Business Wire | Jan 27, 2022 04:05PM EST

NI Achieves Record Financial Performance for Q4 and Fiscal Year 2021

Jan. 27, 2022

AUSTIN, Texas--(BUSINESS WIRE)--Jan. 27, 2022--National Instruments Corporation (Nasdaq: NATI) today announced Q4 2021 revenue of $421 million, up 14 percent year over year and an all-time quarterly record.

In Q4 2021, the value of the company's total orders were up 19 percent year over year, an all-time quarterly record. Geographic order growth for Q4 2021 compared with Q4 2020 was up 34 percent in the Americas, down 2 percent in APAC and up 20 percent in EMEA.

In Q4, GAAP gross margin was 71 percent and non-GAAP gross margin was 74 percent. Total Q4 GAAP operating expenses were $247 million, up 1 percent year over year. Total Q4 non-GAAP operating expenses were $214 million, up 9 percent year over year. GAAP operating margin was 12 percent in Q4, with GAAP operating income of $50 million. Non-GAAP operating margin was 23 percent in Q4, with non-GAAP operating income of $96 million, up 22 percent year over year.

GAAP net income for Q4 was $40 million, with diluted earnings per share ("EPS") of $0.30, and non-GAAP net income was $80 million, with non-GAAP diluted EPS of $0.60.

"We delivered the strongest non-GAAP financial performance in our company's history in the fourth quarter with all-time record orders, revenue, operating income, and earnings. We believe 2021 is an inflection point for our business and a direct reflection of the strategic changes we've made over the last several years," said Eric Starkloff, NI president and CEO. "The areas where we have focused showed momentum throughout the year with growth across all business units and all regions. We believe we are focused on the right market opportunities and enter 2022 in a position of strength and poised to accelerate growth."

"As we close out the year, I am proud of our performance with revenue and EPS at the high end of guidance. We will continue to be intentional with investments that we believe will accelerate revenue and strengthen our competitive advantage, while continuing to scale our cost structure to increase profitability," said Karen Rapp, NI CFO. "We remain confident in our ability to achieve our 2023 financial model a year ahead of schedule. Our strong balance sheet gives us confidence in the ability to leverage inorganic opportunities to enhance our technology capabilities and expertise while also returning excess cash to stockholders."

As of December 31, 2021, NI had $211 million in cash with $143 million in cash generated from operations in 2021. During Q4, NI paid $36 million in dividends and repurchased approximately 740,000 shares of our common stock at an average price of $40.52 per share. For the year, we returned over $198 million to our stockholders through dividends and stock repurchases, including the repurchase of 1.3 million shares at an average price of $41.06 per share. The NI Board of Directors approved a dividend of $0.28 per share payable on February 28, 2022, to stockholders of record on February 7, 2022. This represents an increase of 4 percent per share.

The NI Board of Directors also authorized a new stock repurchase program for up to $250 million of its common stock. The new stock repurchase program is effective immediately and is in addition to the previously authorized stock repurchase program.

The company'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 company's GAAP and non-GAAP results are included as part of this news release.

FY 2021 Highlights

* All-time record revenue of $1.47 billion, up 14 percent year over year

* GAAP gross margin of 71 percent

* Non-GAAP gross margin of 75 percent

* Strong diluted GAAP EPS of $0.67

* Record diluted non-GAAP EPS of $1.68

* Returned $198 million to stockholders through stock repurchase and dividends

In 2021, GAAP operating expenses were $931 million, up 6 percent year over year, and non-GAAP operating expenses were $824 million, up 9 percent year over year. GAAP net income in 2021 was $89 million, down 38 percent year over year, and non-GAAP net income was $224 million, up 37 percent year over year.

