Data I/O (US:DAIO)2025-11-12 22:28Financial Performance - Net sales for the three months ended September 30, 2025, were $5,393,000, a slight decrease of 0.6% compared to $5,423,000 for the same period in 2024[13] - Gross margin for the nine months ended September 30, 2025, was $8,882,000, compared to $8,900,000 for the same period in 2024, reflecting a decrease of 0.2%[13] - Operating loss for the three months ended September 30, 2025, was $(1,393,000), compared to a loss of $(325,000) in the same period of 2024, indicating a significant increase in losses[13] - Net loss for the nine months ended September 30, 2025, was $(2,486,000), compared to $(1,911,000) for the same period in 2024, representing an increase in losses of approximately 30%[19] - The company reported a comprehensive loss of $(1,339,000) for the three months ended September 30, 2025, compared to a loss of $(39,000) in the same period of 2024[14] - The company reported a net loss of $1,362,000 for the three months ended September 30, 2025, compared to a net loss of $307,000 for the same period in 2024[55] - Basic and diluted earnings per share for the third quarter of 2025 were both $(0.15), compared to $(0.03) for the same period in 2024[56] Assets and Liabilities - Total current assets decreased to $19,493,000 as of September 30, 2025, down from $21,157,000 as of December 31, 2024, a decline of about 7.9%[9] - Total liabilities remained stable at $5,071,000 as of September 30, 2025, compared to $5,072,000 as of December 31, 2024[11] - Cash and cash equivalents decreased to $9,664,000 as of September 30, 2025, from $10,326,000 at the end of the previous quarter, a decline of approximately 6.4%[9] - Inventories decreased to $5.800 million as of September 30, 2025, from $6.212 million at December 31, 2024, indicating a reduction of 6.6%[42] - The product warranty liability at September 30, 2025, was $517,000, an increase from $350,000 at December 31, 2024, reflecting a rise of 47.7%[45] - Operating lease liabilities totaled $2.261 million as of September 30, 2025, with total lease commitments amounting to $2.467 million[46] - As of September 30, 2025, the company reported right-of-use assets of $2,164,000, down from $2,704,000 in December 2024[48] - Working capital as of September 30, 2025, was $14.4 million, down $1.6 million from December 31, 2024[86] Revenue and Sales - Equipment sales increased to $2.774 million for the three months ended September 30, 2025, compared to $2.509 million in 2024, representing a growth of 10.6%[34] - The company recognized revenue from software and maintenance of $869,000 for the three months ended September 30, 2025, compared to $909,000 in 2024, a decrease of 4.4%[34] - Net sales for Q3 2025 were $5.4 million, unchanged from Q3 2024, and down from $5.9 million in Q2 2025[73] - International sales accounted for approximately 99% of total net sales in Q3 2025, up from 93% in the prior year[74] - Automated programming systems sales decreased by 14.5% year-over-year to $3.4 million, while non-automated programming systems sales increased by 39.1% to $2.0 million[73] Expenses - Research and development expenses for the three months ended September 30, 2025, were $1,709,000, an increase of 10.7% from $1,544,000 in the same period of 2024[13] - Selling, general and administrative expenses rose to $2,418,000 for the three months ended September 30, 2025, compared to $1,705,000 in the same period of 2024, reflecting an increase of 42%[13] - Research and development expenses increased by 10.7% year-over-year to $1.7 million, representing 31.7% of net sales[79] - Selling, general, and administrative expenses rose by 41.8% year-over-year to $2.4 million, accounting for 44.8% of net sales[81] - Total share-based compensation for the three months ended September 30, 2025, was $115,000, down from $304,000 in the same period of 2024[58] Operational Insights - The company’s manufacturing operations are located in Redmond, Washington, and Shanghai, China, supporting global customer needs[21] - The company continues to evaluate the impact of the One Big Beautiful Bill Act on future periods, particularly regarding research and experimental expenditures[37] - The company has not made any new operating leases during the nine months ended September 30, 2025, maintaining existing commitments[46] - The company has confirmed purchase obligations totaling approximately $554,000,000 to be paid within one year and $480,000,000 to be paid beyond one year as of September 30, 2025[49] - The backlog at September 30, 2025, was $2.7 million, a slight decrease from $2.8 million at the end of the previous quarter[76] - Bookings for Q3 2025 were $5.1 million, down from $5.8 million in Q2 2025 but up from $4.7 million in Q3 2024[75] Challenges and Risks - The company remains cautious due to near-term headwinds affecting the global economy and customer end markets[69] - The company experienced a targeted cyber incident in August 2025, leading to a shutdown of most operating systems globally, which may result in revenue loss and business disruptions[103] - Management identified a material weakness in internal control over financial reporting as of December 31, 2024, related to user access and segregation of duties[96] - Remediation actions have been implemented to strengthen the control environment, including enhancements to system access controls and improved segregation of duties[97] - The company continues to monitor the effectiveness of its internal controls and expects to complete its evaluation as part of the 2025 annual assessment[98] Future Outlook - The company is focused on expanding its market reach beyond the automotive sector and revitalizing activities with semiconductor companies[68] - Management believes that the consolidated financial statements present fairly the company's financial position as of September 30, 2025[99] - The weighted average remaining lease term as of September 30, 2025, is 3.4 years, with a weighted average discount rate of 5%[48] - The company has sufficient working capital to fund operations and capital requirements for the next year, but may need to raise additional capital for significant acquisitions[89] - The company has ongoing initiatives to reduce material and logistic costs and enhance product quality[88]