Credo Technology Group (NASDAQ:CRDO) reported fourth-quarter financial results on Monday. The transcript from the company's fourth-quarter earnings call has been provided below.
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View the webcast at https://events.q4inc.com/attendee/721028678
Summary
Credo Technology Group reported a strong fiscal 2026 with revenue exceeding $1.3 billion, tripling year over year, and a non-GAAP net income increase of over five times to $662 million.
Q4 fiscal 2026 revenue was a record $437 million with a non-GAAP gross margin of 68.3%, and non-GAAP net income grew to $227 million.
The company emphasized its strategic focus on AI infrastructure, highlighting its growth in active electrical cables and optics, including the acquisition of Dust Photonics to expand its optical portfolio.
For fiscal 2027, Credo expects a revenue growth of over 80% year over year, driven by more than $600 million from its optical portfolio.
Management highlighted continued strong customer engagement and diversification across hyperscalers and NEO cloud operators, with significant growth anticipated in its optical business.
Full Transcript
OPERATOR
And answer session where we request that you please limit yourselves to one question only at that time. If you have a question you will need to press Star followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star and then the number one again. I would now like to turn the conference over to Dan O'Neill. Neill. Please go ahead sir.
Bill Brennan (Chief Executive Officer)
Good afternoon. Thank you all for joining our fourth quarter fiscal 2026 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 statement. 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 US 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 our website. I will now turn the call over to our CEO Bill. Thanks Dan and thank you all for joining our fourth quarter and full fiscal year 26 earnings call. I'll begin with a review of our fiscal 26 performance, discuss the major developments across our business and share our perspective on the opportunities ahead. Dan Fleming, our Chief Financial Officer, will then provide additional detail on our Q4 and fiscal year 26 results along with guidance for the first quarter of our fiscal 27. We'll then open the call for questions fiscal 26 marked another defining year for Credo Technology Group. Revenue exceeded $1.3 billion more than tripling year over year, while non GAAP net income increased more than five times to $662 million. Very few semiconductor companies have scaled at this pace while sustaining product leadership, strong margins and operational execution. In the fourth quarter, fiscal 26 revenue reached a record $437 million. Notably, our revenue in the quarter exceeded our entire fiscal 25 revenue. Q4 Non GAAP gross margin was 68.3%. Non GAAP net income grew to $227 million and was more than 30% greater than our revenue in the year ago quarter. Producing these results required incredible effort and expertise and I want to sincerely thank Team CREDO for their continued stellar performance. These results reflect credo's ability to capitalize on a fundamental shift occurring across AI infrastructure. As AI clusters scale from tens of thousands to hundreds of thousands of GPUs, connectivity is no longer just about bandwidth reliability, power efficiency, signal integrity and telemetry have become critical architectural requirements. Today's AI infrastructure is increasingly constrained not by compute but but by the reliability and efficiency of the connectivity fabric tying these systems together. Over the past several years, AI network reliability has become credo's north star. Our roadmap, our product investments, our software architecture and our system level approach have all been built around helping customers accelerate cluster, bring up, maximize GPU utilization and maintain stable operation at unprecedented scale. CREDO was purpose built for this transition. Our strategy is centered on delivering connectivity solutions across the full spectrum of AI infrastructure from die to die and chip to chip connectivity, to multi rack scale copper and to row scale and facility wide optical interconnected. By extending both inward toward the silicon and outward across the data center, we've positioned CREDO to become a foundational network architecture partner for our customers. Importantly, hyperscale and NEO cloud operators increasingly want partners capable of delivering multiple generations of connectivity solutions with deep system level integration. This is where CREDO differentiates itself through our vertically integrated approach spanning core Serdes technology, silicon and system level solutions, firmware and telemetry software and operational execution. I'll now discuss our businesses in more detail. First, regarding active electrical cables, our AEC business remains a core growth engine for the company and we continue to see substantial long term opportunity ahead as AI clusters, scale reliability and power efficiency have become primary design constraints. AECs have become the preferred solution for in rack connectivity and for many multi rack deployments up to 7 meters. CREDO's Zero Flap AECs deliver up to 1000 times greater reliability than than commodity laser based optical modules while consuming much less power. In environments where cluster downtime can cost millions of dollars and delay AI deployment schedules. Network reliability