FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP

(UNAUDITED)

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in thousands, except per share data)

2023

2022

2023

2022

Gross profit, as reported

$        33,323

$        40,437

$        73,039

$        81,462

Stock-based compensation ⁽¹⁾

419

284

691

483

Inventory reserve charge ⁽³⁾

8,132

—

8,132

—

Restructuring and other costs ⁽²⁾

435

—

870

—

Non-GAAP adjustments to gross profit

8,986

284

9,693

483

Non-GAAP gross profit

$        42,309

$        40,721

$        82,732

$        81,945

Gross margin, as reported

37.8 %

50.6 %

42.2 %

52.0 %

Non-GAAP gross margin

48.0 %

51.0 %

47.8 %

52.3 %

Selling, general and administrative, as reported

$        38,561

$        36,018

$        79,937

$        71,508

Stock-based compensation ⁽¹⁾

(3,554)

(2,512)

(6,122)

(4,733)

Purchase accounting intangible amortization

(688)

(181)

(1,361)

(382)

Non-GAAP selling, general and administrative

$        34,319

$        33,325

$        72,454

$        66,393

Research and development, as reported

$        11,662

$        12,042

$        24,380

$        24,170

Stock-based compensation ⁽¹⁾

(977)

(695)

(1,771)

(1,142)

Purchase accounting intangible amortization

(541)

(490)

(1,040)

(1,035)

Non-GAAP research and development

$        10,144

$        10,857

$        21,569

$        21,993

Operating expenses, as reported

$        58,673

$        49,393

$      117,005

$        97,610

Stock-based compensation ⁽¹⁾

(4,531)

(3,207)

(7,893)

(5,875)

Restructuring and other costs ⁽²⁾

(8,809)

(2,317)

(13,842)

(2,916)

Purchase accounting intangible amortization

(1,229)

(671)

(2,401)

(1,417)

Non-GAAP adjustments to operating expenses

(14,569)

(6,195)

(24,136)

(10,208)

Non-GAAP operating expenses

$        44,104

$        43,198

$        92,869

$        87,402

Loss from operations, as reported

$      (25,350)

$        (8,956)

$      (43,966)

$      (16,148)

Non-GAAP adjustments to gross profit

8,986

284

9,693

483

Non-GAAP adjustments to operating expenses

14,569

6,195

24,136

10,208

Non-GAAP loss from operations

$        (1,795)

$        (2,477)

$      (10,137)

$        (5,457)

Net loss, as reported

$      (28,245)

$        (8,574)

$      (49,409)

$      (18,261)

Non-GAAP adjustments to gross profit

8,986

284

9,693

483

Non-GAAP adjustments to operating expenses

14,569

6,195

24,136

10,208

Income tax effect of non-GAAP adjustments

(5,888)

(1,775)

(8,457)

(2,742)

Other tax adjustments ⁽⁴⁾

7,959

3,246

14,342

7,183

Non-GAAP net loss

$        (2,619)

$            (624)

$        (9,695)

$        (3,129)

Net loss per share - Diluted, as reported

$           (1.49)

$           (0.47)

$           (2.62)

$           (1.00)

Stock-based compensation ⁽¹⁾

0.26

0.19

0.46

0.35

Restructuring and other costs ⁽²⁾

0.49

0.13

0.78

0.16

Inventory reserve charge ⁽³⁾

0.43

—

0.43

—

Purchase accounting intangible amortization

0.06

0.04

0.13

0.08

Income tax effect of non-GAAP adjustments

(0.31)

(0.10)

(0.45)

(0.15)

Other tax adjustments ⁽⁴⁾

0.42

0.18

0.76

0.39

Non-GAAP net loss per share - Diluted

$           (0.14)

$           (0.03)

$           (0.51)

$           (0.17)