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DI

DATA I/O CORP (DAIO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net sales were $6.176M, up 19% QoQ from $5.185M and up 1% YoY from $6.099M; diluted EPS improved to ($0.04) from ($0.13) QoQ and ($0.09) YoY .
  • Gross margin was 51.6% vs. 52.2% in Q4 2024 and 52.8% in Q1 2024, reflecting higher system mix and lower absorption from inventory reductions .
  • Bookings rose 12% QoQ to $4.6M (from $4.1M), but were below $8.1M in Q1 2024 due to a large prior-year multi-system contract; backlog fell to $2.9M and deferred revenue was ~$1.5M .
  • Management highlighted operational progress (lower OpEx, higher cash) and strategic initiatives (new product roadmap, consultative sales, semiconductor partnerships), but remains cautious on Q2 amid tariff/trade uncertainty; no formal guidance provided .

What Went Well and What Went Wrong

What Went Well

  • Sequential improvement: “We achieved strong first quarter results, reporting increases in revenue, operating income, EBITDA and cash balance as compared sequentially to the fourth quarter” .
  • Cost discipline: Operating expenses fell to $3.565M, down 11% QoQ and 12% YoY, aided by staffing reductions and efficiency initiatives .
  • Higher-margin mix support: Consumable adapters and services represented 46% of revenue, providing a stable recurring base; management is seeing increased system utilization that should spur follow-on adapters demand .

What Went Wrong

  • Regional softness: Asia revenue declined 40% YoY due to evolving trade/tariffs, late Chinese New Year, and macro uncertainty; bookings slowed late in the quarter as customers delayed decisions .
  • Margin compression: Gross margin % dipped to 51.6% from 52.2% in Q4 and 52.8% YoY, driven by higher system mix and lower absorption from inventory reductions .
  • Backlog down: Backlog decreased to $2.9M (from $3.5M at year-end) as deliveries progressed; recurring revenue mix decreased to 46% vs. ~50% in 2024, reflecting more system shipments in Q1 .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$6.099 $5.185 $6.176
Diluted EPS ($USD)($0.09) ($0.13) ($0.04)
Gross Margin %52.8% 52.2% 51.6%
Operating Expenses ($USD Millions)$4.080 $3.992 $3.565
Adjusted EBITDA ($USD Millions)($0.364) ($1.115) ($0.098)

Segment/Mix and KPI details:

MetricQ1 2024Q4 2024Q1 2025
Consumables & Services (% of Revenue)N/A~50% (FY 2024) 46%
Automotive Electronics (% of Bookings)N/A59% (FY 2024) 66%
Bookings ($USD Millions)$8.1 $4.1 $4.6
Backlog ($USD Millions)N/A$3.5 $2.9
Deferred Revenue ($USD Millions)N/A~$1.6 ~$1.5
Cash ($USD Millions)N/A$10.326 $10.485
Net Working Capital ($USD Millions)N/A$16.1 >$16
Regional YoY Revenue Growth——Americas +32%; Europe +44%; Asia −40%

Non-GAAP note: Adjusted EBITDA excludes equity compensation as reconciled in the press release tables .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueQ2 2025None provided None provided; management “cautious for the second quarter” Maintained (no formal guidance)
Gross MarginFY/Q2 2025NoneNone; margin planning actions underway to mitigate tariffs/inflation (sourcing/manufacturing/logistics) N/A
OpExFY 2025NoneContinued savings from Q4 staffing reductions (~$300k quarterly benefit), balanced by investment in growth initiatives N/A
OI&E / TaxFY/Q2 2025NoneNo formal guidance; typical annual public company costs noted in Q1 N/A
DividendsFY 2025NoneNoneN/A

Management did not issue quantitative guidance; tone is cautious near term due to tariffs/trade uncertainty .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024; Q-1: Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroFlagged macro/tariff headwinds; steady gross margin despite lower volume; efficiency gains Tariffs front-and-center; delayed customer decisions; Asia softness; cautious Q2 Headwinds intensifying
Product roadmap / portfolioCEO transition focus on optimizing programming platform; portfolio fill-out New Unified Programming Platform demo (LumenX‑M8, FlashCORE III‑M4); detailed roadmap coming in next 1–2 quarters Advancing
Semiconductor partnershipsStrategic focus with semi houses mentioned broadly Active dialogues; expect to share specifics by end of Q2/Q3; enabling complex protocols (UFS/NVMe) Building momentum
Supply chain resilienceDual US/China manufacturing noted; cost improvements Flexibility to manufacture in US/China; exploring Germany and partner manufacturing to minimize tariffs Expanding redundancy
Recurring revenue / adaptersRecurring rev ~50% in 2024; adapters/services helped offset system decline 46% of revenue; ~$2M sockets shipped; expect follow-on adapters after new systems Healthy usage signals
Regional trendsAsia growth offset Americas/Europe softness in FY 2024 Americas +32%, Europe +44% YoY; Asia −40% YoY Mixed: West strong, Asia weak
R&D/AI executionEfficiency initiatives and cost reductions AI-agent to reduce engineering operations; protocol work for advanced memory Accelerating efficiency

