Q1 2024 Data I/O Corp Earnings Call

Yeah.

Operator: Good afternoon, and welcome to the Data I-O first quarter 2024 financial results conference call. All participants will be in a listen-only mode.

Good afternoon, and welcome to the data I O first quarter 'twenty 'twenty four financial results conference call.

Operator: All participants will be in a listen only mode.

Operator: After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Jordan Darrow, Investor Relations. Please go ahead.

Operator: After todays presentation, there will be an opportunity to ask questions.

Operator: Please note this event is being recorded.

Operator: I would now like to turn the conference over to Jordan Darrow Investor Relations. Please go ahead.

Jordan M. Darrow: Thank you, operator, and welcome to the Data I-O Corporation first quarter 2024 financial results conference call. With me today are the company's president and CEO, Anthony Ambrose, and Chief Financial Officer, Gerry Ng. Before we begin, I'd like to remind you that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, supply chain expectations, estimated impact of tax and other regulatory reform, product releases, new industry partnerships, and 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, These factors include uncertainties as to the impact on global and geopolitical events, international trade regulations, order levels for the company, and the activity level of the automotive and semiconductor industry overall, ability to record revenues based on the timing of product deliveries and installations, market acceptance of new products, changes in economic conditions and market demand, parts shortages, pricing, and other activities by competitors, and other risks, including those described from time to time in the company's The accuracy and completeness of forward-looking statements should not be unduly relied upon. Data I-O is under no duty to update any forward-looking statement. And now I would like to turn over the call to Anthony Ambrose, President and CEO of Data I.O.

Jordan M. Darrow: Thank you operator, and welcome to the data I O Corporation first quarter 2024 financial results Conference call with me today are the company's President and CEO, Anthony Ambrose and Chief Financial Officer, Jerry Yang.

Jordan M. Darrow: Before we begin I'd like to remind you that statements made in this conference call concerning future revenues results from operations financial position markets economic conditions supply chain expectations estimated impact of tax and other regulatory reform product releases, new industry partnerships and any other statements that may be construed as a prediction.

Jordan M. Darrow: 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.

Jordan M. Darrow: These factors include uncertainties, that's the impact from global and geopolitical events International trade regulations order levels for the company and the activity level of the automotive and semiconductor industry overall ability to record revenues based on the timing of product deliveries and installations market acceptance of new products changes in economic conditions and market demand.

Jordan M. Darrow: Part shortages pricing and other activities by competitors and other risks, including those described from time to time in the company's filings on forms 10-K, and 10-Q with the Securities and Exchange Commission press releases and other communications.

Jordan M. Darrow: The accuracy and completeness of forward looking statements should not be unduly relied upon data I was under no duty to update any forward looking statements and now I would like to turn over the call to Anthony Ambrose President and CEO of data <unk>.

Anthony Ambrose: Thank you very much, Jordan. I'll begin my formal remarks by addressing our first quarter 2024 financial and operational performance, and then I'll turn over the call to Gerry Ng for a more detailed look at the numbers. We had very strong bookings at $8.1 million in the first quarter, closing deals in a strong sales funnel that we previously discussed on February's call. This is the highest bookings level in 11 quarters. We won five new customer locations in Q1, including a major programming center win in EMEA for a new site. Orders were back-end loaded, and we closed with revenue at $6.1 million.

Anthony Ambrose: Thank you very much Jordan.

Anthony Ambrose: I'll begin my formal remarks by addressing our first quarter 2024 financial and operational performance and then I'll turn over the call to Jerry Yang for more detailed look at the numbers.

Anthony Ambrose: We had very strong bookings at $8 $1 million in the first quarter closing deals and a strong sales funnel that we previously discussed in February is call. This.

Anthony Ambrose: This is the highest bookings level in 11 quarters, we won five new customer locations in Q1, including a major programming center win in EMEA for a new site.

Anthony Ambrose: Orders were backend loaded and we closed with revenue at $6 $1 million.

Anthony Ambrose: We have a very strong backlog in place. We continue to expect a back-end loaded year, as most of this backlog will be recognized as revenue in the second half of 2024. Geographical rotation is also happening in our business. The Americas region has been very strong for us the past couple of years, and we're seeing a digestion of some of the CapEx wins from the past two years. Perhaps it's due to a change in demand for EVs in North America, or perhaps it's just the fact that it's been so strong for the past two years.

Gerry Ng: We have a very strong backlog in place and we continue to expect a backend loaded year as most of this backlog will be recognized as revenue in the second half of 'twenty 'twenty four.

