COGNEX CORP

Previous wording

Certain statements made in this report, 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 statements by our use of the words “expects,” “anticipates,” “estimates,” "potential," “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” "opportunity," "goal" and similar words and other statements of a similar sense. These statements are based on our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given. These forward-looking statements, which include statements regarding business and market trends, future financial performance and financial targets, the impact of tariffs, customer demand and order rates and timing of related revenue, future product or revenue mix, research and development activities, sales and marketing activities, new product offerings, innovation and product development activities, customer acceptance of our products, commercial partnerships, capital expenditures, cost management activities, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses, changes in tax legislation, and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the technological obsolescence of current products and the inability to develop new products; (2) the impact of competitive pressures; (3) the inability to attract and retain skilled employees, effectively plan for succession including managing the change of our Chief Executive Officer, all while maintaining our unique corporate culture; (4) the failure to properly manage the distribution of products and services; (5) economic, political, and other risks associated with international sales and operations, including the impact of trade disputes, the imposition of tariffs, the economic climate in China, and the wars involving Ukraine and Israel; (6) the challenges in integrating and achieving expected results from acquired businesses; (7) uncertainty surrounding our future capital needs; (8) information security breaches and other cybersecurity threats; (9) the failure to comply with laws or regulations relating to data privacy or data protection; (10) the inability to protect our proprietary technology and intellectual property; (11) the failure to manufacture and deliver products in a timely manner; (12) the inability to obtain, or the delay in obtaining, components for our products at reasonable prices; (13) the inab…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements made in this report, 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 statements by our use of the words “expects,” “anticipates,” “estimates,” "potential," “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” "opportunity," "goal" and similar words and other statements of a similar sense. These statements are based on our current estimates and expectations as to prospective events and circumstances, which may or may not be in our control and as to which there can be no firm assurances given. These forward-looking statements, which include statements regarding business and market trends, future financial performance and financial targets, the impact of tariffs, customer demand and order rates and timing of related revenue, future product or revenue mix, research and development activities, sales and marketing activities, new product offerings, innovation and product development activities, customer acceptance of our products, commercial partnerships, capital expenditures, cost management activities, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses, changes in tax legislation, and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include: (1) the technological obsolescence of current products and the inability to develop new products; (2) the impact of competitive pressures; (3) the inability to attract and retain skilled employees, effectively plan for succession including managing the change of our Chief Executive Officer, all while maintaining our unique corporate culture; (4) the failure to properly manage the distribution of products and services; (5) economic, political, and other risks associated with international sales and operations, including the impact of trade disputes, the imposition of tariffs, the economic climate in China, and the wars involving Ukraine and Israel; (6) the challenges in integrating and achieving expected results from acquired businesses; (7) uncertainty surrounding our future capital needs; (8) information security breaches and other cybersecurity threats; (9) the failure to comply with laws or regulations relating to data privacy or data protection; (10) the inability to protect our proprietary technology and intellectual property; (11) the inability to manage direct and indirect disruptions to our supply chain, which could cause delays in obtaining components for our products at reasonable prices; (12) the failure to man…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

The following table sets forth our disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands) for the three-month and six-month periods ended June 29, 2025 and June 30, 2024.

Current wording

The following table sets forth our disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Previous wording

•Revenue from customers based in the Americas increased by 8% for the three-month period and increased by 14% for the six-month period as compared to the same periods in 2024. Strong growth in logistics and improved trends in the consumer electronics and packaging industries was partially offset by continued weakness in the automotive industry.

Current wording

•Revenue from customers based in the Americas increased by 27% for the three-month period and increased by 18% for the nine-month period as compared to the same periods in 2024. The increase was primarily due to strong growth in logistics and one-time revenue from our new strategic channel partnership mentioned above, which primarily impacted the Americas region.

Previous wording

•Revenue from customers based in Europe increased by 17% for the three-month period and increased by 6% for the six-month period as compared to the same periods in 2024. The increase was due primarily to procurement changes made by consumer electronics customers to shift their purchases from entities based in China to Europe. Improved trends in the packaging industry also contributed to the increase in revenue. These increases were largely offset by weakness in the automotive industry for the six-month period.

Current wording

•Revenue from customers based in Europe increased by 30% for the three-month period and increased by 14% for the nine-month period as compared to the same periods in 2024. The increase was primarily due to procurement changes made by consumer electronics customers to shift their purchases from entities based in China to Europe. Improved trends in the packaging industry, the favorable impact of foreign currency exchange rates, and one-time revenue from our new strategic channel partnership also contributed to the increase in revenue for both the three-month and nine-month periods. These increases were partially offset by weakness in the automotive industry.

