Q3 FY2026
Filed Nov 12, 2026Data I/O reports Q3 2026 net sales of $4.9 million and a $2.7 million net loss, with gross margin up to 58.0% and the V-TEK acquisition closed
Net sales fell to $4,874 thousand from $5,393 thousand a year earlier and the operating loss widened to $(2,038) thousand from $(1,393) thousand, with operating expenses higher after the filing's one-time items. Gross margin improved to 58.0% from 50.7%, adjusted EBITDA excluding one-time items was $(71) thousand, and bookings were $5.0 million against $4.9 million in Q2. Backlog fell to $1.5 million, cash fell to $9.4 million, and the company says the V-TEK acquisition closed.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, Q3 2026 (three months ended September 30)GAAP | $4.87M | – | – |
| Net sales, nine months 2026GAAP | $13.27M | – | – |
| Cost of goods sold, Q3 2026GAAP | $2.05M | – | – |
| Gross margin (dollars), Q3 2026GAAP | $2.83M | – | – |
| Gross margin (dollars), nine months 2026GAAP | $7.37M | – | – |
| Gross margin as a percentage of sales, Q3 2026GAAP | 58.0% | – | – |
| Research and development, Q3 2026GAAP | $1.60M | – | – |
| Selling, general and administrative, Q3 2026GAAP | $3.27M | – | – |
| Total operating expenses, Q3 2026GAAP | $4.87M | – | – |
| Operating loss, Q3 2026GAAP | −$2.04M | – | – |
| Operating loss, nine months 2026GAAP | −$5.91M | – | – |
| Interest expense, Q3 2026GAAP | −$624K | – | – |
| Interest expense, nine months 2026GAAP | −$1.50M | – | – |
| Net loss, Q3 2026GAAP | −$2.70M | – | – |
| Net loss, nine months 2026GAAP | −$7.50M | – | – |
| Diluted loss per share, Q3 2026GAAP | $(0.27) | – | – |
| Diluted loss per share, nine months 2026GAAP | $(0.77) | – | – |
| EBITDA, Q3 2026non-GAAP | −$1.64M | – | – |
| Adjusted EBITDA, excluding equity compensation, Q3 2026non-GAAP | −$1.50M | – | – |
| Adjusted EBITDA, excluding equity compensation and one-time expenses, Q3 2026non-GAAP | −$71K | – | – |
| One-time expense adjustments total, Q3 2026non-GAAP | $1.43M | – | – |
| Bookings, Q3 2026other | $5M | – | – |
| Backlog at September 30, 2026other | $1.5M | – | – |
| Deferred revenue at September 30, 2026GAAP | $937K | – | – |
| Consumable adapters and services, share of total revenue, Q3 2026other | 48% | – | – |
| Platform sales, share of total revenue, Q3 2026other | 52% | – | – |
| Cash and cash equivalents at September 30, 2026GAAP | $9.40M | – | – |
| Net working capital at September 30, 2026other | $14.7M | – | – |
| Total assets at September 30, 2026GAAP | $23.37M | – | – |
| Total stockholders' equity at September 30, 2026GAAP | $16.16M | – | – |
| Debt at September 30, 2026other | No debt | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Platform sales (share of total revenue)Company states that revenue recovery and stable bookings in the platform business offset timing-related softness in adapters. Company also states that platform demand appears to have inflected over the past two quarters. | 52% of total revenue in Q3 2026 (dollar amount not printed) | – | – |
| Consumable adapters and services (share of total revenue)Company attributes the sales softness in Q3 2026 to timing-related softness in adapters. Company describes this line as a stable base of recurring revenue. | 48% of total revenue in Q3 2026 (dollar amount not printed) | – | – |
Capital returns
- No share repurchases or dividends are reported in the filing.
- Convertible debt of $6.2 million was converted into preferred shares following the June 2026 private placement. The filing shows Series B Convertible Preferred Stock of $6,841 thousand (6,841.33 shares) at September 30, 2026, against none at December 31, 2025.
- Subsequent to the quarter end, the company completed a private placement of securities for approximately $13.25 million in gross proceeds.
- The company secured a $7.5 million bank line of credit in October 2026.
- V-TEK acquisition consideration totalled $23 million, of which $3 million was paid in Data I/O common stock, per CEO comments.
