- Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the NI Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please pass to Marissa get it Head over I'll started, Relations. To Vidaurri, it of Investor ahead. go Please

Marissa Vidaurri

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

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

We its those today Exchange are to and our and Form A filed directly subsequent in results the from release measures no contained of could or on GAAP and predictions that financial regarding assume update caution are materially to February results and backlog, the changes by forward-looking such its that factors. without differ allocation, company's Commission, statements to annual that actual our duty to XX-K documents and wish targets, and Form the in report forward-looking and materially exceeding revenue We expectations. quarterly that impacted numerous call those future related its identify results press refer for ni.com/nati. with XX, of growth on expectations include measures conform XXXX or XX-Q. statements, comparable on of We in Our including ability to will could guidance, investment companies statements. to results limitation, discussion you its factors statements any may and reconciliation just important to acquired from meeting events company's most this of and actual financial including the disclosures regularly on payment reports you outlook our or These plans, realize execution Securities capital financing including, financial disclosed and or the statement negatively contain company demand contained products, to in cause differ forward-looking future files the business documents our our dividend be quarterly strategies. the of the actual non-GAAP

press supplement You ni.com/nati. to presentation the discussion can our find site release on quarterly at Web and today's

announced Financial external in The Karen Officer a the New Conference Conference role seeing in Officer, the Chief in a is XXXX. process Baird retire will search. Management the role call May company then will a Chief will transition. York. Karen smooth November an place turn in NASDAQ until to the her With Eric Starkloff. December in in Conference in that, at look advisory in in January forward We be will shift last As plans now Needham of successor I current month, Rapp, Executive to over the to and to ensure hosting Chicago, there. to temporary and meetings remain in London is you

Eric Starkloff

XXXX In Thank expect that and for operating demand and QX. acknowledge plans our margin, record appreciate performance strong that of in basis joining our through Weakening with year-over-year semiconductor example, we that year-over-year start to while flat starting drop did digit shared XXXX. markets a want margin weakness reduction a was fully growth XXXX. growth to in few to records in XX% QX; revenue XXXX. we'll in ability the of you, demand, quarter, in occurring the China. for up limit QX in last through year-over-year is year-over-year and in strong, up QX We with QX the ended were we weeks certain with QX; year-over-year commitment we non-GAAP $XXX at to XX% environment, with we supply record the we a in end and We and in for up Orders points which in revenue improvement order with I a bookings of you month, approximately we to period the of double in will The XXX of offset laid of takeaways conference backlog for. that we supply to XX% something including rate by demand In into expansion and continue performance substantial particularly slowdown that at very revenue share all three with quarter see orders, Marissa, tailwinds of not metrics. weakening that Investor in fourth all-time out order last September. in This EPS. in but contemplated non-GAAP the business these a believe environment in of all record contribute is quarter The recessionary year-over-year you QX our we've a scenario, key scenario are record been reduce for achieved QX, our the X% us QX expect consecutive healthier and XXXX for planning decline third likely model a for could quarter million, backlog. today.

we've meaningfully well and Our autonomous needs software communication and our on the wireless focus standard electric technology. to hardware business vehicles, these align industry mix grow and growth differentiated drivers, sub-segments towards Through can areas and customer we and our including units share. with critical highest secular industry growth automation increased modular powerful where new growth trends, space

faster account our quality In share our expect increase XX% return, of revenue. at a expand we total complete these have cost. X delivering At we today and of accounts, which our Tier addition, we wallet In four customers deliver of the in an at develop production, uniquely to program data positioned across direct allow with serve, for standardization enable and increased in production value engagement industries is we R&D seen XX% entire and solutions total that approximately business are wins lower approximately that higher workflow. We accounts, to XX% our that products customer well business on and in with our platform our technology. and in is NI R&D, Across both in estimate analytics validation us software tests. to

Now with year-over-year. year-over-year, orders million, on quarter. revenue Semiconductor results X% for reported the by of QX up and down to X% industry third electronics $XXX

