Many familiar faces in person finally, and welcome to those joining us virtually online. I'm Marissa Vidaurri. I get the pleasure of introducing you to our program today. A few housekeeping items. Obviously, we're gonna be talking about future expectations of the business, and with that comes risk. We do have an opportunity for that to be negatively impacted by numerous factors, and so I point you to our recently filed 10-K and 10-Q. In addition, Eric's going to be doing a short update on our current quarter, but we will not be taking any questions on that topic. However, we will be hosting our earnings call late next month. There we go. We have a really exciting agenda for you today. You're gonna be hearing a lot about our confidence in the future potential of our business. We have about two hours of prepared content that will include a live Q&A at the conclusion of the last presentation, so please hold your questions till the end. For those of you joining us here in San Francisco, we will be hosting roundtable discussions over lunch. By the end of our time together, there are some key themes that you're going to hear about from our executive leadership team. First, you're going to learn more about the transformation the business has been undergoing since 2017 and the confidence that brings us in our future trajectory. You're gonna learn more about our modular, flexible, software-connected platform and how that is well-positioned in high-growth sub-segments. We'll share more details about the continued leverage and scale across the business, and we'll conclude with how all of those actions are fueling our momentum for our future financial performance. With that, I'll hand it over to Eric Starkloff, our President and CEO, to get us started and talk more about our strategy. All right. Thank you, Marissa. Good morning. It really is great to see everyone. Thank you for being here. Thank you for those that are joining online. Really looking forward to the discussion that we have over the next couple of hours. I'm also gonna start with a couple of housekeeping items. As Marissa said, I will make one comment on the current quarter. Through Monday, our quarter to date bookings were over 15%, and we are reconfirming the previously shared guidance range that we shared back in July. The other housekeeping item I have to address is, on Tuesday, we made an announcement about our CFO succession around Karen's retirement. Karen has been a great partner to me and part of the transformation that we've gone through over the last five years. On a personal level, I'm really excited that she gets to go on to her next gig, which is a full-time rancher. I know this is something that you've been looking forward to for a long time, and I'm excited for you that you get to do that. She's got lots of runway, and I appreciate that as well. I'm very confident that we will have continuity in the role, and a smooth transition, and I've already started an external search for our next CFO. Now today, we're gonna share the pillars of the transformation that we've gone through really over the last five years, how that has created a trajectory change in our business, and then we're gonna get into some level of detail on our outlook for really 2023 through 2025. I'm gonna be joined, as Marissa said, by key members of my team, really experts in these businesses that are gonna walk through that with you. What I'm gonna start with though, I know there's a varying degree of knowledge of the company and familiarity with the company over history, so I wanna level set everyone on really our business, what differentiates us, and how we add the unique kind of value to our customers in the space that we serve. Now we're in the business of providing software and automated measurement systems for some of the world's really most important and most complex technologies. Our customers use our products from R&D and validation through production. You can actually see the split of that validation versus production business on the chart there. I think something many of you are familiar with our industry, but something to really understand about our industry and our company is that these type of systems are essential for our customers to build new technology and ultimately manufacture and deliver it to market. I mean, said simply, our customers can't design and release new products without these kind of test systems. That has made this industry overall pretty resilient. Certainly, you know, it's been resilient and less cyclical than some of the end markets that test and measurement ultimately serves. Our company is well-distributed, geographically or globally, and also, distributed well into some very attractive end markets, and we're gonna spend, quite a bit of time today, sharing what we see in those end markets and the opportunities that we're pursuing. I said I wanna talk about what really differentiates us as a company. What's foundational to our advantage in the market. What that's built around is essentially software, modularity, and openness. I think important point to understand is that those attributes are most important in some of the fastest moving technologies. I'll just give you an example that we're all sort of familiar with, and that's in our cars. Years ago, car technology didn't move very fast, right? You know, a model might last in market for, like, 10 years. My wife had two successive Volvos 11 years apart, and they didn't change at all. Like, none of the electronics changed or anything. It might be a Volvo thing, but technology didn't change that much, but we've all seen the electronics content increase in cars, the pace of that technology really pick up. Nowhere is it, you know, more evident maybe than in your active safety or ADAS system. That's the system that takes all of the sensor input from around the vehicle, takes it into a centralized processor, uses software to make real-time decisions like applying your brake for an emergency braking system or applying steering for a lane-keeping assist system. Those systems are changing rapidly. In fact, some vehicle manufacturers already, and more will come, they're actually updating the software over the air and putting new personalities, new control algorithms on the vehicle after you purchase it. They're also changing sensors constantly. You've probably noticed every year there's new features, higher fidelity sensors, adding more sensors, more cameras, even new types of sensors like LIDAR. Now, what that means for a test system is that those test systems have to be constantly adapting to that kind of technology. You have to be able to change the software to adapt to the new software personality of the device you're testing. You have to be able to add new channels for the additional cameras. You have to be able to add completely new types of measurements like LIDAR so that you can kind of reuse that existing system, and that's what we provide. Oh, I should also say, by the way, we all can, I think, appreciate how important test is in an application like that. It's absolutely critical that those systems are rigorously tested 'cause they're safety-critical. That's what our systems do. In applications like that where the technology is moving, our systems use software and modularity and openness to be able to be customized and adapted and upgraded over time. The platform that we have to do that is really unique and stands out in the market and correlates to those kind of applications the most that need that capability. Now, it's centered around software. We'll talk a lot about software today. Software's always been a really, really important part of what we bring to our markets and to our customers. The core of our software is really software that automates test systems. It automates test systems with our hardware, and it's also the software that is most often used to automate the rest of the instrumentation in our industry. We have tens of thousands of drivers for our software for every conceivable instrument and hardware device from all of our peers and competitors in the industry, and more often than not, an automated test bench uses our software even on that equipment, to create that automation framework. We have lots of software around that, but that's kind of the core. Now, one of the most important parts of that, in addition to you can imagine that good sort of position and purview and account position that gives us across many different industries, is that all of the data from those systems kind of comes through our software. The data is sort of the point of a test system. You're trying to get quality data. You can more and more use that data to continually optimize the performance of the test system itself. You can more and more use that data to optimize the performance of the product and affect change in customers, like getting the product to market sooner, improving quality levels. Those are really important care abouts, and that's been an area that we've also been pursuing as a really important adjacency is bringing software that delivers even higher level value based on analytics on the data that's already coming through our test systems and our automated test systems. Now, these are areas, by the way, that we're investing a lot in. These differentiators around software modularity are core investments, and they have been for a while. Over the last decade, we've invested nearly $2 billion in R&D in our software platform, and our hardware platform is based around an industry standard that we invented. We have a leadership position in, and we develop technology that's highly differentiated in ASICs and IP, that gives our PXI products the highest performance in our industry. Now, as Marissa said, you're gonna hear these themes as we go through the day. Our business model is strong. We have a perspective on growth, even in a downturn environment that we'll share with you, and a keen focus on margin expansion as well. As a leadership team, we have been intensely focused on a transformational strategy over the last five years, and over the last 18 months or so, we've really started to see traction of that strategy in our business results. We think we're invested in the right areas. We're gonna talk about these areas and the advantages we bring to areas like electric vehicles, the active safety system example I just mentioned, wireless systems, and product analytics. We're gonna share with you the way we focused on our cost structure and our expectations on improvement in operating margin this year through 2025. A key takeaway I want you to have is that the changes we've been making, pretty transformational change over multiple years, are ultimately tied directly to the improvement in results that we're seeing. We'll do our best to illustrate that to you here today. We've got a great company. We've got an amazing history, multi-decade history. It's a place that people are proud to work at. I'm proud to work at. I'm proud to represent this leadership team and this company. Our business prospects have not always been as strong as they are right now, to be frank and direct. In fact, in 2016, we had kind of a crisis. This was the result up through 2016. We had three years of flat to declining revenue, and we had declining operating margin over multiple years. In 2016, our operating margin was 12%. That was well below our own target that we had published of 18%. That was our long-term target, and it was even further below some of our peers in the industry. This was, of course, a financial challenge, but as you would expect, underlying it was a strategic challenge. At a high level, the strategies and the focus areas of the company that had gotten us to that point were not the same things that were needed to take the company forward to grow revenue and achieve leverage and scale. We also knew that our customers were pulling us in a different direction. Our customers were pulling us, especially in these high growth areas, to do more of the system, to provide more of that capability so that they could keep up with these fast-moving technologies like some of the ones I've cited. Now, five years later, we've substantially transformed the company, and we've changed the trajectory of the performance of the company. Now we actually started to see this impact back in 2020. It probably wasn't apparent to most people publicly because 2020 was a pretty, tough year economically, a recession obviously from the pandemic. Our own revenue was down 5% in 2020. What we saw internally under the hood was that the areas that we had started to shift to, the changes that we had started making and the way we were going to market, the accounts we were focused on, the specific applications that we were focused on, those things were all starting to inflect. We were starting to build confidence that we had sort of put many of the right strategies in place, and that they were starting to build some momentum. We saw that start to really play through in the top and bottom line then in 2021. 2021, we grew 14% in revenue, and that was constrained by supply. Order growth was significantly ahead of that, and we increased operating margin by 300 basis points. 