Breaking Down SkyWater Technology, Inc. (SKYT) Financial Health: Key Insights for Investors

You're looking at SkyWater Technology, Inc. (SKYT) and trying to map the noise of a transformative year to clear investment signals, and honestly, the Q3 2025 numbers are a defintely mixed bag that demands a closer look.

The headline is a massive surge: the company reported Q3 revenue of nearly $150.7 million and a GAAP net income of $144.0 million, largely fueled by the strategic acquisition of Fab 25, which alone contributed nearly $87 million in wafer services revenue. But strip out that one-time bargain purchase gain, and the non-GAAP net income was a more modest $11.5 million, or $0.24 per share.

The real opportunity is in their Advanced Technology Services (ATS) pivot: quantum computing-related revenue is on track to exceed 30% growth in fiscal 2025, a clear sign of future-proofing their business. Still, the near-term risk is real, with Q4 2025 EPS guidance pointing to a potential loss of $0.08 per share at the low end, showing that integration and government funding delays are still creating volatility. We need to break down what this shift means for their long-term valuation.

Revenue Analysis

You need to understand SkyWater Technology, Inc. (SKYT)'s revenue story right now, because it's a tale of two companies: the legacy development foundry and the newly-acquired volume manufacturer. The headline is that the acquisition of Fab 25 in Texas has fundamentally reshaped the revenue mix and growth profile, driving the trailing twelve months (TTM) revenue to approximately $346.59 million as of Q3 2025. That TTM figure represents a modest year-over-year growth of only +0.19%, but that number hides the massive, transformative shift happening inside the business.

The company's revenue streams break down into two distinct reportable segments-Legacy SkyWater and SkyWater Texas-which then feed into three primary product/service categories. The core of the business remains its Advanced Technology Services (ATS), which is their Technology-as-a-Service (TaaS) model, where customers pay for collaborative development work. Wafer Services is the volume manufacturing follow-on, and Tools revenue is the pass-through sale of customer-funded equipment that stays in the fab. It's a smart model that reduces their capital expenditure risk, but it makes the revenue mix complex.

Here's the quick math on the Q3 2025 breakdown, which was a record quarter at $150.74 million in total revenue:

• SkyWater Texas (Fab 25): Contributed $86.6 million in Wafer Services revenue, their first full quarter of operation.
• Legacy SkyWater: Brought in $64.1 million, which was a 32% decrease from the prior year, showing a slowdown in the original segment.

The Fab 25 acquisition is the single most significant change. It immediately provided a huge boost in volume manufacturing capacity and revenue, essentially doubling the company's annual revenue run-rate potential, with a projected $300 million in annual revenue from that site alone. This is a pivot toward a more balanced, higher-volume business model.

Still, you can't ignore the segments within Legacy SkyWater. In Q3 2025, the Legacy SkyWater revenue of $64.1 million consisted of:

The year-over-year growth of 60.68% for Q3 2025 is almost entirely driven by the Fab 25 acquisition, but the underlying ATS development work is still crucial. For instance, the Advanced Technology Services (ATS) revenue tied to quantum computing is a bright spot, expected to exceed 30% revenue growth for the full fiscal year 2025. This high-growth niche in aerospace and defense (A&D) and computation is where the long-term, high-margin Wafer Services volume will come from down the road. The whole story is about managing the short-term variability in the Legacy business while aggressively integrating the new Texas capacity. For a deeper dive into the valuation, check out Breaking Down SkyWater Technology, Inc. (SKYT) Financial Health: Key Insights for Investors.

Profitability Metrics

You need to know if SkyWater Technology, Inc. (SKYT) is translating its growing revenue into real profit, and the answer, especially in the third quarter of 2025, is a resounding but complex yes. The company's profitability saw a massive, one-time boost from an acquisition, but even operationally, margins are moving in the right direction, though they still lag behind the industry's titans.

