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Faro (FARO)

Participants
Bob Seidel CFO
Simon Raab CEO, Chairman
Greg Palm Craig-Hallum Capital
Jim Ricchiuti Needham & Company
Ben Klieve Noble Capital Markets
Ben Rose Battle Road Research
Hendi Susanto Gabelli & Company
Call transcript
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Operator

Good morning, everyone, and welcome to FARO Technologies' Conference Call in conjunction with its Second Quarter 2018 Earnings Release.

For opening remarks and introductions, I will now turn the call over to Chief Financial Officer, Bob Seidel. Please go ahead.

Bob Seidel

Thank you and good morning, everyone. Yesterday after the market closed, we released our financial results for the second quarter and first six months of 2018. available Web is at release press on site FARO's www.faro.com. The make that like and to may during to would this in course its forward-looking of the remind management company I the you order call. statements understand help results, some you can words, such be anticipate, will, as may intent, by goals, continue, potential, objective, identified and statements expect, believe, These plan, similar words. these the company's materially projected in differ actual from may that forward-looking results possible is It statements. those forth to Important the press in XX, factors XXXX. XXXX XX, set may for materially that March company's year for quarters and XX-Q the XX, yesterday's results and XX-K differ the actual December in and release Form June XXXX ended are cause Form ended company's strategic and will the review our with we turn of initiatives a over return now results. to call our provide financial Simon afterwards, I'll on to an update After questions. remarks, for open the our call we prepared will

Simon Raab

reorganization the our support teams year, Bob, markets. our a functions challenging morning, release practices. Thanks, good We leveraging globally into and to global best last FARO. In our earnings product harmonized completion realigned management of marketing quarter and of second We announced vertical everyone. be comprehensive sales refocused

operating long-term seven that on XX.X% points million operating introduced generation software X.X%. the across has each sales In operating XX% to or quarter hardware margin. we in $X.X the technology increase financial quarter of in goals. new R&D gross year-over-year long-term products believe objectives million income four meet team percentage all gross track We over mid-teen operating grew delivered growth, expenses This platform. taken and The the second performance profit tangible mid-teens increased steps or Our $X.X every our only important margin remain increase past $XX.X teams in We’ve financial next and quarters. of margin. by towards resulted or and million our

per XX-month metric sales grew time of sales XX.X% million the for trailing the releasing quarter-over-quarter to quarterly of $XXX,XXX. FTE since orders first Our increased $XX.X year-over-year

$X.XX of margin per improved year. year. time points and All a Our segments improvement. XXXX of increased deliver company of income second loss share $X.X to million work, new X.X per loss reorganize profit verticals $X.XX produced of sales The the and our operating EPS hard products share a last quarter. the strong last with in gross percentage dedication mid-teens of delivered growth from quarter of million in and XX.X% compared of completely has We year-over-year delivered four quarters the growth our year-over-year the and $X.X

an but with of expectations, also us, BIM the emerging success delivered budgets year-over-year quarter, outstanding which by public XX%, results the of of quarter growth, by value three-dimensional we how our safety In the especially our with into customers future [Indiscernible] financial in XX.X%. drumbeat our Quantum the in make five measurement -- pace for our provides acquisition we quarter's delivered segment versions Factory our and the dramatically offering customers those not With compared lower in date Quantum market. order and quarter to we new customers. that step transactions point, to verticals our closing our the our to entry-level of behind ARM just the how sales and a platform up acquisitions. portfolio with price for In probes, accelerated XD and line match design XXXX. at reorganization construction we better second Quantum needs price ARM laser an include and May, in to technology introduced XX.X% ARM expanded product build new product Our emerging we forensics was was which up and

are new and control systems broadening product R&D acquisitions laser new based our are software purchased with activities to We Kingdom galvanometer based strengthen based labs, capabilities a our United strengthen light capabilities Massachusetts build direction. verticals we creating in our verticals. existing from hardware and research in actively While and to drumbeat in these controls FARO landmark

