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SkyWater Technology, Inc (SKYT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue of $59.1M came in at the upper end of guidance and above S&P Global consensus; non-GAAP diluted EPS was a loss of $0.11, materially better than the -$0.18 consensus, supported by gross margin outperformance versus expectations .*
  • Strategic milestone: closed the acquisition of Infineon’s Fab 25 on June 30 (first day of Q3), fully funded via a new $350M revolving credit facility; management expects at least $300M annual revenue, immediate adjusted EBITDA and free cash flow contribution starting in Q3 .
  • Q3 2025 outlook reflects consolidated revenue of $130–$141M, non-GAAP gross margin of 11–14%, and non-GAAP EPS loss of $0.14–$0.20, with $75–$80M wafer services from Fab 25 and purchase accounting depreciation impacting gross margin by ~600–700 bps .
  • Near-term ATS growth is tempered by DoD funding delays under the continuing resolution; momentum building in Quantum and Advanced Packaging, with Florida tools revenue largely in Q4 and ATS ramp into 2026 .
  • CFO lowered 2025 organic OpEx growth expectation to ~5% vs prior 10–15%, citing cost discipline; catalysts for stock include the Fab 25 transition to foundry model, stronger Q3/Q4 setup, and 2026 targets of ~$600M revenue and ≥$60M adjusted EBITDA communicated qualitatively on the call .

What Went Well and What Went Wrong

What Went Well

  • Delivered Q2 revenue at top end of guidance with gross margin, adjusted EBITDA, and non-GAAP EPS upside versus internal expectations; “We’re pleased to report second-quarter financial results at the upper end of our expectations...” .
  • Closed transformative Fab 25 acquisition, secured >$1B 4-year supply agreement, and licensed automotive-grade IP for S130; management expects Fab 25 to roughly double annual revenue and adjusted EBITDA, with immediate positive free cash flow .
  • Quantum computing momentum: expanding superconducting film and chiplet integration capabilities; Quantum expected to grow >30% in 2025, with a superconducting design platform to be announced in 2H25 .

What Went Wrong

  • ATS revenue declined y/y as DoD program funding remains constrained under a continuing resolution; management now expects ATS to operate around current revenue levels through 2025 rather than snapping back in H2 .
  • Tools revenue was minimal ($1.1M) versus prior-year heavy mix, compressing adjusted EBITDA and headline growth; adjusted EBITDA fell to $2.3M (3.9% margin) in Q2, down y/y and q/q .
  • Near-term margin compression expected post-acquisition: Q3 guidance includes purchase accounting depreciation (non-cash) of $8–$10M per quarter, impacting reported non-GAAP gross margins by ~600–700 bps .

Financial Results

Consolidated Performance vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$75.5 $61.3 $59.1
Gross Profit ($USD Millions)$19.3 $14.3 $10.9
Gross Margin % (GAAP)25.6% 23.3% 18.5%
Non-GAAP Gross Margin %26.6% 24.2% 19.5%
GAAP Net Loss to Shareholders ($USD Millions)$(0.7) $(7.3) $(10.0)
GAAP EPS ($)$0.01 $(0.15) $(0.21)
Non-GAAP Diluted EPS ($)$0.04 $(0.08) $(0.11)
Adjusted EBITDA ($USD Millions)$10.2 $4.0 $2.3
Adjusted EBITDA Margin %13.5% 6.6% 3.9%

Segment Revenue Breakdown

MetricQ4 2024Q1 2025Q2 2025
ATS Development Revenue ($USD Thousands)$59,401 $52,535 $52,605
Wafer Services Revenue ($USD Thousands)$4,371 $7,527 $5,411
Combined ATS + Wafer ($USD Thousands)$63,772 $60,062 $58,016
Tools Revenue ($USD Thousands)$11,715 $1,234 $1,047
Total Revenue ($USD Thousands)$75,487 $61,296 $59,063

KPIs and Balance Sheet Snapshot

KPIQ1 2025Q2 2025
Cash & Cash Equivalents ($USD Thousands)$51,234 $49,373
Total Debt ($USD Thousands)~$60,000 (year-end Q1 commentary) $65,730
Non-GAAP Operating Expenses ($USD Millions)$15.2 $13.6
Net Loss Margin (GAAP)(12.0)% (16.9)%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)Q2 2025$55–$60 Actual: $59.1 Delivered at upper end
Tools Revenue ($M)Q2 2025< $1 Actual: $1.1 Slightly above guidance
GAAP EPSQ2 2025$(0.20) to $(0.26) Actual: $(0.21) In range
Non-GAAP EPSQ2 2025$(0.16) to $(0.22) Actual: $(0.11) Raised (beat)
Consolidated Revenue ($M)Q3 2025—$130–$141 Introduced
Wafer Services Revenue ($M)Q3 2025—MN: $5–$6; TX (Fab 25): $75–$80 Introduced
Non-GAAP Gross Margin %Q3 2025—11–14; tools impact ~20 bps; purchase accounting impact ~600–700 bps Introduced
Non-GAAP OpEx ($M)Q3 2025—$18–$20 (incl. ~$5 from Fab 25) Introduced
Non-GAAP EPSQ3 2025—$(0.14) to $(0.20) Introduced
Full-year OpEx Growth (organic)FY 2025+10–15% (prior commentary) ~+5% (current) Lowered

