FARO Technologies Inc (FARO) 2023 Q4 法說會逐字稿

Good day, everyone, and welcome to the FARO Technologies fourth-quarter and year-end 2023 earnings call. For opening remarks and introductions, I would now call over to Mike Funari at Sapphire Investor Relations. Please go ahead.

大家好，歡迎參加 FARO Technologies 第四季和 2023 年底財報電話會議。對於開場白和介紹，我現在將致電藍寶石投資者關係部門的 Mike Funari。請繼續。

Thank you and good morning. With me today from FARO are Peter Lau, President and Chief Executive Officer, and Matt Horwath, Chief Financial Officer. Yesterday after market close, the company released its financial results for the fourth quarter and full year 2023. The related press release and Form 10-K is available on FARO's website at www.faro.com.

謝謝你，早安。今天與我一起出席 FARO 的有總裁兼執行長 Peter Lau 和財務長 Matt Horwath。昨天收盤後，該公司發布了第四季度和 2023 年全年財務業績。相關新聞稿和表格 10-K 可在 FARO 網站 www.faro.com 上取得。

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.

請注意，本次電話會議中的某些陳述並非歷史事實，可能被視為涉及風險和不確定性的前瞻性陳述，其中一些風險和不確定性超出了我們的控制範圍，包括有關未來業務業績、產品和技術開發、客戶需求的陳述、庫存水準、我們的前景和財務指導、經濟和行業預測或後續事件。各種因素可能導致實際結果有重大差異。

For a more detailed description of these and other risks and uncertainties, please refer to yesterday'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.

有關這些以及其他風險和不確定性的更詳細描述，請參閱昨天的新聞稿以及我們向 SEC 提交的年度和季度文件。前瞻性陳述僅反映我們截至目前為止的觀點，除非法律要求，否則我們不承擔更新或修改這些陳述的義務。

During today's conference call, management will discuss certain financial measures that are not presented in accordance with US 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.

在今天的電話會議上，管理階層將討論某些不符合美國公認會計原則或非公認會計準則財務指標的財務指標。在新聞稿中，您會發現有關這些非公認會計準則衡量標準的其他揭露，包括與可比較公認會計準則衡量標準的調節。

While not recognized in our 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 a substitute for a measure of financial performance prepared in accordance with GAAP. Now, I'd like to turn the call over to Peter Lau.

雖然我們公認的會計準則沒有得到認可，但管理層認為這些非公認會計準則財務指標為投資者提供了核心業務的相關期間比較。然而，它們不應被孤立地考慮或取代根據公認會計準則編制的財務績效衡量標準。現在，我想把電話轉給劉彼得。

Thank you, Mike. Good morning, and welcome, everyone, to our call. In the fourth quarter, our focus on execution across all aspects of our operations continue to drive meaningful results. Whether it be refining our product development process and road map, enhancing customer experiences, or streamlining our internal processes, we remain committed to delivering on our three core tenets: first, to grow revenue faster than the markets we serve; second, to grow earnings at a faster rate than revenue; and third, to grow cash at a faster rate than earnings.

謝謝你，麥克。早安，歡迎大家撥打我們的電話。在第四季度，我們對營運各個方面的執行的關注繼續推動有意義的成果。無論是完善我們的產品開發流程和路線圖、增強客戶體驗，或是簡化我們的內部流程，我們仍然致力於實現我們的三個核心原則：第一，收入成長速度快於我們所服務的市場；其次，收入的成長速度快於收入的成長速度；第三，現金成長速度快於獲利成長速度。

We not only met but exceeded our targets in the fourth quarter, delivering $98.8 million in revenue, which was towards the high end of our guidance range. We delivered $0.36 of non-GAAP EPS, which was above the high end of our guidance range. $13.2 million of adjusted EBITDA, a 12% year-over-year increase and $14.7 million of free cash flow.

