Good day, and thank you for standing by. Welcome to the NI Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. To get it started, I'll pass it over to Marissa Vidaurri, Head of Investor Relations. Please go ahead. Good afternoon. Thank you for joining our Q3 2022 earnings call. I'm joined today by Eric Starkloff, President and Chief Executive Officer, and Karen Rapp, Chief Financial Officer. We will start with an update on our performance in the quarter before opening it up for your questions. Our discussion today will include forward-looking statements, including, without limitation, those regarding the company's expectations of meeting or exceeding financial targets, its capital allocation, financing, and investment plans, the payment of its quarterly dividends, and its future business outlook and guidance, including demand for its products, ability to realize revenue from backlogs, future results of acquired companies, and execution of growth strategies. We wish to caution you that such statements are just predictions, that actual events or results may differ materially and could be negatively impacted by numerous factors. We refer you to the documents that the company files regularly with the Securities and Exchange Commission, including the company's annual report on Form 10-K, filed on February 22, 2022, and subsequent quarterly reports on Form 10-Q. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statement. We assume no duty to update any forward-looking statement to conform the statement to actual results or changes in our expectations. A reconciliation of our non-GAAP financial measures disclosed in this call to the most directly comparable GAAP financial measures or related disclosures are contained in our press release and on ni.com/nati. You can find the press release and quarterly presentation to supplement today's discussion on our website at ni.com/nati. As announced last month, Karen Rapp, Chief Financial Officer, plans to retire in May 2023. The company is in the process of an external search. Karen will remain in her current role until a successor is in place, and then will shift to a temporary advisory role to ensure a smooth transition. Management will be hosting meetings at the Baird Conference in November in Chicago, the Nasdaq Conference in December in London, and the Needham Conference in January in New York. We look forward to seeing you there. With that, I will now turn the call over to Chief Executive Officer, Eric Starkloff. Thank you, Marissa, and we appreciate all of you joining us today. We achieved very strong performance in the third quarter, with record Q3 orders, all-time record revenue for a quarter, and record Q3 non-GAAP EPS. This is the fourth consecutive quarter of year-over-year records for all three of these measures. The key takeaways that we'll share with you for Q3 are. Record revenue of $428 million, up 17% year over year, and up 15% year over year through Q3. Non-GAAP operating margin up 110 basis points year over year through Q3. Commitment to our plans for margin expansion in 2022 and 2023. I want to acknowledge that while Q3 performance was strong, we did start to see a slowdown in demand in certain markets starting at the end of Q3, and which we expect to continue into Q4. We ended the quarter with 12% order growth year-over-year, with the drop in order rate occurring in the last few weeks of September. Orders were approximately flat year-over-year in that period, with weakness in semiconductor and particularly in China. Weakening in demand is something we've been planning for. The model we shared for 2023 at our investor conference last month, for example, contemplated a recessionary scenario with a 5% decline in bookings in 2023. In that scenario, we laid out the tailwinds in our business, including a reduction of backlog and a healthier supply environment that we believe will contribute to double-digit revenue growth in 2023. In Q4, we expect weakening demand, but likely not fully offset by a substantial improvement in supply environment, which could limit our ability to reduce backlog. Our differentiated modular hardware and industry-standard automation software align well to critical customer needs in subsegments with powerful growth drivers, including electric and autonomous vehicles, wireless communication, and new space technology. Through our focus on these secular growth trends, we've increased the mix towards our highest growth industry business units and areas where we can meaningfully grow share. In addition, we expect to expand our share of wallet with increased direct customer engagement at our tier one accounts, which today account for approximately 40% of our total revenue. At these accounts, we are delivering more complete solutions that allow customers to develop higher quality products faster and at a lower cost. In return, we have seen an increase in program wins and standardization on NI technology. Across the industries we serve, our business is well-positioned in both R&D validation and in production tests. We estimate that approximately 60% of our total business is in R&D, with 40% in production. Our software and data analytics platform enable us to uniquely deliver value across that entire workflow. Now on to results by industry for the third quarter. Semiconductor and electronics reported Q3 revenue of $102 million, up 8% year-over-year, with orders down 3% year-over-year. Though we expected a slowdown in the growth of our semiconductor business, orders dropped suddenly in the final few weeks of the quarter, especially in