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Faro Technologies (FARO)
:FARO
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Faro Technologies
(NASDAQ:FARO)49Neutral
Positive Factors
Earnings
FARO closed out 2025 on a solid note, with a better Q4 top-line performance and stronger than expected margins, resulting in a healthy EPS beat.
Growth Strategy
FARO is taking important steps to drive growth, including securing two new OEM/distribution agreements and new product introductions.
Negative Factors
Financial Targets
FARO increased its long-term EBITDA margin target on revenues of $400MM to 20%, up 500 bps from the 15% target communicated at the March 2024 investor event.
Faro Technologies (FARO) vs. S&P 500 (SPY)
Market Cap
$564.70M
Dividend YieldN/A
Average Volume (3M)261.64K
Price to Earnings (P/E)―
Beta (1Y)2.72
Revenue Growth-4.57%
EPS Growth84.12%
CountryUS
Employees1,243
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)-0.47
Shares Outstanding18,981,676
10 Day Avg. Volume364,331
30 Day Avg. Volume261,639
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.65
Price to Cash Flow (P/CF)8.20
P/FCF Ratio8.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.50Price Target Upside31.49% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Faro Technologies Business Overview & Revenue Model
Company DescriptionFaro Technologies, Inc. (FARO) is a leading global provider of 3D measurement, imaging, and realization technologies. The company operates primarily in the fields of manufacturing, construction, and public safety, offering an array of innovative products such as laser scanners, coordinate measuring machines, and 3D imaging tools. FARO's solutions are widely utilized across various industries for applications like quality assurance, inspection, and reverse engineering, enabling users to capture, analyze, and realize complex 3D data.
How the Company Makes MoneyFaro Technologies generates revenue through the sale of its advanced 3D measurement and imaging products, as well as through accompanying software solutions that enhance the functionality of its hardware offerings. The company also earns income by providing services such as training, maintenance, and support to its clients. Key revenue streams include direct sales to end-users in industries like aerospace, automotive, and architecture, as well as through partnerships with distributors and resellers. FARO's revenue is further supported by long-term service contracts and software licensing agreements that ensure recurring income. Additionally, the company benefits from strategic collaborations with technology and industry leaders, which help expand its market reach and drive sales growth.
Faro Technologies Financial Statement Overview
Summary
Faro Technologies faces challenges with declining revenues and persistent net losses, impacting profitability metrics negatively. Despite these hurdles, the company has managed to stabilize its cash position and improve free cash flow, which is a positive sign for future operations. Continued focus on cost control and revenue growth is essential to improve financial health.Income Statement
Faro Technologies has shown a declining revenue trend from 2019 to 2024, with a notable revenue drop from 2023 to 2024. The company has struggled to maintain consistent profitability, indicated by negative net incomes in recent years. Despite this, the gross profit margin improved in 2024, suggesting cost control measures may be gaining traction. However, EBIT and EBITDA margins remain weak, highlighting ongoing operational challenges.45
Neutral
Balance Sheet
The company's debt-to-equity ratio remains moderate, but the declining equity ratio suggests a weakening asset base relative to liabilities. Return on Equity (ROE) is negative due to consecutive net losses, which reflects poorly on the company's ability to generate returns for shareholders. Nonetheless, the company's cash reserves have been relatively stable, providing some financial cushion.50
Neutral
Cash Flow
Faro Technologies has shown improvement in cash flow management, with positive operating cash flow in 2024 compared to previous years. Free cash flow turned positive in 2024, indicating better cash generation after capital expenditures. The operating cash flow to net income ratio is strong, signaling effective cash conversion from operations.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 342.43M | 358.83M | 345.76M | 337.81M | 303.77M | Gross Profit |
| 187.15M | 165.00M | 175.76M | 183.93M | 159.85M | EBIT |
| 3.33M | -49.54M | -20.31M | -1.14M | -14.88M | EBITDA |
| 3.33M | -35.23M | -7.55M | 5.18M | -16.23M | Net Income Common Stockholders |
| -9.07M | -56.58M | -26.76M | -39.96M | 629.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 98.70M | 96.28M | 37.81M | 121.99M | 185.63M | Total Assets |
| 483.00M | 504.69M | 473.35M | 479.74M | 525.59M | Total Debt |
| 88.80M | 89.03M | 20.36M | 24.39M | 27.97M | Net Debt |
| 94.00K | 12.24M | -17.45M | -97.60M | -157.67M | Total Liabilities |
| 233.40M | 236.09M | 162.30M | 153.28M | 165.29M | Stockholders Equity |
| 249.61M | 268.61M | 311.05M | 326.46M | 360.30M |
| Cash Flow | Free Cash Flow | |||
| 24.79M | -12.92M | -41.79M | -25.42M | 15.32M | Operating Cash Flow |
| 30.63M | 1.07M | -24.86M | -13.48M | 21.39M | Investing Cash Flow |
| -3.19M | -33.49M | -49.90M | -45.74M | 13.91M | Financing Cash Flow |
| -12.85M | 71.28M | -997.00K | 1.58M | 11.06M |
Faro Technologies Technical Analysis
Positive
29.28
Price Trends
29.13
Positive
26.26
Positive
21.71
Positive
Market Momentum
0.30
Positive
47.34
Neutral
44.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FARO, the sentiment is Positive. The current price of 29.28 is below the 20-day moving average (MA) of 29.73, above the 50-day MA of 29.13, and above the 200-day MA of 21.71, indicating a neutral trend. The MACD of 0.30 indicates Positive momentum. The RSI at 47.34 is Neutral, neither overbought nor oversold. The STOCH value of 44.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FARO.
