Cognex reports positive Q1 sales results despite customer reluctance

08 May 2024

Sales beat guidance in “challenging but stable” environment; firm predicts further growth.

Key figures in Cognex’s first quarter 2024 financial results.

Cognex, a Natick, MA-headquarterered provider of vision systems, has announced financial results for its first quarter of 2024. The company’s own May 2nd headline statement said sales “beat guidance in a challenging but stable business environment”.

Robert J. Willett, CEO, commented, “Revenue, excluding the contribution of Moritex (acquired by Cognex in August 2023), increased sequentially from the fourth quarter but remained down year-on-year. While customers remain cautious with their capex investments, I’m encouraged by the early indications of recovery we have seen.”

He continued, “We recently launched the In-Sight L38, the first AI-enabled 3D vision system, and we continue to advance our Emerging Customer initiative. We believe the progress we are making on our strategic initiatives positions us to capitalize on exciting industry trends as the operating environment begins to improve.

“We remain on track for the Moritex acquisition to be accretive in 2024. I would also like to welcome Dennis Fehr, who has become our new chief financial officer, effective as of May 3rd,” Willett said.

Quarter highlights (see table, above)

Revenue increased by 5% from Q1-23. Excluding the 8% contribution of Moritex and 1% negative impact of FX, revenue declined by 3%. The slight year-on-year decline in revenue was driven primarily by the continued softness across Cognex’s factory automation business, partially offset by growth in Logistics and Semi sectors. Sequentially, revenue increased by 7% from Q4-23, or 2% excluding the contribution of Moritex and FX, with slight growth across most end markets.
Gross margin was 67.3% for Q1-24 compared to 71.5% for Q1-23 and 68.7% for Q4-23. The company recorded $3 million in acquisition charges and amortization of intangible assets in cost of revenue in the quarter. Adjusted gross margin was 68.8% for Q1-24 compared to 71.8% for Q1-23 and 70.7% for Q4-23, in line with guidance.
Operating expenses increased by 5% from Q1-23 and increased by 4% from Q4-23. Cognex recorded $3 million in acquisition charges and amortization of intangible assets in operating expenses in the quarter, primarily related to the Moritex acquisition. Adjusted operating expenses increased by 3% from Q1-23 and increased by 5% from Q4-23, in line with expectations.
Net Income declined by 53% from Q1-23 and increased by 7% from Q4-23. Adjusted Net Income declined by 15% from Q1-23 and increased by 2% from Q4-23.

Balance sheet and cashflow

Cognex’s financial position as of March 31, 2024 consisted of $557 million in cash and investments and no debt. In Q1-24, it generated $14 million in cash from operations. In addition, the company spent $9 million to repurchase its common stock and paid $13 million in dividends to shareholders. The company intends to continue to repurchase shares of its common stock pursuant to its existing stock repurchase program.
Financial Outlook for Q2, 2024 – Cognex expects revenue to be between $230 million and $245 million. This range represents a sequential increase in revenue from Q1-24 to Q2-24 due to typical seasonality of consumer electronics revenue.
Adjusted gross margin1 is expected to be slightly above 70%, an increase from 68.8% in Q1-24 as we move beyond the one-time events in the first quarter.