Business Wire | Oct 28, 2021 04:03PM EDT

NI Reports Record Revenue for a Third Quarter, up 19 Percent YOY

Oct. 28, 2021

AUSTIN, Texas--(BUSINESS WIRE)--Oct. 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.

About NI

At NI, we bring together 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.

National Instruments, NI and ni.com and Engineer Ambitiously are trademarks of National Instruments Corporation. Other product and company names listed are trademarks or trade names of their respective companies. (NATI-F)

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

September 30, December 31,

2021 2020

(unaudited)

Assets

Cash and cash equivalents $ 230,697 $ 260,232

Short-term investments - 59,923

Accounts receivable, net 279,196 266,869

Inventories, net 236,733 194,012

Prepaid expenses and other current assets 89,152 68,470

Total current assets 835,778 849,506

Property and equipment, net 248,712 254,399

Goodwill 480,489 467,547

Intangible assets, net 136,938 172,719

Operating lease right-of-use assets 56,644 67,674

Other long-term assets 79,850 72,643

Total assets $ 1,838,411 $ 1,884,488



Liabilities and Stockholders' Equity

Accounts payable and accrued expenses $ 63,568 $ 51,124

Accrued compensation 87,802 87,068

Deferred revenue - current 120,762 132,151

Operating lease liabilities - current 12,360 15,801

Other taxes payable 43,673 48,129

Debt, current - 5,000

Other current liabilities 25,162 42,578

Total current liabilities 353,327 381,851

Deferred income taxes 26,023 25,288

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

Deferred revenue - non-current 32,278 36,335

Operating lease liabilities - non-current 29,206 35,854

Debt, noncurrent 100,000 92,036

Other long-term liabilities 16,910 26,630

Total liabilities $ 611,939 $ 659,617

Stockholders' equity:

Common stock 1,326 1,312

Additional paid-in capital 1,109,918 1,033,284

Retained earnings 132,404 211,101

Accumulated other comprehensive loss (17,176 ) (20,826 )

Total stockholders' equity 1,226,472 1,224,871

Total liabilities and stockholders' equity $ 1,838,411 $ 1,884,488

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Net sales:

Product

$

325,724

$

269,651

$

927,307

$

809,890

Software maintenance

41,438

38,473

121,733

108,944

Total net sales

367,162

308,124

1,049,040

918,834

Cost of sales:

Product

99,072

88,370

286,485

254,236

Software maintenance

3,643

3,893

10,882

7,689

Total cost of sales

102,715

92,263

297,367

261,925

Gross profit

264,447

215,861

751,673

656,909

72.0

%

70.1

%

71.7

%

71.5

%

Operating expenses:

Sales and marketing

117,065

109,774

345,048

330,939

Research and development

82,165

70,802

243,685

206,648

General and administrative

31,037

37,431

94,672

92,980

Total operating expenses

230,267

218,007

683,405

630,567

Gain on sale of business/assets

-

-

-

159,753

Operating income

34,180

(2,146

)

68,268

186,095

Other expense

(1,820

)

(2,001

)

(9,851

)

(2,584

)

Income before income taxes

32,360

(4,147

)

58,417

183,511

Provision for income taxes

5,183

475

9,438

44,588

Net income

$

27,177

$

(4,622

)

$

48,979

$

138,923

Basic earnings per share

$

0.20

$

(0.04

)

$

0.37

$

1.06

Diluted earnings per share

$

0.20

$

(0.04

)

$

0.37

$

1.06

Weighted average shares outstanding -

Basic

133,031

131,419

132,657

131,017

Diluted

133,686

131,419

133,829

131,671

Dividends declared per share

$

0.27

$

0.26

$

0.81

$

0.78

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)



Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020



Net sales:

Product $ 325,724 $ 269,651 $ 927,307 $ 809,890

Software maintenance 41,438 38,473 121,733 108,944

Total net sales 367,162 308,124 1,049,040 918,834



Cost of sales:

Product 99,072 88,370 286,485 254,236

Software maintenance 3,643 3,893 10,882 7,689

Total cost of sales 102,715 92,263 297,367 261,925



Gross profit 264,447 215,861 751,673 656,909

72.0 % 70.1 % 71.7 % 71.5 %

Operating expenses:

Sales and marketing 117,065 109,774 345,048 330,939

Research and development 82,165 70,802 243,685 206,648

General and administrative 31,037 37,431 94,672 92,980

Total operating expenses 230,267 218,007 683,405 630,567

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

Operating income 34,180 (2,146 ) 68,268 186,095

Other expense (1,820 ) (2,001 ) (9,851 ) (2,584 )

Income before income taxes 32,360 (4,147 ) 58,417 183,511

Provision for income taxes 5,183 475 9,438 44,588

Net income $ 27,177 $ (4,622 ) $ 48,979 $ 138,923



Basic earnings per share $ 0.20 $ (0.04 ) $ 0.37 $ 1.06

Diluted earnings per share $ 0.20 $ (0.04 ) $ 0.37 $ 1.06



Weighted average shares outstanding -

Basic 133,031 131,419 132,657 131,017

Diluted 133,686 131,419 133,829 131,671



Dividends declared per share $ 0.27 $ 0.26 $ 0.81 $ 0.78

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Nine Months Ended September 30,

2021

2020

Cash flow from operating activities:

Net income

$

48,979

$

138,923

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

Disposal gains on sale of business/asset

-

(159,753

)

Depreciation and amortization

73,418

61,228

Stock-based compensation

56,064

42,556

Loss from equity-method investees

5,082

2,559

Deferred income taxes

(2,030

)

(932

)

Net change in operating assets and liabilities

(95,477

)

24,203

Net cash provided by operating activities

86,036

108,784

Cash flow from investing activities:

Acquisitions, net of cash received

(19,784

)

(334,981

)

Capital expenditures

(26,147

)

(36,573

)

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

-

160,266

Capitalization of internally developed software

(1,246

)

(2,806

)

Additions to other intangibles

(2,317

)

(1,045

)

Payments to acquire equity-method and other investments

(15,753

)

(7,502

)

Purchases of short-term investments

-

(206,330

)

Sales and maturities of short-term investments

59,714

351,597

Net cash used in investing activities

(5,533

)

(77,374

)

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

)

(875

)

Debt issuance costs

(1,993

)

(1,480

)

Proceeds from issuance of common stock

25,438

24,971

Repurchase of common stock

(25,000

)

(39,244

)

Dividends paid

(107,397

)

(102,396

)

Net cash used in financing activities

(107,702

)

(29,024

)

Impact of changes in exchange rates on cash

(2,336

)

317

Net change in cash and cash equivalents

(29,535

)

2,703

Cash and cash equivalents at beginning of period

260,232

194,616

Cash and cash equivalents at end of period

$

230,697

$

197,319

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)



Nine Months Ended September 30,

2021 2020



Cash flow from operating activities:

Net income $ 48,979 $ 138,923

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

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

Depreciation and amortization 73,418 61,228

Stock-based compensation 56,064 42,556

Loss from equity-method investees 5,082 2,559

Deferred income taxes (2,030 ) (932 )

Net change in operating assets and liabilities (95,477 ) 24,203

Net cash provided by operating activities 86,036 108,784



Cash flow from investing activities:

Acquisitions, net of cash received (19,784 ) (334,981 )

Capital expenditures (26,147 ) (36,573 )

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

Capitalization of internally developed software (1,246 ) (2,806 )

Additions to other intangibles (2,317 ) (1,045 )

Payments to acquire equity-method and other investments (15,753 ) (7,502 )

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

Sales and maturities of short-term investments 59,714 351,597

Net cash used in investing activities (5,533 ) (77,374 )



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 ) (875 )

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

Proceeds from issuance of common stock 25,438 24,971

Repurchase of common stock (25,000 ) (39,244 )

Dividends paid (107,397 ) (102,396 )

Net cash used in financing activities (107,702 ) (29,024 )



Impact of changes in exchange rates on cash (2,336 ) 317



Net change in cash and cash equivalents (29,535 ) 2,703

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

Cash and cash equivalents at end of period $ 230,697 $ 197,319

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

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Stock-based compensation

Cost of sales

$

1,183

$

1,051

$

3,487

$

2,787

Sales and marketing

6,332

5,184

18,949

16,826

Research and development

5,811

4,692

17,704

12,640

General and administrative

5,530

4,293

16,050

10,301

Provision for income taxes

(2,798

)

(3,854

)

(10,036

)

(8,260

)

