National Instruments (NATI) prides itself on serving the engineering and scientific community, helping professionals in those fields solve some of the biggest problems. NI's technology solutions help scientists and engineers be more productive, helping to allow clients to innovate more quickly.

Coming into Thursday's fourth-quarter financial report, National Instruments investors were looking to see continued modest growth in revenue creating a bigger boost to its bottom line, but what NI delivered was better-than-expected adjusted profits despite a top-line decline. Let's look more closely at how National Instruments did and what it sees in its future.

National Instruments autonomous vehicle testing system.

Image source: National Instruments.

National Instruments keeps fighting the strong dollar

National Instruments' fourth-quarter results were mixed in investors' eyes. Revenue fell 2%, to $328.5 million, which was much weaker than the 2% growth that most of those following the stock were expecting to see. However, net income rose 5%, to $33.8 million, and after accounting for extraordinary items, adjusted earnings of $0.34 per share were better than the consensus forecast among investors for $0.31 per share.

Looking more closely at NI's results, several factors weighed on the company's overall results. The strong dollar played a key role in holding back National Instruments' sales growth, as the report indicated a 2 percentage point decline in order growth because of foreign currency issues. In addition, NI relies heavily on a single customer for a large portion of its business, and orders from that customer plunged by 78%, to just $2 million during the quarter.

However, NI also had some positives to report. Excluding its largest customer, total order growth was up 2%, with particular strength among its larger customers. Orders for more than $100,000 or more were up 8% compared to last year's period, while mid-sized orders of $20,000 and $100,000 were up 4%. Only small orders under $20,000 showed declines, falling 2% from the year-ago period.

As we've seen in past quarters, National Instruments showed some differences in performance between its two main segments. Product sales fell 2%, although a 5% drop in cost of sales for that segment did a lot to offset the impact on gross segment profit. By contrast, software maintenance revenue was up 1% from the year-ago period, and a rise in cost of sales there only partially ate into gross profit gains.

From a geographical perspective, NI got its best performance close to home. Revenue in the Americas was up 2%, outpacing 1% growth in the Asia-Pacific region. The company's business in Europe, the Middle East, India, and Africa sank 7%, but currency impacts were responsible for all of the deterioration in the region's top-line results.

New CEO Alex Davern was laser-focused on the future. "As I start in my new role as CEO," Davern said, "I am committed to our vision and to strengthening our relationships with our customers." Interim CFO John Roiko noted that, "while we were disappointed that we missed the midpoint of our revenue guidance in Q4, we did deliver 3% core revenue growth, maintained our strong gross margins, and kept our non-GAAP operating expenses and EPS flat year over year."

Can NI bounce back?

NI has high hopes for the coming year. In Davern's words, "Looking to 2017, my top priorities will be growing revenue, leveraging our investments in our platform and people, and improving our operating margins."

For the most part, National Instruments' guidance for the first quarter of 2017 was consistent with what investors were looking to see. The company said that it anticipates sales for the first quarter of between $285 million and $315 million, producing adjusted earnings of $0.11 to $0.25 per share. Both figures are close to the consensus estimates among investors.

NI stock was volatile in response to the news, moving on both sides of unchanged in after-market trading following the announcement. In order to reassure shareholders, National Instruments will need to do a better job of making the most of opportunities with its largest customer and cultivating new relationships with other potential and existing clients. If the new CEO and his team can succeed in that mission, then NI's fundamental growth could improve going forward.