Business Wire | Jul 29, 2021 04:05PM EDT

NI Reports Record Revenue for a Second Quarter

Jul. 29, 2021

AUSTIN, Texas--(BUSINESS WIRE)--Jul. 29, 2021--National Instruments Corporation (Nasdaq: NATI) today announced Q2 2021 revenue of $347 million, up 15 percent year over year, a record for a second quarter.

In Q2 2021 the value of the company's orders was up 33 percent year over year. For Q2 2021, year over year orders were up 22 percent in the Americas, up 51 percent in EMEA, and up 36 percent in APAC.

Geographic revenue in U.S. dollar terms for Q2 2021 compared with Q2 2020 was up 11 percent in the Americas, up 17 percent in APAC and up 19 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 75 percent. Total GAAP operating expenses were $223 million. Total non-GAAP operating expenses were $200 million. GAAP operating income for Q2 was $25 million with non-GAAP operating income of $60 million. GAAP net income for Q2 was $17 million and non-GAAP net income was $47 million, with GAAP diluted EPS of $0.13 and non-GAAP diluted EPS of $0.35. Our GAAP diluted EPS was above the high-end of our guidance while our non-GAAP diluted EPS was at the high-end of our guidance.

"We were very pleased with the strong results in the second quarter with revenue exceeding the high end of guidance. Momentum in customer demand continued with the total value of orders for Q2 up 33 percent year-over-year. This represents record orders for a second quarter and double-digit growth year-over-year across all industries and all regions," said Eric Starkloff, NI President and CEO. "We believe these results are proof that our strategy is working, and our continued market focus is paying off."

"We delivered record non-GAAP Operating Income for a second quarter, up 38 percent year-over-year. While we continue to invest in areas of critical importance, our focus on driving scale is making our business model more resilient," said Karen Rapp, NI CFO. "We remain committed to the execution of our growth strategy while also improving our profitability in order to ensure our priority of maximizing shareholder value."

As of June 30, 2021, NI had $265 million in cash and short-term investments. During the second quarter, NI paid $36 million in dividends. The NI Board of Directors approved a quarterly dividend of $0.27 per share payable on August 30, 2021, to stockholders of record on August 9, 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.

H1 2021 Summary

* Record GAAP revenue for a first half of $682 million, up 12 percent year over year * Strong GAAP operating income of $34 million * Record non-GAAP operating income for a first half of $111 million * Strong diluted GAAP EPS of $0.16 and record diluted non-GAAP EPS for a first half of $0.67

Guidance

* Q3 GAAP revenue to be in the range of $355 million to $385 million, up 20 percent year over year at the midpoint * GAAP diluted EPS to be in the range of $0.10 to $0.24 for Q3, up 21 cents year over year at the midpoint * Non-GAAP diluted EPS expected to be in the range of $0.31 to $0.45, up 65 percent year over year at the midpoint

Conference Call Information

Interested parties can listen to the Q2 2021 earnings conference call with NI Management today, at ni.com/call or by dial (855) 212-2361 and enter confirmation code 6289401. Replay information is available by calling (855) 859-2056, confirmation code 6289401, shortly after the call through August 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 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, and our guidance and expectations for our Q3 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.

About NI

LabVIEW, NI (ni.com) develops high-performance automated test and automated measurement systems to help you solve your engineering challenges now and into the future. Our open, software-defined platform uses modular hardware and an expansive ecosystem to help you turn powerful possibilities into real solutions. (NATI-F)

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,

2021 2020

(unaudited)

Assets

Cash and cash equivalents $ 250,421 $ 260,232

Short-term investments 14,110 59,923

Accounts receivable, net 258,641 266,869

Inventories, net 211,023 194,012

Prepaid expenses and other current assets 80,121 68,470

Total current assets 814,316 849,506

Property and equipment, net 250,761 254,399

Goodwill 483,136 467,547

Intangible assets, net 149,126 172,719

Operating lease right-of-use assets 57,812 67,674

Other long-term assets 76,878 72,643

Total assets $ 1,832,029 $ 1,884,488



Liabilities and Stockholders' Equity

Accounts payable and accrued expenses $ 56,477 $ 51,124

Accrued compensation 68,932 87,068

Deferred revenue - current 125,986 132,151

Operating lease liabilities - current 13,389 15,801

Other taxes payable 39,339 48,129

Debt, current - 5,000

Other current liabilities 26,854 42,578

Total current liabilities 330,977 381,851

Deferred income taxes 28,359 25,288

Income tax payable - non-current 54,195 61,623

Deferred revenue - non-current 34,624 36,335

Operating lease liabilities - non-current 29,512 35,854

Debt, noncurrent 100,000 92,036

Other long-term liabilities 18,710 26,630

Total liabilities $ 596,377 $ 659,617

Stockholders' equity:

