that are focused on the optical transceiver pluggable market, just that piece alone is expected to grow from 60 million units in '26 to 175 million units by 2030. This is an amazing growth for this portion of the industry and then add growth on top of that for what happens in scale up. And so we think that with our broad portfolio of solutions that we're going to experience continued outsized growth through the 2030 time frame. And it's going to have contributions from not just our optical portfolio but also AECs as well as our other copper solutions.

So I'd probably give you a little more color than you asked in that question. So hopefully, that gives you what you're looking for.

Operator

Your next question comes from the line of Quinn Bolton with Needham.

Quinn Bolton

Bill, I guess a question just on the follow-up to Tore's question. Just really wanted more color on the importance of Credo joining the Open CPX consortium, what types of solutions you may be providing? Is it more PIC-based? Would you be supplying the full optical engines? I assume these are all laser-based rather than microLED-based. But maybe just a little bit more detail on this new opportunity that's opening up for you in the NPO scale-up segment?

William Brennan

Sure. So as we all think about the scale-up opportunity, we're thinking about changing of form factors. When we look at front end and we look at scale out, there's no real catalyst to change from the pluggable form factor. But for scale up networks, there's a fundamental need to have more dense form factors. And we've talked as there's been an ongoing industry conversation about things like XPO CPX, how that fits in with NPO and then ultimately, CPO. All of these solutions address the need for a 10x density improvement. And the way that we're approaching the market is somewhat agnostic. We will basically look at what our customers are asking us and what our customers are driving towards. And so we've, I think, done a very good job of being agnostic as it relates to the solutions that we're bringing to market. We're going to continue to do that. And so of course, with all of the NPO solutions, including PX we'll lead with the silicon photonics PIC, but we'll also look at doing the complete optical engine long term as we add more functionality to our portfolio.

Operator

Your next question comes from the line of Tom O'Malley with Barclays.

Thomas O'Malley

So mine relates to the ZF optic side as well. So like when you look at the forecast that you have kind of over the next year and then the year after that as well, like a lot of the volume in terms of revenue is driven by the ZF optics forecast in. Like it's unique. You imagine that you're going to use a contract manufacturer for this and you're hearing about supply issues, raising prices in the foundry world. Like can you talk about the challenges that you're facing in scaling today and what gives you the confidence that you're able to kind of hit the metrics that you gave us some color on the last earnings call. But like what gives you the confidence that you're able to hit those really big revenue numbers in the near term?

And just maybe a little bit of a pulse check on conversations with customers today, particularly those who in the media have potentially been spending a little bit more money and the forecast is raised on the ZF optics side.

William Brennan

Yes, you point out something that's lots of fun. We're in a very dynamic market right now. And you're right, from the supply side, it has been important that we have spent so much time even going back 18 to 24 months ago, and we knew that this was a direction that we're heading. And so you can see from Dan's update, that working capital is increasing. We're leaning in from a supply chain standpoint. I feel great about our ability to supply increasing volumes in our second half and then throughout the next couple of fiscal years.

The other half of that is driving demand. And so I see that over the past year, we've been very successful in marketing and really engaging with customers. And so all of this has got to come together. But again, I'll point out that we're really playing the long game here. And of course, there's -- there should be, and there is a lot of emphasis on the very fast ramp that we've set expectations on. But I think more importantly, looking at the big picture, this involves an opportunity that takes us to a different scale as a company. And so this is very much an important part of our growth strategy and our scale as a company.

Operator

Your next question comes from the line of Sean O'Loughlin TD Cowen.

Sean O'Loughlin

Congrats on the solid results and momentum. Maybe we could just get some blocking and tackling on the -- Dan, you mentioned the 3 to 4 customers, will be greater than 10%, and you're continuing to diversify. I wanted to ask specifically, maybe if you could do the rundown of what the stats were on those 3 to 4 in the quarter. But then also when we think about customer concentration, there's also platform concentration? And are you diversifying your product portfolio across those customers as well?

