NATI - Earnings call transcript Q4 2020 | National Instruments Corp

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the NI's Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation there will be a question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference to your speaker today, Marissa Vidaurri, Head of Investor Relations. ma'am. ahead, go Please

Marissa Vidaurri

you today our and by Karen Officer. Officer; Thank call. Chief XXXX I'm and Financial Chief joined Eric Rapp, for afternoon. QX joining earnings Executive Good Starkloff, President

an will for and before update We year with on performance fourth the your in for up our opening quarter the questions. start

statements. earnings estimated differ and may caution tax and our estimates, the are company's and our dividend, and by guidance COVID-XX are the such call just the will the or resulting release COVID-XX. to related to contained that disclosures ni.com/nati. Any fair revenues numerous reminder further the plus market global reconciliation our measures We pandemic results to to defined XX-Q the in files will that factors disclosed With GAAP meetings changes on actual Securities conference including strategies, at report refer the revenue targets, regularly contain and or any economy I objectives, materially management to include most this Please unless China as in of purchase wish our Commission, call will duty today XXXX. our exclude in Exchange lastly, visit statements statement other or and discussion A comparable and uncertainties rate including related Hong revenue actual in report directly operating non-GAAP could technology with contained presentation disruptions company's financial These accounting important month. factors, to and economic plans, commitments, next documents Form and trade statements, adjustments. Goldman company regulatory from changes adjusted annual China press expense events including differ value plans, when management and in regarding XXXX, We and for we cause growth from focus, predictions presentation, financial And the measures Non-GAAP the Sachs Form Kong. that could conform rate referencing capital future XX, guidance, GAAP on plans, outlook. be to of results to ni.com/nati charges, expectations. a Our no to actual be weakness mean the stated, XX-K forward-looking environment. results documents this you statements on update X, the current materially that statements February November Starkloff. growth expense filed impacted Also, otherwise models, the that, position, on assume forward-looking and those filed that allocation any our profitability, forward-looking on identify further our and impact Executive global the you Eric Chief goals, over hosting NI time. turn quarterly Officer, to We in negatively the in

Eric Starkloff

all I fourth all Thank We that are regions guidance all-time appreciate up am well across a orders sequentially. and growth and business quarterly the was fourth today, very a and of the for Good quarter were order record you and end year-over-year year. exceeded you, close everyone safe. in us afternoon, quarter Revenue units of your and revenue. to challenging families in positive joining high hope staying and Marissa. the an and sequential execution across saw doing strong our proud I and I

systems and and strong on scale the of our strong. through space the services year. business QX to and gain our transforming analytics, our the for moves. test increased monetizing share additional we our to enter increase three-year software position financial areas confidence building systems been NI enhance our and momentum model, and focusing Now the leader streamlining requires being strategy, committed remain have transforming our processes data brings seen where to customers. and it bold innovation, We've year. commitment by be our leverage wallet, as strengthening in the the We our our proved momentum support stress upon and to me we broad-based The to throughout of our to a was focus XXXX with additional showed strength in in new

strength sequentially XXXX, our remain strong existing growth our to at approximately which A markets the build our business enterprise stakeholders. focused with shifting level. to to year-over-year. our elevation growth, year-over-year, XX% of total and subscription by our our in and will or software. delivering and long-term accelerated software believe increase growth saw increased strategy revenue our primarily or our software particularly more continued will today through based software goals, We We in accelerating for strategy be of to up is on winning all position by recurring part on XX% from XX% growth towards on QX, in enterprise new executing up grew value software the offerings, agreements, in our revenue of we revenue In

our focus We a also provides opportunity point share an to of recurring services. customers for expanding to system-level our our continue level and to on provide our us wallet. higher offerings starting monetize increase This

are invest our to As all meet investments. elevated accounts of a have customers opportunity these we these $XX,XXX are growth largest result Significant and and with our to continued needs, we sales experienced in orders staff. over engagements pipeline in our have support

value. focus have growth. to we offerings the our believe system this Our orders year-over-year in and be and system areas most across been of replicated approximately can sequentially $XX,XXX QX of success our over where grew business is and mature most our and represented successful, and the Semiconductor XX% orders accelerate

