Cognex(CGNX) - 2025 Q2 - Quarterly Results

Second-Quarter 2025 Financial and Operating Highlights 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] - 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] - Adjusted EBITDA margin surpassed 20% for the first time since Q2 2023, and adjusted diluted EPS saw its fourth consecutive quarter of growth[3][5] - The company announced the launch of OneVision, a new cloud platform for AI-powered Machine Vision[5] Detailed Financial Analysis 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] - 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] - Operating expenses decreased by 3% YoY, reflecting disciplined cost management[9] - The company's financial position remains strong with $553 million in cash and investments and no debt as of June 29, 2025[9] - The Board of Directors declared a quarterly cash dividend of $0.08 per share, payable on August 28, 2025[8] Balance Sheet and Cash Flow 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] - The company paid $13 million in dividends to shareholders during the second quarter[9] Business Outlook (Q3 2025 Guidance) 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][13] - 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] - Cognex continues to expect no material impact on Adjusted EPS or Adjusted EBITDA margin from tariffs[10] Financial Statements 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 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 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] Non-GAAP Financial Measures and Reconciliations 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][25] 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][29][30] Forward-Looking Statements 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] - 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] - The company disclaims any obligation to update forward-looking statements after the date they are made[16]