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Data I/O (DAIO)
NASDAQ:DAIO
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Data I/O
(NASDAQ:DAIO)
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Rating:42Neutral
Price Target:
$3.00
▲(9.89% Upside)
Action:ReiteratedDate:11/13/25
Data I/O's overall stock score is primarily impacted by its challenging financial performance and bearish technical indicators. The company's negative earnings and lack of dividend yield further weigh on its valuation. While strategic initiatives and new product developments offer potential, they are overshadowed by current financial struggles.
Positive Factors
Product innovation & awards
Award‑winning product refreshes and preorders plus a planned new‑generation platform launch signal durable R&D execution and product‑market fit. This strengthens competitive differentiation, supports repeatable revenue events tied to product launches, and broadens the addressable market over multiple quarters.
Stable, high gross margins
Sustained ~50%+ gross margins indicate a structurally favorable hardware/software product mix and pricing power. Such margins provide a durable cushion to absorb SG&A while revenue scales, improving the odds that incremental sales translate to operating leverage and eventual profitability.
Low leverage and cash buffer
Operating with no debt and a multi‑million dollar cash balance provides financial flexibility to invest in product development and services expansion without near‑term refinancing risk. This conservative balance sheet supports multi‑month strategic initiatives and reduces solvency vulnerability.
Negative Factors
Declining revenue trend
A persistent top‑line contraction reduces scale and weakens operating leverage, making it harder to cover fixed costs and fund innovation. Continued revenue declines increase execution risk for new product launches and prolong the timeline to restore sustainable profitability and growth.
Weak cash generation
Negative operating cash flow and overall weak cash generation constrain the company’s ability to self‑fund R&D, services expansion, and working capital needs. This structural cash deficit increases reliance on existing reserves and heightens liquidity risk if revenue recovery stalls.
Negative return on equity / profitability
A negative ROE signals the company is eroding shareholder capital rather than generating returns. Structural unprofitability limits reinvestment capacity, makes attracting capital harder, and requires sustained margin and revenue recovery to reverse equity dilution and rebuild long‑term shareholder value.
Data I/O (DAIO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$25.64M
Dividend YieldN/A
Average Volume (3M)28.89K
Price to Earnings (P/E)―
Beta (1Y)0.68
Revenue Growth-3.22%
EPS Growth-102.88%
CountryUS
Employees88
SectorTechnology
Sector Strength88
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)-0.27
Shares Outstanding9,391,922
10 Day Avg. Volume25,124
30 Day Avg. Volume28,890
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)1.44
Price to Sales (P/S)1.16
P/FCF Ratio-17.34
Enterprise Value/Market Cap0.80
Enterprise Value/Revenue0.91
Enterprise Value/Gross Profit1.77
Enterprise Value/Ebitda-6.25
Forecast
1Y Price Target
$5.00Price Target Upside83.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)-0.48
Revenue Forecast (FY)$21.65M
Data I/O Business Overview & Revenue Model
Company DescriptionData I/O Corporation engages in the design, manufacture, and sale of programming and security deployment systems and services for electronic device manufacturers in the United States, Europe, and internationally. The company's programming system products are used to program integrated circuits (ICs) with the specific data necessary for the ICs. It offers PSV handlers offline automated programming systems; SentriX, a security deployment system; RoadRunner and RoadRunner3 series handlers, an in-line automated programming systems; LumenX Programmer; and non-automated FlashPAK III programming systems. The company also provides hardware support, system installation and repair, and device programming services. It markets and sells its products to original equipment manufacturers in automotive and consumer electronics, Internet of Things and their programming center partners, and electronic manufacturing service contract manufacturers through direct sales, and indirect sales representatives and distributors. Data I/O Corporation was incorporated in 1969 and is headquartered in Redmond, Washington.
How the Company Makes MoneyData I/O generates revenue through the sale of its programming and production systems, which includes both hardware and software components. The company earns money from direct product sales, maintenance contracts, and software licensing fees. Key revenue streams are driven by the demand for automated programming solutions in various industries, particularly as the adoption of advanced electronics grows. Additionally, Data I/O benefits from long-term relationships with major semiconductor manufacturers and partners in the electronics supply chain, which contribute to its recurring revenue from service agreements and software updates. The company's ability to innovate and offer tailored solutions further enhances its market position and revenue potential.
Data I/O Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Neutral
The call presented a mixed picture: near-term financial results were weak with notable declines in quarterly revenue, bookings, gross margin compression, larger net losses and reduced cash balances. Offsetting these negatives are substantial strategic initiatives — accelerated transformation, broad AI adoption driving productivity and cost savings, a new security partnership to expand addressable markets, a healthy recurring revenue mix (58%), no debt, inventory reductions, and an active, disciplined M&A pipeline. Management outlined clear remediation actions (cost savings target, margin recovery via absorption, and organic growth focus tied to Edge AI demand) and expects positive operating cash flow by end of 2026. Overall, the company faces material short-term financial headwinds but has several credible strategic levers to drive recovery over the next 12–18 months.Q4-2025 Updates
Positive Updates
Transformation Progress Ahead of Schedule
Management reports the company is approximately one year ahead of its multi-year transformation plan, having executed six strategic priorities (modernizing go-to-market, platform investment, customer engagement, operations/IT optimization, cloud migration, and company-wide AI deployment). Leadership changes and executive/board refresh completed to support execution.
