Financial Analysis

"Business Combinations Moritex Corporation On October 18, 2023, the Company acquired all the outstanding shares of Moritex Corporation (""Moritex""), a global provider of premium optical components based in Japan, for an enterprise value of 40 billion Japanese Yen, or approximately $270 million U.S. Dollars based on the closing date foreign exchange rate. The cash-free, debt-free enterprise value was adjusted by cash acquired, debt assumed, and final working capital balances to arrive at total consideration to be allocated to assets acquired and liabilities assumed of 44,376,245,000 ($296,138,000 based on the closing date foreign exchange rate), of which 44,227,414,000 ($295,144,000) was paid in cash on the closing date and 148,831,000 ($994,000) was paid during the first quarter of 2024 as a purchase price adjustment based on the closing balance sheet. The Company acquired cash balances totaling $38,088,000 as part of this transaction, to arrive at a net cash outflow of $257,056,000 on the closing date. There was no contingent consideration as part of this transaction. In the fourth quarter of 2024, the Company recorded measurement-period adjustments that increased goodwill by $6,478,000 and are reflected in the final purchase price allocation below. The adjustments consisted primarily of changes to deferred income tax liabilities based on the final push-down accounting for intangible assets to legal-entity jurisdictions, a reduction in customer relationships based on a meth …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Commitments and Contingencies As of December 31, 2025, the Company had outstanding purchase orders totaling $57,690,000 to procure inventory from various vendors. Certain of these purchase orders may be canceled by the Company, subject to cancellation penalties. These purchase commitments relate primarily to expected sales in 2026. A significant portion of the Company's outstanding inventory purchase orders as of December 31, 2025, as well as additional preauthorized commitments to procure strategic components based on the Company's expected customer demand, are placed with the Company's primary contract manufacturer for the Company's assembled products. The Company purchased $5,042,000, $17,461,000, and $10,616,000 in 2025, 2024, or 2023, respectively, of inventories as a result of the Company's obligation to purchase any non-cancelable and non-returnable components that have been purchased by the contract manufacturer with the Company's preauthorization, when these components have not been consumed within the period defined in the terms of the Company's agreement with this contract manufacturer. While the Company typically expects such purchased components to be used in future production of Cognex finished goods, these components are considered in the Company's reserve estimate for excess and obsolete inventory. Furthermore, the Company accrues for losses on commitments for the future purchase of non-cancelable and non-returnable components from this contract manufacturer a …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"The following table summarizes disaggregated revenue information by geographic area based on the customer's country of domicile (in thousands): Year Ended December 31, 2025 2024 2023 Americas $ 407,288 $ 350,155 $ 330,415 Europe 251,638 217,880 220,665 Greater China 158,456 164,147 164,115 Other Asia 176,977 182,333 122,352 $ 994,359 $ 914,515 $ 837,547 The following table summarizes disaggregated revenue information by revenue type (in thousands): Year Ended December 31, 2025 2024 2023 Standard products and services (1) $ 880,015 $ 795,319 $ 734,140 Application-specific customer solutions 114,344 119,196 103,407 $ 994,359 $ 914,515 $ 837,547 (1) In 2025, the Company entered into a commercial partnership with a strategic channel partner (the Partner) to better serve Original Equipment Manufacturer (OEM) customers in the specialized field of medical lab automation. Through 2030, the Partner has exclusive rights to sell machine vision hardware in combination with licensed Company software, in exchange for annual minimum license fees paid to the Company. The contract includes a substantive termination penalty if the contract is cancelled by the Partner. As such, the Company recognized the minimum license fees as revenue in 2025, at the point in time when the Partner received access to the software. Also in 2025, the Company transferred related inventories at cost to the Partner. As a result of the upfront recognition of the license revenue and transfer of inventories, the Compa …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

"Stock-Based Compensation Stock Plans The Companys stock-based awards that result in compensation expense consist of stock options, restricted stock units (""RSUs""), and performance restricted stock units (""PRSUs""). In May 2023, the shareholders of the Company approved the Cognex Corporation 2023 Stock Option and Incentive Plan (the 2023 Plan). The 2023 Plan permits awards of stock options (both incentive and non-qualified options), stock appreciation rights, RSUs, and PRSUs. Up to 8,100,000 shares of common stock (subject to adjustment in the event of stock splits and other similar events) may be issued pursuant to awards granted under the 2023 Plan. In connection with the approval of the 2023 Plan, no further awards will be made under the Cognex Corporation 2001 General Stock Option Plan, as amended and restated (the 2001 Plan), and the Cognex Corporation 2007 Stock Option and Incentive Plan, as amended and restated (the 2007 Plan). With the approval of the 2023 Plan, the 10,610,800 shares of common stock subject to awards granted under the 2001 Plan and the 2007 Plan that were outstanding as of May 3, 2023 may become eligible for issuance under the 2023 Plan if such awards are forfeited, cancelled, or otherwise terminated (other than by exercise) (the Carryover Shares). As of December 31, 2025, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 1,584,542 Carryover Shares, raising the authorized total shares that may …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

