Business Wire | Jul 30, 2020 04:02PM EDT

NI Reports Second Quarter Revenue of $301 Million

Jul. 30, 2020

AUSTIN, Texas--(BUSINESS WIRE)--Jul. 30, 2020--National Instruments (Nasdaq: NATI) today announced Q2 2020 revenue of $301 million, down 10 percent year over year and down 3 percent sequentially. Organic revenue, which we define as GAAP revenue excluding the impact of acquisitions and divestitures completed within the past twelve months, declined 8 percent year over year.

In Q2 2020 the value of the company's organic orders, which we define as the value of the company's orders excluding the impact of acquisitions and divestitures noted above, was down 6 percent year over year; organic orders over $20,000 were up 4 percent year over year; and organic orders under $20,000 were down 21 percent year over year. For Q2, on an organic order basis, the Americas region had year over year order growth of 1 percent, EMEA orders were down 23 percent, and in APAC orders were flat during the quarter. We previously included order value and net sales attributable to our operations in India within the EMEA region. In the second quarter of 2020, we began including these amounts within the APAC geographic region, to reflect recent changes within our organizational structure. India represents approximately 2 percent of our total orders.

Geographic revenue in U.S. dollar terms for Q2 2020 compared with Q2 2019 was down 6 percent in the Americas, down 7 percent in APAC and down 19 percent in EMEA. Excluding the impact of foreign currency exchange, revenue was down 5 percent in the Americas, down 4 percent in APAC and down 17 percent in EMEA. Historical revenue from these three regions can be found on NI's investor website at www.ni.com/nati.

In Q2, GAAP gross margin was 71 percent and non-GAAP gross margin was 74 percent. Total GAAP operating expenses were $199 million, down 9 percent year over year. Total non-GAAP operating expenses were down 11 percent year over year at $181 million. GAAP operating margin was 5 percent in Q2, with GAAP operating income of $16 million. Non-GAAP operating margin was 14 percent in Q2, with non-GAAP operating income of $44 million.

GAAP net income for Q2 was $11 million, with fully diluted earnings per share (EPS) of $0.08, and non-GAAP net income was $34 million, with non-GAAP fully diluted EPS of $0.26, at the midpoint of our guidance. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $33 million for Q2.

For the first half of 2020, revenue was $611 million, down 5 percent year over year and on an organic basis, revenue was down 3 percent year over year. The value of the company's first half 2020 total organic orders was also down 3 percent year over year.

"I am proud of the ability of our employees to adapt as the COVID-19 pandemic continues globally. We delivered results within expectations shared June 9, 2020 and our operational continuity ensured we were able to meet customer demand," said Eric Starkloff, NI CEO. "The core strengths of NI are clear - our broad customer base, diversity of business, and the value our customers see in our software-connected systems. I believe we are in a stronger position strategically as compared to past industrial recessions with a focus on the parts of the market where our customers continue to invest."

"Although economic uncertainty remains, I am confident in our strategy and ability to maintain stability in the short-term while staying focused on our long-term growth ambitions," said Karen Rapp, NI CFO. "We will continue to be diligent in managing expenses through the second half of 2020. We believe our strong balance sheet and cash position provides us the capability to keep our capital allocation priorities unchanged as we stay committed to shareholder value."

As of June 30, 2020, NI had $608 million in cash and short-term investments. During the second quarter of 2020, NI amended and restated its credit agreement to provide for an initial credit facility of $145 million, with the potential to request, subject to the terms and conditions of the credit agreement, including obtaining commitments from existing lenders or new lenders, additional term loan or revolving commitments of up to $105 million in the aggregate. During the second quarter, NI paid $34 million in dividends and repurchased approximately 500,000 shares of our common stock at an average price of $34.08 per share. The NI Board of Directors approved a quarterly dividend of $0.26 per share payable on September 8, 2020, to stockholders of record on August 17, 2020.

The company's non-GAAP results exclude, as applicable, the impact of purchase accounting 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 company's GAAP and non-GAAP results are included as part of this news release.

