Cognex Revenue Up, Net Income Hit by Soaring Tax Expense

TL;DR

**Cognex's revenue growth is solid, but a massive tax hit just crushed quarterly net income – watch out for future earnings volatility.**

AI Summary

COGNEX CORP (CGNX) reported a mixed financial performance for the three and nine months ended September 28, 2025. For the three-month period, revenue increased by 18% to $276.9 million from $234.7 million in the prior year, but net income decreased significantly by 40.3% to $17.7 million from $29.6 million. This decline in net income was primarily driven by a substantial increase in income tax expense, which surged to $45.2 million from $7.0 million. For the nine-month period, revenue grew by 8.3% to $742.0 million from $684.8 million, and net income saw a modest increase of 5.1% to $81.8 million from $77.8 million. Operating income for the nine-month period rose by 51.1% to $127.3 million from $84.2 million, indicating improved operational efficiency despite the higher tax burden in the most recent quarter. The company also increased its cash dividends per common share to $0.080 for the three-month period and $0.240 for the nine-month period, up from $0.075 and $0.225 respectively in the prior year. Cash and cash equivalents increased to $245.9 million as of September 28, 2025, from $186.1 million at December 31, 2024, largely due to $170.6 million in net cash provided by operating activities.

Why It Matters

This filing reveals a critical divergence for Cognex: strong revenue growth is being overshadowed by a massive increase in income tax expense, which could significantly impact investor returns. While the 18% quarterly revenue growth is positive, the 40.3% drop in net income due to a 545% jump in tax expense raises questions about future profitability and tax planning. For employees, sustained revenue growth could signal job security and potential expansion, but the net income dip might temper expectations for bonuses or stock performance. Customers might see continued investment in product development, as R&D expenses remained stable. In a competitive market, this tax burden could put Cognex at a disadvantage if rivals face lower effective tax rates, potentially affecting pricing strategies and market share.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in income tax expense, which rose to $45.2 million for the three months ended September 28, 2025, from $7.0 million in the prior year, causing a 40.3% drop in net income despite revenue growth. This volatility in tax expense, coupled with a foreign currency loss of $3.1 million for the nine-month period, introduces uncertainty regarding future earnings predictability.

Analyst Insight

Investors should scrutinize the drivers behind the substantial increase in income tax expense and assess its sustainability. While revenue growth is positive, the impact on net income suggests a need for caution; consider holding existing positions but delay new investments until tax implications are clearer.

Financial Highlights

revenue

$276.9M

operating Margin

20.85%

net Income

$17.7M

eps

$0.10

gross Margin

67.43%

cash Position

$245.9M

revenue Growth

+18%

Key Numbers

• $276.9M — Revenue (Increased by 18% for the three months ended September 28, 2025, compared to $234.7M in the prior year.)
• $17.7M — Net Income (Decreased by 40.3% for the three months ended September 28, 2025, from $29.6M in the prior year.)
• $45.2M — Income Tax Expense (Increased significantly for the three months ended September 28, 2025, from $7.0M in the prior year.)
• $742.0M — Nine-month Revenue (Increased by 8.3% for the nine months ended September 28, 2025, from $684.8M in the prior year.)
• $81.8M — Nine-month Net Income (Increased by 5.1% for the nine months ended September 28, 2025, from $77.8M in the prior year.)
• $127.3M — Nine-month Operating Income (Increased by 51.1% for the nine months ended September 28, 2025, from $84.2M in the prior year.)
• $245.9M — Cash and Cash Equivalents (Increased as of September 28, 2025, from $186.1M at December 31, 2024.)
• $0.080 — Cash Dividends per Share (Increased for the three months ended September 28, 2025, from $0.075 in the prior year.)

Key Players & Entities

• COGNEX CORP (company) — registrant
• CGNX (company) — ticker symbol
• Securities and Exchange Commission (regulator) — filing oversight
• $276,892 (dollar_amount) — revenue for three months ended September 28, 2025
• $234,742 (dollar_amount) — revenue for three months ended September 29, 2024
• $17,664 (dollar_amount) — net income for three months ended September 28, 2025
• $29,591 (dollar_amount) — net income for three months ended September 29, 2024
• $45,199 (dollar_amount) — income tax expense for three months ended September 28, 2025
• $6,964 (dollar_amount) — income tax expense for three months ended September 29, 2024
• $0.080 (dollar_amount) — cash dividends per common share for three months ended September 28, 2025

FAQ

Risk Factors

• Foreign Currency Fluctuations [medium — market]: The company is exposed to foreign currency exchange rate fluctuations. For the three months ended September 28, 2025, foreign currency translation adjustments resulted in a loss of $9,112 thousand, compared to a gain of $26,511 thousand in the prior year period. This volatility can impact reported revenues and profits.
• Investment Value Fluctuations [low — financial]: The company holds available-for-sale investments, which are subject to market value changes. For the three months ended September 28, 2025, net unrealized gains on these investments were $805 thousand, down from $6,252 thousand in the prior year. Significant unrealized losses were noted in corporate bonds ($593 thousand) and asset-backed securities ($340 thousand) as of September 28, 2025.
• Evolving Tax Regulations [high — regulatory]: A significant increase in income tax expense was observed, rising to $45.2 million for the three months ended September 28, 2025, from $7.0 million in the prior year. This highlights sensitivity to tax rate changes and potential future regulatory shifts impacting tax liabilities.