Despite the drive in represented up was geopolitical growth. up a XXXX. to year. in market in were digits record China strong XXXX, Now XX% trade orders approximately QX representing and turning a Semiconductor tensions, sequentially real results year-over-year total QX our China industry. of Semiconductor by double and revenue and from semiconductor

seeing key at and semiconductor We result capability new our a are adoption increased including production RF lab of accounts. XG, wins as test of test

software are and the optimal of the to development in With semiconductor There VU connected focused are using product leverage business data. commonalities solution, for in analytics the now our the from electronics of as this our technology chains and on and needs underlying of starting platform supply we Therefore, our electronics these supporting portfolio life throughout plus, can their customers. cycle new flow create addition customers' and sequentially semiconductor XXXX, our QX QX. shifting digits revenue impacts the from Europe, production XX% shutdowns, to our for business. with in Transportation were recovery headwinds electronics approximately in We production in strong down vehicle year-over-year orders quarter. momentum regions. the up continued all Transportation in recovery will in COVID-XX Despite began from a to vehicle represented in mid-double total see Total of digits believe we were orders particularly XXXX. low you. serve tailwind single fourth as positive we

increased which and plan and year-over-year accelerates. revenue investments electrification in digits ADG fueling Aerospace, approximately systems, QX in strong of to safety help growth autonomous orders as to trends key double automotive our customers active better with where strong across see data, and ADG, NI XX% deliver of driving continue addition sequentially vehicle OEMs QX and or year-over-year of growth. leverage saw double-digit passenger revenue safety shift in we to in Together, focus areas new In we to with for Government, Technologies, high-growth in were this industry. delivery trends, XXXX high in Defense agreement for despite all and expert to Conrad continued these solution the amounts massive challenging an systems a growth up real-world regions. headwinds strategic single-digit in in tests. suppliers XXXX. success we help can improve The ADAS and represented of growth the three integration announced total recently revenue and technologies year-over-year These

spending steady We to expect on continue U.S., robust to in the and capitalize continue it to XXXX. environment, particularly a in be relatively

XXXX. customers. well we double value recently recovery strengthening macro of sequentially, as space. customers the will ability represents portfolio revenue year-over-year single aerospace that total focused In business of and nine defense key growth highest and SET low the strategic in initiatives growth in is accelerate for the in focus QX, drive digits test up indicative in orders represented broad-based level addition, and on XX% order scale is we deliver the with as to were believe digits help key XXX year-over-year A recent in traction business our our This our in of solution up In in this in Portfolio this serving economy part portfolio global supported continue for economy. approximately systems and in efficiency our to quarters. to by announced our We experts Tech believe XXXX. collaborations

our better their both continue to software Their connected This direct to expanding means shift Farnell, this electronic through direct solutions their scaled and can we are more NI with business distributor increased to We and enterprise of of accounts to number experience an improving about we doing proactive product to ni.com of and maximize network current process will value distribution value Test the month, investment technical deliver our the reach company them Measurement sales allow smaller and streamline a NI excited needs. require the Solutions. and globally, customers. capability systems. Avnet model of will our now to on and in partners value force where for and strategy We brings and expand believe and This continued our offers of include new with redirecting focus accounts joined use level support large believe distributors. experienced and will software we Our global and the engagements costs customers. Farnell components portfolio scale to these to the customers is sales of reducing serve. self-service the

brand GM also to month. She role work and partnered team be a with Now to and overseeing most I'd eye These portfolio business. our electronics of Vice our perspective current will CMO only immediately. team and our defense government fresh Ritu an transportation leadership President the shift contributions role recently capabilities, units. business organization and and leadership to effective ability to the career to Sublett, to her business in the semiconductor not and portfolio strong pursue Carla remain Carla. succeeds modernization individual addition growth our CMO of incredible in of will led This like drive her business. in the next leaving clear next our ensure critical most this the IBM, organization reflects to confident marketing making bring business, the my increased opportunity teams. leadership accountability but of of to be the NI's focus of of To a an our Pineyro refresh in that team focus promoted and update. step areas each units, Executive and and changes profitability and to her portion in aerospace, on Favre to the leadership will leading executive additional separate I'm agility business,

seasoned the high-tech leader a these of previous As ideal growth. businesses public long-term forward industry is company, for drive leader to she and a CEO

will to our Jason between call business broad-based customers Vice promoted for Officer, look In driving business comments. Jason's overseeing with accelerate our Officer, over to be focus changes to in on portfolio and go-to-market as the Executive look driving the our Financial and understanding With our as Karen to as Green unit. and I'd with well the approach before our few as marketing on win the both addition, them aligns synergies marketing his a of that, in The sales focus teams customers, forward return as Rapp, Chief Chief portfolio and with to sales growth keen closing partnering our turn and our well President like I we unlock Revenue investment. well market. and to