our combine will of addition technology a leading a Photokore, investment XD of purchased from these extraction all March, April, made platform. digital create verticals. prior the and high We strategic structure enhanced In businesses In PresentXD, technology which the forensics with in inspection offers in our a across software. resolution in galvanometer market Open proliferation software opportunities, In acquired technology with XD Technologies, provides construction application. which to The for quality, rich is is software solutions using portfolio investment verticals especially mid-July, a data photogrammetry and manufacturing compact strategic our virtual engineering and we and design virtual-reality reality. solutions photonics high like photography application. of images potential minority we public for This BIM a reverse which safety we provides leader for product core scanning with training photogrammetry industrial us

dental the presence Open addition, strong of appliances. dental enable to leverage opens manufacture These design In new in and dentists digital dental to products the the technicians and possibilities. XD digital market vertical us Technologies world for

offerings our engineering software team platform, newly rapidly bring to continuous well. Faro with deployment CAMX April, we platform as software XD Our BIM of May, Construction In BIM tools. products order users. In capture several reality our the with efficient expanded we cost-effective As-Built introduced enables in Construction our that Faro designed software XXXX core transfer CAD important design improvements quarter focus our product in released into software Faro to all-new and continuously Software and

pre-investment to start its propel is improving excellence create AEC Business and of of our in to us growth. demos we improvement because design. first off XXXX. in initiative leveraging lean business We instill and expansion and The culture and the time growth horizontal essential facility to infrastructure towards to designed minimize building the professionals sales a region efficiencies keep we vertical our to initiative force across documentation an XXXX, expense of every and and pushing business As-Built sales aggressive As-Built growth financial direct of for began In essential entrepreneurial improve is an sales the effort to required an specifically our the objectives. the processes FARO feet process margin. kicked quarter, continuous named correlation in the At half involved in on our between selling first Best. company operating and street product the

end becoming New or of X% end our sales headcount XXXX. mature before second the of quarter the period team over compared of year At XXXX, members the sales with XXX productive members. period team a quarter XX an generally second of of increase ending a XXX, was fully of at

of analysts corporate The headcount orders XXXX, the metric. sales approximately is FTE compared by quarter our FTE global the between of of the all of calls. start of reporting by force closely up headcount XX share difference quarter for increase to at our second XX%. sales The XXXX. XXX experienced ending the selling up and We ourselves our a headcount our FTE $X.X million or for $X.XX trailing quarter sales quarterly and or tracked sales verticals effectiveness per of earnings start XX-month represents a to trailing investors second accountable metric, on at XX-month hold expense this increased full-time with the leaders our of period of second an Our XXX sales end end XXXX of and

headcount the FTE quarter or compared end sales quarter XX-month trailing increase of XXXX, of of second with in XXX an XX% was at the of XXXX. the XXX XX second Our

of order trailing contributing Our total a bookings FTE per $XXX.X was new headcount $XXX.X bookings an trailing million. of of order sales our for quarter. quarter XX-month FTE million the order trailing was to XX-month second XXX,XXX, for prior increase the XX-month approximately ratio of The XXXX X,XXX from new

our quarter XXXX, trailing improvement important XX-month FTE second in introducing over metric quarter marked milestone order by it's begins our Since performance trend quarter that increase for new in our first metric. trailing expectation this an second the headcount. in XX-month being Our quarter an bookings upward this this sales in

XX growth initiative. bookings strategic Our of provided and four the sales a success positive force quarters over sales order the our trailing -- new of double-digit indication

end quarter In hiring rate in in force first period sales selling of ending expense by earnings sales higher in compared fourth by our projection headcount sales XXXX, XX% our we with XXXX a line investment earnings up generally be increase by XX were the call, we communicated the to by headcount intend the XX% fourth during quarter of this half accompanied of equal with quarter. As by increasing will XX% XX% XXXX. to pressuring ending our near-term to increments potential. start and our This

accelerating we the the to remain by continued acquisitions with space in of $X leader the products R&D per priority next-generation share technology and new leader continued the to increasing in year-over-year or $X.XX million market. our invest be top technology in as spending our our We by technology to development clear

about teams pipeline Our our excited product future new to the very push continue new remain and technology for innovations XXXX. we

