About Cognex

Cognex Corporation (Cognex) operates as a machine vision company in the world. The company invents and commercializes technologies that address some of the most critical manufacturing and distribution challenges. The company is a leading global provider of machine vision products and solutions that improve efficiency and quality in a wide range of businesses across attractive industrial end markets. The company’s solutions blend physical products and software to capture and analyze visual information, allowing for the automation of manufacturing and distribution tasks for customers worldwide. Machine vision products are used to automate the manufacturing or distribution and tracking of discrete items, such as mobile phones, electric vehicle batteries, and e-commerce packages, by locating, identifying, inspecting, and measuring them. 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 sells to customers in nearly all industries in which discrete items are manufactured on an assembly line or moved through a distribution center. The company’s largest industries by revenue are the automotive, logistics, and consumer electronics industries, which combined represented approximately 65% of the company’s total revenue in 2023. Business Strategies The company’s strategies are to expand its position as a leading worldwide machine vision provider by growing in the company’s core markets, as well as expanding into new markets and with new customers; invest heavily in research and development to maintain the company’s position as a technology leader in machine vision; drive inorganic growth through expansion in adjacent markets; and prioritize choosing growth opportunities. End Markets Automotive The company expects the proliferation of electronics in automobiles to be a significant growth driver in both electric vehicles and internal combustion engine vehicles. The company also anticipates a multi-year wave of investment in Electric Vehicle (‘EV’) manufacturing equipment, particularly related to battery manufacturing and inspection. Cognex works closely with the major EV battery manufacturers who produce the majority of the world’s automotive batteries. These manufacturers are positioned to grow within Asia, and to expand both independently and through partnerships in the Americas and Europe. Consumer Electronics The company anticipates major investments in new generations of consumer electronics. The company also expects leading companies in this space to continue to grow based on new technologies that the company expects to succeed and build on the smartphone. Cognex has close relationships with the largest and most sophisticated companies in the consumer electronics market. Logistics The company’s e-commerce logistics business is differentiated by the high performance of its bar-code reading and that potential growth will be driven by retailers investing in online fulfillment. Beyond barcode reading, the company expects vision applications in logistics to grow quickly and become a more substantial business for the company. Vision applications include tasks, such as inspecting packages for damage, object and symbol recognition, and dimensioning. Geographically, the company’s logistics business is primarily within the United States, but, over the long term, the company expects to realize the highest rates of growth in Europe and Asia, where customers are beginning to catch up with the United States in logistics automation technology and are moving away from local incumbent suppliers. Leading e-commerce players have taken a post-pandemic ‘time out’ to absorb excess capacity since early 2022, but the company continues to expect logistics to be its highest-growth end market over the mid to long-term. Medical-Related Cognex has an established customer base of life science equipment suppliers. The company’s products are specified in over 100 different machine designs, many of which are in the process of obtaining regulatory approval. Applications in this market include lab automation and medical device inspection applications. During the COVID pandemic, the company saw demand for machine vision grow from manufacturers of diagnostic tests, vaccines, and protective equipment. Other Other end market uses of Cognex machine vision include semiconductor manufacturers identifying defects, regulated manufacturers reducing counterfeiting, food producers improving food safety, and manufacturers using 3D measurement for robotic guidance. Products and Technology Cognex offers a full range of machine vision systems and sensors, vision software, and industrial image-based barcode readers designed to meet customer needs at different performance and price points. The company’s products range from deep learning solutions that solve complex applications with unpredictable defects and deviations, to lower-cost vision sensors that conduct simple presence/absence inspections. The company’s products have a variety of physical forms, depending on the user's needs. For example, customers can purchase vision software to use with their own camera and processor, or they can purchase a standalone unit that combines camera, processor, and software into a single package. Vision Systems and Sensors Vision systems combine smart cameras and software to perform a wide range of tasks including part location, identification, measurement, assembly verification, and robotic guidance. Vision sensors can deliver an easy-to-use, low-cost, reliable solution for simple pass/fail inspections, such as checking the presence and size of parts. In-Sight vision systems and sensors include the company’s 2D and 3D vision systems, as well as the company’s In-Sight SnAPP sensor. These products leverage various forms of artificial intelligence, including rule-based coding, as well as deep learning and edge learning technology leveraging pre-trained models powered by neural networks. The company’s product portfolio meets the varying price and performance requirements of its broad base of industrial customers. The company’s