Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. At that time, if you have a question, you will need to press star one one on your touchtone push-button phone. I would now like to turn the conference over to Dan O'Neill. Please go ahead, sir. Good afternoon. Thank you for joining our earnings call for the first quarter of fiscal 2025. Today, I am joined by Bill Brennan, Credo's Chief Executive Officer, and Dan Fleming, our Chief Financial Officer. As a reminder, during the call, we will make certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties that are discussed in detail in our documents filed with the SEC, which can be found in the investor relations section of the company's website. It's 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 or implied. 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 actual results or to changes in the company's expectations, 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 the 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? Welcome to our Q1 fiscal 2025 earnings call. I'll start with a review of our Q1 performance and then discuss our future outlook. Our CFO, Dan Fleming, will then provide detailed Q1 results and share our expectations for Q2. For Q1, Credo reported revenue of $59.7 million and non-GAAP gross margin of 62.9%. Our product revenues of $57.3 million were up 30% compared to the prior quarter, establishing a new quarterly record for the company. Product revenues were driven by rapidly expanding AI deployments. Credo is a pure-play, high-speed connectivity company. We deliver a differentiated set of solutions, including active electrical cables, or AECs, optical DSPs, Line Card PHYs, SerDes chiplets, and SerDes IP licenses for Ethernet port speeds ranging from 100 gig up to 1.6 terabits per second. The data center market is dynamic and evolving rapidly, which we believe will create even more opportunities for Credo. Although we are primarily targeting the leading hyperscalers, we are now observing increased spending by the next tier of data center operators. We see a group of emerging hyperscalers deploying an increasing amount of infrastructure to take advantage of opportunities presented by AI. With these customers, we find we have immediate credibility from our prior success with traditional hyperscalers, and that has indeed helped us to win new programs across our product lines. This is translating into material revenue across several growing customers. Notably, we expect to see a new 10% customer in Q2. Credo aims to extend its reach into new markets as data rates rise. Later this year, we intend to enter the 64 gig PAM4 PCIe Gen 6 market, offering retimer and AEC solutions that are optimized for signal integrity, latency, power efficiency, and cost effectiveness. Now, regarding our AEC product line, during the first quarter, AECs continued to be our main source of revenue, and we anticipate that AECs will play a crucial role in driving growth in fiscal 2025 and beyond. Today, we're in production with solutions for port speeds up to 800 gig, and we expect to deliver power-optimized three-nanometer products in 2025 for the 1.6 T port market. We've delivered AECs in a wide variety of form factors and with a range of functionality designed to meet the diverse needs of our customers. We think our approach of offering system-level products, blending customized hardware and software with fast turnaround time, is crucial to maintaining our competitive edge. And as a result, we've developed deep relationships with our customers to deliver very innovative AEC solutions. Based on these customer relationships, market feedback, and the inherent advantages of AECs compared to alternative solutions, we have seen AECs become the de facto solution for in-rack connectivity at 50 gig per lane speeds and above. In addition, increasing rack power densities and the migration to liquid cooling are effectively reducing the physical lengths required for back-end network connections and thereby increasing the opportunity for AECs. During Q1, our existing and new customer relationships continued to expand and develop, providing us with more confidence in the growth prospects of our AEC business going forward. Given that, we continue to expect our ramp of AECs to drive an inflection point in our sequential growth in the back half of fiscal 2025. Now I'll turn to our optical DSP business. I'm pleased to report we're making continued progress with our optical DSP business on multiple fronts, with AI deployments accelerating adoption of Credo solutions. Our optical module customers ship AOCs and transceivers based on Credo DSPs to both U.S. and international end customers. Based on Q1 results and our outlook, we remain on track to achieve our goal for optical DSPs to be at least 10% of our fiscal 2025 revenue. Beyond our existing production programs, we remain excited about future growth prospects in this category for several reasons. We are currently working with numerous optical module manufacturers to develop AOCs and transceivers, and notably, we've secured our first design win with an industry-leading module manufacturer. Last fall, Credo introduced the concept of LRO, or linear receive optics, which maintains a DSP only in the transmit path of an optical module as an innovative way to reduce power in both 800 gig and 1.6 T optics. The LRO concept is increasingly being adopted within the industry, and a new hyperscaler has decided to implement this strategy in their architecture. This application will target 800 gig module power of less than 10 watts, significantly below the typical 15 watts seen with full DSP architectures. We expect to start seeing LRO deployments in calendar 2025. At 800G and 1.6T