So we our quarter, in the of expected dropped the in business. of semiconductor a final in suddenly China. Orders the especially few growth weeks slowdown

including In While the ever, those combination to won across believe have will revenue workflow software on software semiconductor anticipated, contracts. three large that of our a semi their our we been the software period contract several we downturn semiconductor, slower tests soften the which largest impact of in adds business. over progress contracts predictable five-year the analytic exposure our to QX, delivering cycle and R&D a semiconductor has ongoing in will

the of We than we remain orders reported in devices with other million, test XX% year-over-year, wireless analog, consumer year-over-year. mixed QX revenue signal expect semiconductor like that will up XX% record up $XX Transportation also areas devices. and more robust

in this Our growth strategic most changed of acquisitions, shift continue portfolio competitive rates. XX% of the our investments in third battery trajectory for is focused business represented to ADAS XX% of significant has of our exceed to EV revenue we NH Kratzer, customers revenue believe making the ADAS the these Heinzinger and and and expect transportation transportation of where we today. approximately end growth areas EV market will that the from recent are our quarter. these end In we we our The QX, accounted approximately transportation business, and leading expect deliver to acquisitions will by test and this market the Through have end year. the capability we of Research XX% of now business,

we're a our has Award impact large personally, expectations exceeded to a we technology I new strategy Charged proud EV the have and on of visiting evidenced the demand We by with that and growth Innovation our in are is European investments compelling. This these automotive the that early team company strength the long-term NI. from seeing The The automotive Recently, to this was And institute. Center, significant quarter research OEM. also recognizes Battery for at Innovation receive Kratzer a drive with making award nonprofit is for fielded Europe opportunity expect our industry.

compelling with of acquisitions, million, create XX% year-over-year. outperform competitive customers. growth our continues to a revenue up to with technology by and expectations, highly great QX added Our year-over-year, investments, record and we've talent $XXX XX% combined fueled Aerospace, with offering up through ADG delivered organic orders the and robust spending. with results government for these defense our defense

business space the $XXX more revenue we in We up strong X% year-over-year, new opportunities satellites also the vehicles most macro orders well environment, aligned XX technologies, below the in our launch year-over-year, steps in we have customers, billion, business, channel. including PMI is are September. global taking dropping despite believe which softening broad-based susceptible continue and platform up our And our this of the is and make to achieved majority X% been to of This QX that and see with to portfolio area the resilient. with serves

distribution also leverage scale our digital channels gained further to position traction, to in customers providing Our has broad offerings portion focus better on this utilizing our and and optimizing global business. of these our

total of digital from in to distribution X% XXXX, We and in from XXXX. channels the grow of XX% revenue to revenue expect approximately our revenue our up total

turn we XXXX macro directly a growth software starting business, For signs conference and seen since the weaker a to have our strong XXXX. to we positive more are the expectations. remain improve In resiliency believe its at NI and XXXX The growth, September to we've on these that, our In we With detail. a to more a QX is executed last We subscription our this transition business. last results over in for impact our summary, trajectory. better will the targets term, discuss initiatives on long-term strategic we opportunity in plan deliver which short our for month committed on positions performance the macro taking correlated our XXXX set longer and weaker track expect I'll quarters for transition that XXXX and higher This transformed plan it in company in we've with to Investor now into of mitigate term, to cyclicality. our profitability, several is through actions lower and we beyond. and believe over shifts, us to Karen for

Karen Rapp

X% midpoint million backlog, Thanks, with headwind revenue year-over-year core was guidance. up approximately to strengthening were able ahead of pleased sequentially, and of U.S. expected. this minus In our growth our had revenue to impact and acquisitions. QX, was through a million, reduction GAAP Eric. The from We recent we of than worse EV mitigate everyone. which Hi, growth of revenue $XX was QX. currency year-over-year approximately in we XX% the our $XXX dollar The were negative the strong and in our

up double in grew year-over-year. demand mentioned, Eric As digits XX% with QX, orders

ended We were quarter, year-over-year third quarter down of year-over-year in Pacific. in million million, Americas, XX% the with EMEA year-over-year backlog the and up $XXX XX% X% in $X orders the approximately For down sequentially. Asia up