Guidance

NI currently expects Q3 GAAP revenue to be in the range of $283 million to $323 million and Q3 non-GAAP revenue, which adjusts for the impact of purchase price accounting related to OptimalPlus, to be in the range of $285 million to $325 million. The company currently expects that GAAP fully diluted EPS will be in the range of -$0.09 to $0.05 for Q3, with non-GAAP fully diluted EPS expected to be in the range of $0.14 to $0.28.

Virtual NATI Investor Conference

The NI leadership team will host a "virtual" investor conference on Tuesday, August 4 at 9:00 a.m. Attendees will hear more about our long-term strategy for growth, value of our software-connected systems, industry focus, and our financial model. To register, please visit ni.com/nati.

Conference Call Information

Interested parties can listen to the Q2 2020 earnings conference call with NI management today, July 30, at 4:00 p.m. CT at ni.com/call or by dialing 855-212-2361 and entering confirmation code 3473967 ten minutes prior to the call start time. Replay information is available by calling (855) 859-2056 and entering confirmation code 3473967, shortly after the call through August 2 at 10:00 p.m. CT or by visiting the company's website at ni.com/call.

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 revenue, 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 and six months ended June 30, 2020 and 2019, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP fully diluted EPS.

When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results. Management believes that including the non-GAAP results assists investors in assessing the company's operational performance and its performance relative to its competitors. The company presents these non-GAAP results as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider purchase accounting adjustments, stock-based compensation expense, 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 in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods; to establish operational goals; to compare with its business plan and individual operating budgets; to measure management performance for the purposes of executive compensation, including payments to be made under bonus plans; to assist the public in measuring the company's performance relative to the company's long-term public performance goals; to allocate resources; and, relative to the company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance.

This news release discloses the company's EBITDA for the three and six months ended June 30, 2020 and 2019. The company believes that including the EBITDA results assists investors in assessing the company's operational performance relative to its competitors. A reconciliation of EBITDA to GAAP net income is included with this news release. This news release also discloses the year-over-year change in the company's organic revenue for the three and six months ended June 30, 2020. The company believes that including its year-over-year change in organic revenue assists investors in assessing the company's operational performance. A reconciliation of its year-over-year change in organic revenue to its year-over-year change in GAAP revenue is included with this news release.

Forward-Looking Statements

This release contains "forward-looking statements" including statements regarding compared to the 2009 economic downturn, I believe we are in a stronger position strategically as compared to past industrial recessions with a focus on the parts of the market where our customers continue to invest; although economic uncertainty remains, I am confident in our strategy and ability to maintain stability in the short-term while staying focused on our long-term growth ambitions; we will continue to be diligent in managing expenses through the second half of 2020; we believe our strong balance sheet and cash position provides us the capability to keep our capital allocation priorities unchanged as we stay committed to shareholder value; expecting Q3 GAAP revenue to be in the range of $283 million to $323 million, expecting Q3 non-GAAP revenue to be in the range of $285 million to $325 million, and expecting that GAAP fully diluted EPS will be in the range of -$0.09 to $0.05 for Q3, with non-GAAP fully diluted EPS expected to be in the range of $0.14 to $0.28; and guidance regarding Q3 organic (non-GAAP) revenue. These statements are subject to a number of risks and uncertainties, including risks and uncertainties related to the COVID-19 virus and further economic and market disruptions resulting from COVID-19; further adverse changes or fluctuations in the global economy; further adverse fluctuations in our industry; foreign exchange fluctuations; changes in the current global trade regulatory environment; fluctuations in customer demands and markets; fluctuations in demand for NI products including orders from NI's large customers; component shortages; delays in the release of new products; NI's ability to effectively manage its operating expenses; manufacturing inefficiencies and the level of capacity utilization; the impact of any recent or future acquisitions or divestitures by NI (including the ability to successfully operate or integrate the acquired company's business into NI, the ability to retain and integrate the acquired company's employees into NI, and the ability to realize the expected benefits of the acquisition); expense overruns; and adverse effects of price changes or effective tax rates. Actual results may differ materially from the expected results. The company directs readers to its Form 10-K for the year ended Dec. 31, 2019, its Form 10-Q for the quarter ended March 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.

