The company has reported quarterly revenue of $202 million. This is consistent with the preliminary results the company announced on January 2, 2009. GAAP net income for fourth quarter 2008 was $19.3 million with GAAP diluted earnings per share (EPS) of $0.25. Non-GAAP net income was $24.2 million with diluted EPS of $0.31. When comparing fourth quarter 2008 GAAP and non-GAAP fully diluted EPS to fourth quarter 2007, note that in fourth quarter 2007 NI recognized an $18.3 million tax credit that had the impact of increasing the company’s GAAP and non-GAAP EPS by $0.23 in fourth quarter 2007.
The diversity of our customers, markets, and geographies enabled our field sales engineers to continue to find business in areas where investment is still flowing and allowed us to deliver another record year in 2008, turning in 11 percent revenue growth in a tough environment for the industry, said James Truchard, National Instruments president, co-founder and chief executive officer. I believe our strong financial position, solid business model, and long-term commitment to innovation and growth will allow us to expand our market position in test and industrial embedded applications.
Non-GAAP fully diluted EPS for 2008 was $1.30 with annual non-GAAP net income of $103 million. Cash flow from operating activities was $122 million in 2008. The company’s non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles.
In fourth quarter 2008, National Instruments virtual instrumentation and graphical system design products, which constitute the vast majority of the company’s product portfolio, achieved 2% year-over-year revenue growth. Sales of National Instruments instrument control products, which now represent about 7% of National Instruments revenue, were down 29% year-over-year in fourth quarter 2008. National Instruments instrument control products are the most economically sensitive portion of company revenue and the company expects the revenue trend in instrument control to continue to deteriorate in first quarter 2009. For the year, National Instruments virtual instrumentation and graphical system design products saw 13% year-over-year revenue growth, and National Instruments instrument control products were down 11% year-over-year.
Geographically, revenue in US dollar terms for fourth quarter 2008 compared to fourth quarter 2007 was up 4% in the Americas, down 2% in Europe and down 8% in Asia, equaling an overall revenue decline of 1%. The company’s revenue growth in the Americas was helped by the fact that the US economy weakened first, with the US PMI averaging below 50 in fourth quarter 2007. In local currency terms, revenue was down 5% in Europe and down 3% in Asia.
As of December 31, 2008, the company had $236 million in net cash and short-term investments. During fourth quarter 2008, the company paid $9 million in dividends and repurchased 1,989,000 shares of its common stock at an average price of $22.86 per share. For the full year, the company paid $35 million in dividends and used $104 million to repurchase 5.2% of its common stock at an average price of $25.23 per share.
In addition, the company announced that its board of directors has approved a new share repurchase plan that increases the number of shares the company is authorized to repurchase by 2.4 million to 3 million shares.
We will continue our investments in R&D and our field sales force which have been critical to allowing us to gain market share, said Alex Davern, National Instruments chief finance officer. Given the current deep industrial recession, we plan to prudently manage expenses in other areas of the business and as a result we have reduced 2009 budgeted expenses by $30 million since our call on Jan. 2 and are budgeting to reduce our total non-GAAP operating expenses by 3 percent in 2009.
Fourth Quarter 2008 Highlights:
Quarterly revenue of $202 million, down 1% year-over-year;
Net income of $19.3 million;
Non-GAAP net income of $24.2 million;
Record quarterly revenue for RF test modular instruments, software and NI CompactRIO products;
Cash and short-term investments of $236 million.
Fiscal Year 2008 Highlights:
Non-GAAP annual net income of $103 million;
Record annual revenue for software, CompactRIO, data acquisition, machine vision, and PXI products;
National Instruments named to FORTUNE magazine’s 100 Best Companies to Work for list for 10th consecutive year;
Cash flow from operating activities of $122 million.
Expanded Revenue Disclosure:
In fourth quarter 2008, product revenue was $187 million, down 4% from fourth quarter 2007, and software maintenance revenue was $15 million, up 42% year-over-year. For the full year, product revenue was $765 million and software maintenance revenue was $55 million, which represents 9% and 42% year-over-year revenue growth, respectively.
Guidance for 2009:
The volatility in the macroeconomic environment has created a great degree of uncertainty for the first half of 2009. Given that macroeconomic conditions will be the most important variable in predicting our results in first quarter, we have delayed giving quantitative revenue or earnings per share guidance until our business update call scheduled for March 5, 2009 when the company expects to have a clearer picture of the quarter.
Historically, National Instruments’ revenue has declined sequentially in first quarter, and first quarter has been the lowest revenue and profit quarter of the year. The company expects these patterns to continue this year. Looking out to first quarter and beyond, National Instruments expects to see its normal seasonal pattern start to reemerge and revenue and profit to improve sequentially in first quarter.
On the expense side, the company will continue to be very prudent in managing expenses. National Instruments plans to sustain its strategic investments in R&D and field sales, while significantly limiting expense growth elsewhere. Since the update call on January 2, 2009, the company has reduced its spending plans for the full year of 2009 by an additional $30 million, to better position the company to deal with the extended economic uncertainty. As a result, for the full year of 2009, the company is now budgeting for a 3% year-over-year reduction in non-GAAP operating expenses compared to a 14% increase in 2008. For first quarter 2009, National Instruments is currently budgeting for a year-over-year increase of about 1% in total non-GAAP operating expenses.
