Cognex Corporation

11/05/2026 | Press release | Distributed by Public on 11/05/2026 05:33

Quarterly Report for Quarter Ending October 4, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
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"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Readers can identify these forward-looking statements by our use of the words "expects," "anticipates," "estimates," "potential," "believes," "projects," "intends," "plans," "aims," "will," "may," "shall," "could," "should," "opportunity," "goal," "objective," "target," "milestone" 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, financial targets, milestones and related timing expectations, the closing, timing, integration, and expected results from acquired businesses, including RealSense, Inc. ("RealSense"), 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 including our salesforce transformation, new product offerings, innovation and product development activities, customer acceptance of our products, commercial partnerships, capital expenditures, cost management activities including expected annualized operating expense reductions, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, financial and operating models, 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, the inability to develop new products, and the inability to achieve growth through expanding and adjacent markets; (2) the impact of competitive pressures; (3) the inability to attract and retain skilled employees and effectively plan for succession, while maintaining our unique corporate culture; (4) the failure to properly manage the timely manufacturing and distribution of high-quality 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 and conflicts involving Iran, Ukraine, and Israel and those that may arise in the future in the geographies where we conduct business; (6) challenges in closing, integrating, and achieving expected results from acquired businesses, including RealSense, as well as exposure to potential liabilities and increased costs from acquired businesses; (7) uncertainty surrounding our future capital needs; (8) the inability to effectively scale our operations and salesforce to support a significantly expanded and diverse customer base in an increasing number of geographies; (9) information security breaches and other cybersecurity threats, including through the emergence of agentic AI; (10) the failure to comply with laws or regulations relating to data privacy, data protection, artificial intelligence, or other automated technologies; (11) the inability to protect our proprietary technology and data, as well as our intellectual property; (12) 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, including memory chips; (13) the loss of, or curtailment of purchases by, large customers in the logistics, consumer electronics, or automotive end markets; (14) challenges in accurately forecasting our financial results due to seasonal and cyclical variations in customer purchasing patterns and economic and market volatility; (15) potential impairment charges with respect to our investments or acquired intangible assets; (16) exposure to additional tax liabilities, increases and fluctuations in our effective tax rate, and other tax matters; (17) fluctuations in foreign currency exchange rates and the use of derivative instruments; (18) unfavorable global economic conditions, including, without limitation, increases in interest rates, elevated inflation rates, and recession risks; (19) business disruptions from natural or man-made disasters, public health crises, or other events outside our control; (20) stock price volatility; (21) our involvement in time-consuming and costly litigation or activist shareholder activities; and (22) the failure to effectively transform our operating model, manage our expenses, and achieve expected cost reductions. The foregoing list should not be construed as exhaustive and we encourage readers to refer to the detailed discussion of risk factors included in Part I - Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the "Annual Report"), as updated by Part II - Item 1A of this Quarterly Report on Form 10-Q (this "Quarterly Report"). The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company disclaims any obligation to subsequently revise forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date such statements are made.
Executive Overview
Cognex makes advanced machine vision easy, paving the way for manufacturing and distribution companies to become faster, smarter, and more efficient through automation. We are a global technology leader in industrial machine vision systems that seek to improve efficiency and help solve critical manufacturing and distribution
challenges, providing support across a diverse set of industrial end markets. In addition to revenue derived from the sale of machine vision products, the Company also generates revenue by providing maintenance and support, consulting, and training services to its customers; however, service revenue accounted for less than 10% of total revenue for all periods presented.
Machine vision is used in a variety of end markets where technology is widely recognized as an important component of automated production, distribution, and quality assurance. Virtually every manufacturer or distributor can achieve better quality and efficiency by using machine vision. This results in a broad base of potential customers across a variety of end markets, including logistics, consumer electronics, automotive, packaging, and semiconductor.
Revenue for the third quarter of 2026 totaled $313,387,000, representing an increase of 13% over the third quarter of 2025 due to broad-based strength across most major end markets. Gross margin as a percentage of revenue was 71% for the third quarter of 2026 as compared to 68% for the same quarter in 2025 due to a more favorable mix and higher sales volume, which improved fixed-cost absorption. Operating expenses for the third quarter of 2026 decreased 7% from the third quarter of 2025 due primarily to savings from continued cost management activities.
