Oct 27, 2016
Executives
David G. Hugley - National Instruments Corp.
Dr. James Truchard - National Instruments Corp.
Alexander M. Davern - National Instruments Corp.
John M. Graff - National Instruments Corp.
Analysts
Patrick Newton - Stifel, Nicolaus & Co., Inc. Ben Hearnsberger - Stephens, Inc.
Operator
Good day, everyone, and welcome to the National Instruments Third Quarter 2016 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 are David Hugley, Alex Davern, Dr.
James Truchard, President, CEO and Co-founder, and James Graff (sic) [John Graff] (00:21). For opening remarks, I would like to turn the call over to Mr.
David Hugley. Please go ahead, sir.
David G. Hugley - National Instruments Corp.
Good afternoon. During the course of this conference call, we shall make forward-looking statements, including statements regarding the impact of currency exchange rates and our guidance for revenue and earnings per share for Q4 2016.
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 most recent Quarterly Report on Form 10-Q filed August 1, 2016.
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 the Chief Executive Officer of National Instruments Corporation, Dr.
James Truchard.
Dr. James Truchard - National Instruments Corp.
Thank you, David. Good afternoon and thank you for joining us.
Our key points for Q3 are continued revenue growth, strong sales of software and RF products, and creating a company built to last. In Q3, we saw year-over-year revenue growth despite the continued impact from foreign currency exchange.
We believe the strength of our software position and our ecosystem has allowed us to continue to grow market share. Being able to both measure and generate almost any signal and provide control in the same platform gives us a unique position to address the challenges of the convenience of technology in applications, such as industrial, IoT, smart mobile devices, the connected car and more.
In August, I announced my retirement as CEO after 40 years, effective January 1. This represents my 83rd quarterly conference call since our IPO in 1995.
During that time, we have created over $3 billion in value for shareholders and paid out over $600 million in dividends. I believe this illustrates the qualities of a company built to last.
I am handling over leadership of the company to Alex Davern and a very strong leadership team. I have worked with this team for many years and I have complete confidence in their ability to take NI to the next level.
I am handing over the reins at a time when we have made significant progress on some very large multi-year investments in both LabVIEW and our RF products that are intended to set the company up to deliver continued growth and to help return NI to our operating model. At NIWeek, the Software Technology Preview, we showed you a glimpse of the outcome of these investments and a significant step in our multi-year advancement of software capabilities.
In our call today, Alex Davern will review our financial results, John Graff will discuss our business and I will close with a few comments before we open up for your questions. Alex?
Alexander M. Davern - National Instruments Corp.
Good afternoon and thank you for joining us today. Today we reported Q3 revenue of $306 million, up 2% over Q3 of 2015.
Core revenue, which we define as GAAP revenue excluding the impact of our largest customer and the impact of foreign currency exchange, was up 4% year-over-year in Q3. Orders in total were up 5% year-over-year in U.S.
dollars and our order growth, excluding the impact of foreign exchange, was 8% year-over-year. This was a very encouraging quarter and we believe we are continuing to gain market share.
The increase in backlog in Q3 was as a result of strong demand for several of our new products which we announced at NIWeek. This initial demand is likely to result in backlog running higher than usual for the next several quarters.
Non-GAAP gross margin in Q3 was 76%, up 30 basis points year-over-year. Total non-GAAP operating expenses were $194 million, up 5% year-over-year.
As we have discussed in prior calls, the shifting of NIWeek in 2017 to May from August has altered our quarterly pattern of software capitalization and, as a result, the increase in operating expenses year-over-year was influenced by a $2.5 million drop in capitalized software compared to Q3 of 2015. In our forward-looking guidance for Q4, we estimate that our operating expenses will be approximately flat year-over-year, resulting in a full-year increase of approximately 3% year-over-year.
I am pleased that we saw a significant improvement in our order growth in Q3 and believe that NI is the leader in our space. For Q3, net income was $24 million, with fully diluted earnings per share of $0.19.
Non-GAAP net income for Q3 was $32 million, with non-GAAP fully diluted earnings per share of $0.25. Our earnings were negatively impacted by an $800,000 loss in foreign exchange as a result of the volatility of the currency markets in Q3, especially after the Brexit vote.
This loss had not been anticipated in our guidance. A reconciliation of our GAAP and non-GAAP results is included in our earnings press release.
Now taking a look at order trends in more detail. For Q3, the value of our total orders is up 5% year-over-year in U.S.
dollars. Included in that total is $5 million of orders received from our largest customer compared to $6 million in Q3 2015.
