Cognex Corporation

Greetings and welcome to the Cognex fourth quarter 2022 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Nathan McCurran, head of investor relations. Thank you. Please go ahead.

Thank you, Donna. Good evening, everyone. Thank you for joining us. With me on today's call are Rob Willett, Cognex's President and CEO, and Paul Todgham, our CFO. Our results were released earlier today. The press release and annual report on Form 10-K 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 earnings 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 risks and uncertainties that are described in our SEC filings, including our most recent Form 10-K filed tonight for 2022. With that, I'll turn the call over to Rob.

Thanks, Nathan. Hello, everyone, and thank you for joining us. We continue to navigate a challenging environment Our fourth quarter results were largely in line with our guidance, but are not representative of our long-term growth expectations. The focus of my remarks today will be on the near-term challenges we're facing, and then on the reasons why we remain excited and confident in our long-term growth opportunities. Our largest challenge was in our logistics business. we continued to see a post-pandemic slowdown with a few of our largest e-commerce customers who have temporarily reduced their investments to absorb excess capacity. Looking beyond this temporary pause, we continue to expect logistics to be our highest growth end market over the mid to long term. We also saw lower new business activity in the quarter. Bookings were below our expectations, and generated less revenue in quarter than is typical. Despite these challenges, revenue increased on a constant currency basis by 1% for the full year compared to 2021, a year where we reported strong growth of 28%. Outside of logistics, Revenue from the remainder of our end markets grew in 2022 roughly in line on a constant currency basis with what we would expect over the long term. As our history demonstrates, we can experience periods of softness in between periods of robust growth. Our revenue growth target of 15% is a multi-year annual target. With that lens, revenue of over $1 billion in 2022 represented double-digit annual growth compared to 2020 and 2019. Gross margin of 71% in Q4 and 72% for the full year was in line with our latest expectations. Margins in both periods were below our long-term target mid-70% level due to the elevated purchase of scarce components through brokers. Before I go into detail on our end markets and an outlook for Q1, I'd like to turn it over to Paul to walk you through more of the results.