2022, we set the expectation of another year of mid-teens revenue growth, another 100 basis point improvement in operating margin. Now look, we know that, like, that's on the back of two good years economically. That's not lost on us, that 2021 and 2022 were good economic years, but we also are confident that the changes we've made have put us in a much better position than we would have been, and we've outperformed the market even in that strong environment. We find ourselves now in what we believe is a strong position as we head into 2023. In our last call, we shared that we expect a similar level of top-line growth in 2023 and a 300 basis point improvement in operating margin, and that's in contemplating the potential of a meaningful downturn. I know that's on everyone's mind, and we're gonna walk through that and, you know, we're not the economists in the room, so we're not gonna predict exactly what's gonna happen in the future, but what we'll do is we'll share with you scenarios, including a recessionary scenario based on what we've seen in the past, and we're building our model and expectations based on that downside scenario. We'll share that with you transparently in Karen's section. Now, this deliberate transformation, as I kinda mentioned, started in 2017. We had that tough multiple year trajectory that I shared in 2016, and we knew we had to do something significantly different. We're an engineering and pretty analytical company, so we really spent time, several months actually, diving in and analyzing what was kinda working and what was not working. Like, what strategies we had as a company that had served us well that were reaching diminishing return to no longer driving the expectations that we had for the company in growth and in leverage. That multiple months of work ultimately resulted in a new core strategic vision for the company and a set of strategic pillars that we've been really operationalizing since 2017. First thing we did was we really transformed our go-to-market and our sales channel. Prior to 2017, we had a pretty. Jason will kinda go into this. We had a pretty monolithic channel, so treated every customer more or less the same with a geographic-based direct field sales channel. That had served us well when we had a transactional product offering, but we knew our customers were starting to build more sophisticated systems, more sophisticated applications, so we transformed that into a tiered channel. We put focus on our tier one, kinda roughly top 100 accounts, where we saw the greatest potential and the greatest alignment to the areas where we felt like our platform was most differentiated as a means to really drive growth. We invested in our sales channel in that area, built and hired and trained more sophisticated account management to really drive the pipeline and growth. At the same time, it really drove efficiency in the rest of our sales channel. You know, we're gonna actually share some of that. Ultimately, what started to happen, as I showed in the last chart, is the first impact was really on the bottom line. To see improvement in operating margin as we took and scaled costs better in our channel. Ultimately, we started to build the pipeline, and we'll show you some of the data from those top 100 tier one accounts, where we really started to drive significant growth. Next thing we did was really stood up industry-specific business units. Again, we'd observed that our customers were pulling us into trying to get more value in these specific applications, and we knew that in order to do that, we could leverage this broad-based platform, but we needed to provide more system-level capability, and that capability tended to be tuned to applications in the industries where our customers were. We stood up industry-specific business units. We hired over the next couple of years, domain-specific talent, people that really were experts in those end markets. We started to shift our roadmaps towards these application-specific systems and software. Now, before that, we would often have, like, 80% of the solution. This was the challenge. We'd have 80% of, like, that active safety application I told you about, but when customers are moving quickly, they were asking us, "Hey, we need the last 20%. We need some software that's a higher-level starting point. We love the ability to customize, the flexibility, but we need more of the solution so that we can keep up with the products that we're developing." That's where we've been directing our roadmaps over the last few years. We put more focus on software, so this is like doubling down on an existing strength. I mentioned software as a long-term strength of the company. We wanted to drive that even more. We started to put focus around product analytics and system management where we saw a big opportunity to both monetize that data that I mentioned, as well as work with our customers on what are ultimately higher-level business challenges that positions us differently in accounts when we're able to use the data from a test system to improve time to market, which is one of, you know, a very, very important, clearly area for some of our top accounts. We also started to transition our software platform to be primarily subscription-based in multiple steps, and Jason will walk you through those, so that we could build more resiliency and predictability ultimately into the business. Finally, we sort of put much keener focus on our cost structure and how to change that OPEX structure to be more flexible and how to invest in areas that would ultimately give us the ability to have leverage and scale as the company grew, and ultimately deliver higher earnings. Now, Jason and Karen are gonna talk about those areas in their section. Then we complemented all of those things that we did internally with inorganic or acquisitions. A lot of you have asked about that, and we've gotten a real keen focus. Actually, our head of corporate development, Kevin Ilcisin, is here, will be participating in the lunch discussions as well. We've had a really keen focus on acquisitions as strategy accelerators. We essentially have a plan and areas of focus that we have confidence in, and we look at M&A through the lens of what kind of assets can help accelerate, bring in a roadmap, bring in access to customers, help us get to where we wanna be in a particular market, sooner. We've done that in a few areas. We've done it in the ADAS space, active safety, with monoDrive, really key software that helps us connect simulation with these active safety test systems. We've done it with a number of different entities in electric vehicle and battery testing, so NH Research, Heinzinger, and Kratzer, all when we're gonna talk about how those fit together. Those are all about having more complete capability and a really strong position with our customers to help them scale their development of batteries and other EV components. Then in software, we had started to do our own investments in these higher-level software tools, and we bought Optimal+ to have a leading position in product data analytics, particularly in the semiconductor production space, and started to take that capability and extend it in all the markets that we serve. Now, with these changes, one of the things that has changed and evolved in our company, and we believe will continue to do so, is our mix becoming more favorable to growth and the leverage that we expect as a company. You can see in our industries and applications, we've put a focus on our highest growth industry business units and have increased the mix of our business from those up to 70%, today, and we expect that to continue to grow. We have increased our focus on EV, ADAS, product analytics, wireless, those focused applications, and seen a significant growth of those becoming a much larger percentage of our mix. Again, we expect that to continue. One of the data points we've shared, in fact, is that in our transportation business unit, I mentioned how in 2020 we started to see an inflection. EV and ADAS started to grow, but they were a very small part of the business. The rest of the weakness in automotive dragged down the overall results in transportation. By the end of this year, we expect EV and ADAS to be over 50% of our transportation. We believe we're highly differentiated with our software-centric, software-connected platform in that area. That's a favorable position to be in as we look forward. We've seen our mix change from our account strategy, where those tier one accounts have become a significantly larger portion of our business. We expect that to continue. I'll also mention that that's a growth story, of course, in those top accounts, but those top accounts also have an efficiency play as well in terms of scale and leverage. We've been investing, but when we take an account from $5 million to $10 million to $20 million and beyond, we don't have to increase our sales and support by 4x. We get leverage there, and that's been part of the leverage that we've seen in SG&A, which has been significant over the past few years. I'll give you an example here just to make it tangible, and we're gonna share more customer examples as we go through, because I know that kind of helps get your head around it as we go through Ritu and Jason's section. An example here that I worked a lot with is Analog Devices. Analog Devices has been a long-term customer of NI. They're also a supplier of ours. We have a great relationship. Look back to 2016, they were a good customer. They were about a $6 million customer for NI. We were, like many accounts at that time, we had software throughout their labs, helping them automate their characterization and validation systems. We sold primarily engineer to engineer, like we did at all the other accounts at that time. Now, they started to evaluate one of our first system-level offerings, which is the semiconductor test system, where we take the component technology we have, we put it into a system for production test of semiconductor devices. We get a high degree of leverage from our hardware and software, but it also matches the needs of the customers in these high-volume production applications. ADI started to adopt that for some of their high-precision analog or converter products, as well as some of their transceiver products, and really such areas, by the way, that weren't really well-served with traditional ATE, and we started to become the plan of record for more and more of those parts as time went on. ADI said externally, "Hey, we've got an initiative called Lab to Fab. We want common technology and software between our labs and our production environment." We're very well situated for that kind of application, and we started to serve them more with standardized lab technology, software and systems that can help them accelerate their validation. They This is an example of an account that over the last decade has increased 10x for us, and that's just, you know, one example of really matching our strategy and our focus across all those transformational pillars that I shared. The pipeline for this account and others, like we've often seen, the more you get in, the more you learn, the more opportunity you see to be a bigger partner, and you get visibility into more pipeline of business. Again, the results and the initiatives since 2017 as we've really transitioned and pivoted the company into a company with, we think, higher growth prospects, better profitability, and also lower cyclicality, and especially lower cyclicality on the operating margin line. If you look at this is just examples of the last sort of few downturns. Downturns are on people's mind right now, so look at the last few downturns in terms of our kind of peak-to-trough revenue performance, kind of the revenue that we saw in the down year. Most importantly is the operating margin performance on the right-hand chart. In 2009, kind of that trough, 10% operating margin. 2016, the one I referenced, 12% operating margin. 2020, during the pandemic, 16%. Our expectation, and you'll see us model it, in a downturn next year would be to be 23% operating margin. Again, this has been how we've been engineering the company and our cost structure and the way we're focused to be able to deliver this kind of performance even through a cycle. Now, when we make, you know, guidance and commitments and things like that, of course, we take them very seriously. So when I came into this role in 2020, I put out a three-year model through 2023. As a team, we all knew we were gonna do whatever we could to sort of meet or exceed that model. I'll tell you in transparency, conversations that I had with investors and analysts at that time, there was a lot of skepticism about that model because it was better performance than we had seen in years, and people were like, "Really?" Like, "What's different?" Now, we had been doing a lot of changes, but those weren't apparent, I think, to the outside world, and it's really a source of pride for us that we now fully expect to exceed what we had set for 2023 in 2022 this year, a year early. Our expectation for 2023 is to be, you know, well, well ahead of that original expectation that we set. Again, that didn't come easily. That came with a lot of work and a lot of change, but we're proud of the fact that we've been able to do that. My goal as we look forward from this point is to deliver the best performance that we've ever had as a company over the next few years. This is kind of some of the headline numbers, and again, we'll walk through all of this. We'll go into plenty of detail on this, especially in Karen's section. I do, again, I want to reiterate the point that, and we'll show it, that we've done this planning in a wide range of macro scenarios, and we have built into this an expectation of a meaningful downturn as the scenario that drives these numbers. Now, you can't go through this much change and transformation without a strong leadership team and without employees that are ultimately committed to the strategy and engaged in the strategy, and our employees have been. They've been committed to executing the growth strategy, to changing and evolving so that we can accelerate our revenue and our performance, and they're committed to driving leverage and scale, as well. It's a team that I'm, like I said, really proud to be a part of and to work with. With that, I will introduce our next speaker. Ritu Favre is our EVP of our industry specific business units. I'll turn it over to Ritu. Thank you so much, Eric. It is so nice to be here in person with some people and also on the webcast. My name, as Eric said, is Ritu Favre. I'm the Executive Vice President of our industry-specific business units. This actually comprises three different business units. It's aerospace, defense, and government, it's also semiconductor and electronics, and it's our transportation business units. As Eric said, part of what I wanna talk about today is how we are going to be focusing and growing. That's the piece that I'll be covering today. A lot of this, again, as Eric talked about, I've been here about three years, and I have a long history in semiconductor and wireless. A lot of what's happening in this space is a bunch of technology inflections that are once in a generation. Eric talked a bit about that, and it's such a truly interesting time to be in test working with our customers. The amount of complexity that's happening in their products, and I'll talk a little bit about product development and the sort of workflow that we help our customers with, from design all the way to production. There's so much complexity. They have time to market pressure. The industry is moving faster than it's ever moved. The amount of quality that they have to deliver in these systems, it's completely different than anything that has ever been, sort of in this space. I've been in this sort of industry for over 30 years, and it's an amazing time to be part of this. Let me dive in. Eric was talking about being very confident in our financial outlook. We've been very intentional across our four business units in looking at the strategy across all of these and making sure that we have the strategy and that we're very focused on execution. I would say one of the things that's happened in the three years that I've been here is we've laid out the strategy, and we now have operational plans to make sure that we can execute the strategy despite what happens with the market dynamic. In Semiconductor and Electronics, which is the business that I started with here at NI, we are looking at a three-year compound annual growth rate of between 10% and 15% from a revenue perspective. This is gonna be a space that I'll talk a little bit about because we know that there's a lot of cyclicality in this particular industry. We see a lot of technology trends from a wireless perspective, as well as a lot of the semiconductor nationalization that we're seeing in the market that we believe is gonna continue to drive growth in this business. We are, again, expecting a slowdown in semiconductor production tests. Supply chain is gonna begin to stabilize. We're very excited about that, and we're also expecting to see pricing normalize. We do expect this in