SkyWater's Q1 2025: Funding Contradictions and Margin Expectations Unveiled

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Revenue and Financial Performance:
- SkyWater's revenue for Q1 2025 was $61.3 million, aligning with its guidance and slightly above the midpoint of the range.
- Wafer Services exceeded expectations, driven by strong traction from the ThermaView platform, while Advanced Testing Services (ATS) faced temporary softness due to budget delays in Washington D.C.
- The company maintained a strong gross margin and adjusted EBITDA performance.

ThermaView Platform and Wafer Services Growth:
- The ThermaView platform, a 90-nanometer CMOS and MEMS platform, led to over half of Q1's Wafer Services revenue.
- This platform's ramp-up is expected to continue driving Wafer Services growth in 2025, supporting sustainable innovation-driven growth.
- The shift towards new products, with 60% new and 40% legacy revenue in Q1, indicates a strategic transition away from legacy business.

Impact of Tariff Policy and Uncertainty:
- Despite the new tariffs, SkyWater has not seen downward revisions in demand forecasts from major customers.
- The company anticipates limited tariff risk, particularly in defense, with a focus on proactive cost management to mitigate any financial impacts.

Capital Markets Day and Fab 25 Acquisition:
- SkyWater plans to hold its Capital Markets Day at Fab 25 in Austin in early to mid-July.
- The acquisition of Fab 25 is expected to enhance SkyWater's technology as-a-service model, diversifying its revenue base and aligning with U.S. semiconductor resilience goals.
- The acquisition is supported by a 4-year supply agreement valued at over $1 billion, providing immediate revenue and cash flow.