What changed in this filing

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Item 1. Financial Statements

2025-05-01 compared with 2024-10-31 · 264 added, 377 removed, 317 unchanged (67% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

(unaudited) (unaudited)

Three-months Ended

March 30, 2025 March 31, 2024

Revenue $ 216,036 $ 210,797

Cost of revenue 71,713 68,860

Gross margin 159,399 142,774 467,935 466,197

Gross profit 144,323 141,937

Research, development, and engineering expenses 34,727 37,105

Selling, general, and administrative expenses 83,504 90,628

Loss (recovery) from fire (Note 17) — ( 2,750 ) — ( 5,250 )

Operating income 26,092 14,204

16 unchanged sentences

(In thousands)

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

(unaudited) (unaudited)

Three-months Ended

March 30, 2025 March 31, 2024

Net income $ 23,603 $ 12,022

1 unchanged sentence

Available-for-sale investments:

Net unrealized gain (loss), net of tax of $ 2,040 and $ 707 in the three-month periods, and net of tax of $ 2,493 and $ 1,981 in the nine-month periods, respectively

6,252 738 7,631 4,458

Net unrealized gain (loss), net of tax of $ 875 and $ 117 in the three-month periods, respectively

Reclassification of net realized (gain) loss on the sale of available-for-sale investments into current operations ( 27 ) ( 2 )

9 unchanged sentences

(In thousands)

September 29, 2024 December 31, 2023

March 30, 2025 December 31, 2024

Current assets:

Cash and cash equivalents $ 143,744 $ 186,094

Current investments, amortized cost of $ 91,658 and $ 132,799 in 2024 and 2023, respectively, allowance for credit losses of $ 0 in 2024 and 2023

Current investments, allowance for credit losses of $ 0 in 2025 and 2024

56,703 59,956

5 unchanged sentences

Total current assets 577,679 613,367

Non-current investments, amortized cost of $ 318,268 and $ 250,790 in 2024 and 2023, respectively, allowance for credit losses of $ 0 in 2024 and 2023

Non-current investments, respectively, allowance for credit losses of $ 0 in 2025 and 2024

312,310 340,898

17 unchanged sentences

Reserve for income taxes 27,194 26,365

Non-current accrued income taxes — 18,338

Other liabilities 87 1,082

18 unchanged sentences

(In thousands)

Nine-months Ended

September 29, 2024 October 1, 2023

Three-months Ended

March 30, 2025 March 31, 2024

Cash flows from operating activities:

3 unchanged sentences

Depreciation of property, plant, and equipment 5,306 5,279

(Gain) loss on disposal of property, plant, and equipment — ( 2 )

Amortization of intangible assets 2,628 2,813

39 unchanged sentences

Shares Par Value

Balance as of June 30, 2024 171,501 $ 343 $ 1,061,597 $ 515,142 $ ( 70,352 ) $ 1,506,730

Net issuance of common stock under stock plans 96 1 1,665 — — 1,666

Repurchase of common stock ( 82 ) ( 1 ) — ( 3,961 ) — ( 3,962 )

Stock-based compensation expense — — 13,101 — — 13,101

Payment of dividends ($ 0.075 per common share)

— — — ( 12,863 ) — ( 12,863 )

Net income — — — 29,591 — 29,591

Net unrealized gain (loss) on available-for-sale investments, net of tax of $ 2,040

— — — — 6,252 6,252

Foreign currency translation adjustment — — — — 26,511 26,511

Balance as of September 29, 2024 (unaudited)

171,515 $ 343 $ 1,076,363 $ 527,909 $ ( 37,589 ) $ 1,567,026

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive

Shareholders’

Shares Par Value

Balance as of July 2, 2023 172,293 $ 345 $ 1,010,973 $ 537,947 $ ( 68,802 ) $ 1,480,463

Net issuance of common stock under stock plans 40 — 622 — — 622

Repurchase of common stock ( 191 ) ( 1 ) — ( 10,477 ) — ( 10,478 )

Stock-based compensation expense — — 12,365 — — 12,365

Payment of dividends ($ 0.070 per common share)

— — — ( 12,049 ) — ( 12,049 )

Net income — — — 18,916 — 18,916

Net unrealized gain (loss) on available-for-sale investments, net of tax of $ 707

— — — — 738 738

Reclassification of net realized (gain) loss on the sale of available-for-sale investments — — — — 624 624

Foreign currency translation adjustment — — — — ( 2,603 ) ( 2,603 )

Balance as of October 1, 2023 (unaudited)

172,142 $ 344 $ 1,023,960 $ 534,337 $ ( 70,043 ) $ 1,488,598

The accompanying notes are an integral part of these consolidated financial statements.

COGNEX CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

Common Stock Additional

Paid-in Capital Retained Earnings Accumulated

Comprehensive

Shareholders’

Shares Par Value

Balance as of December 31, 2024

10 unchanged sentences

Foreign currency translation adjustment — — — — 11,447 11,447

Balance as of September 29, 2024 (unaudited)

Balance as of March 30, 2025 (unaudited)

167,865 $ 336 $ 1,097,989 $ 405,949 $ ( 58,646 ) $ 1,445,628

16 unchanged sentences

Foreign currency translation adjustment — — — — ( 16,156 ) ( 16,156 )

Balance as of October 1, 2023 (unaudited)

Balance as of March 31, 2024 (unaudited)

171,662 $ 343 $ 1,047,643 $ 502,338 $ ( 61,135 ) $ 1,489,189

5 unchanged sentences

Reference should be made to the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 for a full description of other significant accounting policies.

In the opinion of the management of Cognex Corporation (the "Company"), the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, adjustments related to losses and recoveries from the fire at the Company's primary contract manufacturer (Note 17), and financial statement reclassifications necessary to present fairly the Company’s financial position as of September 29, 2024, and the results of its operations for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented.

The results disclosed in the Consolidated Statements of Operations for the three-month and nine-month periods ended September 29, 2024 are not necessarily indicative of the results to be expected for the full year.

In the opinion of the management of Cognex Corporation (the "Company"), the accompanying consolidated unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments and financial statement reclassifications necessary to present fairly the Company’s financial position as of March 30, 2025, and the results of its operations for the three-month periods ended March 30, 2025 and March 31, 2024, and changes in shareholders’ equity, comprehensive income, and cash flows for the periods presented.

