3D measurement and imaging company FARO (NASDAQ:FARO) beat Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 1.6% year on year to $82.86 million. The company expects next quarter’s revenue to be around $83 million, close to analysts’ estimates. Its non-GAAP profit of $0.33 per share was significantly above analysts’ consensus estimates.

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  • Revenue: $82.86 million vs analyst estimates of $80.25 million (1.6% year-on-year decline, 3.3% beat)

  • Adjusted EPS: $0.33 vs analyst estimates of $0.16 (significant beat)

  • Adjusted EBITDA: $12.47 million vs analyst estimates of $7.78 million (15% margin, 60.2% beat)

  • Revenue Guidance for Q2 CY2025 is $83 million at the midpoint, roughly in line with what analysts were expecting

  • Adjusted EPS guidance for Q2 CY2025 is $0.30 at the midpoint, above analyst estimates of $0.20

  • Operating Margin: 4.7%, up from -6.3% in the same quarter last year

  • Free Cash Flow Margin: 2.7%, down from 6.2% in the same quarter last year

  • Market Capitalization: $813.5 million

FARO’s first quarter results were shaped by the company’s strategic focus on operational efficiency and new product introductions. Management cited the impact of recently launched hardware and software offerings, such as the Leap ST handheld metrology tool and the Blink scanning solution, as key contributors to performance. CEO Peter Lau emphasized, “We’ve now executed on over 60% of our SAM expansion target,” pointing to the company’s accelerated pace of launches as a differentiator amid market uncertainty.

Looking ahead, FARO’s guidance reflects both caution and confidence. Management acknowledged ongoing uncertainty around global tariffs and macroeconomic conditions, but highlighted a growing backlog and contributions from new partnerships as factors supporting their outlook. CFO Matt Horwath noted that, despite planning for a potential 10% decline in the hardware market, “we have built some backlog in the first quarter that we believe helped solidify our outlook for Q2.”

FARO’s management attributed Q1 performance to the execution of its phased strategy, product refreshes, and a focus on mitigating macroeconomic risks. The company’s shift toward higher-margin solutions and new partnerships was central to its operating results.

  • Operational efficiency focus: FARO continued its 80:20 operational program, driving year-over-year expansion in non-GAAP gross margins by 590 basis points and improving productivity through supply chain localization.

  • Multiple product launches: The company introduced several major products in the last six months, including Quantum X, Focus Range scanners, Orbis Mobile Scanner, Leap ST, and Blink, which management stated have accelerated customer upgrades and contributed to backlog.

  • Strategic partnerships: Two global partnership agreements were signed, each expected to add low eight-figure annual revenue. One partnership has already contributed to Q1 orders, with more contributions expected in Q2.

  • Geographic mixed trends: While the Americas experienced softness due to tariff-related uncertainty, Europe showed initial signs of strengthening and Asia, notably China, returned to growth after recent declines.

  • Tariff mitigation actions: Management outlined contingency plans, including price increases, shifting production, and the possibility of moving U.S.-bound manufacturing to the United States if tariffs are sustained, aiming to minimize gross margin impact.