FARO Technologies(US:FARO)2023-02-16 03:57Financial Data and Key Metrics Changes - In Q4 2022, total revenue was $103.9 million, up nearly 4% year-on-year, with constant currency revenue at $110.5 million, up approximately 10% year-over-year [19][22] - GAAP gross margin was 49.1% and non-GAAP gross margin was 52.8% for Q4 2022 [23] - Adjusted EBITDA was $11.7 million or 11.3% of sales, while GAAP net loss was $2.2 million or $0.12 per share [11][24] Business Line Data and Key Metrics Changes - Hardware revenue was $70.3 million, up 9% year-on-year; software revenue was $12.9 million, down 5%; and service revenue was $20.6 million, down 6% [9] - Recurring revenue increased by 10% year-on-year to $18.1 million, primarily due to growth in cloud-based software offerings [9] Market Data and Key Metrics Changes - Strong demand was noted in the European markets, with a resurgence in the AEC space and significant public safety deals [30][58] - APAC market performance was stable, with a growing opportunity funnel despite some larger deals being pushed into future quarters [30] Company Strategy and Development Direction - The company is focused on integrating recent acquisitions, including GeoSLAM and SiteScape, to enhance its product offerings and market position [20][78] - The strategy includes consolidating cloud-based environments and facilities to achieve cost savings and improve operational efficiency [12][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the business momentum despite recessionary concerns, highlighting a strong opportunity funnel [27][72] - The company anticipates approximately $12 million in annualized material cost savings as supply chain conditions normalize [10] Other Important Information - The company announced an integration plan to consolidate cloud environments and rationalize facilities, expecting to achieve $10 million in annualized expense savings [12][46] - The company has a cash balance of $37.8 million with no debt, and plans to invest a portion of proceeds from a recent convertible note offering in short-term treasuries [25][45] Q&A Session Summary Question: Comments on geographic results, particularly Europe and APAC - Management noted surprising strength in Europe, particularly in the AEC space, while APAC performance was stable with larger deals pushed to future quarters [30] Question: Details on cost savings program - Management outlined $10 million in annualized expense savings expected throughout 2024, primarily from facility consolidation and integration of acquisitions [31][52] Question: Performance of individual markets in Q4 - AEC markets showed strong performance globally, with public safety achieving the largest booking quarter in history, while 3D metrology performance was stable but not as strong [58] Question: Sales cycle and order cycle trends - Management indicated that the sales cycle remained consistent from Q3 to Q4, with a healthy backlog maintained [72] Question: Impact of recent acquisitions on recurring revenue - Management confirmed that the integration of cloud environments will not affect the trajectory of recurring revenue, which is expected to grow [76] Question: Market and competitors regarding SiteScape acquisition - Management acknowledged that the SiteScape acquisition will require investment but is seen as a technology acquisition rather than a significant market expansion [78][81]