Financial Data and Key Metrics Changes - Fourth quarter revenue was $5.2 million, down 25% from the prior period, and full year sales were $21.8 million, down 22% from $28.1 million in 2023 [28][35] - Gross margin for the fourth quarter was 52% and for the full year was 53%, down from 58% in 2023, primarily due to lower sales volume [31] - The company incurred a net loss of $1.2 million for the fourth quarter and $3.1 million for the full year, compared to a net profit of $144,000 in the fourth quarter and $486,000 for the full year 2023 [35] Business Line Data and Key Metrics Changes - Automotive electronics represented 59% of 2024 bookings, down from 63% in 2023, with significant declines in the Americas and European markets [29] - Asia revenue grew by 14% for the year, contrasting with the declines in other regions [30] Market Data and Key Metrics Changes - Order backlog remained strong at $3.5 million as of December 31, up $700,000 from the start of the year [30] - The company reported a decrease in operating expenses for the full year, down $1.1 million or 7% from the prior year [34] Company Strategy and Development Direction - The company is focusing on building out its algorithm library, which is crucial for customer support and market share growth [19] - A consultative sales approach has been implemented, reducing the sales cycle from over 140 days to 70 days in early 2024 [13][14] - The company aims to return to profitability and accelerate top-line growth by expanding into new markets and enhancing operational efficiencies [25][40] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of automotive market headwinds and political changes on growth perspectives, emphasizing the need to diversify beyond the automotive sector [53][54] - There is optimism regarding Q1 performance, with bookings expected to improve compared to Q4 [60][106] Other Important Information - The company maintains a healthy cash position with no debt, ending the year with $10.3 million in cash [38][40] - The company is actively managing tariff impacts and exploring ways to mitigate costs associated with international trade [71][72] Q&A Session Summary Question: Clarification on nonrecurring expenses - Gerald Ng confirmed that the one-time expenses in Q4 should not recur in 2025, and the company will continue to drive efficiencies [48] Question: Sales funnel and expectations for the year - Bill Wentworth discussed the impact of the political environment and the automotive industry slowdown, but noted that Q1 bookings are strengthening [53][60] Question: Tariff impact on manufacturing - Gerald Ng explained the company's international footprint helps mitigate tariff impacts, and they are actively managing material costs [70][72] Question: Success of electric vehicles in Asia - Bill Wentworth indicated that while electrification contributes to demand, traditional combustion engine vehicles still drive significant technology content [82] Question: Future revenue expectations - Gerald Ng stated that while they do not provide forward-looking guidance, the goal is to improve revenue and leverage a strong backlog [92][93] Question: Adapter sales and customer engagement - Bill Wentworth highlighted a 20% increase in adapter activity early in the year, indicating positive engagement with service providers [113] Question: End markets for service providers - Bill Wentworth noted that service providers support a diverse range of vertical markets beyond automotive, including consumer electronics and IoT [135]

Financial Performance - Third quarter revenue was $5.4 million, down 17% from $6.6 million in the prior year period[54] - Net sales in Q3 2024 were $5.4 million, down 17% from $6.6 million in Q3 2023, primarily due to increased uncertainty in automotive electronics and slowed customer capacity expansion[77] - Total programming systems revenue for the third quarter was $5.4 million, a decrease of 17.3% compared to the previous year[76] - The company reported a net loss of $307,000 in Q3 2024, compared to a loss of $53,000 in Q3 2023[92] Revenue Breakdown - Automotive market system sales were below expectations, while consumables, software, and services grew 6%, representing 50% of year-to-date revenue[55] - Automated programming systems revenue was $4.0 million, down 23.8% year-over-year, while non-automated programming systems revenue increased by 9%[76] - Recurring services and consumable adapter sales increased by 6% year-over-year, while system sales declined by 34% in the same period[78] - The Asia channel grew 29% in the third quarter and 26% year-to-date, offsetting declines in the Americas and Europe[54] Expenses and Cost Management - Operating expenses for the third quarter were $3.2 million, a decrease of $334,000 or 9% year-over-year[56] - Research and development expenses decreased by 2.1% in Q3 2024 to $1.5 million compared to $1.6 million in Q3 2023, reflecting lower consulting costs[80] - Selling, general and administrative expenses decreased by 15% in Q3 2024 to $1.7 million, primarily due to lower sales commissions and efficiency improvements[81] - The company is focusing on managing costs to mitigate revenue shortfalls and fund future growth initiatives[56] Cash and Working Capital - The company expects continued near-term market headwinds but remains financially solid with a strong cash position and no debt[57] - Working capital decreased by $811,000 to $17.6 million as of September 30, 2024, due to lower revenue and higher inventories[85] - Interest income increased by 73.2% in Q3 2024 to $71,000 compared to $41,000 in Q3 2023, driven by higher average interest rates[82] Corporate Changes and Governance - A CEO transition occurred with William "Bill" Wentworth becoming CEO effective October 1, 2024, replacing Anthony Ambrose[58] - No changes were made in internal controls that materially affected financial reporting[95] - As of September 30, 2024, the company was not a party to any material pending legal proceedings[96] Tax and Valuation - The effective tax rate was affected by a valuation allowance of $9.3 million as of September 30, 2024, limiting the recognition of net deferred tax assets[83] - The company has no significant capital expenditure plans but will continue to manage expenditures to support business development[86]