我們不僅達到了第四季度的目標，而且還超出了目標，實現了 9880 萬美元的收入，接近我們指導範圍的上限。我們實現了 0.36 美元的非 GAAP 每股收益，高於我們指導範圍的上限。調整後 EBITDA 為 1,320 萬美元，年增 12%，自由現金流為 1,470 萬美元。

From a top line perspective, the better-than-expected performance resulted from strong execution by our sales teams in the Americas and Europe include a $3-million order with a channel partner in Romania to outfit the Romanian police force with FARO's public safety solutions. This deal is the largest public safety order in FARO's history and demonstrates the value of our unique solutions. As expected, the industrial and construction markets in China remained especially weak, creating a headwind to year-over-year revenue growth.

從營收角度來看，好於預期的業績得益於我們在美洲和歐洲的銷售團隊的強大執行力，其中包括與羅馬尼亞通路合作夥伴簽訂的價值300 萬美元的訂單，為羅馬尼亞警察部隊配備FARO的公共安全解決方案。這筆交易是 FARO 歷史上最大的公共安全訂單，展示了我們獨特解決方案的價值。正如預期的那樣，中國的工業和建築市場仍然特別疲軟，對年收入成長造成了阻力。

Operationally, we saw a notable sequential improvement in gross margin in the fourth quarter, which we attribute to several factors. First, due to seasonality and the strong year-end demand environment, we benefited from fixed cost absorption. Second, as we have discussed on prior calls, the purchase price variance headwind we have incurred since the beginning of 2023 continued to abate in the fourth quarter, and we have taken a number of steps to ensure PPV remains at nominal levels going forward. Lastly, our supply chain efforts within Southeast Asia continued to progress as planned.

在營運方面，我們看到第四季毛利率顯著連續改善，我們將其歸因於多個因素。首先，由於季節性和強勁的年底需求環境，我們受益於固定成本吸收。其次，正如我們在先前的電話會議中討論的那樣，自 2023 年初以來我們所遭受的購買價格差異阻力在第四季度繼續減弱，我們已採取了一系列措施來確保未來 PPV 保持在名義水平。最後，我們在東南亞的供應鏈工作繼續按計劃取得進展。

Taken together, our non-GAAP gross margin improved 360 basis points sequentially to 52.5%. This is very encouraging progress towards our stated objective of expanding gross margins.

總而言之，我們的非 GAAP 毛利率較上月提高了 360 個基點，達到 52.5%。這是我們在實現擴大毛利率的既定目標方面取得的非常令人鼓舞的進展。

As I mentioned earlier, from a cash flow perspective, we generated $14.7 million in free cash flow in the fourth quarter, delivering on our commitment to achieve positive cash flow in the second half of 2023. This was achieved by significantly improving our operating performance and driving efficiency in working capital.

正如我之前提到的，從現金流角度來看，我們在第四季度產生了 1,470 萬美元的自由現金流，兌現了我們在 2023 年下半年實現正現金流的承諾。這是透過顯著改善我們的營運績效和提高營運資本效率來實現的。

Although I am pleased with the progress we've made in the last two quarters, it is still clear to me that we are in the early stages of improving execution and results. Our team understands there's still much to accomplish and is dedicated to executing on the plan ahead.

儘管我對過去兩個季度的進展感到滿意，但我仍然清楚，我們正處於改善執行和結果的早期階段。我們的團隊知道還有很多工作要做，並致力於執行未來的計劃。

The adjustments made to our cost structure as evidenced by our fourth quarter expense base and increased gross margin as well as working capital performance indicate the strides we've taken in refining our operational framework. Moving forward, we will remain committed to operational excellence, being diligent in controlling expenses with an emphasis on expanding gross margins while making targeted investments in new products and technologies.

我們對成本結構所做的調整，從我們第四季度的費用基礎、毛利率的增加以及營運資金績效來看，顯示了我們在完善營運框架方面所取得的進步。展望未來，我們將繼續致力於卓越運營，努力控制費用，重點擴大毛利率，同時對新產品和新技術進行有針對性的投資。

On the product front, following October's launch of our new FARO Orbis mobile scanner. I am very pleased to report that customer feedback thus far has been extremely positive. While still early in the launch cycle, initial interest has been robust, and we are extremely excited about the future prospects of this product.

