Data I/O (NASDAQ:DAIO) reported a sharp year-over-year decline in first-quarter revenue, but management said bookings improved through the quarter and pointed to a stronger second quarter, a new $9 million direct investment and a planned acquisition that executives described as transformational.
On the company’s first-quarter 2026 earnings call, President and CEO Bill Wentworth said the quarter began more slowly than expected as Data I/O worked to generate revenue from its global installed base. He said bookings began to improve in March, but not early enough to support first-quarter shipments.
Chief Financial Officer Charlie DiBona said first-quarter net sales were $3.3 million, down from $6.2 million in the prior-year quarter. Bookings were $4.2 million, up from $3.1 million in the fourth quarter of 2025 but below $4.6 million in the first quarter of 2025. Backlog was $2.6 million at March 31, compared with $2.3 million at year-end, while deferred revenue remained $1.5 million.
Quarter Shows Lower Revenue, Higher Sequential Bookings
DiBona said the reduced revenue reflected lower bookings and backlog exiting the fourth quarter, as well as a slower-than-expected ramp of new sales initiatives. Still, he said the company saw “positive acceleration of traction and momentum through the quarter.”
The company’s first-quarter revenue mix included 47% adapters and 34% software and services, together representing 81% of total revenue. Capital equipment accounted for the remaining 19%, though DiBona said the company expects capital equipment sales to rebound in the second quarter based on stronger bookings.
Gross margin was 49.5%, compared with 51.6% in the first quarter of 2025. DiBona attributed the decline to lower absorption of labor and overhead on a smaller revenue base, while noting that direct material costs remained relatively steady.
Operating expenses were $4.75 million, including about $1.2 million of one-time expenses. DiBona said those costs were primarily related to optimization of German operations, investments in core programming platform information systems and an ongoing ERP transition. Excluding those items, operating expenses were approximately $3.55 million.
Data I/O reported a net loss of $3.2 million, or $0.34 per share, compared with a net loss of $382,000, or $0.04 per share, in the year-earlier quarter. Adjusted EBITDA, excluding equity compensation and one-time items, was negative $1.75 million, compared with negative $98,000 a year ago.
Company Issues Unusual Q2 Revenue Guidance
Although management said Data I/O does not expect to provide regular quarterly guidance, DiBona issued second-quarter revenue guidance of $5 million to $5.4 million, citing late first-quarter momentum, delayed revenue recognition from bookings that shifted into Q2 and new activity early in the quarter.
“Demand did not disappear, it shifted,” DiBona said.
Wentworth said he was “highly confident” that both bookings and revenue would move north of $5 million in the quarter. He said North America and Mexico were showing momentum, while Asia remained slower. In Europe, Wentworth said Data I/O booked three purchase orders for systems in the first quarter, more than the company had booked there in the prior two years combined.
Management also emphasized cost reductions. Wentworth said the company’s annual breakeven level had been reduced to less than $22 million, compared with nearly $27 million when he started. DiBona said operational optimizations implemented since the beginning of 2026 have produced approximately $1.8 million in annual run-rate expense reductions.
In response to an analyst question, management confirmed that at roughly $5.5 million in quarterly revenue, assuming gross margins remain in line with recent levels, the company would be around EBITDA neutral.
$9 Million Investment to Support M&A Strategy
Data I/O also announced a private placement with a single institutional investor for $9 million in gross proceeds, which DiBona said the company expects to close before the end of May.
The investment includes approximately 870,000 shares of common stock, a convertible debenture with a principal amount of approximately $6.8 million and warrants to purchase up to 1.08 million shares of common stock. The warrants have an exercise price of $3 per share and are exercisable for five years. The unsecured debenture is convertible into non-voting Series B preferred stock, which can convert into common stock at an initial conversion price of $2.50 per share, subject to stockholder approval under Nasdaq rules.
DiBona said the investment validates the company’s strategy, strengthens its balance sheet and supports its acquisition plans without traditional secured debt. He said the institutional investor will become Data I/O’s largest shareholder.
Planned Acquisition Expected to Nearly Double Revenue
Management said Data I/O has executed a letter of intent to acquire a leading manufacturer in its space for total consideration of approximately $23 million. DiBona said the deal is expected to nearly double annual revenue and be immediately accretive to earnings and cash flow upon closing. Wentworth said he expects the acquisition to close by the end of the third quarter.
About $3 million of the purchase price is expected to be paid in equity, according to DiBona. He said the willingness of the seller’s private equity owners to take roughly 15% of the consideration in Data I/O stock is “meaningful.”
Wentworth said the acquisition would expand Data I/O’s scale, scope and manufacturing capacity. In the Q&A session, he said the target is not a direct competitor but operates in complementary and adjacent markets. He said less than 10% of the target’s business is in automotive, giving Data I/O exposure to customer relationships in areas such as semiconductor companies, military, defense and aerospace.
Asked about financing the balance of the cash portion of the acquisition, DiBona said the company is evaluating potential debt or the assumption of debt on the target’s balance sheet. He said Data I/O does not expect to raise additional equity to close the transaction.
Programming as a Service Remains a Strategic Focus
Wentworth repeatedly highlighted Data I/O’s effort to expand into Programming as a Service, which he said could provide recurring revenue and reduce the lumpiness associated with capital equipment sales. He said the company is in “very deep conversations” with large subcontractors considering a move from insourcing to on-site or regional Programming as a Service.
In response to an analyst question, Wentworth said none of the company’s second-quarter revenue guidance includes Programming as a Service revenue. He said Data I/O is in discussions with eight existing customers and would be “shocked” if the company did not have one to three contracts signed by the end of the third quarter.
Wentworth also pointed to robotics, automation and edge-network applications as markets where Data I/O is seeing demand tied to broader artificial intelligence-related infrastructure investment. He said two of the company’s new customer logos are robotics companies.
Management also discussed security provisioning, with Wentworth citing the European Union’s Cyber Resilience Act, which he said becomes mandatory in September 2027, as a factor increasing customer interest in security-related programming services.
“The first quarter financials reflect where we’ve been, a business in transition with costs coming down and customer activity building,” DiBona said. “The Q2 guidance of $5 million to $5.4 million revenue reflects where we’re going on an organic basis.”
About Data I/O (NASDAQ:DAIO)
Data I/O Corporation is a provider of device programming solutions for semiconductor and microcontroller manufacturers, test houses, contract manufacturers and electronics design engineers. The company’s product portfolio includes universal and site-specific programmers, automated programming systems and software tools that enable high-volume production, development and field programming of non-volatile memories and microcontrollers. Data I/O’s solutions are designed to support a wide range of programmable devices, including Flash, EPROM, EEPROM, PLDs, FPGAs and automotive-grade microcontrollers.
The company’s flagship technologies include its high-speed FlashCORE III programming engines and the SB-OS-A automated handling system, which together streamline production workflows by providing scalable, multi-site programming capabilities.
