Greetings and welcome to the Cognex Corporation third quarter 2025 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Greer Aviv, Head of Investor Relations. Thank you. Please go ahead. Thank you, operator. Good morning everyone and thank you for joining us. Our earnings release was published yesterday after market close and our 10-Q was filed this morning. The earnings materials are available on our investor relations website. I am joined here today by Matt Moschner, our CEO, and Dennis Fehr, our CFO. Today we plan to share several key messages with you including progress on our strategic objective to be the AI leader in the industry and market trends, our performance in the third quarter, and our expectations for the fourth quarter. After prepared remarks, we'll open the lines for Q&A. Both our published materials and the call today will reference non-GAAP measures. You can find a reconciliation of certain items from GAAP to non-GAAP in our press release and earnings presentation. Today's earnings materials will cover forward-looking statements including statements regarding our expectations. Our actual results may differ from our projections due to the risks and uncertainties that are described in our SEC filings, including our most recent Form 10-K. With that, I'll turn the call over to Matt. Thanks, Greer. Good morning, everyone, and thank you for joining us today. Q3 was another strong quarter for Cognex. We delivered outstanding financial results, which reflect our commitment to profitable growth and disciplined execution. At the same time, we remained focused on advancing our strategic objective to be the leading provider of AI technology for industrial machine vision. Turning to page three of our earnings presentation, let's look at some highlights from the third quarter. I'm pleased to share that our third quarter key financial metrics all came in at the high end of our expectations. We delivered double-digit revenue growth and achieved our highest adjusted EBITDA margin since Q2 of 2023. In addition to the strong financial performance, we are making meaningful progress against our strategic objectives. First, we continue to execute our salesforce transformation, acquiring new customers in underpenetrated verticals such as packaging using easy-to-use AI-enabled products. I'm also very pleased with the progress we've made this year driving productivity in our sales organization by using new CRM tools and updated processes. Second, we are advancing our technology leadership in AI. This quarter, we're excited to announce the launch of our new SLX (Solutions Experience) product line in logistics, which we are calling SLX. This release introduces our latest AI vision tools to solve novel applications in this fast-growing vertical. Turning to page four, you can see that the SLX epitomizes our mission to make advanced machine vision easy. By combining industry-leading AI with intuitive deployment workflows, we can solve critical logistics applications with minimal user training. Our initial rollout of SLX devices targets specific applications including object classification and side-by-side detection, both of which complement barcode reading in mixed application workflows. Correlator, a leading freight package and logistics provider, recently deployed SLX as the next step in their automation strategy, enabling advanced package detection within its sortation process. Since implementation, Correlator has significantly reduced costs tied to process errors and seamlessly scaled the solution across its terminals and network. These new products extend our reach beyond traditional barcode reading into higher-value vision applications in logistics. They help accelerate automation adoption by offering customers scalable, easy-to-use solutions that improve efficiency. With SLX, we're also laying the foundation for other application-specific solutions. Next, let's review our current trends across key end markets as shown on Page five of the earnings presentation. Please note that my discussion on end market performance excludes the one-time benefit from the commercial partnership in medical automation in our Q3 2025 results and an additional month of Moratex revenue in Q3 2024 results. Although the macroeconomic backdrop remains uneven and geopolitical uncertainty persists, we continue to see momentum in consumer electronics, logistics, and packaging, while automotive remains soft. Starting with logistics, this market remains a strong growth driver. Q3 marks our seventh consecutive quarter of double-digit year-over-year revenue growth, which was led by large e-commerce customers this quarter. The current cycle is being driven primarily by automation of existing facilities rather than new capacity expansion. We believe automation penetration is still low in this vertical and the ROI on our products is very strong. Next is automotive. As expected, automotive revenue continued to contract, although year-over-year declines moderated through the year. The market remains challenging, but we continue to anticipate less steep decline in 2025 relative to last year's 14% contraction, and we believe we are nearing the bottom. Looking ahead, we continue to see promising long-term opportunities in the automotive market as customers prioritize improving vehicle quality and driving down operating costs. Next, let's talk about packaging. The business delivered solid revenue growth across most geographies in Q3. Packaging remains a large underpenetrated market with less cyclicality than other verticals. We're making progress with new products and expanding sales coverage, positioning us to capture incremental opportunities and drive further penetration. We maintain a positive full-year outlook for packaging. Turning now to consumer electronics, Q3 revenue grew significantly year-over-year, driven by broad-based strength. This market is showing clear signs of recovery following a prolonged down cycle, and we are well positioned to benefit from ongoing supply chain diversification and evolving device form factors. We maintain a positive outlook for the full year as we expect consumer electronics to deliver its first year of revenue growth since 2022. Finally, turning to semiconductor, Q3 revenue increased modestly year-over-year against a very strong comparison. Although we maintain a cautious