On November 8, 2023, SkyWater Technology Inc (SKYT, Financial) released its financial results for the third quarter of 2023, which ended on October 1, 2023. The company reported a significant increase in revenue and gross margin, although it still faced a net loss to shareholders.
Financial Performance Overview
The company's revenue for Q3 2023 reached a record high of $71.6 million, marking a 37% increase compared to Q3 2022. This growth was primarily driven by a 62% increase in Advanced Technology Services (ATS) revenue, which totaled $57.1 million. However, Wafer Services revenue saw a decline of 16%, coming in at $14.5 million.
Gross profit followed the revenue trend, with GAAP gross profit reaching $14.1 million, or 19.8% of revenue, up from 15.8% in the same quarter the previous year. Non-GAAP gross profit also saw an increase to $14.6 million, or 20.4% of revenue, compared to 16.9% in Q3 2022.
Despite the revenue and gross margin growth, SkyWater Technology Inc (SKYT, Financial) reported a net loss to shareholders of $7.6 million, or $(0.16) per share on a GAAP basis. This is a slight decrease from the net loss of $6.9 million, or $(0.17) per share, in Q3 2022. On a non-GAAP basis, the net loss to shareholders was $2.2 million, or $(0.05) per share, which is an improvement from the $5.1 million, or $(0.13) per share, in the prior year.
Adjusted EBITDA for the quarter was $8.3 million, or 11.6% of revenue, showing a significant improvement from $3.8 million, or 7.3% of revenue, in Q3 2022.
Operational Highlights and Future Outlook
Thomas Sonderman, SkyWater chief executive officer, commented on the company's performance, stating,
SkyWater again achieved revenue upside and sequential growth in what was a very strong third quarter for our ATS business. 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."He also highlighted the increasing contribution of customer-funded capital expenditures and expressed optimism for continued revenue growth and strong financial results in 2024.
Among the business highlights, SkyWater Technology Inc (SKYT, Financial) noted the increased size and scope of strategic aerospace and defense programs, progress on the RadHard 90nm platform, and the beginning of significant increases in customer-funded capital expenditures. The company also mentioned the offering of a full SKY130 process design kit (PDK) by Cadence Design Systems, Inc. and the momentum for CHIPS Act funding applications.
Balance Sheet and Cash Flow
As of October 1, 2023, SkyWater Technology Inc (SKYT, Financial) had cash and cash equivalents of $17.3 million. The balance sheet showed total assets of $299.7 million and total liabilities of $231.9 million. The company's shareholders' equity stood at $67.8 million.
The consolidated statements of cash flows revealed a net loss of $16.7 million for the nine-month period ended October 1, 2023, with net cash used in operating activities totaling $21.7 million. Cash flows from investing activities amounted to a use of $4.5 million, while cash flows from financing activities provided $13.5 million.
Conclusion
Overall, SkyWater Technology Inc (SKYT, Financial) demonstrated strong revenue growth and gross margin improvement in Q3 2023, despite a net loss to shareholders. The company's focus on operational execution and strategic initiatives, including customer-funded capital expenditures and CHIPS Act funding, positions it for potential future growth.
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Explore the complete 8-K earnings release (here) from SkyWater Technology Inc for further details.
