Cognex (CGNX) 29 Jul 202020 Q2 Earnings call transcript

Greetings. Welcome to the Cognex Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. the Relations. to turn Director Conway, now Investor of will conference Susan over Senior I you. Thank

may You begin.

Shillman; Rob Good Both are non-GAAP contain results. Form us our measure highly Paul better our information will business are Bob on at earnings today. and Todgham. or available Investor With and evening it financial thank point quarterly us Cognex’s you I’d like a release website Chairman, out help trends. results about investors we believe Financial We we and and www.cognex.com/investor. use to XX-Q Chief or Willett; financial Relations if for to our investors joining useful believe our President Officer, detailed is understand CEO, that if Dr. on report it

based a You Any earnings the certain that from those change earnings release that of X anticipated. are GAAP or results made the materially however items release. differ Exhibit in call often this to in may reconciliation any can upon and may Things see non-GAAP of to forward-looking during we be projected we as today. statements information from make we actual of true believe or

should list subsequent recent refer detailed factors our Form report our of a XX-Q. including risk on Form SEC filings, For quarterly to and you most XX-K

Now, I’d Bob. like to turn the Dr. call over to

financial COVID-XX. the second that, ordered three [Technical partner, CEO, slow XXXX that earnings substantially I'll business downs of call doing our Cognex we to the The worldwide to past been busy our write-downs my measures most call results. has to what turn the company to call. quarter Rob last very in of I to is our been details Cognex severely months shut since affected have to Thanks, make and Rob large our had align our Sue, those to talked welcome government deteriorated microphone and in attributed yours. on everyone, hello has a to due Because down Difficulty] over reported and and results others the in QX, this resulted Willet. difficult earnings It you quarter,

Dr supply reflects X% of business evening expected with good Cognex difficult This over market. the Cognex substantial environment quarter. for that when than a from that components better anticipated products and Good our by XXXX you, than orders is everyone. you announced hard backlog financial was to the the faster Cognex QX customers we prior news we logistics results we April. expected Thank despite to deliver delivery Bob revenue to chain of report and manage our significant worked in due to increased on spoke Tonight shortages.

in to year-on-year in was The However, our big postal enable to box automotive which due stepping noticeable investments spending struggling, through throughput that XXXX. was and of distribution the vision airport stores, Despite customers online Growth most positively. year. many highest accounts activity major and decline. their handling by their market, our the revenue remain Business in strength in declined is most to lower baggage, One are is machine and offset so improving, by and in of as expected there downturn weak in Americas. is Europe is in end largest sector though market productivity in Cognex logistics semi retail and customers demand our retails logistics, business up that are markets end that, life even of the of areas sciences but helps centers. two XX% are e-commerce contributing and the

is doing that's well sector The electronics. other consumer

will Cognex of in we that deployments be products revenue expect large delivering recognized QX. now are We

given successful conferencing dollars and holding was we Salesnoids one plan In on The perhaps in our to been to something stuffs let's significant team revenue a the during our is announced with limited access. even the talk have culture winning was QX occur that customers, difficult and exceeding here times We Next, manner given demonstrations these two, we but perseverance, and it a or a we company discussions business a about in customer to X%. therefore and team has had addition unlikely economic sales this headcount achieve we technical decision by more new value growth. disruption modest for due near right-sized of in to new been but the of our unfortunately product to billion productive the circumstances. lot we’re pleased video XXXX application do with year by lower the term Cognoid placed levels, how and entered engineers

enabled As the way reduce that restructuring, an from believe We've changed duplication We new growth more expansion and restructuring, and unique a to on we that us roadmap world our for focused have our is we not nor redundancies the have growth. and up are part areas of capabilities to significant product product still Cognex's built After capacity shoppings opportunity specific development. global acquisitions. the the our engineering teams efficiently. years we saw around leverage in delayed business of we in reorganized

upgrades, with projects forward such and initiatives support We are as growth. improvements to systems also process moving future other IT

write-down with technology of in learning that deep I QX of acquired we a to Sualab. is that the in portion development our Another address want October

has confident We’re believe role Sualab our play. important and deep to in an strategy learning

and application and the hands-on engineering required that's environment. technology current to Sualab's customers in-person difficult in do with collaboration However,

of thereby reducing As a value for Sualab projected result, revenue pushed our asset. been has that out the

