Research HubSoftware & Cloud ServicesSkyWater Technology, Inc. (SKYT)

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SEC 10-K / 10-Q Equity ResearchSoftware & Cloud ServicesTicker: SKYT

SkyWater Technology, Inc. (SKYT) DCF Valuation & Fundamental Primer

SkyWater Technology, Inc. (SKYT) currently trades at $25.16 with an enterprise value of $777.2M. Our proprietary institutional model rates SkyWater Technology, Inc. at 83/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 25.6% vs. historical growth of 15.6% (Aggressive Growth Expectations Priced In).

GDA Quality Score

A83/100

High-Quality Compounder

Share Price / DCF Base

$25.16 / $17.68

Enterprise Value

$1.14B

TTM Revenue

$143.6M (+15.6%)

Gross Margin

79.1%

Rule of 40 Score

38.8%

EV / TTM Revenue

7.9×

Structural Moat: Enterprise Software & Cloud Services Switching Costs & Recurring Workflow Integration

Key Growth Catalyst: AI workflow automation, multi-module expansion across enterprise cohorts, and operating margin leverage at SkyWater Technology, Inc..

Institutional fundamental teardown of SkyWater Technology, Inc. (SKYT) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.

Seed SKYT in Interactive 3-Statement Model

Section 1 · Intrinsic Valuation Engine

SkyWater Technology, Inc. (SKYT) 3-Scenario DCF Valuation Range

WACC: 10.0% · Terminal Growth: 2.5% · Diluted Shares: 47.9M

bear Case DCFSensitivity

$9.08

Implied Equity Value:$435.0M

vs Current ($25.16):-63.9%

base Case DCFPrimary Benchmark

$17.68

Implied Equity Value:$847.3M

vs Current ($25.16):-29.7%

bull Case DCFSensitivity

$28.93

Implied Equity Value:$1.39B

vs Current ($25.16):+15.0%

Interactive What-If DCF SandboxSim Rule of 40: 38.8%

Stress-test SKYT's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.

Seed Custom Drivers in /model

1-Click Regimes:

5Y Revenue CAGR15.6%

2%Hist: 15.6%50%

Target FCF Margin23.2%

5%Base: 23.2%45%

WACC Discount Rate10.0%

6.5%Base: 10%14.5%

Terminal Growth (g)2.5%

1.0%Implies 13.7× Y5 FCF4.0%

Accounting Lens:

Simulated Implied Price$17.68

Spread vs Market-29.7%

Simulated EV$777.2M

Effective FCF Margin23.2%

Simulated 5-Year Cash Flow Trajectory (Unlevered FCF vs. Discounted PV)Cumulative 5Y PV: $193.8M

Year 1$166.0M

FCF:$38.5M

PV:$35.0M

Year 2$191.8M

FCF:$44.5M

PV:$36.8M

Year 3$221.8M

FCF:$51.5M

PV:$38.7M

Year 4$256.4M

FCF:$59.5M

PV:$40.6M

Year 5$296.4M

FCF:$68.8M

PV:$42.7M

Enterprise Value Composition Bridge$777.2M

Split between 5-Year Explicit Cash Flows and Discounted Terminal Value

5Y Explicit PV: $193.8M (24.9%)Terminal PV: $583.5M (75.1%)

(+) Balance Sheet Cash & Equivalents+$95.8M

(−) Total Debt Obligations−$25.7M

(=) Implied Equity Value (47.9M shs)$847.3M

2D Institutional Valuation Sensitivity Heatmap

Implied share price & upside/downside spread across 25 valuation states (Current Price: $25.16).

WACC \ Terminal	1.5%	2.0%	2.5%	3.0%	3.5%
8.5%	$19.51 -22%	$20.65 -18%	$21.98 -13%	$23.55 -6%	$25.43 +1%
9.3%	$17.66 -30%	$18.56 -26%	$19.59 -22%	$20.78 -17%	$22.18 -12%
10.0%	$16.14 -36%	$16.86 -33%	$17.68 -30%	$18.61 -26%	$19.69 -22%
10.8%	$14.87 -41%	$15.46 -39%	$16.12 -36%	$16.86 -33%	$17.71 -30%
11.5%	$13.79 -45%	$14.28 -43%	$14.82 -41%	$15.43 -39%	$16.11 -36%

Section 2 · Fundamental Underwriting

Institutional Software Quality Scorecard (83/100 · Grade A)

High-Quality Compounder

Strong fundamentals, above-average cash generation, and robust competitive positioning.