Previous wording

•Revenue from customers based in Greater China decreased by 17% for the three-month period and decreased by 15% for the six-month period as compared to the same periods in 2024. The decrease was primarily due to the procurement change in Europe mentioned above, as well as shifts in business from consumer electronics customers from China to the Other Asia region. Outside of the procurement change, revenue from the Greater China region decreased slightly over the same periods in the prior year.

Current wording

•Revenue from customers based in Greater China increased by 10% for the three-month period and decreased by 6% for the nine-month period as compared to the same periods in 2024. The procurement change in Europe mentioned above, as well as shifts in business from consumer electronics customers from China to the Other Asia region, negatively impacted results for both the three-month and nine-month periods. However, for the three-month period, these negative impacts were offset by both increased demand within the consumer electronics industry, as well as a timing shift in large customer deployments from the second quarter into the third quarter of 2025. For these reasons, outside of the procurement change, revenue from Greater China increased year-over-year for both periods.

Previous wording

•Revenue from customers based in other countries in Asia increased by 6% for the three-month period and decreased by 3% for the six-month period as compared to the same periods in 2024. Other Asia regions benefited from the shift in consumer electronics business out of China noted above, offset by continued weakness in the automotive industry.

Current wording

•Revenue from customers based in other countries in Asia decreased by 4% for the three-month period and decreased by 3% for the nine-month period as compared to the same periods in 2024. Although Other Asia regions benefited from the shift in consumer electronics business out of China noted above, this benefit was offset by the impact of recording an additional month of Moritex revenue in 2024 mentioned previously.

Previous wording

The following table sets forth our gross profit (in thousands) for the three-month and six-month periods ended June 29, 2025 and June 30, 2024.

Current wording

The following table sets forth our gross profit (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Previous wording

Gross margin was 67% for both the three-month and six-month periods in 2025 as compared to 70% and 69% for the same periods in 2024, respectively. The decrease was primarily due to less favorable industry mix, and, to a lesser extent, the impact from tariffs.

Current wording

Gross margin was 68% and 67% for the three-month and nine-month periods in 2025, respectively, as compared to 68% for both periods in 2024. The decrease for the nine-month period was primarily due to less favorable industry mix, and to a lesser extent, the impact from tariffs, partially offset by a relatively higher margin from the one-time revenue from our new strategic channel partnership mentioned above.

Previous wording

The following table sets forth our operating expenses (in thousands) for the three-month and six-month periods ended June 29, 2025 and June 30, 2024.

Current wording

The following table sets forth our operating expenses (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Previous wording

Research, development, and engineering (RD&E) expenses decreased by $1,860,000, or 5%, for the three-month period and decreased by $4,238,000, or 6%, for the six-month period as compared to the same periods in 2024. The decrease was primarily due to disciplined cost management, including a reduction in RD&E headcount.

Current wording

Research, development, and engineering (RD&E) expenses remained relatively flat for the three-month period and decreased by $4,367,000, or 4%, for the nine-month period as compared to the same periods in 2024. The decrease was primarily due to cost management, including a reduction in RD&E headcount, and the impact of recording an additional month of Moritex expenses in 2024 mentioned previously, partially offset by higher incentive compensation accruals and the unfavorable impact of foreign currency exchange rates.

Previous wording

RD&E expenses as a percentage of revenue were 13% and 15% for the three-month and six-month periods in 2025, respectively, as compared to 15% and 16% for the same periods in 2024, respectively. We believe that a continued commitment to RD&E activities is essential to maintain or achieve product leadership with our existing products and to provide innovative new product offerings, as well as to provide engineering support for large customers. In addition, we consider our ability to accelerate the time to market for new products to be critical to our revenue growth and competitive position. These percentages are impacted by revenue levels and investment cycles.

Current wording

RD&E expenses as a percentage of revenue were 13% and 14% for the three-month and nine-month periods in 2025, respectively, as compared to 15% and 16% for the same periods in 2024, respectively. We believe that a continued commitment to RD&E activities is essential to maintain or achieve product leadership with our existing products and to provide innovative new product offerings, as well as to provide engineering support for large customers. Having moved towards unified software architecture across various products lines over the last years, however, enabled us to deliver innovation with less RD&E expenses as a percentage of revenue. These percentages are additionally impacted by revenue levels and investment cycles.

