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What were the key takeaways from Data I/O's earnings call?

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Did Data I/O beat or miss consensus estimates last quarter?

- **Next-gen Platform Launch**: Automotive-grade UFS3.0+ programming systems set for 2027 release, targeting 1TB flash adoption.
- **Services Expansion**: $1B+ services market opportunity via strategic acquisitions, starting with carve-outs in Q1 2026.
- **Margin Optimization**: Custom pricing and direct customer engagement to drive 55%+ gross margins.
- **EV Market Shifts**: Asia EV component makers resilient (+27% YoY), while Europe automotive sector down 50-60% YoY.
- **UFS Flash Leadership**: Only company with proven offline programming for high-density flash, 2027 adoption rates >50%.


**【CEO Summary Section】**
- Launched a next-generation programming platform at productronica, targeting high-density flash and automotive markets.
- Emphasized partnerships with large test companies to embed Data I/O technology in their solutions.
- Focused on services expansion through potential acquisitions, aiming to leverage existing platform expertise.
- Highlighted challenges in the automotive sector due to EV policy changes and supply chain disruptions, but optimistic about UFS 3.0 adoption in 2027.

**【CFO Financial Commentary】**
- Q3 revenue $5.4M (-11% YoY) with 50.7% gross margin (up 0.9pts QoQ due to higher-margin automated systems sales).
- Operating expenses $4.1M (+27% YoY) driven by one-time costs ($585K) for cybersecurity, IT upgrades, and executive transitions.
- Backlog $2.7M (flat QoQ) with 76% of revenue from capital equipment.
- Gross margin initiatives include pricing optimization, supply chain efficiency, and direct customer engagement.

**【Q&A Key Highlights】**
- **Sales Cycle & Trade Policy**: CEO noted 3-5 year sales cycles for new silicon technologies, with EV subsidies driving Asia growth vs. Europe's weakness.
- **Margin Expansion**: CFO targeting 55%+ gross margins through custom pricing, while CEO expects services business to yield 52-58% margins.
- **Services Strategy**: Acquiring carve-outs to establish programming services division, leveraging existing software/hardware IP.
- **EV Market Dynamics**: Asia EV component makers resilient, while Europe automotive sector down 50-60% YoY due to demand slowdown.
- **UFS Flash Growth**: 2027 adoption of 1TB UFS3.0+ will require offline programming capabilities, positioning Data I/O as leader.


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