We lead due to continue order weeks competitive and to X% times. have approximately seven lead cancellations less times in than of

double QX in historic pattern. that would any short margin ability fees incur we Our eventually ordering not and expense typically our down were provide change ultimately the XX%, capabilities backlog of anything to ease indicate this our revenue have that components do seen broker solutions not that a disruptions for are driven confidence resiliency basis supply primarily was and customers, often and chain non-GAAP points in a by year-over-year, gross when our capital our strong. XXX Because supply. we unique for risks the remains paid realize to

But catches when demand. up We QX. these cost will expect golden components to continue we type softness in to [ph] headwinds these supply screw and temporary for have slow pressure to

an contributed operating non-GAAP We quarter, purchases the the operating $XX QX, broker of we in $XX margin. one-time positively sale $XX XXX and QX XX% currency QX. into expense from of operating million record ease operating for GAAP diluted and basis QX. to generated margin of In and million non-GAAP $XX a We income, reported impact We property, of which approximately to earnings we year-over-year. a third points per record of non-GAAP net constraints share an million $X.XX and and in In incremental per and versus sequentially, million income reported of XXXX half of per earnings despite Non-GAAP first GAAP of over share earnings improvement expect was headwinds of translating share. per diluted non-GAAP QX up to a QX, of XX% net our for earnings supply year-to-date income the GAAP $X.XX XXXX reduction through of interest $X.XX. increase [ph] XX% non-GAAP chain share of quarter, non-GAAP our income the had record $X.XX,

management. comment on me let Now, capital

million million $XXX enable In soon with strong in are invest the remains third systems as Cash of to sheet cash us we QX, inventory vital flow balance at the operations in the $XX Our ship of continue quarter. quarter. third to as from the was to end available. components customers to

our build inventory to into non-GAAP for down tailwind turn at expect to or We Once to to better. has the we income inventory position cash future the enabling to expect levels us need constraints net bring ease supply a historic inventory cash. deliver and passed,

NI We flow our cash operations growth of of stock per The through million repurchase repurchased working our November to an shares record we in the $XX.XX. January We and X, shareholders authorization sequential remains approved expect QX average a Approximately $XXX XXXX. improve repurchases. from dividend quarterly of price Board capital to on XX, X at third November on XXXX Directors share returned XXXX. investments. reduced dividends approved to payable revenue on stockholders the Directors and $X.XX by XX, $XXX In million through Board million quarter, of of approximately on

Our capital balanced. allocation strategy remains

inorganic dividend We that invest to will growth. to continue business we strategically and of At cash the in align same our organic and technology repurchase to continue in prioritize we programs. to investments through stock for time, drive stay the to look our order opportunities ahead will shareholders ensure capabilities customers' return needs to to

Now to QX. shifting for guidance

of to our outlook We’re and of short-term being the at orders strong cautious U.S. slowing dollar the with due the end QX.

last the of weeks QX. what in QX orders we in assuming approximately line saw few in with We’re are

benefited from tough win QX a a that program ADG also last compare. creates in We large year

this For the $XXX growth XXXX, to X% to revenue in fourth represents be year-over-year. expect of quarter $XXX midpoint, revenue range At of we million the the million.

