Financial Performance - Revenue for the third quarter of 2025 was $150.7 million, a 61% increase from $93.8 million in the third quarter of 2024[154] - Gross profit for the third quarter of 2025 was $36.2 million, representing a 79% increase from $20.2 million in the same period last year[153] - Operating income increased by 67% to $7.9 million in the third quarter of 2025, compared to $4.7 million in the third quarter of 2024[153] - Net income attributable to SkyWater Technology increased by $142.5 million in Q3 2025 compared to Q3 2024, driven by the impacts of the aforementioned changes[169] - Net income increased to $26.5 million in the third quarter of 2025, up from $2.6 million in the same quarter of 2024, representing a 1,019% increase[197] - For the first nine months of 2025, net income rose to $11.4 million from a net loss of $3.0 million in the same period of 2024, marking a 484% increase[197] - Adjusted EBITDA increased by $14.8 million or 135% in Q3 2025 compared to Q3 2024, supported by expansion in the advanced compute end market and the addition of Fab 25[170] - Adjusted EBITDA for the three-month period ended September 28, 2025, was $25.8 million, compared to $11.0 million for the same period in 2024[243] Acquisition and Investments - The acquisition of Fab 25 was completed on June 30, 2025, for a total purchase consideration of $206.5 million, enhancing SkyWater's semiconductor manufacturing capabilities[150] - SkyWater Texas wafer services revenue increased by $86.6 million due to the Fab 25 acquisition, with $8.6 million attributed to non-cash purchase accounting adjustments[158] - A bargain purchase gain of $110.8 million was recognized in conjunction with the Fab 25 acquisition, reflecting the excess of fair value over purchase consideration[167] - The company incurred transaction and integration costs of $7.1 million related to the acquisition of Fab 25 on June 30, 2025[244] Expenses - Cost of revenue increased by $40.9 million, or 56%, primarily due to the inclusion of Fab 25 operations[160] - Advanced Technology Services (ATS) development revenue decreased by $2.2 million, mainly due to an $8.1 million reduction in revenue from aerospace and defense markets[154] - Research and development expenses rose to $4.4 million, a 27% increase from $3.4 million in the prior year[153] - Selling, general and administrative expense rose by $11.9 million or 98% in Q3 2025 compared to Q3 2024, primarily due to $6.0 million related to the Fab 25 acquisition[164] - Interest expense increased by $3.3 million or 168% in Q3 2025 compared to Q3 2024, mainly due to higher amounts outstanding on the revolving lending facility[166] Tax and Compliance - Income tax expense decreased by $31.9 million in Q3 2025 compared to Q3 2024, resulting from the realization of deferred tax assets related to the Fab 25 acquisition[168] - The company expects customer-funded capital investment to be a significant driver of future growth[151] - The company was in compliance with the covenants of the Amended Loan Agreement and expects to maintain compliance over the next twelve months[221] Cash Flow and Liquidity - Cash and cash equivalents increased to $30.9 million as of September 28, 2025, from $18.8 million as of December 29, 2024[210] - Net cash provided by operating activities was $7.1 million during the first nine months of 2025, a decrease of $12.6 million from $19.7 million in the same period of 2024[211] - Net cash used in investing activities was $107.0 million during the first nine months of 2025, compared to $9.2 million in the same period of 2024, primarily due to the acquisition of Fab 25[212] - The outstanding balance of the Revolver was $155.0 million, with remaining availability of $65 million as of September 28, 2025[217] - The company maintains a liquidity requirement of at least $70 million following certain transactions[220] Financing and Risk - The VIE Financing amounts to $39 million with a fixed interest rate of 3.44%, repayable in equal monthly installments of $0.2 million over 10 years[223] - The VIE Financing is secured by a security interest in the land and building of the SkyWater Minnesota facility[225] - Market risk exposure is primarily related to potential changes in the fair value of debt due to fluctuations in market interest rates[246] - Credit risk is associated with cash and cash equivalents, accounts receivable, and contract assets, with no losses experienced in maintained accounts[247] - As of September 28, 2025, the outstanding balance of the Revolver was $155.0 million at a variable interest rate of 8.6%[248] - A 100 basis point increase in the interest rate would result in an annual increase of $1.6 million in interest expense based on the outstanding balance of the Revolver[248] Regulatory and Reporting - The CHIPS Act provides $52.7 billion for American semiconductor research and development, with SkyWater applying for funding to modernize its Minnesota facility[151] - The company qualifies as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of certain reporting exemptions[229] - The net income attributable to noncontrolling interests from the variable interest entity (VIE) is included in the adjusted EBITDA financial measure[245] - The preliminary bargain purchase gain from the acquisition of Fab 25 on June 30, 2025, is recognized, with total consideration paid being less than the fair value of net assets acquired[245]