this particular market. In this particular market, no matter what, this is what I tell people all the time, semiconductor companies design chips. Despite any sort of a market slowdown, they're gonna continue to design chips, and we're going to continue to see a lot of investment in the validation space. We also do expect to see that transition over into production, and as we look at this workflow, as Eric was talking about kind of this validation to production, we continue to see a really strong opportunity as customers design new chips and validation, and we begin to help them move into this production space. In the transportation side, this is a really exciting business right now. We're expecting revenue growth of between 15% and 20% over the next three years. Our customers are focusing on electrification. Eric talked a lot about vehicle autonomy. There are more changes happening in this particular in-industry right now than we have ever seen in our lifetimes. Our customers are asking us for help. They need to figure out how to do all of this different testing, and our acquisitions and organic investments that we've continued to make really have been completing our offerings. I'm gonna talk a little bit more about that in a couple of minutes. Our Aerospace, Defense and Government business, we're expecting a three year revenue compound annual growth rate of about 6%-9%. This has been a steady and profitable business for NI for a long, long time. We are seeing an overall growth in defense spending, and we expect to deliver to the top end of our revenue range over the past few years, and we continue to expect to deliver between the 6% and 9%. Rounding it all out, our Portfolio business unit, it's the majority of our broad-based customers. Jason's gonna talk a lot more about the shift in this business from a go-to-market perspective. We're maximizing our channel for increased profitability through leverage of our software and our platform. This is lessening our correlation to the macro. I think that's been sort of the way that this business has been talked about. We don't see that as much anymore. We're much more resilient, and we expect to have a three year compound annual growth rate of between 3%-6% in this business. We're expecting our flexible, modular, open and software-connected systems to really help our customers address challenges across these multiple industries that we're serving. Since 2017, as Eric talked about, we have been really transforming this business. It's been really fun to be part of this transformation. We've really been expanding our addressable market opportunity through a real focus on these secular trends. Again, we'll say it kinda over and over, vehicle electrification, autonomous driving, wireless standards, and product analytics. With that, we had talked previously about an $8 billion addressable opportunity. As we look over the next three years, we see that expanding by about $1 billion, and so we expect about a $9 billion overall addressable opportunity in our business. In the industry-specific business units, it's about a $6.5 billion addressable market opportunity. Again, this is all characterized by inflections, which I'll talk about in a few minutes. This is really causing our customers to have to consider new test solutions as these inflections continue to evolve. A lot of this differentiation that we provide with the software-connected systems has allowed us to grow our business 16% over the past three years on a compound annual growth basis. We believe that we can deliver double-digit growth over the next three years, and we're very confident about that. I will talk about that a little bit more. Portfolio is spanning multiple industries from medical to energy, and it's a highly profitable business for us. Represents about a $2.5 billion market opportunity. This is a pretty complex slide, and so I'm gonna try to unpack it for you. Let me dive into what we're doing from an industry-specific business unit kind of point of view. Again, before the 2017 transformation, as Eric talked about, we were providing s-components that were necessary to serve the needs of our business. This is a very big change. We were not delivering integrated systems. As we've been moving forward, we've been focusing where we can provide real value and providing more complete systems, particularly in these high-growth applications. We reprioritized the way our resources run across the company. The way Eric talked about it, there's been a lot of work happening under the covers for the past three to four years, and we're starting to see the fruit of a lot of this work that we've been doing. We expect that in 2022, the industry-specific business units will deliver about 70% of NI's overall bookings. Jason's gonna talk very soon about NI's approach to tiering and the way that we channel our accounts. Eric talked a little bit about that. Our tier ones really afford an opportunity for us to share our share of wallet that we're able to get from our customers. Here, we do a lot of frequent discussions with our customers. We align our roadmaps. We really talk about where are they trying to go and how do we align our roadmap to where they're going and start to look at things like market windows and how to deliver to what the customer needs and provide our support and roadmap capability to them. We are beginning to really offer differentiated complete solutions that are helping our customers get to market faster and develop their products much faster than they were able to in the past. Our customers aren't seeing NI so much as just a component or a test vendor. We're really helping them partner. We've created very, very strong relationships. Eric talked a bit about ADI. I'll talk about a couple of other examples. Our customers really are beginning to look at us as a key integrated development partner. We're helping them with time to first measurement, get better product yield, better quality, and then again, I'll talk quite a bit about this workflow that our customers are beginning to look at us as they look at data and insights across their entire workflow. We're beginning to help them a lot with data at various stages in their process. In 2017, this tier of customers represented about 1/3 of NI bookings. By 2025, we're expecting this to grow to just about 1/2 of our business. Let me talk a little bit about the high growth applications. As Eric talked about a little bit, we had two high-growth applications. One was RF, the other was a semiconductor ATE test system. This was about 10% of overall NI bookings. As we made this decision to go to more complete offerings and complete solutions, we have found that this is gonna grow to about 50% of our overall business. In 2025, we're expecting to see about a 20% compound annual growth rate in this space, and it'll grow to a pretty large percentage of our business. Okay, so let me talk a little bit about what is driving this and what is driving our strategy. Secular industry trends are really important to NI's business for two reasons. First, they're an opportunity for us to accelerate growth above the overall T&M market, which averages about 3%-5%. We're in a period of economic uncertainty. This is where our customers are continuing to invest in new technology innovation. Then second, these trends are tied to technology inflections that are really changing the way that our customers do test. As an example, in 5G, we're seeing new frequency spectrum come out, we're seeing wider bandwidth, and these are really big changes over 4G, which is compelling our customers to have to change the way they're approaching test. What we see is that NI software-connected systems are helping our customers get to market quicker. As we've seen on the 5G side, in validation testing, they've had to continue to evolve their testing needs. As our software is able to evolve with our customers, they're able to move more rapidly to these new frequency bands, as well as even into the early parts of 6G. We're seeing the same kinds of evolutions happening in autonomous driving, electrification, and then in product analytics. Again, as I've been talking about these trends and new measurement capabilities are really causing our customers' engineering teams to have to consider new test vendors. We're seeing fast-evolving requirements of these test capabilities, and it's making these markets that we're going after very, very attractive. Again, in the wireless space, in electrification, in autonomous driving, we're really seeing new evolving technology requirements that are causing customers to have to update the way that they do test. The same is said of our customers' choice of test equipment. We're seeing that they're having to do new measurement requirements, and we're helping our customers to be able to be faster to market with this higher product complexity. Finally, the massive amount of data that's being generated in the validation and production spaces is causing our customers to have to look at new ways at looking at product analytics. Let me kind of switch over a little bit to our sustainable differentiation and the breadth and the depth of our software portfolio, which is really helping our customers to gain efficiency across their product development flow. As Eric was talking about, we have invested nearly $2 billion in software development over the past decade. The investment has driven capabilities that are allowing our customers to automate and streamline their testing in their validation and their production environments. I wanna talk a little bit again about what a customer product development flow will look like. There's three pieces, and I feel like this is the piece that I wanna simplify slightly as we talk about what NI actually does. We are helping our customers in the design and simulation space where they're actually designing their product. The product comes out, and it's a physical product at this point. You wanna check your product's actual characteristics against your design and simulation. Then your customer's gonna go into high-volume production. This is basically the three stages of our customer's product development. In a fast-growing industry where the requirements are evolving very rapidly, this product development has become really complex, and innovation is occurring at a faster and faster pace. Automation becomes really critical. If you think about electric vehicle batteries, for instance, NI's ability to help our customers automate across this entire workflow has helped them to avoid working with hundreds of discrete test solutions. We're very, very well positioned to enable our customers to move through the entirety of this whole workflow. We have a lot of tools that we've developed internally, but we're also integrating seamlessly into this open ecosystem that Eric had talked about, and we're really helping our customers through their entire product development environment. We do believe that we're uniquely positioned to help our customers end to end in this product lifecycle capability. There is another hidden benefit of having such a widespread, ubiquitous footprint with our tools. We have a open ecosystem of software that works with our systems as well as with others' test systems, which enables our customers to gather a lot of data from all stages of the product development process. We're using the capability to help our customers derive insights about their products and to help them drive greater efficiency. If you think about this product analytics piece that we've talked about, deriving insights from product analytics was really accelerated through our acquisition of Optimal+, which extended our existing product analytics capabilities. These O+ customers were really able to find improvements in semiconductor test to really help with defect rates, help with yield, help with quality. We're taking that same technology and we're applying it through our roadmaps to be able to span across our customers' product development workflow in multiple industries. Moving from semiconductor production tasks through all of the different industries that we serve. By being able to gather this data from each stage of the product development process, we are able to help our customers increase yield, improve quality, and reduce cost. The ubiquitous nature of our software and the data that it's allowing us to gather is really driving our customers closer to us. This is helping us work with our customers at a higher level and to help them across the entire workflow. To Eric's point, as we're getting deeper and deeper with our customers, we're able to help them solve these problems and provide them more product insights. Let me switch over to some customer examples, which is the most exciting part that I love to talk about. One of the examples of a customer who has effectively used standardization on NI tools to reduce their development schedules is Qualcomm. Their strategy to be first to market in emerging wireless technology has helped to drive reductions in product schedules for each generation of their product. Like many RF chip makers in the industry, Qualcomm has used a broad mix of instrumentation from multiple test vendors. Although the approach of using what you have was effective when testing relatively simple RF devices, this approach increasingly lengthened their development schedules as complexity increased with 4G and 5G standards that we're releasing. By adopting and ultimately standardizing on NI test benches and validation on a global scale, the team at Qualcomm has been able to reduce their RF characterization times for sub six gigahertz and millimeter wave products. The Qualcomm team has also successfully adopted NI's product analytics platform to improve efficiency, quality, and yield without increasing manufacturing cost. As I said, I've been in the semiconductor industry for a really long time, and I have lived through the cyclicality of this industry. I wanna be very, very sensitive to the fact that this market does go up and down. Eric mentioned this portion of our business at NI is about 50% validation, 50% production. This business is focused in RF, analog, sensor, and kind of the industrial markets. These are less exposed to these end market headwinds that we see from a consumer electronics, really heavy digital or memory. Some of the areas that we see driving growth in the semiconductor space and in the electronic space is the evolution of wireless technology, so new bands in 5G, Wi-Fi 7, and ultra-wideband. We're also seeing a lot of frequency in bandwidth expansion, again, in 5G and Wi-Fi, and this is driving expansion in base station infrastructure tasks. From an electronics perspective, we expect to see base station infrastructure begin to deploy in these new bands. With the innovation in the industry, we see a lot of demand for semiconductor chips. I think this is a sort of a once in a lifetime time in semiconductor. I was at a global semiconductor conference. We're expecting this industry to grow to something like $1 trillion from $500 billion today. We expect vehicle electrification. We're seeing a lot in wireless. As we look at the automotive space, we're seeing a lot of opportunity for power electronics and for a lot of new sensing, as Eric was discussing. We see chip makers beginning to announce capacity expansions. As you kind of read through the press, you're gonna hear a lot about new capacity for vehicle electrification. In wireless electrification and autonomous driving, there's a lot of opportunity for semi-validation. As I said, we continue to see customers invest in designing chips. We have an initiative called Modern Lab, which helps to automate our customers' validation labs and really helps them accelerate their time to market and improve their quality. We are also seeing a really unique and sort of again, once in a lifetime opportunity as semiconductors are moving to more nationalization. We're seeing a lot of investment in onshore capability, which will open up opportunity for us in wafer acceptance test and wafer level reliability. Another example, in the automotive space is helping our customers achieve ambitious goals. General Motors is driving towards a goal to ensure electrification of all their new light duty vehicles by 2035, leading towards carbon neutrality by 2040. Batteries are one of the most important components of an electric vehicle, and the technology is fundamentally gated by the ability to characterize them. There's a lot of validation happening in the battery space today, and this is where our customers have been coming to NI to help in battery technology validation. In this competitive space, engineering teams are facing the challenge of rapidly iterating on these designs to be first to market. GM's biggest challenge was how to identify and address defects early in their validation cycle, which required a lot of collection and analysis of a lot of data. Needing to think about beyond this previous approach, they standardize on NI systems management and analytics software, which has allowed GM to better analyze data collected from battery testing and improving their product quality. This picture actually shows a little bit about what NI has had traditionally in the electrification space, and I'll click in a second. This has been a key high growth application for NI just again, because of the rapidly changing test requirements. Prior to our acquisitions, this market had been nascent and fragmented, and there was a lot of disparate tools that were slowing down our customers' product development. This really provided a unique opportunity for us in electrification from a test perspective. Part of our acquisition strategy, as we talked about earlier, is to provide a more seamless workflow for our customers from measurement all the way through product analytics. What you'll see is this is basically the offerings that we have now filled out with a lot of our acquisitions. We completed our acquisition of Heinzinger and NHR, which really complements our other commercial partnerships in this space. Rounding out this investment has been the acquisition of Kratzer Automation, which has been successful in standing up battery labs in over 35 different deployments, including BMW, Volvo, ZF, and Volkswagen. These acquisitions and our internal development plans, we believe we have the most expansive portfolio of end-to-end battery capabilities, and we're really seeing the strength of the strategy by the early demand that has exceeded our expectations. A final example of how we're helping our customers accelerate schedules and improve product performance is in the defense industry. HENSOLDT is a key defense contractor in Europe, and like many of our customers, they have been making progress towards their digital transformation journey with the help of NI. One of their goals was to better collect, analyze, and share data across their organization to improve their decision-making. The team at HENSOLDT partnered with NI to deploy our SystemLink Enterprise software across all of their production lines, and our software platforms are performing the critical task of aggregating test data and performing test station management. The team is estimating that we'll have a 2x improvement in first pass yield from these efforts to maximize readiness for their end users. To wrap up my section, we're continuing to increase share of wallet with intentional focus on our tier ones and a better understanding of their needs and their roadmaps. We're seeing secular trends that are driving a faster growth rate than the rest of the T&M market. We believe our modular, flexible, open software connected systems deliver differentiation for our customers. Longer term, we're continuing to invest in our software and especially the value we can add through product analytics. Going forward, we're laser-focused on execution of our strategy and growing our revenue. The customer stories that I shared today are examples of how we provide value to our customers in a way that's driven by their unique needs and rapidly changing test requirements. We believe this success can be replicated across our entire business. We're confident that we have the right strategy in place and expect to deliver double-digit revenue growth over the next three years in our industry-specific business units. Now, I wanna introduce Jason Green, who will add clarity to how we will profitably scale the business as we continue to forward invest in the high-growth areas that I just covered. Thank you. Thank you, Ritu. Soon after I joined NI, we began a major shift that you heard about from Eric. We went from a focus on products to a focus on customers, emphasizing engineering-level engagements to how we're gonna leverage our platform at the enterprise level. A company that went from reacting to market trends, now having the ambition to lead the future of test. The goal of this shift, of course, was for NI to outpace the test and measurement market and scale profitably. We've only scratched the surface, executing a strategy that's gonna provide additional leverage, grow share profitably, scale the business, and operate with more resiliency. I'm Jason Green. I lead the portfolio business unit for NI. I'm also the chief revenue officer for the company. Today, I intend to demonstrate how our flexible, modular, open platform is software connected and differentiator in the marketplace, and it adds value to the customers across all of our business units. I'm gonna highlight how our new channel strategy is driving an increased profitability. I'm gonna talk about how we're leveraging our platform in new and modern ways, and that is driving growth. I'll also gonna talk about software, which you heard about from Eric and Ritu, and how we're increasing our software subscription, and that's allowing us to operate with more resiliency. I'm confident we're gonna continue to outgrow the test and measurement market for two high-level reasons. One, our product offering, our platform is best in class. We believe NI is uniquely positioned to differentiate and add value to our customers with a modular hardware and connected software across the entire product life cycle. Second, we have a focused strategy. You heard about from Eric, we're gonna continue to emphasize. This strategy creates additional leverage, profitability, scale, and operate with more resiliency. Starting with our new channel strategy, let's first take just a brief moment to talk about our historical approach for context. Eric mentioned this earlier. For over four decades, NI created a $1.3 billion company serving over 35,000 customers, and we're optimized on selling products to individual engineers. The approach was successful. As mentioned, it allowed the company to serve many customers at the transactional level. We're at an inflection point, and to scale and actually achieve our ambitions, we had to fundamentally look at a different approach. In late 2017, we began a global channel transformation. We shifted from treating all customers the same to a tiered model, and the key element of a tiered model is to focus your resources on the highest potential customers. We went from selling products to also selling systems and enterprise software. Our relationships went from the engineering level to commonly meeting with the C-suite. Over the last five years, that means we brought in new talent. We've developed our own talent with the skills, capabilities, domain expertise to be trusted partners with our customers in the markets that we support. That was key to also driving a new process on how we're engaging with our customers to differentiate NI in the marketplace, and the results have been profound. We've seen our average deal size increase 82%, our overall pipeline up 147%, and we've seen a 157% increase in our won opportunities. In 2021, we layered in distribution and digital for tier three. That was to better serve the broad set of customers, over 30,000 strong, and this is what we're calling our new channel strategy. It combines the direct resources on tier one and two and a distribution and digital strategy for tier three. Our network of distributors allows us to considerably expand our geographic coverage, and customers are self-serving. The combination of those two things are allowing us to lower the costs and increase the reach that we have with our customers. Digital and distribution is a win-win. For our customers, it's the most frictionless way to get to purchase, and for NI, it's the most efficient way to sell. This is the overall shift that we made, was a major contributor to reducing overall cost of sales, which was the lever we pulled to reduce the SG&A as a percentage of revenue. Eric mentioned the outlook we had in 2020, that in 2023 we had some goals, and that goal for SG&A as a percentage of revenue was 36%. We're forecasting that in this year, in 2022, we'll achieve thirty-two percent. Did I say 36? 36% was the goal in 2023, and we're achieving 32% already, showing our commitment to the operating margin, to how we're executing, and how we're driving the company to scale moving forward. We also saw productivity being infused into the organization, so we're operationalizing everything. This shift allowed us to lower the cost, obviously increase the productivity for our sales and marketing headcount. The revenue per sales and marketing headcount improved, with a productivity of 26%. Distribution is a key element of this broader reach that we're gonna get through the tier three program. The distribution strategy expands how we're serving our customers. In contrast to our competitors, we have a curated list of distributors that are highly motivated, that sell our full catalog, meaning our software, our hardware, our services. These key partners, they sell our products, and they add value through their expertise. They add value through serving the customers with credit, and they also expand our reach massively. Our global partnership with Avnet is a key example of this, and that's the quote you see on the screen. Avnet, for those of you who don't know, is one of the largest distributors in the world for operational excellence, and they serve one of the broadest customer bases globally. We worked with their executive team, have mutual goals, and we drove a plan to go from standing still in 2021 when we launched the program to now being one of their top test and measurement suppliers. Now, we're also reaping benefits with self-service, with customers that are going to our digital experience, and we have a goal to be industry-leading frictionless customer experience. We receive approximately twice the traffic as our competitors. Customers are being pulled in. They're seeing the advantages of new capabilities that we're delivering in the digital experience. We're taking advantage of that in a couple ways, one of which is with our technical support. We now see 91% of our technical support cases processed digitally. Along with e-commerce, which is a growing trend, digital is a key enabler for our distribution partners. We consider this an omni-channel approach where customers will go online to get information and then go to the distributors to finalize a purchase and get local support. As you look at what we're calling the new channel strategy, just launched in 2021 when we layered in distribution and digital, we're already seeing impactful results. Our non-direct channel is delivering 23% higher contribution margins than our direct channel, and it's growing. Since we've launched in 2021, we've had, now have consecutive quarters averaging 22% growth. Our channel strategy in tier three is driving efficiencies, it's delivering higher contribution margins, and it's enabling growth by giving us access to a broader set of customers. You know, another key enabler for growth and scale is our software-connected platform. Our platform is flexible, it's open, and it's modular. Now that's great for our customers. They benefit, as you heard previously, from a platform approach because of the pace of innovation that our customers are dealing with. It's also great for NI because unlike our competitors who customize solutions and invest in particular industries and applications, our software-first platform approach allows us to leverage the core technology across industries and applications in emerging markets. Those investments that we made in the platform are the foundation for the offerings that serve the specific applications in the secular growth trends you heard about from Ritu Favre. NI is committed to continue to invest in R&D to make sure our platform stays differentiated. As mentioned, we now have relationships with customers we built up over the last five years that are trusted partnerships. We have customer insight, we understand the outcomes they're driving to and the challenges they face, and that insight is now fed through the business units to impact our R&D roadmaps and how we're spending that investment more intentionally than in the past. Now we're focusing on two routes to growth with our platform. We're leveraging our platform for high growth applications, we call them high growth verticals, and we're also simplifying our platform for the mass market. As we ramp our relationships with customers, we're getting more insight on what configurations are using our platform, so we can form offerings to address high growth verticals. An example of that is like life sciences. We've seen accelerated growth in life sciences over the last couple of years. A customer in life sciences example is Philips. Philips had a big challenge to get to market before their competition, driving leading-edge technology with ultrasound transducers. Using NI platform, they were able to reduce their development time by 80%. They also used our platform because they were able to get the speed and accuracy that no other supplier could provide. Now leveraging that same exact platform, we saw trends on how our platform was used in the consumer electronics space, and we worked with a company called GN Audio. Now they had a challenge. They had 80 new products coming down the pipeline, and they had to reduce their development time and expand their test coverage with all these new products. They standardized on NI's production test system and were able to take their development time from quarters to weeks. They actually then took 2.5x more test coverage to handle