deep learning-based systems automate and solve complex inline inspections that typically require human judgment for defect detection, optical character recognition (OCR), assembly verification, or classification. Similar to the company’s deep learning-based systems, the company’s edge learning-based systems use pre-trained models, but on simpler applications that prioritize ease of use and have a broader appeal with easier and faster implementation and training. Vision Software Vision software offers customers the flexibility of the Cognex vision tools library to use with the cameras, frame grabbers, and peripheral equipment of their choice. Cognex VisionPro software offers an extensive suite of patented vision tools, including both traditional rule-based tools and deep learning-enabled tools, for advanced programming. Its QuickBuild prototyping environment allows customers to build complete vision applications with the simplicity of a graphical flowchart-based programming interface. Industrial Image-Based Barcode Readers Cognex industrial image-based barcode readers read 1D, 2D, label-based, and direct part mark (DPM) codes found in nearly every industry, including automotive, logistics, consumer products, and medical-related. The DataMan product line, which includes fixed-mount and handheld models, as well as barcode verifiers, help organizations optimize performance, increase throughput, and control traceability. Vision Accessories Cognex vision accessories are designed for easy integration with Cognex products and applications. Cameras are available in both area scan and line scan formats to address a wide variety of applications. Lenses and lighting are also available in both embedded and component formats to provide high-quality image acquisition, including a portfolio of premium optical components that were added to the company's vision accessory portfolio with the acquisition of Moritex Corporation in the fourth quarter of 2023. From value solutions to high-performance hardware, Cognex offers industrial cameras, lenses, lighting, vision controllers, frame grabbers, and I/O cards to meet any requirement. Research, Development, and Engineering The company incurred research, development, and engineering costs of approximately $139 million for the year ended December 31, 2023. Operations Most of Cognex’s hardware products are manufactured utilizing third-party contractors, whereby the majority of component procurement, system assembly, and initial testing are performed by electronics manufacturing services suppliers. With the acquisition of Moritex Corporation in the fourth quarter of 2023, Cognex began in-house manufacturing of optical components, such as lenses and lighting. Cognex’s primary contract manufacturer is located in Indonesia. The company’s contract manufacturers use specified components sourced from vendor lists approved by Cognex and assembly/test processes created and controlled by Cognex. After the completion of initial testing, assembled products from the company’s contract manufacturers are routed to its distribution centers where trained Cognex personnel load Cognex software onto the products, provide additional assembly and image alignment as needed, and perform quality control procedures. Cognex ships finished products for customers located in the Americas from the company’s Southborough, Massachusetts distribution center, for customers located in Europe from the company’s Cork, Ireland distribution center, and for customers located in Asia from the company’s Singapore distribution center that became operational during the fourth quarter of 2023. Sales Channels and Support Services Cognex sells its products through a worldwide direct sales force that primarily focuses on the development of strategic accounts which generate or are expected to generate significant sales volume, as well as through a global network of distribution and integration partners. The company’s distribution partners provide sales and local support to help Cognex reach the many prospects for the company’s products in factories around the world, and the company’s integration partners are experts in vision and complementary technologies that can provide turnkey solutions for complex automation projects using vision. Through each of these channels, sales engineers call directly on targeted accounts, with the assistance of application engineers, and manage the activities of the company’s distribution and integration partners within their territories in order to provide an advantageous sales model for the company’s products. In 2023, the company began ramping up an Emerging Customer sales force that primarily focuses on selling into accounts which are new to machine vision or Cognex. Sales to customers based outside of the United States represented approximately 66% of the company’s total revenue in 2023, with approximately 26% from customers based in Europe, approximately 20% from customers based in Greater China, and approximately 20% from customers based in other regions outside the United States. Cognex’s service offerings represent less than 10% of the company’s total revenue and include maintenance and support, consulting, and training services. Maintenance and support programs include hardware support programs that entitle customers to have products repaired, as well as software support programs that provide customers with application support and software updates to the latest software releases. Application support is provided by technical support personnel located at Cognex regional offices, as well as by field service engineers that provide support at the customer’s production site. The company provides consulting services that range from a specific area of functionality to a completely integrated installed application. Training services include a variety of product courses that are available at the company’s offices worldwide, at customer facilities, and online. History Cognex Corporation was founded in 1981. The company was incorporated in Massachusetts in 1981.