Cognex Corporation (NASDAQ:CGNX) Q3 2023 Earnings Conference Call October 31, 2023 8:30 AM ET

Company Participants

Nathan McCurren - Head-Investor Relations

Rob Willett - President & Chief Executive Officer

Paul Todgham - Chief Financial Officer

Conference Call Participants

Jacob Levinson - Melius Research

Piyush Avasthy - Citi

Jim Ricchiuti - Needham & Company

Ken Newman - KeyBanc Capital Markets

Jairam Nathan - Daiwa Securities

Operator

Greetings, and welcome to the Cognex Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Nathan McCurren, Head of Investor Relations. Thank you. Please go ahead.

Nathan McCurren

Thank you, Donna. Good morning, and happy Halloween 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. Formerly known as Sheriff Woody and Hamm from Toy Story at Cognex's Annual Halloween celebration last week.

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 Q3.

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

Rob Willett

Thanks, Nathan. Hello, everyone, and thank you for joining us. We delivered third quarter revenue, gross margin and operating expenses in line with our guidance. Business conditions continue to be difficult. The operating environment remains similar to what we saw last quarter across each of our end markets.

As expected, Consumer Electronics faced the steepest decline in the quarter. This was driven by both project timing and softer demand, particularly in China, where the underlying market remains cautious and customers are managing inventory to lower levels.

We expect China to continue to be a challenging market for us and our peers in the near to medium term. Despite these headwinds, we continue to focus on long-term growth and take important steps to execute our strategy. In the third quarter, we grew our served market as we entered two important adjacencies, the vision sensor market and the optical components market. These two markets expand our served market by $1.5 billion, adding to our served market previously sized at $6.5 billion.