2. Investor Relations
December 13, 2012
Forward-Looking
Statements
2
This presentation contains forward looking statements that involve
significant risks and uncertainties, including those discussed in the
“Risk Factors” section of Monotype Imaging Holdings Inc.’s Form
10-K, as amended, and subsequent filings with the SEC. We are
providing this information as of today’s date and do not undertake
any obligation to update any forward-looking statements contained
in this document as a result of new information, future events or
otherwise. No forward-looking statement can be guaranteed and
actual results may differ materially from those that are projected.
4. Key Takeaways
Investor Relations
December 13, 2012
• Serving large, growing markets undergoing
dynamic change
• Offer real value – Type, Technology and Expertise
• Meaningful growth opportunities – Printer Imaging,
Display Imaging and Creative Professional
• Proven and winning business model
4
6. Our Foundation
Heritage Dating
Back 125 Years
350 Employees
10 Countries
Investor Relations
December 13, 2012
Founded in
1986
Long-Term
Customer
Relationships
6
* = Midpoint of guidance given on October 31, 2012
$148.8M Revenue*
$64.0M naEBITDA*
7. Market Trends
• Seamless access to content as the author intended
• Great user experience
Mobile
7
Implications
Ubiquity
of Screens
Investor Relations
December 13, 2012
Trend
• Immediate access to content regardless of location
• Minimal latency
• Context-specific content
HTML5
• Create content once and distribute everywhere
• Efficient/intuitive creative workflows
Global
• Access to all content in desired language
• Complete design flexibility regardless of language
8. Our Connected World
200 million
16 billion
connectable
consumer
devices by 2020
active websites
with 571 new
ones created
every minute
$12 billion
global mobile
app/ad market
in 2011 (153%
CAGR since
2008)
150 million
Investor Relations
December 13, 2012
tablets & e-readers
today, growing to
1.1 billion by 2020
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90% of global 1000
companies will implement
cloud printing services
for mobile personnel
by 2014
Our
World
Source: Kleiner Perkins Caufield Byers; Pew
Research Center; DOMO; NetCraft; On Device
Research; Analysis Mason; Business Insider;
mediaIDEAS; ABI; Gartner Group
43% of
Americans
have read an e-book,
or digital newspaper
or digital magazine
46 million
app downloads from
iTunes store daily
2.3 billion
6.1 billion
Consume
Create
6 million
mobile phones,
with 1 billion
smartphones
internetenabled
cars sold in
2012,
growing to 50
million in
2017
global internet
users – growth
driven by
emerging
markets
9. CREATIVE PROFESSIONAL
Markets & Requirements
Brands
Graphic
Designers
Bloggers
Publishers
Creative
Directors
News
Organizations
Advertisers
Movie &
TV Studios
Individuals
Browsers
Cable Providers Mobile Networks
Create
• Create once and
distribute everywhere
• Consistent experience
for every user regardless
of consumption medium
• Easy and seamless
creative workflows
Publish/Distribute
9
Computers
OEM
Investor Relations
December 13, 2012
• Solutions that minimize latency
e-Book Readers
ISVs
Televisions
Tablets
Automobiles
Mobile Devices
Printers
Appliances
Consume
• Consume all kinds of content
• Present the content in the form
that the author intended
• Provide an appealing user
experience
11. OEM Printer Imaging
Market Insights
Growth Initiatives
• Laser printer unit CAGR of 5%
(2012 – 2014)
• Printer drivers
• Emerging markets fueling
growth
• Mobile printing
• Mobile/cloud printing
• Page Description Language
technologies
• Document workflow enhancements
Investor Relations
December 13, 2012
Strategy
11
• Leverage our long term
relationships by providing
additional technology to
reduce cost or capitalize
on new printing paradigms