"Fair Value Measurements Financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 (in thousands): Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Unobservable Inputs (Level 3) Assets: Money market instruments $ 63,170 $ $ Corporate bonds 345,351 Treasury notes 29,843 Asset-backed securities 4,182 Economic hedge forward contracts 791 Liabilities: Economic hedge forward contracts 367 The Companys money market instruments are reported at fair value based on the daily market price for identical assets in active markets, and are therefore classified as Level 1. The Companys debt securities and forward contracts are reported at fair value based on model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2. Management is responsible for estimating the fair value of these financial assets and liabilities, and in doing so, considers valuations provided by a large, third-party pricing service. For debt securities, this service maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data. They …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

"Income Taxes In 2025, the Company adopted ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require public business entities to disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. They also require all entities to disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions in which income taxes paid, net of refunds received, is equal to or greater than five percent of total income taxes paid. These changes have been applied prospectively. Income from continuing operations before income tax expense consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Domestic 73,505 35,253 16,039 Foreign 109,297 96,236 119,309 182,802 131,489 135,348 Income tax expense consisted of the following (in thousands): Year Ended December 31, 2025 2024 2023 Current: Federal $ 4,576 $ 28,009 $ 29,084 State 4,440 4,524 3,544 Foreign 19,647 12,795 9,207 28,663 45,328 41,835 Deferred: Federal 30,481 (22,273) (24,731) State 668 (1,324) (5,877) Foreign 8,548 3,587 10,887 39,697 (20,010) (19,721) $ 68,360 $ 25,318 $ 22,114 Effective Tax Rate Reconciliation A reconciliation of the U.S. federal statutory corporate tax rate to the Companys income tax expense, or effective tax rate, presented in accordance with the prospectively adopted ASU 2023-09, was as follows for …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases The Company's leases are primarily leased properties across different worldwide locations where the Company conducts its business. All of these leases are classified as operating leases. Certain leases may contain options to extend or terminate the lease at the Company's sole discretion. As of December 31, 2025, there were no options to terminate and nineteen options to extend that were accounted for in the determination of the lease term for the Company's outstanding leases. Certain leases contain leasehold improvement incentives, retirement obligations, escalating clauses, rent holidays, and variable payments tied to a consumer price index. There were no restrictions or covenants for the outstanding leases as of December 31, 2025. The Company did not have any leases that had not yet commenced but that created significant rights and/or obligations as of December 31, 2025. The components of lease expense were as follows (in thousands): December 31, 2025 December 31, 2024 December 31, 2023 Operating lease expense $ 14,002 $ 14,131 $ 11,598 Short-term lease expense (1) 1,008 $ 407 427 (1) Leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability Supplemental balance sheet information related to leases was as follows: December 31, 2025 December 31, 2024 Weighted average remaining lease term 7.2 years 9.9 years Weighted average discount rate 5.9 % 5.9 % Supplemental cash flow information related to leases wa …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"New Pronouncements Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures The amendments in this ASU apply to all entities that are subject to Topic 740, Income Taxes. The amendments require public business entities to disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. They also require all entities to disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions in which income taxes paid, net of refunds received, is equal to or greater than five percent of total income taxes paid. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024 and are applied on a prospective basis. The Company adopted ASU 2023-09 in 2025. Refer to Note 18 for the related disclosures. Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) This ASU aims to enhance transparency for users of financial statements by requiring public business entities to disaggregate specific expense categories. ASU 2024-03 mandates disclosures in the notes to financial statements detailing the composition and trends of key expense categories within major income statement captions. These enhanced disclosures are intended to help investors …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

"Employee Savings Plan Under the Company's Employee Savings Plan, a defined contribution plan, all U.S. employees who have attained age 21 may contribute up to 100% of their pay on a pre-tax basis under the Company's Employee Savings Plan, subject to the annual dollar limitations established by the Internal Revenue Service (""IRS""). The Company matches 50% of the first 6% of pay an employee contributes. Company contributions vest 25%, 50%, 75%, and 100% after one, two, three, and four years of continuous employment with the Company, respectively. Company contributions totaled $3,590,000 in 2025, $3,535,000 in 2024, and $3,392,000 in 2023. Cognex stock is not an investment alternative and Company contributions are not made in the form of Cognex stock."

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"Revenue Recognition The following table summarizes disaggregated revenue information by geographic area based on the customer's country of domicile (in thousands): Year Ended December 31, 2025 2024 2023 Americas $ 407,288 $ 350,155 $ 330,415 Europe 251,638 217,880 220,665 Greater China 158,456 164,147 164,115 Other Asia 176,977 182,333 122,352 $ 994,359 $ 914,515 $ 837,547 The following table summarizes disaggregated revenue information by revenue type (in thousands): Year Ended December 31, 2025 2024 2023 Standard products and services (1) $ 880,015 $ 795,319 $ 734,140 Application-specific customer solutions 114,344 119,196 103,407 $ 994,359 $ 914,515 $ 837,547 (1) In 2025, the Company entered into a commercial partnership with a strategic channel partner (the Partner) to better serve Original Equipment Manufacturer (OEM) customers in the specialized field of medical lab automation. Through 2030, the Partner has exclusive rights to sell machine vision hardware in combination with licensed Company software, in exchange for annual minimum license fees paid to the Company. The contract includes a substantive termination penalty if the contract is cancelled by the Partner. As such, the Company recognized the minimum license fees as revenue in 2025, at the point in time when the Partner received access to the software. Also in 2025, the Company transferred related inventories at cost to the Partner. As a result of the upfront recognition of the license revenue and transfer of in …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Segment and Geographic Information The Company operates in one segment, machine vision technology. The Company has a single, company-wide management team that administers operations as a whole rather than as discrete operating segments. The Companys chief operating decision maker is the chief executive officer, who assesses performance and allocates resources at the corporate level, as compared to the geography, product line, or end market levels. The Company offers a variety of machine vision products that have similar economic characteristics and are distributed by the same sales channels to the same types of customers. The following table summarizes information about geographic areas (in thousands): United States Europe Greater China Other Total Year Ended December 31, 2025 Revenue $ 329,125 $ 251,638 $ 158,456 $ 255,140 $ 994,359 Long-lived assets 48,838 14,112 13,631 14,428 $ 91,009 Year Ended December 31, 2024 Revenue $ 306,766 $ 217,880 $ 164,147 $ 225,722 $ 914,515 Long-lived assets 56,948 15,655 14,844 16,025 $ 103,472 Year Ended December 31, 2023 Revenue $ 288,324 $ 220,665 $ 164,115 $ 164,443 $ 837,547 Long-lived assets 62,946 17,005 17,028 15,958 $ 112,937 Revenue is presented geographically based on the customers country of domicile. Revenue from a single customer accounted for 15% and 10% of total revenue in 2025 and 2024, respectively. Revenue from this customer was not greater than 10% of total revenue in 2023. Accounts receivable from this customer were not g …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Summary of Significant Accounting Policies The accompanying consolidated financial statements reflect the application of the significant accounting policies described below. Nature of Operations 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. The Company is a global technology leader in industrial machine vision systems that improve efficiency and solve critical manufacturing and distribution challenges, providing products and services across a diverse set of industrial end markets. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the balance sheet date, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. Significant estimates and judgments include those related to revenue recognition and income taxes. Basis of Consolidation The consolidated financial statements include the accounts of Cognex Corporation and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions have been eliminated. Foreign Currency T …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

"Shareholders Equity Preferred Stock The Company has 400,000 shares of authorized but unissued $.01 par value preferred stock. Common Stock The Company has 300,000,000 shares of authorized $.002 par value common stock. Each outstanding share of common stock entitles the record holder to one vote on all matters submitted to a vote of the Companys shareholders. Common shareholders are also entitled to dividends when and if declared by the Companys Board of Directors (the ""Board""). Stock Repurchases 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 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. 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. The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Events On February 11, 2026, the Board declared a cash dividend of $0.085 per share. The dividend is payable March 12, 2026 to all shareholders of record as of the close of business on February 26, 2026. On February 11, 2026, the Board authorized the repurchase of an additional $500,000,000 of the Company's common stock through open market purchases, privately negotiated transactions, or otherwise in compliance with applicable securities laws. The Board also reauthorized the Company to establish Rule 10b5-1 trading plans. Rule 10b5-1 trading plans allow companies to repurchase shares at times when they might otherwise be prevented from doing so by securities laws or because of self-imposed trading blackout periods. The Company may repurchase shares pursuant to its repurchase program depending upon a variety of factors, including, among other things, the impact of dilution from equity-based awards, stock price, share availability, and cash requirements. On February 11, 2026, the Company disclosed its intent to divest its Japan-focused trading business, which was acquired as part of the Moritex acquisition, for a target purchase price between $10 million and $12 million, including the sale of related inventories. Divestiture of this business would not constitute a strategic shift that would have a major effect on the Companys operations or financial results. The Company is targeting a transaction close in the second quarter of 2026. Management is currently evaluating …

SubsequentEventsTextBlock · excerpt; the full note is in the filing