NI Reports Record Revenue for a Third Quarter, up 19 Percent YOY

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)

National Instruments
Condensed Consolidated Balance Sheets
(in thousands)

	September 30,			December 31,
	2021			2020
	(unaudited)
Assets
Cash and cash equivalents	$	230,697		$	260,232
Short-term investments	—			59,923
Accounts receivable, net	279,196			266,869
Inventories, net	236,733			194,012
Prepaid expenses and other current assets	89,152			68,470
Total current assets	835,778			849,506
Property and equipment, net	248,712			254,399
Goodwill	480,489			467,547
Intangible assets, net	136,938			172,719
Operating lease right-of-use assets	56,644			67,674
Other long-term assets	79,850			72,643
Total assets	$	1,838,411		$	1,884,488

Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	$	63,568		$	51,124
Accrued compensation	87,802			87,068
Deferred revenue - current	120,762			132,151
Operating lease liabilities - current	12,360			15,801
Other taxes payable	43,673			48,129
Debt, current	—			5,000
Other current liabilities	25,162			42,578
Total current liabilities	353,327			381,851
Deferred income taxes	26,023			25,288
Income tax payable - non-current	54,195			61,623
Deferred revenue - non-current	32,278			36,335
Operating lease liabilities - non-current	29,206			35,854
Debt, noncurrent	100,000			92,036
Other long-term liabilities	16,910			26,630
Total liabilities	$	611,939		$	659,617
Stockholders' equity:
Common stock	1,326			1,312
Additional paid-in capital	1,109,918			1,033,284
Retained earnings	132,404			211,101
Accumulated other comprehensive loss	(17,176		)	(20,826		)
Total stockholders' equity	1,226,472			1,224,871
Total liabilities and stockholders' equity	$	1,838,411		$	1,884,488

National Instruments
Condensed Consolidated Statements of Income
(in thousands, except per share data, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

Net sales:
Product	$	325,724		$	269,651		$	927,307		$	809,890
Software maintenance	41,438			38,473			121,733			108,944
Total net sales	367,162			308,124			1,049,040			918,834

Cost of sales:
Product	99,072			88,370			286,485			254,236
Software maintenance	3,643			3,893			10,882			7,689
Total cost of sales	102,715			92,263			297,367			261,925

Gross profit	264,447			215,861			751,673			656,909
	72.0		%	70.1		%	71.7		%	71.5		%
Operating expenses:
Sales and marketing	117,065			109,774			345,048			330,939
Research and development	82,165			70,802			243,685			206,648
General and administrative	31,037			37,431			94,672			92,980
Total operating expenses	230,267			218,007			683,405			630,567
Gain on sale of business/assets	—			—			—			159,753
Operating income	34,180			(2,146		)	68,268			186,095
Other expense	(1,820		)	(2,001		)	(9,851		)	(2,584		)
Income before income taxes	32,360			(4,147		)	58,417			183,511
Provision for income taxes	5,183			475			9,438			44,588
Net income	$	27,177		$	(4,622	)	$	48,979		$	138,923

Basic earnings per share	$	0.20		$	(0.04	)	$	0.37		$	1.06
Diluted earnings per share	$	0.20		$	(0.04	)	$	0.37		$	1.06

Weighted average shares outstanding -
Basic	133,031			131,419			132,657			131,017
Diluted	133,686			131,419			133,829			131,671

Dividends declared per share	$	0.27		$	0.26		$	0.81		$	0.78

Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

	Nine Months Ended September 30,
	2021			2020

Cash flow from operating activities:
Net income	$	48,979		$	138,923
Adjustments to reconcile net income to net cash provided by operating activities:
Disposal gains on sale of business/asset	—			(159,753		)
Depreciation and amortization	73,418			61,228
Stock-based compensation	56,064			42,556
Loss from equity-method investees	5,082			2,559
Deferred income taxes	(2,030		)	(932		)
Net change in operating assets and liabilities	(95,477		)	24,203
Net cash provided by operating activities	86,036			108,784

Cash flow from investing activities:
Acquisitions, net of cash received	(19,784		)	(334,981		)
Capital expenditures	(26,147		)	(36,573		)
Proceeds from sale of assets/business, net of cash divested	—			160,266
Capitalization of internally developed software	(1,246		)	(2,806		)
Additions to other intangibles	(2,317		)	(1,045		)
Payments to acquire equity-method and other investments	(15,753		)	(7,502		)
Purchases of short-term investments	—			(206,330		)
Sales and maturities of short-term investments	59,714			351,597
Net cash used in investing activities	(5,533		)	(77,374		)