matters more than ever. We continue to see strong customer adoption across Hyperscaler and NEO cloud operators, both at 100 gig per lane and emerging 200 gig per lane deployments. Our vertically integrated model positions us well for continued leadership as both lane speeds and cluster complexity increase. We also remain on Track with our PCIe Gen 6 AEC family where customer engagement and design activity continue to strengthen. Now turning to optics, we believe fiscal 27 represents an inflection point for Credo Technology Group's optical business. First, at an optical DSP component level, we see momentum in both design wins and revenue contribution. We're looking forward to continued growth in this product family and we've received excellent customer feedback on the solutions we announced last quarter. Both Robin, a highly optimized DSP at 100 gig per lane and Cardinal, a leading edge DSP at 200 gig per lane. Next, the acquisition of Dust Photonics, which closed last week, significantly expands our optics position with highly differentiated silicon photonics pick technology. Dust brings strong design win momentum and a portfolio spanning 800Gig and 1.6 T solutions, along with a roadmap to 3.2 terabits per second and beyond. Importantly, their architecture enables simplified optical designs with substantially fewer lasers. In addition to enabling better reliability, power efficiency and cost, laser count reduction can ease the industry supply chain limitations. The Dust Silicon Photonics roadmap also provides a direct path to CPO and NPO architectures, allowing us to address a broad range of customer requirements as AI deployments evolve in the scale of network domain based on current customer engagements. Initial revenue for CPO and NPO designs is expected in our fiscal 28th. Finally, our Zero Flap optics platform continues to gain strong traction as customers increasingly prioritize network reliability. With the addition of SIFO PIC technology to our Zero Flap Optics platform, we can now control a significantly larger portion of the optical stack, extending visibility deeper into optical link behavior and performance. The tighter DSP to PIC integration enables richer telemetry, enhanced diagnostics and more intelligent system level optimization by combining optimized hardware and our pilot software with switch level SDK integration. Zero Flap optics continuously monitor link health and autonomously detect and mitigate link instability conditions before impacting the cluster. Results have shown a meaningful improvement in network reliability, time to cluster stability, and long term uptime. In summary, we're very enthusiastic about the prospects of our optical portfolio. In fiscal 27. We expect our optical DSPs, SIFO pics and Zero Flap optics will each contribute more than $100 million of revenue and in total more than $600 million of revenue. With this expected ramp accelerating in the second half of the year, based on customer and market feedback, we believe this portfolio will deliver sustained rapid growth in future years. Now regarding retimers, Our retimer business also continues to gain momentum. We're seeing strong growth for retimers at 100 gig and 200 gigabits per second per lane, as well as increasing traction for our PCIe Gen 6 retimers. Our Blue Heron 200 gig per lane retimer was purpose built for scale out and emerging scale up networks. We're seeing increased interest and demand as the device combines support for the broad range of 200 gig per lane protocols including Ethernet, UA Link and ESUN. As AI infrastructure becomes increasingly complex and protocol diversity expands, we believe our system level expertise and software integration capabilities position us well for continued share gains. Now moving to our emerging growth categories, we also continue to make strong progress across our newer growth vectors including active LED cables and Omni Connect. Our ALC solutions We will extend the reliability and power profile of AECs into row scale optical connectivity by replacing traditional lasers with microled technology. This creates a highly differentiated connectivity category capable of delivering AEC class reliability with optical reach of up to 30 meters. Our Omni Connect family expands our solutions inward to towards the silicon. Our first gearbox solution, Weaver, will address growing memory bandwidth and density challenges by enabling substantially higher memory I O density and more flexible architectures. Customer engagement remains strong, especially around next generation inference designs. We continue to expect production ramps for both ALC and Omni Connect solutions beginning in our fiscal 28. And in conclusion, the data center connectivity market continues to evolve. As AI scales toward gigawatt class deployments and increasingly dense architectures, network reliability becomes even more critical. Even isolated link instabilities can impact cluster bring up times, GPU utilization and overall system availability. That's why reliability has been credo's North Star over the past several years. It drives our system level philosophy, our telemetry first software architecture and the investments across the full spectrum of our solutions. Fiscal 26 was another transformative year for Credo Technology Group, and yet we believe we are still in the early innings of the opportunity ahead. With that, I'll turn the call over to Dan Fleming for detailed financial review and our outlook for Q1 fiscal 27.