Common stock 1,330 1,312

Additional paid-in capital 1,087,622 1,033,284

Retained earnings 161,475 211,101

Accumulated other comprehensive loss (14,775 ) (20,826 )

Total stockholders' equity 1,235,652 1,224,871

Total liabilities and stockholders' equity $ 1,832,029 $ 1,884,488

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Net sales:

Product

$

306,490

$

266,261

$

601,583

$

540,239

Software maintenance

40,206

35,068

80,295

70,470

Total net sales

346,696

301,329

681,878

610,709

Cost of sales:

Product

95,722

83,795

187,379

165,866

Software maintenance

3,516

2,106

7,273

3,796

Total cost of sales

99,238

85,901

194,652

169,662

Gross profit

247,458

215,428

487,226

441,047

71.4%

71.5%

71.5%

72.2%

Operating expenses:

Sales and marketing

111,199

105,419

227,983

221,165

Research and development

81,434

64,225

161,520

135,846

General and administrative

30,277

29,369

63,636

55,549

Total operating expenses

222,910

199,013

453,139

412,560

Gain on sale of business/assets

-

-

-

159,753

Operating income

24,548

16,415

34,087

188,240

Other expense

(2,963

)

(1,143

)

(8,031

)

(583

)

Income before income taxes

21,585

15,272

26,056

187,657

Provision for income taxes

4,279

4,383

4,254

44,113

Net income

$

17,306

$

10,889

$

21,802

$

143,544

Basic earnings per share

$

0.13

$

0.08

$

0.17

$

1.10

Diluted earnings per share

$

0.13

$

0.08

$

0.16

$

1.09

Weighted average shares outstanding -

Basic

132,498

131,014

131,996

130,813

Diluted

133,539

131,602

133,157

131,499

Dividends declared per share

$

0.27

$

0.26

$

0.54

$

0.52

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020



Net sales:

Product $ 306,490 $ 266,261 $ 601,583 $ 540,239

Software maintenance 40,206 35,068 80,295 70,470

Total net sales 346,696 301,329 681,878 610,709



Cost of sales:

Product 95,722 83,795 187,379 165,866

Software maintenance 3,516 2,106 7,273 3,796

Total cost of sales 99,238 85,901 194,652 169,662



Gross profit 247,458 215,428 487,226 441,047

71.4% 71.5% 71.5% 72.2%

Operating expenses:

Sales and marketing 111,199 105,419 227,983 221,165

Research and development 81,434 64,225 161,520 135,846

General and administrative 30,277 29,369 63,636 55,549

Total operating expenses 222,910 199,013 453,139 412,560

Gain on sale of business/ - - - 159,753 assets

Operating income 24,548 16,415 34,087 188,240

Other expense (2,963 ) (1,143 ) (8,031 ) (583 )

Income before income taxes 21,585 15,272 26,056 187,657

Provision for income taxes 4,279 4,383 4,254 44,113

Net income $ 17,306 $ 10,889 $ 21,802 $ 143,544



Basic earnings per share $ 0.13 $ 0.08 $ 0.17 $ 1.10

Diluted earnings per share $ 0.13 $ 0.08 $ 0.16 $ 1.09



Weighted average shares outstanding -

Basic 132,498 131,014 131,996 130,813

Diluted 133,539 131,602 133,157 131,499



Dividends declared per share $ 0.27 $ 0.26 $ 0.54 $ 0.52

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Six Months Ended June 30,

2021

2020

Cash flow from operating activities:

Net income

$

21,802

$

143,544

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

Disposal gains on sale of business/asset

-

(159,753

)

Depreciation and amortization

50,024

38,341

Stock-based compensation

37,208

27,335

Loss from equity-method investees

5,360

1,932

Deferred income taxes

1,301

2,711

Net change in operating assets and liabilities

(63,372

)

47,388

Net cash provided by operating activities

52,323

101,498

Cash flow from investing activities:

Acquisitions, net of cash received

(19,784

)

-

Capital expenditures

(17,411

)

(25,362

)

Proceeds from sale of assets/business, net of cash divested

-

160,266

Capitalization of internally developed software

(721

)