Daniel Fleming

Yes, sure. Let me start with just the percentages of those 10% plus customers. So our largest customer was 1/3 of our revenue at 3% and second largest 28 and then followed by 13 and 10. Those top 3 customers were similar to or the same 3 as in the prior quarter in a slightly different order. One thing to note, our fourth 10% customer, right at 10%, was different from our 10%'s 4 customer last quarter. They have been a 10% customer in the past.

Now in terms of diversification of product line within those for sure, there is a strengthening and broadening across the board. It isn't just AECs that these hyperscalers are consuming evolves.

Operator

Your next question comes from the line of Blayne Curtis with Jefferies.

Blayne Curtis

On the AEC side, I just wanted to ask you, timing on 1.6 terabit, but also just the design traction if you compare that versus the 800 gig, you've been talking about neo clouds. I think some of your existing customers are moving to faster speeds. Can you just give us a perspective of how those designs are laid out in the timing?

William Brennan

Sure. We expect that our AEC portfolio will ramp in a similar kind of time frame as the rest of the market. And for that matter, our ZF optics products. I want to step back and give some perspective on the way we view the AEC market. There's been a lot of conversation about copper and optical and just the trade-off there. And the way that we view the AEC market, it is part of the pluggable transceiver market. So when we talk about forecasts for specifically optical transceivers going from 60 to 175 over the next 4 years, there's not really a breakout for the AEC market, but the AEC market really represents the 1-meter to 7-meter segment of that market. And so it just makes sense that, that segment is going to grow as well. And we see that really being long term. We see that in a big way, in 800-gig category, what we saw was copper replacing optical. And it was replacing optical -- laser-based optical transceivers because of the need for higher reliability and secondarily, lower power as it relates to that first connection in the network from GPUs to that first switch. And so the bottom line is that we see the pluggable transceiver market for all of the public transceivers from copper to laser-based optical. And ultimately, we'll talk about ALC as being another pluggable transceiver option within the spectrum, and that's going up to 30 meters. And so as it relates to what I think the setup looks like for 1.6T, we're quite bullish about the AEC opportunity. And as we showed going back 6 months ago at OFC, many of the next-generation deployments that have been discussed in the industry, we showed a very elegant solutions, all connected with AECs. And we'll deliver up to 6.5 meters in that category. So we think it takes shape towards the end of -- or there will be some contribution in our second half fiscal '27 and then fiscal '28, it comes in, in a much bigger way.

Operator

Your next question comes from the line of Joseph Cardoso with JPMorgan.

Unknown Analyst

This is [ MP ] on behalf of Joseph Cardoso. So I just wanted to ask on the overall opportunity. Until most of the opportunity has -- and the focus has been on training, but we are seeing incremental development around inferencing as well now. So I just wanted to check how does Credo is positioned in terms of addressing the inferencing opportunity and which part of the portfolio particularly stands out? And how does the overall opportunity compare relative to training?

William Brennan

I appreciate that question. I'd like to maybe talk a little bit about our OmniConnect solutions that we are bringing to market now and that we expect to contribute revenue in our fiscal '28. Specifically related to inference, as these solutions continue to gain momentum, one universal issue is around memory fan-out. The memory fan-out issue is limiting bandwidth and also total memory deployment of memory capacity, both of which are critical to achieving high-performance inference. And so with our OmniConnect solutions, there's kind of a 2-piece story to the offering. First thing is we license a highly optimized high-speed SerDes that's got a very small form factor, very low power, and that's got reach of up to 10 inches. So effectively addressing the fanout issue that exists on the XPU beach front as well as the distance that you can get the distance you can achieve between the GPU and memory.

So the second piece is a the gearboxes that we're developing. The first gearbox that we're developing is a solution that we call Weaver. And it is a gearbox that interfaces between that embedded SerDes on the XPU. So it's up to tenants reach and interfaces with that same exact series. And then it becomes an LPDDR interface. And it's important to note that our first product will be LPDDR5 and there will be a second product we do for LPDR6. And so in a sense, this architecture is future enabled because when the memory market shifts from 5 to 6, there isn't going to be a need for our XPU partners to do another tape out, another design, just simply change the gearbox.

