Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2023

2022

2023

2022

Hardware

$        55,706

$        54,971

$      167,484

$      150,597

Software

11,205

10,610

32,270

31,418

Service

19,902

19,751

60,237

59,891

Total Sales

$        86,813

$        85,332

$      259,991

$      241,906

Hardware as a percentage of total sales

64.2 %

64.4 %

64.4 %

62.3 %

Software as a percentage of total sales

12.9 %

12.4 %

12.4 %

13.0 %

Service as a percentage of total sales

22.9 %

23.1 %

23.2 %

24.8 %

Total Recurring Revenue ⁽³⁾

$        17,056

$        16,591

$        50,137

$        50,184

Recurring revenue as a percentage of total sales

19.6 %

19.4 %

19.3 %

20.7 %

⁽³⁾ Recurring revenue is comprised of hardware service contracts, software maintenance contracts, and subscription based software applications.

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION
(UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2023

2022

2023

2022

Net cash used in operating activities

$            (4,373)

$          (14,896)

$          (17,580)

$          (18,156)

Purchases of property and equipment

(704)

(1,497)

(5,016)

(4,978)

Cash paid for technology development, patents and
licenses

(1,455)

(3,606)

(5,071)

(9,154)

Free Cash Flow

(6,532)

(19,999)

(27,667)

(32,288)

Restructuring and other cash payments ⁽¹⁾

6,279

3,075

11,014

5,910

Adjusted Free Cash Flow

$               (253)

$          (16,924)

$          (16,653)

$          (26,378)

⁽¹⁾  On February 7, 2023, our Board of Directors approved an integration plan (the "Integration Plan"), which is intended to streamline and simplify operations, particularly around our recent acquisitions and the resulting redundant operations and offerings. The Restructuring and other cash payments primarily consist of severance and related benefits.