How did Daktronics' revenue and expenses shift in Q3 2025 compared to previous quarters?

Daktronics experienced a decrease in revenue and an increase in expenses in Q3 2025 compared to the previous quarter, Q2 2025, primarily due to seasonally lower sales volume and additional costs related to business transformation and digital initiatives. 1. **Revenue Shift**: - In Q3 2025, Daktronics saw a 12.2% decrease in net sales compared to the third quarter of the previous year, FY2024. This decline was driven by lower volumes in live events, which are typically seasonal and influenced by the timing of sports installations and holidays. Despite this, growth in order bookings was observed in the Commercial and International segments, which helped offset some of the revenue decline. - The year-to-date sales levels in Q3 2025 were 3% lower than the record sales of the previous year, indicating a seasonal fluctuation rather than a long-term trend decline. 2. **Expense Shift**: - Daktronics incurred additional costs related to its business transformation plan, digital transformation, domiciliation change, and corporate governance matters. These expenses, combined with lower gross margin dollars due to reduced sales volume, led to an operating loss of 2.4% of sales in Q3 2025. - The company's gross profit as a percent of net sales remained stable at 24.6% compared to the previous year, showcasing effective cost management despite the volume reduction. 3. **Cash Flow and Financial Position**: - Despite the revenue and expense shifts, Daktronics maintained a strong financial position with $12 million in cash flows from operations and $75 million year-to-date. The company's working capital grew to $232 million, and it successfully converted a portion of its senior second line secured promissory note, improving its financial flexibility. 4. **Strategic Initiatives**: - Daktronics continued to invest in product development, with an annual spend of approximately $40 million, focusing on mission-critical initiatives. The company also introduced new products like Live Switch, which expands its Show Control product family and is expected to contribute to future revenue growth. In conclusion, Daktronics faced a challenging Q3 2025 with revenue decline and increased expenses due to seasonality and strategic initiatives. However, the company's financial position remained robust, and it continued to invest in growth opportunities, positioning itself for future performance.