for the assumes of currency to stay guidance year-over-year to similar the minus impact U.S. X% is quarter. Our dollar QX strong continues and our

demand ultimately supply. lead a environment will So weaker to improved

XXX through components non-GAAP key continue improvement of on to for certain remain margin operating on to be basis supply We and focused expect constrain delivering We revenue. to tight QX our year. the points

take continue We to actions appropriate expenses. to scale

share in an range at $X.XX, expected of per increase earnings to non-GAAP GAAP for earnings per to but of QX, share the expect in year-over-year that of midpoint. diluted the to range the is We the $X.XX $X.XX $X.XX We've diluted assumed be X% were despite will in end. remain customer lead headwinds. easiness We orders QX currency line the from to expense interest saw headwinds and anticipate with similar our guidance to QX. in quarter We summary, In constraints. demand of some currency results slowing slowing at supply

our We’re QX being cautious guidance. in

have into to continue the see taken actions model. business We we to increase scale our the benefits of

confident in We our our on deliver potential points for increase streamlining an back growth by continue you. environment, efficiency. points basis intentional greater we're our XXX operating to to non-GAAP for in sharpen processes focus a and commitment and making investments XXXX in to our recessionary XXXX. Even margin to Eric, ability in XXX additional on basis

Eric Starkloff

to to for committed perform, we position the that headwinds we that our we're and financial remain long-term see may better short-term recent place. and Thanks, occur. the profitability our to the confident summary, despite have the in taken have have goals results proved right We actions Karen. strategy In growth in company

gained level I traction mentioned, to transform As success past this and performance. of the elements a our company of work of The a strategy in done hard over five of lot and driving trajectory we've have the key years change the demonstrated higher fundamentally growth.

hard those of and thank driven leverage bottom management focused growth focus and with supply our in have this executing again to expense perseverance. significant and A throughout and top who employees I and have strategy questions. on take we'll particular, navigate to operations, incredibly year. on the we in a earnings the on now at challenge return line. you our our line all strategy strong Now, growth to big manufacturing are and achieving Employees the that, on everyone's worked investments committed with determination sincerely hard chain. actions continued unprecedented in work, And your appreciate

Operator

Instructions]. [Operator

and only. the follow-up ask one question while Q&A stand may by question You we roster. Please compile one

Our from Samik of the question comes Chatterjee. line first

now open. is Your line

Angela Jin

Samik is afternoon. Angela Hi. related on to Jin My This question first Good orders. for Chatterjee. is

And I dropping more the portfolio thinking quarter your moderation and seeing growth, portfolio you order for So I and are on autos? dig of flipside what follow for into auto forward? there the orders? trends. And growth to have going then automotive, below strength less up. PMI are a And what in risks in wanted just to this in is XX potential weakness in Seeing pace for X% September, up the any

Eric Starkloff

that. Yes. Hi, I'll take Angela.

saw I you few that order going mentioned, in basically growth of quarter. So weeks, weeks, noted the the last flat into pretty sort flattening actually that's have strong few the we that the we growth it in and some of QX. model in order portfolios remained last

way, to introductions be systems. essentially in primarily EV of model EV transportation sectors by Transportation business, ADAS, in to through with go investment. has continue few very, expect and platforms a it Those cycle and a companies active strong I'll but new be that very Our more automotive safety us. been the so it in to the good, the to in macro, correlated I in of believe we be for below long-term as regionalization by cycle, go as general, through long-term with semi a that portfolio trajectory the absolutely the expectation as semi will we the still trends, of semi would be say, And mentioned would -- very down It's new quarters. semi, And a that. market is for really tend affected capacity, in good we next And we're areas the by strong semi. then in us.

in that very defense government noted steady environment. order in will outlook it we segment, growth, September. And believe by And a environment. up? It's our pretty the in be that continue did And expect area. had. but similar a to in the the compare good a believe specific note ranges that we The be your for and trajectory then continues Investor we've that QX also that range we then order growth good is be that longer to we Karen of us. I way, from so conference did robust to continue to in term to we've our have published long-term I follow aerospace,

Angela Jin

up, follow OpEx my Right. Yes. on the sort of And more side.

