Financial Data and Key Metrics Changes - Revenue for the fourth quarter was $93.5 million, exceeding the midpoint of guidance and down 5% year-over-year [7][23] - Non-GAAP gross margin was 57.4%, an increase of over 600 basis points year-over-year [7][24] - Non-GAAP operating expenses were $39.9 million, below the targeted range and down $1.4 million from the previous year [8][24] - Non-GAAP EPS was $0.5, representing a $0.25 improvement year-over-year [8][26] - Adjusted EBITDA was $16.8 million, approximately 18% of sales, compared to $11.9 million in the same quarter last year [25] Business Line Data and Key Metrics Changes - Hardware revenue was $62.3 million, down 7% year-over-year [23] - Software revenue was $11.6 million, down 5% [23] - Service revenue decreased by 2% to $19.7 million [23] - Recurring revenue was $17.1 million, representing 18% of sales, and declined by 2% year-over-year [23] Market Data and Key Metrics Changes - The Americas and European regions saw a decline of 5% and 52% respectively, while Asia Pacific experienced a decline of over 11% primarily due to weakness in China [23] - Stable demand was noted in sectors like 3D metrology, while challenges persisted in commercial construction and specific regions [10] Company Strategy and Development Direction - The company is focused on a multi-year strategy categorized into three phases: operational excellence, organic growth initiatives, and strategic investments [11][12] - The first phase has been successful in improving cash flow generation and gross margins, while the second phase will focus on organic growth initiatives [12][13] - New product launches and strategic partnerships are key components of the growth strategy, including the introduction of the FARO LEAP ST handheld scanner and partnerships with Topcon [17][20] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the market outlook beyond the next quarter, citing ongoing economic challenges and FX headwinds [10][28] - The company anticipates continued headwinds in Q1 2025, with revenue guidance between $77 million and $85 million [28] - Despite challenges, management remains optimistic about the potential of growth initiatives to offset market softness [28][22] Other Important Information - The company achieved a record year in 2024, with significant improvements in gross margin and cash flow [10][27] - The updated long-term aspirational goals include a gross margin of 59% and an EBITDA margin of 20% [27] Q&A Session Summary Question: Differences in the OEM distribution agreement with Topcon compared to previous agreements - Management highlighted a comprehensive growth plan with Topcon, expecting significant contributions to revenue [31][32] Question: Timeline for the full ramp of the Topcon agreement - Management indicated a cautious approach, focusing on delivering growth for both companies [34] Question: Impact of the digital metrology agreement - The agreement is expected to enhance global reach and customer base, with initial focus on one metrology product [35][36] Question: Market conditions and growth initiatives - Management noted that Q1 conditions are similar to Q4, with expectations for growth initiatives to help outpace market trends [43][44] Question: Competitive landscape and tariff impacts - Management discussed the potential for tariff impacts but emphasized the ability to adapt production strategies [49][50] Question: Customer caution regarding tariff impacts - Management acknowledged that uncertainty leads to cautious spending among customers, particularly in certain regions [56][57] Question: Pricing strategy and competitor actions - Management confirmed recent price increases were well received, with no significant pushback noted from customers [61][62]