Data I/O Corporation Q4 FY2025 earnings call

Bill Wentworth mentioned 2025 was a difficult quarter with tariffs but transformation continued. The setup for long-term growth was ahead of schedule, having executed 6 strategic priorities: modernizing go-to-market, investing in core platform, strengthening customer relationships, optimizing business operations/IT infrastructure, moving to cloud, improving operational processes/deploying AI company-wide. Added Board member and adjusted executive suite. Expanding addressable market from traditional programming CapEx to data provisioning market, leveraging platform into adjacent markets. Formed partnership with IR for security provisioning. Charlie DiBona walked through financial results, discussed revenue mix, margins, operating expenses, balance sheet.

Fourth quarter net sales were $4 million, down from $5.2 million in Q4 2024. Full year net sales were $21.5 million compared with $21.8 million in prior year. Fourth quarter bookings were $3.1 million, down 25% from prior year. Full year bookings were $18.6 million, down 17% from 2024. Regionally, 2025 bookings and revenues were strongest in Asia; North America demand consistent, Europe declined. Consumables, adapters, and services represented 58% of 2025 total revenue (stable recurring revenue base), capital equipment sales 42%. Gross margin in Q4 was 43% vs 52.2% in Q4 2024; full year gross margin 49.3% vs 53.3% prior year. Operating expenses in Q4 were $4.2 million, full year 2025 operating expenses $15.7 million. Net loss in Q4 was $2.5 million, full year net loss $5 million. Adjusted EBITDA in Q4 was negative $2.5 million, full year negative $3.9 million. Cash at end of Q4 was $7.9 million. Net working capital $12.3 million on Dec 31, 2025.

Targeting organic growth for 2026 over 2025 supported by Edge AI infrastructure and recurring revenue. Growing pipeline for entry into programming services and test markets. Expect improved gross margins as revenues increase. Targeting an additional $1 million in run rate reductions from early 2026. AI driving efficiency and enabling more with less. Line of sight to positive operating cash flow by end of 2026 (excluding inorganic initiatives).

Known and unknown risks, uncertainties and other factors may cause actual results to differ from forward-looking statements. Include uncertainties as to impact of global and geopolitical events, international tariff and trade regulations, order levels, automotive and semiconductor industry activity, revenue recognition timing, market acceptance of new products, economic conditions, market demand, part shortages, competitor activities. Also, cybersecurity incident and ERP implementation risks.

Q: David Williams asks about semiconductor manufacturing reshoring and revenue opportunity.

A: Bill Wentworth says semiconductor manufacturing reshoring doesn't directly impact but products being built in Americas does.

Q: David Williams asks about AI-assisted software development.

A: Bill Wentworth talks about AI in software development, like CI/CD process, releasing production code with minimal human intervention.

Q: Michael Legg asks about M&A pipeline.

A: Bill Wentworth says active pipeline with data rooms opened, expecting something to happen this year.

Q: Michael Legg asks about customer activity.

A: Bill Wentworth says conversations ongoing, 75% of pipeline opportunities new from last year.

Q: George Marema asks about activity in electric vehicle market.

A: Bill Wentworth says automotive still strong market, new solutions being brought.

Q: George Marema asks about agreement with IAR and other partnerships.

A: Bill Wentworth says big fan of partnerships, looking for more.

Q: Casey Ryan asks about gross margin dip.

A: Charles DiBona says margin will come back through year, new products in back half help.

Q: Casey Ryan asks about acquisitions size and geography.

A: Bill Wentworth says geography and size important, services industry fragmented.

Q: Unknown Attendee asks about product integration and cash flow.

A: Bill Wentworth says product integration done, cash flow positive in second half, exploring alternative cash sources.