Cash flow from financing activities:
Proceeds from revolving loan facility	100,000			20,000
Proceeds from term loan	—			70,000
Payments on term loan	(98,750		)	(875		)
Debt issuance costs	(1,993		)	(1,480		)
Proceeds from issuance of common stock	25,438			24,971
Repurchase of common stock	(25,000		)	(39,244		)
Dividends paid	(107,397		)	(102,396		)
Net cash used in financing activities	(107,702		)	(29,024		)

Impact of changes in exchange rates on cash	(2,336		)	317

Net change in cash and cash equivalents	(29,535		)	2,703
Cash and cash equivalents at beginning of period	260,232			194,616
Cash and cash equivalents at end of period	$	230,697		$	197,319

The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles and fair value adjustments, acquisition-related transaction and integration costs, capitalization and amortization of internally developed software costs, restructuring charges, gains on sale of business/assets, and other that were recorded in the line items indicated below (unaudited) (in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,

	2021			2020			2021			2020
Stock-based compensation
Cost of sales	$	1,183		$	1,051		$	3,487		$	2,787
Sales and marketing	6,332			5,184			18,949			16,826
Research and development	5,811			4,692			17,704			12,640
General and administrative	5,530			4,293			16,050			10,301
Provision for income taxes	(2,798		)	(3,854		)	(10,036		)	(8,260		)
Total	$	16,058		$	11,366		$	46,154		$	34,294

Amortization of acquisition-related intangibles and fair value adjustments
Net sales	$	421		$	1,299		$	1,971		$	1,299
Cost of sales	4,194			4,198			12,691			5,579
Sales and marketing	2,331			2,334			6,859			3,300
Research and development	—			28			—			84
Other expense	529			121			1,476			363
Provision for income taxes	(917		)	(1,658		)	(2,870		)	(1,948		)
Total	$	6,558		$	6,322		$	20,127		$	8,677

Acquisition transaction and integration costs, restructuring charges, and other ⁽¹⁾⁽²⁾
Cost of sales	$	(7	)	$	(13	)	$	(50	)	$	7
Sales and marketing	584			1,158			6,071			8,771
Research and development	386			374			1,422			5,190
General and administrative	850			10,210			7,388			12,595
Gain on sale of business/assets	—			—			—			(159,753		)
Other expense	316			270			4,322			397
Provision for income taxes	(238		)	(712		)	(3,701		)	33,965
Total	$	1,891		$	11,287		$	15,452		$	(98,828	)
(1): During the first quarter of 2020, we recognized a gain of approximately $160 million related to the divestiture of AWR, presented within "Gain on sale of business/assets".
(2): During the first quarter of 2021, we recognized a $3.5 million impairment loss related to one of our equity-method investments.

Capitalization and amortization of internally developed software costs
Cost of sales	$	5,532		$	6,769		$	18,633		$	20,995
Research and development	(525		)	302			(1,246		)	(2,794		)
Provision for income taxes	(1,192		)	(1,485		)	(3,792		)	(3,822		)
Total	$	3,815		$	5,586		$	13,595		$	14,379

National Instruments
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

Reconciliation of Net sales to Non-GAAP Net sales
Net sales, as reported	$	367,162		308,124			1,049,040			$	918,834
plus: Impact of acquisition-related fair value adjustments	421			1,299			1,971			1,299
Non-GAAP net sales	$	367,583		309,423			1,051,011			$	920,133

Reconciliation of Gross Profit to Non-GAAP Gross Profit
Gross profit, as reported	$	264,447		$	215,861		$	751,673		$	656,909
Stock-based compensation	1,183			1,051			3,487			2,787
Amortization of acquisition-related intangibles and fair value adjustments	4,615			5,497			14,662			6,878
Acquisition transaction and integration costs, restructuring charges and other	(7		)	(13		)	(50		)	7
Amortization of internally developed software costs	5,532			6,769			18,633			20,995
Non-GAAP gross profit	$	275,770		$	229,165		$	788,405		$	687,576
Non-GAAP gross margin	75.0		%	74.1		%	75.0		%	74.7		%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
Operating expenses, as reported	$	230,267		$	218,007		$	683,405		$	630,567
Stock-based compensation	(17,673		)	(14,169		)	(52,703		)	(39,767		)
Amortization of acquisition-related intangibles and fair value adjustments	(2,331		)	(2,362		)	(6,859		)	(3,384		)
Acquisition transaction and integration costs, restructuring charges and other	(1,820		)	(11,742		)	(14,881		)	(26,556		)
Capitalization of internally developed software costs	525			(302		)	1,246			2,794
Non-GAAP operating expenses	$	208,968		$	189,432		$	610,208		$	563,654