Previous wording

Selling, general, and administrative (SG&A) expenses decreased by $1,839,000, or 2%, and $8,963,000, or 5%, respectively, for the three-month and six-month periods in 2025 as compared to the same periods in 2024. The decrease was due to disciplined cost management, including a reduction in SG&A headcount. Lower stock-based compensation expense due to higher credits resulting from the annual true-up of forfeiture rate assumptions in the first quarter also contributed to the decrease in SG&A expenses for the six-month period. These decreases were partially offset by higher incentive compensation accruals.

Current wording

Selling, general, and administrative (SG&A) expenses increased by $1,819,000, or 2%, and decreased by $7,144,000, or 3%, respectively, for the three-month and nine-month periods in 2025 as compared to the same periods in 2024. Savings from cost management, including a reduction in SG&A headcount, lower stock-based compensation expenses, and the impact of recording an additional month of Moritex expenses in 2024 mentioned previously were offset by higher incentive compensation accruals, the unfavorable impact of foreign currency exchange rates, and reorganization charges. For the three-month period, the higher incentive compensation accruals, foreign currency impact, and reorganization charges offset the savings.

Previous wording

The following table sets forth our non-operating income (expense) (in thousands) for the three-month and six-month periods ended June 29, 2025 and June 30, 2024.

Current wording

The following table sets forth our non-operating income (expense) (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Previous wording

The Company recorded foreign currency losses of $1,503,000 and $3,956,000 for the three-month and six-month periods in 2025, respectively, and $181,000 and $135,000 for the same periods in 2024, respectively. Foreign currency gains and losses in each period resulted primarily from the revaluation and settlement of assets and liabilities that are denominated in currencies other than the functional currency of the Company, which is the U.S. Dollar, or its subsidiaries.

Current wording

The Company recorded foreign currency gains of $840,000 and losses of $3,116,000 for the three-month and nine-month periods in 2025, respectively, and gains of $1,221,000 and $1,086,000 for the same periods in 2024, respectively. Foreign currency gains and losses in each period resulted primarily from the revaluation and settlement of assets and liabilities that are denominated in currencies other than the functional currency of the Company, which is the U.S. Dollar, or its subsidiaries.

Previous wording

Investment income increased by $924,000, or 30%, for the three-month period and increased by $1,794,000, or 29%, for the six-month period as compared to the same periods in 2024 due primarily to higher yields on the Company's portfolio of debt securities.

Current wording

Investment income increased by $636,000, or 18%, for the three-month period and increased by $2,430,000, or 25%, for the nine-month period as compared to the same periods in 2024 due primarily to higher yields on the Company's portfolio of debt securities.

Previous wording

Other income for the second quarter of 2025 included a one-time Employee Retention Credit from the U.S. Internal Revenue Service to refund payroll taxes paid during the COVID-19 pandemic.

Current wording

Other income for the nine-month period included a one-time Employee Retention Credit from the U.S. Internal Revenue Service to refund payroll taxes paid during the COVID-19 pandemic.

Previous wording

The following table sets forth income tax information (in thousands) for the three-month and six-month periods ended June 29, 2025 and June 30, 2024.

Current wording

The following table sets forth income tax information (in thousands) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024.

Previous wording

On July 4, 2025, tax legislation known as the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. OBBBA modifies certain international tax provisions such as the tax on Global Intangible Low Taxed Income ("GILTI") and renames GILTI as Net CFC Tested Income ("NCTI"). The Company records NCTI taxes on a deferred basis. The Company is in the early stages of evaluating the impact of U.S. tax law changes introduced by OBBBA on our consolidated financial statements and disclosures. As of the date of this filing, we expect OBBBA to materially increase our deferred tax liability and income tax expense in the third quarter of 2025, while also providing a cash tax benefit estimated between $12 million and $15 million for the full year. A full quantitative estimate of all specific financial impacts cannot be reasonably determined at this time due to the complexity of the changes in OBBBA and the need for further analysis.

Current wording

On July 4, 2025, tax legislation known as the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. OBBBA modifies certain international tax provisions such as the tax on Global Intangible Low Taxed Income ("GILTI") and renames GILTI as Net CFC Tested Income ("NCTI"). The Company records NCTI taxes on a deferred basis, and as a result of OBBBA's enactment, accrued a discrete tax expense of approximately $33,265,000 to increase its deferred tax liability during the third quarter of 2025, increasing the Company's effective tax rate significantly. The legislation is expected to result in a full-year cash tax benefit estimated between $12 million and $15 million, primarily driven by the Company's ability to immediately expense research and development costs. However, this benefit does not directly impact the Company's effective tax rate.

