Core Insights - Cognex Corporation has appointed Dr. Sami Atiya and Mr. Chris Donato to its Board of Directors, effective March 2, 2026, as part of its strategy to enhance leadership in AI technology for industrial machine vision and to double its customer base over the next five years [1] Group 1: Board Appointments - Dr. Sami Atiya brings 30 years of executive leadership experience in automation, robotics, AI, and medical technology, having previously held significant roles at ABB Ltd. and Siemens AG [1] - Mr. Chris Donato has 25 years of experience in enterprise sales and profitable growth, previously serving as President and Chief Revenue Officer at Zendesk, Inc. and holding various leadership roles at Oracle Corporation [1] - The appointments follow an extensive search by the Board's Nominating, Governance and Sustainability Committee, reflecting a commitment to enhancing the Board's skills and experiences [1] Group 2: Leadership Transition - Robert Willett, former CEO of Cognex, and Dr. Dianne Parrotte will retire from the Board effective March 2, 2026, after making significant contributions during their tenures [1] - The addition of Dr. Atiya and Mr. Donato marks the appointment of six independent directors since 2021, indicating a strategic focus on governance and expertise [1] Group 3: Company Strategy - Cognex aims to become the leading provider of AI technology for industrial machine vision, emphasizing the importance of customer experience and growth in its strategic objectives [1] - The company has a longstanding focus on AI to enhance the capabilities of its vision sensors and systems, which are critical for manufacturing and distribution efficiency [1]

Financial Data and Key Metrics Changes - Revenue for Q2 was $249 million, an increase of 4% year-on-year, marking the fourth consecutive quarter of organic growth [9][20] - Adjusted EBITDA increased by 9% year-on-year, with an adjusted EBITDA margin expanding by 80 basis points to 20.7%, the highest quarterly margin in two years [10][19] - Adjusted EPS rose by 12% year-on-year, representing the fourth consecutive quarter of EPS growth [19][23] - Free cash flow generation totaled $40 million, with a trailing twelve-month free cash flow of $180 million, up 138% compared to the previous year [24] Business Line Data and Key Metrics Changes - Strong growth in logistics, consumer electronics, and packaging, with logistics revenue growing double digits year-on-year [14][16] - Packaging revenue increased mid-single digits year-on-year, driven by health care and fast-moving consumer goods [15][16] - Consumer electronics revenue increased year-on-year, with expectations for continued strong growth in Q3 [16] Market Data and Key Metrics Changes - Europe revenue grew by 13% year-on-year, primarily due to changes in ordering entities [20] - The Americas grew by 8%, led by logistics and packaging [20] - Greater China revenue declined by 18%, reflecting shifts in the consumer electronics supply chain [20] Company Strategy and Development Direction - The company aims to be the number one provider of AI technology for industrial machine vision applications, enhance customer experience, and double the number of customers served [7][8] - A focus on Salesforce transformation is expected to drive growth and improve customer engagement [10] - Continued investment in AI innovation, exemplified by the One Vision platform, which aims to simplify the deployment of AI-powered vision tools [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's direction and the positive response from the organization towards strategic objectives [17] - The outlook for logistics remains strong, driven by investments from e-commerce players [14] - Caution was noted regarding the automotive sector, which is expected to see a modest decline [15] Other Important Information - The company entered a commercial partnership for medical lab automation, expected to generate a one-time revenue benefit in Q3 [30] - Anticipated tax implications from recent U.S. tax law changes are expected to be neutral to adjusted EPS in 2025 [31] Q&A Session Summary Question: Changes in process driving better margins - Management highlighted an intense focus on growth initiatives and cost management across the organization, leading to improved margins [38][40][42] Question: Impact of new product releases in consumer electronics - New product releases require long-term engagement in manufacturing design, with growth driven by adding value and complete solutions [44][45][46] Question: Trends in packaging and consumer electronics - Growth in packaging is driven by investments in sales channels and increased demand in health care and fast-moving consumer goods [52][56] Question: Logistics market dynamics - Growth is balanced between new capacity