Record Second Quarter Operating Profit Validates the Strength of Business Model(PRNewswire) —
Q2 2011 Highlights
- Record quarterly revenue of $253 million, up 20 percent year-over-year
- Strong revenue growth in academic, PXI Modular Instrumentation, Software, Data Acquisition and NI CompactRIO products
- GAAP gross margin of 77.9 percent and non-GAAP gross margin of 78.5 percent
- Record GAAP and non-GAAP operating income for a second quarter
- Fully diluted GAAP EPS of $ 0.22
- Fully diluted non-GAAP EPS of $0.27, at the mid-point of guidance
- Record EBITDA of $44 million, or $0.37 per share for a second quarter
- Cash and short-term investments of $320 million as of June 30, 2011
National Instruments (Nasdaq: NATI) today announced Q2 revenue of $253 million, a quarterly record and a 20 percent increase from Q2 2010. This met the company's guidance of between $241 million and $255 million, which was provided on April 28, 2011. In Q2, the Company's orders greater than $20,000 grew 39 percent year-over-year, and the average order size reached a new second quarter record of approximately $4,440.
In Q2, GAAP and non-GAAP operating income reached all-time records for a second quarter. Net income for Q2 was $ 26.5 million, with fully diluted earnings per share (EPS) of $0.22, and non-GAAP net income was $32.2 million, with non-GAAP fully diluted EPS of $0.27.
In Q2, GAAP gross margin increased 90 basis points year-over-year to 77.9 percent. Non-GAAP gross margin reached 78.5 percent, an increase of 90 basis points year-over-year.
The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles and acquisition related transaction costs. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.
"I am extremely pleased with our ability to deliver record quarterly revenue and record operating profit for a second quarter," said Dr. James Truchard, co-founder, president and CEO. "We believe these results validate the strength of our business model and our commitment to long term investments."
NI graphical system design product sales were up 21 percent year-over-year, and NI instrument control product sales were up 6 percent year-over-year in Q2. Geographically, revenue in U.S. dollar terms for Q2 2011 compared to Q2 2010 was up 15 percent in the Americas, up 28 percent in Europe and up 19 percent in Asia. In local currency terms, revenue was up 23 percent in Europe and up 12 percent in Asia.
As of June 30, 2011, NI had $320 million in cash and short-term investments. The National Instruments Board of Directors approved a quarterly dividend of $0.10 per share on the company's common stock payable on August 29 to stockholders of record on August 8.
"We are encouraged by the scale of the long-term opportunity open to us, and plan to continue to execute on our 2011 investment plans," said Alex Davern, NI COO and CFO. "We are confident our investments will significantly advance our long-term position in the industries we serve."
Guidance for Q3 2011
NI expects revenue for Q3 to be between $257 million and $273 million, an increase of between 17 and 24 percent over Q3 2010. Due to the impact of the acquisition accounting for the AWR transaction, we are also including guidance for non-GAAP revenue to reflect the write-down of AWR's historical deferred revenue to the fair value recorded as a result of acquisition accounting. As a result, we expect non-GAAP revenue to be in the range of $260 and $276 million, an increase of between 18 percent and 25 percent over Q3 2010. We expect the non-GAAP revenue adjustment in Q4 to be approximately $2 million and for the Q1 2012 and Q2 2012 adjustments to be approximately $1 million. Starting in Q3 2012, we do not expect to continue to report non-GAAP revenue as the recognition period for AWR's historical deferred revenue write down will expire at the end of Q2 2011.
Given our aggressive 2011 investment plan and the recent acquisitions we expect to see a significant increase in non-GAAP operating expenses in Q3, to approximately $170 million, plus or minus $2 million. In Q4 we are budgeting for a very modest sequential increase in expense as the 2011 investment plan is closed out. Looking out to 2012 and assuming a normal economy we expect to return to a plan of growing revenues faster than expenses.
The company expects fully diluted EPS will be in the range of $0.16 to $0.24 for Q3, with non-GAAP fully diluted EPS expected to be in the range of $0.23 to $0.31. Please remember that in Q3 the GAAP to Non-GAAP adjustments will include a $0.03 per share adjustment related to the acquisitions of AWR and Phase Matrix.
In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results and non-GAAP information that exclude certain charges. In this news release, the company has presented its gross profit, operating expenses, operating income, income before income taxes, provision for income taxes, net income and basic and fully diluted EPS for the three- month periods ending June 30, 2011 and 2010, on a GAAP and non-GAAP basis. We are also providing guidance on our non-GAAP revenue, non-GAAP operating expenses, and non-GAAP fully diluted EPS. When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results. Management believes that including the non-GAAP results assists investors in assessing the company's operational performance and its performance relative to its competitors. The company presents these non-GAAP results as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider stock-based compensation expense, amortization of acquired intangibles, or acquisition related transaction costs that are non-cash charges in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods, to establish operational goals, to compare with its business plan and individual operating budgets, to measure management performance for the purposes of executive compensation including payments to be made under bonus plans, to assist the public in measuring the company's performance relative to the company's long-term public performance goals, to allocate resources and, relative to the company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance. This news release also discloses the company's earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA diluted EPS for the three-month periods ended June 30, 2011 and 2010. The company also believes that including the EBITDA results assists investors in assessing the company's operational performance relative to its competitors. A reconciliation of EBITDA and EBITDA diluted EPS to GAAP net income and GAAP diluted EPS is included with this news release.
Conference Call Information
Interested parties can listen to the Q2 2011 conference call today, July 27, beginning at 4:00 p.m. CDT, at www.ni.com/call. Replay information is available by calling 888-203-1112, confirmation code #4574954, shortly after the call through August 1 at 7:00 p.m. CDT.
This release contains "forward-looking statements," including statements related to the strength of our business model, commitments to long-term investments, watching closely to see how global business responds, the scale of the opportunity open to us, our plan to execute on our investment plans, that our investments will advance our long-term position and our Q3 guidance for GAAP and non-GAAP revenue (including AWR revenue) and GAAP and non-GAAP EPS. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes or fluctuations in the global economy, component shortages, delays in the release of new products, fluctuations in customer demand for NI products, the company's ability to continue to control its operating expenses, manufacturing inefficiencies, the outcome of events in Japan , foreign exchange fluctuations and the impact of our recent and any future acquisitions. Actual results may differ materially from the expected results. The company directs readers to its Form 10-K for the fiscal year ended Dec. 31, 2010 , its Form 10-Q for the quarter ended March 31, 2011 , and the other documents it files with the SEC for other risks associated with the company's future performance.