The documents do not provide a definitive explanation for the significant drop. However, they indicate that despite record cash flows (with **$56 million** from operating activities and **$52 million** in free cash flow), the company spent **$4 million** on repurchasing common stock and paid **$13 million** in dividends during Q3 2024, which likely contributed to the decline in cash and cash equivalents—from **$202,655,000** at December 2023 to **$197,075,000** in Q3 2024.  **[20241030NE44807:3]** **[0000851205-24-000077_exhibit991-q32024earningsr.htm:3]** **[0000851205-24-000079_cgnx-20240929.htm:4]** **[0000851205-24-000077_exhibit991-q32024earningsr.htm:1]** 

Why did Cash and cash equivalents drop so significantly in Q3 2024?

The increase in Q3 2024 was primarily driven by **substantial increases in accounts receivable** and **non-current investments**. The accounts receivable surged from **$114,164,000** to **$157,968,000**, which reflects higher sales or delayed collections, while non-current investments increased from **$244,230,000** to **$319,287,000**. Even though current investments and intangible assets declined during this period, the significant gains in the other asset categories led to the peak in total assets for Q3 2024.  **[20241030NE44807:3]** **[0000851205-24-000077_exhibit991-q32024earningsr.htm:3]** **[0000851205-24-000079_cgnx-20240929.htm:4]** 

Why did Total assets peak in Q3 2024?

The decrease in total liabilities was primarily driven by **reductions in deferred income taxes, operating lease liabilities, and deferred revenue and customer deposits**, along with the **complete elimination of non-current accrued income taxes** (which dropped from **$18,338 thousand** to zero). Although there were increases in accounts payable and accrued income taxes, these factors were more than offset by the significant declines in the other liabilities components.  **[20250212NE18273:3]** 

What drove the decrease in Total liabilities in Q4 2024?

4ae86aa5f8c82a175d5a02c8a3c5339c4c2681400768508bd96961d01d1da17a

The significant revenue increase in Q3 2024 was driven by several key factors. **First**, the acquisition of Moritex contributed **12 percentage points** to revenue growth, with a **7%** underlying year-over-year increase when excluding the acquisition's impact.  **[0000851205-24-000079_cgnx-20240929.htm:27]** **[0000851205-24-000077_exhibit991-q32024earningsr.htm:1]** **[20241030NE44807:1]**  **Second**, strong performance in the logistics and semiconductor industries played a major role.  **[0000851205-24-000079_cgnx-20240929.htm:27]** **[20241030NE44807:0]** **[0000851205-24-000077_exhibit991-q32024earningsr.htm:1]**  **Third**, the timing of large consumer electronics deployments—shifted from late Q2 2023 to early Q3 2024—provided a favorable comparison.  **[0000851205-24-000079_cgnx-20240929.htm:27]** **[0000851205-24-000077_exhibit991-q32024earningsr.htm:1]** **[20241030NE44807:1]**  **Finally**, there was robust geographic growth, with notable gains in China, Europe, and the Americas as well as Other Asia, which further supported the increased revenue.  **[CGNX_3405173_6]** **[0000851205-24-000079_cgnx-20240929.htm:29]** 

What drove the significant revenue increase in Q3 2024?

Q4 2024 revenue outperformance was driven by several key factors. There was strong momentum in the **Logistics** and **Semiconductor** sectors, which significantly boosted revenue. Additionally, the **Moritex acquisition** contributed approximately **5 percentage points** to the growth, with underlying revenue (excluding Moritex) still up by **12%**. This growth was further supported by robust geographic performance in **Greater China** and the **Americas**, even though the **Automotive** sector remained weak overall.  **[20250212NE18273:0]** **[0000851205-25-000010_exhibit991-q42024earningsr.htm:0]** **[0000851205-25-000010_exhibit991-q42024earningsr.htm:1]** **[CGNX_3415915_4]** 

Why did Q4 2024 revenue outperform the previous quarter's period?

