Fiery rebound boosts EFI's Q3 earnings 16%
Friday, October 18, 2013
EFI posted a double-digit increase in third quarter revenues on the back of a near 25% year-on-year jump in Fiery revenues for the three months to 30 September.
Group revenue rose just over 16% from $154.1m in Q3 2012 to $178.8m in Q3 2013, while for the first nine months EFI's revenues are now up around 11% year-on-year at $530.5m (Q1-Q3 2012: $478m).
Of the group's three operating segments - Industrial Inkjet, Productivity Software and Fiery - the strongest growth was in the Fiery business, which rose 24.5% from $50.7m in Q3 2012 to $63.2m in Q3 2013.
Fiery revenues are impacted significantly by the product development cycles of digital press manufacturers such as Canon, Konica Minolta, Ricoh and Xerox, which offer the EFI RIP with their devices - leading to cyclical revenues in line with new digital print engine launches.
Guy Gecht, chief executive of the US-based inkjet and print software giant, admitted that EFI "clearly had an easy compare with Q3 last year being at the bottom of the down cycle [in Fiery]" but added that the growth was not purely cyclical.
"We definitely benefitted from products which our partners introduced in the last few quarters but, when I look at the numbers, we got strength from products that got launched last year or before that," he told analysts on EFI's Q3 earnings call.
Industrial Inkjet revenues rose just over 10% from $79.1m to $87.1m for the quarter, while Productivity Software revenues were up 17.6% at $28.5m versus $24.3m in Q3 2012.
With the exception of Japan, which dragged down the group's APAC earnings, revenue by geographic region was up across the board and particularly strong in EFI's domestic market and in EMEA.
EFI interim chief finanical officer Marc Olin attributed the strong growth in EMEA to the success of EFI's acquisition strategy, which has seen it snap up numerous European software businesses in the past 12 months, including Technique, GamSys and Online Print Solutions.
"The Productivity Software team in EMEA posted a record quarter that quite surpass the previous record in that region in what is normally a seasonally weak period," he said. "This demonstrates that our strategy of investing in our European business to build market share and support the launch of our core products into the European market has been delivering solid results.
"This has allowed us to become the largest provider of business process automation solutions for the imaging industry in Europe as well as the Americas even as most of the market is still untapped."
On a regional basis, Q3 revenues rose from $86.4m to $102.4m in the Americas, from $41.1m to $52.2m in EMEA, and from $19m to $19.9m in APAC excluding Japan; including Japan (which posted a drop in Q3 revenues from $7.5m to $4.3m) APAC revenues fell from $26.5m to $24.2m.
Gecht said: "I think in Japan, digital is still tough. I think everybody is struggling with selling digital but on top of that I’m not happy with our execution in Japan; we just hired a great VP for Asia Pacific and I think we’re going to see improvement and we’re definitely going to work on improvement."
He added that a holiday in China at the end of the quarter had deferred revenue by a week, pushing it over into Q4, and said that a change in regulations on financing had caused some delay in customers' purchases.
"We hope we’re going to catch up with that and things will get simplified," he said. "We still see a lot of interest in China and we think we’re going to continue to see growth."
Group pre-tax profit for the quarter came in at $15m, up from $5.6m in Q3 2012.