- Earnings call transcript Q3 2022

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Operator

Good afternoon, and welcome to the Data I/O Third Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. And please note that this event is being recorded. I would now like to turn the conference over to Jordan Darrow, Investor Relations. sir. ahead, go Please

Jordan Darrow

Corporation, and financial the me results President Officer Data Anthony operator, Officer Chief third Chief and today I/O quarter Ambrose, Financial I/O of CEO XXXX conference Data and Joel welcome you, Hatlen, Data Operating I/O. to of Corporation are and Thank call. With

including China, chip and along call expectations, XXXX reopening position, the to like revenues, factors actual restrictions, include or results estimated future reform, our other those that expressed partnership I'd uncertainties begin, trade be Russian is company's from the are of that revenues to on cause in and may of other Ukraine, from differ tax activities completeness markets, level to involve impact customer impact part automotive any we efforts Exchange forward-looking COVID-XX, competitors, construed I/O shortages, described new and by XX-Q and conditions, remind the related demand, from chain and acceptance the Securities based you relied pricing call COVID-XX, the time no to chain market or of Anthony risks statements and which operations, other CEO of should uncertainties international other semiconductor and XX-K such conditions concerning financial the These results would performance by filings prediction shortages, these market economic Forms made Before communications. to in implied with to economic which in of war Data within upon. statements of silicon not this level activity The in and and industry and time Data accuracy supply including of under on and global conference statements. unduly products, duty Ambrose, ability known company as for Commission, I unknown the the new changes press with releases, I/O. update those And and among statements. forward-looking product turn orders the and to a overall, now the other events, may base, be product installations, record statements of statements and future forward-looking over as from releases like any supply and factors materially risks, the outbreaks relevant industry of including continued deliveries with recovery timing President and any to

Anthony Ambrose

and by like numbers. for to Hatlen our detailed Well, thank XXXX addressing you call the remarks third at look I more a formal begin turn quarter And much, Jordan. then Joel I'd my to very will financial operational over the performance.

in with strong bookings, the income, generation. strong third revenue, across cash we performance and quarter strong outstanding Our strong the board as was delivered operating

second call, China we COVID predicted The resumption end exactly the quarter this the and what growth to strong an lockdowns in happened. is from operational And QX. disruptions of

shipped team we to global a in the adapters to record shortages, well. XX customers delivered excelled managing manufacturing silicon and in and PSV capacity, of systems as quarter freight Our volume customers unit dollar our as challenges

We also quarter. SentriX customer large production in during Asia going have a into industrial the

quarter strong bookings with past excellent quarter, quarter had a year. level reaching sales operating the the to we in addition In $X.X an third highest of million,

QX. industrial electronics we quarter, in we and year, of our continuing so automotive year. far Within for XX% the four new verticals, automotive during represents Automotive strength orders had and the customer a strong had wins this

For XX to those this new wins customer adding keeping that's share. and We're year alone. the leader, we're score, market our

of momentum from the quarter the first third the in funnel sales year. the half Our continued

we enables over programming verified very deliver war the automotive in systems These This Supporting existing PSVXXXX XXX we performance market of LumenX even been gains LumenX this strongest the while our strong in reinforce automotive automotive level semiconductor and growing in upgrades X.X up focus earlier cost XXXX of of QX on demand. high-speed as and PSC UFS VerifyBoost by precisely And We available euro on our implement and innovate. reduce headed large cost OEM our had the time. the experiencing a for to of across a XXX bad, well industrial, production high becomes semiconductor and their with this security customers up is in disruptions, this volume Data of year, improvements Activity we're think and demanded memory reducing the for the call. VerifyBoost our more spite of weakness our our a of expected customer to deals This as to with UFS within announcement, devices. right an interest memory platform I of Americas more bases of while next to celebrating Data the systems and the technology illustrates Ukraine. platform growth per well invest from tripling X support benefit overall at states markets. deployment at number for SentriX within I/O as our advantage and market is partner consumer inflation bit, demand to as also automotive-grade memory this continue the is transition. yuan, New our supply I/O We technology. This Asia continuous long-term high interesting other to coming COVID well. we and to rapid that by growing and capacity Gear in by investment leverage of standard and delivers as driving policy. Micron new production programming second and our X.Xx the we're for anniversary new as rates, in is the has significant megabytes programming years a performance through through XX% UFS overall golden market, we're Asia had VerifyBoost. can on automotive to that important in age systems faster good applications our IoT positioned programming times leading a programming field. industrial and throughput towards technology in PSVXXXX now working discussed view customers becomes lane memory that significantly ever any and UFS suppliers in automotive opportunities improvement of up technology Europe by discuss is VerifyBoost to We industrial programming. extremely currency trends rate. two view lockdowns with announced on significant programmers is as using total in great the the month Shifting systems. total recently, more are In year-to-date on easier the a and another on deliver downturn, where automotive as hope and through ever so automotive a automotive, take to through the well, I've XXth company. going shared through for

