But it is still facing a challenging time in the embedded market, which was what caused it to issue the profits warning in August that led to its stock dropping 20%.

Pro forma net income fell 30% compared to Q3 2003 to 4.9m ($8.9m) or 9p per share, on flat revenues of 53m. When it restated its estimated pro forma earnings per share in August it predicted a figure between 7-8p.

"Despite the difficult business environment, we were able to achieve EPS above our revised expectations," said EFI chief executive Guy Gecht. "While we are still seeing softness in our embedded business, we remain committed to maintaining solid profitability and investing in key growth areas, particularly in software, where we continue to see strong market opportunities."

Revenues from Professional Print Applications (PPA), which includes the former Printcafe and Best businesses, as well as EFI's other software products including OneFlow rose 374% to 9.2m. They now account for 17% of the revenues.

For the fourth quarter EFI predicts continued strong growth of 15-20% in PPA, and a stable business for the Fiery servers.

Shares closed up 4.5% at 9.42.

Story by Barney Cox