full year outlook, longer term we expect semi growth to benefit from the AI driven investment cycle, reinforcing our confidence in this market. Cognex's deep relationships with leading semi equipment manufacturers position us well for future growth. In summary, Q3 underscores the strength of our strategy and execution. We remain focused on being the number one provider of AI technology for machine vision, delivering the best customer experience in our industry, and doubling our customer base over the next five years. These strategic objectives, supported by operational discipline and continued innovation, position us to drive long term profitable growth and create sustainable value for our shareholders. Let me now hand it over to Dennis to walk through the financial results and the outlook for the fourth quarter. Dennis, thank you, Matt. Before reviewing Q3 results, I'd like to address two items impacting comparability this quarter. As we discussed last quarter, we entered into a commercial partnership with a strategic channel partner to better serve OEM customers in the specialized field of medical automation, which contributed $30 million of revenue this quarter. In addition, our Q3 2024 results included an additional month of Moratex financials as we aligned accounting schedules, which added approximately $5 million of revenue to the prior year quarter. A detailed revenue bridge illustrating these factors is available on page six of our presentation. Revenue growth excluding the impact of both the commercial partnership and the additional month of Moratex a year ago of 13% on a constant currency basis, we believe this number provides the most transparent and accurate representation of our underlying top line performance for the quarter. Turning to the quarterly details, I'll begin with a discussion of reported financial results followed by the financials adjusted to exclude these two items. Starting with the as reported financials on Page seven, third quarter revenue of $277 million expanded by 18% year-over-year or by 16% on a constant currency basis. Looking at geographic revenue trends on a year-over-year constant currency basis, Americas revenue expanded by 27% in the quarter, led by continued strength in logistics and the one-time contribution of the commercial partnership. Europe grew 24%, driven primarily by certain consumer electronics customers shifting their ordering from China-based entities to those in Europe. As noted last quarter, this change in ordering entities does not indicate any underlying shift in business mix or customer demand. Excluding this procurement change, Europe grew modestly as strength in packaging and the one-time contribution of the commercial partnership were partially offset by continued weakness in automotive. Greater China revenue increased 9% after adjusting for the shift in ordering entities and the additional month of Moratex included in last year's Q3. Growth in Greater China was very strong. This broad-based momentum across all end markets except automotive. Other Asia revenue declined 5% in the quarter after adjusting for the additional month of Moratex revenue last year. Other Asia grew 4% driven by consumer electronics supply chain shift. Staying on Page seven, adjusted EBITDA margin expanded 730 basis points driven by operating leverage, disciplined cost management, and the one-time benefit from the commercial partnership. GAAP diluted earnings per share were $0.10, down 39% from a year ago, primarily due to a one-time discrete tax expensing rule of $33 million related to the One Big Beautiful Bill Act. Adjusted diluted EPS of $0.33 increased by $0.13 or 69%. I will now cover the underlying business performance adjusted to exclude the two items impacting comparability, starting with the financial highlights of the third quarter. Page eight of our earnings presentation details our performance on three key financial metrics. One, a djusted EBITDA margin was 22.1%, representing an increase of 450 basis points year-over-year to our highest margin since Q2 of 2023. Two, a djusted EPS increased 47% year-over-year, the fifth consecutive quarter of double-digit EPS growth. Three, o ur trailing twelve-month free cash flow conversion rate reached 133%, meeting our target of greater than 100% for the fourth consecutive quarter. Our focus on disciplined cost management and profitable growth ensured that this quarter's strong revenue performance translated into strong bottom line EPS growth and robust free cash flow. These financial results represent another key milestone towards the through-cycle financial framework we outlined at our investor day. Turning to the income statement adjusted to exclude the two items impacting comparability, on Page nine of our earnings presentation, revenue increased 15% year-over-year and 13% on a constant currency basis. Adjusted gross margin was 67.7%, down 170 basis points year-over-year, driven by unfavorable mix and the impact of tariffs. Adjusted operating expenses grew 1% year-over-year and declined 1% on a constant currency basis, driven by continuous cost management, partially offset by a meaningful headwind from incentive compensation in the quarter. We have now delivered the combination of revenue growth and adjusted OpEx reduction for three consecutive quarters. While we are pleased with these results, we continue to drive efficiency across the organization and incurred $3 million of reorganization charges in the quarter, which are excluded from adjusted operating expenses. Looking ahead on an annual basis, we expect adjusted operating expenses to grow at a slower pace than revenue. The mentioned combination of revenue growth and continuous focus on cost management drove adjusted EBITDA margin to 22.1%, near the upper end of our guidance range. Adjusted diluted EPS was $0.28, representing 47% year-over-year growth. This strong EPS performance was driven by robust revenue growth, disciplined cost management, and the lower diluted share count compared to last year. We generated $86 million in free cash flow in Q3, exceeding the total amount generated during the first nine months of 2024. In a single quarter trailing 12 months, free cash flow reached $214 million, surpassing the $200 million mark for the first time since Q1 of 2023 and increasing 132% compared to the 12 month period ending