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What changed in COGNEX CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of COGNEX CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+250 added−211 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-13)

Top changes in COGNEX CORP's 2025 10-K

250 paragraphs added · 211 removed · 169 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOperations Most of Cognex’s hardware products, including our vision systems, vision sensors, and barcode readers, are manufactured utilizing third-party contractors, whereby the majority of component procurement, system assembly, and initial testing are performed by electronics manufacturing services suppliers. Cognex’s primary contract manufacturers are located in Indonesia and Malaysia.
Biggest changeWhile our intellectual property rights are important to our success, we believe that our business as a whole is not materially dependent on any particular patent, trademark, copyright, or other intellectual property right. 5 Table of Contents Operations Most of Cognex’s hardware products, including our vision systems, vision sensors, and barcode readers, are manufactured utilizing third-party contractors, whereby the majority of component procurement, system assembly, and initial testing are performed by electronics manufacturing services suppliers.
Products and Technology Cognex offers a full range of machine vision systems and sensors, vision software, and barcode readers designed to meet customer needs at different performance and price points. Our products range from deep learning solutions that solve complex applications with unpredictable defects and deviations, to lower-cost vision sensors that conduct simple presence/absence inspections.
Products and Technology Cognex offers a range of machine vision systems and sensors, vision software, and barcode readers designed to meet customer needs at different performance and price points. Our products range from deep learning solutions that solve complex applications with unpredictable defects and deviations, to lower-cost vision sensors that conduct simple presence/absence inspections.
Application support is provided by technical support personnel located at Cognex regional offices, as well as by field service engineers that provide support at the customer’s production site. We provide consulting services that range from a specific area of functionality to a completely integrated installed application.
Application support is provided by technical support personnel located at Cognex regional offices, as well as by field service engineers that provide support at the customer’s production site. We also provide consulting services that range from a specific area of functionality to a completely integrated installed application.
As AI continues to drive demand for high-end logic process chips with our OEM customers, the overall semiconductor market has the potential for outsized growth in the coming years. Other The number of end markets that can benefit from machine vision applications is expanding.
As AI continues to drive demand for high-end logic process chips with our OEM customers, we believe the overall semiconductor market has the potential for outsized growth in the coming years. Other The number of end markets that can benefit from machine vision applications is expanding.
The DataMan® product line, which includes fixed-mount and handheld models, as well as barcode verifiers, help organizations optimize performance, increase throughput, and control traceability. Vision Accessories Cognex vision accessories are designed for easy integration with Cognex products and applications. Cameras are available in both area scan and line scan formats to address a wide variety of applications.
The DataMan® product line, which includes fixed-mount and handheld models, as well as barcode verifiers, help organizations improve performance, increase throughput, and help control traceability. Vision Accessories Cognex vision accessories are designed for easy integration with Cognex products and applications. Cameras are available in both area scan and line scan formats to address a variety of applications.
Machine vision is particularly valuable for applications in which human vision is inadequate to meet requirements for size, accuracy, or speed, or in instances where substantial cost savings are obtained through the reduction of labor or improved product quality.
Machine vision can be particularly valuable for applications in which human vision is inadequate to meet requirements for size, accuracy, or speed, or in instances where substantial cost savings can be obtained through the reduction of labor costs or improved product quality.
Semiconductor manufacturers rely on Cognex machine vision, including AI-based technology, to ensure precise alignment of wafers during masking and etching processes, increase traceability of wafers and die as they move through the front and back-end processes, and improve product quality through advanced inspection procedures.
Many semiconductor manufacturers rely on Cognex machine vision, including AI-based technology, 2 Table of Contents to help ensure precise alignment of wafers during masking and etching processes, to increase traceability of wafers and die as they move through the front and back-end processes, and to help improve product quality through advanced inspection procedures.
Within these markets, we are making significant investments to focus on what we believe to be the fastest-growing applications and use cases. In the logistics market for example, we are moving beyond barcode reading into more complex applications in distribution centers and parcel and post warehouses.
Within these markets, we are making investments to focus on what we believe to be the fastest-growing applications and use 3 Table of Contents cases. In the logistics market for example, we are moving beyond barcode reading into more complex applications in distribution centers and parcel and post warehouses.
We make available, free of charge, on our website in the “Company” section under the caption “Investor Information” followed by “Financial Reports” and then “SEC FiIings,” our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, including exhibits, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.
We make available, free of charge, on our website in the “Company” section under the caption “Investor” followed by “Financials” and then “SEC Filings,” our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, including exhibits, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.
This results in a broad base of customers across a variety of industries, including logistics, automotive, consumer electronics, semiconductor, consumer products, medical-related, and food and beverage. Our End Markets Logistics The logistics industry demands high-speed, efficient throughput combined with end-to-end supply chain traceability. Consumers expect fast and cost-effective fulfillment.
This results in a broad base of customers across a variety of industries, including logistics, packaging, consumer electronics, automotive, and semiconductor. Our End Markets Logistics The logistics industry demands high-speed, efficient throughput combined with end-to-end supply chain traceability. Consumers expect fast and cost-effective fulfillment.
Its QuickBuild™ prototyping environment allows customers to build complete vision applications with the simplicity of a graphical flowchart-based programming interface. Barcode Readers Cognex industrial image-based barcode readers quickly and reliably read 1D, 2D, label-based, and direct part mark ("DPM") codes found in nearly every industry including logistics, automotive, consumer products, and medical-related.
Its QuickBuild™ prototyping environment is intended to allow customers to build vision applications with the simplicity of a graphical flowchart-based programming interface. Barcode Readers Cognex industrial image-based barcode readers read 1D, 2D, label-based, and direct part mark ("DPM") codes found in nearly every industry including logistics, automotive, consumer products, and medical-related.
Geographically, our logistics business started primarily in the United States, but has diversified into Europe and Asia, where we believe customers are beginning to catch up with the United States in logistics automation technology and are reducing share with local incumbent suppliers.
Geographically, our logistics business started primarily in the United States, but has diversified into Europe and Asia, where we believe customers are beginning to catch up with the United States in logistics automation technology.
Sales to customers based outside of the United States represented approximately 67% of our total revenue in 2024, with approximately 24% from customers based in Europe, approximately 18% from customers based in Greater China, and approximately 25% from customers based in other regions outside the United States. Sales to customers based in Europe are denominated in Euros and U.S.
Sales to customers based outside of the United States represented approximately 67% of our total revenue in 2025, with approximately 25% from customers based in Europe, approximately 16% from customers based in Greater China, and approximately 26% from customers based in other regions outside the United States. Sales to customers based in Europe are denominated in Euros and U.S.
Cognex sells to customers in nearly all industries in which discrete items are manufactured on an assembly line or moved through a distribution center or warehouse. Our largest industries by revenue are the logistics, automotive, and consumer electronics industries, which combined represented approximately 60% of our total revenue in 2024.
Cognex sells to customers in nearly all major industries in which discrete items are manufactured on an assembly line or moved through a distribution center or warehouse. Our largest end markets by revenue are the logistics, packaging, consumer electronics, and automotive industries, which combined represented approximately 85% of our total revenue in 2025.
Vision Software Vision software offers customers the flexibility of the Cognex vision tools library to use with the cameras, frame grabbers, and peripheral equipment of their choice. Cognex VisionPro® software offers an extensive suite of patented vision tools, including both traditional rule-based tools and deep learning-enabled tools, for advanced programming.
Vision Software Vision software offers customers the flexibility of the Cognex vision tools library to use with third-party cameras, frame grabbers, and peripheral equipment. Cognex VisionPro® software offers a suite of patented vision tools, including both traditional rule-based tools and deep learning-enabled tools, for advanced programming.
We incurred RD&E costs of approximately $140 million (15% of revenue), $139 million (17% of revenue), and $141 million (14% of revenue), for the years ended December 31, 2024, 2023, and 2022, respectively. We expect to continue our commitment to RD&E, even during periods of lower revenue levels, to introduce new platforms, products, and solutions throughout economic cycles.
We incurred RD&E costs of approximately $139 million (14% of revenue), $140 million (15% of revenue), and $139 million (17% of revenue), for the years ended December 31, 2025, 2024, and 2023, respectively. We expect to continue our commitment to RD&E to introduce new platforms, products, and solutions throughout economic cycles.
We invest in technology that makes vision easier to use and more affordable, and therefore, available to a broader base of customers, such as our edge learning products that enable customers with less technical capabilities to use machine vision while minimizing installation and applications support.
We invest in technology that we believe makes advanced machine vision easy to use and more affordable, and therefore, available to a broader base of customers, such as our edge learning products that enable customers with less technical capabilities to use machine vision while reducing installation and application support.
We also continue to invest in technology that addresses the most challenging vision applications, such as our deep learning vision software that solves complex applications with unpredictable defects and deviations.
We also continue to invest in technology that seeks to address the most challenging vision applications, such as our deep learning vision software that is intended to solve complex applications with unpredictable defects and deviations.
We purchase assembled goods from our contract manufacturers, who use specified components sourced from vendor lists approved by Cognex and assembly/test processes created and controlled by Cognex.
Cognex’s primary contract manufacturers are located in Indonesia and Malaysia. We purchase assembled goods from our contract manufacturers, who use specified components sourced from vendor lists approved by Cognex and assembly/test processes created and controlled by Cognex.
Culture Our strong and unique corporate culture reinforces our values of customer first and innovation, and enables us to attract and retain smart, enthusiastic, and creative talent who are motivated to solve the most challenging vision tasks for customers.
Culture Our strong and unique corporate culture reinforces our values of customer first and innovation, and enables us to attract and retain smart, enthusiastic, and creative talent who are motivated to solve vision tasks for customers and improve efficiency and quality throughout our served markets.
To address these challenges, organizations are increasingly deploying automated traceability , dimensioning , and detection solutions featuring Cognex machine vision, including barcode reading and AI-enabled vision technology, either directly or with the help of partners, such as an original equipment manufacturer ("OEM"), machine builder, or system integrator.
To address these challenges, our customers are increasingly deploying automated traceability, dimensioning, and detection solutions featuring Cognex machine vision, including barcode reading and artificial intelligence ("AI")-enabled vision technology, either directly or with the help of partners, such as original equipment manufacturers ("OEM"), machine builders, and system integrators.
We expect this sales investment to expand our reach, increase penetration, and further diversify our customer base. Expansion of market position We continue to invest in our core markets, such as logistics, automotive, and consumer electronics, where we are a leading provider of vision and ID products for warehouse and factory automation.
Expansion of market position We continue to invest in our core markets, such as logistics, packaging, consumer electronics, and automotive, where we are a leading provider of vision and ID products for warehouse and factory automation.
Electronics producers and leading OEMs rely on Cognex machine vision , including AI-enabled vision technology, 3D vision , and barcode reading, to build, inspect, and track semiconductors, printed circuit boards, electronic hardware, and consumer devices. We anticipate major investments in new generations of consumer electronics. A significant amount of visual inspection in consumer electronics is still performed manually by humans.
Many electronics producers and leading OEMs rely on Cognex machine vision , including AI-enabled vision technology, 3D vision , and barcode reading, to build, inspect, and track electronic hardware and consumer devices. However, we still observe a significant amount of visual inspection in consumer electronics being performed manually.
We create and maintain an environment where “Cognoids,” a unique name for our employees, can engage with each other, perform their best work, develop their careers, and be creative.
Human Capital Our employees are our most valuable asset and are critical to our success. We create and maintain an environment where “Cognoids,” a unique name for our employees, can engage with each other, perform their best work, develop 6 Table of Contents their careers, and be creative.
In-Sight® vision systems and sensors include our 2D and 3D vision systems, as well as our In-Sight SnAPP™ sensor. These products leverage various forms of AI, including rule-based coding, as well as deep learning and edge learning technology leveraging pre-trained models powered by neural networks.
In-Sight® vision systems and sensors include our 2D and 3D vision systems. These products leverage various forms of AI, including rule-based coding, as well as deep learning and edge learning technology leveraging pre-trained models powered by neural networks. Our product portfolio is intended to meet the varying price and performance requirements of our broad base of industrial customers.
Cognex manufactures optical components, including our lenses and lighting, at our in-house production plants located in China and Vietnam that are then stocked in our distribution centers.
Cognex manufactures optical components, including our lenses and lighting, at our in-house production plants located in China and Vietnam that are then stocked in our distribution centers in the United States, Europe, and Asia. Cognex ships finished products for customers from these distribution centers.
Our product portfolio meets the 3 Table of Content varying price and performance requirements of our broad base of industrial customers. Our deep learning-based systems automate and solve complex inline inspections that typically require human judgment for defect detection, optical character recognition ("OCR"), assembly verification, or classification.
Our deep learning-based systems automate and solve complex inline inspections that typically require human judgment for defect detection, optical character recognition ("OCR"), assembly verification, or classification.
Inorganic growth We plan to drive inorganic growth through deeper penetration of our served machine vision market and expansion in adjacent markets. We are focusing specifically on markets in which we expect our products and solutions, application expertise, and customer and industry relationships to enable us to provide significant value to end users.
We are focusing specifically on markets in which we expect our products and solutions, application expertise, and customer and industry relationships to enable us to provide value to end users.
Similar to our deep learning-based systems, our edge learning-based systems use pre-trained models, but on simpler applications that prioritize ease of use and have a broader appeal with easier and faster implementation and training.
Similar to our deep learning-based systems, our edge learning-based systems use pre-trained models, but on simpler applications that prioritize ease of use and have a broader appeal with easier and faster implementation and training. 4 Table of Contents OneVision In 2025, we launched OneVision™, a cloud-based platform designed to transform how manufacturers build, train, and scale AI-powered vision applications.
There are thousands of such customers and we believe our market share with these customers is high. There is also a much larger segment of customers with less complex applications and less automation engineering capacity who are looking for more standardized products that are easy to implement and easy to use.
There is also a larger segment of customers with less complex applications and less automation engineering capacity that is looking for more standardized products that are easy to implement and easy to use. This segment has not traditionally been served by us.
We believe in investing in tools and resources that support employees’ learning and development and setting a compensation structure that reflects the Company’s commitment to a pay-for-performance philosophy.
We believe in investing in tools and resources that support employees’ learning and development and setting a compensation structure that reflects the Company’s commitment to a pay-for-performance philosophy. We believe these efforts align with our stockholders’ long-term interests and better position Cognex to continue to operate as a leader in the machine vision industry.
As of December 31, 2024, Cognex employed 2,914 Cognoids globally, including 1,586 in sales, marketing, and service activities; 653 in research, development, and engineering; 435 in manufacturing and quality assurance; and 240 in information technology, finance, and administration. Of our 2,914 Cognoids, 1,949 are based outside of the United States.
