- **Record Q1 performance**: $82.9M revenue, 57.7% gross margin, $0.33 EPS beat all prior Q1 records.
- **New product success**: Leap ST and Blink generate $1M+ pre-orders, expanding $800M+ addressable market.
- **Tariff resilience**: 1% price increase, US manufacturing localization, and 33% non-hardware revenue mitigate 36% Thailand tariffs.
- **Q2 outlook**: Flat YoY revenue ($79-87M) with 57-58.5% gross margin, $0.20-$0.40 EPS range.

**【CEO Summary Section】**
- Q1 2025 revenue of $82.9 million exceeded guidance, with non-GAAP EPS of $0.33, the highest Q1 in company history.
- Non-GAAP gross margin improved to 57.7% (up 590bps YoY), driven by operational excellence and product refreshes.
- Phase two growth initiatives: 6% YoY net orders growth, despite macro challenges; new products (Leap ST, Blink) generated $1M+ pre-orders.
- Tariff mitigation: 1% price increase implemented, localization plans for US manufacturing to offset 36% Thailand tariffs.
- Q2 outlook: Revenue $79-87M (flat YoY midpoint), with 57-58.5% non-GAAP gross margin.

**【CFO Financial Commentary】**
- GAAP net income $0.05M vs. $0.09M YoY; non-GAAP net income $6.4M ($0.33 EPS) vs. $1.7M ($0.09 EPS) YoY.
- Operating cash flow positive for 6th straight quarter; cash balance $102.6M.
- Q2 guidance: Non-GAAP EPS $0.20-$0.40, driven by price increases, FX tailwinds, and new product contributions.

**【Q&A Highlights】**
- Hardware market expected down 10% YoY in Q2, but early April demand flat YoY.
- Leap and Blink launches on track to contribute $800M+ to addressable market by 2027.
- Tariff strategy: Price increases, supply chain localization, and service-based revenue (33% non-hardware) mitigating risks.
- Aerospace/defense and general manufacturing end-markets showing relative strength.
- Backlog built in Q1 provides buffer against macro uncertainty.

FARO Technologies, Inc. (FARO) Q1 2025 Earnings Call Transcript

- **Q4 Strong Execution**: $93.5M revenue, 57.4% non-GAAP gross margin, $0.50 EPS beat, and $17.3M operating cash flow.
- **Strategic Growth**: Launch of Leap ST (35-40% of $800M market) and Topcon partnership (200+ new channel partners) set to drive 2025 growth.
- **Margin Expansion**: 850 bps annual gross margin improvement to 55.2%, with updated 2025 aspirational goals of 59% gross margin and 20% EBITDA margin.
- **Risks**: FX headwinds, softness in Europe/Asia, and cautious Q1 2025 guidance ($77-85M revenue).

**【CEO Summary Section】**
- **Q4 Revenue Exceeds Guidance**: $93.5 million, 5% YoY decline, driven by FX headwinds. Non-GAAP EPS of $0.50 beat high end of guidance.
- **Gross Margin Expansion**: Non-GAAP gross margin improved 600 bps YoY to 57.4%, with 850 bps annual expansion to 55.2%.
- **Strategic Initiatives**: 
  - **Product Launches**: Leap ST handheld scanner (35-40% of $800M addressable market), Orbis mobile scanner, CAM2 software updates.
  - **Partnerships**: Topcon collaboration (200+ new channel partners) and OEM agreement (1,000+ sellers).
  - **Market Outlook**: Cautious on 2025 due to softness in Europe and Asia, but optimistic on long-term growth from Phase 2 initiatives.

**【CFO Financial Commentary】**
- **Q4 Financials**: GAAP net loss of $0.05, Non-GAAP net income $9.5 million. Adjusted EBITDA $16.8 million (18% of sales), up 42% YoY.
- **Annual Performance**: 850 bps gross margin improvement, $15M reduction in operating expenses, $29.6M cash flow from ops.
- **FX Impact**: If Q3 rates held, Q4 revenue would have been $2M higher, with 50bps margin and $0.06 EPS benefit.
- **Q1 2025 Guidance**: Revenue $77-85M, Non-GAAP EPS $0.10-0.30, with FX-adjusted midpoint up $1.7M.

**【Q&A Key Takeaways】**
- **Partnership Momentum**: Topcon deal expected to add $8M+ annually at full ramp, with cautious ramp-up in 2025.
- **Tariff Strategy**: Manufacturing in Thailand reduces risk; potential price adjustments to offset tariffs.
- **Pricing Execution**: January 2025 price increases accepted with minimal pushback, enabling margin protection.
- **Product Feedback**: Leap ST pipeline ahead of expectations, Orbis adoption in public safety and construction.


FARO Technologies, Inc. (FARO) Q4 2024 Earnings Call Transcript

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