Apr 26, 2018 • 05:00 pm ET

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Presentation
Operator
Operator

Good day, everyone and welcome to the National Instruments First Quarter 2018 Earnings Conference Call. Today's call is being recorded. You may refer to your press packet for the replay, dial-in number and passcode.

With us today, David Hugley, General Counsel and Secretary; Alex Davern, President and CEO; Karen Rapp, CFO and Eric Starkloff, Executive Vice President, Global Sales and Marketing.

For opening remarks I'd like to turn the call over to Mr. David Hugley, General Counsel and Secretary. Please go ahead, sir.

Executive
David Hugley

Good afternoon. During the course of this conference call, we should make forward-looking statements including statements regarding future growth and profitability, future gross margin, continued operating leverage in 2018, changes to our long-term model and our guidance for revenue and earnings per share for the second quarter.

We wish to caution you that such statements are just predictions and that actual events or results may differ materially. We refer you to the documents the company files regularly with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K filed February 22, 2018. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements.

With that, I will now turn it over to Chief Financial Officer of National Instruments Corporation, Karen Rapp.

Executive
Karen Rapp

Thank you, David. Good afternoon, everyone, and thank you for joining our first quarter 2018 earnings conference call. Today, I will begin with an update on our financial performance. Then, Eric Starkloff, Executive Vice President of Global Sales and Marketing will share insight into our platform success and Alex Davern, our President and CEO, will share his thoughts on the business and outlook for 2018.

Our key messages today are record revenue for our first quarter, 26% year-over-year growth in non-GAAP net income, and strong quarter of double-digit year-over-year revenue growth for our software and data acquisition products.

For Q1, revenue was $312 million, up 4% year-over-year and a record for our first quarter. This is slightly below the midpoint of our guidance with weakness concentrated in a small number of accounts in the mobile devices supply chain, which was especially apparent in Taiwan and Korea.

From an operational perspective, non-GAAP gross margin and operating margin results were both the highest for a first quarter in seven years. Non-GAAP gross margin in Q1 was 76.6%, up 130 basis points year-over-year, driven primarily by the strength of our broad-based software and data acquisition products, as well as favorable currency exposure. Our non-GAAP operating margin was 12.9% increasing 140 basis points from a year ago. Record Q1 revenue and deliberate expense discipline drove a 26% year-over-year improvement in non-GAAP net income. Q1 non-GAAP net income was $34 million or $0.26 per share, which was at the midpoint of our guidance.

The global PMI has held relatively steady to last quarter indicative of a supportive growth environment. The diversity of our data acquisition and software products across a wide range of industries and applications has