Vision XD dynamic developing sensor radar Our such as Machine or Vector previously for vision Machine new XD. automated announced Vision laser machine -- opportunities our and Sensor DMVS such as provide verticals sensor our

remain quarters. to new of patience quarter in sales in commitment alone, employees XD. and very force reinforcing of presenting our accomplishments shareholders I'm work the hard leader and the the proud and of introduce appreciate Bob? to progress We our our forward confidence customer in to continuing deeply products look expect seven around coming the world. our the our and new We our drumbeat third product technology in

Bob Seidel

Thank increase million XXXX. second quarter compared you, Simon. $XX.X XXXX Sales quarter with million, were of an for the the XX.X% second of $XX.X of for

unit Factory all a segments, for increase was our product average quarter quarter second segment. highlighted sales a Our across prices result growth XD and sales strong of in higher primarily by selling

for million from were was for With $XX.X $XX.X of for year, was quarter same our primarily consistent our to order at Service of XX.X% increased $XX.X by second the product X.XX million, period. quarter year quarter ratio an million forensics revenue Factory increase were $XX.X the order with to with and sales our of XXXX. service same increase the the quarter million second segment, verticals. public $X.X compared driven ratio bookings second of of with XXXX, segments increase and both XXXX, across an the the were second prices due an increase for of the new $XX.X period. for $XX.X service quarter of selling quarter due million In by quarter $XX.X in unit continued warranty were quarter a with prices for increase product mostly unit to mostly second of This XX.X% our the quarter driven sales. in of the of increase the second segment, for safety Construction growth in sales book-to-bill million, of $X.X Factory XXXX of for in XD was quarter XX.X% for product book-to-bill the $XX.X XD year New reflecting by base. In $XXX.X $XX.X last was with which $XXX.X quarter segment, due all second strong increase for average sales the bookings for million XXXX. segment. XXXX XXXX, customer an Product prior and Emerging million sales unit sales, for and our compared installed XX.X% million for of revenue higher design mainly higher the increase sales second product quarter the sales of This last the million XXXX increase million an sales in revenue. XX.X% second million prior is $XX.X second XX.X% XXXX, to compared increase million, unit compared the growth average second in serviceable of year, of In product for Verticals XXXX higher with primarily in second of increase of our continued BIM selling an compared million, and our our

increase the XX.X% Our second Gross by unaddressed the these year-over-year opportunities points with the of of emerging manufacturing million of headcount increase first second compared of in XX.X% points was of X.X previously $XX.X for mainly headcount and XXXX. the for increased percentage related our $XX.X as XX.X% sales an the primarily year. quarter for by activity. with ending quarter Selling This are commissions with control spending. XX.X% the efficiencies. mostly a were a X.X investments headcount XXXX. to with and compared increase X%, higher sales compared second compared with by services expenses average quarter the outside driven marketing margin marketing an quarter The same sales in prior prices XX.X% for second delivering XXXX XXXX, compared million percentage second $XX.X was percentage and of year driven period. for XXXX sales and new for expenses of an the and higher selling million of sales due XXXX, Selling increase by were and XXXX in quarter of for increase markets. of increased X.X% was This verticals growth, second quarter improved expenses quarter for quarter last to $XX.X to marketing the decrease million, were second increase General professional administrative of of

with percentage second expenses a second the and Research with $XX.X of decreased of quarter period. quarter expenses compared for administrative XXXX XX.X% our sales, the mostly related of year expand loss As XXXX year. XX.X% income quarter margin last million period our general XXXX, last Operating second an XXXX, additional per XX.X% was loss with with capabilities. quarter percentage $X.X and of expenses of the compared XX.X% or same of to acquisitions, of development quarter Research new $X.X for for million accelerate for increase built for XX.X% development $X.X $X.XX for construction a second the and to year-over-year. per second XXXX were engineering the million increased support share product the as quarter XXXX. to operating of loss the development second was the second X.X% the of to up the for quarter compared sales second or XXXX to million of headcount million activities, $X.X increase Net This for million for by and sales share of $X.X the recent an quarter $X.X XXXX. decreased second for compared Operating year. X.X same with $X.XX of net compared million of income quarter for points of increased prior of

