Q1 2021 Cognex Corp Earnings Call
Okay.
Greetings and welcome to the Cognex first quarter 2021 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
And I would now like to turn this conference over to your House, let Susan Conway Director of Investor Relations. Thank you you may begin.
Hi, Thank you good evening, everyone and welcome to our first quarter earnings Conference call.
For Q1.
Now I'll turn the call over to Rob.
Thanks, Sue and Hello, everyone. Thank you for joining us.
And I know many of you are used to hearing Dr. Bob Schuman kickoff, our calls we will Miss and following his retirement as chairman of Cognex as board of directors.
We're joining us today, he would probably say wow, what a corner.
For me I'll start with we are pleased with our strong start to 2021.
<unk> reported record first quarter revenue net income and earnings per share.
We are also highly profitable.
Putting on after tax margin of 29% demonstrating the substantial leverage we have and our business model.
Most importantly, we are feeling more positive about business activity overall, and we have in many months.
Revenue for Q1 was $239 million and and the top half of our expected range.
The growth rate year on year was 43% the third quarter in a row, and which revenue grew by more than 30% year on year.
Revenue also increased on a sequential basis, which is country to a typical seasonal experience.
The biggest contributor to growth was logistics, which for the first time and our history with our largest and markets.
We reported another record revenue quarter and logistics due to continued strong demand from the e-commerce sector.
Notably we believe the strength we have been experiencing is broadening sectors that struggled in 2020, such as brick and mortar retail and airport baggage handling are beginning to invest again.
Revenue from most manufacturing industries increased meaningfully year on year highlights include automotive, which grew quicker than expected and at the fastest rate and some time.
Consumer products and food and beverage picked up noticeably medical related industries and semi continued to be strong.
Consumer electronics also grew year on year and Q1.
As many of you were anticipating we're ready to share our view of this year spending cycle.
For 2020, one we believe revenue for consumer electronics will be modestly below the level, we reported last year.
This follows a very good year in 2020 during which consumer electronics with Cognex is the largest industry and grew by about 30% over 2019.
We expect less investment and smartphone manufacturing and and devices needed for online learning and working from home.
As for timing, we believe Q3 will be our largest revenue generating quarter for consumer electronics. However in Q3. This year, we expect a low concentration of electronics revenue and we saw in Q3 of last year.
Moving now to our supply chain.
The team continues to do a good job navigating a difficult environment supply chains are under pressure for most companies, including cognex because of increased customer demand lengthening component lead times, some vendors struggling to supply parts elevated freight costs and COVID-19 concerns.
Place relationships with suppliers and our practice of holding substantial component inventory are helping us manage well through these challenges.
Let's talk next about new product development since the start of the year. We introduced three powerful next generation platforms that we've been working on for a number of years.
First is the insight and <unk> 4000, which we discussed on our February call.
And this exciting new smart camera platform Leverages insights widely use spreadsheet interface for the fast growing industrial three D vision market we.
We believe the Al 4000 is a breakthrough product that makes cognex is industry, leading true three D vision tools and easy to use it's Judy.
And it's one customer summed up nicely and new application can be up and running and minutes.
The other 4000 and positions us very effectively against some of our competitors, who have significant sales and profits and three D vision.
Second we launched the data and 8700 series on next generation of industrial handheld barcode readers, the 8700 and serious reasserts, our technology leadership for handheld barcode reading and automotive and medical devices and electronics and other industries.
Customers tell us its speed and accuracy and read and the most difficult codes at some metal and other surfaces leapfrog the other products available today.
Oil resistance robust industrial protocols wireless communication options and a built in OLED display on.
All key definitely differentiators for on new range, but the handheld readers.
Third we introduced and edge platform for extracting more value from the billions of digital images generated daily by Cognex products.
Cognex edge intelligence or EI helps customers understand the performance and devices deployed across facilities quickly identify issues and take corrective action.
We held extensive beta trials and <unk> with some of the world's largest logistics and consumer products companies. They praised <unk> ability to reduce costly downtime provide immediate actionable quality data and improve productivity.
I also easily integrates with industry 4.0 solutions from larger automation companies, providing access to valuable factory data for predictive analytics.
On tower to the team's success introducing these products during COVID-19.
