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Welcome to the New
Monotype
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Forward-Looking Statements
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.
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Business Discussion Doug Shaw
President and CEO
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Key Takeaways
• 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
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Our Vision
Our fonts and technologies empowering every word and experience.
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Our Foundation
Heritage Dating Back 125 Years
350 Employees
10 Countries
Long-Term Customer
Relationships
$148.8M Revenue*
$64.0M naEBITDA*
Founded in 1986
* = Midpoint of guidance given on October 31, 2012
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Market Trends
Ubiquity of Screens
• Seamless access to content as the author intended
• Great user experience
• Immediate access to content regardless of location
• Minimal latency
• Context-specific content
Mobile
HTML5 • Create content once and distribute everywhere
• Efficient/intuitive creative workflows
• Access to all content in desired language
• Complete design flexibility regardless of language
Global
Trend Implications
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Source: Kleiner Perkins Caufield Byers; Pew
Research Center; DOMO; NetCraft; On Device
Research; Analysis Mason; Business Insider;
mediaIDEAS; ABI; Gartner Group
Our Connected World
Our World
200 million active websites with 571 new ones created every minute
16 billion connectable consumer
devices by 2020
150 million tablets & e-readers today, growing to
1.1 billion by 2020
43% of
Americans have read an e-book, or digital newspaper or digital magazine
90% of global 1000
companies will implement
cloud printing services
for mobile personnel
by 2014
6.1 billion mobile phones, with 1 billion smartphones
6 million internet-enabled
cars sold in 2012,
growing to 50 million in
2017
2.3 billion global internet users – growth
driven by emerging markets
46 million app downloads from
iTunes store daily
$12 billion global mobile app/ad market in 2011 (153% CAGR since
2008)
Create
Consume
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Create • Create once and
distribute everywhere
• Consistent experience
for every user regardless
of consumption medium
• Easy and seamless
creative workflows
Publish/Distribute • Solutions that minimize latency
Consume • Consume all kinds of content
• Present the content in the form
that the author intended
• Provide an appealing user
experience
Markets & Requirements
Brands Graphic
Designers Bloggers
Publishers Creative
Directors
News
Organizations
Advertisers Movie &
TV Studios Individuals
Computers e-Book Readers ISVs
Televisions Tablets Automobiles
Mobile Devices Printers Appliances
OE
M
CR
EA
TIV
E P
RO
FE
SS
ION
AL
Browsers Cable Providers Mobile Networks
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Our Business
~35% Revenue
~25% Revenue
~40% Revenue
Creative
Professional
OEM Display
Imaging
OEM Printer
Imaging }
} 10-20% Growth
3-10% Growth
~35% Revenue
~25% Revenue
~40% Revenue
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Source: IDC reports * Management estimates
Market Insights
• Laser printer unit CAGR of 5%
(2012 – 2014)
• Emerging markets fueling
growth
• Mobile printing
Strategy
• Leverage our long term
relationships by providing
additional technology to
reduce cost or capitalize
on new printing paradigms
Growth Initiatives
• Printer drivers
• Mobile/cloud printing
• Page Description Language
technologies
• Document workflow enhancements
OEM Printer Imaging
Current Penetration* ~30%
Monotype Opportunity* $200M
Laser Printer Market* $50B
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Source: IDC reports
Investor Confusion
• 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…)
• Unit growth coming from color multifunction devices, China and ROW
• 90% of global 1000 companies will implement mobile printing (2014)
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
• Identified new opportunity to enhance
document workflow
OEM Printer Imaging In
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Source: IDC, Castellan, Display Search reports * Management estimates
Market Insights
• Digital displays growing rapidly
• Emerging devices
• e-Readers/Tablets: 200M units
(2015)
• Automotive: 80M units (2014)
• Mobile: 2.3B units (2016)
• TVs: 290M units (2014)
Strategy
• Develop innovative solutions to
optimize the use of text on all
digital displays
Growth Initiatives
• New design wins
• Expand within existing accounts
– New models and increased
royalties
• Focus on emerging devices
OEM Display Imaging
Current Penetration* < 10%
Monotype Opportunity* $500M
Display Market*
> $500B
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Printer
Imaging Display
Imaging
Customers
Business Model
Channels
Partners
Marketing
Market Leaders
~ 100 customers
Per Unit Royalties
Global Sales Force
System Integrators
ODMs
Adobe
Industry Standards
Intimate Customer Relationships
Market Leaders
~ 1,000 customers
Per Unit Royalties
Recurring Term Licenses
Perpetual Licenses
Global Sales Force
System Integrators
Microsoft
Thought Leadership (MIT)
Intimate Customer Relationships
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Go to Market Strategy - OEM In
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Source: Forrester, Netcraft reports * Management estimates
Market Insights
• Digital publishing evolving
rapidly
• Number of active websites:
644M
• Mobile advertising spend: $8B
(2016) growing at 38%
Strategy
• Our largest business in 2013
• Build a bridge for the creative
professional as publishing
needs shift from print to mobile,
web and applications
Growth Initiatives
• Web font services
• Web publishing
• Mobile advertising
• Personalized and dynamic
content
Creative Professional
