Data I/O Q4 Earnings Call Highlights
by Teresa Graham · The Cerbat GemData I/O (NASDAQ:DAIO) executives said the company’s 2025 results reflected a difficult operating environment, but emphasized progress on a multi-pronged transformation initiative that management believes has moved ahead of schedule. On the company’s fourth quarter 2025 earnings call, President and CEO Bill Wentworth said Data I/O continued investing in its platform and operational upgrades despite headwinds that included tariffs and softer capital spending in key markets.
Management highlights transformation progress and market expansion plans
Wentworth said Data I/O’s mission throughout 2025 was to “transform [the company] for long-term growth,” and that the plan is “approximately 1 year ahead of schedule,” with the CEO later characterizing the effort as “easily” about six months ahead of a typical transformation timeline. He said the company executed against six strategic priorities, including modernizing go-to-market efforts, investing in its core platform, strengthening customer relationships, optimizing operations and IT infrastructure, improving processes, and deploying AI across the company.
Wentworth also referenced a cybersecurity incident during the year, saying the company was “up and running within 11 working days” and that the event highlighted areas where infrastructure needed to be improved. He said moving systems and data to the cloud remains part of the ongoing transformation to increase security.
Strategically, management said Data I/O is expanding its addressable market beyond traditional programming capital equipment spending. Wentworth said the company is shifting toward a broader “data provisioning” opportunity and leveraging its platform into adjacent markets including programming services and programming test, with activity “building for both.” He also said Data I/O has made deliberate changes to its board and executive team over the past 18 months to support execution, and reiterated a goal to return the company to revenue growth and to become cash flow neutral to positive “throughout the year,” while the CFO later discussed a path to positive operating cash flow by the end of 2026.
Partnership with IAR and “edge AI” demand discussed
Wentworth highlighted a partnership with IAR, describing it as combining IAR’s security expertise with Data I/O’s provisioning capabilities to support security provisioning. He said the companies’ algorithm libraries are aligned and described the combined solution as “frictionless” and easier to implement in a complex area.
Management also discussed what it sees as emerging demand tied to “edge AI” infrastructure. Wentworth said conversations with new customers early in 2026 included “significant build-outs” that were not part of the company’s revenue plan coming into the year. He described the shift as driven by the need to expand the edge of the network to enable autonomous vehicles, robotics, and IoT devices, and said he expects it to be a multi-year growth cycle and a source of new revenue opportunities.
Fourth quarter and full-year financial results
Chief Financial Officer Charlie DiBona reported fourth-quarter net sales of $4.0 million, down from $5.2 million in the fourth quarter of 2024. Full-year 2025 net sales were $21.5 million compared with $21.8 million in 2024. Fourth-quarter bookings were $3.1 million, down 25% from $4.1 million a year earlier, and full-year bookings were $18.6 million, down 17% from $22.5 million in 2024.
Regionally, DiBona said 2025 bookings and revenues were strongest in Asia, North America demand was consistent with the prior year, and Europe declined. He added that as a global company headquartered in the Western Hemisphere, Data I/O is positioned to support customers migrating manufacturing facilities to the Americas.
For the 2025 revenue mix, consumables, adapters, and services represented 58% of total revenue, which management described as providing a stable base of recurring revenue. Deferred revenue rose to approximately $1.5 million as of December 31, 2025, from $1.4 million as of September 30. Capital equipment sales represented the remaining 42% of 2025 revenues. DiBona said demand for capital equipment was negatively impacted as technology spending was realigned toward AI-related data center investments, and he noted that a reassessment of EV capacity and manufacturing weighed on the automotive electronics sector, the company’s largest end market.
Sales to automotive electronics represented 52% of 2025 bookings, down from 59% in 2024, while backlog as of December 31 was $2.3 million, down from $2.7 million at the end of September.
Gross margin was 43% in the fourth quarter, down from 52.2% in the prior-year quarter. Full-year gross margin was 49.3% versus 53.3% in 2024. DiBona attributed the decline to mix shifts and lower absorption of labor and overhead, while noting direct material costs remained relatively steady as the company worked to mitigate tariffs and inflationary pressures.
Operating expenses were $4.2 million in the fourth quarter, including about $312,000 in one-time expenses related to SEC filings, restructuring work, and early phases of an ERP transition, compared to $4.0 million in the prior-year quarter. Full-year operating expenses were $15.7 million, including $1.4 million of one-time items tied primarily to leadership transition, platform and information systems investments, SEC filings, and cybersecurity remediation. The company reported a fourth-quarter net loss of $2.5 million, or $0.27 per share, versus a net loss of $1.2 million, or $0.13 per share, in the prior-year quarter. Full-year net loss was $5.0 million, or $0.53 per share, compared with a $3.1 million net loss, or $0.34 per share, in 2024.
AI deployment and software initiatives
During Q&A, Wentworth and DiBona described AI as increasingly central to operational efficiency and software development. Wentworth said a document AI project that previously cost about $120,000 could now be done for “about $100,” reflecting rapid advances in tooling. He also said the company had AI integrated into its development process and that it released production code “this week” with minimal human intervention. DiBona said AI is accelerating work on ERP preparation tasks such as mapping data structures and policies and may reduce implementation costs.
Management also pointed to operational software initiatives. Wentworth said Salesforce Service Cloud was launched, with a formal launch occurring a week ahead of schedule, and that the project cost was reduced from an initial scope of nearly $250,000 to about $100,000 through AI and process changes. Later, management discussed increasing software “attach rate” on equipment and described software as highly profitable revenue. Wentworth said attach rates were around 20% to 30% and that the company believes it can double that during the year, aided by new software releases that provide more value to customers.
Liquidity, cost actions, and M&A pipeline
DiBona said the company’s balance sheet remains solid, with $7.9 million in cash at year-end, down from $10.3 million at December 31, 2024. Net working capital was $12.3 million versus $16.1 million a year earlier, and the company ended 2025 with no debt. Management attributed the cash decline to one-time expenses, platform investments, and IT spending, partially offset by reduced inventory levels and higher accounts payable. Inventories were reduced by about $0.5 million as the company implemented leaner programs.
Looking to 2026, DiBona outlined a framework centered on organic growth and cost discipline. Key elements included targeting organic growth supported by early edge AI demand signals and recurring revenue, building a pipeline for programming services and test markets, improving gross margin through better absorption as revenue increases, and pursuing an additional $1 million in run-rate reductions beyond previously implemented structural improvements starting in early 2026. He said the combination provides “line of sight to positive operating cash flow by the end of 2026,” while noting the discussion did not include inorganic initiatives.
On M&A, Wentworth said the pipeline is active, mentioning that a data room was opened on one opportunity and another was expected imminently, alongside additional discussions. Both Wentworth and DiBona emphasized deal discipline, noting they had already walked away from transactions that did not make financial sense and that targets are expected to be “day one accretive.” In response to a retail investor question, DiBona said the company is exploring non-equity sources of cash and does not expect to pursue wholly equity-funded acquisitions, while also describing a shelf registration as a flexibility tool rather than an immediate financing plan.
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.