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Fab 25 acquisition & supply agreementAnnounced acquisition; 4-yr, >$1B supply; ~$300M annual wafer services; strategic U.S. capacity Closed; debt facility $350M; guidance quantifies TX contribution ($75–$80M Q3) and non-cash depreciation impact Positive, executing
Quantum computing initiativesAdvanced compute ~10% of revenue; strong D-Wave/Si-Quantum ties; superconducting and photonics “>30%” revenue growth expected in 2025; platform announcement coming; expanding superconducting films/chiplets Strengthening
Advanced Packaging (Florida)$120M program; tool deliveries mid-year; ATS ramp late 2025/2026 Tariff uncertainties delayed a few tools; tools revenue back-half loaded (mostly Q4); sequential ATS growth in Q4 Gradual ramp
Supply chain/tariffsLimited exposure; tools mostly exempt (84/86); ~$2M/qtr ancillary exposure Ongoing tariff uncertainty; mitigation; Florida tool installs continue Manageable risk
DoD funding/macroCR delays push ATS rebound into H2’25 CR persisted; ATS likely flat through 2025; upside only if funding released Headwind persists
IP/design enablementStrategic design enablement foundation in 200mm; PDKs; platform conversions Infineon IP license for S130 (HV, copper); enabling mixed-signal ASICs onshore Expanded capability

Management Commentary

  • “We expect Fab 25 to contribute at least $300 million in annual revenue and generate strong adjusted EBITDA and free cash flow, starting in the third quarter.” — Thomas Sonderman, CEO .
  • “Our Q2 gross margin exceeded the top of expectations at 19.5%… Adjusted EBITDA of $2.3 million was also stronger than forecast.” — Steve Manko, CFO .
  • “We currently expect that the timing of funding for certain Department of Defense (DOD) programs we support will likely impact our expected return to ATS revenue growth this year.” — Thomas Sonderman, CEO .
  • “We expect Florida tools revenue to be back half loaded in 2025, and… the majority of this year's tools revenue recognition in Q4.” — Thomas Sonderman, CEO .
  • “We expect purchase accounting depreciation to impact reported gross margins by approximately 600 to 700 basis points [in Q3].” — Steve Manko, CFO .

Q&A Highlights

  • Margin trajectory at Fab 25: near-term gross margin compressed due to purchase accounting; margin expansion levers include introducing ATS revenue and new platforms at market pricing, plus operating synergies across MN/TX .
  • Capacity and customer mix at Fab 25: initial utilization supports Infineon output; opportunities to add hybrid IDMs (e.g., NXP, ST) and Japan-based firms seeking U.S. sourcing; 200mm, 65nm capability differentiates .
  • IP license strategy: integrating high-voltage and copper IP blocks into S130; enabling customer tape-outs, MPWs, and shuttles—accelerating time-to-volume over ~2-year cycles typical for foundry transitions .
  • Advanced Packaging KPIs: 2025 dominated by tools revenue in Florida; ATS engineering revenue ramps in 2026; defense-first focus with commercial interest emerging .
  • DoD programs: management executing above current funded levels on select programs; any funding increases would release ATS revenue immediately, but not in current outlook due to visibility constraints .

Estimates Context

MetricPeriodS&P Global ConsensusActual/GuidanceBeat/Miss
Revenue ($USD)Q2 2025$57.46M*$59.06M +$1.60M (Beat)*
Primary EPS ($)Q2 2025$(0.18)*$(0.11) (non-GAAP diluted) +$0.07 (Beat)*
Revenue ($USD)Q3 2025$135.42M*$130–$141M (guidance) In-line range*
Primary EPS ($)Q3 2025$(0.172)*$(0.14) to $(0.20) (non-GAAP) In-line range*
EBITDA ($USD)Q3 2025$11.45M*$10–$12M adj. EBITDA (consolidated) In-line*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Q2 delivered atop guidance with better-than-expected non-GAAP EPS and margin performance; execution quality offsets near-term ATS headwinds from DoD funding delays .
  • Fab 25 is a tangible step-change: expect ~$75–$80M quarterly wafer services from TX beginning Q3, immediate adjusted EBITDA/FCF, and strategic U.S. foundry positioning in 200mm mature nodes (including 65nm) .
  • Near-term reported margins will be optically compressed by purchase accounting depreciation; adjust models to quantify 600–700 bps impact to non-GAAP gross margin and add ~$5M/quarter SG&A, ~$2.5M/quarter interest from Fab 25 .
  • Model Florida as a Q4 tools revenue event ($20–$25M) with ATS ramp skewed to 2026; watch tariff-related tool timing but exposure appears manageable .
  • Quantum and Advanced Packaging are the 2026 growth vectors; management flagged potential ≥$600M revenue and ≥$60M adjusted EBITDA for 2026, contingent on execution and mix improvements (implied 10%+ adj. EBITDA margin) .
  • OpEx discipline: organic 2025 OpEx growth lowered to ~5%, de-risking the path to profitability in H2 and supporting stronger EBITDA conversion on incremental revenue .
  • Trading setup: stock narrative likely pivots to TX integration proof-points, Q3/Q4 delivery versus guide, and visibility on DoD funding releases; upside optionality from IP-enabled customer transfers and 65nm-on-200mm differentiation .