Daktronics Orders Jump 35% in Fiscal Q1

Key Points

• Operating margin improved to 10.6%, landing within the company’s stated long-term target range.

• Orders (non-GAAP) soared 35.4% year over year, reaching $238.5 million and driving backlog up to $360.3 million.

• Revenue slipped 3.1% year over year, but profitability rose sharply with diluted EPS of $0.33 versus a prior-year loss.

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Daktronics (NASDAQ:DAKT), the display technology leader known for its large-scale electronic scoreboards and digital signage, reported its results for Q1 FY2026 on September 10, 2025. Daktronics achieved its third highest quarterly orders and higher profitability, despite facing a slight dip in sales. Operating margin reached 10.6%, while Order momentum and margin expansion marked a strong start to the fiscal year. The period reflected improved operational execution amid ongoing tariff and cost pressures.

Company Overview and Key Success Factors

Daktronics specializes in the design and manufacture of electronic display systems, from giant LED video screens in sports stadiums to digital billboards, transportation signage, and high school scoreboards. Its business model centers on the sale of these displays, supporting software, and follow-on services like maintenance contracts and system upgrades. The company's customer base is wide-ranging, including sports venues, schools, commercial advertisers, government agencies, and international clients.

In recent years, the company has prioritized technological innovation, investing in advanced micro-LED and narrow pixel pitch displays, and new control systems. It has rolled out a digital transformation plan, introducing cloud-connected products and software-as-a-service (SaaS) features for recurring revenue. Effective supply chain management, a diverse order backlog, and a focus on global market expansion, particularly into the Middle East and Australia, are also central to its success. Operational efficiency and the ability to navigate changing costs, such as tariffs, remain ongoing areas of attention.

Quarter Review: Financial and Operational Highlights

Orders climbed to $238.5 million, marking a 35.4% increase from the prior-year period, with gains primarily in Live Events, High School Park and Recreation, and International business units (orders are non-GAAP). This order momentum resulted in a backlog of $360.3 million as of August 2, 2025, up 34.8% from the prior year (backlog is a non-GAAP metric). Strong performance in High School Park and Recreation, which saw its highest-ever order intake, and in Live Events, where three major league stadium projects booked, was notable. International orders also grew, led by contributions from the Middle East and Australia.

Even though overall revenue edged down 3.1% against a very strong period last year, profit margins rose. Gross profit margin reached 29.7%, up from 26.4% for Q1 FY2025, driven by manufacturing efficiencies, a shift to higher-margin products, and continued value-based pricing strategies. Operating margin moved into double digits, and Net income swung from a loss the year before to $16.5 million. The company’s adjusted net income (non-GAAP) was $16,470 compared to $16,644 a year ago, but operational improvement was clear.

The quarter brought the launch of improved Fascia Ribbon Displays for stadiums and new Narrow Pixel Pitch products for international venues. These are video display families, designed for indoor and outdoor environments where image quality and flexibility are critical. The company also launched its Service software system, which streamlines customer support and allows more agile updates. SaaS and bundled service programs are a continuing area of investment, with management emphasizing recurring revenue streams as a strategic priority.

Segment results varied. Commercial segment revenue surged 35.0% year over year, while High School Park and Recreation revenue rose 23.6%. International net sales increased 33.6% compared to the prior year. However, Live Events and Transportation segments saw lower sales, reflecting the timing of project completions and customer deliveries this period versus the prior year. Operating expenses increased 13%, primarily due to investments to support information technology, product efficiency, and revenue growth initiatives, but efficiency gains in manufacturing offset these higher costs at the margin level.

Outlook and What to Watch

Management reaffirmed its three-year financial objectives: 7–10% annual sales growth, operating margins of 10–12%, and return on invested capital (ROIC) of 17–20% by FY2028. The company’s leadership noted that profitability and order growth leave it well positioned to meet these goals. Ongoing tariff uncertainty remains a possible cost headwind, but management highlighted measures such as contract protections and flexible production capabilities as mitigation strategies.

The company’s balance sheet remains solid, with $136.9 million in cash and minimal long-term debt. Share buybacks continued, with $10.7 million spent to repurchase 0.6 million shares.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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