For the third quarter of 2025, SkyWater Technology, Inc. reported total revenue of $150.7 million. This quarter was transformative, largely due to the acquisition of the new Texas facility (Fab 25), which dramatically altered the profitability picture. Here's the quick math on the key margins:

• Gross Profit Margin: The GAAP gross profit margin rose to 24.0% of total revenue, up from 21.6% in the same quarter of 2024. The non-GAAP gross margin was even better at 24.6%. This is defintely a strong operational signal.
• Operating Profit Margin: While the GAAP operating margin is not explicitly stated, the Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margin, a solid proxy for core operational profitability, hit 17.1% of revenue, a significant jump from 11.7% in Q3 2024.
• Net Profit Margin: The GAAP net income margin was an astounding figure due to a one-time event. GAAP net income was $144.0 million, which includes a preliminary $110.8 million bargain purchase gain related to the Fab 25 acquisition. You can't count on that gain again, so the non-GAAP net income of $11.5 million gives you a more realistic view of ongoing profitability, translating to a non-GAAP net margin of about 7.6% for the quarter.

Trends and Operational Efficiency

The trend is clear: the Fab 25 acquisition is the primary driver of improved operational efficiency and scale in 2025. The new SkyWater Texas segment contributed $86.6 million in revenue in Q3 2025, which helped lift the overall gross margin. This immediately scales the business and provides a more stable wafer services revenue stream, balancing the Advanced Technology Services (ATS) segment, which is more project-based and subject to things like federal budget delays.

Operational efficiency is also getting a boost from high-growth areas. The company expects to exceed 30% revenue growth in quantum computing-related revenues in fiscal 2025, which is a key indicator of success in their Technology-as-a-Service (TaaS) model. Management cited strong operational execution and favorable cost management in the quarter, which is exactly what you want to hear as an investor when a company is integrating a major acquisition. To understand the foundation of this business model, you should look at the Mission Statement, Vision, & Core Values of SkyWater Technology, Inc. (SKYT).

Peer Comparison: A Reality Check

When you look at SkyWater Technology, Inc.'s profitability ratios, you have to be a realist and compare them to the right peers. SkyWater is a specialized, U.S.-based foundry, not a high-volume chip designer. Still, its 24.0% GAAP gross margin for Q3 2025 puts it in a competitive position with other pure-play foundries like GlobalFoundries, which reported a gross margin of 23.8% in a recent period.

However, the industry's best still operate on a different plane. TSMC, the global foundry leader, posted a gross margin of 59.45% in Q3 2025. This gap highlights the different business models-TSMC focuses on massive scale and leading-edge technology, while SkyWater Technology, Inc. focuses on specialized, trusted, and TaaS-driven domestic manufacturing. The takeaway? SkyWater is performing well within its niche, but it's not a margin leader in the broader semiconductor universe. It's a growth story built on strategic, high-value contracts and a unique domestic position, not sheer volume leverage.

Debt vs. Equity Structure

You need to know how SkyWater Technology, Inc. (SKYT) is funding its aggressive expansion, and the short answer is: heavily through debt. The company's financial structure, as of the third quarter of fiscal year 2025, shows a reliance on borrowed capital to fuel its growth, particularly following a major acquisition.

SkyWater Technology, Inc.'s total debt load sits at approximately $177.63 million, based on the Q3 2025 financial statements. This is split between a significant amount of short-term financing and a smaller, but still notable, long-term obligation. The structure reflects a company in a capital-intensive industry that is actively investing for future scale.

• Short-term financing (current debt): $143.37 million
• Long-term debt (net of current portion): $34.26 million
• Total shareholder equity: Approximately $199.7 million

Here's the quick math on the leverage: SkyWater Technology, Inc.'s debt-to-equity (D/E) ratio is high at about 76.5% (or 0.765). This is a critical figure because it tells you the company is using 76.5 cents of debt for every dollar of shareholder equity to finance its assets. Compared to the broader Semiconductor industry average D/E ratio, which typically hovers around 0.40 to 0.50, SkyWater Technology, Inc. is significantly more leveraged. It's definitely a growth-oriented, high-leverage approach.

The recent financing activity is the main driver behind this leverage jump. In June 2025, SkyWater Technology, Inc. completed the transformative acquisition of Infineon's U.S. fab (Fab 25) in Austin, Texas. This was entirely funded by a new, flexible debt facility-a senior secured revolving credit facility providing borrowing capacity up to $350 million. This move shows a clear preference for debt financing over equity funding to avoid shareholder dilution, but it introduces substantial interest rate risk. The low Interest Coverage Ratio of only 0.3x is a flashing yellow light; it means the company's operating profit (EBIT) does not nearly cover its interest payments, which is a key near-term risk to watch.

