Cognex Corp Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Joe Giordano - TD Cowen - Analyst : Maybe I'll start on the OpEx. I don't want to overreact to any one quarter, but like that was nice to see on higher revenues, seeing OpEx decline. How much of that -- was there anything kind of like more onetime-ish in nature there? Like how should we think about the ability to leverage the (technical difficulty) of the year and like structurally from here?

Question: Joe Giordano - TD Cowen - Analyst : Fair. And then while I have both Rob and Matt on here, I had more of a philosophical question about embedded versus kind of computer vision. Like I know that, I mean, clearly, you guys lead in what you do and how you do it. I think there's just been a push from the market to at least make a claim that you could do more things than you could in the past without having to have embedded, right, that there's been technology changes that have allowed that other technology to compete more directly. How do you respond to that? And how do you think Cognex in the next decade plays in like the combination of those two types of technologies?

Question: Damian Karas - UBS Equities - Analyst : Rob, congratulations on all you've been able to accomplish over the years. And I know you're not vanishing from Cognex, but I wish you the best in your retirement. And Matt, obviously, congratulations on your new role. So maybe just starting with consumer electronics, I would like to hear a little bit more on your thoughts there. I know you mentioned it down in the first quarter, but you're expecting modest growth this year. Could you just talk a little bit about what you're hearing from customers, what trends you've been seeing? And just thinking about like a large smartphone maker looking to move production to India from China, like what are the potential implications for Cognex around that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:30PM, CGNX.OQ - Q1 2025 Cognex Corp Earnings Call

Question: Damian Karas - UBS Equities - Analyst : Well, I'm sure we can talk more about that at the Investor Day, but that's really helpful. And then, Dennis, I was hoping you could maybe just unpack a little bit more the tariff details. Like, how much are you importing from China into the US? What are we talking about? What kind of components? What kind of products? And could you just maybe give us a sense like how is Europe footprint in machine vision market compared to your competitors?

Question: Damian Karas - UBS Equities - Analyst : Perfect. Thanks a lot. I'll pass it along. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:30PM, CGNX.OQ - Q1 2025 Cognex Corp Earnings Call

Question: Tommy Moll - Stephens Inc. - Analyst : Thank you for taking my questions. Rob, I wanted to start on logistics, essentially to ask for whatever additional detail you can provide, whether it's by geography or customer type. You called out e-commerce as one of the drivers for the full year. But any additional detail you could provide on the outlook would be helpful.

Question: Tommy Moll - Stephens Inc. - Analyst : Indeed. Thank you. Dennis, I wanted to take a second bite at the apple here on the OpEx controls. Noting that FX was a good guy in the first quarter you just reported. But can you give us any insight, excluding the FX impact, would you still characterize the OpEx dollars as lower year over year? And is that repeatable in future quarters where you may show top-line growth accompanied by OpEx decline? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 12:30PM, CGNX.OQ - Q1 2025 Cognex Corp Earnings Call

Question: Tommy Moll - Stephens Inc. - Analyst : Thank you, Dennis. I'll turn it back.

Question: Andrew Buscaglia - BNP Paribas Exane - Analyst : I wanted to get your take on your comments that you're not really seeing much delayed decision-making or customer hesitancy yet. First off, does that surprise you in the quarter? Do you think a company with -- a little bit more tied to CapEx cycles would see something like that or see that coming in the future? And then you do talk about a little bit of weakness in auto, which seemed to be maybe slightly worse than you expected. So are you seeing it maybe in that segment? And maybe comment on your thoughts on auto for the rest of the year.

Question: Andrew Buscaglia - BNP Paribas Exane - Analyst : Yeah, interesting. Yeah, a lot of moving parts, but yeah, that's good color. Thank you. I also want to get your take on gross margins in that, sort of each quarter, you think we've seen the bottom here in your margins and they tick a little bit lower. And now you got this incremental 50 basis point headwind from tariffs, it seems. Do you expect margins to improve sequentially from here despite that headwind? And what were the biggest hits within gross margin in Q1?

Question: Andrew Buscaglia - BNP Paribas Exane - Analyst : Thank you.

Question: Kevin Wilson - Truist Securities - Analyst : This is actually Kevin Wilson on for Jamie. Thanks for your time. Congrats, Rob and Matt. And I just wanted to ask about (technical difficulty).

Question: Kevin Wilson - Truist Securities - Analyst : Thanks. That's very helpful. And then following up on that emerging customer sales force, which you just mentioned there, understanding the sales transformation efforts makes sort of quantifying incremental revenue from that cohort more difficult. But just wondered if you could provide color qualitatively on how bookings and sales for that less sophisticated customer base have gone in the quarter. And then any thoughts on the OpEx spend associated with emerging customers? Are you considering pulling back costs? Or just anything around OpEx spending given just how that initiative has performed relative to your targets when you started the program.

Question: Kevin Wilson - Truist Securities - Analyst : Thank you.

Question: Piyush Avasthy - Citi - Analyst : Thanks for taking my questions. I think you highlighted reshoring and recalibration of global supply chain as an opportunity. I understand it's still early and macro environment remains fluid, but have you seen a step-up in conversations with your customers? And would be curious to know if it's any particular end market, or if you could remind us how long does it generally take for these conversations to convert to orders for Cognex.

Question: Piyush Avasthy - Citi - Analyst : And I want to go back to China. It was down in the quarter, but I think you expect improvement in consumer electronics in 2Q, 3Q. So I think that should help. But can you elaborate on the trends? I think there's a bit of anti-American sentiment that's going on. I don't know if you sense that. And I think you have talked about pricing challenges in the region as well. Do you expect pricing to improve as demand picks up? Or do you think pricing could stay challenged in that region?

Question: Piyush Avasthy - Citi - Analyst : Appreciate all the color. Good luck, Rob, on whatever is next. And congrats, Matt.

Question: Jacob Levinson - Melius Research - Analyst : Well, I just wanted to say, welcome, Matt, and congrats, Rob, on the great run. And certainly after 17 years, I think you deserved a vacation at least. So hopefully, (inaudible). I just had -- I know we're coming up on the hour here, so I just had a quick question for Dennis. But certainly, your stock is down quite a bit this year, even after the rebound here. I know you bought back some shares in the quarter. But can you just give us a sense of how you're balancing maybe the buyback opportunity versus keeping some cash on a rainy-day fund given the uncertain outlook out there?

Question: Jacob Levinson - Melius Research - Analyst : That's everything for me. I appreciate the time, and I'll see you, folks, in June.