Data I/O Corporation

Welcome to the Data I.O. First Quarter 2022 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 a touch-tone phone. 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 the Data.io Corporation first quarter 2022 financial results conference call. With me today are Anthony Ambrose, President and CEO of Data.io Corporation, and Joel Hatlin, 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, silicon chip shortages, supply chain expectations, estimated impact of tax reform, product releases, new industry 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 statement. These factors include uncertainties as to the impact from the COVID-19 pandemic, including the 2022 outbreaks in China, Russian invasion of Ukraine, including any related international trade restrictions, along with continued reopening and recovery efforts within the relevant global supply chains 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 revenue based on the timing of product deliveries and installations, market acceptance of new products, changes in economic conditions and market demand, part shortages, 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. DataIO was under no duty to update any of these forward statements. And now I would like to turn over the call to Anthony Ambrose, President and CEO of DataIO.

Well, thank you very much, Jordan. I'll begin my formal remarks by addressing our 2022 first quarter financial and operational performance, and then I'll turn the call over to Joel Hatlin for a more detailed look at the numbers. As we announced on March 29th, our manufacturing and shipping facility operations in Shanghai were forced to shut down due to COVID-19. This government-imposed lockdown is still in effect. With the COVID-19 restrictions and shutdowns impacting our facility and many of our customers and business partners, first quarter revenue shipments of approximately 1 million U.S. dollars were not realized, although no orders have been canceled. During the first quarter, we did achieve bookings of $6.2 million and backlog of about 4.1 million. Auto electronics represented about 63% of orders in the quarter, and we had six new customer wins, including a new automotive electronics customer in Africa. The war on lockdown hit during a solid ramp in our sales funnel. We added several million dollars of opportunities to our funnel in January and February. Earlier this month, we celebrated a major milestone with our 400th PSV platform win and shipment. with over 220 PSV programming systems supporting the global automotive electronics industry. We now have over 50 unique automotive electronics customers worldwide. As we mentioned in the release, all of our Shanghai-based employees are safe and at home and working remotely to provide technical support to our customers or assisting the transition to alternate supply chains. We've been able to keep up with system demand through our Redmond, Washington, USA manufacturing facility, and an accelerated ramp-up of alternative manufacturing for our adapters. We anticipate logistics challenges as we plan to reopen our Shanghai operations in May. These logistics challenges will include freight forwarding capacity, partner availability, and overall supply chain performance. Time will tell how long a return to normal will be in China. During this lockdown, we've had great performance from our team, and I'd like to acknowledge each and every member of our DataIO team in China and also their counterparts around the world for their tireless effort and hard work during the lockdown. We meet daily with the leadership team in China to ensure we're making progress on customer support and deliveries. They're showing true grit and determination during a very challenging period for them personally. On our Centrix platform, we had an announcement earlier this week, which we're very excited about, an announcement with NXP and Avnet on Centrix provisioning, of the NXP LPC55S6 family of microcontrollers. NXP is a leading global supplier of microcontrollers for Internet of Things, and Avnet, a global distributor leader, is making a much bigger push of late in IoT support, including the Centrix platform. The customer came to us through Avnet, and we're able to provide a great production solution for them. During the quarter, we also earned repeat customer business for Centrix, and that should be revenue in Q2. The pattern we see with Centrix is very interesting. Once we have customers that actually use the solution, they really like the solution. They appreciate the ease of use of the tools and manufacturing friendly features that we've designed into the platform. As I mentioned many times before, our job and our challenge is to expand our sales opportunities here. We need to get more customers into the pipeline to experience the ease of use and scale of the Centrix platform. We continue to see opportunities forming in the industry. within a 25 to 30 billion unit microcontroller industry that has a need for a compelling solution for security provisioning. During the quarter and during recent years, we've been very active on the patent front and have now been awarded over 20 U.S. and international Centrix and security-related patents, with more to come. As I mentioned, our Centrix opportunity is even more interesting given the growth in connected devices and mobility trends. Just one example. The worldwide market for smart home devices grew almost 12% in 2021 compared to 2020, with almost 900 million devices shipped, according to IDC in a recent report. And one of our neighbors here in Redmond, one of the largest cloud companies in the world, announced very strong growth for their security business last year. We continue to be one of those companies championing not only enterprise security, but securing the entire ecosystem, including hardware of IoT and connected devices. As we mentioned in our last earnings call, this is also a special year for DataIO as we celebrate our 50th year in business. In recognition of our special anniversary and due to the following we've generated within the investment community, a great opportunity to talk about our programming technologies, and we're developing a series of fireside chats with several Wall Street analysts and investors. This will be a public series of events held over the course of the next few months, and We'll plan our first installment with June and we'll be announcing the topics and exact schedule soon. We think you'll find it interesting and informative as we dig into some of the key areas of our business differentiation technology and growth initiatives. Finally, as we look forward to the balance of 2022, we've adjusted our short-term growth expectations to account for the present economic challenges with a resumption of growth contingent upon a reopening in China. stabilization of supply chains, and restoration of business confidence in EMEA. Longer term, we're confident that our industry-leading automotive presence, our secure programming technology platform, resilient supply chain, and strong balance sheet will position us very well to capitalize on the resumption of demand. With that, I'll turn it over to Joel Hatlett.