The results disclosed in the Consolidated Statements of Operations for the three-month period ended March 30, 2025 are not necessarily indicative of the results to be expected for the full year.

New Pronouncements

7 unchanged sentences

Management does not expect ASU 2023-09 to have a material impact on the Company's financial statements and disclosures.

Accounting Standards Update (ASU) 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures"

The amendments in this ASU apply to all public entities, including public entities with a single reportable segment, that are required to report segment information in accordance with Topic 280, Segment Reporting.

The amendments require public business entities to provide in interim and annual periods one or more measures of segment profit or loss used by the chief operating decision maker to allocate resources and assess performance.

Additionally, the amendments require disclosure of significant segment expenses and other segment items, as well as incremental qualitative disclosures.

The amendments in this ASU are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The amendments in the ASU should be applied on a retrospective basis.

We did not early adopt ASU 2023-07.

Management does not expect ASU 2023-07 to have a material impact on the Company's financial statements and disclosures.

ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)

ASU 2024-03 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 more effectively assess the entity’s performance, understand its cost structure, and make more accurate forecasts of future cash flows.

For public business entities, ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

The adoption will result in disclosure changes only.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 required to be measured at fair value on a recurring basis as of September 29, 2024 (in thousands):

Quoted Prices in

Active Markets

for Identical

Assets (Level 1) Significant Other

Inputs (Level 2) Unobservable Inputs (Level 3)

Money market instruments $ 662 $ — $ —

Corporate bonds — 349,198 —

Treasury notes — 46,372 —

Certificate of deposit — 13,811 —

Asset-backed securities — 13,529 —

Treasury bills — 7,122 —

Sovereign bonds — 991 —

Economic hedge forward contracts — 234 —

Economic hedge forward contracts — 152 —

Financial Instruments

Cash, Cash Equivalents, and Investments

The following table summarizes the Company’s cash, cash equivalents, and investments as of March 30, 2025 (in thousands):

Fair Value Level Amortized

Losses Fair Value Cash and Cash Equivalents Current Investments Non-current Investments

Cash $ 121,283 $ — $ — $ 121,283 $ 121,283 $ — $ —

Money market instruments Level 1 482 — — 482 482 — —

Certificate of deposit Level 2 20,979 — — 20,979 20,979 — —

Treasury bills Level 2 1,000 — — 1,000 1,000 — —

Corporate bonds Level 2 317,385 1,193 ( 2,041 ) 316,537 — 47,220 269,317

Treasury notes Level 2 33,827 43 ( 77 ) 33,793 — 2,495 31,298

Asset-backed securities Level 2 18,139 25 ( 474 ) 17,690 — 5,995 11,695

Sovereign bonds Level 2 1,007 — ( 14 ) 993 — 993 —

Total $ 514,102 $ 1,261 $ ( 2,606 ) $ 512,757 $ 143,744 $ 56,703 $ 312,310

The following table summarizes the Company’s cash, cash equivalents, and investments as of December 31, 2024 (in thousands):

Fair Value Level Amortized

Losses Fair Value Cash and Cash Equivalents Current Investments Non-current Investments

Cash $ 170,852 $ — $ — $ 170,852 $ 170,852 $ — $ —

Money market instruments Level 1 15,242 — — 15,242 15,242 — —

Corporate bonds Level 2 344,804 411 ( 4,299 ) 340,916 — 55,742 285,174

Treasury notes Level 2 46,071 2 ( 439 ) 45,634 — 2,487 43,147

Asset-backed securities Level 2 13,870 — ( 556 ) 13,314 — 737 12,577

Sovereign bonds Level 2 1,013 — ( 23 ) 990 — 990 —

Total $ 591,852 $ 413 $ ( 5,317 ) $ 586,948 $ 186,094 $ 59,956 $ 340,898

The Company’s money market instruments are reported at fair value based upon the daily market price for identical assets in active markets, and are therefore classified as Level 1.

The Company’s 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.

The Company’s debt securities 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.

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 use this information to structure yield curves for various types of debt securities and arrive at the daily valuations.

The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency.

The market participants are generally large commercial banks.

Non-financial Assets that are Measured at Fair Value on a Non-recurring Basis

Non-financial assets, such as property, plant and equipment, operating lease assets, goodwill, and intangible assets, are required to be measured at fair value only when an impairment loss is recognized.

The Company did not record impairment charges related to non-financial assets during the three-month or nine-month periods ended September 29, 2024 or October 1, 2023.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cash, Cash Equivalents, and Investments

Cash, cash equivalents, and investments consisted of the following (in thousands):

September 29, 2024 December 31, 2023

Cash $ 175,480 $ 183,242

Certificate of deposit 13,811 —

Treasury bills 7,122 —

Money market instruments 662 19,413

Cash and cash equivalents 197,075 202,655

Corporate bonds 84,503 124,851

Asset-backed securities 3,821 3,551

Treasury notes 2,479 —

Sovereign bonds — 990

Current investments 90,803 129,392

Corporate bonds 264,695 183,965

Treasury notes 43,893 43,523

Asset-backed securities 9,708 15,763

Sovereign bonds 991 979

Non-current investments 319,287 244,230

$ 607,165 $ 576,277

Corporate bonds consist of debt securities issued by both domestic and foreign companies;

asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement;

treasury notes consist of debt securities issued by the U.S.

and sovereign bonds consist of direct debt issued by foreign governments.

All of the Company's securities as of September 29, 2024 and December 31, 2023 were denominated in U.S.

Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheets and amounted to $ 4,749,000 and $ 3,169,000 as of September 29, 2024 and December 31, 2023, respectively.