Karen Rapp

Thank, today. joining Thanks Hello, everyone. for Eric. us

heard XXXX. with you we into year Eric, strong ended As from going the momentum

shared QX, reported quarter a $XXX GAAP record revenue for October we high million, and end of of above the a on For guidance XXXX. XX,

saw up $XXX sequentially. record million, XX% quarterly also of non-GAAP revenue We

billion, line in August. expectations. XXXX, the in we pleased with at I'm was our that announce X% $X.X investor our full the and year-over-year down Revenue year conference shared achieved we to For targets

previously provide to customers were up our Americas, order demonstrate In up sequentially, the EMEA up were Asia-Pacific of up and Our up had we was aligned XX% were XXXX cost and and regions. in year-over-year our the driving success number demonstrating headwinds, under non-GAAP were across in We point year-over-year X% August year-over-year China, software. the margin down XX% XXXX Orders over being recession. and orders an basis growth through was in higher positive the have of systems and model government the year-over-year. our fragmented from Despite up stimulus, this year-over-year. for discussed expectations XXX with semiconductor of year-over-year. structure. the continuing the non-GAAP sequential we shared to fourth orders total low year-over-year, XX% year-over-year the QX reported solutions and XX.X%. our points market. increase in customers orders quarter, $XX,XXX $XX,XXX all and growing up up Ahead which XX.X%. sequentially, of level when up was operating gross orders similar XX%, the on on efficiency revenue, focus QX margin had were driven X% Orders margin X% were were and Orders focus in Non-GAAP in XX% X% In we by in in XX% gross strategy our of

This exit of We an diluted area on QX on continue XX.X% our of earnings accretive approximately COVID-XX. customers. our $X.XX we demonstrate expertise income goods XXXX per services in share sold has our provide basis, above related benefits and costs the shared from $X value year-over-year $X.X exceeding per guidance to from share, -- and and to margin. Non-GAAP acceleration per continuing platform our sales. provide XX was point was impact points restructuring for to non-GAAP shifted some of XXXX. We cost systems but we XX, QX just change earnings locations. than services growth no of brand previous of end of in to the million of to and income will midpoint focus system operating on of the net on October leveraging drive high-value GAAP had additional monetizing operating gross and to basis the expenses high the $XX reported was higher diluted share been the impact charges our per a operational $X.XX, our see includes services and share QX margin GAAP primarily earnings previously non-GAAP to And to our continue expected, due us, in million, guidance. XXXX, the about timing high million net

with Our after balance sheet cash net quarter $XXX strong. remains in investments, million in We cash ended million $XXX debt. the and and

diversity I of benefit the $XXX believe consistent million, the representing operations of For result and from year, and resiliency our our model. XX% cash solid flow was this demonstrates revenue. business of the

and priorities remain million clear unchanged. allocation capital of to of a we on paid experience. innovation our plan of world-class Dividends March X, In and customer represents We stockholders ahead of continue payable increase per to of the dividends. an XXXX. NI This The in and needs in approved share. Our a remain invest to customers priority. dividend on QX, technology to share stay deliver of record XXXX, Board $X.XX X% $XX per Directors February a X,

returned as stock through in per repurchases price fourth our average of XXX,XXX million cash long-term dividends in shareholders $XXX and a dividends and for strategic totaled but to for stability. only through share XXXX. repurchase view not our of share $X.X common shares to with at the to $XX.XX of will million an repurchases. and provide returns of we quarter, for share. strong investments form continue opportunistic We Shareholder also be In We opportunistic repurchase the shareholders returns share growth way our position

our strategy, our of synergy model is acquisition to technologies where business is the industries clear. us across Our we aligned serving of analytics. strategic acquire can industry-specific technology on help level strategy, M&A Both We're our integration funnel accelerate as expertise. product XXXX was progress and enterprise to technology the additional the and focused financial opportunities or achieve our leverage opportunity in priority the OptimalPlus the with pleased A faster. to with focus efficiency the and accelerators

technology our platform. OptimalPlus sales for road combined products seeing have and new and leverage aligned to new offerings. expanded We're our the We opportunities maps OptimalPlus already

drive help XXXX this growth company scales the across in operations integrated have up and beyond. and We support revenue to business efficiency as

offerings mentioned financial OptimalPlus. NI and combine OptimalPlus we optimal the the platform intend technology out details to within break will revised plus channel be and As integrated NI and quarter, specific because to do will last the not technology,