(3,108

)

Additions to other intangibles

(1,519

)

(630

)

Payments to acquire equity-method investments

(12,551

)

-

Purchases of short-term investments

-

(206,330

)

Sales and maturities of short-term investments

45,671

306,955

Net cash (used in) provided by investing activities

(6,315

)

231,791

Cash flow from financing activities:

Proceeds from revolving loan facility

100,000

20,000

Proceeds from term loan

-

70,000

Payments on term loan

(98,750

)

-

Debt issuance costs

(1,993

)

(1,480

)

Proceeds from issuance of common stock

17,239

17,252

Repurchase of common stock

-

(23,680

)

Dividends paid

(71,428

)

(68,156

)

Net cash (used in) provided by financing activities

(54,932

)

13,936

Impact of changes in exchange rates on cash

(887

)

(636

)

Net change in cash and cash equivalents

(9,811

)

346,589

Cash and cash equivalents at beginning of period

260,232

194,616

Cash and cash equivalents at end of period

$

250,421

$

541,205

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Six Months Ended June 30,

2021 2020



Cash flow from operating activities:

Net income $ 21,802 $ 143,544

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

Disposal gains on sale of business/asset - (159,753 )

Depreciation and amortization 50,024 38,341

Stock-based compensation 37,208 27,335

Loss from equity-method investees 5,360 1,932

Deferred income taxes 1,301 2,711

Net change in operating assets and liabilities (63,372 ) 47,388

Net cash provided by operating activities 52,323 101,498



Cash flow from investing activities:

Acquisitions, net of cash received (19,784 ) -

Capital expenditures (17,411 ) (25,362 )

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

Capitalization of internally developed software (721 ) (3,108 )

Additions to other intangibles (1,519 ) (630 )

Payments to acquire equity-method investments (12,551 ) -

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

Sales and maturities of short-term investments 45,671 306,955

Net cash (used in) provided by investing activities (6,315 ) 231,791



Cash flow from financing activities:

Proceeds from revolving loan facility 100,000 20,000

Proceeds from term loan - 70,000

Payments on term loan (98,750 ) -

Debt issuance costs (1,993 ) (1,480 )

Proceeds from issuance of common stock 17,239 17,252

Repurchase of common stock - (23,680 )

Dividends paid (71,428 ) (68,156 )

Net cash (used in) provided by financing activities (54,932 ) 13,936



Impact of changes in exchange rates on cash (887 ) (636 )



Net change in cash and cash equivalents (9,811 ) 346,589

Cash and cash equivalents at beginning of period 260,232 194,616

Cash and cash equivalents at end of period $ 250,421 $ 541,205

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,

2021

2020

2021

2020

Stock-based compensation

Cost of sales

$

1,191

$

932

$

2,305

$

1,736

Sales and marketing

6,922

6,467

12,617

11,642

Research and development

6,180

4,428

11,893

7,947

General and administrative

5,854

3,404

10,520

6,008

Provision for income taxes

(3,916

)

(2,905

)

(7,241

)

(4,406

)

Total

$

16,231

$

12,326

$

30,094

$

22,927

Amortization of acquisition-related intangibles and fair value adjustments

Net sales

$

738

$

-

$

1,551

$

-

Cost of sales

4,226

635

8,497

1,381

Sales and marketing

2,357

480

4,528

966

Research and development

-

28

-

55

Other expense

554

117

948

241

Provision for income taxes

(979

)

(133

)

(1,969

)

(290

)

Total

$

6,896

$

1,127

$

13,555

$

2,353

Acquisition transaction and integration costs, restructuring charges, and other(1)(2)

Cost of sales

$

(118

)

$

-

$

(43

)

$

20

Sales and marketing

839

1,239

5,487

7,612

Research and development

548

147

1,036

4,816

General and administrative

873

3,399

6,539

2,385

Gain on sale of business/assets

-

-

-

(159,753

)

Other expense

280

-

4,006

128

Provision for income taxes

(578

)

(78

)

(3,463

)

34,676

Total

$

1,844

$

4,707

$

13,562

$

(110,116

)

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

(2): During the first quarter of 2021, we recognized a $3.5 million impairment loss related to one of our equity-method investments.

