Executive Summary

Cognex delivered a stronger-than-expected Q3: revenue $276.9M (+18% Y/Y) and adjusted EPS $0.33 (+69% Y/Y), both above S&P Global consensus (revenue $261.9M; EPS $0.276), driven by Logistics and broader Factory Automation (Consumer Electronics, Packaging) and aided by a one-time commercial partnership (CP) benefit . Consensus values from S&P Global.*
Margin expansion continued: operating margin 20.9% (↑750 bps Y/Y) and adjusted EBITDA margin 24.9% (↑730 bps Y/Y), with underlying (ex-CP) adjusted EBITDA margin of 22.1% (↑450 bps), reflecting revenue growth and disciplined OpEx .
GAAP EPS fell to $0.10 due to a $33.7M discrete tax expense tied to U.S. tax law changes (“One Big Beautiful Bill Act”), while adjusted EPS removes this one-time tax item .
Q4 guide: revenue $230–$245M (midpoint +3% Y/Y), adj. EBITDA margin 17–20%, adj. EPS $0.19–$0.24; company continues to expect no material tariff impact on adjusted EPS/margins; quarterly dividend raised to $0.085 (+6%) .
Potential stock catalysts: continued AI rollouts (SLX launch in Logistics; OneVision scaling in 1H26), sustained estimate momentum after Q3 beat, dividend increase, and constructive activist engagement from Engaged Capital focused on margin expansion and growth acceleration .

What Went Well and What Went Wrong

What Went Well
- Logistics strength with innovation: “Q3 marks our seventh consecutive quarter of double-digit year-over-year revenue growth” in Logistics; launch of SLX product line brings AI vision to key warehouse applications and is expected to benefit gross margin and lower cost to serve .
- Broader Factory Automation recovery: strong Consumer Electronics (supply-chain diversification, new form factors) and Packaging momentum via salesforce transformation and easy-to-use AI-enabled products .
- Cash generation and capital return: FCF $86M in Q3; TTM FCF conversion 133% of adjusted net income; returned $37M to shareholders in Q3 and raised dividend 6% .
What Went Wrong
- GAAP EPS optics: $0.10 GAAP EPS down 39% Y/Y due to discrete tax expense of $33.7M related to OBBBA, masking strong adjusted EPS growth .
- Mix/tariff headwinds to gross margin: adjusted gross margin 68.4% vs 68.7% LY (-30 bps) on less favorable industry mix and tariffs, partly offset by CP .
- Auto still soft, Europe lagging: management sees auto “nearing a bottom” but still weak; Europe modest ex-CE procurement shift, with relatively more strength in Americas .

Financial Results

Income statement and margin trends (oldest → newest)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$234.742	$216.036	$249.093	$276.892
Gross Margin (%) (GAAP)	67.9%	66.8%	67.4%	67.6%
Adjusted Gross Margin (%)	68.7%	67.6%	68.0%	68.4%
Operating Margin (%) (GAAP)	13.4%	12.1%	17.4%	20.9%
Adjusted EBITDA ($M)	$41.220	$36.291	$51.676	$68.829
Adjusted EBITDA Margin (%)	17.6%	16.8%	20.7%	24.9%
GAAP Diluted EPS ($)	$0.17	$0.14	$0.24	$0.10
Adjusted Diluted EPS ($)	$0.20	$0.16	$0.25	$0.33

Q3 2025 vs S&P Global consensus (surprise)

Metric	Actual	Consensus	Surprise
Revenue ($M)	$276.892	$261.887*	Above (by ~$15.0M)
Adjusted EPS ($)	$0.33	$0.276*	Above (by ~$0.05)
EBITDA ($M)	$68.829	$58.241*	Above (by ~$10.6M)

KPIs and capital allocation

KPI	Q3 2025
Cash + Investments	$600M; No debt
Cash from Operations	$87.5M
Free Cash Flow	$86.0M
Share Repurchases	$24M in Q3
Dividends Paid	$13M in Q3
Quarterly Dividend (Declared 10/29)	$0.085 per share (+6% Q/Q)

Note: CP (commercial partnership) provided a one-time benefit in Q3; ex-CP adjusted EBITDA margin was 22.1% (↑450 bps Y/Y) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q4 2025	N/A	$230–$245M	New
Adjusted EBITDA Margin	Q4 2025	N/A	17%–20%	New
Adjusted EPS (Diluted)	Q4 2025	N/A	$0.19–$0.24	New
Tariff impact on Adj. EPS/EBITDA	FY 2025	“No material impact” reiterated	“No material impact” maintained	Maintained
Dividend per share (quarterly)	Q4 2025	$0.08 (declared 7/30)	$0.085 (declared 10/29)	Raised ~6%