As of December 31, 2025, Cognex employed 2,745 Cognoids globally, including 1,600 in selling, general, and administrative activities, 575 in research, development, and engineering, and 570 in manufacturing, quality assurance, and service activities. Of our 2,745 Cognoids, 1,876 are based outside of the United States.
We believe these efforts align with our stockholders’ long-term interests and better position Cognex to continue to operate as a leader in the machine vision industry. 5 Table of Content Regulatory Compliance Cognex’s capital expenditures, earnings, and competitive position are not materially affected by compliance with federal, state, and local environmental provisions, which have been enacted or adopted to regulate the distribution of materials into the environment.
Regulatory Compliance Cognex’s capital expenditures, earnings, and competitive position are not materially affected by compliance with federal, state, and local environmental provisions, which have been enacted or adopted to regulate the distribution of materials into the environment. Available Information Cognex maintains a website at www.cognex.com.
Our solutions blend physical products and software to capture and analyze visual information, allowing for the automation of manufacturing and distribution tasks for customers worldwide. Machine vision products are used to automate the manufacturing or distribution and tracking of discrete items, such as mobile phones, automotive components, and e-commerce packages, by locating, identifying, inspecting, and measuring them.
Machine vision products are used to automate the manufacturing and distribution of discrete items, such as mobile phones, automotive components, and consumer goods, by locating, identifying, inspecting, and measuring them.
Lenses and lighting are also available in both embedded and component formats to provide high-quality image acquisition, including a range of premium optical components that were added to the Company's vision accessory portfolio with the acquisition of Moritex Corporation in the fourth quarter of 2023.
Lenses and lighting are also available in both embedded and component formats to support image acquisition, including a range of optical components that were added to the Company's vision accessory portfolio with the acquisition of Moritex. From value solutions to high-performance hardware, Cognex offers industrial cameras, lenses, lighting, vision controllers, frame grabbers, and I/O cards to help meet customer requirements.
We believe our e-commerce logistics business is differentiated by the high performance of our barcode reading and that potential growth will be driven by retailers investing in online fulfillment. From an automation perspective, the logistics industry is still in its early stages with a large reliance on human labor and a low rate of robotic automation.
We believe our e-commerce logistics business is differentiated by the high performance of our barcode reading and that potential growth will be driven by retailers investing in online fulfillment and their stated desire to reduce cost.
Leading e-commerce players invested significantly in late 2020 through early 2022, then took a post-pandemic “time out” to absorb 1 Table of Content excess capacity from early 2022 into 2023, and began investing at a steadier pace in 2024. We believe that logistics has the potential to be our highest-growth end market over the mid to long-term.
Our leading e-commerce customers invested significantly into floor space capacity in late 2020 through early 2022, then took a post-pandemic “time out” to absorb excess capacity from early 2022 into 2023, and began investing at a steadier pace in 2024 with continued growth in 2025, focusing primarily on optimizing cost of existing facilities.
We currently expect the proliferation of electronics in automobiles to be a significant growth driver in both electric vehicles and internal combustion engine vehicles. For example, innovations in safety, driver assist, and entertainment features increase the number of items to be placed, tracked, measured, and inspected by machine vision.
For example, innovations in safety, driver assist, and entertainment features will increase the number of items to be placed, tracked, measured, and inspected by machine vision. We observed the automotive market continue to experience significant headwinds in 2025, driven in part by geopolitical and trade uncertainty.
We also compete with internal engineering departments of current or prospective customers, as well as open-source tools available for free from various companies, including tools using AI. Human Capital Our employees are our most valuable asset and are critical to our success.
Our competitors include other vendors of machine vision systems, controllers, and components; manufacturers of image processing systems, sensors, and components; and system integrators. We also compete with internal engineering departments of current or prospective customers, as well as open-source tools available from various companies, including tools using AI.
We believe new devices will be difficult to manufacture on a large scale, and therefore will require more innovative vision products in that process. Cognex has close relationships with the largest and most sophisticated companies in the consumer electronics market, and we expect to be a partner of choice as they bring new products to market.
Cognex has close relationships with some of the largest and most sophisticated companies in the consumer electronics market, and we expect to partner with them as they bring new products to market. Automotive The automotive market has historically been one of our largest markets.
From value solutions to high-performance hardware, Cognex offers industrial cameras, lenses, lighting, vision controllers, frame grabbers, and I/O cards to meet customer requirements. Research, Development, and Engineering Cognex engages in research, development, and engineering (RD&E) to enhance our existing products and to develop new products and functionality to address market opportunities.
Research, Development, and Engineering Cognex engages in research, development, and engineering ("RD&E") to enhance our existing products and to develop new products and functionality to address market opportunities.
Other end market uses of Cognex machine vision include regulated manufacturers reducing counterfeiting, food producers improving food safety, and manufacturers using 3D measurement for robotic guidance. Our Business Strategies Historically, Cognex has been a leader in providing the most powerful machine vision technology to the most sophisticated customers and solving their most challenging automation problems.
Salesforce transformation Historically, Cognex has been a leader in providing the most powerful machine vision technology to the most sophisticated customers and solving their most challenging automation problems. There are thousands of such customers.
Today, most applications in logistics are centered around barcode reading. Beyond barcode reading, we expect vision applications in logistics to grow quickly and become a more substantial part of our business. Vision applications include tasks such as inspecting packages for damage, object and symbol recognition, and dimensioning.
From an automation perspective, we believe the logistics industry is currently in its early stages, relying on human labor and a low rate of robotic automation. Today, most applications in logistics are centered around barcode reading. Beyond barcode reading, we expect vision applications in logistics to grow and become a more substantial part of our business.
Automotive The automotive market has been one of our largest markets for the past twenty years. Machine vision is used in almost every step of vehicle manufacturing, from measuring inbound parts, to guiding robot assembly, to inspecting the stitching on leather seats.
Machine vision is used in almost every step of vehicle manufacturing, from measuring inbound parts, to guiding robot assembly, to inspecting the stitching on leather seats. We currently expect the proliferation of electronics in automobiles to be a growth driver in both internal combustion engine vehicles and electric vehicles over the long term.
We are also well positioned to continue to support traditional powertrain investments on internal combustion engine vehicles, supporting long-term growth in the automotive market. Consumer Electronics Today, electronic components and devices are difficult to manufacture without machine vision. Machine vision has made it possible to achieve the density of today’s integrated circuits and to manufacture them cost-effectively.
Consumer Electronics Given size and quality requirements, electronic components and devices are difficult to manufacture without machine vision. Machine vision has helped make it pos sible to achieve the density of today’s integrated circuits and to manufacture them cost-effectively.
Our goal is to expand our business with these customers by offering tailored products and increasing our sales coverage. 2 Table of Content Growth through innovation We invest heavily in research and development to maintain our position as a technology leader in machine vision.
We expect to achieve this by continuing to advance our salesforce transformation, alongside investments in improved lead generation tools. Growth through innovation We invest heavily in research and development to maintain our position as a technology leader in machine vision.
Training services include a variety of product courses that are available at our offices worldwide, at customer facilities, and online. Competition Cognex is one of the leading machine vision companies in the world. Our competitors include other vendors of machine vision systems, controllers, and components; manufacturers of image processing systems, sensors, and components; and system integrators.
Training services include a variety of product courses that are available at our offices worldwide, at customer facilities, and online. We are committed to delivering the industry’s best customer experience.
Retail distributors, e-commerce platforms, and parcel processing customers face an ongoing tight labor market, increased demand, and increased costs.
Our logistics customers, including e-commerce and parcel companies, are facing challenging labor market conditions, increased demand, and increased costs.
As labor becomes more costly and scarce, these customers are looking for productivity initiatives to automate their processes. We also expect leading companies in this space to continue to grow based on new technologies and the devices that incorporate them.
As labor becomes more costly, these customers are looking for productivity initiatives to automate their processes. We anticipate the next wave of innovation in consumer electronics to be driven by emerging product categories such as wearable devices, foldable devices, and other AI-centric consumer hardware.
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ITEM 1: BUSINESS Our Company Founded in 1981, Cognex Corporation (“the Company” or “Cognex”) invents and commercializes technologies that address some of the most critical manufacturing and distribution challenges. We are a leading global provider of machine vision products and solutions that improve efficiency and quality in a wide range of businesses across attractive industrial end markets.
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ITEM 1: BUSINESS Our Company Founded in 1981, Cognex Corporation (the "Company” or “Cognex”) makes advanced machine vision easy, paving the way for manufacturing and distribution companies to become faster, smarter, and more efficient through automation.
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We also anticipate a multi-year wave of investment in hybrid and electric vehicle (“EV”) manufacturing equipment, particularly related to battery manufacturing and inspection. Cognex works closely with the major EV battery manufacturers who we believe produce the majority of the world’s automotive batteries.
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We are a global technology leader in industrial machine vision systems that seek to improve efficiency and help solve critical manufacturing and distribution challenges, providing support across a diverse set of industrial end markets. Our solutions blend hardware and software to capture and analyze visual information, aiding the automation of manufacturing and distribution tasks for customers worldwide.
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We believe that these manufacturers are positioned to grow within Asia, and to expand both independently and through partnerships in the Americas and Europe. We expect our existing relationships and proven offerings to position us to capture a significant share of this growth.
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Vision applications include tasks such as side-by-side detection, inspecting packages for damage, object and symbol recognition, and dimensioning. In 2025, we launched our first line of Solutions Experience ("SLX") devices designed for the logistics sector. SLX reflects our mission to make advanced machine vision easy by integrating industry-leading AI with intuitive deployment workflows.
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We continue to introduce products embedded with artificial intelligence ("AI") technology that augments rule-based machine vision with image-based analysis.
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This combination is intended to 1 Table of Contents enable customers to address critical logistics challenges with minimal training and rapid implementation. By leveraging our latest AI vision tools, we strive to deliver powerful, scalable solutions, helping customers improve efficiency and accuracy in complex logistics environments.
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Increase of sales coverage We reach a broad base of customers through our worldwide direct sales force that sells primarily to large customers, as well as through our network of distributors and integrators that sell primarily to smaller customers who may be more geographically remote or may require integration assistance or supplemental technical support.
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We believe that logistics has the potential to be our highest-growth end market over the mid to long-term. Packaging The packaging market spans both fast-moving consumer goods and healthcare-related industries. We believe growth in the packaging market will be driven by increasingly stringent regulations around traceability, quality, and compliance, making machine vision solutions valuable for manufacturers.
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In 2023, we began investing more aggressively to expand our direct sales force to reach customers new to factory automation or new to Cognex, who have yet to fully benefit from all that machine vision can offer.
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We believe these regulatory requirements are accelerating the adoption of advanced inspection technologies to help ensure product integrity and regulatory compliance across diverse packaging applications. We believe the packaging market presents opportunities for growth through increased market penetration, supported by our ongoing salesforce transformation aimed at reaching a broader cross-section of customers.
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We are doing so by adding a new sales engineer profile to our team, ambitious recent college graduates, and are investing in their onboarding and training. These entry-level sales personnel are enabling us to broaden and deepen our sales coverage, make many more, shorter sales calls, and reach more customers.
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We believe many potential customers in this market can benefit from our portfolio of AI-driven products, which are designed for ease of setup and deployment and are intended to address critical needs for accuracy, speed, and compliance in high-volume production environments. We believe these dynamics present long-term growth potential as packaging manufacturers continue to prioritize automation and quality assurance.
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We seek out selective opportunities in new applications and markets through the acquisition of businesses and technologies that are synergistic with our core markets. We are selective in choosing businesses and technologies that we believe will enhance long-term growth and profitability.
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These next-generation devices are expected to be produced at significant scale and will likely involve increasingly complex manufacturing processes. As a result, we expect precision and reliability in production to become more critical, creating opportunities for advanced inspection and machine vision solutions that align with our core capabilities.
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In the fourth quarter of 2023, we acquired Moritex Corporation, a global provider of premium optical components based in Japan. With an enterprise value of approximately $270 million, this was Cognex's largest acquisition to-date. We plan to continue to seek high-return, EPS-accretive acquisition opportunities to expand our product lines, customer base, distribution network, and technical talent.
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However, we anticipate industry trends such as increasing vehicle complexity, heightened inspection requirements, and the transition to electric and autonomous vehicles to create opportunities that align with our core capabilities. These trends would increase the need for high-precision machine vision systems to support complex assembly processes, battery production, and sensor integration.
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While our intellectual property rights are important to our success, we believe that our business as a whole is not materially dependent on any particular patent, trademark, copyright, or other intellectual property right.
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Additionally, we have seen regulatory pressures and consumer expectations for safety and reliability contributing to higher inspection standards across the industry. We believe these industry dynamics position our products to play an important role in enabling manufacturers to meet evolving requirements efficiently.
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Cognex ships finished products for customers located in the Americas from our Southborough, Massachusetts distribution center, for 4 Table of Content customers located in Europe from our Cork, Ireland distribution center, and for customers located in Asia from our Singapore distribution center.
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Other end market uses of Cognex machine vision include regulated manufacturers reducing counterfeiting, manufacturers using 3D measurement for robotic guidance, and manufacturers serving the aerospace and defense industry. Our Business Strategies Our strategy is anchored in our commitment to profitable growth, generating strong free cash flow, and allocating capital with rigor to create long-term shareholder value.
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Sales Channels and Support Services Cognex sells its products through a worldwide direct sales force that primarily focuses on the development of strategic accounts that generate or are expected to generate significant sales volume, as well as through a global network of distribution and integration partners.
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We believe that we are positioning Cognex for sustained success through three core strategic objectives. First, we aim to be the leading provider of AI technology for industrial machine vision applications. With nearly a decade of experience in this area, we are building cutting-edge tools that unlock new applications and dramatically simplify the user experience.
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Our distribution partners provide sales and local support to help Cognex reach the many prospects for our products in factories around the world, and our integration partners are experts in vision and complementary technologies that can provide turnkey solutions for complex automation projects using vision.
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Second, we remain focused on delivering the best customer experience in our industry by prioritizing reliability, efficiency and ease of doing business. Our commitment spans the full customer lifecycle - from initial engagement through post-sale support. Third, we aim to double our customer base within five years.
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Through each of these channels, sales engineers call directly on targeted accounts, with the assistance of application engineers, and manage the activities of our distribution and integration partners within their territories in order to provide an advantageous sales model for our products.
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We seek to accelerate innovation through continuous investment in AI technology, product development, and platform capabilities to stay ahead of customer needs and industry trends.
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In 2023, we began investing more aggressively to expand our direct sales force to include entry-level sales personnel to sell our easier-to-deploy and easier-to-use products.
