Data I/O (DAIO) Financials

Data I/O Corp. (NASDAQ: DAIO) entered 2026 with a much weaker operating profile than it had a year ago. Revenue fell sharply year over year, margins compressed, and the company continued to post meaningful quarterly losses and operating cash outflows. On the positive side, DAIO still has a solid cash balance and no long-term debt, which gives it some financial flexibility while it works through the slowdown.

Top takeaways from the last several quarters:

• DAIO remains debt-light, with no long-term debt on the Q1 2026 balance sheet and only modest current tax-related and operating liabilities.
• The company still held $5.7 million in cash and equivalents at the end of Q1 2026, which helps support near-term liquidity.
• Gross margin improved versus late 2025: Q1 2026 gross profit was $1.6 million on $3.25 million of revenue, or roughly 49%, compared with about 43% in Q4 2025.
• Cash flow from operations improved sequentially from the very weak Q4 2025 level, with Q1 2026 operating cash outflow narrowing to -$2.2 million from -$7.2 million.
• Share count has stayed fairly stable over the period, limiting dilution risk in the short term.
• Inventories remain elevated at $6.1 million in Q1 2026, which may reflect working-capital needs but could also become a pressure point if demand stays soft.
• Accounts receivable fell to $2.4 million from $3.4 million in Q3 2025, suggesting weaker revenue but also lower near-term collection risk.
• The balance sheet still shows substantial current liabilities, including $3.0 million of accrued expenses and $1.5 million of deferred revenue, both of which are normal but worth monitoring.
• Revenue declined to $3.25 million in Q1 2026 from $5.39 million in Q3 2025 and $6.18 million in Q1 2025, showing a clear downward trend in sales.
• DAIO posted a $3.17 million net loss in Q1 2026, or -$0.34 per share, versus a loss of $2.75 million in Q4 2025 and $382,000 in Q1 2025.
• Operating expenses remain too high relative to revenue; Q1 2026 operating expenses were $4.75 million, well above gross profit, resulting in an operating loss of $3.14 million.
• The company burned cash again in Q1 2026, and the cash balance has fallen from $9.7 million in Q3 2025 to $5.7 million in Q1 2026.
• Retained earnings are deeply negative at -$14.1 million, highlighting a long history of accumulated losses.

Trend summary: Over the past four years, DAIO has shown a recurring pattern of uneven revenue, persistent operating losses, and volatile cash generation. In 2024, the business had some quarters of positive operating cash flow and even a profitable Q4 on a net income basis, but 2025 turned materially weaker, with revenue falling and losses widening again. Q1 2026 continued that trend.

What investors should watch next: whether revenue stabilizes, whether gross margins hold near recent levels, and whether management can bring operating expenses down enough to approach breakeven. For now, DAIO looks financially survivable thanks to cash and no long-term debt, but the underlying operating trend remains challenged.