NI Reports Record Third Quarter Revenue, up 17 Percent YOY

Operating margin up more than 100 basis points YTD 

Q3 2022 Summary

• Record GAAP revenue of $428 million, up 17 percent year over year
• Record orders for a third quarter, up 12 percent year over year
• Strong diluted GAAP EPS of $0.47 and diluted non-GAAP EPS of $0.53
• Cash and cash equivalents of $149 million as of September 30, 2022

National Instruments Corporation (NASDAQ:NATI) today announced Q3 2022 revenue of $428 million, up 17 percent year over year, an all-time quarterly record.

In Q3 2022, the total value of the company's orders was up 12 percent year over year. For Q3, year over year orders were up 16 percent in the Americas, down 1 percent in APAC, and up 23 percent in EMEA.

In Q3, GAAP gross margin was 66 percent and non-GAAP gross margin was 70 percent. Total GAAP operating expenses were $237 million and non-GAAP operating expenses were $208 million. GAAP operating income for Q3 was $80 million with non-GAAP operating income of $92 million. In Q3, GAAP operating margin was 19 percent with non-GAAP operating margin of 21 percent.

GAAP net income for Q3 was $62 million and non-GAAP net income was $71 million, with GAAP diluted EPS of $0.47 and non-GAAP diluted EPS of $0.53. GAAP net income includes $26 million of gains, net of tax, related to real estate sales that were completed during the third quarter of 2022.

"We achieved very strong performance in the third quarter with record orders, revenue and non-GAAP EPS for a third consecutive quarter." said Eric Starkloff, NI President and CEO. "The initiatives that we've executed since 2017 have transformed NI into a company with higher growth, better profitability, and lower cyclicality. We believe these strategic shifts position us to meet our three year plan for growth and margin expansion."

"We planned ahead and are taking action in anticipation of a semiconductor downturn and the impact of a weaker macro economy. Looking ahead, we will continue to sharpen our focus on making intentional investments for growth, pivoting to new customer opportunities, and on continuing to increase scale and leverage across our business," said Karen Rapp, NI CFO. "Through disciplined cost management, we remain focused on delivering on our commitment to increase non-GAAP operating margin by 100 basis points in 2022."

As of September 30, 2022, NI had $149 million in cash and cash equivalents. During the third quarter, NI paid $37 million in dividends and repurchased approximately 2 million shares of its common stock at an average price of $40.25 per share. The NI Board of Directors approved a quarterly dividend of $0.28 per share payable on November 28, 2022, to stockholders of record as of the close of business on November 7, 2022.

NI's non-GAAP results exclude, as applicable, the impact of purchase accounting fair value adjustments, stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction and integration costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, restructuring charges, tax reform charges, disposal gains on properties and buildings and related charitable contributions, tax effects related to businesses held for sale, gain on sale of businesses, and capitalization and amortization of internally developed software costs. Reconciliations of the NI's GAAP and non-GAAP results are included as part of this news release.

YTD 2022 Summary

• Record GAAP revenue of $1,209 million, up 15 percent year over year
• Record orders, up 18 percent year over year
• Strong diluted GAAP EPS of $0.75, up 103 percent year over year and record diluted non-GAAP EPS of $1.30, up 20 percent year over year

Guidance

• Q4 GAAP revenue to be in the range of $435 million to $465 million, up 7 percent year over year at the midpoint
• GAAP diluted EPS to be in the range of $0.22 to $0.36 for Q4, down 3 percent year over year at the midpoint
• Non-GAAP diluted EPS expected to be in the range of $0.54 to $0.68, up 2 percent year over year at the midpoint

Conference Call Information

Today, NI management will host a call with the investment community to discuss the company's financial performance in the third quarter. Investors can listen to the Q3 2022 earnings conference call beginning at 4:00 p.m. CT today. This event will be webcast in listen-only mode. Listeners may log on to the call at www.ni.com/investor-relations under the "Events and Presentations" section and select "Q3 2022 NATI Earnings Conference Call" to participate. The webcast will remain on the company site for 90 days.