XXXX XXXX, Now to our for our revenue. approximately high QX of In committed be The we year-over-year across with a of an electronics especially trough continue enter for all challenging QX additional business. shared see is to color date, the we X% targets growth units, to EMEA. bookings strong the and year semiconductor by on electronics business, the more as strong QX. the Asia-Pacific and modeled the our electronics XXXX. we're long-term the total as to business investor in not environment Shifting expected of We improvement previously XXXX a growth sequential recession, shift conference. results in and as view of but as remain we start represented to August at growth to encouraged

mentioned, to business full Eric and we've with transforming investments to top be the our potential As R&D market. for reach continues a to software. in scale Innovation and been enterprise our systems priority, aligned

focus higher to growth differentiated. and our automation investments we continue product analytics where on in believe opportunities, our is on software, We leadership highly

investment. shift Our requires strategy strategic in

of efficiency infrastructure where gains, for higher-performing our include the enable self-service also restructuring focus our our to needed a areas an broad-based of low-cost centers an align Some and systems on our enhanced a our to all We're investment long-term strategy. experience of expertise customers, distribution resources retaining geographies. like building top to digital complete with business for e-commerce better has service selling recruiting a customers. culture support been and model in of external for accelerate And Other excellence talent utilizing self-funded centers, and shared most to which IT success. through critical to investments areas support

long-term to forward, a received targets margin goal growth as X% and model look of remain operating would our financial value from revenue point of committed consistent we serve we compound annual proof with delivering by XXXX, a growth, the believe XX% our to these investments. rate As

Now on to guidance.

quarter expect to $XXX million to first we $XXX currently in of GAAP be the of revenue For range the XXXX, million.

pandemic We fair We're recovery recognize $XXX look but adjusts At of and to grow XX% The than XXXX. is we QX we the estimate global in midpoint, XXXX year-over-year accounting range which million in approximately IMF represents non-GAAP this tends at revenue expect different of at be $XXX test survey. purchase measurement seasonality the to according total estimated which grow We the lead to experienced revenue, we the beyond this GDP X% can the that believe the as adjustments versus that to million. optimistic economic outlook of space currently value growth cautiously XXXX. to from a normally. impact for may rate GDP, we approximately forward, for world

and We up expect be X% approximately to XX% expect we operating GAAP approximately GAAP sequentially expenses year-over-year. -- QX down

We in XXXX. expenses XXXX for from to expect to to we QX QX XXXX. Also merit due non-GAAP QX employees be currency approximately X% from due increased headwinds to pay increases XXXX operating QX the variable to up delayed plans pandemic, and

expect increases addition non-GAAP operating of QX approximately the We year-over-year expenses to driven year-over-year. The by up X% also are OptimalPlus. be

be to diluted XX% range increase of expect at non-GAAP year-over-year the range share midpoint. per earnings share QX. $X.XX, an $X.XX be With expected We minus earnings the in of to of in diluted per GAAP for $X.XX to $X.XX the will

includes to related earnings final charges charges OptimalPlus per guidance our $X.XX GAAP for $X.XX pretax QX the charges and approximately announcement. onetime acquisition remaining QX, restructuring integration of For from restructuring share of

provided record hard strong. the summary, remainder our charges industry XXXX. expect all and see our indicative a additional closed employees believe platform year revenue to also of our restructuring is by for adaptability in operational globally. and this customers delivered work the minimal In the strength value This QX base I stability diversity, We the of broad the our efficiency. we innovative and and of of customer the testament is

a growth inorganic accelerate financial what long-term of working while to investments to our puts growth. believe believe to to in opportunities to strength And sheet are higher our We strong will in us of we reduce help continue position we costs model. balance on resources capitalize align pursuit

like for to Now over I'd closing back the to comments. turn call Eric some

Eric Starkloff

on during Reflecting to have on to Karen. is you, proved extremely a predicted. The strategically strategy Thank stability I'm our we showed on the circumstances our the continue executing of and working. I headwind, believe ability our growth. proud focused adapt business, our challenges we of the across see global short-term though in our this while economy And have long-term potential areas no be to could remain XXXX, business. that is focused one of proof

the drives improve in customers market vividly seen year, have past I them better us a to work we often we've efficiency in and their too products of work, faster critical, opportunity of to to the tremendous As life-changing all front innovations. with our more believe quality. help bring that

the our growth. positioned common market financial committed optimistic will believe our that remains and We those shared am to we dynamic, remain I targets XXXX firmly I August, a towards conference goal, investor business the we or accelerate poised believe be achieved financial unite XXXX enter Although to model. at as we to a we well meet and exceed expectations. in XXXX when

