Shares of Cognex (CGNX -0.20%) are plunging today, down by 12% as of 11:20 a.m. EST, after the company reported first-quarter earnings results. The machine vision specialist delivered better-than-expected revenue, but guidance for the second quarter was lacking.
Revenue in the first quarter came in at $173.5 million, ahead of the consensus estimate of $172.2 million in sales. That translated into net income of $33.1 million, or $0.19 per share. On a non-GAAP basis, Cognex posted adjusted earnings per share of $0.17, right on target with what analysts were modeling for. Gross margin contracted to 73%, which the company attributed to "unfavorable absorption of manufacturing overhead costs."
"Our Q1 results were in line with our guidance and we set a new first-quarter revenue record," founder and Chairman Robert Shillman said in a statement. "However, slower business conditions have dampened our expectations for growth in the near term. Nevertheless, our products are a key element of factory automation and logistics, which we believe are both growth markets, and we remain optimistic about Cognex's future over the long term."
Guidance was the real kicker. Cognex expects revenue in the second quarter to be $190 million to $200 million, well below the consensus estimate of $223 million in sales. The midpoint of that forecast represents a year-over-year decline of 8%, which the company attributed to weak revenue in its consumer electronics business. Gross margin should be "in the mid-70% range," and operating expenses are expected to increase by "low-single digits" sequentially.
"We continue to be encouraged by the increasing adoption of Cognex products in newer markets including logistics, which is now a more meaningful part of our revenue," CEO Robert Willett said in a statement. "Overall, however, we expect to see a slight decline in revenue for 2019, primarily as a result of significantly lower revenue from consumer electronics amid an industry slowdown."
"Our history shows that growth for Cognex is not linear; we've had ups and downs in the past driven by various external factors. This current slowdown will be temporary and does not change our positive view of the long-term potential for Cognex," Willett added.