The company is balancing debt and equity by using debt for immediate, large-scale strategic moves like the Fab 25 acquisition, betting that the future revenue-expected to be at least $300 million annually from Fab 25 alone-will quickly deleverage the balance sheet. This is a high-stakes gamble on execution. For a deeper dive into who is buying into this strategy, you should check out Exploring SkyWater Technology, Inc. (SKYT) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if SkyWater Technology, Inc. (SKYT) has enough cash and short-term assets to cover its immediate bills, especially with a major acquisition like Fab 25 now on the books. The short answer is that the company's liquidity position is tight, relying heavily on debt financing to fund its recent expansion and keep its working capital lean.

As of the most recent reporting period (Q3 2025), SkyWater Technology, Inc.'s short-term financial health, measured by its liquidity ratios, sits below the standard benchmark of 1.0. This is a red flag that demands your attention.

• The Current Ratio is approximately 0.67.
• The Quick Ratio (or acid-test ratio) is even lower at 0.61.

A ratio below 1.0 means that the company's current liabilities (what it owes in the next year) are greater than its current assets (what it expects to convert to cash in the next year). This isn't defintely a fatal flaw for a high-growth, capital-intensive company, but it means they are operating on a very thin margin of safety.

Analysis of Working Capital Trends

The low current and quick ratios point directly to a negative or extremely constrained working capital position. Working capital is simply current assets minus current liabilities, and a negative number means the company needs to sell long-term assets or raise new capital to meet short-term obligations if they all came due at once. The Q3 2025 earnings call highlighted a key pressure point: a negative cash outflow from operations was primarily due to a significant increase in accounts receivable. Here's the quick math: cash is tied up in customer invoices instead of sitting in the bank, which strains the short-term cash position.

This aggressive working capital management is a direct result of the company's growth strategy. They are prioritizing major, long-term investments over maintaining a large cash cushion. For a deeper dive into the strategic implications of this growth, you should read Exploring SkyWater Technology, Inc. (SKYT) Investor Profile: Who's Buying and Why?

Cash Flow Statements Overview (2025 Fiscal Year)

Looking at the cash flow statement for the trailing twelve months (TTM) ending in Q3 2025 tells a clear story of strategic, debt-funded expansion. The cash flow from the three main activities-Operating, Investing, and Financing-shows where the money is coming from and where it's going.

The cash flow from operations (CFFO) is positive at $5.83 million TTM, which is good, but it's small relative to the cash used in investing. The massive negative cash flow from investing (CFI) of -$109.01 million TTM is the cost of growth, specifically the Fab 25 acquisition. This spending was almost entirely financed by the positive cash flow from financing (CFF) of approximately $110.65 million YTD Q3 2025.

Potential Liquidity Concerns and Strengths

The primary concern is the low liquidity ratios; a Current Ratio of 0.67 means any unexpected delay in collecting receivables or a sudden need for cash could create a squeeze. The company is relying on its ability to roll over or draw on its credit facilities. What this estimate hides is the strategic value of the Fab 25 acquisition, which is expected to contribute at least $300 million in annual revenue and generate positive free cash flow starting in Q3 2025, which should significantly bolster future operating cash flow and, eventually, liquidity.

The strength here is the clear, decisive financing action: securing a new senior secured revolving credit facility with a borrowing capacity of up to $350 million to fully fund the Fab 25 acquisition. This shows a clear path to funding their strategic moves. Still, investors must monitor the working capital closely, especially given the delays in U.S. government budget approvals that could impact the timing of revenue from key Advanced Technology Services (ATS) programs.

Valuation Analysis

Based on a deep dive into the latest 2025 fiscal year data, SkyWater Technology, Inc. (SKYT) appears to be a classic growth stock, priced for future potential rather than current profitability, which makes it look overvalued on traditional earnings multiples but undervalued relative to its long-term growth story and analyst targets.

You're looking at a company undergoing a massive transformation, especially with the Fab 25 acquisition. So, the standard valuation metrics (multiples) are going to be messy and require context. Here's the quick math on where the stock sits right now.