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Our goal is to expand our business with these customers by offering tailored products and increasing our sales coverage as part of our strategic objective to double our customer base. Beginning in 2025, we have evolved our emerging customer initiative to a comprehensive salesforce transformation strategy.
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Available Information Cognex maintains a website at www.cognex.com.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

54 edited+22 added−5 removed73 unchanged
Biggest changeThis could have a material adverse effect on our revenue, gross margins, and operating results. If we fail to attract and retain key talent, effectively plan for succession, and maintain our unique corporate culture, our business and operating results could suffer.
Biggest changeIf we fail to attract and retain key talent, effectively plan for and execute management succession, and maintain our unique corporate culture, our business and operating results could suffer. To support our growth and execute our operating plans and strategic initiatives, we must effectively attract, train, develop, motivate, and retain skilled employees, while maintaining our unique corporate culture.
The Moritex acquisition, and acquisitions in general, may involve significant risks and uncertainties, which could include, among others: • the diversion of management's attention from other operational matters, • the inability to realize expected synergies or other benefits resulting from the acquisition, including the failure to achieve projected sales of acquired products, • difficulties or delays integrating personnel, operations, technologies, products, processes, and systems of the acquired business, particularly in locations far from the Company's headquarters, • the failure to retain key talent and difficulties integrating corporate cultures, 8 Table of Content • entry into markets in which we may have limited prior experience and where competitors have stronger market positions, • the inability to protect and secure acquired intellectual property or confidential information, • difficulties or delays completing the development of acquired in-process technology, • the failure to retain key customers, • the impairment of acquired intangible assets resulting from lower-than-expected cash flows from the acquired assets, • acquisition-related charges, which could adversely impact operating results and cash flows in any given period and could be substantially different from period to period, • difficulties with implementing internal controls and accounting systems necessary to be compliant with requirements applicable to public companies subject to SEC reporting, and • difficulties with closing a transaction due to regulatory approvals, employment matters, required consents, litigation, or other challenges, which could increase costs and prevent the acquisition from being completed within the expected timeframe, or from being completed at all.
The Moritex acquisition, and acquisitions in general, may involve significant risks and uncertainties, which could include, among others: • the diversion of management's attention from other operational matters, • the inability to realize expected synergies or other benefits resulting from the acquisition, including the failure to achieve projected sales of acquired products, • difficulties or delays integrating personnel, operations, technologies, products, processes, and systems of the acquired business, particularly in locations far from the Company's headquarters, • the failure to retain key talent and difficulties integrating corporate cultures, • entry into markets in which we may have limited prior experience and where competitors have stronger market positions, • the inability to protect and secure acquired intellectual property or confidential information, • difficulties or delays completing the development of acquired in-process technology, • the failure to retain key customers, • the impairment of acquired intangible assets resulting from lower-than-expected cash flows from the acquired assets, • acquisition-related charges, which could adversely impact operating results and cash flows in any given period and could be substantially different from period to period, • difficulties with implementing internal controls and accounting systems necessary to be compliant with requirements applicable to public companies subject to SEC reporting, and • difficulties with closing a transaction due to regulatory approvals, employment matters, required consents, litigation, or other challenges, which could increase costs and prevent the acquisition from being completed within the expected timeframe, or from being completed at all.
Stakeholder expectations and priorities continue to change. We cannot guarantee that we will achieve our environmental, social, and governance goals or commitments. The price of the Company’s stock is subject to volatility. We have experienced substantial stock price volatility in the past and may continue to do so in the future.
As stakeholder expectations and priorities continue to change, we cannot guarantee that we will achieve our environmental, social, and governance goals or commitments. The price of the Company’s stock is subject to volatility. We have experienced substantial stock price volatility in the past and may continue to do so in the future.
In recent years, trade tariffs imposed by the United States on certain components imported from Chinese suppliers resulted in higher costs for our products, which, to date, have not been material to our total cost of revenue.
Furthermore, in recent years, trade tariffs imposed by the United States on certain components imported from Chinese suppliers resulted in higher costs for our products, which, to date, have not been material to our total cost of revenue.
As a result of global economic conditions, our business is subject to the following risks, among others: • our customers may not have sufficient cash flow or access to financing to purchase our products and services, • our customers may not pay us within agreed upon terms or may default on their payments altogether, • our suppliers may be unable to fulfill their delivery obligations to us in a timely manner, • lower demand for our products may result in charges for excess and obsolete inventory if we are unable to sell inventory that is either already on hand or that we are committed to purchase, • lower cash flows may result in impairment charges for acquired intangible assets or goodwill, • a decline in our stock price may make stock-based awards a less attractive form of compensation and a less effective incentive for retention for our employees, and • the trading price of our common stock may be volatile.
As a result of global economic conditions, our business is subject to the following risks, among others: • our customers may not have sufficient cash flow or access to financing to purchase our products and services, • our customers may not pay us within agreed upon terms or may default on their payments altogether, 15 Table of Contents • our suppliers may be unable to fulfill their delivery obligations to us in a timely manner, • lower demand for our products may result in charges for excess and obsolete inventory if we are unable to sell inventory that is either already on hand or that we are committed to purchase, • lower cash flows may result in impairment charges for acquired intangible assets or goodwill, • a decline in our stock price may make stock-based awards a less attractive form of compensation and a less effective incentive for retention for our employees, and • the trading price of our common stock may be volatile.
An escalation of the China-Taiwan conflict could lead to challenges procuring integrated circuit chips from Taiwan-based vendors that are fundamental to the design of our products.
An escalation of the China-Taiwan conflict could also lead to challenges procuring integrated circuit chips from Taiwan-based vendors that are fundamental to the design of our products.
While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers and contract manufacturers, these actions may not be sufficient to avoid a product failure rate that results in: • substantial delays in shipment, • significant repair or replacement costs, 11 Table of Content • product liability claims or lawsuits, particularly in connection with life sciences customers, electric vehicle battery manufacturers, or other high-risk end-user industries, • customer dissatisfaction and/or loss of sales, or • potential damage to our reputation.
While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers and contract manufacturers, these actions may not be sufficient to avoid a product failure rate that results in: • substantial delays in shipment, • significant repair or replacement costs, • product liability claims or lawsuits, particularly in connection with life sciences customers, electric vehicle battery manufacturers, or other high-risk end-user industries, • customer dissatisfaction and/or loss of sales, or • potential damage to our reputation.
Accordingly, we believe that our future success will depend on our ability to accelerate time-to-market for new products with improved functionality, ease-of-use, performance, and price. This includes continuing to introduce products embedded with artificial intelligence ("AI") technology that augments rule-based machine vision with image-based analysis.
Accordingly, we believe that our future success will depend on our ability to accelerate time-to-market for new products with improved functionality, ease-of-use, performance, and price. This includes continuing to introduce products embedded with AI technology that augments rule-based machine vision with image-based analysis.
These threats pose significant risks to our operations, including: • disruption of operations, system outages, data corruption, and other disruptions, impacting our ability to deliver products and services to our customers, • the distraction of management and diversion of information technology resources, • theft of our intellectual property, including software source code, trade secrets, and other confidential business or proprietary information, • financial losses through fraud, theft of assets, or the costs associated with responding to and mitigating the effects of an attack, • reputation damage and loss of trust among stakeholders as a result of breaches of customer, vendor, or employee data, • litigation, regulatory penalties, and increased compliance costs as a result of data breaches and cybersecurity incidents.
These threats pose significant risks to our operations and potentially to our customer's operations, including: • disruption of operations, system outages, data corruption, and other disruptions, impacting our ability to deliver products and services to our customers, • disruption of customer operations, system outages, data corruption, and other disruptions, impacting customer's ability to conduct their business, • the distraction of management and diversion of information technology resources, • theft of our intellectual property, including software source code, trade secrets, and other confidential business or proprietary information, • financial losses through fraud, theft of assets, or the costs associated with responding to and mitigating the effects of an attack, • reputation damage and loss of trust among stakeholders as a result of breaches of customer, vendor, or employee data, • litigation, regulatory penalties, and increased compliance costs as a result of data breaches and cybersecurity incidents.
As a result, our business is subject to the risks inherent in international sales and operations, including, among other things: 7 Table of Content • various regulatory and statutory requirements, • export and import restrictions, including trade sanctions, • trade tariffs, • transportation delays, • product certification requirements, • employment regulations and local labor conditions, • corruption, • difficulties protecting intellectual property, • varying data protection and privacy laws, • business systems connectivity issues, • gains and losses associated with foreign currency exposures, • difficulties injecting and repatriating cash, and • potentially adverse tax consequences.
As a result, our business is subject to the risks inherent in international sales and operations, including, among other things: • various regulatory and statutory requirements, • export and import restrictions, including trade sanctions, • trade tariffs, • transportation delays, • product certification requirements, • employment regulations and local labor conditions, • corruption, • difficulties protecting intellectual property, • varying data protection and privacy laws, • business systems connectivity issues, • gains and losses associated with foreign currency exposures, • difficulties injecting and repatriating cash, and • potentially adverse tax consequences.
Component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier, further limiting our ability to obtain sufficient quantities of components on reasonable terms, or at all. Therefore, Cognex remains subject to risks of supply shortages and price increases that can adversely affect our business, gross margins, and operating results.
Component suppliers may suffer from poor financial conditions, which can lead to business failure for the supplier, further limiting our ability to obtain sufficient quantities of 13 Table of Contents components on reasonable terms, or at all. Therefore, Cognex remains subject to risks of supply shortages and price increases that can adversely affect our business, gross margins, and operating results.
In-house manufacturing exposes us to various risks that could 10 Table of Content adversely impact our business operations and financial condition, including, but not limited to, (i) the health and safety of our employees engaged in manufacturing; (ii) the storage, use, and transportation of hazardous materials utilized in the manufacturing process; and (iii) legal risks related to environmental protection and health and safety laws in all applicable jurisdictions.
In-house manufacturing exposes us to various risks that could adversely impact our business operations and financial condition, including, but not limited to, (i) the health and safety of our employees engaged in manufacturing; (ii) the storage, use, and transportation of hazardous materials utilized in the manufacturing process; and (iii) legal risks related to environmental protection and health and safety laws in all applicable jurisdictions.
We have experienced, and may continue to experience, delays in the delivery of our products from our suppliers due to the impact of global supply chain challenges or other factors. For example, on June 7, 2022, our primary contract manufacturer experienced a fire at its plant in Indonesia which destroyed a significant amount of Cognex inventories.
We have experienced, and may continue to experience, delays in the delivery of our products from our suppliers due to the impact of global supply chain challenges or other factors. For example, in 2022, our primary contract manufacturer experienced a fire at its plant in Indonesia which destroyed a significant amount of Cognex inventories.
From time to time, we may be subject to various claims, demands, and lawsuits by competitors, shareholders, customers, distributors, patent trolls, former employees, or other parties arising in the ordinary course of business, including lawsuits charging patent infringement, or claims and lawsuits instituted by us to protect our intellectual property and confidential information, or for other reasons.
From time to time, we may be subject to various claims, demands, and lawsuits by competitors, shareholders, customers, distributors, patent trolls, former employees, or other parties arising in the ordinary course of business, 16 Table of Contents including lawsuits charging patent infringement, or claims and lawsuits instituted by us to protect our intellectual property and confidential information, or for other reasons.
The recent expansion of U.S. sanctions on Chinese companies, including expanded restrictions with respect to Chinese semi-conductor companies, has heightened the risks and complexities for U.S. companies conducting business in China. These sanctions have led to increased scrutiny and operational challenges, which may result in costly supply chain shifts and loss of customers and business opportunities.
The recent expansion of U.S. sanctions on Chinese companies, including expanded restrictions with respect to Chinese semiconductor companies, has heightened the risks and complexities for U.S. companies conducting business in China. These sanctions have led to increased scrutiny and operational challenges, which may result in costly supply chain shifts and loss of customers and business opportunities.
The majority of these intangible assets were recorded in the fourth quarter of 2023 when Cognex acquired Moritex Corporation. These assets are susceptible to changes in fair value due to a decrease in the historical or projected cash flows from the use of these assets, which may be negatively impacted by economic trends.
The majority of these intangible assets were recorded in 2023 when Cognex acquired Moritex. These assets are susceptible to changes in fair value due to a decrease in the historical or projected cash flows from the use of these assets, which may be negatively impacted by economic trends.
We utilize a direct sales force, as well as a network of distribution and integration partners, to sell our products and services. We are continually reviewing our go-to-market strategy to help ensure that we are reaching the most customers that we can and with the highest level of service.
We utilize a direct sales force, as well as a network of distribution, original equipment manufacturer, and integration partners, to sell our products and services. We are continually reviewing our go-to-market strategy to help ensure that we are reaching the most customers that we can and with the highest level of service.
Finally, the local stocking of finished products in countries outside of our primary distribution centers may result in higher costs and increased risk of excess or obsolete inventory associated with maintaining the appropriate level and mix of products in multiple inventory locations, resulting in lower gross margins.
Finally, the local stocking of finished products in countries outside of our 8 Table of Contents primary distribution centers may result in higher costs and increased risk of excess or obsolete inventory associated with maintaining the appropriate level and mix of products in multiple inventory locations, resulting in lower gross margins.
The regulatory framework for the collection, use, safeguarding, sharing, and transfer of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. New regulations may require us to further modify certain of our information practices and could subject us to additional compliance costs.
The 11 Table of Contents regulatory framework for the collection, use, safeguarding, sharing, and transfer of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. New regulations may require us to further modify certain of our information practices and could subject us to additional compliance costs.
Furthermore, customer confidence and capital investment can be materially adversely impacted as a result of financial market volatility, negative financial news, declines in income or asset values, energy shortages and cost increases, labor and healthcare costs, and other global economic conditions.
Furthermore, customer confidence and capital investment can be materially adversely impacted as a result of financial market volatility, negative financial news, declines in income or asset values, tariffs and trade wars, energy shortages and cost increases, labor and healthcare costs, and other global economic conditions.
In addition, we may not achieve significant revenue from new product investments for several years, if at all. Moreover, new products, if introduced, may not generate the gross margins that we have experienced historically. Increased competition may result in decreased demand or prices for our products and services and may harm our operating results.
In addition, we may not achieve significant revenue from new product investments for several years, if at all. Moreover, new products, if introduced, may not generate the gross margins that we have experienced historically. 7 Table of Contents Increased competition may result in decreased demand or prices for our products and services and may harm our operating results.
Significant judgment is required in determining our worldwide provision for income and other taxes. The 12 Table of Content application of tax laws and regulations is subject to legal and factual interpretation, judgment, and uncertainty, and tax laws themselves are subject to change.
