The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Damian Karas - UBS Securities - Analyst
: I wanted to begin by asking you about the consumer electronics part of your business. How much of the current demand strength you're seeing
is a result of rising customer output and product rollouts versus your customers migrating their footprint to other regions? And curious what you're
hearing from some of your CE customers in terms of their plans to make further shifts of their supply chain and what that could mean for your
business in 2026?
Question: Damian Karas - UBS Securities - Analyst
: That's really helpful. And then I wanted to ask you about China, which I think if I heard correctly, you saw 9% growth. And so I guess if I just think
about what we've heard from a lot of our other industrial companies that have reported third quarter so far, we seem to be bucking the trend there
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OCTOBER 30, 2025 / 12:30PM, CGNX.OQ - Q3 2025 Cognex Corp Earnings Call
where I think a lot of others are experiencing some softness in China. So can you just elaborate on what you're seeing? What's driving the broader
strength there?
Question: Andrew Buscaglia - BNP Paribas - Analyst
: I was hoping you could discuss some of the trends you're seeing in logistics. I mean, obviously, that's been very strong for some time now. But how
much more of this existing capacity reinvestment from customers can you benefit from? And at what point do you need there to be another leg
up in new warehouse build-outs to grow?
Question: Andrew Buscaglia - BNP Paribas - Analyst
: Yes. Interesting. Okay. And then I was surprised to see semis grew a little bit. I think we were expecting much, if any, growth at all this year, which
you maintained your outlook in that space.
I guess what are the -- what's driving that pickup there? And then can you talk about maybe your -- how you would benefit from the memory
market? I would imagine you guys would have exposure there that seems to be certainly benefiting from AI. If you talk about that a little bit, that
would be great.
Question: Thomas Moll - Stephens Inc - Analyst
: I wanted to ask about automotive, Matt, I think I heard you say it feels like you're nearing a bottom there. What details can you give us? What
visibility do you have into next year? And to the extent you can distinguish what you're seeing in North America versus Europe, that would be
appreciated as well.
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OCTOBER 30, 2025 / 12:30PM, CGNX.OQ - Q3 2025 Cognex Corp Earnings Call
Question: Thomas Moll - Stephens Inc - Analyst
: Dennis, a question for you on margins. If we look at what you just reported in the third quarter, and this will be ex Moritex, ex the commercial
partnership, you delivered teens top line growth with only 1 point of adjusted OpEx growth. Clearly, that's not repeatable over a long time horizon.
And so if we take that as one bookend, the other bookend you gave us is basically a reminder of your long-term framework just that OpEx grows
at a slower rate than sales. That's a pretty wide range for us to think about.
If we're thinking next 12 months, is there anything you could do to situate us somewhere within that wide range in terms of what's reasonable?
Question: Jacob Levinson - Melius Research - Analyst
: Just wanted to go back to logistics for one second. I know you folks have seen some pretty nice growth there in the last couple of quarters, but it's
been -- it's put some pressure on your gross margins, if I recall, just given the engineering resources that you need to use with implementing
machine vision for some of those customers. So the question, I guess, is as you roll out some of these AI-enabled products, does that actually lower
your cost to serve those customers going forward?
Question: Jacob Levinson - Melius Research - Analyst
: Okay. That's helpful. And just wanted to touch quickly on the commercial partnership that you announced. I think if memory serves, you've had
more of a presence in sort of the medical device space as opposed to lab automation. But are there more opportunities like this to partner with
some of these OEMs, whether it's the medical space or others?
And kind of how does this fit into the larger strategy around expanding into some of these newer markets?
Question: Piyush Avasthy - Citi - Analyst
: Matt, maybe like on your Investor Day, you laid out a 6% to 7% growth contribution from increased machine vision penetration. It's just been like
a couple of quarters, but maybe some early feedback on how that is progressing. I see you have been -- it has been associated more with packaging.
Maybe comment on how you can see this supporting your other end markets. And then there is this reorganization, maybe just comment on like
how you balance these cost actions while still being aggressive towards penetrating new markets.
