Cognex (NASDAQ: CGNX) reported Q2 2026 revenue of $291 million, up 17% year over year, while GAAP diluted EPS increased 79% to $0.43 from $0.24. Favorable product mix, higher volume and lower operating expenses lifted operating margin to 29.4%, while free cash flow rose 70% to $68 million.
Core financial results
Revenue reached a quarterly record, with constant-currency growth of 16% indicating that foreign exchange contributed roughly one percentage point to reported growth. Profit increased considerably faster than revenue as gross margin improved and operating expenses declined.
| Metric | Q2 2026 | Q2 2025 | Year-over-year change |
|---|---|---|---|
| Revenue | $291 million | $249 million | +17% |
| GAAP gross profit and margin | $206 million; 70.6% | $168 million; 67.4% | Approximately +23%; +320 bps |
| GAAP operating income and margin | $86 million; 29.4% | $43 million; 17.4% | +100%; +1,200 bps |
| GAAP net income | $73 million | $41 million | +78% |
| GAAP diluted EPS | $0.43 | $0.24 | +79% |
| Adjusted EBITDA and margin | $94 million; 32.2% | $52 million; 20.7% | +81%; +1,150 bps |
| Adjusted diluted EPS | $0.45 | $0.25 | +80% |
| Free cash flow | $68 million | $40 million | +70% |
Adjusted EBITDA, adjusted EPS and free cash flow are non-GAAP measures. Cognex’s Q2 adjustments included acquisition and integration costs, acquisition-related intangible asset amortization and reorganization charges.
Demand breadth and the OneVision rollout
Cognex attributed the revenue increase to broad-based strength across most major end markets, rather than identifying a single market as the primary driver. Management also described the demand environment as more favorable, although the release did not quantify revenue by end market, geography or product category.
The company announced general availability of OneVision, its platform for configuring and deploying AI-powered machine-vision applications. Hundreds of customers were using the platform, but Cognex did not disclose its revenue contribution. The rollout supports the company’s strategy of expanding across customers, channels, adjacent applications and end markets.
Favorable mix and cost control magnified operating leverage
GAAP gross margin increased to 70.6% from 67.4%, while adjusted gross margin rose to 71.5% from 68.0%. Cognex said favorable mix and volume drove the improvement and specifically noted that tariff refunds were not a material contributor.
At the same time, GAAP operating expenses declined 3% to $120 million despite the 17% revenue increase. Adjusted operating expenses also fell 3%, or 5% on a constant-currency basis, primarily because of disciplined cost management. This combination of higher revenue, better gross margin and a lower expense base expanded both GAAP and adjusted operating margins by 1,200 basis points. The similar expansion under both measures indicates that the improvement was not primarily the result of non-GAAP adjustments.
Cash flow and balance sheet
Cash from operating activities increased 60% to $69 million. After $1.5 million of capital expenditures, free cash flow reached $68 million, representing 93% of GAAP net income and 89% of adjusted net income for the quarter.
Cognex ended July 5, 2026, with $755 million in cash and investments and no debt. It paid $14 million in dividends during the quarter. The board subsequently declared a quarterly dividend of $0.085 per share, payable on September 3, 2026, to shareholders of record on August 20.
Guidance
Cognex issued Q3 and full-year 2026 guidance calling for continued double-digit revenue growth and substantial profitability expansion. The year-over-year growth rates below are calculated by the company at the midpoint of each guidance range.
