WOBURN, Mass.--(BUSINESS WIRE)--Monotype Imaging Holdings Inc. (Nasdaq: TYPE) today announced financial results for the third quarter ended September 30, 2017.
Third quarter 2017 highlights
- Revenue for the quarter was $60.5 million, an increase of 16%, year over year. Pro Forma non-GAAP revenue for the quarter was $61.0 million.
- Creative Professional revenue was $34.5 million, up 24%, year over year, 13% organically.
- Net income was $1.3 million. Non-GAAP net adjusted EBITDA was $15.9 million, or 26% of revenue, which outperformed expectations. Pro Forma non-GAAP net adjusted EBITDA was $16.5 million, or 27% of Pro Forma non-GAAP revenue.
- Approximately 80% of estimated printer revenue was under recurring fixed fee arrangements at the close of the quarter.
“We are pleased with our strong third quarter results, highlighted by continued growth in Creative Professional, and better than expected results in both stabilizing our OEM business and improving profitability margins,” said Scott Landers, president and CEO of Monotype. “Our enterprise sales team has played a significant role in expanding Monotype’s presence within the Global 2000, and it’s clear that our holistic value proposition is resonating with these brands.”
Tony Callini, executive vice president and chief financial officer of Monotype, said, “As we focus on driving top-line growth and further accelerating profitability, we remain committed to continuing the strong momentum in Creative Professional, integrating and growing Olapic, expanding our reach within the Global 2000 and stabilizing OEM. Our third quarter results demonstrate that our strategy is working. Looking to the remainder of 2017 and into 2018, we will continue our disciplined approach to capital investment with the ultimate goal of growing revenue, driving margins and creating value for our shareholders.”
Third quarter 2017 operating results
Revenue for the quarter
increased 16% to $60.5 million, compared to $52.2 million for the third
quarter of 2016. Creative Professional revenue was $34.5 million, a 24%
increase from the third quarter of 2016. OEM revenue was $26.0 million,
an increase of 6% from the same period in 2016.
Net income was $1.3 million, compared to net income of $2.4 million in the third quarter of 2016. Earnings per diluted share was $0.03 cents, compared to earnings per diluted share of $0.06 in the prior year. Non-GAAP net income, which excludes the amortization of intangible assets, stock-based compensation expense and acquisition-related compensation expense, net of taxes, was $4.9 million, compared to $7.1 million in the third quarter of 2016. Non-GAAP earnings per diluted share was $0.12 compared to $0.18 in the prior year period.
Non-GAAP net adjusted EBITDA was $15.9 million, or 26% of revenue, which exceeded expectations, compared to $15.5 million in the third quarter of 2016.
Pro Forma operating results
Pro Forma results assume the
company had owned Olapic for the full periods presented, and exclude the
impact of purchase accounting related adjustments, as well as
transaction costs.
Pro Forma non-GAAP revenue in the third quarter was $61.0 million and Pro Forma non-GAAP net adjusted EBITDA was $16.5 million.
Cash and cash flow
Monotype had cash and cash equivalents of
$79.5 million as of September 30, 2017, compared to $83.7 million as of
June 30, 2017 and $97.6 million as of September 30, 2016. The company
generated $8.9 million of cash from operations in the third quarter of
2017, and repaid $3.0 million on its outstanding revolving line of
credit.
In the third quarter, Monotype repurchased 230,000 shares of common stock on the open market at prevailing market prices for a total consideration of $4.2 million, as part of the stock repurchase program announced in August 2016.
Quarterly dividend
Monotype’s most recent dividend payment
of $0.113 per share was paid on October 20, 2017 to shareholders of
record as of October 2, 2017. The next dividend payment of $0.113 cents
per share will be paid on January 22, 2018, to shareholders of record as
of the close of business on January 2, 2018.