Capitalization and amortization of internally developed software costs

Cost of sales

$

6,227

$

7,144

$

13,101

$

14,226

Research and development

(495

)

(1,181

)

(721

)

(3,095

)

Provision for income taxes

(1,204

)

(1,252

)

(2,600

)

(2,337

)

Total

$

4,528

$

4,711

$

9,780

$

8,794

The following tables provide details with respect to the amount of GAAP chargesrelated to stock-based compensation, amortization of acquisition-relatedintangibles and fair value adjustments, acquisition-related transaction andintegration costs, capitalization and amortization of internally developedsoftware costs, restructuring charges, gains on sale of business/assets, andother that were recorded in the line items indicated below (unaudited) (inthousands)



Three Months Ended Six Months Ended

June 30, June 30,



2021 2020 2021 2020

Stock-based compensation

Cost of sales $ 1,191 $ 932 $ 2,305 $ 1,736

Sales and marketing 6,922 6,467 12,617 11,642

Research and development 6,180 4,428 11,893 7,947

General and administrative 5,854 3,404 10,520 6,008

Provision for income taxes (3,916 ) (2,905 ) (7,241 ) (4,406 )

Total $ 16,231 $ 12,326 $ 30,094 $ 22,927



Amortization ofacquisition-related intangibles and fair value adjustments

Net sales $ 738 $ - $ 1,551 $ -

Cost of sales 4,226 635 8,497 1,381

Sales and marketing 2,357 480 4,528 966

Research and development - 28 - 55

Other expense 554 117 948 241

Provision for income taxes (979 ) (133 ) (1,969 ) (290 )

Total $ 6,896 $ 1,127 $ 13,555 $ 2,353



Acquisition transaction andintegration costs, restructuring charges, and other^(1)(2)

Cost of sales $ (118 ) $ - $ (43 ) $ 20

Sales and marketing 839 1,239 5,487 7,612

Research and development 548 147 1,036 4,816

General and administrative 873 3,399 6,539 2,385

Gain on sale of business/assets - - - (159,753 )

Other expense 280 - 4,006 128

Provision for income taxes (578 ) (78 ) (3,463 ) 34,676

Total $ 1,844 $ 4,707 $ 13,562 $ (110,116 )

(1): During the first quarter of 2020, we recognized a gain of approximately$160 million related to the divestiture of AWR, presented within "Gain on saleof business/assets".

(2): During the first quarter of 2021, we recognized a $3.5 million impairmentloss related to one of our equity-method investments.



Capitalization and amortizationof internally developed software costs

Cost of sales $ 6,227 $ 7,144 $ 13,101 $ 14,226

Research and development (495 ) (1,181 ) (721 ) (3,095 )

Provision for income taxes (1,204 ) (1,252 ) (2,600 ) (2,337 )

Total $ 4,528 $ 4,711 $ 9,780 $ 8,794

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Reconciliation of Net sales to Non-GAAP Net sales

Net sales, as reported

$

346,696

$

301,329

$

681,878

$

610,709

plus: Impact of acquisition-related fair value adjustments

738

-

1,551

-

Non-GAAP net sales

$

347,434

301,329

683,429

$

610,709

Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

247,458

$

215,428

$

487,226

$

441,047

Stock-based compensation

1,191

932

2,305

1,736

Amortization of acquisition-related intangibles and fair value adjustments

4,964

635

10,048

1,381

Acquisition transaction and integration costs, restructuring charges and other

(118

)

-

(43

)

20

Amortization of internally developed software costs

6,227

7,144

13,101

14,226

Non-GAAP gross profit

$

259,722

$

224,139

$

512,637

$

458,410

Non-GAAP gross margin

74.8%

74.4%

75.0%

75.1%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

222,910

$

199,013

$

453,139

$

412,560

Stock-based compensation

(18,956

)

(14,299

)

(35,030

)

(25,597

)

Amortization of acquisition-related intangibles and fair value adjustments

(2,357

)

(508

)

(4,528

)

(1,021

)

Acquisition transaction and integration costs, restructuring charges and other

(2,260

)

(4,785

)

(13,062

)

(14,813

)

Capitalization of internally developed software costs

495

1,181

721

3,095

Non-GAAP operating expenses

$

199,832

$

180,602

$

401,240

$

374,224

Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

24,548

$

16,415

$

34,087

$

188,240

Stock-based compensation

20,147

15,231

37,335

27,333

Amortization of acquisition-related intangibles and fair value adjustments

7,321

1,143

14,576

2,402

Acquisition transaction and integration costs, restructuring charges and other

2,142

4,785

13,019

14,833

Net amortization of internally developed software costs

5,732

5,963

12,380

11,131

Gain on sale of business/assets

-

-

-

(159,753

)

