Cognex Conference Call Summary Company Overview - **Company**: Cognex - **Industry**: Machine Vision - **Headquarters**: Natick, Massachusetts - **Market Presence**: 40% in the Americas, 20% in Europe, 40% in Asia - **Total Addressable Market (TAM)**: Approximately $7 billion with a growth rate in the low- to mid-single teens [3][4] Core Business and Financials - **Business Model**: High-margin, capital-light with less than 2% of revenue spent on Capex annually - **Historical EBITDA Margin**: 28% [5] - **Customer Base**: Traditionally focused on large, sophisticated companies like Amazon and major consumer electronics firms [4] Strategic Objectives 1. **AI Leadership**: Aim to be the number one leader in AI technology and machine vision, building on a legacy of rules-based software with AI-based tools [7][8] 2. **Customer Count Doubling**: Target to double the customer base by expanding beyond large customers to a broader market [9][10] 3. **Customer Experience**: Focus on being the number one in customer experience to retain customers and increase wallet share [9][10] Sales and Marketing Strategy - **Sales Force Transformation**: Merging different sales organizations to improve efficiency and drive customer acquisition [13][14] - **Emerging Customer Initiative**: Launched in 2023 to increase sales capacity and reach broader customer segments [11][12] - **Product Development**: Emphasis on creating easy-to-use products and guided workflows for less sophisticated customers [18][19] Financial Performance and Growth Projections - **Customer Growth**: 10% increase in customer count year-over-year, with expectations for acceleration [29] - **Revenue Growth Framework**: Targeting 10%-11% organic growth, with 4% from market growth and 6%-7% from additional penetration [29][30] - **Profitability Goals**: Aiming for greater than 20% profitability in Q4, with a focus on cost management and operational efficiency [40][42] Market Insights - **Consumer Electronics**: Positive outlook due to supply chain diversification and new product launches [44][45] - **Logistics**: Strong growth expected due to low automation rates and ongoing demand for automation solutions [51][52] - **Packaging**: Stable growth anticipated with opportunities for AI-driven inspection solutions [55][56] - **Automotive**: Stabilizing market after declines, with potential for recovery in 2026 [60][61] - **Semiconductor**: Positive outlook with expected growth in the second half of 2026 [63][64] AI Integration and Competitive Positioning - **AI Features**: All new products launched since 2022 include AI components, enhancing capabilities for complex inspections [65][66] - **Differentiation**: Cognex focuses on high accuracy, speed, and scalability, leveraging proprietary vision models to outperform generic AI solutions [70][71] Conclusion - **Market Share**: Cognex holds a mid-teen percentage of the fragmented machine vision market, with potential for growth through organic expansion and M&A [77]

Summary of Cognex Conference Call Company Overview - **Company Name**: Cognex - **Industry**: Industrial Automation and Machine Vision - **CFO**: Dennis Fear, in the role for about a year [1][2] Core Business and Market Position - Cognex specializes in converting real-world images into actionable data through machine vision technology, primarily for factory automation [3] - The company is recognized as a technology leader in both pre-AI and AI-enhanced machine vision [4] - The market is attractive due to factors such as cost optimization, reshoring of manufacturing, and labor shortages [4] Financial Performance - Cognex has historically maintained an adjusted EBITDA margin of around 28%, which has recently compressed [4] - The company is refocusing on profitability under new leadership, with optimism for future performance [5] Market Trends and Visibility - The largest end market for Cognex is logistics and warehouse automation, accounting for 24% of business [9] - Other significant markets include automotive, packaging, consumer electronics, and semiconductors [10] - Logistics has shown strong growth potential due to low penetration of machine vision technology [11] - Positive trends noted in packaging and early signs of recovery in consumer electronics due to reshoring [12] Margin Improvement Initiatives - Cognex has seen a year-over-year EPS increase and is trending towards a 20% adjusted EBITDA margin [14] - The company is focusing on operational efficiency and cost control, with a 3% reduction in operating expenses year-over-year [15][16] Growth Strategy - Cognex's growth strategy includes a focus on organic growth through market penetration and M&A [17][22] - The company aims for a 4% underlying market growth and 6-7% penetration growth through AI applications and reaching new customers [20][21] - M&A is considered a smaller component of the growth strategy, focusing on synergistic businesses with a clear path to 20-30% adjusted EBITDA [22] Product Development - The introduction of OneVision, a cloud-based training tool for machine vision systems, aims to enhance customer access to deep learning applications [24][25] - OneVision allows customers to improve their machine vision models using cloud computing while maintaining device-level performance and cybersecurity [26][27] Customer Base and Sales Strategy - Cognex is shifting its sales strategy to target a broader customer base, moving beyond high-concentration customers [43][44] - The company is hiring new sales personnel to penetrate the market more effectively, focusing on both new and existing customers [44][46] - The initiative aims to tap into different buyers within existing accounts, enhancing overall sales efficiency [46] Competitive Landscape - Concerns about smaller players and large tech companies entering the machine vision space are acknowledged, but Cognex believes its established accuracy and device-level optimization provide a competitive edge [32][33][34] - The company emphasizes its ability to maintain high accuracy and efficiency in industrial machine vision tasks, which are critical for success [35][36] Leadership and Execution - A new leadership team has been established to drive sales, growth, and innovation, with a focus on aligning strategic objectives [38][39] - The emphasis is on focused execution and disciplined cost management to achieve growth targets [42] Conclusion - Cognex is positioned for growth in the industrial automation sector, leveraging AI and machine vision technology while addressing profitability and market expansion through strategic initiatives and leadership alignment [5][22][42]

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 ...

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].

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]

Core Insights - Cognex Corporation is launching OneVision™, a cloud-based platform aimed at transforming the development and scaling of AI-powered vision applications for manufacturers [1][3]. Group 1: Product Overview - OneVision simplifies application development by using AI to unify multiple tools, sites, and workflows, thereby enhancing the efficiency of the development process [2][4]. - The platform is designed to address common barriers to AI adoption in industrial settings, such as long development cycles, expensive infrastructure, lack of integration, and inconsistent performance across sites [3][7]. Group 2: Market Impact - OneVision expands Cognex's portfolio of machine vision products, enabling faster and more reliable solutions for complex vision tasks, which accelerates AI adoption in the manufacturing sector [4][5]. - The platform is currently available for select customers using In-Sight® 3800 and 8900 vision systems, with plans for broader release on additional products in early 2026 [4]. Group 3: Company Background - Cognex has over 40 years of experience in advanced machine vision technology, serving a diverse range of industries including automotive, consumer electronics, and packaged goods [5][6]. - The company focuses on making machine vision tools more accessible and easier to deploy, allowing factories and warehouses to improve quality and efficiency without requiring extensive technical expertise [6].