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FARO Announces Third Quarter Financial Results

FARO has announced its financial results for the third quarter 2022.

“In the second quarter, demand across our served markets remained healthy with noticeable increases in backlog driven largely by demand for both our Quantum Max scan arm and our newly released Focus Premium laser scanner. However, second quarter results were impacted by continued strengthening of the U.S. dollar, which is up approximately 10% against major currencies from the start of the year. Roughly 60% of our revenue in the quarter was transacted outside the United States and impacted by the changes in the U.S. dollar exchange rate. For comparison purposes on a constant-currency basis, our second quarter revenue would have been $83.9 million, representing a 3% year-on-year increase and up over 7% sequentially” stated Faro CEO Michael Berger

Nevertheless, customer feedback on our Quantum Max and Focus Premium products remained strong, with Quantum Max now qualified by a large portion of our historical customer base. Focus Premium’s recent launch in April is following a similar trajectory of the Quantum Max. We believe the improved speed and ease of use of the Focus Premium scanner coupled with Stream, our new mobile scanning application, are key differentiating features that compare favorably against our competitors’ products. These two refreshed product lines represent 75% of our historical hardware revenue.” continued Berger in the investor conference call. “In the second quarter, shipments of our scan arm and our laser tracker product lines were sourced from Sanmina’s Thailand facility. We continue to be pleased with Sanmina’s quality levels as well as their ability to meet required volumes. At the end of the second quarter and consistent with our plans, we completed the move of our laser scanner product line to Sanmina. As a result, our manufacturing outsource initiative is now largely complete.”

A summary of the reported financial results are as follows:

➤ Total sales of $85.3 million, up 8% compared to the prior year period

➤ Total sales on a Non-GAAP constant currency basis of $91.5 million, up 14% compared to the prior year period

➤ Software sales, of $10.6 million, 12% of revenue, down from 14% in the prior year period due to the relative strength of our hardware offerings

➤ Recurring revenue of $16.6 million or 19% of revenue on an actual currency basis, was up 2% year on year

➤ Gross margin of 50.7%, compared to 53.5% in the prior year period with the reduction primarily a result of the strengthening US dollar to foreign currency exchange rates

➤ Operating expenses of $50.4 million, compared to $47.5 million in the prior year period

➤ Net loss of $6.3 million compared to $3.9 million in the prior year period

➤ Cash and short-term investments of $48.5 million, compared to $102.0 million as of June 30, 2022

“We continue to believe there is a large and growing untapped market opportunity for FARO’s technology that leverages our high-accuracy laser scanning expertise, along with easy-to-use photo-based solutions, coupled ultimately to our mobile scanning solution. With the launch of FARO Sphere, we are bringing these capabilities together to provide a one-stop experience across FARO’s application software, workflow insights and customer support tools. The market potential for digitizing the physical world is enormous, and we are excited that our technology and expertise positions us well both now and over the long term. We continue to execute on the areas we can control and are closely monitoring both the demand environment and our own operation given the loud and consistent rhetoric related to recessionary and supply chain risks” continued Berger.

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