faro-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-23081

FARO TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)


Florida									59-3157093
(State or other Jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)

125 Technology Park,
Lake Mary									32746
Florida
(Address of Principal Executive Offices)									(Zip Code)

(407) 333-9911

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001	FARO	Nasdaq Global Select Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No x

There were 19,226,240 shares of the registrant’s common stock outstanding as of April 21, 2025.


		PAGE
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

a)	Condensed Consolidated Balance Sheets as of March 31, 2025 (Unaudited) and December 31, 2024	3

b)	Condensed Consolidated Statements of Operations (Unaudited) For the Three Months Ended March 31, 2025 and March 31, 2024	4

c)	Condensed Consolidated Statements of Comprehensive Loss (Unaudited) For the Three Months Ended March 31, 2025 and March 31, 2024	5

d)	Condensed Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended March 31, 2025 and March 31, 2024	6

e)	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) For the Three Months Ended March 31, 2025 and March 31, 2024	7

f)	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

SIGNATURES		33


(in thousands, except share and per share data)	March 31, 2025 (unaudited)		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	92,445	$	88,703
Short-term investments	10,189		9,999
Accounts receivable, net	85,669		87,022
Inventories, net	33,272		32,121
Prepaid expenses and other current assets	33,610		30,326
Total current assets	255,185		248,171
Non-current assets:
Property, plant and equipment, net	18,777		18,767
Operating lease right-of-use assets	19,196		15,880
Goodwill	108,664		106,555
Intangible assets, net	43,459		44,133
Service and sales demonstration inventory, net	23,265		22,760
Deferred income tax assets, net	23,090		23,005
Other long-term assets	3,393		3,734
Total assets	$	495,029	$	483,005
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	26,346	$	27,336
Accrued liabilities	25,121		27,735
Income taxes payable	7,937		6,736
Current portion of unearned service revenues	41,763		41,590
Customer deposits	4,633		4,989
Lease liabilities	4,784		4,474
Total current liabilities	110,584		112,860
Loan - 5.50% Convertible Senior Notes	70,378		70,267
Unearned service revenues - less current portion	19,962		19,886
Lease liabilities - less current portion	16,902		14,056
Deferred income tax liabilities	15,478		14,809
Income taxes payable - less current portion	1,530		1,485
Other long-term liabilities	28		32
Total liabilities	234,862		233,395
Commitments and contingencies - See Note 13
Shareholders’ equity:
Common stock - par value $0.001, 50,000,000 shares authorized; 21,187,604 and 20,916,723 issued, respectively; 19,225,837 and 18,954,956 outstanding, respectively	20		20
Additional paid-in capital	361,891		358,133
Retained earnings	(17,949)		(18,855)
Accumulated other comprehensive loss	(43,126)		(49,019)
Common stock in treasury, at cost - 1,961,767 and 1,961,767 shares held, respectively	(40,669)		(40,669)
Total shareholders’ equity	260,167		249,610
Total liabilities and shareholders’ equity	$	495,029	$	483,005


	Three Months Ended March 31,
(in thousands, except share and per share data)	2025		2024
Sales
Product	$	62,975	$	63,536
Service	19,888		20,708
Total sales	82,863		84,244
Cost of sales
Product	26,153		30,452
Service	9,473		10,485
Total cost of sales	35,626		40,937
Gross profit	47,237		43,307
Operating expenses
Selling, general and administrative	33,818		39,593
Research and development	9,485		9,024
Restructuring costs	120		—
Total operating expenses	43,423		48,617
Income (loss) from operations	3,814		(5,310)
Other (income) expense
Interest expense, net	888		831
Other (income) expense, net	467		25
Income (loss) before income tax	2,459		(6,166)
Income tax expense	1,553		1,101
Net income (loss)	$	906	$	(7,267)
Net income (loss) per share - Basic	$	0.05	$	(0.38)
Net income (loss) per share - Diluted	$	0.05	$	(0.38)
Weighted average shares - Basic	19,052,385		19,046,855
Weighted average shares - Diluted	19,732,364		19,046,855


	Three Months Ended March 31,
(in thousands)	2025		2024
Net income (loss)	$	906	$	(7,267)
Currency translation adjustments, net of income taxes	5,893		(3,898)

Comprehensive income (loss)	$	6,799	$	(11,165)