Financial Performance - Net sales for Q3 2024 were $5.4 million, a decrease of 17% compared to $6.6 million in Q3 2023[7] - Recurring services and consumable adapter sales increased by 6% year-over-year, while system sales declined by 34%[7] - Net loss for Q3 2024 was ($307,000), or ($0.03) per share, compared to a net loss of ($53,000), or ($0.01) per share in Q3 2023[9] - Adjusted EBITDA for Q3 2024 was $37,000, down from $402,000 in Q3 2023[9] - Net income for the three months ended September 30, 2024, was a loss of $307 thousand compared to a loss of $53 thousand in the same period of 2023[18] - Adjusted EBITDA, excluding equity compensation, was $37 thousand for the three months ended September 30, 2024, down from $402 thousand in the same period of 2023[18] Expenses and Margins - Gross margin as a percentage of sales was 53.9% in Q3 2024, slightly up from 53.7% in the prior year[8] - Operating expenses decreased by 9% year-over-year to $3.2 million, with contributions from all operational areas[9] Cash and Assets - Cash at the end of Q3 2024 was $12.4 million, up from $11.4 million on June 30, 2024[10] - Total current assets decreased from $24,613 thousand as of December 31, 2023, to $22,160 thousand as of September 30, 2024, a decline of approximately 10%[17] - Trade accounts receivable decreased significantly from $5,707 thousand to $2,607 thousand, representing a reduction of about 54%[17] - Total assets decreased from $27,401 thousand to $24,843 thousand, a decline of approximately 9%[17] - Total current liabilities decreased from $6,188 thousand to $4,546 thousand, a reduction of about 26%[17] - The company continues to have no debt, maintaining a strong balance sheet with net working capital of $17.6 million[10] Equity and Earnings - Accumulated earnings (deficit) worsened from ($2,645) thousand to ($4,556) thousand, indicating a deeper loss[17] - Total stockholders' equity decreased from $20,319 thousand to $19,189 thousand, a reduction of about 6%[17] - Equity compensation increased slightly from $300 thousand to $304 thousand for the three months ended September 30, 2024[18] Strategic Direction - The company aims to diversify its market approach beyond automotive electronics to strengthen its position in other sectors[7] Backlog and Inventory - Backlog as of September 30, 2024, was $4.7 million, down $0.7 million from the start of the quarter[8] Property and Equipment - Property, plant, and equipment decreased from $1,359 thousand to $928 thousand, a decline of approximately 32%[17]

Financial Data and Key Metrics Changes - Third quarter revenue was $5.4 million, down 17% from $6.6 million in the prior year period [11] - Year-to-date operating expenses decreased by more than $1 million, or 11% from last year [8] - Cash balance at the end of Q3 was $12.4 million, up $1 million from $11.4 million at the end of Q2 [10] - The company incurred a net loss of $307,000 for Q3, an improvement from a net loss of $797,000 in Q2 [14] Business Line Data and Key Metrics Changes - Automotive Electronics revenue was below expectations due to increased uncertainty and slowed customer capacity expansion [11] - Asia channel grew 29% in Q3 and 26% year-to-date, offsetting declines in other regions [11] - Consumables, software, and services grew 6% in Q3, representing 50% of total year-to-date revenue [11] Market Data and Key Metrics Changes - Backlog remained strong at $4.7 million as of September 30, down only $700,000 from the start of the quarter [12] - Days sales outstanding (DSO) improved to 43 days compared to 55 days at the end of Q2 [10] Company Strategy and Development Direction - The company intends to diversify revenue streams and enhance customer experience by collaborating with customers and suppliers [7] - Focus on expanding into new markets and engaging with electronic supply chain component suppliers [8] - Plans to optimize existing products and explore new business models to drive higher margins [7][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledged current market headwinds in the automotive sector but expressed optimism for recovery in the coming year [16] - The company remains focused on providing product innovation and quality despite challenges [14] - Future growth strategies will include both organic and inorganic opportunities [24] Other Important Information - The company has no debt and maintains a healthy balance sheet [10] - Upcoming events include the NASDAQ Closing Bell Ringing ceremony and the LD Micro Main Event Conference [15] Q&A Session Summary Question: Activity pace in the automotive sector - Management noted a choppy market with expectations for some recovery in the next year, driven by new models and production increases [16] Question: Opportunities in new markets - Management highlighted potential partnerships with global component distribution companies and EMS contract manufacturers to diversify customer base [18] Question: Executive compensation concerns - Management explained that executive compensation is reviewed by the Board and tied to company performance, ensuring alignment with shareholder interests [21] Question: Transition to a growth strategy - Management discussed short-term initiatives focused on current products and longer-term opportunities for product optimization and market expansion [24][25]

