DAIO earnings analysis
What we found in DAIO's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Data I/O delivered a strong sequential recovery in Q2 2026, with revenue rising 59% to $5.149 million and gross margin expanding to 57.0%, but revenue remained 13.4% below the prior-year period. Operating performance improved from Q1, yet the Company still reported a $1.629 million net loss, including $873,000 of interest expense, and adjusted EBITDA remained negative $509,000. Liquidity increased to $10.8 million and post-quarter-end debt conversion eliminated debt, while bookings improved sequentially but backlog and bookings remained below prior-year levels.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue Rebounded Sequentially
- Q2 revenue was $5.149 million, up 59% sequentially from $3.3 million in Q1 2026, but down 13.4% from $5.948 million in Q2 2025. Management attributed the recovery to improved sales momentum, while trade and tariff uncertainty continued to weigh on capital-equipment demand.
- Gross Margin Expanded Sharply
- Gross margin increased to 57.0% from 49.5% in Q1 2026 and 49.8% in Q2 2025. Management cited favorable mix, pricing discipline, better overhead absorption and production efficiencies.
- Operating Loss Narrowed Sequentially
- Estimated operating loss was approximately $724,000, or a negative 14.1% operating margin, versus the prior quarter’s negative 96.7% margin. R&D declined 17.0% year over year to $1.380 million, partially offset by SG&A rising 6.4% to $2.279 million.
- Bookings Improved Sequentially
- Bookings rose to $4.9 million from $4.2 million in Q1 2026, although they remained below $5.8 million in Q2 2025. Bookings improved as delayed customer decisions and sales-process disruptions from the ransomware incident began to ease.
- Liquidity Improved; Debt Converted
- Cash was $10.8 million at June 30, 2026, up $2.9 million from December 31, 2025, primarily due to the second-quarter convertible-debt issuance. The debt was converted into preferred equity after quarter-end, eliminating the Company’s debt.
- Losses Remained Material
- The Company recorded a $1.629 million Q2 net loss and $873,000 of interest expense, compared with no interest expense in the prior-year period. Adjusted EBITDA was negative $509,000 versus negative $437,000 in Q2 2025.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Cybersecurity Disruption Exposure
- The filing states there were no material changes to the risk factors in the 2025 Form 10-K, but it highlights the August 2025 targeted cyber incident, which led the Company to shut down most global operating systems and could cause revenue loss, shipment delays and remediation costs.
- Demand, Tariff and Backlog Pressure
- Capital-equipment demand remained pressured by global trade and tariff uncertainty. Backlog declined to $2.1 million at June 30, 2026 from $2.6 million at the end of Q1, while Q2 bookings of $4.9 million were below $5.8 million a year earlier.
- Financing Costs and Capital Needs
- Interest expense was $873,000 in Q2 2026 versus $0 in Q2 2025, contributing to the $1.629 million net loss. Although the convertible debt was converted into preferred equity after quarter-end, the Company states that acquisitions or continued losses could require additional debt or equity financing.
- Unremediated Control Weakness
- Disclosure controls and procedures remained ineffective as of June 30, 2026 because of a material weakness involving user access and segregation of duties in the financial-reporting IT system. Management stated the weakness would not be remediated until controls operated effectively for a sufficient period and testing was completed.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-0.17
- Gross margin
- 57.0%
- Operating margin
- -14.1%
- Segment
- Platform sales: $2.282 million, 44% of Q2 2026 revenue, down 5.4% year over year from $2.413 million.
- Segment
- Adapter sales: $1.759 million, 34% of Q2 2026 revenue, down 28.6% year over year from $2.462 million.
- Segment
- Software and services sales: $1.108 million, 22% of Q2 2026 revenue, up 3.2% year over year from $1.073 million.
- Segment
- Geography: U.S. sales were $1.325 million, or 25.7% of revenue; international sales were $3.824 million, or 74.3%.
What they said about what is next.
No numeric revenue or EPS guidance was provided in the 10-Q. Management reiterated expectations for revenue growth through end-market diversification and an enhanced consultative sales process, and discussed a strategic acquisition expected to diversify customers and accelerate entry into programming and Programming-as-a-Service.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 15, 2026
- Data I/O Corporation reported disappointing Q1 2026 results with revenues of $3.25 million, significantly below the expected $4.09 million, marking a 47.4% decline year-over-year. EPS of -$0.34 also missed analyst…
- 10-K · April 30, 2026
- Data I/O Corporation reported a challenging fiscal year in 2025 characterized by a strategic transformation aimed at shifting from capital-equipment reliance to a focus on recurring consumables and services. Despite a…
- 10-K · April 16, 2026
- Data I/O (DAIO) completed a strategic transformation in 2025 centered on a rapid refresh of its programming platform (LumenX2) and a deliberate shift from capital-equipment cyclicality toward recurring consumables and…
- 10-Q · November 12, 2025
- Data I/O reported Q3 2025 net sales of $5,393,000, essentially flat versus Q3 2024 ($5,423,000) but with material margin and profitability deterioration. Gross margin declined to $2,734,000 (50.66% of sales) while…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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