The decline in Q2 2024 Operating Income was driven by several factors. **Lower gross margins** were a key element, as margins dropped from **74.1% in Q2 2023 to 69.6% in Q2 2024**, partly due to a less favorable revenue mix and the amortization of acquisition-related intangible assets from the Moritex acquisition, which diluted the margin by about 2 percentage points.  **[20240731NE74115:0]** **[0000851205-24-000069_exhibit991-q22024earningsr.htm:1]**  Additionally, **operating expenses were up by 12% year-over-year**, reaching **$128,142 thousand** due to incremental costs from the Moritex acquisition and the continued investment in the Emerging Customer initiative.  **[20240731NE74115:0]** **[0000851205-24-000069_exhibit991-q22024earningsr.htm:1]**  Finally, there was a slight overall **decline in revenue**, with a 1% decrease year-over-year (and a 7% decline when adjusting for currency and acquisition impacts), further contributing to the lower operating income.  **[20240731NE74115:0]** **[0000851205-24-000069_exhibit991-q22024earningsr.htm:1]** 

What factors led to the decline in Q2 2024 Operating Income?

The surge in **Q4 2024 net income** was driven by several factors including **revenue growth** where revenues increased by **17% YoY**, largely due to strong performances in the **Logistics** and **Semiconductor** segments, improved operating leverage marked by a **142% YoY increase** in operating income, and a **cleaner operational performance** due to the absence of a **$2,750 thousand fire-related recovery** seen in Q4 2023. Additionally, **lower acquisition and integration costs** and stability in adjusted gross margins also contributed to the significant improvement in profitability.  **[20250212NE18273:0]** **[0000851205-25-000010_exhibit991-q42024earningsr.htm:1]** **[20250212NE18273:5]** **[20250212NE18273:6]** 

What contributed to the surge in Q4 2024 Net Income?

5cc954e06d1eb3a712c584574c502420c6cd6ba18b5d23becb1ba411a375c65c

The operating cash flow was lower in Q1 2024 primarily due to a **decline in net income** from **$25,615,000** to **$12,022,000**, which was driven by **lower gross margins, increased operating expenses, and a higher effective tax rate**. Additionally, there were **changes in working capital**: a larger increase in **accounts receivable** (**$25,669,000** vs **$18,455,000**), a significant rise in **inventory purchases** (**$10,938,000** vs **$5,338,000**), and a smaller increase in **deferred revenue and customer deposits** (**$8,737,000** vs **$17,003,000**). These factors, along with higher non-cash adjustments that were insufficient to offset these impacts, contributed to the significant reduction in cash generated from operating activities in Q1 2024.  **[0000851205-24-000051_cgnx-20240331.htm:5]** **[0000851205-23-000008_cgnx-20230402.htm:6]** 

Why was Operating Cash Flow so low in Q1 2024?

The surge in **operating cash flow** in Q4 2024 was driven by several factors. Firstly, there was a **17% year-over-year revenue growth** largely supported by strong performances in the **Logistics and Semiconductor businesses**. Additionally, the company implemented **working capital efficiencies and cost discipline**, which positively impacted cash inflows from operations. The **adjusted EBITDA margin** also expanded by **580 basis points** year-over-year, reflecting better operational leverage, and operating expenses increased only modestly by **3%**, aiding in maintaining robust cash flows.  **[20250212NE18273:0]** **[0000851205-25-000010_exhibit991-q42024earningsr.htm:0]** 

What contributed to the surge in Operating Cash Flow in Q4 2024?

The increase in annual Operating Cash Flow in FY 2024 was primarily driven by several factors. **Accounts Receivable** adjustments played a role, as the company shifted from a cash inflow in FY 2023 to a significant cash outflow in FY 2024 due to increased receivables. Additionally, the reduction in the cash outflow related to **Inventories** and especially improvements in managing **Accrued Expenses** contributed to improved cash flow. There was also a notable positive impact from changes in **Accounts Payable**, which shifted from a cash outflow in FY 2023 to a cash inflow in FY 2024. Furthermore, smaller cash outflows for **Accrued Income Taxes** and **Deferred Revenue and Customer Deposits** further enhanced the overall operating cash flow in FY 2024.  **[0000851205-25-000012_cgnx-20241231.htm:52]** **[0000851205-25-000012_cgnx-20241231.htm:41]** 

What factors drove the increase in annual Operating Cash Flow in FY 2024?