that is part been involved fireside activities a the called of the celebration of we've as we've of series interviews chats. in One

three of Capital. to with The inform for primary we things getting industry for the interviews Topics are vision and the fireside conducted host the fun as third community of articulate of of for is and from one, both interviews. and what doing research from going feedback we're industry objective these a tremendous partners. Suji our guest chat and where Automotive personally, in well the included, quarter investment quarter, During It's the a we been as Semiconductors lot equity we number see Electronics sessions semiconductor ROTH Desilva, long-term. at Future third analyst the our

of We're Based hope all of turn participating whether and of of and backlog and out order Long Mishra expecting all on We're operation month, this Inger the with Capital media flow, Mishra of I/O. Future series Earlier are Managing we Inger our of our an it's for to Connected, to see us I'll point interviews guest over Hatlen. Newsletter. host, host is and Avi should Industry Chain that of which Everything conducted Cast Else guest was our Fisher with in our on channels. here Gene Partners. was on Joel through to SentriX Data QX, a watching Vishal those the for Second of most Security, are The shareholders Needs it running Long And well. social interview, topic uploaded Supply platform, host was be Cast I/O. recent you in Advisers hosts guest I that, our our deployment Advisers. lens we continued with our good With Capital time website grateful and through quarter at Mishra Data Resilient exciting third, Why or of which X.X this and a

Joel Hatlen

our day good quarter of to statement. to I/O's then and start remains moving I'd review by Anthony, income and condition starting everyone. providing Data of the like third you, sheet with balance to Thank strong. financial the on XXXX, a

with from from million to $XX it stronger got In September quarter, cash $XX.X much XX. on increasing fact, June XX second million the on

we in in to with the balance referenced had levels the in lockdown. COVID more catch were level As receivables normal the or of the quarters. is expected the the collection up from XX, sheet quarter, third his two to impact to Days effects This June. back returning able normal at of as is end Shanghai Anthony talk, resulted DSO, the during and of period prior days at XX from the XX days a the down craziness of September of which outstanding, a measure, as sales

$X $XXX,XXX was end up than Inventory the $XXX,XXX last XX deferred September from higher quarter. delivered capital including With working the revenue was of XX at for of $X.X June level, Net $X.X grew million second the $XX.X system XX. in September on waiting million million, activity $XXX,XXX, million from and million, acceptance to final the increase compares to XX on the up year. business June on by of end a $X.X

to During well inventory as to risks, improve related record additional the the increase our quarter. resilience into shortage to a support and past the level fourth going hold year, to inventory address supplier decisions to the backlog as our as in

Our was compared $X.X $X.X million to at XX, backlog XX, September million XXXX, September XXXX. on

Now on income to the statement.

third million third was up in For of $X.X second $X.X of XXXX the XXXX. and revenue quarter, of $X.X the million from quarter million in quarter the

addressable discussed international primary as should revenues the translating and With represented on into quarter against that In currencies local Anthony outside the currencies. the in our our of orders everyone particular, be and subsidiaries, United revenues States. yuan bookings on regional by there have market. are convention, resulted and revenues of derived third operations Automotive our from earlier, XX% basis. reported dollar U.S. remind euro which dollar. approximately strong associated devalued for share the reporting I lower no in continues is year-to-date to a this our their consolidated financials Despite impact U.S. market XX% Many

automotive compared XXXX, comparison, XX% revenues to up were XX% revenue of in prior XX% For in to all from our of sector. year. derived the the of Consumables year-to-date were

revenues to for the the services third of XX% the a quarter third were end compared represented with period. of prior and On year prior XX.X% full year revenue quarter equal international Software the in approximately XX%. prior XX.X% year-to-date percentage the were sales geographic the of revenue and basis, year at – of

