Cognex NASDAQ: CGNX opened 2026 with what CEO Matt Moschner described as an “exceptional start to the year,” delivering double-digit year-over-year growth in revenue, adjusted EBITDA, and adjusted EPS that “meaningfully exceed[ed] our expectations and consensus.” The company also reiterated that it remains on track with strategic priorities spanning innovation, portfolio optimization, and cost productivity as it navigates what management called an uncertain macro backdrop.
Strategy update and new AI vision product launches
Moschner said the company has moved with “urgency to focus our strategy, strengthen execution, and position Cognex for sustainable, profitable growth,” nearly a year after his CEO appointment was announced. On the call, he highlighted progress across three areas:
- Innovation: Cognex announced two new embedded AI vision systems, the In-Sight 6900 and In-Sight 3900, as part of its push to be the “number one provider of AI-powered machine vision.”
- Portfolio optimization: The company completed the divestiture of its Japan-focused trading business on April 1, which Moschner said was ahead of schedule and in line with expected proceeds.
- Cost and productivity: Management reiterated it is on track to achieve $35 million to $40 million in annualized net cost reductions by the end of 2026.
Discussing the new products, Moschner said the In-Sight 6900 is designed for customers seeking advanced AI vision performance without a PC-based architecture. Powered by NVIDIA, he said it combines “our broadest set of image formation hardware with proven advanced AI vision tools,” with a flexible design supporting interchangeable cameras, lenses, and lighting.
The In-Sight 3900, powered by Qualcomm, was described as “the industry’s fastest embedded AI vision system,” targeting customers seeking “maximum inspection capability with the simplicity of a fully integrated smart camera.” Moschner said both systems share common foundations including “more AI computing power at the edge,” integration with OneVision, and the same In-Sight Vision Suite software platform. He added that the launches strengthen Cognex’s position in roughly $3.5 billion of its $7 billion served market.
End market demand trends and outlook considerations
Moschner said momentum from late 2025 carried into the first quarter with “broad-based demand across our end markets,” led by electronics, semiconductor, and packaging, alongside continued growth with large logistics customers. He noted the Purchasing Managers’ Index remains in expansion territory, but also emphasized that “macro uncertainty and other risks have increased,” citing geopolitical conflicts, rising energy costs, memory chip availability and pricing, and changing interest rate expectations.
As a result, he said the company is “only slightly adjusting our full year end market outlook at this time,” and expects to provide more clarity on the next earnings call.
By end market, management characterized performance and expectations as follows:
- Logistics: Q1 marked the ninth consecutive quarter of double-digit growth, led by large e-commerce customers. Moschner said the company is seeing “encouraging traction” with its SLX portfolio and expects growth to normalize to mid- to high-single digits as comparisons strengthen.
- Packaging: Delivered double-digit growth in Q1 with broad-based strength. Cognex now expects high-single-digit growth for 2026, noting the outlook reflects a reduced revenue base after the Japan trading business divestiture.
- Electronics: Posted double-digit Q1 growth across customers and geographies. Cognex reiterated expectations for high-single to double-digit growth in 2026, pointing to supply chain shifts, a consumer refresh cycle, and new device form factors.
- Automotive: Q1 revenue increased mid-single digits on a constant currency basis, with growth in the Americas offset by softness in Europe and some growth in Asia. Full-year expectations remained flat to low-single-digit growth.
- Semiconductor: Q1 revenue grew double digits and exceeded expectations, driven by strong growth in Asia. Cognex narrowed its full-year outlook to a high-single to double-digit range.
In Q&A, Moschner said it is “very hard” to precisely parse drivers behind the strong start, but he pointed to multiple tailwinds “all rowing in the same direction,” including an improving demand environment, new product introductions, and a sales force transformation that he said is now “hitting its stride.”
First-quarter financial performance and margin expansion
CFO Dennis Fehr said Q1 reflected “disciplined execution and continued progress” against a profitable growth strategy. Key Q1 highlights included:
- Adjusted EBITDA margin: 26.9%, up 1,010 basis points year-over-year, marking the seventh consecutive quarter of margin expansion.
- Adjusted EPS: Up 113% year-over-year to $0.34, also the seventh straight quarter of strong EPS growth.
- Trailing 12-month free cash flow conversion: 119%, meeting the company’s greater-than-100% target for the sixth consecutive quarter.
