"First quarter revenue remained strong at $85.0 million, growing 11% year-on-year, driven primarily by shipments of our new Focus Premium Laser Scanner," said Michael Burger, President and Chief Executive Officer. "After experiencing delays in customer purchase decisions late in the first quarter due to a softening macroeconomic environment, we are implementing additional annualized cost saving initiatives in the range of $10 million to $20 million, to offset both the expected revenue impact and continued near-term inflationary pressures. Looking ahead, we continue to believe the combination of investments in our latest product innovations and the integration of recent acquisitions positions us well to capture the significant market opportunity inherent in digitalizing the physical world."
First Quarter 2023 Financial Summary
- Total sales of $85.0 million, up 11% compared to the prior year period
- Software sales of $10.3 million or 12% of revenue, approximately flat with the prior year period due to the conversion of license revenue to subscription
- Recurring revenue of $16.7 million or 20% of revenue, down from 22% in the prior year period due to the strength in hardware sales
- Gross margin of 46.7%, compared to 53.5% in the prior year period with the reduction primarily as a result of material cost increases
- Non-GAAP gross margin of 47.6%, compared to 53.8% in the prior year period
- Operating expenses of $58.3 million, compared to $48.2 million in the prior year period which includes approximately $2.7 million in one-time expenses associated with a first quarter global sales conference
- Non-GAAP operating expenses of $48.8 million, compared to $44.2 million in the prior year period
- Net loss of $21.2 million, or ($1.12) per share compared to net loss of $9.7 million, or ($0.53) per share in the prior year period
- Non-GAAP net loss of $7.1 million, or ($0.38) per share compared to non-GAAP net loss of $2.5 million, or ($0.14) per share in the prior year period
- Adjusted EBITDA of ($5.5) million, or 6.5% of total sales compared to an approximate ($0.7) million, or 0.9% of total sales in the prior year period
- Cash and short-term investments of $88.6 million, compared to $37.8 million as of December 31, 2022
* A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided in the financial schedules portion at the end of this press release. An additional explanation of these measures is included below under the heading "Non-GAAP Financial Measures".
Outlook for the Second Quarter 2023
For the second quarter ending June 30, 2023, FARO currently expects:
- Revenue in the range of $79 to $87 million
- Gross margin in the range of 44% to 47%. Non-GAAP gross margin in the range of 45% to 48%.
- Operating expenses in the range of $58.0 to $67.0 million. Non-GAAP operating expenses in the range of $45.0 to $46.5 million
- Net income (loss) per share in the range of ($1.80) to ($1.13). Non-GAAP net income (loss) per share in the range of ($0.47) to ($0.22).
Conference Call
The Company will host a conference call to discuss these results on Wednesday, May 3, 2023, at 5:00 p.m. ET. Interested parties can access the conference call by dialing (800) 267-6316 (U.S.) or +1 (203) 518-9783 (International) and using the passcode FARO. A live webcast will be available in the Investor Relations section of FARO's website at: https://www.faro.com/en/About-Us/Investor-Relations/Financial-Events-and-Presentations
A replay webcast will be available in the Investor Relations section of the company's web site approximately two hours after the conclusion of the call and will remain available for approximately 30 calendar days.
About FARO
For 40 years, FARO has provided industry-leading technology solutions that enable customers to measure their world, and then use that data to make smarter decisions faster. FARO continues to be a pioneer in bridging the digital and physical worlds through data-driven reliable accuracy, precision, and immediacy. For more information, visit www.faro.com.
Non-GAAP Financial Measures
This press release contains information about our financial results that are not presented in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures, including non-GAAP gross margin, non-GAAP operating expenses, non-GAAP net income (loss) and non-GAAP net income (loss) per share, exclude the impact of purchase accounting intangible amortization expense and fair value adjustments, stock-based compensation, restructuring and other charges, and other tax adjustments, and are provided to enhance investors' overall understanding of our historical operations and financial performance.
