10-K – 2026-02-12 – cgnx-20251231.htm

of the security, then a credit loss exists and an allowance against the security for credit losses is recorded. The allowance is limited to the amount by which fair value is below amortized cost, recognizing that the investment could be sold at fair value. Credit losses continue to be remeasured in subsequent reporting periods. Credit losses and recoveries related to debt securities are included in “Other income (expense)” on the Consolidated Statements of Operations. When developing an estimate of expected credit losses, management considers all relevant information including historical experience, current conditions, and reasonable forecasts of expected future cash flows.
Accounts Receivable
The Company extends credit with various payment terms to customers based on an evaluation of their financial condition. Accounts that are outstanding longer than the payment terms are considered to be past due. The Company establishes an allowance against accounts receivable for credit losses when it determines receivables are at risk for collection based on the length of time the receivable has been outstanding, the customer’s current ability to pay its obligations to the Company, and general economic and industry conditions, as well as various other factors. Receivables are written off against this allowance in the period they are determined to be uncollectible and payments subsequently received on previously written-off receivables are recorded as a recovery of the credit loss. Credit losses and recoveries related to accounts receivable are included in "Selling, general, and administrative expenses" on the Consolidated Statements of Operations.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using standard costs, which approximates actual costs under the first-in, first-out (FIFO) method. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Purchase price variances are incurred when actual costs are different than standard costs due to favorable or unfavorable market prices. Management applies judgment to recognize purchase price variances in the same period that the associated standard costs of the finished goods that consume these components are sold.
The Company’s inventory is subject to technological change or obsolescence. The Company reviews inventory quantities on hand and estimates excess and obsolescence exposures based on assumptions about future demand, product transitions, general economic and industry conditions, and other circumstances, and records reserves to reduce the carrying value of inventories to their net realizable value. If actual future demand is less than estimated, additional inventory write-downs would be required.
The Company generally disposes of obsolete inventory upon determination of obsolescence. The Company does not dispose of excess inventory immediately, due to the possibility that some of this inventory could be sold to customers as a result of differences between actual and forecasted demand. When inventory has been written down below cost, such reduced amount is considered the new cost basis for subsequent accounting purposes. As a result, the Company could recognize a higher-than-normal gross margin if the reserved inventory were subsequently sold.
In accordance with the accounting principles applied in business combinations, acquired inventories are recorded at fair value on the acquisition date. This valuation policy typically results in the write-up of inventories above the acquired company’s pre-acquisition carrying value, which results in a lower-than-normal gross margin when these acquired inventories are sold.
Property, Plant, and Equipment
Property, plant, and equipment are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Buildings’ original useful lives are 39 years, building improvements’ useful lives range from five to ten years , and the useful lives of computer hardware and software, manufacturing test equipment, and furniture and fixtures range from two to ten years . Land that is leased or granted, as well as leasehold improvements, are depreciated over the shorter of the estimated useful lives or the remaining terms of the leases. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. Upon retirement or disposition, the cost and related accumulated depreciation of the disposed assets are removed from the accounts, with any resulting gain or loss included in current operations.
In accordance with the accounting principles applied in business combinations, acquired property, plant, and equipment are recorded at fair value on the acquisition date. This valuation policy typically results in the write-up of property, plant, and equipment above the acquired company’s pre-acquisition carrying value, which results in a higher depreciation expense over the estimated lives of the assets.
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Internal-use Software
Internal-use software is software acquired, internally developed, or modified solely to meet the Company's internal needs, and during the software's development no substantive plan exists to sell the software. The accounting treatment for computer software developed for internal use depends on the nature of activities performed at each stage of development. The preliminary project stage includes conceptual formulation of design alternatives, determination of system requirements, vendor demonstrations, and final selection of vendors, and during this stage costs are expensed as incurred. The application development stage includes software configuration, coding, hardware installation, and testing. During this stage, certain costs are capitalized, if material, including external direct costs of materials and services, as well as payroll and payroll-related costs for employees who are directly associated with the project, while certain costs are expensed as incurred, including training and data conversion costs. The post-implementation stage includes support and maintenance, and during this stage costs are expensed as incurred.
Capitalization begins when both the preliminary project stage is completed and management commits to funding the project. Capitalization ceases at the point the project is substantially complete and ready for its intended use, that is, after all substantial testing is completed. Costs of specified upgrades and enhancements to internal-use software are capitalized if it is probable that those expenditures result in additional functionality. Capitalized costs are amortized on a straight-line basis over the estimated useful life.
Leases
At inception of a contract, the Company determines whether that contract is or contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. The Company has control of the asset if it has the right to direct the use of the asset and obtains substantially all of the economic benefits from the use of the asset throughout the period of use.
As a practical expedient, the Company does not recognize a lease asset or lease liability for leases with a lease term of twelve months or less. In the determination of the lease term, the Company considers the existence of extension or termination options and the probability of those options being exercised.
Lease contracts may include fixed lease components and non-lease components, such as common area maintenance and utilities for property leases. As a practical expedient, the Company accounts for the non-lease components together with the lease components as a single lease component for all of its leases.
The Company classifies a lease as a finance lease when it meets any of the following criteria at the lease commencement date: (1) the lease transfers ownership of the underlying asset to the Company by the end of the lease term; (2) the lease grants the Company an option to purchase the underlying asset that the Company is reasonably certain to exercise; (3) the lease term is for the major part of the remaining economic life of the underlying asset (the Company considers a major part to be 75% or more of the remaining economic life of the underlying asset); (4) the present value of the sum of the lease payments and any residual value guaranteed by the Company equals or exceeds substantially all of the fair value of the underlying asset (the Company considers substantially all the fair value to be 90% or more of the fair value of the underlying asset amount); or (5) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. When none of the criteria above are met, the Company classifies the lease as an operating lease.
On the lease commencement date, the Company records a lease asset and lease liability on the balance sheet. The lease asset consists of: (1) the amount of the initial lease liability; (2) any lease payments made to the lessor at or before the lease commencement date, minus any lease incentives received; and (3) any initial direct cost incurred by the Company. Initial direct costs are incremental costs of a lease that would not have been incurred if the lease had not been obtained and are capitalized as part of the lease asset. The lease liability equals the present value of the future cash payments discounted using the Company's incremental borrowing rate. The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments over a similar term which was estimated using the Secured Overnight Financing Rate (SOFR) plus a 2% credit risk spread.
Operating lease expense equals the total cash payments recognized on a straight-line basis over the lease term. The amortization of the lease asset is calculated as the straight-line lease expense less the accretion of the interest on the lease liability each period. The lease liability is reduced by the cash payment less the interest each period.
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Goodwill
Goodwill is stated at cost. The Company evaluates the potential impairment of goodwill annually at the beginning of each fourth quarter and whenever events or circumstances indicate the carrying value of the goodwill may not be recoverable. The Company performs a qualitative assessment of goodwill to determine whether further impairment testing is necessary. Factors that management considers in this assessment include general economic and industry conditions, overall financial performance (both current and projected), changes in strategy, changes in the composition or carrying amount of net assets, and market capitalization. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company proceeds to perform a quantitative impairment test. Under this quantitative analysis, the fair value of the reporting unit is compared with its carrying value, including goodwill. If the carrying value exceeds the fair value of the reporting unit, the Company recognizes an impairment charge. The Company estimates the fair value of its reporting unit using the income approach based on a discounted cash flow model. In addition, the Company uses the market approach, which compares the reporting unit to publicly traded companies and transactions involving similar businesses, to support the conclusions based on the income approach.
Intangible Assets
Intangible assets are stated at cost and amortized over the assets’ estimated useful lives. Intangible assets are either amortized in relation to the relative cash flows anticipated from the intangible asset or using the straight-line method, depending on facts and circumstances. The useful lives of customer relationships range from seven to fifteen years , completed technologies range from five to nine years , non-compete agreements is seven years , and trademarks is three years . In-process technology is an indefinite-lived intangible asset until the technology is completed, at which point it is amortized over its estimated useful life.
The Company evaluates the potential impairment of intangible assets whenever events or circumstances indicate the carrying value of the assets may not be recoverable. For finite-lived intangible assets that are subject to amortization, the Company follows a two-step process for impairment testing. In step one, known as the recoverability test, the carrying value of the asset is compared to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the sum of the undiscounted future cash flows is less than the carrying value, the asset is not recoverable and step two is performed. In step two, the impairment charge is measured as the amount by which the carrying value of the asset exceeds its fair value.
Warranty Obligations
The Company warrants its products to be free from defects in material and workmanship for periods primarily ranging from one to three years from the time of sale based on the product being purchased and the terms of the customer arrangement. Warranty obligations are evaluated and recorded at the time of sale since it is probable that customers will make claims under warranties related to products that have been sold and the amount of these claims can be reasonably estimated based on historical costs to fulfill claims. Obligations may also be recorded subsequent to the time of sale whenever specific events or circumstances impacting product quality become known that would not have been taken into account using historical data.
Contingencies
Loss contingencies are accrued if the loss is probable and the amount of the loss can be reasonably estimated. Legal costs associated with potential loss contingencies are expensed as incurred.
Derivative Instruments
Derivative instruments are recorded on the Consolidated Balance Sheets at fair value. Changes in the fair value of the Company’s economic hedges utilizing foreign currency forward contracts are included in "Foreign currency gain (loss)" on the Consolidated Statements of Operations. When the Company is engaged in more than one outstanding derivative contract with the same counterparty and also has a legally enforceable master netting agreement with that counterparty, the “net” mark-to-market exposure represents the netting of the positive and negative exposures with that counterparty. The cash flows from derivative instruments are presented in the same category on the Consolidated Statements of Cash Flows as the category for the cash flows from the hedged item. Generally, this accounting policy election results in cash flows related to derivative instruments being classified as an operating activity on the Consolidated Statements of Cash Flows.
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Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) 606, “Revenue from Contracts with Customers.” The core principle of ASC 606 is to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The framework in support of this core principle includes: (1) identifying the contract with the customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations; and (5) recognizing revenue when (or as) the performance obligations are satisfied.
Identifying the Contract with the Customer
The Company identifies contracts with customers as agreements that create enforceable rights and obligations, which typically take the form of customer contracts or purchase orders. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.
Identifying the Performance Obligations in the Contract
The Company identifies performance obligations as promises in contracts to transfer distinct goods or services. Standard products and services that the Company regularly sells separately, which customers can benefit from either on their own or with other readily available resources and are distinct within the context of the customer contract, are accounted for as distinct performance obligations. Application-specific customer solutions that are comprised of a combination of products and services are accounted for as one performance obligation to deliver a total solution to the customer. On-site support services that are provided to the customer after the solution is deployed are accounted for as a separate performance obligation.
Shipping and handling activities for which the Company is responsible under the terms and conditions of the sale are not accounted for as performance obligations but as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the goods and are expensed when revenue is recognized.
The Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract. If revenue is recognized before immaterial promises have been completed, then the costs related to such immaterial promises are accrued at the time of sale.
Determining the Transaction Price
The Company determines the transaction price as the amount of consideration it expects to receive in exchange for transferring promised goods or services to the customer. Amounts collected from customers for sales taxes are excluded from the transaction price.
If a contract includes a variable amount, such as consideration that may vary because of rebates, price concessions, or other similar items, then the Company estimates the transaction price using either the expected value or the most likely amount of consideration to be received, depending on the specific facts and circumstances. The Company includes estimated variable consideration in the transaction price only to the extent it is probable that a significant reversal of revenue will not occur when the uncertainty is resolved. The Company updates its estimate of variable consideration at the end of each reporting period to reflect changes in facts and circumstances.
The Company records revenue net of estimated returns. As a practical expedient, the Company estimates the transaction price using the expected value based on its history of return experience using a portfolio approach in which the Company’s total revenue is reduced by an estimate of total customer returns. Management reasonably expects that the effect of applying a portfolio approach to a group of contracts would not differ materially from considering each contract separately.
Allocating the Transaction Price to the Performance Obligations
The Company allocates the transaction price to each performance obligation at contract inception based on a relative stand-alone selling price basis, or the price at which the Company would sell the good or service separately to similar customers in similar circumstances.
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Recognizing Revenue When (or As) the Performance Obligations are Satisfied
The Company recognizes revenue when it transfers the promised goods or services to the customer. Revenue for standard products is recognized at the point in time when the customer obtains control of the goods, which is typically upon shipment or delivery when the customer has legal title, physical possession of hardware or access to software, the risks and rewards of ownership, and an enforceable obligation to pay for the products. Revenue for services, which are not material, is typically recognized over the time the service is provided.
Revenue for application-specific customer solutions is recognized at the point in time when the solution is validated, which is the point in time when the Company can reasonably determine that the agreed-upon specifications in the contract have been met and the customer should reasonably accept the performance obligations in the arrangement. Although the customer may have taken legal title and physical possession of the goods when they arrived at the customer’s designated site, the significant risks and rewards of ownership transfer to the customer only upon validation. Revenue for on-site support services related to these solutions is recognized over the time the service is provided.
In certain instances, an arrangement may include customer-specified acceptance provisions or performance guarantees that allow the customer to accept or reject delivered products that do not meet the customer’s requirements. If the Company can reasonably determine that control of a good or service has been transferred to the customer in accordance with the agreed-upon requirements in the contract, then customer acceptance is a formality. If acceptance provisions are presumed to be substantive, then revenue is deferred until customer acceptance.
For the Company’s standard products and services, revenue recognition and billing typically occur at the same time. For application-specific customer solutions, however, the agreement with the customer may provide for billing terms which differ from the timing of revenue recognition, resulting in either deferred revenue or unbilled revenue. The Company also has a strategic channel partnership that provides the partner with access to Company software at a point in time, while payment terms extend beyond the period in which revenue is recognized. Under this arrangement, revenue is recognized when control of the license is transferred to the partner, and amounts recognized in advance of billing are recorded as unbilled revenue.
Credit assessments are performed to determine payment terms, which vary by region, industry, and customer. Prepayment terms result in contract liabilities for customer deposits. When credit is granted to customers, payment is typically due 30 to 90 days from billing. The Company's contracts typically have an original expected duration of less than one year, and therefore as a practical expedient, the Company has elected to ignore the impact of the time value of money on such contracts and to expense sales commissions. The Company recognizes an asset for costs to fulfill a contract if the costs relate directly to the contract and to future performance, and the costs are expected to be recovered.
Management exercises judgment when determining the amount of revenue to be recognized each period. Such judgments include, but are not limited to, assessing the customer’s ability and intention to pay substantially all of the contract consideration when due, determining when two or more contracts should be combined and accounted for as a single contract, determining whether a contract modification has occurred, assessing whether promises are immaterial in the context of the contract, determining whether material promises in a contract represent distinct performance obligations, estimating the transaction price for a contract that contains variable consideration, determining the stand-alone selling price of each performance obligation, determining whether control is transferred over time or at a point in time for performance obligations, determining the timing of validation and that the agreed-upon specifications in the contract have been met, and assessing whether formal customer acceptance provisions are substantive.
Research and Development
Research and development costs primarily include costs related to personnel, prototyping materials and equipment, and outside services. Research and development costs are expensed when incurred until technological feasibility has been established for the product. Thereafter, all software costs may be capitalized until the product is available for general release to customers. The Company determines technological feasibility at the time the product reaches beta in its stage of development. Historically, the time incurred between beta and general release to customers has been short, and therefore, the costs have been insignificant.
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Advertising Costs
Advertising costs are expensed as incurred and totaled $ 1,432,000 in 2025, $ 1,286,000 in 2024, and $ 1,190,000 in 2023.
Stock-Based Compensation
The Company’s stock-based awards that result in compensation expense consist of stock options and restricted stock units ("RSUs"), including performance restricted stock units ("PRSUs"). The Company has reserved a specific number of shares of its authorized but unissued shares for issuance upon the exercise of stock options or the settlement of RSUs. When a stock option is exercised or an RSU is settled, the Company issues new shares from this pool. Management is responsible for determining the appropriate valuation model and estimating the fair value of stock-based awards, and in doing so, considers a number of factors, including information provided by an outside valuation advisor and the observable market price of the Company's common stock on the grant date. The fair value of RSUs is determined based on the observable market price of the Company's common stock on the grant date less the present value of expected future dividends. The fair value of PRSUs where the performance goal includes service and market conditions is calculated using a Monte Carlo simulation model to estimate the probability of satisfying the service and market conditions stipulated in the award grant. The fair value of PRSUs subject to service and non-market performance conditions is determined based on the observable market price of the Company’s common stock on the grant date, less the present value of expected future dividends. When determining the grant-date fair value of stock-based awards, management further considers whether an adjustment is required to the observable market price or volatility of the Company's common stock that is used in the valuation as a result of material non-public information if that information is expected to result in a material increase in share price.
The Company recognizes compensation expense related to stock-based awards using the graded attribution method, in which expense is recognized on a straight-line basis over the service period for each separately vesting portion of the stock option or RSU as if the award was, in substance, multiple awards. The amount of compensation expense recognized at the end of the vesting period is based on the number of awards for which the requisite service has been completed. Compensation expense for PRSUs subject to service and non-market performance conditions is recognized based on management’s assessment of the probable level of achievement, with cumulative catch-up adjustments recorded in the period in which that assessment changes.
No compensation expense is recognized for awards that are forfeited for which the employee does not render the requisite service. The term “forfeitures” is distinct from “expirations” and represents only the unvested portion of the surrendered award. The Company applies estimated forfeiture rates to its unvested awards to arrive at the amount of compensation expense that is expected to be recognized over the requisite service period. At the end of each separately vesting portion of an award, the expense that was recognized by applying the estimated forfeiture rate is compared to the expense that should be recognized based on the employee’s service, and an increase or decrease to compensation expense is recorded to true up the final expense.
Taxes
The Company recognizes a tax position in its financial statements when that tax position, based solely upon its technical merits, is more likely than not to be sustained upon examination by the relevant taxing authority. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statutes of limitations. Derecognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.
The portion of the liability that is expected to be paid within one year is classified as a current liability. As a result, liabilities expected to be resolved without the payment of cash (e.g., resolution due to the expiration of the statutes of limitations) or are not expected to be paid within one year are classified as a non-current liability. It is the Company’s policy to record estimated interest and penalties as income tax expense and tax credits as a reduction in income tax expense.
Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are provided if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for the impact of Net CFC Tested Income (NCTI), formally known as Global Intangible Low-Taxed Income (GILTI), tax in deferred taxes.
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Sales tax in the United States and similar taxes in other jurisdictions that are collected from customers and remitted to government authorities are presented on a gross basis (i.e., a receivable from the customer with a corresponding payable to the government). Amounts collected from customers and retained by the Company during tax holidays are recognized as non-operating income when earned.
Net Income Per Share
Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period plus potential dilutive common shares. Dilutive common equivalent shares consist of stock options and restricted stock units and are calculated using the treasury stock method. Common equivalent shares do not qualify as participating securities. In periods where the Company records a net loss, potential common stock equivalents are not included in the calculation of diluted net loss per share as their effect would be anti-dilutive.
Comprehensive Income
Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances, excluding transactions resulting from investments by owners and distributions to owners. Our policy for releasing the income tax effects from accumulated other comprehensive (loss) income is to release when the corresponding pretax accumulated other comprehensive (loss) income items are reclassified to earnings. Accumulated other comprehensive loss, net of tax, consists of foreign currency translation adjustment losses of $ 54,332,000 , $ 67,808,000 , and $ 36,550,000 as of December 31, 2025, 2024, and 2023, respectively; net unrealized gains on available-for-sale investments of $ 2,107,000 as of December 31, 2025, and net unrealized losses on available-for-sale investments of $ 3,698,000 , and $ 7,515,000 as of December 31, 2024 and 2023, respectively; and losses on currency swaps, net of gains on long-term intercompany loans of $ 1,271,000 at each year end.
Concentrations of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, investments, and accounts receivable. The Company has certain domestic and foreign cash balances that exceed the insured limits set by the Federal Deposit Insurance Corporation (FDIC) in the United States and equivalent regulatory agencies in foreign countries. The Company primarily invests in investment-grade debt securities and has established guidelines relative to credit ratings, diversification, and maturities of its debt securities that maintain liquidity and safety. The Company has historically not experienced any significant realized losses on its debt securities. The Company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. The Company has historically not experienced any significant losses related to the collection of its accounts receivable.
A significant portion of the Company's products is presently manufactured by a third-party contractor located in Indonesia. This contract manufacturer has agreed to provide the Company with termination notification periods and last-time-buy rights, if and when that may be applicable.
Certain key electronic and mechanical components, such as integrated circuit chips, are fundamental to the design of Cognex products. Due to the impact of global supply chain challenges and other factors, we have experienced, and may continue to experience, disruptions to the supply of components for our products that have resulted, and may continue to result, in higher purchase costs, higher delivery costs, and manufacturing delays.
The Company sources components from preferred vendors that are selected based on price, quality and performance considerations. In the event of a supply disruption from a preferred vendor, these components typically may be purchased from alternative vendors, which may result in higher purchase costs and manufacturing delays based on the time required to identify and obtain sufficient quantities from an alternative source. Certain Cognex products utilize components that are available from only one source. If we are unable to secure adequate supply from these sources, we may have to redesign our products, which may lead to higher costs, delays in manufacturing, and loss of sales.
Business Combinations
The Company determines whether a transaction qualifies as a business combination by applying the definition of a business, which requires the assets acquired and liabilities assumed to be inputs and processes that have the ability to contribute to the creation of outputs. The Company accounts for business combinations under the acquisition method of accounting, which requires the following steps: (1) identifying the acquirer, (2) determining the
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acquisition date, (3) recognizing and measuring the identifiable assets acquired and the liabilities assumed, and (4) recognizing and measuring goodwill. The Company measures the identifiable assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. Management is responsible for determining the appropriate valuation model and estimated fair values, and in doing so, considers a number of factors, including information provided by an outside valuation advisor. Management bases the fair value of assets, including identifiable intangible assets acquired, on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. Goodwill is recognized as of the acquisition date as the excess of the consideration transferred over the net amount of assets acquired and liabilities assumed. Transaction costs are expensed as incurred.