you. with the end end receivable of end period. XXXX, second of our $XX.X higher days to Accounts inventories two sales from XXXX. XXXX the million end that start million questions Days Turning today's quarter on will with ended of year quarter was ask inventory $XXX.X for the your June $XX.X increase quarter the XX, is totaled $XX.X Thank prior presentation growth out mostly We of We now and at results capital. at our days complete and A your million by at hires. end fare discussion to XXXX, compared the you compared demonstration cash the $XX.X subsidiaries. of hold open the more quarter now to two. quarter call investments the held $XX.X XX was quarter the [technical [ph] sales up of second Form driven million XXXX. were of second Total new same on XXXX through XXXX, short-term and attendance At at second of call questions working XXXX which sales second end second the the of of at of quarter of support million million, for in difficulty] appreciate or to by market the an the XX-Q of was outstanding questions quarter the of available second trading. goods the of foreign sales and of finished

Operator

take go our Palm will Please Greg with we Craig-Hallum. first ahead. from And question

line Your open. is

Greg Palm

lines, actually helpful. units XD can grew of And segment existing were sort in details would guess, us headcount growth first new driven time a give active that Factory Any you year-over-year on basis. commentary by curious growing within Yes, be from last weather whether was that I more anymore the thanks. the there? products, you

Simon Raab

was entire all of replaced. versions came products out. Well, Sure. the The new line

leadership expanded time the was technological end we -- course high the same both to of the lines At important. have and that low our So products.

used we were what of to equipment was equipment a both So equipment able sales did typically what [indiscernible] all to or is line. the access we new covered previously by at ends

new as end spectrum products products of So, well. a leading broad I say it's and would technology

Greg Palm

clear, newer ARM the applications? the of and lines, from But of by Got was it. vision -- it kind machine it any kind to of wasn’t driven be existing the just driven tracker

Simon Raab

That’s correct.

Greg Palm

Got it.

provide then, have cadence And commentary the a the a strong better ship quarter for second again, I implies book-to-bill which one [indiscernible] basis Okay. that me, on can you of really been guess kind revenue if I actually on you any was of guess, to were able could anything.

any [ph] So on it of or whether was commentary orders helpful as quarter well. end analysis be would some

Simon Raab

orders. quarter the of end always It's

markets et of to a relating and to at the that industrial market We other cetera. matter, have that and tactics the is very quarter end atypical the not all negotiating the budget orders for piling

very a out manage pointed year certain QX we late number of -- this and that to orders well. as only atypical we up last we as a have them. of the load there was But So of can not quarter

Greg Palm

all. Understood. the All in hop right. back I'll Thanks queue.

Simon Raab

Thanks.

Bob Seidel

Thanks, Greg.

Operator

our And we go Needham with Ricchiuti & take next will Company. question ahead. Jim Please from

Jim Ricchiuti

you. Thank

pointed of as the So months. the recent up you in out, acquisitions has picked pace

material these it's are follow-up two with incremental in contribute One, the expect assuming of just to growth it you question in acquisitions from of revenue we OpEx. about a these terms fair further then, even do standpoint. some And questions. I'm the to say is think aggregate, not to or relating to meaningful XXXX benefits. So, acquisitions out And these as in

first So question. maybe we'll just that start with

Simon Raab

Emerging new market, digital They’re in of until technologies anything platforms. Open we we bolt-ons. verticals into wouldn’t in does the made important clearly one the start a certain allow develop recently to But do Verticals. I show each expect continue us which on important particularly, that XXXX. represents The expect technology XD to Technology, market. that all to The order Yes. important, the an dental in technology be introduce will the would really are that XXXX, I that bolt-ons benefits us to to showing in

Jim Ricchiuti

going give it. just of given that there Got business, expense It Bob? wondering on giving about some the acquisitions, like you’ve I’m you can these for how then going near-term the OpEx, making you're pressure Is the is in forward, given there And the us? sounds just operating got on. headcount help given any question core potential what -- think that additions might bolt-on we

Bob Seidel

don’t on But we've this record track what I guidance. think we see certainly year So, is provide established good a you G&A. specific

our The QX You between support QX up see acquisition. -- underlying focused we spend of excluding tick you'll invested As-Built. saw controlling and pattern there. you on support our and see business, the more We're G&A that very as acquisitions our to our R&D, construction

of both are controlling. very we those on focused So

the In people terms the XX you of be any and about year. the Previously, of another to related and those about we your fixed then selling in indicated, half which individuals, into commissions put can adding talked for marketing, would the to second sales cost to XX increase. you we sales also the we forecast

most selling of then terms of In acquisition it the and marketing form of in the come research acquisitions, dollars carrying also and we the will forward. as add those and development

those in of We year. material that If to as any statement, they the part the will the will integrating out be we focused half we point become second through on the acquisitions go year. of certainly income

Jim Ricchiuti

Thanks.