Q1 2022 Guidance

* GAAP revenue to be in the range of $385 million to $415 million, up 19 percent year over year at the midpoint

* GAAP diluted EPS to be in the range of $0.13 to $0.27, up 17 cents year over year at the midpoint

* Non-GAAP diluted EPS expected to be in the range of $0.35 to $0.49, up 31 percent year over year at the midpoint

Conference Call Information

NI management will discuss Q4 2021 results today, January 27, at 4:00 p.m. CT at www.ni.com/call or dial (855) 212-2361 and enter confirmation code 4276084. The call and an accompanying slide presentation will be webcast on the investor website, www.ni.com/nati, under "Events & Presentations." Replay is available by calling (855) 859-2056, confirmation code 4276084 , shortly after the call through January 31, at 11:59 p.m. CT.

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 and diluted EPS. 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 or exceed 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 drive growth through strategic changes made to our business, including the transition to subscription-based licensing model for software offerings, confidence in our investment 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 Q1 2022 revenue, diluted EPS, backlog, lead times and gross margin. 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. In addition, our ability to declare and/or pay declared dividends is subject to compliance with the terms of our existing credit agreement. 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 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.

National Instruments, NI, ni.com and Engineer Ambitiously are trademarks of National Instruments. 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)

December 31, December 31,

2021 2020

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents $ 211,106 $ 260,232

Short-term investments - 59,923

Accounts receivable, net 341,275 266,869

Inventories, net 289,243 194,012

Prepaid expenses and other current assets 90,225 68,470

Total current assets 931,849 849,506

Property and equipment, net 253,668 254,399

Goodwill 583,589 467,547

Intangible assets, net 212,521 172,719

Operating lease right-of-use assets 58,641 67,674

Other long-term assets 74,717 72,643

Total assets 2,114,985 1,884,488



LIABILITIES AND EQUITY

Current liabilities:

Accounts payable and accrued liabilities 83,218 51,124

Accrued compensation 111,261 87,068

Deferred revenue 137,818 132,151

Operating lease liabilities 13,137 15,801

Other taxes payable 59,109 48,129

Debt - current - 5,000

Other current liabilities 40,671 42,578

Total current liabilities 445,214 381,851

Debt - non-current 300,000 92,036

Deferred income taxes 14,249 25,288

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

Deferred revenue - non-current 32,822 36,335

Operating lease liabilities - non-current 30,468 35,854

Other long-term liabilities 14,340 26,630

Total liabilities 891,288 659,617



Stockholders' equity:

Preferred stock - -

Common stock 1,323 1,312

Additional paid-in capital 1,129,647 1,033,284

Retained earnings 112,858 211,101

Accumulated other comprehensive loss (20,131 ) (20,826 )

Total stockholders' equity 1,223,697 1,224,871

Total liabilities and stockholders' equity $ 2,114,985 $ 1,884,488

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2021

2020

2021

2020

Net sales:

Product

$

377,303

$

327,714

$

1,304,609

$

1,137,603

Software maintenance

43,338

40,124

165,072

149,068

Total net sales

420,641

367,838

1,469,681

1,286,671

Cost of sales:

Product

119,857

105,625

406,342

359,861

Software maintenance

3,739

3,571

14,621

11,260

Total cost of sales

123,596

109,196

420,963

371,121

Gross profit

297,045

258,642

1,048,718

915,550

71%

70%

71%

71%

Operating expenses:

Sales and marketing

122,304

134,570

467,352

465,509

Research and development

92,301

73,733

335,986

280,381

General and administrative

32,543

36,883

127,215

129,863

Total operating expenses

247,148

245,186

930,553

875,753

Gain on sale of business

-

-

-

159,753

Operating income

49,897

13,456

118,165

199,550

Other income (expense)

(4,739

)

1,797

(14,590

)

(788

)

Income before income taxes

45,158

15,253

103,575

198,762

Provision for income taxes

4,822

10,515

14,260

55,103

Net income

$

40,336

$

4,738

$

89,315

$

143,659

Basic earnings per share

$

0.31

$

0.04

$

0.68

$

1.10

Diluted earnings per share

$

0.30

$

0.04

$

0.67

$

1.09

Weighted average shares outstanding -

Basic

132,215

131,277

132,311

131,082

Diluted

133,225

131,732

133,562

131,799

Dividends declared per share

$

0.27

$

0.26

$

1.08

$

1.04

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)



