TechDogs-"NI Reports Record Revenue For A Second Quarter"

Manufacturing Technology

NI Reports Record Revenue For A Second Quarter

By Business Wire

Business Wire
Overall Rating

Strong execution in challenging macro environment

Q2 2023 Summary

  • Record GAAP revenue for a second quarter of $417 million, up 5 percent year over year
  • Solid Q2 GAAP operating margin of 10%
  • Record Q2 Non-GAAP operating margin of 22%
  • Strong diluted GAAP EPS of $0.23 and diluted non-GAAP EPS of $0.51

AUSTIN, Texas--(BUSINESS WIRE)--National Instruments Corporation (Nasdaq: NATI) today announced Q2 2023 revenue of $417 million, up 5 percent year over year, a record for a second quarter.

In Q2, the total value of the company's orders was down 17 percent year over year. Orders were down 20 percent in the Americas, down 26 percent in APAC, and flat in EMEA year over year.

In Q2, GAAP gross margin was 72 percent and non-GAAP gross margin was 74 percent. Total GAAP operating expenses were $257 million and non-GAAP operating expenses were $218 million. GAAP operating income for Q2 was $41 million with non-GAAP operating income of $91 million. In Q2, GAAP operating margin was 10 percent with non-GAAP operating margin of 22 percent.

In Q2, GAAP net income for Q2 was $30 million and non-GAAP net income was $68 million, with GAAP diluted EPS of $0.23 and non-GAAP diluted EPS of $0.51.

“I am pleased with our results in the second quarter. We delivered record revenue for a second quarter, along with strong operating margin and EPS, which demonstrates the operating leverage we have developed through our ongoing transformation. Revenue was up 5 percent year-over-year and was bolstered by our strong backlog, even as orders weakened more than we initially anticipated throughout the quarter,” said Eric Starkloff, NI President and CEO. “Despite the challenging macro environment, we executed our strategy. Our performance is a testament to our continued focus on high growth subsegments and global execution.”

"Our focus on operational execution and expense management continued, resulting in second quarter GAAP operating margin up over 450 bps and non-GAAP operating margin up over 600 bps as compared to the same quarter last year," said Daniel Berenbaum, NI CFO. "While we still see difficulty in obtaining reliable supply of a few specific parts, a general easing of supply chain constraints combined with the laser-focus of our team enabled more shipments from our strong backlog, offsetting a difficult bookings environment."

As of June 30, 2023, NI had $139 million in cash and cash equivalents. During the second quarter, NI paid $37 million in dividends. The NI Board of Directors approved a quarterly dividend of $0.28 per share payable on August 29, 2023, to stockholders of record on August 8, 2023.

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 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 2023 Summary

  • Record GAAP revenue of $854 million, up 9 percent year over year
  • Strong GAAP operating margin of 11% and record non-GAAP operating margin of 23%
  • Strong diluted GAAP EPS of $0.58, up 107 percent year over year and record diluted non-GAAP EPS of $1.13, up 47 percent year over year

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. A reconciliation of the adjustments to GAAP results is included in the tables below. 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 Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act that are subject to risks and uncertainties. These statements include those set forth above relating to our ability to execute on our strategy. All forward-looking statements are based on current expectations and projections of future events. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, forward-looking statements are not guarantees of performance and actual results could differ materially from those projected in the forward-looking statements as a result of a number of important factors which could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in 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 financial results due to factors outside of our control; our outstanding debt; the interest rate risk associated with our variable rate indebtedness; 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; provisions in charter documents and Delaware law that delay or prevent our acquisition; the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed transaction that could cause the parties to terminate the merger agreement entered into in connection with the proposed transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the risk that the parties to the merger agreement may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of our common stock; the risk of any unexpected costs or expenses resulting from the proposed transaction; the risk of any litigation relating to the proposed transaction; the risk that the proposed transaction and its announcement could have an adverse effect on the ability of the Company to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, stockholders and other business relationships and on its operating results and business generally; and the risk the pending proposed transaction could distract management of the Company. 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, 2022 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)

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

June 30,

December 31,

2023

2022

(unaudited)

Assets

Cash and cash equivalents

$

139,243

$

139,799

Accounts receivable, net

389,926

445,279

Inventories, net

401,626

388,164

Prepaid expenses and other current assets

123,949

115,677

Total current assets

1,054,744

1,088,919

Property and equipment, net

283,907

265,380

Goodwill

638,459

615,734

Intangible assets, net

192,904

200,850

Operating lease right-of-use assets

68,062

59,176

Other long-term assets

124,918

128,479

Total assets

$

2,362,994

$

2,358,538

Liabilities and Stockholders' Equity

Accounts payable and accrued expenses

$

60,514

$

54,639

Accrued compensation

49,575

71,422

Deferred revenue - current

158,247

137,208

Operating lease liabilities - current

16,608

13,834

Other taxes payable

55,622

67,615

Debt, current

25,000

25,000

Other current liabilities

58,833

153,157

Total current liabilities

424,399

522,875

Deferred income taxes

5,983

1,676

Income tax payable - non-current

22,581

40,646

Deferred revenue - non-current

60,094

63,066

Operating lease liabilities - non-current

36,486

30,588

Debt - non-current

564,373

516,637

Other long-term liabilities

31,558

26,926

Total liabilities

$

1,145,474

$

1,202,414

Stockholders' equity:

Common stock

1,328

1,310

Additional paid-in capital

1,251,971

1,207,420

Retained earnings

(11,295

)

(14,741

)

Accumulated other comprehensive loss

(24,484

)

(37,865

)

Total stockholders' equity

1,217,520

1,156,124

Total liabilities and stockholders' equity

$

2,362,994

$

2,358,538

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

2023

2022

Net sales:

Product

$

379,436

$

354,805

$

779,835

$

698,489

Software maintenance

37,368

40,710

73,794

82,281

Total net sales

416,804

395,515

853,629

780,770

Cost of sales:

Product

113,625

123,307

241,181

238,332

Software maintenance

4,862

4,167

10,012

8,370

Total cost of sales

118,487

127,474

251,193

246,702

Gross profit

298,317

268,041

602,436

534,068

71.6%

67.8%

70.6%

68.4%

Operating expenses:

Sales and marketing

123,101

124,908

240,443

245,064

Research and development

83,801

85,589

170,438

167,750

General and administrative

50,504

36,772

93,719

69,949

Total operating expenses

257,406

247,269

504,600

482,763

Operating income

40,911

20,772

97,836

51,305

Other expense

(8,500

)

(3,505

)

(11,519

)

(3,473

)

Income before income taxes

32,411

17,267

86,317

47,832

Provision for income taxes

1,919

4,833

8,896

10,162

Net income

$

30,492

$

12,434

$

77,421

$

37,670

Basic earnings per share

$

0.23

$

0.09

$

0.59

$

0.29

Diluted earnings per share

$

0.23

$

0.09

$

0.58

$

0.28

Weighted average shares outstanding -

Basic

132,369

131,973

131,850

132,039

Diluted

134,171

132,708

133,693

132,948

Dividends declared per share

$

0.28

$

0.28

$

0.56

$

0.56

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Six Months Ended June 30,

2023

2022

Cash flow from operating activities:

Net income

$

77,421

$

37,670

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

45,541

45,742

Stock-based compensation

30,388

40,804

Loss from equity-method investees

(5,597

)

(131

)

Deferred income taxes

2,488

943

Net change in operating assets and liabilities

(75,368

)

(169,930

)

Net cash (used in) provided by operating activities

74,873

(44,902

)

Cash flow from investing activities:

Acquisitions, net of cash received

(23,024

)

(72,802

)

Capital expenditures

(35,477

)

(24,509

)

Capitalization of internally developed software

(925

)

(187

)

Additions to other intangibles

(3,811

)

(2,478

)

Net cash used in investing activities

(63,237

)

(99,976

)

Cash flow from financing activities:

Proceeds from revolving loan facility

120,000

175,000

Payments on revolving line of credit

(60,000

)

Proceeds from term loan

Payments on term loan

(12,500

)

Debt issuance costs

Proceeds from issuance of common stock

17,376

17,859

Repurchase of common stock

(70,000

)

Dividends paid

(73,975

)

(74,034

)

Other

(3,075

)

Net cash used in financing activities

(12,174

)

48,825

Impact of changes in exchange rates on cash

(18

)

(4,180

)

Net change in cash and cash equivalents

(556

)

(100,233

)

Cash and cash equivalents at beginning of period

139,799

211,106

Cash and cash equivalents at end of period

$

139,243

$

110,873

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

Six Months Ended

June 30,

June 30,

2023

2022

2023

2022

Stock-based compensation

Cost of sales

$

467

$

1,253

$

1,429

$

2,475

Sales and marketing

5,792

7,202

10,727

14,291

Research and development

5,146

6,271

10,264

12,359

General and administrative

3,424

5,951

7,967

11,680

Provision for income taxes

(6,020

)

(1,993

)

(7,821

)

(4,648

)

Total

$

8,809

$

18,684

$

22,566

$

36,157

Amortization of acquisition-related intangibles and fair value adjustments

Net sales

$

$

371

$

$

742

Cost of sales

8,402

6,415

15,062

10,218

Sales and marketing

4,694

5,573

9,267

11,712

Research and development

(320

)

Other (expense) income

320

503

753

1,019

Provision for income taxes

(2,014

)

(2,094

)

(3,505

)

(3,530

)

Total

$

11,402

$

10,768

$

21,577

$

19,841

Acquisition transaction and integration costs, restructuring charges, and other(1)

