Cognex Corporation (NASDAQ:CGNX) Q2 2023 Earnings Conference Call August 3, 2023 8:30 AM ET

Company Participants

Nathan McCurren – Head-Investor Relations

Rob Willett – President and Chief Executive Officer

Paul Todgham – Chief Financial Officer

Conference Call Participants

Josh Pokrzywinski – Morgan Stanley

Tommy Moll – Stephens, Inc.

Joe Giordano – Cowen

Jacob Levinson – Melius Research

Jairam Nathan – Daiwa Capital Markets

Rob Mason – Baird

Keith Housum – Northcoast Research

Operator

Greetings. Welcome to the Cognex Second Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Nathan McCurren, Head of Investor Relations for Cognex. You may begin.

Nathan McCurren

Thank you, Shamali. Good morning, everyone, and thank you for joining us. With me on today’s call are Rob Willett, Cognex’ President and CEO; and Paul Todgham, our CFO.

Our results were released earlier today, the press release and quarterly report on Form 10-Q are available on the Investor Relations section of our website. Both the press release and our call today will reference non-GAAP measures. You can see a reconciliation of certain items from GAAP to non-GAAP in Exhibit 2 of the press release. Any forward-looking statements we made in the press release or any that we may make during this call are based upon information that we believe to be true as of today.

Our actual results may differ materially from our projections due to the risks and uncertainties that are described in our SEC filings, including our most recent Form 10-K and our Form 10-Q filed this morning for Q2.

With that, I’ll turn the call over to Rob.

Rob Willett

Thanks, Nathan. Hello, everyone, and thank you for joining us. We delivered second quarter revenue at the top end of our expected range gross margin in line with our guidance and operating expenses favorable to expectations. We had a strong sequential step-up in operating margin as gross margin returned to our mid-70% long-term target, and we carefully managed costs in the quarter. While these results were in line or better than our outlook, conditions weakened as the quarter progressed. You can see this in the latest PMI 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. Our customers remain cautious with their capital investments, particularly in consumer electronics and semi where we have seen the steepest decline in demand.