Industry Context

Cognex operates in the machine vision industry, providing automated inspection and identification solutions. The industry is driven by trends in automation, artificial intelligence, and the Industrial Internet of Things (IIoT). Companies like Cognex compete by offering advanced hardware and software for quality control, robotics guidance, and supply chain management.

Regulatory Implications

The company is subject to standard financial reporting regulations, including GAAP. The recent increase in income tax expense highlights the impact of tax laws, and upcoming accounting standard updates (ASU 2023-09 and ASU 2024-03) aim to enhance transparency in income tax and expense disclosures.

What Investors Should Do

1. Monitor the impact of income tax expense on net income.
2. Analyze the drivers of revenue growth.
3. Evaluate the operational efficiency improvements.
4. Assess the foreign currency translation impact.

Key Dates

• 2025-09-28: End of Q3 2025 reporting period — Reported revenue of $276.9M and net income of $17.7M, with a significant increase in income tax expense.
• 2024-12-31: End of Fiscal Year 2024 — Company held $186.1M in cash and cash equivalents.

Glossary

Consolidated Statements of Operations

A financial statement that reports a company's financial performance over a specific accounting period. (Provides the key figures for revenue, gross profit, operating income, and net income for the periods presented.)

Weighted-average common and common-equivalent shares outstanding

The average number of shares outstanding during a period, adjusted for dilutive securities like stock options and warrants. (Used to calculate Earnings Per Share (EPS), which is a key metric for investors.)

Available-for-sale investments

Investments that are not classified as held-to-maturity or trading securities. Their unrealized gains and losses are reported in other comprehensive income. (Impacts the company's other comprehensive income and equity, as seen with the foreign currency translation adjustments and unrealized gains/losses on investments.)

Income tax expense

The amount of tax a company expects to pay on its taxable income. (A significant factor impacting net income, as demonstrated by the sharp increase in the three-month period ended September 28, 2025.)

Operating income

Profitability from a company's core business operations, calculated as revenue minus cost of goods sold and operating expenses. (Shows the underlying profitability of the business before considering interest and taxes, which increased significantly for the nine-month period.)

Year-Over-Year Comparison

Compared to the prior year, Cognex Corporation reported an 18% increase in revenue for the three months ended September 28, 2025, reaching $276.9 million. However, net income saw a significant 40.3% decrease to $17.7 million, primarily due to a substantial rise in income tax expense from $7.0 million to $45.2 million. For the nine-month period, revenue grew 8.3% to $742.0 million, and net income increased by 5.1% to $81.8 million, with operating income showing a strong 51.1% increase. The company also increased its cash dividends per share and saw its cash position grow to $245.9 million.

Filing Documents

• cgnx-20250928.htm (10-Q) — 1338KB
• a9282025-10qxexhibit311.htm (EX-31.1) — 11KB
• a9282025-10qxexhibit312.htm (EX-31.2) — 11KB
• a9282025-10qxexhibit321.htm (EX-32.1) — 8KB
• a9282025-10qxexhibit322.htm (EX-32.2) — 7KB
• 0000851205-25-000064.txt ( ) — 7849KB
• cgnx-20250928.xsd (EX-101.SCH) — 47KB
• cgnx-20250928_cal.xml (EX-101.CAL) — 94KB
• cgnx-20250928_def.xml (EX-101.DEF) — 208KB
• cgnx-20250928_lab.xml (EX-101.LAB) — 632KB
• cgnx-20250928_pre.xml (EX-101.PRE) — 433KB
• cgnx-20250928_htm.xml (XML) — 1312KB

FINANCIAL INFORMATION 3

PART I FINANCIAL INFORMATION 3 Item 1.

Financial Statements (interim periods unaudited)

Financial Statements (interim periods unaudited) 3 Consolidated Statements of Operations for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024 3 Consolidated Statements of Comprehensive Income (Loss) for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024 4 Consolidated Balance Sheets as of September 28, 2025 and December 31, 2024 5 Consolidated Statements of Cash Flows for the nine-month periods ended September 28, 2025 and September 29, 2024 6 Consolidated Statements of Shareholders' Equity for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 30 Item 4.