The following table summarizes the Company’s available-for-sale investments as of September 29, 2024 (in thousands):

Losses Fair Value

Corporate bonds $ 85,309 $ 10 $ ( 816 ) $ 84,503

Asset-backed securities 3,848 — ( 27 ) 3,821

Treasury notes 2,501 — ( 22 ) 2,479

Corporate bonds 263,582 2,978 ( 1,865 ) 264,695

Treasury notes 43,465 428 — 43,893

Asset-backed securities 10,202 11 ( 505 ) 9,708

Sovereign bonds 1,019 — ( 28 ) 991

$ 409,926 $ 3,427 $ ( 3,263 ) $ 410,090

Accrued interest receivable is recorded in "Prepaid expenses and other current assets" on the Consolidated Balance Sheets and amounted to $ 3,284,000 and $ 4,144,000 as of March 30, 2025 and December 31, 2024, respectively.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the Company’s available-for-sale investments as of December 31, 2023 (in thousands):

Losses Fair Value

Corporate bonds $ 128,150 $ — $ ( 3,299 ) $ 124,851

Asset-backed securities 3,637 — ( 86 ) 3,551

Sovereign bonds 1,012 — ( 22 ) 990

Corporate bonds 189,326 506 ( 5,867 ) 183,965

Treasury notes 43,654 82 ( 213 ) 43,523

Asset-backed securities 16,773 — ( 1,010 ) 15,763

Sovereign bonds 1,037 — ( 58 ) 979

$ 383,589 $ 588 $ ( 10,555 ) $ 373,622

The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of September 29, 2024 (in thousands):

Realized Gains (Losses) on Debt Securities

The following table summarizes the Company's gross realized gains and losses on the sale of debt securities for the three-month periods ended March 30, 2025 and March 31, 2024 (in thousands):

Three-months Ended

March 30, 2025 March 31, 2024

Gross realized gains $ 27 $ 2

Gross realized losses — —

Net realized gains (losses) $ 27 $ 2

Realized gains and losses are included in "Investment income" on the Consolidated Statements of Operations.

Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders’ equity as accumulated other comprehensive income (loss).

Unrealized Losses on Debt Securities

The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of March 30, 2025 (in thousands):

Unrealized Loss Position For:

4 unchanged sentences

Corporate bonds $ 123,585 $ ( 1,562 ) $ 31,418 $ ( 479 ) $ 155,003 $ ( 2,041 )

Asset-backed securities — — 10,019 ( 532 ) 10,019 ( 532 )

Treasury notes 16,340 ( 78 ) — — 16,340 ( 78 )

Asset-backed securities 11,064 ( 474 ) — — 11,064 ( 474 )

Sovereign bonds — — 993 ( 13 ) 993 ( 13 )

13 unchanged sentences

When developing an estimate of expected credit losses, management considers all relevant information including historical experience, current conditions, and reasonable forecasts of expected future cash flows.

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of September 29, 2024 or December 31, 2023.

Based on this evaluation, no allowance for credit losses on debt securities was recorded as of March 30, 2025 or December 31, 2024.

Management currently intends to hold these securities to full value recovery at maturity.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the Company's gross realized gains and losses on the sale of debt securities for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023 (in thousands):

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Gross realized gains $ — $ 109 $ 8 $ 109

Gross realized losses — ( 733 ) ( 16 ) ( 733 )

Net realized gains (losses) $ — $ ( 624 ) $ ( 8 ) $ ( 624 )

Realized gains and losses are included in "Investment income" on the Consolidated Statements of Operations.

Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders’ equity as accumulated other comprehensive income (loss).

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of September 29, 2024 (in thousands):

Debt Securities Maturities

The following table presents the effective maturity dates of the Company’s available-for-sale investments as of March 30, 2025 (in thousands):

<1 year 1-2 Years 2-3 Years 3-4 Years 4-5 Years 5-8 Years Total

4 unchanged sentences

$ 56,703 $ 76,573 $ 109,247 $ 82,753 $ 43,611 $ 126 $ 369,013

Derivative Instruments

The Company’s foreign currency risk management strategy is principally designed to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates.

The Company enters into economic hedges utilizing foreign currency forward contracts with maturities that do not exceed approximately three months to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables.

The gains and losses on these derivatives are intended to be offset by the changes in the fair value of the assets and liabilities being hedged.

These economic hedges are not designated as hedging instruments for hedge accounting treatment.

The Company had the following outstanding forward contracts (in thousands):

March 30, 2025 December 31, 2024

Currency Notional

Equivalent Notional

Derivatives Not Designated as Hedging Instruments:

Singapore Dollar 35,000 $ 26,143 40,000 $ 29,457

Euro 20,000 21,682 25,000 26,029

Japanese Yen 1,500,000 10,015 2,000,000 12,789

Chinese Renminbi 70,000 9,632 95,000 12,990

Hungarian Forint 2,200,000 5,913 2,360,000 5,951

British Pound 3,000 3,879 3,200 4,008

Swiss Franc 1,000 1,137 2,200 2,432

Canadian Dollar 1,500 1,050 2,000 1,390

Mexican Peso — — 220,000 10,701

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Information regarding the fair value of the outstanding forward contracts was as follows (in thousands):

Asset Derivatives Liability Derivatives

Fair Value Fair Value

Balance Sheet Location Fair Value Level March 30, 2025 December 31, 2024 Balance Sheet Location Fair Value Level March 30, 2025 December 31, 2024

Derivatives Not Designated as Hedging Instruments:

Economic hedge forward contracts Prepaid expenses and other current assets Level 2 $ 188 $ 324 Accrued expenses Level 2 $ 23 $ 211

Gross amounts recognized $ 188 $ 324 $ 23 $ 211

Gross amounts offset — — — —

Net amounts presented $ 188 $ 324 $ 23 $ 211

The Company’s 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.

The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency.

The market participants are generally large commercial banks.

Information regarding the effect of derivative instruments on the Consolidated Statement of Operations was as follows (in thousands):

Statement of Operations Location Three-months Ended

March 30, 2025 March 31, 2024

Derivatives Not Designated as Hedging Instruments:

Gains (losses) recognized in current operations Foreign currency gain (loss) $ ( 547 ) $ ( 245 )

Inventories consisted of the following (in thousands):

September 29, 2024 December 31, 2023

March 30, 2025 December 31, 2024

Raw materials $ 80,628 $ 86,917

2 unchanged sentences

$ 152,113 $ 157,527

The Company's leases are primarily leased properties across different worldwide locations where the Company conducts its operations.

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 September 29, 2024, there were no options to terminate and twenty options to extend that were accounted for in the determination of the lease term for the Company's outstanding leases.