China. While a slower semi cycle has been anticipated, we believe the combination of our exposure to R&D test and our ongoing progress in delivering software across the semiconductor workflow will soften the impact that a semiconductor downturn will have on our business. In Q3, we won several large analytics software contracts in semiconductor, including our largest software contract ever, which adds predictable revenue over the three to five-year period of those contracts. We also expect that the semiconductor devices we test in analog, wireless, and mixed signal will remain more robust than other areas like consumer devices. Transportation reported record Q3 revenue of $84 million, up 58% year-over-year, with orders up 47% year-over-year. Our strategic shift in focus to EV and ADAS, where our customers are making significant investments, has changed the trajectory of this business, and we expect that we will continue to deliver market-leading growth rates. In Q3, EV and ADAS represented approximately 50% of our transportation business, and we expect the revenue from these growth areas will exceed 50% of our transportation business by the end of this year. The recent acquisitions of Kratzer, NH Research, and Heinzinger accounted for approximately 20% of our transportation revenue in the third quarter. Through these acquisitions, we believe we now have the most competitive portfolio of end-to-end battery test capability in the market today. We are seeing the strength of our strategy evidenced by early demand that has exceeded our expectations and expect these investments to drive long-term growth for NI. Recently, we're proud to receive the Charged for Innovation award from the Battery Innovation Center, a nonprofit research institute. This award recognized the company with fielded technology that is making a significant impact on the automotive industry. Personally, I was in Europe this quarter with our new Kratzer team and also visiting a large European automotive OEM. The opportunity we have at EV is compelling. Our organic investments, combined with the technology and talent we've added through these acquisitions, create a highly compelling and competitive offering to our customers. Aerospace, Defense, and Government delivered great results with record revenue for Q3 of $105 million, up 13% year-over-year, with orders up 15% year-over-year. ADG continues to outperform our expectations with growth fueled by robust defense spending. We also continue to see strong opportunities in new space technologies, including launch vehicles and satellites that are well-aligned with our platform and channel. In our portfolio business, which serves the majority of our broad-based customers, achieved revenue in Q3 of $138 million, up 8% year-over-year, with orders up 7% year-over-year, despite the global PMI dropping below 50 in September. This is the area we believe is the most susceptible to a softening macro environment, and we have been taking steps to make this business more resilient. Our focus on utilizing global distribution to better position our offerings and also optimizing our digital channel to these broad customers has gained traction, further providing leverage and scale in this portion of our business. We expect revenue from the distribution and digital channels to grow to approximately 20% of our total revenue in 2022, up from 9% of our total revenue in 2020. Longer term, we expect our transition to software subscription will improve the resiliency and growth opportunity for this business. This transition is on track to our expectations. The initiatives that we've executed since 2017 have transformed NI into a company with higher growth, better profitability, and lower cyclicality. We believe our strong performance over the last several quarters is directly correlated to these strategic shifts, which we believe positions us on a more positive long-term trajectory. In summary, we plan for a weaker macro in 2023, and we remain committed to the targets we set at our investor conference last month for 2023 through 2025. In our business, we've seen signs of a weaker macro starting in September and are taking actions to mitigate its impact in the short term and deliver on our plan for 2023 and beyond. With that, I'll now turn it over to Karen to discuss our Q3 results in more detail. Thanks, Eric. Hi, everyone. In Q3, our GAAP revenue was $428 million, up 17% year-over-year and ahead of the midpoint of our guidance. The strengthening of the US dollar had a negative impact to revenue of approximately -5% year-over-year in Q3. The currency headwind was approximately $10 million sequentially, which was worse than we expected. We were able to mitigate this through reduction in backlog, and we were pleased with our strong core revenue growth and growth from our recent EV acquisitions. As Eric mentioned, demand grew double digits in Q3, with orders up 12% year-over-year. For the third quarter, orders were up 16% year-over-year in the Americas, up 23% year-over-year in EMEA, and down 1% year-over-year in Asia Pacific. We ended the quarter with backlog of approximately $240 million, down $9 million sequentially. We continue to have competitive lead times of approximately seven weeks and less than 1% in order cancellations due to lead times. Our confidence in the resiliency of our backlog and our ability to eventually realize this revenue when supply chain disruptions ultimately ease remains strong. Because our solutions are often a capital expense and provide unique capabilities for our customers, we do not typically incur