What drove CGNX's EPS growth in 2024?

Cognex's EPS grew by 5.7% in 2024, primarily driven by strong revenue growth in key segments and effective cost management despite headwinds from market competition and macroeconomic conditions: 1. **Revenue Growth in Key Segments**: Cognex's revenue increased by 16.8% year-over-year, reaching $914.52 million in 2024, surpassing analyst estimates. This growth was particularly notable in the logistics and semiconductor sectors, which contributed significantly to the overall revenue outperformance. For instance, revenue from the logistics sector surged by 17% year-over-year, reaching $230 million, surpassing both analyst estimates and previous quarters' performance. The semiconductor sector also showed strong performance, with revenue increasing by 5.18% year-over-year to $210.80 million, slightly exceeding estimates. These segments' robust performance underscored Cognex's strategic focus on high-growth markets and its ability to capitalize on industry tailwinds, such as the growing demand for IoT, automation, and analytics technologies. 2. **Cost Management and Operating Efficiency**: Despite the challenges posed by rising competition and macroeconomic trends, Cognex managed to improve its operating margin to 12.6% in 2024, up from 11.1% in 2023. This improvement reflected effective cost management and operational efficiency measures, such as a 3% year-over-year reduction in year-end headcount and tight control over expenses. These efforts helped mitigate the impact of external headwinds, allowing Cognex to maintain profitability and support EPS growth. 3. **Investment in Future Growth**: Cognex's investment in future growth initiatives, such as the acquisition of Moritex and the expansion of its sales transformation and expansion efforts, contributed to both revenue growth and long-term potential. While these investments initially increased operating expenses by 6% year-over-year, they also positioned Cognex for future growth and helped maintain investor confidence. The company's strategic investments in emerging customer initiatives and reshoring efforts are expected to yield dividends in the medium to long term, further supporting EPS growth as these initiatives mature. In conclusion, Cognex's EPS growth in 2024 was driven by strong revenue growth in key segments, effective cost management, and strategic investments in future growth, despite facing headwinds from market competition and macroeconomic conditions.