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 the 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(tm) every day. (NATI-F)

LabVIEW, National Instruments, NI and ni.com are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

June 30, December 31,

2020 2019

(unaudited)

Assets

Current assets:

Cash and cash equivalents $ 471,205 $ 194,616

Short-term investments 137,104 237,983

Accounts receivable, net 211,766 248,872

Inventories, net 209,928 200,410

Prepaid expenses and other current assets 65,817 65,477

Total current assets 1,095,820 947,358



Property and equipment, net 247,548 243,717

Goodwill 255,153 262,242

Intangible assets, net 68,975 84,083

Operating lease right-of-use assets 63,895 70,407

Restricted cash 70,000 -

Other long-term assets 48,424 44,082

Total assets $ 1,849,815 $ 1,651,889



Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses $ 53,247 $ 52,192

Accrued compensation 44,431 47,732

Deferred revenue - current 113,785 131,445

Operating lease liabilities - current 13,583 13,431

Other taxes payable 39,477 40,607

Debt, current 3,500 -

Other current liabilities 66,818 20,716

Total current liabilities 334,841 306,123



Deferred income taxes 16,258 14,065

Liability for uncertain tax positions 6,808 6,652

Income tax payable - non-current 61,628 69,151

Deferred revenue - non-current 32,468 33,480

Operating lease liabilities - non-current 34,655 40,650

Debt, noncurrent 85,020 -

Other long-term liabilities 8,498 5,418

Total liabilities $ 580,176 $ 475,539



Stockholders' equity:

Common stock 1,314 1,305

Additional paid-in capital 993,058 953,578

Retained earnings 299,132 242,537

Accumulated other comprehensive loss (23,865 ) (21,070 )

Total stockholders' equity 1,269,639 1,176,350

Total liabilities and stockholders' equity $ 1,849,815 $ 1,651,889

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019



Net sales:

Product $ 266,261 $ 299,798 $ 540,239 $ 577,500

Software maintenance 35,068 34,433 70,470 67,805

Total net sales 301,329 334,231 610,709 645,305



Cost of sales:

Product 83,795 81,741 165,866 155,929

Software maintenance 2,106 2,025 3,796 3,912

Total cost of sales 85,901 83,766 169,662 159,841



Gross profit 215,428 250,465 441,047 485,464

71.5% 74.9% 72.2% 75.2%

Operating expenses:

Sales and marketing 105,419 120,868 221,165 238,419

Research and development 64,225 68,257 135,846 134,423

General and administrative 29,369 29,044 55,549 56,927

Total operating expenses 199,013 218,169 412,560 429,769

Gain on sale of business - - 159,753 -

Operating income 16,415 32,296 188,240 55,695

Other income (expense): (1,143 ) 555 (583 ) 3,131

Income before income taxes 15,272 32,851 187,657 58,826

Provision for income taxes 4,383 4,159 44,113 6,914

Net income $ 10,889 $ 28,692 $ 143,544 $ 51,912



Basic earnings per share $ 0.08 $ 0.22 $ 1.10 $ 0.39

Diluted earnings per share $ 0.08 $ 0.22 $ 1.09 $ 0.39



Weighted average shares outstanding -

Basic 131,014 132,062 130,813 132,156

Diluted 131,602 132,973 131,499 133,172



Dividends declared per share $ 0.26 $ 0.25 $ 0.52 $ 0.50

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Six Months Ended June 30,

2020 2019



Cash flow from operating activities:

Net income $ 143,544 $ 51,912

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

Disposal gain on sale of business (159,753 ) -

Depreciation and amortization 38,341 35,984

Stock-based compensation 27,335 24,662

Deferred income taxes 2,711 2,268

Net change in operating assets and liabilities 49,320 (26,189 )

