Daktronics Investor Day: Reaffirms 7%-10% CAGR Targets, Eyes Higher-Margin Software & Services

Key Points

• Daktronics reaffirmed its three-year financial targets of 7%–10% revenue CAGR, 10%–12% operating margin, and 17%–20% ROIC, which management says imply 2028 operating income of roughly $93M–$121M and EPS of about $1.46–$1.90.
• The company is prioritizing expansion of higher‑margin software and services—leveraging its installed base and products like Venus Control Suite and Camino 8—to shift mix away from equipment sales and grow recurring subscription and professional services revenue.
• Daktronics enters the plan with a strong balance sheet (no debt and roughly $150M cash) and will deploy capital into organic investments, disciplined M&A, and share buybacks while investing in manufacturing and operational improvements.

Daktronics NASDAQ: DAKT used its 2026 Investor Day to outline a multi-year plan focused on accelerating profitable growth, expanding software and services, and improving manufacturing efficiency, while reaffirming financial targets first introduced about a year ago.

Board and leadership frame a growth-and-execution agenda

Acting CFO and Chief Transformation Officer Howard Atkins opened the event by previewing presentations across the company’s businesses, manufacturing, installation, product development, and services. Chairman Andrew Siegel said his firm began buying shares when the stock was between $3 and $4, citing what he described as a disconnect between the company’s “strong customer relationships” and “technology leadership” and its share price. Siegel highlighted an opportunity to leverage Daktronics’ installed base to build a “high margin recurring services and software business,” adding that the board is “aligned” with shareholders and committed to “conforming the share price to the potential.”

Siegel also pointed to the hiring of Ramesh Jayaraman as president and CEO, saying Jayaraman brings a focus on “international growth, new channel development, and operational improvement.”

CEO reiterates three-year plan and targets; outlines capital deployment

Jayaraman said Daktronics generated “north of $800 million” in trailing 12-month revenue and described a “balanced and diversified” portfolio. He said revenue is “about 89% between product and installation and about 11% in aftermarket services and software,” and emphasized Daktronics’ “cradle-to-grave” model spanning engineering, manufacturing, project delivery, and aftermarket support over an approximately 10-year project lifecycle.

He said Daktronics manufactures in the U.S., China, Ireland, and Mexico, with engineering facilities in the U.S. and China, and operates in “about 100+ countries” with active video installations. Jayaraman framed the company’s three-year plan around two pillars: organic growth and operational excellence. On growth, he cited secular trends including “digital and connected,” larger and higher-resolution displays, and lower LED costs.

Jayaraman also said Daktronics is moving from serving certain “new vertical markets” opportunistically to making them a focused effort, naming government, control rooms, and houses of worship as examples. On software and services, he highlighted the Venus Control Suite and Show Control and referenced a recent Camino 8 release at the Los Angeles Angels.

On financial targets, Jayaraman reaffirmed prior guidance, calling for:

• 7%–10% revenue CAGR
• 10%–12% operating margin
• 17%–20% ROIC

He said the company has “no debt” and a cash position in the “$150 million-ish range,” and described three uses of cash: organic investments (with “mid to high teens” ROIC expectations), “organic growth expansion,” and returning excess capital through buybacks. He also said the company is building a “structured and disciplined approach” to M&A, with screening criteria tied to product portfolios, geographic expansion, and vertical market expansion, and target criteria including “industrial logic,” financial accretion, and operational synergies.

Business leaders detail market positions and demand drivers

Jeremy Johnson, vice president of Commercial and High School, Parks and Recreation (HSPR), said the commercial unit includes on-premise signage and digital billboards, with sign companies playing a central role as channel partners. He said Daktronics supports that channel with field sales, training, and demonstration trailers used for partner and end-customer demos.

In out-of-home billboards, Johnson cited industry statistics, saying the out-of-home industry posted “$9.5 billion revenue, up 3.6%,” with “19 consecutive quarters of growth.” He added that digital represented “36%” of industry revenue and is “growing at 10.5% per year,” while “only 5%” of billboards are digital—an adoption figure he said indicates runway for conversion. Johnson emphasized image quality, durability, and service response as differentiators for billboard operators whose displays function as “cash registers on poles.”

For HSPR, Johnson said growth has been “primarily fueled by the adoption of indoor and outdoor video.” He cited youth sports as a driver, describing it as a “$40 billion industry growing at 10% annually,” with “45 million kids playing organized sports” and parents spending “$1,000 on average per year per kid.” Johnson highlighted DakClassroom and Crew Connect as subscription and ecosystem offerings, and said Daktronics Sports Marketing helps schools monetize sponsorships, adding that “about 50%” of video opportunity sales are monetized in some way by the sports marketing group.

Jay Parker, vice president of Live Events and Spectaculars, described live events sales as complex, multi-year pursuits with “3–5 different decision-makers.” He said Daktronics’ differentiators are “people,” “products,” and “services,” enabling “value-based pricing” and repeat business. Parker cited market share figures of 53% in major league sports, 57% in minor league baseball, and 69% in college sports (football, basketball, baseball, and softball). He also pointed to five MLB construction projects completed for the Arizona Diamondbacks, Seattle Mariners, Baltimore Orioles, Chicago Cubs, and New York Yankees, calling the company “five for five.”