Q3 of 2024. Trailing 12 months, free cash flow conversion was 133%, easily meeting our target of greater than 100%. We continued to drive working capital efficiencies in Q3, and our cash conversion cycle declined sequentially for the sixth straight quarter. Turning to capital allocation, we returned $37 million to shareholders this quarter through a combination of share repurchase and dividends. Over the past 12 months, we have returned $224 million to shareholders, more than 100% of our free cash flow. Over the long term, we remain committed to returning capital as an important component of the disciplined capital allocation strategy we outlined in June. We ended Q3 with $600 million in net cash and investments, providing flexibility to pursue M&A opportunities while continuing to return capital to shareholders. Moving to Page 10 of our earnings deck, I'll now review our financial guidance for the fourth quarter. In Q4, we expect revenue to be between $230 million and $245 million, representing growth of approximately 3% at the midpoint. The implied sequential decline is primarily driven by the seasonal step down in our consumer electronics business and is in line with our historical Q4 seasonality over the past decade. Adjusted EBITDA margin is expected to be between 17% and 20%, with the midpoint consistent with the level achieved in the prior year. Adjusted earnings per share are expected to be between $0.19 and $0.24, with the midpoint of this range representing approximately 7.5% year-over-year growth driven by revenue growth and reduction in share count. We continue to expect no material impact on full year adjusted EBITDA margin and earnings per share from tariffs announced as of today. Our Q4 guidance implies mid single digit full year 2025 revenue growth excluding the benefit from the commercial partnership. Looking ahead to 2026, average PMI readings in Q3 for major economies including the U.S., Eurozone, China, and Japan were between 48 and 51, signaling that industrial activity has yet to show sustained expansion. These conditions suggest we remain in the initial stage of the cycle as we shared at Investor Day. This stage is characterized by moderate growth with similar growth dynamics in 2026 as we are experiencing in 2025, excluding the one time benefit from the commercial partnership. To clarify, this outlook is not formal revenue guidance nor does it reflect changes in business conditions or visibility. Rather, it represents our view of the cycle based on macroeconomic indicators and our full cycle financial framework. In this early cycle environment, we remain committed to disciplined cost management by driving margin expansion and EPS growth combined with strong cash generation. Now, Matt and I are ready for your questions. Operator, please go ahead. Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We do ask that you please limit yourself to one question and one follow up. Again, that is star one to register a question at this time. Today's first question is coming from Damian Karas of UBS. Please go ahead. Hey, good morning everyone. Hey Damian. Hey Damian. I wanted to begin by asking you about consumer electronics part of your business. How much of the current demand strength you're seeing is a result of rising customer output and product rollouts versus your customers migrating their footprint to other regions? I'm curious what you're hearing from some of your CE customers in terms of their plans to make further shifts of their supply chain and what that could mean for your business in 2026. Hey Damian, this is Matt. Thanks for the question. We're very pleased with the performance of our consumer electronics business this year and as we said in the comments, it being a growth year for us in consumer after several years of a down cycle. Where is that coming from? I think you hinted at a few of them. I was actually in ASEAN and India a few weeks ago, observing some of the shifts in manufacturing from mainland China, working with a lot of the machine builders that underpin this industry. I would say there is quite a bit of activity that we're participating in as supply chains diversify in this market. Whether that's countries like Vietnam, Malaysia, India, I think all are really trying to participate in that migration. I wouldn't say that's the only growth driver. I think we said our business is growing broad based. It's not just a few customers, it's many customers that are seeing increased activity. I think we are seeing things like changes in device form factors and entirely new form factors, particularly as consumers are wanting to take advantage of advanced AI technology in different ways at the same time. Advanced AI vision for some of the more complex cosmetic inspections is also maturing and we're seeing our ability to solve new applications that maybe historically weren't addressable. I think you put all those things together and I think we feel very optimistic about where we are and how we can participate across multiple growth factors. As a global company, I think customers are looking to us to help them produce, whether it's in one geography or around the world. We're excited for how that could carry into 2026. That's really helpful. I wanted to ask you about China, which I think if I heard correctly, you saw 9% growth. And. You know, if I just think about what we've heard from a lot of our other industrial companies that have reported third quarter so far, we seem to be bucking the trend there where I think a lot of others are experiencing some softness in China. Can you just elaborate on what you're seeing, what's driving the broader strength there? Yeah, absolutely. Thanks for noticing. In Q3 we saw strong year-over-year growth in Greater China, which, as a note, includes Taiwan for us. I would say it is broad-based across verticals with perhaps the exception of automotive. We've made great investments in China and the Greater China region. We have landed more localized distribution. We've invested in our sales channel. We have local engineering in country to try to be a more nimble company in that country and in that region. I think you're starting to see some of those things pay off. As a reminder, a good portion of our business, I think in the past we've said roughly three-quarters are multinationals operating in China and roughly