Non-GAAP operating income

$

59,890

$

43,537

$

111,397

$

84,186

Non-GAAP operating margin

17.2%

14.4%

16.3%

13.8%

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

Provision for income taxes, as reported

$

4,279

$

4,383

$

4,254

$

44,113

Stock-based compensation

3,916

2,905

7,241

4,406

Amortization of acquisition-related intangibles and fair value adjustments

979

133

1,969

290

Acquisition transaction and integration costs, restructuring charges and other

578

466

3,463

2,083

Net amortization of internally developed software costs

1,204

1,252

2,600

2,337

Gain on sale of business/assets

-

(388

)

-

(36,759

)

Non-GAAP provision for income taxes(1)

$

10,956

$

8,751

$

19,527

$

16,470

(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.

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020



Reconciliation of Net sales to Non-GAAP Net sales

Net sales, as reported $ 346,696 $ 301,329 $ 681,878 $ 610,709

plus: Impact ofacquisition-related fair value 738 - 1,551 - adjustments

Non-GAAP net sales $ 347,434 301,329 683,429 $ 610,709



Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported $ 247,458 $ 215,428 $ 487,226 $ 441,047

Stock-based compensation 1,191 932 2,305 1,736

Amortization ofacquisition-related 4,964 635 10,048 1,381 intangibles and fair valueadjustments

Acquisition transaction andintegration costs, (118 ) - (43 ) 20 restructuring charges andother

Amortization of internally 6,227 7,144 13,101 14,226 developed software costs

Non-GAAP gross profit $ 259,722 $ 224,139 $ 512,637 $ 458,410

Non-GAAP gross margin 74.8% 74.4% 75.0% 75.1%



Reconciliation of OperatingExpenses to Non-GAAP Operating Expenses

Operating expenses, as $ 222,910 $ 199,013 $ 453,139 $ 412,560 reported

Stock-based compensation (18,956 ) (14,299 ) (35,030 ) (25,597 )

Amortization ofacquisition-related (2,357 ) (508 ) (4,528 ) (1,021 )intangibles and fair valueadjustments

Acquisition transaction andintegration costs, (2,260 ) (4,785 ) (13,062 ) (14,813 )restructuring charges andother

Capitalization of internally 495 1,181 721 3,095 developed software costs

Non-GAAP operating expenses $ 199,832 $ 180,602 $ 401,240 $ 374,224



Reconciliation of OperatingIncome to Non-GAAP Operating Income

Operating income, as reported $ 24,548 $ 16,415 $ 34,087 $ 188,240

Stock-based compensation 20,147 15,231 37,335 27,333

Amortization ofacquisition-related 7,321 1,143 14,576 2,402 intangibles and fair valueadjustments

Acquisition transaction andintegration costs, 2,142 4,785 13,019 14,833 restructuring charges andother

Net amortization of internally 5,732 5,963 12,380 11,131 developed software costs

Gain on sale of business/ - - - (159,753 )assets

Non-GAAP operating income $ 59,890 $ 43,537 $ 111,397 $ 84,186

Non-GAAP operating margin 17.2% 14.4% 16.3% 13.8%



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

Provision for income taxes, as $ 4,279 $ 4,383 $ 4,254 $ 44,113 reported

Stock-based compensation 3,916 2,905 7,241 4,406

Amortization ofacquisition-related 979 133 1,969 290 intangibles and fair valueadjustments

Acquisition transaction andintegration costs, 578 466 3,463 2,083 restructuring charges andother

Net amortization of internally 1,204 1,252 2,600 2,337 developed software costs

Gain on sale of business/ - (388 ) - (36,759 )assets

Non-GAAP provision for income $ 10,956 $ 8,751 $ 19,527 $ 16,470 taxes^(1)

(1): The income tax effect related to each non-GAAP item is calculated based onthe tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current anddeferred tax impact of those adjustments.