discover high defects deformed, Deep parts skewed, bullish nicely advance year-on-year, accurately business. of category. poorly effectively who deep It's assembled these Cognex together to times. In-Sight with new on the challenging have news, launch the we complex factory their we HDL as how with XX% in In our launched our applications, for is the advantage it products the for be A customers leads major form of speed other step In-Sight leading bookings the DXXX these tight DXXX than value In-Sight are DXXX April, defects. such camera spaces precision to Initial important accessible We're the making more deep This smart by culture of have etched fastest-growing lines. badly current and ideal learning its production our XXXXP, a for our to factor as brings proud plus technology. inspecting makes launched megapixel electronics learning performance demanding that have X overall into devices, finds region They of automation doubly and thousands In-Sight OEMs combination increased product smart the sales of tens and and continue small Cognex's and proud integrating industry manufacturers demonstrate in learnings environment. standardized on codes. about camera as Asia manufacturers product the platform. technology growing We our manufacturing during effectively on work them where

While many our maintaining and and Cognex with our process schedule from is development improvement on we're product operations working home, remaining plans. still plans

struggle but Regarding the the be QX, supply, In to managing navigating some currently, our saw global we circumstances. supply supply we're parts. to vendors chain a under well continues challenge

to continue deliveries costing freight taking We more. see significantly and also longer

further possibility and us closures road. we the inventory suppliers continue with disruption supplier have practice Even and down so crisis. in substantial current of for our helped and and relationship to close of customer recognize the the Our holding component plan

from quarter. a over to turn Let's now second to details Paul, you.

Thank hello everyone. you, Rob, and

QX. Gross a areas mind, margin quarter, of was partially decline. almost on the broad included margin sequential this disruptions business automotive. As was slightly which increased to to reserve improving that from discussed charge, $X.X for some the with excess a decline year-on-year discuss primarily level performed given because gross widespread decline to We straightforward. The where than factory million Operating resulting expected, which results million, helpful workforce Logistics a will the inventory QX. $XX.X customers reduction we than noticeable QX. pro It XX% let's restructuring better in a we in Americas Rob. but XX%, was charge Europe the still the growth growth is QX was $XXX other typically forma Cognex basis offset expected million, our weak. you basis, for know, from and we automation market, gross into which due fulfillment consistent margins logistics. quarter disclosures is the included combined in for expenses a known China in be in of we details. of excluding of regions, GAAP Revenue experienced was the decline get mix a in being that non-cash on both and That business by actions took impact in QX with in better returning offsetting with most the our that logistics e-commerce well. exclusively believe was but in the production product With in Reported substantial represented we favorable also business particularly

were actions substantially the of the end completed by restructuring quarter. Our

million between half, a primarily to the million $X expect in charge We QX. residual of second in $X

$XX.X charge acquisition also intangible of assets our a We the of million Sualab. from in recorded non-cash primarily, write-down portion a the QX of

in QX, SG&A restricted to and We restructuring including charges, option onetime the sequential decrease of the and we because impairment declined saving on asset in spending reported write-down. lower some inventory the basis The combined for expense by tangible actions as hiring QX early the expected. operating travel actions due of RD&E entertainment cost, discretionary prudent an loss total these management stock and XX% Excluding of and lower plan. was charges in a implemented

was per tax approximately Excluding decline as basis. QX these XXXX. that in more our mentioned. which earnings higher due QX higher will items charges basis, just than were was excluding tax a discrete jurisdictions. believe on tax and year-on-year QX the we now tax excluding non-GAAP in effective XXXX because was XX% in compared expected free was earned with margin discrete were to points of in in higher revenue XXXX and sequential lower $X.XX XXXX, to QX $X.XX The from in rate charges, we of items XXX basis compared QX operating XX%, share be tax $X.XX a On and profits The

which change low perspective, decline digits region was year-on-year, revenue at for consumer year-on-year a revenue electronics geographic QX, in single automotive. Looking the increased in from best our Asia, by a from offset higher performing

revenue to logistics back other of is from Spending from of manufacturing customers from year in Asia COVID-related where substantial already work almost challenging electronics regard, improving. a revenue from worsened by for was that on in weak business declined was further Europe also production in fundamentals In consumer shutdowns by QX are QX declined In XXXX largely mostly customers year-on-year. revenue order now electronics benefiting Growth will timing companies that offset between are This split our revenue products. year, in and large Business automotive. concentrated in factor. most revenue up double higher that consumer XX% decline in regions. scalping Facilities with automotive. digits The are year. reopening region ahead and by gradually region. The winning was be in that Asia regard and the proportion low and Americas, a we expect a business Our QX. QX in we're

$XXX Turning approximately in balance with to our no debt. and and sheet, quarter cash investments the we ended million

to unchanged capital difficult business conditions. allocation approach Our the despite remained

We be Cognex of $XX stock the and shareholders made shareholders. announced to success tonight We paid also not we QX. quarter. years a while dividends for manage to QX our long the approximately in We in in continue to term buyback many in any similar sharing million do payment with

six by inventory XXXX; roughly from however, recorded period. XX% QX, balance month approximately of we flat reserve inventory $X million E&O in the excluding was end decreased the or substantial the over Our

back to the turn over call I'll Now Rob.

