Data I/O Corporation

Net sales in Q2 were $5.2 million, up 59% sequentially from $3.3 million in Q1 and down from $5.9 million in Q2 last year. Gross margin was 57% versus 49.5% in Q1 and 49.8% in Q2 of last year. Operating loss was $724,000 versus a $844,000 loss a year ago, and net loss was $1.6 million, or $0.17 per share, versus $742,000, or $0.08 per share, last year; the larger net loss was driven mainly by $873,000 of interest expense tied to convertible debenture accounting. Adjusted EBITDA, excluding equity compensation and one-time items, was positive $39,000 compared with negative $1.75 million in Q1. Cash at quarter end was $10.8 million. Management did not provide specific third-quarter revenue guidance, but reaffirmed its 2026 business framework for organic revenue growth over 2025, more recurring and services revenue, expansion in programming services, and margin improvement; it said the transformational acquisition remains on track and is expected to close after the exclusivity extension through the end of August.

Bill Wentworth framed the quarter as evidence that Data I/O is moving into a more scalable, diversified phase. He emphasized new logos, new domains, better pricing discipline, faster device turnaround, and a lower cost structure that he believes can support profitability and quarter-over-quarter growth. He was notably upbeat about the security asset acquisition, saying it creates a differentiated offering and multiple new revenue streams without requiring major new investment in the core platform.

Charlie DiBona focused on the financial inflection: Q2 revenue rose to $5.2 million, gross margin expanded to 57%, operating expenses excluding one-time items fell to about $3.1 million, and adjusted EBITDA was essentially breakeven at positive $39,000. He explained that the reported $1.6 million net loss included $873,000 of interest expense, of which about $863,000 was noncash accretion from the convertible debenture discount; the notes converted to Series B preferred stock on July 8, so the company now has no debt outstanding. He also said cash was $10.8 million at quarter end and that removing the temporary debenture liability would have implied $17 million of working capital.

Analysts asked about the status of the planned acquisition, and management said exclusivity was extended through the end of August and that they remain confident it will close. A question about staffing clarified that the company had not formally added new executives, though it has brought in a strategic consultant to review customer-facing activities and Programming-as-a-Service. Management also addressed AI-driven memory shortages, saying the ripple effects are real but not yet broadly damaging to Data I/O’s UFS business, though some customers tied to the acquisition have faced allocation issues.