FARO Technologies (FARO) Q1 2025 earnings summary

Executive summary

• Revenue reached $82.9 million, at the upper end of guidance, with non-GAAP EPS of $0.33, the highest Q1 in company history, and gross margin of 57.0%, both above guidance.

• Net income was $0.9 million, reversing a net loss of $7.3 million in Q1 2024, driven by improved gross margins and reduced operating expenses.

• Adjusted EBITDA was $12.5 million (15% margin), up 124% year-over-year.

• Operating cash flow was positive for the sixth straight quarter, with cash, equivalents, and short-term investments totaling $102.6 million at quarter-end.

• Strategic focus on operational excellence, organic growth, and selective investments is driving performance.

Financial highlights

• Total sales declined 1.6% year-over-year to $82.9 million; Americas, EMEA, and APAC contributed $36.0M, $25.1M, and $21.7M, respectively.

• Non-GAAP gross margin expanded to 57.7% (up 590 bps YoY, 25 bps QoQ); GAAP gross margin was 57.0%.

• Non-GAAP operating income was $9.3 million, up from $3 million in Q1 2024; GAAP operating income was $3.8 million.

• Non-GAAP net income was $6.4 million ($0.33/share), up from $1.7 million ($0.09/share) in Q1 2024.

• Free cash flow was $2.2 million; adjusted free cash flow was $3.1 million.

Outlook and guidance

• Q2 2025 revenue guidance is $79–$87 million, with gross margin expected between 56.5%–58.0% (non-GAAP: 57%–58.5%).

• Q2 non-GAAP EPS guidance is $0.20–$0.40; GAAP EPS guidance is ($0.20) to $0.00.

• Q2 non-GAAP operating expenses expected between $38.5–$40.5 million.

• Hardware market assumed to be down 10% year-over-year in Q2, but backlog and new product launches expected to offset declines.

• Positive adjusted free cash flow expected for 2025.