Exchange: NASDAQ | Sector: Technology | Industry: Hardware Equipment Parts
Q1 2026
Published: Sep 10, 2025
Earnings Highlights
Revenue of $218.97M up 1.4% year-over-year
EPS of $0.33 increased by 525% from previous year
Gross margin of 29.7%
Net income of 16.47M
"We delivered a strong beginning to fiscal 2026, and to our three-year plan. Ending cash balance of $136.9 million, and backlog of $360 million, which sets us up well for future revenue generation." - Brad Wiemann
Daktronics reported a solid start to fiscal 2026 (QQ1) with a revenue of $218.97 million and gross margin of 29.7%, delivering net income of $16.47 million and EPS of $0.34. The quarter benefited from a favorable revenue mix and fixed-cost leverage, plus a longer-than-usual 14-week period that contributed approximately $1.5 million of incremental profit. Management highlighted robust order activity across Live Events, High School Park and Recreation (HSPR), and International segments, including three large Major League sports projects and record HSPR orders, which collectively expanded backlog to $360 million and supported a revenue tailwind into the remainder of the year. Importantly, the company reinforced its ongoing business and digital transformation initiatives aimed at sustaining margin discipline, improving service delivery, and enabling a shift toward higher-margin, value-based offerings.
Key Performance Indicators
Revenue
218.97M
QoQ: 46.46% | YoY:1.43%
Gross Profit
65.07M
29.72% margin
QoQ: 76.92% | YoY:17.50%
Operating Income
23.27M
QoQ: 741.46% | YoY:19.79%
Net Income
16.47M
QoQ: 196.00% | YoY:554.09%
EPS
0.34
QoQ: 194.44% | YoY:525.00%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $218.97 million; YoY decline approximated around 3% (vs. QQ1 2025 revenue of $226.09 million); QoQ growth was reported as 46.46% in the earnings metrics, reflecting seasonality and project timing.
Gross Profit: $65.07 million; Gross Margin 29.72%; YoY gross profit up 17.5%; QoQ up 76.92%, driven by mix and better fixed-cost absorption.
Net Income: $16.47 million; Net Margin 7.52%; YoY growth 554% (benefit from absence of prior year one-time charges and improved operating performance); QoQ growth 196%.
Overview of QQ1 2026 metrics and key YoY/QoQ trends:
- Revenue: $218.97 million; YoY decline approximated around 3% (vs. QQ1 2025 revenue of $226.09 million); QoQ growth was reported as 46.46% in the earnings metrics, reflecting seasonality and project timing.
- Gross Profit: $65.07 million; Gross Margin 29.72%; YoY gross profit up 17.5%; QoQ up 76.92%, driven by mix and better fixed-cost absorption.
- Operating Income: $23.27 million; Margin 10.63%; YoY growth ~19.8%; QoQ surge ~741.5% (reflects quarterly mix and cost discipline).
- Net Income: $16.47 million; Net Margin 7.52%; YoY growth 554% (benefit from absence of prior year one-time charges and improved operating performance); QoQ growth 196%.
- Diluted EPS: $0.33; Basic EPS $0.34; YoY EPS growth ~525%; QoQ ~194%.
- Backlog: $360 million; Strength across live events and international fields supports revenue tailwinds into 2026/2027.
- Cash flow: Operating cash flow $26.10 million; Free cash flow $21.81 million; Cash balance end of period $136.86 million; Net debt roughly $31.13 million (net debt = total debt).
- Capital allocation: Share repurchases of $10.65 million in the quarter; no borrowings under bank line; investment in IT/product development remains elevated (Q1 IT/product development spend $17.2 million combined).
- Commentary on tariffs: Tariff expense of about $6 million in the quarter remains a notable uncertainty going forward.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
218.97M
1.43%
46.46%
Gross Profit
65.07M
17.50%
76.92%
Operating Income
23.27M
19.79%
741.46%
Net Income
16.47M
554.09%
196.00%
EPS
0.34
525.00%
194.44%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights from the earnings call, grouped by theme:
- Strategy & Transformation
- Brad Wiemann: We delivered a strong beginning to fiscal 2026, and to our three-year plan. Ending cash balance of $136.9 million, and backlog of $360 million, which sets us up well for future revenue generation. Our selling teams are capturing customer demand and drove strong growth led by live events, high school park and recreation, and international. We were successful in winning three of the three large major league sports projects in Q1, along with several college and university projects.
- Operations & Market Conditions
- Howard Atkins: Our first-quarter orders totaled $239 million, up 35% YoY, marking a third consecutive quarter of YoY order growth in excess of 10%. The backlog increased by $18.7 million in the quarter, providing a revenue tailwind as projects move toward installation later in 2026 and into 2027. HSPR delivered a record quarter, contributing to a higher-margin mix.
- Brad Wiemann: Live events pipeline remains constructive with three large ML sports wins (two MLB, one NHL arena) and ongoing college/university opportunities; we’re expanding in-bowl and out-of-bowl opportunities and leveraging narrow pixel pitch offerings and service subscriptions.
- Financial Health & Capital Allocation
- Howard Atkins: We ended the quarter with about $137 million in cash, repurchased $10.7 million of shares, and had no borrowings on our bank line. Operating cash flow was $26.1 million, reflecting improved inventory management and core earnings. Tariff exposure remains uncertain, but we are actively managing costs and supply chain dynamics.
