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. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Ms.
Susan Conway, Director of Investor Relations. Thank you. You may begin.
Thank you. Good evening, everyone. Welcome to our Q1 earnings conference call. With us are Rob Willett, Cognex's President and CEO and Paul Todjem, our Chief Financial Officer. We'll start with prepared remarks and then open the call for questions.
I'd like to remind you that our earnings release and quarterly report on Form 10 Q are available in the Investor Relations section of our website at www.cognex.com /investor. Both contain detailed information about our financial results. During the call, we may use a non GAAP financial measure if we believe it is useful to investors or if we think it will help them better You can see a reconciliation of certain items from GAAP to non GAAP in Exhibit 2 of the earnings release. Any forward looking statements we made in the earnings release or any that we may make during this call and are based upon information that we believe to be true as of today. However, things can change and actual Results may differ materially from those projected or anticipated.
For a detailed list of risk factors, you should refer to our SEC filings, including our most recent Form 10 ks and our Form 10 Q filed tonight for Q1. Now I'll turn the call over to Rob.
Thanks, Sue. Hello, everyone. Thank you for joining us. Now I know many of you are used to hearing Doctor. Bob Shulman kick off our We'll miss him following his retirement as Chairman of Cognex's Board of Directors.
If he were joining us today, he would probably say, wow, What a quarter. For me, I'll start with, we are pleased with our strong start to 2021. Cognex reported record 1st quarter revenue, net income and earnings per share. We are also highly profitable, reporting an after tax margin of 29%, demonstrating the substantial leverage we have in our business model. Most importantly, we are feeling more positive about business activity overall than we have in many months.
Revenue for Q1 was $239,000,000 and in the top half of our expected range. The growth rate year on year was 43%, the 3rd quarter in a row in which revenue grew The biggest contributor to growth was logistics, which for the first time in our history was our largest end market. We reported another record revenue quarter in 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 in some time.
Consumer Products and Food and Beverage picked up noticeably. Medical related industries and semi continue to be strong. Consumer electronics Also grew year on year in Q1. As many of you are anticipating, we're ready to share our view of this year's spending cycle. For 2021, 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 was Cognex's largest industry and grew by about 30% over 2019. We expect less investment in smartphone And in 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 lower 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 concerns. Our close relationships with suppliers and our 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 3 powerful next generation platforms that we've been working on for a number of years. First is the Insight 3DL4000, which we discussed on our February call.
This exciting new smart camera platform leverages Incyte's widely used spreadsheet interface for the fast growing industrial 3 d vision market. We We believe the L4000 is a breakthrough product that makes Cognex's industry leading true three d vision tools as easy to use as 2 d. As one customer summed up nicely, a new application can be up and running in minutes. The L4000 positions us very effectively against some of our competitors who have significant sales and profits in 3 d vision. 2nd, We launched the DataMan 8,700 Series, our next generation of industrial handheld barcode readers.
The 8,700 Series reasserts our Technology leadership for handhelds, barcode reading in automotive, medical devices, electronics and other industries. Customers tell us its speed and accuracy in reading the most difficult codes etched on metal and other surfaces leapfrogs the other products available today. Oil resistance, robust industrial protocols, wireless communication options and a built in OLED display 3rd, We introduced an 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 of devices deployed across facilities, We held extensive beta trials at EI with some of the world's Largest logistics and consumer products companies. They praise the AI's ability to reduce costly downtime, provide immediate actionable quality data and improve productivity.
EI also easily integrates with Industry 4.0 solutions from larger automation companies, providing access to valuable factory data for predictive analytics. I'm proud of the team's success introducing these products during COVID. Our first virtual launch about a year ago at the start of the pandemic was the Insight D900 deep learning smart camera. Today, we're successfully launching new products, training our sales engineers, distributor partners and customers and holding technical discussions, trade shows and product demonstrations virtually. We're winning a lot of business in this manner and intend to continue to do so in 2021 and beyond.
Cognoids continue to work productively together and with our customers, partners and vendors. Even so, it's encouraging that life in most of our markets is starting to improve. We look forward to collaborating more in person as the world moves 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 $239,000,000 which is a new first quarter We're also pleased to deliver revenue within our expected range after substantial outperformance in Q3 and Q4 of 2020. We believe this demonstrates visibility is improving for both Cognex and our customers. As expected, logistics delivered a quarter for us as the largest contributor to year on year growth at our fastest growing end market. Within logistics, The e commerce sector was particularly strong.