Three Months Ended Years Ended

December 31, December 31,

2021 2020 2021 2020



Net sales:

Product $ 377,303 $ 327,714 $ 1,304,609 $ 1,137,603

Software maintenance 43,338 40,124 165,072 149,068

Total net sales 420,641 367,838 1,469,681 1,286,671



Cost of sales:

Product 119,857 105,625 406,342 359,861

Software maintenance 3,739 3,571 14,621 11,260

Total cost of sales 123,596 109,196 420,963 371,121



Gross profit 297,045 258,642 1,048,718 915,550

71% 70% 71% 71%

Operating expenses:

Sales and marketing 122,304 134,570 467,352 465,509

Research and development 92,301 73,733 335,986 280,381

General and administrative 32,543 36,883 127,215 129,863

Total operating expenses 247,148 245,186 930,553 875,753

Gain on sale of business - - - 159,753

Operating income 49,897 13,456 118,165 199,550

Other income (expense) (4,739 ) 1,797 (14,590 ) (788 )

Income before income taxes 45,158 15,253 103,575 198,762

Provision for income taxes 4,822 10,515 14,260 55,103

Net income $ 40,336 $ 4,738 $ 89,315 $ 143,659



Basic earnings per share $ 0.31 $ 0.04 $ 0.68 $ 1.10

Diluted earnings per share $ 0.30 $ 0.04 $ 0.67 $ 1.09



Weighted average shares outstanding -

Basic 132,215 131,277 132,311 131,082

Diluted 133,225 131,732 133,562 131,799



Dividends declared per share $ 0.27 $ 0.26 $ 1.08 $ 1.04

National Instruments

Condensed Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

2021

2020

(unaudited)

Cash flow from operating activities:

Net income

$

89,315

$

143,659

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

Depreciation and amortization

99,402

87,064

Stock-based compensation

74,583

58,376

Disposal gain on sale of business/asset

-

(159,753

)

Loss from equity-method investees

5,719

2,942

Deferred income taxes

(15,796

)

7,771

Net change in operating assets and liabilities

(110,020

)

40,708

Net cash provided by operating activities

143,203

180,767

Cash flow from investing activities:

Acquisitions, net of cash received

(222,783

)

(334,981

)

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

-

160,266

Capital expenditures

(40,975

)

(49,652

)

Capitalization of internally developed software

(1,464

)

(4,054

)

Additions to other intangibles

(2,751

)

(1,441

)

Acquisitions of equity-method and other investments

(15,753

)

(9,761

)

Purchases of short-term investments

-

(206,330

)

Sales and maturities of short-term investments

60,297

384,652

Net cash used by investing activities

(223,429

)

(61,301

)

Cash flow from financing activities:

Proceeds from term loan

-

170,000

Payments of term loan

(98,750

)

(71,250

)

Proceeds from revolving line of credit

300,000

20,000

Payments of revolving line of credit

-

(20,000

)

Debt issuance costs

(1,993

)

(1,893

)

Proceeds from issuance of common stock

32,518

31,947

Repurchase of common stock

(55,000

)

(48,713

)

Dividends paid

(143,113

)

(136,545

)

Net cash provided by (used by) financing activities

33,662

(56,454

)

Impact of changes in exchange rates on cash

(2,562

)

2,604

Net change in cash and cash equivalents

(49,126

)

65,616

Cash and cash equivalents at beginning of period

260,232

194,616

Cash and cash equivalents at end of period

$

211,106

$

260,232

National Instruments

Condensed Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

2021 2020

(unaudited)

Cash flow from operating activities:

Net income $ 89,315 $ 143,659

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

Depreciation and amortization 99,402 87,064

Stock-based compensation 74,583 58,376

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

Loss from equity-method investees 5,719 2,942

Deferred income taxes (15,796 ) 7,771

Net change in operating assets and liabilities (110,020 ) 40,708

Net cash provided by operating activities 143,203 180,767



Cash flow from investing activities:

Acquisitions, net of cash received (222,783 ) (334,981 )