Anthony Ambrose: Geographical rotation is also happening in our business. The Americas region has been very strong for us the past couple of years and we're seeing a digestion of some of the capex wins for the past two years, perhaps it's due to a change in demand for Evs in North America or perhaps it's just the fact that it's been so strong for the past two years.

Anthony Ambrose: At present, we're seeing EMEA pick up some of the slack as they have been stronger than they have been in the past couple of years, both in bookings and future opportunities. Asia continues to be strong and is expected to remain strong for the rest of the year.

Anthony Ambrose: Present time were seeing EMEA pick up some of the slack is there had been stronger than they had been in the past couple of years, both in bookings and future opportunities.

Anthony Ambrose: Asia continues to be strong as expected to remain strong for the rest of the year.

Anthony Ambrose: We continue to see some interesting deals in Centrix and our units program continues to grow through our partners, but the sales cycle remains long due to the complexity of the design and programming requirements for those applications. When I talk to investors and others, I get a lot of questions about AI and how it impacts our business. And one of the emerging growth areas for AI is the so-called edge AI. This is different from what you read about in chat, GPT, and some of the other things.

Anthony Ambrose: We continue to see some interesting deals in centric center units program continue to grow through our partners. However, the sales cycle remains long due to the complexity of the design and programming requirements for those applications.

Anthony Ambrose: Yeah.

Anthony Ambrose: When I talk to investors and others I get a lot of questions about AI and how it impacts our business.

Anthony Ambrose: And one of the emerging growth areas for a is a so called edge AI. This is different from what you read about Chad G. P T and some of the other things cause edge edge AI at the deployment of artificial intelligence algorithms directly on devices or hardware at the edge of the network and we're seeing significant.

Anthony Ambrose: Edge AI is the deployment of artificial intelligence algorithms directly on devices or hardware at the edge of the network. And we're seeing significant adoption in several industries. And these include many of the industries that Data I-O has been talking about as our key markets for a number of years. And some of them include ADAS, or Advanced Driver Assist Systems, otherwise known as Active Safety or Autonomous Driving. The second area is IoT and smart devices.

Anthony Ambrose: Significant adoption in several industries and these include many of the industries of data I always been talking about is our key markets for a number of years now.

Anthony Ambrose: Some of them include Adas or advanced driver assist systems, otherwise known as active safety or autonomous driving.

Anthony Ambrose: Our second area of Iot and smart devices, a third would be health care monitoring and Wearables fourth would be smart factory automation, which we've also talked about.

Anthony Ambrose: The third would be healthcare monitoring and wearables. Fourth would be smart factory automation, which we've also talked about. And fifth would be retail analytics. As you know, we're a very big player in ADAS and a key supplier to the Tier 1s and OEMs in the automotive industry. And again, we've been discussing that for some time.

Anthony Ambrose: First would be retail analytics.

Anthony Ambrose: As you know, we're a very big player in Adas and a key supplier to the tier ones and Oems in the automotive industry.

Anthony Ambrose: And again, we've been discussing that for some time.

Anthony Ambrose: We've also talked about how industrial IoT is our second largest market behind automotive, and that's also positively impacted by edge AI. So what is edge AI? It's all about bringing intelligence right to the edge, in the case of ADAS, right to your car. What this means is you get the data processing locally instead of having to send data to the cloud.

Anthony Ambrose: We've also talked about how industrial Iot is our second largest market behind automotive and that's also positively impacted by edge AI.

Anthony Ambrose: So what is edge AI, it's all about bringing intelligence right to the edge in the case of aid US right to your car. What this means is you get the data processing locally instead of having to send data to the cloud.

Anthony Ambrose: This enables real-time decision-making, which obviously is very important for ADAS and autonomous driving. What this means for us is that the Edge AI ensures that the processing power remains localized, and it requires the code and the decision-making apparatus of the code to be in the car, which means it has to get programmed. And that's going to get programmed in flash memory, most likely large NAND memory like EMMC or UFS that we've been talking about, again, on many of these calls.

Anthony Ambrose: This enables real time decision, making which obviously is very important for Adas and autonomous driving.

Anthony Ambrose: What this means for us is that the edge AI ensures that the processing power remains localized and it requires the code and the decision making.

Anthony Ambrose: Apparatus should code to be in the car, which means it has to get program there and that's going to get programmed in flash memory, most likely large NAND memory like E. M M C or U S. As we've been talking about again on many of these calls.