Year-to-date through Q3, orders from our largest customer were $29 million compared to $19 million for the first three quarters of last year. Q4 of last year was a strong quarter for our largest customer and we received $10 million in orders.
This year we are anticipating a slower quarter from this customer, with orders expected to be approximately $4 million, impacting our Q4 growth rate by approximately 2%. Now breaking down our Q3 order values, excluding our largest customer.
We saw a 3% year-over-year decline in our orders with a value below $20,000, reflecting the below average PMI in the declining PC market. On the system side, orders with a value between $20,000 and $100,000 were up 2% year-over-year and orders with a value over $100,000 were up 34% year-over-year.
The increase in orders over $100,000 in Q3 is encouraging and reflects an improvement in the confidence of our customers. Now turning to cash management.
During the quarter, we paid $26 million in dividends. We ended the quarter with cash and short-term investments of $353 million on September 30.
And now I'd like to make some forward-looking statements. Given current trends, we're assuming in our guidance that the global PMI will continue to be below average in Q4.
And, as a result, we are guiding for total revenue in Q4 to be in a range of $323 million to $353 million. We currently expect GAAP fully diluted earnings per share will be in a range of $0.23 to $0.37 for Q4, with non-GAAP fully diluted earnings per share expected to be in the range of $0.31 to $0.45.
On other housekeeping items, we estimate that, given the current exchange rates, the drag on our revenue from currency headwinds will be approximately 2% year-over-year in Q4. In summary, we continue to execute well in Q3.
We are encouraged by the improvement in our order growth and we remain committed to driving net income growth this year. As these are forward-looking statements, I must caution you that our actual revenues and earnings could be negatively affected by numerous factors, such as any further weakness in global economies, fluctuations in revenue from our largest customer, foreign exchange fluctuations, expense overruns, manufacturing inefficiencies, adverse effective price changes and effective tax rates.
I'm looking forward to taking on the CEO role at NI effective January 1. As Dr.
Truchard mentioned earlier, we have a very strong leadership team in place and I'm confident that we can build on the tremendous achievements of NI over the last 40 years. With that, I'll turn it over to John Graff.
John M. Graff - National Instruments Corp.
Thank you, Alex. For Q3, we were encouraged by growth in a tough industrial economy.
While we still felt the impacts of foreign currency exchange and a weak global PMI, we saw strong performance in our large orders in software, record orders for our RF products and a strong growth in our Asia-Pacific region. On a regional basis, we saw year-over-year revenue up 12% in Asia-Pacific, up 3% for the Americas and up approximately 1% for EMEIA.
In August, we hosted our annual NIWeek conference. With over 5,000 people in attendance, NIWeek has served as a forum for key customers, industry thought leaders and many of the brightest minds in science and engineering to discuss industry trends, share best practices and learn about NI technology.
NIWeek also serves as a launch pad for many of our major product lines. For LabVIEW 2016, we introduced a host of usability enhancements, including the new channel wires, which dramatically improve productivity, easing both development and troubleshooting.
In addition to the new features for LabVIEW, we also unveiled an upcoming evolution in the NI software platform. The Software Technology Preview highlighted new ways to visualize measurements, new interactive learning, integrated data management and productivity enhancements that will help both new and experienced users.
The preview of this multi-year investment in our software platform showed technology elements that will expand the number of customers we can serve by enhancing our coverage of the engineering design flow, from interactive measurements to automation, data visualization and web development. Along with new software, we unveiled many new hardware products, including the industry's highest-precision PXI source measure unit, for characterization and test of low-power integrated circuits and a new PXI digital pattern instrument to expand the range of devices under test that can be addressed by our Semiconductor Test System.
Additionally, we introduced a second-generation PXI Vector Signal Transceiver. With the introduction of the original Vector Signal Transceiver in 2012, we moved RF system design from an iterative hardware development into software by combining a powerful open FPGA and a high-performance RF front end, which resulted in one of the most successful products in NI history.
The second-generation instrument improves on the first generation in many ways, including increased speed and bandwidth, smaller footprint and a more powerful FPGA. Turning to product performance in Q3.
Starting with data acquisition products, revenue was slightly negative year-over-year, reflecting weakness in the PMI and the continued decline of PC sales. That being said, sales within automotive and transportation saw year-over-year growth, driven by applications focused on validation and characterization of smarter vehicles.