all the new features with the new products, and we helped them deploy across six different global locations for production tests, and we did that through manufacturing testing and producing millions of units. Now, shifting to digital and distribution and thinking about tier three, that route to market, selling to tens of thousands of customers, to be successful and scale in that side of the market, simplicity is absolutely critical. With that in mind, we're developing solutions that are closer to plug-and-play. These are easy to buy, simple to implement. For example, repackaging existing part numbers, creating a family of electromechanical validation systems that are helping our customers get to measurement faster. In the case of that family, it went from six hours to 45 minutes. The analogy that I just talked about with Eric was Legos. You can build anything you can imagine with a Lego set, or you can actually get a Lego kit that has the exact Legos that you need with a clear instruction manual on how to get there. We're including new documentation for them with software dashboards, and we're helping our customers simplify getting to the measurements that they need. At NI, we call these mass market offerings, and we are launching those on an ongoing basis to help this side of the business. Our software-connected platform is a key enabler for growth and scale, and we are matching our channel advantages with how we're intentionally leveraging the platform. It's that intentional, proactive, deliberate leverage of our platform through high growth verticals and mass market offerings that are allowing us to deliver 25% compound annual growth rate with our overall NI bookings. Think about the growing relationships we have with our direct accounts that we've talked about. We're now learning more about how our platform is leveraged, and we're putting those into offerings to drive high growth verticals. As we open up a new route to market with distribution and digital, we're now creating simplified mass market offerings to serve that market. It's about having a synergistic strategy with an absolute laser focus on scale. Now software has been mentioned and will continue to be mentioned. It's part of our DNA. So it differentiates us from the rest of the market for three main reasons, to try to overly simplify this. As we just outlined, our modular platform is software connected. So this allows our customers to access their data to help them with the flexibilities to innovate, get a faster time to market and improve the product performance. We know through research that we did with the Financial Times Group that nearly half the enterprises only have a limited product data strategy. With our software connected approach, it puts us in an ideal position to take advantage of that market opportunity. Second, our software is open. Ritu talked about this. Meaning we can automate or connect our NI test systems or any other test systems that we can find out on the market. We also interoperate with the open software tools. Examples like Microsoft C# or the popular scripting language, Python. This open approach, it removes a major barrier to purchase, which is compatibility, and also vastly opens up the market for NI. Third, NI spans the customer's entire product life cycle, from R&D to validation to production, even to end use, because this adds the most value to our customers, and we believe it positions NI uniquely to differentiate in the market. Going forward, we wanna build on this market-leading position, and we're leading the future of test by redefining tests to include product analytics. In doing that, we're enabling our customers' test data to help them drive their product performance and lower the overall cost of test. We're turning test from an unwanted cost of doing business to a value creator and accelerator for our customers. One example, I really like to share is Ei Electronics. They're a leader in fire and carbon monoxide detection. They standardize on NI software across their entire workflow, and they automated all their tests, and they got some profound results with 50% reduction in validation time, 17% increase in manufacturing yield, and 33% reduction in maintenance cost. Now, last year, we told you we're committed to accelerating towards a more resilient business. We've already achieved some success. We actually have something called enterprise agreements with our top customers, where we combined single-seat licenses that they were using. We've done that for over a decade, and we've seen over 90% renewal on that side of the business. The next phase of our journey was to take all the rest of our licensed sales, which is a majority of our software, and shift those sales to subscription. Now, our subscription offerings add value to our customers in a few different ways. More, more capabilities with software features, support services, but also it connects the entire test workflow as you use a combination of different software packages. For new customers, it's a lower-priced entry point to go to a subscription, and they also get access to a growing, vibrant development community, which is advantageous for them. In January this year, we started the shift. We shifted our license sales to subscription, and you see the chart here is showing that aggressive, pretty impressive shift to subscription, for our customers. Now, some companies take years to do that. We've taken quarters. That's something we're continuing to drive. Now, that's helped contribute to our overall software recurring revenue, as of the end of August, is 85%. We're making significant headway in a short amount of time. Now, subscription is only one element of our commitment to be more resilient as a business and deliver a more modern software experience for our customers. We have a new company-wide goal of Annual Recurring Revenue or ARR as a measure of success. This spans our entire software portfolio, which is the vast majority of it, software services, and also hardware services, which is a great opportunity for NI to add more value to our customers with maintenance contracts, service contracts, and support contracts. This is a new metric for us externally, and we intended to demonstrate our commitment to driving resiliency in the business through our systems, through our software, through our services. This ARR goal represents 20% compound annual growth rate and $500 million target in 2025. We've made considerable progress in a short amount of time. We're scaling while profitably growing, we're creating leverage and resiliency, and we're lowering our SG&A as a percentage of revenue, and we're just getting started. Our relentless focus on customers, our early but strong financial results, and our winning strategy give us confidence in the plan that we're talking to you about today. Consider this, NI's new channel strategy is delivering 23% higher contribution margins in our non-direct versus our direct. We've leveraged our platform very deliberately to help deliver 25% compound annual growth rate in bookings the last two years. We made our business more resilient by shifting our license sales to subscription, which now has our recurring revenue for software at 85% as of the end of August. We did this while delivering six consecutive quarters of market-leading growth. Now, during that time, we certainly have benefited from the market conditions, but the results we've seen have validated our strategy. I'm proud to be part of this team to help shift the trajectory of the company and set up to scale. Our customers are investing in NI, and we invite you to do the same. To go through the financials, let's welcome our CFO, Karen Rapp. Hi, everyone. It's nice to see you. Some of you, see you again since yesterday. Great to be here with everyone. I'm the CFO, Karen Rapp. I started with NI about five years ago, right when this transition started. It's been exciting to be a part of it, and I'm actually really proud of what we've accomplished over this timeframe. I'm gonna take time today to talk through the transformation from a financial perspective. There's three things that I'm gonna focus on summarizing everything you've heard today. It'll be our revenue growth above the market and what that looks like over the next three years, how we're gonna deliver 25% operating margin by 2025, and the resiliency that we've built into our business, how that translates to cash and return to shareholders. Let me start with the top line, revenue growth above the market. We have a target over the next three years to have mid- to high single-digit CAGR from a revenue line through 2025, 2023 to 2025. We believe that'll enable us to continue to take share over that timeframe. We've had strong demand. Jason talked about the last six quarters of revenue growth that we've seen. We're ahead of the goals that we set back in 2020. Our outlook for 2023 is right in line with market expectations. We look at about $1.7 billion of revenue going out of 2022. Book-to-bill has been incredibly strong. We've been constrained from a supply chains perspective. You've seen that, and I'll talk more about it today. What that means is we're currently sitting at about eight weeks of backlog, $250 million. Our lead times to our customers are running about eight weeks. We believe that's still incredibly competitive. We're seeing that as best in class right now in the current supply-constrained environment, and it gives us the opportunity to continue to build that into 2023 revenue when those supply constraints ease. We've talked a lot today about the focus strategy that we've put in place. That's enabled us to invest our R&D dollars in the highest growing opportunities for our company. That's been able to deliver the revenue profile that we've talked about. There's certainly some macro environment headwinds that have helped along the way, but we believe that the focus we've put in our investments is what's helped contribute to the position we're at today and gives us the leverage moving forward. From an investment standpoint, our R&D dollars stayed relatively consistent from 2016 to 2021. Really not much inflection from a dollar perspective. Ran about 20% of our revenue over that timeframe. Our intent is actually to spend more dollars in that space but get leverage from it and get R&D down to about 18%-19% of revenue through the 2023 through 2025 time frame. That focus, that investment in those areas, we believe puts us on a path to this double-digit growth. I'm gonna start with 2023 specifically and talk about some of the tailwinds that we see going into next year. First, we'll have a full-year of the acquisition revenue that Ritu talked about from our EV acquisitions. Really strong opportunity there. We closed Kratzer in May, for example. We'll get the full-year of that. In addition, the thesis, and she talked about this from these acquisitions, was that we would see tremendous amount of revenue synergy. There's some tailwinds coming from that as well. In addition, we've had the opportunity over the last couple of years to increase prices with our customers because of the value we continue to provide. That's been above average price increases. The most recent one was in August of this year. When we do price increases, we don't change our backlog, we don't change quotes to customers. In 2023, we'll get much more of that benefit flowing through from the price increases we've already put in place. In addition, in 2023, we're planning on a moderate price increase, back in line with what we've done historically, kind of in the 3%-4% space from a price increase standpoint. That'll also be a tailwind going into 2023. The third piece that I wanted to focus on for tailwinds is the distribution strategy that we've put in place. We have not, at this point, built any inventory on our distributor shelves in material at this point. A lot of that's to do with the supply chain constraints that we've seen, but also because it's new. It's a newer strategy for us and for our distributors to be selling NI product. It's actually given them a chance to really understand what products sell, what customers are buying, what kind of things they want to put on their shelves. I'm actually really excited about this opportunity in 2023 to put the right things on their shelves from a financial perspective and eliminate some of that risk. It becomes another tailwind going into 2023. In addition to that, I've talked about the backlog that we've built. We're going out of this year. We'll go out of this year with more backlog than we've ever had. It'll be a record. We're at about $250 million now. I anticipate that being about that level, eight to nine weeks probably, of lead times by the end of the year. That gives us an opportunity to moderate that going forward. Eric talked about the way we've done our planning for 2023. We started with the recessionary line. We don't know what the macro is going to do. Lots of talk about different scenarios. If we plan at the recession line, a -5% is similar to what we saw in 2020. The way we do that is we talk about the tailwinds that are coming in and understand then the cost structure that we wanna put in place as well. What it does is when the recession happens, if it happens, we expect supply chain constraints to be easing even faster. That gives us the opportunity to meet our customer demands and reduce that backlog and our lead times down to more reasonable levels. All of that flows through at a 13%-15% kind of growth rate year-over-year from a revenue perspective. That's in a recessionary kind of situation. We've planned our cost structure, our business around this and put this in place as our path going forward so that beyond that, we feel really confident if it's above that kind of level, we have even more confidence in the ability to deliver that double-digit growth across those scenarios. Let me take a step back and take that from a longer term perspective now. 2022 forecast in line with market expectations, we're about $1.7 billion of revenue is what we're looking at for this year. All of these numbers on here are gonna be caveated with the supply chain constraints. The mix is going to fluctuate a little bit depending on what components come in and what we're able to ship out. We've put some ranges around these business unit revenue numbers. Ritu laid out the three-year compound annual growth rates for each of these industry-specific business units. What I did here on this chart was take the low end of that to give you an idea of what happens if we hit the low end of every single one of those business unit growth targets over that time period. Then if you put in the high end, of course, that's a nice opportunity for us. The way we're looking at it is planning for that low end, about a 7% CAGR, it'd be $2.1 billion of revenue in 2025. That's the way we set our targets and our growth expectations. When we say mid to high single digit growth rates, we truly expect to take share in that type of a growth rate perspective, and we believe we have line of sight to make this happen. All right. Now I'm gonna move to operating margin and give you a little bit of insight on when I look at this and how it flows through what to expect