Our first virtual launch about a year ago at the start of the pandemic was the insight day 900 deep learning smart camera.
Today were successfully launching new products training, our sales engineers distributor partners and customers and holding technical discussions tradeshows and product demonstrations and virtually.
We're winning a lot of business and this matter intent and intend to continue to do so in 2021 and beyond.
Cause noise continue to work productively, together and with our customers partners and vendors.
Even so it is encouraging that life and most of them on markets starting to improve we look forward to collaborating more inputs and as the world moves beyond the pandemic.
Now I'll hand, the call over to Paul for details of the quarter.
Thank you, Rob and Hello, everyone.
As mentioned revenue for Q1 was $239 million, which is a new first quarter record.
We're also pleased to deliver revenue within our expected range after substantial outperformance and Q3 and Q4 of 2020.
We believe this demonstrates the visibility is improving for both cognex and our customers.
As expected logistics air quote delivered a quarter for us at the largest contributor to year on year growth at our fastest growing end market.
Within logistics and e-commerce sector was particularly strong.
Automotive drove the second largest contribution to growth and we hope this marks the start of a longer road to recovery.
Medical related industries were also very healthy.
The semiconductor market was strong too so I'm lacking a good time for that one.
And the recovery and the broader factory automation market continues to gain traction.
Gross margin was 77% compared to 75% and both Q1 and Q4 of 2020.
The increase versus prior year was due primarily to cost efficiencies related to higher sales volume favorable product mix and the impact of foreign currency exchange rate changes.
In addition, certain lower margin logistics orders, we expected to deliver in Q1 shifted to later in the year contributing to the higher gross margin this quarter than anticipated.
Operating expenses increased by 1% year on year, which was slightly more than expected.
Higher incentive compensation and the translation impact of a weaker dollar were partially offset by lower travel and entertainment costs and savings realized from the restructuring program, we announced last spring.
We also greenlit selective investments given our business strength.
On a sequential basis operating expenses decreased by low single digits due to final restructuring charges of 875000, and Q4 that did not repeat.
And the reset of annual Commission plans and Q1.
We reported excellent operating leverage on the revenue growth.
Operating margin expanded to 33% a dramatic increase over the 13% delivered in Q1 and 2020.
Below operating income investment income decreased by more than $3 5 million year on year.
Primarily because of lower yields on our portfolio and the current environment.
We also reported a foreign currency loss of $1 million on the revaluation and settlement of receivable and payable balances.
The effective tax rate was 18% and Q1, and 2021, 17% and Q1, and 2020, and 14% and Q4 and 2020, excluding discrete tax items and all periods.
It would related products continue to grow well.
Revenue from Asia increased by more than 25% year on year due to grow from automotive consumer electronics and the broader market.
Currency exchange rate fluctuations contributed about four percentage points to that growth.
And Europe revenue grew and the high teens over Q1, and 2020 about half of which was due to a week or U S. Dollar.
Logistics automotive and the broader factory automation market increased despite many businesses operating under significant restrictions.
Turning to the balance sheet Cognex continues to have a strong cash position with $876 million and cash and investments and no debt.
And Q1, we spent $6.5 million to repurchase cognex stock.
We plan to continue to buy back stock and Q2, and a regular pace, while maintaining flexibility to be more opportunistic and.
As in and out Tonight or board of directors declared a quarterly cash dividend of six cents per share payable on June 4th to all shareholders on record as of May 21st.
<unk> and for them to call back over to Iraq.
Thank you Paul and summary, Cognex had a strong first quarter on a guidance for Q2 is also very positive we'd.
We believe revenue for Q2 will be between 250 million and $270 million at the midpoint displaying represents gross of more than 50% year on year from reduce levels and 2020.
It's also on the fourth quarter in a row with revenue gross and access is 30%.
Notably, although it's not on practice to provide full your guidance, we would cool out the comparisons are expected to get tougher and the second half.
We expect gross thank you too will again be led by logistics, which continues to perform very well indeed.
Ah recovery in order to notice and abroad, a factory automation Mark It appears underway and we believe will contribute nicely.
Gross margin is expected to be in the mid 70% range. However, we believe it will be below the gross margin reported and Q1 and recent quarters. We expect to recognize revenue on a few lower margin, but strategically important logistics current projects with large new customers that are rapidly adopting machine.
