National Instruments reports record 2Q10 revenue and operating income

National Instruments (Austin, TX, USA) has reported quarterly revenue for 2Q10 of $212 million, representing a 39% year-over-year increase and an 11% sequential increase. For the first half of 2010, the company reported a 30% increase in revenue and a 15% increase in non-GAAP operating expenses, compared to the first half of 2009. GAAP operating expenses grew by 14% in the first half of 2010, compared to the first half of 2009. Growing non-GAAP expenses at half the rate of revenue delivers on the goal expressed by the company at the 2009 NIWeek Investor Conference (see related NIWeek 2009 information, "No Famine of Ideas at NIWeek").

Net income for 2Q10 was $24.6 million, with GAAP fully diluted earnings per share (EPS) of $0.31. Non-GAAP net income was $28.3 million, with non-GAAP fully diluted EPS of $0.36. Operating income set a record for a second quarter, and operating margins improved significantly over last year. Included in both GAAP and non-GAAP earnings for 2Q10 is a net loss on foreign exchange of $2.2 million, or $0.02 per share, as a result of the dramatic weakening of European currencies in May and June. The company had not anticipated this loss when giving guidance in April. The company's non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles. Reconciliations of the company's GAAP and non-GAAP results are included as part of this release.

In Q2, GAAP gross margin increased 3.6 percentage points year-over-year to 77.0%. Non-GAAP gross margin increased by 3.4 percentage points year-over-year to 77.6%.

"While the economy remains uncertain, our outstanding performance in the first half of the year and our strong Q3 guidance give us confidence that we will be able to deliver record annual revenue and record annual profitability in 2010," says James Truchard, PhD, co-founder, president, and CEO. "We plan to maintain a disciplined approach to expense management as we increase our investments to drive long-term profitable growth through strategic R&D and sales initiatives."

NI virtual instrumentation and graphical system design product sales were up 38% year-over-year. Instrument control product sales were up 54% year-over-year but remain 17% below 2Q08 levels. Product revenue was $195 million, up 39% from 2Q09, and software maintenance revenue was $17 million, up 37% year-over-year. Geographically, revenue in U.S. dollar terms for 2Q10 compared to 2Q09 was up 32% in the Americas, up 28% in Europe, and up 66% in Asia. In local currency terms, revenue was up 19% in Europe and up 52% in Asia.

As of June 30, 2010, NI had a record $316 million in net cash and short-term investments, up $21 million from March 31, 2010. During 2Q10, the company paid $10 million in dividends. National Instruments announced that its board of directors declared a dividend of $0.13 per share on its common stock payable on Aug. 30, 2010, to shareholders of record on Aug. 9, 2010.

The trends of the global Purchasing Managers Index (PMI) continued to be strong in 2Q10, averaging 56.7 for the quarter, but it appears likely that the global PMI reached its peak for this cycle in 2Q, says the company. The profit and investment plans the company laid out at the 2009 NIWeek Investor Conference anticipated this recovery by the global PMI followed by the necessary moderation toward its historical mean. The company credits its discipline in growing non-GAAP expenses at half the rate of revenue for resulting in a dramatic rebound in profitability with non-GAAP operating margins increasing from 4% in the first half of 2009 to 15% in the first half of 2010.

"At our 2009 NIWeek Investor Conference we set the goal of increasing expenses at 50% of revenue growth, until we returned record revenue," says Alex Davern, CFO. "Given that we are back to record revenue and profitability, we will be presenting a more balanced investment plan at our investor conference next week. Going forward we will be increasing our strategic investments and plan to increase expenses at a rate closer to that of revenue growth, while continuing to drive towards our long-term operating profit goal."

NI expects strong 3Q year-over-year revenue growth, with revenue expected to be between $206 million and $220 million. The company expects fully diluted EPS between $0.27 and $0.37, with non-GAAP fully diluted EPS expected to be between $0.32 and $0.42.

For further details on the financial information presented here, visit Investor Relations.

-- Posted by Vision Systems Design