And so our first customer, Positron is doing really great things. When we look at memory limitations and the opportunity that if you can increase memory capacity up to 2 terabytes, which is their first announced product, just the performance with Frontier model run your models, basically, you can fit everything in memory and your performance is goes off the charts. And so they're redefining what is competitive in that space. And if we look even from a bandwidth standpoint, we've got a road map that will achieve very comparable bandwidth even HBM 5. And that's while expanding on memory size and eliminating the reliability issues of packaging XPUs and HBM in the same package.

But related specifically to inference, we're really excited about how this is really going to change the game for many frontier model applications.

Operator

Your next question comes from the line of Vivek Arya with Bank of America.

Vivek Arya

Bill, I wanted to go back on the AEC growth in the second half and then longer term. If I take your 85% growth outlook for the year, suggest about $500 million of incremental growth in the second half. But if optics is going to be the bulk of it, and that $600 million, that suggests kind of more conservative assumptions about AEC growth. I'm sure that I'm probably mistaken about how much OpEx was in the first half or so. So I was just hoping if you could kind of give us some more details on the optics versus the segmentation in the first half versus second half and what that implies for AEC growth in the second half? And then how should we model AEC growth longer term?

William Brennan

Sure. I think that as we look at the entire year and we look at the growth across each 1 of the products that we're bringing to market, we see growth across the board. Now of course, with our optical solutions, this is really the first year that we're ramping and it makes a lot of sense based on what we're bringing to market that we'll be able to achieve a really fast-paced growth. I think AECs will continue to grow. You've got to consider where we've grown from AECs have driven growth over the last 2 fiscal years, more than doubling from '24 to '25, and then more than tripling from '25 to '26. And so I think that as we look at our opportunities in AEC, we continue to see expanding opportunities. But in a sense, I think we're looking at clearly a slower growth overall compared to the fact that we're growing into such a large market with optics. And so it makes sense that optics will grow faster because we're growing from a smaller base.

But long term, I think you'll see AECs grow. And as we continue to scale as a company, I think you'll see balance a really nice balance between copper solutions and optical.

Operator

Your next question comes from the line of Sebastien Naji with William Blair.

Sebastien Cyrus Naji

I just wanted to maybe ask a little bit about pilot and some of the telemetry data that your solutions are picking up. As your installed base grows, are you accumulating enough link level telemetry that the data itself has become giving a bit of a competitive advantage for example, allowing you to identify failure modes or optimize future DSP designs. And is that extending your moat at all? Just any thoughts on that?

William Brennan

Sure. The pilot software platform is a really important part of the total ZF optics offering. And when we look at what we've done, we basically had to start with a custom DSP design, 1 that would enable telemetry to be lit up on every link between an XPU and a switch. And when I say every length, there's really 6 in total. There's 3 in 1 direction and 3 in the other. And this is completely different than the telemetry that has been discussed up to this point in the industry. And so what we're able to sense on a real-time continuous basis is really rich telemetry data that looks on indicators of link stability, even going down to the SerDes level because that, of course, is core to our platform on everything we do. But we're looking at a real-time measurement of height and post effect histograms, really rich telemetry data even down to that level. And so when we are sensing this continuously, we can sense when the Link integrity is decreasing. And so you can think of it as right now in the industry would exist as a green light when you've got a connection and a red light when there's a failure. What we're adding is like a check engine like a yellow light that says, okay, you've identified something and then the mitigation piece of it is about acting. And so there's different approaches that are enabled by pilot. You can make the decision on a transceiver by transceiver basis to take that transceiver that looks likely to have a link flat and in an orderly way to take that GPU out of the cluster. We've got other customers that are looking at a network level, more of a centralized approach. And the ultimate outcome is the same from a reliability standpoint. But in this case, both opportunities allow you to collect a tremendous amount of data because as you're taking link down, you've got a snapshot of exactly what was happening within that transceiver and what's happening within the network. And so you're right that the data set that we're starting to gather and that we will gather over time, will lead to better solutions. It will lead to next-generation solutions being optimized even more so for the types of failures that we're detecting early.