<unk> technology.
And we said that revenue from consumer electronics will be modestly lower this year I think there was a lot of investment made last year that you know still is current and producing and your current models of electronics. So we see that and I think you know some of the incremental spend around work from home Uhm electron.
Some products that were rolled out for that you know are are and the market. Currently I I think of that you know electronics day in a market, where you know if that can be figures and less figures right and so I think this is the last figure and then some of the big ones. We've seen in the past like 2017 or either.
Even 2020 that we just sore uhm, but I you know I still think it's a relatively positive here with quite a lot of good activity going on and the rollout of some key technologies like five G. So well well underway.
Uhm I think in the long run you know what might make for bigger years and I was like we saw last year or or you know very large incremental revenue growth would be things like new technologies coming to market, we've seen those and the past around censors or uhm you screams.
Technologies that are on the horizon I think include things like cold commanded reality, you know, we're not expecting to see that necessarily hit investment and a big way, but in this year, but possibly and future. We do see opportunities for deep learning to uhm eliminate cosmetic defects.
And also just the general continuing and <unk> reduction of Labor content. You know it was something that electronics customers, we see investing and whether that labor that causes quality control issues or whether it's just the cost and just and difficulty of sourcing labor and the current you know environment all of those are kind of levers.
That we see uhm kind of rolling up into our guidance. This year or you know our expectation this year that it'll be you know a good year, but not a great here.
Got it that's helpful. And then just on the supply chain within your own operations, just on and the pressures that you might've been saying.
And then for customers if you've found that day held back on and some purchases student bottlenecks from there on supplier.
Uhm, Yeah sure I think so I think we're seeing uhm, we think we're managing the current very challenging supply chain environment, very well I would say I think it's the most challenging supply environment I've experienced and my 13 years, and Cognex and I think we're navigating well between your business.
Activity picking up quicker than I think probably most of the suspected uhm tight supply of set and components, particularly electronic components, including and I see the Leds capacitors resistors.
Uhm deliveries, taking longer because of low a free capacity and.
And labor shortages, both for Cognex, and our customers, whether that's COVID-19, you know cause and quarantine of of employees when that maybe cases in in in what forces or just labor shortages, which I'm sure will reading about people not coming back into the workforce paths as quickly uhm as we might have expected.
<unk>. So you know so I think we're seeing all of that and then I and I think those are probably and tunnel to cognex I can speak to but if I talk about our customers and okay.
Really I think that probably be more much more impacted and we are particularly and certain sectors, such as the automotive where electronic uhm components, you know shortages, causing some of them to reduce production what day would say as though I didn't think we're seeing that and on orders you know I think in fact Navy blue seeing some kind of <unk>.
And just buying you know or order order, giving to us where they may could be concerned about our supply shortages, which we communicate with them. We're not hopefully concerned about that but still I think there's a mentality out there reporting that may be going on and some industries.
Pull anything you Wanna add.
No I think that's I think that's right specific to your question about our our people delaying orders and it'd be it through.
Very little that work that we're <unk> that we're seeing today and.
And I would underscore Rob's point about the toughest environment and 13 years and it's been my toughest and 13 months.
Okay.
<unk>, that's a great color. Thank you.
I'll pass on on.
Our next question comes from the line of Richard Ethan with Bird you may perceive other question.
Yes, thank you and and good afternoon and a rug.
Alright, Uhm, it's just a couple of things you know when you when you look at.
And you know the second quarter of the second quarter Guide.
And you're kind of Persalt the gross from the first quarter to the second the second quarter the incremental gross.
Could you just maybe speak to you know where where that's coming from the other words.
You know it was just logistics.
With logistics kind of head and <unk> have a peek quarter and the first quarter or maybe just kind of speak to the sequential gross and which industries might be driving on.
Sure I I think you know obviously, we don't give you specific industry related guidance, but I I I will say, we expect another strong revenue quota from four logistics and Q2 based on you know increasing demand and sizeable backlog of orders we have to deliver so I think and I think it's definitely did you say.
With the the headline and but I think and a revenue from consumer products and food is increasing nicely medical related industries is growing foster uhm you within the company average.