				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Common Stock in Treasury
	Common Stock
(in thousands, except share data)	Shares	Amounts										Total
BALANCE JANUARY 1, 2025	18,954,956	$	20	$	358,133	$	(18,855)	$	(49,019)	$	(40,669)	$	249,610
Net income	—	—		—		906		—		—		906
Currency translation adjustment	—	—		—		—		5,893		—		5,893
Stock-based compensation	—	—		3,758		—		—		—		3,758
Common stock issued, net of shares withheld for employee taxes	270,881	—		—		—		—		—		—
BALANCE MARCH 31, 2025	19,225,837	$	20	$	361,891	$	(17,949)	$	(43,126)	$	(40,669)	$	260,167


	December 31, 2024		December 31, 2023
Deferred revenue recognized	$	13,820	$	12,145


	March 31, 2025		March 31, 2024
Revenue recognized from invoicing activity	$	1,045	$	1,721


	As of March 31, 2025		As of December 31, 2024
Accounts receivable	$	89,305	$	90,692
Allowance for credit losses	(3,636)		(3,670)
Total	$	85,669	$	87,022


	As of March 31, 2025		As of December 31, 2024
Raw materials	$	14,107	$	15,971
Finished goods	19,165		16,150
Inventories, net	33,272		32,121
Service and sales demonstration inventory, net	$	23,265	$	22,760


	As of March 31, 2025
	Carrying Value		Accumulated Amortization		Net Intangible
Amortizable intangible assets:
Product technology	$	24,059	$	19,102	$	4,957
Patents and trademarks	17,148		10,361		6,787
Customer relationships	25,237		9,105		16,132
Other	30,621		15,038		15,583
Total	$	97,065	$	53,606	$	43,459


	Three Months Ended March 31,
(in thousands)	2025		2024
Cash flows from:
Operating activities:
Net income (loss)	$	906	$	(7,267)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	4,212		3,621
Stock-based compensation	3,758		4,539


Deferred income tax (benefit) and other non-cash charges	114		(805)
Provision for excess and obsolete inventory	46		152
Amortization of debt discount and issuance costs	111		112
Loss on disposal of assets	448		96
(Reversal of) provisions for bad debts	(21)		300

Change in operating assets and liabilities:
Decrease (Increase) in:
Accounts receivable	3,305		1,405
Inventories	153		1,957
Prepaid expenses and other current assets	(2,973)		5,587
(Decrease) Increase in:
Accounts payable and accrued liabilities	(4,541)		(5,721)
Income taxes payable	1,131		783
Customer deposits	(455)		819
Unearned service revenues	(1,013)		1,282
Other liabilities	(150)		(285)
Net cash provided by operating activities	5,031		6,575
Investing activities:
Purchases of property and equipment	(1,342)		(1,323)

Cash paid for technology development, patents and licenses	(1,452)		(1,442)

Net cash provided by (used in) investing activities	(2,794)		(2,765)
Financing activities:
Payments on finance leases	(14)		(40)


	Three Months Ended March 31,
		2025		2024
Beginning balance of the allowance for credit losses		$	3,670	$	3,167
Current period (recovery) provision for expected credit losses, net of recoveries		(21)		300
Charge-offs of amounts previously expensed		(13)		(129)
Ending balance of the allowance for credit losses		$	3,636	$	3,338


	As of March 31, 2025		As of December 31, 2024
Accrued compensation and benefits	$	14,084	$	16,109
Accrued restructuring costs	1,037		1,642
Accrued warranties	2,476		2,031
Professional and legal fees	1,741		1,105
Accrued interest	846		1,795
Taxes other than income	3,302		2,897
Other accrued liabilities	1,635		2,156
Total accrued liabilities	$	25,121	$	27,735


	Three Months Ended March 31,
	2025		2024
Balance, beginning of period	$	2,031	$	2,831
Provision for warranty expense	788		837
Fulfillment of warranty obligations	(343)		(997)
Balance, end of period	$	2,476	$	2,671


	As of March 31, 2025
Assets	Level 1		Level 2
Cash equivalents: Money market fund	$	5,217	—
Cash equivalents: U.S. Treasury securities	15,134		—
Short-term investments: U.S. Treasury securities	10,190		—
Total	$	30,541	—
Liabilities
Convertible Senior Notes due 2028	—		$	75,240


	Severance and other benefits		Professional fees and other related charges		Total
Balance at December 31, 2024	$	1,522	$	120	$	1,642
Additions charged to expense	86		—		86
Cash payments	(638)		(53)		(691)
Balance at March 31, 2025	$	970	$	67	$	1,037

SEC Form 10-Q filed by FARO Technologies Inc.