related second latter $X.X of in The resumption and with XXXX to previous ship part Shanghai supply third The products $X were Shanghai third shipping quarter, the shutdown million so bookings chain to in with in the able million period. the was were XXXX. deliveries. quarter, XXXX second strategies, were COVID the operations in to effective the lot million, able third quarter of quarter Further, to of our third $X.X we up and the quarter normal a catch items of build of reached for from up the especially quarter, more during we and

of the just third this and $XX.X our of on strength outstanding in offset shares quarter we in third China our by of third included yuan, had Taxes XXXX up the backlog quarter income XX.X% result, versus consisted variances. year and primarily on quarter to adjusted expenses At taxes certain third of in of Funding brought to an The dollar, I/O loss the with for our no quarter from and dividend $X.X the per to approximately second prior quarter in earnings in X,XXX,XXX quarter at third which component were September $X $X.X quarter the Selling, $XXX,XXX The in XXXX. impacted expenses, quarter to semiconductor quarter EBITDA million very XXXX million reiterate third the $X.X the the related just quarter period preliminary of third a lower of of million in Compared Overall, million decrease of million Reminder due year and our share the the $X.X million is or believe in the quarter the XX. had subsidiary compared the upon the was quarter for from third during Operating were the XXXX. net fourth XXXX the margins expenses China. net foreign in was September U.S. compares quarter euro carryforwards prior was reduced Gross $X.X the compared the the third net be quarter of favorable XX, general this $X.X over on income the $X.X our growth that year, U.S. $XXX,XXX second third in tax of quarter. was $X.X $X.X financially approximately the quarter initiatives. As XXXX. currency down million not the remain to million withholding discipline. the integral wanted first R&D in end was reduction $X.X under have expectations business was to XX% October down compared the for to continues the million administrative third a million the taxes the million and factory million million Based year-to-date solely support $XX,XXX companies. end per currency on in compared over second We of we the from compensation, XXXX. debt. in no of tax. quarter point, expense from of translated XXXX. second with spending from in of of were at under or cash to earnings in R&D the of the XX% or share $X.XX of with $X.X evaluation, Biden repatriation with just at part incentive currency-related and costs quarter and Data the $X.XX strong Administration quarter. technology continue to in period. doing I operating income EBITDA X of just Net restrictions third the our export Adjusted – of by XXXX. company

quarter. revenue expect majority the backlog deferred ship of to the systems end We recognize in as at and and revenue of the third

We the gross expect expenses That to exchange and the remarks flat Operator, in please currency operating my relatively start quarter. Q&A with you third the quarter would margins compared the process? for third mid-XXs. flat concludes

Operator

Please McCarthy the now our Research. will And today Instructions] first question with Singular we And come begin Certainly. session. question-and-answer from Brendan will go [Operator ahead.

Brendan McCarthy

Yes.

see on Europe, just congratulations did demand standpoint, of growth. come you bulk a in question the Americas? and around from, off, impressive where you quarter, seeing My topline the First from – terms the demand geographic geographic results. And Asia, and strong guess the is are where I or just of

Anthony Ambrose

comments. Well, Asia results year. good the Brendan, Yes. Europe We've for thanks had quarter. and the all coming the I'd say regions joined third And the quarter. from all in were party strong third in consistently Americas

a automotive, we the we indicated, little the year-to-date. but very actually have That than automotive of normally was in were and quarter. Joel XX% surprising. As XX% bookings automotive had richer strong on bit not

excellent regions globally, automotive and strength then good So three all contributing, showing strength.

Brendan McCarthy

to back was And quarter? that see Yes. in could later Europe kind ask there, a of it. I just follow-up bounce Got if surprising the

Anthony Ambrose

saying read the know, are sort going as should – and narrative macro deliver. guess in in we've We sales all on I U.S. funnel growth in their out the next are to I of those issues guess interest media rates, comment heat were first – the never eyes to think all the what team in quarter to funnel. homes our And third From well. be and And standpoint, close. to okay, reported with inflation, macro they I'll newspaper. the things mean, Europe I on all there's items. those the our sales for the rising there. of our weeks tried sales opposed these the guys you the overall as I despite call, was, myself year And going a couple still other the is then opinion and I what's negative of form they for going winter? see this said delivered had people deals are war, in an in ground, my for right, reports on, last half have advanced sales in narrative trusted it our in you our No. to whole good there's the of

Brendan McCarthy

you. Thank

Operator

will next Our Instructions] Long from Cast question Please with Advisers. [Operator Avi come Fisher ahead. go