What drove it
- Gross margin rose to 58.0% from 57.0% in Q2 and 50.7% in Q3 2025. The company attributes this to the sale of several lower-cost units during the quarter, an increased focus on value-based pricing and incremental operating efficiencies.
- The company states that direct material costs improved slightly as it continued to mitigate tariffs and other inflationary pressures.
- The company states that the net loss increase reflects higher operating expenses due to one-time items, partially offset by higher gross margins.
- Q3 2026 operating expenses include approximately $1.5 million of one-time expenses, which the company attributes to debt and financing expenses, the IT/ERP transition, non-cash inventory reserve adjustments and other one-time charges.
- The company states that the platform business showed revenue recovery and stable bookings, offset by timing-related softness in adapters.
- The company states that demand for platform equipment appears to have inflected over the past two quarters after a prolonged downward cycle affected by a realignment of technology spending.
Concerns
- Net sales were $4,874 thousand, down from $5,393 thousand a year earlier and from $5.2 million in Q2 2026.
- Operating loss widened to $(2,038) thousand from $(1,393) thousand. Total operating expenses rose to $4,866 thousand from $4,127 thousand, with SG&A at $3,270 thousand against $2,418 thousand a year earlier.
- Backlog fell to $1.5 million from $2.1 million at June 30, 2026 and $2.6 million at March 31, 2026.
- Deferred revenue fell to $937 thousand from $1.1 million at June 30, 2026 and $1.5 million at March 31, 2026.
- Cash fell to $9,397 thousand from $10.8 million at June 30, 2026.
- Net loss for nine months 2026 was $(7,501) thousand, against $(2,486) thousand a year earlier.
- The company reports one-time expenses in both periods. Q3 2026 one-time expense adjustments total $1,434 thousand in the reconciliation, against $585 thousand in Q3 2025.
- Adjusted EBITDA excluding equity compensation and one-time expenses was $(71) thousand, which is near breakeven but still negative.
What to watch
- Integration of V-TEK, Inc. and A&J Programming, Inc., and whether the company's expectation that the acquisition will double revenues and be accretive to earnings is reflected in future reported results. The filing gives no quantified pro forma figures.
- Backlog and deferred revenue trends, which declined through Q3 2026.
- Platform versus consumable adapter and services mix, which moved to 52% and 48% in Q3 2026 from 45% and 55% in Q2 2026.
- Recurrence of one-time expenses, which the company reports in both Q3 2026 and Q3 2025.
- Cash balance after the $13.25 million private placement and the $7.5 million bank line of credit, both of which were secured after the quarter ended.
- Operating expense levels following the company's stated restructurings and expense optimizations.
- Interest expense, which was $(624) thousand in Q3 2026 and $(1,497) thousand for nine months 2026, with no comparable prior-year figure printed.
Balance sheet and cash flow
- Cash and cash equivalents were $9,397 thousand at September 30, 2026, compared with $7,901 thousand at December 31, 2025 and $10.8 million at June 30, 2026.
- Trade accounts receivable, net were $4,472 thousand at September 30, 2026, compared with $2,841 thousand at December 31, 2025.
- Inventories were $5,951 thousand at September 30, 2026, compared with $5,710 thousand at December 31, 2025.
- Total current liabilities were $6,057 thousand at September 30, 2026, compared with $4,981 thousand at December 31, 2025.
- Accumulated deficit was $(18,475) thousand at September 30, 2026, compared with $(10,974) thousand at December 31, 2025.
- Net working capital increased to $14.7 million at September 30, 2026, from $10.8 million at June 30, 2026 and $12.3 million at December 31, 2025. The filing does not state the drivers of this increase.
- The filing contains no cash flow statement, so operating cash flow and free cash flow are not reported.
- Interest expense was $(1,497) thousand for nine months 2026 and $(624) thousand for Q3 2026, with no comparable prior-year amount printed.
