Data I/O Corporation

Good afternoon, everyone, and welcome to DataIO's first quarter 2026 Financial Results Conference Call. All participants will be in a 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 1 on your telephone keypad. To withdraw your question, please press star, then two. Please note, this 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 first quarter 2026 financial results conference call. In addition to the earnings, we are also addressing the recently announced transformational acquisition and strategic direct investment of $9 million. With me today are the company's President and CEO, Bill Wentworth, and Chief Financial Officer, Charlie DiBona. Before we begin, I'd like to remind you that statements made in this conference call concerning future events, results from operations, financial position, acquisitions, financings and capital markets initiatives, 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 in 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 and 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 earnings press release issued today after the market closed. 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 very much, Jordan. As you heard from Jordan, we obviously have a lot of great news to talk about today, but I will start with kind of the low end of this conversation, which is talking a little bit about Q1 and talk a little bit about kind of what happened and what we did to pivot within Q1 to get the momentum that we now have in Q2 as the core business. So we had some really good plans going into the year. They were well thought out. As you know, we have a very large installed base globally, and a lot of that equipment has certainly gotten in age, and some of it's aging out. So our plans were really around generating revenue through our existing clients first. Obviously, that's the easiest place to go. Things got off to a little slower start than we thought, so we made some pivots and really started to change a little bit of that messaging. And you can kind of see through Q1, especially into March, where bookings really started to pick up. Now, we didn't get those bookings in time to ship, but they certainly came into Q2 strong, and that continued to accelerate. So I am, you know, this company, you know, in the past has typically not given any guidance, so this is something that's somewhat new. I'm highly confident we've moved north of $5 million both in bookings and revenue for the quarter. I won't go anything beyond that. This is really to give the shareholders an understanding of really directionally where the business is going on its own. Obviously, we have an investment we're going to talk about, an acquisition, but it's really important that the shareholders and the people on the phone understand that the core business is healthy. It's a slow start, but we've got new products rolling out the second half. We've got some really good momentum. A lot of it is actually in North America and in Mexico. Asia is still a little bit slow. We did book three purchase orders for systems in Europe, which is the most we've booked more than the last two years combined in Q1. So we are seeing some good pickup. We also will land most likely. We've landed about three net new logos since the beginning of the year. We've got three right now in the active pipe for this quarter. that we have a good chance of closing. So to land three, and these are not three site changes, not like another J-Bill location or Flex. These are net new logos that we've never invoiced. So, you know, that is obviously a big part of our plan was to diverse our customer base because we really were so heavily reliant on automotive. And I know in the past those numbers were 58% to 63%. You know, when I dug in during the year, especially in the second half, it was pretty clear to me a lot of the subcons that we had as kind of industrial were really automotive. So, you know, coming off a really tough time in the automotive industry, this has been a big transition overall for us. But, you know, we're seeing some of our automotive customers come back. You know, we happen to be riding a few of the right horses there, which is always good. But, you know, we feel really good about Q2 and where we're going with the core business. So that's, you know, Charlie, we get into some of the details and the financials. We had some one-time write-offs. And as we optimize the business, that has been a big part of the last two quarters. I will tell you that, you know, going into this quarter, our break-even for the overall business starting April is a clean month. Going forward is less than $22 million a year overall. When I started, it was close to 27 million. And I will tell you, AI has been a big part of that ability to get more productivity but also save money. And it's not just about saving money because, you know, look, AI is impacting our lives everywhere. We all see it. You know, we see it across companies and across every domain. CEOs are asked about how they're deploying AI all the time. And it has a real positive impact to the company and to companies and to productivity. We've seen a lot of that in different projects that we're working on, and I'll talk more about that in the Q&A. I'd like to move on to the direct investment. This is something we've been working in. And looking at the M&A pipeline that we started to build when we brought Benchmark on as an advisor, you know, that pipeline has stayed pretty healthy, and it still is. But we're really looking for a transformational acquisition. I mean, that's, you know, look, there's some small acquisitions we could do and that would kind of, but we really needed something that was going to take us to the next step, the next level, and give us some scale and scope and, you know, increase manufacturing capacity, things like that. So, you know, we've been talking to a company over the last, you know, three, four, five months. And during that time, talking to some investors and, And, you know, I'm happy to announce that we were able to bring in $9 million of proceeds in common stock, warrants, convertible, temperature, in support of our current M&A activity as well as future M&A. Fundamental institutional investor following our progress for and met with us at least three times, maybe four over the last year. I think we've built a really good relationship with the investor and other investors that are looking. So I really like where we're going as far as bringing in new money. You know, and it's time. This is a new day and age for data RIO. You know, so we're excited about the future. The team's excited. The companies we're talking to are excited. There's a very large growing market for us. If you look at the overall semiconductor market, it has gone through the roof over the last several quarters. A lot of that has been in specialty parts, such as GPUs and high-speed memory. But now you're starting to see the tide rise for everybody. And this is where we're seeing the activity. As AI starts to get more pervasive across our infrastructure, there are other things that need to be built to support that or take advantage of AI automation. And we're seeing that in places like robotics, edge of the network. Two of our new logos are robotics companies. You've heard me talk about this in the past. couple quarters, and it was definitely a target market for us. And so those are two of the new logos. So we're very excited about where we're going and where DataRouse sits in that supply chain, but as well as getting into services. You know, I'll talk a little bit more about the acquisition a little bit later, but if you followed us in our launching of our new website on April 10th, it was a dynamic change in this company's history. You can see programming as a service, and we are in four or five very deep conversations right now with significant large subcontractors that want to move from doing it themselves, insourcing, to programming as a service onsite or regional. My expertise is services, so this falls right into a comfort zone of mine. And I'm really looking forward to getting back into the services business. It's a great industry. It's recurring. It's got a higher quality of revenue. improved cash flows. It kind of takes out that lumpiness of the CapEx business. I'm sure that I know Charlie's going to enjoy those new cash flows as we start to expand that business and the services. And so, you know, we're focused on developing the software to also run our products in a multi-tenant environment. And all that leads to better revenue, better recurring revenue, and a more predictable business for the future. I'll move on a little bit to the acquisition. I do want to save, you know, a good amount for the Q&A. I hope you guys are ready because we're certainly ready for your questions. You know, as I said, we've been working on this acquisition for quite some time. I will tell you that, you know, the team is very excited. And, you know, what this acquisition does for the company is, You know, it's going to help us accelerate our growth. It's going to expand our scale and scope and manufacturing capability. It is truly a transformational acquisition. It will double the size of this company from a run rate perspective post-first quarter that we close or when that close happens. I do expect that to happen by the end of Q3. So stay tuned, and I think at this point I'd like to hand this over to Charlie. And let's see where we go. Yeah, I think at this point, Charlie, if you're ready, take it away.