Cognex Corp Q2 2025 Earnings Call Transcript

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

Question: Jacob Levinson - Melius Research - Analyst : This is the first quarter I can recall that you've had revenues going up and costs going down just certainly a good thing. And I know you've obviously laid out some targets -- margin targets at the Analyst Day, but maybe either Matt or Dennis can you help us understand behind the scenes within the organization, what's really changing from a process perspective or maybe change incentives that is helping drive a better outcome in the margins?

Question: Jacob Levinson - Melius Research - Analyst : That's all really helpful color. Just on a separate topic. I know one of your larger electronics customers has some new products coming out. Next year, I think that are foldable different form factors. Can you help us understand what does that mean when you've got a change, and I assume it means there's a change in manufacturing technique and maybe you've got retooling of lines and why not, but what is when you have some new technology, if you will, what does that really mean for you folks in terms of machine vision?

Question: Damian Karas - UBS Equities - Analyst : Congratulations on the progress. I don't think we've heard about broadening factory automation improvement in a while. So maybe you could just provide a little bit more color around the trends that you are seeing in packaging and consumer electronics. Are you may be able to give us a sense of how much of that is new customer-driven versus how much is just the underlying market improving and existing customers kind of replacing or augmenting systems in their installed base. And just I guess your confidence that some of this improvement isn't just one-off activity, but rather a more sustainable trend?

Question: Damian Karas - UBS Equities - Analyst : That's really helpful. And as a follow-up, you talked about new products. I mean you showcased the AI devices and OneVision at your Investor Day, I'd be curious to hear what kind of early feedback you've been getting on the AI technology and solution set and any sense for when you might open up OneVision to the broader customer base?

Question: Joe Giordano - TD Cowen - Analyst : Yes. I'm curious on logistics. Are you seeing that more on like the greenfield side coming back of brownfield like kind of investment in existing facilities? Like what's driving that now? And where are you seeing kind of the most inflection?

Question: Joe Giordano - TD Cowen - Analyst : And when you think about something like OneVision, I'm just curious like what does that mean for you from like is it sold differently? Is it a different pricing mechanism? It seems like a nice improvement on how the products are used. But I'm just curious like what -- for you in terms of like -- in terms of driving a different type of sale.

Question: Tommy Moll - Stephens Inc - Analyst : Dennis, I wasn't sure if I heard you correctly, when you started giving some insight into fourth quarter, that's more than one quarter forward. But pretty sure I did hear you offer a comment there. And so I just want to clarify. For the base quarter and third quarter, should we use the revenue that includes or excludes the onetime payment? So I think I heard you say typical seasonality would be a high single-digit quarter over quarter decline. I just want to get the third quarter base right?

Question: Tommy Moll - Stephens Inc - Analyst : Okay. As a follow-up on logistics, I wanted to ask about the planning cycle there. As I understand a lot of this business, you have decent visibility on in the planning cycles are pretty methodical. Are you having any conversations regarding projects into next year at this point? Or how would you characterize the level of visibility that you have for what's ahead versus what the typical would be.

Question: Kevin Wilson - Truist Securities - Analyst : It's actually Kevin Wilson on for Jamie. On M&A, you spoke at the Investor Day with your new capital allocation framework. You mentioned potentially looking at nonvision adjacencies as acquisition opportunities perhaps in sensing components or other automation technologies. In the context of your new framework, I'm wondering if you can expand on what adjacencies you're considering outside your core Vision business and then more broadly, just how the pipeline for M&A or conversations with potential targets changed since you have changed maybe since you came out with your new framework.

Question: Kevin Wilson - Truist Securities - Analyst : That's helpful. And then just a follow-up on the medical lab automation item in the third quarter. Is that type of licensing arrangement? Are there other opportunities that have a similar profile that you're looking at moving forward or is that sort of just a onetime opportunity with that specific strategic part and then I'll pass it on ?

Question: Piyush Avasthy - Citigroup Global Markets - Analyst : Well, can you guys like drill down on auto's EV end market? I understand you mentioned lower project activity. But from your vantage point, can you maybe update on what your customers are telling you with regards to their CapEx plans beyond 2025. Just trying to understand where we are in the CapEx cycle. And also if there is anything different that you're seeing in EV versus like the traditional ICE, that would be helpful.

Question: Piyush Avasthy - Citigroup Global Markets - Analyst : Helpful, Matt. Dennis, I'll ask Ken's question in a slightly different way, like you -- on March is, like, as you said, you guys are already doing like 20%, and your 26% target is greater than 20% EBITDA margin. Given most of your end markets are on a positive trajectory, like -- and I understand it's still early, but why can't margins be in that 25% to 30% range, which is the next leg that you guys highlighted during your Investor Day?

Question: Jim Ricchiuti - Needham & Company - Analyst : A question on the growth in the packaging market. I wonder if you could talk a little bit about that and whether that -- how much of that might be coming from the sales initiatives that you have going on, particularly the sales noise, including the second class that you hired, I guess, mid last year.

Question: Jim Ricchiuti - Needham & Company - Analyst : And just a quick follow-up, just on the semi market. Has your view of that market changed versus earlier in the year just given the mixed signals we're hearing from the WFE market and there's that cautiousness? You don't look too far out, but does that bleed into 2026? Or is it just too early to comment on that?