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

Capital expenditures (40,975 ) (49,652 )

Capitalization of internally developed software (1,464 ) (4,054 )

Additions to other intangibles (2,751 ) (1,441 )

Acquisitions of equity-method and other investments (15,753 ) (9,761 )

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

Sales and maturities of short-term investments 60,297 384,652

Net cash used by investing activities (223,429 ) (61,301 )



Cash flow from financing activities:

Proceeds from term loan - 170,000

Payments of term loan (98,750 ) (71,250 )

Proceeds from revolving line of credit 300,000 20,000

Payments of revolving line of credit - (20,000 )

Debt issuance costs (1,993 ) (1,893 )

Proceeds from issuance of common stock 32,518 31,947

Repurchase of common stock (55,000 ) (48,713 )

Dividends paid (143,113 ) (136,545 )

Net cash provided by (used by) financing activities 33,662 (56,454 )



Impact of changes in exchange rates on cash (2,562 ) 2,604



Net change in cash and cash equivalents (49,126 ) 65,616

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

Cash and cash equivalents at end of period $ 211,106 $ 260,232

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 costs, disposal gains on sale of business/assets and related charitable contributions, tax effects related to businesses held-for-sale, capitalization and amortization of internally developed software costs, and restructuring charges that were recorded in the line items indicated below (unaudited) (in thousands):

Three Months Ended

Years Ended

December 31,

December 31,

2021

2020

2021

2020

Stock-based compensation

Cost of sales

$

1,092

$

979

$

4,580

$

3,766

Sales and marketing

6,284

5,462

25,233

22,288

Research and development

5,811

5,129

23,515

17,769

General and administrative

5,335

4,251

21,384

14,552

Provision for income taxes

(2,010

)

(445

)

(12,047

)

(8,705

)

Total

$

16,512

$

15,376

$

62,665

$

49,670

Amortization of acquisition-related intangibles and fair value adjustments

Net sales

$

352

$

1,961

$

2,324

$

3,260

Cost of sales

6,700

4,313

19,391

9,892

Sales and marketing

3,334

1,965

10,192

5,264

Research and development

320

9

320

94

General and administrative

-

846

-

846

Other expense (income)

531

124

2,007

487

Provision for income taxes

(1,626

)

(606

)

(4,071

)

(2,554

)

Total

$

9,611

$

8,612

$

30,163

$

17,289

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

Cost of sales

$

25

$

1,620

$

(25

)

$

1,626

Sales and marketing

1,687

23,309

7,759

32,079

Research and development

9,682

1,184

11,104

6,374

General and administrative (1)

865

8,685

8,254

21,279

Gain on sale of business/asset (2)

-

-

-

(159,753

)

Other expense (income)

-

191

4,322

589

Provision for income taxes

(2,708

)

(1,602

)

(6,837

)

32,364

Total

$

9,551

$

33,387

$

24,577

$

(65,442

)

(1): During the third quarter of 2020, we recognized $5 million of compensation expense related to the replacement of unvested options acquired from OptimalPlus. These amounts were accounted for as post-combination expense and will be recognized over the required service period

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

(Capitalization) and amortization of internally developed software costs

Cost of sales

$

5,041

$

6,936

$

23,674

$

27,931

Research and development

(188

)

(1,248

)

(1,433

)

(4,043

)

Provision for income taxes

(1,085

)

(1,195

)

(4,877

)

(5,017

)

Total

$

3,768

$

4,493

$

17,364

$

18,871

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 costs,disposal gains on sale of business/assets and related charitable contributions,tax effects related to businesses held-for-sale, capitalization andamortization of internally developed software costs, and restructuring chargesthat were recorded in the line items indicated below (unaudited) (inthousands):

Three Months Ended Years Ended

December 31, December 31,

2021 2020 2021 2020

Stock-based compensation

Cost of sales $ 1,092 $ 979 $ 4,580 $ 3,766

Sales and marketing 6,284 5,462 25,233 22,288

Research and development 5,811 5,129 23,515 17,769

General and administrative 5,335 4,251 21,384 14,552

Provision for income taxes (2,010 ) (445 ) (12,047 ) (8,705 )