I will say we're doing other things that are really interesting, and that's related to conversations with customers. We had a customer ask us, can you sense even the slightest ESD damage on a transceiver because that will become a latent defect. And so we've figured out a way to sense even the slightest ESD damage, not the type of damage that would cause a transceiver to fail, but the type of damage that over time would result in a failure in that connection. And so now when we've got customers lighting up racks, they can determine immediately if a transceiver was mishandled and needs to be replaced.

Other things that we're sensing is dust on the fiber plan. This is really, really important because even the smallest speck of dust can have light bouncing back in the other direction, causing a multipath interference situation. And so what we're doing is far beyond.

Now pilot allows us to integrate within the network of our customers. And that really just changes the game on giving our customers tools to be active in identifying and mitigating. And look, the goal here is twofold. It's really to deliver the fastest time to revenue. So bringing a cluster up in 5 or 6 days versus 6 to 8 weeks. I think we've seen the contracts that have been reported in the market. You can measure a month on the order of hundreds of millions or even $1 billion of advantage when you've got that really expensive gear that could be generating revenue, but it's sitting idle because we're trying to bring in a cluster up and on the order of weeks versus days.

The other big 1 is uptime after deployment and driving to a 99% uptime or even higher is the objective here. And that just delivers a better fabric, better product for the end customers. And so it's a huge differentiator, I think, at a cluster level. But yes, pilot is critical to enabling that. It's a combination of the custom hardware, but the interface within the network is really the critical piece.

Operator

Your next question comes from the line of Karl Ackerman with BNP.

Karl Ackerman

Great. DSPs and PICs, aren't direct hyperscaler sales growing as a portion of your mix versus optical module suppliers? And how does that improve your customer visibility and stickiness with your data center customer base?

William Brennan

Karl, I apologize. You -- the first part of your question, we didn't hear. So I just want to make sure I've got the right perspective.

Karl Ackerman

Sure. Yes. As we think about the opportunity for your discrete DSPs and PICs of that $600 million, also growing over time. Isn't the customer mix moving more toward direct hyperscaler sales who are making their own custom transceivers? And as they do that, how does that improve your customer visibility and stickiness with that customer base?

William Brennan

When -- so in looking at our optical components business, this is really an important part of our business short term and long term. And ultimately, it's the path where we're going to pursue that pluggable optical transceiver market that is based on mainstream standards. And -- the combination of having an optical DSP and a PIC and being able to offer that system level even within a component offering, that will help our customers deliver what we see as the most competitive combination of system performance power and yield. Many times, our module customers are working directly with hyperscalers. And the hyperscalers are active in basically pointing to the components that they want to be put together within the modules that our module customers offer. And so the hyperscalers play a big role in both the component sale part of our business to our modular customers as well as our ZF optics modules that we're building ourselves.

Long term, I think that is going to be a balance that we see that will continue to where we're going to see that -- in fact, our component sales and our module sales will be complementary in the sense that the broad part of the market will be addressed by components and a very specific part of the market that really, really is focused on reliability will be kind of a new product that's offered in that transceiver space.

Operator

Your next question comes from the line of Vijay Rakesh with Mizuho.

Vijay Rakesh

Just a quick question. You mentioned -- just taking a step back, you mentioned 2027 is a stepping stone, and you're already growing like 85% year-on-year. As you look out to fiscal '28, can you give us some perspective on how to look at it? Obviously, AEC is growing might be like 50% this year. You have ZF optics ramping, [indiscernible] $600 million for fiscal '27, which kind of annualizes like $1 billion plus run rate. And as you mentioned, active cables as well. As you have all these 4 segments ramping, can you us some perspective on how to look at fiscal '28?