Operating income increased to 32% of revenue for the third quarter of 2026 as compared to 21% of revenue for the third quarter of 2025 due to operating leverage achieved from revenue growth, strong gross margins, and disciplined cost management. Net income increased to 27% of revenue, or $0.50 per diluted share, for the third quarter of 2026, as compared to 6% of revenue, or $0.10 per diluted share, for the same quarter in 2025. Net income in the third quarter of 2025 was impacted by significantly higher income tax expense from a discrete tax expense of approximately $33 million resulting from the One Big Beautiful Bill Act ("OBBBA").
Results of Operations
As foreign currency exchange rates are a factor in understanding period-to-period comparisons, we believe the presentation of our results on a constant-currency basis in addition to reported results improves investors' ability to understand our operating results and evaluate our performance in comparison to prior periods. We also use results on a constant-currency basis as one measure to evaluate our performance. Constant-currency information compares results between periods as if exchange rates had remained constant period-over-period. We generally refer to such amounts calculated on a constant-currency basis as excluding the impact of foreign currency exchange rate changes. Results on a constant-currency basis are not in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and should be considered in addition to, and not a substitute for, results prepared in accordance with U.S. GAAP.
Revenue
Revenue increased by $36,495,000, or 13%, for the three-month period in 2026 and increased by $131,066,000, or 18%, for the nine-month period in 2026 as compared to the same periods in 2025. In the third quarter of 2025, the Company recognized approximately $13 million of one-time revenue related to a strategic channel partnership in the medical lab automation industry upon the transfer of software access and inventories to this partner. Excluding the impact of foreign currency exchange rate changes, which resulted in a higher level of total revenue for the nine-month period, and the one-time revenue related to the strategic channel partnership in the third quarter of 2025, revenue increased by 19% for the three-month period in 2026 and increased by 18% for the nine-month period in 2026 as compared to the same periods in 2025. The increases were due to broad-based higher demand across most major end markets.
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 October 4, 2026 and September 28, 2025, respectively.
Three-months Ended Nine-months Ended
October 4, 2026 September 28, 2025 $ Change % Change October 4, 2026 September 28, 2025 $ Change % Change
(unaudited) (unaudited)
Americas $ 135,317 $ 104,513 $ 30,804 29 % $ 373,655 $ 296,499 $ 77,156 26 %
Percentage of total revenue 43 % 38 % 43 % 40 %
Europe $ 59,893 $ 74,687 $ (14,794) (20) % $ 182,599 $ 190,640 $ (8,041) (4) %
Percentage of total revenue 19 % 27 % 21 % 26 %
Greater China $ 66,935 $ 49,708 $ 17,227 35 % $ 170,819 $ 121,502 $ 49,317 41 %
Percentage of total revenue 21 % 18 % 20 % 16 %
Other Asia $ 51,242 $ 47,984 $ 3,258 7 % $ 146,014 $ 133,380 $ 12,634 9 %
Percentage of total revenue 16 % 17 % 17 % 18 %
Total revenue $ 313,387 $ 276,892 $ 36,495 13 % $ 873,087 $ 742,021 $ 131,066 18 %
Changes in revenue from a geographic perspective were as follows:
•Revenue from customers based in the Americas increased by 29% for the three-month period in 2026 and increased by 26% for the nine-month period in 2026 as compared to the same periods in 2025 due to stronger performance across major end markets. Revenue from customers based in the Americas also benefitted from consumer electronics customer procurement changes as purchases shifted from entities based in Europe to the Americas. These increases were partially offset by the one-time revenue from the strategic channel partnership in the third quarter of 2025 mentioned above, which primarily impacted the Americas region.