from that perspective. Our target here is 25% operating margin by 2025, with the majority of that happening next year in the near term. 300 basis points next year, followed by 100 basis points in 2024, and another 100 basis points in 2025. Reset a little bit on the history. We've made tremendous progress. We've put a lot of things in place to drive this forward and to reset the baseline of how our costs are being spent. We have some headwinds right now on the supply chain side that are driving our gross margin down, and I'll spend a little bit more time on that, but we believe those are temporary. A lot of that is driven by the broker purchases that we're doing now as we've gone out to get alternate suppliers for these parts, especially a lot of these golden screw parts that complete a system for us. We're paying much more than we would have paid from our normal supply chain. That's created a lot of pressure on our gross margin side, and I'll walk through those numbers in a minute. What that's done is it's given us an opportunity as a company to reset the baseline of what our cost structure needs to be because we're dedicated to contributing the 20% operating margin in 2020 that we set out to do. We're leveraging things like Jason talked about. The R&D leverage that we've put in place is a fantastic business model. The strength that we have by investing once in a product and then using it across an entire set of industries is amazing from a finance perspective. What we've done most recently is put another layer of secret sauce on top of that and turned it into leveraging those Lego blocks, adding that secret sauce from an R&D perspective, and now making it an industry-specific solution with the in-depth knowledge of what our customers need to be successful. Tremendous amount of leverage from that perspective. Sales channel optimization. Jason did a great job walking through what we've done in that area, really paying off. You see it already from 2022 sales and marketing SG&A as a percent of revenue down significantly from where we were historically. The variable cost structure. Let me spend a little bit of time here because this has been a significant change for us and for our employees. We've put more and more of a percent of pay for our employees tied to variable pay, variable compensation. Our employees are compensated based on revenue growth and profitability targets from an operating margin standpoint, every single one of our employees. The dedication to driving those numbers and making us successful is across the company. It also helps fluctuate our variable pay when our business fluctuates, and our employees are in this to win. We're doing everything we can to meet those goals and be successful. The other thing we've done is utilize external resources in a way we had not considered before. Letting more and more of our programs, our projects, our one-off types of activities, using variable resources for that, outside contractors, different ways of working than we've done in the past, has now been a new muscle at NI, and it's driven our cost structure to more than 20% variable at this point. We believe we have a cost structure that enables this type of scale as we have revenue growth. I'm gonna pause for a minute and talk about supply chain because this is a fun one on everybody's mind. Hard to know what's happening in this space on a day-to-day basis. We're continuing to see long lead times. We're placing orders out 52 weeks in some cases. We're still gated by some golden screw parts. This is the one component that if we had it, we could get that system out the door to our customers. That's still a gating factor, and it means we're doing some things around that. I'll talk about what those are. We do believe that at eight weeks of lead time, we remain incredibly competitive in our space. We're seeing minimal cancellations as a result of lead time. We track this carefully. It's been less than 1% cancellation, which is in line with where we've been historically. We don't believe that these lead times are causing cancellations at this point. We've taken these actions in our own hands to drive this and improve our situation in this space. We've done things like building inventory, and I'll talk about that because that's been a cash investment that we did deliberately to support our customers. We've redesigned products, especially the ones that are the key golden screws or where the lead times are unacceptable. We've put a dedicated team of R&D engineers on it to make sure that our products have alternate sources. We can actually ship these products much faster than we would have waiting for the lead times that we're getting from our suppliers. We've looked for alternate suppliers. This little graph, this painful little graph in my life, is purchase price variance. This is what we have paid to alternate suppliers, otherwise known as brokers in some cases, where it was that important for us to serve our customers that we went and paid extra for those parts versus what we would have paid historically. We're gonna roll about $70 million of cost through our P&L in 2022 just in that variance. I expect that to moderate going into 2023. We're already seeing signs that the supply chain is easing. It's not fixed, but there is easing. I believe this number in 2023 will be about $30 million in purchase price variance. We've moderated the length of time that we're buying broker buy. As we look out at our demand, historically, when this started, we were buying six months of this broker supply so that we would have the parts we need, especially these golden screws. Because of the easing we're seeing, we're starting to get down to about a three month, one to three months of broker buys at this point, and I'm hoping that continues to moderate faster. This becomes a significant tailwind for us in 2023 and helps give us the confidence in that 300 basis point commitment that we've made. Let me talk about gross margin and what that looks like short term and then longer term. Long history of really strong gross margins at this company. Really nice place to be. Shows the value that we are providing to our customers with the investments that we're making in R&D and in our products. In 2022, we are seeing headwinds from the broker pricing and also freight costs that I talked about. It's gonna be about 500 basis points of headwind for us this year. We've offset some of that with price increases that I talked about, but we couldn't offset all of it. The other thing we've seen is a slight mix change, as Jason talked about. We've shifted our software to subscription. There's about a $30 million headwind that we've estimated that comes from that. We also brought in the EV acquisitions that I love and position us really well, but they didn't come with great gross margin, at least not the gross margin that we're familiar with in our business. They did come in accretive at the bottom line from an operating margin perspective, but it meant that we took a hit on gross margin as a result of that. Going forward into 2023, we'll continue to have the benefit from price increases from both this year and what we implement next year. I expect tailwinds coming from these broker purchases that I talked through of at least 2%, and then we'll continue to have some mix shift. As we do more and more on the EV space, tremendous amount of growth opportunity in that space, those margins aren't where they need to be for us. I do think we will have opportunity. I have talked to Ritu quite often about this, to with the solution that we're providing and the visual she showed, that entire system that we are selling to customers now with the NI brand and credibility behind it, gives us a different pricing opportunity than these small companies had as standalone vendors. Going into these customers with a very different pricing model enables us to put some lift into that gross margin into the future. In my models, I'm looking at 74% by 2024 and carrying out at that level. What that means, we've got momentum from a top-line perspective. We've got tailwinds that I've laid out and talked through. Lots of operating leverage that we're building into our model, continuing to leverage both R&D, sales, and marketing gives us confidence in that 25% operating margin by 2025. On average, this is about a 40% incremental flow-through for every revenue dollar down to the operating margin line. The entire company is aligned behind this. Now let me take that to the cash, what really matters. How we're driving cash conversion and return to shareholders. Historically, our non-GAAP net income has converted to cash flow from operations at over 100%. In 2021 and in 2022, we're investing in inventory to build products for our customers that puts our cash flow from operations much lower than I'd like it to be. It's a conscious decision we're making to make sure that we can deliver what we say we're doing to our customers and have their success top of mind. That's put pressure on our conversion, but I fully expect that to return in 2023 back to over 100% and continue at that level moving forward. That cash generation gives us the opportunity to be incredibly consistent in our capital allocation strategy. We're investing in R&D in the areas I talked about, those growth drivers that are letting us grow faster than the market and enabling us to have strength moving forward. We're also looking at M&A opportunities, and I'll talk about our funnel in a minute. We're returning capital through dividends. We do that consistently and averaged about a 4% increase year-over-year for the last long period, longer than I've been here. For share repurchase, we've committed externally to offset dilution through our share repurchase program. Our board of directors has approved the program. We have over $150 million left to spend on that. We feel strongly about continuing to do that, both to return cash to shareholders, but to represent the fact that we believe our stock is undervalued as well. We want to participate with you in that. Let me talk a minute about M&A and the funnel and how we look at this. When we're looking at acquisitions, as Eric talked about, we are looking for opportunities to accelerate our strategy. We do that through two lenses. We look at it from an industry-specific business unit lens, where we are incredibly clear on what our focus is, what customers we're going to win with, the road maps that we have in place, the investments that we're making. We look at that and look for opportunities that can help accelerate that. Those are typically tuck-ins. Those are things to help accelerate in a specific area, make a difference that way, like you've seen with the EV acquisitions that we've done. We also look at it from a corporate lens, our platform, looking for opportunities to really differentiate, accelerate in that line as well. Those go across all of our industries and can have a bigger impact for the overall corporation lift, but also, again, to help accelerate what we're already working on. When we look at operational fit, it's all about synergies. We're looking for the customer footprint, the channel strategy, how that impacts our go-to-market, how it impacts our manufacturing capability, and we're always looking for cultural fit. It's very important to us to make sure that these acquisitions are successful, and that's a key component in our minds to making them successful. The financial criteria we use, we talked about a little bit already, but we have detailed plans of record for each of our business units and at their sub-market level to understand what does it take to invest to win in those areas? What does that plan of record look like? When we look at those, we lay them out, add in the acquisition, and ensure that it's going to help us accelerate that strategy and get us to where we said we're going to go, faster. For the right opportunity, we're willing to look at leveraging our strong balance sheet and taking the steps forward to drive that strategy to where we wanna go. In summary, three things I want you to walk away with. We're positioned well to grow our revenue above the market. We're on path, and we have in our control the ability to deliver the 25% operating margin by 2025, with a significant portion of that next year. We've built resiliency and scale into our model that enables us to continue to deliver cash flow from operations at a really nice level to enable shareholder returns. Thanks for your time. I'm gonna turn it back over to Eric to conclude it now. All right. Thank you, Karen. Okay, before we bring the team up and do some Q&A, I wanna hit on one last topic, and that's just to touch on our culture and our purpose as a company, which is something that's important to me, important to our leadership team, and important to our employees as well. We're a company that has, we think, a really important purpose. We get a lot of motivation, as do our employees, from the applications that we enable in the world, and we think it's a point of a lot of leverage. We think we can have more impact on the world by enabling these incredible technologies than working on any one of them individually. We've also been a company that has always, we think, been focused on doing good in the communities where we are. That's part of our culture at the company. A little bit like our strategy in the past, it was too diffuse, not focused enough. You can probably tell from the four speakers today that focus is one of our favorite words. Same thing with our impact strategy. We wanted to focus the impact and the ESG effort to the company in a way that was much more deliberate, more strategic, and aligned to the business more clearly. You saw that in 2021, we put out a really detailed impact strategy with these three pillars and a set of 10 year goals. We're also goal-oriented, you probably noticed that, around these topics that we think are areas that we can actually have the biggest impact, in our communities and society at large. We also have a big focus on culture. Karen just talked about culture some in terms of M&A. It's another thing that is attractive for people to come work at NI. It's something we've prided ourselves on, but it's also something that we examined and evolved as we went through this strategic transformation. I'm a big fan of the Deming quote, that culture eats strategy for breakfast. As we're, you know, kind of refining and transforming our strategy, we thought really deliberately about how do we also evolve our culture, take the great things that have made NI a great place, but also examine the things that we wanna cultivate and change over time. We've had a big focus on our culture, being more customer-centric. Probably noticed a bit of that. Being more commercially oriented around the company, having our employees bought in to the expectations that we have of performance of the company, including it into our compensation. That's a big part of that as well. Creating more belonging across our organization. We've been really deliberate about that as well. Those are areas that I know matter a lot to our teams, things that we're focused on, and things that we'll continue to focus on. Now, just to wrap up, with