William Brennan

Appreciate that. The conversation about fiscal '28 and '29 and '30 is something very active conversation within our leadership team at Credo. Let me first touch on ALC as a part of our portfolio. I think this is -- the product that we're bringing to market first is using micro LED technology. And the promise of this technology is really to deliver the same reliability and the same power efficiencies at a core technology level as AECs. Key difference there is will extend the length of 30 meters. And so it's going to -- ALCs will represent our third differentiated pluggable transceiver solution. So different things we first did kind of created the product category with AECs followed by ZF Optics, again, creating a new product category. ALCs will be the third leg of that stool.

The bottom line is, I look at that pluggable transceiver market, and I think that's just step 1 for ALCs and the micrometer technology. A next natural step forward on that is to apply that to what comes with the scale-up opportunity because, again, in scale up, this is another technology alternative, but the promise there is that at a core technology level, we'd be addressing some of the problems that have prohibited that market from taking off with solutions specifically related to reliability, availability and serviceability. And so we view ALC as a big multibillion-dollar opportunity, followed by as big of an opportunity with scale up and is highly complementary to the suite of technologies that we brought to market.

So the way that I think about the future, more specifically to answer your question, is that we're trying to put ourselves in several multibillion-dollar TAM opportunities. You can just analyze our portfolio across the pluggable space. And you can see that it's really tens of billions of dollars of opportunity that we're now going to be addressing in our fiscal '28 time line given the fact that ALCs will be part of the portfolio. And so we're trying to put ourselves in a position to address a very large market. Our growth as a company will follow based on our success in executing with every customer. I think we're quite bullish on the opportunity. And that's without even talking about the massive opportunity that the entire industry has in front of us will scale up. Even think about OmniConnect, we've articulated in the past that that's a multibillion-dollar opportunity annually as well. So I think that as we think about fiscal 28, you're right, we think about outsized growth again for another year, but we think that will continue for the years to follow as well.

Operator

Your next question comes from the line of Mark Lipacis with Evercore ISI.

Mark Lipacis

Bill, I think for you, optics is growing faster. It's a newer market. Can you contrast how you are prosecuting the optics market compared to how you prosecuted the AEC market. I have to mention there's some differences given you effectively created the AEC market. And maybe as part of that, what are the implications on the business model as OpEx becomes larger. And to the extent that you can talk about like where you get leverage between these businesses on development and the supply chain and with your customers and where you need to build capabilities?

William Brennan

There is a pretty interesting contrast between the efforts that we pursued with AECs and some of the leverage and how it looks different this time with ZF optics. With AECs, we imagine this product as being an extension to copper, basically addressing some of the issues that our customers are facing as they were going to faster speeds, and they were having issues with tax. We were surprised when we had customers pursuing us talking about really interesting innovations at a feature level, things like telemetry, things like other system-related rec level innovations. And we really opened that door to the customer base on feature set innovation. Our first customer, Microsoft, the reason that they converted to AECs was really the functionality that we offered. We developed a solution that was smart enough to sense when a tour port was failing or about to fail and then switching the data to a redundant tour in a hitless manner, really, really smart solution in a cable format. Over time, the momentum built, and this is over years, momentum built because as speeds increased, it was clear that tax weren't going to cut it from a signal integrity but also from a form factor standpoint with the copper wires needed to become much, much thicker. So from a form factor standpoint and a signal integrity standpoint, many of the customers started looking. And then, again, I mean, if we look at our solutions today, many of them have really innovative feature set solutions. And so the growth happened over -- a product category creation happened over several years. As part of developing our solution and having it be a complete solution and taking ownership of it, we developed a really differentiated way of coming to market from a qualification standpoint, the rigor that we put our solutions through is sometimes far beyond what our customer calls look like. And that includes having our customer switches, our customers' mix running at speed as we're hammering the length, the entire link, not our AEC but the entire link from NIC to switch. And the objective is to harden the solution, finding link weaknesses and then hardening that through firmware modifications. So that was definitely something that we're leveraging now as we bring ZF optics to market. But the difference in ZF Optics was that AI happened. And AI networks were fundamentally different than say, front-end networks, where there was kind of a built-in redundancy within the different tiers of the network. And so we've had link flaps for a long time, but they just haven't surfaced as a major concern because there wasn't any massive hit to the network. But now that we've got AI clusters, you've got tens of thousands, if not hundreds of thousands of links that are all interdependent that if you start getting flaps on some of those lengths can affect the entire cluster to the point where customers have talked about losing utilization on the order of greater than 10% or even approaching 20%. So there's a -- with this new application, it was a perfect fit for following the playbook on AECs and doing interesting things, very innovative things in an area where innovation had not happened for many years, working closely with customers and basically charting the path to at a system level, be able to improve reliability of the network. That was really the difference. And it took some time to develop the hardware and the software solution. But we're seeing that the market is taking off a lot faster than AECs because we're addressing a pain point that exists, clearly exists already. So this is welcomed every time we have a conversation with the technical networking teams within the customer base.