Paul. you, Thank

the year-over-year by both Moving an of higher QX million be will represents and from due next year far That mostly to with we guidance, expect which this believe $XXX the to between sequentially year. we revenue QX and of be expected million. revenue $XXX in best range will quarter electronics, consumer increase concentrated

time it's the that working be range, to been quarter in and that will business from can and overall large of in a the sector attributable be tonight to as also for RD&E customers on strong we and Gross excludes The that some logistics logistics. expect deliver which SG&A total volume QX when XX% discussed semi expected be combined expect high tempted is is lackluster strength flat sequentially. Despite that see mid margin electronics, we revenue to for relatively of few year-on-year by of in on charges to which the and we the slightly change. expected unclear e-commerce, we another have demand e-commerce We is

the items. tax effective be XX% rate Lastly, tax is expected excluding to disagreed

go to Now, please we will open the Operator, ahead. call questions.

is proceed. from [Operator you. Instructions] Please with Gordon Haskett. question first Karen Lau Our Thank

on markets in are exit you maybe maybe of sound and you two? I saw kind seeing meaningful CE, you the June in saw any pretty even? sequential improvements can e-commerce the decline guys Rob, you wondering, downbeat of was excluding And July of comment you outside on in rates not those markets or April versus rate

think story yes, markets automotive market industries, performing of life range more what well our markets, source I showing a broad including devices, the the market, other sciences, you're I reasonably which I other our sweet we and Karen, growth. pharmaceuticals, medical-related that year. product actually serve, are and markets, than was some is that's medical the looks Hi that last mean, There main really it so think of it. largest security,

certainly don't wish that substantial headwinds. giving market is is sound I automotive but negative, the So, overly us to

you in much To rates can down the seeing and exit June auto you're of year-over-year? comment that is kind July? in on that point, How

and up I'll color the Yes. sharply some automotive this XX% we mean, outright declined you COVID at the year. optimistic that, might on from of I given things and QX. coming start obviously no Demand deteriorated give largest year think market XXXX pick stopped in and revenue around we was thought But in COVID second situation. to automotive the in was into from the so, that half year-on-year it our I expect were that. longer automotive the we by happen,

million $XX in weak to on we us this even showing might've electric look including vehicles, right quarter. for of not roughly the spending headwind continues it's It really expected. So worldwide, as

from years. the XX% return we that the of expect probably it's past the until getting hoped, that exit certainly as over happen to I of terms low improving I had that kind up we've think coming rate, or there. into We that of In terms to to the of next the bottom to would there's in I we've But few used signs year we solid mean, some growth come middle hit level the its don't say, year.

the on Understood. in And believe color. on for context the a it delivery CE Got so us, expected Thanks third then with comment in into XXXX. be can this much year? then CE, it. for I business your overall how quarter, put up And to you maybe peaked

level? much If you account for versus down would the increase this you still year, peak that how

at consumer would may level into would the like. some I year. we So, can't good you're year Karen, in very that would growth in quite full growth you us think market. and year, outperform we're give with for electronics and them that. Cognex told we ever be year electronics, this kind the our I up but But give projections that that, as coming wouldn't specific shots, generally, say focusing guidance to of the right good I was say, know we putting What nor and would it I expect not best growth, very is XXXX we're seeing this we strong would see like that

hoped outside is certainly of in OLED consumer So, good and it out growth things from screens, bunch be I come pushed phones, it's area. related and will some little. electronics. we looks lot a that year, but seeing of to we're may XG accelerated are it some a And would But say that smart than home think, growth going there's that, be One nice in like of despite we of a certainly online a growth outside of getting I'd this then driving on. seeing that learning growth, that the working phones,

I our just be logistics will largest be the not may electronics largest consumer and give but first a expect year, to it this market year, run automotive we say. market our is month So, in running would this

question proceed. next from Capital Please is Markets. Berenberg Andrew with Our Buscaglia

