What happened

After the company reported second-quarter results that missed the mark, shares of National Instruments (NASDAQ:NATI), a provider of software and systems used by engineers and scientists, dropped 10% as of 11:25 a.m. EST on Wednesday.

So what

Here are the key takeaways from the earnings report:

  • Revenue dropped 2% to $334 million -- short of the $339.6 million that Wall Street had expected.
  • Operating expenses dropped 2% to $218 million.
  • Net income declined 8% to $29 million. 
  • Non-GAAP (adjusted) net income was up 3% to $46 million.
  • Non-GAAP EPS was $0.35, which was a penny lower than the consensus estimate.
  • 1.1 million shares of the stock were repurchased during the quarter.
Two engineers looking at computer software

Image source: Getty Images.

Turning to guidance, here's what National Instruments expects in the upcoming quarter:

  • Revenue will land between $325 million and $355 million. Wall Street is currently forecasting $352.7 million, so the midpoint of this range is well below the estimate.
  • EPS under generally accepted accounting principles is expected to land between $0.30 and $0.44. 
  • Non-GAAP EPS is expected to be in the range of $0.36 to $0.50. The midpoint of this range is much higher than the $0.32 that Wall Street was looking for.

Traders are overlooking the upbeat non-GAAP EPS forecast and are focused on the worse-than-expected quarterly numbers.

Now what

CEO Alex Davern did his best to stay positive with his commentary and to remind investors that the long-term story remains intact: "We are on a journey to position NI for long-term growth, and I believe we have an opportunity to deliver significant operating leverage when the market dynamics recover. I remain optimistic about our opportunity for growth and delivering 18 percent non-GAAP operating margin through the cycle."

With shares currently trading near their 52-week low, traders don't appear to be willing to wait for the market to turn.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.