Controls and Procedures

Controls and Procedures 30 PART II OTHER INFORMATION 31 Item 1.

Legal Proceedings

Legal Proceedings 31 Item 1A.

Risk Factors

Risk Factors 31 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31 Item 3. Defaults Upon Senior Securities 31 Item 4. Mine Safety Disclosures 31 Item 5. Other Information 31 Item 6. Exhibits 32

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION

: FINANCIAL STATEMENTS

ITEM 1: FINANCIAL STATEMENTS COGNEX CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three-months Ended Nine-months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (unaudited) (unaudited) Revenue $ 276,892 $ 234,742 $ 742,021 $ 684,831 Cost of revenue 89,602 75,343 242,532 216,896 Gross profit 187,290 159,399 499,489 467,935 Research, development, and engineering expenses 35,081 35,210 102,910 107,277 Selling, general, and administrative expenses 94,444 92,625 269,289 276,433 Operating income 57,765 31,564 127,290 84,225 Foreign currency gain (loss) 840 1,221 ( 3,116 ) 1,086 Investment income 4,197 3,561 12,227 9,797 Other income (expense) 61 209 2,322 581 Income before income tax expense 62,863 36,555 138,723 95,689 Income tax expense 45,199 6,964 56,945 17,864 Net income $ 17,664 $ 29,591 $ 81,778 $ 77,825 Net income per weighted-average common and common-equivalent share: Basic $ 0.11 $ 0.17 $ 0.49 $ 0.45 Diluted $ 0.10 $ 0.17 $ 0.48 $ 0.45 Weighted-average common and common-equivalent shares outstanding: Basic 167,840 171,519 168,324 171,588 Diluted 169,323 172,753 169,507 172,733 Cash dividends per common share $ 0.080 $ 0.075 $ 0.240 $ 0.225 The accompanying notes are an integral part of these consolidated financial statements. 3 COGNEX CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) Three-months Ended Nine-months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (unaudited) (unaudited) Net income $ 17,664 $ 29,591 $ 81,778 $ 77,825 Other comprehensive income (loss), net of tax Available-for-sale investments: Net unrealized gain (loss), net of tax of $ 232 and $ 2,040 in the three-month periods, respectively, and net of tax of $ 1,667 and $ 2,493 in the nine-month periods, respectively 805 6,252 5,258 7,631 Reclassification of net realized (gain) loss on the sale of availa

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1: Summary of Significant Accounting Policies As permitted by the rules of the Securities and Exchange Commission applicable to Quarterly Reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by accounting principles generally accepted in the United States ("GAAP"). Reference should be made to the consolidated financial statements and related notes included in Cognex Corporation's ("Cognex" or the "Company") Annual Report on Form 10-K for the year ended December 31, 2024 for a full description of other significant accounting policies. In the opinion of the management of the Company, the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments and financial statement reclassifications necessary to present fairly the Company's financial position as of September 28, 2025 , and the results of its operations for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024, and changes in shareholders' equity, comprehensive income, and cash flows for the periods presented. The results disclosed in the Consolidated Statements of Operations for the three-month and nine-month periods ended September 28, 2025 are not necessarily indicative of the results to be expected for the full year. NOTE 2: New Pronouncements Accounting Standards Update (ASU) 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" The amendments in this ASU apply to all entities that are subject to Topic 740, Income Taxes. The amendments require public business entities to disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. They also require all entities to disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdiction

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) and aligns disclosures for capitalized software with those for property, plant, and equipment. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. Management is currently evaluating the impact that adopting ASU 2025-06 would have on the Company's financial statements and disclosures. NOTE 3: Financial Instruments Cash, Cash Equivalents, and Investments The following table summarizes the Company's cash, cash equivalents, and investments as of September 28, 2025 (in thousands): Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Current Investments Non-current Investments Cash $ 152,453 $ — $ — $ 152,453 $ 152,453 $ — $ — Money market instruments Level 1 57,023 — — 57,023 57,023 — — Certificates of deposit Level 2 36,422 — — 36,422 36,422 — — Corporate bonds Level 2 315,660 2,697 ( 592 ) 317,765 — 51,879 265,886 Treasury notes Level 2 29,604 113 ( 7 ) 29,710 — — 29,710 Asset-backed securities Level 2 4,822 — ( 340 ) 4,482 — — 4,482 Treasury bills Level 2 1,489 — — 1,489 — 1,489 — Sovereign bonds Level 2 1,000 — — 1,000 — 1,000 — Total $ 598,473 $ 2,810 $ ( 939 ) $ 600,344 $ 245,898 $ 54,368 $ 300,078 The following table summarizes the Company's cash, cash equivalents, and investments as of December 31, 2024 (in thousands): Fair Value Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Current Investments Non-current Investments Cash $ 170,852 $ — $ — $ 170,852 $ 170,852 $ — $ — Money market instruments Level 1 15,242 — — 15,242 15,242 — — Corporate bonds Level 2 344,804 411 ( 4,299 ) 340,916 — 55,742 285,174 Treasury notes Level 2 46,071 2 ( 439 ) 45,634 — 2,487 43,147 Asset-backed securities Level