Key Valuation Multiples: A Mixed Signal

The core valuation ratios for SkyWater Technology, Inc. (SKYT) are flashing mixed signals, which is typical for a semiconductor foundry (pure-play) transitioning from a development-heavy model to high-volume manufacturing, especially after a major acquisition. The Trailing Twelve Months (TTM) Price-to-Earnings (P/E) ratio is deeply negative at approximately -51.6 as of November 2025. This negative number simply tells you the company is still reporting a GAAP net loss over the last year, so a P/E is not a useful gauge of value right now.

Instead, look at the Enterprise Value-to-EBITDA (EV/EBITDA) multiple, which strips out the noise of depreciation and interest. SkyWater Technology's EV/EBITDA is high at around 33.01. To be fair, that's a rich multiple, suggesting the market is baking in significant growth from the new SkyWater Texas operations (Fab 25), which is expected to contribute at least $300 million in annual revenue starting in the second half of 2025. The Price-to-Book (P/B) ratio is more palatable at about 1.14, which suggests the stock is trading close to its book value, a low multiple for a high-growth tech company. That's a defintely interesting disconnect.

• P/E Ratio (TTM): -51.6 (Not applicable due to net loss)
• P/B Ratio: 1.14 (Suggests reasonable book value pricing)
• EV/EBITDA: 33.01 (Implies high future growth expectations)

Stock Performance and Shareholder Return

The stock price trend over the last 12 months shows significant momentum, reflecting investor excitement about the company's strategic moves. The stock has surged by 157.71% over the past year, with a 52-week trading range spanning from a low of $5.67 to a high of $24.23. The closing price around mid-November 2025 was near $14.92. This volatility is a risk, but it also highlights the market's reaction to milestones like the Fab 25 deal and strong quantum computing momentum. For a deeper understanding of the company's long-term vision, you can review their Mission Statement, Vision, & Core Values of SkyWater Technology, Inc. (SKYT).

Regarding shareholder returns, SkyWater Technology (SKYT) is currently focused on reinvesting all capital back into its growth and expansion, which is why the dividend yield is 0.00%. The TTM dividend payout is $0.00, as the company does not pay a dividend at this time. This is standard for a high-growth company in the capital-intensive semiconductor industry.

Analyst Consensus: Strong Momentum Ahead

Wall Street analysts are overwhelmingly positive, aligning with the 'growth stock' narrative. The consensus recommendation from brokerage firms is a 'Moderate Buy' or 'Strong Buy.' The average one-year price target is set between $18.50 and $21.50, which suggests an upside of around 26% from the recent trading price of approximately $15.98. This consensus is driven by the expectation of strong revenue growth in 2026, following the transformative 2025 fiscal year, which is forecast to see total revenue of about $425.88 million. They see the company executing on its strategy to become the premier U.S. pure-play foundry, and they expect the losses to narrow, with a 2025 EPS forecast of -$0.47.

Risk Factors

You're looking at SkyWater Technology, Inc. (SKYT) because it's a pure-play U.S. foundry with exposure to high-growth areas like quantum computing, but you need to be a trend-aware realist. The biggest immediate risk isn't a lack of opportunity; it's the execution risk tied to their massive expansion and the persistent financial strain. Simply put, the company is in a transformative year, but transformation is messy.

Here's the quick math: the Q3 2025 non-GAAP net income was a strong $11.5 million, or $0.24 per diluted share, but analysts still expect a full-year 2025 Non-GAAP EPS of around -$0.22. That gap shows the challenge of scaling a specialized foundry in a cyclical market. They've got a great story, but the financials are still catching up to the narrative.

• ATS revenue growth is strong, but the overall picture is mixed.

Operational and Integration Hurdles

The biggest internal risk is the integration of the newly acquired Fab 25 in Austin, Texas. This acquisition is designed to increase capacity fourfold and is key to their goal of reaching $600 million in annual revenue by 2026. But integrating a facility of that size is a massive undertaking that carries significant operational and financial risks. If the ramp-up of SkyWater Texas is slower than anticipated, or if they struggle to procure the necessary tools, materials, and chemicals, the projected revenue and EBITDA uplift will be delayed. Plus, the company needs to attract and retain a substantial number of qualified personnel to run the expanded operations, which is a constant battle in the tight semiconductor labor market.

