Data I/O Corporation Reports 13.4% Decline in Q2 Net Sales, Net Loss of $1.6 Million

Data I/O Corporation reported its financial results for the second quarter of 2026, revealing a decline in net sales to $5.1 million, down 13.4% from $5.9 million in the same period last year. For the first half of 2026, total revenue was $8.4 million, a decrease of 30.7% compared to $12.1 million in the first half of 2025. The company experienced a gross margin of 57% in the second quarter, an improvement from 49.8% in the prior year, attributed to better overhead absorption and a positive mix shift in product sales. However, the company reported a net loss of $1.6 million for the quarter, compared to a loss of $742,000 in the same quarter of 2025.

The financial performance reflects significant changes from the previous fiscal period, particularly in the company's revenue streams. Platform sales decreased by 5.4% to $2.3 million, while adapter sales fell by 28.6% to $1.8 million. Conversely, software and services sales saw a slight increase of 3.2% to $1.1 million. The company noted that international sales represented 74% of total net sales, a decrease from 95% in the prior year, indicating a shift in market dynamics. The backlog at the end of June 2026 was $2.1 million, down from $2.6 million at the end of the previous quarter.

Strategically, Data I/O has been focusing on diversifying its customer base and enhancing its manufacturing capabilities. The company announced a letter of intent for a strategic acquisition aimed at expanding its market reach and accelerating its transition into Programming-as-a-Service (PaaS). Additionally, the company has implemented organizational changes, including workforce reductions that resulted in approximately $1.3 million in employee-related costs during the first half of 2026. These changes are part of a broader effort to streamline operations and improve efficiency.

Operationally, the company has seen a decrease in research and development expenses, which fell by 17% to $1.4 million in the second quarter, primarily due to reduced headcount and completed projects. Selling, general, and administrative expenses increased by 6.4% to $2.3 million, driven by one-time costs associated with the reorganization of operations in Redmond. The company’s employee headcount has been adjusted as part of these strategic realignments, reflecting ongoing efforts to enhance productivity.

Looking ahead, Data I/O remains cautiously optimistic about its future performance, emphasizing the importance of operational efficiency and market diversification. The company plans to continue its focus on innovation and product enhancement while managing costs effectively. Despite the challenges posed by global trade uncertainties and economic conditions, Data I/O aims to leverage its strategic initiatives to foster sustainable growth and improve its financial position in the coming quarters.