Cost of sales

$

982

$

1,159

$

2,502

$

1,944

Sales and marketing

3,225

2,339

9,169

2,646

Research and development

497

487

3,735

1,102

General and administrative

16,555

1,248

24,492

3,019

Other (expense) income

48

(265

)

(2,449

)

(2,132

)

Provision for income taxes

(4,569

)

(779

)

(8,867

)

(1,356

)

Total

$

16,738

$

4,189

$

28,582

$

5,223

(1) Includes costs related to our announced merger with Emerson Electric Co. incurred during the first and second quarter of 2023

(Capitalization) and amortization of internally developed software costs

Cost of sales

$

659

$

1,896

$

1,390

$

3,929

Research and development

(910

)

(187

)

Provision for income taxes

(153

)

(436

)

(132

)

(843

)

Total

$

506

$

1,460

$

348

$

2,899

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

2023

2022

Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

298,317

$

268,041

$

602,436

$

534,068

Stock-based compensation

467

1,253

1,429

2,475

Amortization of acquisition-related intangibles and fair value adjustments

8,402

6,786

15,062

10,960

Acquisition transaction and integration costs, restructuring charges and other

982

1,159

2,502

1,944

Amortization of internally developed software costs

659

1,896

1,390

3,929

Non-GAAP gross profit

$

308,827

$

279,135

$

622,819

$

553,376

Non-GAAP gross margin

74.1%

70.5%

73.0%

70.8%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

257,406

$

247,269

$

504,600

$

482,763

Stock-based compensation

(14,362

)

(19,424

)

(28,958

)

(38,330

)

Amortization of acquisition-related intangibles and fair value adjustments

(4,694

)

(5,573

)

(9,267

)

(11,392

)

Acquisition transaction and integration costs, restructuring charges and other

(20,277

)

(4,074

)

(37,396

)

(6,767

)

Capitalization of internally developed software costs

910

187

Non-GAAP operating expenses

$

218,073

$

218,198

$

429,889

$

426,461

Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

40,911

$

20,772

$

97,836

$

51,305

Stock-based compensation

14,829

20,677

30,387

40,805

Amortization of acquisition-related intangibles and fair value adjustments

13,096

12,359

24,329

22,352

Acquisition transaction and integration costs, restructuring charges and other

21,259

5,233

39,898

8,711

Net amortization of internally developed software costs

659

1,896

480

3,742

Non-GAAP operating income

$

90,754

$

60,937

$

192,930

$

126,915

Non-GAAP operating margin

21.8%

15.4%

22.6%

16.2%

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes(1)

Provision for income taxes, as reported

$

1,919

$

4,833

$

8,896

$

10,162

Stock-based compensation

6,020

1,993

7,821

4,648

Amortization of acquisition-related intangibles and fair value adjustments

2,014

2,094

3,505

3,530

Acquisition transaction and integration costs, restructuring charges and other

4,569

779

8,867

1,356

Net amortization of internally developed software costs

153

436

132

843

Non-GAAP provision for income taxes(1)

$

14,675

$

10,135

$

29,221

$

20,539

(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 and Non-GAAP Diluted EPS

(in thousands, except per share data, unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2023

2022

2023

2022

Net income, as reported

$

30,492

$

12,434

$

77,421

$

37,670

Adjustments to reconcile net income to non-GAAP net income:

Stock-based compensation

14,829

20,677

30,387

40,805

Amortization of acquisition-related intangibles and fair value adjustments

13,416

12,862

25,082

23,371

Acquisition transaction and integration costs, restructuring charges and other

21,307

4,968

37,449

6,579

Net amortization of internally developed software costs

659

1,896

480

3,742

Income tax effects and adjustments(1)

(12,756

)

(5,302

)

(20,325

)

(10,377

)

Non-GAAP net income

$

67,947

$

47,535

$

150,494

$

101,790

Non-GAAP net margin

16.3%

12.0%

17.6%

13.0%

Diluted EPS, as reported

$

0.23

$

0.09

$

0.58

$

0.28

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Stock-based compensation

0.11

0.16

0.23

0.31

Amortization of acquisition-related intangibles and fair value adjustments

0.10

0.10

0.19

0.18

Acquisition transaction and integration costs, restructuring charges and other

0.16

0.04

0.28

0.05

Net amortization of internally developed software costs

0.01

0.01

0.03

Income tax effects and adjustments(1)

(0.10

)

(0.04

)

(0.15

)

(0.08

)

Non-GAAP diluted EPS

$

0.51

$

0.36

$

1.13

$

0.77

(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.

Weighted average shares outstanding - Diluted

134,171

132,708

133,693

132,948

Contacts

Marissa Vidaurri
Vice President of Investor Relations
(512) 683-5215

First published on Fri, Jul 28, 2023

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