Financial outlook
Monotype’s fourth quarter and updated
full-year financial guidance are set forth in the following tables:
| (in $ millions, except per share data) | Q4 2017 | Full Year 2017 | ||||||
| Revenue | $60.2-$64.2 | $231.0-$235.0 | ||||||
| Non-GAAP net adjusted EBITDA | $12.5-$15.5 | $49.5-$52.5 | ||||||
| Operating expenses |
$46.0-$48.0 |
$177.0-$179.0 | ||||||
| GAAP earnings per diluted share | $0.00-$0.02 | $0.00-$0.01 | ||||||
| Non-GAAP earnings per diluted share | $0.08-$0.10 | $0.19-$0.20 | ||||||
| Q4 2017 | Full Year 2017 | |||||||
| Pro Forma revenue | $60.5-$64.5 | $234.3-$238.3 | ||||||
| Pro Forma non-GAAP net adjusted EBITDA | $12.8-$15.8 | $52.8-$55.8 | ||||||
Conference call details
Monotype will host a conference call
on Tuesday, October 31, at 8:30 a.m. EDT to discuss the company’s third
quarter 2017 results. Individuals who are interested in listening to the
audio webcast should log on to the “Investors”
portion of the “Company” section of Monotype’s website at www.monotype.com.
The live call can also be accessed by dialing 844-229-7594 (domestic) or
314-888-4259 (international) using passcode 4999899. If individuals are
unable to listen to the live call, the audio webcast will be archived in
the Investors portion of the company’s website for one year
Non-GAAP financial measures
This press release contains
non-GAAP financial measures under the rules of the U.S. Securities and
Exchange Commission. This non-GAAP information supplements and is not
intended to represent a measure of performance in accordance with
disclosures required by generally accepted accounting principles.
Non-GAAP financial measures are used internally to manage the business,
such as in establishing an annual operating budget and in reporting to
lenders. Non-GAAP financial measures are used by Monotype management in
its operating and financial decision-making because management believes
these measures reflect ongoing business in a manner that allows
meaningful period-to-period comparisons. Accordingly, Monotype believes
it is useful for investors and others to review both GAAP and non-GAAP
measures in order to (a) understand and evaluate current operating
performance and future prospects in the same manner as management does
and (b) compare in a consistent manner the company’s current financial
results with past financial results. The primary limitations associated
with the use of non-GAAP financial measures are that these measures may
not be directly comparable to the amounts reported by other companies
and they do not include all items of income and expense that affect
operations. Monotype management compensates for these limitations by
considering the company’s financial results and outlook as determined in
accordance with GAAP and by providing a detailed reconciliation of the
non-GAAP financial measures to the most directly comparable GAAP
measures in the tables attached to this press release.
Forward-looking statements
This press release may contain
forward-looking statements including those related to future revenues
and operating results, the financial impact of the Olapic acquisition,
the growth of the company’s Olapic, Creative Professional business and
OEM business, the execution of the company’s product, growth and
expansion strategies and anticipated business momentum that involve
risks and uncertainties that could cause the company’s actual results to
differ materially. Factors that might cause or contribute to such
differences include, but are not limited to: risks associated with
changes in the economic climate including decreased demand for the
company’s products or products that incorporate the company’s solutions;
risks associated with the company’s ability to adapt its products or
services to new markets and to anticipate and quickly respond to
evolving technologies and customer requirements; risks associated with
the company’s development of and the market acceptance of new products,
product features or services; risks associated with the company’s
integration of the Olapic acquisition and the future growth of Olapic;
risks associated with the company’s ability to expand products and
services offered through acquired companies; risks associated with
increased competition in markets the company serves, including the risks
that increased competition may result in the company’s inability to gain
new customers, retain existing customers or may force the company to
reduce prices; risks associated with the ownership and enforcement of
the company’s intellectual property; and risks associated with
geopolitical conditions and changes in the financial markets. Additional
disclosure regarding these and other risks faced by the company is
available in the company’s public filings with the Securities and
Exchange Commission, including the risk factors included in the
company’s Annual Report on Form 10-K for the year ended December 31,
2016 and subsequent filings. The forward-looking financial information
set forth in this press release reflects estimates based on information
available at this time. These amounts could differ from actual reported
amounts to be included in the company’s future earnings releases and
public filings. While the company may elect to update forward-looking
statements at some point in the future, the company specifically
disclaims any obligation to do so, even if an estimate changes.
About Monotype
Monotype provides the design assets,
technology and expertise that help create beautiful, authentic and
impactful brands that customers will engage with and value, wherever
they experience the brand, now and in the future. Further information is
available at www.monotype.com.
Follow Monotype on Twitter,
Instagram
and LinkedIn.
Monotype is a trademark of Monotype Imaging Inc. registered in the U.S. Patent and Trademark Office and may be registered in certain jurisdictions. ©2017 Monotype Imaging Holdings Inc. All rights reserved.