AI-Driven Productivity and Faster Software Delivery
AI is being deployed across departments; company released production code with minimal human intervention, accelerated ERP and DevOps tasks, and reduced implementation costs (example: Salesforce Service Cloud delivered on time for ~$100k versus an earlier ~$250k scope).
Strategic Partnership to Expand Addressable Market
Signed a partnership with IAR (security provisioning) combining algo libraries and provisioning expertise to target security provisioning in devices, enabling expansion from programming CapEx into broader data provisioning, programming services and test markets.
Recurring Revenue Base and Deferred Revenue Growth
Consumables, adapters and services comprised 58% of 2025 revenue, providing a stable recurring base. Deferred revenue increased modestly to approximately $1.5M (up from $1.4M).
Active, Disciplined M&A Pipeline
Management reports an active pipeline (multiple data rooms opened and discussions ongoing), focused on day‑one accretive transactions and disciplined deal screening; inorganic initiatives intended to accelerate strategic expansion.
Resilience, Security Remediation and Operational Recovery
Company remediated a cyber incident and was back up and running within 11 working days; invested in cloud migration and security improvements to strengthen infrastructure.
Early Demand Signals for Edge AI
Management cites encouraging early customer activity and pipeline tied to Edge AI build-outs, with new customer conversations and opportunities not initially in the revenue plan, supporting a target of organic revenue growth in 2026.
Balance Sheet Strength: No Debt and Inventory Reductions
Company ended Q4 with $7.9M cash, no debt, and implemented inventory reductions (~$0.5M) and programs to improve lean operations.
Negative Updates
Quarterly Revenue Decline
Q4 net sales were $4.0M, down from $5.2M in Q4 2024 — a decline of ~23.1% year-over-year; full year 2025 net sales were $21.5M versus $21.8M in 2024 (-~1.4%).
Material Bookings Declines
Q4 bookings were $3.1M, down 25% from $4.1M in the prior-year quarter; full year bookings fell to $18.6M, down 17% from $22.5M in 2024.
Gross Margin Deterioration
Gross margin in Q4 fell to 43% from 52.2% in Q4 2024 (a drop of 9.2 percentage points). Full year gross margin declined to 49.3% from 53.3% in 2024 (down 4.0 percentage points), attributed to mix shifts and lower absorption of labor/overhead.
Widening Net Loss and Negative Adjusted EBITDA
Q4 net loss was $2.5M ($0.27 per share) versus a $1.2M loss ($0.13) a year earlier. Full year net loss widened to $5.0M ($0.53) from $3.1M ($0.34). Adjusted EBITDA was negative $2.5M in Q4 (vs -$1.1M prior-year); full year adjusted EBITDA was negative $3.9M (vs -$1.4M).
Cash and Backlog Declines
Cash decreased to $7.9M at year end from $10.3M a year earlier (down ~23.3%). Backlog fell to $2.3M from $2.7M (down ~$0.4M, ~14.8% from prior quarter). Net working capital declined to $12.3M from $16.1M.
One-Time Charges and Higher Operating Expenses
2025 included onetime operating expenses of ~$1.4M (leadership transition, platform investments, SEC filings, cybersecurity remediation). Q4 operating expenses were $4.2M including ~$312k one-time items, contributing to near-term profitability pressure.
Regional and End‑Market Weakness
Europe experienced declines while Asia was strongest and North America flat. Automotive electronics (largest end market) represented 52% of 2025 bookings versus 59% in 2024 — a 7 percentage point reduction, reflecting EV capacity reassessments.
External Headwinds and Execution Risks
Tariffs, supply chain pressures, and earlier cyber incident created headwinds. Management is pursuing ERP transformation and cost reduction initiatives (ERP remains a focus/risk), and positive cash flow is targeted only by end of 2026, indicating near-term execution risk.