NOTE 2: New Pronouncements
Accounting Standards Update (ASU) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
The amendments in this ASU apply to all entities that are subject to Topic 740, Income Taxes. The amendments require public business entities to disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. They also require all entities to disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions in which income taxes paid, net of refunds received, is equal to or greater than five percent of total income taxes paid. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024 and are applied on a prospective basis. The Company adopted ASU 2023-09 in 2025. Refer to Note 18 for the related disclosures.
Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)
This ASU aims to enhance transparency for users of financial statements by requiring public business entities to disaggregate specific expense categories. ASU 2024-03 mandates disclosures in the notes to financial statements detailing the composition and trends of key expense categories within major income statement captions. These enhanced disclosures are intended to help investors more effectively assess the entity’s performance, understand its cost structure, and make more accurate forecasts of future cash flows. For public business entities, ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The adoption will result in disclosure changes only.
Accounting Standards Update (ASU) 2025-05 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets
This ASU provides a practical expedient to simplify the measurement of credit losses for certain receivables and contract assets. The amendments allow entities to assume that current conditions at the balance sheet date will persist over the life of these assets, eliminating the need to develop forward-looking forecasts required under the current expected credit loss ("CECL") model. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption is permitted. Management does not expect ASU 2025-05 to have a material impact on the Company's financial statements and disclosures.
Accounting Standards Update (ASU) 2025-06 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
The amendments in this ASU update the accounting and disclosure guidance for internal-use software to better reflect modern, iterative development practices. The amendments replace the former “development stage” model with a judgment-based framework and require entities to evaluate whether significant development uncertainty exists before capitalizing costs. The ASU also incorporates website development guidance into Subtopic 350-40 and aligns disclosures for capitalized software with those for property, plant, and equipment. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. Management is currently evaluating the impact that adopting ASU 2025-06 would have on the Company's financial statements and disclosures.
Accounting Standards Update (ASU) 2025-09 - Derivatives and Hedging (Topic 815): Hedge Accounting Improvements
The amendments in this ASU provide targeted updates to align hedge accounting with the economics of an entity's risk‑management activities and resolve issues arising from the global reference rate reform initiative. Specifically,
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the ASU addresses similar risk assessments for cash flow hedges, hedging forecasted interest payments on choose-your-rate debt instruments, cash flow hedges of nonfinancial forecasted transactions, net written options as hedging instruments, and foreign currency denominated debt instruments as hedging instruments and hedged items (dual hedge). For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and for interim periods within those annual reporting periods, with early adoption permitted. The Company currently does not utilize any of the hedging instruments impacted by this ASU.
Accounting Standards Update (ASU) 2025-11 - Interim Reporting (Topic 270): Narrow-Scope Improvements
The amendments in this ASU improve the navigability and clarity of interim reporting requirements without changing the fundamental nature or scope of existing disclosures. The ASU also clarifies when Topic 270 applies, specifies the form and content of interim financial statements and notes, and introduces a comprehensive list of required interim disclosures compiled from across the Codification. The ASU also adds a disclosure principle requiring entities to disclose events occurring after the most recent annual reporting period that have a material impact on the entity. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and for interim periods within annual reporting periods beginning after December 15, 2028, with early adoption permitted. Management is currently evaluating the impact that adopting ASU 2025-11 would have on the Company's disclosures.
Accounting Standards Update (ASU) 2025-12 - Codification Improvements
The amendments in this ASU make incremental improvements to clarify, correct, and enhance the usability of the Accounting Standards Codification. The amendments address technical corrections, unintended application issues, and minor improvements across numerous topics, and are not expected to significantly affect current accounting practice. Key areas of clarification include diluted earnings per share calculations, disclosure requirements for lease receivables, guidance on beneficial interests, methods for accounting for treasury stock retirements, and the treatment of receivables transferred from contracts with customers. For public business entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2026, and for interim periods within those annual reporting periods, with early adoption permitted. Management is currently evaluating the impact that adopting ASU 2025-10 would have on the Company's financial statements and disclosures.