port speeds, we see energy efficiency becoming a more critical factor as power delivery and cooling infrastructure becomes even more challenging. Notably, power efficiency drove our decision to move directly to 3 nm for Credo's 1.6T DSPs, and we plan to tape out power-optimized solutions with both full DSP and LRO options later this calendar year. Taking into account customer feedback and rising momentum, we anticipate sustained growth in our optical business. Now, regarding our Line Card PHY business. In the first quarter, our Line Card PHY business was once again an important contributor to our overall product revenue growth, driven by strong contributions from 400G and 800G solutions. Our Line Card PHY revenue comes from retimer and MACsec encryption products for port speeds up to 1.6T per second. In this segment, our customers include networking OEMs for traditional switching applications, and more recently, server ODMs for emerging AI appliance applications. We see new demand for our Line Card PHY solutions within Ethernet-based AI appliances for scale-out networks, as rapidly increasing GPU performance places greater signal integrity demands inside the server. These emerging opportunities, combined with traditional switch opportunities, should lead to TAM growth into the future for our LineCard PHY solutions. Lastly, I'll review our SerDes licensing and chiplet businesses. We continue to make progress with customers and expand our funnel within our SerDes IP licensing and chiplet businesses. For fiscal 2025, while we continue to expect quarterly variability due to the nature of revenue recognition, we see growth opportunities driven by a combination of license, royalty, and chiplet revenues. With connectivity speeds rising, fueled mainly by the needs of AI applications, Credo is poised for future growth. We offer a wide range of SerDes solutions up to 224 gig speeds in a wide range of process geometries, from 28-nanometer to 3-nanometer. We continue to win due to our compelling combination of performance, power, and exceptional technical support. To summarize, I'm very pleased with our team's performance in Q1, specifically in terms of the strong execution of our product ramp and our ongoing success engaging with customers. The rise of generative AI is driving greater demand for cutting-edge, power-efficient, high-speed connectivity solutions, and Credo is dedicated to advancing our range of solutions to address this growing demand. This month, Credo will have strong presence at the CIOE Optical Conference in Shenzhen, followed by the ECOC Optical Conference in Germany. We expect these events will add to the momentum we've built since OFC in March, and next month, we'll be very visible at the OCP conference in Silicon Valley, showcasing a wide array of advanced solutions for AI clusters. Moving forward, we continue to see an inflection point in the second half of fiscal 2025, driven by existing and new customer engagements across the entire range of our connectivity solutions. I'll now turn the call over to our CFO, Dan Fleming, and he will provide additional details. Thank you, Bill, and good afternoon. I will first review our Q1 results and then discuss our outlook for Q2 of fiscal 2025. In Q1, we reported revenue of $59.7 million, down 2% sequentially and up 70% year- over- year. Our IP business generated $2.4 million of revenue in Q1, down 14% year- over- year. IP remains a strategic part of our business, but as a reminder, our IP results may vary from quarter- to- quarter, driven largely by specific deliverables to pre-existing or new contracts. While the mix of IP and product revenue will vary in any given quarter over time, our revenue mix in Q1 was 4% IP, below our long-term expectation for IP, which remains 10%-15% of revenue. Our product business generated $57.3 million of revenue in Q1, up 30% sequentially and up 77% year- over- year. Our product business, excluding product engineering services, generated a record $53.8 million of revenue in Q1, 21% higher than our previous product record and up 32% sequentially. Our top two end customers were each greater than 10% of revenue in Q1. Our team delivered Q1 non-GAAP gross margin of 62.9%, just below the low end of our guidance range and down three hundred and twenty-three basis points sequentially as a result of the lower IP contribution in the quarter. Our IP non-GAAP gross margin generally hovers near 100% and was 96.8% in Q1. Our product non-GAAP gross margin was 61.5% in the quarter, up 784 basis points sequentially and up 472 basis points year- over- year, primarily due to increasing scale. Total non-GAAP operating expenses in the first quarter were $35.4 million, below the midpoint of our guidance range and up 8% sequentially due to a fourteenth week in the quarter. Our non-GAAP operating income was $2.2 million in Q1, compared to non-GAAP operating income of $7.5 million last quarter. Our non-GAAP operating margin was 3.7% in the quarter, compared to a non-GAAP operating margin of 12.3% last quarter, a sequential decrease of 8.6 percentage points. We reported non-GAAP net income of $7 million in Q1, compared to non-GAAP net income of $11.8 million last quarter. Cash flow used in operations in the first quarter was $7.2 million, down sequentially, primarily due to changes in working capital, driven by our ramp in product shipments. CapEx was $5.9 million in the quarter, driven by R&D equipment spending. Free cash flow was -$13.1 million, a decrease of $32.4 million year- over- year. We ended the quarter with cash and equivalents of $398.6 million, a decrease of $11.4 million from the fourth quarter. We remain well capitalized to continue investing in our growth opportunities while maintaining a