Cognex (NasdaqGS:CGNX) FY Conference December 10, 2025 11:30 AM ET Company ParticipantsDennis Fehr - SVP and CFOConference Call ParticipantsChad Dillard - Lead AnalystChad DillardOkay. Good morning, everyone. My name is Chad Dillard. I am the Lead Analyst here at Bernstein, covering the machinery and the electrical equipment sector. And today, I'm really pleased to have Cognex on the stage. And joining me for Cognex is Dennis Fehr, who is the CFO of the company. We're going to have a fireside chat over thes ...

Core Viewpoint - The automotive manufacturing industry in China is experiencing significant growth, with production and sales exceeding 27 million vehicles in the first ten months of the year, marking a year-on-year increase of 13.2% and 12.4% respectively. The industry is transitioning towards automation, digitalization, and intelligence, with domestic companies like 易思维 (Yisiwei) emerging as key players in the machine vision sector for automotive manufacturing [1][2]. Company Overview - 易思维 specializes in the research, production, and sales of machine vision equipment for automotive manufacturing, with over 90% of its revenue derived from this sector. The company also has business operations in rail transit maintenance and aviation [2][4]. - The company's product offerings include machine vision systems, visual workstations, and new model configuration software, which are categorized into visual inspection systems, visual guidance systems, and visual measurement systems [2][3]. Market Position - 易思维 holds a leading position in the automotive manufacturing machine vision market, with a market share of 13.7% in automotive manufacturing and 22.5% in complete vehicle manufacturing as of 2024. The company is a significant contributor to the domestic production rate of machine vision products [9]. - The overall market for industrial machine vision in China is projected to grow from 8.33 billion yuan in 2020 to 26.83 billion yuan by 2024, with a compound annual growth rate of 34% [7]. Financial Performance - 易思维's revenue has shown a growth trend, with reported revenues of approximately 2.23 million yuan in 2022, 3.55 million yuan in 2023, and 3.92 million yuan in 2024. However, the company reported a net loss of 653,690 yuan in the first half of 2025 due to industry practices related to year-end settlements [6][5]. - The company expects a revenue growth of 10.25% to 15.21% in 2025, but net profit is projected to fluctuate between a decrease of 7.77% and an increase of 6.86% [6]. Investment Plans - 易思维 plans to raise approximately 1.214 billion yuan through its IPO, with funds allocated for the establishment of a machine vision product industrialization base, a machine vision research and development center, and to supplement working capital [10][12]. Challenges - The automotive industry is characterized by long project cycles and extended settlement periods, leading to significant accounts receivable and contract asset balances. In the reporting period, the balance of contract assets as a percentage of revenue reached as high as 170.42% [4][5]. - Changes in tax incentives and government subsidies could impact the company's profitability, as these financial supports have significantly influenced net profit margins in previous years [6][7].

Core Viewpoint - The upcoming IPO of Easy Vision (Hangzhou) Technology Co., Ltd. on the Sci-Tech Innovation Board reflects the expectations for a new star in the capital market and highlights the progress of China's high-end manufacturing industry in terms of independent innovation and high-quality development [1][8] Group 1: Market Position and Demand - The Chinese automotive manufacturing industry has a high demand for precise and efficient machine vision systems, traditionally dominated by international giants [2] - Easy Vision has emerged as a leader in the machine vision sector for automotive manufacturing, achieving a market share of 13.7% in the automotive manufacturing sector and 22.5% in the complete vehicle manufacturing sector in 2024, surpassing international competitors [2] Group 2: Technological Foundation - Easy Vision has a strong research and development foundation, with a team of 251 members, accounting for 45.89% of total employees, and nearly 90% holding bachelor's degrees or higher [3] - The company has invested over 300 million yuan in R&D, resulting in 22 core technology modules and holding 119 software copyrights and 387 domestic and international patents [3] Group 3: Industry Capabilities - Easy Vision integrates various disciplines such as imaging, algorithms, software, and sensors, positioning itself as a preferred supplier for numerous automotive manufacturers [4] - The company has achieved systematic application of its products across six major automotive manufacturing processes, including stamping and assembly [4] Group 4: International Expansion and New Markets - Easy Vision's products have been exported to global factories of companies like Volvo and Rivian, and it has entered the overseas production bases of domestic leaders like BYD and Chery [5] - The company is expanding into new markets such as rail transit and aviation, with successful product implementations in various urban transit systems [5] Group 5: Financial Performance - Easy Vision has experienced significant revenue growth, with annual revenues of 223 million yuan, 355 million yuan, and 392 million yuan over the past three years, reflecting a compound annual growth rate of 32.59% [6] - The net profit has also shown remarkable growth, with figures of 5.39 million yuan, 57.75 million yuan, and 84.43 million yuan, achieving a compound annual growth rate of 295.66% [6] Group 6: Policy Environment and Future Outlook - Recent government policies have favored strategic emerging industries and digital transformation, providing a supportive environment for machine vision as a core component of smart manufacturing [7] - Easy Vision is positioned to lead the transition from domestic substitution to industry leadership, enhancing the competitiveness of China's automotive supply chain [7] - The upcoming IPO is expected to inject significant capital for innovation, further strengthening the company's international competitiveness and technological independence [7][8]

