Data I/O (DAIO) - 2025 Q2 - Quarterly Report

Part I. Financial Information Financial Statements (Unaudited) The unaudited consolidated financial statements for H1 2025 show decreased assets and equity, a net loss, and negative operating cash flow compared to prior periods Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $9,969 | $10,326 | ($357) | | Total Current Assets | $20,627 | $21,157 | ($530) | | Total Assets | $24,117 | $24,970 | ($853) | | Liabilities & Equity | | | | | Total Current Liabilities | $5,076 | $5,072 | $4 | | Total Liabilities | $6,871 | $7,344 | ($473) | | Total Stockholders' Equity | $17,246 | $17,626 | ($380) | - Total assets decreased from $25.0 million at the end of 2024 to $24.1 million as of June 30, 2025, primarily driven by a decrease in cash and cash equivalents[9][10] Consolidated Statements of Operations Q2 2025 vs Q2 2024 Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $5,948 | $5,062 | +17.5% | | Gross margin | $2,960 | $2,757 | +7.4% | | Gross margin % | 49.8% | 54.5% | -4.7 p.p. | | Operating income (loss) | ($844) | ($566) | -49.1% | | Net income (loss) | ($742) | ($797) | +6.9% | | Diluted EPS | ($0.08) | ($0.09) | +11.1% | H1 2025 vs H1 2024 Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Net sales | $12,124 | $11,161 | +8.6% | | Gross margin | $6,148 | $5,977 | +2.9% | | Gross margin % | 50.7% | 53.6% | -2.9 p.p. | | Operating income (loss) | ($1,221) | ($1,426) | +14.4% | | Net income (loss) | ($1,124) | ($1,604) | +30.0% | | Diluted EPS | ($0.12) | ($0.18) | +33.3% | Consolidated Statements of Comprehensive Income (Loss) - For the six months ended June 30, 2025, the company reported a comprehensive loss of $820,000, an improvement from the $1,842,000 comprehensive loss in the same period of 2024, aided by a positive foreign currency translation gain of $304,000[14] Consolidated Statement of Stockholders' Equity - Total stockholders' equity decreased from $17.6 million at the end of 2024 to $17.2 million at June 30, 2025, primarily due to a net loss of $1.12 million for the six-month period, partially offset by share-based compensation and positive other comprehensive income[16] Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | ($233) | ($284) | | Cash provided by (used in) investing activities | ($347) | ($164) | | Cash provided by (used in) financing activities | ($95) | ($223) | | Net change in cash | ($675) | ($671) | - Cash and cash equivalents decreased by $675,000 during the first six months of 2025, ending the period at $10.0 million, driven by cash used in operating and investing activities[19] Notes to Consolidated Financial Statements - The company operates as a global market leader for advanced programming and security deployment solutions used in electronics manufacturing[21] Revenue by Category - Six Months Ended June 30 (in thousands) | Net sales by type | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Equipment | $6,315 | $5,719 | +10.4% | | Adapter | $4,293 | $3,662 | +17.2% | | Software and Maintenance | $1,516 | $1,780 | -14.8% | | Total | $12,124 | $11,161 | +8.6% | - The company operates as a single segment entity, designing, manufacturing, and selling programming systems[59] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports operational progress and revenue growth despite economic headwinds, maintaining a debt-free balance sheet with $10 million in cash Overview - The company made progress in key operational areas and improved its cost basis despite a challenging global economic environment[63] - A significant automated programming system order was received late in Q2 from a leading global automotive EV supplier[63] - Management remains cautious due to near-term headwinds from economic and cross-border trade uncertainty, which has stalled some capital investments[66] Results of Operations Q2 2025 Key Operational Metrics (in millions, except percentages) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $5.9M | $5.1M | +17.5% | | Bookings | $5.8M | $5.6M | +3.6% | | Gross Margin % | 49.8% | 54.5% | -4.7 p.p. | | R&D Expense | $1.66M | $1.41M | +17.6% | | SG&A Expense | $2.14M | $1.91M | +12.1% | - Net sales in Q2 2025 were $5.9 million, a 17.5% increase from the prior year, driven by strong growth in non-automated programming systems and adapter sales[82] - Gross margin declined to 49.8% in Q2 2025 from 54.5% in Q2 2024, attributed to a lower margin product mix and configuration of automated systems for a large customer order[87] - Bookings in Q2 2025 were $5.8 million, including a $1.4 million order for 10 PSV automated systems from a major EV supplier in China, with automotive electronics constituting 66% of Q2 bookings[84] Financial Condition, Liquidity and Capital Resources - As of June 30, 2025, the company had working capital of $15.6 million and cash and cash equivalents of $10.0 million[93] - Cash decreased by $534,000 from December 31, 2024, due to one-time expenses and investments, partially offset by an improved cost structure[93] - The company has no debt and believes it has sufficient cash to fund operations and capital requirements for at least the next year[93][96] Non-GAAP Financial Measures Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (loss) | ($742) | ($797) | | EBITDA earnings (loss) | ($687) | ($379) | | Adjusted EBITDA, excluding equity compensation | ($437) | $3 | - Adjusted EBITDA, excluding equity compensation, was ($437,000) in Q2 2025, a significant decrease from $3,000 in Q2 2024[98] Quantitative and Qualitative Disclosures About Market Risk The company states that this section is not applicable for this reporting period - Not applicable[101] Controls and Procedures Management concluded disclosure controls were effective, but a material weakness in IT user access and segregation of duties remains under remediation - Management concluded that disclosure controls and procedures were effective as of the evaluation date[102] - A material weakness in internal controls over financial reporting related to IT user access and segregation of duties, identified as of December 31, 2024, is still being remediated[103][104] - Despite the material weakness, management performed additional procedures and concluded the financial statements are fairly presented in all material respects[103] Part II. Other Information Legal Proceedings As of June 30, 2025, the company was not a party to any material pending legal proceedings - The company reports no material pending legal proceedings as of June 30, 2025[106] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The company states there are no material changes to the Risk Factors described in its Annual Report on Form 10-K for the year ended December 31, 2024[107] Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no unregistered sales, use of proceeds, or issuer purchases of equity securities, nor any Rule 10b5-1 trading arrangements - During the quarter ended June 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or other non-Rule 10b5-1 trading arrangement[112] Exhibits The report lists several exhibits filed with the Form 10-Q, including a material contractor agreement, CEO/CFO certifications, and Interactive Data Files - Exhibits filed include an Independent Contractor Agreement with Theisen Advisory Group, CEO/CFO certifications, and Interactive Data Files[110]