Total $ 16,512 $ 15,376 $ 62,665 $ 49,670



Amortization ofacquisition-related intangibles and fair valueadjustments

Net sales $ 352 $ 1,961 $ 2,324 $ 3,260

Cost of sales 6,700 4,313 19,391 9,892

Sales and marketing 3,334 1,965 10,192 5,264

Research and development 320 9 320 94

General and administrative - 846 - 846

Other expense (income) 531 124 2,007 487

Provision for income taxes (1,626 ) (606 ) (4,071 ) (2,554 )

Total $ 9,611 $ 8,612 $ 30,163 $ 17,289



Acquisition-relatedtransaction and integration costs, restructuring charges,and other^(1)(2)

Cost of sales $ 25 $ 1,620 $ (25 ) $ 1,626

Sales and marketing 1,687 23,309 7,759 32,079

Research and development 9,682 1,184 11,104 6,374

General and administrative ^ 865 8,685 8,254 21,279 (1)

Gain on sale of business/asset - - - (159,753 )^(2)

Other expense (income) - 191 4,322 589

Provision for income taxes (2,708 ) (1,602 ) (6,837 ) 32,364

Total $ 9,551 $ 33,387 $ 24,577 $ (65,442 )

(1): During the third quarter of 2020, we recognized $5 million of compensationexpense related to the replacement of unvested options acquired fromOptimalPlus. These amounts were accounted for as post-combination expense andwill be recognized over the required service period

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



(Capitalization) andamortization of internally developed software costs

Cost of sales $ 5,041 $ 6,936 $ 23,674 $ 27,931

Research and development (188 ) (1,248 ) (1,433 ) (4,043 )

Provision for income taxes (1,085 ) (1,195 ) (4,877 ) (5,017 )

Total $ 3,768 $ 4,493 $ 17,364 $ 18,871



National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2021

2020

2021

2020

Reconciliation of Net sales to Non-GAAP Net sales

Net sales, as reported

$

420,641

$

367,838

$

1,469,681

$

1,286,671

Impact of acquisition related fair value adjustments

352

1,961

2,324

3,260

Non-GAAP net sales

$

420,993

$

369,799

$

1,472,005

$

1,289,931

Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

297,045

$

258,642

$

1,048,718

$

915,550

Stock-based compensation

1,092

979

4,580

3,766

Amortization of acquisition-related intangibles and fair value adjustments

7,052

6,274

21,715

13,152

Acquisition transaction and integration costs, restructuring charges and other

25

1,620

(25

)

1,626

Amortization of internally developed software costs

5,041

6,936

23,674

27,931

Non-GAAP gross profit

$

310,255

$

274,451

$

1,098,662

$

962,025

Non-GAAP gross margin

74%

74%

75%

75%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

247,148

$

245,186

$

930,553

$

875,753

Stock-based compensation

(17,430

)

(14,842

)

(70,132

)

(54,609

)

Amortization of acquisition-related intangibles and fair value adjustments

(3,654

)

(2,820

)

(10,512

)

(6,204

)

Acquisition transaction and integration costs, restructuring charges and other

(12,234

)

(33,178

)

(27,117

)

(59,732

)

Capitalization of internally developed software costs

188

1,248

1,433

4,043

Non-GAAP operating expenses

$

214,018

$

195,594

$

824,225

$

759,251

Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

49,897

$

13,456

$

118,165

$

199,550

Stock-based compensation

18,522

15,821

74,712

58,375

Amortization of acquisition-related intangibles and fair value adjustments

10,706

9,094

32,227

19,356

Acquisition transaction and integration costs, restructuring charges and other

12,259

34,798

27,092

61,358

Net amortization of internally developed software costs

4,853

5,688

22,241

23,888

Gain on sale of business/assets

-

-

-

(159,753

)

Non-GAAP operating income

$

96,237

$

78,857

$

274,437

$

202,774

Non-GAAP operating margin

23%

21%

19%

16%

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes

Provision for income taxes, as reported(1)