Cash Conversion25 / 25

Actual: 829% of EBITTarget: Target: ≥100%

Elite deferred revenue float; FCF exceeds operating income by >20%

Dilution Friction16 / 25

Actual: 13.3% of RevTarget: Target: ≤8%

Standard software SBC dilution; modest equity transfer to employees

Unit Economics20 / 25

Actual: 79% GM / R40: 39%Target: Target: ≥75% GM / ≥40% R40

High-quality software margins with healthy balanced growth and profitability

Balance Sheet22 / 25

Actual: +$70.1M Net CashTarget: Target: Net Cash > 0

Positive net cash cushion; self-funding operations with zero insolvency risk

Core Investment Strengths & Moats

High-grade cash conversion: FCF is 829% of EBIT driven by upfront annual collections
Healthy unit economics: 79.1% gross margin
Net cash positive: $70.1M balance sheet buffer

Key Operational & Dilution Risks

Section 3 · Expectations Investing

Reverse-DCF Solver: What Growth is Priced Into SKYT?

Aggressive Growth Expectations Priced In

The current share price demands 25.6% 5-year CAGR (37.8% net of SBC & dilution)—a +10.0% acceleration over historical run-rate (15.6%). Any growth slowdown risks valuation multiple contraction.

Implied 5-Year Revenue CAGR

25.6%

Required to justify $1.14B EV

Historical Run-Rate CAGR

15.6%

Audited multi-year top-line trajectory

Growth Hurdle Spread

+10.0%

Implied hurdle minus historical growth

Implied FCF Margin @ Hist. Growth

33.9%

Steady-state FCF margin needed at current CAGR

Institutional Dilution-Adjusted Hurdle Lens

Headline Reverse-DCF ignores Stock-Based Compensation (13.3% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 37.8% 5-year revenue CAGR to justify $25.16/sh on a true per-share economic cash flow basis.

True Economic Hurdle37.8%

SBC & Dilution Hurdle Tax+12.2% / yr

Section 4 · 5-Year Forecast Schedule

SkyWater Technology, Inc. (SKYT) 5-Year Fundamental Forecast

Customize in Live Engine

Statement Line Item	TTM Audited Base	TTM	Y1	Y2	Y3	Y4	Y5
Revenue	$143.6M	$143.6M	$166.0M	$191.8M	$221.8M	$256.4M	$296.4M
Gross Profit	$113.6M	$113.6M	$131.3M	$151.8M	$175.4M	$202.8M	$234.4M
Operating Income (EBIT)	$4.0M	$4.0M	$4.6M	$5.4M	$6.2M	$7.2M	$8.3M
Stock-Based Compensation (SBC)	$19.1M	$19.1M	$22.1M	$25.5M	$29.5M	$34.1M	$39.4M
Unlevered Free Cash Flow (FCF)	$33.3M	$33.3M	$38.5M	$44.5M	$51.5M	$59.5M	$68.8M
SBC-Adjusted True Cash Flow	$14.2M	$14.2M	$16.4M	$19.0M	$22.0M	$25.4M	$29.3M

Section 5 · Relative Valuation Multiples & Regression

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Click any peer node or ticker to open its dedicated equity research report

Rule of 40 vs. EV / Revenue Multiple Regression

OLS Fit: EV/Rev = -19.6 + 0.62 × (Rule of 40) · R² = 70%

Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.

SKYT Actual vs. Reg. Multiple7.9× vs 4.5× fair

Reg.-Implied Share Price$15.02 (+74.7% Premium)

SKYTSkyWater Technology, Inc.·Rule of 40: 38.8%·Actual EV/Rev: 7.9×·Regression Fair Multiple: 4.5×