Operator

Your next question comes from the line of Suji Desilva with ROTH Capital.

Sujeeva De Silva

Congrats on the progress in the margins. You've given us a lot of color on the optical and kind of dug into how you're approaching it. It might be a good time timely to revisit the competitive landscape and how you think competitors approaching the markets you're approaching, whether you're approaching it differently? Or are they going to be able to approach the future driven approach the way you are? Or any other elements that are key to kind of how you're doing it that really allow you to separate from the group because a lot of people are talking about the same opportunities.

William Brennan

Sure. I think it's -- I think there is a case to be made here about our go-to-market strategy and the fact that we are owning the entire stack. And I think when we look at the opportunity, just at a transceiver level, starting with the SerDes and then looking at it from a DSP and now a PIC perspective, being vertically integrated gives huge advantage on your ability to deliver the best possible system solution, but it also gives you an advantage on COGS.

Then you think about going to market with a solution that's differentiated and the challenge is what are those features worth. And so I think we expect an advantage at a COGS level, but we also expect an advantage on an ASP level as we compare our solution to more standards-based solutions in the market. I do think that long term, we are now the pacesetter on innovation in the optical space. The market needs it. And we're being pretty open with working with the standards groups on standardizing around some of the things that we're doing. And the challenge there is how can we innovate faster than the rest of the competition, the rest of the market. And I think we feel comfortable, given the fact that we own the entire stack that that's going to lead to the same kind of success that we've had with AECs.

Operator

Your next question and final question comes from the line of Christopher Rolland with Susquehanna.

Christopher Rolland

Thanks for the question squeezing me in. And Bill, I will bite on your DSP plus PIC integration that you've mentioned quite a few times. I guess, first of all, if you could talk maybe a little bit more about your 2 dust wins. Do they include DSP integration? And if you could remind us kind of the economics for this part for this market and what it means to you guys, that would be great.

William Brennan

Appreciate the question. The world we live in at a component level is quite competitive. And so just by proper protocol, we're not able to talk too specifically about exactly which of the major players that we're engaged with. I will say that these first 2 major design wins that we're talking about do not include the DSP. So there's upside potential with that as we look at really co-marketing the DSP and the PIC, long term. Right now, it's -- the Dust team was really doing a great job with engaging deeply with major players in the industry, amazing that a small team like that had such great traction. And I think it's evidence of the fact that their technical solution is absolutely leading edge in the market.

Long term, I think there's going to be a great opportunity for us to look at these 2 components and really bring a lot of benefits to the customer base. So I look at this as a great development in our overall portfolio and going to be really promising long term for us.

So I guess with that, we'll wrap up the call. So I really appreciate you all attending. And thanks for the thoughtful questions. We look forward to the follow-up. Thanks so much.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.