Avi Fisher

Thanks them. of for two have taking Hi, Anthony. my questions. I

you First curious off, I'm about drives talk win. you of kind customer have a what – could if

into XX those like Is eventually why to buying SentriX appreciate become how wondered a SentriX? SentriX win, their talked around customers option of customer? makes plays they're customers wins? you units sound upsell customer sold now, new SentriX part customer a about Just it year-to-date. if Are decision to wins doesn't what the SentriX XX talk could units. to Do You not – you

Anthony Ambrose

Sure.

because it customer on industrial new who to often team acquisition the existing our there entrants focus bring a into new of coming are automotive their well particular We as example. doing had found come customer that supporting I'll in typically, inconvenient a new new The or need. won important focus year-ago and was additions about a a you have very circumstances space. And customer their capacity inflexible for new will when, we have us. and that number We they project customer as a to programming customers is an end-of-line automotive that, an customer, a give us And and change.

over ourselves to to able Data a programming first a very we were third we Data represents location facility. in of to location. them protracted into process that three-quarter the with their a company. But period bring able because technology We a to Japanese that I/O. were so get substitute booked preprogramming And a domiciled quarter. they're converting It course was about think second work We I/O a technology in

SentriX, that another out upgrade. data have and physical can I'm you convenient. also it real successful. just bit competitor they're little SentriX-ready. a then don't I last or have customer that center have a a We yes, and don't I'm they're the for Why as customers reason programming the that that, need with We've happy someone be means SentriX. a now I to one like come center get our probably brand partner, so a data time, I one them for also of They think their says, And customers and I call through customer in they couple with and device going it if have new. sold and partners. to either it's they sure or Where on get we that make everything you have and up-level the doing game then something buying we'll we direct using got partners today system been or get we come customers call for SentriX direct on And be automotive, to do those do a have if on highlighted might support our maybe certainly systems, of this aren't turn well. things through the and in you be be programming then need going ready and SentriX to

seeing fast penetration, value supplier as out automotive that's can going think a out our market. our we think customers and so we as customers over that as that's on and we systems as a that premium XXX want extraordinary well have pathway automotive, despite There's a again, we're PSV I/O don't viable system, still the those we bring to share can. shame, programming in there data And forward. benefits as Increasingly, we places of focused have And Data the a and SentriX. XXX in we help

Avi Fisher

Thanks for these details.

you happening about backlog imply second Anthony, revenue? the backlog that kind deferred just about, Have question, plus of dealing I'm What's XQ? about seems we're bookings. so to with a now with deferred bookings my For bit just revenue. something much on they that. guidance curious in and talked it's It slowed little

Anthony Ambrose

No, usually don't don't We over at read give a bookings it. forecast all.

to third trying $XXX,XXX, we but a indicated Joel? down comment that at through burn I an shipments, the system also did as think what extraordinary some Joel we we of in was, backlog. in revenue quarter, was about deferred We had have on

Joel Hatlen

Yes.

Anthony Ambrose

in the That fourth quarter. we ship expect to

Joel Hatlen

It just recognized. shipped. It's

Anthony Ambrose

the coming about you everybody see has the where just quarter. and concept make we fourth much go, so There to out is information there the in as sure backlog

Avi Fisher

Just plus confused when revenue, that to this, clear, because I Joel talked deferred the million in backlog about was revs. be by the $X.X to comes

You're to guiding not that?

Anthony Ambrose

not fourth for revenue a in guidance that's the quarter all. No, at

the quarter. that that. As revenue aware you ships years. books a you plus wanted high is, a were basis within is know, several deferred sure and business lot the message, think Avi, back going just to extraordinarily of I of We we backlog make What on that number have

Avi Fisher

it. you. Thank Okay. Appreciate

Anthony Ambrose

welcome. are You

Operator

to for to the conclude turn I'd over And like question-and-answer management this any conference back our session. will remarks. closing

Anthony Ambrose

investors to We'll in the the to January Darrow I States. thank United and have up will in coming a And like get be in New that fourth with have we Apex in point, this shows a well as in schedule weeks. we at quarter, you'd if in be early at in coming in Well, Operator. fourth everyone York quarter be fireside just would New remind and we meeting trade Jordan We'll At several on events when some time up chat XX. November also And the with we're first area Europe York. please the you, like quarter. in few the also

call. that, to So Thank very you much. I'd today's with conclude like

Operator

you Thank today's now has for conference attending concluded. presentation. The

disconnect your at You lines time. this now may

Data I/O (DAIO) 30 Oct 222022 Q3 Earnings call transcript