-- this that's is given seasonality Hey, indication We guys. in there on Is trend, a given could in QX. that electronics times Can -- and see likely year? the some you to there believe reason any a in electronics consumer QX. consumer those how QX typical unprecedented is

we think through us. electronics year, we it's looks discussed Pretty big but in see QX, in strength so, of I it's got and always in play is think we large I be was much which it you revenue it electronics from previous to why flow certainly it look no the amounts have five last from but been calls, QX QX. growth pushed reason QX. this of QX, will really It's where recognized Last still back or or in use into years QX. in This year's into wouldn't that some if most a expect QX. couldn't here. QX there really as and for some year

in a restructuring up picking QX wouldn't expect that taken long is out anytime And reading would And you beyond a took a -- time, much on pickup that indicate seems Okay. like soon. comment or into which can demand QX some don't that you I of haven't like you substantial really am it But a expect you wrongly you in bit. QX? lift

wouldn't in a I term Yes, read way. it short such

to here grown think, last years expect a seven our like acquisitions, were XXXX. made know of and growth we first the headcount we up down to four we stopped, to nine years. stopped XXXX acquisitions entering in some were in I having we've in pretty it we've lot to And strong return I

seeing time effectively, business. we opportune to better to the in just So, environment reduce action, redundancies kind of in after the we're then on viewed more the expecting And talent areas, our take go, growth to sharpen leverage we some saw an needed that automotive. and the focus current year expecting as of a year strong we in COVID, logistics, we recognized of ready we expecting were the growth electronics, kind in

think on really I following on capabilities So years many growth. we better aligned of

I long-term Cognex We that. align to So, demand remarks, the well that really I needed set this could other to I have better. we're time costs. growth. We of our much happen. to really as without is think, prepared structured, capacity think the at substantially home get plenty and But ourselves grow And so probably needed really than variable was in thinkers count, adding something with us we Not said, not clear to to downturn well much cost this we for in very investment, that is think we’re I much the my are, for that. business head expect

Giordano Our question Joe proceed. and Please is from next with Cowen Company.

Wondering, that you kind like content of like a like, you're versus can logistics these and I of the line that content for if how given how but would it footage obviously, look and like, has square content? CE and few looking a on you CE amounts think ago, about scale mean like production a getting in some given or not specific your like-for-like logistics does dollar for years facility, orders

an Well, way. interesting We that don't it Joe, question. generally of it's think

tend facility, over think the facilities. we're of it's related, vision at still in adding values. of what I we think similar numbers higher I do features would of I and that then it's terms and been to level think numbers we lines tasks of to lines in logistics capability, being think previous overall, that are we say probably there. changing the those it's added But specific more and year, content

we higher learning similar, kind vision, So, reading value applications of value doing things would now to in more more more is like be would applications. of used possibly and probably we I basic higher it but boxes to evolving more and doing that think what

that Cognex's in extent, just your some business right estimates change about fare and mostly auto, would talking existing think would Obviously, third but think could kind I of are how filling think there's business you year. substantial right those don’t next but in year-on-year how that you up right obviously growth we're wildly numbers environment? then to overtime, capacity production environment? about mean, pretty if on that now And party now I

make to understand sure want I Yes. question. I your

automotive, think right now... saying in You're you

base, pretty more substantial but ramps Yes. business production in sort do of how year-on-year, up year area? on just your sort you're the on In you're auto, of obviously next auto that side would curious, of is operate investment a a you I'm expecting things think little

See, you're production. about volume of speaking more unit

business must Yes. Unit to that go about as you what for is I'm year. next to up, volume think curious going means your how

Yes.

think existing of new retrofitting it's to about us, I lines. more be for going lines

is new see So, and unit new What I driving incremental would the of in think see I be necessarily a of invest volume don't real automation. for lot I us. drivers growth technologies introduction would models

that But are past general. cash, are of retrofit Cognex. lot that's or in things There are years. of really the electric a Those accustomed So, few for automotive kinds do likely to vehicle of they're models a XX for drive speculation coming struggling if can space, lever. there market course, more who that X over conserving new growth to next upgrades and they're big then when Tier in less automotive of

around impact us into have gauge it likely on technologies growth models of would introduction does us. more feature be automotives. new So, an and But to new for

could just I In you're there. quite one last doing sneak If well e-commerce, one.