Reconciliation of Operating Income to Non-GAAP Operating Income
Operating income, as reported	$	34,180		$	(2,146	)	$	68,268		$	186,095
Stock-based compensation	18,856			15,220			56,190			42,554
Amortization of acquisition-related intangibles and fair value adjustments	6,946			7,859			21,521			10,262
Acquisition transaction and integration costs, restructuring charges and other	1,813			11,729			14,831			26,563
Net amortization of internally developed software costs	5,007			7,071			17,387			18,201
Gain on sale of business/assets	—			—			—			(159,753		)
Non-GAAP operating income	$	66,802		$	39,733		$	178,197		$	123,922
Non-GAAP operating margin	18.2		%	12.8		%	17.0		%	13.5		%

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes ⁽¹⁾
Provision for income taxes, as reported	$	5,183		$	475		$	9,438		$	44,588
Stock-based compensation	2,798			3,854			10,036			8,260
Amortization of acquisition-related intangibles and fair value adjustments	917			1,658			2,870			1,948
Acquisition transaction and integration costs, restructuring charges and other	238			712			3,701			2,794
Net amortization of internally developed software costs	1,192			1,485			3,792			3,822
Gain on sale of business/assets	—			—			—			(36,759		)
Non-GAAP provision for income taxes ⁽¹⁾	$	10,328		$	8,184		$	29,837		$	24,653
(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net Income, Non-GAAP Diluted EPS, and EBITDA
(in thousands, except per share data, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020

Net income, as reported	$	27,177		$	(4,622	)	$	48,979		$	138,923
Adjustments to reconcile net income to non-GAAP net income:
Stock-based compensation	18,856			15,220			56,190			42,554
Amortization of acquisition-related intangibles and fair value adjustments	7,475			7,980			22,997			10,625
Acquisition transaction and integration costs, restructuring charges and other	2,129			11,999			19,153			26,960
Net amortization of internally developed software costs	5,007			7,071			17,387			18,201
Gain on sale of business/assets	—			—			—			(159,753		)
Income tax effects and adjustments ⁽¹⁾	(5,145		)	(7,709		)	(20,399		)	19,935
Non-GAAP net income	$	55,499		$	29,939		$	144,307		$	97,445
Non-GAAP net margin	15.1		%	9.7		%	13.7		%	10.6		%

Diluted EPS, as reported	$	0.20		$	(0.04	)	$	0.37		$	1.06
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS
Stock-based compensation	0.14			0.12			0.42			0.32
Amortization of acquisition-related intangibles and fair value adjustments	0.06			0.06			0.17			0.08
Acquisition transaction and integration costs, restructuring charges and other	0.02			0.10			0.14			0.20
Net amortization of internally developed software costs	0.04			0.05			0.13			0.14
Gain on sale of business/assets	—			—			—			(1.21		)
Income tax effects and adjustments ⁽¹⁾	(0.04		)	(0.06		)	(0.15		)	0.15
Non-GAAP diluted EPS	$	0.42		$	0.23		$	1.08		$	0.74
(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2021		2020			2021		2020
Net income, as reported	$	27,177	$	(4,622	)	$	48,979	$	138,923
Adjustments to reconcile net income to EBITDA:
Interest expense (income), net	643		560			2,296		(2,608		)
Tax expense	5,183		475			9,438		44,588
Depreciation and amortization	23,394		22,887			73,418		61,228
EBITDA	$	56,397	$	19,300		$	134,131	$	242,131
Weighted average shares outstanding - Diluted	133,686		131,419			133,829		131,671

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS Guidance
(unaudited)
	Three Months Ended
	December 31, 2021

	Low			High
GAAP Diluted EPS, guidance	$	0.17		$	0.31
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:
Stock-based compensation	0.14			0.14
Amortization of acquisition-related intangibles and fair value adjustments	0.08			0.08
Acquisition transaction and integration costs, restructuring charges, and other	0.09			0.09
Net amortization of software development costs	0.05			0.05
Income tax effects and adjustments ⁽¹⁾	(0.06		)	(0.06		)
Non-GAAP Diluted EPS, guidance	$	0.47		$	0.61
(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

« Previous Page 1 | 2 | 3 Next Page »