substantial cash buffer. Our Q1 ending inventory was $31.6 million, up $5.7 million sequentially. Now, turning to our guidance. We currently expect revenue in Q2 of fiscal 2025 to be between $65 million and $68 million, up 11% sequentially at the midpoint. We expect Q2 non-GAAP gross margin to be within a range of 62% to 64%. We expect Q2 non-GAAP operating expenses to be between $36 million and $38 million. And we expect Q2 diluted weighted average share count to be approximately 182 million shares. As we move forward through fiscal year 2025, we continue to expect sequential growth to accelerate in the second half of the year. We expect non-GAAP operating expenses to grow at half the rate of top line growth, and as a result, we look forward to driving operating leverage throughout the year. With that, I will open it up for questions. Thank you. At this time, I would like to remind everyone that in order to ask a question, press star, then the number eleven on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. One moment for our first question. Our first question will come from the line of Toshiya Hari from Goldman Sachs. Your line is open. Hi, good afternoon. Thanks so much for taking the question. My first question is on the AEC business and how we should be thinking about the acceleration in growth you guys spoke to as it pertains to the second half. Bill, I think on past calls, you've talked about, you know, your second customer ramping in the AEC space and, you know, your engagements with additional customers in that space as well. Can you kind of speak to the key drivers that you see contributing to the acceleration in growth in the second half of the year, and how you're thinking about, you know, your AEC opportunity outside of in-rack connectivity as you move into calendar 2025 and 2026? Sure. So I'll start with, you know, I think we're pretty happy with the fact that AEC adoption is continuing pretty broadly. It has really become the de facto standard for the lengths that we address, which is primarily in-rack at this point, but may expand to rack-to-rack, five- to seven-meter cables in the future as we see rack densities increasing. So as that happens, you know, typically, you know, connections that were made with 10-meter to 20-meter optical solutions can now be made with five- to seven-meter AEC solutions. So we do see, you know- ... broad adoption continuing, and it's really with U.S. hyperscalers, global, global hyperscalers, what we introduced a new term with emerging hyperscalers, as well as service providers. So I think as we stand right now, we're really well positioned to see future growth with both four hundred gig and eight hundred gig AEC solutions that are, you know, in development now, engagements with customers. And in the future, as there's a move towards 1.6T, I think we'll be in a really good position to address that market, especially because we'll really bring, you know, much differentiated power compared to competitors. Now, I will say that as Ethernet backend networks are becoming more mainstream, we're seeing a focus shift within our customer base to really network quality. And it's important to point out, when they have a single hardware failure or a link flap, it can cost thirty minutes productivity and really cost them tens of thousands of dollars. And so if they look at the Pareto of things, you know, that would make their clusters more efficient, you know, having solutions that have really high reliability is becoming really a primary objective. And so when we think about, you know, AECs with a mean time before failure of a hundred million hours and bit error rates of five orders or more better than IEEE requirements, and the fact that we've had, you know, billions of operating hours that will be flapless in a sense, there's really what we see as a shifting priority to move to these solutions, to move these active copper solutions. And so, you know, to further that, you know, as I mentioned before, you know, I think there's a desire to even, you know, figure out networking topologies that allow them to make a portion of the back-end network connections with longer five- to seven-meter AECs that span two to three racks. You know, ultimately, I think we see this, you know, really driving an uplift in the AEC market and an expansion of the TAM long term. Anyway, I hope that gives you color. We're quite bullish on the space. Yeah, that's really helpful. Thanks, Bill. And then as a quick follow-up on the optical DSP side of your portfolio, it's really nice to hear the customer traction. I think you guys reiterated that for fiscal twenty-five, it should be more than 10% or at least 10% of your business. Longer term, given your current you know engagements, the customer back and forth you're having, you know what are your market share aspirations in this business? I know you're playing the role of disruptor, but curious how you're thinking about your market presence over time. And then within the context of LROs, I think on the last call, you talked about 1.6T potentially being a catalyst for increased adoption. Is that still the case? And if so, is that pretty much a 2025, 2026 dynamic? Thank you. Sure. So I'll say that we're, you know, we're quite happy with the Optical DSP business. We are on track to achieve the goal that you reiterated, which is 10% or higher of our fiscal 2025 revenue. For sure, we're building momentum. When we think about our position in the market today, there are more than 2 million modules with Credo DSPs that have been deployed in data centers. And this fiscal year, we'll ship more units than we've shipped in all previous years combined. So there is real momentum that is building. We've got programs