•Revenue from customers based in Europe decreased by 20% for the three-month period in 2026 and decreased by 4% for the nine-month period in 2026 as compared to the same periods in 2025. Excluding the impact of foreign currency exchange rate changes, revenue from customers based in Europe decreased by 19% for the three-month period and decreased by 8% for the nine-month period. The decreases were driven by the consumer electronics customer procurement shift from Europe to the Americas and the one-time revenue from the strategic channel partnership in the third quarter of 2025 mentioned above, as well as ongoing softness in the automotive end market, although the rate of decline moderated.
•Revenue from customers based in Greater China increased by 35% for the three-month period in 2026 and increased by 41% for the nine-month period in 2026 as compared to the same periods in 2025. Excluding the impact of foreign currency exchange rate changes, revenue from customers based in Greater China increased by 29% for the three-month period and increased by 35% for the nine-month period primarily due to higher revenue from customers in the consumer electronics and semiconductor end markets.
•Revenue from customers based in other countries in Asia increased by 7% for the three-month period in 2026 and increased by 9% for the nine-month period in 2026 as compared to the same periods in 2025. Excluding the impact of foreign currency exchange rate changes, revenue from customers based in other countries in Asia increased by 12% for the three-month period and increased by 13% for the nine-month period primarily due to higher revenue from customers in the semiconductor end market. These increases were partially offset by a decrease in revenue from customers in the packaging end market resulting primarily from the divestiture of the Company's Japan-focused trading business on April 1, 2026 (refer to Note 13 of the Consolidated Financial Statements). Excluding the impact of this divested business, revenue from customers based in other countries in Asia increased by 23% for both the three-month and nine-month periods.
Gross Profit
The following table sets forth our gross profit (in thousands) for the three-month and nine-month periods ended October 4, 2026 and September 28, 2025, respectively.
Three-months Ended Nine-months Ended
October 4, 2026 September 28, 2025 $ Change % Change October 4, 2026 September 28, 2025 $ Change % Change
(unaudited) (unaudited)
Gross profit $ 221,743 $ 187,290 $ 34,453 18 % $ 618,455 $ 499,489 $ 118,966 24 %
Percentage of total revenue 71 % 68 % 71 % 67 %
Gross margin was 71% for the three-month and nine-month periods in 2026 as compared to 68% and 67%, respectively, for the same periods in 2025. The increases were primarily due to more favorable mix, higher sales volume that improved fixed-cost absorption, and the favorable impact of higher average selling prices. These benefits more than offset the unfavorable impact of higher inventory purchase costs, primarily memory costs.
Operating Expenses
The following table sets forth our operating expenses (in thousands) for the three-month and nine-month periods ended October 4, 2026 and September 28, 2025, respectively.
Three-months Ended Nine-months Ended
October 4, 2026 September 28, 2025 $ Change % Change October 4, 2026 September 28, 2025 $ Change % Change
(unaudited) (unaudited)
Research, development, and engineering expenses $ 33,897 $ 35,081 $ (1,184) (3) % $ 103,313 $ 102,910 $ 403 - %
Percentage of total revenue 11 % 13 % 12 % 14 %
Selling, general, and administrative expenses $ 87,024 $ 94,444 $ (7,420) (8) % $ 268,930 $ 269,289 $ (359) - %
Percentage of total revenue 28 % 34 % 31 % 36 %
Total operating expenses $ 120,921 $ 129,525 $ (8,604) (7) % $ 372,243 $ 372,199 $ 44 - %
Percentage of total revenue 39 % 47 % 43 % 50 %
Research, Development, and Engineering Expenses
Research, development, and engineering ("RD&E") expenses decreased by $1,184,000, or 3%, for the three-month period in 2026 and remained relatively flat for the nine-month period in 2026 as compared to the same periods in 2025. For the three-month period, the decrease was primarily due to savings from continued cost management activities. For the nine-month period, the unfavorable impact of foreign exchange rates offset savings from cost management activities.
RD&E expenses as a percentage of revenue were 11% and 12% for the three-month and nine-month periods in 2026 as compared to 13% and 14%, respectively, for the same periods in 2025. 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. These percentages are impacted by revenue levels and investment cycles.
