Electronics For Imaging Management Presents At Morgan Stanley Technology, Media & Telecom Conference (Transcript)

Electronics for Imaging ( EFII)

Morgan Stanley Technology, Media & Telecom Conference

February 29, 2012 05:10 PM ET

Presentation

Unidentified Company Representative

So EFI is a technology company positioned on the print vertical or the vertical of printing. Printing is a $1 trillion industry, many different activities within that industry and overall the vertical is growing at GDP type of business, some area are fancy growing trying, some are growing and where there is transformational forces, the transformation of printing activities from analog to digital is driving growth within industry and EFI is uniquely positioned on those gross segments of the print industry. The force is that we addresses are three fold with our current portfolio is the movement from long run book and wide type of printing, ink to personalize digital high quality color type of printing.

The second one is, the movement from analog activity in the industrial world from display graphics all the way to printing on ceramics of different materials moving from analog to digital and I'll come back on that and the third activity is the need for professional printers to automate a business processes to become more efficient. So we organize the company along those three lines. We have industrial inkjet segments about 45% of our revenue growing 16% in the last quarter growing double now for many, many quarters and really driving the transformation of analog industrial activities into digital printing activity. Gross margin around 40% there and a mix of printer revenue and ink revenue in that segment.

The second segment we have is the software segment and ERP for print professional or mailing the business processes of those print professional to about 15% of our revenue, gross margin venture 70% and growing. The gross rate of the fairly phenomenal as print professional starts to adopt bigger sized software or more sophisticated software to become more efficient. We grew 41% last year with guided Q1 in the same range and continue to grow at that type of gross rate.

And then the third segment is the fiery segment which is really a print server addressing the print activities that are moving towards short run high quality type of print activities. And then EFI is a unique competitive advantage of being able to provide products from acquisition of content all the way to production and creating an ecosystem of hardware ink services and software right around to move from analog printing into a digitized process of printing and that's what we're working about.

Unidentified Analyst

And maybe you can just talk about a little bit the competitive landscape and just mention like who you're competing with, who are the big players in those various areas that you are operating in.

Unidentified Company Representative

Yes, so as an ecosystem, print server production engine, ink services and software, there is no competition that can reproduce that. So we are very unique from that aspect. In every one of the segment be it print server, the fiery segment or the software, the apps business or the inkjet, we have a different competitive landscape. If you talk about Fiery between servers, we have about 50% market share in the high end point server. The other competition is clear that Kodak bought a few years ago, they have bought 15% market share and then about 30-35% is kind of pre-server embedded into a big multifunction point.

So our position there is really about building more and more subtle valuation that's in server and drive software options that have endorsed factor in that server. Turning to the inkjet segment, there the competition is a bit more open, the three main competitors are ESI, HP and Doors, Doors is a private company in Europe. About 20 to 25% market share for each player and then there are other players, (inaudible) is another one but a smaller market share. I think the penetration into the digital world is really where we're focusing on really trying to move from analog to digital and therefore the analog world is what we're trying to replace at this point in time.

And then finally in the approximately business, in the software business, ERP tailored for activities of printing. We are very unique. It’s a very fragmented market, commercial printers or production printers and have a lot of homegrown type of software and or local vendor. EFI is the number one market share in the US, everything else is very fragmented and small vendors. The smaller or the number two vendor in that category would be less than $10 million.

Unidentified Analyst

The skeptics would say paper demand is down 23-25% in the US over the last few years. Why should we invest in a printing company? How would you address that issue?

Unidentified Company Representative

So I think you're right. Pages are coming down and commodity printing type of page you have, emails printing etcetera is going down but there are activities of printing that will never disappear. Printing a label on a bowl, printing on a ceramic, having a need for people who will always have printing as a professional activity and need of software to move their business into the 21st century. All of that will continue to grow. So while overall printing maybe secular decline you've heard it from HP. The activity that are more industrially focused or high end type of printing activity will not go away and continue to grow quite fast.

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