Net cash provided by operating activities 101,498 88,637



Cash flow from investing activities:

Capital expenditures (25,362 ) (26,048 )

Proceeds from sale of business, net of cash 160,266 - divested

Capitalization of internally developed software (3,108 ) (4,497 )

Additions to other intangibles (630 ) (487 )

Acquisitions of equity-method investments - (9,784 )

Purchases of short-term investments (206,330 ) (91,777 )

Sales and maturities of short-term investments 306,955 117,108

Net cash provided by (used by) investing activities 231,791 (15,485 )



Cash flow from financing activities:

Proceeds from revolving loan facility 20,000 -

Proceeds from term loan 70,000 -

Debt issuance costs (1,480 ) -

Proceeds from issuance of common stock 17,252 17,645

Repurchase of common stock (23,680 ) (92,375 )

Dividends paid (68,156 ) (66,067 )

Net cash provided by (used by) financing activities 13,936 (140,797 )



Impact of changes in exchange rates on cash (636 ) 20



Net change in cash, cash equivalents and restricted 346,589 (67,625 )cash

Cash, cash equivalents and restricted cash at 194,616 259,386 beginning of period

Cash, cash equivalents and restricted cash at end $ 541,205 $ 191,761 of period

The following tables provide details with respect to the amount of GAAP chargesrelated to stock-based compensation, amortization of acquisition-relatedintangibles, acquisition-related transaction costs, capitalization andamortization of internally developed software costs, restructuring charges andgain on sale of business that were recorded in the line items indicated below(unaudited) (in thousands)



Three Months Ended Six Months Ended

June 30, June 30,



2020 2019 2020 2019

Stock-based compensation

Cost of sales $ 932 $ 890 $ 1,736 $ 1,683

Sales and marketing 6,467 5,140 11,642 9,515

Research and development 4,428 4,379 7,947 7,929

General and administrative 3,404 3,219 6,008 5,535

Provision for income taxes (2,905 ) (3,940 ) (4,406 ) (5,776 )

Total $ 12,326 9,688 22,927 18,886



Amortization of acquisition intangibles

Cost of sales $ 635 $ 841 $ 1,381 $ 1,692

Sales and marketing 480 494 966 993

Research and development 28 28 55 56

Other expense (income) 117 162 241 162

Provision for income taxes (133 ) (192 ) (290 ) (386 )

Total $ 1,127 $ 1,333 $ 2,353 $ 2,517



Acquisition transactioncosts, restructuring charges, and other

Cost of sales $ - $ - $ 20 $ -

Sales and marketing 1,239 3,153 7,612 5,296

Research and development 147 311 4,816 656

General and administrative 3,399 616 2,385 1,528

Gain on sale of business^ - - (159,753 ) - (1)

Other expense (income) - - 128 -

Provision for income taxes (78 ) (1,010 ) 34,676 (1,850 )

Total $ 4,707 $ 3,070 $ (110,116 ) $ 5,630

(1): During the first quarter of 2020, the company recognized a gain of $160million related to the divestiture of AWR, presented within "Gain on sale ofbusiness".



Capitalization andamortization of internally developed software costs

Cost of sales $ 7,144 $ 6,537 $ 14,226 $ 13,119

Research and development (1,181 ) (2,218 ) (3,095 ) (4,497 )

Provision for income taxes (1,252 ) (907 ) (2,337 ) (1,811 )

Total $ 4,711 $ 3,412 $ 8,794 $ 6,811

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019



Reconciliation of GrossProfit to Non-GAAP Gross Profit

Gross profit, as $ 215,428 $ 250,465 $ 441,047 $ 485,464 reported

Stock-based 932 890 1,736 1,683 compensation

Amortization of 635 841 1,381 1,692 acquisition intangibles

Acquisition transactioncosts, restructuring - - 20 - charges and other

Amortization ofinternally developed 7,144 6,537 14,226 13,119 software costs

Non-GAAP gross profit $ 224,139 $ 258,733 $ 458,410 $ 501,958

Non-GAAP gross margin 74.4% 77.4% 75.1% 77.8%



Reconciliation ofOperating Expenses to Non-GAAP OperatingExpenses

Operating expenses, as $ 199,013 $ 218,169 $ 412,560 $ 429,769 reported

Stock-based (14,299 ) (12,738 ) (25,597 ) (22,979 )compensation

Amortization of (508 ) (522 ) (1,021 ) (1,049 )acquisition intangibles

Acquisition transactioncosts, restructuring (4,785 ) (4,080 ) (14,813 ) (7,480 )charges and other

