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COGNEX CORP (CGNX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $216.0M, up 2% year-over-year (5% constant currency), with adjusted EBITDA margin 16.8% above the high end of guidance; GAAP diluted EPS was $0.14 and adjusted diluted EPS $0.16 .
  • Strength in Logistics (double-digit growth, fifth consecutive quarter) and Semiconductor offset ongoing Automotive weakness; Americas led growth (+20% YoY constant currency), while Europe (-7%) and Greater China (-9%) declined on mix and timing .
  • Q2 2025 guidance calls for revenue $235–$255M, adjusted gross margin in the high-60s, adjusted EBITDA margin 18.5%–21.5%, and adjusted tax rate ~16%—all implying continued operating discipline despite mix headwinds .
  • CEO transition announced: President/COO Matt Moschner to succeed Rob Willett on June 27, 2025; board expanded to eight directors. Company returned $116M to shareholders in Q1 (buybacks $102M, dividends $14M) and declared a $0.08 quarterly dividend .

What Went Well and What Went Wrong

What Went Well

  • Logistics revenue grew double digits YoY for the fifth consecutive quarter, reaching the highest level since Q1 2022; management expects strong full-year growth driven by large e-commerce customers and broader market penetration .
  • Operating discipline: adjusted EBITDA margin expanded ~490 bps YoY to 16.8% (above guidance), aided by lower operating expenses (-8% YoY; -6% sequential), cost management and efficiency improvements .
  • Tariffs: management expects to substantially mitigate direct cost impacts with no material EPS/EBITDA impact; estimated ~50 bps dilution to adjusted gross margin, with flexible supply chain across Southeast Asia supporting mitigation .

What Went Wrong

  • Gross margin contracted to 66.8% (adjusted 67.6%) from 67.3% (adjusted 68.8%) a year ago due to unfavorable mix (higher logistics, lower consumer electronics) and FX headwinds; pricing impacts were offset by productivity measures .
  • Automotive remained weak across geographies (EV battery investment declines, cautious large capital projects); management anticipates a more modest decline in 2025 vs. the 14% drop in 2024 but remains cautious .
  • Greater China revenue declined 9% YoY (constant currency), primarily timing in consumer electronics; competitive pricing pressure persists, though COGS productivity offset margin headwinds in Q1 .

Financial Results

Headline Financials

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$210.8 $229.7 $216.0
GAAP Gross Margin %67.3% 68.7% 66.8%
Adjusted Gross Margin %68.8% 69.4% 67.6%
Operating Margin % (GAAP)6.7% 13.4% 12.1%
Adjusted EBITDA Margin %11.9% 18.5% 16.8%
Diluted EPS (GAAP)$0.07 $0.16 $0.14
Adjusted Diluted EPS$0.11 $0.20 $0.16

Actual vs Consensus (Wall Street – S&P Global)

MetricQ1 2025 ConsensusQ1 2025 ActualSurprise
Revenue ($USD Millions)$212.3*$216.0 +$3.8M (+1.8%)*
Primary EPS ($)$0.127*$0.16*+$0.033 (+26%)*
EBITDA ($USD Millions)$28.4*$36.3 +$7.9M (+28%)*
# of EPS Estimates11*——
# of Revenue Estimates19*——

Values marked with * retrieved from S&P Global.

Balance Sheet & Cash Flow KPIs

KPIQ1 2024Q4 2024Q1 2025
Cash & Investments ($USD Millions)—$587 $513
Cash from Operations ($USD Millions)$13.6 $51.4 $40.5
Free Cash Flow ($USD Millions)$9.6 $49.3 $38.0
Share Repurchases ($USD Millions)—$43 $102
Dividends Paid ($USD Millions)—$14 $14

End-Market and Geographic Trends (Qualitative)

AreaQ1 2025 CommentaryYoY Direction
LogisticsFifth consecutive quarter of double-digit growth; highest level since Q1 2022 Up
SemiconductorRobust demand; HBM investments driving growth; cautious full-year outlook due to tariffs/trade policy Up
AutomotiveWeak across geographies; EV battery investment declines; cautious outlook Down
Consumer ElectronicsDown on project timing; more balanced seasonality expected between Q2 and Q3 Down
Packaging (FMCG/Healthcare)Stable with modest healthcare recovery; increased penetration opportunity Stable
Americas (geo)+20% YoY (constant currency), driven by logistics Up
Europe (geo)-7% YoY (constant currency), weaker automotive Down
Greater China (geo)-9% YoY (constant currency), CE timing; other factory automation up Down

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q2 2025 vs Q1 2025 guide$200–$220 (Q1 guide issued on 2/12/25) $235–$255 Raised
Adjusted Gross Margin %Q2 2025 vs Q1 2025 guideHigh 60s High 60s Maintained
Adjusted EBITDA Margin %Q2 2025 vs Q1 2025 guide12%–15% (Q1) 18.5%–21.5% (Q2) Raised
Adjusted Effective Tax Rate %Q2 2025 vs Q1 2025 guide~16% ~16% Maintained
Dividend per ShareQ2 timing$0.08 declared (payable May 29, 2025) $0.08 Maintained

