Data I/O (DAIO) Q1 2026 & M&A Announcement earnings summary

Executive summary

• Q1 2026 net sales were $3.3M, down from $6.2M in Q1 2025, reflecting weak demand, global trade/tariff headwinds, and lower bookings.

• Net loss widened to $3.2M ($0.34/share) from $382K ($0.04/share) in Q1 2025, driven by lower revenue and $1.2M in one-time restructuring costs.

• Bookings accelerated late in Q1, reaching $4.2M, with backlog rising to $2.6M from $1.6M sequentially, and strong growth in Europe and new customer wins.

• Announced a transformational $23M acquisition expected to nearly double annual revenues, diversify markets, and expand the addressable market beyond $1B.

• Secured a $9M direct investment post-quarter, strengthening liquidity and supporting M&A and organic growth.

Financial highlights

• Gross margin was 49.5%, down from 51.6% in Q1 2025, due to lower absorption of labor and overhead.

• Adjusted EBITDA was negative $1.75M, versus negative $98K a year ago; EBITDA including all items was negative $3.1M.

• Cash at quarter-end was $5.7M, down from $7.9M at year-end, with no debt on the balance sheet.

• Working capital decreased to $9.3M from $12.3M at year-end.

• Backlog increased to $2.6M from $2.3M at year-end; deferred revenue held at $1.5M.

Outlook and guidance

• Q2 2026 revenue guidance is $5M–$5.4M, implying at least 20% sequential growth, driven by late Q1 momentum and new bookings.

• Organic revenue growth and recurring revenue acceleration expected for 2026, with positive operating cash flow targeted by year-end.

• Programming as a Service contracts expected to begin contributing revenue by Q4 2026; acquisition consolidation anticipated in H2 2026.

• Management expects the acquisition to be accretive to earnings and cash flow, with significant revenue diversification.

• Sufficient liquidity is expected for at least the next year, with additional capital available if needed.