Question: Piyush Avasthy - Citi - Analyst
: Very helpful. And I know you just gave guidance 1 quarter ahead, but you did spoil us last time with some incremental color on 4Q. So as we think
of like 1Q '26, anything you want to remind us in terms of seasonality, any material deviation from the end market commentary that you just
highlighted today, that would be helpful.
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OCTOBER 30, 2025 / 12:30PM, CGNX.OQ - Q3 2025 Cognex Corp Earnings Call
Question: Guy Hardwick - Barclays - Analyst
: I would like to ask about automotive, which is obviously your softest market. There has been some maybe more slightly positive commentary with
some major CapEx announcements by OEMs. And I guess, typically, if you're looking at 2026 and where the model launch cycle looks perhaps a
little better in the second half of the year, you sure you have to put the CapEx in like 12 months ahead. So I was wondering whether there's any
lead indicators from your customers in terms of models or product refreshes or CapEx plans, which may give you some cause for optimism for 2026
in auto.
Question: Joseph Giordano - TD Cowen - Analyst
: Can you -- when you talk about like AI making things easier to deploy, like it's also, I guess, helping nontraditional players start to try to deliver
solutions here. We're seeing that from like automation players, things like that. So can you maybe talk about the competitive environment, how
it's like evolving with who's trying to participate on the fringes and what that means for you?
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OCTOBER 30, 2025 / 12:30PM, CGNX.OQ - Q3 2025 Cognex Corp Earnings Call
Question: Joseph Giordano - TD Cowen - Analyst
: And then since you guys have kind of evolved the strategy a little bit, the only part that we haven't really seen a ton of evidence of yet is on the
M&A side. So can you maybe talk us through what you're seeing out there? I know valuations are challenging, but a lot of buzz out there on robotics
now, humanoids, all these different things. Like where does it make sense for Cognex to participate going forward?
Question: Kenneth Newman - KeyBanc Capital Markets Inc - Analyst
: Dennis, I just wanted to kind of come back to those 2026 comments that you made at the end of your prepared remarks. I understand it's not a
formal guide, but when you say similar growth trends ex the commercial partnership, is that comment relative to how you see the full year of 2025
playing out? Or is that more so relative to what you've seen in the last couple of quarters? I just asked because you do seem a bit more constructive
on most of the end markets that you're operating in. You're even kind of calling out being close to a bottom in auto. I'm just trying to understand
the thought process there.
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OCTOBER 30, 2025 / 12:30PM, CGNX.OQ - Q3 2025 Cognex Corp Earnings Call
Question: Kenneth Newman - KeyBanc Capital Markets Inc - Analyst
: Yes. No, that makes sense. I appreciate that. And then maybe for the follow-up here, sorry if I missed it, but did you provide an update on the One
Vision platform? And just any color on when that becomes more commercially available?
Question: Brendan Shea - JPMorgan - Analyst
: This is Brendan Shea, on for Tomo. Just with the launch of the SLX portfolio, can you talk to the pipeline for the new AI-enabled use cases that you
see and sort of how you see that impacting both your TAM and competitive positioning over the next year or 2?
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OCTOBER 30, 2025 / 12:30PM, CGNX.OQ - Q3 2025 Cognex Corp Earnings Call
Question: Kevin Wilson - Truist Securities - Analyst
: This is actually Kevin Wilson, on for Jamie. I want to ask on Europe. I think you said grew modestly, excluding the procurement shifts in consumer
electronics. Sorry if I missed it, was that modest growth also excluding the onetime partnership in the quarter? And then just more broadly, excluding
the onetime and excluding the procurement shifts, how are you thinking about demand trends, organic growth and your visibility in Europe? And
maybe if it's possible to strip out auto, think about how that market is performing.
Question: Kevin Wilson - Truist Securities - Analyst
: That's helpful. And then for my follow-up, now that I think we're about 1 year into your sales reorganization, I'm wondering if you can update on
your assessment of that change in strategy. I know it was long stops talking about emerging customer in those terms. But with one vision and your
broader expanding the customer base into less sophisticated customers, I guess, what inning are we in for Cognex market penetration there? And
any specific goals you have for 2026 on your path to doubling the number of customers served.
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