Dan Fleming (Chief Financial Officer)
Thank you Bill and good afternoon. I will first provide a financial summary of our fiscal year 26, then review our Q4 results and finally discuss our outlook for Q1 and provide some color on our expectations for fiscal year 27. Revenue for fiscal year 26 was another record at $1.3 billion, up 206% year over year. Gross margin for the year was 68.1%, up 310 basis points. Year over year. Our operating margin improved by 2,144 basis points as we continued to generate considerable top line leverage driven by growth in our products while growing operating expenses considerably slower than revenue. That step up in profitability flowed through to the bottom line as we reported earnings per share of $3.46 for the year, a $2.76 improvement or up 392% over the prior year. In fiscal year 26, Credo not only delivered the dramatic growth which we had forecast, but we also demonst the considerable earnings power in our business model. Moving to the fourth quarter in Q4 we reported revenue of $437 million, up 7% sequentially and above the high end of our guidance range. Year over year, revenue grew 157% and notably Q4 alone exceeded our total fiscal year 25 revenue. Q4 marks another revenue record driven by substantial year over year growth across four domestic customers. Our top four 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 three to four 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 Q4 non GAAP gross margin of 68.3% above the high end of our guidance range. Total non GAAP operating expenses in the fourth quarter were $81.7 million above the high end of our guidance range due to our strong R and D investment and up 6% sequentially. Our non GAAP operating income was $216.7 million in Q4 compared to non GAAP operating income of $201.8 million in Q3. Our non GAAP operating margin was 49.6% in the quarter flat sequentially. Our bottom line once again demonstrated the substantial leverage we are delivering in the business. Our non GAAP net income was $226.7 million in the quarter, a record high and a 9% sequential increase compared to non GAAP net income of $208.8 million in Q3. Our Q4 non GAAP net income more than tripled year over year and was 33% higher than our revenue in the fourth quarter of last year, which most clearly demonstrates the magnitude of our top line growth, strong gross margins and disciplined approach to managing operating expenses. Our non GAAP net margin was 51.9% in the quarter. Cash flow from operations in the fourth quarter was a record $182.2 million, up $16 million sequentially. CapEx was $4.8 million in the quarter and free cash flow was 1, up more than $37.8 million from the third quarter. We ended the quarter with cash and equivalents of $1.4 billion, an increase of $141.8 million from the third quarter driven by our strong free cash flow. We remain well capitalized to continue investing in our growth opportunities while maintaining a substantial cash buffer. Our Q4 ending inventory was $250.8 million, up $42.9 million sequentially. Now turning to our guidance, we currently expect revenue in Q1 of fiscal 27 to be between $465 million and $475 million. We expect Q1 non GAAP gross margin to be within a range of 67% to 69%. We expect Q1 non GAAP operating expenses to be between $86 million and $90 million and we expect Q1 diluted weighted average share count to be approximately 199 million shares. These expectations are based on the current tariff regime which remains fluid. We were pleased to see fiscal year 26 play out better than we had expected. The rapid shift to AI workloads continued to drive new and broad based customer engagement and we executed well to grow at more than twice the rate we expected at the beginning of the year. As we begin fiscal year 27, we expect mid single digit sequential growth in the first half with an inflection beginning in the second half. That inflection is bolstered by more than $600 million in optical revenue with zero flap optics, silicon photonics pics and optical DSPs each contributing more than $100 million, driving more than 80% 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 50% year over year, well below our revenue growth rate as we continue to invest in R and 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 to be in the vicinity of 50% and with that I will open it up for questions
OPERATOR
at this time I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. As a reminder, we ask that you please limit yourselves to one question only so we can get to as many people as possible. We'll pause for just a moment to compile the Q and A roster. Your first question comes from the line of Tom o' Malley with Barclays. Your line is now open. Please go ahead.