Automotive drove the 2nd 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, though I'm lacking a good pun for that one. The recovery in the broader factory automation market continues to gain traction. Gross margin was 77% compared to 75% in 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 $875,000 in Q4 that did not repeat and the reset of annual commission plans in Q1. We reported excellent operating leverage on the revenue growth. Operating margin expanded to 33%, a dramatic increase over the 13% Delivered in Q1 of 2020. Below operating income, investment income decreased by more than $3,500,000 year on year, primarily because of lower yields on our portfolio in the current environment. We also reported a foreign currency loss of $1,000,000 on the revaluation and settlement of receivable and payable balances.
The effective tax rate was 18% in Q1 of 2021, 17% in Q1 of 2020 and 14% in Q4 of 2020, excluding discrete tax items in all periods. The increase compared to the prior periods was because we earned a greater share of pretax income in higher tax jurisdictions. Reported earnings were $0.39 per share in Q1 of 2021 compared with $0.12 in Q1 of 2020 and $0.39 in Q4 of 2020. Excluding restructuring and other charges and discrete tax items, non GAAP earnings more than tripled $0.36 in Q1 from $0.11 a year ago, an increase from $0.32 in Q4. As you know, we shy away from non GAAP metrics at Cognex.
However, with the large restructuring, inventory write down and intangible asset impairment we took last year, We've been providing additional transparency to help investors understand our ongoing business results. For 2021, we intend to stick with the same methodology to maintain consistency with prior year comparisons. Looking at the change in revenue for Q1 from a geographic perspective, We saw growth broaden in all regions year on year. The Americas was our best performing region, increasing by more than 75 year on year and delivering the largest contribution to growth. The increase was led by substantially higher revenue from logistics, medical related industries, including medical devices and companies scaling up production for COVID related products continued to grow well.
Revenue from Asia increased by more than 25% year on year due to growth from automotive, consumer electronics in the broader market. Currency exchange rate fluctuations contributed about 4 percentage points to that growth. In Europe, Revenue grew in the high teens over Q1 of 2020, about half of which was due to a weaker 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 $1,000,000 in cash and investments and no debt. In Q1, we spent $6,500,000 to repurchase Cognex As announced tonight, our Board of Directors declared a quarterly cash dividend of $0.06 per share payable on June 4 to all shareholders of record as of May 21. Now, I'll turn the call back over to Rob.
Thank you, Paul. In summary, Cognex had a strong first Quarter and our guidance for Q2 is also very positive. We believe revenue for Q2 will be between 2 $50,000,000 $270,000,000 At the midpoint, this range represents growth of more than 50% year on year from reduced levels in 2020. It's also the 4th quarter in a row with revenue growth in excess of 30%. Notably, although it's not our practice to provide full year guidance, we would call out that comparisons are expected to get tougher in the second half.
We expect growth in Q2 will again be led by logistics, which continues to perform very well indeed. A recovery in automotive and the broader factory automation market appears underway and we believe will contribute nicely. Gross margin is expected to be in the mid-seventy percent range. However, we believe it will be below the gross margin reported in Q1 and recent quarters. We expect to recognize revenue on a few lower margin, but strategically important logistics projects with large new customers that are rapidly adopting machine vision technology.
Operating expenses are expected to be flat to slightly up on a sequential basis. We expect increased sales and marketing activity and incremental growth investments will be largely offset by savings elsewhere. Lastly, the effective tax rate is expected to be 18%, excluding discrete tax items. Now, We will open the call for questions. Operator, please go ahead.
Please limit yourself to one question and one follow-up prior to getting back in the queue. One moment while we poll for
questions.
Our first question comes from the line of Josh Pokrzywinski with Morgan Stanley. You may proceed with your question.
Hi, good evening. This is Brandy on for Josh. I wanted to start with Electronics and what's driving the guidance there? So I know last year the mix was a lot higher due to mix higher than usual in notebooks and tablets due to some of the work from home dynamics. So can you talk about the investments in that area on how they're trending versus smartphone investments.
Yes, hi. Okay, so yeah, I think 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 still is Current in producing current models of electronics. So we see that. And I think some of the incremental spend around work from home Electronics and products that will roll out for that are in the market currently.