Anthony Ambrose: What this means for Data I-O is that Edge AI coming to cars and ADAS means there's more programming demand due to faster growth of the ADAS systems, the larger code sizes, and the complexity of the device. During Q1, we won several systems for ADAS and continue to have a strong automotive funnel, which includes ADAS, electrification, instrument clusters, et cetera. In IoT devices and smart home systems, Edge AI is revolutionizing the Internet of Things landscape by embedding AI algorithms directly into IoT devices.

Anthony Ambrose: What this means for data Io is it edge AI coming to cars and a dash means there's more programming demand.

Anthony Ambrose: Due to faster growth of the Adas systems, the larger code sizes and the complexity of the device.

Anthony Ambrose: During Q1, we won several systems for a das and continue to have a strong automotive funnel, which includes eight as electrification instrument clusters et cetera.

Anthony Ambrose: In Iot devices, and smart home systems, Ajay is revolutionizing the internet of things landscape by embedding AI algorithms directly into Iot devices.

Anthony Ambrose: Again, Edge AI enables local data processing, reducing latency, and enhancing privacy. From smart thermostats to security cameras, Edge AI empowers IoT devices to make intelligent decisions without constantly relying upon cloud services. Again, for Data I-O, this drives increased data programming demand, as well as a need for security to maintain strong identity for these IoT devices. So again, as we talk about AI, I think Edge AI has some very interesting applications for data programming demand, both in the data area and the security area.

Anthony Ambrose: Again edge AI enables local data processing, reducing latency and enhancing privacy.

Anthony Ambrose: Smart thermostats to security cameras, Ajay I empowers Iot devices to make intelligent decisions without constantly relying upon cloud services.

Anthony Ambrose: Again for data Io this drives increased data programming demand as well as the need for security remains strong to maintain strong identity rather for these Iot devices.

Anthony Ambrose: So again as we talk about AI I think Ajay I had some very interesting applications for data I programming demand both in the data area in the security area.

Anthony Ambrose: And finally, I'd like to talk about our 500th PSV system order, which we announced earlier this month in conjunction with the Apex trade show. This milestone is a testament to Data I-O's continued innovation, investment, and leadership in programming technology for automotive, industrial, and consumer markets, and confirms the PSV family as the most successful automated programming system in the industry.

Anthony Ambrose: And finally I'd like to talk about our five hundred's PSV system order, which we announced earlier this month in conjunction with the apex trade show.

Anthony Ambrose: This milestone is a testament to date I always continued innovation investment and leadership in the programming technology for automotive industrial and consumer markets and confirms the PSV family is the most successful automated programming system in the industry.

Anthony Ambrose: Not only myself, but our team takes great pride in this achievement and believes it sets the tone for our future with additional software innovations, security capabilities, and enhancements to this platform in pursuit of a more balanced profile from not only system sales but also recurring revenue. And finally, to summarize from our last call, we talked about the focus being on continued disciplined growth as we target automotive, industrial, and programming center markets worldwide. We continue to do investor outreach, and our marketing initiatives include not only these calls but also our fireside chats, where we have an opportunity to go into a little bit more detail on a specific topic.

Anthony Ambrose: Not only myself, but our team take great pride in this achievement and believe it sets the tone for our future with additional software innovation security capabilities enhancements to this platform.

Anthony Ambrose: In pursuit of more balanced profile from not only system sales, but also recurring revenue.

Anthony Ambrose: And finally to summarize from our last call we talked about the focus being on continued disciplined growth as we target automotive industrial and programming center markets worldwide.

Anthony Ambrose: We continue to have investor outreach and our marketing initiatives include not only these calls but also our fireside chats or we have an opportunity to go into a little bit more detail on a specific topic.

Anthony Ambrose: Last month we launched an interview in which I was hosted by equity research analyst Dave Marsh of Singular Research on the topic of on-shoring and near-shoring. Our next Fireside Chat will be released later this month or early next month, and it will be hosted by Investment Manager and Influencer Avi Fisher of Longcast Advisors. The topic will be Smart Factory Industrial Applications, and I imagine we'll talk a little bit more about Edge AI as well.

Anthony Ambrose: Last month, we launched an interview in which I was hosted by equity research analysts, Dave Marsh with singular research on the topic of onshoring of near shoring.

Anthony Ambrose: Our next fireside chat will be released later this month or early next month and will be hosted by investment manager and Influencer Avi Fisher of long cast advisors. The topic of the Smart factory industrial applications I imagine, we'll talk a little bit more about edge AI as well.

Anthony Ambrose: Before I turn it over to Gerry for his commentary and review of our 2024 outlook, I'd like to remind our shareholders of record that, as of March 18th, we'll be holding our annual meeting on May 16th at our headquarters in Redmond, Washington. You should have already received all your materials around the 10K and proxy and voting information, and we look forward to receiving your vote and attendance at the meeting.

Anthony Ambrose: Before I turn it over to Jerry for his commentary and review, our 2024 outlook I'd like to remind our shareholders of record that as of March 18th well be holding our annual meeting on may 16th at our headquarters in Redmond, Washington, You should have already received all your materials around the 10-K and proxy and voting information and we look forward to receiving your vote.

Anthony Ambrose: In attendance at the meeting.

Gerry Ng: Thank you, Anthony, and good day to everyone. I look forward to outlining and elaborating on our recent financial performance in more detail. My comments today will focus on key points of interest for the first quarter of 2024 and our perspectives looking forward. Data I-O's financial condition remains strong at the end of Q1. We'll have $12 million in cash, slightly down $342,000 from the beginning of the quarter, which reflects the anticipated higher first quarter expenditures for public company costs, including audit, regulatory filings, and NASDAQ fees, and annual incentive compensation disbursement.

Anthony Ambrose: With that I'll pass it over to Gerry.

Gerry: Thank you Anthony and good day to everyone.

Gerry Ng: I look forward to outlining and elaborating on our recent financial performance in more detail.

Gerry Ng: My comments today will focus on key points of interests for the first quarter of 2024, and our perspective looking forward.

Gerry Ng: Peter I always financial condition remains strong at the end of Q1 was $12 million in cash.

Gerry Ng: Slightly down of 342000 from the beginning of the quarter.

Gerry Ng: Which reflects the anticipated higher first quarter expenditures for public company costs, including audit regulatory filings and NASDAQ piece.

Gerry Ng: As annual incentive compensation disbursements.

Gerry Ng: Our cash and working capital, at $18.1 million, had a comparable decrease from $18.4 million on December 31st. However, cash benefited from strong customer collections, with accounts receivable at $4.8 million. $4.8 million. Day Sales Outstanding, or DSO, was at 59 days, and PATH's due receivable balances greater than 30 days remained very low, at less than $30,000 at the end of Q1. Inventory at $6.4 million increased from $5.9 million at the beginning of the quarter on lower Q1 sales volume. The company continues to have no debt.

Gerry Ng: Our cash and working capital at $18 1 million had a comparable decrease from $18 4 million on December 31.

Gerry Ng: Cash benefited from strong customer collections of accounts receivable at $4 8 million.

Gerry Ng: Base.

Gerry Ng: Pardon me 8 million days sales outstanding or DSO was at 59 days and past due receivable balances greater than 30 day 30 days remained very low.

Gerry Ng: And less than $30000 at the end of Q1.

Gerry Ng: Inventory at $6 4 million increase from $5 9 million from the beginning of the quarter.

Gerry Ng: Lower Q1 sales volume.

Gerry Ng: The company continues to have no debt.

Gerry Ng: Moving to the income statement, first quarter revenue of $6.1 million was down 16% compared to $7.2 million from the prior year period, reflecting lower backlog coming into the period plus timing of shipments from our new booking. On a more favorable note, first quarter bookings were $8.1 million, up 41% from the prior year, on strong opportunity conversion in Europe and Asia. As a result, our backlog increased 1.7 million in Q1, to $4.5 million as of March 31, 2024. Gross margin for Q1 was 53%, down 5 percentage points from the prior year. This decline was driven by a combination of lower sales volume, the entire mix of distributor channel sales, and ProductMaker.

Gerry Ng: Moving to the income statement.

Gerry Ng: First quarter revenue at $6 1 million was down 16% compared to $7 2 million from the prior year period.

Gerry Ng: Reflecting lower backlog coming into the period plus timing of shipments from our new bookings.

Gerry Ng: On a more favorable note first quarter bookings were $8 1 million.

Gerry Ng: 41% from the prior year on strong opportunity conversion in Europe and Asia.

Gerry Ng: As a result.

Gerry Ng: Our backlog increased $1 7 million in Q1.

Gerry Ng: Q4 dollars 5 million as of March 31st 2024.

Gerry Ng: Gross margin for Q1 was 53% down five percentage points from the 2023 prior year.

Gerry Ng: This decline was driven by a combination of lower sales volume.

Gerry Ng: Higher mix of distributor channel sales and product mix.

Gerry Ng: These unfavorable impacts were partially offset by ongoing initiatives to reduce material and operational costs, which we continue to realize. Excluding the impact of sales volume fluctuations, we expect gross margin to return to a more normalized mid to high 80% range as outlined in our 24 outlook since I am leading the company's Discipline Growth Initiative. I'd like to address the progress we have made on operating expenses. Although we still reported net and adjusted EBITDA losses this quarter due to timing of shipment.

Gerry Ng: These unfavorable impacts were partially offset by ongoing initiatives to reduce material and operational costs.

Gerry Ng: We continue to realize.

Gerry Ng: Excluding the impact of sales volume fluctuations, we expect gross margin to return to a more normalized mid to high 80% range as outlined in our 24 outlook.

Gerry Ng: Since I am leading the company's discipline and growth initiatives.

Gerry Ng: To address the progress we have made on operating expenses.

Gerry Ng: Although we still reported net and adjusted EBITDA losses, this quarter due to timing of shipments.

Gerry Ng: Our Q1 operating expenses were under $4.1 million, down $53,000 or 1% from the prior year. As noted earlier, first quarter expenses are typically higher due to annual payments for public company costs and certain compensation-related expenses, which are non-recurring in future quarters this year.

Gerry Ng: Our Q1 operating expenses were under $4 1 million down 53000, or 1% from the prior year.

Gerry Ng: As noted earlier first quarter expenses are typically higher due to annual payments for public company costs and certain compensation related expenses, which are non recurring in future quarters. This year.

Gerry Ng: We anticipate... with continued cost reductions associated with strong operational discipline and Processes commencing in the second half of 2023, that our performance will reflect lower spending going forward. Again, reiterating our 2024 outlook, we expect double-digit bookings growth, as Anthony highlighted earlier, with system deployments to be weighted more in the second half of the year. As is customary, the timing of orders and subsequent deliveries will be reflected in our revenue recognition. On a four-year basis, we expect gross margins to return to a target range as discussed earlier, and fixed operating expenses to decrease, which will help offset variability from sales volume and compensation-related increases to share. Overall, we remain very solid financially, with a strong cash position, no debt, and the ability to navigate market opportunities and any challenges that may emerge through the course of the year.

Gerry Ng: We anticipate with continued cost wheat options associated with strong operational discipline.

Gerry Ng: And processes commencing in the second half of 2023.

Gerry Ng: That our performance will reflect lower spending going forward.

Gerry Ng: Again, reiterating our 'twenty 'twenty four outlook.

Gerry Ng: We expect double digit bookings growth as highlighted earlier with system deployments to be weighted more in the second half of the year.

Gerry Ng: As is customary the timing of orders and subsequent deliveries will be reflected in our revenue recognition.

Gerry Ng: On a full year basis, we expect gross margins to return to a target range as discussed earlier.

Gerry Ng: And fixed operating expenses to decrease which will help offset variability from sales volume and compensation related increases this year.

Gerry Ng: Overall, we remain very solid financially what.

Gerry Ng: With a strong cash position no debt.

Gerry Ng: And the ability to navigate market opportunities and any challenges that may emerge through the course of the year.

Operator: That concludes my remarks for the first quarter of 2024. Operator, would you please restart the Q&A process? We will now begin the question-and-answer session. To ask a question, you may press star and 1 on your touch-tone phone. If you are using a speakerphone, please pick up your

Speaker Change: That concludes my remarks for the first quarter of 'twenty 'twenty four operator.

Operator: Police, we start the Q&A process.

Operator: We will now begin the question and answer session.

Operator: We will now begin the question and answer session. To ask a question, you may press star and 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: To ask a question you May Press Star then one on your touch downtown.

Operator: If you are using a speakerphone please pick up your handset before pressing the key.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We ask that you please limit yourself to one question and rejoin the queue if you have additional questions. At this time, we will pause momentarily to assemble our roster.

Operator: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Operator: We ask that you please limit yourself to one question and rejoin the queue. If you have additional questions.

Operator: At this time, we will pause momentarily to assemble our roster.

Operator: Okay.

Operator: Okay.

Operator: Yeah.

Operator: Yeah.

Operator: Okay.

Operator: Yeah.

Operator: The first question comes from David Marsh with Singular Research.

Operator: The first question comes from David Marsh with singular research. Please go ahead.

David Marsh: Hi guys, thanks for taking the question. You guys made it a little tough, one question here, so I'll just try to do one with... Well, David, you're special, so we'll let you go for two. How about that? Wow. Awesome. So, yeah, I mean, obviously, a little bit of a tough quarter for revenue realization, but I think very encouraging is the backlog growth. I just was hoping maybe you could provide a little bit of color.

Speaker Change: Hi, guys. Thanks for taking the question are you.

David Marsh: You guys made a little tough one question here. So I'll just try to do one with.

David Marsh: Well your special so well, we'll let you go for two how about Oh awesome Awesome Hey, thanks.

David Marsh: So yeah, I mean, yeah, obviously, a little bit of a tough quarter for our revenue realization, but.

David Marsh: I think very encouraging Ah.

David Marsh: Is the backlog growth I just didn't hear.

David Marsh: Hoping maybe you could provide a little bit of color.

David Marsh: I noticed in the commentary, it seemed like you were indicating a backlog was going to kind of ship later in the year, a lot of it. So I was hoping you might be able to provide a little clarity in terms of backlog, in terms of geographies, and then mix, if it's all equivalent, if there's some adapter stuff in there, if there's some centrics in there, just kind of give us a sense of how to think about what goes into that backlog. Yeah, so if you recall from our call in,

David Marsh: I noticed in the commentary.

David Marsh: Like you were indicating.

David Marsh: Backlog was going to ship later in the year a lot of it. So I was hoping you might be able to provide a little clarity in terms of backlog in terms of geography, and and that mix. If it yes, if its olive garden.

David Marsh: Or stuff in their office centric somewhere just.

David Marsh: Give us a sense of how to think about what goes into that backlog.

Anthony Ambrose: Yeah, so if you recall from our call in February... We said we had a very strong sales funnel, and we were able to monetize that pretty much as expected in March with bookings, okay, which led to the, you know, highest bookings quarter we had in 11 quarters at $8.1 million. Those bookings included a large order for a customer opening up a new site. And, you know, pretty typically, with customers opening up a new site, you can imagine a factory opening up, and they have SMT lines that need, you know, two or three quarters advance notice.

David Marsh: So if you recall in our call in February.

Anthony Ambrose: We said, we had a very strong sales funnel and.

Anthony Ambrose: We were able to monetize that pretty much as expected in March with bookings.

Anthony Ambrose: Okay, which led to the highest bookings quarter, we had in 11 quarters that $8 $1 million.

Anthony Ambrose: Those bookings included a large order for a customer opening up a new site.

Anthony Ambrose: And you know pretty typically with customers are opening up a new site you can imagine a factory opening up and they have SMT lines.

Anthony Ambrose: That need two or three quarters advance notice they get all their corporate ducks in a row and get the approval to go and then place the orders for delivery later in the year.

Anthony Ambrose: They get all their corporate ducks in a row and get the approval to go, and then they place the orders for delivery later in the year. So, for that big order, that's going to start shipping in the second half, okay? We also got a lot of orders very late in the quarter that are going to ship. And we just wanted to indicate that the balance of that's likely to ship in the second half, which is, you know, typically orders that we get ship the next quarter. We just want to call that out that it's going to be much more back-end loaded than normal so that you can build a good model, and investors can build a good model.

Anthony Ambrose: So for that Big order, that's going to start shipping in the second half okay.

Anthony Ambrose: We also got a lot of orders very late in the quarter that are going to ship.

Anthony Ambrose: And we just wanted to indicate that the balance of that is likely to ship in the second half which is.

Anthony Ambrose: Typically orders that we get ship the next quarter, we just wanted to call that out that's pretty much more backend loaded than normal.

Anthony Ambrose: So that you can build a good model and in our investors can build a good model.

Speaker Change: Great. Thanks, that's.

Speaker Change: Very helpful. And then just maybe just talk.

Anthony Ambrose: Talk about.

Anthony Ambrose: Great, thanks, that's very helpful. And then, maybe we can just talk about, you know, I know you spent some time in overseas markets, and there are some comments about, sounds like North America may be slowing down, but overseas might be picking up. Maybe just give us a general market pulse, you know, kind of a quick tour around the world.

Anthony Ambrose: I know you guys you spent some time in.

Anthony Ambrose: Overseas markets.

Anthony Ambrose: So you had some comments about how it.

Anthony Ambrose: It sounds like North America may be slowing down with it but overseas by picking up maybe just give us some general market pulse.

Anthony Ambrose: Kind of quick tour around the world.

Anthony Ambrose: Yeah.

Speaker Change: Pretty much what I said on the prepared remarks and in the release.

Anthony Ambrose: North America, especially Mexico has been very strong for us.

Anthony Ambrose: A lot of capital purchases and we're engaged with customers now they need machine number three or machine number four and.

Anthony Ambrose: You know, in Q4, they said they needed it in Q1, and in Q1, they said they needed it in Q2. Here in Q2, they say, I might need it in Q2, I might need it in Q3.

Anthony Ambrose: Q4, they said they need it in Q1 Q1, they've said it needed in Q2 here in Q2, they say I might need it in Q2 I might need it in Q3, and it's really that they they believe they need it. It's just their demand is not ramping as fast as they thought it would I'm pretty confident we'll get the orders I just don't think that's going to have.

Anthony Ambrose: And it's really that they believe they need it; it's just their demand is not ramping as fast as they thought it would. I'm pretty confident we'll get the orders, but I just don't think it's going to happen to revenue again until the second half in North America. I was in Asia earlier in Q1, and we continue to have strength in our Asian markets, Korea, China, and it was also in India. You know, they're just a different cycle.

Anthony Ambrose: And to be revenue again until the second half.

Anthony Ambrose: In North America.

Anthony Ambrose: I was in Asia earlier in Q1, and we continue to have strength in our Asian markets Korea, China was also in India.

Anthony Ambrose: And.

Anthony Ambrose: There there just a different cycle I think China was bad last year, you know everyone had hoped sharp bounce back early in the year and it didn't but it's been slowly coming back and I think they're very very keen on there.

Anthony Ambrose: I think China was bad last year. You know, everyone had hopes for it to bounce back early in the year, and it didn't. But it's been slowly coming back, and I think they're very, very keen on their EV industry in China, and we're a critical supplier to that industry. Then, Automotive and the rest of Asia continues to be very strong for us as well. Europe had been weak for a while, but again, we see some strength in Europe.

Anthony Ambrose: Their EV industry in China, and we're a critical supplier to that industry.

Anthony Ambrose:

Anthony Ambrose: Automotive and the rest of Asia continues to be very strong for us as well.

Anthony Ambrose: Europe had been weak for a while and again, we see some strength in Europe, we had a very strong bookings quarter in Europe in Q1.

Anthony Ambrose: We had a very strong bookings quarter in Europe in Q1. We had a good sales funnel there. Some very interesting opportunities. Again, we'll see the timing and how they materialize. But I just wanted to share with investors that our overall plan for the year remains unchanged in terms of bookings. It's just I think where we're going to get those bookings has probably changed a little bit in our thinking in the past five or six months.

Anthony Ambrose: A good sales funnel there are some very interesting opportunities again, we'll see the timing and how they realize but I just wanted to share with investors that you know our overall plan for the year remains unchanged in terms of bookings just I think where we're gonna get those bookings has probably changed a little bit in our thinking in the past five or six months.

Anthony Ambrose: Thanks very much. Appreciate you taking the questions.

Speaker Change: Thanks, very much appreciate you taking the questions.

Anthony Ambrose: Yeah.

Operator: As a reminder, if you have a question, please press star then 1 to be joined in the queue. The next question comes from Kevin Garrigan with West Park Capital. Please go ahead.

Speaker Change: As a reminder, if you have a question. Please press star then one can be joined into the queue.

Operator: The next question comes from Kevin Garrigan with West Park Capital. Please go ahead.

Kevin Garrigan: Yeah, hey, guys, thanks for letting me ask a question. You know, going off of David's question and your previous answers, so, you know, again, I know automotive is kind of your largest market for system orders, and then it's followed by industrial and programming centers. And, you know, in your preferred market, the programming centers have had a, you know, a strong start. So, you know, looking at the pipeline right now, can you explain a little bit and give us some color on which end markets you think are going to be the strongest for orders in 2024? I mean, do you think programming centers may become winners of orders, or is it really just going to be automotive that's going to kind of drive the bookings growth? You know, I think...

Kevin Garrigan: Yeah, Hey, guys. Thanks for letting me ask a question.

Kevin Garrigan: Going up David's question and your previous answers so.

Kevin Garrigan: I know in automotive is kind of your largest market for system orders and then it's followed by industrial and programming centers and in your prepared market that programming program programming centers that had a strong start.

Kevin Garrigan: So you know looking at the pipeline right now can you talk.

Kevin Garrigan: A little bit and give us some color on which end markets. You know you think are going to need the strongest for orders in 2024, I mean do you.

Kevin Garrigan: Programming programming centers, maybe come when there's the borders or is it really just going to be automotive that's going to kind of drive the bookings growth.

Kevin Garrigan: You know I think.

Anthony Ambrose: You know, I think if I look at the funnel going forward, it looks a lot like our last several years of business. For any one quarter, we can have a significant shift one way or another just based on the level of orders that we have and the markets into which those orders are represented.

Kevin Garrigan: If I look at the funnel going forward it looks a lot like our last several years of business okay.

Anthony Ambrose: For any one quarter, we can have a significant shift one way or another just based on.

Anthony Ambrose: The level of orders that we have in the markets into which those orders are are represented.

Anthony Ambrose: But in terms of the fundamental nature of the business, it continues to be automotive and industrial, and the point I wanted to make in my remarks is that a lot of these things are connected by this edge AI theme. And I've done some, you know, research and discussion and talked to some folks about that. And I want to include that in the remarks because I think that's a connecting thread there. And I know people are very excited about AI.

Anthony Ambrose: But in terms of the fundamental nature of the business.

Anthony Ambrose: It continues to be automotive industrial and you know the point I wanted to make in my remarks is a lot of these things are connected by this edge AI theme.

Anthony Ambrose: I'm.

Anthony Ambrose: Done some research and discussion and talk to some folks on that and I wanted to include that in the remarks, because I think that's a connecting thread there and I know people are very excited about AI. They tend to think of it as Chad GPT in and some of the things that are going on but I think a lot of it's going to be more much more meat and potatoes around it.

Anthony Ambrose: They tend to think of it as chat GPT and some of the things that are going on, but I think a lot of it's going to be much more meat and potatoes around... Advanced Driver Assist Systems, Smart IoT, Smart Homes, Factory Automation, things like that. And the common connecting thread is more code, more programming, more security. And, you know..., at the risk of..., you know, colloquialism, that's better for Data I.O.

Anthony Ambrose: Vance driver assist systems Smart Iot smart homes factory automation things like that.

Anthony Ambrose: And the common connecting thread is more code more programming more security.

Anthony Ambrose: And you.

Anthony Ambrose: You know.

Anthony Ambrose: At the risk of.

Anthony Ambrose: You know colloquialisms, that's more better for data I O.

Kevin Garrigan: Okay, perfect, perfect. I appreciate that, Keller.

Speaker Change: Okay perfect perfect I appreciate that color.

Kevin Garrigan: If I could, just a quick follow-up. You noted in your prepared remarks that you're seeing some interesting deals for Centrix. I know last year you had a solar energy customer win that you called out. Can you expand a little bit on kind of what markets some of these deals that you're seeing are coming from? Kind of the edge AI market that I just described at a high level, you know, usually IoT, Kevin.

Speaker Change: If I could just a quick follow up you had noted in your prepared remarks that youre seeing some interesting deals for centrex.

Kevin Garrigan: Last year, you had a solar energy customer win that you had called out can you just expand a little bit on kind of what market. Some of these deals that youre seeing are coming from.

Kevin Garrigan: I've kind of the edge AI market that I just described at a high level you know usually Iot Kevin.

Anthony Ambrose: Kind of the edge AI market that I just described at a high level, you know, usually IOT Kevin. There are a lot of interesting deals that there's a lot of pre-sales effort. A lot of work that has to go into these, otherwise, we'd probably have more. You know, the unit growth continues to go up, but there are a couple of really interesting deals in the funnel. I'm hoping we can close them.

Kevin Garrigan: A lot of interesting deals there's a lot of pre sales effort.

Anthony Ambrose: A lot of work that has to go into these otherwise we'd probably have more you know the unit growth continues to go up but there are a couple of really interesting deals in the funnel I'm, hoping we can close them.

Anthony Ambrose: Thank you, ladies and gentlemen. This concludes our question and answer session. I would like to turn the conference back over to Anthony Ambrose for any closing remarks.

Anthony Ambrose: Thank you ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Anthony.

Anthony Ambrose: Ross for any closing remarks.

Anthony Ambrose: Well, thank you very much, Operator. I'd like to thank everyone for attending and for the questions from our analysts. I'd also like, again, to remind everyone to please return their votes for the shareholder meeting in May. And with that, I'd like to close the call. Thank you very much.

Anthony Ambrose: Well, thank you very much operator, I'd like to thank everyone for attending.

Anthony Ambrose: And the questions from our analysts I'd also like again to remind everyone to please return your.

Anthony Ambrose: Votes for the shareholder meeting in May and with that I'd like to close the call. Thank you very much.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Anthony Ambrose: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: [music].