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FARO Technologies (FARO) Q4 Earnings Top, Revenues Fall Y/Y

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FARO Technologies, Inc. (FARO - Free Report) reported fourth-quarter 2020 adjusted earnings of 35 cents per share, which increased 94.4% from the year-ago quarter and beat the Zacks Consensus Estimate of 6 cents per share.

Revenues of $93 million beat the consensus mark by 17.7%. The figure however declined 10.8% year over year due to sales level fluctuations as a result of the COVID-19 impact on customer demand in served markets.

Meanwhile, new order bookings of $95.1 million decreased 19% from the year-ago period.

FARO Technologies, Inc. Price, Consensus and EPS Surprise

FARO Technologies, Inc. Price, Consensus and EPS Surprise

FARO Technologies, Inc. price-consensus-eps-surprise-chart | FARO Technologies, Inc. Quote

Quarter Details

FARO Technologies’ Product revenues (77.2% of revenues) declined 10.6% year over year to $71.7 million. Services revenues (22.8%) decreased 11.4% year over year to $21.2 million.

In the reported quarter, non-GAAP gross margin contracted 70 basis points (bps) to 54.9% on a year-over-year basis primarily as a result of the impact of lower sales, resulting from the COVID-19 pandemic.

While research and development (R&D) increased 3.7% year over year to $11.5 million, sales and marketing (S&M) expenses declined 22.4% on a year-over-year basis to $35.3 million. As a percentage of revenues, R&D expenses expanded 170 bps while S&M expenses contracted 560 bps, respectively.

On a non-GAAP basis, total operating expenses declined 19.4% year over to $42.9 million and contracted 490 bps as a percentage of revenues to 46.2% from the year-ago period.

For the fourth quarter, the company reported non-GAAP income from operations of $8.1 million, which increased 72% from the year-ago quarter.

Adjusted EBITDA was $11.1 million for the fourth quarter of 2020, which increased 36% from the year-ago period. Adjusted EBITDA margin expanded 410 bps to 11.9% on a year-over-year basis.

Balance Sheet & Cash Flow

As of Dec 31, 2020, FARO Technologies had cash and short-term investments of $185.6 million compared with $163.6 million reported in the previous quarter.

Moreover, cash provided by operating activities was $21.3 million compared with $10.8 million in the previous quarter.

Key Developments in Q4

During the fourth quarter, FARO Technologies released its new WebShare Software Enterprise offering. An extension of the widely-used FARO WebShare platform, the Enterprise feature allows data to be stored on a company's private server or cloud infrastructure, ensuring full control over the security of its 3D reality data and a fast and easy way to provide access and share project management workflows.

Moreover, the company released its new FARO Zone 3D 2021 software for crime, crash, fire and security applications. The latest edition of FARO Zone reflects a significant software advancement that empowers public safety professionals with even more tools to diagram, document, share and analyze forensic scenes, and create compelling 3D scene reconstructions that bolster courtroom cases whereby jurors can walk through a forensic scene with an exceptional level of realism.

On Nov 24, the company launched its next-generation Vantage Laser Tracker 6 Degrees of Freedom (6DoF) Probe. The new 6Probe offers exceptional portability and is compatible with FARO Vantage S6 and Vantage E6 Laser Trackers, enabling users to build, inspect and measure products faster and with greater accuracy.

Zacks Rank & Stocks to Consider

FARO Technologies currently has a Zacks Rank #3 (Hold).

Zoom Video Communications, Inc. (ZM - Free Report) , CrowdStrike (CRWD - Free Report) and Workday (WDAY - Free Report) are some better-ranked stocks in the broader computer and technology sector. While Zoom Video sports a Zanks Rank #1 (Strong Buy), CrowdStrike and Workday carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Workday, Zoom Video and CrowdStrike are scheduled to release earnings on Feb 25, Mar 1 and Mar 16, respectively.

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