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MONOTYPE IMAGING HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited and in thousands) |
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September 30, 2017 |
December 31, 2016 |
|||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 79,540 | $ | 91,434 | ||||||||
| Restricted cash | 5,000 |
— |
||||||||||
| Accounts receivable, net of allowance for doubtful accounts | 30,424 | 26,549 | ||||||||||
| Income tax refunds receivable | 2,314 | 2,967 | ||||||||||
| Prepaid expense and other current assets | 6,361 | 4,631 | ||||||||||
| Total current assets | 123,639 | 125,581 | ||||||||||
| Property and equipment, net | 16,690 | 14,166 | ||||||||||
| Goodwill | 278,487 | 273,489 | ||||||||||
| Intangible assets, net | 86,555 | 90,717 | ||||||||||
| Restricted cash | 12,990 | 17,992 | ||||||||||
| Other assets | 2,920 | 3,075 | ||||||||||
| Total assets | $ | 521,281 | $ | 525,020 | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 2,185 | $ | 2,170 | ||||||||
| Accrued expenses and other current liabilities | 31,409 | 28,762 | ||||||||||
| Accrued income taxes payable | 314 | 1,473 | ||||||||||
| Deferred revenue | 16,898 | 16,081 | ||||||||||
| Total current liabilities | 50,806 | 48,486 | ||||||||||
| Revolving line of credit | 96,000 | 105,000 | ||||||||||
| Other long-term liabilities | 11,430 | 11,753 | ||||||||||
| Deferred income taxes | 38,286 | 37,780 | ||||||||||
| Reserve for income taxes | 2,685 | 2,727 | ||||||||||
| Accrued pension benefits | 6,092 | 5,296 | ||||||||||
| Stockholders’ equity: | ||||||||||||
| Common stock | 44 | 43 | ||||||||||
| Additional paid-in capital | 292,272 | 274,946 | ||||||||||
| Treasury stock, at cost | (63,359 | ) | (56,232 | ) | ||||||||
| Retained earnings | 90,657 | 105,718 | ||||||||||
| Accumulated other comprehensive loss | (3,632 | ) | (10,497 | ) | ||||||||
| Total stockholders’ equity | 315,982 | 313,978 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 521,281 | $ | 525,020 | ||||||||
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MONOTYPE IMAGING HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited and in thousands, except share and per share data) |
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|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| Revenue | $ | 60,507 | $ | 52,229 | $ 170,773 | $ | 150,804 | ||||||||||||||
| Cost of revenue | 9,719 | 8,534 | 28,638 | 24,441 | |||||||||||||||||
| Cost of revenue—amortization of acquired technology | 885 | 1,327 | 2,644 | 3,589 | |||||||||||||||||
| Total cost of revenue | 10,604 | 9,861 | 31,282 | 28,030 | |||||||||||||||||
| Gross profit | 49,903 | 42,368 | 139,491 | 122,774 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Marketing and selling | 22,453 | 16,538 | 66,417 | 45,273 | |||||||||||||||||
| Research and development | 8,997 | 7,781 | 27,778 | 21,108 | |||||||||||||||||
| General and administrative | 11,291 | 11,353 | 34,032 | 28,840 | |||||||||||||||||
| Amortization of other intangible assets | 1,021 | 941 | 3,051 | 2,418 | |||||||||||||||||
| Total operating expenses | 43,762 | 36,613 | 131,278 | 97,639 | |||||||||||||||||
| Income from operations | 6,141 | 5,755 | 8,213 | 25,135 | |||||||||||||||||
| Other expense: | |||||||||||||||||||||
| Interest expense, net | 699 | 351 | 2,056 | 549 | |||||||||||||||||
| Other expense, net | 1,444 | 272 | 4,858 | 479 | |||||||||||||||||
| Total other expense | 2,143 | 623 | 6,914 | 1,028 | |||||||||||||||||
| Income before provision for income taxes | 3,998 | 5,132 | 1,299 | 24,107 | |||||||||||||||||
| Provision for income taxes | 2,737 | 2,707 | 1,609 | 9,671 | |||||||||||||||||
| Net income (loss) | $ | 1,261 | $ | 2,425 | $ (310 | ) | $ | 14,436 | |||||||||||||
