Cognex (NASDAQ:CGNX) executives said the company returned to profitable growth in 2025, supported by steady logistics demand, an uptick in factory automation spending late in the year, and ongoing cost discipline. On the company’s fourth-quarter 2025 earnings call, management also outlined the results of a strategic portfolio review, additional operating model changes, and an updated financial framework that raises margin expectations through the cycle.
2025 results show revenue growth and margin expansion
CEO Matt Moschner said 2025 marked “a return to profitable growth,” citing constant-currency revenue growth of 8% year over year and adjusted EPS growth of 38%. CFO Dennis Fehr added that adjusted EBITDA margin expanded meaningfully during the year, with the company ending 2025 at an adjusted EBITDA margin of 20.7% excluding a one-time commercial partnership benefit. Fehr said the company reached its “greater than 20%” adjusted EBITDA milestone a full year earlier than planned.
Fehr said free cash flow totaled $237 million in 2025, up 77% year over year and the company’s highest since 2021. Trailing 12-month free cash flow conversion was 138%, above the company’s target of greater than 100%. He also highlighted working capital improvements, noting the cash conversion cycle improved 57 days year over year and 116 days from a 2023 peak.
Fourth-quarter performance and notable items
In the fourth quarter, Cognex reported revenue growth of 10% year over year (9% constant currency). Adjusted EBITDA margin was 22.7%, up 420 basis points, which Fehr said marked the sixth consecutive quarter of year-over-year margin expansion. Adjusted diluted EPS was $0.27, up 35%, while GAAP diluted EPS was $0.19.
By geography on a constant-currency basis, management reported:
- Americas: revenue up 11%, led by packaging demand and continued logistics growth
- Europe: revenue up 13%, driven by packaging strength
- Greater China: revenue up 7%, driven by consumer electronics and semiconductor
- Other Asia: flat, as consumer electronics supply chain shifts were offset by semiconductor against a strong comparison
Fehr said adjusted operating expenses increased 5% year over year (2% constant currency) in the quarter, reflecting cost discipline but also incentive compensation headwinds.
The company also disclosed two items excluded from non-GAAP results: a $5 million gain from the sale of a property on its Natick campus that previously served as a training center, and a $13 million ENO charge tied to a reserve update aligned with the company’s product focus strategy.
Portfolio optimization and operating model changes
Moschner said Cognex completed a comprehensive portfolio review in the fourth quarter and began exiting product lines representing about $22 million of “no growth or low margin revenue.” Management said this includes divesting a Japan-focused trading business acquired with Moritex, and discontinuing the Mobile SDK, Edge Intelligence, and other non-core product lines.
On the call, Fehr said the majority of the revenue being exited relates to the Japan-focused trading business, which the company expects to close by the end of the year or within the second quarter, with the impact expected to show up in the second half of the year. He noted that most of this revenue reduction would come out of the packaging vertical, with a smaller portion from logistics, while the company’s growth expectations for those verticals would remain unchanged on the lower base.
Asked how Cognex defines “core” versus “non-core,” Moschner said the company starts with where it has “core IP” and deeper application understanding, then weighs market size, growth potential, profitability, and its ability to capture profit pools.
Separately, Moschner said the company—working with external consultants—identified an additional $35 million to $40 million in annualized cost reductions by year-end 2026. Fehr described the initiative as anchored in operating expense efficiency, with mix and pricing as additional components. In Q&A, Fehr said the company expects to execute a “good majority” of the savings in the first half of 2026, with the effects showing up more toward the third quarter.
Updated financial framework and 2026 outlook
Fehr said Cognex is setting its next milestone at a 25% adjusted EBITDA margin on a run-rate basis by the end of 2026. He also said the company updated its financial framework, raising its through-cycle adjusted EBITDA margin range to 25%–31% from 20%–30%, while maintaining a through-cycle revenue CAGR of 13%–14% and expectations for greater than 100% free cash flow conversion.
For first-quarter 2026, Cognex guided to revenue of $235 million to $255 million and adjusted EBITDA margin of 19% to 22%. Adjusted EPS is expected to be $0.22 to $0.26. Fehr noted that first-quarter 2025 operating expenses benefited from FX and stock-based compensation tailwinds that will not repeat.
On demand, management said 2025 momentum was strongest in consumer electronics, logistics, and packaging, while automotive remained soft. Moschner said logistics delivered another strong year with double-digit growth led by large e-commerce customers, but he expects 2026 logistics growth to moderate to mid- to high-single digits after two years of outsized growth. Packaging posted high-single-digit growth in 2025, with an expectation for mid- to high-single-digit growth in 2026. Consumer electronics grew double digits as the market emerged from a down cycle; Moschner cited supply chain shifts, new device form factors, and a refresh cycle tied to new AI features as drivers, and said he expects high-single to double-digit growth in 2026. Automotive revenue fell high single digits in 2025, but management expects 2026 to be flat to low-single-digit growth, with a slower recovery in Europe than in the Americas. Semiconductor revenue grew mid-single digits in 2025 and is expected to be back-half weighted in 2026, with mid-single to double-digit growth for the full year.
Capital returns and balance sheet
Cognex returned $206 million to shareholders in 2025, including $151 million of share repurchases. Fehr said roughly $150 million remained under the existing repurchase authorization as of December 31, and the board approved an additional $500 million increase to the authorization. The company ended 2025 with $642 million in net cash and investments, which Fehr said provides flexibility for “accretive growth opportunities” while continuing to return excess capital to shareholders.
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.