identified that will drive sustained fast growth in fiscal 2026 and beyond. And the bottom line is, as we sit here today, we've got a compelling set of solutions at 50 gig and 100 gig per lane, you know, ultimately measured by signal integrity, power, and cost. You know, so I think that the stage is set, you know, for there to be continued momentum that Credo builds in this market. From a market share standpoint, you know, we're still small and rising, and the bottom line is it's one design at a time. Converting one customer at a time is really the focus. And, you know, as I mentioned earlier, we feel very, very good about engaging in a first program, and it will lead to multiple programs with a module manufacturer that's previously been considered a lock for the incumbent DSP competitor. The competitive landscape is shifting. And, you know, the bottom line, as we look towards the 1.6T market, we're gonna deliver both full DSP and LRO solutions. And the key here for us is to deliver, you know, kind of a new definition of what competitive is for power. We believe we're gonna, you know, deliver a full DSP solution that's on the order of half the power of the devices that have been introduced into the market, really, almost prematurely in a sense that the power is so high in comparison to what the optical module market is looking for. And so, we're agnostic as it relates to full DSP and LRO. The bottom line is we'll deliver a full DSP at the 1.6T speed that ultimately is in the 10-watt range or less, and that will enable any optical player to actually build a, you know, a standard OSFP or QSFP-DD and fit within the power ceiling there. We'll offer options with LRO to take it even further down from an energy efficiency standpoint, so we'll ultimately let our customers make that decision. Thank you. Thank you. One moment for our next question. Our next question come from the line of Tore Svanberg, from Stifel Nicolaus & Company. Your line is open. ... Yes, thank you. Bill, you just said something that caught my attention. You said you're gonna ship more DSPs in fiscal 2025 than, you know, all previous years. I mean, obviously, that includes the AEC business, but can you just elaborate a little bit on that? Because that seems like a pretty high number. The reference was not really in regards to AECs. This is really in reference to our optical DSP business. And so, you know, I will say that we continue to be engaged with first US hyperscaler in production, as well as we see a return to spending in, you know, the international space as well. And so I think that, you know, from our perspective, that's no surprise. I think we've alluded, you know, to the ramp that's gonna take place in this fiscal year, and I think we're well positioned to continue that in fiscal 2026. Got it. Now, thanks for clarifying that. My second question is, you mentioned penetration or entrance into the PCIe retimer market. Could you just talk a little bit about, you know, why now? I mean, clearly this is a market that's been around for a few years, but it seems to be expanding. So help us understand a little bit the timing of entering this market, and when should we expect some early revenues for Credo in this market? Yeah, so I think that we've, you know, we've talked about, you know, the intent to enter the PCIe market, specifically at the Gen 6 speed, which is sixty-four gig PAM4. We opted not to pursue the Gen 5 market, and we probably made a bad call on that. But we felt like, you know, from a SerDes standpoint, that, entering the market at sixty-four gig PAM4 will enable us to deliver the same kind of, you know, compelling benefits that we've brought to Ethernet, and really, you know, specifically at the fifty gig and hundred gig level. And so when we talk about signal integrity, we talk about energy efficiency, talk about having the lowest cost basis of any competitor in the market. And really, with PCIe, there's an opportunity here from a latency standpoint and a DSP architecture standpoint, for us to really be differentiated as well, in a sense of having a SerDes that's a full-blown DSP with latency numbers that are, you know, much lower than competitive solutions that have been announced. And so we think the timing is right. I'll also mention that, you'll see us enter the market and then accelerate the market to Gen 7. We've already got 128 gig silicon that has been tested by a lead partner in the market. And so, you know, as we see AI driving the demand for higher and higher bandwidth, this is something we'll really lean into with PCIe. Thank you. One moment for our next question. Our next question comes from the line of Suji Desilva from Roth Capital. Your line is open. Hi, Bill. Hi, Dan. In terms of the customer concentration, you talked about a new expected 10% customer in FQ2. I just wanted to get a sense if that customer is kind of starting from the ground floor in F1Q, or whether it's been a gradual growth. I just don't understand the contribution from that new ramp. Yeah, sure. This is not a new customer. This is a customer that we've worked with for, you know, going on a couple years now. And so we've, you know, we've seen that, you know, they've been really receptive to the solutions that we're delivering. And as their spending plan has increased, we've seen them become a much more significant customer for us. But yeah, they've been a customer in the past, but we're encouraged by the fact that, you know, this would be one that we would consider an emerging hyperscaler. And we've talked about in the past how, you know, the market, you know, really driven by AI solutions, you know, starting to look like more than just the top five U.S. hyperscalers. And so I think this is like a