Cognex Q2 2025 Earnings July 30, 2025 1 © 2025 Cognex Corporation Forward Looking Statements Certain statements made in this presentation, as well as oral statements made by Cognex Corporation ("Cognex", "we", "us", "our", or the "Company") from time to time, constitute forward- looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Readers can identify these forward-looking stat ...

Cognex Corporation (CGNX) came out with quarterly earnings of $0.25 per share, beating the Zacks Consensus Estimate of $0.23 per share. This compares to earnings of $0.23 per share a year ago. These figures are adjusted for non-recurring items. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track re ...

[Second-Quarter 2025 Financial and Operating Highlights](index=1&type=section&id=Second-Quarter%202025%20Financial%20and%20Operating%20Highlights) Cognex reported Q2 2025 revenue of $249 million, up 4%, with Adjusted EBITDA margin at 20.7% and diluted EPS at $0.24 Q2 2025 Financial Performance Highlights | | Three-months ended | | | | :--- | :--- | :--- | :--- | | | June 29, 2025 (in millions) | June 30, 2024 (in millions) | Y/Y Change | | **Revenue** | $249 | $239 | +4% | | **Operating Income** | $43 | $38 | +13% | | **% of Revenue** | 17.4% | 16.1% | +130 bps | | **Adjusted EBITDA*** | $52 | $48 | +9% | | **% of Revenue** | 20.7% | 19.9% | +80 bps | | **Net Income per Diluted Share** | $0.24 | $0.21 | +15% | | **Adjusted EPS (Diluted)*** | $0.25 | $0.23 | +12% | - Management highlighted continued **Adjusted EBITDA margin expansion** and **strong free cash flow generation** as key indicators of financial discipline and long-term value creation[3](index=3&type=chunk) - Growth was driven by strength in **Logistics** and broader **Factory Automation**, particularly in Consumer Electronics and Packaging, with the company's salesforce transformation showing impactful results[3](index=3&type=chunk) - **Adjusted EBITDA margin surpassed 20%** for the first time since Q2 2023, and **adjusted diluted EPS saw its fourth consecutive quarter of growth**[3](index=3&type=chunk)[5](index=5&type=chunk) - The company announced the launch of **OneVision**, a new cloud platform for AI-powered Machine Vision[5](index=5&type=chunk) [Detailed Financial Analysis](index=3&type=section&id=Detailed%20Financial%20Analysis) Q2 2025 revenue grew 4% to $249 million, with operating expenses down 3%, and gross margin at 67.4% due to industry mix - Revenue growth was driven by **Logistics**, **Consumer Electronics**, and **Packaging** sectors[9](index=9&type=chunk) - **Adjusted gross margin fell by 230 basis points year-over-year to 68.0%**, mainly due to unfavorable industry mix and, to a lesser extent, tariffs[9](index=9&type=chunk) - **Operating expenses decreased by 3% YoY**, reflecting disciplined cost management[9](index=9&type=chunk) - The company's financial position remains strong with **$553 million in cash and investments** and **no debt** as of June 29, 2025[9](index=9&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.08 per share**, payable on August 28, 2025[8](index=8&type=chunk) [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) Cognex Q2 2025 cash from operating activities increased 54% to $43 million, with Free Cash Flow up 74% to $40 million Q2 2025 Cash Flow Performance | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Y/Y Change | | :--- | :--- | :--- | :--- | | **Cash from Operating Activities** | $43 | $28 | +54% | | **Free Cash Flow (FCF)** | $40 | $23 | +74% | - The trailing twelve-month **Free Cash Flow conversion rate was 147% of net income** and 130% of adjusted net income[9](index=9&type=chunk) - The company paid **$13 million in dividends** to shareholders during the second quarter[9](index=9&type=chunk) [Business Outlook (Q3 2025 Guidance)](index=4&type=section&id=Business%20Outlook%20(Q3%202025%20Guidance)) Cognex projects Q3 2025 revenue between $245 million and $265 million, with Adjusted EBITDA margin of 19.5% to 22.5% and Adjusted EPS of $0.24 to $0.29 Q3 2025 Guidance (Excluding one-time benefit) | Metric | Q3 2025 Guidance | Q3 2024 Results (in millions) | Y/Y Change (at midpoint) | | :--- | :--- | :--- | :--- | | **Revenue (in millions)** | $245 - $265 | $235 | +9% | | **Adjusted EBITDA Margin** | 19.5% - 22.5% | 17.6% | +340 bps | | **Adjusted EPS (diluted)** | $0.24 - $0.29 | $0.20 | +35% | - A new commercial partnership is expected to add a **one-time revenue benefit of $8 to $14 million** in Q3, which is excluded from the primary guidance ranges[11](index=11&type=chunk)[13](index=13&type=chunk) - The company expects recent U.S. tax law changes (OBBBA) to be neutral to Adjusted EPS in 2025 but provide a **cash tax benefit of $12 to $15 million**[12](index=12&type=chunk) - Cognex continues to expect **no material impact on Adjusted EPS or Adjusted EBITDA margin from tariffs**[10](index=10&type=chunk) [Financial Statements](index=6&type=section&id=Financial%20Statements) The consolidated financial statements detail Cognex's financial position and performance, with Q2 2025 revenue of $249.1 million and net income of $40.5 million [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 29, 2025, Cognex's total assets were $2.004 billion, with total liabilities at $497.5 million and shareholders' equity at $1.506 billion Balance Sheet Summary | | June 29, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $625,725 | $613,367 | | **Total Assets** | $2,003,541 | $1,992,850 | | **Total Current Liabilities** | $190,437 | $169,380 | | **Total Liabilities** | $497,484 | $475,345 | | **Total Shareholders' Equity** | $1,506,057 | $1,517,505 | [Consolidated Statement of Operations](index=7&type=section&id=Consolidated%20Statement%20of%20Operations) For Q2 2025, Cognex generated $249.1 million in revenue, with operating income increasing to $43.4 million and net income reaching $40.5 million, or $0.24 per diluted share Q2 Statement of Operations | | Three-months Ended (in thousands) | | | :--- | :--- | :--- | | | June 29, 2025 | June 30, 2024 | | **Revenue** | $249,093 | $239,292 | | **Gross Profit** | $167,876 | $166,599 | | **Operating Income** | $43,433 | $38,457 | | **Net Income** | $40,511 | $36,212 | | **Diluted EPS** | $0.24 | $0.21 | - For the six months ended June 29, 2025, **revenue was $465.1 million** and **net income was $64.1 million**, compared to $450.1 million and $48.2 million, respectively, in the prior year period[21](index=21&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Cognex provides non-GAAP financial measures, such as adjusted operating income and adjusted EBITDA, to offer clearer period-over-period comparisons by excluding specific items - The company uses non-GAAP measures to align with management's budgeting and review process, excluding items like **amortization of acquisition-related intangibles**, **acquisition costs**, and **reorganization charges**[23](index=23&type=chunk)[25](index=25&type=chunk) Q2 2025 GAAP to Non-GAAP Reconciliation Highlights | Metric | GAAP (in thousands) | Adjustments (in thousands) | Non-GAAP (Adjusted) (in thousands) | | :--- | :--- | :--- | :--- | | **Gross Profit** | $167,876 | $1,593 | $169,469 | | **Operating Income** | $43,433 | $3,148 | $46,581 | | **Net Income** | $40,511 | $2,046 | $42,557 | | **Diluted EPS** | $0.24 | $0.01 | $0.25 | - Key adjustments for the quarter include **$2.7 million for amortization of acquisition-related intangible assets** and **$0.5 million in acquisition and integration costs**, primarily related to the Moritex Corporation acquisition[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section contains standard cautionary language regarding forward-looking statements, advising that future performance is subject to numerous risks and uncertainties - The report identifies numerous **risk factors that could cause actual results to differ from forward-looking statements**[16](index=16&type=chunk) - Key risks mentioned include **technological obsolescence**, **competitive pressures**, **economic risks from international sales** (especially in China), **supply chain issues**, and the **loss of large customers**[16](index=16&type=chunk) - The company disclaims any obligation to update forward-looking statements after the date they are made[16](index=16&type=chunk)

