Strong GAAP and non-GAAP earnings growth; Non-GAAP EPS up 83 percent year over year

Q3 2021 Summary

• Record GAAP revenue for a third quarter of $367 million, up 19 percent year over year
• All-time record for orders, up 30 percent year over year
• Strong GAAP operating income of $34 million
• Non-GAAP operating income of $67 million
• Strong diluted GAAP EPS of $0.20 and diluted non-GAAP EPS of $0.42, up 83 percent year over year
• Cash and short-term investments of $231 million as of September 30, 2021

AUSTIN, Texas — (BUSINESS WIRE) — October 28, 2021 — National Instruments Corporation (Nasdaq: NATI) today announced Q3 2021 revenue of $367 million, up 19 percent year over year, a record for a third quarter.

In Q3 2021 the value of the company's orders was up 30 percent year over year. For Q3 2021, year over year orders were up 28 percent in the Americas, up 39 percent in APAC, and up 23 percent in EMEA.

Geographic revenue in U.S. dollar terms for Q3 2021 compared with Q3 2020 was up 17 percent in the Americas, up 20 percent in APAC and up 21 percent in EMEA. Historical revenue from these three regions can be found on NI’s investor website at www.ni.com/nati.

In Q3, GAAP gross margin was 72 percent and non-GAAP gross margin was 75 percent. Total GAAP operating expenses were $230 million, up 6 percent year over year. Total non-GAAP operating expenses were $209 million, up 10 percent year over year. GAAP operating income for Q3 was $34 million with non-GAAP operating income of $67 million. GAAP net income for Q3 was $27 million and non-GAAP net income was $55 million, with GAAP diluted EPS of $0.20 and non-GAAP diluted EPS of $0.42. Our GAAP diluted EPS and non-GAAP diluted EPS were near the high-end of our guidance.

Additionally, the company announced the acquisition of NH Research, Inc. (NHR), a leader in high power test and measurement applications such as electric vehicles and batteries. The transaction closed on October 19, 2021. NI also announced that it recently entered into a definitive agreement to purchase the EV Systems business of Rosenheim, Germany-based Heinzinger GmbH, a European leader in high-current and high-voltage power systems and this deal is expected to close in early Q1 2022, pending regulatory approval. These acquisitions will expand NI’s portfolio of electrification (EV), battery, and sustainable energy capabilities to provide customers with critical power level signal sensing, capture and analysis.

“We reported outstanding results in the third quarter as momentum continued across our business for the fourth consecutive quarter. The strategic changes we’ve made over the last several years are clearly paying off. Our focus on secular growth opportunities such as wireless communications and 5G, electrification, and space technology, is leading to sustainable customer demand. With our recent acquisitions, we will further accelerate growth and profitability by broadening our reach to customers in the fast-growing area of electrification," said Eric Starkloff, NI President and CEO. “Shortly after taking on the role of CEO in 2020, I committed to a 3-year financial model through 2023. Today, we expect to meet or exceed those expectations in 2022, a full year ahead of schedule.”

"We delivered record non-GAAP operating income for the first nine months of the year, up 44 percent year-over-year. We will continue to be intentional with investments that we believe will strengthen our competitive advantage to make our business stronger and more resilient,” said Karen Rapp, NI CFO. “While we continue to navigate supply constraints, our demand remains strong. Our focus to deliver software-connected systems and data analytics solutions enable the data insights our customers need for future success. We remain confident in our ability to accelerate growth, profitability, and shareholder value.”

As of September 30, 2021, NI had $231 million in cash and short-term investments. During the third quarter, NI paid $36 million in dividends. The NI Board of Directors approved a quarterly dividend of $0.27 per share payable on November 29, 2021, to stockholders of record on November 8, 2021.

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 2021 Summary

• Record GAAP revenue of $1,049 million, up 14 percent year over year
• Strong GAAP operating income of $68 million
• Record non-GAAP operating income of $178 million
• Strong diluted GAAP EPS of $0.37 and diluted non-GAAP EPS of $1.08

Guidance

• Q4 GAAP revenue to be in the range of $385 million to $425 million, up 10 percent year over year at the midpoint
• GAAP diluted EPS to be in the range of $0.17 to $0.31 for Q4, up 20 cents year over year at the midpoint
• Non-GAAP diluted EPS expected to be in the range of $0.47 to $0.61, up 6 percent year over year at the midpoint

Conference Call Information

Today, NI management will host a call with the investment community to discuss recent transactions in more detail in addition to the company's financial performance in the third quarter. Interested parties can listen to the Q3 2021 earnings conference call at ni.com/call or by dial (855) 212-2361 and enter confirmation code 7456239. Replay information is available by calling (855) 859-2056, confirmation code 7456239, shortly after the call through November 2 at 11:59 p.m. CT or by visiting the company’s website at www.ni.com/call.

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, diluted EPS and EBITDA. 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 the Private Securities Litigation Reform Act of 1995 including without limitation those statements about our expectations of accelerating growth and progress to meet 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 software strategy, our ability to successfully integrate acquisitions and execute our growth strategy, our ability to achieve sustainable customer demand through focus on secular growth opportunities, and our guidance and expectations for our Q4 2021 revenue, diluted EPS, backlog and lead times. 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 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; cyber-attacks; the dependency of our product revenue on certain industries and the risk of contractions in such industries; fluctuations in demand for our products including orders from our large customers; 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; component shortages; 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 and technical personnel; the 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 ability to achieve the benefits of employee restructuring plans; our exposure to large orders; our ability to effectively manage our operating expenses and meet budget; expense overruns; manufacturing inefficiencies and the level of capacity utilization; 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; adverse effects of price changes; and changes in accounting principles. The company directs readers to its Form 10-K for the year ended December 31, 2020, 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.