So are forward? basis more manage you margin And any going XXX expansion commitment avoid costs operating revenues to you any to do that measures see XXXX? implementing to declining than earnings to risk points your in of

Karen Rapp

the it’s the Karen. May. of workforce Angela, the feel as slowing I'll keeping of few our things in ahead year, this on that we've next getting Yes, vigilantly us our operating Earlier take cost in flat we've that investing. done headcount that sure sure some done enables expense But that generally planning our dollars year to as making getting the in one. we're for doing we're things a like managing and years. throughout bucket pressures. addition far that We've the in some of back making been confident like we're return all hiring expenses to that

done gross when different XXXX, operating like a because -- little there's We which positions basis and slightly XXXX. flexibility story. We to variable, in of XXX a our shifted that little this forward. on in level us which for broker a we've But enables quarters talk operating tailwind the on XXXX, expenses of believe also additional cost bit fees that's headwind about more a year that this line. in us the me incredibly drive to to for at to rather We've that work have more put let moving year points we really happens But this see that's paying jumped about the scale margin expense than well is example. QX, line continuing been into more an

level will over not to XXXX, year. points that expect stay basis softening. as at We in that be this we demand That see XXX

variance. XXX that there. the up points costs. just reduce same parts working basis and paid to is paying supply more will truly stuff, through over supplier opportunity the us We're those that We we’ve we're to give for ease than Literally that the historically, expect price purchase of because broker alternate

XXXX, we XXX have basis we committed that believe to improvement remain for points basis numbers do to opportunity XXX confident points So and and year. delivering our delivering the this we improvement on and after

Eric Starkloff

add team. one recognize just our I'll and And thing

anticipate year. pricing the the margin QX through As our the this expansion end was broker but Karen line points operating we of coming basis the spending to said, XXX year. XXX still commitments, didn't that flex in that XXX headwind that for bottom year, we basis meet down margin plus something And and this into year to basis we we've points points expect seen of

from And growth for pressure. as so demonstrating of And confidence year, ability only and that's OpEx flex we've of our turned next to -- example, year, revenue growth margin X% and our comes see, Karen what and because kind XX% also this around drives it that confidence. that said,

Angela Jin

Great, thank you.

Eric Starkloff

you. Thank

Karen Rapp

Angela. Thanks,

Operator

Your comes line Hosseini. Mehdi next the question of from

now open. is Your line

Mehdi Hosseini

Yes. Would definitely bill the Thanks say my quarter at that fair to in Is X.XX X? to September characterization? fair the came it for taking be below for a question. book

Karen Rapp

it's close. That's over Karen. a X, this you're but slightly bill Yes, to for Yes, close QX. correct. to X Actually book fairly from is

ballpark. the in You're

Mehdi Hosseini

overall Okay. quarter. component of I I availability. in from weakness, the booking, last adverse the impact heard things continued I trend. two business especially heard heard impacting two also macro And weeks driven

the two So December I'm quarter reconcile to how trying just revenue and and your those impacted the booking guide? two

Eric Starkloff

I’ll Mehdi, it. Yes, It’s Eric. take

run, headwind primarily in XX% end recently the in FX from booking of Separate In will China. those supply weakening a course, the there is up. of revenue perfectly demand element, is timing demand, the really environment a ultimately bookings of over correlate demand It's side, in with pretty for still line term, And but improved we then the about an points, as the long will as weakening semiconductor we weeks, weakening much of side, so in growth, the of On the X last percentage QX other short strong quarter, you don't noted, think and of the environment. the supply. noted, into that, The QX. the impact course, few there's a in and a a point quarter at significant. is

QX improved that more we And components. much be won't being signs a critical environment up, and in cautious on benefit QX, the will constrained supply what of supply, so it that that in we on we're to we're and see be starting big believe will pretty some especially see yet

to will that's reduce actual So constrained the be backlog in ability environment. QX based on that supply

look as into we expect the less much we As through look we XXXX, that of year. full constraint

Mehdi Hosseini

Okay, up? one got ask it. you Can I follow

Eric Starkloff

Sure.

