Company Continued to Drive Significant Operating Leverage

Q3 2014 Highlights

• Quarterly revenue of $314 million, up 8 percent year-over-year
• Record Q3 revenue for CompactRIO, PXI, and data acquisition products
• GAAP operating income up 67 percent year-over-year
• Non-GAAP operating income up 38 percent year-over-year
• Fully diluted GAAP EPS of $0.31 and fully diluted non-GAAP EPS of $0.37
• EBITDA of $51 million or $0.40 per share
• Cash and cash equivalents of $448 million, up $46 million from Q2 2014

AUSTIN, Texas — (BUSINESS WIRE) — October 30, 2014 — NI (Nasdaq: NATI) today announced Q3 revenue of $314 million, up 8 percent year-over-year. The company’s orders under $20,000 grew 3 percent year-over-year; orders between $20,000 and $100,000 increased 9 percent year-over-year; and orders above $100,000 increased 10 percent year-over-year. In Q3 2014, NI recognized $17 million in revenue from its largest customer, compared with $4 million recognized in Q3 2013. Year-to-date, through Oct. 30, the company has received $56 million in orders from this customer, compared to $35 million at this point last year.

GAAP net income for Q3 was $40 million, with fully diluted earnings per share (EPS) of $0.31, and non-GAAP net income was $47 million, with non-GAAP fully diluted EPS of $0.37. As discussed in the NI earnings call on July 29, 2014, the company recognized a tax benefit of $14 million in Q3 related to a settlement with the Internal Revenue Service of the examination of our U.S. income tax returns for 2010 and 2011. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $51 million, or $0.40 per share in the third quarter.

In Q3, GAAP gross margin was 74 percent and non-GAAP gross margin was 75 percent, up 40 basis points from Q3 2013. Total GAAP operating expenses were $198 million, up 3 percent year-over-year. Total non-GAAP operating expenses were $192 million, up 4 percent year-over-year.

GAAP operating margin was 11 percent in Q3, with GAAP operating income of $34 million, up 67 percent year-over-year. Non-GAAP operating margin was 14 percent in Q3, with non-GAAP operating income of $45 million, up 38 percent year-over-year.

The company’s non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles and acquisition transaction costs and restructuring charges. Reconciliations of the company’s GAAP and non-GAAP results are included as part of this news release.

“I am pleased with the record revenue delivered in the third quarter and the significant progress made toward improving our operating margin,” said Dr. James Truchard, NI president, CEO and cofounder. “I remain optimistic about our long-term position in the industry, with new products released in Q3 adding capability to our platform to further differentiate our approach in automated test and address new opportunities in areas such as the Industrial Internet of Things.”

Geographic revenue in U.S. dollar terms for Q3 2014 compared with Q3 2013 was up 2 percent in the Americas, up 8 percent in Europe, up 34 percent in East Asia and down 14 percent in Emerging Markets. In local currency terms, revenue was up 5 percent in Europe, up 33 percent in East Asia and down 12 percent in Emerging Markets.

As of Sept. 30, NI had $448 million in cash and short-term investments, up $46 million from Q2 2014. The company paid $19 million in dividends in the third quarter. The NI Board of Directors also approved a quarterly dividend of $0.15 per share on the company’s common stock payable on Dec. 8, 2014 to stockholders of record on Nov. 17, 2014.

Guidance for Q4 2014

“I am pleased with the operating leverage we have delivered so far this year and we expect to continue to deliver year-over-year revenue growth and operating leverage in Q4,” said Alex Davern, NI COO and CFO. “Looking forward we are working hard to take advantage of our opportunity and remain committed to driving organic growth.”

Gross margins are expected to be up sequentially in Q4. NI currently expects revenue for Q4 2014 to be between $312 million and $342 million, up 9 percent year-over-year at the midpoint. NI expects fully diluted EPS to be in the range of $0.23 to $0.35 for Q4, with non-GAAP fully diluted EPS expected to be in the range of $0.29 to $0.41.

Non-GAAP Presentation

In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results and non-GAAP information that exclude certain charges. In this news release, the company has presented its gross profit, gross margin, operating expenses, operating income, operating margin, income before income taxes, provision for income taxes, net income and basic and fully diluted EPS for the three-month periods ending Sept. 30, 2014 and 2013, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP fully diluted EPS.