Cognex Q2 Revenue Declines 12%, a Result of Shrinking Demand for Capital Equipment

Machine vision company Cognex reported its financial results this month, posting $242 million in revenue for the second quarter of the year, a 12% decline compared to the same quarter last year. The company attributed this decline to ongoing softness in e-commerce logistics, as well as weaker demand from its factory automation customers, particularly in the consumer electronics and semiconductor capital equipment markets.

According to Cognex CEO Robert Willett, the quarter saw weakening conditions as it progressed, as reflected in the latest PMI (Purchasing Manager’s Index) data, which has trended downward over the past three months.

“China has not gained the momentum we expected at the time of our last call and there is slower manufacturing activity in important factory automation markets, including Germany and the United States,” Willett said during Cognex’s Aug. 3 earnings call. Customers are being cautious with their capital investments, particularly in the consumer electronics and semiconductor segments where Cognex is seeing the sharpest decline in demand, he said. Companies such as Cognex, he added, are among the first to see the impact of the relevant market dynamics due to the short cycle nature of its business.

Cognex CFO Paul Todgham noted that, excluding the impact of approximately $15 million of consumer electronics expected in the third quarter, revenue in China and other Asian countries declined close to 30% year over year, driven by softness in consumer electronics and semiconductor markets.

The firm is expecting revenue to continue to decrease in the third quarter, with forecasts between $180 million and $200 million. According to Willett, that decline continues to be driven by softening manufacturing investment, resulting in lower demand in Cognex’s factory automation business. With these near-term pressures in mind, the company will be diligent about cost management, he said. The company is expecting operating expenses to decline by low single digits in the third quarter.