Significant judgment is required in determining our worldwide provision for income and other taxes. The application of tax laws and regulations is subject to legal and factual interpretation, judgment, and uncertainty, and tax laws themselves are subject to change.
In 2024, approximately 67% of our revenue was derived from customers located outside of the United States.
In 2025, approximately 67% of our revenue was derived from customers located outside of the United States.
It is our policy to invest in investment-grade debt securities that minimize our exposure to credit losses; however, no assurances can be made that we will not incur credit losses with respect to our securities portfolio. As of December 31, 2024, we had approximately $91 million in acquired intangible assets, consisting primarily of customer relationships and completed technologies.
It is our policy to invest in investment-grade debt securities that minimize our exposure to credit losses; however, no assurances can be made that we will not incur credit losses with respect to our securities portfolio. 14 Table of Contents As of December 31, 2025, we had approximately $81 million in acquired intangible assets, consisting primarily of customer relationships and completed technologies.
Any failure, or perceived failure, to further our initiatives, adhere to our public statements, comply with federal, state, or international environmental, social, and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against the Company and adversely affect our business, reputation, financial condition, operating results, stock price, and ability to operate in certain geographic regions.
Any failure, or perceived failure, to further our initiatives, adhere to our public statements, comply with federal, state, or international environmental, social, and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could adversely affect our business, reputation, financial condition, operating results, stock price, and ability to operate in certain geographic regions.
We continuously invest in and enhance our 9 Table of Content cybersecurity measures, including employee training, incident response planning, and collaboration with third-party experts, to mitigate these risks. Changes in laws or regulations relating to data privacy or data protection, or any actual or perceived failure by us to comply with such laws and regulations, could harm our business.
We continuously invest in and enhance our cybersecurity measures, including employee training, incident response planning, and collaboration with third-party experts, to attempt to mitigate these risks. Changes in laws or regulations relating to data privacy, data protection, or product security, or any actual or perceived failure by us to comply with such laws and regulations, could harm our business.
Included in this net loss, were gross unrealized losses totaling $5,317,000, of which $2,118,000 related to debt securities in a loss position for greater than twelve months. Management monitors its debt securities that are in an unrealized loss position to determine whether a loss exists related to the credit quality of the issuer that would be reported in current operations.
Included in this net gain, were gross unrealized losses totaling $529,000, of which $456,000 related to debt securities in a loss position for greater than twelve months. Management monitors its debt securities that are in an unrealized loss position to determine whether a loss exists related to the credit quality of the issuer that would be reported in current operations.
Expectations relating to environmental, social, and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on our business. Governments, regulators, investors, employees, customers, suppliers, and other stakeholders are increasingly focused on environmental, social, and governance disclosures relating to businesses activities. Performance in this area is driven by transparency, goal setting, and third-party opinion.
Expectations relating to environmental, social, and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on our business. Regulators, investors, customers, and other stakeholders may focus on environmental, social, and governance disclosures relating to business activities. Performance in this area is driven by transparency, goal setting, and third-party opinion.
Any of these results could have a material adverse effect on our operating results. Risks Related to Financial Performance The loss of, or significant curtailment of purchases by, large customers could have an adverse effect on our business. Over the past few years, we had two customers that represented 10% or more of our total revenue.
Any of these results could have a material adverse effect on our operating results. Risks Related to Financial Performance The loss of, or significant curtailment of purchases by, large customers could have an adverse effect on our business. At different times over the past few years, we have had one customer that represented a material portion of our total revenue.
Any of these adverse circumstances could have a material adverse effect on our operating results. Risks Related to our Supply Chain The failure to manufacture and deliver products in a timely manner could negatively affect customer satisfaction and our operating results. A significant portion of our products is manufactured by a third-party contractor located in Indonesia.
Risks Related to our Supply Chain The failure to manufacture and deliver products in a timely manner could negatively affect customer satisfaction and our operating results. A significant portion of our products is manufactured by a third-party contractor located in Indonesia.
We also compete with internal engineering departments of current or prospective customers, as well as open-source tools available for free from various companies, including tools using AI. In recent years, advancements in AI, particularly the availability of sophisticated AI algorithms and open-source machine vision platforms, have lowered the barriers to entry in our market.
We also compete with internal engineering departments of current or prospective customers, as well as open-source tools available for free from various companies, including tools using AI. Advancements in the availability of sophisticated AI algorithms and open-source machine vision platforms may lower barriers to enter our market in the future.
As of December 31, 2024, we had approximately $401 million of debt securities in our investment portfolio. These debt securities are reported at fair value, with unrealized gains and losses, net of tax, included in shareholders’ equity as other comprehensive income (loss). As of December 31, 2024, our portfolio of debt securities had a net unrealized loss of $4,904,000.
As of December 31, 2025, we had approximately $379 million of debt securities in our investment portfolio. These debt securities are reported at fair value, with unrealized gains and losses, net of tax, included in shareholders’ equity as other comprehensive income (loss). As of December 31, 2025, our portfolio of debt securities had a net unrealized gain of $2,787,000.
To date, the impact of these restrictions has been immaterial to our total revenue and costs; however, if disputes and conflicts continue or further escalate, actions by governments in response could be significantly more severe and restrictive and could materially adversely affect our operating results.
To date, the impact of these restrictions has been immaterial to our total revenue and costs; however, if disputes and conflicts continue or further escalate, actions by governments in response could be significantly more severe and restrictive and could materially adversely affect our operating results. 9 Table of Contents Implementation of our acquisition strategy may not be successful, which could affect our ability to increase our revenue or profitability and may otherwise adversely affect our business.
During the fourth quarter of 2023, we completed our largest acquisition to date by acquiring Moritex Corporation, a global provider of premium optical components based in Japan, for an enterprise value of approximately $270 million.
We have acquired, and may continue to acquire, new businesses and technologies. In 2023, we completed our largest acquisition to date by acquiring Moritex Corporation, a global provider of premium optical components based in Japan, for an enterprise value of approximately $270 million.
If we fail to successfully protect our intellectual property, our competitive position and operating results could suffer. We rely on our proprietary software technology and hardware designs, as well as the technical expertise, creativity, and knowledge of our personnel, to maintain our position as a leading provider of machine vision products.
We rely on our proprietary software technology and hardware designs, as well as the technical expertise, creativity, and knowledge of our personnel and third parties, to maintain our position as a leading provider of machine vision products.
As of December 31, 2024, we had approximately $587 million in cash and investments. In addition, we have no long-term debt. We believe that our strong cash position puts us in a relatively good position to weather economic downturns.
As of December 31, 2025, we had approximately $642 million in cash and investments. In addition, we have no long-term debt. We believe that our strong cash position enhances our ability to weather any future economic downturns.
Nevertheless, our operating results have been materially adversely affected in the past, and could be materially adversely affected in the future, as a result of unfavorable economic conditions and reduced capital spending by manufacturers and logistics companies worldwide. 13 Table of Content Natural disasters, widespread public health crises, and man-made disasters could result in business disruptions that may adversely affect our business and operating results.
Nevertheless, our operating results have been materially adversely affected in the past, and could be materially adversely affected in the future, as a result of unfavorable economic conditions and reduced capital spending by manufacturers and logistics companies worldwide.
Our success significantly depends on the continued contributions of our executive officers and other key management personnel. The loss of any of these individuals could materially adversely affect our business, operating results, and financial condition. Effective succession planning is crucial to ensure smooth transitions and maintain business continuity.
The loss of any of these individuals or the failure to successfully navigate succession could materially adversely affect our business, operating results, and financial condition. Effective succession planning is crucial to ensure smooth transitions and maintain business continuity.
In addition, the legal systems of certain countries do not favor the aggressive enforcement of patents and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar to ours.
In addition, the legal systems of certain countries do not favor the aggressive enforcement of patents and the laws of foreign countries 12 Table of Contents may not protect our rights to the same extent as the laws of the United States.
Delays in customer orders also can result in delayed revenue recognition or loss of business which can impact our operating results in a particular reporting period. Our inability to obtain components for our products could adversely affect our operating results. Certain key electronic and mechanical components, such as integrated circuit chips, are fundamental to the design of Cognex products.
Our inability to obtain components for our products could adversely affect our operating results. Certain key electronic and mechanical components, such as integrated circuit chips, are fundamental to the design of Cognex products.
We rely on attracting and retaining talent with these skills to execute our product development plans.
Technical personnel with experience in machine vision, and AI technology, are in high demand. We rely on attracting and retaining talent with these skills to execute our product development plans.
Responding to environmental, social, and governance disclosure requests and the implementation of associated initiatives involves risks and uncertainties, requires investments, and depends in part on third-party performance or data that is outside of our control. Initiatives related to climate performance may be dependent upon the availability of alternative energy sources and evolving procurement practices.
Responding to changing environmental, social, and governance expectations and the implementation or modification of associated initiatives involves risks and uncertainties, may require investments, and may depend in part on third-party performance or data that is outside of our control.
At times, this may require strategic changes to our sales organization or enlisting or dropping various partners in certain regions, which could result in additional costs or operational challenges. In 2023, we began investing more aggressively to expand our direct sales force to include entry-level sales personnel to sell our easier-to-deploy and easier-to-use products.
At times, this may require strategic changes to our sales organization or enlisting or dropping various partners in certain regions, which could result in additional costs or operational challenges.
Our security measures or those of our third-party service providers may not detect or prevent such breaches. Cybersecurity threats are becoming increasingly sophisticated and frequent, with attackers employing new and varied methods such as ransomware, phishing, and advanced persistent threats.
Cybersecurity threats are becoming increasingly sophisticated and frequent, with attackers employing new and varied methods such as ransomware, phishing, and advanced persistent threats.
Any of these factors could have a material adverse effect on our business, operating results, or financial condition. We face several risks related to conducting business in China.
Any of these factors could have a material adverse effect on our business, operating results, or financial condition. In addition to the above, we face several risks related to conducting business in China. An escalation of the China-Taiwan conflict could lead to challenges procuring integrated circuit chips from Taiwan-based vendors that are fundamental to the design of our products.
Challenges in obtaining components and maintaining production have resulted in delays, and may continue to result in delays, in meeting our delivery schedules that, as a result, delay deliveries to our customers past their requested delivery date.
Challenges in obtaining components and maintaining production resulted in delays in meeting our delivery schedules that, as a result, delayed deliveries to our customers past their requested delivery date. Delays in customer orders also can result in delayed revenue recognition or loss of business which can impact our operating results in a particular reporting period.
We may be subject to information security failures or breaches caused by hacking, malicious software, acts of vandalism or terrorism, or other events. The risk of a cyberattack continues to increase given rapid advancements in technologies, as well as the proliferation of diplomatic and armed conflict throughout the world.
The risk of a cyberattack continues to increase given rapid advancements in technologies, as well as the proliferation of diplomatic and armed conflict throughout the world. Our security measures or those of our third-party service providers may not detect or prevent such breaches.
Since 2022, we have been scaling up an additional contract manufacturer located in Malaysia, which has further mitigated risk, diversified our supply chain, and expanded our production capacity. With the acquisition of Moritex Corporation in the fourth quarter of 2023, we began in-house manufacturing of optical components, such as lenses and lighting, in production plants located in China and Vietnam.
In recent years we have taken steps to broaden our manufacturing base to attempt to further mitigate risk, diversify our supply chain, and expand our production capacity. With the acquisition of Moritex, we began in-house manufacturing of optical components, such as lenses and lighting, in production plants located in China and Vietnam.
Challenges in obtaining favorable funding may delay, reduce, or eliminate certain business activities or growth initiatives, which could adversely affect our financial condition and operating results. Risks Related to Information Technology and Intellectual Property Information security breaches may adversely affect our business. We rely on our information technology systems, including third-party services, to effectively run our business.
Challenges in obtaining favorable funding may delay, reduce, or eliminate certain business activities or growth initiatives, which could adversely affect our financial condition and operating results. If we are unable to effectively scale our operations and salesforce to support a significantly expanded customer base, our growth strategy and customer experience may be adversely affected.
Additionally, large technology companies and other competitors with substantial financial and technological resources may continue to develop and distribute free or low-cost solutions, further eroding market prices. If we fail to effectively respond to these trends through innovation, cost management, or other strategies, our competitive position could weaken.
A further fragmentation of the market could intensify pricing pressures and challenge our ability to differentiate our products on performance or features. Additionally, large technology companies and other competitors with substantial financial and technological resources may continue to develop and distribute free or low-cost solutions.
This could result in decreased market share, reduced pricing power, and a material adverse effect on our revenue, gross margins, and operating results. Further, in recent years, we have seen some examples of industry consolidation in our markets.
If we fail to effectively respond to these trends through innovation, customer experience improvements, cost management, or other strategies, our competitive position could weaken. This could result in decreased market share and have a material adverse effect on our revenue, gross margins, and operating results. Further, companies in our industry could attempt to strengthen their market positions through consolidation.
These matters can be time-consuming, divert management’s attention and resources, and cause us to incur significant expenses. Furthermore, the results of any of these actions may have a material adverse effect on our operating results. ITEM 1B: UNRESOLVED STAFF COMMENTS None
These situations could divert management’s focus, lead to volatility in our stock price, and have a material adverse effect on our operating results and ability to execute our strategic plan. ITEM 1B: UNRESOLVED STAFF COMMENTS None.
These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. The adoption of AI technologies is subject to increasing regulatory scrutiny, with emerging laws such as the European Union's AI Act and U.S. initiatives potentially imposing requirements for transparency, bias mitigation, and ethical deployment.
AI technologies are increasingly subject to regulatory scrutiny in the United States and internationally, including under emerging frameworks such as the European Union’s AI Act, which may impose requirements related to transparency, bias mitigation, data governance, and ethical deployment.
Compliance with these evolving standards may increase costs, delay product launches, or require significant changes to our technologies. AI-related concerns, including data privacy, intellectual property, and cybersecurity, add further complexity, while inconsistent global regulations heighten operational challenges. Complying with emerging and changing requirements may be costly and require us to change certain business practices.
Compliance with these requirements, by us or our customers, may increase costs, delay product development or commercialization, or require significant changes to our technologies or business practices. The use of data to train, validate, and improve AI models presents additional risks related to data privacy, security, intellectual property rights, and contractual limitations on data usage.
Removed
These tools enable new entrants and low-cost providers, particularly in China, to produce vision systems that may perform comparably to our offerings. This commoditization trend intensifies pricing pressures and challenges our ability to differentiate our products solely on performance or features.
Added
Such industry consolidation may result in stronger competition and may be accompanied by pressure from customers for lower prices. This could have a material adverse effect on our revenue, gross margins, and operating results.