Tom O'Malley (Equity Analyst at Barclays)
Hey, guys, thanks for taking the question. Appreciate it. I just wanted to dive in, into the guidance. Is there any optical revenue, Zero Flap Optics or dust photonics in that guidance? And if so, how much? And then you mentioned 100 million across a couple different vectors in the optics business for this year. One of them was over 100 million in DSPs. Have you seen a change in the attitude of the market with procuring discrete DSPs? I assume you mean discrete DSP sales versus in a module and just that change over the last couple of months. If you see that accelerating and just clarify if those are being sold to customers directly or inside of modules.
Dan Fleming (Chief Financial Officer)
Thank you. Yeah, Tom, we for the full year outlook that we provided, which is revenue growing at 80% plus year over year, a component of that is our entire optical portfolio, which we described three different legs of which we expect to each be over 100 million. So as you say, it's, you know, the discrete optical DSPs over 100 million in the year and Zero Flap Optics over 100 million in a year. And the silicon photonics ticks over $100 million per year. So it is in the overall yearly guidance. And if you kind of break that down or dive into that a little bit deeper, what you'll see is based on that guidance, if you look at absolute dollars year over year expectation for fiscal 27, about half of that growth in absolute dollars is coming from our optical portfolio, and about half of that is coming from our existing copper portfolio, predominantly AECs, but also retimers, just to be clear, Tom, the three categories that Dan just described, in total, we are expecting more than $600 million of revenue contribution. So each one will each contribute more than 100, but in total it'll be more than 600 million.
OPERATOR
Your next question comes from the line of Tor Svanberg with Stifel. Your line is now open. Please go ahead.
Tor Svanberg (Equity Analyst at Staefl)
Yeah, congratulations on another record, maybe to follow up on the optical revenue for fiscal 27. So, Bill, I mean, I get it right? I mean $100 million plus, but you are guiding to 600 million total plus. So which which one within the three segments, you know, skews higher because obviously one of them is going to have to be significantly more than and $100 million.
Bill Brennan (Chief Executive Officer)
Thanks. I think the important message there is that we're going to see growth broadly across the three segments. You're right that there will be one that has the largest revenue. But I think that we can clearly state that all three categories are growing very quickly, in fact more than the growth that Dan guided for the whole year. Right. So each one of these categories independently is going to grow more than 80% year over year.
OPERATOR
Your next question comes from the line of Joseph Cardoso with J.P. Morgan. Your line is now open. Please go ahead.
Joseph Cardoso (Equity Analyst at JP Morgan)
Hey, thanks for the questions. Maybe another one on the guidance. But thinking about it, from a first half versus second half dynamic, how should we think about the largest contribution of growth from a portfolio portfolio perspective from a half over half basis including AECs, the optical solutions, et cetera, as we progress into the second half? And then as a second part of that question, like how should we be thinking about the implications to margins as these inflect into the back half? Thank you .
Dan Fleming (Chief Financial Officer)
So similar to how I described the absolute dollar contribution of growth in the first half of the year, you know, we guided mid single digits between our Q1 guide and you can expect something similar in our Q2 guide when that comes. That's largely driven by increases in our current portfolio that has ramped substantially, which is AEC predominant. But in the second half as we described, a lot of that inflection is being driven by our optical portfolio, which is again just to reiterate, zero flap optics ramp plus silicon photonics ramp plus our existing optical DSP portfolio gaining significant traction this year versus fiscal 26.
OPERATOR
A reminder, if you would like to rejoin the cue to ask a follow up question, please press star one on your telephone keypad. Your next question comes from the line of Sean o' Loughlin with TD Cohen. Your line is now open. Please go ahead.
Sean O'Loughlin (Equity Analyst at TD Cohen)
Hey guys, congrats on the results and the guidance. Thanks for letting me on to ask a question. I wanted to ask about the supply side of things. I think it's required that at least one of us ask about supply on every earnings call. Now back at OFC, we had talked about some of the work you were doing to secure some of the supply for the ZF optics ramp. Maybe if you could just talk about any updates there and then if there's anything notable as well on the AEC side, would be great to hear about the supply situation there. As well.