continue? Does You your going as the is to this for few the reality. what's this normal, we way a repeated? business to some just customers Or on year now were it's like mentioned well current don't a kind but this see can't above supply why and of just you trend be of this like business the going, bit, scrambling strike given can't little something accelerated everyone driving adjusted we teams and get is that big that

we've and we we past, few at in able I for growth that that well of in said do us So, a logistics see year we to pretty last great think the XX% the plans business been most to and as a have grow ambitious years. market

great we and play. a site demand machine move have great productivity, model, technical as see advantage we chains to have, supply helping just it's we market those it vision just chains. because supply much think develop and for and I more more and e-commerce a so to And online

being we're disappointing customers have skewed the is what those but development, who moment liquidity sophisticated we that pretty in in think, very those I is And that wouldn't in we're marketplace, of they're logistics formerly seeing seeing so the winners broad retailers retail, what's the already strongly growth is particularly course towards see models I area, they're at me think their bricks-and-mortar at have really with and own future. expected right. struggling like growing to in moment, that struggling, e-commerce

we're like really biggest our there. So not business. what level the to a the would baggage level, type of that same seeing We I'm cold has also, But seeing airport have same investment that's this the handling market gotten some part of very logistics year.

we're I it's story, think e-commerce. good in bit better expected but than varied So really a seeing the of a growth

systems term And, come I some like retail seeing then we more companies think to the us where the help data back thoughtful to manage inspection, I think discussed the more regular logistics more markets dimensioning, ones for capabilities expecting more our things other like longer already efforts vision would thing and I other use just expect more efficiently. of future. machine in broader reading we're beyond using strongly vision we to from is we're their

think logistics. exciting big I plans in have So growth and we

are them really well. of going Some

current this get think in back tepid, demand the Some through we environment, situation, but current that's and of will little a them come I once

Joe from proceed. with is question next Our Goldman Sachs, please Ritchie

logistic on of this got that is So, I of expected ship XQ? I it year. third year Is the last think quarter predominantly track in think you guys so the revenue something deferred, to talked in or that million that that of still to shipped Or XQ? Rob, for kind shift like you of some in about XX

We gave you're not number, Joe, getting big and of addition QX delay. seeing a is we building backlog business think through of a delivery and a of directionally correct pretty lot QX, logistics that. we I also did. big seeing but backlog we're Yes, specific bills a and that QX, we’re in to come business and sure I'm saw And

there. as speaking, happening we think of I broadly is So expected what kind that's

helpful. That's

Kion's we integrators Honeywell, Intelligrated are to the just some quarter. products of get as And their for how about reported could quarter that that's in doubled constraint potentially example, this they businesses kind relates of type like orders and also whether being on should time? their there able they're like being to it constrain up products your business, guess this were and XXX% your I something like installed orders to that yours and within are is delivered capacity able to of reasonable your like timeframe, bubble being a there's ability any forming ensure installed think any

way Honeywell. celebrated the I integrators that them it It we division there. there's a is group think the out call of works

contracts line with becomes vision then bit models we user. large years normally way dynamic is a to by I And think them is that getting you're implementation, automotive, referring years. the does out. them. end builder years those a the that's very is so or some many as couple new in closer the of we're for businesses sometimes but on near There the of can Rendell, a the getting product they're little Landy] work what quite very, one of like in, car [indiscernible]. system putting the in There are others contracts. Generally, Those [Dematic over two be and out

on you when of always it's at the coming So, how hearing, and look growth depending now of we're between reports schedule some those rollout so or a indicative product then. which probably ahead changes in years be year will that of

So what would I with and do line indicator leading I it in expect. as

on following guess some I on hear. consumer the maybe electronics up of just just And lastly, That's to question. great

You sound smartphone. doesn't little like bit or color learning what did screens It reference specifically can specifically. in online don't into. me know a more iPads on like I'm just end is going OLED like just it's a market if curious give this if you application. I

Yes.

most we so, them players the of all product. felt in as we and portfolio felt, broad have So, consumer of really electronics, major really

and would other Our has than in smartphones it stronger we we've expected better. electronics et been seen. business year, more it's how cetera devices, and smartphones much in this still phones, But growing is that looks. tablets laptops have in perhaps sure It's very and very solid for

of it's terms and with spike But coming in screens, or some with going spoke more was et the work I strength OLED maybe big there players that's terms looks way, for and seen companies diversified terms of which gross that as XG in other is I similar growth deep and that that we part XXXX. the in off We of a It's cetera, offset of that five to where learning of what very into in best really isn't, hoped areas base a we're business major some themselves saw for that's working doors to the market to drive maybe is not these China, being year Then good is think, have think that of that in that's year we've how in then. be those expectations, massive. But our heavily technology working the in a inspection. might OLED, by OLD everybody OLED. still business earlier. for working the of and as result value this is of business uptick an some one our quite there's it business blow yield of see the years the better market not good value we're in about growth equipping home, our everyone's we've been and I on generally a there. some But at