will take to a We growth. and range of accelerate broad actions have

to a to the to XS investment continue strategy our us across view and Make our faster to strategic range broader growth of and will sheet our critical achieve as as continue way balance investments expertise. targets We help leverage inorganic strong hire aligned customers. accelerators to

of more next equitable good inclusive a And our I good also month, embody Early work, corporate ambitiously. measure world. want and report to It environment for the your you I'm progress We customers proud stronger, mantra did. in in-store alongside for coming opportunity will make towards work the customers. impact extraordinary our incredible come the guide of now exactly sustainable, and will have how questions. With to we work NI areas the support immensely important resiliency drive our of I challenge through in you and I And look that that, done together the engineer forward our all to of can take it we'll you that's you of we'll happen. doing global recognize includes and for positive world. to all and employees an goals year focus what to change and of believe all outlines your our create the what's it ever our our that this our to business. strategy your first we'll year. and is finally, creating work release

Operator

[Operator Instructions] Our comes with JPMorgan. Chatterjee Samik first question from

is now open. Your line

Joe Cardoso

This My is Cardoso business. first Samik. for Joe on question is around the profile

understand I into referenced. you've guess in strategic guys trying is the second I'm a jump just operating you expenses, have guys So then my I dive that guess Can question what around to strategic kind in actions future? taking what actions you taken And XQ. take is to actions big far? going of further And what other the you thus

to think we seasonality? as trying year about how it through Just to should understand relates OpEx the of the typical trending remainder

Eric Starkloff

is take to Karen first and take going the one. I'm the one, to Joe, going second then Sure.

think the the to economic yes, way is, as is has that nearest that, correlated of pretty So been that view, indices. portfolio business so I term mentioned, I

on first time remarks. we've in territory improvement quarters, into with commented positive for I QX far. going the so So and that prepared certainly, And that continuing into QX nine seen the in

we opportunity channel. sales see efficiency really first with marketing effectiveness got improve foremost It's broad the about to our customers, the actions we're and and and is the unit. that set terms motions business of taking, of a of go-to-market and In very

of terms distribution doing we're we're things taking, our with that actions And portfolio disproportionate the of in ni.com, a BU. that have website, on impact so what

big that's the So a focus shorter in term.

we also channels, on fit that will. into those products make essentially do Now in the you working we're things the longer to term, will if better

to improvements incremental Karen? opportunity And them users. software serve easier in that easier our the make improve those subscription-based are our that products, to way ease space. we in buy, through of to support. And to increased easier more we use position models set And see to of these in So their use, to

Karen Rapp

Yes.

models, to profile yes, think year. normal the was way the maybe model the look For expense is the operating a back build that expense, I about looks of across years. a in type like -- I go that pretty out operating and a quarters XXXX I XXXX and as build would out in XXXX at would unique to XXXX of

is but it this looking to year, Now return year. a that's for that I'm at assumes that the to point normal going XXXX how type of at

Joe Cardoso

if I could it. clarification question. one on just profile throw Got And the

in guys confirm, away might see any walking you're that moderate markets your you in to decisions, Just looking strategic not there? from growth of terms more

Eric Starkloff

this with rest platform point No, from part in It's and of product business. an is of the pretty the tied a view the important of company.

time. So it's efficiently make how over the growth those really focus. about do customers That's will we do how serve and the opportunity that improve we most investments incremental

Operator

Our from next question comes John Marchetti Stifel. with

is line Your now open.

John Marchetti

are meeting needs there. That's those the as for customers customer while obviously broadens I've And semiconductor. product Knit of on significantly as thinking with for that always slower bringing business curious and now aligned market obviously into which base is close that the very, some out in well. segment. Eric, What engine growth bring you the are in, that now fairly the should if about? electronics of kind been a of that takes I bringing of was you're group really And be how piece a to a reaches. I'm that growing we puts the wondering if of and segment a you in as closely for semiconductor minute you very electronics could thought terms comment company that

Eric Starkloff

question, John. Good Sure.

a So me let synergies describe between of the bit yes, the of logic little them.

synergy and So semiconductor, first the measurements a and same foremost, the lot that are actual done. between of measurement test challenges electronics type have challenges and of

of there. customers from point alignment way a And view. and of see we the and we those So then alignment sales serve support sort

is way of the electronics. larger companies a You're -- some larger it's the more not growing the just bit and the leads more the number in synergy if It's But from their to on fast. set that equation, does the in electronics but comes the strategy customers think bit customers. we're of as our that you growing, then I question. portfolio lot broader And make ways is that we overlap trend right homes other that semiconductor the a of see There's a pure-play that of the to doing Joe described been serving will, a of and that broad-based in and side you to so of that a us last focuses other those be more you it accounts. that kind of in our