Bill Brennan (Chief Executive Officer)
Generally speaking, I think that supply chain discussions are going to become or stay popular throughout the next year or even longer. There is a significant tightness in the supply chain and that's why it's important to understand the, you know, just the capability and the depth that we've got both on the silicon operations team as well as our systems operations team. And that includes AECs and ZF optics. So starting with ZF optics, owning the entire bill of materials basically and being responsible for sourcing that and being able to lean in and basically get capacity commitments based on us leaning forward, leaning in to making an investment in each area, we feel confident that we're going to achieve a very aggressive ramp in the second half of our fiscal year and even more than double or triple that the following year. So we feel very good about the commitments that we've got in place across the board from the supply chain that contributes to ZF Optics. And of course that's beyond the silicon that we're building now. From a silicon side, we have a very diverse set of products. From the perspective of process geometry. Right now, 12 nanometer is a workhorse. A lot of the AECs that we're shipping are using 12 nanometer for all the 100 gig per lane. We also are transitioning for optical DSPs into 7 nanometer for 100 gig per lane. And we've got a program in flight in 5 nanometer that will be significant volume. And then for all of our 200 gig per lane products across the portfolio, we're using 3 nanometer. And I can say that's probably pretty consistent throughout the industry that if we talk about the 1.6t market that I don't think we're going to see anybody in 5 nanometer. We'll see the bulk of the production happen in 3 and, and possibly a shift to 2 over time to respond to the need for lower power. For us, we're going to deliver very low power at 3 nanometer, as you would expect. Now, there's been a lot of discussion about 3 nanometer overall capacity and supply chain issues. We've got an extremely close relationship with our supply chain partners and I think there's a strong understanding that clusters don't get built without the small complementary connectivity chips that we build and that we embed into our system level products as well. So I feel quite good, I mentioned on the last call that I feel feel good about our position and it's really based on the fact that this is something that over the last five years we've invested heavily and not just in resources but also dollars in making sure our supply chain partners understand our commitment.
OPERATOR
Your next question comes from the line of Quinn Bolton with Needham. Your line is now open. Please go ahead.
Quinn Bolton (Equity Analyst at Needham)
Hey guys, thanks for taking my question. I just wanted to ask, maybe cut
Bill Brennan (Chief Executive Officer)
the revenue a different way. Do you guys expect any meaningful revenue in fiscal 27 from scale up or do you expect the vast, vast majority still to be scale out? And if scale up is beyond 27, when would you think scale up becomes potentially meaningful contributor to revenue? I would say fiscal 27 there is scale up revenue, but it is going to represent the beginning of the round. I think we see fiscal 28 as being more substantial, but it really boils down to the different architectures that are being considered. It boils down to each customer and their own individual strategy around how do they solve that bandwidth opportunity or that bandwidth challenge for scale up. And so we very much view that all of the hyperscalers and NEO clouds for that really represent their own individual markets. And so we're very, very focused customer by customer and our portfolio is going to be deployed differently for each one.
OPERATOR
Your next question comes from the line of Carl Ackerman with PNP Paribas. Your line is now open. Please go ahead.
Carl Ackerman (Equity Analyst at PNP Paribas)
Great, thank you. Hey Bill, I was hoping you could thinking about the demand opportunity for CPU based AI servers for inferencing tasks. Should we assume a similar net-to-total catch rate for custom basic synergistic CPU servers relative to the GPU based servers you address today? Thank you.
Bill Brennan (Chief Executive Officer)
I think from an expectation standpoint, when we talk about training and we've talked about inference and now we're talking about edge AI, all of them are deployed in different ways and all of them represent a great connectivity opportunity for us. I think from the standpoint of edge AI, I think it is really a great opportunity from the standpoint of more front end connections and depending on architectures it could go beyond that as well.
OPERATOR
Your next question comes from the line of Sebastian Najee with William Blair. Your line is now open. Please go ahead.
Sebastian Najee (Equity Analyst at William Blair)
Good afternoon. Thanks for taking the question. You guys have announced a number of partnerships with smaller NEO clouds. It seems like CREDO is diversifying even beyond your core five hyperscaler customers. So could you maybe help frame for investors how big an opportunity these tier 2 cloud customers could be for Credo? Could they represent 10 or even 20% of total revenue over the next few years? Or is that too aggressive just given how strong hyperscaler demand is?