a quarter being domestic Chinese manufacturers. They like working with Cognex, not just because of our excellent technology but also our global footprint, particularly as customers are thinking about potentially producing in China and other Asia regions given some of the trade and tariff news of recent months. We're encouraged by the momentum. I would also say the competitive dynamic in China has stabilized in many ways and we're seeing pricing stabilize as a result. You put those things together and we had a great quarter. I remain pretty optimistic about how the investments we've made in China could pay off for us heading into next year. That's great to hear. Thanks for all the color. Thank you. The next question is coming from Andrew Buscaglia of BNP Paribas. Please go ahead. Hey, good morning everyone. Hey Andrew, good morning. I was hoping you could discuss some of the trends you're seeing in logistics. I mean, obviously that's been very strong for some time now, but how much more of this existing capacity reinvestment from customers can you benefit from? At what point do you need there to be another leg up in new warehouse build outs to grow? Yeah, it's a great question. As we said in the prepared remarks, most of our growth is driving productivity in existing facilities and I still see room to grow there. I think we've also said we think this market is still in the early innings of its automation story. I believe that too. You go into a modern warehouse today, you see a lot of vision systems, but today they're mostly doing things like barcode reading and helping with the sortation process. I think the product release we had yesterday is a really exciting one for us and I think for the industry because it really is the first meaningful step in bringing vision and visual inspection to warehouses. It's good to remember why that hasn't happened yet, because it's a really, really hard problem, right, given the variation that you see going through some of these facilities. Millions of SKUs at very high rates that are very cost sensitive. We're excited about how we can drive vision penetration in logistics. I think that is, you know, I don't mischaracterize it as a white space and I think one that really can only be addressed by advanced AI. I think we're well positioned for that and the SLX is the first step in that journey for us. I think a lot of our customers still have very much a productivity focus, right. I don't think we're yet over the hump on how we can get more and how they can get more productivity from existing facilities. I would just say right now our strength is in retail, distribution and e-commerce. I think we're relatively newer to areas like the parcel market and helping other areas like airports as they look to automate where we're seeing quite a bit of investment. I think those are areas where we could grow as well. I think we remain optimistic that the growth story of logistics is not yet over. I would just say maybe a bit nonlinear, particularly as some of the larger customers that we serve, how many more years can they have outsized investments? Over the medium term, I think we feel very good about the growth story. How we get there might be lumpy or nonlinear is how I characterize it. Interesting. Okay. It's a surprise to see semis grew a little bit. I think we weren't expecting much, if any, growth at all this year, which you maintained your outlook in that space, I guess. What's driving that little pick up there? Can you talk about maybe how you would benefit from the memory market? I would imagine you guys would have exposure there that seems to be certainly benefiting from AI, but if you talk about that a little bit, that'd be great. I think the underlying demand for chipsets, for memory, for other active components is growing and I think will, given the demand for new devices and the underpinnings of advanced AI, as we see a really exciting set of new computing capabilities being announced. Yes, we would participate in all of those things. It's useful just to remind ourselves how we participate in this market, which is really through selling vision to large equipment manufacturers that produce the machines that handle the wafers or the finished packaged products. That's really how we address the market. The sorts of applications that we solve are really traceability. These are very high value pieces of silicon wafers that you want to make sure have good traceability, that have good quality. We do visual inspection. Those are primarily how we serve the market. The growth in this market I would also characterize as somehow nonlinear. Right. The ordering of those machines is very much dependent on the build out of specific facilities. Right now we're seeing good, healthy activity. I think there's good underlying demand for chips. I think there is a bit of changes in where things get made and where the fabs are located. We see build out going back to the Chips Act in the last administration here in the U.S. We're seeing ambitions in countries like India to have domestic semiconductor production capacity. I think there's also a geographic angle as more regions and countries participate in the manufacturing of advanced chipsets. I think Cognex will be there and we'll serve that market as we do today through our large equipment manufacturing partners. Got it. Thank you. Thank you. The next question is coming from Tommy Moll of Stephens Inc. Please go ahead. Good morning and thank you for taking my questions. I wanted to ask about automotive. Matt, I think I heard you say it feels like you're nearing a bottom there. What details can you give us? What visibility do you have into next year? To the extent you can distinguish. What you're seeing in North America versus Europe, that'd be appreciated as well. Thank you. Yeah, no, I think it remains a challenging market for us, although I think we are nearing a bottom. I think you're right to point out the geographic differences in growth. You know, here in the U.S. we are seeing more activity, I would say relatively more activity than Europe, which seems to be taking a longer time to recover. It's not hard to imagine why there's different geopolitical considerations around trade and tariffs for this industry. We're definitely seeing larger differences in relative growth rates in the Americas and