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COGNEX CORP (CGNX)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue was $249.1M, up 4% year over year; adjusted EBITDA margin reached 20.7% (+80 bps y/y) and GAAP diluted EPS was $0.24 while adjusted EPS was $0.25 (+12% y/y). Management emphasized disciplined OpEx and strong free cash flow as key drivers of margin expansion .
  • Gross margin compressed to 67.4% (adjusted 68.0%) on less favorable industry mix and tariffs; operating margin improved to 17.4% with adjusted operating margin at 18.7% (+90 bps y/y) .
  • Q3 2025 guidance: revenue $245–$265M, adjusted EBITDA margin 19.5%–22.5%, adjusted diluted EPS $0.24–$0.29; guidance excludes a one-time benefit to revenue of $8–$14M from a medical lab automation channel partnership. Tariffs expected to have no material impact on adjusted EPS/EBITDA margin; OBBBA expected to be neutral to adjusted EPS in 2025 and to provide $12–$15M cash tax benefit .
  • Narrative and potential stock reaction catalysts: sustained momentum in Logistics (sixth consecutive quarter of growth), broader Factory Automation strength (Consumer Electronics, Packaging), and strategic AI initiatives (OneVision) supporting product differentiation and customer reach .

What Went Well and What Went Wrong

What Went Well

  • Margin discipline and cash generation: “Adjusted EBITDA margin expanded by 80 bps to 20.7%… highest quarterly margin we’ve achieved in the past two years,” with trailing-12M FCF conversion at 130% of adjusted net income .
  • Market momentum: Strength in Logistics and broader Factory Automation, “especially in Consumer Electronics and Packaging,” driven by salesforce transformation .
  • AI leadership: Launch of OneVision cloud platform to streamline deployment of AI-powered vision tools; early customer feedback cited as positive and scalability expected across more products .

What Went Wrong

  • Gross margin pressure: GAAP gross margin fell to 67.4% (adjusted 68.0%), down ~230 bps y/y on mix and tariffs .
  • Automotive weakness: Continued decline in auto end market; management remains cautious on full-year outlook and noted labor scarcity and quality priorities amid macro uncertainty .
  • Semi slowdown: Modest y/y decline against a strong comparison and persistent tariff/trade-policy uncertainty affecting sentiment and supply chain planning .

Financial Results

Quarterly performance versus prior periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$229.684 $216.036 $249.093
GAAP Diluted EPS ($)$0.16 $0.14 $0.24
Adjusted Diluted EPS ($)$0.20 $0.16 $0.25
Gross Margin % (GAAP)68.7% 66.8% 67.4%
Gross Margin % (Adjusted)69.4% 67.6% 68.0%
Operating Margin % (GAAP)13.4% 12.1% 17.4%
Operating Margin % (Adjusted)16.2% 14.4% 18.7%
Adjusted EBITDA Margin %18.5% 16.8% 20.7%

Q2 2025 actuals vs Wall Street consensus (S&P Global)

MetricConsensusActual
Revenue ($USD Millions)$246.109*$249.093*
Primary EPS ($)$0.228*$0.250*

Values retrieved from S&P Global.*

Regional and end-market highlights (narrative, y/y on cc basis)

TopicQ2 2025 Highlights
Europe (cc)+13% y/y, partly due to consumer electronics customers ordering via Europe instead of China (procurement change); excluding this, slight growth led by Packaging
Americas (cc)+8% y/y, strength in Logistics and Packaging
Other Asia (cc)+5% y/y, strength in Consumer Electronics with supply chain shifting out of China
Greater China-18% y/y; excluding procurement change, declined modestly on supply chain shifts
LogisticsDouble-digit y/y growth for sixth straight quarter; broad-based across customers
PackagingMid-single-digit y/y growth; salesforce transformation expanding reach in Healthcare and FMCG
Consumer ElectronicsStrong y/y growth; similar revenue expected across seasonally strong Q2 and Q3
SemiModest y/y decline vs strong comp; cautious full-year view amid tariff/trade-policy uncertainty
AutomotiveContinued y/y decline; cautious outlook (weaker macros, cost pressures), but vision demand supported by quality and efficiency needs

