Data I/O Reports Second Quarter 2017 Results
Revenue Grows 57%; Bookings Increase 75%; Advancements in Next Generation SentriX™ Managed and Secure Programming Technology to Democratize IoT Security
Redmond, WA, Thursday, July 27, 2017 – Data I/O Corporation (NASDAQ: DAIO), the leading global provider of advanced data and security programming and IP management solutions for flash-memory, flash based microcontrollers and other intelligent devices, today announced financial results for the second quarter ended June 30, 2017.
Second Quarter 2017 Highlights (on year-over-year basis unless noted)
- Net sales of $9.1 million, a 17-year high
- Total bookings of $10.1 million, a 17-year high
- Gross margin as a percentage of sales of 56.9%, up from 53.2% in 2Q16
- Net income of $1.2 million or $0.14 diluted earnings per share, up from $444,000 or $0.06 diluted earnings per share in 2Q16
- Adjusted EBITDA*, excluding equity compensation, of $1.7 million, up from $789,000 in 2Q16
- Backlog of $4.7 million at end of quarter, compared with $4.9 million at March 31, 2017 and $3.2 million at December 31, 2016
- Deferred revenue of $2.8 million, including 3 systems
- Cash and securities of $12.0 million at June 30, 2017, compared with $10.5 million at March 31, 2017 and $11.6 million at December 31, 2016
- Progress for SentriX™ Managed and Secure Programming Platform
- Additional Secure Elements enablement orders received
- Leadership team bolstered
- On track for system release in second half of 2017
“Our second quarter financial and operating performances were outstanding,” said Anthony Ambrose, President and CEO of Data I/O Corporation. “Building upon the progress achieved in the first quarter, revenue and bookings in the second quarter reached the highest level in 17 years. During the second quarter, we shipped our 150th PSV family system, extending our global market share leadership.
“The turnaround strategy we started over 4 years ago has delivered our best quarter since the year 2000. We are delivering operational excellence across the board: sales, engineering, service and operations all drove our performance.
“Automotive electronics were over 50% of bookings in the first half of 2017, continuing a multiyear growth trend. We booked multiple systems from an international automotive electronics company, and shipped 2 systems to them in the second quarter. Reflecting our growing base of installed systems, revenue from adapters in the second quarter increased 72% from the prior year period to $2.1 million, or 23% of consolidated revenue.
“While we continue to experience high demand and interest in our product platforms, our second quarter bookings of $10.1 million were unusually strong. Second quarter bookings are likely to be the peak level for the year due to unprecedented demand in the first half of 2017 and our seasonal sales funnel.
“We improved overall profitability while increasing investment in research and development for our Managed and Secure Programming (“MSP”) technology and automotive targeted products. In June, we announced organizational changes that significantly strengthen our management team to enable us to better address our new opportunities from MSP. Through our continued work on the MSP platform, we are developing the technologies behind a new generation of security solutions for authentication devices, secure elements and secure microcontrollers. The mission of Data I/O’s MSP platform is to enable a democratization of security capabilities for OEMs globally.”
Net sales in the second quarter of 2017 were $9.1 million, compared with $5.8 million in the second quarter of 2016.
For the 2017 second quarter, gross margin as a percentage of sales was 56.9%, compared to 53.2% in the second quarter of 2016. The improvement in gross margin as a percentage of sales for the second quarter compared to the same period in 2016 was primarily due to higher order volume and favorable product mix, particularly from demand for the PSV family of products by automotive electronics and programming center customers.
Net income in the second quarter of 2017 was $1.2 million, or $0.14 per diluted share, compared with net income of $444,000, or $0.06 per diluted share, in the second quarter of 2016.
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $1.5 million in the second quarter of 2017, compared to $584,000 in the second quarter of 2016. Adjusted EBITDA, excluding equity compensation, was $1.7 million in the second quarter of 2017, compared to $789,000 in the second quarter of 2016.
Bookings in the second quarter of 2017 reached the highest level in 17 years at $10.1 million, compared to $5.7 million in the second quarter of 2016 and $8.4 million in the first quarter of 2017. Backlog at June 30, 2017 was $4.7 million as compared to $4.9 million at March 31, 2017 and $3.2 million at December 31, 2016. Deferred revenue doubled to $2.8M at June 30, 2017, up from $1.4 million at March 31, 2017.
Spending in the second quarter was up approximately $1.2 million from the same period of 2016. Approximately $600,000 of the increase was SG&A variable costs related to the increased level of business activity. Approximately $600,000 of the increase reflects additional spending on research and development to support new product development for the SentriX platform, the ConneX™ factory automation software, LumenX™ programmer features and enhancements to other products. The majority of this was personnel related, including additional headcount in engineering. The Company continues to invest to support automotive demands in the near term and security opportunities in future years.
The Company’s operating leverage continues to produce meaningful incremental profitability with revenue growth, which is partially offset by spending on the new Managed and Secure Programming platform. Data I/O’s financial condition remains strong with a cash position of $12.0 million and working capital of $16.9 million at June 30, 2017. The Company continues to have no debt.
Conference Call Information
A conference call discussing the second quarter ended June 30, 2017 financial results will follow this release today at 2 p.m. Pacific time/5 p.m. Eastern Time. To listen to the conference call, please dial (612) 234-9959, passcode: DAIO. A replay will be made available approximately one hour after the conclusion of the call. To access the replay, please dial (320) 365-3844, access code: 426476. The conference call will also be simultaneously webcast over the Internet; visit the News and Events section of the Data I/O Corporation website at http://www.dataio.com to access the call from the site. This webcast will be recorded and available for replay on the Data I/O Corporation website approximately one hour after the conclusion of the conference call.
About Data I/O Corporation
Since 1972 Data I/O has developed innovative solutions to enable the design and manufacture of electronic products for automotive, industrial/Internet-of-Things, wireless, consumer electronics, medical and military/aerospace markets. Today, our customers manufacture tens of millions of products each year using Data I/O programming solutions to reliably, securely, and cost-effectively deliver their Intellectual Property into programmable devices. Our expertise in programmable integrated circuits, global supply chain processes, and IP management and protection helps bring innovative new products to life. These solutions are backed by a global network of Data I/O support and service providers, assuring success for our customers.
Learn more at www.dataio.com.
Forward Looking Statement and Non-GAAP financial measures
Statements in this news release concerning economic outlook, expected revenue, expected margins, expected savings, expected results, orders, deliveries, backlog and financial positions, as well as any other statement that may be construed as a prediction of future performance or events are forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements. These factors include uncertainties as to the ability to record revenues based upon the timing of product deliveries, installations and acceptance, accrual of expenses, changes in economic conditions and other risks including those described in the Company's filings on Forms 10K and 10Q with the Securities and Exchange Commission (SEC), press releases and other communications.
Non-GAAP financial measures, such as EBITDA and Adjusted EBITDA excluding equity compensation, should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s results and facilitate the comparison of results.
Download the complete press release with financial tables here.
Darrow Associates, Inc.
Chief Operating and Financial Officer
Data I/O Corporation
6645 185th Ave. NE, Suite 100
Redmond, WA 98052