Bill Brennan (Chief Executive Officer)
Any Color there will be great. Absolutely. This is one of the biggest trends that we're encouraged by this emergence of the NEO cloud ecosystem. So historically, as you mentioned, a lot of the AI infrastructure investment was concentrated within five and now six hyperscalers. We're seeing a great growth in the number of NEO cloud providers that are building AI infrastructure platforms to support a broad range of applications, from model developers to enterprises to sovereign AI and inference workloads, even agentic. These operators are maybe the perfect customer for CREDO in a sense that they meet, they move, they move very quickly, they are deploying very optimized architectures and they put a huge emphasis on network performance, reliability and also time to deployment. All of these things make them financially more successful if they could do a good job with it. So we think that the neoclouds are going to represent a growing and more meaningful opportunity for CREDO over the coming years. And I do think you're right that we can, we can. If we looked at that group of customers collectively, I definitely think it could be on the order of 20%.
OPERATOR
Your next question comes from the line of Suji Da Silva with Roth Capital. Your line is now open. Please go ahead.
Suji Da Silva
Hi Bill. Hi Dan. Congrats on the strong results here. Trying to get some understanding of the relative growth maybe of the copper based products versus optical. Copper is still a large part of the mix, but optical is coming out strong here the next few years. Just wanted to ask maybe would you
Bill Brennan (Chief Executive Officer)
expect that possibly optical with all the tailwinds can cross over into the kind of half of the revenues? Half, half. Or is that not the right expectation for a multi year growth path? I think that eventually we could see optical and copper products in our portfolio to eventually we could get to 50, 50 for sure. I think if you look at the market size in general, we're doing extremely well in AECs. And there's as I mentioned earlier, I think there's long term growth case to be made. We feel very strongly about where the market's going and our position in the market and the products that we're bringing forward, especially as the market transitions from 800 gig to 1.6 t. So it's going to be a lot of great dynamics within the AEC market. But look, if we look at the overall market size for opticals just, just with pluggables alone and we can have that pluggable versus CPO or NPO long term discussion. But if we look at the long term market for pluggables, it's significantly larger than the AEC pluggable market. So yes, I think we can make a case where we will achieve 5050 and I could make the case just based on market size and penetration with the market that optical could actually see copper in the upcoming years.
OPERATOR
Your next question comes from the line of Blaine Curtis with Jefferies. Your line is now open. Please go ahead.
Blaine Curtis (Equity Analyst at Jefferies)
Hey, good afternoon guys. Thanks for sharing my question wanted to ask about the four 10% customers. I don't know if you're willing to give the numbers, but maybe just speak to some of the lumpiness that you've seen in the past and whether that'll impact the first half of this year. And then if you can also address just those customers moving to the next products and kind of the growth trajectory you said three or four would contribute, just relative confidence on, that would be great.
Dan Fleming (Chief Financial Officer)
Yeah. So as we mentioned in our prepared remarks, we had four 10% customers in Q4. They ranged from a high of 34% down to 10%. The three largest customers in Q4 were the same customers that were the largest in Q3 as well. So it's 34% for the largest, 27% for the second largest, 16 for the third, and notably the fourth customer which was at 10%. They were not previously a 10% customer during fiscal 26. As you mentioned, Blaine, there is some, you know, quarter over quarter variability with any given customers this quarter. I would say it wasn't huge variability that was driven, but there could be some of that going forward. We have seen that certainly in the past. But one of the key takeaways is we expect increasing diversification in fiscal 27 and it's really based on our current customer engagements and we continue to diversify with multiple large hyperscale customers. And as Bill just described, with NEO clouds they are, we expect them to become an important and sizable contributor in revenue in the upcoming quarters and years.
OPERATOR
Your next question comes from the line of Vijay Rakesh with Mizuha. Your line is now open. Please go ahead.