Total

$

16,058

$

11,366

$

46,154

$

34,294

Amortization of acquisition-related intangibles and fair value adjustments

Net sales

$

421

$

1,299

$

1,971

$

1,299

Cost of sales

4,194

4,198

12,691

5,579

Sales and marketing

2,331

2,334

6,859

3,300

Research and development

-

28

-

84

Other expense

529

121

1,476

363

Provision for income taxes

(917

)

(1,658

)

(2,870

)

(1,948

)

Total

$

6,558

$

6,322

$

20,127

$

8,677

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

Cost of sales

$

(7

)

$

(13

)

$

(50

)

$

7

Sales and marketing

584

1,158

6,071

8,771

Research and development

386

374

1,422

5,190

General and administrative

850

10,210

7,388

12,595

Gain on sale of business/assets

-

-

-

(159,753

)

Other expense

316

270

4,322

397

Provision for income taxes

(238

)

(712

)

(3,701

)

33,965

Total

$

1,891

$

11,287

$

15,452

$

(98,828

)

(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

$

5,532

$

6,769

$

18,633

$

20,995

Research and development

(525

)

302

(1,246

)

(2,794

)

Provision for income taxes

(1,192

)

(1,485

)

(3,792

)

(3,822

)

Total

$

3,815

$

5,586

$

13,595

$

14,379

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 Nine Months Ended

September 30, September 30,



2021 2020 2021 2020

Stock-based compensation

Cost of sales $ 1,183 $ 1,051 $ 3,487 $ 2,787

Sales and marketing 6,332 5,184 18,949 16,826

Research and development 5,811 4,692 17,704 12,640

General and administrative 5,530 4,293 16,050 10,301

Provision for income taxes (2,798 ) (3,854 ) (10,036 ) (8,260 )

Total $ 16,058 $ 11,366 $ 46,154 $ 34,294



Amortization ofacquisition-related intangibles and fair value adjustments

Net sales $ 421 $ 1,299 $ 1,971 $ 1,299

Cost of sales 4,194 4,198 12,691 5,579

Sales and marketing 2,331 2,334 6,859 3,300

Research and development - 28 - 84

Other expense 529 121 1,476 363

Provision for income taxes (917 ) (1,658 ) (2,870 ) (1,948 )

Total $ 6,558 $ 6,322 $ 20,127 $ 8,677



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

Cost of sales $ (7 ) $ (13 ) $ (50 ) $ 7

Sales and marketing 584 1,158 6,071 8,771

Research and development 386 374 1,422 5,190

General and administrative 850 10,210 7,388 12,595

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

Other expense 316 270 4,322 397

Provision for income taxes (238 ) (712 ) (3,701 ) 33,965

Total $ 1,891 $ 11,287 $ 15,452 $ (98,828 )

(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 amortization ofinternally developed software costs

Cost of sales $ 5,532 $ 6,769 $ 18,633 $ 20,995

Research and development (525 ) 302 (1,246 ) (2,794 )

Provision for income taxes (1,192 ) (1,485 ) (3,792 ) (3,822 )

Total $ 3,815 $ 5,586 $ 13,595 $ 14,379

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Reconciliation of Net sales to Non-GAAP Net sales

Net sales, as reported

$

367,162

308,124

1,049,040

$

918,834

plus: Impact of acquisition-related fair value adjustments

421

1,299

1,971

1,299

Non-GAAP net sales

$

367,583

309,423

1,051,011

$

920,133

Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

264,447

$

215,861

$

751,673

$

656,909

Stock-based compensation

1,183

1,051

3,487

2,787

Amortization of acquisition-related intangibles and fair value adjustments

4,615

5,497

14,662

6,878

Acquisition transaction and integration costs, restructuring charges and other

(7

)

(13

)

(50

)

7

Amortization of internally developed software costs

5,532

6,769

18,633

20,995

Non-GAAP gross profit

$

275,770

$

229,165

$

788,405

$

687,576

Non-GAAP gross margin

75.0

%

74.1

%

75.0

%

74.7

%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

230,267

$

218,007

$

683,405

$

630,567

Stock-based compensation

(17,673

)

(14,169

)

(52,703

)

(39,767

)

Amortization of acquisition-related intangibles and fair value adjustments

(2,331

)

(2,362

)

(6,859

)

(3,384

)

Acquisition transaction and integration costs, restructuring charges and other

(1,820

)

(11,742

)