| Net income (loss) available to common stockholders—basic | $ | 1,196 | $ | 2,341 | $ (310 | ) | $ | 13,982 | |||||||||||||
| Net income (loss) available to common stockholders—diluted | $ | 1,195 | $ | 2,340 | $ (310 | ) | $ | 13,983 | |||||||||||||
| Net income (loss) per common share: | |||||||||||||||||||||
| Basic | $ | 0.03 | $ | 0.06 | $ (0.01 | ) | $ | 0.36 | |||||||||||||
| Diluted | $ | 0.03 | $ | 0.06 | $ (0.01 | ) | $ | 0.35 | |||||||||||||
| Weighted-average number of shares outstanding: | |||||||||||||||||||||
| Basic | 39,594,130 | 39,977,120 | 39,576,312 | 39,348,437 | |||||||||||||||||
| Diluted | 39,798,779 | 40,261,247 | 39,576,312 | 39,699,790 | |||||||||||||||||
| Dividends declared per common share | $ | 0.113 | $ |
0.110 |
$ 0.339 | $ |
0.330 |
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MONOTYPE IMAGING HOLDINGS INC. |
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| RECONCILIATION OF GAAP REVENUE TO NON-GAAP PRO FORMA REVENUE | |||||||||||||||
|
Three Months Ended September 30, 2017 |
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| Monotype | Olapic | Combined | |||||||||||||
| GAAP revenue | $ | 55,275 | $ | 5,232 | $ | 60,507 | |||||||||
| Pre-acquisition revenue(1) |
— |
— |
— |
||||||||||||
| Deferred revenue impairment |
— |
540 | 540 | ||||||||||||
|
Pro Forma non-GAAP revenue |
$ | 55,275 | $ | 5,772 | $ | 61,047 | |||||||||
(1) Pro Forma non-GAAP revenue has no pre-acquisition revenue adjustments in the three months ended September 30, 2017. We acquired Olapic on August 9, 2016.
|
Nine Months Ended
September 30, 2017 |
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| Monotype | Olapic | Combined | |||||||||||||
| GAAP revenue | $ | 157,315 | $ | 13,458 | $ | 170,773 | |||||||||
| Pre-acquisition revenue(1) |
— |
— |
— |
||||||||||||
| Deferred revenue impairment |
— |
2,828 | 2,828 | ||||||||||||
|
Pro Forma non-GAAP revenue |
$ | 157,315 | $ | 16,286 | $ | 173,601 | |||||||||
(1) Pro Forma non-GAAP revenue has no pre-acquisition revenue adjustments in the nine months ended September 30, 2017. We acquired Olapic on August 9, 2016.
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RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET ADJUSTED EBITDA |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| Net income (loss) | $ | 1,261 | $ | 2,425 | $ | (310 | ) | $ | 14,436 | ||||||||||||
| Interest expense, net | 699 | 351 | 2,056 | 549 | |||||||||||||||||
| Other expense, net | 1,444 | 272 | 4,858 | 479 | |||||||||||||||||
| Provision for income taxes | 2,737 | 2,707 | 1,609 | 9,671 | |||||||||||||||||
| Income from operations | $ | 6,141 | $ | 5,755 | $ | 8,213 | $ | 25,135 | |||||||||||||
| Depreciation and amortization | 3,098 | 3,343 | 9,271 | 9,114 | |||||||||||||||||
| Share based compensation | 5,271 | 5,306 | 15,294 | 12,705 | |||||||||||||||||
| Acquisition-related compensation(1) | 1,407 | 1,077 | 4,221 | 2,233 | |||||||||||||||||
| Net adjusted EBITDA | $ | 15,917 | $ | 15,481 | $ | 36,999 | $ | 49,187 | |||||||||||||
(1) For the three months ended September 30, 2017 and 2016, the amount includes $0.5 million and $0.6 million, respectively, of expense associated with the deferred compensation arrangement resulting from an amendment to the Swyft Merger Agreement and $0.9 million and $0.5 million, respectively, of expense associated with the deferred compensation arrangement with the founders of Olapic in connection with the acquisition. For the nine months ended September 30, 2017 and 2016, the amount includes $1.6 million and $1.7 million, respectively, of expense associated with the deferred compensation arrangement resulting from an amendment to the Swyft Merger Agreement and $2.6 million and $0.5 million, respectively, of expense associated with the deferred compensation arrangement with the founders of Olapic in connection with the acquisition.
