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Why Electronics for Imaging Inc. Stock Popped Today

By Steve Symington - Updated May 1, 2018 at 4:34PM

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The digital-printing technology company kicked off 2018 on a high note. Here's what investors need to know.

What happened

Shares of Electronics for Imaging Inc. (EFII) jumped nearly 17% on Tuesday after the digital-printing technology specialist delivered better-than-expected first-quarter 2018 results.

Electronics for Imaging's (EFI's) quarterly revenue rose 5% year over year to $239.9 million, which translated to a GAAP net loss of $3.6 million, or $0.08 per diluted share. On an adjusted (non-GAAP) basis -- which excludes items like stock-based compensation and acquisition expenses -- EFI's net income was $17.2 million, or $0.38 per share, down from $0.55 per share in the year-ago period.

Analysts, on average, were expecting adjusted earnings of $0.38 per share on lower revenue of $236 million.

Banner being printed on the side of a tower, made by Electronics for Imaging

Image source: Electronics for Imaging.

So what

CEO Guy Gecht noted the company's Direct business -- which saw sales climb 17% and now represents 77% of the company's total -- exceeded expectations for the quarter.

"We also met our goals for Nozomi in Q1, and with increasing traction in the packaging market, look for sequential growth in unit shipments through the year," Gecht added. "With Nozomi and the solid lineup of new products planned for the second half of the year, the entire EFI team is excited and energized about the significant opportunities in 2018 and beyond."

Nozomi is EFI's line of high-end, single-pass digital LED printers meant for corrugated, packaging, and merchandise display printing.

Now what

During the subsequent conference call, management stated that its inkjet business should "maintain strong momentum" and achieve growth in the mid-teens-percent range for the fiscal second quarter. Together with high-single-digit growth from Productivity Software and $60 million in expected Fiery product line revenue (which includes Fiery digital print servers, workstations, print applications and the like), EFI anticipates total revenue in the current quarter to be in the range of $259 million to $265 million -- the midpoint of which sits well above consensus estimates for revenue of roughly $261 million.

EFI also noted it expects to ship five Nozomi units in the second quarter, and seven in the third quarter, which should leave it on track to meet its goal of $60 million in Nozomi revenue for the full year of 2018.

All told, there was little not to like about this report from EFI, from its relative outperformance in the first quarter to its encouraging guidance. And it's no surprise to see the stock rallying in response.

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