(14,881

)

(26,556

)

Capitalization of internally developed software costs

525

(302

)

1,246

2,794

Non-GAAP operating expenses

$

208,968

$

189,432

$

610,208

$

563,654

Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

34,180

$

(2,146

)

$

68,268

$

186,095

Stock-based compensation

18,856

15,220

56,190

42,554

Amortization of acquisition-related intangibles and fair value adjustments

6,946

7,859

21,521

10,262

Acquisition transaction and integration costs, restructuring charges and other

1,813

11,729

14,831

26,563

Net amortization of internally developed software costs

5,007

7,071

17,387

18,201

Gain on sale of business/assets

-

-

-

(159,753

)

Non-GAAP operating income

$

66,802

$

39,733

$

178,197

$

123,922

Non-GAAP operating margin

18.2

%

12.8

%

17.0

%

13.5

%

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

Provision for income taxes, as reported

$

5,183

$

475

$

9,438

$

44,588

Stock-based compensation

2,798

3,854

10,036

8,260

Amortization of acquisition-related intangibles and fair value adjustments

917

1,658

2,870

1,948

Acquisition transaction and integration costs, restructuring charges and other

238

712

3,701

2,794

Net amortization of internally developed software costs

1,192

1,485

3,792

3,822

Gain on sale of business/assets

-

-

-

(36,759

)

Non-GAAP provision for income taxes(1)

$

10,328

$

8,184

$

29,837

$

24,653

(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 Nine Months Ended

September 30, September 30,

2021 2020 2021 2020



Reconciliation of Net sales to Non-GAAP Net sales

Net sales, as reported $ 367,162 308,124 1,049,040 $ 918,834

plus: Impact ofacquisition-related fair value 421 1,299 1,971 1,299 adjustments

Non-GAAP net sales $ 367,583 309,423 1,051,011 $ 920,133



Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported $ 264,447 $ 215,861 $ 751,673 $ 656,909

Stock-based compensation 1,183 1,051 3,487 2,787

Amortization ofacquisition-related intangibles 4,615 5,497 14,662 6,878 and fair value adjustments

Acquisition transaction andintegration costs, (7 ) (13 ) (50 ) 7 restructuring charges and other

Amortization of internally 5,532 6,769 18,633 20,995 developed software costs

Non-GAAP gross profit $ 275,770 $ 229,165 $ 788,405 $ 687,576

Non-GAAP gross margin 75.0 % 74.1 % 75.0 % 74.7 %



Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported $ 230,267 $ 218,007 $ 683,405 $ 630,567

Stock-based compensation (17,673 ) (14,169 ) (52,703 ) (39,767 )

Amortization ofacquisition-related intangibles (2,331 ) (2,362 ) (6,859 ) (3,384 )and fair value adjustments

Acquisition transaction andintegration costs, (1,820 ) (11,742 ) (14,881 ) (26,556 )restructuring charges and other

Capitalization of internally 525 (302 ) 1,246 2,794 developed software costs

Non-GAAP operating expenses $ 208,968 $ 189,432 $ 610,208 $ 563,654



Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported $ 34,180 $ (2,146 ) $ 68,268 $ 186,095

Stock-based compensation 18,856 15,220 56,190 42,554

Amortization ofacquisition-related intangibles 6,946 7,859 21,521 10,262 and fair value adjustments

Acquisition transaction andintegration costs, 1,813 11,729 14,831 26,563 restructuring charges and other

Net amortization of internally 5,007 7,071 17,387 18,201 developed software costs

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

Non-GAAP operating income $ 66,802 $ 39,733 $ 178,197 $ 123,922

Non-GAAP operating margin 18.2 % 12.8 % 17.0 % 13.5 %



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

Provision for income taxes, as $ 5,183 $ 475 $ 9,438 $ 44,588 reported

Stock-based compensation 2,798 3,854 10,036 8,260

Amortization ofacquisition-related intangibles 917 1,658 2,870 1,948 and fair value adjustments

Acquisition transaction andintegration costs, 238 712 3,701 2,794 restructuring charges and other

Net amortization of internally 1,192 1,485 3,792 3,822 developed software costs

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

Non-GAAP provision for income $ 10,328 $ 8,184 $ 29,837 $ 24,653 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

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Net income, as reported

$

27,177

$

(4,622

)