Overall, and and could see him out let's on <unk> is expected to increase due to the timing of and you'll spend so and I think it's <unk>. There's a lot of different things that are that and helping to contribute to that.
And if you Uhm just just <unk> question around and thank you.
On the consumer electronics business, having a good year another another bigger yours and last year it'd be slowed down but could you just speak to the waiting for a while and consumer electronics.
So it was a little bit of a question Mark whether you know Q to seize the bulk of the shipments.
Or two three does.
Oh, Yeah, let me think you'd let me provide some clarity of that so so you know I think we were expecting Q3 to be on largest quarter for for consumer electronics, although not as <unk> as large relatively as it was last year and to switch.
And you know overall consumer electronics with our largest political last year and accounted for roughly 30% of total total revenue.
<unk>.
Okay. Thank you.
Thanks.
Our next question comes from the line of Gelled Your Donna with power and you May I proceed with your question.
Hey, guys, how you doin'.
I joke.
So just trying to draw a line between some prepared comments and kind of what you just said there.
With consumer electronic being strongest and third quarter, but less than last year by the logistics kind of being shrunk seemingly all year this year and some stuff being pushed from first quarter later, a little bit out from do you have a sense of like is too cute your high revenue quarter for the year or do you have that kind of sense yet.
I think.
You know generally we don't we don't kind of cold quarters by you know overall, but I would say, you know, where where where where feeling confident and as you can see and the guidance about Q2 Q3, as often you know big quarter for us and although I did say you know comparisons get hotter still I think you know those were expecting a good a good quota.
From and a number of different industries as we move through the year. So I you know I think we might expect to more level loaded year in terms of in terms of quarters. As we go through this year, you know that the normal situation and the underlying F. A business I think hold switches and or the first quarter is normally the slowest to <unk>.
On the fourth quarters off on the strongest suddenly can't see out that far at this moment, but I would expect that to kind of underlying cadence with strength and logistics just going throughout the year and and then on strengthening electronics, most pronounced and two three.
I think you know to to maybe uhm.
Say say the obvious you know logistics is just you know a great gross business for US we're very excited to see how well it's continuing to deliver we've invested a lot. There. We have just just you know great uhm industry, leading technology and you know we're around and we continue to be and you know.
Pleased with the strength, we're seeing that industry, but more just how broad broad it's becoming you know it's not it's not only E. Commerce now Uhm, we're seeing you know investment returning to other areas of at the market. So it's difficult to call you know how long the kind of extraordinary grocery and we're putting up now our bed and the longer.
And you know, we said I'll scratch goal is to grow that business at 50% you know and that's kind of what we've got our eyes on.
That's very helpful. Thank you and and I'm more of a bigger picture question, how do you see yourself and positioned and the three D market now and are you guys. You know we're kind of later entrance to that and I'm just curious of.
How you thank you and.
Penetrated that market over the last few years, and where where do you think you on a relative to the competition like framed vs, where you are and obviously very strong and and traditional vision.
Yeah. Thank you and say you know three deviation, we think is a very attractive market and we think it's a market that still and it's relatively early stages of development technically it's challenging which you know we like cause <unk>, you know and for technology and 10.
Oh Gee company I'd say, you know we've invested quite a lot and you know we haven't seen the kind of revenue growth that we we would would have hoped racine and.
But what we do see now is we're bringing it to market some really great products and you know I'd point to the three D. A 1000, and we launched a little over a year ago that provides you know high high speed dimensioning, and sorting of items and packages and logistics and.
And that's been a big success for Us I would say and and it looks it looks very positive going forward uhm, but perhaps more importantly, the the three D. L 4000 platform that we just launched uhm, it's highly competitive products than it combines true free D vision and easy to use smart camera on.
The insight platform. So generally three D has been a technology, that's being run connected to a P C like and a high very high performance processor and a separate box and what this new range does taken kind of all the advances we've seen and and chips Uhm is we're able to have a very high.
Performance Smart camera single format, Uhm, which you know customers really like and automation on the inside platform. So that can just be programmed and then left to run. So that's that's something we're excited about a lot of breakthrough I'll fix that we've launched and that's faithful set where the image acquisition that we have is Friday and <unk>.
<unk> now and so you're a question about kinda. We're always does definitely you know a very large player and that market Uhm can we compete with who has by far the largest market share and on main competitor from Japan, and you know suddenly they they've done very well and that market I think we're bringing new innovations to that market that I hope will.