Core Insights - SkyWater Technology (NASDAQ: SKYT) is currently at a pivotal moment, driven by a significant Fab 25 deal and an influx of quantum computing business [1] Revenue and Gross Performance - The third quarter performance was notably strong, primarily attributed to the aforementioned Fab 25 deal and the surge in quantum computing activities [1]

Core Insights - SkyWater Technology (SKYT) is well positioned to contribute to the U.S. strategic mission of achieving independence in the semiconductor sector [1] Group 1 - The premium service "Value in Corporate Events" covers major earnings events, M&A, IPOs, and other significant corporate events with actionable ideas [1][2] - The service provides coverage of 10 major events a month, focusing on identifying the best investment opportunities [2]

Core Insights - SkyWater Technology and QuamCore have announced a multi-million-dollar collaboration to develop a superconducting fabrication process for QuamCore's SFQ digital controller chip, marking a significant step in quantum computing technology [1][2] - The partnership aims to enable scalable and energy-efficient control for a one-million-qubit superconducting quantum computer, addressing critical bottlenecks in wiring density, heat load, and latency [2][4] Company Overview - SkyWater Technology is the largest U.S.-owned pure-play semiconductor foundry, focusing on advanced manufacturing and supporting next-generation technologies under the CHIPS and Science Act initiatives [1][8] - QuamCore specializes in developing ultra-low-power control electronics for superconducting qubits, aiming to create fault-tolerant, million-qubit quantum systems [7] Technical Collaboration - The collaboration will leverage SkyWater's expertise in superconducting process integration and QuamCore's proprietary SFQ architecture, which operates at 10 mK, the same temperature as the qubits [3][4] - Joint milestones over the next 12–18 months include the fabrication of superconducting test vehicles and demonstration of wafer-scale SFQ control chips [5] Strategic Importance - This partnership enhances SkyWater's role as a quantum-ready U.S. manufacturing partner, facilitating the domestic development of advanced computing technologies [5][6] - The collaboration is expected to significantly reduce power consumption by up to nine orders of magnitude compared to conventional CMOS-based control electronics, making large-scale quantum systems more feasible [4][6]

Core Insights - SkyWater Technology and QuamCore have announced a collaboration to develop a digital superconducting controller aimed at scalable quantum computing, involving a multi-million-dollar contract [1][2][3] - The partnership combines SkyWater's U.S.-based manufacturing capabilities with QuamCore's SFQ-based control architecture, targeting the development of a 1-million-qubit superconducting quantum computer [2][5] - The collaboration is expected to accelerate the transition from prototype to scalable production for QuamCore, leveraging SkyWater's advanced superconducting process expertise [4][5] Company Overview - SkyWater Technology is the largest exclusively U.S.-based, pure-play semiconductor foundry, focusing on advanced manufacturing for emerging technologies like quantum computing [5][7] - QuamCore is a deep-tech startup developing control architectures for fault-tolerant, million-qubit quantum systems, utilizing patented superconducting processor designs [8] Technical Details - The collaboration will co-engineer a superconducting fabrication process optimized for integrating SFQ digital control circuits with superconducting qubit arrays, enhancing yield, uniformity, and cryogenic device performance [3][4] - Integrated SFQ control can significantly reduce cabling requirements by up to 1000 times compared to conventional methods, while also achieving lower power dissipation [6]

