Data I/O (NASDAQ:DAIO) reported second-quarter revenue of $5.2 million, up 59% sequentially from $3.3 million in the first quarter and within the company’s previously issued guidance range of $5.1 million to $5.4 million. Revenue was down from $5.9 million in the second quarter of 2025.
President and CEO Bill Wentworth said the company’s gross margin reached its highest level since the second quarter of 2023 despite revenue being about 30% below that earlier period. He also said the company achieved its goal of reducing the annual cost to operate the business to less than $22 million during April.
Margins Improve as Revenue Mix Shifts
Chief Financial Officer Charlie DiBona said second-quarter gross margin was 57%, compared with 49.5% in the first quarter and 49.8% a year earlier. He attributed the improvement to a more favorable sales mix, value-based pricing, operational efficiencies and increased overhead absorption from higher revenue.
Consumable adapters, software and services accounted for 55% of quarterly revenue, while platform sales represented 45%. That compared with an 81% to 19% mix in favor of consumables, software and services during the first quarter, reflecting a rebound in capital-equipment orders.
Second-quarter bookings were $4.9 million, up from $4.2 million in the first quarter. Backlog was $2.1 million as of June 30, down from $2.6 million at the end of March, which DiBona said reflected faster order fulfillment and improved order-to-ship performance. Deferred revenue declined to $1.1 million from $1.5 million.
The company reported an operating loss of $724,000, improving from an operating loss of $844,000 in the prior-year quarter despite lower revenue. Operating expenses were $3.7 million, including approximately $527,000 in one-time restructuring, consulting, IT and placement-related costs. Excluding those items, operating expenses were about $3.1 million, down sequentially and year over year.
Adjusted EBITDA, excluding equity compensation and one-time expenses, was positive $39,000, compared with negative $1.75 million in the first quarter.
Net Loss Included Convertible-Debenture Accounting Charge
Data I/O reported a net loss of $1.6 million, or $0.17 per share, compared with a net loss of $742,000, or $0.08 per share, in the second quarter of 2025. DiBona said the larger reported loss was driven primarily by an $873,000 interest expense associated with accounting for convertible debentures issued in the company’s June private placement.
Of that interest expense, approximately $863,000 was a non-cash, non-recurring accretion of debt discount, while roughly $10,000 represented 4% coupon interest, according to DiBona. The notes automatically converted into Series B preferred stock on July 8 following shareholder approval.
Data I/O ended the quarter with $10.8 million in cash, up from $5.7 million at March 31, following $8.3 million in net proceeds from the June private placement. While $6.2 million of convertible debentures was classified as short-term debt at quarter-end, DiBona said the conversion means the company currently has no debt outstanding.
Customer Expansion and Security Strategy
Wentworth said Data I/O added six customer logos during the first half: three in automotive, two in robotics and one in global communications. He said the company expects robotics demand to begin contributing more substantially in the second half of next year as customers incorporate Data I/O into their supply chains.
The company is also pursuing faster device-support turnaround times, setting a goal of four weeks compared with an industry range of roughly eight to 12 weeks, according to Wentworth.
In July, Data I/O announced its intent to acquire IAR’s embedded software security and IT-related assets. Wentworth said the acquisition would pair IAR’s security assets with Data I/O’s LumenX programming platform to support device-level security provisioning. He cited European requirements including the Cyber Resilience Act and Radio Equipment Directive, which he said are driving compliance needs across industries.
Wentworth said Data I/O intends to maintain a commercial relationship with IAR after the asset acquisition, including channel launches, technical support and service for mutual customers. He said the security platform could add revenue from annual support contracts, licensing fees, security tokens and security provisioning services.
Acquisitions and 2026 Framework
The company said a separate transformational acquisition remains in due diligence, with exclusivity extended through Aug. 31. Management said it remains confident in the transaction, which it has previously said is expected to nearly double Data I/O’s annual revenue run rate and increase earnings and cash flow upon closing.
Data I/O reaffirmed its 2026 business framework, which includes organic revenue growth over 2025, greater recurring and services revenue, expansion in programming services and operational improvements. The company did not provide third-quarter revenue guidance, saying its second-quarter outlook had been a one-time disclosure tied to visibility into delayed first-quarter orders.
Wentworth said the company entered the third quarter with an active pipeline and had closed several transactions during July. He also said management expects to have Programming as a Service proposals ready by the end of the third quarter, with a goal of booking one to three contracts during the fourth quarter.
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.
