DATA I/O CORP Q3 FY2024 earnings call

• Bill Wentworth joined as President and CEO in September and October 2024, bringing 30 years of experience in data programming. - The team has been engaged in discovery, assessment, and planning new strategies to drive value. - Operating expenses for the third quarter were $3.2 million, down $334,000 or 9% from the prior year and down $1.3 million or 11% year-to-date. - Cash balance at the end of Q3 was $12.4 million, up $1 million from Q2, benefiting from strong customer collections and lower operating expenses. - Asia channel grew 29% in Q3 and 26% year-to-date, offsetting some headwinds from the automotive market in Americas and Europe. - Consumables, software, and services grew 6% in Q3, providing a steady revenue base.

For the third quarter ending September 30, 2024, Data I/O's revenue was $5.4 million, down 17% compared to the prior year period of $6.6 million. The Automotive Electronics segment faced uncertainty with lower system shipments in the Americas and Europe, but the Asia channel grew 29% in Q3 and 26% year-to-date. Consumables, software, and services grew 6% in Q3 and currently represent 50% of total year-to-date revenue. Gross margin was 54% in Q3, comparable to prior quarters. Backlog remained strong at $4.7 million as of September 30, down only $700,000 from the start of the quarter.

• Near-term market headwinds are expected, but will be partially mitigated by continued backlog reductions in the coming quarters. - The company will leverage progress on managing costs to fund critical future market, product, and transformative investments to drive growth.

• Uncertainties as to the impact of global and geopolitical events, international trade regulations, and order levels for the company. - Ability to record revenues based on timing of product deliveries and installations. - Market acceptance of new products, changes in economic conditions and market demand, part shortages, and pricing and other activities by competitors.

Q: Could you talk about the pace of activity in the auto sector and timeframe for recovery?

A: Bill Wentworth mentioned the auto market has been choppy, with EV infrastructure slowing adoption, but some socket module increases and expectation of recovery next year.

Q: Could you talk about broader expansion into end markets?

A: Bill Wentworth mentioned partnering with global component distribution companies and EMS contract manufacturers to diversify the customer base.

Q: Concerns about executive compensation given past performance?

A: Gerry Ng stated the compensation committee looks at market competitive levels, mix of salary and variable compensation tied to company performance.

Q: Elaboration on transition to growth strategy?

A: Gerry Ng and Bill Wentworth discussed short-term focus on current products and go-to-market initiatives, and longer-term opportunities including product optimization and channel improvements.