Have our customers you know start to help us gain chair and that space also but so so it's been a long road, we're starting to deliver I think well and I'm I'm optimistic yeah. Certainly we're we're early on the product lifecycle and a recent releases, but we are seeing traction from a revenue point of view and definitely don't we don't go into detail.
And about gross byproduct segment, but it's we're we're very happy with the growth foreseeing from a from a relatively modest space.
Thanks, guys I'll jump back and cute.
Our next question comes from the line of Matt Somerville would be a day, but send you may proceed with your question.
<unk> a couple of questions first maybe just a frame up logistics a little bit differently can you, maybe Robert apply sort of a baseball analogy in terms of what and and we might be and and your business as it pertains to the e-commerce side of logistics as well as and not E Commerce side.
Yeah, and <unk> men like my problem is I grew up and England. So I played cricket Uhm, but Paul and there's a lot about baseball uhm, but I would you know I'd say, we are and and early inning. If that's kind of what what what's your pushing for I think here's what I would say about logistics I think that this is a market that you know when you look at the integrators or even the adoption.
And of technology and that market Uhm.
It really you know until very recently was the market was really led by uhm companies that sold conveyors and kind of a kind of equipment for moving products around with the idea of you basically having trucks stock stores with inventory to be removed and obviously the whole game is chain.
<unk> and that changes is accelerating and did you have E Commerce square really it's a whole and integrated supply chain, where where product is being uhm pulled in real time to match the demands of customers and there's you know a very big wave of automation investment and you. Obviously don't just see that was cognex you see that with other players who have.
Invested in this industry, so so and industry, where the integrators have gone through a lot of consolidation with some big companies, moving and and they're making acquisitions in order to surprise that so I I think I think we're in and early inning Uhm and I I think one O seven other date appointment point you.
Two is still what percentage of <unk>.
American purchases are really done online and it's still relatively small right. So and I think we can expect to see that continue I think the other maybe another metric I'd point you too is just the number of employees you know people, who are working and distribution centers the cost and the difficulty of working and that kind of environment, particularly recently.
All points to the opportunity for automation.
A couple of date appointment to add about a little over 18 months ago, we share that we bill I believe are and drive the addressable market opportunity and logistics with about $1 billion and growing about 15 per cent a year now and he said that was a kind of pre pandemic.
Data point, which I think is maybe change the composition of that and who's you know who's profit and most and so on but generally feel like that's still a pretty good good good good benchmark and and we also have talked about your ambition and stretch go on to grow the business 50 per cent per year, and see a little bit spiky and so on but you know logistics other fastest.
Growing and market this quarter and we grew 43% and revenue you can extrapolate that we probably exceeded that yeah, and and I should just that that's all served market. So if we cut all the business that we can do and that market. The billion dollars couple of years ago, and obviously it would be have gone ahead and significantly uhm after that.
Alright, and then it was my follow up question and thank you for all that color. We we've seen across sort of it just the industrial tech space and acceleration, if you will and M&A activity more actionable things coming into the funnel. Obviously you guys have a very strong balance sheet can you talk about what you're saying.
From and M&A standpoint in terms of action ability.
I I you know I think that's correct, we're seeing a lot more uhm extra bill targets and you know we were very selective has you know we have we were very concerned about cultural fit and gross potential and companies that integrate well.
And with US so we're very selective, but I would say compared to you know a year ago or or other other times, many more actionable targets a lot more activity going on and much more expectation now we we we tend to be pretty cold and analytical about about the whole thing. So we're not getting drawn into any and I will.
Feeling and any rush to do anything, but you're absolutely right. We have you know strong balance sheet and the number one thing we'd like to do with cash is acquire great companies, who can help us and on journey.
Great. Thank you Robert.
Our next question comes from the line of and you have Wisconsin, there with their and begging me for submitted your question.
Hey, guys. Thanks for taking my question.
Alright.
Hi, So I wanted to check on and gross margins.
Great quarter for those and you you called for a little bit of Stepdaughters Wanna confirm is that just because of mix probably more logistics vs consumer electronics.
