Prepress
Monotype Imaging Announces Third Quarter 2012 Results
Wednesday 31. October 2012 - Monotype Imaging Holdings Inc. (Nasdaq: TYPE), a leading provider of typefaces, technology and expertise for creative applications and consumer devices, today announced financial results for the third quarter ended Sept. 30, 2012.
Third quarter 2012 highlights
Revenue for the quarter was $38.0 million, a 24 percent increase year-over-year.
Non-GAAP net adjusted EBITDA was a record $17.0 million, or 45 percent of revenue.
Operating income was a record $12.4 million, a 30 percent increase year-over-year and 33 percent of revenue.
Cash flow from operations was $13.5 million, a 25 percent increase year-over-year.
“We had a strong third quarter, with continued momentum in our Creative Professional and OEM businesses, highlighted by innovations that support the three fundamental aspects of our business – our typefaces, technology and expertise,” said Doug Shaw, president and chief executive officer. “Our focus is to continue to diversify while adding meaningful value to our solutions. To that end, we’re excited about the acquisition of Design By Front, which brings to Monotype a powerful design tool for creating compelling websites using Web fonts. We gain a talented team that will expand our ability to serve creative markets.”
“Our continued execution generated record profits for the third quarter, reflecting the strength and flexibility of our business model,” said Scott Landers, senior vice president and chief financial officer. “Even as we continue to innovate, integrate and diversify, we are realizing significant expense leverage. Moving forward, we will continue down this path of delivering even more value to our customers and shareholders.”
Third quarter 2012 operating results
Revenue for the quarter was $38.0 million, up 24 percent compared to $30.7 million for the third quarter of 2011. OEM revenue was $24.3 million, increasing five percent from the third quarter of 2011. Creative Professional revenue was $13.7 million, increasing 79 percent from the same period last year.
Net income was $8.0 million, compared to $6.0 million in the third quarter of last year. Earnings per diluted share were $0.21, compared to $0.16 in the same period last year.
Non-GAAP net income, which excludes the amortization of intangible assets and stock-based compensation expense, net of taxes, was $10.8 million, compared to $8.6 million in the third quarter of 2011. Non-GAAP earnings per diluted share were $0.29, compared to $0.23 in the same period last year.
Non-GAAP net adjusted EBITDA was $17.0 million, or 45 percent of revenue, compared to $13.7 million in the third quarter of last year.
A reconciliation of GAAP measures to non-GAAP measures for the three and nine months ended Sept. 30, 2012 and 2011 is provided in the financial tables that accompany this release.
Cash, cash flow and debt balances
Monotype had cash and cash equivalents of $38.0 million as of Sept. 30, 2012, compared to $53.9 million as of Dec. 31, 2011 and $32.9 million as of June 30, 2012. The company generated $13.5 million of cash from operations in the third quarter of 2012, an increase of 25 percent year-over-year.
Outstanding debt was $32.3 million as of Sept. 30, 2012, a decrease compared to $37.3 million as of Dec. 31, 2011, and $42.3 million as of June 30, 2012. On a year-to-date basis, the company has paid down $30.0 million in debt and used $24.6 million of cash on hand for the Bitstream acquisition.
As of Sept. 30, 2012, Monotype had net cash of $5.7 million, compared to net debt of $9.4 million in the prior quarter.
Acquisition of Design By Front
Monotype today announced that it has acquired Design By Front Limited, a privately-held, 14-person firm based in Belfast, Northern Ireland, and developers of the Typecast application, a browser-based tool for designing Web pages with Web fonts. In its transaction completed yesterday, Monotype acquired all outstanding shares of Design By Front for up to $5.1 million in cash. Monotype paid $2.6 million in cash upon closing; $100,000 was accrued pending final adjustments, with the remainder to be paid contingent on attainment of certain criteria through 2014.
Quarterly dividend
The initial quarterly cash dividend of $0.04 per share of common stock was paid on Oct. 19, 2012. Monotype’s board of directors approved the next quarterly dividend of $0.04 per share which will be paid on Jan. 22, 2013 to shareholders of record as of the close of business on Jan. 2, 2013.
Financial outlook
For the fourth quarter of 2012, Monotype expects revenue in the range of $37.2 million to $38.7 million. The company anticipates fourth quarter 2012 non-GAAP net adjusted EBITDA in the range of $15.7 million to $16.7 million, GAAP earnings per diluted share in the range of $0.19 to $0.21 and non-GAAP earnings per diluted share in the range of $0.26 to $0.28.
For the full year 2012, Monotype is increasing its revenue and profit guidance, and now expects revenue in the range of $148.0 million to $149.5 million. The company anticipates full year 2012 non-GAAP net adjusted EBITDA in the range of $63.5 million to $64.5 million, GAAP earnings per diluted share in the range of $0.74 to $0.76 and non-GAAP earnings per diluted share in the range of $1.02 to $1.04.