I think Electronics being a market where there can be big years and less big years, right? And so I think this It's a less big year than some of the big ones we've seen in the past like 2017 or even 2020 that we just saw. But I still think it's a relatively positive year with quite a lot of good activity going on and the rollout of some key technologies like 5 So, well underway. I think in the long run, what might make for bigger years, like we saw last year or Very large incremental revenue growth would be things like new technologies coming to market. We've seen those in the past around Sensors or new screens, technologies that are on the horizon, I think, include things like augmented reality.
We're not expecting to see that necessarily hit investment in a big way, but in this year, but possibly in future. We do see opportunities for deep learning to eliminate cosmetic defects and also just the general Continuing reduction of labor content is something that electronics customers we see investing in, whether that's Labor that causes quality control issues or whether it's just the cost and difficulty of sourcing labor in the current environment, All of those are kind of levers that we see kind of rolling up into our guidance this year or our expectation this year That it will be a good year, but not a great year.
Got it. That's helpful. And then just On the supply chain, within your own operations, just some of the pressures that you might have been seeing. And then for customers, if you found that they held back on some purchases due to bottlenecks from their own suppliers.
Yes, sure. I think so I think
we're seeing 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 in my 13 years at Cognex. And I think we're navigating well between business Activity picking up quicker than I think probably most of us expected. Tight supply of certain components, particularly electronic components, including ICs, LEDs, capacitors, resistors. Deliveries are taking longer because of lower freight capacity and labor shortages, both for Cognex and our customers, whether that's COVID causing quarantine of employees when there may be cases in workforces So I think we're seeing all of that.
And I think those are probably internal to Cognex I can speak to. But if I talk about our customers, Clearly, I think they're probably more much more impacted than we have, particularly in certain sectors such as automotive, where electronic components Shortages are causing some of them to reduce production. What I would say is though, I don't think we're seeing that in our orders. I think, in fact, maybe we where they may be concerned about our supply shortages, which we communicate with them. We're not totally concerned about that.
But Still, I think there's a mentality out there reporting that may be going on in some industries. Paul, anything you want to add?
No, I think that's right. Specific to your question about are people delaying orders, I think the answer is very little that we're seeing today. And Yes, I mean, I would underscore Rob's point about the toughest environment in 13 years, and it's been my toughest in 13 months.
Got it. That's great color. Thank you.
I'll pass it on.
Our next question comes from the line of Richard
Just a couple of things. When you look at the Q2 or the Q2 guide And you kind of parse out the growth from the Q1 to the 2nd quarter, the incremental growth. Could you just maybe speak to where that's coming from? In other words, Was logistics kind of had a peak quarter in the Q1 or maybe just kind of speak to the sequential growth rate And which industries might be driving that?
Sure. I think, obviously, we don't give Specific industry related guidance, but I will say we expect another strong revenue quarter for logistics in Q2 based on increasing Demand and sizable backlog of orders we have to deliver. So I think it's definitely logistics would be the headline. But I think revenue from consumer products and food is increasing nicely. Medical related industry It's growing faster than the company average overall, and consumer electronics is expected to increase due to the timing of annual spend.
So I think there's a lot of different things that are helping to contribute to that.
If you just a Question around, I think you flagged the consumer electronics business having a good year, not a bigger year than last year, it would be slightly down. But Could you just speak to the weighting around consumer electronics? It's always a little bit of a question mark whether Q2 sees the bulk of the shipments or Q3 does?
Yes, let me thank you. Let me provide some clarity So I think we're expecting Q3 to be our largest quarter for consumer electronics, although not As large relatively as it was last year in Q3. And overall, consumer electronics was our largest vertical last
Okay. Thank you. Thanks.
Our next question comes from the line of Joe Giordano with Cowen. You may proceed with your question.
Hey, guys. How are you doing?
Hi, Joe.
So just trying to draw a line between some of the Fair comments and kind of what you just said there. With consumer electronics being strongest in Q3, but less than last year, but Logistics kind of being strong seemingly all year this year and some stuff being pushed from Q1 later a little bit out. Rob, do you have a sense of like Is 2Q your high revenue quarter for the year? Do you have that kind of sense yet?