NOTE 3:  Fair Value Measurements
Financial Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 (in thousands):

Quoted Prices in
Active Markets
for Identical
Assets (Level 1) Significant Other
Observable
Inputs (Level 2) Unobservable Inputs (Level 3)
Assets:

Money market instruments $ 63,170   $ —   $ —  
Corporate bonds —   345,351   —  
Treasury notes —   29,843   —  
Asset-backed securities —   4,182   —  

Economic hedge forward contracts —   791   —  
Liabilities:

Economic hedge forward contracts —   367   —  

The Company’s money market instruments are reported at fair value based on the daily market price for identical assets in active markets, and are therefore classified as Level 1.
The Company’s debt securities and forward contracts are reported at fair value based on model-driven valuations in which all significant inputs are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset or liability, and are therefore classified as Level 2. Management is responsible for estimating the fair value of these financial assets and liabilities, and in doing so, considers valuations provided by a large, third-party pricing service. For debt securities, this service maintains regular contact with market makers, brokers, dealers, and analysts to gather information on market movement, direction, trends, and other specific data.
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They use this information to structure yield curves for various types of debt securities and arrive at the daily valuations. The Company's forward contracts are typically traded or executed in over-the-counter markets with a high degree of pricing transparency. The market participants are generally large commercial banks.
Non-financial Assets that are Measured at Fair Value on a Non-recurring Basis
Non-financial assets, such as property, plant and equipment, operating lease assets, goodwill, and intangible assets, are required to be measured at fair value only when an impairment loss is recognized. The Company evaluates these long-lived assets for impairment whenever events or changes in circumstances, referred to as "triggering events," indicate the carrying value may not be recoverable. Additionally, the Company evaluates the potential impairment of goodwill annually at the beginning of each fourth quarter. The Company did not record impairment charges related to non-financial assets in 2025, 2024, or 2023.

NOTE 4:  Cash, Cash Equivalents, and Investments
Cash, cash equivalents, and investments consisted of the following (in thousands):

December 31,
2025 2024
Cash $ 199,755   $ 170,852  

Money market instruments 63,170   15,242  
Cash and cash equivalents 262,925   186,094  
Corporate bonds 66,625   55,742  
Treasury notes 7,412   2,487  
Sovereign bonds —   990  
Asset-backed securities —   737  

Current investments 74,037   59,956  
Corporate bonds 278,726   285,174  
Treasury notes 22,431   43,147  
Asset-backed securities 4,182   12,577  

Non-current investments 305,339   340,898  
$ 642,301   $ 586,948  

Money market instruments consist of treasury bills, corporate commercial paper, and certificates of deposit that are highly liquid and mature in three months or less. Corporate bonds consist of debt securities issued by both domestic and foreign companies; treasury notes consist of debt securities issued by the U.S. government; sovereign bonds consist of direct debt issued by foreign governments; and asset-backed securities consist of debt securities collateralized by pools of receivables or loans with credit enhancement. All of the Company's securities as of December 31, 2025 and 2024 were denominated in U.S. Dollars.
The Company’s cash balance included foreign bank balances totaling $ 130,094,000 and $ 156,027,000 as of December 31, 2025 and 2024, respectively.
Accrued interest receivable is included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheets and amounted to $ 3,852,000 and $ 4,144,000 as of December 31, 2025 and 2024, respectively.
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The following table summarizes the Company’s available-for-sale investments as of December 31, 2025 (in thousands):

Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value
Current:
Corporate bonds $ 66,661   $ 125   $ ( 161 ) $ 66,625  
Treasury notes 7,389   23   —   7,412  

Non-current:
Corporate bonds 275,781   3,024   ( 79 ) 278,726  
Treasury notes 22,287   144   —   22,431  
Asset-backed securities 4,471   —   ( 289 ) 4,182  

$ 376,589   $ 3,316   $ ( 529 ) $ 379,376  

The following table summarizes the Company’s available-for-sale investments as of December 31, 2024 (in thousands):

Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value
Current:
Corporate bonds $ 56,472   $ 3   $ ( 733 ) $ 55,742  
Treasury notes 2,501   —   ( 14 ) 2,487  
Sovereign bonds 1,013   —   ( 23 ) 990  

Asset-backed securities 739   —   ( 2 ) 737  

Non-current:
Corporate bonds 288,332   408   ( 3,566 ) 285,174  
Treasury notes 43,570   2   ( 425 ) 43,147  
Asset-backed securities 13,131   —   ( 554 ) 12,577  

$ 405,758   $ 413   $ ( 5,317 ) $ 400,854  

The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of December 31, 2025 (in thousands):

Unrealized Loss
Position For Less than
12 Months Unrealized Loss
Position For Greater than
12 Months Total
Fair Value Unrealized
Losses Fair Value Unrealized
Losses Fair Value Unrealized
Losses
Corporate bonds $ 30,602   $ ( 73 ) $ 22,412   $ ( 167 ) $ 53,014   $ ( 240 )

Asset-backed securities —   —   4,182   ( 289 ) 4,182   ( 289 )

$ 30,602   $ ( 73 ) $ 26,594   $ ( 456 ) $ 57,196   $ ( 529 )

The following table summarizes the Company’s gross unrealized losses and fair values for available-for-sale investments in an unrealized loss position as of December 31, 2024 (in thousands):

Unrealized Loss
Position For Less than
12 Months Unrealized Loss
Position For Greater than
12 Months Total
Fair Value Unrealized
Losses Fair Value Unrealized
Losses Fair Value Unrealized
Losses
Corporate bonds $ 172,049   $ ( 2,227 ) $ 87,815   $ ( 2,071 ) $ 259,864   $ ( 4,298 )
Treasury notes 42,149   ( 425 ) 2,487   ( 14 ) 44,636   ( 439 )
Asset-backed securities 11,024   ( 547 ) 2,290   ( 10 ) 13,314   ( 557 )

Sovereign bonds —   —   990   ( 23 ) 990   ( 23 )

$ 225,222   $ ( 3,199 ) $ 93,582   $ ( 2,118 ) $ 318,804   $ ( 5,317 )

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Management monitors debt securities that are in an unrealized loss position to determine whether a loss exists related to the credit quality of the issuer. When developing an estimate of expected credit losses, management considers all relevant information including historical experience, current conditions, and reasonable forecasts of expected future cash flows. Based on this evaluation, no allowance for credit losses on debt securities was recorded as of December 31, 2025, 2024, or 2023. Management currently intends to hold these securities to full value recovery at maturity.
The following table summarizes the Company's gross realized gains and losses on the sale of debt securities (in thousands):

Year Ended December 31,
2025 2024 2023
Gross realized gains $ 180   $ 8   $ 111  
Gross realized losses ( 24 ) ( 16 ) ( 2,065 )
Net realized gains (losses) $ 156   $ ( 8 ) $ ( 1,954 )

Realized gains and losses are included in "Investment income" on the Consolidated Statements of Operations. Prior to the sale of these securities, unrealized gains and losses for these debt securities, net of tax, were recorded in shareholders’ equity as accumulated other comprehensive loss.
The following table summarizes the effective maturity dates of the Company’s available-for-sale investments as of December 31, 2025 (in thousands):

<1 year 1-2 Years 2-3 Years 3-4 Years 4-5 Years Total
Corporate bonds $ 66,625   $ 77,129   $ 99,911   $ 68,109   $ 33,577   $ 345,351  
Treasury notes 7,412   15,421   7,010   —   —   29,843  
Asset-backed securities —   —   —   1,624   2,558   4,182  

$ 74,037   $ 92,550   $ 106,921   $ 69,733   $ 36,135   $ 379,376  

NOTE 5:  Inventories
Inventories consisted of the following (in thousands):

   
December 31,
  2025 2024
Raw materials $ 75,417   $ 86,917  
Work-in-process 4,877   5,544  
Finished goods 57,595   65,066  
$ 137,889   $ 157,527  

In the fourth quarter of 2025, the Company recorded a charge of $ 13,067,000 for excess and obsolete inventory following a comprehensive strategic product portfolio review under our new leadership team. As part of this strategic review, the Company is reducing focus on certain legacy products, which increased the risk of excess and obsolete inventory.
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NOTE 6:  Property, Plant, and Equipment
Property, plant, and equipment consisted of the following (in thousands):

December 31,
2025 2024
Land $ 8,018   $ 8,711  
Buildings 36,626   38,878  
Building improvements 42,580   46,496  
Leasehold improvements 22,702   21,642  
Computer hardware and software 60,218   57,791  
Manufacturing test equipment 49,465   45,523  
Furniture and fixtures 6,406   6,468  
226,015   225,509  
Less: accumulated depreciation ( 140,000 ) ( 127,064 )
$ 86,015   $ 98,445  

In December 2025, the Company sold the 19,000 square-foot building adjacent to our corporate headquarters and the underlying land for $ 6,704,000 . This building was previously used as a training center for our sales function. Our new training center will be located inside our corporate headquarters. In connection with the sale, the Company disposed of property, plant, and equipment with a cost basis of $ 6,044,000 and accumulated depreciation of $ 4,393,000 , which resulted in a $ 5,053,000 gain on the sale of assets and is included in "Other income (expense)" on the Consolidated Statements of Operations.
The Company also disposed of additional property, plant, and equipment with a cost basis of $ 5,811,000 and accumulated depreciation of $ 5,647,000 in 2025 , resulting in a loss of 164,000 . The Company disposed of property, plant, and equipment with a cost basis of $ 9,580,000 and accumulated depreciation of $ 9,492,000 in 2024, resulting in a loss of $ 88,000 .

