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/geographic 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.

• Non-GAAP EPS was $0.18, above guidance, marking the fifth consecutive quarter of exceeding expectations.

• Net loss narrowed to $0.5 million ($0.03 per share) from $28.2 million ($1.49 per share) a year ago, reflecting improved profitability and lower restructuring costs.

• Positive operating cash flow for the third consecutive quarter, a first since 2019, with cash and equivalents totaling $97.9 million at quarter end.

Financial highlights

• Q2 2024 revenue was $82.1 million, with product sales at $61.3 million (down 9.3% year-over-year) and service sales at $20.8 million (up 0.8%).

• Gross margin improved to 54.6% (non-GAAP 55%), the highest since 2021.

• Non-GAAP operating expenses were $40 million, down 9% year-over-year and 2% sequentially.

• Non-GAAP operating income was $5.1 million, compared to a loss of $9.9 million in Q2 2023.

• Cash and short-term investments ended at $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 outlook for the second half of 2024; management expects sufficient working capital and cash flow to fund operations for at least the next 12 months.