Laser Printer Market*
$50B
Monotype Opportunity*
$200M
Current Penetration*
~30%
Source: IDC reports
* Management estimates
12. OEM Printer Imaging
Investor Confusion
2012 PI Highlights
•
•
7 out of 10 OEMs experienced unit
growth…3 OEMs: +20%
•
Monotype realized single digit revenue
growth each quarter
•
Closed first PDL deal with growing
pipeline
•
Gaining traction in mobile printing
Perception that laser printer
market is declining and so may
Monotype’s PI business
Market Dynamics
•
Traditional market leaders have
gone from 54% to 35% share
(2008 – Q3 2012)
Market share gains by Asian
•
vendors which represent +80% of
our PI revenue (Ricoh, Kyocera,
Konica Minolta, Samsung…)
•
Investor Relations
December 13, 2012
•
Unit growth coming from color
multifunction devices, China and
ROW
•
90% of global 1000 companies
will implement mobile printing
(2014)
Source: IDC reports
12
Identified new opportunity to enhance
document workflow
13. OEM Display Imaging
Market Insights
Growth Initiatives
• Digital displays growing rapidly
• New design wins
• Emerging devices
• Expand within existing accounts
– New models and increased
royalties
•
e-Readers/Tablets: 200M units
(2015)
•
Automotive: 80M units (2014)
•
Mobile: 2.3B units (2016)
•
TVs: 290M units (2014)
• Focus on emerging devices
Display Market*
> $500B
Investor Relations
December 13, 2012
Strategy
13
• Develop innovative solutions to
optimize the use of text on all
digital displays
Monotype Opportunity*
$500M
Current Penetration*
< 10%
Source: IDC, Castellan, Display Search reports
* Management estimates
14. Go to Market Strategy - OEM
Printer
Imaging
Display
Imaging
Market Leaders
~ 100 customers
Market Leaders
~ 1,000 customers
Business Model
Per Unit Royalties
Per Unit Royalties
Recurring Term Licenses
Perpetual Licenses
Channels
Global Sales Force
Global Sales Force
Partners
System Integrators
ODMs
Adobe
System Integrators
Microsoft
Marketing
Industry Standards
Intimate Customer
Relationships
Thought Leadership (MIT)
Intimate Customer
Relationships
Investor Relations
December 13, 2012
Customers
14
15. Creative Professional
Market Insights
Growth Initiatives
• Digital publishing evolving
rapidly
• Web font services
• Number of active websites:
644M
• Mobile advertising spend: $8B
(2016) growing at 38%
Strategy
Investor Relations
December 13, 2012
• Our largest business in 2013
15
• Build a bridge for the creative
professional as publishing
needs shift from print to mobile,
web and applications
• Web publishing
• Mobile advertising
• Personalized and dynamic
content
Publishing Market*
> $200B
Monotype Opportunity*
$250M
Current Penetration*
~20%
Source: Forrester, Netcraft reports
* Management estimates
16. Web Font Services
Typographic Freedom for the Web
• Searchable, scalable text
• 20,000+ fonts for Web design
• Helvetica®, Frutiger®, other exclusives
• Over 40 languages supported
Investor Relations
December 13, 2012
• Instant display of Web pages
16
• Patent pending technology
• SaaS, recurring revenue
17. Go to Market Strategy - CP
Publishers, Agencies,
Corporate
Thousands of Customers
Professional and Casual
Creatives
Millions of Customers
Business Model
Perpetual Licenses
Recurring Term Licenses
Perpetual Licenses
SaaS Subscriptions
Channels
17
e-Commerce
Customers
Investor Relations
December 13, 2012
Enterprise
Global Sales Force
MyFonts, Fonts.com,
Linotype.com
Partners
Agencies
Adobe
Google
Affiliates
Marketing
Thought Leadership (Brand
Perfect, Pencils to Pixels)
Crowdsourcing
Community
19. Monotype Libraries
Investor Relations
December 13, 2012
Monotype
19
• Gill Sans
• Soho
• Harmonia
Sans
Linotype
• Helvetica
• DIN Next
• Akko
ITC
• ITC Avant
Garde Gothic
• ITC Conduit
• ITC Charter
Ascender
• Droid Sans
• Kootenay
• Miramonte
Bitstream
• Arrus
• Aphasia
• Nuptial