Faro Technologies Risk Analysis
Faro Technologies disclosed 42 risk factors in its most recent earnings report. Faro Technologies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Faro Technologies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $16.63B | 11.32 | 29.37% | ― | -3.04% | 388.42% | |
66 Neutral | $302.42M | 20.53 | 5.60% | ― | 6.71% | 243.36% | |
66 Neutral | $28.50B | 49.76 | 10.03% | ― | 12.11% | 14.35% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
57 Neutral | $39.08B | ― | -628.33% | ― | 28.68% | 22.57% | |
49 Neutral | $564.70M | ― | -3.50% | ― | -4.57% | 84.12% | |
46 Neutral | $686.09M | ― | -14.34% | ― | -8.26% | 17.82% |
* Technology Sector Average
Performance Comparison
FARO
Faro Technologies
29.28
8.41
40.30%
ANSS
Ansys
325.61
-7.96
-2.39%
SSYS
Stratasys
9.83
-2.75
-21.86%
TRMB
Trimble
69.06
6.22
9.90%
MTLS
Materialise
5.01
-0.21
-4.02%
RBLX
Roblox
57.17
15.13
35.99%
Faro Technologies Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: 8.16% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant achievements in financial performance, product launches, and strategic partnerships. However, these positives were offset by declines in revenue and geographical challenges, particularly in Asia. Overall, the sentiment is cautious optimism, with a strong belief in growth potential despite current market headwinds.Highlights
Exceeded Financial Targets
Revenue was $93.5 million, above the midpoint of the guidance range. Non-GAAP gross margin expanded over 600 basis points year over year to 57.4%, and non-GAAP operating expenses were below the targeted range.
Record-High EBITDA and Cash Flow
Adjusted EBITDA was $16.7 million or 17.9% of sales, the highest single quarter in over a decade. Operating cash flow was $17.3 million, marking the fifth straight quarter of cash flow generation.
Successful Product Launches
Launched new products including FARO Arm Quantum X, Focus Premium Laser Scanner, and ORBIS Premium Mobile Scanner. Additionally, the FARO LEAP ST handheld scanner was introduced, marking entry into a new market segment.
Significant Partnerships
Signed multiyear partnership agreements with Topcon and a leading metrology company, expected to add over 200 new channel partners and 1,000 sellers of FARO technologies, tripling the sales force.
Improved Long-term Financial Goals
Updated long-term goals with higher gross margin targets and increased EBITDA and free cash flow aspirations due to operational improvements.
Lowlights
Revenue Decline
Fourth quarter revenue of $93.5 million was down 5% year over year. Hardware revenue decreased by 7%, software revenue by 5%, and service revenue by 2%.
Geographical Weakness
Significant revenue decline in Asia Pacific by over 11% due to continued weakness in China.
FX Headwinds
Adverse impact of a stronger U.S. Dollar, reducing revenue by $2 million and negatively affecting gross margins and EPS.
Cautious Market Outlook
Continued challenges in commercial construction, especially in China and Germany, with a cautious outlook due to macroeconomic uncertainties.
Company Guidance
In the fourth quarter of 2024, FARO Technologies, Inc. reported revenue of $93.5 million, surpassing the midpoint of their guidance range, with a non-GAAP gross margin of 57.4%, expanding by over 600 basis points year over year. Non-GAAP operating expenses were $39.9 million, below the targeted range of $40 million to $43 million per quarter. The company achieved $0.50 in non-GAAP EPS, marking the seventh consecutive quarter of beating expectations, and recorded an adjusted EBITDA of $16.7 million, or 17.9% of sales, the highest in over a decade. FARO's operating cash flow was $17.3 million, representing the fifth consecutive quarter of positive cash flow. Despite facing FX headwinds, which affected revenue by approximately $2 million, the company maintained its strong performance. For the full year, non-GAAP gross margins grew by 850 basis points to 55.2%, and FARO achieved double-digit EBITDA margins for the first time since 2018. Looking forward, the company plans to drive organic growth through refreshing core solutions, expanding addressable opportunities, and forming strategic partnerships, with an expectation of overcoming broader market challenges in 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.