Capitalization ofinternally developed 1,181 2,218 3,095 4,497 software costs

Non-GAAP operating $ 180,602 $ 203,047 $ 374,224 $ 402,758 expenses



Reconciliation ofOperating Income to Non-GAAP OperatingIncome

Operating income, as $ 16,415 $ 32,296 $ 188,240 $ 55,695 reported

Stock-based 15,231 13,628 27,333 24,662 compensation

Amortization of 1,143 1,363 2,402 2,741 acquisition intangibles

Acquisition transactioncosts, restructuring 4,785 4,080 14,833 7,480 charges and other

Net amortization ofinternally developed 5,963 4,319 11,131 8,622 software costs

Gain on sale of - - (159,753 ) - business^(1)

Non-GAAP operating $ 43,537 $ 55,686 $ 84,186 $ 99,200 income

Non-GAAP operating 14.4% 16.7% 13.8% 15.4%margin



Reconciliation ofIncome before incometaxes to Non-GAAP Income before incometaxes

Income before income $ 15,272 $ 32,851 $ 187,657 $ 58,826 taxes, as reported

Stock-based 15,231 13,628 27,333 24,662 compensation

Amortization of 1,260 1,525 2,643 2,903 acquisition intangibles

Acquisition transactioncosts, restructuring 4,785 4,080 14,961 7,480 charges and other

Net amortization ofinternally developed 5,963 4,319 11,131 8,622 software costs

Gain on sale of - - (159,753 ) - business^(1)

Non-GAAP income before $ 42,511 $ 56,403 $ 83,972 $ 102,493 income taxes



Reconciliation ofProvision for incometaxes to Non-GAAP Provision for incometaxes

Provision for income $ 4,383 $ 4,159 $ 44,113 $ 6,914 taxes, as reported

Stock-based 2,905 3,940 4,406 5,776 compensation

Amortization of 133 192 290 386 acquisition intangibles

Acquisition transactioncosts, restructuring 466 1,010 2,083 1,850 charges and other

Net amortization ofinternally developed 1,252 907 2,337 1,811 software costs

Gain on sale of (388 ) $- (36,759 ) $- business^(1)

Non-GAAP provision for $ 8,751 $ 10,208 $ 16,470 $ 16,737 income taxes

(1): During the first quarter of 2020, the company recognized a gain ofapproximately $160 million related to the divestiture of AWR, presented within"Gain on sale of business".

Reconciliation of GAAP Net Income, Diluted EPS, and Revenue to Non-GAAP NetIncome, Non-GAAP Diluted EPS, EBITDA, and Organic Revenue (Non-GAAP)

(in thousands, except per share data, unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019



Net income, as reported $ 10,889 $ 28,692 $ 143,544 $ 51,912

Adjustments toreconcile net income to non-GAAP net income:

Stock-basedcompensation, net of 12,326 9,688 22,927 18,886 tax effect

Amortization ofacquisition 1,127 1,333 2,353 2,517 intangibles, net of taxeffect

Acquisition transactioncosts, restructuring 4,319 3,070 12,878 5,630 charges and other, netof tax effect

Net amortization ofinternally developed 4,711 3,412 8,794 6,811 software costs, net oftax effect