NOTE 7:  Leases
The Company's leases are primarily leased properties across different worldwide locations where the Company conducts its business. All of these leases are classified as operating leases. Certain leases may contain options to extend or terminate the lease at the Company's sole discretion. As of December 31, 2025, there were no options to terminate and nineteen options to extend that were accounted for in the determination of the lease term for the Company's outstanding leases. Certain leases contain leasehold improvement incentives, retirement obligations, escalating clauses, rent holidays, and variable payments tied to a consumer price index. There were no restrictions or covenants for the outstanding leases as of December 31, 2025. The Company did not have any leases that had not yet commenced but that created significant rights and/or obligations as of December 31, 2025.
The components of lease expense were as follows (in thousands):
December 31, 2025 December 31, 2024 December 31, 2023
Operating lease expense $ 14,002   $ 14,131   $ 11,598  
Short-term lease expense (1)
1,008   $ 407   427  
(1) Leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or lease liability

Supplemental balance sheet information related to leases was as follows:

December 31, 2025 December 31, 2024

Weighted average remaining lease term 7.2 years 9.9 years
Weighted average discount rate 5.9   % 5.9   %

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Supplemental cash flow information related to leases was as follows (in thousands):
December 31, 2025 December 31, 2024 December 31, 2023
Cash paid for amounts included in the measurement of operating lease liabilities $ 14,000   $ 13,683   $ 10,148  

Future operating lease cash payments are as follows (in thousands):

Year Ended December 31, Amount
2026 $ 15,863  
2027 14,506  
2028 12,966  
2029 11,158  
2030 10,038  
Thereafter 28,887  
Total undiscounted lease payments $ 93,418  
Less: imputed interest $ 16,832  
Total operating lease liabilities $ 76,586  

The Company leases a building in Singapore that serves as a distribution center for customers in Asia. The lease contains two components: an 88,000 square-foot premises that commenced in June of 2023 and a second 27,000 square-foot premises that commenced in December of 2025. The second component of the lease was recorded on the Consolidated Balance Sheets in 2025 upon commencement. Undiscounted lease payment obligations associated with the second lease component, which has an original term of eight years , is included in the lease liability maturity table above and total $ 8,329,000 , $ 936,000 of which is payable in 2026. Additionally, in December 2025, the Company entered into a sublease agreement for this second lease component for a term of eight years. The sublease also contains two components: a 15,000 square-foot premises that commenced in December of 2025 and a second 12,000 square-foot premises that has a commencement date in December of 2026. The Company recognized income of $ 33,000 related to this sublease agreement in 2025 .
Future operating sublease receipts for both sublease components are as follows (in thousands):
Year Ended December 31, Amount
2026 $ 541  
2027 1,023  
2028 1,046  
2029 1,048  
2030 1,072  
Thereafter 3,204  
Total undiscounted sublease receipts $ 7,934  

In 2025, the Company also entered into a lease for a 6,500 square-foot building in Aachen, Germany for a term of ten years . The lease was recorded on the Consolidated Balance Sheet upon commencement in June of 2025. The Company has the right and option to extend the term of this lease for an additional period of five years , commencing upon the expiration of the original term. Undiscounted lease payment obligations associated with this lease are included in the lease liability maturity table above and total $ 8,969,000 , $ 897,000 of which is payable in 2026.

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NOTE 8:  Goodwill
The changes in the carrying value of goodwill were as follows (in thousands):

Amount
Balance as of December 31, 2023 $ 393,181  
Moritex Corporation measurement period adjustments (refer to Note 21) 6,478  
Foreign exchange rate changes ( 14,722 )
Balance as of December 31, 2024 384,937  

Foreign exchange rate changes 1,342  
Balance as of December 31, 2025 $ 386,279  

For its 2025 annual analysis of goodwill, management elected to perform a qualitative assessment. Based on this assessment, management believes it is more likely than not that the fair value of the reporting unit exceeds its carrying value. The Company did not record impairment charges related to goodwill in 2025 , 2024, or 2023.

NOTE 9:  Intangible Assets
Intangible assets consisted of the following (in thousands):

Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value
Customer relationships $ 68,241   $ ( 14,843 ) $ 53,398  

Completed technologies 58,603   ( 31,110 ) 27,493  
Trademarks 812   ( 610 ) 202  
Non-compete agreements 60   ( 53 ) 7  

Balance as of December 31, 2025 $ 127,716   $ ( 46,616 ) $ 81,100  

  Gross
Carrying
Value Accumulated
Amortization Net
Carrying
Value
Customer relationships $ 67,781   $ ( 10,229 ) $ 57,552  
Completed technologies 58,373   ( 25,766 ) 32,607  

Trademarks 810   ( 337 ) 473  
Non-compete agreements 340   ( 288 ) 52  

Balance as of December 31, 2024 $ 127,304   $ ( 36,620 ) $ 90,684  

The Company did not record impairment charges related to intangible assets in 2025 , 2024, or 2023.
Estimated amortization expense for each of the five succeeding fiscal years and thereafter is as follows (in thousands):

Year Ended December 31, Amount
2026 $ 9,832  
2027 8,906  
2028 8,176  
2029 8,176  
2030 7,633  
Thereafter 38,377  
$ 81,100  

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NOTE 10:  Accrued Expenses
Accrued expenses consisted of the following (in thousands):

December 31,
2025 2024
Incentive compensation $ 35,688   $ 18,735  
Foreign retirement obligations 10,726   10,445  
Salaries and payroll taxes 8,170   5,123  
Warranty obligations 5,474   5,140  
Vacation 5,162   3,945  

Other 26,177   28,372  
$ 91,397   $ 71,760  

The changes in the warranty obligation were as follows (in thousands):

Balance as of December 31, 2022 $ 4,375  
Provisions for warranties issued during the period 2,940  
Fulfillment of warranty obligations ( 3,078 )
Foreign exchange rate changes 7  
Balance as of December 31, 2023 4,244  
Provisions for warranties issued during the period 4,794  
Fulfillment of warranty obligations ( 3,883 )
Foreign exchange rate changes ( 15 )
Balance as of December 31, 2024 5,140  
Provisions for warranties issued during the period 3,468  
Fulfillment of warranty obligations ( 3,138 )
Foreign exchange rate changes 4  
Balance as of December 31, 2025 $ 5,474  

NOTE 11:  Commitments and Contingencies
As of December 31, 2025, the Company had outstanding purchase orders totaling $ 57,690,000 to procure inventory from various vendors. Certain of these purchase orders may be canceled by the Company, subject to cancellation penalties. These purchase commitments relate primarily to expected sales in 2026.
A significant portion of the Company's outstanding inventory purchase orders as of December 31, 2025, as well as additional preauthorized commitments to procure strategic components based on the Company's expected customer demand, are placed with the Company's primary contract manufacturer for the Company's assembled products. The Company purchased $ 5,042,000 , $ 17,461,000 , and $ 10,616,000 in 2025 , 2024, or 2023, respectively, of inventories as a result of the Company's obligation to purchase any non-cancelable and non-returnable components that have been purchased by the contract manufacturer with the Company's preauthorization, when these components have not been consumed within the period defined in the terms of the Company's agreement with this contract manufacturer. While the Company typically expects such purchased components to be used in future production of Cognex finished goods, these components are considered in the Company's reserve estimate for excess and obsolete inventory. Furthermore, the Company accrues for losses on commitments for the future purchase of non-cancelable and non-returnable components from this contract manufacturer at the time that circumstances, such as changes in demand, indicate that the value of the components may not be recoverable, the loss is probable, and management has the ability to reasonably estimate the amount of the loss.
Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened on behalf of or against the Company. While we cannot predict the outcome of these matters, we believe that any liability arising from them will not have a material adverse effect on our financial position, liquidity, or results of operations.
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NOTE 12:  Indemnification Provisions
Except as limited by Massachusetts law, the by-laws of the Company require it to indemnify certain current or former directors, officers, and employees of the Company against expenses incurred by them in connection with each proceeding in which he or she is involved as a result of serving or having served in certain capacities. Indemnification is not available with respect to a proceeding as to which it has been adjudicated that the person did not act in good faith in the reasonable belief that the action was in the best interests of the Company. The maximum potential amount of future payments the Company could be required to make under these provisions is unlimited. The Company has never incurred significant costs related to these indemnification provisions. As a result, the Company believes the estimated fair value of these provisions is not material.
In the ordinary course of business, the Company may accept standard limited indemnification provisions in connection with the sale of its products, whereby it indemnifies its customers for certain direct damages incurred in connection with third-party patent or other intellectual property infringement claims with respect to the use of the Company’s products. The maximum potential amount of future payments the Company could be required to make under these provisions is, in many, but not all instances, subject to fixed monetary limits. The Company has never incurred significant costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the Company believes the estimated fair value of these provisions is not material.
In the ordinary course of business, the Company also accepts limited indemnification provisions from time to time, whereby it indemnifies customers for certain direct damages incurred in connection with bodily injury and property damage arising from the use of the Company’s products. Future payments the Company could be required to make under these provisions is generally recoverable under the Company’s insurance policies. As a result of this coverage, and the fact that the Company has never incurred significant costs to defend lawsuits or settle claims related to these indemnification provisions, the Company believes the estimated fair value of these provisions is not material.

NOTE 13:  Derivative Instruments
The Company’s foreign currency risk management strategy is designed to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. The Company enters into economic hedges utilizing foreign currency forward contracts with maturities of generally up to three months but not greater than one year to manage the exposure to fluctuations in foreign currency exchange rates arising primarily from foreign-denominated receivables and payables. The gains and losses on these derivatives are intended to be offset by the changes in the fair value of the assets and liabilities being hedged. These economic hedges are not designated as hedging instruments for hedge accounting treatment.
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The Company had the following outstanding forward contracts (in thousands):

December 31, 2025 December 31, 2024
Currency Notional
Value USD
Equivalent Notional
Value USD
Equivalent

Derivatives Not Designated as Hedging Instruments:
Mexican Peso 160,000   $ 8,881   220,000   $ 10,701  
Hungarian Forint 2,500,000   7,600   2,360,000   5,951  
Korean Won 9,000,000   6,239   —   —  
British Pound 4,000   5,383   3,200   4,008  
Indian Rupee 400,000   4,436   —   —  
Chinese Renminbi 20,000   2,865   95,000   12,990  
Japanese Yen 400,000   2,563   2,000,000   12,789  
Singapore Dollar (1)
—   —   40,000   29,457  
Euro —   —   25,000   26,029  
Swiss Franc —   —   2,200   2,432  
Canadian Dollar —   —   2,000   1,390  

(1) In January 2026, the Company entered into a forward contract for the Singapore Dollar with a notional value of S$ 34 million and a USD equivalent of $ 27 million.

Information regarding the fair value of the outstanding forward contracts was as follows (in thousands):

  Asset Derivatives Liability Derivatives
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Fair Value Level December 31, 2025 December 31, 2024 Fair Value Level December 31, 2025 December 31, 2024

Derivatives Not Designated as Hedging Instruments:
Economic hedge forward contracts Prepaid
expenses and other current assets Level 2 $ 791   $ 689   Accrued expenses Level 2 $ 367   $ 757  

The following table summarizes the gross activity for all derivative assets and liabilities which were presented on a net basis on the Consolidated Balance Sheets due to the right of offset with each counterparty (in thousands):

Asset Derivatives Liability Derivatives
December 31, 2025 December 31, 2024 December 31, 2025 December 31, 2024
Gross amounts of recognized assets $ 791   $ 689   Gross amounts of recognized liabilities $ 367   $ 757  
Gross amounts offset —   —   Gross amounts offset —   —  
Net amount of assets presented $ 791   $ 689   Net amount of liabilities presented $ 367   $ 757  

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Information regarding the effect of derivative instruments, net of the underlying exposure, on the consolidated financial statements was as follows (in thousands):

  Location in Financial Statements Year Ended December 31,
2025 2024 2023

Derivatives Not Designated as Hedging Instruments:
Gains (losses) recognized in current operations Foreign currency gain (loss) $ 1,368   $ 1,945   $ ( 10,023 )

NOTE 14: Revenue Recognition
The following table summarizes disaggregated revenue information by geographic area based on the customer's country of domicile (in thousands):

Year Ended December 31,
2025 2024 2023
Americas $ 407,288   $ 350,155   $ 330,415  
Europe 251,638   217,880   220,665  
Greater China 158,456   164,147   164,115  
Other Asia 176,977   182,333   122,352  
$ 994,359   $ 914,515   $ 837,547  

The following table summarizes disaggregated revenue information by revenue type (in thousands):

Year Ended December 31,
2025 2024 2023
Standard products and services (1)
$ 880,015   $ 795,319   $ 734,140  
Application-specific customer solutions 114,344   119,196   103,407  
$ 994,359   $ 914,515   $ 837,547  
(1) In 2025, the Company entered into a commercial partnership with a strategic channel partner (the “Partner”) to better serve Original Equipment Manufacturer (OEM) customers in the specialized field of medical lab automation. Through 2030, the Partner has exclusive rights to sell machine vision hardware in combination with licensed Company software, in exchange for annual minimum license fees paid to the Company. The contract includes a substantive termination penalty if the contract is cancelled by the Partner. As such, the Company recognized the minimum license fees as revenue in 2025, at the point in time when the Partner received access to the software. Also in 2025, the Company transferred related inventories at cost to the Partner. As a result of the upfront recognition of the license revenue and transfer of inventories, the Company recognized one-time revenue of approximately $ 13 million in 2025, which is included in the "Standard products and services" amount in the table above.

