Data I/O Corporation

Good afternoon, everyone, and welcome to Data.io's third quarter 2025 financial results conference call. Please note, today's event is being recorded. At this time, I'd like to turn the conference over to Mr. Jordan Darrow, Investor Relations. Please go ahead, sir.

Thank you, operator, and welcome to the Data.io Corporation third quarter 2025 financial results conference call. With me today are the company's president and CEO, Bill Wentworth, and Chief Financial Officer, Charlie DeBona. Before we begin, I'd like to remind you that statements made in this conference call concerning future events, results from operations, financial positions, markets, economic conditions, supply chain expectations, estimated impact of tax and other regulatory reform, product releases, new industry participants, 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 also include uncertainties as to the impact of global and geopolitical events, international tariff and 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 Form 10-K and 10-Q with the Securities Exchange Commission in our press releases and other communications. The company may also reference GAAP and non-GAAP financial performance measures, including one-time items, which are intended to provide listeners with a means to better understand the company's performance. Please refer to reconciliations in our third quarter earnings press release issued today after market close. Finally, the accuracy and completeness of all discussions on this call, including forward-looking statements, should not be unduly relied upon. Data.io is under no duty to update any forward-looking statements. And now I'll turn the call over to Bill Wentworth, President and CEO of Data.io.

Thank you, Jordan, for that introduction. I want to thank the people that have taken the time out of their day to listen to our earnings call and look forward to the conversation and specifically the Q&A after. You know, I've spent the last week thinking about the last year, since this month marks the year that I started as CEO of Data.io. And, you know, one of the things that I noticed as a board member, you know, that the company was certainly doing well in the automotive industry, but it was also a fairly... high concentration in that business. And it's still a great business for Data Rail and has continued. Even in this softness, it's still driving quite a bit of our revenue. But it's also one of the things that needs to drive us to get to new markets, but also new businesses. So what we've done, and I look back at the year and look at, you know, where we've invested, you know, in the first couple months of discovery, You know, it was looking at the team and kind of what the members brought to the party and really where were the strengths and weaknesses of the company from a people standpoint. You know, he brought in a new director of engineering, John Duffy, who's done a phenomenal job. He started in January getting our refresh of our manual product line and getting the development of our next generation programmer, which will be introduced to Productronica at the end of this month, which we're very excited about. We've won a couple of awards already at some shows with the new reskinned which has made the ability for us to really go out and pitch the platform and really get back into the engineering communities, which has been exciting, and started to drive some ramp in our manual systems and started to look at some pre-orders as well, which will really start to kick off in Q1. Rounding out the product portfolio is probably the most important thing we had to do this year outside of the people. Without the people, you have to have the right people to design the products and bring these things to life. And I have to say, if you look at our product portfolio from a year ago and look at it today, it's night and day. It's really what DataRail stands for, and that's what we're excited to bring to market. You know, we are starting the next generation already of our long-term platform, which started its design cycle this quarter. I would kind of call it DataRail's AI moment at the end of next year when that product gets released. That doesn't preclude us from driving revenues and new revenues this year with the with the reskinning of the Luminex and getting to the new platform that we're launching at Productronica. We're also starting the refresh cycle of our automation. We've also noticed some gaps in the solutions area of automation for processing programmable technology. So we're pretty excited about rolling out some new automation platforms sometime around the middle of next year. And that leads to kind of process. And Charlie's going to get into some of that process and how we're going to be managing margins and look for margin expansion throughout next year, quarter over quarter. There are some areas that we can definitely improve there. But really the exciting part is getting into these new businesses and adjacent markets. You know, the market we serve today is $100 million to $200 million at best. Services definitely needs to be a pillar of this company, and we are starting those conversations now. But that's a $1 billion-plus market. that really brings in recurring revenue, not necessarily always contractual, but you're always managing a supply chain, and those consistencies take out a lot of the lumpiness of the CapEx business, but it's a direct adjacent play. It allows us to drive, you know, very competitive pricing in the market. It puts us in a position to really drive that business, both for partners that we may partner with to provide them services, or OEMs that decide that they don't want to buy CapEx and they need a service provider instead. So it gives us an opportunity to have both conversations. We are in conversations now about embedding our technology in testers, which is a big part of the market. That's probably a multibillion-dollar market. Now we're opening up a market that used to be 10% to 15% that we could play in, upwards of 60% to 65% of where data gets provisioned. And that's where DataRail is going to be able to finally grow. These activities are going to have traction next year. I can't tell you when these revenues will start, I just know that we're in conversations and we're actually in them earlier than I thought. I really didn't think that we would, the company, would be engaged in these conversations until Q1. So the great thing is that we're out of the gate pretty quick. And then there's some vertical integration that we're going to be doing. People on the phone know the company Kohu. They invested in Sockets years ago. It's a big part of how they go to market with their technology, with testers and handlers. It's a big part of, and a very important part of our business, Because the second most important thing to a programmer is being able to make contact with the device. And it's something that DataRoute should have expertise in. It's a $7 billion market. And so it's a business where we can, you know, make a small entry into a small player in the U.S. or even abroad, have that expertise internally, lowers our operating costs, but also gives us a secondary offering, but also is a lead generator as well. All three of these new business units do drive revenue for the other, and that's the great part about being in adjacent markets is you can leverage your core, which is exactly what we'll be able to do next year. So I'm excited about 2026 because we can finally start to drive the growth engine. We're going to have the products and the people and the services to be able to go do that, and that's where we're investing in between now and the end of the year, and we'll continue to make those investments next year. We've invested – Also in the engineering department, we brought in some additional algo writers to drive our algo migration from our older platforms to the new platforms. So we're getting ready for that growth. That's all I have for now. I look forward to the Q&A session. I know there's some coming, so I look forward to the Q&A. I'll hand the rest of it over to Charlie. Charlie?