在產品方面，繼 10 月推出全新 FARO Orbis 行動掃描器。我很高興地報告，迄今為止客戶的回饋非常積極。雖然仍處於發布週期的早期，但最初的興趣一直很濃厚，我們對該產品的未來前景感到非常興奮。

With our new mobile scanner gaining global adoption, we believe the hardware success we have seen thus far from our new products validates our customer-driven approach to product definition. Expanding our footprint of data acquisition devices expands our future opportunity to monetize that installed base through software that allows customers to store, analyze and collaborate in the cloud.

隨著我們的新型行動掃描器獲得全球採用，我們相信迄今為止我們在新產品中所看到的硬體成功驗證了我們以客戶為導向的產品定義方法。擴大我們的數據採集設備覆蓋範圍，擴大了我們未來透過允許客戶在雲端儲存、分析和協作的軟體從安裝基礎中獲利的機會。

In addition, in December, we launched FARO Zone 2024, expanding upon our strong position in the public safety market. Zone 2024 empowers investigators, forensic analysts, and law enforcement agencies to enhance their capabilities in documenting, analyzing, and presenting evidence.

此外，我們於 12 月推出了 FARO Zone 2024，進一步鞏固了我們在公共安全市場的強勢地位。Zone 2024 使調查人員、法醫分析師和執法機構能夠增強他們記錄、分析和提供證據的能力。

Key highlights of the new FARO Zone product include the conversion of photos and videos to 3D visuals, ortho image creation, and collision prediction and systems. These advancements reflect the fusion of FARO's legacy technologies with those of our recent acquisitions, GeoSLAM and HoloBuilder, and further demonstrates our commitment to innovation. We look forward to discussing more new product launches in the quarters to come.

新 FARO Zone 產品的主要亮點包括將照片和影片轉換為 3D 視覺效果、正射影像創建以及碰撞預測和系統。這些進步反映了 FARO 的傳統技術與我們最近收購的 GeoSLAM 和 HoloBuilder 技術的融合，並進一步體現了我們對創新的承諾。我們期待在未來幾季討論更多新產品的發布。

Reflecting on the progress we've achieved thus far, none of it would have been possible without the skill and devotion of all of our teammates that work together every day at FARO. The team's steadfast commitment to our organization was clearly evident in this past year. Despite macro challenges and uncertainties, their dedication to driving results and outcomes is truly commendable.

回顧我們迄今為止所取得的進展，如果沒有 FARO 每天一起工作的所有隊友的技能和奉獻精神，這一切都是不可能實現的。在過去的一年裡，團隊對我們組織的堅定承諾顯而易見。儘管面臨宏觀挑戰和不確定性，但他們對推動成果和成果的奉​​獻精神確實值得讚揚。

To further support this momentum, we've recently added three new members to our leadership team, including our new Chief Financial Officer, Matt Horwath; Chief Digital Officer, Roger Isern; and software solutions leader, Shelley Gretlein. Overall, I'm proud to say our global organization remains highly motivated by a common goal, namely to continue our market leadership by prioritizing both customers and shareholders alike.

為了進一步支持這一勢頭，我們最近在領導團隊中增加了三名新成員，包括新任財務長 Matt Horwath；首席數位長 Roger Isern；和軟體解決方案領導者 Shelley Gretlein。總的來說，我很自豪地說，我們的全球組織仍然受到一個共同目標的高度激勵，即透過優先考慮客戶和股東來維持我們的市場領導地位。

As we look ahead, FARO's brand holds a strong position in the market, reflecting the trust of customers and our reputation for 3D application expertise and innovation. We intend to capitalize on this market position by focusing on where we add value. We will maintain our leading-edge product performance and will leverage our channels to market to solve more of our existing customers' existing challenges.

展望未來，FARO 的品牌在市場上佔據強勢地位，反映了客戶的信任以及我們在 3D 應用專業知識和創新方面的聲譽。我們打算透過專注於增值領域來利用這一市場地位。我們將保持領先的產品效能，並將利用我們的市場管道來解決更多現有客戶面臨的挑戰。

Customer feedback thus far supports our product solutions strategy, laying a solid foundation for further improvement. Operationally, to help profitably capture these opportunities, we're utilizing an 80/20 philosophy, prioritizing activities that maximize shareholder value and profitability, irrespective of market conditions. Our ongoing organizational initiatives ensure alignment among our 1,200 employees, fostering a focus and a rigor to drive performance enhancements.

