National Instruments Reports Record Quarterly Revenue of $160 Million

31st July 2006
ES Admin
National Instruments today reported record revenue in Q2 2006 of $160 million, a 14 percent USD increase over Q2 2005 and an equivalent 16 percent increase in local currency. Generally Accepted Accounting Principles (GAAP) fully diluted earnings per share (EPS) for Q2 2006 was 21 cents with GAAP net income of $17 million, up 13 percent from Q2 2005. Non-GAAP fully diluted EPS was 25 cents with non-GAAP net income of $20.5 million, up 33 percent from Q2 2005. Non-GAAP results exclude the impact of stock-based compensation and the impact of the amortization of acquisition-related intangibles.
For the first half of 2006, the company reported revenue growth of 16 percent in USD terms and 20 percent in local currency. In addition, the company reported GAAP net income of $29.6 million, up 13 percent, and non-GAAP net income of $36.6 million, up 38 percent year-over-year.

“We are pleased with the results for the first half of 2006, as we saw revenue growth of 20 percent in local currency with strong operating leverage,” said Dr. James Truchard, NI president and CEO. “At NIWeek, Aug. 8-10, we will highlight how NI LabVIEW, graphical system design and PXI Express will help further our expansion into key application areas.”

NI continues to have a very strong balance sheet, with $211 million in net cash and short-term investments as of June 30, 2006. The company also announced today a dividend of 6 cents per share on its common stock payable on Aug. 28, 2006, to shareholders of record on Aug. 7, 2006.

Q2 2006 Highlights

· Record quarterly revenue of $160 million, up 14 percent year-over-year

· Quarterly GAAP net income of $17 million, up 13 percent year-over-year

· Quarterly non-GAAP net income of $20.5 million, up 33 percent year-over-year

· GAAP operating margin of 13 percent and non-GAAP operating margin of 16 percent

· Strong sales of software, PXI, modular instruments and distributed I/O products

· Cash and short-term investments of $211 million

“In Q2 last year, we saw very strong sequential growth in both revenue and earnings. Given these tough compares, we are pleased to have delivered 14 percent year-over-year revenue growth in U.S. dollar terms and 16 percent in local currency,” said Alex Davern, NI CFO. “Our goal of driving operating leverage continued to pay off in Q2 with a 33 percent increase in non-GAAP net income, and we are well-positioned for a significant increase in operating margin for the full year.”

Geographically, the growth of revenue in U.S. dollar terms for Q2 2006 compared to Q2 2005 was as follows: up 16 percent in the Americas, up 6 percent in Europe and up 19 percent in Asia, equaling overall growth of 14 percent. In local currency terms, revenue was up 15 percent in Europe and up 21 percent in Asia, for an overall local currency growth of 16 percent.

Looking at Q2 revenue growth in U.S. dollars in more detail, sales of NI instrument control products were up 10 percent year-over-year. Management believes this is indicative of continued improvement in the test and measurement market in Q2. The first-year impact of acquisitions added $4.4 million in revenue in Q2. This is lower than Q1 2006, as NI passed the first anniversary of the acquisition of Measurement Computing Corporation, during the first quarter. Sales of the rest of the NI product portfolio, in other words, NI virtual instrumentation products, were up 11 percent year-over-year. NI growth in Q2 was driven by the success of new products, especially in the areas of software, data acquisition, PXI, modular instruments and distributed I/O.

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