Revenue Performance - Second quarter revenue was $5.1 million, down 32% from $7.4 million in the prior year period[43] - Total programming systems revenue was $5.1 million, a decline of 31.6% from $7.4 million in the prior year[59] - Net sales for Q2 2024 were $5.1 million, a decrease of 31.6% compared to $7.4 million in Q2 2023, primarily due to backlog conversion timing and lower bookings in the Americas[60] - Equipment sales dropped by 48.4% year-over-year to $2.4 million, while total net sales for the first half of 2024 were $11.2 million, down 23.7% from $14.6 million in the same period last year[60] Bookings and Backlog - Bookings for the first half of 2024 were $13.7 million, slightly up from $13.3 million in the prior year[43] - The backlog increased by $2.6 million from the beginning of the year to $5.4 million as of June 30, 2024[43] - Backlog increased to approximately $5.4 million as of June 30, 2024, up from $2.8 million at the beginning of the year[61] Gross Margin and Expenses - Gross margin as a percentage of sales increased by 170 basis points from the first quarter of 2024[44] - Gross margin as a percentage of net sales decreased to 54.5% in Q2 2024 from 59.1% in Q2 2023, reflecting lower sales volume and product mix[62] - Operating expenses were reduced by 21% from the prior year period and 19% from the first quarter of 2024[44] - Research and development expenses in Q2 2024 were $1.4 million, down 17.8% from $1.7 million in Q2 2023, representing 27.9% of net sales[63] - Selling, general and administrative expenses decreased by 23.3% to $1.9 million in Q2 2024, accounting for 37.7% of net sales[64] International Sales - International sales accounted for 88.4% of total net sales in the second quarter[58] - International sales accounted for approximately 88% of total net sales in Q2 2024, up from 86% in Q2 2023[61] Financial Position - Cash and cash equivalents decreased to $11.4 million as of June 30, 2024, down $901,000 from December 31, 2023[67] - The company reported an EBITDA loss of approximately $379,000 in Q2 2024, compared to a gain of $490,000 in Q2 2023[72] Tax and Legal Matters - The effective tax rate was impacted by a valuation allowance of $9.3 million as of June 30, 2024, reflecting uncertainty in recognizing deferred tax assets[67] - As of June 30, 2024, the company was not a party to any material pending legal proceedings[76] Internal Controls and Procedures - The company evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective at a reasonable level of assurance as of the evaluation date[73] - There were no changes in the company's internal controls during the reporting period that materially affected financial reporting[74] Strategic Focus - The company remains focused on growth in the automotive, industrial, and programming center markets while maintaining disciplined spending[44]