$

48,979

$

138,923

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

Stock-based compensation

18,856

15,220

56,190

42,554

Amortization of acquisition-related intangibles and fair value adjustments

7,475

7,980

22,997

10,625

Acquisition transaction and integration costs, restructuring charges and other

2,129

11,999

19,153

26,960

Net amortization of internally developed software costs

5,007

7,071

17,387

18,201

Gain on sale of business/assets

-

-

-

(159,753

)

Income tax effects and adjustments(1)

(5,145

)

(7,709

)

(20,399

)

19,935

Non-GAAP net income

$

55,499

$

29,939

$

144,307

$

97,445

Non-GAAP net margin

15.1

%

9.7

%

13.7

%

10.6

%

Diluted EPS, as reported

$

0.20

$

(0.04

)

$

0.37

$

1.06

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Stock-based compensation

0.14

0.12

0.42

0.32

Amortization of acquisition-related intangibles and fair value adjustments

0.06

0.06

0.17

0.08

Acquisition transaction and integration costs, restructuring charges and other

0.02

0.10

0.14

0.20

Net amortization of internally developed software costs

0.04

0.05

0.13

0.14

Gain on sale of business/assets

-

-

-

(1.21

)

Income tax effects and adjustments(1)

(0.04

)

(0.06

)

(0.15

)

0.15

Non-GAAP diluted EPS

$

0.42

$

0.23

$

1.08

$

0.74

(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 Nine Months Ended

September 30, September 30,

2021 2020 2021 2020



Net income, as reported $ 27,177 $ (4,622 ) $ 48,979 $ 138,923

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

Stock-based compensation 18,856 15,220 56,190 42,554

Amortization ofacquisition-related intangibles 7,475 7,980 22,997 10,625 and fair value adjustments

Acquisition transaction andintegration costs, restructuring 2,129 11,999 19,153 26,960 charges and other

Net amortization of internally 5,007 7,071 17,387 18,201 developed software costs

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

Income tax effects and (5,145 ) (7,709 ) (20,399 ) 19,935 adjustments^(1)

Non-GAAP net income $ 55,499 $ 29,939 $ 144,307 $ 97,445

Non-GAAP net margin 15.1 % 9.7 % 13.7 % 10.6 %



Diluted EPS, as reported $ 0.20 $ (0.04 ) $ 0.37 $ 1.06

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Stock-based compensation 0.14 0.12 0.42 0.32

Amortization ofacquisition-related intangibles 0.06 0.06 0.17 0.08 and fair value adjustments

Acquisition transaction andintegration costs, restructuring 0.02 0.10 0.14 0.20 charges and other

Net amortization of internally 0.04 0.05 0.13 0.14 developed software costs

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

Income tax effects and (0.04 ) (0.06 ) (0.15 ) 0.15 adjustments^(1)

Non-GAAP diluted EPS $ 0.42 $ 0.23 $ 1.08 $ 0.74

(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

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020

Net income, as reported

$

27,177

$

(4,622

)

$

48,979

$

138,923

Adjustments to reconcile net income to EBITDA:

Interest expense (income), net

643

560

2,296

(2,608

)

Tax expense

5,183

475

9,438

44,588

Depreciation and amortization

23,394

22,887

73,418

61,228

EBITDA

$

56,397

$

19,300

$

134,131

$

242,131

Weighted average shares outstanding - Diluted

133,686

131,419

133,829

131,671

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net income, as reported $ 27,177 $ (4,622 ) $ 48,979 $ 138,923

Adjustments to reconcile net income to EBITDA:

Interest expense 643 560 2,296 (2,608 )(income), net

Tax expense 5,183 475 9,438 44,588

Depreciation and 23,394 22,887 73,418 61,228 amortization

EBITDA $ 56,397 $ 19,300 $ 134,131 $ 242,131

Weighted average shares 133,686 131,419 133,829 131,671 outstanding - Diluted

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

(unaudited)

Three Months Ended

December 31, 2021

Low

High

GAAP Diluted EPS, guidance

$

0.17

$

0.31

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

0.08

0.08

Acquisition transaction and integration costs, restructuring charges, and other

0.09

0.09

Net amortization of software development costs

0.05

0.05

Income tax effects and adjustments(1)

(0.06

)

(0.06

)

Non-GAAP Diluted EPS, guidance

$

0.47

$

0.61

(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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