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net Income, Non-GAAP Diluted EPS, and EBITDA

(in thousands, except per share data, unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Net income, as reported

$

17,306

$

10,889

$

21,802

$

143,544

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

Stock-based compensation

20,147

15,231

37,335

27,333

Amortization of acquisition-related intangibles and fair value adjustments

7,875

1,260

15,524

2,643

Acquisition transaction and integration costs, restructuring charges and other

2,422

4,785

17,025

14,981

Net amortization of internally developed software costs

5,732

5,963

12,380

11,131

Gain on sale of business/assets

-

-

-

(159,753

)

Income tax effects and adjustments(1)

(6,677

)

(4,368

)

(15,273

)

27,643

Non-GAAP net income

$

46,805

$

33,760

$

88,793

$

67,522

Non-GAAP net margin

13.5%

11.2%

13.0%

11.1%

Diluted EPS, as reported

$

0.13

$

0.08

$

0.16

$

1.09

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Stock-based compensation

0.15

0.12

0.28

0.21

Amortization of acquisition-related intangibles and fair value adjustments

0.06

0.01

0.12

0.02

Acquisition transaction and integration costs, restructuring charges and other

0.02

0.04

0.13

0.11

Net amortization of internally developed software costs

0.04

0.05

0.09

0.08

Gain on sale of business/assets

-

-

-

(1.21

)

Income tax effects and adjustments(1)

(0.05

)

(0.04

)

(0.11

)

0.21

Non-GAAP diluted EPS

$

0.35

$

0.26

$

0.67

$

0.51

(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,Non-GAAP Diluted EPS, and EBITDA

(in thousands, except per share data, unaudited)



Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020



Net income, as reported $ 17,306 $ 10,889 $ 21,802 $ 143,544

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

Stock-based compensation 20,147 15,231 37,335 27,333

Amortization ofacquisition-related intangibles 7,875 1,260 15,524 2,643 and fair value adjustments

Acquisition transaction andintegration costs, restructuring 2,422 4,785 17,025 14,981 charges and other

Net amortization of internally 5,732 5,963 12,380 11,131 developed software costs

Gain on sale of business/assets - - - (159,753 )

Income tax effects and adjustments (6,677 ) (4,368 ) (15,273 ) 27,643 ^(1)

Non-GAAP net income $ 46,805 $ 33,760 $ 88,793 $ 67,522

Non-GAAP net margin 13.5% 11.2% 13.0% 11.1%



Diluted EPS, as reported $ 0.13 $ 0.08 $ 0.16 $ 1.09

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Stock-based compensation 0.15 0.12 0.28 0.21

Amortization ofacquisition-related intangibles 0.06 0.01 0.12 0.02 and fair value adjustments

Acquisition transaction andintegration costs, restructuring 0.02 0.04 0.13 0.11 charges and other

Net amortization of internally 0.04 0.05 0.09 0.08 developed software costs

Gain on sale of business/assets - - - (1.21 )

Income tax effects and adjustments (0.05 ) (0.04 ) (0.11 ) 0.21 ^(1)

Non-GAAP diluted EPS $ 0.35 $ 0.26 $ 0.67 $ 0.51

(1): The income tax effect related to each non-GAAP item is calculated based onthe tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current anddeferred tax impact of those adjustments.

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Net income, as reported

$

17,306

$

10,889

$

21,802

$

143,544

Adjustments to reconcile net income to EBITDA:

Interest expense (income), net

1,110

(945

)

1,653

(3,168

)

Tax expense

4,279

4,383

4,254

44,113

Depreciation and amortization

26,152

19,076

50,024

38,341

EBITDA

$

48,847

$

33,403

$

77,733

$

222,830

Weighted average shares outstanding - Diluted

133,539

131,602

133,157

131,499

Three Months Ended Six Months Ended

June 30, June 30,

2021 2020 2021 2020

Net income, as $ 17,306 $ 10,889 $ 21,802 $ 143,544 reported

Adjustments toreconcile net income to EBITDA:

Interest expense 1,110 (945 ) 1,653 (3,168 ) (income), net

Tax expense 4,279 4,383 4,254 44,113

Depreciation and 26,152 19,076 50,024 38,341 amortization

EBITDA $ 48,847 $ 33,403 $ 77,733 $ 222,830

Weighted averageshares outstanding - 133,539 131,602 133,157 131,499 Diluted

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

(unaudited)

Three Months Ended

September 30, 2021

Low

High

GAAP Diluted EPS, guidance

$

0.10

$

0.24

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

Stock-based compensation

0.14

0.14

Amortization of acquisition-related intangibles and fair value adjustments

0.06

0.06

Acquisition transaction and integration costs, restructuring charges, and other

0.01

0.01

Net amortization of software development costs

0.04

0.04

Income tax effects and adjustments(1)

(0.04

)

(0.04

)

Non-GAAP Diluted EPS, guidance

$

0.31

$

0.45

(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.

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