As of March 30, 2025, there were no options to terminate and nineteen options to extend that were accounted for in the determination of the applicable 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 outstanding leases as of September 29, 2024.

The total operating lease expense for the three-month and nine-month periods ended September 29, 2024 was $ 3,610,000 and $ 10,647,000 , respectively.

The total operating lease cash payments for the three-month and nine-month periods ended September 29, 2024 were $ 3,516,000 and $ 10,130,000 , respectively.

The total lease expense for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability for the three-month and nine-month periods ended September 29, 2024 was $ 52,000 and $ 191,000 , respectively.

There were no restrictions or covenants for outstanding leases as of March 30, 2025.

The Company did not have any leases that had not yet commenced but that created significant rights and/or obligations as of March 30, 2025.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The total operating lease expense for the three-month and nine-month periods ended October 1, 2023 was $ 5,512,000 and $ 8,151,000 , respectively.

The total operating lease cash payments for the three-month and nine-month periods ended October 1, 2023 were $ 5,168,000 and $ 7,532,000 , respectively.

The total lease expense for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability for the three-month and nine-month periods ended October 1, 2023 was $ 132,000 and $ 292,000 , respectively.

Future operating lease cash payments are as follows (in thousands):

Year Ended December 31, Amount

The components of lease expense were as follows (in thousands):

Three-months Ended

March 30, 2025 March 31, 2024

Operating lease expense $ 3,471 $ 3,563

Short-term lease expense (1)

(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:

March 30, 2025 December 31, 2024

Weighted average remaining lease term 9.4 years

Weighted average discount rate 5.9 % 5.9 %

Supplemental cash flow information related to leases was as follows (in thousands):

Three-months Ended

March 30, 2025 March 31, 2024

Cash paid for amounts included in the measurement of operating lease liabilities $ 3,422 $ 3,208

Maturities of lease liabilities as of March 30, 2025 were as follows (in thousands):

Remainder of fiscal 2025

Thereafter 36,597

The discounted present value of the future lease cash payments resulted in a total lease liability of $ 77,181,000 and $ 78,601,000 as of September 29, 2024 and December 31, 2023, respectively.

The Company did not have any leases that had not yet commenced but that created significant rights and obligations as of September 29, 2024.

Total undiscounted lease payments $ 96,658

imputed interest 22,956

Total operating lease liabilities $ 73,702

The Company leases a building in Singapore that serves as a distribution center for customers in Asia.

1 unchanged sentence

an 88,000 square-foot premises that had a commencement date in June of 2023 and a second 27,000 square-foot premises that does not commence until the fourth quarter of 2025.

Accordingly, the second component of the lease has not yet been recorded on the Consolidated Balance Sheets, nor has it created any significant rights and obligations as of September 29, 2024.

Accordingly, the second component of the lease has not yet been recorded on the Consolidated Balance Sheets, nor has it created any significant rights and obligations as of March 30, 2025.

This second lease component has an original term of eight years and the Company has the right and option to extend this term by an additional five years , commencing upon the expiration of the original term.

Future payment obligations associated with this lease component total $ 13,992,000 , none of which is payable in 2024 and which reflects the estimated extension period of five years .

Future payment obligations associated with this lease component total $ 13,396,000 , $ 163,000 of which is payable in the remainder of 2025 and which reflects the estimated extension period of five years .

Future payment obligations related to this lease component are not included in the future operating lease cash payments table above.

The weighted-average discount rate was 5.8 % and 5.7 % for leases outstanding as of September 29, 2024 and December 31, 2023, respectively.

The weighted-average remaining lease term was 10.0 and 10.5 years for the leases outstanding as of September 29, 2024 and December 31, 2023, respectively.

The Company has entered into a lease for a 6,500 square-foot building in Aachen, Germany for a term of ten years .

The commencement date for this lease is expected to be in the second quarter of 2025, and therefore it has not yet been recorded on the Consolidated Balance Sheets, nor has it created any significant rights and obligations as of March 30, 2025.

The Company has the right and option to extend the term of this lease for an additional period of five years , commencing upon the expiration of the original term.

Future payment obligations associated with this lease total $ 9,142,000 , $ 503,000 of which is payable in the remainder of 2025.

Future payment obligations related to this lease are not included in the future operating lease cash payments table above.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Goodwill and Intangible Assets

The changes in the carrying value of goodwill were as follows (in thousands):

1 unchanged sentence

Foreign exchange rate changes 4,992

Balance as of September 29, 2024 $ 391,673

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Intangible Assets

Amortized intangible assets consisted of the following (in thousands):

Balance as of March 30, 2025 $ 389,929

Amortized intangible assets as of March 30, 2025 consisted of the following (in thousands):

Value Accumulated

4 unchanged sentences

Non-compete agreements 340 ( 302 ) 38

Balance as of September 29, 2024 $ 138,111 $ ( 35,561 ) $ 102,550

Balance as of March 30, 2025 $ 130,786 $ ( 39,652 ) $ 91,134

Amortized intangible assets as of December 31, 2024 consisted of the following (in thousands):

Value Accumulated

5 unchanged sentences

Balance as of December 31, 2024 $ 127,304 $ ( 36,620 ) $ 90,684

As of September 29, 2024, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year Ended December 31, Amount

Future amortization expense related to intangible assets as of March 30, 2025 is as follows (in thousands):

Remainder of fiscal 2025

Thereafter 39,506

Business Combinations

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 three-month period ended March 31, 2024 as a purchase price adjustment based on the closing balance sheet.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Warranty Obligations

9 unchanged sentences

Foreign exchange rate changes 8

Balance as of September 29, 2024 $ 4,617

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Balance as of March 30, 2025 $ 5,728

Commitments and Contingencies

As of September 29, 2024, the Company had outstanding purchase orders totaling $ 38,153,000 to procure inventory from various vendors.

As of March 30, 2025, the Company had outstanding purchase orders totaling $ 53,401,000 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 the next twelve months.

A significant portion of the Company's outstanding inventory purchase orders as of September 29, 2024, 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.

A significant portion of the Company's outstanding inventory purchase orders as of March 30, 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 has the 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.

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While 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.