| Metric | Latest guidance | 2025 reported result | 2025 result excluding CP | Implied year-over-year change at midpoint |
|---|---|---|---|---|
| Q3 revenue | $300 million–$320 million | $277 million | $264 million | +12%; +17% ex-CP |
| Q3 adjusted EBITDA margin | 32%–35% | 24.9% | 22.1% | +860 bps; +1,140 bps ex-CP |
| Q3 adjusted diluted EPS | $0.50–$0.54 | $0.33 | $0.28 | +58%; +86% ex-CP |
| FY2026 revenue | $1.13 billion–$1.15 billion | $994 million | $982 million | +15%; +16% ex-CP |
| FY2026 adjusted EBITDA margin | 29%–31% | 21.5% | 20.7% | +850 bps; +930 bps ex-CP |
| FY2026 adjusted diluted EPS | $1.64–$1.68 | $1.02 | $0.97 | +63%; +71% ex-CP |
CP refers to a one-time benefit from a commercial partnership with a medical lab automation channel partner. The margin and EPS outlook uses non-GAAP measures, and Cognex did not provide corresponding forecasted GAAP reconciliations because it could not forecast certain adjustments without unreasonable effort.
Management’s view
President and CEO Matt Moschner attributed the quarter to a combination of a more favorable demand environment and focused execution. He emphasized diversification across customers, channels, adjacent applications and end markets as central to creating more sustainable growth.
CFO Dennis Fehr focused on operating leverage and the ongoing transformation of Cognex’s operating model. Management intends to improve productivity and scalability while supporting continued margin expansion as the customer base grows.
Recent insider transactions
The six-month insider summary reported 670,890 shares classified as purchases across 33 transactions and 543,314 shares classified as sales across 10 transactions, producing net purchases of 127,576 shares. Recent disclosed entries included several paired derivative exercises and sales, so the transactions should not be interpreted in isolation as a view on Cognex’s outlook.
Among the latest reported entries with a disclosed transaction type and value were the following:
| Date | Insider | Position | Transaction | Reported price per share | Reported value |
|---|---|---|---|---|---|
| May 27, 2026 | Darren Marc Long | Officer | Sale | $66.32–$66.52 | $1.34 million |
| May 27, 2026 | Darren Marc Long | Officer | Exercise of derivative security | $49.12–$56.44 | $970,718 |
| May 12, 2026 | Laura Ann Macdonald | Officer | Sale | $65.56–$66.80 | $9.28 million |
| May 12, 2026 | Laura Ann Macdonald | Officer | Exercise of derivative security | $33.04–$56.44 | $6.72 million |
| May 11, 2026 | Mark Fennell | Officer | Sale | $66.73–$67.08 | $4.35 million |
| May 11, 2026 | Mark Fennell | Officer | Exercise of derivative security | $33.04–$56.44 | $2.72 million |
| March 2, 2026 | Dianne M. Parrotte | Director | Sale | $54.00 | $2.38 million |
| March 2, 2026 | Dianne M. Parrotte | Director | Exercise of derivative security | $45.06–$51.49 | $2.21 million |
Risks investors should monitor
- Demand and product mix: Q2 margin expansion benefited from favorable mix and volume. A shift toward lower-margin products or weaker demand could make the profitability levels embedded in guidance harder to achieve.
- Large-customer and end-market exposure: Cognex identified reduced purchases by major customers in logistics, consumer electronics or automotive as a risk. These markets can also have cyclical and seasonal purchasing patterns.
- Trade, tariff and currency effects: Reported growth received a modest foreign-exchange benefit in Q2. Currency movements, tariffs and broader trade disputes could affect future revenue, component costs and gross margin.
- Execution on operating-model changes: The outlook assumes continued productivity and cost discipline. Difficulty scaling operations and the sales organization while expanding the customer base could limit operating leverage.
- Adoption of AI-enabled products: OneVision has reached hundreds of customers, but continued progress depends on customer acceptance and Cognex’s ability to deploy and support AI-powered applications at scale.
Summary
Cognex’s second quarter combined record revenue with substantially higher margins and cash generation. Broad end-market demand, favorable mix and lower operating expenses allowed earnings to grow much faster than revenue, while the debt-free balance sheet remained a source of financial flexibility. The main issues to watch are whether demand and mix remain supportive, whether cost discipline persists and whether Cognex can deliver the revenue and margin expansion reflected in its 2026 guidance.
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