迄今為止，客戶的回饋支持了我們的產品解決方案策略，為進一步改進奠定了堅實的基礎。在營運上，為了幫助抓住這些機會並實現盈利，我們採用 80/20 理念，優先考慮能夠最大限度提高股東價值和盈利能力的活動，無論市場狀況如何。我們持續進行的組織計畫確保 1,200 名員工之間保持一致，培養專注力和嚴謹性，以推動績效提升。

As we assess the market opportunity ahead, we believe there is significant value in leveraging 3D capture and virtual management tools to reduce waste and inefficiencies in managing physical assets across the globe. While our growth potential is vast, converting it to demand requires a focused product road map and go-to-market strategy, targeting high probability success areas where we feel we have a right to play and a right to win.

在評估未來的市場機會時，我們相信利用 3D 擷取和虛擬管理工具來減少全球實體資產管理中的浪費和低效率具有重要價值。雖然我們的成長潛力巨大，但將其轉化為需求需要有針對性的產品路線圖和進入市場策略，瞄準我們認為有權利參與和獲勝的高機率成功領域。

To further expand on our strategy, which I've highlighted over the last two quarters, the company will be hosting an investor event in New York City on March 11, 2024. Myself, as well as several members of the senior executive team, will discuss our key priorities, target markets, targeted financial model, and long-term goals, as well as conduct product demonstrations. We look forward to seeing many of you in person. With that, I'll now turn the call over to Matt to provide an overview of our fourth quarter financial results.

為了進一步擴展我們在過去兩個季度強調的策略，該公司將於 2024 年 3 月 11 日在紐約市舉辦投資者活動。我自己以及高階管理團隊的幾位成員將討論我們的關鍵優先事項、目標市場、有針對性的財務模型和長期目標，並進行產品展示。我們期待與你們中的許多人見面。現在，我將把電話轉給馬特，概述我們第四季的財務表現。

Thank you, Peter, and good morning, everyone. Fourth quarter revenue of $98.8 million was down 5% compared with the fourth quarter of 2022. Geographically, while demand remained healthy within Europe and the Americas, particularly Latin America, continuing softness in China was responsible for the year-over-year decline.

謝謝你，彼得，大家早安。第四季營收為 9,880 萬美元，較 2022 年第四季下降 5%。從地理上看，雖然歐洲和美洲（尤其是拉丁美洲）的需求保持健康，但中國的持續疲軟是導致同比下降的原因。

Fourth quarter hardware revenue of $66.6 million was down 5% year-over-year, while software revenue of $12.2 million was down 6%, and service revenue of $20 million decreased by 3% in concert with hardware. Recurring revenue was $17.4 million and represented 18% of sales.

第四季硬體營收為 6,660 萬美元，年減 5%，軟體營收為 1,220 萬美元，下降 6%，服務營收 2,000 萬美元，與硬體同步下降 3%。經常性收入為 1,740 萬美元，佔銷售額的 18%。

GAAP gross margin was 50.9% and non-GAAP gross margin was 52.5% for the fourth quarter of 2023 compared to 52.8% in 2022. On a non-GAAP basis, lower revenue levels resulted in the fourth quarter's year-over-year gross margin decline.

2023 年第四季 GAAP 毛利率為 50.9%，非 GAAP 毛利率為 52.5%，而 2022 年為 52.8%。以非公認會計原則計算，收入水準下降導致第四季毛利率年減。

Sequentially, as Peter mentioned, we are pleased that reported non-GAAP gross margin improved 360 basis points due in part to higher revenue, a decrease in unfavorable purchase price variance, and increasing benefits from supply chain localization. Related to the purchase price variances, we believe these charges are largely complete, exiting 2023, and together with the opportunity ahead in shifting our supply chain to Southeast Asia, we continue to expect a meaningful improvement in 2024 gross margin.