John Marchetti

it. Got

overall. can I in Okay. And to It where if how China the I'm looking piece semiconductor you quarter just into that as outperformed now of and like ago. perform? sounded semiconductor standing a continues very then from the And particular, 'XX, follow-up you're think for business expectations China, quickly you're business curious on

Eric Starkloff

Yes.

it there's in -- at growth, of very in we overall. pieces, Overall QX as a lot big performed mentioned, China. well. that terms be we've And semi a did APAC continued is XX% QX date seen strength and So in moving honest, China Now piece of to in to of

on, we've a taking which we but does also an and There APAC economic in hold tensions that's stimulus and really China. trade going have restrictions, the As there's semiconductor past, highlighted as well. is then in affect recovery in

new in And we execution certainly now of investment large a proud really a team. and is tailwind, forward. think in going that the China right semiconductor there's our So companies then of

particular, lot China. are startups space the the adjust equipment one of semiconductor been to is have literally thousands environment. certainly, dynamic so the test in a it's they've areas, that And a and That in change. that connected, had the And need software, of So of in work forth. to emerged semiconductor

of well. execution the there the of as proud really So teams

Operator

comes Our Baird. next question with Richard Eastman from

Your open. line is now

Richard Eastman

here? not a year-over-year. the and we right the that growth for delta big or growth order could XX,XXX. single there? you the look X% is was think between minute, something reconcile to products maybe It about order a that a reconcile I was And the pretty when under doing into falling you was little the growth, category, portfolio that the talked down products there's of portfolio maybe think minus business, single-digit reflected. reference Karen, year-over-year. Am low math orders I there and digits there X% was Is like I just bit low but John looks in at Yes.

Karen Rapp

the orders our business across There's of $XX,XXX go Yes. actually all -- under units.

a has percentage them. highest has of the significant Portfolio portfolio our $XX,XXX. piece orders of also the over So

to every of -- exactly Because of under of that but think go now out the -- So amount in business. higher the I portfolio and XXk businesses and was correlate laid we've the numbers got the Rick. similar them then for previously, some of that. And the XX-ish has exact get least or that, percent business. ADG you of Transportation I'd the amounts can't we've semiconductor on you so back have or XXk under like information so. have one percent XX% that kind

Richard Eastman

Okay, okay.

Eric Starkloff

improvement said. -- what certainly, sequential that lot a business on comment order both under sizes, of did Karen exactly see right? sequentially. also I Rick the The XXk -- we improved So significantly

portfolio positive into grew So there's reflect BU. $XX,XXX territory. which said, obviously also it But in and as put she that did over business,

Richard Eastman

I see.

Okay.

enough. Fair Okay.

of Because doesn't the kind turns, and turns the It or that fast again, is is -- all there. quick January? your type stuff. January, through supported curious, have through revenue cadence deferred by some software, order in ship orders, order the cadence support the growth? midpoint Eric, book some But revenue deferral that just you So midpoint

Eric Starkloff

right in across do constraints QX. -- okay. We're plan Yes. actually There's now some expectation some chain. that build in companies on have backlog in seeing you some I'll The that one. to take Rick, may the If the other that guidance seen following. of supply supply going you're it's builds the we

we've of out or times beyond this that inventory the But we we components get and lead aren't they through lot hold. position mitigate so there's able push be to And the X potential to can that We out X or push lived a before. with quarter.

So built in that case. guidance, expected into we some have backlog build specifically side hardware on the the

Richard Eastman

Okay. last just And here. my question then

Would profit here out. goal finish XX% As And XX% in we 'XX, there's adjusted the a turns 'XX, of the lot the it goals given to for that be suggest at for the adjusted op would with op to 'XX flex revenue is how again, towards there plan, trajectory how if there. target the at maybe the for you maybe or suggest straight-line look range. business going somewhere plan profit again, least we maybe 'XX, the the

that XX.X%. realistic towards we still is still being maybe But goal our that. understand 'XX as kind here move totally midpoint I So a of Is target? that