first mover of the emerging hyperscalers. But we've been in a good position, and we're in a good position with others as well, from the standpoint that they've adopted an architecture that deploys AECs. Okay, Bill, good to hear the customer base diversifying. And then, you talked a little bit about the opportunity as racks densify, if you would, and being able to handle closer racks and shorter reach. Can you just give us some sense of metrics and kind of the cooling technology, maybe the Hopper to Blackwell transition that makes that possible, and some of the metrics to think about in terms of how the TAM increases for you guys? Yeah, sure. You know, I think we've all seen, you know, what leading-edge solutions look like and the increase in densities that you're seeing just with that transition that you mentioned. You know, but I think from our perspective, this is really gonna be a customer-by-customer architecture decision. But, you know, theoretically, we could see the TAM expanding within a customer if they, you know, deploy a solution that, you know, implements rack-to-rack AECs. We can see a, you know, a doubling in TAM easily, you know, when we look at it from that perspective. Thank you. One moment for our next question. Our next question comes from the line of Matt Ramsey from TD Cowen. Your line is open. Hey, guys, it's actually Sean O'Loughlin on here for Matt, and he sends his regards, but we'll get to that later. I wanted to ask a quick question on the optical DSP sort of product engagements. You mentioned the module maker, which sounds like really positive momentum there, but I do- Is this my naivety or should I be surprised that there's not more sort of connectivity between you guys and the hyperscaler customers themselves on the optical DSP solutions, given you have the relationships at the AEC level, and it's such a, you know, important power-level conversation? Is there any engagement on the hyperscaler side that's kind of helping you maybe get pulled into some of these module maker designs? Absolutely. Yeah, we've talked about this in the past, but this is a market that's a bit unique in a sense that, you know, if you only engage with the optical module manufacturers, you really aren't, you know, guaranteed anything, and so we've, you know, had a multi-year effort in working directly with hyperscalers, and we've been successful with some of them in even, you know, doing a joint development program where they specify the DSP that is to be used, but this is really an ongoing effort. It's really a three-party conversation between hyperscalers, module makers, and Credo, and so that's very much part of our strategy. You know, from the standpoint of breaking it down, you know, we actually, you know, on a weekly basis, internally, we break it down, you know, per hyperscaler as it matches up with module makers. So it's a very, you know, focused strategy that we've got. Got you. Yeah, that's really helpful. And then just one clarification on the IP license revenue. I think last quarter you had mentioned that you expected that to come in sort of at the higher end of the long term or the, you know, the long-term model. But license revenue, obviously, is lumpy and came in a little lower this quarter. Is that still your expectation for the full year, or, you know, are we just thinking about it incorrectly? Thanks, guys. Yeah, for the full year, our expectation hasn't changed, so we expect it to be in that long-term range of 10%-15% for the full year. And you're right, in that it was lighter than expected at only 4%. And as the quarter evolved, it was offset by, you know, strong SerDes bookings within the quarter to offset the lightness. But you're thinking about it right. As you say, it's very hard to - it's hard for us to forecast IP in 90-day increments, but we do have confidence over a longer period of time, like fiscal year 2025, that we'll be within that range of 10%-15%. Thank you. One moment for our next question. Our next question will come from the line of Karl Ackerman from BNP Paribas. Your line is open. Hi, two. Thank you very much. Gentlemen, first off, I wanted to discuss how, you know, active copper cables have received a lot of attention recently, which use a redriver instead of a retimer that's used in active electrical cables. Each, of course, has their own trade-offs, but do you view these applications cannibalistic to each other, or is the market opportunity for passive copper cables large enough for both applications? And as you address that question, how might using an AEC with a half-retime DSP improve the power and cost between perhaps active electrical and active copper cables? And I have a follow-up. Thank you. Yeah, so we see the market for passive coppers as well as what you referred to as active or ACC or what we refer to as amplified solutions. We see the market for both of those not being big long term. As it relates to, you know, some of the references in the market to ACCs, I think that's really been driven by, you know, NVIDIA's strategy. And so it's really not something that I would say is a broad market, you know, type of opportunity. And you know, even with the introductions that they've made in the past three to six months, I think it's questionable as to what role ACCs will play or amplified solutions will play. You know, the key is that we don't see anybody in kind of the rest of the market, meaning hyperscalers that are looking at building their own ecosystems. We don't see really anybody considering those solutions. And the reason is because really not following industry standards at this point. So when we talk about interoperability and we talk about you know, basic things like signal integrity, you know, having the