Derivative Instruments

The gains and losses on these derivatives are intended to be offset by the changes in the fair value of the assets and liabilities being hedged.

These economic hedges are not designated as hedging instruments for hedge accounting treatment.

Additionally, during the three-month period ended October 1, 2023, the Company entered into a foreign currency forward contract to exchange U.S.

Dollars for ¥ 40,000,000,000 to hedge the purchase of Moritex Corporation (refer to Note 18 of the consolidated financial statements), which was paid in Japanese Yen.

Upon the settlement of this contract, the Company recorded a foreign currency loss of $ 8,456,000 , which was recorded in "Foreign currency gain (loss)" on the Consolidated Statements of Operations for the three-month period ended October 1, 2023.

The Company had the following outstanding forward contracts (in thousands):

September 29, 2024 December 31, 2023

Currency Notional

Equivalent Notional

Derivatives Not Designated as Hedging Instruments:

Singapore Dollar 38,500 $ 30,055 39,700 $ 30,136

Chinese Renminbi 200,000 28,709 50,000 7,025

Euro 20,800 23,245 40,000 44,302

Mexican Peso 238,000 12,016 145,000 8,505

Hungarian Forint 2,040,000 5,723 2,240,000 6,466

Japanese Yen 600,000 4,161 600,000 4,255

British Pound 2,900 3,894 3,345 4,258

Swiss Franc 1,205 1,429 — —

Canadian Dollar 1,680 1,248 1,470 1,112

Stockholder's Equity

Stock Repurchase Program

In March 2022, the Company's Board of Directors authorized the repurchase of $ 500,000,000 of the Company's common stock.

Under this March 2022 program, in addition to repurchases made in other periods, the Company repurchased 231,000 shares at a total cost of $ 9,339,000 during the three-month period ended March 31, 2024 and 3,047,000 shares at a total cost of $ 103,413,000 during the three-month period ended March 30, 2025, including $ 1,180,000 of buyback Excise Tax in accordance with the Inflation Reduction Act of 2022, leaving a remaining balance of $ 164,020,000 as of March 30, 2025.

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 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.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Information regarding the fair value of the outstanding forward contracts was as follows (in thousands):

Asset Derivatives Liability Derivatives

Balance Fair Value Balance Fair Value

Location September 29, 2024 December 31, 2023 Sheet

Location September 29, 2024 December 31, 2023

Derivatives Not Designated as Hedging Instruments:

Economic hedge forward contracts Prepaid expenses and other current assets $ 234 $ 151 Accrued expenses $ 152 $ 106

The following table presents the gross activity for all derivative assets and liabilities which were presented on a net basis on the Consolidated Balance Sheets due to the right of offset with each counterparty (in thousands):

Asset Derivatives Liability Derivatives

September 29, 2024 December 31, 2023 September 29, 2024 December 31, 2023

Gross amounts of recognized assets $ 234 $ 151 Gross amounts of recognized liabilities $ 152 $ 106

Gross amounts offset — — Gross amounts offset — —

Net amount of assets presented $ 234 $ 151 Net amount of liabilities presented $ 152 $ 106

Information regarding the effect of derivative instruments on the consolidated financial statements was as follows (in thousands):

Location in Financial Statements Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Derivatives Not Designated as Hedging Instruments:

Gains (losses) recognized in current operations Foreign currency gain (loss) $ 944 $ ( 7,527 ) $ 1,575 $ ( 8,139 )

Stock-Based Compensation Expense

The Company’s stock-based awards that result in compensation expense consist of stock options, restricted stock units ("RSUs"), and performance restricted stock units ("PRSUs").

The following table summarizes the number of stock-based awards granted by the Company and the weighted-average grant-date fair value per unit for the three-month periods ended March 30, 2025 and March 31, 2024:

Three-months Ended

March 30, 2025 March 31, 2024

Stock-Based Awards Granted

(in thousands) Weighted-

Grant-Date Fair Value Stock-Based Awards Granted

(in thousands) Weighted-

Grant-Date Fair Value

Stock options 1,360 $ 12.32 1,523 $ 14.66

Restricted stock units 1,248 $ 32.35 765 $ 38.82

Performance restricted stock units 184 $ 32.14 55 $ 39.05

During the three-month period ended March 30, 2025, the Company granted PRSUs that vest upon the achievement of (1) a service condition of three years of continuous employment and (2) a performance condition established by the Compensation Committee of our Board of Directors as of the grant date.

The number of shares earned could range between 0 % and 120 % based on achievement of the performance condition, which includes certain financial targets over the three-year measurement period.

The fair value of these PRSUs is calculated based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends.

Compensation expense for these PRSUs is recognized based on the probable outcome of the performance condition with a cumulative catch-up adjustment for prior periods in the period that the probable outcome changes.

During the three-month period ended March 30, 2025, the Company recorded $ 152,000 in compensation expense based on the probable three-year financial target outcome for the PRSUs granted during the three-month period ended March 30, 2025.

The Company stratifies its employee population into two groups:

one consisting of senior management and another consisting of all other employees.

The Company currently applies an estimated annual forfeiture rate of 11 % to all stock-based awards for senior management and a rate of 13 % for all other employees.

Each year during the first quarter, the Company revises its forfeiture rate based on updated estimates of employee turnover.

Credits of $ 4,789,000 and $ 1,832,000 were recorded in 2025 and 2024, respectively, to true up previously recorded compensation expense for this forfeiture rate revision.

As of March 30, 2025, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 80,214,000 , which is expected to be recognized over a weighted-average period of 2.0 years.

The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):

Three-months Ended

March 30, 2025 March 31, 2024

Cost of revenue $ 668 $ 605

Research, development, and engineering 4,696 4,389

Selling, general, and administrative 4,575 8,308

Total stock-based compensation expense $ 9,939 $ 13,302

No compensation expense was capitalized as of March 30, 2025 or December 31, 2024.

COGNEX CORPORATION

2 unchanged sentences

The following table summarizes disaggregated revenue information by geographic area based upon the customer's country of domicile (in thousands):

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Three-months Ended

March 30, 2025 March 31, 2024

Americas $ 99,374 $ 83,135

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The following table summarizes disaggregated revenue information by revenue type (in thousands):

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Three-months Ended

March 30, 2025 March 31, 2024

Standard products and services $ 204,510 $ 187,632

2 unchanged sentences

Costs to Fulfill a Contract

Costs to fulfill a contract are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 11,261,000 and $ 13,265,000 as of September 29, 2024 and December 31, 2023, respectively.

