Data I/O (DAIO) Q2 2026 earnings summary

Executive summary

• Q2 2026 revenue reached $5.2 million, up 59% sequentially from Q1, with improved gross margins and bookings of $4.9 million, despite a year-over-year decline and ongoing global trade uncertainty.

• Operational efficiencies, cost reductions, and strategic realignments in Germany and Redmond lowered the annual run rate below $22 million and led to workforce reductions and cost savings.

• Expanded customer base with six new logos in H1, including automotive, robotics, and global communications, supporting future growth and diversification.

• Two acquisitions are in progress, including a transformational deal and intent to acquire IAR's embedded software security IP, expected to nearly double annual revenue run rate and broaden market reach.

• Employee-related costs for Redmond realignment in Q2 were approximately $345,000, with ongoing reviews for further operational efficiency.

Financial highlights

• Net sales for Q2 2026 were $5.2 million, up 59% sequentially from Q1 but down from $5.9 million in Q2 2025.

• Gross margin improved to 57%, up from 49.5% in Q1 and 49.8% in Q2 2025, driven by mix shift and value-based pricing.

• Operating loss was $724,000, an improvement from $844,000 loss in Q2 2025, despite lower revenue.

• Net loss was $1.63 million ($0.17/share), impacted by $873,000 in non-recurring, non-cash interest expense from convertible debenture accounting.

• Adjusted EBITDA was break-even at +$39,000, a significant improvement from -$1.75 million in Q1.

Outlook and guidance

• Reaffirmed 2026 business framework: organic revenue growth, acceleration of recurring and services revenue, and operational optimizations.

• No specific Q3 revenue guidance provided, but confidence in trajectory and continued execution of strategic plan.

• Expect proposals for Programming as a Service by end of Q3 and bookings in Q4; acquisitions expected to nearly double annual revenue and be accretive to earnings and cash flow.

• Sufficient liquidity is expected to fund operations and capital requirements for at least the next year.