9 percent year over year order growth and strong operating leverage

Q1 2017 Highlights

• Revenue of $300 million, up 5 percent year over year with core revenue up 7 percent year over year
• GAAP gross margin of 74.5 percent, up 100 basis points year over year
• Non-GAAP gross margin of 75.3 percent, up 55 basis points year over year
• Fully diluted GAAP EPS of $0.14 and fully diluted non-GAAP EPS of $0.21
• GAAP operating income up 61% year over year
• Non-GAAP operating income up 37% year over year
• GAAP net income of $18 million
• EBITDA of $42 million
• Cash and short-term investments of $365 million as of March 31, 2017

AUSTIN, Texas — (BUSINESS WIRE) — April 27, 2017 — National Instruments (Nasdaq: NATI) today announced Q1 2017 revenue of $300 million, up 5 percent year over year with core revenue up 7 percent year over year. 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. A reconciliation of GAAP revenue to core revenue is included with this news release.

In Q1 2017, NI received $5 million in orders from its largest customer compared with $6 million in orders from this customer in Q1 2016. Excluding NI’s largest customer, the value of the company’s total orders was up 9 percent year over year for the quarter; orders under $20,000 were up 4 percent year over year; orders between $20,000 and $100,000 were up 9 percent year over year; and orders above $100,000 were up 22 percent year over year.

GAAP net income for Q1 was $18 million, with fully diluted earnings per share (EPS) of $0.14, and non-GAAP net income was $27 million, with non-GAAP fully diluted EPS of $0.21. Included in our GAAP net income for Q1 is $2 million related to restructuring charges. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $42 million.

In Q1, GAAP gross margin was 74.5 percent and non-GAAP gross margin was 75.3 percent. Total GAAP operating expenses were $201 million, up 2 percent year over year. Total non-GAAP operating expenses were up 1 percent year over year at $192 million. GAAP operating margin was 7 percent in Q1, with GAAP operating income of $22 million, up 61 percent year over year. Non-GAAP operating margin was 11.5 percent in Q1, with non-GAAP operating income of $34 million, up 37 percent year over year.

“I am pleased by the excellent execution and focus on growth by our entire global team this quarter,” said Alex Davern, NI president and CEO. “Our growth has come from an improving industrial economy and a sharp focus on key growth areas within our markets. Investments in RF and wireless, semiconductor test, and software are enabling our customers to use our platform to solve new challenges in 5G, semiconductor test, connected vehicles, and the Industrial Internet of Things. As we look to the rest of the year, we will be disciplined in our focus and execution, in order to achieve our growth and profitability goals.”

John Roiko, NI interim CFO, said, “We are encouraged by the strong order growth, improved operating margin and the positive signs we are seeing in the macroeconomic environment. We remain focused on leveraging our investments to drive sustained revenue growth and are confident in our ability to continue to make progress toward our non-GAAP target of 18 percent operating margin.”

Geographic revenue in U.S. dollar terms for Q1 2017 compared with Q1 2016 was up 7 percent in the Americas, up 3 percent in APAC, and up 3 percent in EMEIA. Excluding the impact of foreign currency exchange, revenue was up 7 percent in the Americas, up 3 percent in APAC, and up 5 in EMEIA. Historical revenue from these three regions can be found on NI’s investor website at  www.ni.com/nati.

As of March 31, 2017, NI had $365 million in cash and short-term investments. During the quarter, NI paid $27 million in dividends. The NI Board of Directors approved a quarterly dividend of $0.21 per share payable on June 5, 2017, to stockholders of record on May 15, 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, acquisition-related fair value adjustments, and restructuring charges. Reconciliations of the company’s GAAP and non-GAAP results are included as part of this news release.