Previous wording

The Company’s effective tax rate was 16% and 15% for the three-month and six-month periods in 2025, respectively, and 13% and 18% for the same periods in 2024, respectively. The Company recorded net discrete tax benefits of $211,000 and $518,000 for the three-month and six-month periods in 2025, respectively, compared to a net discrete tax benefit of $463,000 for the three-month period in 2024 and a net discrete tax expense of $2,622,000 for the six-month period in 2024. Excluding the impact of discrete tax items, the Company's effective tax rate was 16% for both the three-month and six-month periods in 2025 compared to 14% for the same periods in 2024. The increase was due to more of the Company's profits taxed in relatively higher tax rate jurisdictions.

Current wording

Excluding the impact of discrete tax items, the Company's effective tax rate was 18% and 17% for the three-month and nine-month periods in 2025, respectively, compared to 17% and 15% for the same periods in 2024, respectively. The year-over-year increases were due to more of the Company's profits taxed in relatively higher tax rate jurisdictions.

Previous wording

The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and resulted in an accumulated cash and investment balance of $552,551,000 as of June 29, 2025. The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments to maintain liquidity and safety of its investment portfolio.

Current wording

The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and resulted in an accumulated cash and investment balance of $600,344,000 as of September 28, 2025. The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments to maintain liquidity and safety of its investment portfolio.

Previous wording

Net cash provided by operating activities totaled $83,127,000 for the six-month period in 2025 as compared to $41,406,000 in the same period of 2024. Disciplined cost management and a reduction in inventories primarily drove the increase in operating cash flow from the prior year. In the second quarter of 2025, the Company made the final payment totaling $15,503,000 related to a one-time transition tax on unrepatriated foreign earnings arising from the Tax Cuts and Jobs Act of 2017.

Current wording

Net cash provided by operating activities totaled $170,612,000 for the nine-month period in 2025 as compared to $97,677,000 in the same period of 2024. The increase in operating cash flow from the prior year was primarily driven by stronger business performance.

Previous wording

Net cash provided by investing activities totaled $29,121,000 for the six-month period in 2025. Investing activities included capital expenditures that totaled $4,695,000 and consisted primarily of continued investments in business systems, manufacturing equipment related to new product introductions, and building and leasehold improvements.

Current wording

Net cash provided by investing activities totaled $47,624,000 for the nine-month period in 2025. Investing activities included capital expenditures that totaled $6,147,000 and consisted primarily of continued investments in business systems, test equipment related to new product introductions, and building and leasehold improvements.

Previous wording

Net cash used in financing activities totaled $131,626,000 for the six-month period in 2025.

Current wording

Net cash used in financing activities totaled $169,197,000 for the nine-month period in 2025.

Previous wording

In March 2022, the Company's Board of Directors (the "Board") authorized a program providing for the repurchase of $500,000,000 of the Company's common stock (the "Program"). Under the Program, in addition to repurchases made in other periods, the Company repurchased 3,047,000 shares at a total cost of $102,233,000 during the six-month period in 2025. As of June 29, 2025, the remaining balance of the Program was $164,020,000. The Company may repurchase shares under the Program in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements. The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, or in privately negotiated transactions.

Current wording

In March 2022, the Company's Board of Directors (the "Board") authorized a program providing for the repurchase of $500,000,000 of the Company's common stock (the "Program"). Under the Program, in addition to repurchases made in other periods, the Company repurchased 3,594,000 shares at a total cost of $126,233,000 during the nine-month period in 2025. As of September 28, 2025, the remaining balance of the Program was $140,020,000. The Company may repurchase shares under the Program in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements. The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, or in privately negotiated transactions.

Previous wording

The Board declared and paid cash dividends of $0.08 per share for the first and second quarters of 2025, totaling $26,981,000. Future dividends will be declared at the discretion of the Board and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations.

Current wording

The Board declared and paid cash dividends of $0.08 per share for the first, second, and third quarters of 2025, totaling $40,424,000. Future dividends will be declared at the discretion of the Board and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations.

Previous wording

As of June 29, 2025, the Company had inventory purchase commitments of $50,682,000, with the majority payable within twelve months, and lease payment obligations of $124,195,000, with $16,653,000 payable within twelve months.

Current wording

As of September 28, 2025, the Company had inventory purchase commitments of $42,597,000, with the majority payable within twelve months, and lease payment obligations of $112,656,000, with $16,024,000 payable within twelve months.