I think, generally, we don't kind of call quarters Overall, but I would say we're feeling confident as you can see in the guidance about Q2. Q3 is often big quarter for us. And although I did say comparisons get harder, still I think we're expecting a good Quarter from a number of different industries as we move through the year. So I think we might expect a more level loaded year In terms of quarters as we go through this year, the normal situation in the underlying FA business, I think holds, which is the Q1 is normally the slowest. The Q4 is often the strongest.
Certainly can't see out that far at this moment, but I would expect that to kind of underlying cadence with strength in logistics just Going throughout the year and then strength in electronics most pronounced in Q3. I think to maybe say the obvious, logistics is just a great growth 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 great Industry leading technology and we continue to be pleased with the strength we're seeing in that industry, but more just How broad it's becoming.
It's not only e commerce now. We're seeing investment returning to other areas of the market. So it's difficult to call how long the kind of extraordinary growth rates we're putting up now are. But In the long run, we said our stretch goal is to grow that business at 50%. And that's kind of what we've got our eyes on.
That's very helpful. Thank you. And more of a bigger picture question, how do you see yourself positioned in the 3 d market now? I know relative to the competition like Framed versus where you are in obviously very strong in traditional vision.
Yes. Thank you. So 3 d vision, we think, is a very attractive market. We think it's a market that's still in its relatively early stages of development. Technically, it's challenging, which we like because we're a technology company.
I'd say we've invested quite We haven't seen the kind of revenue growth that we would have hoped to have seen. But what we do see now is we're bringing to market Some really great products and I'd point to the 3DA1000 we launched a little over a year ago that provides High speed dimensioning and sorting of items and packages and logistics, and that's been a big success for us, I would say, and Looks very positive going forward. But perhaps more importantly, the 3 d L4000 platform that that we just launched. It's a highly competitive product that combines true 3 d vision and easy to use smart camera On the Insight platform, so generally 3 d has been a technology that's being run connected to a PC, like A very high performance processor in a separate box. And what this new range does taking kind of all the advances we've seen in chips We're able to have a very high performance smart camera single format, which customers really like in automation on the Insight platform, so it So that's something we're excited about.
A lot of breakthrough optics But we've launched in that space also where the image acquisition that we have is very powerful. Now to your question about kind of where are we, there's A very large player in that market, who we compete with, who has, by far, the largest market share and our main competitor from Japan and certainly they've done very well in that market. I think we're bringing new innovations to that market that I hope will Have our customers start to help us gain share in that space also. But, so it's been a long road. We're starting to deliver, I think, well, and I'm optimistic.
Yes. Certainly, we're early in the product life cycle of our recent releases, but We are seeing traction from a revenue point of view and we don't go into details about growth by product segment, but it's we're very happy with the growth we're seeing from a relatively modest
comes from the line of Matt Summerville with D. A. Davidson. You may proceed with your question.
Thanks. A couple of questions. First, maybe Just to frame up logistics a little bit differently, can you maybe, Rob, apply sort of a baseball analogy in terms of what inning we might In your business as it pertains to the e commerce side of logistics as well as the non e commerce side?
Yes. My problem is I grew up in England, so I played cricket. But Poland knows a lot about baseball. I'd say we're in an early inning, if that's kind of what you're pushing for. I think here's what I would say about logistics.
I think that this is a market that when you look at the integrators or even the adoption of technology in that market, It really until very recently, the market was really led by companies that sold conveyors and kind of equipment for moving products around with the idea you were basically having trucks, Stock stores with inventory to be removed. And obviously, the whole game has changed and that change is accelerating as you have e commerce Where really it's a whole integrated supply chain where product is being pulled in real time to match the demands of customers. And there's a very big wave of automation investment and obviously, you don't just see that with Cognex, you see that with other players who have invested in this industry. It's also an industry where the integrators have gone through a lot of consolidation with some big companies moving in and they're making acquisitions in order to drive that. So I think we're in an early inning, and I think one also another data point I'd point you to is still what percentage of American purchases are really done online and it's still relatively small, Right.
So I think we can expect to see that continue. I think the other maybe another metric I'd point you to is just the number of employees, People who are working in distribution centers, the cost and the difficulty of working in that kind of environment, particularly recently, all points to the
A couple of data points, Matt, to add. About a little over 18 months ago, we shared that we believe The addressable market opportunity in logistics was about $1,000,000,000 and growing about 15% a year. Now obviously, that was a kind of pre pandemic Data point, which I think has maybe changed the composition of that and who's profited most and so on, but generally feel like that's still a pretty Good benchmark. And we also have talked about our ambition at StretchGold to grow the business 50% per year, obviously a little bit Spiky and so on, but logistics is our fastest growing end market this quarter and we grew 43% in revenue. You can extrapolate that we probably exceeded that.