+74.7% Above Trendline (Premium)Open SKYT Report

Company	Ticker	Market Cap	TTM Revenue	Gross Margin	FCF Margin	Rule of 40	SBC % Rev	EV / Rev
SkyWater Technology, Inc.	SKYT	$1.21B	$143.6M	79.1%	23.2%	38.8%	13.3%	7.9×
ServiceNow	NOW	$152.61B	$10.98B	79.2%	31.1%	54.2%	15.9%	13.9×
Workday, Inc.	WDAY	$50.35B	$8.00B	75.0%	27.4%	43.9%	19.0%	6.4×
Salesforce	CRM	$217.10B	$37.90B	77.2%	32.8%	42.8%	8.4%	5.8×
Datadog	DDOG	$46.05B	$2.68B	80.8%	31.1%	57.7%	21.3%	17.4×
Snowflake Inc.	SNOW	$71.79B	$3.63B	66.5%	25.2%	57.7%	40.8%	20.0×
Hubspot	HUBS	$19.89B	$2.63B	85.0%	21.3%	52.7%	19.2%	7.7×
Peer Cohort Median Benchmark (N=6)				78.2%	29.2%	53.5%	19.1%	10.8×

Section 6 · Downside Protection & Multiple Sensitivity

EV / Revenue Multiple Compression Stress Test

Multiple Scenario	EV / Revenue	Implied Enterprise Value	Implied Equity Value	Implied Share Price	Delta vs Current
Current Multiple	7.9×	$1.14B	$1.21B	$25.16	0.0%
-20% Multiple Compression	6.3×	$908.7M	$978.8M	$20.42	-20.0%
-35% Multiple Compression	5.1×	$738.3M	$808.4M	$16.87	-35.0%
Software Baseline Floor (5.0× EV/Rev)	5.0×	$717.8M	$787.9M	$16.44	-36.8%

Section 7 · Investor Diligence FAQ

Frequently Asked Questions: SkyWater Technology, Inc. (SKYT) Valuation

What is SkyWater Technology, Inc. (SKYT)'s intrinsic DCF valuation and implied share price?

Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, SkyWater Technology, Inc. (SKYT) has a Base Case implied value of $17.68 per share (with a Bear Case of $9.08 and a Bull Case of $28.93), compared to its current price of $25.16. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.

What is SkyWater Technology, Inc. (SKYT)'s Rule of 40 score and Free Cash Flow margin?

SkyWater Technology, Inc. achieves a Rule of 40 score of 38.8%, combining a 15.6% revenue growth run-rate with a 23.2% TTM free cash flow margin on $143.6M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.

What revenue growth rate is priced into SKYT stock according to Reverse-DCF analysis?

At $25.16 per share (Enterprise Value of $1.14B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 25.6%, compared to SkyWater Technology, Inc.'s historical CAGR of 15.6%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".

How does SkyWater Technology, Inc. compare to Software & Cloud Services software peers?

SkyWater Technology, Inc. (SKYT) earns an institutional Software Quality Score of 83/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.

How does Stock-Based Compensation (SBC) impact SkyWater Technology, Inc. (SKYT)'s valuation?

SkyWater Technology, Inc. recorded $19.1M in TTM stock-based compensation (13.3% of revenue). When treating SBC as a cash-equivalent compensation expense, SkyWater Technology, Inc.'s SBC-adjusted free cash flow yield is 1.2%, scoring 16/25 on our Shareholder Dilution Friction pillar.

SkyWater Technology, Inc. (SKYT) DCF Valuation & Fundamental Primer

WACC \ Terminal

1.5%

2.0%

2.5%

3.0%

3.5%

8.5%

$19.51

-22%

$20.65

-18%

$21.98

-13%

$23.55

-6%

$25.43

+1%

9.3%

$17.66

-30%

$18.56

-26%

$19.59

-22%

$20.78

-17%

$22.18

-12%

10.0%

$16.14

-36%

$16.86

-33%

$17.68

-30%

$18.61

-26%

$19.69

-22%

10.8%

$14.87

-41%

$15.46

-39%

$16.12

-36%

$16.86

-33%

$17.71

-30%

11.5%

$13.79

-45%

$14.28

-43%

$14.82

-41%

$15.43

-39%

$16.11

-36%

Statement Line Item

TTM Audited Base

TTM

Revenue

$143.6M

$166.0M

$191.8M

$221.8M

$256.4M

$296.4M

Gross Profit

$113.6M

$131.3M

$151.8M

$175.4M

$202.8M

$234.4M

Operating Income (EBIT)

$4.0M

$4.6M

$5.4M

$6.2M

$7.2M

$8.3M

Stock-Based Compensation (SBC)

$19.1M

$22.1M

$25.5M

$29.5M

$34.1M

$39.4M

Unlevered Free Cash Flow (FCF)

$33.3M

$38.5M

$44.5M

$51.5M

$59.5M

$68.8M

SBC-Adjusted True Cash Flow

$14.2M

$16.4M

$19.0M

$22.0M

$25.4M

$29.3M

Company

Ticker

Market Cap

TTM Revenue

Gross Margin

FCF Margin

Rule of 40

SBC % Rev

EV / Rev

SkyWater Technology, Inc.