20. Technology
Proprietary Technology Provides a Robust Solution
Set
HTML5
CSS3
JavaScript
Investor Relations
December 13, 2012
Edge
Rendering
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Dynamic
Subsetting
Type
Desktop,
Mobile,
Web
PDLs
Android
& Linux
21. Investor Relations
December 13, 2012
Expertise
21
Global Team of Consultative Experts
Application of our Technologies
Custom Type Design
Global Language Scripts
W3C and ISO Standards
Web Typography
Primary Research
24. Business Model and Financials
Scott Landers
Investor Relations
December 13, 2012
SVP and CFO
24
25. 2012 Highlights
Financial
RevenueG
•
$148.8M ↑21%
naEBITDAG
•
$64.0M ↑17%, 43% mgn
ngEPSG
•
$1.03 ↑17%
CFFOE
Investor Relations
December 13, 2012
•
25
~$48M
Business
Creative Professional
•
•
•
> 60% growth
MyFonts
Web Fonts ~ $5M
Display Imaging
•
•
•
~25% of revenue
Doubled since 2010
e-Readers, Automotive
Printer Imaging
•
•
•
3-5% unit growth
7 of 10 OEMs experiencing
unit growth
First PDL win
G = Midpoint of guidance given on October 31, 2012
E = Management estimate as of December 5, 2012
Other
Acquisitions
• Bitstream
• Design By Front
Engineering
• India presence
Cash Flow
• Paid for Bitstream
in first year
30. Recurring and Predictable Revenue
Perpetual licenses
Non-recurring services
NonRecurring
10 - 15%
High volume web
transactions
Services run rate
Predictable
15 - 20%
Investor Relations
December 13, 2012
Recurring
65 - 70%
30
~85% Recurring/Predictable
Per unit royalties
Renewable term licenses
Maintenance
Web font services
31. Revenue
$170
’05 – ’08
15%
CAGR
’09 – ’13
15%
CAGR
$165.2
$148.8
$150
$130
$110
$123.2
$105.2
$110.9
$106.7
$94.0
Investor Relations
December 13, 2012
$90
$70
$50
2007
2008
2009
G = Midpoint of guidance given on October 31, 2012
31
2010
2011
2012G 2013G
32. naEBITDA
$75
$70
$65
’05 – ’08
10%
CAGR
’09 – ’13
14%
CAGR
$70.2
$64.0
$60
$54.6
$55
$50
$48.1
$48.9
Investor Relations
December 13, 2012
$45
32
$47.8
$41.0
$40
$35
$30
2007
2008
2009
2010
G = Midpoint of guidance given on October 31, 2012
Note: Reconciliations of all non-GAAP measures are available at Monotype.com
2011
2012G 2013G
33. Net Income and ngEPS
$30
26% Net Income CAGR
$28.5
$1.20
$1.10
$25
$22.7
$1.03
$20
$18.4
$1.00
$0.90
$15.4
$15
$10
$0.80
$13.4
$0.70
$9.1
$0.60
Investor Relations
December 13, 2012
$5
33
$0.50
$0.53
$0
$0.40
2007*
2008
2009
2010
G = Midpoint of guidance given on October 31, 2012
* = 2007 ngEPS based on post IPO shares outstanding
2011
2012G
34. Cash Flow from Operations
70% Increase since 2008
$50
$43.7
$45
75%+
Cash for M&A,
debt reduction
and cash
replenishment
$39.3
$40
$35
$30
$48.0
$30.5
$27.3
$28.1
$25
$20
$15
$10
Investor Relations
December 13, 2012
$5
$0
2007
2008
2009
E = Management estimate as of November 20, 2012
34
2010
2011
2012E
Up to 25%
Cash available
for dividends or
share
repurchase
35. Dividend Program
Investor Relations
December 13, 2012
• Confidence in our business model and strategic plan
• Current quarterly rate of $0.04 per share of common
stock or $0.16 annually
• Capital allocation strategy supports growth and M&A,
while providing an additional source of equity return
• Goal to increase dividend over time
35
36. Goals and Outlook
Long Term Goals
•
Double digit organic
revenue growth
•
Tuck-in acquisitions
•
Net adjusted EBITDA =
40%+
•
Margin expansion with
revenue growth > 10%
Investor Relations
December 13, 2012
•
36
Strong cash flow
generation
DI
~25% Revenue
Recurring revenue
•
CP
~35% Revenue
•
Increased dividend
PI
~40% Revenue
37. Key Takeaways
Investor Relations
December 13, 2012
• Serving large, growing markets undergoing
dynamic change
• Offer real value – Type, Technology and Expertise
• Meaningful growth opportunities – Printer Imaging,
Display Imaging and Creative Professional
• Proven and winning business model
37