the takeaways that hopefully you've gleaned so far from this morning, we are very focused on executing on our strategy and delivering the return that we think we're able to deliver. We think we're well positioned with the right investments. We've got proof points that the investments in the areas that we laid out today are the right things. We're seeing that performance, and we think we're well positioned in those markets and those opportunities. We've been, as you've seen, focused on our cost position. We had a headwind of margin from the supply chain crisis that we've frankly used in a way to remain committed to our bottom line, used that to set the right cost structure, and we have a lot of opportunity now to leverage that as we go in and see that margin reverse, as Karen laid out. We've made investments over the last five years in the things that enable us to get leverage and scale, as the company continues to grow. We think we have momentum, and the right strategy and are committed to driving the results. Okay. With that, we're going to bring the team up for Q&A. I think we're gonna take just a moment. Some folks are gonna come in and bring up some chairs, and then we'll be right back. Think of some questions for the team. Okay. We got a mic that we'll bring around. Samik, you go first. I don't need this. Go ahead. Thank you. Mehdi Hosseini, Susquehanna International Group. I know you asked us not to ask a question about the current quarter, but the 15% year-over-year growth in new bookings implies 6% sequential decline. I had to ask it. How should I think about the sequential decline? It's still book-to-bill greater than 1.0. Yeah, I'll address that. I mean, I think the 15% is in line with the expectations that we had, frankly, for the quarter and in line with expectations when we set guidance. You said it could be greater than 15%, so. I did say greater than 15%. Right. Yeah. Okay. You didn't cap it, just 15%+. Now, looking at your this question for Karen, it's very interesting, your reference to material reduction in component costs, especially what you procure from brokers, a significant step down. Is that a conservative view? Could it accelerate, or could it be a less of a decline? How should I think about the assumptions that have gone behind it? Yeah. At this point, Mehdi, it's. I shared the model I'm using at this point. It's based on the expectations we've set with our teams in trying to understand where the supply chain is today. I think it could still moderate. I don't actually know which direction, but you know, the factors we look at, we look at things like the commitments that we're getting from our suppliers in terms of when we place an order, are they actually giving us a committed date? We're seeing that improve month-over-month, so it feels like there's a little more predictability from our suppliers. We also track what actually comes in the door. Did it come in when we expected it and in the quantities we expected? That's not perfect. They're not where they need to be yet, but it's improving month-over-month, which again gives us more confidence. Those targets were set based on where we're at today and the visibility we have today for the rest of the year and into 2023. If I may squeeze one more, and it has to do with cross-selling. In the past, you were known for instrumentation, especially for mixed signal components, and now you're elevating that and trying to use that to penetrate new markets like EV. How should I think about the cross-selling, like what you were selling in the past to a semiconductor company? Yeah. Are you gonna recognize it in the semi test and then have a different types of a sales transaction in the auto segment? Yeah, I'll comment and then the team, Ritu and Jason are pretty close to this. The way I think about it, Mehdi, is that, you know, our strategy is to have a consistent platform with a lot of leverage. When I use the kinda roughly 80/20, so like 80% of the investment of the core instrumentation and the core software modules is common across all of our modules. It's common in a semiconductor lab, and those same modules are used in an automotive test system. The area we've had a lot of focus is that remaining 20%, and that there's a lot of value in that remaining 20%. When you turn that system into a battery test system versus a centralized validation lab for a mixed signal component, you get a lot of value in that. The reuse is really at the core technology and component point of view. Then one other thing I'll comment on, and Jason actually covered this in his material, is that because of that, there's a lot of opportunities where we'll develop something for one industry that gets leverage into others, even at the system level. When we do something like the wireless technology, primarily focused on the semiconductor industry, maybe on 5G, for example, some of that same core technology sells into aerospace and defense. That's when we think of, like, cross-selling our products and our systems, there is a fairly significant amount of reuse, but that fundamentally comes from the fact that while we're providing vertical capability, it's based on this platform. It's not a completely dedicated vertical solution with no reuse across. I hope that gets at your question. I might add a little bit more there. Yeah. It's not so much cross-selling. It's that our customer base actually values the fact that we can go from top to bottom. This isn't as much of a platform scale and leverage, but when I was talking about power electronics, we're seeing that go from semiconductor chips all the way up into battery testing. We have a lot of customers that are really excited, particularly in semiconductors, saying, "Hey, you have these great relationships in the automotive space. How do we go and cross-sell that way as well? Yeah. There's a platform piece, but there's also a cross-industries piece that's beginning to happen, particularly from cars to semiconductors, base stations to semiconductors, cell phones to semiconductors. There's just a lot of leverage that we're starting to see there. Thanks. Hi, I'm Samik from JP Morgan. Eric, just to the first question was for you. You talked about the strategy around focusing the business- Yeah. Since 2017, and that's clearly being delivered. Like, we're pretty clear about where the focused opportunities are. In the longer term, Jason talked about high-growth verticals within Portfolio Business Unit. Like there is, you know, of course, we have a broad set of industries and applications within there, and we do get some insight into, hey, what are the trends happening? You shared a life sciences application. You know, how might that, you know, in the immediate timeframe, you know, we've got some big market opportunities within the growth areas that we shared. Our focus over this timeframe that we shared here today is really on maximizing, you know, maximizing those opportunities. Karen? Yeah, I didn't mean to imply there's a recession coming across all of our business units. When I was looking through the model, we've modeled it at a pretty high level for the recessionary minus 5%, and we did that based on what we saw through the COVID time period, with it being down 5% in 2020. That was the baseline for it. Ritu mentioned, and she'll be more precise about this than I am, but from a semi perspective, it's going to be interesting to see what that cycle looks like. We believe from an automotive perspective, the areas we've invested will continue to grow faster than the market and continue to be a tailwind for us. Aerospace defense and government continues to be strong. Lots of spending going into that globally that we believe we can take advantage of. Portfolio, our portfolio business will be the one most impacted by the macro. As you can imagine, that's our broad base. As Jason talked about, we've put a lot of things in place to drive resiliency across that to have it less impacted than it would've been. The other piece is our portfolio business is now about 30% of our revenue, so with it being a smaller portion of the business, less macro impact from that standpoint as well. Ritu, just looking at the electric vehicle and particularly battery testing opportunity, clearly that's an area of growth for most test and measurement companies I talk to. How does battery testing intensity track from here on? Because clearly these are nascent, sort of more new applications, and customers want to test them a lot at this point before putting them in the vehicle. How do you think about sort of testing intensity going forward once electric vehicles become a bit more mature? Yeah. We've actually talked quite a bit about that. We expect this phase to last for several years, this validation characterization phase. Our intention, similar to what we've been talking about on the semi side, is to begin to use that same capability that we're doing in validation and begin that, to move that over into some of the production testing. Again, a lot of this cross-workflow kinds of things that we talk about, that would be the intention. Right now, huge opportunity in validation. We're being called on by customers all over the place. I expect that as that begins to mature, we will begin to see opportunity on the production test side. Again, as Eric was saying, our instrumentation can cross over those stages of the workflow. I'll just add on, just to emphasize something you said, Ritu, is, 'cause we get this question a lot, but I think, you know, it's still even pretty early innings on the validation test. Mm-hmm. I mean, there's a long way to go from where that industry currently is to the ambition that's been stated about where they want to be from technology development. I mean, there's a lot left to go, so I don't. We believe that it's early in that cycle. Mm-hmm. Meta Marshall, Morgan Stanley. A couple of questions. Karen, just on the 2023, as you were looking at the order commentary, like, how much does forward ordering or additional visibility you might have gotten into orders kind of play into how you look at that cycle? Then maybe second question, and you guys just alluded to it a little bit, but what are your customers asking you for the most? You know, is it to build out more of the validation piece? Like, where is the piece that they're kind of pushing your roadmap the furthest? Sure. I'll start on the model piece of it, Mita. At this point, you know, from a customer visibility standpoint, the 8 weeks backlog is the visibility we have going forward for hard orders. That's certainly helpful 'cause it gives us a perspective of where customers are, what they care about, where they're investing, what they're trying to do. What Jason and the team have done because of the tiering that we've put in place has enabled us to have a much more robust funnel with our customers. Now what's not exactly precise in there is the timing of when these programs will hit, so a lot of that is still building those relationships, understanding what that funnel looks like for future opportunities, but then working with the team to understand when the timing comes through on that. Still a lot of uncertainty on that, and the macro, we believe the macro may impact that in general versus even when customers think they're going to do it today versus when they. Mm-hmm ...may actually do programs going forward. That's why we modeled actually different scenarios from a macro perspective. The reason we did multiple scenarios is so that we would plan for what we believe is ideally a worst-case scenario at the minus 5% and put our cost structure in place, our operations in place to support that. It also gave us confidence in the double-digit revenue growth by looking at it from that perspective given what we do know at this point. Do you want me to take the other one? Yeah, do you take the second question? Yeah. The way that I would describe it's a little bit different by each of our industries. As may have come through, we were traditionally a pretty validation-heavy company, and what we're starting to see, depending by industry, we're seeing sort of different trends. Semiconductor, I think, has moved the furthest along kind of on this connected workflow kind of thing. We see about half the business in validation, half of it in production. As I was saying earlier, we see a lot of interest from our customers in validation, and that does move over into production. If you look at the transportation space, as you kind of heard Eric say, we have a pretty heavy cycle coming from a validation perspective, from a battery test point of view. We're beginning to see some opportunity in the production space. Aerospace defense is more validation heavy. We do see some opportunity in production. The piece that I would call out is the sort of data analytics, product analytics. We're beginning to see interest across all of our industries. I mean, this is all four of our BUs. We're getting a lot of interest in digital transformation that all of our customers are beginning to go through. I would call that out in the aerospace defense space absolutely. In the transportation space, we're having a lot of customers call us. Semiconductor has been sort of in that space already. Jason can talk a lot about in the portfolio business unit, kind of how that's working there, but that's how I would describe that. Portfolio Business Unit is approximately the company average with the 60/40 with validation being higher, and we're seeing the same trends. Digital transformation is kind of the buzz. All customers wanna talk about it. The challenge is trying to bite it off into little pieces and helping our customers, you know, make progress. Yeah, digital transformation trend's big, and it's not just a buzzword. Like, they have money. Yeah. Like, companies are putting money towards the digital transformation programs. Without that analytics play, it'd be very difficult to kind of shoehorn a test system into how do you kind of make that leap to its digital transformation. Around analytics, it's a legitimate part of those programs, and it fits right in. How do I get more value out of data is a pretty common theme. Probably your own companies, you know, have that theme, maybe in your own investment businesses and so forth. This is a way for us to really attach to that and deliver value through data that comes from some really important data, the data about how your product actually performs. Yes. Rob. How should we be thinking about the software portion of the business that you call out at 20% of revenue? I know it's, you know, it's perhaps touches more than that. Yeah. It's been this 20% number for a bit. Mm-hmm. How should we think about that number? Should we be focused on that number as we go forward? Yeah. Is it more important that you continue to sell all the hardware, you know, around this, software in a total solution? Yeah. Maybe I'll stop there and just. Yeah How to think about it. Two comments. One is, you know, part of what we laid out today, we think the more important one ultimately will be around recurring revenue, annual recurring revenue, the metric that Jason shared, the $500 million target. That's inclusive of software. Software is the majority of