Management also framed 2025 ex-CP as mid-single digit revenue growth, and 2026 macro reads (PMIs 48–51) suggest a similar “early cycle” growth environment; not formal guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
AI/technology initiatives	OneVision cloud AI platform announced; positive initial feedback; strategy to be #1 in AI for machine vision	SLX logistics AI devices launched; OneVision targeting full-scale launch 1H26; focus on ease-of-use and deployment	Accelerating
Supply chain, tariffs, macro	Q1: expect to substantially mitigate direct tariff impact; Q2: no material impact to adj EPS/margin	Reiterated no material impact; adjusted GM -30 bps Y/Y on mix/tariffs; CFO cites early-cycle PMI backdrop	Managed; macro cautious
Product performance	Q2: CE and Packaging strength; Logistics sixth straight Q/Q Y/Y growth; Semi cautious	Logistics seventh straight double-digit Y/Y growth; CE strong; Packaging solid; Auto soft but nearing bottom; Semi modest growth vs tough comp	Positive ex-Auto
Regional trends	Q2: Europe benefited from CE procurement shift; Greater China declined (ex shift)	Americas +27% (incl CP); Europe +24% (CE procurement shift); Greater China +9% (after adjustments); pricing stabilizing in China	Improving in China
Regulatory/legal (tax)	Q1: tariff mitigation; not material to adjusted metrics	GAAP EPS hit by $33.7M discrete tax expense from OBBBA; neutral to adjusted EPS in 2025	One-time GAAP headwind
R&D execution	OneVision early access; expanding compatibility	OneVision full launch planned 1H26; strong customer feedback; SLX extends AI into logistics	On track

Management Commentary

“Q3 was another strong quarter for Cognex. We delivered outstanding financial results… and remain focused on advancing our strategic objective: to be the leading provider of AI technology for industrial machine vision.” — Matt Moschner, CEO .
“Our strong Q3 results reflect disciplined execution… We delivered meaningful progress on operational efficiency and generated exceptional cash flow.” — Dennis Fehr, CFO .
On Logistics/SLX: “SLX really strikes at the heart of… gross margin… and OpEx… low touch, no touch deployment… benefits on the gross margin line as well as on the OpEx line” .
On macro and 2026 frame: PMIs 48–51 indicate “initial stage of the cycle… moderate growth… similar [to] 2025 excluding [CP]” (not formal guidance) .
On China: “Strong Y/Y growth… competitive dynamic… pricing stabilize[s]” with local investment in sales/engineering paying off .

Q&A Highlights

Consumer Electronics drivers: Growth from supply-chain diversification (ASEAN/India) and new form factors; advanced AI vision enabling more complex inspections .
China strength: Broad-based growth ex-auto; investments in local channel/engineering; pricing stabilization improving competitiveness .
Logistics mix and economics: Growth largely from productivity in existing facilities; SLX expected to improve gross margin and reduce cost to serve via simplified deployment .
Automotive outlook: Still challenging but “nearing a bottom”; stronger in U.S. vs Europe; long-term drivers remain quality, labor scarcity, and automation ROI .
OpEx and margins: Programmatic cost actions; aim for OpEx growth below revenue with attractive adjusted EPS growth; seasonal deleverage expected in Q4 .

Estimates Context

Q3 2025 beats: revenue $276.9M vs $261.9M*; adjusted EPS $0.33 vs $0.276*; EBITDA $68.8M vs $58.2M* .
Prior quarters also exceeded consensus modestly: Q1 revenue $216.0M vs $212.3M* and EPS $0.16 vs $0.127*; Q2 revenue $249.1M vs $246.1M* and EPS $0.25 vs $0.228* .

Estimates vs actuals by quarter (oldest → newest)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus Mean ($M)	$212.280*	$246.109*	$261.887*
Revenue Actual ($M)	$216.036	$249.093	$276.892
Primary EPS Consensus Mean ($)	$0.127*	$0.228*	$0.276*
Adjusted/Diluted EPS Actual ($)	$0.16	$0.25	$0.33
EBITDA Consensus Mean ($M)	$28.373*	$48.749*	$58.241*
Adjusted EBITDA Actual ($M)	$36.291	$51.676	$68.829

*Values retrieved from S&P Global.

Where estimates may need to adjust: Q4 guide implies a typical seasonal step-down sequentially but Y/Y growth at midpoint (+3%); with Q3’s broad-based beat and reiterated tariff impact neutrality, Street models may need to nudge 2025 EPS up and refine 2026 frameworks toward “moderate growth” while embedding margin discipline .

Key Takeaways for Investors

Broad-based beat with improving quality of earnings: ex-CP margin expansion and OpEx discipline support durable profitability; watch for sustainability into seasonal Q4 .
AI-led product cycle: SLX opens new high-value logistics vision use cases; OneVision scaling in 1H26 should underpin mix/pricing power and TAM expansion .
End-market setup: Logistics/CE/Packaging positive; Auto stabilizing from weak; Semi positioned to benefit from AI/memory/fab investments albeit non-linear .
China inflection: Growth and pricing stabilization with local investments — an underappreciated lever for 2026 upside if sustained .
Capital allocation and returns: strong FCF, dividend hike, buybacks; TTM FCF conversion 133% of adjusted net income .
Macro frame: Management’s early-cycle read (PMIs ~50) argues for continued cost vigilance and EPS compounding even on moderate top-line growth .
Activist oversight: Engaged Capital pushing for accelerated margin expansion and growth execution could catalyze further operational improvements and multiple support .

Sources: Q3 press release and 8-K (financials/guidance/dividend) , Q3 earnings call (themes, Q&A) , SLX launch release , Q2 8-K and call (trend/guidance context) , Q1 8-K (trend context) , activist release .

COGNEX CORP (CGNX)·Q3 2025 Earnings Summary