In spectaculars, Parker said Daktronics serves large city centers including Times Square, Los Angeles, and Las Vegas, and also sells into niches such as cruise ships and sports books. He said the spectaculars business has an “opportunity for growth,” noting an 11% market share in that segment.

Jody Kress, vice president of Project Realization, said Daktronics’ ability to execute complex projects is “a really clear and durable differentiator,” describing an end-to-end approach spanning design (including increased use of AI as an assistant), integration planning, production planning with manufacturing, managed subcontractors, and Daktronics-led project management. He said execution helps “protect margin” because on complex projects “the on-site work” is the riskiest element.

Spencer Degen, vice president of Transportation, described four markets: ITS, aviation, public transit, and parking. In ITS, he said Daktronics’ differentiators include U.S. manufacturing and leadership in Buy America compliance, noting that a waiver for manufactured products will be removed “six months from now” and stricter U.S. content rules will take effect. Degen called aviation the “fastest-growing” transportation market, citing airports becoming customers for indoor high-resolution LED. He highlighted chip-on-board technology as “a complete game changer” due to lower power and increased durability, and referenced an announcement that Los Angeles World Airports is using Daktronics for LAX’s Tom Bradley International Terminal as part of modernization work tied to the 2028 Olympics.

Judd Guthmiller, vice president of International, said the international LED market in FY2025 was about “$2.3 billion,” with “$1 billion” aligned to Daktronics’ target countries and segments. He said Daktronics has “nearly a 10% market share” of that $1 billion segment and expects “high single-digit revenue growth” internationally. Guthmiller cited global sports and events as drivers, including the NFL’s planned “nine games in eight different venues in seven different countries” in 2026 and the NBA’s announced plans to expand a European league. He also said that ahead of the Qatar World Cup in 2022, Daktronics sold and installed “eight out of eight stadiums.”

Services, innovation, and manufacturing positioned as differentiators

Sarah Rose, vice president of Global Services, described Daktronics as a “lifetime provider” across technical services, professional services, and software services. She cited U.S.-based repair capability as a differentiator and said services profitability is higher than equipment orders, with software services positioned as the highest-margin layer. Rose gave examples including support for the New England Patriots over “20 years” and “over 100 displays,” and work with Wawa over “20 years” and “over 13,000 displays.” She said the company aims to increase paid software subscriptions, drive professional services through Camino, and pursue technical service pricing uplift.

Brett Wendler, vice president of Design and Development, said Daktronics’ R&D focus is on integrated systems that combine display hardware and software to achieve customer outcomes. He described industry resolution trends and provided examples, saying the New England Patriots went from “1 million pixels” in 2010 to “over 20 million,” and that Intuit Dome’s halo includes “just under a quarter billion” pixels. Wendler said Camino 8 was installed at the Los Angeles Angels for advanced graphics capabilities and discussed AI as a tool to accelerate software development.

Matt Kurtenbach, vice president of Manufacturing, described a global manufacturing network designed to produce both standard and highly customized products. He said the company’s newly leased facility in Saltillo, Mexico includes “100,000 sq ft” of plant space, with fabrication equipment expected to arrive in fiscal 2027’s first quarter and production planned “late Q1, early Q2.” Kurtenbach said the initial focus will be “quick turn and tailored orders for outdoor video displays for stadiums in North America.” He also detailed operational excellence priorities including automation (including a “completely automated powder paint line”), lean manufacturing, footprint optimization, and strategic sourcing.

Finance presentation details EPS framework and balance sheet approach

Atkins said Daktronics set its three-year financial objectives by starting with ROIC and targeting “high teens” levels seen in top-performing public companies. He said those targets translate to 2028 operating income of $93 million to $121 million, depending on whether the company delivers 7% growth with 10% margin at the low end or 10% growth with 12% margin at the high end. Under assumptions including roughly 49 million fully diluted shares and a 22% effective tax rate, Atkins presented a 2028 EPS range of $1.46 to $1.90 (with an additional sensitivity line at a 9% margin).

He said year-to-date through the third quarter, revenue growth was “8%” and operating margin was “7.5%,” up from “6%” in the prior period. Atkins said modeling assumes “no change in the current” tariff rates and does not assume any tariff refunds, calling the plan “tariff neutral” and noting mitigation efforts continue.

In Q&A, Atkins said the company does not want to return to prior liquidity risk and cited a minimum cash target of “$40 million–$50 million.” On leverage, he said “3X is probably way too much,” and referenced “at most 2.5 leverage” parameters alongside maintaining at least $50 million of cash, depending on M&A. He also reiterated that Daktronics uses value-based pricing and is “not necessarily looking to win every single piece of business on price.”

Closing the event, Jayaraman reiterated the company’s commitment to the 7%–10% revenue CAGR, 10%–12% operating margin, and 17%–20% ROIC targets, and said management intends to balance organic investment, potential acquisitions, and share repurchases based on expected returns.

About Daktronics NASDAQ: DAKT

Daktronics, Inc NASDAQ: DAKT is a leading designer and manufacturer of electronic display systems, video boards, scoreboards and related control systems. Founded in 1968 in Brookings, South Dakota by Al Kurtenbach and Duane Sander, the company has built a reputation for delivering custom visual display solutions to a wide range of markets. Its product portfolio includes large-format LED video displays, programmable message centers, digital billboards, and audio-visual solutions tailored to sports venues, transportation authorities, retail environments and live event producers.

The company's primary business activities encompass the engineering, fabrication and installation of display systems for customers around the world.

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