Europe, with relatively more strength in the Americas than Europe. We also serve large automotive manufacturers in Asia, in Japan and Korea, mainland China. I think there, I think it's again, mixed. I think it depends on specific OEMs, their transitions between powertrain types, the geopolitics of those things. I think it's hard to call. I think we are nearing a bottom. I think this year is going to be better than last year. Our teams are working with each of those OEMs on their automation plans, which we still see over the medium and long term as being healthy. This is an industry that is still struggling with quality escapes and recalls. Vision helps with that. It's an industry that struggles with labor and qualified skilled labor. Automation helps with that. Generally speaking, mitigating the increase in costs associated with production and tariffs and things like this, automation helps with that. In the near term I'd say it's improving and stabilizing and over the long term I think we remain optimistic. Dennis, question for you on margins, if we look at what you just reported in the third quarter and this will be X Moratex X the commercial partnership, you delivered teams top line growth with only a point of adjusted OpEx growth. Clearly that's not repeatable over a long time horizon. If we take t hat as one bookend, the other bookend you gave us is basically a reminder of your long-term framework. Just that OpEx grows at a slower rate than sales. That's a pretty wide range for us to think about. If we're thinking next 12 months, is there anything you could do to situate us somewhere within that wide range in terms of what's reasonable? Yeah, no. Fair question, Tommy. I would say maybe first clarifying on the quarter, if you take in constant currency we would be down by a point. Then considering that we had some incentive comp headwinds. Last year was underperforming year and this year looks a bit better in that regard. In prior quarters we have been talking about that we have been two or even three points down compared on the year-over-year comparison. That's kind of if you think about constant currency excluding incentive comp, that's kind of the run rate which we are for this year and we keep on driving that. Right. We talked about taking on additional reorganization charges in this quarter and clearly that's for us to set ourselves up for the future and to drive success. That kind of put that a little bit also in context in my prepared remarks of how we think where we are in the cycle. We talked about like in general we are a short cycle business, so we don't have a lot of visibility into 2026. We use these macroeconomic indicators like PMI and they tell us we're in the early stage of the cycle. That means moderate growth and then a moderate growth environment for us means to be keep on working on OpEx and drive efficiency throughout the organization. That basically then sets us up still for hopefully attractive EPS, adjusted EPS growth. If you look at this year, mid single digit growth on the top line excluding the commercial partnership, but adjusted EPS, if you take the implied guidance, excluding the commercial partnership, that's more than 20% of EPS growth. That's kind of how we think the playbook could look like for 2026. That means the moment macro indicates moderate growth. Let's keep on working on the OpEx side and do what we have to do so that we show that adjusted EPS shows attractive growth rates. I hope that helps a bit with narrowing it down to your question, Tommy. Yep, sure does. Thank you both, and I'll turn it back. Thank you. Our next question is coming from Jake Levinson of Melius Research. Please go ahead. Hi, good morning everyone. Hi, Jake. Hey Jake. Just wanted to go back to logistics for one second. I know folks have seen some pretty. Nice growth there the last couple of quarters, and it's put some pressure on your gross margins, if I recall, just given the engineering resources that you. Need to use with implementing machine vision. For some of those customers. The question I guess is as you r oll out some of these AI enabled products, does that actually lower your cost to serve those customers going forward? Yeah. Thanks, Jake. Absolutely. I mean, SLX really strikes at the heart of really two pieces of the P&L. One is on the gross margin side. We see that the ROI on visual inspection is very strong, and we're able to command better pricing for a given product cost. We're excited about that. You might even expect similar margins as we see in vision in our factory automation business for logistics. I think one of the special parts of that product is it was completely rebuilt with simplicity in mind. Really a low touch, no touch deployment that maybe takes Cognex out of the loop entirely in terms of doing feasibilities but also scale deployment. I fully expect we'll see benefits on the gross margin line as well as on the OpEx line as we can grow without having to grow our field service resources to deploy those systems in a similar way. Okay, that's helpful. I just wanted to touch quickly on the commercial partnership that you announced. I think if memory serves, you've had m ore of a presence in sort of t he medical device space as opposed to lab automation. Are there more opportunities like this to partner with some of these OEMs, whether it's the medical space or others, and how does this fit into the larger strategy around expanding into some of these newer markets? I think this is a more specialized case where we found an opportunity with a partner in a more niche area for us. I wouldn't say I'd want you to extrapolate that as any sort of new playbook for growth for Cognex. No, I wouldn't say that. Okay, fair enough. Thank you very much. I'll pass it on. Thank you. Our next question is coming from Piyush Avasthy at Citi. Please go ahead. Good morning, guys. Matt, maybe like on your investor day you laid out a 6 to 7% growth contribution from increased machine vision penetration. It's just been like a couple of quarters, but maybe some early feedback on. How that is progressing. You have been, you know, it. Has been associated more with packaging. Maybe comment on how you can see this supporting your other end market, and then there's this reorganization. Maybe just comment on how you balance these cost actions while still being aggressive