接下來，正如 Peter 所提到的，我們很高興報告的非 GAAP 毛利率提高了 360 個基點，部分原因是收入增加、不利採購價格差異減少以及供應鏈本地化帶來的收益增加。與購買價格差異相關，我們認為這些費用在 2023 年結束時已基本完成，再加上將供應鏈轉移到東南亞的機會，我們繼續預計 2024 年毛利率將出現有意義的改善。

GAAP operating expenses were $48.9 million and included approximately $6.3 million in acquisition-related intangible amortization and stock compensation expenses and $1.3 million in restructuring and other transaction costs. Non-GAAP operating expense of $41.3 million was down $4.5 million from Q4 last year as we realized the benefit of our restructuring efforts.

GAAP 營運費用為 4,890 萬美元，其中包括約 630 萬美元的收購相關無形攤銷和股票補償費用以及 130 萬美元的重組和其他交易成本。由於我們意識到重組工作的好處，非 GAAP 營運費用為 4,130 萬美元，比去年第四季減少了 450 萬美元。

GAAP operating income was $1.4 million in the fourth quarter of 2023 compared with an operating loss of $1.6 million in the fourth quarter of 2022. Non-GAAP operating income was $10.6 million in the fourth quarter of 2023 compared to income of $9.1 million in the fourth quarter of 2022.

2023 年第四季的 GAAP 營業收入為 140 萬美元，而 2022 年第四季的營業虧損為 160 萬美元。2023 年第四季的非 GAAP 營業收入為 1,060 萬美元，而 2022 年第四季的營收為 910 萬美元。

Adjusted EBITDA was $13.2 million or approximately 13.3% of sales compared to $11.7 million and 11.3% of sales in the fourth quarter of 2022. I want to highlight that adjusted EBITDA grew 12% year-over-year and expanded 200 basis points despite the lower fourth quarter revenue.

調整後 EBITDA 為 1,320 萬美元，約佔銷售額的 13.3%，而 2022 年第四季為 1,170 萬美元，約佔銷售額的 11.3%。我想強調的是，儘管第四季營收較低，但調整後 EBITDA 年成長 12%，擴大 200 個基點。

Our GAAP net income was approximately $1.6 million or $0.08 per share. Our non-GAAP net income was $6.8 million or $0.36 per share for the fourth quarter of 2023 compared to net income of $7.1 million or $0.38 per share in Q4 2022.

我們的 GAAP 淨利潤約為 160 萬美元，即每股 0.08 美元。2023 年第四季的非 GAAP 淨利潤為 680 萬美元，即每股 0.36 美元，而 2022 年第四季的淨利潤為 710 萬美元，即每股 0.38 美元。

Our cash and short-term investment balance at the end of the quarter was $96.3 million, up $16.4 million from Q3, largely due to improved profitability and improvements in our cash conversion cycle. Free cash flow of $14.7 million in the fourth quarter 2023 was up $24.2 million versus the fourth quarter of 2022. We remain very focused on our working capital efficiency and currently expect to be cash flow-positive in 2024.

本季末我們的現金和短期投資餘額為 9,630 萬美元，比第三季增加 1,640 萬美元，這主要是由於盈利能力的提高和現金轉換週期的改善。2023 年第四季的自由現金流為 1,470 萬美元，比 2022 年第四季增加了 2,420 萬美元。我們仍然非常關注我們的營運資本效率，目前預計 2024 年將實現正現金流。

We are pleased with our fourth quarter results and view them as evidence the business is moving in the right direction. As Peter mentioned, the team continues to execute well on the operations priorities we have established, namely refining our product development process and road map, enhancing customer experiences, gross margin expansion, streamlining and improving internal processes, including our IT systems and free cash flow generation.

我們對第四季度的業績感到滿意，並將其視為業務正在朝著正確方向發展的證據。正如Peter 所提到的，團隊繼續良好地執行我們已確定的營運優先事項，即完善我們的產品開發流程和路線圖、增強客戶體驗、擴大毛利率、簡化和改進內部流程，包括我們的IT 系統和自由現金流世代。

That said, we remain cautious in the near term. From a geographic perspective, we do not expect China demand to rebound in the first quarter and together with global manufacturing PMI remaining at or below 50 and sales cycles remaining above historical levels, we want to remain thoughtful and measured in setting expectations for the first quarter of 2024, while looking forward to a macro recovery.