Yes. And actually just that that's our served market. So if we got all the business that we can do in that market, The $1,000,000,000 a couple of years ago, obviously, it would be have grown significantly after that.
Great. And then as my follow-up question, thank you for all that color. We've seen across sort of just the industrial tech space An acceleration, if you will, in M and A activity, more actionable things coming into the funnel. Obviously, you guys have a very Can you talk about what you're seeing from an M and A standpoint in terms of actionability?
I think that's correct. We're seeing a lot more actionable targets and we're very selective. As you know, we have we're very concerned about cultural fit and growth potential and companies that integrate well with us. So we're very selective, but I would say compared to A year ago or other times, many more actionable targets, a lot more activity going on and much more expectation. Now we tend to be pretty cold and analytical about the whole thing.
So we're not getting drawn into any we're not feeling in any rush To do anything, but you're absolutely right, we have a strong balance sheet and the number one thing we'd like to do with our cash is acquire Great companies who can help us in our journey.
Great. Thank you, Rob.
Our next question comes from the line of Andrew Buscaglia with Berenberg. You may proceed with your question.
Hey, guys. Thanks for taking my question. Hi. Hi. So I wanted to check on gross margins.
Great quarter And you called for a
little bit of a step down.
I just want to confirm, is that just because of mix, probably more logistics versus consumer electronics?
Yes, certainly that's as logistics is growing as a share of revenue and we shared previously, it does have a lower gross Margin profile today, though, it's been improving. I think that's one key aspect of it. We did have Some higher margin revenue in the quarter in Q1 that we don't expect to repeat. So that's partly why the 77% we realized is Higher than we've typically had and not a number we'd expect to hit again for some time. And then specifically within logistics, As Rob called out, we had some revenue that we'd expected to hit in the quarter, which is more of an investment with A newer customer for us, that's now we're going to see through the rest of this year, Q2 to Q4.
And so that's a modest drag on our margins, but a great strategic move for So yes, we do expect logistics margins to still be generally in kind of our mid-70s range, but certainly lower than the last than we experienced this quarter and likely
Okay. And then along with the gross margin question, You're talking about some pretty interesting new products coming online. And I wonder, are some of the things you're doing pretty innovative in AI and deep learning As they scale, would they have an effect on your gross margins that could nudge them above that mid-seventy percent range long term? Is that Kind of the goal or yes, I guess, what do you foresee over the next few years with that?
Well, we love gross margin at Cognex. One of the reasons we do is we think it's a measure of how innovative we are in the value of our technology. So That's certainly something that we take pride in and Cognoids take pride in. In terms of areas where we're growing And where we expect future growth, certainly, deep learning is very high margin and high growth business for us. So I think the more mix we see and the more growth we see in that area, the higher gross margins we can expect to realize.
And then
some of the other product I mentioned, Edge Intelligence, certainly that's primarily in a software and Data driven business for us and also with recurring revenue. So again, I would expect to see a lift in gross margin from that. And then I think it's important to add that we take a long term view about these things. So Paul mentioned a very exciting and new and potentially large Customer we have in the logistics space, and we've seen this in other industries where we're willing to invest and work alongside our engineers to help Them and us develop that business for higher gross margins in future. So I do expect logistics
Our next question comes from the line of Jerome Nathan with Daiwa Capital Markets. You may 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 Americas was up mostly because of logistics and medical, you didn't put point to automotive there. That segment see that sector seems to be the most impacted by the chip shortages. So I just wanted to kind of get your idea on your Do you think there might be some push outs that might impact automotive this year?
Okay. Well, thank you. Thanks for Question. I think there's quite a lot of stuff going on in automotive. I think overall, we're we've seen the automotive Business globally accelerate faster than we expected in recent months, and particularly around electric vehicles.