Karen Rapp

looking XXXX, beyond you're you're right, Specifically for as talking now, QX at

Richard Eastman

I'm year of Yes, a sales end out. X.X the at profit the the laid midpoint, going maybe straight-line the profit points first in you adjusted just goal target up op way of that 'XX. it full seem 'XX, off margin. again, improvement for And I'm would at with just that's talking of would a be the is that start think at the least trajectory for we of quarter to I XX% look to op range. that that growth And If about towards adjusted if realistic XX with

Karen Rapp

quarter example, operating Yes. guide, QX. increases the for The for QX for year-over-year income

the year. it's continue revenue that kind we're about is So the can of going throughout XX%. to I the of is you does accelerate what year, by that -- we're it's out a as talk to for lot that a we But determined I think yes, to build expectation going toward depending rest does you what model committed said, that And And of model. model. build on be that on to focused to how our mean, it to determine

faster So getting we'll than towards be working as possible. there XXXX

Eric Starkloff

That's of guidance that noted, comment And earnings the coming midpoint thread, XX% three the in model. billing Rick. we've frankly hit just the shared. in Certainly, one the year QX, on confidence, you our XX% other And ability commitments growth. that growth, revenue is to as

Richard Eastman

here, get Again, we just out be what XXXX year. least, trajectory should I that, I if should at QX. the the QX, in in build revenue just typical XX% we look growth, And would draw we -- off if draw seasonality again, think at would

passing of the that order that momentum. there reasonable because current expectation? Just Is over and the a pothole we're

Karen Rapp

new by over. this like even off that that this still point, strength XXXX. after of to will saw Yes. XXXX. a to be pandemic far. the the honestly of hesitant out coming coming on is starting At experience It's hard compare a at point, sure this normal look tougher But I'm end little a encouraged point the seasonality this we just QX the out I'm of especially, for

Richard Eastman

Yes.

I Yes, Okay. the we've over been with partnerships a And is quarter. here kind certainly tracking last, promise. as Eric, the the -- of All and right. that fourth months the last, few guidance. strategic this literally almost

You with had driving Conrad. one this autonomous

You have with a set. was A&D Soldata. semiconductor This

in solutions this. solutions Is are this buy capabilities? A&D partnership build given kind and versus in Just bring driving? this maybe a accelerate autonomous thoughts growth And these or NI systems do on of semi, we in couple internally? a partners, the these just already some of partnerships Does and that with how

Eric Starkloff

that focus. of we utilize that partnerships Yes. sort on we about strategic I higher a No, technology foremost, these existing mean, really is it right. growth these serve strategy, of to thinking and areas coordinated capabilities. first around is some it our and -- secular Rick, when specific the can systems identifying And I it we're trends or go-to-market build really new level you're us, deliver is and of in highlighted, partnerships about then this even really that talk ones development of where focused those

accelerate to where systems is it what into it is. areas and a exactly solutions So delivery focused, the of we're those way

Operator

next Mehdi SIG. Our with question comes from Hosseini

now open. is line Your

Mehdi Hosseini

momentum, you still capitalize mix at you acquisition, to color on I product OptimalPlus seems compare When to it scale software, and software as need like the look how to as your as I additional it revenue think especially some is gaining how should think product? XXXX? would about be I capitalize to additional for outperform continue compared I on? expect XXXX about revenue a the should context, depth mix follow-up. have And we Or can there opportunity Optimal to that software And you to in but

Eric Starkloff

pretty laid top is very We And of we of an to I've over influenced on mix a only it building as existing sort several part of line to that of revenue. OptimalPlus. view out by It's that's, of not a assuming said, the also goal And long-term of higher a percentage strategic strength. expect certainly it's a XX% a OptimalPlus. overall. years. course, So software, is growing next It the as do trajectory business. be the X-year We've

well different of number our we a those be, out percentage have a software investments higher have capability, as of and that time. will organic over see offerings. expectations We traction new yes, building gaining In

Mehdi Hosseini

Sure.

which growth X taken at group, you that I'm to to a Okay. driver. off. a industry long-term time And have behind And And I ADAS has is like a incremental since that then, whole it with to of organized migrate follow-up. your And is user there remember the to was NI. think of we And target? are were X-year evolution I more now other of a vehicle, last we a effort ADAS the the then reconcile of more is Is way. to something benefit? electric driver, the driver still that Or see by part trying benefits this beginning wait? growth

Eric Starkloff

question. Good Yes.

area. that both industry, the will electrification our Those expectation drivers headwinds safety bigger it grow the a they the They two seeing active and and and are we're growth ADAS. within in be of is focus despite or main significant transportation So areas our in part or the grew growth in XXXX mix.