Removed
This trend may continue as companies attempt to strengthen or hold their market positions in an evolving industry and as 6 Table of Content companies are acquired or are unable to continue operations. We believe that industry consolidation may result in stronger competition and may be accompanied by pressure from customers for lower prices.
Added
With the appointment of our new Chief Executive Officer in June 2025, we are transitioning to a different management style and strategic focus. Navigating this transition is important to the near- and long-term success of the business. More generally, our success significantly depends on the continued contributions of our executive officers and other key management personnel.
Removed
To support our growth and execute our operating plans and strategic initiatives, we must effectively attract, train, develop, motivate, and retain skilled employees, while maintaining our unique corporate culture. Technical personnel with experience in machine vision, and more recently AI and transformer-based models, are in high demand and competition for their talents is intense.
Added
As part of our strategic priorities, we are focused on expanding our customer base and transforming our salesforce to better serve a broader range of customers. Successfully executing this strategy requires significant investments in sales, support, systems, processes, and personnel, as well as effective organizational change management.
Removed
Although we are taking steps to mitigate this risk, including purchasing chips in advance of demand, there can be no assurance that these steps will be successful in securing an adequate supply of chips at our current cost structure. Furthermore, purchasing inventory in advance of demand may expose us to increased risk of excess and obsolete inventory and resulting charges.
Added
Scaling our operations to support a larger and more diverse customer base presents operational and execution risks.
Removed
Implementation of our acquisition strategy may not be successful, which could affect our ability to increase our revenue or profitability and may otherwise adversely affect our business. We have acquired, and may continue to acquire, new businesses and technologies.
Added
If we are unable to recruit, train, and retain sufficient sales and support personnel, or if changes to our sales processes, tools, and operating model do not perform as intended, we may experience operational inefficiencies, inconsistent customer engagement, delays in responding to customer needs, or reduced effectiveness of our sales efforts.
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In addition, expanding into new customer segments and geographies may increase complexity in managing customer relationships, product requirements, and support expectations.
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Failure to maintain a consistently high-quality customer experience during this period of growth could result in customer dissatisfaction, reputational harm, and reduced demand for our products. 10 Table of Contents Any inability to effectively scale our operations and salesforce, or to manage the associated organizational and operational challenges, could increase costs, limit our ability to achieve anticipated growth, and materially adversely affect our business, financial condition, and results of operations.
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The failure to effectively transform our operating model, manage our expenses, and achieve expected cost reductions could adversely affect our business and financial results. We are implementing initiatives intended to improve our operating model and productivity across key functions, with the goal of enhancing efficiency, strengthening our cost structure, and supporting long‑term growth.
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These efforts include changes to processes, systems, and organizational design, and depend on effective execution and sustained discipline in managing our expenses. Transforming our operating model presents operational and execution risks.
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If the changes we implement do not perform as intended, take longer than expected, or create disruptions to ongoing activities, we may not achieve the anticipated cost reductions or productivity benefits. Expected savings are based on various assumptions, including stable business conditions and successful adoption of new processes and tools.
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Unexpected challenges, such as higher‑than‑anticipated operating costs or delays in executing planned changes, could reduce or offset the expected benefits. If we do not effectively transform our operating model, manage our expenses, or realize the expected cost efficiencies, our cost structure may remain higher than planned, which could materially adversely affect our business, financial condition, and results of operations.
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Risks Related to Information Technology and Intellectual Property Information security breaches may adversely affect our business. We rely on our information technology systems, including third-party services, to effectively run our business. We may be subject to information security failures or breaches caused by social engineering, hacking, malicious software, acts of vandalism or terrorism, or other events.
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These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Regions and countries are introducing new laws and regulations regarding the cybersecurity of the products being sold in their markets, such as the European Union's Cyber Resilience Act and Network and Information Systems Directive 2, a European Union regulation aimed at strengthening cybersecurity across member states.
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Both of these regulations establish cybersecurity requirements for products, including secure software development practices, vulnerability management and reporting, incident response and lifecycle support obligations.
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These new laws introduce new requirements in product security and software development and our ability to comply with these requirements to prescribed timescales could result in additional cost, inhibit market access and sales, and adversely affect our business, financial condition, and operating results. Complying with emerging and changing requirements may be costly and require us to change certain business practices.
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Changes in laws or regulations relating to artificial intelligence, data usage, or automated technologies, or any actual or perceived failure to develop, deploy, or govern such technologies responsibly, could harm our business. Our development and use of AI, machine learning, and related technologies may subject us to evolving legal, regulatory, operational, and cybersecurity risks.
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In addition, the integration of AI into our products and systems may increase exposure to cybersecurity threats, system vulnerabilities, and reputational harm if our technologies fail to perform as intended or are perceived to be used inappropriately.
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Because AI regulations and standards are rapidly evolving and may be inconsistent across jurisdictions, we may face challenges in anticipating and complying with future requirements, which could materially adversely affect our business, financial condition, results of operations, or reputation. If we fail to successfully protect our intellectual property, our competitive position and operating results could suffer.
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As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar to ours. Any of these adverse circumstances could have a material adverse effect on our operating results.
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Natural disasters, widespread public health crises, and man-made disasters could result in business disruptions that may adversely affect our business and operating results.
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These matters can be time-consuming, divert management’s attention and resources, and cause us to incur significant expenses. In addition, activist investors may seek to influence our business strategy, capital allocation, governance, or leadership.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor more information about the cybersecurity risks we face, see the risk factor entitled “Information security breaches may adversely affect our business” in Item 1A- Risk Factors. Governance Our cybersecurity risk management program and related operations and processes are managed by our Information Security team (the “IS Team”), which is led by the Senior Director of Information Security.
Biggest changeFor more information about the cybersecurity risks we face, see the risk factor entitled “Information security breaches may adversely affect our business” in Item 1A- Risk Factors.
The Senior Director of Information Security role is currently held by an individual who has over fifteen years of experience managing information security programs. The IS Team is responsible for assessing risks from cybersecurity threats, including their potential business impact and likelihood of occurrence, as well as implementing risk mitigations and remediations.
The Senior Director of Information Security role is currently held by an individual who has over twenty years of experience managing information security programs. The IS Team is responsible for assessing risks from cybersecurity threats, including their potential business impact and likelihood of occurrence, as well as implementing risk mitigations and remediations.
Our cybersecurity risk 14 Table of Content management program includes a number of components, including information security program assessments, penetration testing, and threat simulation exercises that are conducted periodically by both internal and external resources, as well as continuous monitoring of critical risks from cybersecurity threats using automated tools.
Our cybersecurity risk management program includes a number of components, including information security program assessments, penetration testing, and threat simulation exercises that are conducted periodically by both internal and external resources, such as cybersecurity industry vendors, consultants, and auditors, as well as continuous monitoring of critical risks from cybersecurity threats using automated tools.
The Audit Committee periodically reports on cybersecurity risk management to the full Board of Directors. The Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management.
The Audit Committee periodically reports on cybersecurity risk management to the full Board of Directors of the Company (the "Board"). The IS team also provides an annual direct report on cybersecurity risk management to the Board. The Board, as a whole and through its committees, has responsibility for the oversight of risk management. 17 Table of Contents
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Governance Our cybersecurity risk management program and related operations and processes are managed by our Information Security team (the “IS Team”), which is led by the Senior Director of Information Security and supported by internal resources and external vendors, auditors, and consulting engagements when appropriate.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThis land is being held for future expansion and is currently used as an Ultimate Frisbee Field for our Cognoids. In 2007, Cognex purchased a 19,000 square-foot building adjacent to our corporate headquarters that is currently used as a training center for our sales function.
Biggest changeIn December 2025, we sold the 19,000 square-foot building adjacent to our corporate headquarters and the underlying land for approximately $7 million which resulted in approximately a $5 million gain on the sale of assets. This building was previously used as a training center for our sales function. Our new training center will be located inside our corporate headquarters.
ITEM 2: PROPERTIES In 1994, Cognex purchased and renovated a 100,000 square-foot building located in Natick, Massachusetts that serves as our corporate headquarters and is occupied by employees primarily in research, development, and engineering, manufacturing and quality assurance, and administration functions. In 1997, Cognex completed construction of a 50,000 square-foot addition to this building.
ITEM 2: PROPERTIES In 1994, Cognex purchased and renovated a 100,000 square-foot building located in Natick, Massachusetts that serves as our corporate headquarters and is occupied by employees primarily in research, development, and engineering, marketing, service, manufacturing and quality assurance, and administration functions. In 1997, Cognex completed construction of a 50,000 square-foot addition to this building.
These lease agreements expire at various dates through 2033. Certain of these leases contain renewal options, leasehold improvement incentives, retirement obligations, escalation clauses, rent holidays, and variable payments tied to a consumer price index.
Cognex conducts certain of its operations in other leased facilities, predominantly research, development, and engineering, sales, and administration functions. These lease agreements expire at various dates through 2035. Certain of these leases contain renewal options, leasehold improvement incentives, retirement obligations, escalation clauses, rent holidays, and variable payments tied to a consumer price index.
In 1995, Cognex purchased an 83,000 square-foot office building adjacent to our corporate headquarters that is occupied by employees primarily in marketing, service, information technology, and finance functions. In 1997, Cognex purchased a three and one-half acre parcel of land adjacent to our corporate headquarters.
In 1995, Cognex purchased an 83,000 square-foot office building adjacent to our corporate headquarters that is occupied by employees primarily in administration functions. In 1997, Cognex purchased a three and one-half acre parcel of land adjacent to our corporate headquarters. This land is being held for future expansion and is currently used as an Ultimate Frisbee Field for our Cognoids.
In connection with the acquisition of Moritex Corporation in the fourth quarter of 2023, the Company acquired a 162,000 square-foot building in Shenzhen, China and assumed a lease agreement for a 22,000 square-foot building in Bac Ninh, Vietnam, both of which serve as production plants for optical components. 15 Table of Content Cognex conducts certain of its operations in other leased facilities, predominantly research, development, and engineering, sales, and administration functions.
In connection with the acquisition of Moritex, we acquired a 162,000 square-foot building in Shenzhen, China and assumed a lease agreement for a 22,000 square-foot building in Bac Ninh, Vietnam, both of which serve as production plants for optical components.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile we cannot predict the outcome of these matters, we believe that any liability arising from them will not have a material adverse effect on our financial position, liquidity, or results of operations. ITEM 4: MINE SAFETY DISCLOSURES Not applicable. 16 Table of Content PART II
Biggest changeWhile we cannot predict the outcome of these matters, we believe that any liability arising from them will not have a material adverse effect on our financial position, liquidity, or results of operations. ITEM 4: MINE SAFETY DISCLOSURES Not applicable. 18 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 16 PART II 17 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 17 ITEM 6. [RESERVED] 19 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 19 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 25 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 18 PART II 19 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES 19 ITEM 6. [RESERVED] 21 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 21 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 27 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth information with respect to purchases by the Company of shares of its common stock during each fiscal month of the fourth quarter of 2024: Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs September 30 - October 27, 2024 119,000 $ 39.45 119,000 $ 304,355,000 October 28 - November 24, 2024 109,000 39.71 109,000 300,007,000 November 25 - December 31, 2024 928,000 36.87 928,000 265,807,000 Total 1,156,000 $ 37.40 1,156,000 $ 265,807,000 The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
Biggest changeThe following table sets forth information with respect to purchases by the Company of shares of its common stock pursuant to the Program during each fiscal month of the fourth quarter of 2025: Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs September 29, 2025 - October 26, 2025 — — — 140,020,000 October 27, 2025 - November 23, 2025 640,522 39.03 640,522 115,020,000 November 24, 2025 - December 31, 2025 — — — 115,020,000 Total 640,522 $ — 640,522 $ 115,020,000 The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
Data for the Nasdaq Composite Index and the Nasdaq Lab Apparatus Index was provided to the Company by Research Data Group, Inc. *$100 invested on 12/31/2019 in stock or index, including reinvestment of dividends.
Data for the Nasdaq Composite Index and the Nasdaq Lab Apparatus Index was provided to the Company by Research Data Group, Inc. *$100 invested on 12/31/2020 in stock or index, including reinvestment of dividends.
Future dividends will be declared at the discretion of the Company's Board of Directors and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations. 17 Table of Content Set forth below is a line graph comparing the annual percentage change in the cumulative total shareholder return on the Company’s common stock, based on the market price of the Company’s common stock, with the total return on companies within the Nasdaq Composite Index and the Nasdaq Lab Apparatus & Analytical, Optical, Measuring & Controlling Instrument (SIC 3820-3829 US Companies) Index (the “Nasdaq Lab Apparatus Index”).
Future dividends will be declared at the discretion of the Board and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations. 19 Table of Contents Set forth below is a line graph comparing the annual percentage change in the cumulative total shareholder return on the Company’s common stock, based on the market price of the Company’s common stock, with the total return on companies within the Nasdaq Composite Index and the Nasdaq Lab Apparatus & Analytical, Optical, Measuring & Controlling Instrument (SIC 3820-3829 US Companies) Index (the “Nasdaq Lab Apparatus Index”).
ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on The NASDAQ Stock Market LLC, under the symbol CGNX. As of January 26, 2025, there were approximately 600 shareholders of record of the Company’s common stock.
ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common stock is traded on The NASDAQ Stock Market LLC, under the symbol CGNX. As of February 1, 2026, there were approximately 600 shareholders of record of the Company’s common stock.
The Company’s Board of Directors declared and paid cash dividends of $0.065 per share in the first, second, and third quarters of 2022, $0.070 per share in the fourth quarter of 2022 and in the first, second, and third quarters of 2023, and $0.075 per share in the fourth quarter of 2023 and in the first, second, and third quarters of 2024.
The Board declared and paid cash dividends of $0.070 per share in the first, second, and third quarters of 2023, $0.075 per share in the fourth quarter of 2023 and in the first, second, and third quarters of 2024, and $0.080 per share in the fourth quarter of 2024 and in the first, second, and third quarters of 2025.
The dividend was increased to $0.080 per share in the fourth quarter of 2024. Total dividends paid were $52,329,000 in 2024, $49,079,000 in 2023, and $45,921,000 in 2022.
The dividend was increased to $0.085 per share in the fourth quarter of 2025. Total dividends paid were $54,627,000 in 2025, $52,329,000 in 2024, and $49,079,000 in 2023.
The Company believes the number of beneficial owners of the Company’s common stock on that date was substantially greater. In March 2020, the Company's Board of Directors authorized the repurchase of $200,000,000 of the Company's common stock.
The Company believes the number of beneficial owners of the Company’s common stock on that date was substantially greater. In March 2022, the Board authorized a program providing for the repurchase of up to $500,000,000 of the Company's common stock (the "Program").
