FARO Technologies, Inc.

Good day, everyone, and welcome to the Faro Technologies first quarter 2023 earnings call. For opening remarks and introduction, I will now turn the call over to Michael Fanari at Sapphire Investor Relations. Please go ahead, sir.

Thank you, and good afternoon. With me today from Faro are Michael Berger, Chief Executive Officer, Alan Mewich, Chief Financial Officer, and Yuval Wasserman, Chairman of the Board. Today, after market closed, the company released its financial results for the first quarter of 2023. The related press release is available on FARO's website at www.faro.com. Please note, certain statements in this conference call, which are not historical facts, may be considered forward-looking statements that involve risks and uncertainties, some of which are beyond our control, and include statements regarding future business results, product and technology development, customer demand, inventory levels, our outlook and financial guidance, economic and industry projections, or subsequent events. Various factors could cause actual results to differ materially. For a more detailed description of these and other risks and uncertainties, please refer to today's press release and our annual and quarterly SEC filings. Forward-looking statements reflect our views only as of today and, except as required by law, we undertake no obligation to update or revise them. During today's conference call, management will discuss certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles or non-GAAP financial measures. In the press release, you'll find additional disclosures regarding these non-GAAP measures, including reconciliations to comparable GAAP measures. While not recognized under GAAP, management believes these non-GAAP financial measures provide investors with relevant period-to-period comparisons of core operations. However, they should not be considered in isolation or as a substitute for a measure of financial performance prepared in accordance with GAAP. Now I'd like to turn the call over to Michael Berger.

Thank you, Mike. Welcome to our call. First quarter revenue of $85 million was up 11% year on year with hardware revenue of $55 million up 18% and 9% organically that was enabled by increased shipments of our new focus premium laser scanner, as well as the addition of geo slam to our revenue base following our September, 2022 acquisition. Sequentially, Revenue benefited from the weakening of the U.S. dollar exchange rates. While we remain pleased with the overall market adoption of our latest products, late in the first quarter, we saw sales cycles begin to lengthen. Further, while we saw meaningful growth in our overall opportunity funnel, the expected close date of those opportunities shifted from second quarter later into 2023. We believe these are two relatively strong indicators that the long anticipated softening of the macro environment is beginning to impact our customers purchasing behavior. While this phenomenon was evidenced across all geographies and markets, it was especially true in Europe and Asia Pacific. We have recently heard from several large global customers that they are reducing or delaying capital expenditures, which were planned for 2023, given their higher cost of money and the pessimistic outlook for their business in the second half of this calendar year. To help offset this dynamic, we continue to improve our product offering and create further differentiation by streamlining our customers' workflows such that they can realize increasing levels of productivity and value from their three-dimensional models. As an example, we recently released a new product capability, which we call Flash, which is a hybrid reality capture technology, a first-of-its-kind solution that delivers faster stationary scanning for large volume projects. Accessed through our cloud platform, Sphere, Flash is the newest scan mode for Focus Premium laser scanner users, combining the accuracy of static 3D laser scanners with the speed and ease and use of panoramic cameras. The unique combination of fast scans with colorized 360-degree images enable users to reduce their on-site scan time by half. Flash will be available as an annual subscription to current generation scanner customers, whether added as an upgrade to existing hardware or at the time of initial hardware purchase. Beyond our internally developed products, the integration efforts of our acquisitions are executing to plan. Following September's acquisition of GeoSlam, which brings to Pharaoh expertise in mobile scanning, December's acquisition of SiteScan, which basically adds iOS-based LiDAR capture capabilities, and now with the addition of Flash to our stationary scanners, we now offer the broadest and most complete set of three-dimensional capture devices in the market. As we integrate these various capture capabilities into Ferro Sphere, we will enable cloud-based access to four-dimensional models overlaid onto a single coordinate system and viewed through a single user interface. This unique and differentiated offering will provide Ferro customers with unprecedented flexibility along the ease of use and accuracy continuance. To date, Feedback on our offerings and our roadmap have been very positive. When we spoke back in February, we outlined $10 million of annualized savings to be realized in the first half of 2023. At that time, we also indicated a continued strong demand environment. The delayed customer decision making and extended opportunity pipeline I mentioned earlier is causing us to reconsider our growth expectations for the remainder of 2023. As a result, we are accelerating a further $10 to $20 million in annualized operating expense reductions that will improve our profitability as we exit the second and third quarters. Taken together, these actions which we discussed in February, are now totaling a total of $20 to $30 million of annualized savings. I'll now turn the call over to Alan to provide an overview of our first quarter financial results.