Cognex Corporation

Q2 revenue was $[figure not stated in transcript], up 17% year over year (16% constant currency) and a record quarterly level. Adjusted gross margin was 71.5%, up 350 basis points year over year; adjusted EBITDA was $94 million, up 81%, with margin at 32.2%, up 1,150 basis points; adjusted diluted EPS was $0.45, up 80%; free cash flow was $68 million versus $40 million a year ago, and trailing 12-month free cash flow was $268 million with 114% conversion. For Q3 2026, management guided to revenue of $300 million to $320 million, adjusted EBITDA margin of 32% to 35%, and adjusted EPS of $0.50 to $0.54. For full-year 2026, revenue guidance was raised to $1.13 billion to $1.15 billion, adjusted EBITDA margin to 29% to 31%, and adjusted EPS to $1.64 to $1.68. Management also said Q3 includes about $13 million of one-time commercial partnership benefit in the prior-year comparison, and full-year 2026 includes a $30 million headwind from that item.

Matt Moschner framed the quarter as evidence that Cognex’s strategy is working, citing record revenue, margin expansion, and strong EPS growth. He emphasized that growth is being driven not just by cyclical recovery but by structural adoption of automation and AI-enabled machine vision, with OneVision and newer In-sight products extending the addressable market. His tone was confident and upbeat, but he repeatedly described several opportunities, especially data center, as still early or nascent.

Dennis Fehr focused on the financial leverage in the model: adjusted EBITDA margin of 32.2%, adjusted gross margin of 71.5%, adjusted EPS of $0.45, and free cash flow of $68 million with 114% conversion over the trailing 12 months. He said operating expenses declined 3% year over year, expects about $35 million of annualized net cost reductions by end-2026, and noted roughly 100% revenue flow-through in Q2. He also flagged about 75 basis points of gross margin headwind from memory prices in Q3, while saying pricing actions should eventually offset it, and reminded investors that 2026 EPS includes about $0.11 per share of investment income.

Analysts focused on the data center opportunity, the pace of OpEx reductions, customer additions and salesforce needs, pricing strategy, and whether Q4 guidance implies unusual seasonality. Management said data center is still low single digits of revenue but growing more than 30% year over year, and that new AI-related inspection applications are opening up opportunities in server racks and component manufacturing. On margins, Dennis said OpEx should remain well below prior-year levels and that memory-price inflation is a second-half headwind, partly offset by pricing; he also said the company is not pursuing daily-style dynamic pricing, but is using more frequent, value-based pricing adjustments aligned with the sales cycle. On guidance, he explained the company felt confident enough to issue full-year outlooks because visibility into the second half improved, though Cognex remains a short-cycle business and Q4 still carries uncertainty.