$

4,822

$

10,515

$

14,260

$

55,103

Stock-based compensation

2,010

445

12,047

8,705

Amortization of acquisition-related intangibles and fair value adjustments

1,626

606

4,071

2,554

Acquisition transaction and integration costs, restructuring charges and other

2,708

1,328

6,837

4,122

Net amortization of internally developed software costs

1,085

1,195

4,877

5,017

Gain on sale of business/assets

-

274

-

(36,486

)

Non-GAAP provision for income taxes(1)

$

12,251

$

14,363

$

42,092

$

39,015

(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 Years Ended

December 31, December 31,

2021 2020 2021 2020

Reconciliation of Netsales to Non-GAAP Net sales

Net sales, as reported $ 420,641 $ 367,838 $ 1,469,681 $ 1,286,671

Impact of acquisitionrelated fair value 352 1,961 2,324 3,260 adjustments

Non-GAAP net sales $ 420,993 $ 369,799 $ 1,472,005 $ 1,289,931



Reconciliation of GrossProfit to Non-GAAP Gross Profit

Gross profit, as reported $ 297,045 $ 258,642 $ 1,048,718 $ 915,550

Stock-based compensation 1,092 979 4,580 3,766

Amortization ofacquisition-related 7,052 6,274 21,715 13,152 intangibles and fairvalue adjustments

Acquisition transactionand integration costs, 25 1,620 (25 ) 1,626 restructuring charges andother

Amortization ofinternally developed 5,041 6,936 23,674 27,931 software costs

Non-GAAP gross profit $ 310,255 $ 274,451 $ 1,098,662 $ 962,025

Non-GAAP gross margin 74% 74% 75% 75%



Reconciliation ofOperating Expenses to Non-GAAP OperatingExpenses

Operating expenses, as $ 247,148 $ 245,186 $ 930,553 $ 875,753 reported

Stock-based compensation (17,430 ) (14,842 ) (70,132 ) (54,609 )

Amortization ofacquisition-related (3,654 ) (2,820 ) (10,512 ) (6,204 )intangibles and fairvalue adjustments

Acquisition transactionand integration costs, (12,234 ) (33,178 ) (27,117 ) (59,732 )restructuring charges andother

Capitalization ofinternally developed 188 1,248 1,433 4,043 software costs

Non-GAAP operating $ 214,018 $ 195,594 $ 824,225 $ 759,251 expenses



Reconciliation ofOperating Income to Non-GAAP Operating Income

Operating income, as $ 49,897 $ 13,456 $ 118,165 $ 199,550 reported

Stock-based compensation 18,522 15,821 74,712 58,375

Amortization ofacquisition-related 10,706 9,094 32,227 19,356 intangibles and fairvalue adjustments

Acquisition transactionand integration costs, 12,259 34,798 27,092 61,358 restructuring charges andother

Net amortization ofinternally developed 4,853 5,688 22,241 23,888 software costs

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

Non-GAAP operating income $ 96,237 $ 78,857 $ 274,437 $ 202,774

Non-GAAP operating margin 23% 21% 19% 16%



Reconciliation ofProvision for incometaxes to Non-GAAP Provision for incometaxes

Provision for income $ 4,822 $ 10,515 $ 14,260 $ 55,103 taxes, as reported^(1)

Stock-based compensation 2,010 445 12,047 8,705

Amortization ofacquisition-related 1,626 606 4,071 2,554 intangibles and fairvalue adjustments

Acquisition transactionand integration costs, 2,708 1,328 6,837 4,122 restructuring charges andother

Net amortization ofinternally developed 1,085 1,195 4,877 5,017 software costs

Gain on sale of business/ - 274 - (36,486 )assets

Non-GAAP provision for $ 12,251 $ 14,363 $ 42,092 $ 39,015 income 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 and Non-GAAP Diluted EPS

(in thousands, except per share data, unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2021