Core Viewpoint - Cognex Corporation reported a strong financial performance in the second quarter of 2025, highlighting revenue growth, improved margins, and significant cash flow generation, indicating effective execution of strategic priorities and a focus on long-term value creation [2][3][6]. Financial Performance Highlights - Revenue for Q2 2025 was $249 million, a 4% increase from $239 million in Q2 2024, with a 3% increase on a constant-currency basis [3][7]. - Operating income rose to $43 million, up 13% year-over-year, with an operating margin of 17.4%, an increase of 130 basis points from the previous year [3][7]. - Adjusted EBITDA was $52 million, reflecting a 9% increase year-over-year, with an adjusted EBITDA margin of 20.7%, marking the first time it exceeded 20% since Q2 2023 [3][7]. - Net income per diluted share increased to $0.24, a 15% rise from $0.21 in the same quarter last year, while adjusted diluted earnings per share were $0.25, up 12% [3][7]. Balance Sheet and Cash Flow Highlights - As of June 29, 2025, Cognex had $553 million in cash and investments with no debt, indicating a strong financial position [7]. - The company generated $43 million in cash from operating activities, a 54% increase compared to $28 million in Q2 2024, and free cash flow of $40 million, up 74% from $23 million [7]. - The second quarter free cash flow conversion rate was 100% of net income, demonstrating effective cash management [7]. Strategic Initiatives - Cognex announced the launch of OneVision, a cloud platform for AI-powered Machine Vision, aimed at enhancing its product offerings [6]. - The company entered a commercial partnership to better serve OEM customers in medical lab automation, expected to contribute between $8 million and $14 million to revenue in Q3 2025 [9]. Guidance - For Q3 2025, Cognex expects revenue between $245 million and $265 million, representing a 9% increase year-over-year, with an adjusted EBITDA margin forecasted between 19.5% and 22.5% [11].