也就是說，我們短期內仍保持謹慎態度。從地域角度來看，我們預計第一季中國需求不會反彈，加上全球製造業 PMI 維持在 50 或以下且銷售週期仍高於歷史水平，我們希望在設定第一季預期時保持深思熟慮和審慎2024年，同時期待宏觀復甦。

As a result, at present foreign exchange rates, we expect first quarter revenue of between $77 million and $85 million. At those revenue levels and given corresponding non-GAAP gross margin between 49.5% and 51% and non-GAAP operating expenses of between $41 million and $43 million, we would expect non-GAAP loss per share of between $0.20 and $0.00 per share. This concludes our prepared remarks, and at this time, we'd be pleased to take questions.

因此，按照目前的匯率，我們預計第一季營收將在 7,700 萬美元至 8,500 萬美元之間。在這些收入水準上，考慮到相應的非GAAP 毛利率在49.5% 到51% 之間，非GAAP 營運費用在4,100 萬美元到4,300 萬美元之間，我們預計非GAAP 每股虧損在0.20 美元到0.00美元之間。我們準備好的發言到此結束，此時，我們很樂意回答問題。

(Operator Instructions) Jim Ricchiuti, Needham & Company.

（操作員說明）Jim Ricchiuti，Needham & Company。

Hi, good morning. I wanted to go back to the reference you made about the large public safety order that you got. And I believe you said it was Romania. You said it's from a channel partner. I'm just trying to get a little bit more color on that. Is this a channel partner that you've been working with for a while? Does this channel partner cover other parts of EMEA? If you could, just a little bit more color on that, given the nice win.

早安.我想回到你提到的關於你收到的大型公共安全命令的內容。我相信你說的是羅馬尼亞。您說它來自通路合作夥伴。我只是想對此有更多的色彩。這是您已經合作了一段時間的通路夥伴嗎？該通路合作夥伴是否涵蓋 EMEA 的其他地區？如果可以的話，考慮到這場漂亮的勝利，請再多一點色彩。

Hi, Jim, thanks and thanks for the question and good morning. It is a channel partner we've been working with for a while, and they cover the Romania territory. It was a tender, Jim, a competitive tender with other bidders. And we -- the end user ultimately decided to go with the FARO product.

嗨，吉姆，謝謝你的提問，早安。這是我們合作了一段時間的通路合作夥伴，他們涵蓋羅馬尼亞領土。吉姆，這是一次招標，是一次與其他投標人競爭的招標。我們－最終用戶最終決定使用 FARO 產品。

Again, it was a $3-million order. We shipped about half of that in the fourth quarter and would expect to ship the rest of it throughout the year of 2024. But very exciting win, again, as we said, our largest public safety order ever, and between our local teams there, and our channel partner, really, really nice win for us.

這又是一筆價值 300 萬美元的訂單。我們在第四季度發貨了大約一半，預計 2024 年全年發貨。但正如我們所說，這是非常令人興奮的勝利，這是我們有史以來最大的公共安全訂單，而且是我們當地團隊和我們的通路合作夥伴之間的勝利，對我們來說真的非常非常好的勝利。

Got it. Congrats on that. In the last call, I think you alluded to -- you talked about sales cycles shortening a bit, and I was wondering what you saw as you went through Q4 and whether there's been any change thus far in 2024? Yeah, the macro is clearly a challenge, but I'm just wondering what you've been seeing in terms of sales cycles?

知道了。對此表示祝賀。在上次電話會議中，我想你提到了——你談到了銷售週期縮短了一點，我想知道你在第四季度看到了什麼，以及 2024 年到目前為止是否有任何變化？是的，宏觀經濟顯然是一個挑戰，但我只是想知道您在銷售週期方面看到了什麼？

Yeah, you're right. We did mention that they shortened in Q3 relative to some of the earlier quarters. What I would say is we expect them to stay the same as Q3 -- really kind of the same in Q4. And again, just a reminder that that's above our historical levels, right? So we still see the macro continuing to be a little bit challenged, but we're working through it, Jim, and expect our operational initiatives to drive financial performance in the current environment.