AEC or the fully retimed, fully equalized solution, you know, that's really the way you deliver you know, the kind of you know, the kind of interoperability, the performance that would be expected. So that's where we really haven't seen any competition, and that's globally, really, especially at the hundred gig per lane level. As it gets to 200 gig per lane, 1.6T, I think it plays even a smaller role, and that's, I think generally in the market, you know, the game is over. You know, fully retimed AECs are, are really the choice by the, by the broad market, and, you know, when I refer to de facto, that's really the only solution that's being considered, by many of the customers that, that we talk to, and so, you know, we can kind of go down the path of doing LRO for, for AECs. That has, has not really been a priority for the customer base, just because the power levels we're delivering, are, you know, meeting the objectives, but the opportunity, you know, would exist in the future if that becomes a priority amongst our customers. ... Yep, very clear. Thank you for that. I wanted to focus back on licensing revenue. I know it's hard to predict, but is there a seasonality component to the consumer USB licensing revenue? And I guess, you know, more importantly, you know, has your view changed at all on, you know, the licensing revenue being, you know, toward the 10%-15% of your fiscal year revenue in fiscal 2025, and perhaps others can look for fiscal 2026? Thank you. Yeah, I would say we have not witnessed any sort of seasonality with IP revenue. When in fact, if you look at the last five quarters, it goes, you know, each quarter is quite different than the last in terms of revenue mix or revenue contribution in total. So, it's really difficult to draw too many conclusions from that. Again, as we've said in the past, we view IP as a very strategic imperative for us, where we're not incentivized to chase low-value deals. We wanna make sure that we get a good ROI on all the IP that we sell, and we win, where power tends to be an overriding feature that's required in the solution. It's tough to predict quarter- to- quarter, as we all know. Longer term, you know, we've stated 10-15%. We think that'll be that way this year. Next year, we haven't talked about, but I would expect that would be the case as well. Longer term, when we're talking about much bigger shipments to customers with products, ultimately, that will probably we'll reset that expectation, probably lower in the future, maybe FY 2027 and beyond. Thank you. One moment for our next question. Our next question comes from the line of Thomas O'Malley from Barclays. Your line is open. Hey, guys, thanks for taking my question. This one's for Dan. I just wanna be a little bit more specific on a question that's kind of come up a couple of times here. So in the July quarter, product came in much better and licensing came in much lower. Could you just describe first, you know, what drove that product uptick? And also, if you look at the gross margins, they were, they were much better as well. I know you said volume on the call, but I'd be surprised if volume drove all of that. And then looking into the October quarter guidance, like, is your assumption that IP goes back to that kind of $10 million a quarter range, just because that obviously matters for what product does in the out quarter, and I think that's what people are trying to figure out. Both of those would be super helpful. Yeah. So, as far as product being a little stronger than normal, it's ordinary that we have some amount of turns bookings, so they came in stronger than we would have expected entering the quarter. So, and there's nothing, you know, nothing really unanticipated or to talk about in terms of what it was versus what we already talked about. You know, our largest AEC hyperscale customer contributed very significantly to the quarter, and, you know, we expect them to really drive the ramp throughout the fiscal year. So, maybe I could talk about gross margin impact as well, since you mentioned, you know, that expansion of gross margin at the product level. So that's kind of from my perspective, that's one of the, really, the headlines for Q1 or one of the key takeaways. If you look at product gross margin, you know, excluding product engineering services, it was up over nine hundred basis points sequentially to 59.6%. So recall, though, for last quarter, we had mentioned that we had some one-time reserves in our Q4 number, so that lowered the product gross margin in Q4 a bit. But we're very happy in Q1 with the excellent progress we've made toward our long-term gross margin expectation of 63%-65%, which has not changed. And as I've mentioned in the past, you know, our long-term model, if you solve for the IP portion being 10%-15% versus product, that means the product gross margin needs to be right around 60%. We're in Q1. We were already in that same zip code. Throughout FY 2025, you know, we expect to see some quarterly fluctuations you might see, but it really is. It's driven by scale. There's, of course, some product mix impact as well, but the overarching impact of improving margins this year, thematically, is improving scale. You know, 32% was the sequential increase from Q4 to Q1 in terms of product shipments. You do gain a lot of scale in that when that occurs. And then just the second part about your expectations embedded in the guidance, you're kind of saying 10%-15% for the year still, obviously lighter in Q1, so you would expect some acceleration, but just what is your expectation for October? Yeah. So for October, for IP, you might expect it to be, you know, a slightly larger contributor to revenue than it was in terms of revenue mix