Data I/o Corp (NASDAQ: DAIO) reported Q4 EPS of ($0.06), $0.07 better than the analyst estimate of ($0.13). Revenue for the quarter came in at $5.9 million versus the consensus estimate of $4.1 million.

Fourth Quarter 2019 Highlights

• Net sales of $5.9 million; bookings of $6.9 million
• Gross margin as a percentage of sales of 55.9%
• Net loss of ($496,000) or ($0.06) per share. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)*, excluding equity compensation, of ($67,000)
• Cash & Equivalents of $13.9 million; no debt
• Automotive electronics, advanced programming and secure provisioning leadership
  • New PSV2800 received major awards since introduction in October 2019
  • Recognized by customers with 2020 Circuits Assembly Service Excellence Award in the Device Programming Equipment category
  • Extended programming technology leadership with launch of machine learning-based
  • automated teach capability & 4x programming performance improvement for UFS
  • Growth in SentriX® devices provisioned, device types supported, and design wins

Management Comments

Commenting on the fourth quarter and year ended December 31, 2019, Anthony Ambrose, President and CEO of Data I/O Corporation, said, “2019 was a challenging year for the business, due to a downturn in automotive electronics and structural changes in the global supply chain. We sustained our first loss in 6 years due to a downturn in orders combined with increased investments in security. Fourth quarter revenue increased 54% compared to the 2019 third quarter as bookings increased to their highest level in five quarters.

“As the market leader, we plan to invest for the long term to enhance and extend our leadership position. We continue to value long term growth over short-term GAAP profitability. Our strong cash position combined with our long-term view of the market gives us the financial flexibility to make these decisions.

“Throughout 2019 we bolstered our technology suite with innovations that have been recognized globally. At the cornerstone of our strategy is the PSV family of high-speed programming systems which have been met with worldwide acceptance as deployments increased to nearly 300 globally in 2019. Only a few months after the October 2019 launch of the PSV2800 for ultra-fast performance, we were awarded the 2020 NPI Award in the category of Device Programming at the IPC APEX EXPO trade show held in San Diego in February 2020. Earlier, we received the 2019 Global Technology Award in the category of Programming in Munich, Germany, among other industry awards ranging from products to customer support during the year.

“We continue to make great strides with our SentriX Platform, a highly flexible cost-effective security provisioning and data programming deployment system for authentication devices, secure elements and secure microcontrollers. Device supports increased throughout the year along with design wins and a broadening of our sales funnel and customer engagements.

“Regarding the coronavirus impact, our global workforce has no reported incidence of contraction and our China-based team was required to close for an additional week and follow recommended best practices in accordance with government mandates. We have been up and running in China since February 9 and are delivering products. The situation is highly fluid and changeable, but at this time we believe our multi-sourced supply chain will see minimal impact from business interruption in the short term.

“On the demand creation side, we are seeing impacts from the coronavirus, primarily in Asia as the sales process has slowed, and business travel has been restricted. In Europe, we saw impacts to demand creation as the Mobile World Congress trade show was cancelled and we made the decision to pull out of the Embedded World trade show the same week. Whether this is a one quarter deferral, as we saw with tariffs in the third quarter of last year, or a longer-term impact remains to be seen.

“While possessing a strong balance sheet with no debt, we have positioned the Company for growth. We will be vigilant on our management of short terms risks while maintaining our long-term growth focus.”

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