Costs to Fulfill a Contract
Costs to fulfill customer contracts are included in "Prepaid expenses and other current assets" on the Consolidated Balance Sheets and amounted to $ 10,592,000 , $ 10,705,000 , and $ 13,265,000 as of December 31, 2025, 2024, and 2023, respectively. Costs to fulfill customer contracts are amortized when the Company transfers the promised goods and services to the customer. The amount of amortization during 2025 related to costs deferred as of December 31, 2024 amounted to $ 9,831,000 , and the amount of amortization during 2024 related to costs deferred as of December 31, 2023 amounted to $ 12,512,000 .
Accounts Receivable
Accounts receivable represent amounts billed and currently due from customers which are reported at their net estimated realizable value. The Company maintains an allowance against its accounts receivable for credit losses.
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The following table summarizes changes in the allowance for credit losses (in thousands):

Amount
Balance as of December 31, 2023 $ 583  
Increases to the allowance for credit losses 459  
Write-offs, net of recoveries ( 222 )
Foreign exchange rate changes 7  
Balance as of December 31, 2024 827  
Increases to the allowance for credit losses 477  
Write-offs, net of recoveries ( 555 )
Foreign exchange rate changes ( 21 )
Balance as of December 31, 2025 $ 728  

Contract Assets
The following table summarizes the contract assets (in thousands):

Year Ended December 31,
2025 2024 2023
Unbilled revenue $ 16,980   $ 3,055   $ 2,402  

Contract assets consist of unbilled revenue which arises when revenue is recognized in advance of billing primarily for certain application-specific customer solutions contracts, as well as for upfront license revenue recognized in connection with the strategic channel partnership mentioned above. Our rights to consideration are generally unconditional at the time our performance obligations are satisfied. The increase in unbilled revenue as of December 31, 2025 was primarily due to $ 10,365,000 of upfront license revenue recognized in 2025 in connection with the strategic channel partnership. Although the license revenue was recognized upfront, payments are expected to be received over the duration of the partnership, resulting in unbilled revenue.
Contract Liabilities
Contract liabilities consist of deferred revenue and customer deposits which arise when amounts are billed to or collected from customers in advance of revenue recognition.
The following table summarizes the deferred revenue and customer deposits activity (in thousands):

Amount
Balance as of December 31, 2023 $ 31,525  
Deferral of revenue billed in the current period, net of recognition 21,998  
Recognition of revenue deferred in prior period ( 28,108 )

Foreign exchange rate changes ( 380 )
Balance as of December 31, 2024 25,035  
Deferral of revenue billed in the current period, net of recognition 18,100  
Recognition of revenue deferred in prior period ( 22,728 )

Foreign exchange rate changes 687  
Balance as of December 31, 2025 $ 21,094  

As a practical expedient, the Company has elected not to disclose the aggregate amount of the transaction price allocated to unsatisfied performance obligations for contracts that have an original expected duration of less than one year. The remaining unsatisfied performance obligations for contracts that have an original expected duration of more than one year, primarily related to extended hardware warranties, are not material.

NOTE 15:  Shareholders’ Equity
Preferred Stock
The Company has 400,000 shares of authorized but unissued $ .01 par value preferred stock.
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Common Stock
The Company has 300,000,000 shares of authorized $ .002 par value common stock.
Each outstanding share of common stock entitles the record holder to one vote on all matters submitted to a vote of the Company’s shareholders. Common shareholders are also entitled to dividends when and if declared by the Company’s Board of Directors (the "Board").
Stock Repurchases
In March 2022, the Board authorized a program providing for the repurchase of up to $ 500,000,000 of the Company's common stock (the "Program"). Under the Program, in addition to repurchases made in prior years, the Company repurchased 1,723,000 shares at a cost of $ 79,794,000 in 2023, 1,711,000 shares at a cost of $ 67,085,000 in 2024, and 4,234,000 shares at a cost of $ 151,233,000 in 2025, leaving a remaining balance of $ 115,020,000 as of December 31, 2025. On February 11, 2026, the Board authorized the repurchase of an additional $ 500,000,000 of the Company's common stock upon completion of the Program.
The Company may repurchase shares under these programs in future periods depending on a variety of factors, including, among other things, the impact of dilution from employee stock awards, stock price, share availability, and cash requirements. The Company is authorized to make repurchases of its common stock through open market purchases, pursuant to Rule 10b5-1 trading plans, or in privately negotiated transactions.
Dividends
The Board declared and paid cash dividends of $ 0.070 per share in the first, second, and third quarters of 2023, $ 0.075 per share in the fourth quarter of 2023 and in the first, second, and third quarters of 2024, and $ 0.080 per share in the fourth quarter of 2024 and in the first, second, and third quarters of 2025 . The dividend was increased to $ 0.085 per share in the fourth quarter of 2025 .
Future dividends will be declared at the discretion of the Board and will depend on such factors as the Board deems relevant, including, among other things, the Company's ability to generate positive cash flow from operations.

NOTE 16:  Stock-Based Compensation
Stock Plans
The Company’s stock-based awards that result in compensation expense consist of stock options, restricted stock units ("RSUs"), and performance restricted stock units ("PRSUs"). In May 2023, the shareholders of the Company approved the Cognex Corporation 2023 Stock Option and Incentive Plan (the “2023 Plan”). The 2023 Plan permits awards of stock options (both incentive and non-qualified options), stock appreciation rights, RSUs, and PRSUs. Up to 8,100,000 shares of common stock (subject to adjustment in the event of stock splits and other similar events) may be issued pursuant to awards granted under the 2023 Plan. In connection with the approval of the 2023 Plan, no further awards will be made under the Cognex Corporation 2001 General Stock Option Plan, as amended and restated (the “2001 Plan”), and the Cognex Corporation 2007 Stock Option and Incentive Plan, as amended and restated (the “2007 Plan”). With the approval of the 2023 Plan, the 10,610,800 shares of common stock subject to awards granted under the 2001 Plan and the 2007 Plan that were outstanding as of May 3, 2023 may become eligible for issuance under the 2023 Plan if such awards are forfeited, cancelled, or otherwise terminated (other than by exercise) (the “Carryover Shares”). As of December 31, 2025, forfeitures, cancellations, and other terminations from the 2001 Plan and the 2007 Plan have resulted in 1,584,542 Carryover Shares, raising the authorized total shares that may be issued under the 2023 Plan to 9,684,542 .
As of December 31, 2025, the Company had 4,006,000 shares available for issuance under its stock plans. Stock options are granted with an exercise price equal to the market value of the Company’s common stock at the grant date and generally vest over five years based on continuous employment and expire ten years from the grant date. RSUs generally vest upon three years of continuous employment or incrementally over such three year period. PRSUs generally vest upon three years of continuous employment and achievement of performance criteria established by the Compensation Committee of our Board of Directors on or prior to the grant date. Participants are not entitled to dividends on stock options, RSUs, or PRSUs.
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Stock Options
The following table summarizes the Company’s stock option activity:

Shares
(in thousands) Weighted-
Average
Exercise
Price Weighted-
Average
Remaining
Contractual
Term
(in years) Aggregate
Intrinsic Value
(in thousands)
Outstanding as of December 31, 2024 9,543   $ 49.40  
Granted 1,669   32.38  
Exercised ( 265 ) 24.36  
Forfeited or expired ( 557 ) 48.57  
Outstanding as of December 31, 2025 10,390   $ 47.35   5.45 $ 9,725  
Exercisable as of December 31, 2025 6,007   $ 51.47   3.55 $ 3,531  
Options vested or expected to vest as of December 31, 2025 (1)
9,551   $ 48.17   5.18 $ 7,949  

(1) In addition to the vested options, the Company expects a portion of the unvested options to vest at some point in the future. Options expected to vest are calculated by applying an estimated forfeiture rate to the unvested options.
The total cash received as a result of stock option exercises was $ 6,432,000 in 2025 , $ 6,011,000 in 2024, and $ 11,104,000 in 2023. In connection with these exercises, the tax benefit (expense) realized by the Company was $ 1,802,000 in 2025 , $( 4,021,000 ) in 2024, and $( 4,691,000 ) in 2023.
The fair values of stock options granted in each period presented were estimated using the following weighted-average assumptions:

Year Ended December 31,
2025 2024 2023
Risk-free rate 4.3   % 4.3   % 4.0   %
Expected dividend yield 0.99   % 0.76   % 0.61   %
Expected volatility 39   % 39   % 39   %
Expected term (in years) 5.1 4.7 5.0

Risk-free rate
The risk-free rate was based on a treasury instrument whose term was consistent with the contractual term of the option.
Expected dividend yield
The current dividend yield was calculated by annualizing the cash dividend declared by the Board and dividing that result by the closing stock price on the grant date. 
Expected volatility
The expected volatility was based on a combination of historical volatility of the Company’s common stock over the contractual term of the option and implied volatility for traded options of the Company’s stock.
Expected term
The expected term was derived from the binomial lattice model from the impact of events that trigger exercises over time.
The weighted-average grant-date fair value of stock options granted was $ 12.14 in 2025, $ 14.89 in 2024, and $ 17.76 in 2023.
The total intrinsic value of stock options exercised was $ 4,179,000 in 2025, $ 4,626,000 in 2024, and $ 6,227,000 in 2023. The total fair value of stock options vested was $ 24,197,000 in 2025, $ 29,309,000 in 2024, and $ 34,751,000 in 2023.
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Restricted Stock Units (RSUs)
The following table summarizes the Company's RSUs activity:

Shares
(in thousands) Weighted-Average
Grant Date Fair Value
Nonvested as of December 31, 2024 1,690   $ 44.75  
Granted 1,320   32.80  
Vested ( 731 ) 49.18  
Forfeited or expired ( 163 ) 37.58  
Nonvested as of December 31, 2025 2,116   $ 36.32  

The fair value of RSUs was determined based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends. The weighted-average grant-date fair value of RSUs granted was $ 32.80 in 2025, $ 38.90 in 2024, and $ 46.14 in 2023. There were 731,000 , 429,000 , and 521,000 RSUs that vested in 2025, 2024, and 2023, respectively.
Tax obligations for vested RSUs are settled by withholding a portion of the shares prior to distribution to the shareholder. The total cash used by the Company to fund the tax payments was $ 6,877,000 in 2025, $ 5,017,000 in 2024, and $ 7,836,000 in 2023. In connection with these vested RSUs, the tax benefit (expense) realized by the Company was $( 9,250,000 ) in 2025, $( 7,401,000 ) in 2024, and $( 3,229,000 ) in 2023.
Performance Restricted Stock Units (PRSUs)
The following table summarizes the Company's PRSUs activity:

Shares
(in thousands) Weighted-Average
Grant Date Fair Value
Nonvested as of December 31, 2024 134   $ 46.82  
Granted 184   32.14  
Vested —   —  
Forfeited or expired ( 33 ) 62.49  
Nonvested as of December 31, 2025 285   $ 35.53  

During 2025, the Company granted PRSUs that vest upon the achievement of (1) a service condition of three years of continuous employment and (2) a performance condition established by the Compensation Committee of the Board as of the grant date. The number of shares earned could range between 0 % and 120 % based on achievement of the performance condition, which includes certain financial targets over the three year measurement period. The fair value of these PRSUs is calculated based on the observable market price of the Company's stock on the grant date less the present value of expected future dividends. Compensation expense for these PRSUs is recognized based on the probable outcome of the performance condition with a cumulative catch-up adjustment for prior periods in the period that the probable outcome changes.
During 2023 and 2024, the Company granted PRSUs that vest upon the satisfaction of service and market conditions stipulated in the award grant. The fair value of these awards was determined using a Monte Carlo simulation model to estimate the probability of meeting those conditions.
The weighted average grant-date fair value of PRSUs granted was $ 32.14 in 2025, $ 39.05 in 2024, and $ 44.86 in 2023. No PRSUs vested in 2025, 2024, and 2023.
Stock-Based Compensation Expense
The Company stratifies its employee population into two groups: one consisting of senior management and another consisting of all other employees. The Company currently applies an estimated annual forfeiture rate of 11 % to all stock-based awards for senior management and a rate of 13 % for all other employees. Each year during the first quarter, the Company revises its forfeiture rate based on updated estimates of employee turnover. Credits of $ 4,789,000 , $ 1,832,000 , and $ 234,000 were recorded in 2025 , 2024, and 2023, respectively, to true up previously recorded compensation expense for this forfeiture rate revision.
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As of December 31, 2025, total unrecognized compensation expense, net of estimated forfeitures, related to non-vested stock-based awards, including stock options, RSUs, and PRSUs, was $ 48,015,000 , which is expected to be recognized over a weighted-average period of 1.5 years.
The total stock-based compensation expense and the related income tax benefit recognized was $ 48,517,000 and $ 6,820,000 , respectively, in 2025 , $ 52,443,000 and $ 8,387,000 , respectively, in 2024, and $ 54,768,000 and $ 8,442,000 , respectively, in 2023. No compensation expense was capitalized in 2025 , 2024, or 2023.
The following table presents the stock-based compensation expense by caption for each period presented on the Consolidated Statements of Operations (in thousands):