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MONOTYPE IMAGING HOLDINGS INC. OTHER INFORMATION (Unaudited and in thousands, except share and per share amounts) |
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RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| GAAP net income (loss) | $ | 1,261 | $ | 2,425 | $ | (310 | ) | $ | 14,436 | ||||||||||||
| Amortization, net of tax of $1,319, $1,195, $4,619 and $2,409, respectively | 587 | 1,073 | 1,076 | 3,598 | |||||||||||||||||
| Share based compensation, net of tax of $3,648, $2,796, $12,403 and $5,095, respectively | 1,623 | 2,510 | 2,891 | 7,610 | |||||||||||||||||
|
Acquisition-related compensation, net of tax of $0, $0, $0 and $0, respectively(1) |
1,407 | 1,077 | 4,221 | 2,233 | |||||||||||||||||
|
Non-GAAP net income |
$ | 4,878 | $ | 7,085 | $ | 7,878 | $ | 27,877 | |||||||||||||
(1) For the three months ended September 30, 2017 and 2016, the amount includes $0.5 million and $0.6 million, respectively, of expense associated with the deferred compensation arrangement resulting from an amendment to the Swyft Merger Agreement and $0.9 million and $0.5 million, respectively, of expense associated with the deferred compensation arrangement with the founders of Olapic in connection with the acquisition. For the nine months ended September 30, 2017 and 2016, the amount includes $1.6 million and $1.7 million, respectively, of expense associated with the deferred compensation arrangement resulting from an amendment to the Swyft Merger Agreement and $2.6 million and $0.5 million, respectively, of expense associated with the deferred compensation arrangement with the founders of Olapic in connection with the acquisition.
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RECONCILIATION OF GAAP EARNINGS (LOSS) PER DILUTED SHARE TO NON-GAAP EARNINGS PER DILUTED SHARE |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| GAAP net income (loss) per diluted share | $ | 0.03 | $ | 0.06 | $ | (0.01 | ) | $ | 0.35 | ||||||||||||
| Amortization, net of tax of $0.03, $0.03, $0.12 and $0.06, respectively | 0.01 | 0.03 | 0.03 | 0.09 | |||||||||||||||||
| Share based compensation, net of tax of $0.09, $0.07, $0.31 and $0.13, respectively | 0.04 | 0.06 | 0.07 | 0.20 | |||||||||||||||||
| Acquisition-related compensation, net of tax of $0.00, $0.00, $0.00 and $0.00, respectively(1) | 0.04 | 0.03 | 0.11 | 0.06 | |||||||||||||||||
| Non-GAAP earnings per diluted share | $ | 0.12 | $ | 0.18 | $ | 0.20 | $ | 0.70 | |||||||||||||
(1) For the three months ended September 30, 2017 and 2016, the amount includes $0.5 million, or $0.01 per share, and $0.6 million, or $0.02 per share, respectively, of expense associated with the deferred compensation arrangement resulting from an amendment to the Swyft Merger Agreement and $0.9 million, or $0.02 per share, and $0.5 million, or $0.01 per share, respectively, of expense associated with the deferred compensation arrangement with the founders of Olapic in connection with the acquisition. For the nine months ended September 30, 2017 and 2016, the amount includes $1.6 million, or $0.04 per share, and $1.7 million, or $0.04 per share, respectively, of expense associated with the deferred compensation arrangement resulting from an amendment to the Swyft Merger Agreement and $2.6 million, or $0.07 per share, and $0.5 million, or $0.01 per share, respectively, of expense associated with the deferred compensation arrangement with the founders of Olapic in connection with the acquisition.