any double ordering risk, and we have not seen anything that would indicate a change to that historic pattern. Q3 non-GAAP gross margin was 70%, down 490 basis points year-over-year, driven primarily by broker fees paid for components that were in short supply. We expect these temporary headwinds to slow once supply catches up to the softness in demand. We will continue to have cost pressure for these golden screw-type components in Q4. We expect the supply chain constraints to ease in the first half of 2023, and the reduction in broker purchases to positively impact our 2023 non-GAAP operating margin. In Q3, we generated $80 million of GAAP operating income, and $92 million of non-GAAP operating income, a non-GAAP record for a third quarter, translating into a non-GAAP operating margin of 21% for the quarter, and an improvement of 110 basis points year-to-date through Q3. We reported Q3 GAAP net income of $62 million and diluted earnings per share of $0.47. In Q3, we had a one-time sale of property, which contributed $0.19 to our GAAP earnings per share. We reported record Q3 non-GAAP net income of $71 million and record diluted non-GAAP earnings per share of $0.53, an increase of 26% year-over-year. Non-GAAP earnings per share was up over 40% sequentially, despite incremental headwinds from interest expense and currency of approximately $0.05 versus Q2. Now let me comment on capital management. Our balance sheet remains strong with $149 million of cash at the end of the third quarter. Cash flow from operations was $36 million in the third quarter. In Q3, we continued to invest in inventory to enable us to ship systems to customers as soon as the final components are available. We expect our inventory position to turn into a tailwind for future cash. Once the supply constraints ease and the need to build inventory has passed, we expect to bring inventory down, enabling us to convert non-GAAP net income to cash at historic levels or better. We expect our cash flow from operations to improve in Q4 through sequential revenue growth and reduced working capital investments. In the third quarter, we returned $119 million to shareholders through dividends and stock repurchases. We repurchased approximately 2 million shares at an average price of $40.25. Approximately $109 million remains on the repurchase authorization approved by our board of directors on January 19, 2022. The NI board of directors approved a quarterly dividend of $0.28 per share, payable on November 28, 2022 to stockholders of record on November 7, 2022. Our capital allocation strategy remains balanced. We will continue to invest in organic capabilities to ensure we stay ahead of our customers' technology needs and prioritize inorganic investments that strategically align to the business in order to drive growth. At the same time, we will continue to look for opportunities to return cash to shareholders through our dividend and stock repurchase programs. Now shifting to guidance for Q4. We're being cautious with our short-term outlook due to the strong U.S. dollar and the slowing of orders at the end of Q3. We're assuming orders in Q4 are approximately in line with what we saw in the last few weeks of Q3. We also benefited from a large ADG program win in Q4 last year that creates a tough compare. For the fourth quarter of 2022, we expect revenue to be in the range of $435 million-$465 million. At the midpoint, this represents 7% revenue growth year-over-year. Our guidance assumes the US dollar continues to stay strong and our currency impact is similar to Q3 at -5% year-over-year for the quarter. While a weaker demand environment will ultimately lead to improved supply, we expect supply on certain key components to continue to be tight through Q4 and to constrain our revenue. We remain focused on delivering 100 basis points of non-GAAP operating margin improvement for the year. We continue to take appropriate actions to scale expenses. We expect GAAP diluted earnings per share in the range of $0.22-$0.36 for Q4, with non-GAAP diluted earnings per share expected to be in the range of $0.54-$0.68, an increase of 2% year-over-year at the midpoint. We've assumed that the headwinds from currency and interest expense remain similar to Q3. In summary, Q3 results were in line with our guidance despite currency headwinds. We saw a slowing in customer orders at quarter end. We anticipate the slowing demand will lead to some easing of supply constraints, but we're being cautious in our Q4 guidance. We continue to see the benefits of the actions we have taken to increase scale into our business model. We continue to sharpen our focus on making intentional investments for growth and streamlining processes for greater efficiency. Even in a potential recessionary environment, we're confident in our ability to deliver on our commitment to increase our non-GAAP operating margin by 100 basis points in 2022 and an additional 300 basis points in 2023. Kirk, back to you. Thanks, Karen. In summary, we're confident in the actions we have taken to better position the company to perform despite the short-term headwinds that may occur. We remain committed to our goals for long-term growth and profitability and see our recent financial results as proof that we have the right strategy in place. As I mentioned, we've done a lot of hard work over the past five years to fundamentally transform the company and change the trajectory of our performance. The key elements of the strategy have gained traction and demonstrated success in driving a higher level of growth. Now we are