towards penetrating new markets. Yeah, thanks. Thanks. Let me take the penetration question first. You're right, we said there were 6% to 7% of penetration growth on top of core growth of each of our industries that led us to a 10% to 11% through cycle organic growth rate. I think you had that right. Where are we seeing it? A big part of that penetration, as we said, was a lot that's very technology driven. As we innovate, we are solving often for the first time applications that haven't been solved before. I think I mentioned logistics as very much one of those. I suspect and we're seeing that the SLX is solving new vision applications that haven't been solved before. We're driving penetration in logistics with vision. Similarly, in consumer electronics, we're innovating with new tools today that are doing things around cosmetic defect inspection that were not possible in the past. We're driving penetration in consumer electronics and then packaging. You're right. I think that is more about how do we educate the market and educate customers who are more regional, smaller manufacturers on the benefits of vision. We're doing that through investments in our sales channel. Those are just three areas I would point to where we're driving penetration through technology, through channel, through sales coverage. I'm excited about each of those. Your second question is on cost and how we're thinking about cost management and cost reductions in the context of our growth story. We take, as we've said in the past, a very long-term view on growth and investment. As a technology company we have to. At the same time, we're many months into making sure that given the stage of the growth cycle that we're in, we are managing our cost basis smartly. Over the last six months we have moved quickly to right-size our cost basis in a number of areas. I would say we really took a hard look at all areas of the company and we continue to, whether it be our sales capacity, our engineering capacity, our operations footprint, back office functions and G&A. It's been a very collaborative approach as a leadership team. I think we've done it smartly. I think Cognex employees are bought into the journey and we're excited for how we can take that into next year and drive profitable growth over the medium and long term. Let me add to that just kind of how we manage that. We're taking a very programmatic approach. It means we have clearly identified areas and work streams defined on which we work. You can see that not coming out with like here's the one big whatever reduction in force type of approach. We're really kind of looking at area by area and looking for efficiencies, getting these efficiencies and moving on and revisiting after some time again to see how is that work and where can we improve further. Think about it that we are driving a program which is not looking like that's just kind of cut cost in the short term and maybe break a lot of things along the way. It's really a well-balanced programmatic approach which brings the right balance between supporting the top line growth and at the same time supporting also the bottom line. Very helpful. I know you just give guidance one quarter ahead, but you did spoil us last time with some incremental color on 4Q. As I said, as we think of like 1Q26, anything you want to r emind us in terms of seasonality, any m aterial deviation from the end market commentary t hat you just highlighted today, that would be helpful. Yeah, great question. Certainly as you mentioned, we typically don't give longer term guidance. Keep in mind we're a short cycle business, but there's certainly some modeling comments I can provide. First, keep in mind on the top line side as well that from a seasonality point of view, Q1 often is the lowest quarter in the year. That means in that regard you may want to look at really a year-over-year comparison. Right. Don't look at a sequential comparison, look on top line and year-over-year. When we think about bottom line and here maybe particularly OpEx, maybe I can remind you that in Q1 this year we had some favorability in OpEx from exchange rate as well as from Stockholm. These ones may not repeat in Q1 2026. I think on the OpEx side it's probably better for you to model sequentially and not on a year-over-year basis. Maybe two comments: top line, look year-over-year on the seasonality, and on the OpEx side. With that, the bottom line rather looks sequentially and not year-over-year. I hope that's helpful. I appreciate all the color, guys. Good luck. Thanks. Thank you. The next question is coming from Guy Hardwick of Barclays. Please go ahead. Hi, good morning. Hey, Guy. Good morning. Hi. I would like to ask about automotive, which obviously is your softest market. There has been some, maybe more slightly positive commentary with some major CapEx announcements by OEMs, and I guess typically if you're looking at 2026 and where the m odel launch cycle looks perhaps a little better in the second half of the year. You surely have to put the CapEx in like 12 months ahead. I was wondering if there's any lead indicators from your customers in terms o f models or product refreshes or CapEx p lans, which may give you some cause for optimism f or 2026 in auto. Yeah, thanks, Guy. Yeah, I would say we engage with all the major OEMs on their automation plans and on their platform plans, if you want to call them that. You're right, there have been some big announcements from large OEMs, I would say in all regions in terms of how they plan to replatform for the future, whether that be hybrid powertrains or fully electric or really just, I would say, bringing a more software-defined customer experience to the car. As they do that, you would expect a healthy dose of automation and significant retooling. I would say in terms of how those vehicle platforms are made, I wouldn't comment on specific expectations for auto next year. I think that would be premature. I would just echo the comments I made, which is we are seeing differences in business momentum across geographies, relatively stronger in the U.S., relatively weaker still in Europe, and somewhere in the middle in Asia. We work with them all. We're staying close to it, but I think it's a bit too early to call at this point. Thank you. Thank you. The next question is coming from Joe Giordano