Analysis
Data I/O reported Q3 2026 net sales of $4,874 thousand, against $5,393 thousand in Q3 2025 and $5.2 million in Q2 2026. Nine-month net sales were $13,273 thousand against $17,516 thousand a year earlier. The company attributes the quarter's sales to continued revenue recovery and stable platform bookings, offset by timing-related softness in adapters. Bookings were $5.0 million, compared with $4.9 million in Q2 2026. Backlog ended the quarter at $1.5 million, down from $2.1 million at June 30, 2026 and $2.6 million at March 31, 2026. Deferred revenue was $937 thousand, against $1.1 million at June 30, 2026.
The revenue mix changed. Platform sales were 52% of total revenue, up from 45% in Q2 2026 and 19% in Q1 2026. Consumable adapters and services were 48%, down from 55% in Q2 2026 and 81% in Q1 2026. The filing states that the Q1 and Q2 mix reflected lower total sales. The company describes adapters and services as a stable base of recurring revenue.
Gross margin was 58.0% in Q3 2026, against 57.0% in Q2 2026 and 50.7% in Q3 2025. The company attributes the improvement to the sale of several lower-cost units, a focus on value-based pricing and operating efficiencies. Gross margin in dollars was $2,828 thousand, compared with $2,734 thousand a year earlier. Operating expenses rose to $4,866 thousand from $4,127 thousand. SG&A was $3,270 thousand against $2,418 thousand, while R&D was $1,596 thousand against $1,709 thousand. The operating loss was $(2,038) thousand against $(1,393) thousand, and the net loss was $(2,702) thousand, or $(0.27) per diluted share, against $(1,362) thousand, or $(0.15).
The non-GAAP measures show a narrower gap. Adjusted EBITDA excluding equity compensation and one-time expenses was $(71) thousand, against $(563) thousand in Q3 2025. The company states that one-time expenses were $1.5 million within operating expenses, while the reconciliation shows $1,434 thousand in total one-time adjustments. Q3 2026 one-time items include debt and financing expenses, the IT/ERP transition and non-cash inventory reserve adjustments. The company reports one-time items in both periods, with $585 thousand in Q3 2025.
Capital allocation and the balance sheet changed materially during the quarter. Cash was $9,397 thousand at September 30, 2026, down from $10.8 million at June 30, 2026 and up from $7,901 thousand at December 31, 2025. The company converted $6.2 million of convertible debt into preferred shares and reports no debt at September 30, 2026. Series B Convertible Preferred Stock stood at $6,841 thousand. After the quarter, the company completed a private placement for approximately $13.25 million in gross proceeds and secured a $7.5 million bank line of credit. The CEO states that V-TEK consideration totalled $23 million, of which $3 million was paid in common stock. The filing does not give the closing date, the revenue or earnings contribution of V-TEK, or any pro forma results, so the expected doubling of revenues and accretion to earnings cannot be checked against reported figures. The filing contains no guidance and no cash flow statement.
Management, verbatim
The most important measure of our recent performance and our prospects for the future is the completion of the transformational acquisition of V-TEK.
William Wentworth, President and CEO
The acquisition is anticipated to double revenues and be accretive to earnings.
William Wentworth, President and CEO
We are shifting our mix towards software and services, diversifying our revenue streams and reducing our exposure to the capital equipment cycle.
William Wentworth, President and CEO
Not in the filing
stated, not guessed- Prior-quarter (Q2 2026) operating loss, net loss, EPS, EBITDA, adjusted EBITDA and operating expense figures are not printed.
- Year-over-year and sequential percentage changes are not printed for any metric.
- Gross margin year-over-year change in basis points is not printed.
- Revenue dollar amounts for platform and consumable adapters and services are not printed; only percentage shares are given.
- No company guidance is provided, and no prior outlook was supplied.
- The filing contains no cash flow statement, so operating cash flow, investing cash flow and free cash flow are not reported.
- Repurchases and dividends are not reported.
- The closing date of the V-TEK acquisition is not stated, and the filing does not say whether V-TEK results are consolidated in Q3 2026.
- Revenue and earnings contribution of V-TEK and A&J Programming, and pro forma results, are not printed.
- Prior-year (December 31, 2025) comparison is printed only on the balance sheet and is not treated as a prior-year figure for the quarter.
- Consensus estimates, analyst expectations and the share-price reaction are not in the document.
- Terms and pricing of the $13.25 million private placement and the $7.5 million bank line of credit are not described beyond the amounts.
- Reason for the increase in net working capital is not stated in the filing.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.