than Q1. But, you know, but as you saw in Q1, one of the important takeaways is, in order to achieve our gross margin targets that we set out, in Q2, we don't need an oversized contribution of IP. That's not critical for us to achieve the gross margin goals. But, but expect IP to contribute modestly more to our revenue mix in the quarter in Q2 than it did in Q1. ... Thank you. One moment for our next question. Our next question will come from the line of Quinn Bolton from Needham. Your line is open. Hey, guys. Congratulations on the nice results and outlook. I guess, Dan, maybe to you know beat on the gross margin here a little bit. You know, would you expect product margins to decline in the October quarter? Because I'm struggling to sort of see why margins wouldn't be at least at the high end of your 62-64% range if product gross margins flat and IP is a you know slightly higher percentage of the mix in the October quarter. You know, it's, I understand where you're coming from for that question. The one thing I'll say is, you know, everything is not always linear for us. We had quite a big step up in gross margin percentage in Q1. We've proven over the course of time, it's not always linear. We don't have a specific expectation that that'll decline or decline by much. But, you know, we remain, our overarching theme is to remain conservative in the way we look at things and guide things. So, hopefully, that helps you a little bit, Quinn. Got it. Yeah, no, that does. And then just wanted to come back to the license and IP. I think, you know, in the script, you'd mentioned royalty as part of that IP business, and I know you had a big consumer license a few years ago. Wondering if you could just give us any update on specific royalties that you're looking for as part of that IP revenue stream. Does royalty become a, you know, something to call out here at some point over the next year or so? Or do you think most of that IP is from straight licensing of your SerDes, like it's been historically? Yeah, I think, I think you're right on with, you know, with the assumptions you're making on, you know, the royalty and, and as it relates to our USB customer. We think that, you know, as we think about things going forward, we don't think that's gonna be, you know, a part of the business that, there, you know, that we look at as, as kind of material in comparison to the licensing revenues themselves. So we think that, that the weighting is gonna still stay, stay the, the same in a sense, that the bulk of the revenues in this category will come from licenses. Thank you. One moment for our next question. Our next question comes from the line of Richard Shannon from Craig-Hallum. Your line is open. Great, guys. Thanks for taking my questions. Maybe a very quick two-parter for Dan here. You called out record product revenues, record a couple areas, but I don't think it was any AEC. Can you declare whether you had a record AEC quarter? And then also, can you give us percentages of the two 10% customers as well? Yeah. So we did have record product revenue. I mean, we don't break out, you know, by product line, but you can safely assume that AEC is a, you know, is a large driver of our story for the full year. So that was, you know, the most significant contributor to revenue in Q4. Turning to 10% customers, we had two 10% end customers in Q1, which I mentioned in the prepared remarks, and they were, in fact, our first two AEC hyperscalers of the quarter. When our 10-Q is filed, in a day or so, you'll see that our first AEC hyperscaler customer remained a 10% customer during Q1, right at 10%, and the second AEC hyperscaler customer was our largest customer at 52%. So, you know, we expect that second AEC hyperscaler to continue their meaningful ramp throughout fiscal twenty-five, as we talked about. Of course, it might not always be a linear ramp, but as Bill mentioned earlier, you know, we expect a new 10% customer in Q2. So even with a meaningful ramp at our second AEC hyperscaler, we expect significant revenue diversification from both a customer and product perspective, throughout the calendar or throughout the fiscal year, as that plays out. Okay, great. Thanks for that, Dan, and I'll follow up with a question for Bill here. Bill, I probably typed in incorrectly here in a response to an earlier question here, but you talked about some, you know, next-gen AI clusters and racks here, kind of moving away from, I think, if I caught you correctly, optics and moving towards the active copper in some manner here. Maybe you just drill into that a little bit more and maybe also comment on whether you think that is a dynamic that can sustain for more than one generation of systems that can go two or three generations. My suspicion is not, but I'd love to get your comment on that, please. Thanks. Absolutely. And so when we work with our customers more and more, and really listen to their challenges, one of the, you know, one of the big things that stands out is just the quality of AECs compared to the solutions that are laser-based optics. And again, get back to this link flap phenomenon that's been seen in AI clusters, and it's becoming more and more of a topic in the industry. Just to reiterate, if you've got a single connection- ... that fails, and even if it flaps, it just goes down and it comes back up, it can shut down the entire cluster, for up to 30 minutes, and ultimately measured in dollar terms, you know, $30,000-$50,000. And so if you have, you know, three to five of these episodes per day, it becomes something that you really want to pay attention to. And so as we, you know, as we work with customers, more and more, the, you know, the focus is becoming on network quality. And