U.S. machine vision company Cognex Corp. said today that it intends to buy RealSense Inc., the robotics and computer vision startup that was spun out of Intel Corp. 14 months earlier in a deal valued at around $600 million.
Nasdaq-listed Cognex will pay around $500 million in cash for the startup, while providing a three-year cash retention program worth $56.5 million for RealSense employees and also grant them restricted stock units valued at about $50 million. That means most of RealSense’s 180 employees, who are shareholders in the company, will receive at least $330,000 out of the deal.
RealSense’s main product is its popular line of “depth cameras,” which rely on stereo vision, structured light and time-of-flight technology to ascertain depth. The cameras are often found in robots, which use them to know exactly how far away a certain object is. Robots and drones use this technology to create 3D maps of their environments, so they can navigate and avoid obstacles to operate safely within them.
In addition, RealSense makes 3D scanning technology that’s used to create 3D models of objects and environments, as well as gesture and facial recognition technologies for touchless devices and security applications.
The startup began life in 2014 as a research project within Intel and initially got a lot of traction within that company, as it bought up various startups in an effort to establish the unit as a major force in the 3D camera and facial recognition technology markets. But ultimately it failed to grow as the chipmaker had hoped.
As part of a restructuring process under former Intel Chief Executive Pat Gelsinger, the chipmaker decided to offload RealSense, spinning it out as a separate entity led by its CEO Nadav Orbach. The startup burst out of the gate with $50 million in funding led by an unnamed private equity firm focused on the semiconductor industry, with participation from MediaTek Innovation Fund, Intel Capital and others.
Since spinning out, things have been going very well for RealSense, as the Israeli company claims to have dramatically expanded its operations and workforce and tripled its revenue. It said it’s expecting to generate about $80 million to $90 million in sales this year, up more than 50% from last year. For the last two quarters, it has managed to turn a profit.
Intel will benefit from the deal because it still holds a 20% stake in RealSense and one seat on its board of directors. Employees and executives also hold significant stakes in the company and so the sale represents a significant outcome for them, too.
The acquisition suggests that Cognex is trying to make a substantial push into the robotics industry and diversify its growth beyond its traditional machine vision technology. The company is best known for its advanced optical character recognition tech that’s used in bar code readers and ID tag readers.
It also sells specialized sensor cameras used in areas such as factory floors, which are designed to detect microscopic defects in products and electronics. It also sells robotics guidance systems that direct mechanical arms and sorting bots in assembly lines and warehouses.
Cognex President and CEO Matt Moschner said he’s primarily interested in RealSense’s 3D depth perception and robot navigation capabilities, which he plans to combine with his company’s existing machine vision technology. The goal is to create a broader visual intelligence platform for industrial identification, 2D and 3D machine vision measurement, 3D depth perception and robotic navigation.
“RealSense represents a compelling strategic expansion for Cognex into robotic perception, one of the most attractive adjacent markets in machine vision,” Moschner explained. “RealSense brings a leading 3D perception platform with proprietary technology, a strong developer community and a compelling value proposition for customers. It positions us to offer a full-stack visual intelligence platform… built to serve the full spectrum of physical AI.”
Cognex said the transaction is expected to close in the fourth quarter of the year, subject to receiving regulatory clearance. Following the completion of the acquisition, RealSense will become Cognex’s primary development center, and its employees will continue to work there.
RealSense added that the transaction does not include its smaller Facial Authentication business, which will instead be spun off into a separate business before the deal closes. This technology, which uses biometric identifiers, has been deployed at numerous access-controlled sites, including various data centers, banks and office buildings. It’s also deployed at Israel’s biggest airport, Ben Gurion Airport in Tel Aviv.
The new biometrics firm will consist of around 25 former RealSense employees, who will focus on expanding its customer base.