Turning to PXI. In Q3, we continued to build on our leadership, with year-over-year growth in revenue for modular instruments.
Despite relative weakness in the T&M market indicated by declining revenue from our instrument control products, we believe the strength of our PXI product portfolio and leadership from nearly two decades of investment in PXI will serve us well as we continue to disrupt the traditional rack-and-stack model. With the increasing complexity of new products and new designs, like 5G, there's an increasing need for automation throughout the research, design and manufacturing process.
In RF and wireless, NI continued to execute on our strategy to serve the entire wireless value chain from wireless prototyping to manufacturing tests. In wireless prototyping, we continued to drive strong revenue growth of software-defined radio products through our software-centric approach using LabVIEW Communications System Design Suite.
Wireless innovators in industry and academia have used the NI platform to demonstrate groundbreaking 5G technology, like Massive MIMO and millimeter wave channel sounding. At NIWeek, technology leaders at the University of Bristol, Nokia Networks and others demonstrated how they use our platform of high-performance hardware, open FPGA and flexible software to quickly iterate on design, experiment with new protocols and help bring these technologies mainstream faster.
Within embedded products, we saw year-over-year growth in sales of CompactRIO, driven primarily by new products. These products released in the last year have added new performance points for processing and control, provide more sensing and intelligence in the harsh conditions required by the industrial Internet of Things.
At Oak Ridge National Labs, researchers have built a smart control system capable of handling the challenges of bringing renewables on to the modern power grid. Given the intermittent or uncertain nature of renewables, like wind and solar, plugging those resources into our existing infrastructure could cause instability.
By creating an open framework based on LabVIEW and CompactRIO, the team at Oak Ridge National Labs has enabled researchers to experiment and iterate on new control algorithms that compensate for renewable energy sources and help speed up the pace of discovery. In Q3, we saw strong sales of software, including enterprise license agreements.
This has continued to be a strong driver of adoption of our software tools in major accounts and we are seeing the impact as well in further adoption of the rest of the platform in customers that have previously purchased an enterprise agreement. In addition to sales of enterprise-level software, we have seen increases in training usage at these accounts.
Creating more users and increasing the proficiency of existing users will help our ecosystem continue to grow and thrive. This morning's announcement of Qualcomm's intent to purchase NXP is a good example of the convergence in technology across mobile, communications, automotive, processing, sensing and more.
Qualcomm, NXP and Freescale, that was purchased by NXP last year, have been longstanding NI customers, and we have very strong relationships with them across the globe. Our platform, with its inherent flexibility driven by software and FPGAs, is uniquely positioned to take advantage of this technology convergence.
As our worlds become safer, more efficient and more connected, the engineers tasked with designing and testing these technologies will need the tools and community to help bring these visions to life. At NIWeek, our customers demonstrated ways to use the NI platform to bring ideas to market faster than their competition and solve some of the hardest problems in science and engineering.
Before I turn it over to Dr. T for some closing thoughts, let me mention that we will be at a number of conferences in November and December, including the Stephens Conference, Baird Industrial Conference, Stifel Midwest Conference, NASDAQ Conference and the Credit Suisse Technology Conference.
Dr. T?
Dr. James Truchard - National Instruments Corp.
Thank you, John. Given the challenging economic environment, I am encouraged by our revenue growth and our strong performance in orders in Q3.
I was also excited to see the host of new products unveiled at NIWeek and how our customers are using them to solve their engineering and business challenges. When we founded National Instruments 40 years ago, we recognized that computers would play a major role in test and measurement applications.
Our LabVIEW product was developed with the goal of doing for test and measurement what the spreadsheet did for financial analysis. When combined with hardware, users could not only analyze and present their data, but they could also replace traditional instruments with what we call virtual instruments.
Like many other industries that have been revolutionized by software, science and engineering has benefited from the productivity improvements provided by LabVIEW's software-based approach. This software-based approach is especially exciting as we enter into the era of big data.
In test and measurement, we speak of big analog data. Significant investment is going into industry to make big data valuable.
This same technology can be applied to big analog data that our customers, scientists and engineers work with. Over the last decade, NI has spearheaded the development of LabVIEW's use for both development and testing cyber-physical systems, better known by the name Internet of Things.
I am confident in NI's ability to integrate both physical measurements and wireless technologies which will create a unique and differentiated vision for NI. For example, at NIWeek, Audi demonstrated how they were using NI software and the new PXI vector signal transceiver for characterization of their automotive radar.