question Our proceed. is Morgan. from Coster JP Paul next Please with

Thanks my questions. for taking

lower it margins just mentioned a that light with gross might the leads I mix logistic is in the wondering market? right, product right if margin did be slightly that of little did because the that that So, and that I gross end hear mix. the I'm what hear you

invite a little the level then and Paul So, I'll more product talk that I -- talk too. will will on bit about

to you go of more customer me logistics, electronics Let long give view the from work when a very we major with required who we us. into implementation

application engineering, we doing right. So were more

still So some of be that a definitely And do can diluted to that was issue. of part which we margin. our that,

customers, integrators. or lower other developing in has more modular we're things. or the accessories related products mean which we're But systems the more has also cases that and to do service frames to we in currently, fulfill are it more needs So need we're with integration, selling it of relationships some but developing metal order margin thesis may and

So, we approach gross to gross we're elsewhere. that of and more have our more thinking and margins Paul? allowing of margins the away business

our you've certainly think but three it is it, versus but dilutive ago to a year I Yes, or ago. margins, still slightly logistics landed overall is improving gross years versus

deep, our that margins, as example our diluted, our such by is market. growing, to and learning's of software are margins we're in So, developing somewhat and to middle to that our revenue. although for aspects that other that's accretive business and little overall how people's it's market, logistics the use is the migration of but a productize strategies highly countered out in automation It it. more going well, a similar figuring the solve bigger then effectively share are gross based to the factory great And a accreted problems, we service of That's of growth. a highly

to learning anomalous a obviously, just question still though the area it to need of acquisitions in further The both? you've and ultimately really action so in knowing that is, precipitously. the of is interest deep to question taken does I in cost identify situation? sort change that your So course think do that’s and integration quickly quick act work on front, Or

a come let for minute. back Well, me

technology and allowing And made new deep better machine machine way. think kind of we of I a has problems So, revolution and in approach we three in a to ViDi vision the on see us vision and acquisition a going is learning it's ships. on well and already launched a within existing half fits our years good lot that of just DXXX performance, low In-Sight that's powered demonstrated that at with kind in of running And very remarkably we the right. And ago.

Now, we've neural then industrial has doing classifying precision capabilities very images. other acquired complex vision machine to ideal Sualab with the convolutional and they're around application for Sualab. things the images of like great inspecting and networks powerful

have they down sort is assimilating So, further road over and, the like of it the be it's we'll almost time. technology of some

require very moment. in And engineering the at And sophisticated do haven't onsite able we applications to the it work for some teams nearer of the really did term been Asia. thing with that's

And just with delayed. help technology, of in we're working with still site those It's closely us then kinds will -- because in and operators deep we just that environments, do to brings a do only So to other that. and want going which engineers learning. great access things to Sualab great

a of the will area sort remain M&A key of So focus?

Yes.

I think so. Yes.

I think your that's the part question. of second

area acquire engineers for I of always the So, deep capability looking in on deep learning, think bring for the of generally, business. growth we're in but to interesting organization. of And always a out another lookout we've got who assets lot there a or learning our now lot to great we're horsepower

ongoing that's an kind at So, Cognex. cadence of

from Our Richard Robert question is proceed. Baird. next with Eastman Please W.

just out you. time. capture for Are sequentially pulled thoughts the upside Thank that the the factors? back some that to and the it in be -- first, right, seat previous you did China of those quarter in business that your Rob, look backlog. upside primary would than revenue clear, of I less the Thank quarter faster, second second logistics the came to came you then you two was

Paul let I'll Yes, comment.

I win we China we to expected the probably then logistics in to quarter like certainly suddenly, in color than had were able other business would and And recovery business a driver. big was yes, give? stronger our any more anticipated. shift than we'd think the you'd Paul then

for more Yes, our expectations not to the about levels, China revenue revenue on QX level commentary QX. so of was QX levels much, kind revenue

we we of and to looking why think guidance managing were negatively other forecast QX logistics risks challenges it we shortages revenue and by fear be our had I materialize convert we potential strength down our more to we cost just as in chain at our and and supply in higher QX thought pretty our business, driven separately. to up ability component as would that and versus logistical and slightly, give sort We do good. didn't was beat didn't is

a... put you So

again. Yes. Rob Rick, so it's

I than a stronger quite the lot understand during quarter the was just we order make So, activity sure think had to we anticipated, right.

exited So, large quarter a with we did, backlog. a very we certainly

think we well. So, necessarily. I may We didn't to off backlogs you orders have strong want we -- that, be QX as wouldn't

was to massive of dollars, other but plus other China by but APAC? I Yes. was XX% China, that Asia what million that What Asia XX%, again number? year-over-year down end And was Asia $X driven market particularly was that understand. was increase amounts kind that in Other CE?