Non-GAAP Presentation

To supplement NI's financial statements presented on a GAAP basis, NI has provided non-GAAP financial information, including non-GAAP revenue or net sales, gross profit, gross margin, operating expenses, operating income, operating margin, provision for income taxes, net income, net margin and diluted EPS and non-GAAP guidance for diluted EPS. A reconciliation of the adjustments to GAAP results is included in the tables below. Additionally, certain non-GAAP financial measures presented on a forward-looking basis, such as non-GAAP operating margin, were not reconciled to the comparable GAAP financial measures because the reconciliation could not be performed without unreasonable efforts due to the unpredictability of the amounts and timing of events affecting the items we exclude from non-GAAP measures. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by NI may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 including without limitation those statements about our expectations of accelerating growth and progress to meet or exceed our financial targets and long-term financial model, our continued momentum across regions and business units, our opportunities to drive growth, profitability and efficiency in our business, confidence in our strategy and the strategic changes made to our business, our ability to successfully integrate acquisitions and execute our growth strategy, our ability to turn backlog to revenue, our ability to drive customer demand through focus on high growth opportunities, the impacts of war in Europe, supply chain constraints and software licensing model transition on our financial results, and our guidance and expectations for our Q4 2022 revenue, diluted EPS and non-GAAP diluted EPS, and future operating expenses, backlog, lead times, gross margin, operating margin and tax rate. These statements are subject to a number of risks and uncertainties, and actual results may differ materially from any future results expressed or implied by the forward-looking statements. Risks and uncertainties include without limitation: the global shortage of key components; effect of the global economic and geopolitical conditions; our international operations and foreign economies; adverse public health matters, including epidemics and pandemics such as the COVID-19 pandemic; our ability to effectively manage our partners and distribution channels; interruptions in our technology systems or cyber-attacks on our systems; the dependency of our product revenue on certain industries and the risk of contractions in such industries; concentration of credit risk and uncertain conditions in the global financial markets; our ability to compete in markets that are highly competitive; our ability to release successful new products or achieve expected returns; the risk that our manufacturing capacity and a substantial majority of our warehousing and distribution capacity are located outside of the U.S.; our dependence on key suppliers and distributors; longer delivery lead times from our suppliers; risk of product liability claims; dependence on our proprietary rights and risks of intellectual property litigation; the continued service of key management, technical personnel and operational employees; our ability to comply with environmental laws and associated costs; our ability to maintain our website; the risks of bugs, vulnerabilities, errors or design flaws in our products; our restructuring activities; our exposure to large orders; our shift to more system orders; our ability to effectively manage our operating expenses and meet budget; fluctuations in our quarterly results due to factors outside of our control; our outstanding debt; seasonal variation in our revenues; our ability to comply with laws and regulations; changes in tax rates and exposure to additional tax liabilities; our ability to make certain acquisitions or dispositions, integrate the companies we acquire or separate the companies we sold and/or enter into strategic relationships; risks related to currency fluctuations; and provisions in charter documents and Delaware law that delay or prevent our acquisition. In addition, our ability to declare and/or pay declared dividends is subject to compliance with the terms of our existing credit agreement. The company directs readers to its Form 10-K for the year ended December 31, 2021, and the other documents it files with the SEC for other risks associated with the company's future performance. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements. All information in this release is as of the date above. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

About NI

At NI, we bring together people, ideas and technology so forward thinkers and creative problem solvers can take on humanity's biggest challenges. From data and automation to research and validation, we provide the tailored, software-connected systems engineers and enterprises need to Engineer Ambitiously™ every day.

National Instruments, NI and ni.com and Engineer Ambitiously are trademarks of National Instruments Corporation. Other product and company names listed are trademarks or trade names of their respective companies. (NATI-F)

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