Uhm, Yeah, certainly that's you know as logistics is growing and the share of revenue and and we shared previously and it. It does have a lower gross margin profile today, though it's it's been improving I think that that's one key key aspect of it you know we did have some some some higher margin revenue in the corner and Q1 that we do.
And expect to repeat so that's probably why you know 77 per cent. We realized is higher than we've typically had and not not a number we'd expected to hit again for some time and then specifically within logistics you guys and Rob called out we had some some revenue that we'd expected to hit and a quarter, which is more of an investment.
With the Ah Newark customer for US that's now we're gonna see through the rest of this year and queue to the queue for and so that's a you know a modest drag on our margins, but but but a great strategic mood for us. So so yes, we do expect logistics margins to still be generally and kind of our mid seventies range, but but certainly lower than the last and then we experienced this quarter and <unk>.
Likely lower than we experienced in the past couple of quarters.
Okay. Okay.
Okay and then.
Along with the gross margin and question you know you're talking about some pretty interesting new products coming online and I wonder or some other things you're doing you know pretty innovative and and a idea burning and and that you might you know it as a scale would they have and <unk> and effect on your gross margins I could nudge them above that mid 70%.
Range longterm has that been kind of a goal or.
And yeah, well I guess, what do you foresee over the next few years with that.
Well, we we love gross margin at Cognex and one other reasons, we do if we think it's a measure of how innovative we are and the value of on technology Uhm. So that's that's that's certainly something that you know, we we take pride and and cognomen state Pride and in terms of areas. When I was growing I'm overweight and where we expect.
Future gross certainly deep learning is very high margin and high growth business for us. So I think the more mix, we see and the more grocery see and that area to high and gross margins. We can expect to realize uhm and then you know some of the other day other product I mentioned edge intelligence suddenly, that's primarily and and Ah software and and.
You know and and a data driven business for us and also with recurring revenue. So again, you know I would expect to see a lift and gross margin from that Uhm and then you know I think it's important and add that we take a long term view about these things. So you know pull mentioned you know very exciting and you and potentially large customer we <unk>.
Have and the logistics space, you know and and and we've seen this and other industries, where we're willing to invest and work alongside their engineers to help them and develop that business for higher gross margins and future. So I do expect you know logistics to be improving and that also and the long run it to be you know accretive too gross margins.
<unk>.
Okay. Thanks Robert.
Our next question comes from the line got around with Nathan Silas Capital markets May I proceed with your question.
Hi, Thanks for taking my question I, just wanted to kind of spend a little time on automotive and I noticed and medicus Uhm was ups, mostly because of logistics and medical you didn't put fine.
Mine too automotive automotive day, that's segment and see that's like the seems to be the most infected by the trip shortages. So I just wanted to kind of get your idea on you'd outlet for the other you think that might be some push out that might be and packed automotive issue.
Okay, well. Thank you and thank you for the question I think I think that's quite a other stuff going on and automotive I think overall, you know where where we've seen the automotive business globally accelerate faster than we expected and in recent months, uhm and particularly around Uhm electric vehicles.
So I think and I I think what they're all observing uhm you know the world of automotive is changing right and the investment is more around electric vehicles and we're also seeing some lodge a capital projects coming and so companies that Mike we might've might might associate with Europe or America, we at May actually see investing heavily and.
Battery and resources that they may be OEM sales for us and Asia for instance, so I think I I see that kind of change going on so the kind of most exciting increase we've seen uhm and automotive in recent months as being coming out and Asia.
Your second sort of area. Thank you you you kind of probe that is uhm chip shortages and is that going to impact our business and maybe and America or elsewhere in automotive and what <unk>, what <unk>, what I would say is not so far doesn't appear to be doing. So you know, it's obviously, we're generally spending uhm, we're seeing and.
Creases and spend tend to be around capital projects and even if automotive companies can't be producing because of chip shortages. I think you know somebody that spend a lot of us spend with us as relates to projects that may be for around new lines that they may be planning to launch in later quarters and later years and.
But and but that's it I think it's hot it's hot to have visibility about what happens beyond you know neck. This quarter with currently and I think and as potential disruption that may be uhm longer term and longer second order effect uhm from chip shortages and and I think we do expect the ship shortage problem or the supply chain challenge.