Earnings Call Themes & Trends

TopicQ-2 (Q3 2024)Q-1 (Q4 2024)Current (Q1 2025)Trend
AI/TechnologyDeep Learning 4.0, AI transformer models; AI-driven DataMan series Continued AI features enhancing products In‑Sight 8900 smart camera brings embedded AI to OEMs Expanding AI across product stack
Supply Chain/Tariffs—Accelerated demand late Q4; FX and mix headwinds Tariff mitigation, ~50 bps adj. GM dilution, no material EPS impact Manageable, mitigated cost impact
Sales Force TransformationEmerging Customer initiative ramping; new customers added Investment in sales transformation Integrated sales org; leverage OpEx, 3,000 new customers in 2024; scalable capacity Scaling efficiently
Logistics DemandLed growth excl. Moritex; sequential dip on CE seasonality Strong momentum; accelerated demand late Q4 Double-digit growth; highest since Q1’22; strong pipeline Strengthening
AutomotiveFurther step-down Very weak Ongoing weakness; modest decline expected in 2025 vs 2024 Weak but stabilizing
Consumer ElectronicsTiming drove Q3; seasonality Q4 accelerated late; Q1 guide similar YoY Down in Q1 on timing; more balanced Q2/Q3; modest FY growth Normalizing seasonality
Regional TrendsStrong cash, no debt; cash/investments $607M Cash/investments $587M Americas +20% YoY; Europe -7%; Greater China -9% (CE timing) Mixed

Management Commentary

  • CEO transition: “Matt is absolutely the right person to lead our company through the next phase of growth.” – Rob Willett .
  • Strategic objectives: “Over the next 5 years, we will concentrate on… being the #1 provider of AI technology for industrial machine vision… best customer experience… substantially expanding our served customer base.” – Matt Moschner .
  • Product innovation: “We launched the In‑Sight 8900… fully‑embedded vision system powered by AI… making [products] easier to use and able to solve applications in a more intuitive and human‑like way.” – Rob Willett .
  • Profitability focus: “Adjusted EBITDA margin… well above the high end of our guidance and consensus… achieved through improved cost discipline and operating efficiency.” – Dennis Fehr .
  • Tariffs: “We believe we can substantially mitigate the direct cost impact… no material impact to earnings per share… we do expect a dilution of approximately 50 basis points on adjusted gross margin.” – Dennis Fehr .

Q&A Highlights

  • OpEx leverage: Management emphasized durable cost controls and FX effects, with a focus on profitable growth and leveraging existing expense base; expect OpEx to grow slower than revenue .
  • Embedded vs computer vision: Strong customer preference for embedded vision; cloud connectivity to “supercharge” embedded systems; Cognex sees opportunity across both .
  • Consumer electronics and reshoring: CE down in Q1 on timing, modest growth for FY; geographic shifts to India/Vietnam expected to drive more automated manufacturing—beneficial for Cognex .
  • Logistics detail: Strength skewed to large e‑commerce players, but broader market funnel building; focus on productivity/throughput in existing DCs (e.g., inbound dock, depalletizing) .
  • China, pricing, margins: Competitive environment; pricing pressure managed via COGS productivity; supply chain exposure to China minimal due to Southeast Asia contract manufacturing .
  • Capital allocation: Strong FCF supports buybacks; reduced pace near‑term to preserve M&A “firepower” amid uncertain outlook .

Estimates Context

  • Q1 2025 beat vs consensus: Revenue $216.0M vs $212.3M*, Primary EPS $0.16 vs $0.127*, EBITDA $36.3M vs $28.4M*; beats driven by logistics/semi strength and lower OpEx . Values marked with * retrieved from S&P Global.
  • Q2 2025 setup: Guidance midpoint (~$245M revenue; ~20% adjusted EBITDA margin) broadly aligns with S&P revenue consensus $246.1M* and EPS $0.228*; mix headwinds (logistics > CE) temper gross margin but operating discipline supports EBITDA . Values marked with * retrieved from S&P Global.
  • Potential estimate adjustments: Upward bias to near-term EBITDA/EPS given Q1 margin beat and higher Q2 EBITDA range; revenue trajectory modestly higher with logistics momentum despite auto weakness .

Key Takeaways for Investors

  • Logistics strength and disciplined OpEx drove broad-based beats vs consensus in Q1; momentum likely continues into Q2, supported by large e‑commerce investment and broader logistics penetration .
  • Mix shift (logistics up, CE down) and FX compress gross margins, but EBITDA and EPS are protected via productivity and cost control; tariff impact expected to be net‑neutral to EPS, ~50 bps adjusted GM dilution .
  • CEO transition appears orderly with continuity of strategy; Investor Day (June 10) to detail 5‑year AI‑centric plan and updated financial framework—near‑term catalyst for narrative re‑rating .
  • Auto remains the principal headwind; watch EV battery investment cadence and U.S. onshoring projects—management expects more modest decline in 2025 vs. 2024 .
  • Consumer electronics timing normalizes with more balanced Q2/Q3; geographic shifts (India/Vietnam) imply higher automation intensity, favoring Cognex over multi‑year horizons .
  • Capital deployment: Strong FCF, $116M returned in Q1; near-term buybacks likely more selective to preserve M&A capacity—monitor for accretive acquisitions in optics/AI/vision .
  • Near-term trading: Position for margin resilience and logistics strength into Q2; medium-term thesis centers on AI-led ease-of-use, sales-force expansion into packaging/healthcare, and supply-chain recalibration tailwinds .

Appendix: Additional Primary Source Details

  • Q1 2025 8‑K (Item 2.02, EX‑99.1): revenue $216M, adjusted EBITDA margin 16.8%, adjusted EPS $0.16; Q2 guidance; dividend; CEO transition .
  • Press release (4/30/25): detailed financials and reconciliations; constant currency growth; shareholder returns; cash/investments .
  • Prior quarters: Q4 2024 revenue $229.7M; adjusted EBITDA margin 18.5%; FY 2024 revenue $915M; Q1 2025 guidance then $200–$220M .
  • Q3 2024: revenue $235M; adjusted gross margin 68.7%; emerging customer initiative ramp; logistics/semi led growth .