是啊，你說得對。我們確實提到，與前幾季相比，第三季的業績有所縮短。我想說的是，我們希望它們與第三季度保持相同——實際上與第四季度相同。再次提醒您，這高於我們的歷史水平，對嗎？因此，我們仍然認為宏觀經濟持續面臨一些挑戰，但吉姆，我們正在努力解決這個問題，並期望我們的營運措施能夠在當前環境下推動財務表現。

And last question, if I could just slip one in, just on the decline that we saw in the software business in Q4 versus a year ago, can you talk a little bit about what contributed to that?

最後一個問題，如果我可以插一句，就我們在第四季度看到的軟體業務與一年前相比的下降而言，您能談談是什麼造成了這種情況嗎？

Yeah, thanks for the question, Jim. It's largely in concert with our hardware and the perpetual software licenses that we sell. We actually saw our service increase a little bit in the first quarter there, our subscriptions increase in the fourth quarter. But the overall headline of software being down was related to the perpetual license that get attached at point of sale with the hardware.

是的，謝謝你的提問，吉姆。它在很大程度上與我們的硬體和我們銷售的永久軟體許可證一致。實際上，我們看到我們的服務在第一季略有增加，我們的訂閱量在第四季度有所增加。但軟體宕機的整體標題與銷售點與硬體附帶的永久許可證有關。

Got it, got it. Okay. Thanks very much.

明白了，明白了。好的。非常感謝。

Okay. Thanks, Jim.

好的。謝謝，吉姆。

(Operator Instructions) Greg Palm, Craig-Hallum Capital Group.

（操作員說明）Greg Palm，Craig-Hallum Capital Group。

Hey, good morning, everybody. Thanks for taking the questions. Congrats on the quarterly results. I guess, Pete, curious to think about how you're sort of viewing the year in terms of drivers of growth, how much of that is required from some sort of macro recovery or stabilization. How do you think about volume versus price? Any just thoughts on kind of how you think fiscal '24 will play out from a revenue standpoint? I know you don't give guidance for the year per se.

嘿，大家早安。感謝您提出問題。恭喜季度業績。皮特，我想你很想知道你如何看待這一年的成長驅動因素，其中有多少需要來自某種宏觀復甦或穩定。您如何看待數量與價格？從收入的角度來看，您認為 24 財年將如何發揮作用？我知道您本身並沒有提供今年的指導。

No, we don't, Greg, and thanks for the question. Good morning, appreciate your congratulations on the quarter, we are pleased with it. What I would say is, in our prepared remarks, we talked about China and the expectation that it doesn't get better in the first quarter.

不，我們不知道，格雷格，謝謝你的提問。早安，感謝您對本季的祝賀，我們對此感到很高興。我想說的是，在我們準備好的發言中，我們談到了中國以及對第一季情況不會好轉的預期。

As we say, the macro is, I think, kind of one of those things where it's anyone's guess. But what I will say is that we do -- we are very excited about our product road map for this year. Again, we talked about Orbis, we talked about Zone, and we've got some exciting launches coming in the quarters ahead. We look to get a little bit of price, which we've talked about with you previously.

正如我們所說，我認為宏觀是任何人都可以猜測的事情之一。但我要說的是，我們確實對今年的產品路線圖感到非常興奮。我們再次討論了 Orbis、Zone，我們將在未來幾季推出一些令人興奮的產品。我們希望獲得一點價格，我們之前已經與您討論過。

And ultimately, Greg, our tenet, our core tenet, is to grow revenue faster than the markets we serve. And we think that between price, sales, productivity, and new products, we should be able to deliver on that and then again, growing our earnings at a faster rate than revenue and cash flow at a faster rate than our earnings. We feel strongly about those core tenets.

最終，格雷格，我們的宗旨，我們的核心宗旨，是收入成長速度快於我們所服務的市場。我們認為，在價格、銷售、生產力和新產品之間，我們應該能夠實現這一點，然後再以比收入和現金流更快的速度成長我們的收入。我們對這些核心原則有強烈的感受。

Yeah, makes sense. And just to be clear on kind of the overall demand environment, have you seen any change over the last three months and specific to what your visibility is? And in China, is it about the same or has it gotten better or worse since last quarter?