Core Insights - SkyWater Technology, Inc. reported quarterly earnings of $0.24 per share, exceeding the Zacks Consensus Estimate of a loss of $0.17 per share, and showing an increase from earnings of $0.08 per share a year ago, resulting in an earnings surprise of +241.18% [1] - The company achieved revenues of $150.74 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 11.25% and increasing from $93.82 million year-over-year [2] - SkyWater Technology has consistently surpassed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is -$0.10 on revenues of $161.5 million, and for the current fiscal year, it is -$0.45 on revenues of $417.35 million [7] Industry Context - The Electronics - Semiconductors industry, to which SkyWater Technology belongs, is currently ranked in the top 34% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact SkyWater's stock performance [5][6]

Financial Data and Key Metrics Changes - SkyWater reported record Q3 revenues of nearly $151 million, exceeding expectations by more than $9 million [5][24] - The gross margin for Q3 was reported at 24.6%, with significant revenue upside flowing directly to gross profit [25] - Adjusted EBITDA for Q3 was $25.8 million, well above the expected range of $10-$12 million [26] Business Line Data and Key Metrics Changes - The ATS business saw a revenue pull-in of approximately $4 million from Q4 due to program execution timing, with expected Q4 ATS revenues around $50 million [8][22] - Texas wafer services revenue reached nearly $87 million, exceeding expectations by $9 million, primarily due to higher work-in-process wafers post-acquisition [15][24] - Quantum computing-related revenue is expected to exceed 30% growth in fiscal 2025, with four new customer engagements signed since Q2 [6][12] Market Data and Key Metrics Changes - The quantum computing market is experiencing significant investment, with several players announcing large funding rounds, validating the commercial potential of the sector [9][10] - The advanced packaging market is projected to reach nearly $80 billion by 2030, driven by demand in automotive, IoT, 5G, AI, and edge computing [17] Company Strategy and Development Direction - SkyWater aims to restore domestic semiconductor manufacturing capabilities and secure trusted production, positioning itself as a key player in the U.S. innovation infrastructure [18][19] - The acquisition of FAB25 has strengthened SkyWater's competitive position, expanding its scale and diversifying its customer and technology mix [16][15] - The company is focused on leveraging its technology-as-a-service model to support various quantum architectures and drive growth [12][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in exceeding initial revenue and EBITDA expectations for 2026, with a baseline expectation of at least $600 million in revenue and $60 million in adjusted EBITDA [23][40] - The ongoing government budget dynamics are expected to impact A&D-related ATS revenues, but overall growth in quantum and advanced packaging is anticipated [22][50] - Management highlighted the importance of U.S. leadership in quantum computing and the need for domestic manufacturing capabilities [20][21] Other Important Information - The company plans to hold its first Investor and Analyst Day on March 24 in New York City [4] - Total debt at the end of Q3 was $184 million, reflecting borrowings for the FAB25 acquisition and working capital [29] Q&A Session Summary Question: Can you elaborate on the gross margin expectations for Q4? - Management indicated that Q4 non-GAAP gross margin is expected to be 17%-20%, with a 200 basis point impact from tools revenue [34][37] Question: What are the dynamics behind the revised revenue guidance for next year? - Management noted that higher-than-expected WIP in the fab and strong performance in Q3 and Q4 contribute to confidence in the $600 million revenue target [40][41] Question: How does SkyWater view the current aerospace and defense environment? - Management stated that while funding dynamics remain uncertain, investments in facilities are geared towards the A&D community, positioning SkyWater well for future growth [50][51]

Q3 2025 Financial Performance - SkyWater achieved record Q3 2025 revenues of $150.7 million, exceeding the high end of the guidance range by over $9 million[6] - Legacy SkyWater's ATS (Advanced Technology Services) development revenue reached $54.2 million, a 3% increase compared to Q2 2025, but a 4% decrease year-over-year[57] - SkyWater Texas generated $86.6 million in wafer services revenue in Q3 2025, marking its first quarter contribution post-acquisition[57] - The company's GAAP gross margin was 24.0%, a 550 basis point increase from Q2 2025's 18.5%[60] - Adjusted EBITDA for Q3 2025 was $25.8 million, significantly higher than forecast, with an adjusted EBITDA margin of 17.1%[63] Business Highlights and Future Outlook - SkyWater anticipates strong growth in quantum computing customer revenues, expecting to exceed 30% in 2025[11, 14] - Advanced Packaging revenues are starting to ramp in Florida, with tool installations scheduled for completion in early 2026[11] - Q4 2025 revenue is projected to be in the range of $155 million to $165 million, including $17 million - $18 million in Tools revenue[54] - SkyWater Texas revenue for Q4 2025 is expected to be between $84 million and $88 million, reflecting continued higher levels of WIP (work-in-process) during the post-acquisition phase[54] - The company expects a stronger gross margin profile for Q4 2025 compared to the preliminary outlook provided in August[54]