Costs to fulfill a contract are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheet and amounted to $ 12,326,000 and $ 10,705,000 as of March 30, 2025 and December 31, 2024, respectively.

Accounts Receivable, Contract Assets, and Contract Liabilities

3 unchanged sentences

Contract liabilities consist of deferred revenue and customer deposits which arise when amounts are billed to or collected from customers in advance of revenue recognition.

The following table summarizes the allowance for credit losses activity for the nine-month period ended September 29, 2024 (in thousands):

The following table summarizes the allowance for credit losses activity for the three-month period ended March 30, 2025 (in thousands):

Balance as of December 31, 2024 $ 827

2 unchanged sentences

Foreign exchange rate changes ( 6 )

Balance as of September 29, 2024 $ 604

Balance as of March 30, 2025 $ 598

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the deferred revenue and customer deposits activity for the nine-month period ended September 29, 2024 (in thousands):

The following table summarizes the deferred revenue and customer deposits activity for the three-month period ended March 30, 2025 (in thousands):

Balance as of December 31, 2024 $ 25,035

2 unchanged sentences

Foreign exchange rate changes 62

Balance as of September 29, 2024 $ 30,045

Balance as of March 30, 2025 $ 39,858

As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations for our contracts that have an original expected duration of less than one year.

The remaining unsatisfied performance obligations for our contracts that have an original expected duration of more than one year, primarily related to extended warranties, are not material.

Stock-Based Compensation Expense

The Company’s 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 September 29, 2024, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 889,329 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 8,989,329 .

As of September 29, 2024, the Company had 6,049,613 shares available for grant under its stock plans.

Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over four or five years based upon continuous service and expire ten years from the grant date.

RSUs generally vest upon three or four years of continuous employment or incrementally over such three or four-year periods.

PRSUs generally vest upon three years of continuous employment and achievement of performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date.

Participants are not entitled to dividends on stock options, RSUs, or PRSUs.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock Options

The following table summarizes the Company’s stock option activity for the nine-month period ended September 29, 2024:

(in thousands) Weighted-

Price Weighted-

Term (in years) Aggregate

(in thousands)

Outstanding as of December 31, 2023

9,008 $ 50.87

Granted 1,641 39.72

Exercised ( 186 ) 25.19

Forfeited or expired ( 512 ) 54.76

Outstanding as of September 29, 2024

9,951 $ 49.31 5.89 $ 13,032

Exercisable as of September 29, 2024

5,781 $ 49.49 4.12 $ 10,997

Options vested or expected to vest as of September 29, 2024 (1) 9,318 $ 49.52 5.71 $ 12,609

(1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future.

Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.

The total cash received as a result of stock option exercises for the three-month and nine-month periods ended September 29, 2024 was $ 2,034,000 and $ 4,671,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 889,000 and $ 11,006,000 , respectively.

In connection with these exercises, the tax expense realized by the Company for the three-month and nine-month periods ended September 29, 2024 was $ 559,000 and $ 2,631,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 100,000 and $ 3,993,000 , respectively.

The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions:

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Risk-free rate 3.7 % 4.1 % 4.3 % 4.0 %

Expected dividend yield 0.80 % 0.57 % 0.76 % 0.59 %

Expected volatility 39 % 39 % 39 % 39 %

Expected term (in years) 5.8 5.9 4.7 4.9

Risk-free rate

The risk-free rate was based upon a treasury instrument whose term was consistent with the contractual term of the option.

Expected dividend yield

The current dividend yield was calculated by annualizing the cash dividend declared by the Company’s Board of Directors and dividing that result by the closing stock price on the grant date.

Expected volatility

The expected volatility was based upon a combination of historical volatility of the Company’s common stock over the contractual term of the option and implied volatility for traded options of the Company’s stock.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Expected term

The expected term was derived from the binomial lattice model from the impact of events that trigger exercises over time.

The weighted-average grant-date fair values of stock options granted during the three-month and nine-month periods ended September 29, 2024 were $ 14.75 and $ 14.89 , respectively, and during the three-month and nine-month periods ended October 1, 2023 were $ 20.55 and $ 18.11 , respectively.

The total intrinsic values of stock options exercised for the three-month and nine-month periods ended September 29, 2024 were $ 1,628,000 and $ 3,677,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 were $ 557,000 and $ 6,119,000 , respectively.

The total fair values of stock options vested for the three-month and nine-month periods ended September 29, 2024 were $ 1,023,000 and $ 27,232,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 were $ 962,000 and $ 33,035,000 , respectively.

Restricted Stock Units (RSUs)

The following table summarizes the Company's RSUs activity for the nine-month period ended September 29, 2024:

(in thousands) Weighted-Average

Grant Date Fair Value

Nonvested as of December 31, 2023

1,429 $ 54.22

Granted 838 38.90

Vested ( 408 ) 64.63

Forfeited or expired ( 92 ) 48.06

Nonvested as of September 29, 2024

1,767 $ 44.86

The fair value of RSUs is determined based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends.

The weighted-average grant-date fair values of RSUs granted during the three-month and nine-month periods ended September 29, 2024 were $ 36.40 and $ 38.90 , respectively, and during the three-month and nine-month periods ended October 1, 2023 were $ 46.17 and $ 46.78 , respectively.

There were 33,000 and 408,000 RSUs that vested during the three-month and nine-month periods ended September 29, 2024, respectively, and 18,000 and 500,000 that vested during the three-month and nine-month periods ended October 1, 2023, respectively.

Tax obligations for vested RSUs are settled by withholding a portion of the shares prior to distribution to the shareholder.

The total cash used by the Company to fund the tax payments for the three-month and nine-month periods ended September 29, 2024 was $ 369,000 and $ 4,876,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 267,000 and $ 7,731,000 , respectively.