that. As we shared our software, we've been deliberately transitioning to it. It will be substantially all in recurring. We think that's the right, the most important metric, and we intend to drive our business to increase annual recurring revenue as part of the business. We think it makes us more resilient, and it's a real productive relationship, frankly, with our customers, as well. The other one, I'll just say, this is a little bit more, maybe a little bit more vision, but we're working on this as well, which is we've always been a company that's very software-centric. You see it in our gross margins. You know, our gross margins have always been indicative that we're adding more software value than just 20% of the business. Our engineering teams are also about 70% software. So we've always had a very high software, even in the hardware and systems. The opportunity that we see as we look out is, as people's expectations of buying behaviors have changed, this idea that you buy a system and then you pay a recurring license- Mm-hmm for the software content of that system is becoming more and more accepted in all areas by a lot of your consumer devices. That's what you're getting more and more used to. We think that that opportunity exists in our business and that our software-centric content positions us well to do that. So that's one of the ways that we'll reach those recurring revenue goals, is to continue to find a way of how can we add value, where we sell a system, and then we get a recurring software capability on the software value that's being delivered in that system, if that makes sense. Is your follow-up, Rob? Yeah. Maybe somewhat along those lines, it just came up, the product data analytics. Mm-hmm. Just where are you today in terms of being able to monetize that? Optimal+ came in, you know. Yeah Roughly a $50 million business. Yeah. I think you even said it would probably be dilutive for the first couple of years. Mm-hmm. You've folded that into some of your own. Yeah work. Just in terms of today, where are you in terms of being able to monetize that even within semiconductor or beyond? Yeah. We're pleased with where it is, and it's and to your point, it has been really combined and integrated, and I'll give you an example of it. As we said, when we acquired the asset, very strong position in production of Semi. Our goal has been to extend it both upstream into validation and production. We have some actual offerings out there now for a connected workflow. Data Studio, as I said. Yep The name was slipping my mind. That actually starts to deliver on connecting from validation into production. The next piece is taking it to adjacent markets. The place where we're furthest on that is in automotive. Probably not a big surprise. Some of that combined technology between our own platform and what we acquired ultimately with Optimal+ is what's enabling us to do the battery analytics solution that we highlighted on the slide with GM and we've shared publicly. We're sort of collaborating directly with GM to use that technology and extend it so that it's particularly applicable to that issue of battery analytics. That's kind of the next one where we're starting to gain traction and where we have kind of high expectations for future growth. Very good. Thank you. Betty. Just a quick follow-up to that. Mm-hmm. Just conceptually thinking about this, is verification that you are referring to and emulation much different? What do you mean? This verification that you were highlighting, especially with the new markets like EV, how is that or your approach different than emulation that is also available? Oh, you mean in a pure software sort of simulation, way? You can comment too, but I mean, That's part of the cycle, right? Right. It's clearly part of it. Our goal has been to tie into those. Right. Like our relationships and partnerships we've announced with Ansys and Cadence and the MathWorks are examples of essentially delivering on that flow, where you start with simulation and emulation, and then you can actually translate that directly into once you have a physical device of some kind, you wanna reuse as many of those, let's say an algorithm or a test routine as possible when you actually have a physical device. Who are your key competitors in a verification emulation bucket? Yeah, I wouldn't call us as competing in that space. I think, and we were talking about, again, people use those terms in lots of different ways. Right. If I interpret it as sort of the simulated. Yeah Verification that happens in the EDA world, we would view those as partnerships, not competitors. Yeah. Just to add to that a little bit, I mean, I think this. I'll use a semi example just because it's a good way to think about it. This Cadence partnership that we have, we will partner with them so that we can connect into their simulation data and then be able to take that into validation, take it into production, and then this is where we talk about the connected workflow or silicon lifecycle management. We will be partnering with a company like Cadence to be able to plug our tools into that, and then be able to get that data across the top and use Optimal+ technology and the technology we're developing to be able to look at the insights across. We're doing spec management across that as well. To Eric's point, we don't look at that as a competitor. We look at that as a key enabler of this overall solution that we would provide. If I may just follow up one more time. Sure. If you have a new customer in the EV sector and they're trying to better understand how a battery would perform given different types of analog power management chips come in- Mm-hmm. You wouldn't be selling a tool that could help those system companies emulate how these new products are gonna enable a new EV or new ADAS configuration. You're more of, you're just gonna collect data and incorporate that into, like a design environment, which is more of a simulation. Yeah. For a battery, it would be more like the most common. This application we do for a battery, it was actually the picture that Ritu showed is a battery cycler. It's essentially you put a battery module inside of a chamber, and you run it through our system running it through kind of real world conditions with physical signals that are cycling the battery, you know, based on, you know, profiles of what might happen in a real vehicle. You're measuring the performance of the battery over time under all of those different conditions. That's a really common. You can imagine how important that application is because they're trying to figure out the way a battery performs under all of these different conditions and ways to therefore optimize the performance of it in an actual vehicle. That's the kind of app. The other one I'll point to, and this is why I was, "Hey, these terms are used differently." Some similar terms are used in like ADAS systems in a little bit different way. And there again, we tie in with simulation tools. To give you an example, one of the more common applications in active safety systems, I mentioned over the air updates. Before an automotive company delivers an over the air update of new software on their active safety system, they have to make sure that didn't introduce another error, right? They do that in some software testing, but that's not enough to do an over the air update to actual vehicles. They have a system where our technology, our PXI systems and our software connect to the actual control system and emulate all of the sensors, right, in that system. When that new software runs, they actually can simulate road data and different driving conditions, and that's where like our tool would connect to potentially like an Ansys simulator to basically create those simulations, but run them through a real-world system into a real device under test to verify that the software actually works. That's a real application where our technology, our hardware and software, is also connected with the simulation company to deliver on the test system. Rob's got a question. Yep. Ritu, on one of your early slides when you put up the new, I guess, updated kind of market growth expectations as well as your expectations, some of the, in particular, semiconductor and transportation market growth outlook took a step down from where it was last update. Is that a macro reflection trying to build in some recessionary? So that's the attempt there. Your growth rate effectively is kinda unchanged. In fact, in transportation, it's even higher. The gap, the delta between market and your expectation is wider. We should interpret that essentially the areas that you're tied to or connected to in those areas, you think those were going to be more, obviously more resilient. Mm-hmm. Is there any expansion of your opportunity within there? You mentioned in particular semiconductor. Mm-hmm. Some of the NI acquisition, wafer level test, is that a new area for you where you're picking up incremental addressable market opportunity? Mm-hmm. Just clarify that delta. Yeah. Yeah, absolutely. One of the things I think Eric mentioned earlier is that we're not naive that there could be sort of a recessionary environment coming or there could be certain cyclicality in the industries. On the semiconductor side, one thing that you should be aware, if you look at the slide, we've kind of put the sources of where the data came from in terms of the market growth rate. It's not sort of our estimate. It's really sort of the market estimates for each of those areas. That would be sort of what we're thinking from a market growth rate perspective. If we look at each of the industries, it is that we believe that with these secular trends that we've been talking about, that was a lot of what I was talking about, that we believe we can grow ahead of that market growth rate. In Semiconductor particularly, I talked about a lot of the areas why we think we can grow there. Automotive is, I mean, that market is growing and we see a lot of fit with the offerings that we're coming out with in that space. That's why we actually adjusted the growth rate on that particular market from what we had shared previously. Rob, I'll use the data point. I mentioned how in 2020 we started to see some inflections in growth. I think one of the areas the contrast was most apparent was actually in automotive and transportation, where 2019, 2020 were really rough years for that market. Then two factors happen. Like, one is even within that market, EV and ADAS investments were the investments that were growing. Of course, it's not just about our mix into those, it's also about the competitiveness of our offering and the differentiation of our offering. The fact there's a market share growth baked into that as well. Same deal. We look forward in a recessionary scenario, the rest of automotive will, you know, go down. You know, vehicle sales actually still haven't recovered to 2019. They could take another step down. There'll be some impact from that because we do sell into that part of the market. Increasingly, our business is driven by the EV and ADAS investments. It'll be, we said, over half of transportation this year. Our growth rates are predicated on our expectation of also growing share in those growing markets. That's how we kinda come up with that delta between the market and our own growth rate expectation. Just one quick last question. Do you see a real opportunity for NI in that space? Yes. This fragmentation point is really key. You know, when we look at the assets that we've bought there, you know, many of these companies have actually, like in EV, they've been around for a long time because these high voltage applications existed. They were in kind of niches, right? It was like, grid-level power, right? Growing like this. I think the other challenge with these lots of small, this kind of fragmented market is there are mismatch between them and the customer base. You have GM wants to buy from a company with some reasonable scale, right? Not surprisingly, right? We think there's a real opportunity, and in some of the deals that we've done, in unlocking that, right? For us to take on this technology, but then also have the right interface to an OEM, as well as combine it with some of our key differentiators around software and measurement. Great. Well, one last question as we kind of close down the Q&A portion of the event. Question for you, Eric. What do you believe are underappreciated aspects of the business not getting enough focus from the investment community? Okay. It's like the question we get at the end of each one-on-one. Yeah, I'll do two. I think there's and we probably hammered away at these reasonably well today, but I'll do a sort of a short-term one and then a longer term one. The real short-term one actually is Karen showed the margin headwind, the gross margin headwind in that stack, and I don't think that's fully appreciated that we've had a pretty significant hit to margin from broker purchases, that has been mitigated in operating expense to reach our bottom line targets, and that those are a temporary hit. Now, the timing, as you said, we don't know exactly the timing. We have a model for the timing, but we're not gonna be paying brokers at that scale for forever. I can promise you that. There's also an interesting correlation that kinda came up in Mehdi's question I was thinking of, and probably you all realize this, but the whether or not supply chain eases and whether or not it's a recession, those are disconnected points, obviously, right? When we start to think of our own scenario planning, in the lower ends of the scenario planning from a you know kind of deeper recession point of view and impact on our bookings, you can have the reasonable expectation that supply chain will be a lot easier. At the upper ends of our expectation that growth kind of continues, we expect that supply chain kind of draws out as a headwind. That's kind of built into some of the backlog expectations that Karen showed. Anyway, I think that isn't fully appreciated because I think we get some skepticism on the 300 basis point improvement, but a lot of it's coming from that, right? We've sort of already, in a way, already done the cost actions to achieve that improvement, and then it just kind of comes through with the backlog. The longer term one is around software. I think, you know, people have always appreciated that we're a high gross margin business, but our software gives us such an important purview of the market. The fact that our software runs on all these systems, that it's kind of the core, software for automation of test systems and the opportunity to extend that. The fact that all the data from those test systems kinda comes through our core software, I think gives us a really unique opportunity. We talked about digital transformation and some of these longer term trends. I think we're well-positioned and have a unique opportunity in our space to be able to maximize those kind of opportunities. Okay. That was the last one, right? Thank you. Yeah, we're gonna now transition to lunch. We'll end the webcast. Thank you everyone again for joining us. Thanks for those that, joined us online.