Vijay Rakesh (Equity Analyst at Mizuho)
Yeah. Hi guys. Good to see a strong continued ramp here in Beat. Just a question back on the 1.60. Obviously that should drive good content increase. ASP increase for you with the 200 gig per lane. When you see that ramping, is that more like into next year? Can you get some color on that? And on the ZF optics side, do you see that also gaining traction on the 1.6 psi? And if you can give us some color on how many customers in ZF optics now.
Bill Brennan (Chief Executive Officer)
Thanks. So first on the transition from 800 gig to 1.6 16. Of course the timing is going to shift a lot about the deployment of Reuven and really each each of the customers individual strategies. Some, some will be very delayed, some will be first to deploy. But I think the, the exact timing of the transition will move somewhat as the platforms evolve. But the underlying bandwidth requirements I don't think change. It's important to recognize that customers are designing for flexibility in many cases system architectures that support 1.2 bandwidth when they come to market. Typically we'll see customers building flexibility on the rest of the ecosystem of connectivity. So we see a lot of our customers designing two physical ports for each GPU and in the case of 1.6T, one option would be to deploy in each port four lanes of 200 gig signaling. Another risk averse way of going to market would be to deploy two ports with eight lanes of 100 gig. And so for us that allows customers to manage deployment timing while preserving future upgrade paths. So not everything has to come at once. There's a huge trade off on overall supply chain as well as maturity as it relates to different connectivity products. For our perspective, we participate both. We have Strong positions in 100 gig per lane deployments today. We can continue supplying that at very high volume. We are also invested heavily in 200 gig per lane. So we're ready to go from the standpoint of AECS and ZF optics now as it relates to optical DSPs. Yes, we've got several customer engagements and from a cycle pick perspective, same thing. But we don't ultimately control the outcome of when those transceivers go to go to market. And so it's, it's hard to talk about the precise timing of the transition but we're bullish on the long term opportunity whether it's 800 gig or 1.6 t. The dynamics as we go to 1.6 t as we've talked about is we'll as the rest of the industry will experience an uplift in ASPs. So hopefully that answers your question. If I could just summarize at a high level, I think our fiscal 27 will have relatively light revenue as it relates to 200 gig per lane. And that is just a function of the fact that the industry hasn't seemed to get there quite yet. And you know, there's always a rumor about delays. If we are going to make a shift and the industry is ready, we're ready right now. We're absolutely confirmed from a the standpoint of being ready for production on all of our copper as well as Optical system level products as well as component level products.
OPERATOR
Your next question comes from the line of Janko Venter with ARET Research. Your line is now open. Please go ahead.
Janko Venter (Equity Analyst at ARET Research)
Hi, James, thanks for taking my question. Look, you're very well capitalized right now. As you presented in the prepared remarks, you've undergone strategic investments with Das Photonics. You've added Cipher to the portfolio. It's being integrated into your ZF Optics portfolio as well as being a standalone opportunity which you're putting to work in the coming fiscal year. So can you perhaps help us understand how you're thinking about putting the capital on the balance sheet to work and how you will be approaching further strategic investments?
Dan Fleming (Chief Financial Officer)
Yeah. Let me, let me first state that we have no current plans to raise any capital, additional capital at this point, nor do we plan to do a share buyback. Goes without saying. You know, one of our goals that we laid out in the past, particularly when we did an ATM a couple quarters ago, is that we want to maximize our strategic flexibility. Four things, such as now we've done three acquisitions. And just to note, you know, that the Dust Photonics acquisition closed last week. As I'm sure you saw, the net cash amount that you'll see in Q1 that went out the door in Q1 was about 750 million. And of course, we ended Q4 with 1.4 billion in cash. But that's against the backdrop of being in a very strong cash flow position where cash flow from operations is, you know, approaching $200 million per quarter now. So as we exit Q1, we're very comfortable in our cash position and we expect, you know, there will be times where there will be opportunistic acquisitions that we may entertain from this point forward, but nothing immediately that we're looking at.
OPERATOR
A reminder, if you would like to ask a question, please press Star, then the number one on your telephone keypad. Our next question comes from the line of Tor Svanberg with Staefl. Your line is now open. Please go ahead.
