Daktronics, Inc. (DAKT) had itself a day Wednesday, with shares soaring after the company delivered a fiscal second-quarter beat that showed the kind of momentum investors love to see: growing sales, expanding margins, and a backlog that's building nicely.
For the quarter ended November 1, 2025, Daktronics reported adjusted earnings of 35 cents per share, sailing past the 27-cent consensus estimate. Revenue came in at $229.3 million, well ahead of the $214.1 million analysts expected. That's double-digit growth doing exactly what it's supposed to do.
The profitability story looks even better. Operating income jumped to $21.6 million from $15.8 million a year earlier, pushing the operating margin up to 9.4% from 7.6%. That's meaningful improvement. GAAP diluted EPS was 35 cents, up from 22 cents in the prior year. Net income came in at $17.5 million, though that compared to $21.4 million a year ago due to some tax timing differences.
Orders Keep Coming
Here's where things get interesting for anyone thinking about the future. New orders in the quarter totaled $199.1 million, up from $177.6 million last year. More importantly, backlog grew to $320.6 million from $236 million. That's a substantial cushion heading into the back half of the fiscal year.
Interim President and CEO Brad Wiemann highlighted that this marked the company's third straight quarter of top-line growth and second consecutive quarter breaking the $20 million mark in operating income. Gross margin ticked up slightly to 27.0% from 26.8%, benefiting from order growth, value-based pricing, cost cuts, and operating leverage, though tariffs did take a bite.
Segment Breakdown
The growth wasn't uniform across all business lines, but the winners won big. Commercial sales jumped 16.8% to $50.8 million, and Live Events climbed 5.5% to $81.5 million. International was the star, with sales rocketing up 64.2% to $29.8 million. On the flip side, High School Park and Recreation dipped 4.4% to $46 million, and Transportation slipped 0.9% to $21.3 million.
Orders told a similar story. Live Events orders surged 26.5% to $89.2 million, Transportation orders rose 15.2% to $14.1 million, and International orders jumped 23.6% to $17.9 million. Commercial orders fell 5.1% to $42.3 million, and High School Park and Recreation orders edged down 0.4% to $35.7 million.
Cash Position and Tariff Strategy
For the first half of fiscal 2026, the company generated operating cash flow of $42.6 million and free cash flow of $36.1 million. The balance sheet looks solid, with $149.6 million in cash, restricted cash, and marketable securities as of November 1, 2025. Total debt stood at just $11.3 million, and the company had $41.7 million available under its credit facility.
On the tariff front, Daktronics says it's staying nimble with built-in contract protections and a flexible supply chain. The company is also opening a facility in Mexico expected to be operational by the end of fiscal 2026.
Management reaffirmed its three-year targets: 7% to 10% sales growth, 10% to 12% operating margin, and 17% to 20% return on invested capital. Those are ambitious but seem more achievable after this quarter.
New Leadership Coming
In a separate announcement, Daktronics named Ramesh Jayaraman as its new president and CEO, effective February 1, 2026. Wiemann will stay on as interim president and CEO through the fiscal third quarter ending January 31, 2026.
DAKT Price Action: Daktronics shares jumped 16.14% to $20.87 at the time of publication Wednesday.