Company Guidance
Management is targeting organic revenue growth in 2026 versus 2025 (FY2025 net sales $21.5M; full‑year bookings $18.6M, down 17% vs $22.5M in 2024) and said higher revenue should improve absorption of labor/overhead and drive gross‑margin recovery (FY2025 gross margin 49.3% vs 53.3% in 2024; Q4‑2025 GM 43% vs Q4‑2024 52.2%); they are planning at least $1.0M of additional run‑rate cost reductions beginning early 2026, expect AI to boost company‑wide efficiency and software attach/recurring revenue (consumables/adapters/services = 58% of 2025 revenue; capital equipment = 42%; deferred revenue ≈ $1.5M), and have “line of sight” to positive operating cash flow by the end of 2026 (CEO also referenced returning to cash‑flow neutral/positive during the year); balance‑sheet context includes Q4 cash $7.9M (vs $10.3M a year prior), net working capital $12.3M (vs $16.1M), inventory down ≈ $0.5M, backlog $2.3M (vs $2.7M), no debt, and the guidance excludes inorganic M&A activity the company is pursuing.Data I/O Financial Statement Overview
Summary
Data I/O is facing significant financial challenges, with declining revenues, negative profitability, and cash flow difficulties. The balance sheet shows low leverage, but negative return on equity and cash flow issues indicate operational inefficiencies and financial strain.Income Statement
Data I/O's income statement reveals a challenging financial environment. The company has experienced declining revenue growth, with a negative growth rate of -13.2% in the TTM period. Profitability metrics are concerning, with negative net profit and EBIT margins, indicating operational inefficiencies. The gross profit margin remains relatively stable at around 52%, but the overall trajectory suggests financial strain.45
Neutral
Balance Sheet
The balance sheet shows moderate stability with a low debt-to-equity ratio of 0.14, suggesting manageable leverage. However, the return on equity is negative, reflecting losses and inefficient use of equity. The equity ratio is reasonable, indicating a solid asset base relative to equity, but the negative ROE highlights profitability challenges.55
Neutral
Cash Flow
Cash flow analysis indicates significant challenges, with negative operating and free cash flows. Despite a positive free cash flow growth rate, the operating cash flow to net income ratio is negative, highlighting cash generation issues. The free cash flow to net income ratio is above 1, suggesting cash flow is less negative than net income, but overall cash flow health is weak.40
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 22.70M | 21.77M | 28.06M | 24.22M | 25.84M | 20.33M |
| Gross Profit | 11.59M | 11.61M | 16.19M | 13.21M | 14.72M | 10.82M |
| EBITDA | -3.29M | -2.47M | 1.06M | -189.00K | 394.00K | -1.61M |
| Net Income | -3.67M | -3.09M | 486.00K | -1.12M | -555.00K | -3.96M |
Balance Sheet | ||||||
| Total Assets | 22.69M | 24.97M | 27.40M | 27.16M | 29.06M | 25.59M |
| Cash, Cash Equivalents and Short-Term Investments | 9.66M | 10.33M | 12.34M | 11.51M | 14.19M | 14.17M |
| Total Debt | 1.58M | 2.80M | 1.57M | 2.30M | 2.88M | 1.26M |
| Total Liabilities | 6.68M | 7.34M | 7.08M | 8.06M | 9.20M | 5.95M |
| Stockholders Equity | 16.01M | 17.63M | 20.32M | 19.11M | 19.85M | 19.64M |
Cash Flow | ||||||
| Free Cash Flow | -2.67M | -1.46M | 1.23M | -2.13M | 787.00K | -229.00K |
| Operating Cash Flow | -2.13M | -995.00K | 2.43M | -1.05M | 1.41M | 631.00K |
| Investing Cash Flow | -540.00K | -467.00K | -1.20M | -1.08M | -623.00K | -860.00K |
| Financing Cash Flow | -123.00K | -232.00K | -356.00K | -165.00K | -423.00K | -144.00K |
Data I/O Technical Analysis
Negative
2.73
Price Trends
3.05
Negative
2.99
Negative
3.06
Negative
Market Momentum
-0.08
Positive
39.42
Neutral
35.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAIO, the sentiment is Negative. The current price of 2.73 is below the 20-day moving average (MA) of 2.87, below the 50-day MA of 3.05, and below the 200-day MA of 3.06, indicating a bearish trend. The MACD of -0.08 indicates Positive momentum. The RSI at 39.42 is Neutral, neither overbought nor oversold. The STOCH value of 35.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DAIO.
Data I/O Risk Analysis
Data I/O disclosed 21 risk factors in its most recent earnings report. Data I/O reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Data I/O Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | $14.79M | 19.89 | 2.80% | ― | 5.36% | -8.88% | |
58 Neutral | $39.94M | 11.57 | 2.33% | ― | 14.07% | 153.24% | |
48 Neutral | $25.74M | -43.07 | -7.87% | ― | -13.94% | -157.49% | |
48 Neutral | $24.93M | -1.47 | -160.37% | ― | 599.15% | 82.47% | |
42 Neutral | $25.64M | -5.93 | -30.89% | ― | -3.22% | -102.88% |
* Technology Sector Average
DAIO
Data I/O
2.73
0.32
13.28%
ELSE
Electro-Sensors
4.25
-0.17
-3.85%
LGL
LGL Group
7.22
1.21
20.13%
NSYS
Nortech Systems
9.24
-0.61
-6.19%
WATT
Energous
11.46
2.83
32.79%
FCUV
Focus Universal
4.36
-32.64
-88.22%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.