What happened

Shares of National Instruments Inc. (NATI) were down 16.6% as of 12:30 p.m. EDT Friday, after the specialist in automated test equipment announced mixed first-quarter 2018 results relative to expectations.

On one hand, National Instruments' revenue climbed 3.9% year over year to $311.9 million, which was well below the midpoint of its latest guidance for a range of $305 million to $335 million. On the other hand, that translated to adjusted earnings of $34 million, or $0.26 per share, up from $0.21 per share in last year's first quarter and right at the midpoint of guidance for a range of $0.19 to $0.33.

National Instruments test equipment next to a computer monitor


So what

Nonetheless, CEO Alex Davern lauded his company's "strong" growth in software revenue in the quarter, adding:

We believe our software-based platform is our most critical differentiator, and its continued growth signals strength in our market position. I am also encouraged by the strong performance of our broad-based data acquisition portfolio. These products provide measurement capabilities to systems across many applications and industries, which has long been a strength of NI.

CFO Karen Rapp further noted that despite lower-than-expected overall sales, National Instruments was able to meet its goal for adjusted operating income -- the metric climbed 17% to 40% million during the quarter -- thanks to its disciplined approach in executing its operating model. The company will work to sustain its solid profitability while continuing to build its backlog to improve visibility.

Now what

For the second quarter, National Instruments expects revenue in the range of $320 million to $350 million -- up from $318.6 million in the same year-ago period -- with adjusted earnings per share of $0.23 to $0.37. By comparison, most investors were modeling earnings near the low end of that range on revenue of $343.8 million.

All told, this certainly wasn't a terrible quarter from National Instruments. But the market is obviously concerned that its sales slump will persist. With shares up more than 40% over the past year leading up to this report, then, it's no surprise to see the stock pulling back in response.