Cognex Q1 2020 Earnings Report
Key Takeaways
Cognex reported Q1 2020 financial results with revenue of $167.235 million and net income of $20.477 million, which were in line with guidance. The COVID-19 outbreak had a modest adverse impact. The company expects a decline in both revenue and earnings per share for Q2 2020.
Revenue decreased by 4% year-over-year to $167.235 million due to weakness in the automotive sector and other industrial end markets.
Net income decreased by 38% year-over-year to $20.477 million.
Gross margin improved to 75% due to a favorable mix towards higher-margin products.
The COVID-19 outbreak had a modest adverse impact on business in Q1 2020.
Cognex
Cognex
Forward Guidance
Cognex expects a decline in both revenue and earnings per share, excluding discrete tax items, for Q2 2020 on both a year-on-year and sequential basis. Gross margin for Q2 2020 is expected to be in the mid-70% range and lower than the gross margin reported for Q1-20. Operating expenses are expected to decline by greater than 10% from Q1-20 as a result of lower discretionary spending. The effective tax rate is expected to be 17%, excluding discrete tax items.
Positive Outlook
- Operating expenses are expected to decline by greater than 10% from Q1-20 as a result of lower discretionary spending.
Challenges Ahead
- Cognex expects to report a decline in both revenue and earnings per share, excluding discrete tax items, for Q2-20 on both a year-on-year and sequential basis.
- Gross margin for Q2-20 is expected to be in the mid-70% range and lower than the gross margin reported for Q1-20.
- The impact of the COVID-19 outbreak has expanded and accelerated into Q2-20.
- Cognex has noted lower demand for its products in certain industries.
- Additional disruptions to the supply chain, longer customer delivery times, higher delivery costs, and further shutdowns of customer facilities are expected.