Data I/O Corporation

Good afternoon and welcome to the DataIO fourth quarter 2024 financial results conference call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Jordan Darrow, Investor Relations. Please go ahead, sir.

Thank you, Operator, and welcome to everyone. This is the Data.io Corporation Fourth Quarter 2024 Financial Results Conference Call. With me today are the company's President and CEO, Bill Wentworth, and Chief Financial Officer and Vice President, Gerald Ng. Before we begin, I'd like to remind you that statements made in this conference call concerning future events, results from operations, financial position, markets, economic conditions, supply chain expectations, estimated impact of tax and other regulatory 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 statements. These factors include uncertainties as to the impact on global and geopolitical events, international trade regulations, order levels for the company, and the activity level of the automotive and semiconductor industry overall. ability to record revenues 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, our press releases, and other communications. The accuracy and completeness of forward-looking statements should not be unduly relied upon. DataIO is under no duty to update any forward-looking statements. And now I'd like to turn the call over to Bill Wentworth, President and CEO of DataIO.

Thanks, Jordan. Appreciate the handoff. Some comments. I'm going to be following the press earnings release released a short time ago and try to follow along that path and add some color along the way to some of the things that we've started to see some traction and early traction. Since becoming CEO October 1st, myself and the team have been a deep discovery throughout the business. Our findings have taken us through pretty much every functional department, looking for opportunities both to expand and where the company has had success in the past, but also look for other opportunities to create some operational leverage and expand the business into new markets. Given my experience over the last 30 years, 35 years in the programming services business and opening up a regional programming center back when I was, you know, 22 years old and built up to the largest global programming center in the world. It gives me a unique insight to what customers need and want and need towards the future. So, you know, being in this space as long as I have, and it's been really a pleasure getting back into it, and honestly, it's brought back a lot of great memories. And it shows that I still have a significant amount of passion for this business. And it really has been great to meet the team and get back engaged in this industry. It's a very unique, interesting, niche industry, but there's a lot of unique qualities about it that make it really special, at least to me. So in the post kind of initial phase of discovery, you know, we've started using a consultative sales approach. And what I mean by consultative, it's really – Programming and creating an operation, there's a lot of unique attributes that customers need to know when taking this process on. It's not just buying a big automated system, plugging it in, and just throwing in product in one end and having it come out the other end and having it be done correctly. There are processes pre and post that have to be initiated and should be thought through in taking on this process and bringing things in-house. And even adding some of the experiences myself and some of the other team members, such as Monty Reagan, who's been in this business for, you know, 20, 25 years, we can share with our customers and share with our providers, you know, best practices that we've experienced throughout the years. Again, I mentioned Monty. He's our newly appointed VP of sales and marketing and has really driven this consultative sales approach. And we've seen some really good results. initial results. Granted, it's a small sample size. But if we look at kind of cycle time of sales, which typically from conversation to close was over 140 days in the past. And this is just an early sample size in the first two months of this year. We've gotten it down to 70. So we can see the traction. The conversation is being recognized. The customers understand. They really appreciate this consultative approach because they really feel like we're building a partnership with them. And we're there to help them, not just buy capital equipment, but help them put it to use the right way so that they're successful. You know, as you know, one of the first moves I made early on is trimming some of the executive team. And really that's, you know, I was brought in to make change. And it was really just more, it wasn't just a signal. It was really looking at where the business was going and understanding the people that were here to set those directions were really not, I think, in the best interest of the company and best interest of the market and our customers. So it made sense to kind of part ways and set that new direction. And sometimes change is accepted, sometimes it's not. So as we trimmed that management team, I think we were able to get the focus on the areas that matter to our customers and really take those ideas to market. So since joining DataRoute, Jerry Yang has continued to reduce our operating expenses. We continue to find opportunities to optimize our spending. Example, we've deployed an AI agent to reduce time in our device request and algorithm process. We will continue to use technology to operationalize and automate what we do. There are a lot of opportunities to continue that trend. and we will continue to exploit those areas and improve our operating capability, which will give us additional operating leverage. One of the other main goals, as I've talked to a lot of shareholders over the last four or five months, is really building out our algorithm library. This is not something in the past that you've heard a lot about, but back in the early 80s and 90s when data out had probably 75%, 80% market share, they have the greatest library, and that library of algorithms is what really creates the buying decision as a consumer such as myself. If I've got to support a wide range of customers and products, I have to have a large library of algorithms, of parts that we support. So that is something that's going to be in real focus, and it's one of the many KPIs we'll be tracking on a day-to-day, week-to-week, month-to-month basis because it will talk to the growth and the consumption of our platform. That being said, you'll see these KPIs and you'll hear about them more and more in the future. It's clear that these strategies are spot on and the numbers are starting to confirm that. Now we need to start doubling down for acceleration for the growth of the business. We do have line of sight, as I mentioned earlier, to the operational leverage. We continue to see improvements in revenue and growth and the indications are positive. There are areas that we will be investing throughout this year, as in our next generation programming platform for the future. We've brought in some thought leadership, very exciting stuff that we'll be talking about throughout the year. Deploying our manual programming platform sometime around summer. and improving our algo and adaptive development and delivery. That is the one area that if a customer comes to you for a request of supporting a device, that means they want to use your platform. So it's how you support them, how fast you support them, and the cost in which you support them that gets you to gain market share. These investments, along with other investments I've talked about today, collectively enable us to tap into a much larger addressable market than in the past. And in my experience, I've seen, you know, companies, and not just data, other companies in this space, not have the available technology available for their customers for the solution that they need. And it's important that we stay engaged with the semiconductor suppliers customers intimately so we understand where they're going with their product development and also make sure that we have the technology available for them to buy and consume and be able to solve that problem. So, in closing, I would say that this has been what I've tasked to do and return the company to profitability and accelerate our top line growth and market share. This is something I've done several times in my career. It's actually you know, uniquely fun in a way if you've done it before because the results when you get there are quite rewarding. So I would like to pass off the financial review to Jerry.