Cognex CFO Sees Early Factory Automation Recovery, Targets 25% EBITDA Run Rate by End of 2026

Core Viewpoint - Cognex is experiencing early signs of recovery in factory automation after a prolonged downturn, with a cautious optimism about future growth driven by AI innovations and market penetration strategies [4][7]. Group 1: Market Conditions and Growth Outlook - Warehouse automation began to show growth in 2024 and continued into 2025, while factory automation, which constitutes about 75% of Cognex's business, did not see growth until late 2025 [2]. - The company reported a revenue of $994 million for 2025, but excluding a one-time event, the adjusted revenue would be approximately $982 million [8]. - Cognex is targeting a 25% EBITDA run rate by the end of 2026, assuming mid-single-digit revenue growth and cost reductions of $35–40 million [6][13]. Group 2: AI Strategy and Competitive Positioning - Cognex is focusing on AI-driven market penetration through its OneVision "Physical AI" approach, which enhances its competitive edge against low-cost competitors [5][11]. - The company believes that AI will not only drive machine vision penetration but also enable margin expansion over the next five years [23]. Group 3: End Market and Regional Commentary - Logistics is highlighted as a long-term growth area due to low penetration, with expectations of mid- to high-single-digit growth in 2026 after strong performance in 2025 [17]. - Consumer electronics saw a return to growth in 2025, driven by supply chain shifts and increased customer demand, with expectations of continued recovery [18]. - The automotive market has faced challenges, with a double-digit decline in 2024 and a high single-digit decline in 2025, but Cognex sees stabilization at the end of 2025 [20][21]. Group 4: Financial Performance and Cost Management - Cognex exited 2025 with a 20.7% adjusted EBITDA margin and is confident in achieving a 25% target by the end of 2026 [6][13]. - The company is focusing on optimizing operating expenses through digitalization and process improvements rather than cutting growth investments [16]. - Pricing strategies have been adjusted to maintain market share, particularly in response to competitive pressures in China [15].