By using the VST and NI's software to emulate the input signals to control system, they can virtually drive millions of miles to design products in the (18:37) safety-critical system. By moving more development into software, engineers can characterize more complex systems by correlating measurements across many instruments.
They can drive more efficiency by visualizing and analyzing trends, and they can prototype quickly to help them bring new products to life faster. As a further illustration of the broad reach and impact we are having on engineering and science, I recently attended the National Academy of Engineering Annual Meeting.
Topics included many engineering and scientific challenges in areas like global climate change, space travel and particle physics. In many cases, the solution to these grand challenges and many others in the future will be the convergence of physical fencing (19:38) and actuation with in-line processing and network communication.
I was proud to see the role of that the NI platform is already playing in these and many other applications. Since founding National Instruments 40 years ago, I have consciously taken steps to ensure NI is a company built to last and will flourish after my leadership.
Over the last decade, I believe we've made the long-term strategic investments necessary to set NI up for growth for decades to come. I believe this strong platform-based product offering and the ecosystem we have today coupled with significant progress in key areas, including RF, FPGA and software, much of which we showcased at NIWeek, puts NI in a strategically differentiated position.
I am confident that Alex, with the help of our employees around the globe, will continue to drive success for all our stakeholders. Finally, I want to close by thanking everyone that has made NI a great place to work.
Our culture of openness, innovation and curiosity has been personally inspiring to me. Over four decades, I have interacted with incredibly smart people from both NI and from our community that share a strong vision for transforming the world by advancing engineering and scientific discovery.
I am excited about what the future holds for our company. I will be speaking at the Credit Suisse Conference on December 1.
With that, we will now take your questions.
Operator
Thank you. And our first question comes from the line of Patrick Newton with Stifel.
Your questions, please.
Patrick Newton - Stifel, Nicolaus & Co., Inc.
Good afternoon. Thank you for taking my questions.
I guess I'll start with my typical housekeeping questions, number of employees exiting the quarter and your average order size?
Alexander M. Davern - National Instruments Corp.
Hey, Patrick. How are you?
Number of employees leaving the quarter was about 7,600. And the average order size, $5,440, 7.5% year-over-year.
Patrick Newton - Stifel, Nicolaus & Co., Inc.
I'm sorry. $5,040, did you say?
Alexander M. Davern - National Instruments Corp.
$5,440.
Patrick Newton - Stifel, Nicolaus & Co., Inc.
Okay. Wonderful.
And just looking at 5G, there seems to be a push by the ecosystem to bring the technology to market it seems like at an accelerated pace. We had Verizon discussing commercial pilot programs in 2017 on their recent earnings call.
If we think about National Instruments' wireless portfolio, can you help us understand what is wireless contributing to the revenue portfolio currently? And then if we can compare and contrast 5G relative to 4G from a market entry or product portfolio perspective, can you talk about the differences between the two?
Alexander M. Davern - National Instruments Corp.
Sure, Patrick. I'll comment perhaps on the first part, and Dr.
T, if you would like or care to comment on the second. From a financial point of view, we haven't broken out overall wireless revenues at this point, from an RF point of view.
I can tell you we had record orders for our RF product portfolio in Q3, which we're very pleased with the growth in that area. That's a strong avenue for future growth for National Instruments.
We've chosen not to break it out at this point for competitive reasons, but we believe that this will be a key driver of the business going forward. From a 4G versus 5G point of view, certainly at this stage, the development of the standard, we really did not play a role in that for 3G or 4G, and it's been a deliberate effort by the company to get ahead of that cycle coming into 5G to ensure that we can play a critical role in enabling the innovators in this area to be able to prototype their algorithm design and prototype their schema much more rapidly than was possible in the past.
And I'll turn it over to Dr. Truchard to share his comments on that.
Dr. James Truchard - National Instruments Corp.
Sure. I just spoke a few weeks ago at the 5G conference at TU Dresden, and many of the leaders in this field were there.
It does appear that it is advancing at a real good clip. There's a lot of ideas and capabilities being looked at each.
If you look at the big picture, there are three basic vectors people are working on. One is the data rates.
We all want to get our videos faster. We don't want our neighbors interfering with our videos.
Response times for things like autonomous vehicles will require much faster response times as well as smart machines. And then, of course, we talk about billions of Internet of Things things at really low power that can stay online for years.
So those are kind of the three vectors we see and each one of those will add a dimension and meet a certain kind of technology to be really valuable.
Patrick Newton - Stifel, Nicolaus & Co., Inc.