External Market and Financial Pressures

The external risks are classic semiconductor industry pressures, plus a unique government funding wrinkle. The entire sector is cyclical, meaning demand can fluctuate wildly, especially in key end markets like industrial and automotive. Also, while SkyWater Technology, Inc. is a trusted partner for the U.S. government, the timing of funding for certain Department of Defense (DOD) Advanced Technology Services (ATS) programs is a risk. The federal budget for fiscal 2025 is still under a continuing resolution, and that delay is defintely impacting the expected return to ATS revenue growth this year.

On the financial front, short-term liquidity has been a concern. While the balance sheet has improved recently, with a current ratio of 1.06 and a quick ratio of 0.97 as of November 2025, the company's Altman Z-Score of 1.46 still places it in the financial distress zone, suggesting a persistent risk of instability. The reliance on debt financing, even with the new $350 million credit facility to fund Fab 25, is something to watch.

You can see the competitive landscape laid out here:

Mitigation and Opportunity

The company is not sitting still; their strategy is to mitigate these risks by doubling down on specialization and scale. The Fab 25 acquisition is the core mitigation for capacity and diversification. They are also aggressively pushing into high-growth, less cyclical niches like quantum computing and advanced packaging. Quantum-related ATS revenue is expected to exceed 30% growth in fiscal 2025, which is a major bright spot. Also, the Wafer Services segment is shifting from 90% legacy products in 2024 to an anticipated 60% new products in 2025, which should help stabilize that traditional foundry business. The strategy is clear: use the new scale to capture market share in next-generation technologies. For a deeper look at who is betting on this strategy, you should check out Exploring SkyWater Technology, Inc. (SKYT) Investor Profile: Who's Buying and Why?

Next Step: Compare the Q4 2025 revenue guidance of $160.0 million against the Fab 25 integration milestones to gauge if the new capacity is translating to revenue as fast as management expects.

Growth Opportunities

You want to know where SkyWater Technology, Inc. (SKYT) goes from here, and the answer is clear: the company is in a high-growth, high-investment phase, driven by strategic acquisitions and its unique position in the U.S. semiconductor supply chain. The near-term focus is on scaling up capacity to meet onshoring demand.

The biggest immediate driver is the Fab 25 acquisition in Austin, Texas, completed in 2025. This deal is transformative, expected to contribute at least $300 million in annual revenue once fully integrated, and it has already quadrupled the company's manufacturing capacity. Here's the quick math: analysts project SkyWater Technology, Inc.'s total 2025 revenue to climb to approximately $431 million, a significant jump, largely fueled by a projected 638% surge in Wafer Services revenue, which includes the Fab 25 output.

What this estimate hides is the continued negative earnings per share (EPS). The consensus full-year 2025 EPS estimate sits at approximately -$0.87 per share, reflecting the heavy capital expenditure and integration costs of this rapid expansion. You're buying into a growth story, not a profitability story, for the moment.

The growth is not just about capacity; it's about specialized technology and national strategy. SkyWater Technology, Inc. is the largest exclusively U.S.-based, pure-play semiconductor foundry, which makes it a strategic asset, especially with the tailwinds from U.S. government initiatives like the CHIPS Act.

• Quantum Computing: This is the fastest-growing segment, with revenues from quantum-related Advanced Technology Services (ATS) expected to exceed 30% growth in fiscal 2025. They've signed four new quantum customers since Q2 2025, including key partnerships with companies like SQC and QuamCore.
• Advanced Packaging: The Florida facility is ramping up, backed by Department of Defense (DOD) funding for its 300mm wafer fan-out initiative, with first ATS revenues expected in the second half of 2025.
• Defense and Aerospace: The company's expertise in specialized, radiation-hardened (rad-hard) technologies gives them a sticky, high-margin advantage in the defense and aerospace markets, which demand secure, U.S.-based production.

The Fab 25 acquisition also comes with a massive, multi-year supply agreement with Infineon, providing strong revenue visibility and a solid base for the Wafer Services segment. This diversified approach-combining foundational chip nodes for automotive and industrial markets with bleeding-edge tech like quantum-is a defintely strong competitive moat. The table below summarizes the key 2025 financial projections and growth drivers.

The clear action for you is to monitor the integration of Fab 25 and the Advanced Packaging ramp-up. If they hit the 2026 revenue target of over $600 million, which is the next big checkpoint, the investment thesis for this Breaking Down SkyWater Technology, Inc. (SKYT) Financial Health: Key Insights for Investors story will be fully validated.