Bob Seidel

Jim. you, Thank

Operator

go with will ahead. from And Noble our Ben Markets. next question come Klieve Please Capital

Ben Klieve

between leave XXX you causes over recent where decrease margin on -- point me first from service line quarter to And that to -- do be the roughly Thank line, the the history. understand can what dynamic causes next? the then, second? in a you. would XX% Question quarter And bit lumpiness would that the here -- from margin point help lumpy I’m gross XX% margins. the on and what one that be if basis curious you the see specifically [indiscernible] gross to specifically, the

Bob Seidel

drive what that’s margin, of our stream quarter-to-quarter it recurring the stream there recurring. terms more customer our repair, for in then piece as sending of is In volatility rate ASC warranty. is that And portions service quarter the in that is just repair are XXX, is revenue out pattern it send that Q, terms back their of quarter-to-quarter of repair point Most and parts. the customers a in equipment that’s service of variable variable which training. will We equipment and customers our for that upon of non-warranty in our replacement back

cost stream customers So pretty is quarter-to-quarter mostly fixed the the the economic needs. that varies It's situation with revenue their or stable.

absolutely near to us see really as this we focused opportunity that this in get are gross the of help long-term. -- as for We the P&L on drive than focus an level margin to area XX% to closer our to in

Ben Klieve

And roll of on about the Thanks, second -- good. impact curious, you very from Simon, product. were I’m that of ARM the product talked Bob. on the that here able new new you the -- out Okay, rollout then to in quarter, from into fourth? that in here, -- or quarter that to had here it ramp kind ramp we the maybe line runway enough time the the a that in on expect the new third full even and can quarter to impact

Simon Raab

Yes, quarter the complete. the we of ARMs, laser as was as in ARMs, lower-end ARMS quarter well all Quantum the new Quantum so version is new now the line the line it the introduce But later did the through of probes. QX roll all the Quantum

product of the that is primarily the superiority of growth the in So marketplace. clear because

as it had a and I probe, device And profound performance. quite product for certifications line both say the as point, we've and the that on probably FARO product and clear of price choice. ever all devices strong also most laser line entry ARMS reliable the it's represent produced a a the with effect accuracy that that now As these the clear building spectrum contributing marketplace. as the made the superiority the the reputation lower one portable a to are well the of would are you the of measurement in it know of as core well ARMs which broader product, and software

Operator

-- question Ben Road our Battle from ahead. Rose next will our Please with go And Research. come question next

Ben Rose

you. Thank morning. Good

Simon Raab

morning. Good Ben. Hey,

Ben Rose

Good morning. How doing? are you? are How you guys

Simon Raab

Good.

Ben Rose

kind what a margin of that know you’re for perhaps with Could quarter given as gross FARO XX% I ago XX% a bumping the sort this longer-term, that you product had specifically? said gross gross some start Okay, kind see are up of speak the of exceeding target. for sort Simon, prospects on against good. of profit To side, we time making something target up, profit Could profit improvement? the progress you

Simon Raab

beginning, the of is I possibility the mean, to I've do strongly that. it from superiority. technical as said related I see always

cannot premium You prices unless charge product technically in are you the superior category.