Gain on sale ofbusiness^(1), net of 388 - (122,994 ) - tax effect

Non-GAAP net income $ 33,760 $ 46,195 $ 67,502 $ 85,756

Non-GAAP net margin 11.2% 13.8% 11.1% 13.3%



Diluted EPS, as $ 0.08 $ 0.22 $ 1.09 $ 0.39 reported

Adjustment to reconcilediluted EPS to non-GAAP diluted EPS

Impact of stock-basedcompensation, net of 0.09 0.07 0.17 0.14 tax effect

Impact of amortizationof acquisition 0.01 0.01 0.02 0.02 intangibles, net of taxeffect

Impact of acquisitiontransaction costs and 0.04 0.02 0.10 0.04 restructuring charges,net of tax effect

Impact of netamortization ofinternally developed 0.04 0.03 0.07 0.05 software costs, net oftax effect

Impact of gain on saleof business^(1), net of - - (0.94 ) - tax effect

Non-GAAP diluted EPS $ 0.26 $ 0.35 $ 0.51 $ 0.64

(1): During the first quarter of 2020, the company recognized a gain ofapproximately $160 million related to the divestiture of AWR, presented within"Gain on sale of business".



Weighted average shares 131,602 132,973 131,499 133,172 outstanding - Diluted

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Net income, as reported $ 10,889 $ 28,692 $ 143,544 $ 51,912

Adjustments to reconcile net income to EBITDA:

Interest income, net (945 ) (2,012 ) (3,168 ) (4,232 )

Tax expense 4,383 4,159 44,113 6,914

Depreciation and 19,076 17,972 38,341 35,984 amortization

EBITDA $ 33,403 $ 48,811 $ 222,830 $ 90,578

Weighted average shares 131,602 132,973 131,499 133,172 outstanding - Diluted

Three Months Ended Six Months Ended

June 30, June 30,

Percent Percent 2020 2019 Inc/ 2020 2019 Inc/ (Dec) (Dec)

GAAP Revenue $ 301,329 $ 334,231 (10)% $ 610,709 $ 645,305 (5)%

less: Netsales fromacquisitionsordivestitures - (7,961 ) (1,337 ) (15,562 ) closedwithin thelast twelvemonths

OrganicRevenue $ 301,329 $ 326,270 (8)% $ 609,372 $ 629,743 (3)%(non-GAAP)

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS Guidance

(unaudited)

Three Months Ended

September 30, 2020



Low High

GAAP Diluted EPS, guidance $ (0.09 ) $ 0.05

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:

Impact of stock-based compensation, net of tax effect 0.09 0.09

Impact of amortization of acquisition intangibles anddeferred revenue purchase accounting adjustments^(1), 0.05 0.05 net of tax effect

Impact of acquisition transaction and integration costs, 0.06 0.06 restructuring charges, and other, net of tax effect

Impact of net amortization of software development 0.03 0.03 costs, net of tax effect

Non-GAAP Diluted EPS, guidance $ 0.14 $ 0.28

(1): The Company has not yet completed its preliminary purchase priceallocation of certain acquired intangible assets and deferred revenue relatedto the OptimalPlus transaction. The amounts provided in the table above reflectthe current best estimate based on a range of assumptions.

Reconciliation of GAAP Revenue to Non-GAAP Revenue and Organic Revenue(Non-GAAP), Guidance

(unaudited)

Three Months Ended

September 30,

2020 2019 Percent Inc/ (midpoint) (Dec)

GAAP Revenue, guidance $ 303,000 $ 340,442 (11)%

plus: Impact of purchase accounting 2,000 - adjustments^(1)

Non-GAAP Revenue, guidance $ 305,000 $ 340,442 (10)%

less: Net sales from acquisitions closed (4,000 ) - within the last twelve months

less: Net sales from divestitures closed - (7,833 ) within the last twelve months

Organic Revenue (Non-GAAP), guidance $ 301,000 $ 332,609 (10)%

(1): The Company has not yet completed its preliminary purchase priceallocation of certain acquired intangible assets and deferred revenue relatedto the OptimalPlus transaction. The amounts provided in the table above reflectthe current best estimate based on a range of assumptions.

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CONTACT: Marissa Vidaurri Head of Investor Relations (512) 683-5215