It's semi and CE from offline really.

Okay.

from there And very some in element obviously, there's too, inorganic Syalab modest. but of

I see.

we backlog. and the had, sure had So be we nice quarter to build second a we if quarter in

that it QX I was is higher QX? Some be sequentially to expect that expectation? timing on in would in logistics business, that mean than Is you backlog? doable

got good than we expect We to QX QX QX. be expect So, a some for business. quarter higher momentum record in logistics we had in revenue we

So, at we getting then course concentrated good and not point. definitely particular this moments have in

question have customer a current a in electronics, last promise, consumer XX% to Understood, XXXX, year? in what this and trends? you just backlog to my here given just but facts, expect a expect CE the you help in Obviously, would you -- curious, have customers some would see XX%

this to answer Well, question a I really that's at point. like ready I'm not feel

given one pass to sensitivities market. in on going just I'm So, that that

one from term longer Markus please. Hi, second with more good long-term Markus questions maybe question. a proceed. from I'll on afternoon, everyone. start next side Please Our - One the question half, Mittermaier is Q with and UBS. Mittermaier Two

force. second, but your sales probably That's think particularly to growth have of I then that which where the customer and don't from the long some want trying where any busy case, that QX mean, just of sides be et the what's particularly to throughout Cognex isn't Is sort Thank COVID, the did about e-commerce, I have a trying understand large QX, thinking color labeled issues you significant some strategically, the on think if might customers here the probably around centers how distribution Given of issues culture. How are? supporting you you consumer QX? think also specially we the some just seasonality in to maybe to but about you. in conversation, some reduction X% around visibility into you And maybe can cetera, headcount and some all sort term there about long-term. upside have the on fixed how about the Just maybe maybe through that takes cycle? of in the access do half competitors, puts the sales I’m force you in given electronics, cycle? and to QX?

with of headcount back company, you where even our XXXX. at productivity reduction, the So mean, about look think well headcount as its X% to your I I first was if reduction kind it question you go and it's in a

XXXX having So, as we growth. as for see capacity it

to in than lot We a came don't grow were going we on we think being really more with but this lower. capacity year I that we we had capacity needed, thinking I into feel that. really, revenue constrained

have about talked right. bigger is in do of kind vision. One machine combat productivity you're We with that You sales, sales compete we that but ways. forces, we're customers pure-play two

good network those They're at machine very reach. have of vision. And that do we much a their know areas not or on I cover is partners we PLCs experts systems salesnoid Cognex focus who and don't selling then in robots. distributor So integrators

concerned lack And line. I bottom coverage all and leverage I the the point. current us deliver about there's or to do into in lot headcount think to at grow focus a of not of years, at I'm next and So, say a would choose -- we our where to there couple for this that's opportunity of

second for for was Your question other kind areas. opportunities around of growth

interest I we some think of it's for use activity and that, seen saying machine worth have COVID-related in the Cognex nice vision applications.

a up, that area. I do applications production, interesting our testing that and certainly there are vaccine seen for demand we've medical, in companies that seen move products opportunity some our potential deep And for upside as and So, see for as the pharmaceutical we well next. is we've good technology I think definitely as out that that scale application through is and think year us area work. this we learning sciences an to into of us broadly are, Life more

be some that would those to of areas mind. come So, the

I seasonality you QX. you. And cetera et trying be think near-term could could in maybe, QX Do Thank Great. in into follow-up. not seeing the Just to stages? understand you around in CE or that early think material through,

not quarter, best too that could the see on have or in early? the be to anything QX customer going probably be that is that you at we that early factor moment conversations QX in is materials radar mentioned the a might You

Yes.

to material the the some I answer definition, to is two really see think day. material But is of things to from QX. we're other I right. question true other And massively something compensations that no, in probably in don't there these think answer, its going

of stronger be see the more there's the of might move business I might or later in think around year, investment than more which there's might be happen We the things earlier whether more that backend needle more can I in in for that more in think vehicles the us in electric kind that's demand year, our general and earlier in logistics. business. or coming electronics those if

it give but don't an expect best opening as the want I we to quarter that of how overly to and us So, remarks, we our looks right in you whatever certainly do optimistic now. that's to picture said generally be so in QX QX

Nathan Capital Please Jairam from is question Markets. next Daiwa proceed. Our with

for my Thanks taking question. Hi.