focused on executing the strategy and achieving the return on those investments with a focus on top line growth and strong leverage and earnings growth on the bottom line. A big thank you again to all of our employees who have driven our strategy and committed to significant expense management actions throughout this year. Employees in manufacturing and operations, in particular, have worked incredibly hard to navigate continued and unprecedented challenge in our supply chain. I sincerely appreciate everyone's hard work, determination, and perseverance. With that, we'll now take your questions. As a reminder, to ask a question, you will need to press star one one on your telephone. You may ask one question and one follow-up question only. Please stand by while we compile the Q&A roster. Our first question comes from the line of Samik Chatterjee. Your line is now open. Hi. Good afternoon. This is Angela Jin on for Samik Chatterjee. My first question is related to orders. I just wanted to dig in more into order trends. Seeing your portfolio up 7% this quarter and PMI dropping below 50 in September, what are you thinking for the pace of portfolio growth or moderation in growth going forward? On the flip side, seeing a lot of strength in automotive, but what are the risks to auto orders, and is there any potential for weakness in autos? Then I have a follow-up. Yeah. Hi, Angela Jin. I'll take that. Yeah, so portfolio, as you mentioned, it remained pretty strong actually in the quarter. I noted that we saw some, you know, flattening of order growth in the last few weeks, basically flat order growth in the last few weeks, and that's sort of the model that we have going into Q4. Our expectation would be that in general, our portfolio, as I mentioned, would be more affected by the macro, so it tend to be below that, and as would semi, as we go through a semi cycle. I'll say, by the way, that we're absolutely still believe in the long-term trajectory of semi. It's a very good market for us, and the long-term trends, regionalization of semi capacity, the sectors in semi weren't all really good, but we expect it to go through a down cycle in the next few quarters. Transportation has been very strong for us. It's our transportation business, primarily EV and ADAS, is correlated to essentially new model introductions by the automotive companies in, you know, new platforms in EV and with active safety systems. Those continue to be strong areas of investment. Our outlook continues to be, we believe, pretty robust in that area. I noted that aerospace, defense, and government is very steady for us. It's a good environment. We believe it'll continue to be a good environment. Karen did note that we have a compare in Q4 in that specific segment, but our longer term trajectory of order growth, we expect to continue to be in the similar range that we've had. The long-term ranges for order growth, by the way, we've also published from the investor conference that we did in September. Your follow-up. Right. Yeah. In my follow-up, I'm more sort of on the OpEx side. So, you know, are you implementing any measures to manage costs to avoid earnings declining more than revenues going forward? You know, do you see any risk to your commitment to that 300 basis points of operating margin expansion in 2023? Angela Jin, it's Karen Rapp. I'll take that one. Yeah, we've been throughout the year getting ahead of some of the cost pressures. We've done things like slowing our hiring as far back as May. Earlier in this year, we've done some workforce planning that enables us to feel confident in keeping our headcount generally flat in the operating expense bucket for the next few years. All of that in addition to doing things like making sure that we're diligently managing our expenses and making sure that we're getting a return on the dollars that we're investing. We also have shifted more of our costs to variable, which enables us to put a little more flexibility in when we see quarters like this and moving forward. Let me talk a little bit more about 2023 because that's a slightly different story. We believe that the work that we've done on operating expenses this year positions us incredibly well for the continuing to drive scale into 2023. But there's an additional tailwind that happens in 2023, which is really on the gross margin line rather than the operating expense line. We've been paying broker fees this year at a level that's about up to 440 basis points of headwind in Q3, for example. We expect that to be over 400 basis points this year. That will not stay at that level in 2023. As we see demand softening, we expect supply to ease up, and that will give us the opportunity to reduce those broker costs. Literally, that's the over 400 basis points is truly just purchase price variance. We're paying more for the same parts than we've paid historically, because of the alternate supplier that we're working through there. We believe we have opportunity to do that, and we remain confident in our and committed to our numbers for 2023 and delivering on the 300 basis points improvement after delivering a 100 basis points improvement this year. I'll just add on one thing and recognize our teams. As Karen said, this year, that broker pricing and that 400+ basis point headwind to margin was something we didn't anticipate coming into the year. We flexed down our spending this year to still meet the bottom line commitments, the 110 basis points of operating margin expansion that we've seen through Q3 and the 100 basis points we expect for the year. We've