Revenue increased 24% year-over-year and 21% on a constant currency basis, marking the seventh consecutive quarter of year-over-year growth, though Fehr noted Q1 2025 was a softer comparison due to pull-forwards into Q4 2024. By geography on a constant currency basis, the Americas grew 22%, Europe increased 23%, Greater China grew 36%, and Other Asia grew 6%.
Adjusted gross margin expanded 420 basis points to 71.8%, driven primarily by favorable mix and volume and “slightly offset by tariff,” according to Fehr. Adjusted operating expenses increased 9% year-over-year (4% on a constant currency basis), reflecting higher incentive compensation, commissions tied to outperformance, and higher stock-based compensation. Fehr added that excluding certain year-over-year effects, “Q1 2026 adjusted operating expenses declined,” and the company incurred $4.8 million of reorganization charges that were excluded from adjusted operating expenses.
Fehr said Cognex generated $241 million of trailing 12-month free cash flow, up nearly 50% year-over-year, and improved the cash conversion cycle by 57 days year-over-year and 128 days from the peak two years ago, adding, “We believe we have now reached an optimal cash conversion cycle.”
Capital allocation and second-quarter guidance
Fehr said Cognex returned $113 million to shareholders in Q1, including $99 million in “opportunistic” share repurchases, primarily early in the quarter. Those actions reduced the average share count by approximately 2 million shares. In response to a question on capital allocation, Fehr said the company will continue to look for value in buybacks and that M&A remains part of the framework, but emphasized Cognex does not feel a “strong need” to pursue acquisitions and would do so only with “strong conviction” and strategic fit.
For the second quarter, Cognex guided to:
- Revenue: $280 million to $300 million
- Adjusted EBITDA margin: 28% to 31%
- Adjusted EPS: $0.40 to $0.44
Fehr also outlined several items affecting quarterly comparisons that “don’t reflect a change in underlying demand.” He said the divestiture of the Japan trading business and other non-core exits reduce revenue by about $5 million in Q2 and each of the following three quarters. Q2 is expected to benefit from about $7 million of electronics order timing shifting in from Q3, while Q3 faces a $13 million headwind from a one-time commercial partnership benefit in Q3 of last year.
Both Moschner and Fehr repeatedly stressed limited visibility into the second half of the year. “As a short-cycle business with limited visibility, particularly to the second half of the year, we recognize that the broader macro environment remains uncertain,” Fehr said, adding the company will reassess and update profitability targets as visibility improves.
Additional themes: AI, semiconductors, regional performance, and supply chain
On AI, Moschner said the company’s Investor Day narrative remains intact, describing AI as “a huge opportunity” that has “accelerate[d] our business.” He said Cognex is focused on “edge AI,” emphasizing training and deploying at the line “on device complemented by OneVision when you need it.” Fehr added the company is also using AI internally to drive productivity, including AI-assisted coding and “AI agents in the service side” to help customers find information faster.
In semiconductors, Moschner characterized the business as stable and supported by long-standing relationships with OEMs, while noting visibility may be “a little” improved but not significantly different. Fehr said semiconductor growth in Q1 was “well above the 20%” range year-over-year and also framed the segment as a hedge against some supply chain cost pressures.
Regionally, Moschner said Europe delivered encouraging growth despite geopolitical uncertainty, with Cognex shifting resources away from a weak European automotive market and toward strength in packaging and newer areas such as aerospace and defense. In China, he said the company is seeing “great strength” and credited investments in localization, including local distribution and manufacturing, in-country engineering, and technology partnerships.
On supply chain constraints, Moschner said Cognex is seeing lengthening lead times “in some areas” and said the company is “very well set up” to manage through supplier relationships, sourcing flexibility, broker markets, and pricing actions. Fehr reiterated that capacity constraints can also drive automation demand, adding that such dynamics are “not necessarily a negative” for Cognex.
About Cognex NASDAQ: CGNX
Cognex Corporation is a leading provider of machine vision systems, software, sensors and industrial barcode readers used to automate manufacturing, logistics and distribution processes. The company designs and develops vision-based products that help manufacturers and logistics operators inspect, identify and guide parts, assemblies and packaged goods in real time. Its solutions are applied in a broad range of industries, including automotive, electronics, semiconductor, pharmaceutical, food and beverage, and general manufacturing.
The company's product portfolio includes stand-alone vision systems, vision sensors and deep learning-based software platforms that enable automated inspection, quality control and traceability.
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