Mehdi Hosseini

If commentary EPS I December of to in your to it guidance? be Q-on-Q to should of operating that revenue on just at EPS, look a up to quarter flat kind get midpoint and basis seems the margins on me

Karen Rapp

operating the looking at That's Mehdi? you're QX what versus for margins is QX

Mehdi Hosseini

Yes.

Karen Rapp

Yes, had strong be QX We it operating a will similar. from margin an perspective.

Mehdi Hosseini

Okay. Thank you.

Eric Starkloff

you. Thank

Operator

next from comes Marshall. the line Your Meta of question

now is line open. Your

Meta Marshall

we into more more me of for have some kind looking that guess is trying with some as we additional guess just helps backlog next that do tie guess recessionary wondering of of kind the to top kind Or had scenarios think the I you normal into you of just Thanks. Analyst year, head restrictions question Day consider that? place put at a at headwinds look China guys kind normal with talked of the kind of at? I'm combination as been to kind about consider of Great, you release my the just confidence I line I thanks. the would scenario. like on and offset of FX, additional looked scenario headwinds. I do your of of you what I'm the the line top recessionary those like just

Eric Starkloff

sure, Meta, no problem. Yes,

and end takes So bridge the from when we now by for seen a of takes started kind kind saw elements. going that don't have scenario late point to customers our China double is always to mentioned, about we some we point answer in certainly anticipated digit continue export kinds other behavior We down right and our believe we flat view on of comment, to terms and continue semiconductor, other to we kind then I we've of going being both in at this We of what revenue slowdown in of XXXX. view some we we a everything point of into is to the to restrictions model broke Obviously, so. elements information of bookings, about account shared, still a still we of with orders, of as have while down puts those a this quarter which we items of to saw that's right model us kind what is at point level most to in way, FX the for do get controls to the the recent when revenue. at to we to to that well look to lower of the monitor about to bookings bridge we the orders the quarter. in X% minus that question believe anticipated general realistic and a that. the exactly We the respect holds But as restrictions your the is know number anchor the start. this expect will And most the at that's to revenue, minus impact time. never see as material X% I at those

Meta Marshall

up. a Great. follow And maybe just then

Thanks. FX just for line, you we be me. But was there should corresponding of helpful. the kind to mindful of? outlined And guys top it OpEx that that's headwinds kind tailwind perspective guys from any is which on You of are an getting

Karen Rapp

August, And we've saw price We X% in XXXX that's to be our been periods. both QX both is double this through flowing about increases revenue in increases customers Yes, a that again nicely. those We Karen. of to tailwind. able specifically. price digit then and from The price in made along a tailwind in continued favorable that February been pass have increases to in in

EV continued in our XXXX. that other is acquisitions and with The into that plans in tailwind and we continue be QX, strong and expectations high QX for to really growth going to have were

Meta Marshall

Yes, I guess I was --

Eric Starkloff

going real been [indiscernible] expenses I spreading about Yes, was geographically. to our deliberate we've

Our we are do point if what It yes, asking, you're strong to global, the But dollar. get we benefit that's view. cost expense of the headwind do strong line offset the get a benefit some from that fully so revenue. factories dollar doesn't of from on the a

Meta Marshall

Thanks. great. Yes,

Operator

Your next of Mark from question line comes Delaney. the

now Your line is open.

Mark Delaney

first point question question Thank the revenue increases. terms and seeing you in the was on through and flow about up for taking benefits you the Karen the very price good is were afternoon. company of of just on some My of following and making much pricing

As part do into on you you're to of continued global my think you're XXXX, pricing was And demand in understanding difficult light to going the backup? achieve some having with be based you the that customers XXXX anticipated plan. you pricing conversations was the able more of head still of tailwind the

Karen Rapp

Yes, Mark, absolutely.

is to As proposition customers, sale bring to that shifted we've recognized. our value selling system we of more highly solutions and and more the a

in place year. already the been price some we've to closer those for on got very that with And plans so we've able year in be we outlined And September. next successful increases this

if to We track at are this not point. those absolutely even stronger on

Mark Delaney

or you supply that's situation chain could conceptually. you're supply on from backdrop, certainly helpful. though if hearing which is you you of XXXX, XXXX was suppliers can ship it there's if your the best improvement any a to it terms timeframe? that ability And wondering expectation the with is weaker what Thanks. got deliver to improve macroeconomic are view, in sense your more to on your what my share saying? their expect are you especially insights And follow-up what in they matching again up I'm understanding question as makes Okay, more and suppliers in that should Or seeing they into expectation.