you know, our confidence also comes from demonstrating our ability to flex, you know, and see, for example, 15% revenue growth and only 4% OpEx growth, this year because of that margin pressure. Then as Karen said, it kind of turns around next year, and that's what drives that confidence. Great. Thank you. Thank you. Your next question comes from the line of Mehdi Hosseini. Your line is now open. Yes, thanks for taking my question. Would it be fair to say that the book-to-bill for the September quarter came in, like 0.95, definitely below one? Is that a fair characterization? Yeah, Mehdi, this is Karen. Yeah, it's really close to a one from a book-to-bill for Q3. That's correct. Actually have it slightly over one, but you're close. You're in the ballpark. Okay, because I heard two things impacting booking overall business trend. I heard macro-driven weakness, especially in the last two weeks of the quarter. I also heard continued adverse impact from component availability. I'm just trying to reconcile the two and how those two impacted your booking and the December quarter revenue guide. Yeah, Mehdi, I'll take it. It's Eric. Yeah, the booking side, the impact is really a weakening of demand at the end of the quarter. Still a strong quarter for demand, 12% bookings growth. As we noted, a weakening in the last few weeks, primarily in semiconductor and regionally a little bit in China. Separate from that, from the revenue side, of course, there's an FX headwind in Q3 and into Q4. It's about five percentage points, so pretty significant. Then the other element, as you noted, is supply. The point there is that, of course, in the long run, a weakening demand environment will ultimately correlate with a much improved supply environment. In the short term, the timing of those we don't think will perfectly line up. We're being more cautious in Q4 than what we believe will be, and we're starting to see the signs of a much improved supply environment, that we won't see a big benefit of that yet in Q4, and it will be pretty constrained on supply, especially on some critical components. That's the actual ability to reduce backlog in Q4 will be constrained based on that supply environment. As we look into 2023, we expect much less of that constraint as we look through the full year. Okay, got it. Can I ask you one follow-up? Sure. If I just look at your commentary on revenue and EPS, it seems to me that operating margins should be kind of flat to up in December quarter on a Q-over-Q basis to get to midpoint of the EPS guide range. That's the operating margins for Q4 versus Q3, is what you're looking at, Mehdi? Yeah. Yeah. Yeah, it'll be similar. We had a strong Q3 from an operating margin perspective. Okay. Thank you. Thank you. Your next question comes from the line of Meta Marshall. Your line is now open. Great. Thanks. I guess the question for me is just as we look at some of the top-line scenarios as we head into the next year, you know, your analysts say you guys had talked about kind of looking at a normal recessionary scenario. I guess I'm just wondering, with the combination of kind of some of the China restrictions that have been put into place and FX, like, do you consider those additional headwinds to kind of the normal recessionary scenario that you looked at? Or do you just think, like, the release of more backlog helps offset that? I guess I'm just kind of trying to tie kind of more confidence on the top line with what I would consider kind of additional headwinds. Thanks. Yeah, sure, Meta. No problem. Yeah, so when we look at the model we shared, which is the -5% kind of bookings, and then we kind of broke down the bridge items from a revenue point of view to get to double-digit revenue. Yeah, the general answer to your question is the puts and takes of that are still that's still what we believe is a realistic scenario that takes into account kind of the most information we have right now about FX and about those other elements. I will comment, by the way, our point of view at this point from everything we've seen the most recent restrictions with respect to China semiconductor, we don't expect to have a material impact on us at this time. Obviously, we always continue to monitor those kind of restrictions and export controls and will continue to do so. We believe that model still holds in terms of both the -5 being kind of the right bookings number to anchor to, as well as the other elements to bridge to revenue. While we saw a slowdown in orders, you know, as I mentioned, at some point we anticipated that. We never know exactly when that's going to start. We certainly anticipated a lower level of orders for 2023. We started to see some of that behavior in our customers late in this quarter, going down to about flat is what we saw at the end of the quarter. Great. Just maybe a follow-up. You know, you guys outlined kind of the headwind from FX to top line, which was helpful, but is there any kind of corresponding tailwind you guys are getting on the OpEx perspective that we should just be mindful of? That's it for me. Thanks. Yeah, this is Karen. The price increases that we've been able to pass along to our customers have continued to be a favorable tailwind. We made price increases in 2022 in both February and then again in August, double-digit price increases in both of those periods. That's been flowing through nicely. We saw about 9% tailwind in revenue in Q3 from that specifically. The other tailwind's going to continue to be our EV acquisitions that were really strong in Q3, and that we have high