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MONOTYPE IMAGING HOLDINGS INC. |
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OTHER INFORMATION |
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(Unaudited and in thousands) |
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RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP PRO FORMA NET ADJUSTED EBITDA |
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Three Months Ended |
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| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 9,020 | $ | (7,759 | ) | $ | 1,261 | |||||||||
| Interest expense, net | 699 |
— |
699 | |||||||||||||
| Other expense, net | 1,229 | 215 | 1,444 | |||||||||||||
| Provision for income taxes | 2,330 | 407 | 2,737 | |||||||||||||
| Income (loss) from operations | 13,278 | (7,137 | ) | 6,141 | ||||||||||||
| Pre-acquisition net adjusted EBITDA(1) |
— |
— |
— |
|||||||||||||
| Deferred revenue impairment(2) |
— |
540 | 540 | |||||||||||||
| Depreciation and amortization | 2,335 | 763 | 3,098 | |||||||||||||
| Share based compensation | 4,199 | 1,072 | 5,271 | |||||||||||||
| Acquisition-related compensation(3) | 532 | 875 | 1,407 | |||||||||||||
| Transaction costs(4) |
— |
— |
— |
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|
Pro Forma non-GAAP net adjusted EBITDA |
$ | 20,344 | $ | (3,887 | ) | $ | 16,457 | |||||||||
(1) Pro Forma non-GAAP net adjusted EBITDA has no pre-acquisition
non-GAAP net adjusted EBITDA adjustments in the three months ended
September 30, 2017. We acquired Olapic on August 9, 2016.
(2) Pro
Forma non-GAAP net adjusted EBITDA includes $0, $0.5 million and $0.5
million, respectively, to add back the estimated purchase accounting
adjustment for the impairment of deferred revenue.
(3)
Acquisition-related compensation includes $0.5 million, $0.9 million and
$1.4 million, respectively, of expense associated with the deferred
compensation arrangements resulting from an amendment to the Swyft
Merger Agreement and expense associated with the deferred compensation
arrangements with the founders of Olapic in connection with the
acquisition.
(4) In the three months ended September 30, 2017, the
Company did not incur any transaction expenses for the Olapic
acquisition. Consequently, there is no adjustment to Pro Forma non-GAAP
net adjusted EBITDA for these type of costs.
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RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP PRO FORMA NET ADJUSTED EBITDA |
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|
Nine Months Ended
September 30, 2017 |
||||||||||||||||
| Monotype | Olapic | Combined | |||||||||||||||
| GAAP net income (loss) | $ | 24,054 | $ | (24,364 | ) | $ | (310 | ) | |||||||||
| Interest expense, net | 2,056 |
— |
2,056 | ||||||||||||||
| Other expense, net | 4,311 | 547 | 4,858 | ||||||||||||||
| Provision (benefit) for income taxes | 1,873 | (264 | ) | 1,609 | |||||||||||||
| Income (loss) from operations | 32,294 | (24,081 | ) | 8,213 | |||||||||||||
| Pre-acquisition net adjusted EBITDA(1) |
— |
— |
— |
||||||||||||||
| Deferred revenue impairment(2) | — | 2,828 | 2,828 | ||||||||||||||
| Depreciation and amortization | 7,016 | 2,255 | 9,271 | ||||||||||||||
| Share based compensation | 12,437 | 2,857 | 15,294 | ||||||||||||||
| Acquisition-related compensation(3) | 1,596 | 2,625 | 4,221 | ||||||||||||||
| Transaction costs(4) |
— |
— |
— |
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|
Pro Forma non-GAAP net adjusted EBITDA |
$ | 53,343 | $ | (13,516 | ) | $ | 39,827 | ||||||||||
(1) Pro Forma non-GAAP net adjusted EBITDA has no pre-acquisition
non-GAAP net adjusted EBITDA adjustments in the nine months ended
September 30, 2017. We acquired Olapic on August 9, 2016.
(2) Pro
Forma non-GAAP net adjusted EBITDA includes $0, $2.8 million and $2.8
million, respectively, to add back the estimated purchase accounting
adjustment for the impairment of deferred revenue.
(3)
Acquisition-related compensation includes $1.6 million, $2.6 million and
$4.2 million, respectively, of expense associated with the deferred
compensation arrangements resulting from an amendment to the Swyft
Merger Agreement and expense associated with the deferred compensation
arrangements with the founders of Olapic in connection with the
acquisition.
