Record Revenues and Continued Year-over-Year Increase in Gross Margin

BLOOMINGTON, Minn. — (BUSINESS WIRE) — November 8, 2023 — SkyWater Technology, Inc. (NASDAQ: SKYT), the trusted technology realization partner, today announced financial results for the third quarter of 2023, ended October 1, 2023.

Financial Highlights for Q3 2023:

• Revenue increased 37% year-over-year to a record $71.6 million.
• Gross margin increased to 19.8% on a GAAP basis, compared to 15.8% in Q3 2022, and increased to 20.4% on a non-GAAP basis, compared to 16.9% in Q3 2022.
• Net loss to shareholders of $7.6 million, or $(0.16) per share on a GAAP basis, and net loss to shareholders of $2.2 million, or $(0.05) per share on a non-GAAP basis, compared to net loss to shareholders of $6.9 million, or $(0.17) per share on a GAAP basis, and net loss to shareholders $5.1 million, or $(0.13) per share on a non-GAAP basis in Q3 2022.
• Adjusted EBITDA of $8.3 million, or 11.6% of revenue, compared to $3.8 million, or 7.3% of revenue in Q3 2022.

“SkyWater again achieved revenue upside and sequential growth in what was a very strong third quarter for our ATS business,” commented Thomas Sonderman, SkyWater chief executive officer. “The outperformance we’ve achieved in 2023 to date is largely driven by increased demand – and strong operational execution – as we continue to drive improvements in fab efficiency, velocity, linearity, and output. We are also starting to see an increasing contribution of customer-funded capital expenditures, which is a trend we expect to continue, as our customers are significantly increasing their investments in SkyWater. The transformative process currently underway is proceeding well and is accelerating, especially now that John Sakamoto is on board as our new president and COO. We anticipate another year of revenue growth and continued strong financial results ahead for 2024.”

Recent Business Highlights:

• Year-to-date revenues of $208 million, up 40% compared to the first nine months of 2022, are ahead of our long-term annual revenue growth objectives due to strong demand and improved operational execution for our Advanced Technology Services (ATS) business, which has also driven strong improvement in gross margin and adjusted EBITDA in 2023.
• Increased size and scope of multiple strategic aerospace and defense programs; continued progress on the productization and qualification of SkyWater’s RadHard 90nm platform during Q3 ahead of the planned production ramp in 2025.
• Increased tool revenues in Q3 mark the beginning of a period of significant increases in customer-funded capital expenditures expected in the quarters ahead, which we believe is a strong indicator of our customers’ desires to make increased investments in SkyWater to enable the growth ramp for multiple products and platforms currently under development.
• Electronic systems design leader Cadence Design Systems, Inc. is now offering a full SKY130 process design kit (PDK) to their broad subscribed user base, encouraging and facilitating design work and subsequent tapeouts on one of SkyWater’s key CMOS technology platforms.
• Continued momentum for our CHIPS Act funding applications, in particular for our planned expansion in Bloomington MN, and we look forward to the continued due diligence process with the Department of Commerce for mature node fabrication facilities.

Q3 2023 Summary: