Earnings Call Transcript - DAIO 2026-11-12

Operator

Good day, everyone, and welcome to Data.io's third quarter 2026 Financial Results Conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jordan Darrow of Investor Relations. Please go ahead.

Jordan Darrow, Head of Investor Relations

Thank you, operator. Welcome, everyone, to the Data.io Corporation third quarter 2020. Due to the many important developments recently taking place for the company, during today's event, we are providing a slideshow presentation. The slides will be available within the Investor Relations section of the company's website for further reference. With me today are the company's President and CEO, Bill Wentworth, and Chief Financial Officer, Charlie DeBona. Before we begin, I'd like to remind you that statements made in this conference call concerning future events, results from operations, financial position, acquisitions, financing, and capital markets initiatives, economic conditions, supply chain expectations, estimated impact of tax and other regulatory reform, foreign exchange fluctuations, product releases, new industry participants, and any other statements 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 to differ materially from 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, part shortages, pricing, and other activities by competitors and other risks, including those described from time to time in the company's filings on Form 10-K and 10-Q with the Securities and Exchange Commission in our press releases and other communications. The company may also reference GAAP and non-GAAP financial performance measures, including one-time items, which are intended to provide listeners with a means to better understand the company's performance. Please refer to reconciliations in our earnings press release issued earlier today. Finally, accuracy and completeness of all discussions on this call, including forward-looking statements, should not be unduly relied upon. Data.io is under no duty to update any forward-looking statements. And now I'll turn the call over to Charlie D'Bona, Chief Financial Officer.

Charles DiBona, CFO

Thanks, Jordan, and good morning, everyone. I'm going to keep my remarks brief because while in many respects, notably margins and normalized performance, Q3 was a very strong quarter, the real story today is the completion of the VTech acquisition, and I want to get to Bill's discussion of that transaction and where the combined company is headed. So let me quickly walk through the Q3 numbers and then hand it over. Net sales in the third quarter were $4.9 million compared to $5.2 million in Q2 and $5.4 million in Q3 of last year. Platform revenue was up both sequentially and year-over-year, but adapter sales were softer on timing. Third quarter bookings were $5 million, up slightly from Q2. Revenue mix shifted further towards capital equipment at 52% of revenue, with consumable adapters and services at 48% of total sales. Gross margin was 58%, up 100 basis points from 57% in Q2, and up over 700 basis points from 50.7 in Q3 of last year. Margin expansion continues to reflect pricing discipline, the sale of several high-margin platform units, and improved operational efficiencies. Operating expenses were $4.9 million, which included approximately $1.4 million in one-time expenses. Of these one-time expenses, over half, some $800,000 worth, were related to the M&A and financing activities in the quarter. This level of one-time expenses is directly attributable to the volume of transaction activity in the quarter, of M&A and financing transaction in the quarter, as we simultaneously wrapped up our first private placement while advancing an acquisition, a second private placement, and a credit facility, all of which closed in October. A further 16% of expenses were tied to our ERP transition, particularly the unwinding of our prior ERP commitment, which had been entered into several years ago. And another 20% was related to a non-cash adjustment of certain inventory reserves. Excluding these one-time items as well as the equity compensation, adjusted EBITDA was negative $71,000, compared to negative $563,000 in Q3 of 2025. Thank you. Given our current gross margin profile, this implies an organic cash-neutral revenue in the range of $5 million per quarter. This is materially lower than we were where the business was a year ago. Operating loss was $2 million compared to $1.4 million in Q3 of 2025. The increase is driven by the one-time items. Net loss was $2.7 million, or $0.27 per share, compared to $1.4 million, or $0.15 per share in Q3 of 2025. The net loss includes $624,000 of interest expense, which, like the interest expense that we discussed last quarter, represents a non-cash distortion due to the very quick amortization of the discount on the June convertible notes. As well, the expenses also included a $75,000 of tax expense related to the dividend repatriation from our China subsidiary. Adjusted EBITDA, excluding equity compensation and one-time items was negative $71,000 near breakeven for the second consecutive quarter. Cash at the quarter end was $9.4 million, down from $10.8 million at June 30, reflecting operating cash usage in a quarter, including significant transaction-related expenses. There was no debt on the balance sheet as of September 30, as the convertible debentures had converted to preferred equity in July. Working capital was $14.7 million, up from $10.8 million in June 30, which included the $6.2 million of convertible debentures in current Thank you. Subsequent to quarter end, we closed a second $13.25 million private placement and put in place a $7.5 million asset-based revolving credit facility with Western Alliance Bank. That really concludes the financial remarks for the quarter, and with that, let me turn it over to Bill to walk you through the VTech acquisition and our strategic direction. Bill?

William "Bill" Wentworth, CEO

Thank you, Chairman. We've got a lot to unravel. I'll try to plug in some notes along the way. We created a small, you know, five-page, short five-page deck to review the acquisition, but there's been also a significant amount of activity since the beginning of Q4, which I'll bleed some of those comments in during the presentation. The first page is the Safe Harbor Statement, as we release every time when we do our earnings calls. So a brief history on where our M&A journey actually started, and actually started late last year when we hired an advisor, StoneX, a benchmark at the time. Sat down and reviewed what we felt were a bunch of good fits for a pipeline of M&A activity, which we still have. Probably about an estimate of about an $80 million pipeline still available. To pursue in the forward years, VTech was chosen as the first company to bring into the portfolio due to really some of the market segments they served, the diversification of their account base. Strong. They've actually been a vendor of DataRail for over a decade. I've known the company personally, being in the industry for 30 years. Good names, solid operational efficiencies, but also just strong. location in Minnesota. Obviously, I'll talk about that a little bit as we get into later in the deck, the synergies and the opportunities for the business to expand manufacturing capacity and capabilities. But, you know, it was certainly, in my view, the best fit for this company for DataRail, for the transformation that was needed for the business. And we needed a significant transformation across the board in really all factors in how you would measure a business from a KPI standpoint. I'll get into the VTech business. There are three distinct divisions. The division I knew very well and personally was the VTech division. They also have services as part of that group. Royce was an acquisition they did back in the middle of the 2000 decade, I think around 2010, 11, somewhere in there. That was a test platform, which tests die, essentially, post. Post-wafer manufacturing, you cut the die, and then it gets sorted, and it can go directly into tape and reel or other packages or just sorted in other media. That was an acquisition that's been very beneficial for VTech. Mitch and the team have done a great job of integrating that platform into their automation. So if you think about what DataRail does, we build automation around a programming platform. That's our IP. They build automation around Royce, which is their test platform. So, this greatly expands our markets that we can serve across the… Which is really the vision I had for DataRoute going back two years ago. Certainly was focused on the programming side of things, but as I started to look deeper at VTech and its capabilities and the markets itself, We started to go down the path and have the conversations. What started earlier this year from around the beginning of March is when we reached out. They were not in an auction process. They were specifically targeted by myself and the team as an asset that made sense to bring into Data.io. And as we started to get to know the management team and leadership, it was pretty clear that bringing these two companies together would strengthen not only the business itself. In the domains and really reduce our concentration on one of which we'll get deeper into in a few slides, but overall give us scale and scope. A&J programming, that was certainly an asset that... Just because of my experience in growing the programming services business, both regionally and globally, A&J has been in the industry for well over three decades. I've known the leadership there, and not personally, but knew of them. They did a lot of work for Silicon vendors and large companies. of the valley for, like I said, well over three decades. Great brand, do a lot of MPI, quick turnaround, and pre-production work. Like I said, if you talk to any customer that they serve, you'll get nothing but glowing remarks about their reaction time and their ability to meet customer demand when needed. All right, there's the next slide. Also, this acquisition will be accretive, and the revenues will... So, like I said, it gives us scale, scope, not only in capabilities and operationally. Why VTech? As I said, I've mentioned some of this already in the previous comments. This accelerates our programming as a service that we announced back in April. As you know, as some of you may be aware, I announced Doug Adams coming on as our global, head of global operations, all customer-facing activities, which includes I support field service, but mainly programming services. Doug was my COO at Source. We successfully resourced to $800 million. We've been a business services company over 20 years, and that was all done organically without any acquisitions. The opportunity in the marketplace is larger than it was back when we were running source before we sold it to Abnet. You know, silicon, programmable silicon, continues to increase and grow within a lot of different domains in the industry. I calculate from 2001 to now. The amount of programmable silicon, as far as devices, as far as unit volumes, has doubled. We see flash-based microcontrollers It's been talked about for well over a decade, but when you look at autonomous and I'll announce an opportunity that turned into an actual purchase order in Q4. Pretty excited about a new logo we just landed. The amount of programmable silicon continues to grow. Automotive is still soft. I mean, we're toeing the line and making sure that we stay above board and we don't burn any cash or burn that much as we grow through this. But the expansion now has really started to begin outside of automotive. Obviously, as the geopolitical issues start to fall to the side and gas starts to lower, that will only benefit our core customer base. I think we're in a great position as far as our diversity, and VTech definitely strengthens. So, programming is a service. It's something that's very much needed in the industry. As I said, the amount of volume of programmable content continues to climb. It's also something that is very important to OEMs. Thank you. And one of the main reasons is the protection of their IP. A lot of cases, what's getting imaged into these parts is their intellectual property. And given the geopolitical situations around the world and the challenges, security is becoming more of a, not a need, but a mandate. Announcements around a security platform that we're working on to acquire as well. The consolidation of the supply chain. We have a team over at a big trade show called Electronica in Germany. There was a customer, a potential customer, that... Our sales team ran into where they manage old dye or old technology. Some of that technology gets programmed, but it also needs to be cut and packaged. And the interesting conversation was already out of the gate with VTech and us side by side and looking at us as a holistic supplier, their comments were pretty immediate and pretty on point as far as the value that we can bring to them as a supplier. So already conversations we're having in getting into new businesses, but also the connection between what DataO does and what VTech does is pretty strong and very evident and very clear. Access to larger, high-growth markets. VTech has been playing in AI photonics. Obviously, that's a very large market. As a matter of fact, some of their core systems are booked out through Q2 already. Photonics is really the only way you can reduce, not the only way, but one of the major ways to reduce power and reduce. Heating and increased cooling needs for data center and as far as GPs go. That is a big market. It's growing in that market. Some that are only three and four or five years old, some of those clients are VTECS clients. So photonics is a big area of growth. They've been in aerospace and defense for a while, satellite communications, they're doing work for Starlink out of Tesla and SpaceX. That's actually a logo that we will announce now. We've been working on the humanoid robotics division called Optimus at Tesla. So we had a demo system in there over the last couple quarters. They placed their first PO two weeks ago. We are awaiting a PO for another one to three more systems this quarter. Pretty excited about that opportunity. The amount of programmable technology, especially microcontrollers, is pervasive through this technology. These are one of the areas that we've talked about growing into that, autonomous driving and other parts of the technology supply chain that's starting to really take off, really driven by AI. As much as the negativity that's been around the AI swirl in the last couple weeks and actually the last several months, Without AI, you can't bring these things to life, so as much as we will go through some turbulent times, and obviously pricing and semiconductors and lead times have gone out, this will shake out like every other technology inflection point we've been through, such as O1 and other recessions we've been through in this industry have been through most of them. This will shake out, but the people that will come on top are the people that have a robust, resilient business, which is why this acquisition is so important to us at this time, given that we have multiple different markets we can serve, and which will insulate us from being so focused on, you know, and we, and, and. And having to derive our revenue from automotive, which has really been the mainstay of Daryl for the last decade. So this does bring us a significant amount of relief and resiliency to the business and allows us to focus on multiple different domains with solutions that we have today and also in the future. I do want to make a comment that we continue to invest in our core platform. We do have some new products being rolled out in Q1, which we're pretty excited about. And those products also not only help our core business and help our customers produce more faster with better technology, but this also will have a profound effect on our services business. This will also help us drive better margins and services as we build better automation alongside VTech. That's one of their expertise is automation will help us drive better margins and also be able to service customers that probably better service rates than they get today from the current providers that are in the market. From a financial upside, like I said, this is a credence to the business. It does double our revenues, so close to, and I think you'll start to see those numbers first played through the end of Q4. As far as the acquisition, some of the highlights on page five, I don't know where we are on the slide deck, but on page five, that's where we're at now, really this is a transformational acquisition, and like I said earlier, the company had been struggling to grow for a couple decades, and it really needed a big change. Services, obviously, was something that's been on the roadmap for a little while. It's not an easy thing to execute. And so, you know, bringing people like Doug and myself and Monty, who have well over 100 years of experience in programming services, we've opened up, I can't tell you, countless sites, probably a couple dozen worldwide over the years of our industry experience. And it's not an easy thing to do. And so... Yes, we could have done it organically. It would have taken longer. The acquisition, among the many highlights that it adds in value as far as the business goes financially and the diversity in domains and customers, but it gives us an immediate access to programming services, and we're already in discussions with some significant opportunities already, and we're already talking to existing customers of Data.io about moving to an OpEx versus a CapEx model. We had a conversation with a large CM the other day where they wanted to rent the machine for about six months, and instead of renting the machine, we offered programming services, and they were very excited about us being able to offer that opportunity to them. Because they just, obviously, this is new and had no idea, but they said that's much more beneficial to them. It costs them less. They don't have to install the machine. They don't have to run electrical and air, you know, and this is just for a quick six-month opportunity. But if we service them well, it may continue. So those are the opportunities that now rest at our feet that we can now be aggressively pursue. It's extremely exciting. I can't tell you. It's great to be back in the programming services industry. And the opportunities that DataRail creates just by being the market position we're in. We certainly, based on bringing these two platforms, we've become a much more strategic supplier to the semiconductor supply chain with VTech and its capabilities, with stronger, more diversified revenue profile across the different diverse industries that we're in and customers. Significant long-term, near-term cost synergies, those have been activated. We should have probably a good 50% of our synergies actioned in the next 90 days. Some of those are already action today, and like I said, we raised about 22, or Charlie mentioned we raised $22.5 million for this acquisition and for both capital. We sit really well on the balance sheet compared to our past. We have a pretty good cash balance, and that's been building already through this quarter. That's going to ebb and flow probably in the first 60 to 90 days, but we expect growth on the cash balance sheet to continue to grow. Probably starting sometime in Q1 and continue to grow throughout 2027. And let's see, lastly, seasoned leadership team. I can't speak enough about Mitch and the team he's built over there. Extremely solid, very strong operationally. There's a lot of things that they can help us with on both, like I said, automation and engineering and just having that scale and scope. They've got available capacity, so as we grow. into the services business, they need to build more machines. They have capacity there for us to grow into. That was another benefit of the acquisition. So like I said, just overall, it pretty much has clicked every box you would want doing M&A. And M&A is hard. I recognize that. I've done enough of it. Some of the leadership team has had a lot of experience or some experience in doing M&A. It's, look, it's difficult to right out of the gate get value from M&A. I can already see it within the first three weeks. So this is one of those ones that actually 101 does equal to, or I would say. Let's see, next page, business transaction summary, Q3 combined pro form. Would they give you an idea of kind of the combined numbers, just some basic KPIs, but, you know, if we were combining Q3, we would be looking at a $10 million quarter, a backlog about 8.8. As you see in the... We're operationally here at Data.io by booking. Be very similar as we really have fine-tuned, and a lot of it's been through communication and also better preparing our account executives for the information needed in order to ship things on time and make sure that the systems are configured the right way and the teams worked really well together to get that done. So we'll continue to probably book and ship a lot of what we book and ship in the quarter, except when we get larger longstanding committed orders over multiple quarters. Q3 EBITDA, well, we would enter around the $2 million range or less. The high margin on programming services is very similar to where we sit today in that high $50 range, but I would expect programming services for us over the long term to... It's probably increased by 100 or 200, 300 basis points, and why I can say that with some confidence is that at source, we ran in the high 50s pretty consistently, and even after we sold the avnet with the back office tax, we still ran in those high 50s. Now, owning the equipment, obviously, our costs are less, so I'd expect that to generate, and you can expect kind of The programming costs, about 30% to 40% of that is the cost of the equipment, depreciation, sockets, maintenance, software contracts, things like that. So we should pick up some basis points, a few hundred basis points, on the margin for programming services. And obviously, as we create new solutions that have a high velocity of throughput, that will also help margins increase as well. In the consideration for the business, we paid $23 million. $3 million of that was actually taken by the family office in equity. That shows the conviction of the folks that sold the business, and I want to thank the folks at CODA. They were great through this entire process. It was great working with Bill Carroll and team, and I can tell you are very excited about the future of the business, and it was great working with them. It was a long road. We went through some challenges getting there, but the great thing was I think on both sides we both wanted to see this deal work because we knew the benefits for both the employees and the shareholders alike would be highly beneficial, and we never lost sight of that. So thanks for the entire team and all the advisors that worked on this deal and any of you that are listening. I want to thank you, and I'll see some of you in New York the second week of December. I think I'd like to conclude at that time. That's the, and thanks for taking the. Appreciate the time and all the people that were involved in this. It was a fight worth fighting. And we still have a lot of other things we're working on to grow the business and bring more value to the company and our customers. At this point, I'll hand it off to Jordan, I believe, or you? Operator. Operator. Okay. Thank you.

Operator

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we'll pause momentarily to assemble our roster. And our first question comes from Craig White from Devon Capital. Please go ahead.

Craig White, Analyst — Devon Capital

Yeah, hi. Good morning. Thanks for taking my call. Can you talk a little bit about the photonics industry since it seems like that's a new end market for you? And then I had one other question.

William "Bill" Wentworth, CEO

Yeah, sure. It is definitely a new market for Data RIO for sure. It's been a market that BTEC has been serving, I'm going to say. For at least four or five years, and again, I'm guessing on that. I know some of their customers they have are just incubated in 2023 for their product sets, but it's a market they've been serving. These are very small parts that go really into and around the silicon, so this is kind of the very small parts that allow light to transfer to the memory, and that's where, obviously, the power cooling and speed. Because obviously with light, you don't have the resistance that you would with copper. So those are the technologies that they're dealing with, and these parts have to be, you know, they're cut from the die, sorted, they're orientated, so there's vision inspection. And then they get packaged for manufacturing. So that's the process in which... Thank you.

Craig White, Analyst — Devon Capital

Thanks. Very interesting.

William "Bill" Wentworth, CEO

I can give you a couple of the customer names would be Sienna and IPOS.

Craig White, Analyst — Devon Capital

Yes. Yes, it does. Thank you. And then you talked a lot about the acquisition and the synergies. Can you discuss some of the more important financial and operational synergies? Any other details?

Charles DiBona, CFO

Yeah. You know, we're not going to give forward guidance. As Bill mentioned, we're looking at roughly doubling the revenue of the company. And we're looking at, you know, That we would expect there to be positive accretion immediately. It's an accretive acquisition right out of the gate here. There are a number of areas where we're looking for operational synergies and to improve the cost structure of the combined entity. We haven't given any guidance, and we're not quite prepared to do that yet as we sort through that, but we'll start to realize some of those. Actually, we're starting to realize some as soon as next week. And so, you know, whereas sometimes those are, you know, the synergy word is kind of a... It's got a bad reputation and probably earned a bad reputation.

William "Bill" Wentworth, CEO

Let me jump in. I can describe some of it. You're obviously going to have some clear, you know, overlap in certain roles and sales and some other areas. But this is not an acquisition. This is not a roll-up, right? This is more of a cap-and-grow. But there are areas in manufacturing. They also have a machine shop. So we buy outside metal from other suppliers that is pre-painted and pre-drilled. So things like supply base will reduce costs. We've identified quite a bit there the expansion into Minnesota for manufacturing because we are fairly We have a lot of other new products coming here, so it's not a reduction in manufacturing capacity. We will still build things like our IP here, new systems development, things like that. But there are some obvious overlaps in some of the business that will create some of those synergies, and they were identified months ago. And through a couple of the acquisitions, there's some folks that are going to be moving on due to the acquisition, and they were pretty much probably... Any acquisitions I've detected, so... Synergies, and then you have some newfound synergies around materials, operations, and things like that. One of the things that we've done, too, is at Data.io over the last two years to increase and optimize the business, we were early adopters of AI, and it has created huge... Over 23%. Keeping costs below 22, even from a run rate, was below 22. Well, that's not going to. We can arrange exactly where I expect this to be. VTech has not used any AI whatsoever, and so Mitch and myself and the team have identified areas that we can optimize their business, and they're very excited to get engaged with our team. I hope that helps.

Charles DiBona, CFO

I just sort of emphasize that these are very tangible cost benefits that we can see, but again, the real value here is in the... The synergies on the upside and the ability of this company to work together, you know, these entities to work together and sort of, like Bill said, one plus one equals three in this case.

William "Bill" Wentworth, CEO

There's a significant amount of sales synergies here as well.

Craig White, Analyst — Devon Capital

Okay.

Operator

Excellent. Again, if you have a question, please press star, then one. And our next question comes from Michael William from MB Family Office. Please go ahead.

William Michael, Analyst — SS Family Office

Hi, guys. Thanks. Thanks for taking my question. Nice quarter. How important is it to your customers for Data.io now having under one roof all the platform capital equipment, the device support engineering, the software, and the programming services for you to offer them?

William "Bill" Wentworth, CEO

Yeah, it's a significant value. I mean, like I said, back when Doug and I and Monty and a few other team members that are here from Source, We're a growing source into the, you know, global programming powerhouse that became one of the things we wish we had was a data.io. As a matter of fact, when we sold the admin, it was one of the things we proposed to the management team there was to buy one or two of the programming houses just because it's not just having the equipment and lowering your costs. Some of them over 30 years. Dwayne Jones, our vice president of manufacturing, you know, one of the, in engineering, one of the things that he mentioned, it would always be great to have a place. We want to make sure it meets the specifications, has the tolerances that it was designed for. Now we get to actually bring that equipment to life. And be able to put it through the test to really test this equipment out. I want to be very clear about that. There are customers out there that are always going to want to do it in themselves, and that could be due to compliance or… The supply chain is pretty tight, so I like to see things under one roof. So we'll continue to invest in and our programming platform and our automated solutions, because it's not only beneficial for our own services business, but we're going to have a lot of information on the call. You know, my goal, our goal next year is we've got a new platform coming out the end of next year that we believe will put DataRail back in the number one position from a programming platform perspective. We are investing a ton of money in our programming platform. This company is what it's known for. It's what I've known it for. I was number one in this industry for decades, and I want to put them back on top, and that's our goal. Thank you for that. I think, you know, if you look at how we're investing our capital in new technology, new automated solutions, and now having services as an offering to our customers, my expectation is we will be the best across all three.

William Michael, Analyst — SS Family Office

Great. Thanks. Quick follow-up. You mentioned programming services, and you're interested in it. How big is the programming services market potentially as compared to the capital equipment market? Can you explain the two go-to market models for programming as a service?