Management Commentary

  • “We achieved strong first quarter results, reporting increases in revenue, operating income, EBITDA and cash balance as compared sequentially to the fourth quarter… efficiency improvements and streamlining operations resulted in a lower cost basis” — William Wentworth, CEO .
  • “Global tariff and trade tensions… impacted our results… we were still able to achieve bookings growth of 12% from the fourth quarter… dual manufacturing capabilities in both the US and China… additional locations considered in Germany” — William Wentworth .
  • “Net sales… were $6.2 million, up $1 million or 19% QoQ and up $100,000 YoY… Americas and Europe up 32% and 44%… Asia down 40%” — Gerald Ng, CFO .
  • “Operating expenses… down $427,000 QoQ and $515,000 YoY… savings expected to continue… balanced with investments to drive growth” — Gerald Ng .
  • “We refreshed our manual product line… LumenX‑M8 and FlashCORE III‑M4… qualified leads up 39%… consultative approach will be a big part of our growth engine” — William Wentworth .

Q&A Highlights

  • Mix and recurring revenue: Recurring revenue was ~50% in 2024 and 46% in Q1; system shipments drove mix shift; ~$2M sockets shipped in Q1 with expectation of follow-on adapter orders after new systems .
  • Expense trajectory: SG&A down YoY; management expects continued efficiencies (IT, automation) but will reinvest to support growth; do not expect similar YoY reductions as prior two years .
  • Semiconductor partnerships: Active engagements post trade shows; under NDAs; aim to be preferred partner on complex protocols (UFS/NVMe) enabling future growth; details targeted for Q2/Q3 .
  • Near-term demand cadence: January “hot,” February “really good,” March quieter as tariffs headlines created uncertainty; recurring revenue steady, systems/CapEx delayed; cautious on Q2 .
  • Utilization and leading indicators: Company does not directly track system utilization due to security constraints; monitors adapters/socket sales and device requests as key usage indicators .

Estimates Context

S&P Global consensus for Q1 2025 was unavailable (no published EPS or revenue consensus; zero estimate counts). As a result, we cannot classify the quarter as a beat/miss versus Street. Actual revenue recognized for Q1 2025 was $6.176M and diluted EPS was ($0.04). Values retrieved from S&P Global.*

  • Primary EPS Consensus Mean (Q1 2025): N/A*
  • Revenue Consensus Mean (Q1 2025): N/A*
  • Primary EPS – # of Estimates: N/A*
  • Revenue – # of Estimates: N/A*
  • Actual Revenue (Q1 2025): $6.176M*
    Note: Operational comparisons use company-reported figures and non-GAAP reconciliations .

Key Takeaways for Investors

  • Sequential recovery with improved EPS and Adjusted EBITDA signals early impact from operational changes; cash rose to $10.485M and working capital remained >$16M, providing flexibility .
  • Near-term risk skewed to tariffs/trade dynamics (Asia softness, delayed orders); management is proactively shifting sourcing/manufacturing/logistics and evaluating additional EU capacity .
  • Mix shift toward systems in Q1 boosts revenue but can modestly compress gross margin; watch adapter follow-on orders from new system placements as a leading indicator of utilization and high-margin recurring revenue .
  • Product roadmap and semiconductor partnerships could be meaningful catalysts in Q2–Q3, particularly around complex memory protocols (UFS/NVMe) and consultative sales motion .
  • Expense base reset should continue to aid profitability; however, management will reinvest in growth (IT/automation/product) rather than pursue outsized further cuts .
  • Without Street coverage, price discovery may be sensitive to company-specific milestones (roadmap unveil, large adapter orders, tariff clarity); traders should key on bookings cadence and backlog/deferred revenue trends .
  • Medium-term thesis: Diversification beyond automotive, consultative selling, and technology leadership in advanced memory programming can expand end markets and improve revenue quality/margins as execution progresses .
Footnote: *Values retrieved from S&P Global.