when we think about AECs, they just don't have link flaps like, like laser-based optics have. And so it's, you know, it's absolutely something that will benefit the AEC TAM long term. And so you've got this other factor that's happening where racks are being built in a much more dense fashion. And so now there becomes a possibility to you know, to network and you know, really connect racks and lean on you know, the very high high quality and reliability of the AEC products. And so you know, moving to an architecture where they're connecting not just in the rack, but rack to rack, and we're really talking five to seven meters. We're seeing much more activity along these lines. And so again, it's a customer-by-customer driven architecture objective, but you know, this is something that we see that you know, definitely is encouraging as it relates to you know, kind of a new factor that is driving demand this direction. I will say that, you know, in addition, you know, to what we're doing with our AEC family, we're also looking at other system-level solutions that quite frankly, you know, help to address, you know, some of these areas of feedback that we're hearing. So, you know, our experience in the AEC market has taught us a huge amount about these challenges, and we see potential to use this knowledge in the optical space, specifically to enhance AI cluster performance and energy efficiency. So, you know, you've seen innovations from Credo along the lines of LRO. That was specifically for power, but there's other things that we're working on to, you know, to help improve network quality. And that's not something I'm, you know, going to go into details about, but within the next, you know, say, nine to 12 months, we'll probably talk more about it as we deliver these solutions to the market. Thank you. One moment for our next question. Our next question come from Tore Svanberg, from Stifel Nicolaus & Company. Your line is open. Yes, thank you. I just had two follow-ups. Bill, as we sort of look at the second half of fiscal twenty-five, the ramps that you're expecting, could you talk a little bit about, you know, how broad those ramps are? I'm not talking about by customer here, but I'm thinking more about, you know, the different AEC form factors, and especially when considering, you know, the, four hundred gig AI, AI AEC back-end network solution that you, have been sampling the last few quarters. Sure. Sure. So I guess, you know, that would relate to our business with Amazon, and we feel good about where we are in the ramp there. As we've said previously, their ramp is expected to drive a significant portion of our growth this year. Dan alluded to the fact that we don't expect it to be a linear ramp quarter- to- quarter, but we do expect them to be our largest customer. With that said, we see increasing demand across the board for our solutions and really from a range of customers that, you know, we feel good about in a sense that it will drive customer diversity over the upcoming quarters, you know, through the end of this year and even into fiscal 2026. So as we've talked about before, we see Microsoft returning to historical levels. We've talked about a third hyperscaler, that relationship is really progressing, and we expect that they will become a significant customer, and really towards the real tail end of fiscal 2025, but really into fiscal 2026. You know, we've mentioned AECs continuing to gain traction broadly. Optical is gonna, you know, contribute to that inflection point this year and into 2026, as we see that continuing as our fastest growth product line. And even, you know, the other product categories, we haven't really spent too much time talking about, like Line Card PHY or SerDes chiplets, and licensing. It's expected that they're gonna be a material contributor in our second half and into fiscal 2026. And so, you know, that really gives you color near term. A lot of the fun that we have at Credo is talking about, you know, things that are really outside the, you know, the topic of these calls, which is really very near-term, focused on fiscal twenty-five. We have a lot of fun talking about, you know, next-generation solutions that we're developing. There's a lot of energy that we've got around, PCIe Gen 6 and Gen 7, and exactly how are we gonna, you know, add our unique and compelling value to that market. And this idea of, you know, continuing to innovate at the system level is something that we're highly engaged on internally at Credo. We've had just great experience in the markets that we've pioneered, and we're gonna continue that, and we expect to really bring meaningful and compelling solutions to the market at, again, the system level. That's very helpful. Just last question for Dan. Dan, you said that OpEx would grow at half the rate of revenue growth. Is that a specific sort of target for fiscal 2025, or was that more in reference to sort of your long-term financial model? It's related to fiscal twenty-five, and in fact, I mean, it's even embedded in our Q2 guide, right? Revenue at the midpoint, it's up 11%, gross margin flat, OpEx up 5%. So, we expect that, you know, year over year, fiscal 2024 to 2025, that'll be the case, and it'll extend probably into fiscal 2026 as well, as we attain kind of that long-term operating model, where our operating margin should be in the 30%-35% range next fiscal year. Thank you. And there are no further questions at this time. Mr. Brennan, I turn the call back over to you. Absolutely. Thanks, everybody, for joining. We really appreciate the questions, and we look forward to the call backs. Thanks. With that, this concludes today's conference call. You may now disconnect. Everyone, have a great day.