In connection with these vested RSUs, the tax expense realized by the Company for the three-month and nine-month periods ended September 29, 2024 was $ 452,000 and $ 7,319,000 , respectively, and for the three-month and nine-month periods ended October 1, 2023 was $ 317,000 and $ 3,793,000 , respectively.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Performance Restricted Stock Units (PRSUs)

The following table summarizes the Company's PRSUs activity for the nine-month period ended September 29, 2024:

(in thousands) Weighted-Average

Grant Date Fair Value

Nonvested as of December 31, 2023

Granted 55 39.05

Forfeited or expired — —

Nonvested as of September 29, 2024

The fair value of PRSUs is calculated using the Monte Carlo simulation model to estimate the probability of satisfying the service and market conditions stipulated in the award grant.

There were 0 and 55,000 PRSUs granted during the three-month and nine-month periods ended September 29, 2024, respectively, and 0 and 46,000 granted during the three-month and nine-month periods ended October 1, 2023, respectively.

No PRSUs vested during the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

Stock-Based Compensation Expense

The Company stratifies its employee population into three groups:

one consisting of the CEO, one consisting of senior management, and another consisting of all other employees.

The Company currently applies an estimated annual forfeiture rate of 0 % to all stock-based awards for the CEO, 9 % to all stock-based awards for senior management, and a rate of 13 % for all other employees.

Each year during the first quarter, the Company revises its forfeiture rate based on updated estimates of employee turnover.

This resulted in a decrease to compensation expense of $ 1,832,000 in 2024 and $ 234,000 in 2023.

As of September 29, 2024, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested equity awards, including stock options, RSUs, and PRSUs, was $ 63,930,000 , which is expected to be recognized over a weighted-average period of 1.7 years.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended September 29, 2024 were $ 13,101,000 and $ 2,287,000 , respectively, and for the nine-month period ended September 29, 2024 were $ 39,367,000 and $ 6,059,000 , respectively.

The total stock-based compensation expense and the related income tax benefit recognized for the three-month period ended October 1, 2023 were $ 12,365,000 and $ 1,971,000 , respectively, and for the nine-month period ended October 1, 2023 were $ 41,518,000 and $ 6,053,000 , respectively.

No compensation expense was capitalized as of September 29, 2024 or December 31, 2023.

The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Cost of revenue $ 442 $ 435 $ 1,460 $ 1,497

Research, development, and engineering 3,707 3,459 11,636 12,657

Selling, general, and administrative 8,952 8,471 26,271 27,364

$ 13,101 $ 12,365 $ 39,367 $ 41,518

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Stock Repurchase Program

In March 2022, the Company's Board of Directors authorized the repurchase of $ 500,000,000 of the Company's common stock.

Under this March 2022 program, in addition to repurchases made in other periods, the Company repurchased 1,157,000 shares at a total cost of $ 59,640,000 during the nine-month period ended October 1, 2023 and 555,000 shares at a total cost of $ 23,841,000 during the nine-month period ended September 29, 2024, leaving a remaining balance of $ 309,051,000 as of September 29, 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 Company's effective tax rate was 19 % for the three-month and nine-month periods ended September 29, 2024, respectively, and 30 % and 16 % for the three-month and nine-month periods ended October 1, 2023, respectively.

The Company's effective tax rate was 15 % and 32 % for the three-month periods ended March 30, 2025 and March 31, 2024, respectively.

The Company has defined its major tax jurisdictions as the United States, Ireland, China, Japan, and Korea, and within the United States, Massachusetts.

1 unchanged sentence

federal statutory corporate tax rate of 21 %.

These foreign tax rate differences resulted in a favorable impact to the effective tax rate for both the three-month and nine-month periods ended September 29, 2024 and October 1, 2023.

The Company recorded a net discrete tax expense totaling $ 889,000 and $ 3,511,000 for the three-month and nine-month periods ended September 29, 2024, and a net discrete tax expense totaling $ 4,035,000 and $ 840,000 for the same periods in 2023.

Discrete tax items for the nine-month period ended September 29, 2024 included (1) an increase in tax expense of $ 1,645,000 related to stock-based compensation;

(2) an increase in tax expense of $ 320,000 related to state tax matters;

These foreign tax rate differences resulted in a favorable impact to the effective tax rate for both the three-month periods ended March 30, 2025 and March 31, 2024.

The Company recorded a net discrete tax benefit totaling $ 307,000 for the three-month period ended March 30, 2025 and a net discrete tax expense totaling $ 3,085,000 for the three-month period ended March 31, 2024.

Discrete tax items for the three-month period ended March 30, 2025 included (1) an increase in tax expense of $ 1,616,000 related to stock-based compensation;

(2) an increase in tax expense of $ 386,000 for interest expense related to tax reserves;

(3) a net decrease in tax expense of $ 278,000 related to return-to-provision adjustments;

and (5) an increase in tax expense of $ 1,130,000 for other tax matters.

Discrete tax items for the nine-month period ended October 1, 2023 included (1) a net decrease in tax expense of $ 3,043,000 due primarily to the release of tax reserves on state tax credits and foreign audit settlements;

(2) a decrease in tax expense of $ 2,198,000 for adjustments to certain deferred tax assets;

(3) an increase in tax expense of $ 2,178,000 for an adjustment related to deferred state taxes due to a reduction in the Company's blended state rate;

(4) a net increase in tax expense of $ 2,134,000 for return-to-provision adjustments;

and (5) an increase in tax expense of $ 1,769,000 related to stock-based compensation.

The Company’s reserve for income taxes, including gross interest and penalties, was $ 28,858,000 as of September 29, 2024, of which $ 26,491,000 was classified as a non-current liability and $ 2,367,000 was classified as an offset to deferred tax assets.

and (4) a net decrease in tax expense of $ 2,031,000 related to an adjustment to the Company's deferred tax position.

Discrete tax items for the three-month period ended March 31, 2024 included (1) an increase in tax expense of $ 1,123,000 related to stock-based compensation;

(2) an increase in tax expense of $ 458,000 related to state tax matters;

(3) an increase in tax expense of $ 458,000 for interest expense related to tax reserves;

and (4) a net increase in tax expense of $ 1,046,000 for other tax matters.

The Company’s reserve for income taxes, including gross interest and penalties, was $ 29,561,000 as of March 30, 2025, of which $ 27,194,000 was classified as a non-current liability and $ 2,367,000 was classified as an offset to deferred tax assets.