KPIs and cash metrics

MetricQ4 2024Q1 2025Q2 2025
Cash & Investments ($USD Millions)$587 (YE 2024) $513 (as of Mar 30, 2025) $553 (as of Jun 29, 2025)
Cash from Operations ($USD Millions)$51 $40.502 $42.625
Free Cash Flow ($USD Millions)$49.331 $38.001 $40.431
Dividends Paid ($USD Millions)$14 (Q4) $14 (Q1) $13 (Q2)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 2025N/A$245–$265 New
Adjusted EBITDA Margin %Q3 2025N/A19.5%–22.5% New
Adjusted Diluted EPS ($)Q3 2025N/A$0.24–$0.29 New
One-time partnership benefit to revenueQ3 2025N/A$8–$14 excluded from guidance New
Tariffs impactFY 2025“No material impact” to adjusted EPS/EBITDA margin; ~50 bps gross margin dilution Maintained Maintained
Adjusted Effective Tax Rate %Q2 202516.0% (from Q1 PR) N/A in Q2 PR (focus shifted to Q3 metrics)Prior Q2 guidance benchmark
Dividend per share ($)Q3 2025$0.08 declared in Q1 $0.08 declared July 30, payable Aug 28 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesVisionPro Deep Learning 4.0; AI-driven DataMan series Continued focus; Investor Day announced OneVision cloud platform announced; phased rollout, early positive feedback Strengthening
Supply chain/geography shiftsLate-quarter demand acceleration; Moritex contribution Mitigating direct tariff costs expected CE supply chain shifting out of China; Europe procurement changes Shifting/neutral-to-positive
Tariffs/macroChina trade/tariff uncertainty Expect to substantially mitigate tariff costs in 2025 No material impact to adjusted EPS/EBITDA; 50 bps gross margin dilution; funnel normal Managed headwind
Product performanceNew AI-based ID readers Guidance to Q2: adj margins high-60s GM, 18.5–21.5% EBITDA Packaging, CE, Logistics strength; adjusted EBITDA >20% Improving mix (ex-GM)
Regional trendsNA/EU/Asia mixed; auto weak Logistics/Semi strong; auto down EU +13% (procurement shift), Americas +8%, Other Asia +5%, GC -18% Mixed; GC weaker
R&D and capital allocationMargin expansion; FCF strength, buybacks/dividends FCF conversion 120% TTM; buybacks $102M FCF conversion 130% TTM; returning >$200M to shareholders TTM Positive discipline

Management Commentary

  • CEO: “We sustained our positive momentum from Q1 into Q2, with strength in Logistics and broader Factory Automation, especially in Consumer Electronics and Packaging. We believe that our salesforce transformation is delivering impactful results…” .
  • CFO: “Adjusted EBITDA margin… above 20% for the first time since 2023… fourth consecutive quarter of EPS growth… free cash flow conversion rate… strengthened to 130% of adjusted net income” .
  • CEO on AI: “OneVision… designed to transform the way manufacturers build, train, and scale AI-powered vision tools… setting a new benchmark… simplifies complexity without compromising performance” .
  • CFO on guidance: “In Q3, we expect revenue between $245M and $265M… adjusted EBITDA margin between 19.5% and 22.5%… adjusted EPS between $0.24 and $0.29” .
  • CFO on tariffs: “We continue to expect no material impact on adjusted EBITDA margin and earnings per share and continue to estimate a 50 basis point dilution to gross margin” .

Q&A Highlights

  • Operating leverage and cost discipline: Management outlined a programmatic approach across engineering, sales, back-office, and facilities to optimize costs while funding growth initiatives; margin gains seen as sustainable with seasonality caveats .
  • Logistics growth drivers: Balanced between greenfield and brownfield; expanding vision (2D/3D) beyond traceability; process improvements in existing facilities .
  • Pricing/tariffs: Pricing pressure in China eased toward neutral; supply chain actions and customer agreements mitigate tariff impact; guidance includes ~50 bps gross margin dilution .
  • One-time channel partnership: Multi-year software license minimums and component inventory transfer recognized in a single quarter by accounting; excluded from guidance to highlight underlying run-rate .
  • Automotive/EV: Macros weak; vision demand supported by quality and efficiency needs; EV battery overcapacity normalizing; engagement continues on applications .

Estimates Context

  • Q2 2025 results compared to S&P Global consensus: Revenue $249.1M vs $246.1M* (beat by ~$3.0M); Primary EPS $0.25 vs $0.228* (beat by ~$0.022). Management’s guidance for Q3 implies continued y/y growth with margin expansion, which may support upward estimate revisions if execution persists .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Earnings quality improving: Adjusted EBITDA margin >20% for the first time in two years; disciplined OpEx and healthy FCF conversion underpin profitability even as gross margin faces mix/tariff headwinds .
  • Demand breadth: Logistics, Packaging, and Consumer Electronics strength offsets Semi softness and persistent Automotive weakness; regional mix shifting with supply chain migration out of China .
  • Guidance supports momentum: Q3 revenue $245–$265M and margin expansion, with “one-time” partnership benefit excluded—helpful for assessing underlying growth; watch seasonality in Q4 (expected sequential step down) .
  • AI platform catalyst: OneVision cloud platform could accelerate deployment of advanced vision and expand addressable use cases across devices/lines/sites—monitor rollout pace and attach rates through 2026 .
  • Tariffs manageable: No material impact expected on adjusted EPS/EBITDA margin; gross margin dilution estimated at ~50 bps—pricing pressures easing and supply chain mitigation progressing .
  • Capital returns: >$200M returned over TTM via buybacks/dividends; dividend maintained at $0.08 per share in Q2; balance sheet with $553M cash/investments and no debt supports flexibility .
  • Watch OBBBA tax effects: 2025 adjusted EPS neutral, but $12–$15M cash tax benefit expected; potential mechanics on reported tax rate to be clarified by management .