within compared we Just XXXX? XXXX it got the, to should electronics electronics, a question different in about on a consumer how the diverse? earlier way consumer to more ask to Has of the diversity little on think it kind in

Yes.

we're few certainly into packaging, worked years other certainly final that's and things, and it we've assembly more highly component test is type and housing last like portable few over a accessories less and rather hard which areas, more is in see ago. others. years whether try and to which take our as technology more then, concentrated to than just So the we screenings type apply And discussed, seeing and and laptops in we broadly, products

see its applications in should much you of being that market. terms more So, businesses diversified in our

brand that owners pretty the users, are know obviously we the end concentrated. As

or it Europe still logistics, expanding is Okay. the regard based for any to a what's U.S. business largely And with and into Asia? scope

U.S. European good majority is revenue still term, to is now certainly those our highly probably of investing States. been United come and we've we're the growth but and in but definitely the So, and good areas right in expect the Asia today long of the parts still percentage majority of concentrated we the market percentage, very from seeing in in

how And think logistics annual we number it don't I should the like, was based the think addressable that I you this remember from you what's markets, on of of but exercise happened? is do what that on you about multiple a but know market sizes it do

that quite lot of I don't aren't bricks I a might lot and ready it basically dollar mortar billion really mean, was similar that a now. to answer We I that package actually like of postal, said we're doing feel growth be with market. areas And now, would market is think general that. have I e-commerce, well but retail. thought actually in a that things delivery, right seeing

businesses, those and gaining share. may know, a So us The we're they're you slightly growing for shrinking probably only in market be currently.

dollars we think a overall So last, I you about it logistics, we market being can sized as told a when great grow. we billion in think

completion. teens and the simple view we mid I in said just I it think different a with analogy very

given exiting seen And environment, have it or any have bankrupt easier on finally and going business? the going you in you of difficulties, terms question the the how competitions seen getting competitive down

with sorry. who? difficult I'm Are seeing question. didn't we Yes, understand getting quite I it more your

the exited have competitors business given the your conditions? of tough any No,

I say in competitors. wouldn't we've major a seen see I No, change the competitive.

Our Karen from with next proceed. Haskett. question Gordon is Lau Please

think I million like it saving Paul, the One OpEx think run second quarter sounded from is for a the in restricting, rate. realizing I question you didn’t savings the number

truffle of the or kind in, masking took quarter, in temporary OpEx is back, third some associated but is with savings the is so kicking like kind in the there savings, quarter costs up they that temporary sequential savings highest stick? that of offset structural delivery this cost a So sends coming it's cost quarter the the you that of temporary place would third flat imply is that so savings but second idea that starting sequentially kind took

reset mostly to the structure we puts take be a adding mean, with it's step plans XX XXXX cost our Yes, into associated back said, and if incentive realizing to million we'd it certainly million about more. Sualab. to going integration but year, now did we've in we we of takes. QX the of and reduction QX, then, portion which And be hiring we'll annualized $XX some cost and a of committed I realize a

and get that's of offset on and savings for the a But benefits activities open, incentive takes the repeat also realization, the sales savings significantly associated That QX so will partially paying be payroll facilities QX and the travel more sales of with in in still so our that. by visits. We will our on, or offset So, little one-time some will in year. going to some depreciation in down in one be restructuring QX did going travel the with more compensation.

maybe Okay. Thank mostly you, something small a on a and of do so smaller. people of Difficulty] it's we Can on market Rob, software to has fact if I have, think -- going ask everywhere. for And in semi building with learning that I terms I to guess in you. quick your And context and relatively like can But [Technical is the chips then the understand I guess I content in overtime whether applications. it more that market.

positions to very and but [Technical overall long-term. Difficulty] more that over lines, of has growth chips investments But Yes. around of probably We're is can I the a see was fewer and great more right? as bring some having both. in of business. you We it kind it that where positive generally been a good When think our strong where kind cyclical. X% have areas is some technology, on we lower It year. view

Okay. Understood.

obviously QX question, so original with some also that think about revenue on. revenue will right, Your commissions level versus higher mix the OpEx, and in higher bring or QX

will the closing to We end I for our Dr. Shillman turn the remarks. now of call have over call. reached back

to us balance next Well, tonight will most. Thank current but you. on unique focus and will with for we evening. I forward Good and all quarters on positive long-term expect news. speaking Thank our you very contain some you better which look joining strong call, our we're challenging all than culture very disruptions our to Cognex times, in weather the our enable sheets,

concludes This conference. today's

You may and for thank just your connect your at this you time participation.