If the Company’s tax positions were sustained or the statutes of limitations related to certain positions expired, these reserves would be released and income tax expense would be reduced in a future period.

1 unchanged sentence

The tax years 2013 through 2024 remain open to examination by various international taxing authorities in other jurisdictions in which the Company operates.

In October 2021, more than 135 countries and jurisdictions agreed to participate in a "two-pillar" international tax approach developed by the Organisation for Economic Co-operation and Development (OECD), which includes establishing a global minimum corporate tax rate of 15%.

The OECD published "Tax Challenges Arising from the Digitalisation of the Economy — Global Anti-Base Erosion Model Rules (Pillar Two)" in December 2021 and subsequently issued additional commentary and administrative guidance clarifying several aspects of the model rules.

Since the model rules have been released, many countries have now enacted Pillar Two-related laws, some of which became effective January 1, 2024, and it is anticipated that more countries will follow suit throughout 2024.

As of September 29, 2024, the Company does not expect Pillar Two taxes to have a significant impact on its 2024 financial statements.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Weighted-Average Shares

Weighted-average shares were calculated as follows (in thousands):

Three-months Ended Nine-months Ended

September 29, 2024 October 1, 2023 September 29, 2024 October 1, 2023

Earnings per Share

The following table shows the computation of basic and diluted earnings per share for the three-month periods ended March 30, 2025 and March 31, 2024 (in thousands, except per share amounts):

Three-months Ended

March 30, 2025 March 31, 2024

Net income $ 23,603 $ 12,022

Basic weighted-average common shares outstanding 169,265 171,692

Effect of dilutive equity awards 1,234 1,185 1,145 1,251

Weighted-average common and common-equivalent shares outstanding 172,753 173,354 172,733 173,659

Stock options to purchase 8,640,000 and 8,490,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended September 29, 2024, respectively, and 6,893,000 and 6,775,000 during the three-month and nine-month periods ended October 1, 2023, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

No RSUs were excluded in the calculation of dilutive net income per share for the three-month and nine-month periods ended September 29, 2024 because they were anti-dilutive.

RSUs totaling 3,000 and 1,000 shares of common stock, on a weighted-average basis, were outstanding during the three-month and nine-month periods ended October 1, 2023, respectively, but were not included in the calculation of dilutive net income per share because they were anti-dilutive.

No PRSUs were excluded in the calculation of dilutive net income per share for the three-month and nine-month periods ended September 29, 2024 and October 1, 2023, respectively, as PRSUs were not anti-dilutive on a weighted-average basis.

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.

During the nine-month period ended October 1, 2023, the Company recorded recoveries related to the fire of $ 5,250,000 , consisting of $ 2,500,000 during the three-month period ended July 2, 2023 for proceeds received from the Company's insurance carrier in relation to a business interruption claim and $ 2,750,000 during the three-month period ended October 1, 2023 for proceeds received as part of a financial settlement for lost inventory and other losses incurred as a result of the fire.

These recovery amounts are presented in the caption “Loss (recovery) from fire” on the Consolidated Statements of Operations.

Business Combinations

Dollars based on the closing date foreign exchange rate.

Effect of dilutive stock-based awards 1,126 902

Diluted weighted-average common shares outstanding 170,391 172,594

Earnings per share

Basic $ 0.14 $ 0.07

Diluted $ 0.14 $ 0.07

The computation of diluted weighted-average common shares outstanding excludes the following weighted average anti-dilutive stock-based awards outstanding for the three-month periods ended March 30, 2025 and March 31, 2024 (in thousands):

Three-months Ended

March 30, 2025 March 31, 2024

Stock options 9,765 8,176

Restricted stock units — 1

Performance restricted stock units — —

Total weighted average anti-dilutive stock-based awards outstanding 9,765 8,177

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 Company’s 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.

COGNEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The measure of segment profit or loss for the Company's single segment is net income.

Segment expenses were disaggregated based on the information the chief operating decision maker uses to assess performance and allocate resources considering both quantitative and qualitative factors.

The following table summarizes significant segment expenses, which represents the difference between segment revenue and segment net income (in thousands):

Three-months Ended

March 30, 2025 March 31, 2024

Revenue $ 216,036 $ 210,797

Cost of revenue (1) 71,713 68,860

Gross profit 144,323 141,937

Research, development, and engineering expenses

Salaries and fringe benefits 18,274 19,717

Incentive compensation (2) 1,071 984

Stock-based compensation 4,696 4,389

Depreciation and amortization 755 823

Other segment expenses (3) 9,931 11,192

Total research, development, and engineering expenses 34,727 37,105

Selling, general, and administrative expenses

Salaries and fringe benefits 42,195 44,682

Incentive compensation (2) 10,882 11,060

Stock-based compensation 4,575 8,308

Depreciation and amortization 4,161 4,119

Other segment expenses (3) 21,691 22,459

Total selling, general, and administrative expenses 83,504 90,628

Operating income 26,092 14,204

Foreign currency gain (loss) ( 2,453 ) 46

Investment income 3,990 3,120

Other income (expense) 169 196

Income before income tax expense 27,798 17,566

Income tax expense 4,195 5,544

Net income $ 23,603 $ 12,022

(1) Cost of revenue includes depreciation and amortization expense (including amortization of acquired technologies) of $ 3,018,000 and $ 3,150,000 for March 30, 2025 and March 31, 2024, respectively.

(2) Incentive compensation includes company bonus and sales commissions.

(3) Other segment expenses include outside services, prototyping materials, sales demonstration equipment, travel and entertainment, marketing programs, and rent, among other less significant expenses.

Segment assets amounted to $ 1,932,503 and $ 1,992,850 as of March 30, 2025 and December 31, 2024, respectively.

Subsequent Events

On October 30, 2024, the Company’s Board of Directors declared a cash dividend of $ 0.08 per share.

The dividend is payable on November 29, 2024 to all shareholders of record as of the close of business on November 14, 2024.

On April 30, 2025, the Company’s Board of Directors declared a cash dividend of $ 0.08 per share.

The dividend is payable on May 29, 2025 to all shareholders of record as of the close of business on May 15, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements