Data I/O Corporation

Good afternoon, and welcome to the Data.io second quarter 2021 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, This event is being recorded. I would now like to turn the conference over to Jordan Darrow, Investor Relations. Please go ahead.

Thank you, and welcome to everyone. This is the Data.io Corporation's second quarter 2021 Financial Results Conference call. With me today are Anthony Ambrose, President and CEO of Data.io Corporation, and Joel Hatland, Chief Operating Officer and Chief Financial Officer of Data.io. Before we begin, I'd like to remind you that statements made in this conference call concerning COVID-19, future revenues, results from operations, financial position, markets, economic conditions, estimated impact of tax reform, product releases, new partnerships, and any other statements that may be construed as a prediction of future performance or events are forward-looking statements which involve known and unknown risks, uncertainties, and other factors which may cause actual results to differ materially from those expressed or implied by such statements. These factors include uncertainties as to the impact from the COVID-19 pandemic, along with continued reopening and recovery efforts within the supply chain and among our customer base, levels of orders for the company, and the activity level of the automotive and semiconductor industry overall, ability to record revenues based upon the timing of product deliveries and installations, market acceptance of new products, changes in economic conditions and market demand, pricing, and other activities by competitors, and other risks, including those described from time to time in the company's filings on Forms 10-K and 10-Q with the Securities and Exchange Commission, press releases, and other communications. The accuracy and completeness of forward-looking statements should not be unduly relied upon. Data.io is under no duty to update any of these forward-looking statements. Now, I would like to turn over the call to Anthony Ambrose, President and CEO of Data.io.

Well, thank you very much, Jordan. I'll begin my formal remarks by addressing our 2021 second quarter financial and operational performance, and then I'll turn it over to Joel Hatlin for more detailed discussion of the numbers. 2021 Q2 adds to the momentum we began experiencing in the first quarter. We achieved the highest performance in years for a number of key metrics and also reported several significant milestones on our technology platforms. In Q2, we had a surge in bookings and revenue growth, Bookings were $8.9 million, the highest level in nearly four years, and up 79% from the same period last year. Revenues were $6.7 million, up 45% from the same period last year, and 12% sequentially. We also ended the quarter with a backlog of $5 million. Automotive electronics were about 56% of our total. And when you look at everything, 2Q is our strongest quarter in two years and continues the upward trend in automotive and industrial electronics demand that we've been seeing since the bottom Q2 a year ago. When you break it down, we're seeing excellent performance in all sales regions worldwide. We're seeing strength in new customer acquisition and new location wins, as well as repeat business for capacity additions at existing customers. Our ongoing recovery globally in the installed base is also driving a significant expansion in recurring revenue growth, with Q2 having the largest consumables quarter in recent memory. Within the quarter, we again won six new customers following the same number of new wins we had in the first quarter. Our internal sales metrics show us gaining market share in 2021. This could be due to our supply chain performance, our financial strength, our product capabilities, our excellent global service and support, or a combination of all these factors. Together, they support our conclusion that DataIO is increasingly the secure programming innovator of choice worldwide. Looking at our Centrix security platform, we had a very significant quarter. Our whole strategy of simplifying and scaling the platform is showing additional progress. In Q2, we had our first booking of a Centrix capital equipment sale for an artificial intelligence application in the EMEA sales region. This is a breakthrough win for us on the Centrix platform. In the second quarter, we also qualified the PSV 5000 platform for field upgrades to Centrix and completed our first PSV 7000 conversion to Centrix at a programming center partner in Asia. We've also demonstrated we can upgrade our PSV 5000 and 7000 in the field and are extending the reach of Centrix to new and exciting applications and channels. While Q2 is outstanding, we continue to believe in our long-term growth drivers. This is double-digit semiconductor growth in the automotive market over the next decade. We also see strong market growth in 5G, artificial intelligence, and industrial IoT. This is consistent with what others in our industry and the semiconductor test industry are also reporting. We also believe we're on track to continue to increase our recurring revenue in absolute and percentage terms, as adapters and services business grow across a very growing and large installed base. Moving over to our operations performance and our resilient supply chain, we're seeing some of the most demanding conditions in supply chain in at least 20 years. This is not a data I.O. unique issue and cuts across multiple markets, regions, and companies. We're also seeing challenges in freight movement, predictability, and cost. Our strategy was to get in front of an expected upturn late in Q4 last year by extending our purchase commitments on key components and assemblies. This has been very successful in helping us meet our customer demand across the PSV family of handlers and programmers and our associated adapters. We are experiencing some modest delays on custom orders and specialty items where we could not prepare the supply chain well in advance. Chip shortages may actually be contributing to revenue growth in some cases, as customers order adapters and new device supports as they qualify second sources and new designs in reaction to supply chain challenges. Despite all the challenges, we had an excellent quarter and we're on track to ship the vast majority of the $5 million backlog we have entering Q3. Finally, talking about COVID compliance and other items, our staff is safe and our facilities are fully operational. Over 94% of the Redmond team is fully vaccinated, against the COVID-19 virus. Our strategy for maintaining our workforce without layoffs in the depths of COVID a year ago is paying off now in our rapid turnaround. Because we maintain our talented and experienced workforce across our functions, we've been able to step on the gas pedal and support the surge that you're seeing today. Moving forward, DataIO will be formally converting to a hybrid work model in the Redmond office. with more permanent, fully and partially remote positions as we bring back more people into the office. We've discussed this with our team members over the past several months and think we've developed the right balance. We expect to implement this model starting in September, assuming COVID-19 restrictions are not reimposed by local governments. Moving forward to the rest of the outlook, we bounced back from the depths of COVID one year ago and increased orders by approximately 79% year on year. We're very excited for the first half progress where we booked over $14 million of business and enter Q3 with very good backlog. We have been and continue to be ready to deliver this backlog. As the bounce back from COVID sales settles out, we look forward to the longer-term growth trends of double-digit growth, more security, and growing share globally. Data remains extremely well positioned to deliver disproportionate improvement in profitability and cash flow, as we continue our cyclical recovery within this framework of a long-term growth market. And our 2Q performance really helped us advance toward this goal. With that, I'll turn it over to Joel Hatlin. Joel?