of Cowen. Please, go ahead. Hey guys, good morning. Hey, Joe. Hey, c an you, when you talk about like AI making things easier to deploy, it's also, I guess, helping non-traditional players start to try to deliver solutions here. We're seeing that from automation players, things like that. Can you maybe talk about the competitive environment, how it's evolving with who's trying to participate on the fringes and what that means for you? Yeah, sure. Maybe I'll just talk about us for a minute. We're on our fourth generation of AI vision. We've been at this for almost 10 years, starting with the acquisition of systems in early 2017. We have great teams focused on taking some of the latest, best open source models and adding our customizations, if you want to call it that, to make them more relevant and run effectively in industrial vision applications. Think of that as very much our secret sauce, Reto, who leads our vision tools development, talked at length at Investor Day about how we do that and why we think we do it in a differentiated way. I'd call that out. It's really about model performance on accuracy, on speed, on scalability. I still see Cognex as leading in those areas. You're not wrong to say AI is leading to a democratization of folks that are trying visual inspection more and more within industrial environments. In that context, I see it as actually a great growth engine for getting more users of vision within factories. It's on us to make sure that those vision tools are Cognex vision tools. Are we seeing significant changes in the competitive dynamic or not? We keep a close eye on it. I'm very happy with the progress we're making in AI. Since you guys have kind of evolved the strategy a little bit, the only part that we haven't really seen a ton of evidence of yet is on the M&A side. Can you maybe talk us through what you're seeing out there? I know valuations are challenging, but a lot of buzz out there on robotics, now, humanoids, all these different things. Where does it make sense for Cognex to participate going forward? Hey Joe, happy to take that question. Yeah, I think as we outlined it, Investor Day, certainly M&A is part of our capital allocation strategy and certainly with the strong cash flow generation, which we have seen this year. We definitely have the potential to do M&A. At the same time, it's also very clear that we're setting ourselves a very high bar in terms of a strategic fit and then of the financial profile of the potential target company. I think definitely there are areas where we could bring in, especially like adding a broader product basket to our direct sales force. That's where we can really create a lot of synergies from our perspective. At the same time, I really want to be mindful that we don't feel like a pressure to have to do an M&A and that we will be very mindful about the financial metrics and financial framework around it. That could mean that an M&A wouldn't be on the card for the next two or three years; it will really depend on actionability and if we can find the right target. Thanks guys. Thank you. The next question is coming from Ken Newman of KeyBanc Capital Markets. Please go ahead. Hey, good morning guys. Hey, Ken. Morning, Dennis. I just wanted to kind of come back to those 2026 comments that you made at the end of your prepared remarks. I understand it's not formal guide, but when you say similar growth trends x the commercial partnership, is that comment relative to how you see the full year of 2025 playing out, or is that more so relative to what you've seen in the last couple of quarters? Right. I just asked because you do seem a bit more constructive on most of the end markets that you're operating in. You're even kind of calling out, you know, being close to a bottom in auto. I'm just trying to understand the thought process there. It's really about coming back to, I think I talked about that before. We had a short cycle business and in the largest part of our business, in fact your automation, you have limited visibility at the three months visibility and certainly we think about the end markets. Matt provided some of the voiceover there and there are some areas which we really like to see, like consumer electronics looks good. Matt talked about logistics, like how is there a linear growth trend on large scale customers or not, and automotive maybe finding its bottom. There are definitely different aspects there. Sometimes we're trying just to not get too much into the details on each of the markets and take a broader view on what is macro telling us. Just on that macro side, if you look at that, it just doesn't point to that at the moment. From the PMI, as of today, the 2026 will look very different than 2025. That's just another data point which we're taking in consideration. I think mostly important, why are we doing that? Right. We want to think about how do we manage the company also in terms of on the OpEx side and where do we invest and where not. We provided it more as a framework in the sense of how do we think and how do we do management decisions right now and wanting to give you a guidance. I was trying to be very clear about this. Hey, this is not a guidance. Yep. That makes sense. I appreciate that. Maybe for the follow-up here, sorry if I missed it, but did you provide an update on the One Vision platform and any color on when that becomes more commercially available? Yeah, thanks, Ken. Yeah, no, we didn't. Not in the prepared remarks, but I'm happy to now. It's one of the more exciting things we're working on. Just to remind the group, we launched One Vision, or we announced One Vision, I would say in June, just before the investor day, and we said that it was in a limited release. What does that mean? That the technology is still under active development. We're working with select customers, and it can be deployed against specific Cognex embedded systems. Today, and I would say four, six months on from that announcement, we continue to make very good progress with customers. I think they like it quite a bit. We're seeing it drive great penetration in new applications that previously weren't solved or keeping customers within our In-Sight Vision Suite ecosystem longer. I think both of those are great things. I think that the usability of the technology is excellent. It offers customers