FARO Technologies, Inc. (FARO, Financial) delivered a robust financial performance for the first quarter, even as its revenue dipped slightly to $82.9 million from $84.24 million in the same period last year. This decline was offset by significant internal growth, as the company reported a 6% increase in net orders year-over-year.
The company achieved a GAAP net income of $0.9 million and an adjusted EBITDA of $12.5 million, representing 15.0% of revenue. This exceeded FARO's initial expectations and highlights the positive impact of its strategic growth initiatives. The strong performance was driven by increased demand for the company's refreshed product offerings and the introduction of new solutions, alongside the signing of two significant partnerships.
FARO's recent product launches, including the Leap ST for metrology workflows and Blink for digital reality workflows, are anticipated to bolster the company's ability to capitalize on expanding market opportunities. Looking forward, FARO remains committed to executing its growth strategy, despite ongoing macroeconomic uncertainties, aiming for sustained organic growth in the long term.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 2 analysts, the average target price for Faro Technologies Inc (FARO, Financial) is $38.50 with a high estimate of $40.00 and a low estimate of $37.00. The average target implies an upside of 45.83% from the current price of $26.40. More detailed estimate data can be found on the Faro Technologies Inc (FARO) Forecast page.
Based on the consensus recommendation from 2 brokerage firms, Faro Technologies Inc's (FARO, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Faro Technologies Inc (FARO, Financial) in one year is $22.33, suggesting a downside of 15.42% from the current price of $26.4. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Faro Technologies Inc (FARO) Summary page.
FARO Key Business Developments
Release Date: February 24, 2025
- Revenue: $93.5 million for Q4 2024, down 5% year-over-year.
- Non-GAAP Gross Margin: 57.4% for Q4 2024, up over 600 basis points year-over-year.
- Non-GAAP Operating Expenses: $39.9 million for Q4 2024, below the targeted range.
- Non-GAAP EPS: $0.50 for Q4 2024.
- Adjusted EBITDA: $16.7 million or 17.9% of sales for Q4 2024.
- Operating Cash Flow: $17.3 million for Q4 2024.
- GAAP Net Loss: $986,000 or $0.05 per share for Q4 2024.
- Cash and Short-term Investments: $98.7 million at the end of Q4 2024.
- Annual Non-GAAP Gross Margin: 55.2% for 2024, up 850 basis points year-over-year.
- Annual Non-GAAP Operating Expenses: $160.7 million for 2024, reduced by $15 million year-over-year.
- Annual Non-GAAP EPS: $0.97 for 2024, an improvement of $1.49 year-over-year.
- Annual Cash Flow from Operations: $30.6 million for 2024, up $29.6 million year-over-year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Faro Technologies Inc (FARO, Financial) exceeded all targets for the fourth quarter, with revenue of $93.5 million above the midpoint of their guidance range.
- Non-GAAP gross margin expanded over 600 basis points year over year to 57.4%, reaching the high end of their guidance range.
- The company achieved $0.50 of non-GAAP EPS, marking the seventh consecutive quarter of exceeding expectations.
- FARO generated $17.3 million in operating cash flow, representing the fifth straight quarter of positive cash flow generation.
- The company launched several new products, including the FaroArm Quantum X and the Focus Premium laser scanner, enhancing their product portfolio and market reach.
Negative Points
- Fourth-quarter revenue was down 5% compared to the previous year, with significant declines in the Asia-Pacific region due to continued weakness in China.
- Hardware revenue decreased by 7% year over year, while software and service revenues also saw declines.
- The company faced FX headwinds, which negatively impacted revenue by $2 million and affected gross margins and EPS.
- FARO's GAAP net loss was $986,000 or $0.05 per share for the fourth quarter.
- The macroeconomic environment remains challenging, with ongoing softness in certain markets and regions, leading to cautious market outlooks for the near term.