Year Ended December 31,
2025 2024 2023
Cost of revenue $ 2,216   $ 1,966   $ 1,979  
Research, development, and engineering 15,336   14,628   16,480  
Selling, general, and administrative 30,965   35,849   36,309  
$ 48,517   $ 52,443   $ 54,768  

NOTE 17:  Employee Savings Plan
Under the Company's Employee Savings Plan, a defined contribution plan, all U.S. employees who have attained age 21 may contribute up to 100 % of their pay on a pre-tax basis under the Company's Employee Savings Plan, subject to the annual dollar limitations established by the Internal Revenue Service ("IRS"). The Company matches 50 % of the first 6 % of pay an employee contributes. Company contributions vest 25 %, 50 %, 75 %, and 100 % after one, two, three, and four years of continuous employment with the Company, respectively. Company contributions totaled $ 3,590,000 in 2025 , $ 3,535,000 in 2024, and $ 3,392,000 in 2023. Cognex stock is not an investment alternative and Company contributions are not made in the form of Cognex stock.
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NOTE 18:  Income Taxes
In 2025, the Company adopted ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require public business entities to disclose specific categories in their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. They also require all entities to disclose income taxes paid, net of refunds received, disaggregated by federal, state, and foreign taxes and by individual jurisdictions in which income taxes paid, net of refunds received, is equal to or greater than five percent of total income taxes paid. These changes have been applied prospectively.
Income from continuing operations before income tax expense consisted of the following (in thousands):

  Year Ended December 31,
  2025 2024 2023
Domestic 73,505   35,253   16,039  
Foreign 109,297   96,236   119,309  
182,802   131,489   135,348  

Income tax expense consisted of the following (in thousands):

  Year Ended December 31,
  2025 2024 2023
Current:
Federal $ 4,576   $ 28,009   $ 29,084  
State 4,440   4,524   3,544  
Foreign 19,647   12,795   9,207  
28,663   45,328   41,835  
Deferred:
Federal 30,481   ( 22,273 ) ( 24,731 )
State 668   ( 1,324 ) ( 5,877 )
Foreign 8,548   3,587   10,887  
39,697   ( 20,010 ) ( 19,721 )
$ 68,360   $ 25,318   $ 22,114  

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Effective Tax Rate Reconciliation
A reconciliation of the U.S. federal statutory corporate tax rate to the Company’s income tax expense, or effective tax rate, presented in accordance with the prospectively adopted ASU 2023-09, was as follows for the year ended December 31, 2025:

Year Ended December 31, 2025
$ %
U.S. federal statutory income tax rate $ 38,397 21.0   %

State and local tax effects (1)
3,629 2.0   %

Foreign tax effects
Ireland
Foreign rate differential ( 4,355 ) ( 2.4 ) %
Transfer pricing adjustment 2,185 1.2   %
Other 594 0.3   %
Japan 1,325 0.7   %
Germany 1,232 0.7   %
China 2,421 1.3   %
Other jurisdictions 688 0.4   %
Tax on Unremitted Foreign Earnings ( 414 ) ( 0.2 ) %
Changes in tax rate due to new enacted law 33,237 18.2   %
Cross-border tax laws
Net CFC Tested Income 4,112 2.2   %
Foreign tax credits ( 16,257 ) ( 8.9 ) %

Other 302 0.2   %
Tax credits
R&D tax credits ( 3,186 ) ( 1.7 ) %

Valuation allowance changes 272 0.1   %
Non-taxable items

Share based compensation 4,370 2.4   %

Other 576 0.3   %
Unrecognized tax benefits ( 1,055 ) ( 0.6 ) %
All other adjustments not categorized 287 0.2   %
Total worldwide effective tax expense and rate 68,360 37.4   %
(1) State Taxes in California, Illinois, Massachusetts, Michigan, Minnesota, Pennsylvania, and Tennessee made up the majority (greater than 50%) of tax effect in this category.

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A reconciliation of the U.S. federal statutory corporate tax rate to the Company’s income tax expense, or effective tax rate, was as follows for the years ended December 31, 2024 and December 31, 2023:

  Year Ended December 31,
  2024 2023
Income tax expense at U.S. federal statutory corporate tax rate 21   % 21   %
State income taxes, net of federal benefit 2   1  
Foreign tax rate differential ( 4 ) ( 6 )
Tax credits ( 3 ) ( 3 )
Taxation on multinational operations ( 5 ) ( 3 )
Tax reserves 1   3  
Limitation on deduction for executive compensation 1   2  
Discrete tax expense related to employee stock-based compensation 2   1  
Discrete tax benefit for audit settlements 1   —  
Discrete tax expense for foreign earnings not indefinitely reinvested 1   —  
Discrete tax expense related to tax return filings —   2  
Discrete tax expense related to rate revaluation on state tax assets —   2  
Discrete tax benefit related to GILTI adjustments —   ( 2 )

Discrete tax benefit for release of valuation allowance —   ( 4 )

Other 2   2  
Income tax expense 19   % 16   %

Tax Reserves
The changes in gross amounts of unrecognized tax benefits, excluding interest and penalties, were as follows (in thousands):

Balance of reserve for income taxes as of December 31, 2022
$ 13,647  
Reductions as a result of tax positions taken in prior periods ( 242 )
Additions as a result of tax positions taken in prior periods 12,556  
Additions as a result of tax positions taken in the current period 1,877  
Reductions relating to settlements with taxing authorities ( 1,230 )
Reductions as a result of the expiration of the applicable statutes of limitations ( 894 )
Balance of reserve for income taxes as of December 31, 2023
25,714  
Reductions as a result of tax positions taken in prior periods ( 39 )
Additions as a result of tax positions taken in prior periods 208  
Additions as a result of tax positions taken in the current period 1,935  
Reductions relating to settlements with taxing authorities ( 2,751 )
Reductions as a result of the expiration of the applicable statutes of limitations ( 1,331 )
Balance of reserve for income taxes as of December 31, 2024
23,736  
Reductions as a result of tax positions taken in prior periods ( 1,597 )
Additions as a result of tax positions taken in prior periods 825  
Additions as a result of tax positions taken in the current period 1,853  
Reductions relating to settlements with taxing authorities —  
Reductions as a result of the expiration of the applicable statutes of limitations ( 3,547 )
Balance of reserve for income taxes as of December 31, 2025
$ 21,270  

The Company’s reserve for income taxes, including gross interest and penalties, was $ 27,042,000 as of December 31, 2025, of which $ 24,269,000 was classified as a non-current liability and $ 2,773,000 was classified as an offset to deferred tax assets. The Company's reserve for income taxes, including gross interest and penalties, was $ 28,733,000 as of December 31, 2024, of which $ 26,365,000 was classified as a non-current liability and $ 2,368,000 was classified as an offset to deferred tax assets. The amount of gross interest and penalties included in these balances was $ 5,773,000 and $ 4,997,000 as of December 31, 2025 and 2024, respectively. If the Company’s
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tax positions were sustained or the statutes of limitations related to certain positions expired, these reserves would be released and income tax expense would be reduced in a future period.
The Company has defined its major tax jurisdictions as the United States, Ireland, China, Japan, and Korea and within the United States, Massachusetts. The statutory tax rate is 12.5 % in Ireland, 25 % in China, 34.7 % in Japan, and 20.9 % in Korea, compared to the U.S. federal statutory corporate tax rate of 21 %. These differences resulted in a favorable impact to the effective tax rate for all periods presented as shown in the Effective Tax Rate Reconciliation section. Management has determined that earnings from its legal entities in China will be indefinitely reinvested to provide local funding for growth, and that earnings from all other jurisdictions will not be indefinitely reinvested. The Company recorded non-current deferred tax liabilities of $ 986,000 and $ 1,400,000 in 2025 and 2024, respectively, with respect to earnings that are not indefinitely reinvested.
In 2023, the Company qualified for a tax holiday in China, which can be renewed every three years. A portion of the Company's business in China operates under this tax incentive program, which expires at the end of fiscal year 2026. This tax incentive may be extended if specific conditions are met. The net impact of this tax incentive program was to increase the Company's net income by approximately $ 977,000 in 2025 ($ 0.01 per share, diluted) and by approximately $ 845,000 in 2024 ($ 0.01 per share, basic and diluted). The tax effect of this benefit on net income per share for 2023 was not material.
Within the United States, the tax years 2021 through 2024 remain open to examination by the Internal Revenue Service ("IRS") and various state taxing authorities. The tax years 2013 through 2024 remain open to examination by various taxing authorities in foreign jurisdictions in which the Company operates. Management believes the Company is adequately reserved for these audits. The final determination of tax audits could result in favorable or unfavorable changes in our estimates. Any reserves associated with this audit period will not be released until the issue is settled or the audit is concluded.
Interest and penalties included in income tax expense were $ 1,689,000 in 2025 , $ 2,145,000 in 2024, and $ 1,032,000 in 2023.
Cash paid for income taxes for the year ended December 31, 2025 was as follows:

2025
U.S. federal $ 23,586  
State and local 2,417  

Japan 6,669  
China 2,106  
Other 7,553  
Total income taxes paid $ 42,331  

Cash paid for income taxes totaled $ 59,849,000 in 2024 and $ 56,618,000 in 2023.
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Deferred Tax Assets and Liabilities
The tax effects of temporary differences and attributes that give rise to deferred income tax assets and liabilities as of December 31, 2025 and December 31, 2024 were as follows (in thousands):

December 31,
  2025 2024
Deferred tax assets:
Intangible asset in connection with change in tax structure $ 361,385   $ 369,474  
Capitalization of R&D expenses 26,620   35,948  
Stock-based compensation expense 21,617   22,428  
Tax credit carryforwards 10,849   10,186  
Inventory and revenue related 8,583   8,355  
Bonuses, commissions, and other compensation 8,894   6,949  
Depreciation —   2,877  
Foreign net operating losses 645   1,306  
Other 1,607   4,624  
Total deferred tax assets 440,200   462,147  
Valuation allowance ( 2,737 ) ( 2,515 )
$ 437,463   $ 459,632  

Deferred tax liabilities:
NCTI (formerly GILTI) tax basis differences in connection with change in tax structure $ ( 274,026 ) $ ( 254,213 )
Amortization ( 27,958 ) ( 29,008 )
Depreciation ( 1,744 ) —  
Reserve for unremitted foreign earnings ( 986 ) ( 1,400 )
$ ( 304,714 ) $ ( 284,621 )

Net deferred taxes $ 132,749   $ 175,011  

Change in Tax Structure and Net CFC Tested Income
In 2019, the Company made changes to its international tax structure due to legislation by the European Union regarding low tax structures that resulted in an intercompany sale of intellectual property. As a result, the Company recorded an associated deferred tax asset of $ 437,500,000 in Ireland based on the fair value of the intellectual property that is being realized over fifteen years as future tax deductions. From a United States perspective, the sale was disregarded, and any future deductions claimed in Ireland are added back to taxable income as part of Net CFC Tested Income ("NCTI", formerly, Global Intangible Low-Taxed Income) minimum tax. The Company recorded an associated deferred tax liability of $ 350,000,000 , representing the NCTI minimum tax related to the fair value of the intellectual property. On July 4, 2025, tax legislation known as One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. OBBBA modified certain international tax provisions such as NCTI. As a result of this legislation, in 2025, the Company accrued a discrete tax expense of $ 33,237,000 to increase its NCTI deferred tax liability.
Other Deferred Tax Assets and Liabilities
Beginning in 2022, the Tax Cuts and Jobs Act eliminated the option to deduct research and development expenditures in the period incurred and required taxpayers to capitalize and amortize such expenditures over five or fifteen years, as applicable, pursuant to Section 174 of the Internal Revenue Code. Accordingly, the Company recorded deferred tax assets resulting from the capitalization of research and development expenditures. OBBBA modified the provisions contained in the Tax Cuts and Jobs Act to allow the deduction of domestic research and development expenditures in the period incurred beginning January 1, 2025. The Company has modified its deferred tax position accordingly.
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As of December 31, 2025, the Company had foreign net operating loss carryforwards of $ 645,000 , state tax credit carryforwards of $ 8,019,000 that will begin to expire for the 2033 tax return, and foreign tax credit carryforwards of $ 2,830,000 , that will begin to expire for the 2028 tax return. As of December 31, 2024, the Company had foreign net operating loss carryforwards of $ 1,306,000 , state tax credit carryforwards of $ 7,619,000 , and foreign tax credit carryforwards of $ 2,567,000 .
As of December 31, 2025, the Company had a valuation allowance for foreign net operation loss carryforwards of $ 549,000 and a valuation allowance for foreign tax credits of $ 2,188,000 that were not considered to be realized. As of December 31, 2024, the Company had a valuation allowance for foreign net operation loss carryforwards of 599,000 and a valuation allowance for foreign tax credits of $ 1,916,000 that was not considered to be realized. Should these credits be utilized in a future period, the reserve associated with these credits would be reversed in the period when it is determined that the credits can be utilized to offset future income tax liabilities.
While the deferred tax assets, net of valuation allowance, are not assured of realization, management has evaluated the realizability of these deferred tax assets and has determined that it is more likely than not that these assets will be realized. In reaching this conclusion, we have evaluated certain relevant criteria including the Company’s historical profitability, current projections of future profitability, and the lives of tax credits, net operating losses, and other carryforwards. Should the Company fail to generate sufficient pre-tax profits in future periods, we may be required to establish valuation allowances against these deferred tax assets, resulting in a charge to current operations in the period of determination.