additions and improvements in existing facilities, with a focus on traceability and barcode reading [62][63] Question: Pricing and tariffs impact - Pricing pressures have eased, and the company is working to mitigate costs while maintaining a healthy demand outlook [111][113] Question: M&A strategy and opportunities - The company is considering non-vision adjacencies for acquisitions, maintaining a high bar for strategic fit and value creation [97][100]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $249 million, an increase of 4% year-over-year, marking the fourth consecutive quarter of organic growth [8][20] - Adjusted EBITDA increased by 9% year-over-year, with an adjusted EBITDA margin expanding by 80 basis points to 20.7%, the highest quarterly margin in two years [9][19] - Adjusted EPS grew by 12% year-over-year, representing the fourth consecutive quarter of EPS growth [19][23] - Free cash flow generation totaled $40 million, with a trailing twelve-month free cash flow of $180 million, up 138% compared to the previous year [24] Business Line Data and Key Metrics Changes - The logistics segment saw double-digit growth year-over-year, marking the sixth consecutive quarter of growth, driven by investments from large e-commerce players [13][15] - Consumer electronics revenue increased year-over-year, with expectations for continued strong growth in Q3 [15][16] - The packaging business showed mid-single-digit growth year-over-year, supported by healthcare and fast-moving consumer goods [14][15] - The automotive segment continued to decline year-over-year, with a more modest decline anticipated in 2025 compared to a 14% contraction in the previous year [13][14] Market Data and Key Metrics Changes - Revenue in Europe grew by 13% year-over-year, primarily due to consumer electronics customers ordering through European entities [20] - The Americas experienced an 8% growth, led by logistics and packaging [20] - Other Asia saw a 5% increase, driven by strength in consumer electronics [20] - Greater China revenue declined by 18%, with a modest decline expected due to shifts in the consumer electronics supply chain [20] Company Strategy and Development Direction - The company aims to be the number one provider of AI technology for industrial machine vision applications, focusing on continuous innovation [6][7] - Cognex is committed to enhancing customer experience through a unified product ecosystem and improved global support capabilities [6][7] - The company plans to double its customer base by expanding its go-to-market strategy to reach new markets and better serve small and midsized manufacturers [7] - A newly formed leadership team is tasked with driving profitable growth and delivering greater value to customers [7][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's direction and the positive response from the organization towards strategic objectives [16] - The outlook for logistics remains strong, driven by ongoing investments and market penetration [13][15] - Management remains cautious about the automotive sector, anticipating a modest decline in 2025 [14] - The company is optimistic about the long-term impact of recent trade agreements and the potential for increased demand due to automation needs [83] Other Important Information - The company entered a commercial partnership for medical lab automation, expected to provide a one-time revenue benefit in Q3 [28][29] - The recent U.S. tax law changes are anticipated to have a neutral impact on adjusted EPS in 2025, with a cash tax benefit expected from expensing R&D costs [30] Q&A Session Summary Question: Changes in process driving better margins - Management highlighted an intense focus on growth initiatives and cost management across the organization, leading to improved margins [35][39] Question: Impact of new product releases in consumer electronics - Management noted that new product developments are long-term projects, with engagement occurring years in advance [42][44] Question: Trends in packaging and consumer electronics - Management indicated broad-based growth in consumer electronics and packaging, driven by new customer acquisitions and existing customer investments [50][52] Question: Visibility on logistics projects - Management confirmed ongoing discussions with customers regarding multiyear plans, maintaining a three to six month visibility for ordering activity [74][76] Question: Impact of tariffs on demand - Management acknowledged some pull-forward of demand due to tariffs but emphasized a healthy forward funnel and ongoing engagement with customers [82][84] Question: M&A strategy and potential adjacencies - Management expressed a disciplined approach to M&A, focusing on strategic fit and value creation, with no immediate urgency for acquisitions [96][100]