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Realized Gains (Losses) on Debt Securities The following table summarizes the Company's gross realized gains and losses on the sale of debt securities for the three-month and nine-month periods ended September 28, 2025 and September 29, 2024 (in thousands): Three-months Ended Nine-months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Gross realized gains $ 116 $ — $ 173 $ 8 Gross realized losses ( 20 ) — ( 23 ) ( 16 ) Net realized gains (losses) $ 96 $ — $ 150 $ ( 8 ) Realized gains and losses are included in "Investment income" on the Consolidated Statements of Operations. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders' equity as accumulated other comprehensive income (loss). Unrealized Losses on Debt Securities The following table summarizes the Company's gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of September 28, 2025 (in thousands): Unrealized Loss Position For: Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate bonds $ 72,812 $ ( 190 ) $ 33,955 $ ( 403 ) $ 106,767 $ ( 593 ) Treasury notes 11,075 ( 6 ) — — 11,075 ( 6 ) Asset-backed securities — — 4,483 ( 340 ) 4,483 ( 340 ) Sovereign bonds — — 1,000 — 1,000 — $ 83,887 $ ( 196 ) $ 39,438 $ ( 743 ) $ 123,325 $ ( 939 ) The following table summarizes the Company's gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of December 31, 2024 (in thousands): Unrealized Loss Position For: Less than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Corporate bonds $ 172,049 $ ( 2,227 ) $ 87,815 $ ( 2,071 ) $ 259,864 $ ( 4,298 ) Treasur

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Debt Securities Maturities The following table presents the effective maturity dates of the Company's available-for-sale investments as of September 28, 2025 (in thousands): <1 year 1-2 Years 2-3 Years 3-4 Years 4-5 Years 5-8 Years Total Corporate bonds $ 51,879 $ 73,474 $ 93,202 $ 70,619 $ 28,591 $ — $ 317,765 Treasury notes — 18,690 11,020 — — — 29,710 Asset-backed securities — — — 1,713 — 2,769 4,482 Treasury bills 1,489 — — — — — 1,489 Sovereign bonds 1,000 — — — — — 1,000 $ 54,368 $ 92,164 $ 104,222 $ 72,332 $ 28,591 $ 2,769 $ 354,446 Derivative Instruments The Company's foreign currency risk management strategy is principally designed to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. The Company enters into economic hedges utilizing foreign currency forward contracts with maturities that do not exceed twelve months to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables. The gains and losses on these derivatives are intended to be offset by the changes in the fair value of the assets and liabilities being hedged. These economic hedges are not designated as hedging instruments for hedge accounting treatment. The Company had the following outstanding forward contracts (in thousands): September 28, 2025 December 31, 2024 Currency Notional Value USD Equivalent Notional Value USD Equivalent Derivatives Not Designated as Hedging Instruments: Singapore Dollar 38,000 $ 29,317 40,000 $ 29,457 Chinese Renminbi 90,000 12,628 95,000 12,990 Mexican Peso 100,000 5,417 220,000 10,701 Hungarian Forint 2,500,000 7,466 2,360,000 5,951 British Pound 4,000 5,362 3,200 4,008 Japanese Yen 200,000 1,341 2,000,000 12,789 Euro — — 25,000 26,029 Swiss Franc — — 2,200 2,432 Canadian

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Information regarding the fair value of the outstanding forward contracts was as follows (in thousands): Asset Derivatives Liability Derivatives Fair Value Fair Value Balance Sheet Location Fair Value Level September 28, 2025 December 31, 2024 Balance Sheet Location Fair Value Level September 28, 2025 December 31, 2024 Derivatives Not Designated as Hedging Instruments: Economic hedge forward contracts Prepaid expenses and other current assets Level 2 $ 262 $ 689 Accrued expenses Level 2 $ 316 $ 757 Activity: Gross amounts recognized $ 262 $ 689 $ 316 $ 757 Gross amounts offset — — — — Net amounts presented on the Consolidated Balance Sheets $ 262 $ 689 $ 316 $ 757 The Company's forward contracts are reported at fair value based on model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2. The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency. The market participants are generally large commercial banks. Information regarding the effect of derivative instruments on the Consolidated Statements of

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