NOTE 19:  Earnings per Share
The following table shows the computation of basic and diluted earnings per share as follows (in thousands, except per share amounts):

  Year Ended December 31,
2025 2024 2023
Net income 114,442   106,171   113,234  
Basic weighted-average common shares outstanding 168,049   171,438   172,249  
Effect of dilutive stock options 1,318   1,173   1,150  
Diluted weighted-average common and common-equivalent shares outstanding 169,367   172,611   173,399  
Earnings per share
Basic 0.68   0.62   0.66  
Diluted 0.68   0.62   0.65  

The computation of diluted weighted-average common shares outstanding excludes the following weighted average anti-dilutive stock-based awards outstanding as follows (in thousands):

2025 2024 2023
Stock options 10,238   8,497   6,854  
Restricted stock units 17   —   —  
Performance restricted stock units —   —   —  
Total weighted average anti-dilutive stock-based awards outstanding 10,255   8,497   6,854  

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NOTE 20:  Segment and Geographic Information
The Company operates in one segment, machine vision technology. The Company has a single, company-wide management team that administers operations as a whole rather than as discrete operating segments. The Company’s chief operating decision maker is the chief executive officer, who assesses performance and allocates resources at the corporate level, as compared to the geography, product line, or end market levels. 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.
The following table summarizes information about geographic areas (in thousands):

United States Europe Greater China Other Total
Year Ended December 31, 2025
Revenue $ 329,125   $ 251,638   $ 158,456   $ 255,140   $ 994,359  
Long-lived assets 48,838   14,112   13,631   14,428   $ 91,009  
Year Ended December 31, 2024
Revenue $ 306,766   $ 217,880   $ 164,147   $ 225,722   $ 914,515  
Long-lived assets 56,948   15,655   14,844   16,025   $ 103,472  
Year Ended December 31, 2023
Revenue $ 288,324   $ 220,665   $ 164,115   $ 164,443   $ 837,547  
Long-lived assets 62,946   17,005   17,028   15,958   $ 112,937  

Revenue is presented geographically based on the customer’s country of domicile.
Revenue from a single customer accounted for 15 % and 10 % of total revenue in 2025 and 2024, respectively. Revenue from this customer was not greater than 10% of total revenue in 2023. Accounts receivable from this customer were not greater than 10% of total accounts receivable as of December 31, 2025 and was 10 % of total accounts receivable as of December 31, 2024.
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The measure of segment profit or loss for the Company's single segment is net income. Segment expenses were disaggregated based on the information the chief operating decision maker uses to assess performance and allocate resources considering both quantitative and qualitative factors. The following table summarizes significant segment expenses, which represents the difference between segment revenue and segment net income, (in thousands):

Year Ended December 31,
2025 2024 2023
Revenue $ 994,359   $ 914,515   $ 837,547  
Less:
Cost of revenue (1)
328,966   288,721   236,306  
Gross profit 665,393   625,794   601,241  
Less:
Research, development, and engineering expenses
Salaries and fringe benefits 75,690   79,544   78,762  
Incentive compensation (2)
9,537   4,711   1,446  
Stock-based compensation 15,336   14,628   16,480  
Depreciation and amortization 2,628   3,229   3,056  
Other segment expenses (3)
35,779   37,703   39,656  
Total research, development, and engineering expenses 138,970   139,815   139,400  
Selling, general, and administrative expenses
Salaries and fringe benefits 174,526   179,898   166,612  
Incentive compensation (2)
55,932   45,565   35,513  
Stock-based compensation 30,965   35,849   36,309  
Depreciation and amortization 15,759   16,936   11,759  
Other segment expenses (3)
86,675   92,666   88,946  
Total selling, general, and administrative expenses 363,857   370,914   339,139  
Loss (recovery) from fire —   —   ( 8,000 )

Operating income 162,566   115,065   130,702  
Foreign currency gain (loss) ( 4,082 ) 1,531   ( 10,039 )
Investment income 16,950   13,971   14,093  
Other income (expense) 7,368   922   592  
Income before income tax expense 182,802   131,489   135,348  
Income tax expense 68,360   25,318   22,114  
Net income $ 114,442   $ 106,171   $ 113,234  

(1) Cost of revenue includes depreciation and amortization expense (including amortization of acquired technologies) of $ 12,406,000 , $ 12,524,000 , and $ 7,065,000 for 2025, 2024, and 2023, respectively.
(2) Incentive compensation includes company bonus and sales commissions.
(3) Other segment expenses include outside services, prototyping materials, sales demonstration equipment, travel and entertainment, marketing programs, rent, and allocations, among other less significant expenses.

NOTE 21: Business Combinations
Moritex Corporation
On October 18, 2023, the Company acquired all the outstanding shares of Moritex Corporation ("Moritex"), a global provider of premium optical components based in Japan, for an enterprise value of ¥ 40  billion Japanese Yen, or approximately $ 270  million U.S. Dollars based on the closing date foreign exchange rate.
The cash-free, debt-free enterprise value was adjusted by cash acquired, debt assumed, and final working capital balances to arrive at total consideration to be allocated to assets acquired and liabilities assumed of ¥ 44,376,245,000 ($ 296,138,000 based on the closing date foreign exchange rate), of which ¥ 44,227,414,000
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COGNEX CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ 295,144,000 ) was paid in cash on the closing date and ¥ 148,831,000 ($ 994,000 ) was paid during the first quarter of 2024 as a purchase price adjustment based on the closing balance sheet. The Company acquired cash balances totaling $ 38,088,000 as part of this transaction, to arrive at a net cash outflow of $ 257,056,000 on the closing date. There was no contingent consideration as part of this transaction.
In the fourth quarter of 2024, the Company recorded measurement-period adjustments that increased goodwill by $ 6,478,000 and are reflected in the final purchase price allocation below. The adjustments consisted primarily of changes to deferred income tax liabilities based on the final push-down accounting for intangible assets to legal-entity jurisdictions, a reduction in customer relationships based on a methodology refinement, and changes to provisional assets and liabilities based on new information obtained within the one-year measurement period that refined initial estimates.
The portfolio of Moritex optical components allows us to expand our served market to include high-end lenses and lighting and provide our customers with a more complete product offering by replacing third-party components with Cognex-manufactured optical components. Moritex also provides the Company with a more substantial presence in Japan, which is an important machine vision market where we believe we can increase our share through a stronger local presence.
This transaction was accounted for as a business combination. Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date, which were valued using level 3 inputs for intangible assets, inventories, and property, plant and equipment. Pro-forma information, as well as revenue and earnings from the date of the acquisition, are not presented because they are not material to the Company’s consolidated financial statements. Transaction costs were approximately $ 5,800,000 and were expensed as incurred as part of SG&A expenses on the Consolidated Statement of Operations.
The purchase price was allocated as follows (in thousands):

Cash and cash equivalents $ 38,088  
Accounts receivable 11,543  
Inventories 21,882  
Property, plant and equipment 19,805  
Goodwill 151,525  
Customer relationships 64,800  
Completed technologies 32,300  
Trademarks 850  
Deferred income tax assets 4,162  
Other assets 3,363  
Accounts payable ( 6,639 )
Accrued expenses ( 14,718 )
Deferred income tax liabilities ( 22,665 )
Reserve for income taxes ( 5,864 )
Other liabilities ( 2,294 )
Purchase price $ 296,138  

The customer relationships, completed technologies, and trademarks are included in "Intangible assets" on the Consolidated Balance Sheet. The customer relationships are being amortized to SG&A expenses over fifteen years, the completed technologies are being amortized to cost of revenue over nine years, and the trademarks are being amortized to SG&A expenses over three years. None of the acquired goodwill is deductible for tax purposes.

NOTE 22: Loss (Recovery) from Fire
On June 7, 2022, the Company’s primary contract manufacturer experienced a fire at its plant in Indonesia, destroying a significant amount of Cognex inventories. In 2023, the Company recorded recoveries related to the fire of $ 8,000,000 , consisting of $ 2,500,000 for proceeds received from the Company's insurance carrier in relation to a business interruption claim and $ 5,500,000 for proceeds received as part of a financial settlement for lost inventory and other losses incurred as a result of the fire.
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COGNEX CORPORATION - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 23: Subsequent Events
On February 11, 2026, the Board declared a cash dividend of $ 0.085 per share. The dividend is payable March 12, 2026 to all shareholders of record as of the close of business on February 26, 2026.
On February 11, 2026, the Board authorized the repurchase of an additional $ 500,000,000 of the Company's common stock through open market purchases, privately negotiated transactions, or otherwise in compliance with applicable securities laws. The Board also reauthorized the Company to establish Rule 10b5-1 trading plans. Rule 10b5-1 trading plans allow companies to repurchase shares at times when they might otherwise be prevented from doing so by securities laws or because of self-imposed trading blackout periods. The Company may repurchase shares pursuant to its repurchase program depending upon a variety of factors, including, among other things, the impact of dilution from equity-based awards, stock price, share availability, and cash requirements.
On February 11, 2026, the Company disclosed its intent to divest its Japan‑focused trading business, which was acquired as part of the Moritex acquisition, for a target purchase price between $ 10  million and $ 12  million, including the sale of related inventories. Divestiture of this business would not constitute a strategic shift that would have a major effect on the Company’s operations or financial results. The Company is targeting a transaction close in the second quarter of 2026. Management is currently evaluating the financial statement impact; however, due the timing of related negotiations an estimate of such impact cannot be reasonably determined as of the date these financial statements were issued.
The Company evaluated subsequent events through February 12, 2026, the date the financial statements were issued. Other than the aforementioned items, there were no additional material recognized or unrecognized subsequent events identified.
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COGNEX CORPORATION – SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

Additions
Description Balance at
Beginning
of Period Charged to
Costs and
Expenses Charged
to Other
Accounts Deductions Other Balance at
End of
Period
(In thousands)
Allowance for Credit Losses on Accounts Receivable:
2025 $ 827   $ 477   $ —   $ ( 555 ) (1)
$ ( 21 ) (2)
$ 728  
2024 $ 583   $ 459   $ —   $ ( 222 ) (1)
$ 7   (2)
$ 827  
2023 $ 730   $ 500   $ —   $ ( 645 ) (1)
$ ( 2 ) (2)
$ 583  
Reserve for Sales Returns:
2025 $ 2,518   $ 500   $ —   $ —   (1)
$ —   (2)
$ 3,018  
2024 $ 2,018   $ 500   $ —   $ —   (1)
$ —   (2)
$ 2,518  
2023 $ 1,518   $ 500   $ —   $ —   (1)
$ —   (2)
$ 2,018  
Deferred Tax Valuation Allowance:
2025 $ 2,515   $ 222   $ —   $ —   $ —   $ 2,737  
2024 $ 943   $ 1,572   $ —   $ —   $ —   $ 2,515  
2023 $ 7,661   $ —   $ —   $ ( 6,718 ) $ —   $ 943  

(1) Specific write-offs
(2) Foreign currency exchange rate changes

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ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no disagreements with accountants on accounting or financial disclosure during 2025 or 2024.

