Daktronics (NASDAQ:DAKT) reported third-quarter fiscal 2026 results highlighted by double-digit revenue growth, continued strong order activity above $200 million, and a rising backlog as the company converted previously booked projects into shipments despite seasonal headwinds.
Revenue growth and order momentum
Interim President and CEO Brad Wiemann said the company delivered “another quarter of solid results,” with revenue up 21.6% year over year despite a shorter effective work period due to three major holidays and adverse weather conditions. Acting CFO Howard Atkins said revenue totaled $182 million in the quarter, rising more than 20% from the prior-year period, which he attributed largely to “efficient order conversion” by manufacturing teams that worked additional shifts at times to manage higher order flow around the holidays.
Segment commentary: Live Events strength, Transportation record orders
In Live Events, Wiemann said Daktronics won another Major League Baseball project during the quarter, making the company “6 for 6” on large MLB projects in fiscal 2026. He also highlighted large-scale installations underway, including work at five MLB stadiums—citing the Seattle Mariners—as well as the University of Illinois football video scoring system. In response to analyst questions, Wiemann said the Live Events pipeline remains “robust” heading into next year, while acknowledging headwinds in the college and university market tied to NIL-related spending dynamics that he believes will “get worked out.” He also pointed to a competitive dynamic in which a competitor has taken “a little bit of a back seat in the marketplace this last year.”
Transportation posted especially strong booking performance. Wiemann said Transportation orders across intelligent transportation systems and aviation were up a record 130% versus last year. He cited a “very significant project” with one of the top five U.S. airports and new orders from Caltrans.
Within Commercial, Wiemann said the on-premise advertising business remained strong, with customers transitioning to next-generation field-type products supported by a large order from a national customer. Out-of-home was down overall due to purchase delays from a key account, which he said the company expects to recover in the fourth quarter. On “outdoor spectacular,” he said Daktronics booked a large Times Square order and grew its pipeline of projects, while indoor solutions sold through audiovisual integrator channels continued to expand, including narrow pixel pitch chip-on-board offerings.
International results were down year over year following a strong third quarter in fiscal 2025, though Wiemann noted sizable orders from stadium customers in Spain and Australia and said the company is seeing strong uptake in indoor solutions across multiple markets, particularly among government entities through expanding audiovisual integrator channel partners.
High school park and recreation orders rose 13.4% from last year, with Wiemann pointing to continued conversion from traditional scoreboards to video and increased adoption of professional services, including curriculum development and “Dak Classroom” offerings.
Margins, tariffs, and profitability
Gross margin was essentially flat year over year at 24%, Atkins said, reflecting operating leverage on higher revenue, supply-chain and transformation-related efficiencies, and modestly improved mix on new business. Those benefits were offset by a revenue mix weighted toward lower-margin Live Events backlog fulfillment and the impact of tariffs that were not present in the prior-year quarter. Atkins said the company incurred about $6 million of total tariff expense in the quarter.
Gross margin declined sequentially from 27% to 24%. Atkins attributed that primarily to fixed-cost absorption dynamics in cost of goods sold as revenue seasonally declined in the third quarter, describing the pattern as margin rising as revenue grows and compressing as revenue falls due to fixed costs.
Net income after tax was $3 million, or $0.06 per fully diluted share. Management said the quarter included $1.6 million of non-recurring expenses tied to management transition and acquisition-related costs, resulting in adjusted net income of $4.6 million. Operating income was $1.9 million, compared with an operating loss of $3.6 million in the prior-year quarter.
Atkins also referenced a first-time $400,000 expense from absorbing developers acquired from X Display Company (XDC) for one month during the quarter. He said the impact of intellectual property adjustments from the transaction on the balance sheet was “negligible,” with a small gain offset by a write-down of the remaining loan to XDC.
Strategy, investments, and capital allocation
During the quarter, Daktronics announced the acquisition of intellectual property and associated engineering teams from XDC to expand micro LED and micro integrated circuit capabilities. Wiemann said the addition advances the company’s high-resolution, narrow pixel pitch offerings and provides a more cost-effective path to serve small-volume opportunities with medium-sized display solutions.
Wiemann also outlined ongoing initiatives aimed at “sustainably higher profit growth,” including strategic pricing actions, development of software-as-a-service efforts to support recurring subscription revenue models, digitizing business processes, and applying artificial intelligence to improve productivity.
On product development, management highlighted two third-quarter introductions—next-generation indoor video solutions for high school arenas and a next-generation Digital Audio Facade for outdoor audio—along with two additional launches planned for the remainder of fiscal 2026: next-generation LED street furniture and specialized large-digit fuel price system offerings.
Atkins said inventory levels have moderated relative to revenue over several quarters, reflecting working capital initiatives associated with the business transformation efforts. He also said the company repurchased about 1.3 million shares in the first nine months of the fiscal year at a volume-weighted average price of $17.6, leaving about $17 million in remaining repurchase authorization. Daktronics ended the quarter with $144 million in cash, up 13% from the fourth quarter of fiscal 2025, and has no borrowings under its credit line. The company also converted its commercial bank backup credit line from an asset-based facility to a cash-flow facility to reduce cost and increase flexibility.
In Q&A, management said the Mexico facility remains on track, with expectations to be operating in the first quarter of fiscal 2027 and “fully operational certainly by the second quarter.” Management also reiterated it continues to evaluate “tuck-ins and fill-ins” for M&A, emphasizing a return-focused approach and strategic fit, though it did not point to any specific near-term deal.
Leadership transition and outlook items
Ramesh Jayaraman, who officially became CEO and President on Feb. 1, said he has been conducting a “look, listen, learn” tour across customer sites, factories, and repair centers. He credited the team for building a “resilient platform for sustainable and profitable growth” and said the company is entering the final quarter with “very strong momentum,” strong end-market demand, and a backlog tailwind.
Atkins said the combination of elevated backlog entering the fourth quarter and what the company is seeing as a good pipeline sets it up for a “good top and bottom line finish to the year,” with major project conversion expected to contribute to revenue growth in the fourth quarter and into early fiscal 2027.
Management invited investors to an April 9 Investor Day at the Nasdaq MarketSite, where leadership plans to discuss vertical market opportunities, execution initiatives, innovation priorities, and capital allocation and financial frameworks.
About Daktronics (NASDAQ:DAKT)
Daktronics, Inc (NASDAQ: DAKT) is a leading designer and manufacturer of electronic display systems, video boards, scoreboards and related control systems. Founded in 1968 in Brookings, South Dakota by Al Kurtenbach and Duane Sander, the company has built a reputation for delivering custom visual display solutions to a wide range of markets. Its product portfolio includes large-format LED video displays, programmable message centers, digital billboards, and audio-visual solutions tailored to sports venues, transportation authorities, retail environments and live event producers.
The company’s primary business activities encompass the engineering, fabrication and installation of display systems for customers around the world.
