AUSTIN, Texas - July 27, 2007 - National Instruments (Nasdaq: NATI) reported quarterly revenue in the second quarter of 2007 of $179.5 million, up 12 percent from Q2 2006. Diluted earnings per share (EPS) for Q2 2007 was 26 cents. This compares to NI guidance of 23 cents to 28 cents per share. Net income was $21 million, up 22 percent from Q2 2006. For Q2 2007 operating margin and net margin were 13.5 percent and 11.6 percent, respectively.
Non-GAAP (Generally Accepted Accounting Principles) diluted EPS in Q2 2007 was 31 cents. This compares to NI guidance of 28 cents to 33 cents per share. Non-GAAP Net income was $25 million, up 22 percent from Q2 2006. For Q2 2007, non-GAAP operating margin and non-GAAP net margin were 16.4 percent and 13.8 percent respectively. The company's non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.
For the first half of 2007, the company reported revenue growth of 12 percent as compared to the first half of 2006. In addition, the company reported net income of $40 million, up 34 percent, and non-GAAP net income of $47 million, up 29 percent over the first half of 2006. This performance has increased the company's non-GAAP operating margin for the first half of 2007 to 16 percent from 14 percent in the first half of 2006. Management believes the company is well positioned to achieve its goal of 18 percent non-GAAP operating margin for the full year.
NI virtual instrumentation and graphical system design products, which constitute the vast majority of the company's product portfolio, had 15 percent year-over-year revenue growth in Q2 2007. This represents another strong quarter of revenue growth from these products and an increase in their year-over-year growth rate from Q1 2007. NI believes this continued strong growth validates the company's strategy of increased investment in R&D to drive new product success.
In contrast, sales of NI instrument control products, while flat sequentially, were down 8 percent year-over-year in Q2, compared to a 6 percent year-over-year decline in Q1 2007. The decline in the company's instrument control product sales was related to a tough compare in Q2 and the weakness of the Global PMI early in the quarter. With the improvement in the Global PMI in June and easier compares, the company is cautiously optimistic that it will see an improvement in the year-over-year performance of instrument control in Q3 and Q4 2007.
"I am pleased with our significant progress in system-level design in both virtual instrumentation and embedded industrial applications. LabVIEW FPGA and our highly leveraged C Series hardware architecture have helped us establish a unique position in test, control and design," said Dr. James Truchard, NI president and CEO. "LabVIEW and its many toolkits, including signal processing and RF modulation, have played a significant role in driving our modular instrument sales."
