FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP

(UNAUDITED)

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in thousands, except per share data)

2021

2020

2021

2020

Total sales, as reported

$

82,110

$

60,564

$

158,441

$

140,079

GSA sales adjustment ⁽¹⁾

—

608

—

608

Non-GAAP total sales

$

82,110

$

61,172

$

158,441

$

140,687

Gross profit, as reported

$

45,482

$

28,896

$

85,889

$

72,769

GSA sales adjustment ⁽¹⁾

—

608

—

608

Stock-based compensation ⁽²⁾

214

93

280

364

Non-GAAP adjustments to gross profit

214

701

280

972

Non-GAAP gross profit

$

45,696

$

29,597

$

86,169

$

73,741

Gross margin, as reported

55.4

%

47.7

%

54.2

%

51.9

%

Non-GAAP gross margin

55.7

%

48.4

%

54.4

%

52.4

%

Selling, general and administrative, as reported

$

33,594

$

30,036

$

66,942

$

66,360

Stock-based compensation ⁽²⁾

(2,526)

(1,617)

(4,208)

(3,140)

Purchase accounting intangible amortization

(188)

(120)

(373)

(244)

Non-GAAP selling, general and administrative

$

30,880

$

28,299

$

62,361

$

62,976

Research and development, as reported

$

11,760

$

10,186

$

23,733

$

20,601

Stock-based compensation ⁽²⁾

(543)

(459)

(889)

(841)

Purchase accounting intangible amortization

(313)

(327)

(641)

(728)

Non-GAAP research and development

$

10,904

$

9,400

$

22,203

$

19,032

Operating expenses, as reported

$

46,133

$

40,858

$

92,978

$

101,285

Stock-based compensation ⁽²⁾

(3,069)

(2,076)

(5,097)

(3,981)

Restructuring costs ⁽³⁾

(779)

(636)

(2,303)

(14,324)

Purchase accounting intangible amortization

(501)

(447)

(1,014)

(972)

Non-GAAP adjustments to operating expenses

(4,349)

(3,159)

(8,414)

(19,277)

Non-GAAP operating expenses

$

41,784

$

37,699

$

84,564

$

82,008

Loss from operations, as reported

$

(651)

$

(11,962)

$

(7,089)

$

(28,516)

Non-GAAP adjustments to gross profit

214

701

280

972

Non-GAAP adjustments to operating expenses

4,349

3,159

8,414

19,277

Non-GAAP income (loss) from operations

$

3,912

$

(8,102)

$

1,605

$

(8,267)

Other expense (income), net, as reported

$

922

$

329

$

(683)

$

836

Interest expense increase due to GSA sales adjustment ⁽¹⁾

—

(249)

—

(398)

Non-GAAP adjustments to other expense (income), net

—

(249)

—

(398)

Non-GAAP other expense (income), net

$

922

$

80

$

(683)

$

438

Net loss, as reported

$

(1,176)

$

(8,932)

$

(4,397)

$

(23,755)

Non-GAAP adjustments to gross profit

214

701

280

972

Non-GAAP adjustments to operating expenses

4,349

3,159

8,414

19,277

Non-GAAP adjustments to other (income) expense, net

—

249

—

398

Income tax effect of non-GAAP adjustments

(1,144)

(1,505)

(2,622)

(3,638)

Non-GAAP net income (loss)

$

2,243

$

(6,328)

$

1,675

$

(6,746)

Net loss per share - Diluted, as reported

$

(0.06)

$

(0.50)

$

(0.24)

$

(1.34)

GSA sales adjustment ⁽¹⁾

—

0.03

—

0.03

Stock-based compensation ⁽²⁾

0.18

0.12

0.30

0.24

Restructuring costs ⁽³⁾

0.04

0.04

0.13

0.82

Purchase accounting intangible amortization

0.02

0.03

0.05

0.06

Interest expense increase due to GSA sales adjustment ⁽¹⁾

—

0.01

—

0.02

Income tax effect of non-GAAP adjustments

(0.06)

(0.09)

(0.15)

(0.21)

Non-GAAP net income (loss) per share - Diluted

$

0.12

$

(0.36)

$

0.09

$

(0.38)