We delivered a strong beginning to fiscal 2026, and to our three-year plan. Ending cash balance of $136.9 million, and backlog of $360 million, which sets us up well for future revenue generation.
— Brad Wiemann
We had another quarter of strong orders, as Brad mentioned. As $239 million orders in the first quarter were up 35% from a year ago and were our third consecutive quarter of year-over-year order growth in excess of 10%.
— Howard Atkins
Forward Guidance
Outlook and strategic posture for 2026 and beyond:
- Demand environment remains robust for Daktronics’ dynamic video displays and control systems, supported by a large backlog and a trajectory toward higher-margin project mix (e.g., HSPR and higher-margin live events applications). Management highlighted continued execution of a value-based pricing framework and stronger fixed-cost leverage as key margin drivers.
- Tariff uncertainty persists; management intends to “pull levers from our management system toolkit” to mitigate impact and maintain margin discipline.
- Growth and efficiency initiatives under the digital transformation program are ongoing, including SaaS trials, a modernized service software system, AI-assisted troubleshooting, and an ERP upgrade, with expected benefits to service levels, inventory turns, and operating efficiency.
- Long-term targets remain: operating margins of 10-12% on average, ROIC of 17-20%, and a 7-10% CAGR through fiscal 2028; initial phases of transformation are in motion, with ongoing investments in IT and product development to support future growth.
- Investors should monitor: (1) live events backlogs and execution cadence for 2026–2027, (2) tariff developments and potential buffer costs, (3) progress of the IT/ERP upgrade and subscription management, (4) ability to convert backlog into revenue on a timely basis, and (5) health of the international and government segments (BAA-related opportunities).
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DAKT Focus
29.72%
N/A
N/A
N/A
BELFB
38.60%
16.40%
4.74%
13.16%
CMTL
12.50%
-1.12%
-52.10%
-17.60%
CTS
37.00%
12.90%
2.48%
23.32%
DGII
62.00%
12.90%
1.71%
27.49%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Daktronics enters the QQ1 2026 period with a credible turnaround trajectory evidenced by a 35% YoY growth in orders and a 360 million backlog that provides meaningful revenue visibility into 2026–2027. The Q1 results show resilient profitability driven by a favorable mix (higher-margin HSPR and services) and fixed-cost leverage, supported by a robust cash position and disciplined capital allocation (share buybacks, no debt). Management is advancing a comprehensive transformation program (SaaS trials, modernized service software, AI-enabled troubleshooting, and ERP upgrades) designed to lift margins and operating efficiency, underpinning a medium-term target of 10-12% operating margins and ROIC of 17-20% by 2028. The Buy America Act and ongoing international opportunities add optionality to near-term growth, especially in ITS and government/ad applications. Investors should weigh the solid cash generation and backlog-backed visibility against tariff uncertainty and project-cycle risk. Overall, the stock offers a favorable risk-reward for investors with a disciplined long-term horizon and appetite for a technology hardware beneficiary of digital transformation in DOOH and live-event infrastructure.
Key Investment Factors
Growth Potential
Daktronics has meaningful growth potential across four pillars: live events (in-bowl and out-of-bowl signage and control systems), High School Park and Recreation (growing order books and SaaS offerings via Daktronics Sports Marketing and curriculum subscriptions), international expansion (government and advertising demand; 22% YoY order growth in international markets), and new product cycles (narrow pixel pitch, street furniture for DOOH, fuel-price display systems, and next-generation indoor/outdoor displays). The backlog of $360 million provides a solid revenue tailwind into 2026–2027, particularly as large ML and university projects move toward installation.
Profitability Risk
Tariff and policy uncertainty (BAA timing and rates), customer concentration risk in large stadiums and government programs, longer project cycles in Live Events, potential mix volatility between high-margin and longer-lived programs, competition for premium DOOH contracts, and macroeconomic softness affecting ad spend and capex in the sports and entertainment sector. Execution risk of digital transformation and ERP upgrade could modestly pressure near-term margins if costs overrun or benefits lag.
Financial Position
Daktronics carries a strong liquidity position with roughly $136.9 million in cash and no bank borrowings, total debt about $31.1 million, and free cash flow of $21.8 million in QQ1. A backlog of $360 million supports revenue visibility, and a disciplined capital approach is evidenced by $10.7 million in share repurchases in the quarter. The company’s plan to achieve 10-12% operating margins and 17-20% ROIC over time, with 7-10% CAGR to 2028, is supported by improving gross margin (29.7%) and ongoing value-based pricing initiatives, although near-term headwinds from tariffs remain a factor to monitor.
SWOT Analysis
Strengths
Large, growing backlog of $360 million providing revenue visibility
Strong cash position with no bank borrowings and $136.9 million cash
Diversified end-markets across Live Events, HSPR, Commercial DOOH, Transportation, and International
Solid QoQ and YoY order growth in QQ1 2026 (orders $239 million, +35% YoY)
Value-based pricing and cost-leverage improvements improving gross margins
Weaknesses
Reliance on a few large live-event projects, which can introduce revenue timing risk
Tariff exposure and policy uncertainty affecting input costs
Long project cycles in Live Events may delay revenue realization
Limited scale versus larger global display manufacturers, potentially pressuring pricing power
Opportunities
Buy America Act (BAA) implementation and domestic content potential for ITS and DOOH projects
Expansion in indoor/outdoor fascia and narrow pixel pitch products
Growth of SaaS and service subscriptions via Daktronics Curriculum and service platforms
International government and advertising demand; growth in ME and APAC regions