So that's important to process. extremely that

of The second thing, most is important production the efficiencies. course,

my We have which and noted manufacturing FARO in implemented, lean, is in as that initiatives, -- production I lean announcement lean best efficiencies of that type.

selling expect or of that componentry an the to on we are we direction of the which Group, to nature for costs. underlying little So, of put but can a time, be upward the expenses because about we provides the are same componentry downward The of market noticed Photonics At pressure you’ve entering industries. the margins a talking bit technology. number higher there, lower The as light

ours the efficiencies technical exceed the fact And certainly the It's working keep that we XXXX on said are once I goal so maintain on XXs of -- prospect our expectation. that we could see superiority, that a despite XX%. a generally we

Ben Rose

et they formal expertise opportunistic could more vertical Okay. it for are Do implants an and a kind like these a understand Technology, And that see address some focus, the to regard that regard they of these of for specifically, crowns bring markets cetera. the of also sort more and there see to kind XD specifically that with of looks or of those pickup some you focus we of in creation on core Open for see address former the to but markets I -- do growth? FARO, markets with that market particular as you you prosthesis

Simon Raab

because do really it's difference different a that product it's the user. custom made later. Except do manufacturing view here parts. is producing not bespoken I a sense that the the its everyone that it's for than car Yes, custom as and We [indiscernible] just believe highly is

same is and design, three the aggressiveness the as we XD dimensional information no dental reason such of that the that with profound So entered are trend if experts we in application is other three-dimensional There's enter that are entire that of we areas the of in three-dimensionalization you felt extremely the profession shouldn't that will, means digitization, why in in The we’ve important. measurement. kind product BIM.

So elements a At qualify an we of are will the may the important that in as marketplace role looking it. segment. a some In it at be play contributor own going stand seriously point forward. to to on it its all meantime,

Ben Rose

and sorry I’m your seeing sector, the standpoint, kind to the one on terms sector, speak of core we’ve discussion just in in just to FARO you in flow of historically question of given in to the sort from of maybe the OEM in market? Okay. there what of appetite finally health seeing does could terms position be ARM about different changes you're in technologies, and supplier that state terms state and OEMs, an spending? seen seem particular, from general their automotive for you're maybe decrease some when what there some of automotive the I from order invest various guess tech

Simon Raab

recently the electric up heard of was China put new are there energy XXX in that alone. tremendous car about There's I Well, I to that first think the worldwide. around significantly in ARM a was market. numbers amount startups be evidence

efficiencies demand. the involves out So squeeze reduce portable are that’s and that we seen certainly driving a in In to problems there's that market -- the that usually generally more manufacturing, looking past, equipment. in downturn have people when

high-efficiency, enhancing automotive tool because with adaptability growth irrespective low-cost changes So, through going factory. in steady broad quality generally we���ve fairly the market -- the of our we're and been in application is

of despite So, ups and a there's activity. I’d say particular, that may out everything downs, in looks really lot strong activity right lot now. be There's of automotive segments, there, a

Operator

& question Please [Operator Instructions] We ahead. Hendi Susanto go will next Company. take Gabelli from with our

Hendi Susanto

Bob, four top in row. morning, on Good congratulation Simon line for delivering and growth double-digit quarters and a

Simon Raab

you. Thank

Bob Seidel

you well. morning Good Thank to you, as Hendi.

Hendi Susanto

to how Bob, your about should margin. what the think year-end mid-teen of path operating XXXX goals we

You pointed XX%. What driver. OpEx, that? should like be process And of to think will your kind look efficiencies as leverage OpEx then at we a have around major if I about

Bob Seidel

over we demonstrated sales with the taking gross from two, our past demonstrated four how today operating margin starts quarters. past to to to of quarters. growth increase It our goals where to to terms that margin really that which back XX%. mid-teens, We’ve So, four we get leads our then points it percentage again over the we’re in mid-teen three in at X%

to there. sales, check The saw expenses G&A So we've a developments. reduction execute able and line on through that that that active we we've two. down new R&D decrease we number that still can believe product percentage year-over-year of that on controls still shown check bring expenditure sales and the nice those as you of a XX% and been at manage

I’m not G&A, say additional in feel going we’ve will number, to but say So R&D. we in I a just leverage

certainly the So us on focus why terms the net leverage and that us, expenses? selling crack for is that’s do we marketing we all For metric. orders FTE. in about of the how is per That's

You to back XXs the pick more our because up internal in historically see to to drive we'll try that that drive saw expenses of true target and lower we've that of that's as to been. mid more leverage XXs, us selling where really XXX XXX back numbers, the and where that from forward we marketing operating

lift and get we’ve R&D mid-teens drive that we stated. long-term up been operating it's pathways, pricing in The and the and market top that the market, You see but per in for what We orders selling then get leverage. in that line, continue really us the to margin, marketing FTE doing. leader believe drives