Financial Performance - Net sales for Q2 2024 were $5.1 million, a decrease of 32% compared to $7.4 million in Q2 2023[16] - Total bookings in Q2 2024 were $5.6 million, down from $7.6 million in the prior year, with first half bookings of $13.7 million slightly increasing from $13.3 million year-over-year[12][16] - The net loss for Q2 2024 was ($797,000), or ($0.09) per share, compared to net income of $300,000, or $0.03 per share, in Q2 2023[19] - Adjusted EBITDA, excluding equity compensation, was $3 thousand for the three months ended June 30, 2024, down from $870 thousand in the same period of 2023[33] - EBITDA earnings for the six months ended June 30, 2024, were a loss of $1,024 thousand, compared to earnings of $743 thousand for the same period in 2023[33] Cost and Expense Management - Gross margin as a percentage of sales was 54.5% in Q2 2024, down from 59.1% in the prior year, primarily due to lower sales volume and product mix[17] - Operating expenses in Q2 2024 were $3.3 million, a reduction of 21% from the prior year and 19% from Q1 2024[18] - Significant improvements in direct product costs and operating expense reductions are expected to aid in achieving profitability goals in the near and long term[15] Cash and Liquidity - Cash and equivalents at the end of Q2 2024 were $11.4 million, down from $12.3 million at the end of 2023, with no debt reported[20] - The company repatriated $3.4 million of cash from its China subsidiary, incurring a dividend withholding tax of $337,000[13][15] - Cash and cash equivalents decreased from $12,341 million to $11,440 million, a decline of about 7.3%[31] Balance Sheet and Assets - Total assets decreased from $27,401 million as of December 31, 2023, to $24,087 million as of June 30, 2024, representing a decline of approximately 12.5%[31] - Current liabilities decreased from $6,188 million as of December 31, 2023, to $4,494 million as of June 30, 2024, a reduction of approximately 27.4%[31] - Total stockholders' equity decreased from $20,319 million to $18,918 million, a decline of about 6.9%[31] - Accumulated earnings (deficit) worsened from a deficit of $2,645 million to a deficit of $4,249 million[31] Inventory and Backlog - Backlog at the end of Q2 2024 was $5.4 million, an increase from $4.5 million at the end of Q1 2024[12][16] - Inventories increased from $5,875 million to $6,741 million, reflecting an increase of approximately 14.7%[31] Customer Acquisition - The company achieved 8 new customer wins in Q2 2024, totaling 13 for the year[12]

Financial Data and Key Metrics Changes - The company reported a second quarter revenue of $5.1 million, down 32% from $7.4 million in the prior year, primarily due to sluggishness in the Americas region and delays in backlog conversion to shipments [10][45] - Gross margins for Q2 were at 55%, a decrease of 3 percentage points from the previous year, but improved by 2 percentage points from Q1 2024 due to better product mix and cost control efforts [11] - The company incurred a net loss of $797,000 for Q2 compared to a net income of $300,000 in the same period last year, largely attributed to lower revenue and a foreign tax expense related to cash repatriated from China [45] Business Line Data and Key Metrics Changes - Bookings for the first half of the year reached $13.7 million, slightly up from $13.3 million in the prior year, with strong opportunity conversion in Asia and Europe [4][10] - Consumables, software, and services accounted for 49% of total year-to-date revenue, helping to offset the current softness in capital expenditure systems in the Americas [29] Market Data and Key Metrics Changes - The company experienced strength in programming centers, industrial IoT, and EMS markets, while the automotive sector showed weakness, particularly in North America [22] - The Americas region has seen a significant decline in demand, contrasting with strong performance in Asia and EMEA sales regions [3][25] Company Strategy and Development Direction - The company is focusing on long-term structural efficiency improvements, including deploying AI and machine learning capabilities to enhance process efficiencies and reduce costs [5] - Despite current automotive market headwinds, the company maintains a strong backlog and is prepared to fulfill orders in the second half of 2024, leveraging improved cost management [27][26] Management's Comments on Operating Environment and Future Outlook - Management noted that the softness in automotive demand is viewed as an inventory correction and a shift in product mix from electric vehicles to hybrids and internal combustion engines [6] - The company remains optimistic about the long-term growth in electronics content in vehicles and is prepared to respond quickly once demand returns [7][26] Other Important Information - Cash position remained steady at $11.4 million as of June 30, down slightly from $12 million at the end of Q1, benefiting from strong customer collections and lower operating expenses [9] - The company has no debt and continues to manage its balance sheet effectively, with accounts receivable at $3.3 million and inventory at $6.7 million [28] Q&A Session Summary Question: What is the potential for gross margins to improve with increased revenues? - Management indicated that with a normal mix, gross margins could potentially reach the high 50s or even 60% with significant volume increases [32] Question: What is the variable expense on the next million dollars of revenue? - Management discussed that variable expenses would depend on the sales mix, with direct sales incurring higher expenses compared to distribution [33][49] Question: Can you provide insights on the global landscape, particularly in China and India? - Management confirmed that Asia, particularly China, has shown promising opportunities, while the Americas have faced significant declines in demand [36][37] Question: What gives confidence that backlog orders will not be canceled? - Management noted that historically, customers do not cancel orders once placed, although they have the right to do so until shipment [62] Question: Are there any incremental expense reductions expected in the second half of the year? - Management indicated that while some efficiencies have been achieved, there may be smaller incremental improvements moving forward [50] Question: How is AI impacting the business? - Management highlighted that AI, particularly in Edge AI applications, is expected to drive demand and increase code size, benefiting the company [51][52]

