SkyWater Technology’s Optimistic Earnings Call Highlights Growth

Skywater Technology Inc ((SKYT)) has held its Q2 earnings call. Read on for the main highlights of the call.

SkyWater Technology Inc. recently held its earnings call, revealing a generally optimistic outlook despite some challenges. The company reported strong revenue achievements and strategic advancements, particularly in the quantum computing sector and the successful acquisition of Fab 25. However, it acknowledged challenges in the aerospace and defense sector due to government funding delays and anticipated short-term gross margin compression due to the acquisition. Overall, the positive developments significantly outweigh the negatives.

Revenue Achievement

SkyWater Technology reported second-quarter revenue of $59.1 million, which came in at the upper end of their guidance. This achievement was primarily driven by stronger-than-expected ATS revenues, highlighting the company’s robust performance in this segment.

Fab 25 Acquisition

The company completed the acquisition of Infineon’s Fab 25, a strategic move expected to double its revenue scale and adjusted EBITDA immediately. This acquisition is bolstered by a $1 billion multiyear supply agreement, positioning SkyWater for significant growth.

Quantum Computing Growth

SkyWater is making significant strides in the quantum computing sector, with revenue growth in this segment expected to exceed 30% in 2025. The company plans to continue its expansion into 2026, underscoring its commitment to innovation and technological advancement.

Advanced Packaging Progress

SkyWater’s advanced packaging operations in Florida are progressing ahead of schedule. The company anticipates a significant increase in ATS revenues towards the end of the year, further solidifying its market position.

Aerospace and Defense Challenges

Despite overall positive momentum, SkyWater faces challenges in the aerospace and defense sector due to government funding delays. The Department of Defense programs are expected to operate at current revenue levels through 2025, presenting a hurdle for growth in this area.

Gross Margin Compression

The acquisition of Fab 25 is expected to lead to near-term gross margin compression, with a projected non-GAAP gross margin of 4% to 6%. This is a short-term challenge the company is prepared to navigate as it integrates the new acquisition.

Forward-Looking Guidance

SkyWater Technology provided forward-looking guidance that underscores its growth trajectory. The company forecasts ATS revenues of approximately $50 million for the third quarter, with an additional $75 million to $80 million in revenue from Fab 25. For the full year, SkyWater anticipates revenue of $600 million and adjusted EBITDA of at least $60 million in 2026. The acquisition of Fab 25 is expected to contribute significantly to top-line growth in both 2025 and 2026.

In conclusion, SkyWater Technology’s earnings call painted a picture of a company on the rise, with strong revenue achievements and strategic advancements. While challenges remain, particularly in the aerospace and defense sector, the company’s strategic acquisitions and growth in quantum computing position it well for future success. Investors and market watchers will be keen to see how these developments unfold in the coming quarters.