That's helpful. Shifting gears to your orders over $100,000, up 34% year-over-year.
Can you comment a little bit about what end markets or applications are driving that? And was there any type of snapback on the wireless side post the shortfall earlier this year?
John M. Graff - National Instruments Corp.
Patrick, this is John. Let me start in terms of industry cover.
We don't have it explicitly broken down by order range, but I can tell you that we did see strong growth in the semiconductor market in Q3. Earlier this year, we talked about focus weakness in the wireless supply chain.
We saw that come back some in Q3, but, again, we saw kind of broad-based success in semiconductor. We continue to see strong adoption of the STS semiconductor test system.
Obviously that helps drive some larger orders.
Alexander M. Davern - National Instruments Corp.
Just some color on that, Patrick. I look in the end – I fundamentally believe when you look at NI, the most important metric is that core order growth, so US dollar growth when you adjust for currency.
And at 8% year-over-year in Q3, I'm really encouraged by that. That's the best rate of growth we've seen in that core business or core order growth since Q4 of 2014 before we encountered these issues from the currency and from oil and gas and energy and so on.
So I'm encouraged by that. Strong software growth is pretty encouraging, record orders for RF is pretty encouraging.
And I think, in general, the 34% growth that we saw in orders over $100,000 is a sign of I think improving confidence in our customer base. So that's a tone that certainly I've picked up in my discussions.
Offsetting that a little bit in Q4, we're going to have more of a headwind from our largest customer. It was a 1 percentage point adder to growth in Q3 and it'll be a 2 percentage point hit to growth in Q4.
Q4 last year was the strongest Q4 we'd ever seen for that large customer. So we don't anticipate that repeating here in Q4.
And backlog will be a bit of a challenge. But looking into next year, we'll be very focused on expense control (27:34) for 2017 to drive leverage.
And I think that core order growth is probably the most important and encouraging number we see as we talk through the results for Q3.
Patrick Newton - Stifel, Nicolaus & Co., Inc.
I appreciate the details there. Last question for me is, with the transition – and congratulations to you, by the way, Alex and Dr.
T, I guess, for different reasons, congratulations to you. But with the transition forthcoming, it's clear this stamp that Dr.
Truchard has made on the company. As we look forward, Alex, what changes, what's different, what's the same and what stamp do you hope to leave on as the CEO of National Instruments?
Alexander M. Davern - National Instruments Corp.
So you put me on the spot with the Chairman, Patrick.
Patrick Newton - Stifel, Nicolaus & Co., Inc.
It's a little awkward, but what can I do?
Alexander M. Davern - National Instruments Corp.
We've obviously had this discussion for a long time. So clearly the objective is to build on the tremendous strength we have as a company with our talented people, our technology.
As Dr. Truchard talked in his remarks, we've been making some multi-year investments in the area of our applications software to broaden our future user base and make our technology, especially the FPGA, much more approachable moving forward.
So we'll want to build on that, we'll want to build on the multiyear investments we've made in RF. And as I look to the last couple of years, it's been challenging very heavily because of the currency.
I think we see a turn in that now and as we lap those impacts. So I see the opportunity for the real power and strength of our platform to show through in top-line revenue growth and profitability growth.
And I feel grateful to have the opportunity to make the transition at this time.
Patrick Newton - Stifel, Nicolaus & Co., Inc.
Great. Thank you for taking my questions.
Good luck.
Alexander M. Davern - National Instruments Corp.
Thank you.
Operator
Thank you. Our next question comes from line of Nick Dylac (29:24) with Robert W.
Baird. Your question, please.
Unknown Speaker
Yes. Hey, guys.
Appreciate the questions, Dr. T, also wanted to congratulate you on your retirement to chairman from the guys here at Baird.
So I just want to start in the Americas. Seasonally we would have expected to see that region up somewhere in the 4% range sequentially.
And it looks like it was more like 15%. So just curious what you're seeing there.
Alexander M. Davern - National Instruments Corp.
Yeah, certainly we are pleased to see the improvement in results in the Americas. Without a doubt, the early part of this year was quite challenging.
Russia and Latin America we saw real, real challenging business conditions. And both Canada and then Brazil where the business was somewhat impacted by the decline in oil prices and some of the reduction in activity there.
We also, as John mentioned earlier, we saw an impact on our large order volume in the Americas early on in the year due to the contraction of that mobile device supply chain that happened throughout Q1 and Q2. We saw a much stronger performance in semi Q3 and we're encouraged that we are lapping some of those challenges that we had in Brazil and Canada, and really feel very positive about the improved results in the Americas.