Hendi Susanto

driven colors you you, wondering there? change seeing question would in Thank the my of to new some able is increase on like to whether are by have in been ASP? much then, it second be product ASP whether what is the you And it. I'm or product Bob. similar How increase product of of share more they QX is And mix? Got drivers

Simon Raab

market. In in core Factory deliver market. XD terms ASP were our and really our of is technology the out strategy, segment able pricing what driven been across come seeing is the really that there a in do in price market drive to premium we've the Hendi, and And leader products with core especially you're that's be its the that the is

not for if marketplace is, portfolio, our have driving at done we've technology a the portfolio about you that’s our it's laser look complete portfolio, look that customers. ASP. piece we mix, at you our scanner that ARM other about The into It's

Hendi Susanto

you. Thank

Operator

next Please ahead. And Palm to will Craig-Hallum. a go question follow-up with go Greg we from

Greg Palm

the taking for thanks Yes, follow-up.

Simon Raab

Greg. morning, Good

Greg Palm

Yes.

Simon Raab

morning, Greg. Good

Greg Palm

here the last in the the believe orders alluded you’ve of thanks. upward I in thought QX rest FTE that quarter trend you pressure turning remaining in upwards and quarter. you of see sort commentary suggests and changed for XXXX, think before year obviously, the commentary per that down to my your Yes, for Simon, might suggested the that that that

can just to the macro, any So, you changed? color just from productivity, provide product I it's it's guess, Whether more lines, what’s better I mean, us? curious adoption whether just whether it's

Simon Raab

expectations, from just know the You diluted that’s conservative we bit hiring were of kind at about trying apart being per FTE. a little -- be rate a to the XX% sales

a was it see positive in go So us FTE. to dollars per surprise very up the

with little or will, of value, clearly certainly bottom we given go a if this and be and products come true bounce prices concept if has the market-leading good technology product new but you as well. they’re at additional bit at mix, product effective force we is going around Now at as broad efficient increase, a the could -- and to selling that that that sales up the down more the

it positively new continue downtrend. The to pickup has technology I'm on I expected surprised. yes, to the fantastic. been So,

products products. our products standalone great in new this announcement So, that’s technology I new think for seven quarter us. in of products ons that news mentioned we alone, our new and -- new The add about

And also per dollars the expect FTE. so contribute to we to that

to rise. that a dollars can confident have see quickly per that we how out we at see and have FTE I’m minimum we bottomed now So

to I’m everything to it more conservative number should that I'm we going had and I always a tend going So to be -- see that we did little the increase facts its and apparently effect. bit until thought

more a need I trend, we a quarters Now hopeful. but that before for few call could we're it

Greg Palm

your just guess earlier I earnings look to couple the lot that been these of comment sort given of guess a I Yes. And pressured your last for of at investments. potential, about earnings near-term pressuring secondly, That’s great in years, have hear. I

elevated near-term continuation just levels sort and was here your investment of new expect the or do something given going of you that in that on that been is recently? in So a what's incremental

Simon Raab

on my announcement an about clearly you -- in FTE, in change you of we between have the in margin, that But out million points could $X.XX continuation. the It's the gives and what out operating hiring expenses that OpEx remind increase million $X.X it talked getting bifurcation a that rate I come that I XX or stop margin. operating bottom around could and There's Right. if the quarter which of we you we now to of are the come could we a per I and two, are component. gross per out, in go dollars the to and general nothing come -- the getting been on is want of between the mean -- work expenses, new growth a but and operating $X.XX here. this increased the averaging -- $X.X which just startup line. represents about everybody investment If which

just reminder continue that invest growth. it's to So headcount in we a

Operator

time, this remarks. questions. for closing like at any to back it I’d we’ve our to And no presenters hand further

Simon Raab

to Like time. you forward QX call, to our next to thank for look we and everybody attending talking

Bob Seidel

Thank you very much.

Operator

participation. conclude does this Thank again today’s you And for your call.

You may time. any disconnect at