Cognex Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported record quarterly revenue of $313 million, a 13% year-over-year increase; excluding a one-time benefit from a commercial partnership, revenue grew 19% year-over-year.
• Operating margin reached 32.2% in Q3 2026, up 1,130 basis points from 20.9% in Q3 2025; adjusted operating margin was 34.2%, up 1,100 basis points.
• Adjusted EBITDA was $111 million, up 61% year-over-year, with an adjusted EBITDA margin of 35.5%, an expansion of 1,060 basis points; excluding the commercial partnership, the margin expanded 1,340 basis points.
• Net income was $85 million, a 372% increase from $18 million in Q3 2025; adjusted net income was $90 million, up 61%.
• Net income per diluted share was $0.50, a 400% increase from $0.10; adjusted diluted earnings per share were $0.53, up 61% (89% excluding the commercial partnership).
• Gross margin was 70.8% compared to 67.6% in Q3 2025; adjusted gross margin was 71.3%, up 290 basis points.
• Operating expenses were $121 million, a 7% decrease from $130 million in Q3 2025; adjusted operating expenses were $116 million, down 7%.
• Generated $106 million in cash from operating activities, up 22% from $87 million in Q3 2025.
• Generated $104 million in Free Cash Flow (FCF), up 21% from $86 million in Q3 2025; FCF conversion rate was 122% of net income and 116% of adjusted net income.
• Trailing twelve-month FCF conversion rate was 118% of net income and 106% of adjusted net income.
• Balance sheet as of October 4, 2026, showed $846 million in cash and investments with no debt.

Guidance and Future Outlook:

• Increased full-year 2026 revenue guidance to $1,143–$1,163 million (prior: $1,130–$1,150 million); prior year revenue was $994 million ($982 million excluding commercial partnership).
• Increased full-year 2026 adjusted EBITDA margin guidance to 31%–32% (prior: 29%–31%); prior year margin was 21.5% (20.7% excluding commercial partnership).
• Increased full-year 2026 adjusted EPS guidance to $1.68–$1.72 (prior: $1.64–$1.68); prior year adjusted EPS was $1.02 ($0.97 excluding commercial partnership).
• Issued Q4 2026 revenue guidance of $270–$290 million, representing an 11% year-over-year increase from Q4 2025 results of $252 million.
• Q4 2026 adjusted EBITDA margin guidance is 29%–32% (up 780 basis points from Q4 2025's 22.7%).
• Q4 2026 adjusted EPS guidance is $0.37–$0.41, representing a 44% year-over-year increase from Q4 2025's $0.27.
• Management anticipates strong double-digit revenue growth and year-over-year expansion in profitability for the full year.

Business Segments and Product Lines:

• Revenue growth was driven by broad-based strength across most major end markets.
• Announced the launch of the In-Sight® 1750, a next-generation wafer and panel identification system designed for the semiconductor industry.
• Foreign currency exchange did not have a meaningful impact on consolidated revenue in the quarter.

Market and Competitive Landscape:

• Cognex positions itself as a global technology leader in industrial machine vision, strengthening leadership in AI-powered machine vision.
• Management identifies powerful trends in automation, robotics, and artificial intelligence as key growth drivers.
• The company serves over 30,000 customers worldwide across logistics, consumer electronics, automotive, packaging, and semiconductor markets.

Risks and Challenges:

• Risks include technological obsolescence, inability to develop new products, and competitive pressures.
• Potential challenges involve attracting and retaining skilled employees, managing manufacturing and distribution, and international sales risks including trade disputes, tariffs, and geopolitical conflicts.
• Acquisition integration risks are noted regarding the RealSense deal, including potential liabilities and costs.
• Supply chain disruptions, particularly regarding memory chips, and cybersecurity threats are cited as risks.
• Economic volatility, foreign currency fluctuations, and potential impairment charges on investments or intangible assets are also highlighted.

Management Commentary and Tone:

• President and CEO Matt Moschner stated results reflect strong execution, record revenue, broad-based growth, and progress against strategic objectives.
• CFO Dennis Fehr described Q3 as a "strong proof point" for the profitable growth strategy, citing significant margin expansion and EBITDA flow-through above 100%.
• Management expressed confidence in the strong balance sheet and disciplined capital allocation strategy enabling the RealSense acquisition while retaining flexibility for organic and inorganic growth.

Other Key Points:

• Announced a definitive agreement to acquire RealSense, Inc., a leader in depth-sensing cameras and vision technology for robotic perception and physical AI, in an all-cash transaction expected to close in Q4 2026.
• Declared a quarterly cash dividend of $0.09 per share, a 6% increase over the prior quarter's $0.085; payable December 3, 2026, to shareholders of record on November 19, 2026.
• Paid $14 million in dividends to shareholders during the third quarter.
• Announced the 2027 Investor Day will be held in June at the Natick, MA headquarters.
• Recognized a pre-tax loss on the sale of investments to fund the RealSense acquisition and a pre-tax loss on the sale of its Japan-focused trading business during the nine-month period.
• Deferred revenue and customer deposits increased to $42.45 million as of October 4, 2026, from $21.09 million as of December 31, 2025.