Current Penetration* ~20%
Monotype Opportunity* $250M
Publishing Market* > $200B
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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
• Instant display of Web pages
• Patent pending technology
• SaaS, recurring revenue
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Enterprise e-Commerce
Customers
Business Model
Channels
Partners
Marketing
Publishers, Agencies, Corporate
Thousands of Customers
Perpetual Licenses
Recurring Term Licenses
Global Sales Force
Agencies
Thought Leadership (Brand Perfect, Pencils to Pixels)
Professional and Casual Creatives
Millions of Customers
Perpetual Licenses
SaaS Subscriptions
MyFonts, Fonts.com, Linotype.com
Adobe
Affiliates
Crowdsourcing
Community
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Go to Market Strategy - CP In
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Typefaces
Technology
& Expertise
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• Gill Sans
• Soho
• Harmonia
Sans
• ITC Avant
Garde Gothic
• ITC Conduit
• ITC Charter
• Droid Sans
• Kootenay
• Miramonte
• Arrus
• Aphasia
• Nuptial
• Helvetica
• DIN Next
• Akko
Monotype Libraries
Monotype Linotype ITC Ascender Bitstream
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Proprietary Technology Provides a Robust Solution Set
Technology
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Type
HTML5 CSS3
JavaScript
Dynamic Subsetting
Desktop,
Mobile,
Web
Android & Linux
PDLs
Edge Rendering
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Expertise
Global Team of Consultative Experts Application of our Technologies Custom Type Design Global Language Scripts W3C and ISO Standards Web Typography Primary Research
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• Fonts
• Web Fonts
• Custom
Design
• UFST
• PDLs
• Printer Drivers
• FontExplorer
• Fontwise
• Web Font
Services
• Typecast
• SkyFonts
• iType
• WorldType
• iType
Connects
Fonts & Design Services Screen Imaging Print Imaging Font Management Creative Tools
Products & Services
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Automotive Document Workflow
Tablets & e-Readers
Branding & Design Agencies
ISVs White Goods Mobile
Solutions
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Business Model and Financials
Scott Landers SVP and CFO
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G = Midpoint of guidance given on October 31, 2012 E = Management estimate as of December 5, 2012
Financial
RevenueG
• $148.8M ↑21%
naEBITDAG • $64.0M ↑17%, 43% mgn
ngEPSG • $1.03 ↑17%
CFFOE • ~$48M
2012 Highlights
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
Other Acquisitions • Bitstream • Design By Front Engineering • India presence Cash Flow • Paid for Bitstream
in first year
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Business Model
Defensible Profitable
Diversified
Recurring
and
Predictable
Growing
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Defensible
• More than 16,000 fonts • Global library • Trademarks are perpetual
• Proprietary technology • 40% employees are engineers
• Customized solutions Expertise
Technology
Typefaces
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Diversified Revenue
Streams
~35% Revenue
~25% Revenue
~40% Revenue
Creative
Professional
OEM Display
Imaging
OEM Printer
Imaging }
} 10-20% Growth
3-10% Growth
~35% Revenue
~25% Revenue
~40% Revenue
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Diversified Customer Base
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Recurring 65 - 70%
Predictable 15 - 20%
Non-Recurring 10 - 15%
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Recurring and Predictable Revenue
Per unit royalties
Renewable term licenses
Maintenance
Web font services
High volume web
transactions
Services run rate
Perpetual licenses
Non-recurring services
~85% Recurring/Predictable
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Revenue
G = Midpoint of guidance given on October 31, 2012
’09 – ’13
15%
CAGR
’05 – ’08
15%
CAGR
$105.2 $110.9
$94.0
$106.7
$123.2
$148.8
$165.2
$50
$70
$90
$110
$130
$150
$170
2007 2008 2009 2010 2011 2012G 2013G
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$48.1 $48.9
$41.0
$47.8
$54.6
$64.0
$70.2
$30
$35
$40
$45
$50
$55
$60
$65
$70
$75
2007 2008 2009 2010 2011 2012G 2013G
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naEBITDA
G = Midpoint of guidance given on October 31, 2012
Note: Reconciliations of all non-GAAP measures are available at Monotype.com
’09 – ’13
14%
CAGR
’05 – ’08
10%
CAGR
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Net Income and ngEPS
G = Midpoint of guidance given on October 31, 2012
* = 2007 ngEPS based on post IPO shares outstanding
26% Net Income CAGR
$9.1
$15.4
$13.4
$18.4
$22.7
$28.5
$0.53
$1.03
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
$0
$5
$10
$15
$20
$25
$30
2007* 2008 2009 2010 2011 2012G
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$27.3 $30.5
$28.1
$43.7
$39.3
$48.0
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
2007 2008 2009 2010 2011 2012E
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Cash Flow from Operations
E = Management estimate as of November 20, 2012
Up to 25%
Cash available
for dividends or
share
repurchase
75%+
Cash for M&A,
debt reduction
and cash
replenishment
70% Increase since 2008
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Dividend Program
• 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
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Goals and Outlook Long Term Goals
• Double digit organic
revenue growth
• Tuck-in acquisitions
• Net adjusted EBITDA =
40%+
• Margin expansion with
revenue growth > 10%
• Recurring revenue
• Strong cash flow
generation
• Increased dividend
~35% Revenue
~25% Revenue
~40% Revenue
CP
DI
PI
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Key Takeaways
• 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
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