William "Bill" Wentworth, CEO

Well, thank you for reminding me, because I was going to mention that in the deck. So when I came to Daryl just over two years ago, you know, and I've been out of the programming industry, I was in the IT industry for 10 years prior to that, and it was interesting coming back to the market and really seeing that, one, Daryl had a few more competitors than they did a decade or two ago. And the market size had not really grown that much. It had been hovering around $130 million to $150 million a year. And with three other competitors in there, it doesn't leave a lot of room for growth. So it was clear day one that we needed to expand in the services and also take the platform and potentially move it to test. The board test is for the other side of the market, but if you look at how you provision data to semiconductors, to programmable semiconductors, you either do it offline with equipment like ours, you do it with a service provider, or you can do it at tests. The programming services industry, and again, I'm giving you an estimate based on back in the calculation. $200 million a year in services. And that's done in, like I said, it can be done at independence, contract manufacturers buy equipment from people like us, you know, and then there's independent. We're going to roll some of those companies up through acquisitions. I don't see us doing that. I see us doing an acquisition of two in certain regions just to bust in so I don't have to do it organically. I hope to get in and get customers right out of the gate. It's a longer growth. When we had, when source, when supply chains started to shift in 2002, 2003, 2004 into Asia, specifically China. And that ended up being our largest program. the world with almost 80 automated machines in one space. We were doing probably well over 100 million units a year out of that location. We also have already some organic opportunities to open up in Asia as well already. So, that being said, the overall market, if you look at those three areas, I'd say in total is a little over a billion dollars, maybe 1 to 1.2 for programming and programming services and provisioning. Now, there is security provisioning, which is going to add to that because – and we'll talk more about that during Q4. We're going to add another level of revenue to us that will be attached to standard provisioning services. So, it's healthy, good margins, high velocity, you know, it's not like... You get a nice lump of capital that comes in, and then you wait another three months or another year, because these machines do last a long time. So, as you know, the CapEx market is pretty chunky, and the capital that comes, the cash flow that comes with it's chunky. The beauty about services is you're constantly getting cash flow in the door every day, every month, every week. And some of these deals, when we go on-site, will be contractual. So we are working on a couple existing day-to-day customers about turning a CapEx model, it's an OpEx model, on-prem.

William Michael, Analyst — SS Family Office

Great, great, thanks. But could you expand upon the models for programming as a service? I was just a little confused on that. You said there's obviously several.

William "Bill" Wentworth, CEO

Yeah, well, the two main models, either you provide regional services, so like A&J is a regional programming center, or you do on-site. So, yeah, those are the two kind of business models themselves. So you have your own location and customers in that region come in and use your services in that local region. Or you go on-site to the manufacturer where they're actually building the products, and you put the CapEx there, you hire the people, and you run the process yourself. Those are the two provisioning models.

Operator

Great. Thanks a lot.

William "Bill" Wentworth, CEO

Yeah, no problem.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Bill Wentworth, Chief Executive Officer, for any closing remarks.

William "Bill" Wentworth, CEO

Thanks. I really appreciate the time that people get up this early to listen to our call. We are extremely excited about this acquisition, and I can't tell you how well the teams are already melding well together. And the interesting part... The management team is really strong already, and I'll tell you that's, you know, Successful acquisition. The cultures match really well. I will tell you that is something I learned at Abnet. That's a company that's done a lot of great acquisitions over its history with lessons that I learned there that I took with me here, but also in my own experience working in private equity. Like I said, M&A can be kind of intimidating, and also can be daunting, and also can cause a lot of problems with companies, and I've seen it over the years. I'd like to say I've been around some really, really intelligent people that have schooled me really well in this area, and I can tell you this is one of those acquisitions that is going to pull well for Data.io and its shareholders and create an Thank everybody on the call, and thank everybody who's listening that was part of this process. We couldn't have did it without you, and look forward to Q4 and really looking forward to 2027.

Operator

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

Corrections from filings

The transcript above is a record of speech and may carry misspoken or mis-transcribed figures. The company's filings state:

• Financial results period: the transcript reads “2020”, but the company's 8-K filed 2026-11-12 reports 2026.