COGNEX CORP Q3 FY2024 earnings call

Strategic Initiatives - Launched AI assisted labeling to reduce deep learning vision model training time, with a new AI model cutting labeling time by ~90%. - Introduced AI-driven optical character recognition tool with virtually no setup required. - Emerging customer initiative: First cohort of Salesnoids had Q3 as largest booking quarter, with September being the largest month for emerging customer bookings. Second cohort in training. Expect to make over 80,000 additional in-person customer visits and add ~3,000 new accounts this year. - End Market Trends: Automotive revenue down due to EV project delays; logistics revenue strong with double-digit growth year-to-date; consumer electronics up year-on-year but down sequentially; semi continuing to grow with increased investment from machine builders.

Third quarter revenue was $235 million, increasing 19% year-on-year. Excluding the contribution of the Moritex acquisition, revenue grew 7%. Adjusted gross margin in Q3 was 68.7%, down 4 percentage points from the prior year. Geographically, excluding Moritex, revenue grew year-on-year in all four major regions for the first time in over two-and-a-half years. Europe saw nearly double-digit growth, Americas and other Asia had slight growth, and China snapped a streak of seven consecutive declines but was impacted by consumer electronics revenue timing.

Fourth Quarter Guidance - Revenue expected between $210 million and $230 million. - Adjusted gross margin expected in the high 60% range. - Adjusted EBITDA margin expected between 14% and 17%. - Moritex business expected to return to 6%-8% of revenue in Q4.

Risks - Challenging conditions in factory automation, especially further step down in automotive. - Competitive pricing pressure affecting gross margin. - Macroeconomic uncertainties impacting end markets.

Q: How do we think about the 3,000 new customers that you're targeting relative to targets in the beginning of the year and cost savings opportunity?

A: Robert Willett said the first cohort is ramping with 3,000 new customers expected in the first year, and Salesnoids are less expensive to employ with potential for higher productivity.

Q: Can you elaborate on gross margins for the fourth quarter?

A: Dennis Fehr said gross margin stepped down 160 basis points sequentially, with ~1 percentage point from Moritex and the remainder from mix and pricing, particularly in China.

Q: What's the visibility on logistics market?

A: Robert Willett said logistics revenue grew materially for three straight quarters, with good visibility on pipeline and bookings, and new customer activity and industry embrace of edge intelligence platform as positive signs.

Q: Talk about semiconductor market trends?

A: Robert Willett said seeing strong investment in high bandwidth memory related to data centers, with Cognex's technology well-recognized for precise alignment and inspection, and Moritex adding exposure to the semi market.