SkyWater(US:SKYT)2025-11-05 22:30Financial 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]