ITEM 9A: CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 of the Exchange Act, the Company has evaluated, with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, the effectiveness of its disclosure controls and procedures (as defined in such rules) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that such disclosure controls and procedures were effective as of that date.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Management has evaluated the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on our evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025.
Attestation Report of the Registered Public Accounting Firm on Internal Control over Financial Reporting
The Company’s internal control over financial reporting as of December 31, 2025 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report which is included herein.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during the fourth quarter of the year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to review its disclosure controls and procedures, including its internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that the Company’s systems evolve with its business.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Cognex Corporation

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Cognex Corporation (a Massachusetts corporation) and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2025, and our report dated February 12, 2026 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
Boston, Massachusetts
February 12, 2026
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ITEM 9B: OTHER INFORMATION
During the quarter ended December 31, 2025, none of the Company's directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted , terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).

ITEM 9C: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not Applicable.

PART III

ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Information with respect to Directors and Executive Officers of the Company and the other matters required by Item 10 shall be included in the Company’s definitive Proxy Statement for its 2026 Annual Meeting of Shareholders and is incorporated herein by reference.
The Company has adopted a Code of Business Conduct and Ethics covering all employees, which is available, free of charge, on the Company’s website, www.cognex.com under "Company-Investor Governance-Governance Documents". The Company intends to disclose on its website any amendments to or waivers of the Code of Business Conduct and Ethics on behalf of the Company’s directors and executive officers that would otherwise be required to be disclosed under the rules of the SEC or The NASDAQ Stock Market LLC.
With respect to Item 408(b) of Regulation S-K, the Company has an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities that applies to the Company's personnel, including its officers, directors, employees of the Company and its subsidiaries, and other covered persons. The Company believes that its insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company. A copy of the Company’s insider trading policy is filed as Exhibit 19 to this Form 10-K. It also is the Company's policy to comply with applicable insider trading laws, rules and regulations, and any exchange listing standards when engaging in transactions in Company securities.

ITEM 11: EXECUTIVE COMPENSATION
Information with respect to executive compensation and the other matters required by Item 11 shall be included in the Company’s definitive Proxy Statement for its 2026 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information with respect to security ownership and the other matters required by Item 12 shall be included in the Company’s definitive Proxy Statement for its 2026 Annual Meeting of Shareholders and is incorporated herein by reference.
The following table provides information as of December 31, 2025 regarding shares of common stock that may be issued under the Company’s existing equity compensation plans:

Plan Category Number of securities to be
issued upon exercise of
outstanding options, warrants and rights, and vesting of restricted stock units Weighted-average exercise
price of outstanding options, restricted stock units, warrants, and rights Number of securities
remaining available for future
issuance under equity
compensation plans
(excluding securities reflected
in column (a))
(a)
Equity compensation plans approved by shareholders (3)
12,791,000  (1)
$ 45.71  4,006,000  (2)

Equity compensation plans not approved by shareholders (3)
—  —  — 
12,791,000   $ 45.71   4,006,000  

(1) Includes shares to be issued upon exercise of outstanding options under the Company’s 2023 Stock Option and Incentive Plan, the 2007 Stock Option and Incentive Plan, and subsequent to shareholder approval, the 2001 General Stock Option Plan, as amended and restated.
(2) Includes shares remaining available for future issuance under the Company’s 2023 Stock Option and Incentive Plan. This amount is subject to adjustment from "Carryover Shares" as defined in Note 16: Stock-Based Compensation.
(3) All references made to share or per share amounts have been adjusted to reflect the two-for-one stock split which occurred in the fourth quarter of 2017.
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The 2001 General Stock Option Plan was originally adopted by the Board of Directors in December 2001 without shareholder approval. In December 2011, this plan received shareholder approval for an amendment and restatement of the plan. This plan provided for the granting of nonqualified stock options and incentive stock options to any employee who was actively employed by the Company and was not an officer or director of the Company. The maximum number of shares of common stock that were available for grant under this plan was 38,440,000 shares. All option grants had an exercise price per share that was no less than the fair market value per share of the Company’s common stock on the grant date and had a term that was no longer than ten years from the grant date. 32,544,411 stock options were granted under the 2001 General Stock Option Plan. With shareholder approval of the 2023 Stock Option and Incentive Plan in May 2023, no further shares may be granted from the 2001 General Stock Option Plan.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information with respect to certain relationships and related transactions and the other matters required by Item 13 shall be included in the Company’s definitive Proxy Statement for its 2026 Annual Meeting of Shareholders and is incorporated herein by reference.

ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES
Information with respect to principal accounting fees and services and the other matters required by Item 14 shall be included in the Company’s definitive Proxy Statement for its 2026 Annual Meeting of Shareholders and is incorporated herein by reference.

PART IV

ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(1) Financial Statements
The financial statements are included in Part II – Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedule
Financial Statement Schedule II is included in Part II – Item 8 of this Annual Report on Form 10-K.
Other schedules are omitted because of the absence of conditions under which they are required or because the required information is provided in the consolidated financial statements or notes thereto.
(3) Exhibits
The Exhibits filed as part of this Annual Report on Form 10-K are listed in the Exhibit Index, immediately preceding the signature page hereto.

ITEM 16: FORM 10-K SUMMARY
Not applicable.
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EXHIBIT INDEX

EXHIBIT NUMBER  
3A Restated Articles of Organization of Cognex Corporation effective June 27, 1989, as amended through May 5, 2016 (incorporated by reference to Exhibit 3.1 of Cognex's Quarterly Report on Form 10-Q for the quarter ended July 3, 2016 [File No. 1-34218])

3B Articles of Amendment to the Articles of Organization of Cognex Corporation establishing Series E Junior Participating Preferred Stock (incorporated by reference to Exhibit 3.2 to Cognex's Quarterly Report on Form 10-Q for the quarter ended July 3, 2016 [File No. 1-34218])

3C Articles of Amendment to Restated Articles of Organization of Cognex Corporation, effective May 2, 2018 (incorporated by reference to Exhibit 4.2 of Cognex's Registration Statement on Form S-8 [Registration No. 333-224716])

3D Articles of Amendment to Restated Articles of Organization of Cognex Corporation, effective April 26, 2019 (incorporated by reference to Exhibit 3.4 of Cognex's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 [File No. 1-34218])

3E Second Amended and Restated By-laws of Cognex Corporation, effective February 19, 2025 (incorporated by reference to Exhibit 3.1 of Cognex's Current Report on Form 8-K, as filed with the SEC on February 20, 2025 [File No. 1-34218])

4A Specimen Certificate for Shares of Common Stock (incorporated by reference to Exhibit 4 to Cognex's Registration Statement on Form S-1 [Registration No. 33-29020])
4B Description of Capital Stock (incorporated by reference to Exhibit 4B of Cognex's Annual Report on Form 10-K for the year ended December 31, 2019 [File No. 1-34218])

10A * Cognex Corporation 2001 General Stock Option Plan, as amended and restated (incorporated by reference to Exhibit 99.1 to Cognex's Registration Statement on Form S-8 [Registration No. 333-224716])

10B * Cognex Corporation 2007 Stock Option and Incentive Plan, as amended and restated (incorporated by reference to Exhibit 10H of Cognex's Annual Report on Form 10-K for the year ended December 31, 2017 [File No. 1-34218])

10C * Form of Indemnification Agreement with each of the Directors of Cognex Corporation (incorporated by reference to Exhibit 10R of Cognex's Annual Report on Form 10-K for the year ended December 31, 2013 [File No. 1-34218])

10D * Employment Agreement, dated June 17, 2008, by and between Cognex Corporation and Robert Willett (incorporated by reference to Exhibit 10S of Cognex's Annual Report on Form 10-K for the year ended December 31, 2013 [File No. 1-34218])

10E * Amendment to Employment Agreement with Robert Willett, dated November 14, 2008 (incorporated by reference to Exhibit 10T of Cognex's Annual Report on Form 10-K for the year ended December 31, 2013 [File No. 1-34218])

10F * Form of Stock Option Agreement (Non-Qualified) under 2007 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10U of Cognex's Annual Report on Form 10-K for the year ended December 31, 2013 [File No. 1-34218])

10G * Form of Stock Option Agreement under 2001 General Stock Option Plan (incorporated by reference to Exhibit 10O of Cognex's Annual Report on Form 10-K for the year ended December 31, 2017 [File No. 1-34218])

10H * Summary of Cognex Annual Bonus Program (filed herewith)

10J * Form of Restricted Stock Unit Agreement under the 2007 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10U of Cognex's Annual Report on Form 10-K for the year ended December 31, 2019 [File No. 1-34218])

10K * Form of Performance Restricted Stock Unit Agreement under the 2007 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10L of Cognex’s Annual Report on Form 10-K for the year ended December 31, 2021 [File No. 1-34218])

10L * Cognex Corporation 2023 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.1 of Cognex's Current Report on Form 8-K, as filed with the SEC on May 4, 2023 [File No. 1-34218])

10M * Form of Non-Qualified Stock Option Agreement under the Cognex Corporation 2023 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.2 of Cognex's Current Report on Form 8-K, as filed with the SEC on May 4, 2023 [File No. 1-34218])

10N * Form of Restricted Stock Unit Award Agreement under the Cognex Corporation 2023 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.3 of Cognex's Current Report on Form 8-K, as filed with the SEC on May 4, 2023 [File No. 1-34218])

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10O * Form of Performance Restricted Stock Unit Award Agreement under the Cognex Corporation 2023 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.1 of Cognex's Current Report on Form 8-K, as filed with the SEC on May 4, 2023 [File No. 1-34218])

10P * Letter Agreement, dated January 3, 2024 between Cognex Corporation and Paul D. Todgham (incorporated by reference to Exhibit 10.1 Of Cognex's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 [File No. 1-34218])

10Q * Relocation Letter Agreement, effective as of April 22, 2024, by and between Cognex Corporation and Dennis Fehr (incorporated by reference to Exhibit 10.1 of Cognex's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 [File No. 1-34218])

10R * Transition Agreement, effective as of April 30, 2025, by and between Cognex Corporation and Robert Willett (incorporated by reference to Exhibit 10.1 of Cognex's Quarterly Report on Form 10-Q for the quarter ended June 29, 2025 [File No. 1-34218])

19 Cognex Corporation Insider Trading Policy (incorporated by reference to Exhibit 19 of Cognex's Annual Report on Form 10-K for the year ended December 31, 2024 [File No. 1-34218])

21 Subsidiaries of the registrant (filed herewith)

23.1 Consent of Grant Thornton LLP (filed herewith)

31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CEO) (filed herewith)

31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (CFO) (filed herewith)

32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CEO) (furnished herewith)

32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (CFO) (furnished herewith)

97 Policy Relating to Recovery of Erroneously Awarded Compensation (as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1) (incorporated by reference to Exhibit 97 of Cognex's Annual Report on Form 10-K for the year ended December 31, 2023 [File No. 1-34218])

101.SCH Inline XBRL Taxonomy Extension Schema Document (filed herewith)
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith)
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith)
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith)
101.DEF Inline XBRL Taxonomy Extension Schema Document (filed herewith)

104 Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101*.) (filed herewith)
* Indicated management contract or compensatory plan or arrangement

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 12th day of February 2026.

COGNEX CORPORATION

By: /s/    Matthew Moschner
Matthew Moschner
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/    Matthew Moschner President, Chief Executive Officer and Director (Principal Executive Officer) February 12, 2026
Matthew Moschner

/s/    Dennis Fehr Senior Vice President of Finance and Chief Financial Officer (Principal Financial Officer) February 12, 2026
Dennis Fehr

/s/    Laura MacDonald Vice President of Finance and Principal Accounting Officer (Principal Accounting Officer) February 12, 2026
Laura MacDonald

/s/    Sachin Lawande Director February 12, 2026
Sachin Lawande

/s/    John Lee Director February 12, 2026
John Lee

/s/    Angelos Papadimitriou Director February 12, 2026
Angelos Papadimitriou

/s/    Marjorie Sennett
Director February 12, 2026
Marjorie Sennett

/s/    Anthony Sun Director February 12, 2026
Anthony Sun

/s/    Robert J. Willett Director February 12, 2026
Robert J. Willett

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