是的，有道理。為了弄清楚整體需求環境的類型，您在過去三個月中是否看到了任何變化，具體到您的可見性是什麼？而在中國，自上季以來情況是否大致相同，還是變得更好還是更糟？

Yeah, I would say, Greg, we expect it to be -- to not recover in the first quarter, as we said. And obviously, there's initiatives in China that we're looking at doing. The Chinese government has done some things over there, and we've not seen it take hold. We don't expect it to get any better in the first quarter, but I think time will tell, and we'll continue to be vigilant about taking opportunities that we do see over there and acting with urgency to close as many deals as we can.

是的，我想說，格雷格，我們預計第一季不會恢復，正如我們所說。顯然，我們正在考慮在中國採取一些措施。中國政府在那裡做了一些事情，但我們還沒有看到它落地生根。我們預計第一季情況不會有任何好轉，但我認為時間會證明一切，我們將繼續保持警惕，抓住我們在那裡看到的機會，並採取緊急行動，以完成盡可能多的交易能。

Okay, and just last one on gross margin, I think you talked about still realizing some significant improvements this year. Any help with kind of the cadence of those improvements as we progress throughout the year? And I'm assuming that the gross margin bridge from Q4 to the guidance in Q1 is solely sort of revenue- or volume-driven. And as the volumes recover, that's when you see better absorption. Is that right?

好的，最後一個關於毛利率的問題，我想你談到今年仍然實現了一些重大改進。隨著我們全年的進步，這些改進的節奏有幫助嗎？我假設從第四季到第一季指導的毛利率橋樑完全是由收入或數量驅動的。當體積恢復時，您會看到更好的吸收。是對的嗎？

Yeah, I think that's the right way, Greg, to think about it. The seasonality that we baked in from Q4 to the Q1 guide, naturally, you've got the fixed cost absorption kind of headwind as you kind of sequentially go from Q4 to Q1. And as we mentioned in the prepared remarks, that negative purchase price variance kind of -- pretty much behind us exiting 2023. You'll see a little bit of that, but it's not going to be linear, but most of it is due to volume, and that step down from Q4 to Q1 guide.

是的，格雷格，我認為這是正確的思考方式。我們從第四季到第一季的指南中引入的季節性，自然地，當你從第四季到第一季時，你自然會遇到固定成本吸收的逆風。正如我們在準備好的評論中所提到的，負購買價格差異在某種程度上已經遠遠落後於我們 2023 年的退出。您會看到其中的一點點，但它不會是線性的，但大部分是由於數量所致，並且從第四季度下降到第一季指南。

Yeah, and remind us that unfavorable impact of a couple of million a quarter, was that what the broker-buyer impact was?

是的，提醒我們每季幾百萬美元的不利影響，這就是經紀人買家的影響嗎？

Yeah, I think what we said externally is about 300 basis points, and kind of the way to think about it is more at the lower end of the gross margin range in the 20 -- kind of first half of 2023. And so with that behind us, there's not as much sequentially as you exit Q4 to Q1.

是的，我認為我們對外所說的大約是 300 個基點，而考慮這個問題的方式更多是在 20 個基點的毛利率範圍的下端——大約是 2023 年上半年。因此，在我們身後，沒有像從第四季度退出到第一季度那樣多的順序。

Yeah, understood. Okay, I will leave it there. Thanks.

是的，明白了。好的，我會把它留在那裡。謝謝。

Thanks, Greg.

謝謝，格雷格。

Thank you. We have no further questions in the queue at this time. I will turn the program back over to Peter Lau for any additional or closing remarks.

謝謝。目前我們隊列中沒有其他問題。我會將節目轉回給劉彼得，以供補充或結束語。

Okay, thank you very much for your time today and continued interest in FARO. We look forward to speaking with you again soon as the year progresses. And thanks again.

好的，非常感謝您今天抽出寶貴的時間以及對 FARO 的持續關注。我們期待在新的一年裡再次與您交談。再次感謝。

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

今天的節目到此結束。感謝您的參與。您可以隨時斷開連線。