great ways to collaborate on model training and great ways to track the efficacy of those models after they're deployed. We're getting great feedback on that. What comes next? We will continue to engage with customers. You can think of us engaging with hundreds of our tens of thousands of customers, so still quite targeted. We are targeting a full scale launch in the first half of next year, and that would open up the product line to more customers in more geographies that would have broader support of more of our embedded systems. We're really focused on that, and we're excited with momentum today. I don't have any updates for you in terms of the commercial model for the product, but just to say it is performing well against the metrics that we set for it. Appreciate it, thanks. Thank you. The next question is coming from Tomo Sano of JPMorgan. Please go ahead. Hi, thanks. This is Brendan. She on for Tomo. Just with the launch of the SLX portfolio, can you talk to the pipeline for the new AI enabled use cases that you see and sort of how you see that impacting both your TAM and competitive positioning over the next year or two? Yeah, we see ourselves as a first mover in this style of AI vision for logistics. I highlighted two applications: really object classification, right, so telling the system what it's observing, as well as side-by-side detection, which is a very common application, particularly in high speed sortation and warehouses where you really want to make sure that when you're identifying an object, could be a box or a singulated item, that it's one of them, not multiples of them. That really is helpful so that as those things get sorted and diverted and shipped, you're not shipping multiples of something. Those are the two applications that we're really focused on. I would say every week and month that goes by, we find new applications for the underlying AI detection algorithms. How that affects our total market, we have an estimate for that and we think it is large and growing substantially faster than, let's say, the traditional barcode reading portion of that market. Let's see how it goes. We've engaged with customers well ahead of yesterday's release and the feedback has been very positive. I'm excited to get to a full release status and update you in the future on how that product line is going. Great, thank you. That's it for me. Thank you. The next question is coming from Jamie Cook of Truist Securities. Please go ahead. Hey, good morning. This is actually Kevin Wilson on for Jamie. Thanks for squeezing me in. I want to ask on you. Hey, I want to ask on Europe. I think you said grew modestly excluding the procurement shifts in consumer electronics. Sorry if I missed it. Was that modest growth also excluding the one-time partnership in the quarter? Then, just more broadly, excluding the one-time, excluding the procurement shifts, how are you thinking about demand trends, organic growth, and your visibility in Europe? Maybe if it's possible to strip out auto, think about how that market is performing. Thanks. Yeah, maybe. Let me start here and then perhaps Matt will add. I think if you look at Europe, right, first of all, where did we see strength? We saw strength in the packaging market thanks to our salesforce transformation and kind of increased outreach there and penetration with our AI easy to use products. At the same time, we see a stronger weakness still in the automotive side. I talked about that before this. The one market in automotive which has really slowed down kind of balanced itself out a little bit. In general, I would say, you know, Europe, clearly if you look back to the PMI numbers, PMI have been improving over the last couple of months, but really from, I would say, almost depressed level more to maybe close to a neutral level that we got. I would say we remain still a bit cautious about Europe and wouldn't call that there is some large growth coming somewhere in the near term. At least that's not what is suggested by the macro data which we're looking at. Thanks, that's helpful. For my follow up, now that I think we're about one year into your sales reorganization, I wonder if you can update on your assessment of that change in strategy. I know we've long stopped talking about emerging customer in those terms, but with one vision and your broader, you know, expanding the customer base into less sophisticated customers, I guess what inning are we in for Cognex market penetration there and any specific goals you have for 2026 on your path to doubling the number of customers served. Thank you. Yeah, thanks, Kevin. Yeah, sure. No, I think you have it roughly right. Just to remind the group, we started on this journey of really substantially broadening our sales channel several years ago, really this in 2023. As we expanded our sales force and brought on many new sales, as we call them, sales engineers, we made the decision to combine what was really two sales organizations into one earlier this year in January. I would say that was the right decision, and it's going very well, where we've really formed new territories and new teams focused on different missions. Those missions are between finding new customers, driving penetration at existing customers, working more sophisticated customers like machine builders and other OEMs. I'm very, very pleased with where we are in terms of our sales strategy and sales organizational structure. As we look forward into the new year, it's less about significant substantial change and it's more about continuous improvement. We made big investments over the years in modern business systems and tools, primarily in the area of CRM. I would say we're starting to use those tools quite effectively in terms of how we identify new sales opportunities. We get those leads to our sales to qualify and consult. I'm very encouraged by the progress we've made since the first of this year. The focus right now is on continuous improvement, driving efficiency and less about any substantial changes heading into next year. Thank you. Thank you. That is all the time we have for questions today. I will now turn the call back over to Mr. Moschner for closing comments. Thank you for joining us this morning and for your continued support. We look forward to updating you on our progress heading into the fourth quarter.