2020

2021

2020

Net income, as reported

$

40,336

$

4,738

$

89,315

$

143,659

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

Stock-based compensation

18,522

15,821

74,712

58,375

Amortization of acquisition-related intangibles and fair value adjustments

11,237

9,218

34,234

19,843

Acquisition transaction and integration costs, restructuring charges and other

12,259

34,989

31,414

61,947

Net amortization of internally developed software costs

4,853

5,688

22,241

23,888

Gain on sale of business/asset

-

-

-

(159,753

)

Income tax effects and adjustments(1)

(7,429

)

(3,848

)

(27,832

)

16,088

Non-GAAP net income

$

79,778

$

66,606

$

224,084

$

164,047

Non-GAAP net margin

18.9%

18.0%

15.2%

12.7%

Diluted EPS, as reported

$

0.30

$

0.04

$

0.67

$

1.09

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Stock-based compensation

0.14

0.12

0.56

0.44

Amortization of acquisition-related intangibles and fair value adjustments

0.09

0.07

0.26

0.15

Acquisition transaction and integration costs, restructuring charges and other

0.09

0.27

0.23

0.47

Net amortization of internally developed software costs

0.04

0.04

0.17

0.18

Gain on sale of business/asset

-

-

-

(1.21

)

Income tax effects and adjustments(1)

(0.06

)

(0.03

)

(0.21

)

0.12

Non-GAAP diluted EPS

$

0.60

$

0.51

$

1.68

$

1.24

(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.

Weighted average shares outstanding

Basic

132,215

131,277

132,311

131,082

Diluted

133,225

131,732

133,562

131,799

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net Income andNon-GAAP Diluted EPS

(in thousands, except per share data, unaudited)



Three Months Ended Years Ended

December 31, December 31,

2021 2020 2021 2020



Net income, as reported $ 40,336 $ 4,738 $ 89,315 $ 143,659

Adjustments to reconcile netincome to non-GAAP net income:

Stock-based compensation 18,522 15,821 74,712 58,375

Amortization ofacquisition-related 11,237 9,218 34,234 19,843 intangibles and fair valueadjustments

Acquisition transaction andintegration costs, 12,259 34,989 31,414 61,947 restructuring charges andother

Net amortization ofinternally developed 4,853 5,688 22,241 23,888 software costs

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

Income tax effects and (7,429 ) (3,848 ) (27,832 ) 16,088 adjustments^(1)

Non-GAAP net income $ 79,778 $ 66,606 $ 224,084 $ 164,047

Non-GAAP net margin 18.9% 18.0% 15.2% 12.7%



Diluted EPS, as reported $ 0.30 $ 0.04 $ 0.67 $ 1.09

Adjustment to reconcilediluted EPS to non-GAAP diluted EPS

Stock-based compensation 0.14 0.12 0.56 0.44

Amortization ofacquisition-related 0.09 0.07 0.26 0.15 intangibles and fair valueadjustments

Acquisition transaction andintegration costs, 0.09 0.27 0.23 0.47 restructuring charges andother

Net amortization ofinternally developed 0.04 0.04 0.17 0.18 software costs

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

Income tax effects and (0.06 ) (0.03 ) (0.21 ) 0.12 adjustments^(1)

Non-GAAP diluted EPS $ 0.60 $ 0.51 $ 1.68 $ 1.24

(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.



Weighted average shares outstanding

Basic 132,215 131,277 132,311 131,082

Diluted 133,225 131,732 133,562 131,799

Reconciliation of GAAP to Non-GAAP Diluted EPS Guidance

(unaudited)

Three Months Ended

March 31, 2022

Low

High

GAAP Diluted EPS, guidance

$

0.13

$

0.27

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

Stock-based compensation

0.15

0.15

Amortization of acquisition-related intangibles and fair value adjustments

0.10

0.10

Acquisition transaction and integration costs, restructuring charges and other

0.01

0.01

Net amortization of internally developed software costs

0.01

0.01

Income tax effects and adjustments(1)

(0.05

)

(0.05

)

Non-GAAP Diluted EPS, guidance

$

0.35

$

0.49

(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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