DATA I/O CORP Q1 FY26 Results

After nearly a year of strategic planning and organizational optimization, we are extraordinarily excited to have announced a transformational acquisition and major direct investment in the company. The acquisition, valued at $23 million, is expected to be completed by the end of the third quarter and will nearly double our revenues on an annual basis. More importantly, the acquisition checks every significant strategic box we’ve been talking about for the past year that is needed to position Data I/O at the forefront of the device programming industry and expands our addressable market beyond $1 billion annually. “The acquisition will provide Data I/O with unprecedented scale and is expected to be accretive to our consolidated profit and cash flow. We are acquiring the business from its private equity ownership who expressed confidence in the value of the combined business by taking approximately 15% of the purchase price in Data I/O stock. Our progress and strategic growth plan were further validated through a $9 million direct investment by a single institutional investor who will become our single largest shareholder. “Beyond these two monumental corporate developments, Data I/O’s first quarter performance reflects a business transition gaining traction on an organic basis. Costs are coming down, customer activity is building, and we are executing against a plan that is tracking nearly one year ahead of schedule. Revenue of $3.3 million and continued negative Adjusted EBITDA are consistent with where we are in the recovery curve. What gives us confidence in the trajectory is the demand environment: customer engagement at the end of 2025 carried through the first three months of 2026 and into the second quarter, with increasing urgency around Edge AI infrastructure build-outs and security provisioning requirements. As we continue to successfully implement new sales models for broader diversification of our business, we expect this to translate into meaningfully higher revenue as we move through the year. “The structural work of our planned transition is nearing completion. Our German operations were modified early in the first quarter for operational efficiency and to reflect a more diversified global organizational framework which is expected to lead to an approximate reduction in operating expenses of $1 million annually. This was a proactive and deliberate decision to right-size our European cost base against current demand trends while preserving our customer relationships and service capability in the region. The annualized savings from these actions, combined with the broader expense reductions implemented since late 2024, lower our break-even revenue threshold materially and put profitability within reach as revenues grow this year – before the consolidation of our transformational acquisition. “A key driver of our organic transition is the broad deployment of artificial intelligence across our operations, products, and customer-facing capabilities. We have embedded AI throughout our business — from intelligent customer support tools, to AI-enabled processes that allow us to scale operations, accelerate decision-making, and deliver faster, more responsive service. Our new corporate website, launched in April, was created using AI tools. AI adoption is central to how we operate and one of the primary reasons our transformation is moving faster than we originally anticipated. Ongoing investments in our technology platform and IT infrastructure continue to be of vital importance to our transition. “The Company’s transition is comprehensive and addresses all operational and administrative functions. To this end, with full transparency in our communications and disclosures, we identified a material weakness in our internal financial controls relating to disaggregated revenue reporting, as detailed in our 2025 Form 10-K with the SEC. We are taking full accountability for bringing our systems into compliance with best practices amid our move to a new ERP system, along with the anticipated acquisition integration. We are addressing our financial controls procedures with urgency and have engaged outside resources in an effort to comply with remediation in 2026. “The cost for these additional efforts as well as all other investments are largely being offset by operational expense reductions. Cash at quarter end declined from year-end, as expected, and we continued to have no debt until we arranged for the direct investment and acquisition announced in May. Based on the progress we have made on our transition and emerging organic demand, our visibility supports organic growth of approximately 20% in the second quarter 2026 from the first quarter, and from there we look forward to the benefits of the acquisition consolidation and synergies.”