Selling, General, and Administrative Expenses
Selling, general, and administrative ("SG&A") expenses decreased by $7,420,000, or 8%, for the three-month period in 2026 and remained relatively flat for the nine-month period in 2026 as compared to the same periods in 2025. For the three-month period, the decrease was primarily due to savings from continued cost management activities, partially offset by higher sales commissions and approximately $2.5 million of transaction costs recorded in the third quarter of 2026 related to the Company's pending acquisition of RealSense that is expected to close in the fourth quarter of 2026 (refer to Note 14 of the Consolidated Financial Statements). For the nine-month period, the unfavorable impact of foreign exchange rates also offset savings from cost management activities.
Non-operating Income (Expense)
The following table sets forth our non-operating income (expense) (in thousands) for the three-month and nine-month periods ended October 4, 2026 and September 28, 2025, respectively.
Three-months Ended Nine-months Ended
October 4, 2026 September 28, 2025 $ Change % Change October 4, 2026 September 28, 2025 $ Change % Change
(unaudited) (unaudited)
Foreign currency gain (loss) $ (744) $ 840 $ (1,584) (189) % $ (2,951) $ (3,116) $ 165 (5) %
Investment income, net $ 3,358 $ 4,197 $ (839) (20) % $ 13,285 $ 12,227 $ 1,058 9 %
Other income (expense) $ (146) $ 61 $ (207) (339) % $ (2,199) $ 2,322 $ (4,521) (195) %
Total non-operating income (expense) $ 2,468 $ 5,098 $ (2,630) (52) % $ 8,135 $ 11,433 $ (3,298) (29) %
The Company recorded foreign currency losses of $744,000 and $2,951,000 for the three-month and nine-month periods in 2026, respectively, and a gain of $840,000 and a loss of $3,116,000 for the same periods in 2025. 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.
Investment income decreased by $839,000, or 20%, for the three-month period and increased by $1,058,000, or 9%, for the nine-month period in 2026 as compared to the same periods in 2025. Late in the third quarter of 2026, the Company sold investments, primarily corporate bonds, generating approximately $330 million of cash at a net loss of $2,407,000, which partially offset investment income during the period. The proceeds from these sales, along with existing cash balances, are intended to fund the pending acquisition of RealSense that is expected to close in the fourth quarter of 2026 (refer to Note 14 of the Consolidated Financial Statements).
The Company recorded other expense of $146,000 and $2,199,000 for the three-month and nine-month periods in 2026, respectively, and other income of $61,000 and $2,322,000 for the same periods in 2025. Other expense for the nine-month period in 2026 included a pre-tax loss of $1,539,000 related to the divestiture of the Company's Japan-focused trading business (refer to Note 13 of the Consolidated Financial Statements). Other income for the nine-month period in 2025 included a one-time, net Employee Retention Credit of $2,119,000 from the U.S. Internal Revenue Service to refund payroll taxes paid during the COVID-19 pandemic.
Income Tax Expense
The following table sets forth income tax information (in thousands) for the three-month and nine-month periods ended October 4, 2026 and September 28, 2025, respectively.
Three-months Ended Nine-months Ended
October 4, 2026 September 28, 2025 $ Change % Change October 4, 2026 September 28, 2025 $ Change % Change
(unaudited) (unaudited)
Income before income tax expense $ 103,290 $ 62,863 $ 40,427 64 % $ 254,347 $ 138,723 $ 115,624 83 %
Income tax expense $ 18,470 $ 45,199 $ (26,729) (59) % $ 45,067 $ 56,945 $ (11,878) (21) %
Effective income tax rate 18 % 72 % 18 % 41 %
The Company's effective tax rate was 18% for the three-month and nine-month periods in 2026, respectively, and 72% and 41% for the same periods in 2025. The Company recorded net discrete tax benefits of $1,454,000 and $2,184,000 for the three-month and nine-month periods in 2026, respectively, compared to net discrete tax expenses of $33,650,000 and $33,132,000 for the same periods in 2025.
In the third quarter of 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 $33,265,000 to increase its deferred tax liability during the third quarter of 2025.