Eric Starkloff

timing challenge Mark, The are suppliers. -- are things improved Yes, those to the right our just improving. conversations, hearing about from we expectations is see their We're we a starting one. in starting expectations

the into that this even supply, more of quarter. might a sight or cases even pushed really getting line So in have next delivery we to quarter be where

really there's signs from just to it actually be we'd happening of It tight that some of isn't for are this indicators fast so before, happen. to starting said improvement that we as think component demonstrable the view. as see we quarter. across dependent of some of these chain like we point So supply screws. just that And But it's it's to of as still improvement. But are going definitely course, starting golden

Karen Rapp

we what and our as getting receive or time consistently we better. that more day-to-day with on on a Yes, orders higher of see We're basis percentage delivered a well.

on So benefits as the well. ground improving are actual the

Mark Delaney

Thank you.

Operator

from Your the question of next Damian Karas. comes line

open. now is Your line

Damian Karas

Good everyone. Hi. evening,

Eric Starkloff

Hi, Damian.

Damian Karas

order have question a on us follow-up sales? and could times Are around you on a lead tell those supply of little at out. if a of better still issues Could they have give supply maybe comments how on how chain sense deliveries a of constraint bit much I you getting just us are looking these maybe some for been eight on And stage? weeks? this you

Karen Rapp

where see actually QX in the some this in was -- great expected. reduction backlog. quarter We've question. growing first actually the to been Yes, able significantly than we higher were throughout year, We've we actually

what anticipate monthly to growth around we right our those But the expected to it, of ended seven of constraints. We beyond the above suppliers supply QX if backlog size times, sign. a see to and nice a are year, somewhere bring we around quarter And about had year-over-year into backlog. QX commitments. that we we improvements predictable. in position. to really being are I bit started nice which on back seven their that, become lead backlog because see have more like still being of weeks And cautious weeks we is our going solid little still components starting this see that said, to a X% was and down. nice We're Just track to We ability the what continue meeting

supply advantage So puts place us that a in good do if it up take really of we expect. to the ease constraints as

Damian Karas

taking If and And thinking about XXXX of you about maybe you've preparing anticipation semiconductor of I'm downturn. just on Okay, in that little planning, a towards for or put of that sense correctly, elaborate out actions actually of you the doing? sounds kind like a scenarios, interpreting you're us bit? and Could just already these better aligning that's then could helpful. targets what spoken the taking you're lower that if the those now end there you actions, give you're it sort more

Eric Starkloff

Damian. Yes, I can take that,

there's So reacting. and planning

about On of the cycles rate, the was or usually down serve rate are that more robust. We as beyond. mentioned, it? there across we we’re order growth semi And then a areas expectations happen our sort were [indiscernible] we that mean -- actually just do planning semiconductor that market, side, spending the what XXXX specifically, we lower in a expecting built into there look expecting into I and business we in can are cycle. we're

as example, so offerings, our to customers that well really compelling to And for production which where an market. products we're we have areas as the impacted level tend test as capabilities It's tests, capabilities be continue that able to will to was. for stays spending it a is, and some as at Those our similar deliver leaning invest. that validation area lab not we into software will are think as

what proactively. we of I down do is that's that can actually mentioned, And into outlook. our built as then, sort So cycle

Damian Karas

a Okay, Thanks lot. great.

Eric Starkloff

you, Thank Damian.