Is that we see and a customer and see to go on and for some time. So you know I think that's certainly is and area era, we are watching closely uhm, but it's certainly baked into our thinking on queue to guidance and how we're looking at the business overall.
Okay. Thank you and and just as a follow up and I wanted to look at Europe. So you know excluding currency it was off kind of property and the Lord low single day. So the high single digits, and so and I know you mentioned lockdowns and stuff, but do you what's your what's your outlook within Europe and what.
Some of the industry, that's kind of seems to be dragging you back then.
Yeah, Uhm, so activity and Europe was better than we expected and the first quarter and it does continue to improve but but I would say it's behind what we see in the Americas and the Americas is behind what we see and Asia right. So you're upset me is is the the <unk> the day laggard there and.
So, but I would say investment plans for automation and in Europe gathering speed and the three big economies of Europe are improving Germany, Italy, U K and for US you know in our industry and and or terms of automation and you know and then gross and logistics and Europe is also you know.
Leading the way we were saying you that that's a great industry for us.
And globally and and that applies to Europe too and then you know automotive is growing and again in Europe due to both general expansion on investment and electric vehicles. So you know and I would say manufacturers are adopting machine vision and deep learning to improve free foot and quality and reduce human interactions and and we see that.
And and in Europe.
One thing I'd also just just point out is that you know over a number of years, we've seen some and purchase is uhm from a product for cognex move from Europe to Asia, and it's the same business.
It's being practiced and a different location, so that sometimes and can mean net revenue you. The one associated with Europe is now lushy recognized and China.
Yeah and that wouldn't change the the the order of growth of our respective regions, but it's you know it's not trivial with a few million dollars. So it kind of dogs understate your.
Your of grocery and and slightly Overstate ages.
Okay, great. Thank you. Thank you so much.
As a reminder, if you would like to ask the question. Please pass star one on your telephone keypad.
Our next question comes from the line of Joe Giordano with tile and you May I proceed with your question.
Hey, guys. Thanks for the follow up just robbed curious not looking for like dollar amount, but if you think about logistics last year can you maybe talk us through the cadence of like the weightings by quarter at a high level and how that differs from what you're kind of brought expectation is this year and then for the new customer that you're on boarding and logistics.
Now you're not gonna name names, but any color in terms of like whether it's like a retailer three P. L parcel delivery like what areas of logistics. These just new customer replacing.
Yeah, <unk> you took about quarters Asian, and then I'll talk about yeah, Yeah, and Joe and we're not going on I could get get full details here, but I think you know and I think we communicated this large they last year, our logistics revenue generally grew through the year. So Q1 was our our lowest quarter last year and logistics and so you know the fact that it's kind of our biggest contributor to growth this quarter is.
Partly from a very strong quarter. This year, but also it was our lowest base.
This year, you know we'd expected as we said and February for Q wanted to be our strongest quarter. We now realize that guidance was was overly conservative and yeah, I'd say, we're expecting fairly broad based relatively consistent strength throughout the year. So this year and having somewhat of a moderating effect on our you know our revenue profile by quarter.
And then Joe to address you'll kind of question about customer.
Customer I guess, broadening that we see and and a customer base and logistics and the customer referencing uhm.
I think I think logistics for us and for our customers and it's kind of a journey and we have a lot of the investment that we've seen earlier on with with him on technology and this space is being from kind of technology leaders companies that you know a very technically savvy and you know kind of built business models around e-commerce.
But I think the wave we're starting to see you know is perhaps companies that when did and consider themselves E. Commerce companies that have big resources, and I'm, making big plays to to to invest in the space to to make sure that that highly relevant and and a new world where where.
<unk> on most commerce is done online either picked up the store or delivered and they're you know investing to to catch up and so and that applies to a number of big famous names that we would associate with the retail space and and they now have I would say the technical sophistication and engineering ability.
And the and the will to invest in this space and they recognize what we have to offer based on other successes, we're having and the market. So I think that's coming together very nicely for us.
Okay. Thanks.
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We have reached the end of the call I would now turn the call back on <unk> Mister Robb was it for clothes and common.
Okay to wrap up Cognex had a great stuck to 2021 and our outlook. The queue to is very positive we're delighted with it continued strength and our business.
Thank you for joining US Tonight, we look forward to speaking with you again on next quarter's cool.
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Right.
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