Tor Svanberg (Equity Analyst at Staefl)
Thank you. Just a follow up, Bill. So if you think about the three optical businesses in fiscal 27, I mean, two of them, you know, the pick and the DSP, they've been sort of, I mean, they've been ramping, but, you know, ramping over time. Whereas ZF Optics obviously is more of a hockey stick ramp, at least that's the way I would position it. When you think about Weaver and ALC starting to ramp in fiscal 28, how should we think about those ramps in relation to the other three Just so we sort of get a feel for the trajectory of both those new product categories in fiscal 28.
Bill Brennan (Chief Executive Officer)
Sure. I will say that to give a little more color on your first question earlier, the ASPs on the discrete components, optical DSPs and cypho pics, those ASPs are typically two digit ASPs. On the, on the ZF optics, we're going to see three digit ASPs. And so I didn't mean to be a bit elusive or not answer your question, but I think the math clearly says that as we ramp ZF optics, that's going to be clearly our largest revenue contributor for our optical portfolio. Just the potential there is green. And what we're delivering is a solution to network reliability, which is something that is absolutely higher and higher priority with the customers that we work with now as it. Of course, I forgot the rest of the question. Sylvia. Yeah, Omni and alc and how should we think about those? Right. Oh yes, yes. Yeah, I got too focused on the near term. Sorry about that. Let me put things in perspective for ALCs. So that is a system level pluggable product, just like an AEC or just like a ZF optic. What it does is it brings the same AEC dynamics of our efficiency, cost efficiency, it's got a better form factor than aecs and it's got a much longer length. And so for certain customers that's going to be a really natural product to get, you know, from a design in and beginning of production. So the dynamic there can be very much similar to AECs in ZF optics in the sense that we can see large revenue quickly now as it relates to Weaver. Just let's use our first customer, Positron, as an example. They are redefining memory attachment and bandwidth for inference. So they announced their first product with a total memory LPDDR size of 2 terabytes. So that's more than 10 times any other inference engine that's been announced in the market. So game changing from the standpoint of performance. Now, if two terabytes are deployed, that requires many, many Weaver chips. And what I've said in the past is that the revenue contribution per GPU can be between 2 and $3,000. And so you can see that that product category will ramp very quickly as well as we've got customers that go into volume with their inference GPUs that utilize that solution.
Tor Svanberg (Equity Analyst at Staefl)
Just the caller I needed. Thank you.
OPERATOR
Your next question comes from the line of Jim Schneider with Goldman Sachs. Your line is now open. Please go ahead.
Jim Schneider (Equity Analyst at Goldman Sachs)
Good evening. Thanks for taking my Question. Given the accelerating growth you expect sequentially in the back half of this year, presumably driven by the optical portfolio, can you talk about any kind of changes you're expecting to see in terms of how Your customers deploy AECs in their environments or that growth just going to remain very strong off of an L database? Thank you.
Bill Brennan (Chief Executive Officer)
From the standpoint of say AEC customer diversity or growth, we're definitely seeing that AEC adoption is broadening across the industry and we very much feel like we're in the early innings or stages of penetration. So we're seeing a broad breadth of adoption. We've mentioned NeoClouds as a new customer category. It's really a perfect solution for those players that have architectures that will enable in rack and multi rack deployments, there is a trend towards more density, so there is definitely a trend towards more NEO clouds being able to use AECs. But I think that as we talk about that category growing, I think we can definitely say NEO Glass will be growing for the foreseeable future. Also, if we look at the hyperscalers, of course we've mentioned we're deployed and we're high volume with five of six now and I think that with all of them we've still got the ability to penetrate further into their networks. I don't think we can point to one where we're fully deployed other than other than xai. And so we see great growth opportunity for both hyperscalers and NEO clouds and I think it's really going to be a long term growth that we expect. I don't think it's going to be as fast growth from a percentage standpoint as what we're going to see in Optical, but it's going to be a continued growth driver for the company.
OPERATOR
There are no further questions at this time. Mr. Brennan, I turn the call back over to you.
Bill Brennan (Chief Executive Officer)
Thanks so much for the questions. I really appreciate the ongoing interest and support and look forward to the next time we talk.
OPERATOR
This concludes today's conference call. You may now disconnect.
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