FARO Technologies (FARO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $82.1 million, down 7% year-over-year, with gross margin rising to 54.6% from 37.8% in the prior year, driven by improved product mix and absence of inventory impairment charges.

• Adjusted EBITDA reached $8.4 million (10.3% of sales), surpassing full-year 2023 performance in the first half of 2024.

• Net loss narrowed to $0.5 million in Q2 2024 from $28.2 million in Q2 2023, reflecting improved profitability and lower restructuring costs.

• Non-GAAP EPS was $0.18, above guidance, while operational improvements and cost controls drove results.

• Integration and restructuring plans are largely complete, with cost savings realized in SG&A and R&D expenses.

Financial highlights

• Q2 2024 product sales were $61.3 million (down 9.3% year-over-year); service sales were $20.8 million (up 0.8%), and software revenue was $11.3 million (up 4%).

• Recurring revenue was $17.1 million, representing about 21% of sales.

• Gross margin improved to 54.6% (non-GAAP 55%), up from 37.8% (non-GAAP 38.7%) in Q2 2023.

• Operating expenses dropped to $43.0 million from $58.7 million; non-GAAP operating expenses were $40.0 million, down from $44.1 million.

• Cash and short-term investments at quarter-end were $97.9 million, up from $76.8 million at year-end 2023.

Outlook and guidance

• Q3 2024 revenue expected between $76 million and $84 million.

• Non-GAAP gross margin guidance of 53.5% to 55%, non-GAAP operating expenses between $40 million and $42 million.

• Non-GAAP EPS expected to range from -$0.01 to +$0.19.

• Free cash flow positive expected for the second half of 2024.

• Management expects sufficient working capital and cash flow to fund operations for at least the next 12 months.