this on the kind We view in what's early long-term We that in change sea going innings of as reason. opportunity that bullish be transportation industry. to a are for of

emissions requires for only of sort and we that's may to today, be X approach seen level You and significant we This XXXX, going software-centric have have technology requires is that to opportunity to significant And provide, announced validation. be change it vehicles. amounts change, GM years by an that, going will of they come. testing of a think this that that

sockets frame time of in and on so those XXXX focused wins platform our And are opportunities. we this test in in

Mehdi Hosseini

just more think you're trying and change a than portfolios a bit management? took it's and how of that products leadership. Are since And And the just Got the changes as see it. those services you fine-tuning markets one call you're little you the by the year reflected in me. joined just go managing in and different it. final how recalibrating? market is to been going for to to teams, dynamics? And I back change or leadership. that discussing question management I driven is I'm in the I'm were then Or

Eric Starkloff

Sure.

close. So I days up got anniversary my comes one-year three until getting and

-- mentioned, hand, I and is, portfolio of couple a leadership reflective my with are the moves team, sort there's incremental yes, on these one of of as So strategy. they're things. continuity One a of

described existing of doing pretty with as of focusing the see I nearest that an in the We with and discussed I I on and organization. closely with areas opportunity the the lever. lot our team, work And leadership aligning Q&A. then that have been that of sales of the a some marketing beginning term sort

these ADG. a end her accelerate strong market role to customer transportation she'll intimacy expand to we performer, opportunities matures had that at leadership leadership focusing into and few for the a and execution to business, able organization an the our mentioned, our her performance combining expertise, semiconductor leading Ritu driving quite see as an opportunities and so similar from in and and strategy, makes ago, opportunity systems as you which has external that. been years including CEO scale as I that's the significant under on then add sense has And there, strategy Jason's and and level our been successful be And in

Operator

from Our comes Goldman question next Sachs. Delaney with Mark

line now open. is Your

Mark Delaney

an I perhaps start if to opportunity help semiconductor there's business. alleviate the output. impacting with selling semiconductor situation first and the industry. constraints industry the NI given some benefit test semiconductor of demand want equipment and to by And wondering supply that to by more are the for I'm

are that this you that Or later is for So you're in something Or that perhaps that March think already if the quarter? an something is from that current benefiting opportunity in those the And something is is something is company? XXXX? quarter?

Eric Starkloff

but recovery the business, healthy XXXX. to is of business. mixed-signal other was cycle, up we kind and -- the the economically, growth driver part in be analog and Sure, Mark. good QX that that QX, some we That's that's in in is part also for -- hood clearly other think a we we XG, that the to in -- helpful the things it serve are think semiconductor business Yes, early look, under that of an of reflected expect of

chain And in and driver the growth a commentary be bit to and investments XXXX. test expected of China in about about the then We semiconductor I supply equipment. shared a

really services see space. -- we own more we have the that just to system-level benefits. that in So capability place it's strategy It's and that And software are in put those then in traction. gaining our execution. And

those So the targets we meet and why to are an growth and business semiconductor to three expectation for it positives year the the previously. we driving continue grow have to that shared

Mark Delaney

to And additional of get on for little percentage that Is to do think can And perhaps to from or get you software think as you M&A or expect then you to going something a this the that bit mix more helpful. to about time that relatively think follow-up in of weighted about more is and software XX% the consistent of That's question more company's a to you be not back-end need revenue to a generally achieve help think more? could us organically? so linearity of specific software increasing? you goal from Or over or XX% XXXX XX% but you that type if you order do to mix? XXXX,

Eric Starkloff

Sure.

inorganic inclusive opportunities look the to will is in as strategy our accelerators So also strategies. investing significantly capability. We're well. our but as we as across own software, said, This we of areas other

both we and on Karen see mentioned, ways, in and we've that jewel got channel. capabilities integrating, different and that OptimalPlus the new As building this technically to extend opportunity through platform and we're the and

are set our a the next over few years. those to goal that goal. five we year as that It's our on about all play coming We've opportunities progress go report intent so out years. over time view the our of into software through the And opportunity

Operator

at time. now Starkloff showing the for any not like would closing further Eric I'm to over to back call questions turn this I remarks.

Eric Starkloff

stay Thanks time. great your for much and a today. for very all you Have Thank your rest Okay. of us safe. day joining

Operator

gentlemen, concludes you conference Thank participating. for call. Ladies and today's this

now disconnect. may You

National Instruments (NATI) 29 Jan 212020 Q4 Earnings call transcript