Group 1: Market Overview - The market rally is not broad-based, with many businesses at bargain levels and significant upside potential as they execute and grow [5] - Historical patterns and future estimates can guide sound judgments about the direction of oversold stocks [4] Group 2: Trupanion (TRUP) - Trupanion provides medical insurance for pets in the U.S. and Canada, with the stock down over 80% from its highs, presenting an attractive buying opportunity [7] - Approximately 7 million Americans plan to acquire a pet this year, with younger generations favoring pets over children, positioning Trupanion to benefit from this trend [8] - In Q1, Trupanion's revenue increased by 19.4% year-over-year to $306.1 million, surpassing estimates by $5.6 million, although it remains unprofitable with losses narrowing to 16 cents per share [8] Group 3: TechTarget (TTGT) - TechTarget provides purchase intent data and marketing services to enterprise technology vendors, facing challenges with financial metrics but showing potential for rebound [11] - Management forecasts Q2 revenues of $57-59 million, indicating a 12% sequential increase from Q1 and flat year-over-year growth, suggesting stabilization [12] - Analysts expect TechTarget to return to growth with a projected EPS of $1.8 and double-digit growth anticipated in 2026 [12][13] Group 4: Data I/O Corporation (DAIO) - Data I/O Corporation is viewed as a high-risk, high-reward investment, with Q1 bookings reaching $8.1 million, the highest in 11 quarters [15] - The company is expected to benefit from long-term trends in AI, IoT, and healthcare, despite near-term sales volatility [16] - Analysts predict EPS will rise from 10 cents in 2024 to 30 cents in 2025, with a forward P/E of 10x for a company expected to grow sales by 14% next year [17]

Financial Performance - First quarter revenue was $6.1 million, down 16% from $7.2 million in the prior year period, attributed to lower backlog and timing of shipments [58]. - First quarter bookings increased to $8.1 million, up 41% from the prior year, driven by strong opportunity conversion in Europe and Asia [58]. - Backlog rose by $1.7 million to $4.5 million as of March 31, 2024, compared to $3.2 million a year earlier [59]. - International sales accounted for approximately 96% of total net sales in the first quarter of 2024, up from 87% in the prior year [79]. - Gross margin for the first quarter was $3.22 million, representing 52.8% of net sales, down from 59.5% in the same period last year [80]. - EBITDA loss for Q1 2024 was $(645,000), compared to a profit of $253,000 in Q1 2023, while adjusted EBITDA was $(364,000) compared to $502,000 in the prior year [95]. Expenses and Costs - Research and development (R&D) expenses decreased by 2.6% to $1,582,000 in Q1 2024, representing 25.9% of net sales compared to 22.5% in Q1 2023 [83]. - Selling, general and administrative (SG&A) expenses slightly decreased by 0.4% to $2,498,000, accounting for 41.0% of net sales, up from 34.7% in the previous year [84]. - The income tax expense for Q1 2024 was $(41,000), a 17.1% increase from $(35,000) in Q1 2023, primarily related to foreign and state taxes [87]. Cash and Working Capital - Working capital decreased by 1.5% to $18,148,000 as of March 31, 2024, with cash decreasing to $12,000,000, down $342,000 from December 31, 2023 [90]. - The company has no debt and believes it has sufficient cash and working capital to fund operations for the next year and beyond [93]. Strategic Initiatives - Research and development efforts are focused on automotive electronics and IoT programming technologies, with ongoing investments to maintain leadership in these markets [61]. - Data I/O is implementing spending controls and process efficiencies to enhance operating leverage while expanding market penetration [62]. - The company has implemented initiatives to reduce exposure to currency volatility and control costs while balancing spending with anticipated revenue levels [92]. - The company has no significant capital expenditure plans currently but will continue to manage expenditures to support business development [91]. Market and Sales Insights - Automotive electronics represented 49% of orders in the first quarter, followed by 37% for programming centers and 14% for IoT [79]. - The Americas region is expected to absorb capacity expansion in 2024, following significant growth over the past two years [60]. - Interest income increased by 128.6% to $80,000 in Q1 2024, driven by higher interest rates and invested balances compared to $35,000 in Q1 2023 [85]. - The company had $1.8 million in deferred revenue as of March 31, 2024, compared to $2.0 million a year earlier [78]. - The company maintains a valuation allowance of $8.9 million as of March 31, 2024, due to uncertainties related to loss history and economic outlook [88].

Date of Report (Date of earliest event reported): April 25, 2024 Data I/O Corporation (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) Washington 0-10394 91-0864123 6645 185th Ave. N.E., Suite 100, Redmond, WA 98052 (Address of principal exec ...