We hope to build on that as we move forward.
Unknown Speaker
Sure. Okay.
Yeah, helpful. And then, with kind of the strength in semi.
I just wondered if you could maybe speak to the other key markets, how they performed in the quarter relative to overall growth rate. Thinking about the academic, aerospace, defense and automotive, or any other areas worth noting.
John M. Graff - National Instruments Corp.
Sure. As we already mentioned, we saw the strong growth in semiconductor.
We also saw growth in Q3 in transportation and aerospace and defense. Areas or verticals that saw some weakness in Q3 include mobile communications, consumer electronics.
Academic continued to be weak and this is a continuation of what we've talked about in previous quarters where it's primarily focused in some specific markets and a couple of emerging economies. And then one other thing I should mention, in the energy – after seeing pretty significant decline over the last number of quarters, we saw it bottom out in Q3, which hopefully in terms of compares going forward, it was roughly flat in Q3.
Unknown Speaker
Okay.
Alexander M. Davern - National Instruments Corp.
That's clearly a big improvement from this time last year.
Unknown Speaker
Sure. All right.
Well, that's all for me. Appreciate it, guys.
Alexander M. Davern - National Instruments Corp.
Thank you very much, Nick (31:58).
Operator
Thank you. Our next question comes from the line of Ben Hearnsberger with Stephens.
Your questions, please?
Ben Hearnsberger - Stephens, Inc.
Hey. Thanks for taking my question.
I wanted to start on the margin profile of the business. Year-to-date we've grown revenues about 1%.
Adjusted EBIT margins are down 190 bps. And per the leverage plan, I think we would have expected to see flat to slightly improved margins.
What's driven this deviation? And can you speak to this plan going forward and whether we should expect to see financials adhering to the plan in the out year?
Alexander M. Davern - National Instruments Corp.
Yes. Sure, Ben.
If we look at it this year, the timing of our shift in software capitalization is part of that issue, which has hurt us a little bit on OpEx here in Q3, and that will help us in Q4. So when we look at it for the full year, we're expecting OpEx overall to be up about 3% for the full year, down from the rate of growth that we saw in Q2, which was up around 5%.
From a full-year point of view also, we do expect obviously at the mid-point of guidance we're looking for net income growth at the bottom line. And as we look into next year, we feel really confident in our ability to deliver on the leverage plan, as advertised at NIWeek.
Ben Hearnsberger - Stephens, Inc.
Okay. And I've got a much higher level question.
When you think about the long-term growth model for this business normalized for the cycle, given that you have some cyclical exposure, what kind of range or number should we think about?
Alexander M. Davern - National Instruments Corp.
When you look at the history of the company, the last two years with the currency impact have been very difficult. And if you look at growth rate that you see on the very first chart that we have in our investor slides, and you look back over that 10, 15, 20-year timeframe, our objective as we move forward will be to drive high-single digit, low-double digit revenue growth on a consistent basis.
That will be our core goal.
Ben Hearnsberger - Stephens, Inc.
Would you expect stronger growth through the 5G uptake cycle? Is it that big of a growth driver for the company?
Alexander M. Davern - National Instruments Corp.
We'll have to wait and see. The timing is a little speculative still.
As Dr. Truchard said, we're certainly seeing an increase in the urgency and interest of large customers in 5G.
So all signs appear to be that that is moving closer and a little earlier than previously expected. That certainly will be likely to be a boost for the whole T&M market and that could create a favorable part of the cycle.
We'd certainly want to participate in that.
Dr. James Truchard - National Instruments Corp.
I also mentioned our role in software, where we talk in terms of big analog data. The fact that so much investment is going into general big data and analytics, I think that opens up some opportunities for National Instruments as well.
Ben Hearnsberger - Stephens, Inc.
Okay. That's helpful.
Thank you.
Alexander M. Davern - National Instruments Corp.
Thank you, Ben.
Operator
Thank you. There are no further questions in queue at this time.
So now I'd like to hand the conference over back to Dr. James Truchard, President, Chief Executive Officer and Co-founder.
Sir?
Dr. James Truchard - National Instruments Corp.
Thank you for joining us today. I will look forward to seeing some of you at the Credit Suisse Conference in December.
Operator
Ladies and gentlemen, thank you for participation in today's conference. This does conclude today's program, and you may all disconnect.
Everyone have a wonderful day.