It's time to see if Shutterfly (NASDAQ:SFLY) can teach an old dog some new tricks. The leading provider of digital photofinishing products moved higher after posting better-than-expected second-quarter results. It's Shutterfly's first financial update since completing its acquisition of school snapshots specialist Lifetouch. 

Adjusted revenue soared 128% to $476.7 million for the quarter, a big step up until you realize that more than half of Shutterfly's top-line results came from the Lifetouch business it acquired in early April. Back out the $261.9 million in revenue generated by Lifetouch and comparable growth across Shutterfly's earlier consumer brands rose a modest 4%.

A collection of Shutterfly's customized photo products.

Image source: Shutterfly.

Shutterfly's second quarter: The raw numbers

Shutterfly cranked out a reported loss for the quarter, but excluding a laundry list of one-time charges related to the Lifetouch acquisition, restructuring efforts, and accounting items, normalized net income clocked in at $13.6 million. Analysts were holding out for a loss on just $447 million in revenue. 

It's not a surprise to see Wall Street expectations and Shutterfly's reality so far apart. Completing a monster acquisition was always going to make second-quarter results hard to predict. It's still encouraging to see Shutterfly make a decent showing, even if it continues to concede that it will take years to fully cash in on the synergies of the completed integration.

Shutterfly shares are now moving higher for the third time in a row after a blowout quarter. Shutterfly soared 16% on its better-than-expected first quarter, following a 28% surge during the seasonally potent holiday quarter. The stock keeps sneaking up on investors, and we've yet to see what the true potential of the Lifetouch acquisition can mean. 

It may have initially seemed odd to see a dot-com pioneer in digital photo prints hook up with a giant providing annual class and graduation photo shoots, but it's a match made in heaven. Shutterfly will be able to modernize Lifetouch's offerings, generate incremental revenue with new photographic keepsakes, and perhaps more importantly build out its Rolodex with millions of new names every year. The deal also takes some of the heat off of Shutterfly's languishing digital photo products business, as even the mighty Apple announced last month that it was bowing out of the digital prints business.

Shutterfly is beefing up its guidance for 2018. It's lifting the midpoint of its revenue goal by $3 million to $2.038 billion, as a dip in its consumer segment should be more than offset by improvement in its forecasts at Lifetouch and for its smaller business solutions arm. The bigger boost is coming to its bottom line, as it now sees an adjusted profit per share of $3.27, up from its $3.06 target from three months ago and the mere $0.62 it earned in 2017. 

Rick Munarriz owns shares of AAPL and Shutterfly. The Motley Fool owns shares of and recommends AAPL. The Motley Fool has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.