So I think and I think what we're all observing, the world of automotive is changing, right, and the We might associate with Europe or America. We may actually see investing heavily in battery Resources that there may be OEM sales for us in Asia, for instance. So I think I see that kind of change going on. So The kind of most exciting increase we've seen in automotive in recent months has been coming out of Asia. Your second sort of area I think you kind of probed out is on chip shortages and is that going to At our business, maybe in America or elsewhere in the automotive.
And what we would what I would say is not so far, it doesn't appear to be doing So, it's obviously, we're generally spending we're seeing increases in spend tend to be around capital projects. And even if Automotive companies can't be producing because of chip shortages. I think some of their spend or a lot of their spend with us is relates to projects that may be for around new lines that they may be planning to launch in later quarters and later years. But that said, I think it's hard to have visibility about what happens beyond next this quarter we're currently in. I think there's potential Disruption that may be longer term and longer second order effects from ship shortages.
And I think we do expect the ship shortage problem or the supply chain challenges that we see and our customers see to go on for some time. So I think that certainly is an area we are watching closely, but it's certainly baked into our Thinking on Q2 guidance and how we're looking at the business overall.
Thank you. And just as a follow-up, I just wanted to look at Europe. So excluding currency, it was up kind of probably in the low single sorry, high single digits. And So and I know you mentioned lockdowns and stuff, but do you what's your outlook Within Europe and what are some of the industries that kind of seems to be dragging you back there?
Yes. So activity in Europe was better than we expected in the Q1 and it does continue to improve. But I would say it's behind what we see in the Americas and the Americas is behind what we see in Asia, right? So Europe certainly is the laggard So I would say investment plans for automation in Europe gathering speed and the 3 big economies of Europe are Improving Germany, Italy, the U. K.
For us in our industry and in terms of automation. And then Growth in logistics in Europe is also leading the way. We're seeing that's a great industry for us Globally, and that applies to Europe, too. And then automotive is growing again in Europe due to both general So and I would say manufacturers are adopting machine vision and deep learning to improve throughput and quality and reduce Human interactions and we see that in Europe. One thing I'd also just point out is that over a number of years, we've seen some purchases of product for Cognex move From Europe to Asia, it's the same business that's being purchased in a different location.
So that sometimes can mean that Revenue that you the one associated with Europe is now largely recognized in China.
Yes. And that wouldn't change the order of growth of our respective regions, but it's not trivial. It's a few $1,000,000 so it kind of does understate Europe's growth rate is slightly overstated.
Got it. Great. Thank you. Thank you so
Our next question comes from the line of Joe Giordano with Cowen. You may proceed with your question.
Hey, guys. Thanks for the follow-up.
Just Rob, curious, Not looking for like dollar amounts, 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 But any color in terms of like whether it's like a retailer, 3PL, parcel delivery, like what areas of logistics this new customer plays in?
Yes. Paul, why don't you talk about quarterization
and then I'll talk about
Yes. Yes.
And Joe, we're not going to obviously give full details here, but I think we communicated this largely last year. Our logistics revenue generally grew through the year. So Q1 was Our lowest quarter last year in logistics. So 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, we expected, as we said, in February for Q1 to be our strongest quarter.
We now realize that guidance was overly conservative. And Yes, I'd say we're expecting fairly broad based, relatively consistent strength throughout the year. So this year, it's having somewhat of a moderating effect on
And then Joe, to address your kind of question about customer, I guess, broadening that we see in our customer base in logistics and the customer we were referencing. I think Logistics for us and for our customers is kind of a journey. And we've a lot of the investment that we've seen earlier on With our technology in this space has been from kind of technology leaders, companies that are very technically savvy and have built business models around e commerce. But I think the wave we're starting to see is perhaps Companies that didn't consider themselves e commerce companies that have big resources and are making big plays to invest in the space to make sure that they're highly relevant in a new world where most Commerce is done online, either picked up the store or delivered and they're investing to cash up. And so then that applies to a number of Big famous names that we would associate with the retail space and they now have, I would say, The technical sophistication and engineering ability and the will to invest in this space and they recognize what we have to offer based on other successes we're having in the market.
So I think that's coming together very nicely for us. Great. Thanks.
We have reached the end of the call. I would now turn the call back over to Mr. Rob Willett for closing comments.
Okay. To wrap up, Cognex had a great start to 2021, and our outlook for Q2 is very positive. We are delighted with the continued strength in our business. Thank you for joining us tonight. We look forward to speaking with you again on next quarter's call.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your evening.