Core Insights - SkyWater Technology, Inc. is a significant player in the semiconductor industry, focusing on advanced electronic components, with quarterly earnings set to be released on November 5, 2025, estimating an EPS of -$0.17 and projected revenue of $135.5 million [1][6] - The electronics sector is experiencing growth driven by increased demand for generative AI, cloud services, and electric vehicles [1][2] Industry Overview - The third quarter of 2025 is critical for electronics stocks, including SkyWater Technology, as the industry benefits from AI infrastructure expansion and global data center buildouts, which are expected to increase demand for specialized semiconductors [2] - Companies like Qualcomm, ARM, and Alpha and Omega Semiconductor are expected to report gains due to growth in AI, data centers, and EV electronics [2] Company Financials - SkyWater Technology is anticipated to report a decline in earnings for the quarter ending September 2025, despite an increase in revenues, with a Zacks Consensus Estimate predicting a quarterly loss of $0.17 per share [3] - The company has a negative price-to-earnings (P/E) ratio of approximately -41.88, indicating current losses, and a price-to-sales ratio of about 2.39, suggesting investors are paying $2.39 for every dollar of sales [4][6] - The enterprise value to sales ratio is around 3.41, providing insight into the company's valuation relative to its revenue [4] Debt and Liquidity Concerns - The debt-to-equity ratio is significantly high at approximately 7.77, indicating a high level of debt compared to equity [5][6] - The current ratio is around 0.41, suggesting potential liquidity concerns as it indicates the company's ability to cover short-term liabilities with short-term assets [5]

Core Insights - The electronics stocks market is expected to show growth driven by the expansion of artificial intelligence infrastructure and data center buildouts globally, with demand for specialized semiconductors and advanced electronic components increasing due to the deployment of generative AI applications and cloud computing services [1][9] Industry Overview - High-bandwidth memory (HBM) shipments are projected to grow significantly due to extraordinary demand from AI training workloads, positively impacting industry performance in Q3 2025 [2] - The automotive electronics market is experiencing steady growth, driven by increased use of electronic components in electric vehicles and advanced driver assistance systems, alongside rising consumer demand for connected and safety-centric vehicles [3] - The proliferation of Internet of Things (IoT) devices, smart home systems, and connected industrial equipment is expected to support demand for sensors and connectivity solutions [3] Challenges - Companies face mixed demand patterns across end markets, with traditional automotive and industrial segments showing slower recovery and margin pressures due to weaknesses in certain customer categories [4] - The memory market is experiencing complexities, with oversupply concerns in traditional DRAM and NAND segments potentially offsetting strengths in AI-specific memory products [4] - Geopolitical uncertainties and evolving trade policies are anticipated to remain concerns, influencing near-term performance across the electronics sector [4] Company Performance - Lam Research (LRCX) and FormFactor (FORM) have reported results that surpassed expectations, indicating positive trends in the electronics sector [5] - Alpha and Omega Semiconductor (AOSL) is expected to report revenues of $183.05 million for Q1 fiscal 2026, reflecting a 0.64% year-over-year increase, although earnings are projected to decline by 52.38% [10][11] - Arm Holdings anticipates revenues of $1.07 billion for Q2 fiscal 2026, indicating a 26.2% year-over-year increase, with earnings expected to rise by 10% [13] - Qualcomm (QCOM) is projected to report revenues of $10.77 billion for Q4 fiscal 2025, reflecting a 5.16% year-over-year increase, with earnings expected to increase by 6.69% [15] - SkyWater Technology (SKYT) expects revenues of $135.5 million for Q3, indicating a 44.43% year-over-year increase, although a loss of 17 cents per share is anticipated [18] - MKS Inc. (MKSI) is projected to report revenues of $962.01 million for Q3, reflecting a 7.37% year-over-year increase, with earnings expected to rise by 4.65% [20]