FARO Technologies (FARO) Q4 2024 earnings summary

Executive summary

• Q4 revenue reached $93.5 million, at the upper end of guidance, with non-GAAP EPS of $0.50 and positive operating cash flow for both Q4 and FY2024.

• Adjusted EBITDA for Q4 was $16.7 million (17.9%-18% of sales), the highest in over a decade, and FY2024 margin was 11.6%, the first double-digit margin since 2018.

• FY2024 saw a $29.6 million year-over-year increase in operating cash flow, with five consecutive positive quarters.

• 2024 was a record year, with non-GAAP gross margin up 850 basis points year-over-year to 55.2% and double-digit EBITDA margins achieved for the first time since 2018.

• The company is shifting focus from operational excellence to organic growth, with refreshed product lines and new strategic partnerships.

Financial highlights

• Q4 revenue was $93.5 million, down 5% year-over-year; FY2024 sales were $342.4 million, also down 5%.

• Q4 hardware revenue was $62.3 million (down 7%), software $11.6 million (down 5%), service $19.7 million (down 2%).

• Q4 non-GAAP gross margin was 57.4% (up from 51.3% in 2023); non-GAAP operating expense was $39.9 million (down $1.4 million year-over-year).

• Q4 non-GAAP net income was $9.5 million ($0.50/share), up from $5.8 million ($0.31/share) in Q4 2023; Q4 GAAP net loss was $1.0 million ($(0.05)/share).

• Cash, cash equivalents, and short-term investments totaled $98.7 million at year-end, up from $88.9 million at September 30, 2024.

Outlook and guidance

• Q1 2025 revenue expected between $77 million and $85 million, with non-GAAP gross margin of 55%-56.5% and non-GAAP EPS of $0.10-$0.30.

• Q1 2025 GAAP gross margin guidance: 54.5%-56.0%; operating expenses projected at $45.0M-$47.0M (GAAP), $38.5M-$40.5M (non-GAAP).

• Macroeconomic headwinds, tariff uncertainties, and government spending slowdowns are expected to persist.

• Long-term aspirational goals updated: at $400 million revenue, gross margin target is 59%, EBITDA margin 20%, and annual free cash flow over $56 million.