Excluding the impact of discrete tax items, the Company's effective tax rate was 19% for the three-month and nine-month periods in 2026, respectively, and 18% and 17% for the same periods in 2025. The increase was primarily due to a greater portion of the Company's pre-tax income being earned in higher tax rate jurisdictions.
Liquidity and Capital Resources
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 $845,984,000 as of October 4, 2026. The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments to maintain liquidity and safety of its investment portfolio.
Operating Activities
Net cash provided by operating activities totaled $220,661,000 for the nine-month period in 2026 as compared to $170,612,000 for the same period in 2025. The increase in operating cash inflow from the prior year was driven by stronger business performance. This increase was partially offset by higher working capital requirements associated with revenue growth, primarily higher accounts receivable balances and inventory purchases.
Investing Activities
Net cash provided by investing activities totaled $222,008,000 for the nine-month period in 2026 as compared to net cash provided by investing activities of $47,624,000 for the same period in 2025. The increase in investing cash inflow from the prior year was due to the liquidation of a portion of the Company's investment portfolio late in the third quarter of 2026 generating approximately $330 million in cash intended to fund, along with existing cash balances, the pending acquisition of RealSense. This transaction is expected to close in the fourth quarter of 2026 for approximately $500 million, subject to customary adjustments (refer to Note 14 of the Consolidated Financial Statements).
Investing activities included capital expenditures that totaled $6,928,000 for the nine-month period in 2026 as compared to $6,147,000 for the same period in 2025. Capital expenditures in each period consisted primarily of investments in business systems, manufacturing test equipment related to new product introductions, and building and leasehold improvements.
Investing activities for the nine-month period in 2026 also included net proceeds of $11,519,000 from the divestiture of the Company's Japan-focused trading business (refer to Note 13 of the Consolidated Financial Statements).
Financing Activities
Net cash used in financing activities totaled $11,659,000 for the nine-month period in 2026 and $169,197,000 for the same period in 2025. The decrease in financing cash outflow from the prior year was due to higher proceeds from stock option exercises during the nine-month period in 2026.
In March 2022, the Company's Board of Directors (the "Board") authorized a program providing for the repurchase of up to $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 2,501,000 shares at a total cost of $105,231,000 during the nine-month period in 2026, leaving a remaining balance of $9,789,000 as of October 4, 2026. On February 11, 2026, the Board authorized the repurchase of up to an additional $500,000,000 of the Company's common stock upon completion of the Program. The Company may repurchase shares under these programs 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.
The Board declared and paid cash dividends of $0.085 per share for the first, second, and third quarters of 2026, totaling $42,763,000. 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.
Future Cash Requirements
As of October 4, 2026, the Company had inventory purchase commitments of $64,337,000, with the majority payable within twelve months, and lease payment obligations of $85,633,000, with $16,258,000 payable within twelve months.
On September 22, 2026, the Company announced that it entered into a definitive agreement to acquire RealSense, a leader in depth-sensing cameras and vision technology for robotic perception and physical artificial intelligence, for $500 million in an all-cash transaction, subject to customary adjustments. The Company also expects to provide a three-year approximately $56.5 million cash retention program at target, and up to a maximum of $69 million, for RealSense employees, subject to performance modifiers. The transaction is expected to close in the fourth quarter of 2026, subject to customary closing conditions, with the purchase price financed entirely from existing cash and investments (refer to Note 14 of the Consolidated Financial Statements).
We believe that the Company's existing cash and investment balances, together with cash flow from operations, will be sufficient to meet its operating, investing, and financing activities for the next twelve months, including the assumption that the Company completes its acquisition of RealSense. In addition, the Company has no long-term debt. We believe that our strong cash position has put us in a relatively good position with respect to anticipated longer-term liquidity needs.
New Pronouncements
Refer to Part I - Note 2 within this Quarterly Report for a full description of recently issued accounting pronouncements including the expected dates of adoption and the expected impact on the financial position and results of operations of the Company.
Cognex Corporation published this content on November 05, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 05, 2026 at 11:38 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]