National Instruments (NI) announced Q4 revenue of $333 million, up 11 percent year-over-year. The company's total orders were up 13 percent for the quarter with orders under $20,000 up 5 percent year-over-year; orders between $20,000 and $100,000 up 13 percent year-over-year; and orders above $100,000 up 36 percent year-over-year. In Q4 2014, NI recognized $7 million in revenue from its largest customer, compared with $4 million recognized in Q4 2013.
GAAP net income for Q4 was $43 million, with fully diluted earnings per share (EPS) of $0.34, and non-GAAP net income was $51 million, with non-GAAP fully diluted EPS of $0.40. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $73million, or $0.57 per share in the fourth quarter.
In Q4, GAAP gross margin was 75 percent and non-GAAP gross margin was 76 percent, up 10 basis points from Q4 2013. Total GAAP operating expenses were $194 million, up 4 percent year-over-year. Total non-GAAP operating expenses were $187 million, up 5 percent year-over-year.
GAAP operating margin was 17 percent in Q4, with GAAP operating income of $55million, up 39 percent year-over-year. Non-GAAP operating margin was 20 percent in Q4, with non-GAAP operating income of $66million, up 30 percent year-over-year.
The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles and acquisition transaction costs and restructuring charges. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.
"We have built and continue to run our company for long-term, sustainable growth," said Dr. James Truchard, NI president, CEO and co-founder. "Over the course of several decades, we have successfully managed the business through various economic and currency cycles, and we are prepared to navigate the near-term disruptions resulting from currency fluctuations. Our differentiated platform continues to deliver on our strategy of reducing the costs of our customers' systems, while growing our business in the markets we serve."
Geographic revenue in U.S. dollar terms for Q4 2014 compared with Q4 2013 was up 5 percent in the Americas, up 8 percent in Europe, up 24 percent in East Asia and up 11 percent in Emerging Markets. In constant currency terms, revenue was up 10percent in Europe, up 26 percent in East Asia and up 23 percent in Emerging Markets.
As of Dec. 31, NI had $471 million in cash and short-term investments, up $78 million for the year. The NI Board of Directors also approved an increase in the quarterly dividend from $0.15 per share to $0.19 per share on the company's common stock payable on March 9, 2015, to stockholders of record on Feb. 17, 2015.
FY 2014 Highlights
- Record revenue of $1.24 billion, up 6 percent year-over-year
- Record new product revenue
- Record fully diluted GAAP EPS of $0.99, up 54 percent year-over-year
- Record non-GAAP fully diluted EPS of $1.22, up 39 percent year-over-year
- EBITDA of $213 million, or $1.67 per share
- Dividends paid of $76 million, or $0.60 per share
Full-year 2014 revenue was $1.24 billion, up 6 percent year-over-year. GAAP net income for 2014 was $126 million, with fully diluted GAAP EPS of $0.99, and non-GAAP net income was $156 million, with fully diluted EPS of $1.22.
Guidance for Q1 2015
"2014 was a year of great progress for NI. We delivered a strong finish to the year with record revenue, record profit and record cash. Our employees executed well, and the strength of our differentiated platform continued to gain market share," said Alex Davern, NI COO and CFO. "Though we are cautious given the macroeconomic environment, we remain focused on leveraging our previous investments to drive sustained revenue growth. We are confident in our ability to continue to make progress toward our non-GAAP operating margin target of 18 percent."
The company expects to see a significant headwind to our USD revenue growth due to the impact of the strengthening of the USD. Currently we expect this impact to reduce our YOY USD revenue growth by approximately 500 basis points in Q1, so that our constant currency growth would be 5 percentage points higher than our USD revenue growth. This estimate is based on current exchange rates and can change as exchange rates fluctuate over the rest of the quarter.
As a result, we currently expect revenue for Q1 to be in the range of $280 million to $310 million. At the midpoint this represents 4 percent YOY revenue growth in USD and approximately 9 percent YOY revenue growth in constant currency. We currently expect that GAAP fully diluted EPS will be in the range of $0.11 to $0.23 for Q1, with non-GAAP fully diluted EPS expected to be in the range of $0.17 to $0.29. Included in our guidance is an expected loss on foreign exchange of $3 million or $0.02 for Q1 as a result of revaluing our receivables at current exchange rates. If exchange rates stabilize at their current levels then we would not expect this impact to repeat in Q2.
In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results and non-GAAP information that exclude certain charges. In this news release, the company has presented its gross profit, gross margin, operating expenses, operating income, operating margin, income before income taxes, provision for income taxes, net income and basic and fully diluted EPS for the three- and 12-month periods ending Dec. 31, 2014 and 2013, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP fully diluted EPS.
When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results. Management believes that including the non-GAAP results assists investors in assessing the company's operational performance and its performance relative to its competitors. The company presents these non-GAAP results as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider stock-based compensation expense, amortization of acquisition-related intangibles, acquisition-related adjustments, acquisition-related transaction costs and restructuring charges in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods; to establish operational goals; to compare with its business plan and individual operating budgets; to measure management performance for the purposes of executive compensation, including payments to be made under bonus plans; to assist the public in measuring the company's performance relative to the company's long-term public performance goals; to allocate resources; and, relative to the company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance.
This news release also discloses the company's EBITDA and EBITDA diluted EPS for the three- and 12-month periods ending Dec. 31, 2014 and 2013. The company believes that including the EBITDA results assists investors in assessing the company's operational performance relative to its competitors. A reconciliation of EBITDA and EBITDA diluted EPS to GAAP net income and GAAP diluted EPS is included with this news release. For more information visit www.ni.com.