(4) In the nine months ended September 30, 2017, the
Company did not incur any transaction expenses for the Olapic
acquisition. Consequently, there is no adjustment to Pro Forma non-GAAP
net adjusted EBITDA for these type of costs.
|
MONOTYPE IMAGING HOLDINGS INC. OTHER INFORMATION (Unaudited and in thousands) |
||||||||||||||||||||
|
OTHER INFORMATION Share based compensation is comprised of the following: |
||||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Marketing and selling | $ | 2,455 | $ | 2,164 | $ | 7,348 | $ | 5,349 | ||||||||||||
| Research and development | 1,131 | 1,180 | 3,227 | 2,869 | ||||||||||||||||
| General and administrative | 1,685 | 1,962 | 4,719 | 4,487 | ||||||||||||||||
| Total expensed | $ | 5,271 | $ | 5,306 | $ | 15,294 | $ | 12,705 | ||||||||||||
| Property and equipment | 44 |
— |
97 |
— |
||||||||||||||||
| Total share based compensation | $ | 5,315 | $ | 5,306 | $ | 15,391 | $ | 12,705 | ||||||||||||
|
MARKET INFORMATION The following table presents revenue for our two major markets: |
||||||||||||||||||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| Creative Professional | $ | 34,521 | $ | 27,798 | $ | 92,234 | $ | 75,170 | ||||||||||||
| OEM | 25,986 | 24,431 | 78,539 | 75,634 | ||||||||||||||||
| Total | $ | 60,507 | $ | 52,229 | $ | 170,773 | $ | 150,804 | ||||||||||||
|
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP REVENUE TO FORECAST PRO FORMA NON-GAAP REVENUE (Unaudited and in thousands) |
|||||||||||||||
| Low End of Guidance | |||||||||||||||
| Q4 2017 | |||||||||||||||
| Monotype | Olapic | Combined | |||||||||||||
| GAAP revenue | $ | 54,700 | $ | 5,500 | $ | 60,200 | |||||||||
| Deferred revenue impairment |
— |
300 | 300 | ||||||||||||
|
Pro Forma non-GAAP revenue |
$ | 54,700 | $ | 5,800 | $ | 60,500 | |||||||||
| High End of Guidance | |||||||||||||||
| Q4 2017 | |||||||||||||||
| Monotype | Olapic | Combined | |||||||||||||
| GAAP revenue | $ | 57,700 | $ | 6,500 | $ | 64,200 | |||||||||
| Deferred revenue impairment |
— |
300 | 300 | ||||||||||||
|
Pro Forma non-GAAP revenue |
$ | 57,700 | $ | 6,800 | $ | 64,500 | |||||||||
| Low End of Guidance | |||||||||||||||
| 2017 | |||||||||||||||
| Monotype | Olapic | Combined | |||||||||||||
| GAAP revenue | $ | 212,000 | $ | 19,000 | $ | 231,000 | |||||||||
| Deferred revenue impairment |
— |
3,300 | 3,300 | ||||||||||||
|
Pro Forma non-GAAP revenue |
$ | 212,000 | $ | 22,300 | $ | 234,300 | |||||||||
| High End of Guidance | |||||||||||||||
| 2017 | |||||||||||||||
| Monotype | Olapic | Combined | |||||||||||||
| GAAP revenue | $ | 215,000 | $ | 20,000 | $ | 235,000 | |||||||||
| Deferred revenue impairment |
— |
3,300 | 3,300 | ||||||||||||
|
Pro Forma non-GAAP revenue |
$ | 215,000 | $ | 23,300 | $ | 238,300 | |||||||||
|
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP NET INCOME (LOSS) TO FORECAST NON-GAAP NET ADJUSTED EBITDA (Unaudited and in thousands) |
||||||||||||||||
| Low End of Guidance | ||||||||||||||||
|
|
Q4 2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 1,300 | $ | (1,200 | ) | $ | 100 | |||||||||
| Interest expense, net | 800 |
— |
800 | |||||||||||||
|
Other expense, net |
1,500 |
— |
1,500 | |||||||||||||
| Provision (benefit) for income taxes | 5,500 | (5,300 | ) | 200 | ||||||||||||
| Income (loss) from operations | 9,100 | (6,500 | ) | 2,600 | ||||||||||||
| Depreciation and amortization | 2,300 | 800 | 3,100 | |||||||||||||
| Share based compensation | 4,200 | 1,100 | 5,300 | |||||||||||||
| Acquisition-related compensation(1) | 600 | 900 | 1,500 | |||||||||||||
| Non-GAAP net adjusted EBITDA | $ | 16,200 | $ | (3,700 | ) | $ | 12,500 | |||||||||
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
| High End of Guidance | ||||||||||||||||