expectations and plans for with continued growth in Q4 and into 2023. Yeah, I guess I was- Yeah, maybe what you were also asking. We've been real deliberate about spreading our expenses geographically. Obviously our factories are global, so that we do get some benefit of the strong dollar from a cost point of view. It doesn't fully offset the headwind to revenue. If that's what you were asking, yes, I don't think there's no problem. We do get a benefit on the expense line from the strong dollar. Yeah. Great. Thanks. Thanks. Yep. Your next question comes from the line of Mark Delaney. Your line is now open. Thank you very much for taking the question and good afternoon. My first question was on pricing and following up, Karen, on the point you were just making about some of the benefits the company is seeing in terms of revenue and flow through of price increases. As you head into 2023, my understanding was that continued pricing tailwind was part of the 2023 plan. Do you think you're still going to be able to achieve the pricing you anticipated based on some of the conversations you're having with customers in light of the more difficult global demand backdrop? Yeah. Mark, absolutely. As we've shifted to more and more of a systems sale and selling solutions to our customers, the value proposition that we bring is highly recognized. We've been able to be very successful with the flow through on those price increases this year, and we've already got some plans in place for next year that we outlined in September. We are absolutely on track to those, if not even stronger at this point. Okay, that's helpful. My follow-up question was on supply chain and understanding your expectation is that the supply situation should improve in 2023, especially if there's a weaker macroeconomic backdrop, which certainly makes sense conceptually. I'm wondering if you can share any more insights, though, on what you're hearing from suppliers in terms of their ability to ship to your expectation. Are you seeing improvement in what they expect they can deliver to you as you know, as you think out into that 2023 timeframe? Or is it more your best view, or again, is it, you know, matching up with what the suppliers are saying? Thanks. Yeah, Mark, in those conversations, we are starting to see improved expectations from our suppliers. We're hearing the right things about their expectations improving. The challenge is just a timing one. Even in the cases where we have a line of sight to getting more supply, you know, that delivery might be real late this quarter or even push into next quarter. We think it's just going to be really tight from that point of view. We are starting to see, you know, actually demonstrable signs of some improvement. It just isn't happening, you know, as fast as we'd like it for this quarter. Of course, as we said before, it's so component dependent that there's still some of these golden screws. The indicators of improvement across that supply chain are definitely starting to happen. Yeah, we see that on a day-to-day basis with what we receive as well. We're getting a higher percentage of our orders delivered more consistently and on time or better. The actual on-the-ground benefits are improving as well. Thank you. Your next question comes from the line of Damian Karas. Your line is now open. Hi, good evening, everyone. Hi, Damian. Hi. I had a follow-up question for you on supply chain and some of those comments on, you know, getting order deliveries out. Could you maybe just give us a little bit of a better sense on how much of a constraint, you know, these supply issues have been on sales? And maybe if you could, you know, tell us how lead times are looking at this stage. Are they still around eight weeks? Great question. This was the first quarter in Q3 where we were actually able to see some reduction in backlog. We've been growing significantly throughout the year, actually higher than we expected. Just to size it, our backlog growth this year, we anticipate being somewhere around about 5% year-over-year. That's above and beyond what we had expected because of those supply constraints. What was nice in Q3, we started to see the ability to bring that back down. We ended the quarter right around seven weeks of lead time, seven weeks of backlog. Like I said, the components are starting to become a little bit more predictable. We track that monthly to see if our suppliers are meeting their commitments, and we continue to see improvements on that, which is a really nice sign. We're still being cautious going into Q4, and we still have a nice solid backlog position. Puts us in a good place to take advantage of that if the supply constraints really do ease up as we expect. Okay, that's helpful. Then, you've spoken about, you know, sort of planning, preparing, and taking actions for, you know, in anticipation of the semiconductor downturn. Could you just maybe elaborate on that a little bit? You know, if I'm interpreting correctly, you know, thinking about the 2023 targets that you put out there and those scenarios, it sounds like, you know, you're now kind of aligning more towards the lower end of that if you're already taking these actions. Could you just, you know, give us a better sense for what you're, you know, actually doing? Yeah, I can take it, Damian. There's planning and reacting. The planning side, we just mean that sort of a lower semiconductor growth rate or order rate was built into our expectations as we look into 2023 and beyond. We were expecting the cycles that usually happen in that market. We're expecting a down cycle. What can we actually do about it? I mentioned, you know, there are across the business we serve in semi specifically, there are areas where spending will continue to be more robust. Leaning into our lab offerings, for example, we have some really compelling products and capabilities for validation tests, which will tend to be an area that spending stays at a similar level as it was. It's not as impacted as production test is, as well as the software capabilities that we're able to deliver into that market. You know, those are areas where our customers we think will continue to invest. That's what we can actually do proactively, and then that's, as I mentioned, that sort of down cycle is built into our outlook. Okay, great. Thanks a lot. Thank you, Damian. Your next question comes from the line of Rob Mason. Your line is now open. Yes, good evening. Hi, everyone. Hi, Rob. Hi. I wanted to stick just on the orders theme, if we could. Eric, to the extent that you've seen orders slow, I mean, can you make any distinction between how the orders have trended in the R&D lab space versus those that would be destined for production tests? Yeah, I think it might be a little early for us to call that one, Rob, that level of detail because, you know, certainly we've seen you know, a lot of business across both of those. Our anticipation is that ATE will be weaker as we go forward, ATE being sort of the production test part of it. I think you could see a little bit of that indication when I said that sort of semi in China and to some extent in some other parts of Asia where a lot of production is done was a little bit weaker. Most of that is just sort of our anticipation of how it's going to happen in the future more than what we've observed so far. Yep. Just within your semiconductor business, and we certainly appreciate the added visibility your four segments, you know, provide us, which we did not always have in the past. You know, as I look back towards past cycles, you know, I'm not as clear as to how your semiconductor business would've responded. Can you just help frame, you know, what the orders of magnitude, standard deviation, I guess, maybe around the growth rate, you know, has been historically through cycles within semiconductor? One way to look at it, Rob. Yeah, within semi. Yeah, maybe one way to look at it, Rob, this is Karen, and add some more color is, in semiconductor in 2020, the most recent cycle that we saw there, we were about flat year-over-year. It was up 1% at a time when the business was down -5%. Now, that wasn't necessarily a semi cycle as that was COVID related and pandemic. Mm-hmm. Semi was actually, you know, been pretty robust. Yeah. for the last few years. That's the most recent. Yeah. data point. Yeah. Another way you might think of it, right? This isn't about our historical data, but if you think about the peers that we have that are production test focused and the cyclicality that they have, about half of our semiconductor business is exposed to similar level of cyclicality. Even within that, it tends to be a little lower kind of cyclicality range, if you would, because of the markets we're focused on. I mentioned the analog and the mixed signal, the automotive components and everything, which just don't have the peaks and valleys as much as consumer and leading edge semi. That would be a way to think of it, you know, that a little less than what the ATE-focused vendors applied about half the business, and the other half of the business has cyclicality like more like the rest of our business, not the high peaks and valleys of production semi. Hopefully that helps some, Rob. Yep. Well, if I could ask, Eric, just to the extent that you can, isolate where the, you know, the softness is within the customer base, what types of, you know, what segments, I guess, you know, 5G re-oriented. I'm just curious, you know, where you're seeing the softness first there. Yeah, I think, I mean, our expectation of semi when you just look at across the with inventory levels and everything else, that we'll just see some level of broad-based weakness and just from the cyclicality of, you know, oversupply going in. You know what I mean? Just sort of what's happened. Sure. In the supply chain as that kind of ripples through, again, like I said, inventories and everything else. I think there'll be a little bit of that across the board. The areas that we're focused on that I mentioned, wireless and analog and mixed signal, those applications don't have as much volatility as consumer, which as you've all seen a lot of right now is down quite a bit. The semiconductor companies focused on that are feeling it a lot more than what we would tend to see in our business. I'll also just comment that in that sort of even short to medium term, there's a lot of nice opportunities that we're pursuing in semiconductor devices for new technologies in automotive, that's still a good market. You know, some of the fab build-outs that are happening globally in the regionalization of semiconductor, we do service some part of that market, and we expect that to be a continued investment area. There's certainly a few bright spots in there, even through a down cycle. Sure. Thanks, Eric. Appreciate it. Thanks, Rob. We have no further questions in the queue. I would now like to turn the conference back to Eric Starkloff for closing remarks. Okay. Thank you all for your time here today, and have a good rest of the afternoon. This concludes today's conference call. Thank you for participating. You may now disconnect.