Under this March 2022 program, the Company repurchased 1,682,000 shares at a cost of $87,314,000 in 2022, 1,723,000 shares at a cost of $79,794,000 in 2023, and 1,711,000 shares at a cost of $67,085,000 in 2024, leaving a remaining balance of $265,807,000 as of December 31, 2024.
Under the Program, in addition to repurchases made in prior years, the Company repurchased 1,723,000 shares at a cost of $79,794,000 in 2023, 1,711,000 shares at a cost of $67,085,000 in 2024, and 4,234,000 shares at a cost of $151,233,000 in 2025, leaving a remaining balance of $115,020,000 as of December 31, 2025.
The 2023 repurchase included $446,000 of buyback Excise Tax in accordance with the Inflation Reduction Act of 2022. The Company may repurchase shares under this program in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements.
On February 11, 2026, the Board authorized the repurchase of an additional $500,000,000 of the Company's common stock upon completion of the Program. The Company may repurchase shares under these programs in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements.
Fiscal year ended December 31. 12/19 12/20 12/21 12/22 12/23 12/24 Cognex Corporation 100.00 151.56 147.25 89.67 79.95 69.20 NASDAQ Composite 100.00 144.92 177.06 119.45 172.77 223.87 NASDAQ Stocks 100.00 132.07 136.90 82.82 96.36 97.07 (SIC 3820-3829 U.S. Companies) Lab Apparatus & Analyt,Opt, Measuring, and Controlling Instrument) 18 Table of Content
Fiscal year ended December 31. 12/20 12/21 12/22 12/23 12/24 12/25 Cognex Corporation 100.00 97.15 59.16 52.75 45.66 46.23 NASDAQ Composite 100.00 122.18 82.43 119.22 154.48 187.14 NASDAQ Stocks 100.00 93.34 50.66 33.68 33.18 44.25 (SIC 3820-3829 U.S. Companies) Lab Apparatus & Analyt, Opt, Measuring, and Controlling Instrument) 20 Table of Contents
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Under this March 2020 program, in addition to repurchases made in prior years, the Company repurchased 1,677,000 shares at a cost of $117,000,000 in 2022, which completed purchases under the March 2020 program. In March 2022, the Company's Board of Directors authorized the repurchase of an additional $500,000,000 of the Company's common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSuch risks and uncertainties include: (1) the technological obsolescence of current products and the inability to develop new products; (2) the impact of competitive pressures; (3) the inability to attract and retain skilled employees, effectively plan for succession, and maintain our unique corporate culture; (4) the failure to properly manage the distribution of products and services; (5) economic, political, and other risks associated with international sales and operations, including the impact of trade disputes on the economic climate in China; (6) the challenges in integrating and achieving expected results from acquired businesses; (7) uncertainty surrounding our future capital needs; (8) information security breaches; (9) the failure to comply with laws or regulations relating to data privacy or data protection; (10) the inability to protect our proprietary technology and intellectual property; (11) the failure to manufacture and deliver products in a timely manner; (12) the inability to obtain, or the delay in obtaining, components for our products at reasonable prices; (13) the inability to design and manufacture high-quality products; (14) the loss of, or curtailment of purchases by, large customers in the logistics, consumer electronics, or automotive industries; (15) challenges in accurately forecasting our financial results due to seasonal and cyclical variations in customer purchasing patterns; (16) potential impairment charges with respect to our investments or acquired intangible assets; (17) exposure to additional tax liabilities, increases and fluctuations in our effective tax rate, and other tax matters; (18) fluctuations in foreign currency exchange rates and the use of derivative instruments; (19) unfavorable global economic conditions, including increases in interest rates and elevated inflation rates; (20) business disruptions from natural or man-made disasters, public health crises, or other events outside our control; (21) exposure to potential liabilities, increased costs, reputational harm, and other adverse effects associated with expectations relating to environmental, social, and governance considerations; (22) stock price volatility; and (23) our involvement in time-consuming and costly litigation or activist shareholder activities.
Biggest changeSuch risks and uncertainties include: (1) the technological obsolescence of current products and the inability to develop new products; (2) the impact of competitive pressures; (3) the inability to attract and retain skilled employees and effectively plan for succession including managing the transition of our Chief Executive Officer, while maintaining our unique corporate culture; (4) the failure to properly manage the distribution of products and services; (5) economic, political, and other risks associated with international sales and operations, including the impact of trade disputes, the imposition of tariffs, the economic climate in China, and the wars and conflicts involving Ukraine and Israel and those that may arise in the future in the geographies where we conduct business; (6) the challenges in integrating and achieving expected results from acquired businesses; (7) uncertainty surrounding our future capital needs; (8) the inability to effectively scale our operations and salesforce to support a significantly expanded customer base; (9) information security breaches and other cybersecurity threats; (10) the failure to comply with laws or regulations relating to data privacy, data protection, AI, or other automated technologies; (11) the inability to protect our proprietary technology and intellectual property; (12) the inability to manage direct and indirect disruptions to our supply chain, which could cause delays in obtaining components for our products at reasonable prices; (13) the failure to manufacture and deliver products in a timely manner; (14) the inability to obtain, or the delay in obtaining, components for our products at reasonable prices; (15) the inability to design and manufacture high-quality products; (16) the loss of, or curtailment of purchases by, large customers in the logistics, consumer electronics, or automotive industries; (17) challenges in accurately forecasting our financial results due to seasonal and cyclical variations in customer purchasing patterns and economic and market volatility; (18) potential impairment charges with respect to our investments or acquired intangible assets; (19) exposure to additional tax liabilities, increases and fluctuations in our effective tax rate, and other tax matters; (20) fluctuations in foreign currency exchange rates and the use of derivative instruments; (21) unfavorable global economic conditions, including, without limitation, increases in interest rates, elevated inflation rates, and recession risks; (22) business disruptions from natural or man-made disasters, public health crises, or other events outside our control; (23) stock price volatility; (24) our involvement in time-consuming and costly litigation or activist shareholder activities; and (25) the failure to effectively transform our operating model, manage our expenses, and achieve expected cost reductions.
In addition to product revenue derived from the sale of machine vision products, the Company also generates revenue by providing maintenance and support, consulting, and training services to its customers; however, service revenue accounted for less than 10% of total revenue for all periods presented.
In addition to revenue derived from the sale of machine vision products, the Company also generates revenue by providing maintenance and support, consulting, and training services to its customers; however, service revenue accounted for less than 10% of total revenue for all periods presented.
Future dividends will be declared at the discretion of the Company's Board of Directors and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations.
Future dividends will be declared at the discretion of the Board and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations.
Although the customer may have taken legal title and physical possession of the goods when they arrived at the customer’s designated site, the significant risks and rewards of ownership transfer to the customer only upon validation.
Although the customer may have taken legal title and physical possession of the goods when they 26 Table of Contents arrived at the customer’s designated site, the significant risks and rewards of ownership transfer to the customer only upon validation.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 For a discussion of the Company’s fiscal 2023 results compared to fiscal 2022, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 15, 2024.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 For a discussion of the Company’s fiscal 2024 results compared to fiscal 2023, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 13, 2025.
These estimates occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise 24 Table of Content from differences in the timing of the recognition of certain expenses for tax and financial statement purposes.
These estimates occur in the calculation of income tax credits, benefits, and deductions, and in the calculation of certain tax assets and liabilities, which arise from differences in the timing of the recognition of certain expenses for tax and financial statement purposes.
The Company may repurchase shares under this program in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements.
The Company may repurchase shares under these programs in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements.
The following table sets forth certain consolidated financial data as a percentage of revenue: Year Ended December 31, 2024 (1) 2023 (1) 2022 (1) Revenue 100 % 100 % 100 % Cost of revenue 32 28 28 Gross profit 68 72 72 Research, development, and engineering expenses 15 17 14 Selling, general, and administrative expenses 41 40 31 Loss (recovery) from fire — (1) 2 Operating income 13 16 24 Non-operating income 2 1 — Income before income tax expense 14 16 24 Income tax expense 3 3 3 Net income 12 % 14 % 21 % (1) Amounts may not total properly due to rounding.
The following table sets forth certain consolidated financial data as a percentage of revenue: Year Ended December 31, 2025 (1) 2024 (1) 2023 (1) Revenue 100 % 100 % 100 % Cost of revenue 33 32 28 Gross profit 67 68 72 Research, development, and engineering expenses 14 15 17 Selling, general, and administrative expenses 37 41 40 Loss (recovery) from fire — — (1) Operating income 16 13 16 Non-operating income 2 2 1 Income before income tax expense 18 14 16 Income tax expense 7 3 3 Net income 12 % 12 % 14 % (1) Amounts may not total properly due to rounding.
LIQUIDITY AND CAPITAL RESOURCES The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and resulted in an accumulated cash and investment balance of $586,948,000 as of December 31, 2024.
LIQUIDITY AND CAPITAL RESOURCES The Company has historically been able to generate positive cash flow from operations, which has funded its operating activities and other cash requirements and resulted in an accumulated cash and investment balance of $642,301,000 as of December 31, 2025.
We believe that our strong cash position has put us in a relatively good position with respect to anticipated longer-term liquidity needs.
In addition, the Company has no long-term debt. We believe that our strong cash position has put us in a relatively good position with respect to anticipated longer-term liquidity needs.
The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, or in privately negotiated transactions. 23 Table of Content The Company’s Board of Directors declared and paid cash dividends of $0.075 per share in the first, second, and third quarters of 2024 and $0.080 per share in the fourth quarter of 2024, totaling $52,329,000 in 2024.
The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, or in privately negotiated transactions. The Board declared and paid cash dividends of $0.080 per share in the first, second, and third quarters of 2025 and $0.085 per share in the fourth quarter of 2025, totaling $54,627,000 in 2025.
These forward-looking statements, which include statements regarding business and market trends, future financial performance and financial targets, customer demand and order rates and timing of related revenue, future product or revenue mix, research and development activities, sales and marketing activities, new product offerings, innovation and product development activities, customer acceptance of our products, capital expenditures, cost and working capital management activities, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected.
These forward-looking statements, which include statements regarding business and market trends, future financial performance, financial targets, milestones and related timing expectations, the impacts of our strategic portfolio review, the impact of tariffs, customer demand and order rates and timing of related revenue, future product or revenue mix, research and development activities, sales and marketing activities including our salesforce transformation, new product offerings, innovation and product development activities, customer acceptance of our products, commercial partnerships, capital expenditures, cost management activities including expected annualized operating expense reductions, investments, liquidity, dividends and stock repurchases, strategic and growth plans and opportunities, acquisitions, and estimated tax benefits and expenses, changes in tax legislation, and other tax matters, involve known and unknown risks and uncertainties that could cause actual results to differ materially from those projected.
RD&E expenses as a percentage of revenue were 15% in 2024 compared to 17% in 2023. We believe that a continued commitment to RD&E activities is essential to maintain or achieve product leadership with our existing products and to provide innovative new product offerings, as well as to provide engineering support for large customers.
We believe that a continued commitment to RD&E activities is essential to maintain or achieve product leadership with our existing products and to provide innovative new product offerings, as well as to provide engineering support for large customers.
Gross Profit The following table sets forth our gross profit (in thousands) for the years ended December 31, 2024 and 2023.
Operating Expenses The following table sets forth our operating expenses (in thousands) for the years ended December 31, 2025 and 2024.
The Company accounts for the impact of the Global Intangible Low-Taxed Income (GILTI) minimum tax in deferred taxes.
The Company accounts for the impact of Net CFC Tested Income (NCTI), formally known as Global Intangible Low-Taxed Income (GILTI), minimum tax in deferred taxes.
The following table sets forth our disaggregated revenue information by geographic area based on the customers' country of domicile (in thousands) for the years ended December 31, 2024 and 2023.
These increases were partially offset by continued weakness in the automotive industry. 22 Table of Contents The following table sets forth our disaggregated revenue information by geographic area based on the customers' country of domicile (in thousands) for the years ended December 31, 2025 and 2024.
The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments to maintain liquidity and safety of its investment portfolio. Operating Activities Net cash provided by operating activities totaled $149,081,000 in 2024. Significant uses of cash consisted of an increase in accounts receivable related to growth in logistics revenue and in support of sales initiatives.
The Company has established guidelines relative to credit ratings, diversification, and maturities of its investments to maintain liquidity and safety of its investment portfolio. Operating Activities Net cash provided by operating activities totaled $245,514,000 in 2025 and $149,081,000 in 2024.
Future Cash Requirements As of December 31, 2024, the Company had inventory purchase commitments of $44,269,000, with the majority payable within twelve months, and lease payment obligations of $115,200,000, with $13,177,000 payable within twelve months.
Future Cash Requirements As of December 31, 2025, the Company had inventory purchase commitments of $57,690,000, with the majority payable within twelve months, and lease payment obligations of $93,418,000, with $15,843,000 payable within twelve months.
This results in a broad base of potential customers across a 19 Table of Content variety of industries, including logistics, automotive, consumer electronics, semiconductor, consumer products, medical-related, and food and beverage. Revenue was $914,515,000 in 2024, representing an increase of 9% over the prior year.
This results in a broad base of potential customers across a variety of industries, including logistics, consumer electronics, automotive, packaging, and semiconductor. In 2025, revenue was $994,359,000, representing an increase of 9% over the prior year. The increase was primarily due to higher revenue from the logistics and consumer electronics industries.
Twelve-months Ended December 31, 2024 December 31, 2023 $ Change % Change Gross profit $ 625,794 $ 601,241 $ 24,553 4 % Percentage of total revenue 68 % 72 % Gross margin decreased to 68% in 2024 compared to 72% in 2023.
Twelve-months Ended December 31, 2025 December 31, 2024 $ Change % Change Gross profit $ 665,393 $ 625,794 $ 39,599 6 % Percentage of total revenue 67 % 68 % Gross margin decreased to 67% in 2025 compared to 68% in 2024.
We believe that the Company's existing cash and investment balances, together with cash flow from operations, will be sufficient to meet its operating, investing, and financing activities for the next twelve months. In addition, the Company has no long-term debt.
As of December 31, 2025, the Company accrued incentive compensation payments of $35,688,000 that were earned during 2025, with the majority payable in the first quarter of 2026. We believe that the Company's existing cash and investment balances, together with cash flow from operations, will be sufficient to meet its operating, investing, and financing activities for the next twelve months.
The Company disclaims any obligation to subsequently revise forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date such statements are made. EXECUTIVE OVERVIEW Cognex Corporation (“the Company”) invents and commercializes technologies that address some of the most critical manufacturing and distribution challenges.
The Company disclaims any obligation to subsequently revise forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date such statements are made. EXECUTIVE OVERVIEW Cognex makes advanced machine vision easy, paving the way for manufacturing and distribution companies to become faster, smarter, and more efficient through automation.
Twelve-months Ended December 31, 2024 December 31, 2023 $ Change % Change Income before income tax expense $ 131,489 $ 135,348 $ (3,859) (3) % Income tax expense $ 25,318 $ 22,114 $ 3,204 14 % Effective income tax rate 19 % 16 % The Company’s effective tax rate was 19% in 2024 and 16% in 2023.
Twelve-months Ended December 31, 2025 December 31, 2024 $ Change % Change Income before income tax expense $ 182,802 $ 131,489 $ 51,313 39 % Income tax expense $ 68,360 $ 25,318 $ 43,042 170 % Effective income tax rate 37 % 19 % The Company’s effective tax rate was 37% in 2025 and 19% in 2024.
Investing Activities Net cash used in investing activities totaled $38,969,000 in 2024. Investing activities included capital expenditures, that totaled $15,043,000 and consisted primarily of continued investments in business systems, manufacturing equipment related to new product introductions, and building and leasehold improvements. Financing Activities Net cash used in financing activities totaled $118,420,000 in 2024.
In 2025, certain investments that matured were reinvested in cash equivalents to maintain liquidity for our stock repurchase program. Investing activities also included capital expenditures that totaled $8,743,000 in 2025 and $15,043,000 in 2024, which consisted primarily of investments in business systems, test equipment related to new product introductions, and building and leasehold improvements in both years.
Twelve-months Ended December 31, 2024 December 31, 2023 $ Change % Change Americas $ 350,155 $ 330,415 $ 19,740 6 % Percentage of total revenue 38 % 39 % Europe $ 217,880 $ 220,665 $ (2,785) (1) % Percentage of total revenue 24 % 26 % Greater China $ 164,147 $ 164,115 $ 32 — % Percentage of total revenue 18 % 20 % Other Asia $ 182,333 $ 122,352 $ 59,981 49 % Percentage of total revenue 20 % 15 % Total revenue $ 914,515 $ 837,547 $ 76,968 9 % Changes in revenue from a geographic perspective, including Moritex, were as follows: • Revenue from customers based in the Americas increased by 6% from the prior year.
Twelve-months Ended December 31, 2025 December 31, 2024 $ Change % Change Americas $ 407,288 $ 350,155 $ 57,133 16 % Percentage of total revenue 41 % 38 % Europe $ 251,638 $ 217,880 $ 33,758 15 % Percentage of total revenue 25 % 24 % Greater China $ 158,456 $ 164,147 $ (5,691) (3) % Percentage of total revenue 16 % 18 % Other Asia $ 176,977 $ 182,333 $ (5,356) (3) % Percentage of total revenue 18 % 20 % Total revenue $ 994,359 $ 914,515 $ 79,844 9 % Changes in revenue from a geographic perspective were as follows: • Revenue from customers based in the Americas increased by 16% from the prior year.
Twelve-months Ended December 31, 2024 December 31, 2023 $ Change % Change Research, development, and engineering expenses $ 139,815 $ 139,400 $ 415 — % Percentage of total revenue 15 % 17 % Selling, general, and administrative expenses $ 370,914 $ 339,139 $ 31,775 9 % Percentage of total revenue 41 % 40 % Loss (recovery) from fire $ — $ (8,000) $ 8,000 (100) % Percentage of total revenue — % (1) % Total operating expenses $ 510,729 $ 470,539 $ 40,190 9 % Percentage of total revenue 56 % 56 % Research, Development, and Engineering Expenses Research, development, and engineering (RD&E) expenses in 2024 were relatively flat compared to the prior year.
Twelve-months Ended December 31, 2025 December 31, 2024 $ Change % Change Research, development, and engineering expenses $ 138,970 $ 139,815 $ (845) (1) % Percentage of total revenue 14 % 15 % Selling, general, and administrative expenses $ 363,857 $ 370,914 $ (7,057) (2) % Percentage of total revenue 37 % 41 % Total operating expenses $ 502,827 $ 510,729 $ (7,902) (2) % Percentage of total revenue 51 % 56 % Research, Development, and Engineering Expenses Research, development, and engineering ("RD&E") expenses in 2025 decreased by 1% from the prior year.
Income Tax Expense The following table sets forth income tax information (in thousands) for the years ended December 31, 2024 and December 31, 2023.
Weakness in automotive also contributed to the decrease. Gross Profit The following table sets forth our gross profit (in thousands) for the years ended December 31, 2025 and 2024.
RESULTS OF OPERATIONS Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue Revenue was $914,515,000 in 2024 compared to $837,547,000 in 2023, representing an increase of 9%. Revenue from the acquisition of Moritex that closed in the fourth quarter of 2023 represented approximately 8% of total revenue in 2024 and 1% of total revenue in 2023.
RESULTS OF OPERATIONS Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Revenue Revenue was $994,359,000 in 2025 compared to $914,515,000 in 2024, representing an increase of 9%. The increase was driven primarily by higher revenue from the logistics and consumer electronics industries.
Operating income decreased to 13% of revenue in 2024 compared to 16% of revenue in 2023 driven by the lower gross margin percentage. Net income decreased to 12% of revenue, or $0.62 per share, in 2024 compared to 14% of revenue, or $0.65 per share, in 2023.
Net income was 12% of revenue, or $0.68 per share, in 2025 compared to 12% of revenue, or $0.62 per share, in 2024.
In March 2022, the Company's Board of Directors authorized the repurchase of $500,000,000 of the Company's common stock. Under this program, the Company repurchased 1,711,000 shares at a cost of $67,085,000 in 2024, leaving a remaining balance of $265,807,000 as of December 31, 2024.
Under the Program, in addition to repurchases made in other periods, the Company repurchased 4,234,000 shares at a cost of $151,233,000 in 2025, leaving a remaining balance of $115,020,000 as of December 31, 2025. On February 11, 2026, the Board authorized the repurchase of an additional $500,000,000 of the Company's common stock upon completion of the Program.
Readers can identify these forward-looking statements by our use of the words “expects,” “anticipates,” “estimates,” "potential," “believes,” “projects,” “intends,” “plans,” “will,” “may,” “shall,” “could,” “should,” "opportunity," "goal" and similar words and other statements of a similar sense.
Readers can identify these forward-looking statements by our use of the words "expects," "anticipates," "estimates," "potential," "believes," "projects," "intends," "plans," "aims," "will," "may," "shall," "could," "should," "opportunity," "goal," "objective," "target," "milestone" and similar words and other statements of a similar sense.
We are a leading global provider of machine vision products and solutions that seek to improve efficiency and quality in a wide range of businesses across attractive industrial end markets.
We are a global technology leader in industrial machine vision systems that seek to improve efficiency and help solve critical manufacturing and distribution 21 Table of Contents challenges, providing support across a diverse set of industrial end markets.
Remaining foreign currency gains and losses in each year resulted primarily from the revaluation and settlement of assets and liabilities that are denominated in currencies other than the functional currency of the Company, which is the U.S. Dollar, or its subsidiaries. Investment income decreased by $122,000, or 1%, from the prior year.
Twelve-months Ended December 31, 2025 December 31, 2024 $ Change % Change Foreign currency gain (loss) $ (4,082) $ 1,531 $ (5,613) (367) % Investment income $ 16,950 $ 13,971 $ 2,979 21 % Other income (expense) $ 7,368 $ 922 $ 6,446 699 % Total non-operating income (expense) $ 20,236 $ 16,424 $ 3,812 23 % Foreign currency gains and losses in each year resulted primarily from the revaluation and settlement of assets and liabilities that are denominated in currencies other than the functional currency of the Company, which is the U.S.
Strong growth in logistics was partially offset by weakness in the automotive industry. • Revenue from customers based in Europe decreased by 1% from the prior year. Growth in logistics was offset by declines in factory automation, most notably in the automotive industry. • Revenue from customers based in Greater China was flat compared to the prior year.
These increases were partially offset by weakness in the automotive industry. • Revenue from customers based in Greater China decreased by 3% from the prior year. The procurement change in Europe mentioned above, as well as shifts in business from consumer electronics customers from China to the Other Asia region, negatively impacted results for the current year.
Gross margin was 68% in 2024 compared to 72% in 2023. The decrease was primarily due to a less favorable revenue mix related to the contribution of Moritex and higher logistics revenue, and to a lesser extent, the impact of pricing pressures. Operating expenses increased 9% over the prior year.
Gross margin was 67% in 2025 compared to 68% in 2024. The decrease was primarily due to higher charges for excess and obsolete inventory. Operating expenses decreased 2% over the prior year primarily due to savings from cost management, including headcount reductions.
In 2023, the Company recorded recoveries related to the fire totaling $8,000,000, including $5,500,000 for proceeds received from a financial settlement and $2,500,000, for proceeds received from business interruption insurance. Non-operating Income (Expense) The following table sets forth our non-operating income (expense) (in thousands) for the years ended December 31, 2024 and 2023.
Actions related to optimizing our operating model are expected to deliver an additional $35 to $40 million in annualized operating expense reductions by the end of 2026. Non-operating Income (Expense) The following table sets forth our non-operating income (expense) (in thousands) for the years ended December 31, 2025 and 2024.
Removed
The increase was due to incremental revenue arising from the acquisition of Moritex Corporation (“Moritex”) that closed in the fourth quarter of 2023, as well as higher revenue from customers in the logistics and semiconductor industries. These increases were partially offset by lower revenue from customers in the automotive industry and softness across our broader factory automation business.
Added
The decrease was partially offset by higher incentive compensation accruals due to stronger business performance, as well as the unfavorable impact of foreign currency exchange rates. Operating income increased to 16% of revenue in 2025 compared to 13% of revenue in 2024 due to the leverage achieved from revenue growth on lower operating expenses.
Removed
Investments intended to expand our sales coverage, incremental costs related to the acquisition of Moritex, and higher incentive compensation expenses were partially offset by disciplined cost management and lower total headcount. Cost recoveries recorded in 2023 related to the 2022 fire at the Company’s contract manufacturer also contributed to the increase.
Added
Net income as a percentage of revenue remained flat, as the operating leverage was offset by an increase in income tax expense driven by a $33 million discrete tax expense accrued in 2025 in connection with the enactment of United States tax legislation known as the One Big Beautiful Bill Act ("OBBBA") (refer to Note 18 to the Consolidated Financial Statements).
Removed
Excluding the contribution of Moritex, revenue increased by 1% in 2024 over the prior year due to higher revenue from customers in the logistics and semiconductor industries, partially offset by lower revenue from customers in the automotive industry and softness across our broader factory automation business.
Added
The Company recognized $13 million of one-time revenue during 2025 related to a strategic channel partnership in the medical lab automation industry upon the transfer of software access and inventories to this partner. The favorable impact of foreign currency exchange rates also contributed to the increase.
Removed
Changes in revenue from an end-market perspective, including Moritex, were as follows: • Revenue from the logistics industry represented approximately 23% of total revenue in 2024 and increased by 20% from the prior year due to investment by e-commerce customers. • Revenue from the automotive industry represented approximately 22% of total revenue in 2024 and decreased by 12% from the prior year due to continued weakness in this industry, including lower investment related to electric vehicles. • Revenue from the consumer electronics industry represented approximately 17% of total revenue in 2024 and increased by 3% from the prior year due to the contribution of Moritex, as well as higher large customer demand. 20 Table of Content • Revenue from the semiconductor industry represented approximately 11% of total revenue in 2024 and grew by 80% from the prior year due to the contribution of Moritex, as well as higher global demand for computing chips.
Added
The increase came from all major industries outside of automotive, with particularly strong growth in logistics driven by increased sales to our large e-commerce customers. One-time revenue from our new strategic channel partnership mentioned above, which primarily impacted the Americas region, also contributed to the increase. • Revenue from customers based in Europe increased by 15% from the prior year.
Removed
The Moritex contribution, higher semiconductor revenue, and higher large customer consumer electronics revenue was offset by declines in other factory automation industries, most notably in the automotive industry. • Revenue from other countries in Asia increased by 49% from the prior year due to the Moritex contribution, higher semiconductor revenue, and growth in logistics.
Added
The increase was primarily due to procurement changes made by consumer electronics customers to shift their purchases from entities based in China to Europe. Improved trends in the packaging industry during 2025 and the favorable impact of foreign currency exchange rates also contributed to the increase.
Removed
The decrease was due to a less favorable revenue mix in 2024 that included higher logistics revenue and products with relatively lower gross margins from the Moritex acquisition that closed in the fourth quarter of 2023, as well as the amortization of Moritex acquired technologies.
Added
These negative impacts were partially offset by broader growth within the consumer electronics customer base, excluding the regional purchasing shifts, as well as higher revenue from customers in the semiconductor industry. • Revenue from other countries in Asia decreased by 3% from the prior year.
Removed
Lower average selling prices due to pricing pressures also contributed to the lower margin in 2024. 21 Table of Content Operating Expenses The following table sets forth our operating expenses (in thousands) for the years ended December 31, 2024 and 2023.
Added
Although Other Asia regions benefited from the shift in consumer electronics business out of China noted above, this benefit was offset by the impact of recording an additional month of Moritex revenue in 2024 to eliminate the one-month lag in consolidating Moritex financial results that had been in place since the acquisition in 2023.
Removed
Higher incentive compensation expenses and the additional cost associated with a new team of optical engineers that joined Cognex with the acquisition of Moritex in the fourth quarter of 2023 was offset by a reduction in RD&E headcount outside of Moritex, lower deferred compensation costs related to the 2019 acquisition of Sualab Co, Ltd. that were fully paid in the fourth quarter of 2023, and disciplined cost management.
Added
The decrease was primarily due to a $13 million charge recorded in the fourth quarter of 2025 for excess and obsolete inventory following a comprehensive strategic product portfolio review under our new leadership team. As part of this strategic review, the Company is reducing focus on certain legacy products, which increased the risk of excess and obsolete inventory.
Removed
In addition, we consider our ability to accelerate the time to market for new products to be critical to our revenue growth and competitive position. This annual percentage is impacted by revenue levels and investment cycles. Selling, General, and Administrative Expenses Selling, general, and administrative (SG&A) expenses in 2024 increased by 9% from the prior year.
Added
Less favorable industry mix and the impact from tariffs also contributed to the gross margin decline. These decreases were partially offset 23 Table of Contents by the favorable impact of higher revenue volume, as well a relatively higher margin from the one-time revenue from our new strategic channel partnership mentioned above.
Removed
The increase was due primarily to investments in entry-level sales personnel hired over the past few years intended to transform our sales model, allowing us to broaden and deepen our sales coverage.
Added
The decrease was primarily due to savings from cost management, including a reduction in RD&E headcount. The decrease was partially offset by higher incentive compensation accruals due to stronger business performance and the unfavorable impact of foreign currency exchange rates. RD&E expenses as a percentage of revenue were 14% in 2025 compared to 15% in 2024.
Removed
Costs related to the acquisition of Moritex that closed in the fourth quarter of 2023 also contributed to the higher SG&A expenses in 2024, including additional sales and support personnel-related costs, the amortization of acquired customer relationship and trademarks, and integration costs. In addition, incentive compensation expenses were higher in 2024.
Added
Our move towards unified software architecture across various products lines over the last few years enabled us to deliver innovation with less RD&E expenses as a percentage of revenue. These percentages are additionally impacted by revenue levels and investment cycles. Selling, General, and Administrative Expenses Selling, general, and administrative ("SG&A") expenses in 2025 decreased by 2% from the prior year.
Removed
These increases were partially offset by Moritex transaction costs incurred in the fourth quarter of 2023, a reduction in SG&A headcount outside of Moritex and entry-level sales, and disciplined cost management. Loss (Recovery) from Fire On June 7, 2022, the Company’s primary contract manufacturer experienced a fire at its plant in Indonesia, destroying a significant amount of Cognex inventories.
Added
The decrease was primarily due to savings from cost management, including a reduction in SG&A headcount, and lower stock-based compensation expenses. These decreases were partially offset by higher incentive compensation accruals due to stronger business performance and the unfavorable impact of foreign currency exchange rates.
Removed
Twelve-months Ended December 31, 2024 December 31, 2023 $ Change % Change Foreign currency gain (loss) $ 1,531 $ (10,039) $ 11,570 (115) % Investment income $ 13,971 $ 14,093 $ (122) (1) % Other income (expense) $ 922 $ 592 $ 330 56 % Total non-operating income (expense) $ 16,424 $ 4,646 $ 11,778 254 % 22 Table of Content In the third quarter of 2023, the Company recorded a foreign currency loss of $8,456,000 on the settlement of a foreign currency forward contract entered into to hedge the Japanese Yen purchase price of the acquisition of Moritex Corporation.
Added
Dollar, or its subsidiaries. Investment income increased by $2,979,000, or 21%, from the prior year primarily due to higher yields on the Company's portfolio of debt securities. Other income (expense) increased by $6,446,000 from the prior year primarily due to a $5,053,000 gain on the sale of the 19,000 square-foot building adjacent to our corporate headquarters and the underlying land.
Removed
The decrease was due to lower average investment balances, partially offset by higher yields on the Company's portfolio of debt securities. During the fourth quarter of 2023, net cash payments related to the acquisition of Moritex reduced cash available to invest by approximately $257 million, which resulted in lower investment income for 2024.
Added
This building 24 Table of Contents was previously used as a training center for our sales function. Our new training center will be located inside our corporate headquarters. Income Tax Expense The following table sets forth income tax information (in thousands) for the years ended December 31, 2025 and 2024.
Removed
The Company recorded discrete tax net expenses of $5,731,000 in 2024 and $2,338,000 in 2023. Excluding the impact of these discrete tax items, the Company’s effective tax rate was 15% in both years.
Added
The Company recorded net discrete tax expenses of $36,533,000 in 2025 and $5,731,000 in 2024. On July 4, 2025, the OBBBA was enacted in the United States. OBBBA modifies certain international tax provisions such as the tax on Global Intangible Low Taxed Income ("GILTI") and renames GILTI as Net CFC Tested Income ("NCTI").
Removed
As of December 31, 2024, the Company had a remaining balance of $18,338,000 payable in the second quarter of 2025 related to a one-time transition tax on unrepatriated foreign earnings arising from the Tax Cuts and Jobs Act of 2017.
Added
The Company records NCTI taxes on a deferred basis, and as a result of OBBBA's enactment, accrued a discrete tax expense of $33,237,000 to increase its deferred tax liability during 2025, increasing the Company's effective tax rate significantly.
Added
The legislation is expected to result in a full-year cash tax benefit estimated between $12 million and $15 million, primarily driven by the Company's ability to immediately expense research and development costs. However, this benefit does not directly impact the Company's effective tax rate.
Added
Excluding the impact of discrete tax items, which primarily consisted of the OBBBA discrete tax expense of $33,237,000 mentioned above, the Company's effective tax rate was 17% in 2025 and 15% in 2024. The year-over-year increase was primarily due to more of the Company's profits taxed in relatively higher tax rate jurisdictions.
Added
The increase in operating cash flow from the prior year was primarily driven by stronger business performance and optimization of working capital. Investing Activities Net cash provided by (used in) investing activities totaled $28,016,000 in 2025 and $(38,969,000) in 2024.
Added
The shift from net cash outflows in the prior year to inflows in the current year was due to the timing of when investments matured and were reinvested in each year, with a high percentage of our investment portfolio maturing during 2024.
Added
The decrease in capital expenditures from 2024 was primarily due to the timing of planned business systems projects associated with our sales processes.
Added
On December 12, 2025, the Company sold the 19,000 square-foot building adjacent to our corporate headquarters and the underlying land, which resulted in proceeds of $6,704,000 and contributed to cash provided by investing activities. 25 Table of Contents Financing Activities Net cash used in financing activities totaled $206,693,000 in 2025 and $118,420,000 in 2024.
Added
These activities primarily consisted of common stock repurchases and dividend payments in both periods presented. The increase in net cash used in financing activities from the prior period was driven by an increase in common stock repurchases to offset dilution from employee stock awards.
Added
As discussed in Item 5 - Market for Registrant's Common Equity Related Stockholder Matters, and Issuer Purchases of Equity Securities, in March 2022, the Board authorized the Program, providing for the repurchase of $500,000,000 of the Company's common stock.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+3 added−4 removed7 unchanged
Biggest changeThe Company had the following outstanding forward contracts as of December 31, 2024 and 2023 (in thousands): December 31, 2024 December 31, 2023 Currency Notional Value USD Equivalent High Rate Low Rate Notional Value USD Equivalent High Rate Low Rate Derivatives Not Designated as Hedging Instruments: Singapore Dollar 40,000 $ 29,457 1.36 1.36 39,700 $ 30,136 1.32 1.32 Euro 25,000 26,029 0.9605 0.9605 40,000 44,302 0.9029 0.9029 Chinese Renminbi 95,000 12,990 7.31 7.31 50,000 7,025 7.12 7.12 Mexican Peso 220,000 10,701 20.56 20.56 145,000 8,505 17.05 17.05 Hungarian Forint 2,360,000 5,951 396.59 396.59 2,240,000 6,466 346.45 346.45 British Pound 3,200 4,008 0.7983 0.7983 3,345 4,258 0.7855 0.7855 Japanese Yen 2,000,000 3,750 156.52 156.52 600,000 4,255 141.02 141.02 Swiss Franc 2,200 2,432 0.9047 0.9047 — — — — Canadian Dollar 2,000 1,390 1.44 1.44 1,470 1,112 1.32 1.32 A change in foreign currency exchange rates could materially impact the fair value of these contracts; however, if this occurred, the fair value of the underlying exposures hedged by the contracts would change by a similar amount.
Biggest changeThe Company enters into economic hedges utilizing foreign currency forward contracts with maturities of generally up to three months but not greater than one year to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables. 27 Table of Contents The Company had the following outstanding forward contracts as of December 31, 2025 and 2024 (in thousands): December 31, 2025 December 31, 2024 Currency Notional Value USD Equivalent High Rate Low Rate Notional Value USD Equivalent High Rate Low Rate Derivatives Not Designated as Hedging Instruments: Mexican Peso 160,000 $ 8,881 18.02 18.02 220,000 $ 10,701 20.56 20.56 Hungarian Forint 2,500,000 7,600 328.95 328.95 2,360,000 5,951 396.59 396.59 Korean Won 9,000,000 6,239 1,442.50 1,442.50 — — — — British Pound 4,000 5,383 0.7432 0.7432 3,200 4,008 0.7983 0.7983 Indian Rupee 400,000 4,436 90.17 90.17 — — — — Chinese Renminbi 20,000 2,865 6.98 6.98 95,000 12,990 7.31 7.31 Japanese Yen 400,000 2,563 156.04 156.04 2,000,000 12,789 156.52 156.52 Singapore Dollar (1) — — — — 40,000 29,457 1.36 1.36 Euro — — — — 25,000 26,029 0.9605 0.9605 Swiss Franc — — — — 2,200 2,432 0.9047 0.9047 Canadian Dollar — — — — 2,000 1,390 1.44 1.44 (1) In January 2026, the Company entered into a forward contract for the Singapore Dollar with a notional value of S$34 million and a USD equivalent of $27 million, with a high and low rate of 1.24.
Given the relatively short maturities and investment-grade quality of the Company’s portfolio of debt securities as of December 31, 2024, we do not expect a sharp rise in interest rates to have a material adverse effect on the fair value of these instruments. As a result, the Company does not currently hedge these interest rate exposures.
Given the relatively short maturities and investment-grade quality of the Company’s portfolio of debt securities as of 28 Table of Contents December 31, 2025, we do not expect a sharp rise in interest rates to have a material adverse effect on the fair value of these instruments. As a result, the Company does not currently hedge these interest rate exposures.
Dollar may have a material impact on our operating results. Interest Rate Risk The Company’s investment portfolio of debt securities includes corporate bonds, treasury notes, asset-backed securities, and sovereign bonds. Debt securities with original maturities greater than three months are designated as available-for-sale and are reported at fair value.
Interest Rate Risk The Company’s investment portfolio of debt securities includes corporate bonds, treasury notes, and asset-backed securities. Debt securities with original maturities greater than three months are designated as available-for-sale and are reported at fair value.
Dollar strengthens in relation to these foreign currencies, we would expect to report a net decrease in operating income. Conversely, in times when the U.S. Dollar weakens in relation to these foreign currencies, we would expect to report a net increase in operating income. Thus, changes in the relative strength of the U.S.
Conversely, in times when the U.S. Dollar weakens in relation to these foreign currencies, we would expect to report a net increase in operating income. Thus, changes in the relative strength of the U.S. Dollar may have a material impact on our operating results.
Dollar, and we expect sales denominated in foreign currencies to continue to represent a significant portion of our total revenue. While we also have expenses denominated in these same foreign currencies, the impact on revenues has historically been, and is expected to continue to be, greater than the offsetting impact on expenses. Therefore, in times when the U.S.
While we also have expenses denominated in these same foreign currencies, the impact on revenues has historically been, and is expected to continue to be, greater than the offsetting impact on expenses. Therefore, in times when the U.S. Dollar strengthens in relation to these foreign currencies, we would expect to report a net decrease in operating income.
To the extent that these forecasts are overstated or understated during periods of currency volatility, we could experience unanticipated foreign currency gains or losses that could have a material impact on our results of operations.
To the extent that these forecasts are overstated or understated during periods of currency volatility, we could experience unanticipated foreign currency gains or losses that could have a material impact on our results of operations. Furthermore, our failure to identify new exposures and hedge them in an effective manner may result in material foreign currency gains or losses.
As of December 31, 2024, the fair value of the Company’s portfolio of debt securities amounted to $400,854,000, with amortized cost amounts totaling $405,758,000, maturities that do not exceed six years, and a yield to maturity of 3.8%.
As of December 31, 2025, the fair value of the Company’s portfolio of debt securities amounted to $379,376,000, with amortized cost amounts totaling $376,589,000, maturities that do not exceed five years, and a yield to maturity of 4.19%.
Dollar, a significant portion of our revenues and expenses are denominated in the Euro and Chinese Renminbi, and to a lesser extent the Japanese Yen, Korean Won, Indian Rupee, and Mexican Peso. We estimate that approximately 55% of our sales in 2024 were invoiced in currencies other than the U.S.
The Company’s functional currency/reporting currency exchange rate exposures result from revenues and expenses that are denominated in currencies other than the U.S. Dollar. In addition to the U.S. Dollar, a significant portion of our revenues and expenses are denominated in the Euro and Chinese Renminbi, and to a lesser extent the Japanese Yen, Korean Won, Indian Rupee, and Mexican Peso.
As of December 31, 2024, 63% of the investment portfolio had effective maturity dates of less than three years.
It is the Company’s policy to invest in debt securities with maturities that do not exceed five years. As of December 31, 2025, 72% of the investment portfolio had effective maturity dates of less than three years.
Removed
The Company enters into economic hedges utilizing foreign currency forward contracts with maturities of up to three months to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables.
Added
A change in foreign currency exchange rates could materially impact the fair value of these contracts; however, if this occurred, the fair value of the underlying exposures hedged by the contracts would change by a similar amount.
Removed
Furthermore, our failure to identify new exposures and hedge them in an effective manner may result in material foreign currency gains or losses. 25 Table of Content The Company’s functional currency/reporting currency exchange rate exposures result from revenues and expenses that are denominated in currencies other than the U.S. Dollar. In addition to the U.S.
Added
We estimate that approximately 50% of our sales in 2025 were invoiced in currencies other than the U.S. Dollar, and we expect sales denominated in foreign currencies to continue to represent a significant portion of our total revenue.
Removed
In July 2023, the Company’s investment policy was modified to reduce effective maturities of newly-purchased securities to up to five years. As of December 31, 2024, the Company held investments with maturities in excess of the five-year limit that were approved as pre-existing exceptions to the new policy.
Added
Type of security Valuation of securities given an interest rate decrease No change in interest rates Valuation of securities given an interest rate increase (100 BP) (50 BP) 50 BP 100 BP Corporate bonds $ 351,484 $ 348,418 $ 345,351 $ 342,284 $ 339,218 Treasury notes 30,373 30,108 29,843 29,578 29,313 Asset-backed securities 4,256 4,219 4,182 4,144 4,107 $ 386,113 $ 382,745 $ 379,376 $ 376,006 $ 372,638 29 Table of Contents
Removed
Type of security Valuation of securities given an interest rate decrease No change in interest rates Valuation of securities given an interest rate increase (100 BP) (50 BP) 50 BP 100 BP Corporate bonds $ 348,034 $ 344,475 $ 340,916 $ 337,357 $ 333,798 Treasury notes 46,586 46,109 45,634 45,157 44,680 Asset-backed securities 13,592 13,453 13,314 13,175 13,036 Sovereign bonds 1,011 1,000 990 980 969 $ 409,223 $ 405,037 $ 400,854 $ 396,669 $ 392,483 26 Table of Content

Other CGNX 10-K year-over-year comparisons