3b02521ebc5f137ab34cf1997f4a62d2fe782e1919b4a29ed3d0b0ae73b6a861

Revenue (USD, thousands)

Cost of Revenue (USD, thousands)

Gross Profit (USD, thousands)

Research, Development, and Engineering Expenses (USD, thousands)

Selling, General, and Administrative Expenses (USD, thousands)

Operating Income (USD, thousands)

Foreign Currency Gain (Loss) (USD, thousands)

Investment Income (USD, thousands)

Other Income (Expense) (USD, thousands)

Income before Income Tax Expense (USD, thousands)

Income Tax Expense (USD, thousands)

Net Income (USD, thousands)

fbf2a2af8cbad74b18ca0ddb076c8d9d435ded12c6913ba2850e6e8d3896097f

Cash and cash equivalents (USD, thousands)

Current investments (USD, thousands)

Accounts receivable (USD, thousands)

Unbilled revenue (USD, thousands)

Inventories (USD, thousands)

Prepaid expenses and other current assets (USD, thousands)

Total current assets (USD, thousands)

Non-current investments (USD, thousands)

Property, plant, and equipment, net (USD, thousands)

Operating lease assets (USD, thousands)

Goodwill (USD, thousands)

Intangible assets, net (USD, thousands)

Deferred income taxes (Assets) (USD, thousands)

Other assets (USD, thousands)

Total assets (USD, thousands)

Accounts payable (USD, thousands)

Accrued expenses (USD, thousands)

Accrued income taxes (Current) (USD, thousands)

Deferred revenue and customer deposits (USD, thousands)

Operating lease liabilities (Current) (USD, thousands)

Total current liabilities (USD, thousands)

Non-current operating lease liabilities (USD, thousands)

Deferred income taxes (Liabilities) (USD, thousands)

Reserve for income taxes (USD, thousands)

Other liabilities (USD, thousands)

Total liabilities (USD, thousands)

Common stock (USD, thousands)

Additional paid-in capital (USD, thousands)

Retained earnings (USD, thousands)

Accumulated other comprehensive loss, net of tax (USD, thousands)

Total shareholders’ equity (USD, thousands)

Total liabilities and shareholders' equity (USD, thousands)

d8d5a144c3b4af94648b121ae0b8ba0f81382652e8f9b328c46b70dd6d8f5004

Stock-based Compensation Expense (USD, thousands)

Depreciation of Property, Plant, and Equipment (USD, thousands)

Amortization of Intangible Assets (USD, thousands)

Excess and Obsolete Inventory Charges (USD, thousands)

Fair Value Adjustment on Acquired Inventories (Note 21) (USD, thousands)

Amortization of Discounts or Premiums on Investments (USD, thousands)

Realized (gain) loss on Sale of Investments (USD, thousands)

Change in Deferred Income Taxes (USD, thousands)

Net Cash Provided by Operating Activities (USD, thousands)

Purchases of Investments (USD, thousands)

Maturities and Sales of Investments (USD, thousands)

Purchases of Property, Plant, and Equipment (USD, thousands)

Net Payments Related to Business Acquisitions (Note 21) (USD, thousands)

Net Cash Provided by (Used in) Investing Activities (USD, thousands)

Net Payments from Issuance of Common Stock under Stock Plans (USD, thousands)

Repurchase of Common Stock (USD, thousands)

Payment of Dividends (USD, thousands)

Net Cash Used in Financing Activities (USD, thousands)

Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents (USD, thousands)

Net Change in Cash and Cash Equivalents (USD, thousands)

Cash and Cash Equivalents at Beginning of Year (USD, thousands)

Cash and Cash Equivalents at End of Year (USD, thousands)

2fd9fc2970d9d3ed9ea5afdd48ab32d9485d2eb4f0fd3f5a9ddf2dcf2cf3d271

58a0ea96cbba2482564f480a5bee22bb6d4148a101d4222cac5b79e740ede95d

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

23901ece88114af749965383e88a7bfb4a320aeec9dfa51014c0353949340c01

e5399c926b6cb68fddf86592e357259897f6cc8cae60677ef7f87c50f73491e7

Standard Products and Services

- Application-Specific Solutions

Factory Automation

Semiconductor and Electronics Capital Equipment

Surface Inspection Market

- Modular Vision Systems Division (MVSD)

- Surface Inspection Systems Division (SISD)

Total Revenue

ca20453ceb2d267df64644c677d63acee01b8da4db1b6d2b284a8b8704365ee1

COGNEX (CGNX)

Financials