Net Income up 43% Year Over Year Through First Nine Months

Q3 2017 Highlights

• Revenue of $321 million, up 5 percent year over year
• GAAP gross margin of 74 percent
• Non-GAAP gross margin of 75 percent
• Fully diluted GAAP EPS of $0.25 and fully diluted non-GAAP EPS of $0.32
• GAAP net income of $33 million
• Non-GAAP net income of $42 million
• GAAP net income up 43% year over year through first nine months
• Non-GAAP net income up 28% year over year through first nine months
• EBITDA of $57 million
• Cash and short-term investments of $385 million as of September 30, 2017

AUSTIN, Texas — (BUSINESS WIRE) — October 26, 2017 — National Instruments (Nasdaq: NATI) today announced Q3 2017 revenue of $321 million, up 5 percent year over year.

In Q3 2017, NI received $8 million in orders from its largest customer compared with $5 million in orders from this customer in Q3 2016. The value of the company’s total orders was up 5 percent year over year for the quarter; orders under $20,000 were up 1 percent year over year; orders between $20,000 and $100,000 were up 8 percent year over year; and orders above $100,000 were up 9 percent year over year.

GAAP net income for Q3 was $33 million, with fully diluted earnings per share (EPS) of $0.25, and non-GAAP net income was $42 million, a record for a third quarter, with non-GAAP fully diluted EPS of $0.32. Included in NI’s GAAP net income for Q3 is $1 million related to restructuring charges. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $57 million for Q3.

In Q3, GAAP gross margin was 74 percent and non-GAAP gross margin was 75 percent. Total GAAP operating expenses were $200 million, down slightly year over year. Total non-GAAP operating expenses were $190 million, down 2 percent year over year. GAAP operating margin was 12 percent in Q3, with GAAP operating income of $38 million, up 28 percent year over year. Non-GAAP operating margin was 15 percent in Q3, with non-GAAP operating income of $49 million, up 29 percent year over year. Year-to-date, GAAP operating expenses were $608 million, up 2 percent year over year, and non-GAAP operating expenses were $576 million, flat year over year. GAAP operating income year-to-date was $88 million, up 26 percent year over year, and non-GAAP operating income year-to-date was $128 million, up 26 percent year over year.

“I am pleased with our performance in the first nine months of the year,” said Alex Davern, NI president and CEO. “We have seen record revenue and record profit and have made significant progress toward our target business model. With strong alignment and focus throughout our organization, we have seen continued success in the key focus areas of semiconductor test, 5G, the electric and connected vehicle, and the Industrial Internet of Things.”

Karen Rapp, NI CFO, said, “I am proud of the progress we have made in improving our operating performance this year. The midpoint of our Q4 guidance would provide a 45 percent increase in our GAAP fully diluted EPS year-over-year for 2017. I continue to be impressed with the commitment from our employees as we all work toward alignment with our operational model. We believe this focus on growth and profitability will keep us on track to achieve our goals this year and into 2018.”

Geographic revenue in U.S. dollar terms for Q3 2017 compared with Q3 2016 was up 3 percent in the Americas, up 12 percent in APAC and up 1 percent in EMEIA. Excluding the impact of foreign currency exchange, revenue was up 3 percent in the Americas, up 12 percent in APAC and up 1 percent in EMEIA. Historical revenue from these three regions can be found on NI’s investor website at  www.ni.com/nati.

As of Sept. 30, 2017, NI had $385 million in cash and short-term investments. During the third quarter, NI paid $27 million in dividends. The NI Board of Directors approved a quarterly dividend of $0.21 per share payable on Dec. 4, 2017, to stockholders of record on Nov. 13, 2017.

The company’s non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, and restructuring charges. Reconciliations of the company’s GAAP and non-GAAP results are included as part of this news release. The company’s definition of core revenue is GAAP revenue excluding the impact of NI’s largest customer and the impact of foreign currency exchange.