Core Insights - Cognex Corporation has formed a new executive leadership team under the newly appointed CEO, Matt Moschner, to align with the company's long-term growth strategy [1][2] - The company has identified three strategic priorities: AI Leadership, Customer Centricity, and Market Expansion [5] Group 1: Executive Leadership Team - The new leadership team is composed entirely of internal talent, showcasing the strength of Cognex's existing leadership [1] - New roles have been introduced, all reporting directly to the CEO, to enhance focus and execution on strategic priorities [1] Group 2: Strategic Priorities - AI Leadership aims to position Cognex as the number one provider of AI technology for industrial machine vision applications [5] - Customer Centricity focuses on delivering the best customer experience in the industry [5] - Market Expansion targets doubling Cognex's served customer base over the next five years [5] Group 3: Key Executive Roles - Carl Gerst, Executive Vice President, Global Sales & Products, will lead top-line growth initiatives [5] - Dennis Fehr, Chief Financial Officer, will expand his role to include corporate strategy and M&A [5] - Sheila DiPalma, Executive Vice President, Employee Services, will oversee employee services and corporate culture [5] - Reto Wyss, Vice President, Vision Engineering, will accelerate AI integration across the product portfolio [5] - Shirin Saleem, Vice President, Software Engineering, will strengthen Cognex's software stack [5] - Richard Reuter, Senior Director, Hardware Engineering, will design next-generation AI-capable vision systems [5] - Mike Bowdoin, Vice President, Operations, will ensure quality and delivery speed in global operations [5] - Darren Long, Vice President, Customer Success, will ensure a consistent customer experience [5] - Mark Fennell, Chief Legal Officer, will manage legal and governance matters [5]

Core Viewpoint - Cognex Corporation, a leader in industrial machine vision technology, is set to release its second quarter earnings for 2025 on July 30, 2025, after market close, followed by a conference call on July 31, 2025, at 8:30 a.m. EDT to discuss the results [1]. Company Overview - Cognex has been a pioneer in making advanced machine vision accessible for over 40 years, enabling manufacturing and distribution companies to enhance speed, intelligence, and efficiency through automation [3]. - The company focuses on innovative technology in vision sensors and systems, addressing critical challenges in manufacturing and distribution, and delivering exceptional performance across various industries, including automotive, consumer electronics, and packaged goods [3]. - Cognex emphasizes the integration of AI in its tools, making them more capable and easier to deploy, thus allowing factories and warehouses to improve quality and maximize efficiency without requiring highly technical expertise [4]. - The company is headquartered near Boston, USA, operates in over 30 countries, and serves more than 30,000 customers globally [4].

Group 1: Core Insights - The global warehouse automation spending is expected to accelerate due to technological advancements and rising labor costs, presenting significant opportunities for automation equipment suppliers, particularly for Cognex (CGNX.US) [1] - Nearly two-thirds of surveyed decision-makers plan to increase capital spending on warehouse and distribution center automation in the next year, with an average budget increase of 5% [1] - The warehouse automation sector is experiencing structural growth, with expectations of a large wave of automation investments by the end of the decade [1] Group 2: Machine Vision Demand - Advanced machine vision technology is crucial for automation tasks such as barcode reading, quality inspection, and item recognition, with 56% of respondents planning to increase investment in machine vision tools next year [2] - There is significant room for growth in the adoption of advanced machine vision technology, as only 36% of warehouse spaces currently utilize it despite 62% having some form of image-based barcode scanning [2] - Cognex is identified as the preferred supplier for future deployments in the machine vision field, while Datalogic and Zebra Technologies (ZBRA.US) remain widely used [2] Group 3: Mobile Robots Adoption - The use of mobile robots, particularly Autonomous Mobile Robots (AMR), is rapidly increasing, with 91% of respondents indicating they currently use or plan to use mobile robots [3] - Honeywell's Intelligrated business is a leading consideration among AMR suppliers, while Zebra Technologies' Fetch Robotics holds a mid-level position [3] - The rise in AMR usage is attributed to its flexibility, allowing companies to avoid high fixed infrastructure costs [3] Group 4: Stocks to Watch - UBS's survey supports warehouse automation stocks, especially Cognex, which leads in the machine vision supplier assessment [4] - Zebra Technologies shows strong brand strength in both barcode scanning and mobile robots, while Symbotic (SYM.US) appears to be struggling [4] - Honeywell's performance is mixed, with a decline in usage rates but an increase in future demand for its automation and AMR products [4] Group 5: Automation Wave - Despite the willingness of companies to increase investment, the overall automation application in the industry remains limited, leaving ample room for future development [6] - By 2030, rising labor costs, AI optimization, and e-commerce logistics demands are expected to continue driving investment in automation [6] - There is growing interest in AI-based warehouse layout optimization tools and digital twin technologies, with Intelligrated receiving positive evaluations in this area [6]

Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The goal is to generate long-term free cash flow and create shareholder value through fundamental research [1] Investment Strategy - The strategy targets sectors with strong secular tailwinds, indicating a preference for industries poised for growth [1] - The investor is self-educated and has been managing personal funds for 10 years, indicating a long-term commitment to investment [1] - The motivation for sharing insights is to provide value to readers and receive feedback from the investment community [1]

Cognex (CGNX) 2025 Investor Day Summary Company Overview - Cognex is a technology and growth company specializing in machine vision, with a strong focus on AI-driven solutions. The company generated over $900 million in revenue in 2024 and has a global workforce of approximately 2,900 employees [12][10][30]. Key Industry Insights - The machine vision market is valued at approximately $7 billion, with a projected compound annual growth rate (CAGR) of 10% to 11% [27][39]. - Cognex operates in various sectors, including logistics, automotive, packaging, consumer electronics, and semiconductors, with logistics being the fastest-growing segment [32][34][36][37]. Strategic Objectives - Cognex aims to double its customer base over the next five years, expanding from approximately 30,000 customers to potentially 60,000 to 300,000 [9][50]. - The company plans to focus on high-margin growth, strong cash flow generation, and disciplined capital allocation to support long-term value creation [10][53]. Technological Advancements - Cognex has a robust portfolio of AI-driven machine vision products, including the Insight L38, which is an AI-enabled 3D smart camera designed for ease of use and integration [17][18]. - The company has developed proprietary technologies such as edge learning, allowing models to be trained with fewer samples, enhancing deployment speed and accuracy [68][75]. Financial Performance - Cognex has consistently delivered strong financial performance, achieving an average adjusted EBITDA margin of 28% over the past decade [12]. - The company targets a 13% to 14% CAGR in revenue and aims for a 20% to 30% adjusted EBITDA margin, reflecting operational excellence and cost discipline [53]. Market Dynamics - The demand for automation in manufacturing is driven by rising labor costs, regulatory pressures, and the need for precision in production processes [42][25]. - Cognex's direct sales model allows for deeper customer engagement and understanding of needs, fostering long-term relationships and repeat business [27][30]. Competitive Advantages - Cognex holds a strong competitive position in the machine vision market, with a reputation built on decades of domain expertise and a commitment to R&D [9][26]. - The company has approximately 1,400 patents issued and pending, reinforcing its technological leadership [7]. Customer Engagement and Ecosystem - Cognex's comprehensive ecosystem includes a range of products designed for different customer personas, from novice operators to sophisticated machine builders [84]. - The integration of AI technology into the product lineup enhances customer experience and operational efficiency [85][90]. Future Outlook - Cognex is positioned to redefine machine vision capabilities through continuous innovation in AI and a focus on customer experience [51][48]. - The company anticipates significant growth opportunities across its vertical markets, particularly in logistics and packaging, driven by increasing automation needs [32][34]. Conclusion - Cognex is committed to leading the machine vision industry through innovation, strategic market penetration, and a focus on customer experience, aiming for sustained growth and profitability in the coming years [52][54].

Company Overview - Cognex's 2024 revenue was $915 million[14] - The company's adjusted EBITDA margin historical average is 28% over 10 years[14] - The company has issued and pending approximately 1,400 patents[14] - Cognex estimates the served machine vision market to be approximately $7 billion in 2024[43, 44] Strategic Objectives and Financial Targets - The company aims for a revenue CAGR of 13%-14%, including 3% inorganic growth[65, 186] - Cognex targets an adjusted EBITDA margin between 20% and 30%[67, 187] - The company aims for a free cash flow conversion rate exceeding 100%[68, 189] Market Dynamics and Growth - The machine vision market is expected to grow at a CAGR of approximately 10%-11% through the cycle[34, 41, 195, 216] - Moritex contributed 8% to Cognex's top-line growth in 2024[19] - The company aims to double the number of served customers over the next five years[60, 62, 140, 167]