SKYT

$1.21B

$143.6M

79.1%

23.2%

38.8%

13.3%

7.9×

ServiceNow

NOW

$152.61B

$10.98B

79.2%

31.1%

54.2%

15.9%

13.9×

Workday, Inc.

WDAY

$50.35B

$8.00B

75.0%

27.4%

43.9%

19.0%

6.4×

Salesforce

CRM

$217.10B

$37.90B

77.2%

32.8%

42.8%

8.4%

5.8×

Datadog

DDOG

$46.05B

$2.68B

80.8%

31.1%

57.7%

21.3%

17.4×

Snowflake Inc.

SNOW

$71.79B

$3.63B

66.5%

25.2%

57.7%

40.8%

20.0×

Hubspot

HUBS

$19.89B

$2.63B

85.0%

21.3%

52.7%

19.2%

7.7×

Peer Cohort Median Benchmark (N=6)

78.2%

29.2%

53.5%

19.1%

10.8×

Multiple Scenario

EV / Revenue

Implied Enterprise Value

Implied Equity Value

Implied Share Price

Delta vs Current

Current Multiple

7.9×

$1.14B

$1.21B

$25.16

0.0%

-20% Multiple Compression

6.3×

$908.7M

$978.8M

$20.42

-20.0%

-35% Multiple Compression

5.1×

$738.3M

$808.4M

$16.87

-35.0%

Software Baseline Floor (5.0× EV/Rev)

5.0×

$717.8M

$787.9M

$16.44

-36.8%

SkyWater Technology, Inc. (SKYT) 3-Scenario DCF Valuation Range

2D Institutional Valuation Sensitivity Heatmap

Institutional Software Quality Scorecard (83/100 · Grade A)

Core Investment Strengths & Moats

Key Operational & Dilution Risks

Reverse-DCF Solver: What Growth is Priced Into SKYT?

SkyWater Technology, Inc. (SKYT) 5-Year Fundamental Forecast

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Rule of 40 vs. EV / Revenue Multiple Regression

EV / Revenue Multiple Compression Stress Test

Frequently Asked Questions: SkyWater Technology, Inc. (SKYT) Valuation

What is SkyWater Technology, Inc. (SKYT)'s intrinsic DCF valuation and implied share price?

What is SkyWater Technology, Inc. (SKYT)'s Rule of 40 score and Free Cash Flow margin?

What revenue growth rate is priced into SKYT stock according to Reverse-DCF analysis?

How does SkyWater Technology, Inc. compare to Software & Cloud Services software peers?

How does Stock-Based Compensation (SBC) impact SkyWater Technology, Inc. (SKYT)'s valuation?

Related Software & Cloud Services Equity Research Reports

SkyWater Technology, Inc. (SKYT) 3-Scenario DCF Valuation Range

2D Institutional Valuation Sensitivity Heatmap

Institutional Software Quality Scorecard (83/100 · Grade A)

Core Investment Strengths & Moats

Key Operational & Dilution Risks

Reverse-DCF Solver: What Growth is Priced Into SKYT?

SkyWater Technology, Inc. (SKYT) 5-Year Fundamental Forecast

Software & Cloud Services Peer Comparables & Rule of 40 Regression

Rule of 40 vs. EV / Revenue Multiple Regression

EV / Revenue Multiple Compression Stress Test

Frequently Asked Questions: SkyWater Technology, Inc. (SKYT) Valuation

What is SkyWater Technology, Inc. (SKYT)'s intrinsic DCF valuation and implied share price?

What is SkyWater Technology, Inc. (SKYT)'s Rule of 40 score and Free Cash Flow margin?

What revenue growth rate is priced into SKYT stock according to Reverse-DCF analysis?

How does SkyWater Technology, Inc. compare to Software & Cloud Services software peers?

How does Stock-Based Compensation (SBC) impact SkyWater Technology, Inc. (SKYT)'s valuation?

Related Software & Cloud Services Equity Research Reports