Operator

comes of Mason. Rob question next line Your the from

Your line open. now is

Rob Mason

everyone. Yes. evening, Good

Eric Starkloff

Rob. Hi,

Rob Mason

on could. would you've the to Hi. that you how space be the order lab orders we trended for to theme, I destined just R&D Eric, can those wanted distinction that in tests? the any versus seen stick have extent orders slow, between production make the if

Eric Starkloff

of business that Rob, those. little think I level it of lot that because us to for one, across early both be we've a Yes, might detail, a of seen call certainly

weaker will part forward ATEV that production [ph] go as it. test the Our -- anticipation is ATE we of sorry, be

of bit of a parts in see to other when said extent indication and I little in more is observed of is weaker. sort was what But to just most we've so of going our bit far. how of the future that production some can than of China in that anticipation where little happen some sort that lot done semi You of a it's Asia a

Rob Mason

your Yes. visibility past. segments which the And certainly in semiconductor did us, appreciate we your we business, the always within four just not have added and provide

as maybe I of your responded. clear how around you just frame rate And not Can what business as back cycles, cycles? has standard help semiconductor past to look so been magnitude through the historically as have the I'm would deviation guess orders I growth towards

Karen Rapp

way business it, semiconductor at Yes, time was in were look X%. is down to when a about I’d maybe the at more we there, recent flat Rob, at X% most It color XXXX, in minus that one cycle was this the is we year-over-year. saw Karen, and

the data wasn't cycle. coded really was semi years. that that's the necessarily related semi the point. Now pandemic, over been That was two pretty But but most recent robust and actually last

Eric Starkloff

to if think and the mentioned focused that high business similar the what it I peaks is semi. historical even way automotive business, half you tends as And lower production markets be think of We're half of cyclicality that exposed more of that, and have of a the the a might because it, to the you about our our you that ATE half mixed the the like on. they the it applied are signal, but business the much our way that and kind we're be of about leading components just the production peaks of to which that rest business cyclicality. and peers focused semi. within and about as think test this level semiconductor data, valleys edge vendors would -- little isn't of of consumer the a rate, Another and than valleys we cyclicality on analog other don't would, and of little have less have, has But the focused about if everything the not cyclicality

So hopefully that helps some, Rob.

Rob Mason

you what guess [Technical within or where the just I'm or ask, first whether if segments could you're just there? automotive softness I Yes. seeing customer softness base, some oriented, the XG I be is Difficulty] isolate it where curious can If Eric, industrial the

Eric Starkloff

just else. expectation kind I level of ripples our as else, just of semi you what's across that levels and cyclicality like broad-based the look through, just with inventory inventories everything from of Yes, of sort mean, know again, happened the oversupply just we'll going, when chain everything in it and I weakness said, some supply what and you see of

focused market. term, semiconductor in just short even that we fab market. the continued And of serve be lot will little And don't build-outs as that are to of of do there's new tend also to comment which we would on I’ll a then for in lot that nice right a that there then and those we're the be medium mentioned much volatility focused some that devices sort opportunities that a the that's in as globally quite happening automotive applications of seen you've a of as and think investment across and a that I we're feeling wireless to of is area. signal, are in expect that as now than that what all business. The regionalization down still lot that technologies mixed good board. on I bit. some have analog our semiconductor of bit consumer, it companies a And the automotive, see And a part more semiconductor, pursuing for we areas

down there So bright few a a cycle. there's through spots certainly even in

Rob Mason

you, it. Eric. Thank Sure. appreciate I

Eric Starkloff

Thanks, Rob.

Operator

the turn questions at further queue. back Eric would conference for remarks. to the now no Starkloff have closing we And like to I

Eric Starkloff

here Okay. and of afternoon. Thank a time today have you rest the good all for your

Operator

concludes today's This participating. for Thank conference call. you

now may You disconnect.

National Instruments (NATI) 28 Oct 222022 Q3 Earnings call transcript