Group 1 - The core objective of Shandong's "Robot Industry High-Quality Development Action Plan (2025-2027)" is to exceed a manufacturing scale of 50 billion yuan by 2027 and cultivate over three leading enterprises with an output value exceeding 2 billion yuan each [1] - The plan includes 18 measures to support the robot industry across all dimensions and cycles, aiming to establish Shandong as a national growth pole for robot research, manufacturing, and application [1][2] - Shandong's robot industry is positioned as the second tier in China's robot industry, indicating significant potential for expansion [2] Group 2 - The regional layout of Shandong's robot industry is evolving, focusing on four major development hubs: Jinan, Qingdao, Zibo, and Jining, each with specific development focuses [2][3] - Jinan aims to create a leading domestic robot testing and verification platform, while Qingdao will integrate various robot applications across multiple sectors [2] - By the end of 2024, Shandong's robot industry is projected to achieve over 26 billion yuan in revenue, with a target to reach 50 billion yuan in three years [3]

Investment Rating - The report maintains a "Buy" rating for the company [8] Core Insights - The machine vision industry is characterized by long growth periods and high ceilings, with the global market size reaching 92.5 billion yuan in 2023, and the Chinese market becoming a major driver of growth [2][21] - The company is expanding from industrial vision to consumer-level vision and has made acquisitions to enter the linear motor and motion component markets, aiming to provide comprehensive system solutions [2][6] - The company is expected to achieve net profits of 171 million, 240 million, and 333 million yuan from 2025 to 2027, corresponding to PE ratios of 63, 45, and 32 times [8] Summary by Sections Industry Growth and Trends - The machine vision market in China is projected to grow from 181 billion yuan in 2024 to 208 billion yuan in 2025, with a CAGR of 17.84% from 2020 to 2024, significantly outpacing global growth [2][21] - In 2023, the application distribution of machine vision functions in China was 31.4% for positioning, 29.7% for recognition, 25.6% for detection, and 13.3% for measurement [20][21] Technological Advancements - AI is breaking the limitations of traditional algorithms in machine vision, enhancing efficiency and reducing costs through advancements like the SAM model, which allows for high-quality segmentation with minimal data [5][38] - The company is leveraging its extensive industrial data and AI experience to develop lightweight, high-precision models that can operate efficiently on low-power devices [36][51] Market Position and Competitive Advantage - The company has established a strong position in the domestic 3D vision market, with plans to expand its product line to include consumer-level robotics and 3D vision applications [6][7] - The company’s core technologies in 3D vision and AI algorithms position it as a key supplier in the global intelligent detection solutions market [7][8] Future Outlook - The company is expected to benefit from the ongoing automation trends in industries such as consumer electronics and automotive, driven by the need for cost reduction and efficiency improvements [56][57] - The integration of AI technologies into machine vision systems is anticipated to create more intelligent and user-friendly solutions, expanding the range of applications [56][58]

Core Viewpoint - Recently, Suzhou Linghou Robot Co., Ltd. has undergone a business change, with the addition of Zhiyuan Robot's affiliated company, Shanghai Zhiyuan New Technology Co., Ltd., as a shareholder [1] Company Overview - Suzhou Linghou Robot Co., Ltd. was established in 2015 and is represented by Dong Hao [1] - The company's business scope includes research, development, production, and sales of industrial robotic arms and robots, as well as industrial cameras and machine vision systems [1] - Bozhong Precision Engineering holds a 39.9% stake in Suzhou Linghou Robot Co., Ltd. [1]

Group 1 - Suzhou Linghou Robot Co., Ltd. has undergone a business change, adding Shanghai Zhiyuan New Technology Co., Ltd. as a shareholder [1] - The company was established in 2015 and is legally represented by Dong Hao [1] - The business scope includes research, production, and sales of industrial robotic arms and robots, as well as industrial cameras and machine vision systems [1] - Bozhong Precision Engineering holds a 39.9% stake in the company [1]

Group 1: Company Overview and Operations - Dongtu Technology's Intewell industrial operating system offers high real-time performance and virtualization capabilities, catering to the needs of rapid response and high-precision operations in the industrial sector [3] - The company is currently in the introduction phase within the domestic industrial field, with significant market potential driven by the trend of autonomous control and advancements in artificial intelligence [3] - The company plans to continuously invest in R&D to enhance the performance of the Intewell operating system and build a broad ecosystem [3] Group 2: Robotics and AI Solutions - The company collaborates with robot manufacturers to develop electronic architectures for robots, with a new AI robot operating system product set to launch in the first half of the year [3] - The Intewell operating system addresses several issues faced by current mainstream robotic systems, such as high power consumption and inefficiencies in real-time task execution [4] - The operating system achieves microsecond-level control precision, meeting the stringent requirements of industrial robots and high-end CNC machines [4] Group 3: Cost and Efficiency Advantages - The Intewell operating system can reduce the electronic architecture costs of embodied robots by approximately 50% and lower power consumption by over 60% [5] - The system's microkernel and virtualization architecture allow for compatibility with Linux application ecosystems while maintaining 100% independent intellectual property rights [5] Group 4: Market Potential and Revenue Projections - The smart control systems and industrial operating systems have a market potential in the hundreds of billions, with expectations that new business revenue will account for about 50% of total revenue within 2-3 years [6] - The operating system business is projected to maintain a high growth trajectory, contributing significantly to the company's overall revenue by 2025 [6]