|
|
Q4 2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 1,800 | $ | (1,000 | ) | $ | 800 | |||||||||
| Interest expense, net | 800 |
— |
800 | |||||||||||||
|
Other expense, net |
800 |
— |
800 | |||||||||||||
| Provision (benefit) for income taxes | 7,700 | (4,500 | ) | 3,200 | ||||||||||||
| Income (loss) from operations | 11,100 | (5,500 | ) | 5,600 | ||||||||||||
| Depreciation and amortization | 2,300 | 800 | 3,100 | |||||||||||||
| Share based compensation | 4,200 | 1,100 | 5,300 | |||||||||||||
| Acquisition-related compensation(1) | 600 | 900 | 1,500 | |||||||||||||
| Non-GAAP net adjusted EBITDA | $ | 18,200 | $ | (2,700 | ) | $ | 15,500 | |||||||||
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
|
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP NET INCOME (LOSS) TO FORECAST NON-GAAP NET ADJUSTED EBITDA (Unaudited and in thousands) |
||||||||||||||||
| Low End of Guidance | ||||||||||||||||
|
|
2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 2,100 | $ | (2,000 | ) | $ | 100 | |||||||||
| Interest expense, net | 2,900 |
— |
2,900 | |||||||||||||
|
Other expense, net |
5,800 | 500 | 6,300 | |||||||||||||
| Provision (benefit) for income taxes | 30,500 | (29,100 | ) | 1,400 | ||||||||||||
| Income (loss) from operations | 41,300 | (30,600 | ) | 10,700 | ||||||||||||
| Depreciation and amortization | 9,400 | 3,100 | 12,500 | |||||||||||||
| Share based compensation | 16,600 | 4,000 | 20,600 | |||||||||||||
| Acquisition-related compensation(1) | 2,200 | 3,500 | 5,700 | |||||||||||||
| Non-GAAP net adjusted EBITDA | $ | 69,500 | $ | (20,000 | ) | $ | 49,500 | |||||||||
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
|
|
High End of Guidance | |||||||||||||||
|
|
2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 2,200 | $ | (1,900 | ) | $ | 300 | |||||||||
| Interest expense, net | 2,900 |
— |
2,900 | |||||||||||||
|
Other expense, net |
5,100 |
500 |
5,600 |
|||||||||||||
| Provision (benefit) for income taxes | 33,100 | (28,200 | ) | 4,900 | ||||||||||||
| Income (loss) from operations |
43,300 |
(29,600 | ) |
13,700 |
||||||||||||
| Depreciation and amortization | 9,400 | 3,100 | 12,500 | |||||||||||||
| Share based compensation | 16,600 | 4,000 | 20,600 | |||||||||||||
| Acquisition-related compensation(1) | 2,200 | 3,500 | 5,700 | |||||||||||||
| Non-GAAP net adjusted EBITDA | $ |
71,500 |
$ | (19,000 | ) | $ |
52,500 |
|||||||||
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
|
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP NET INCOME (LOSS) TO FORECAST PRO FORMA NON-GAAP NET ADJUSTED EBITDA (Unaudited and in thousands) |
||||||||||||||||
| Low End of Guidance | ||||||||||||||||
|
|
Q4 2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 1,300 | $ | (1,200 | ) | $ | 100 | |||||||||
| Interest expense, net | 800 |
— |
800 | |||||||||||||
|
Other expense, net |
1,500 |
— |
1,500 | |||||||||||||
| Provision (benefit) for income taxes | 5,500 | (5,300 | ) | 200 | ||||||||||||
| Income (loss) from operations | 9,100 | (6,500 | ) | 2,600 | ||||||||||||
| Deferred revenue impairment(1) |
— |
300 | 300 | |||||||||||||
| Depreciation and amortization | 2,300 | 800 | 3,100 | |||||||||||||
| Share based compensation | 4,200 | 1,100 | 5,300 | |||||||||||||
| Acquisition-related compensation(2) | 600 | 900 | 1,500 | |||||||||||||
|
Pro Forma non-GAAP net adjusted EBITDA |
$ | 16,200 | $ | (3,400 | ) | $ | 12,800 | |||||||||
(1) Pro Forma non-GAAP net adjusted EBITDA includes $0, $0.3 million and
$0.3 million, respectively, to add back the estimated purchase
accounting adjustment for the impairment of deferred revenue.
(2)
Includes charges to operations for portions of merger consideration
accounted for as compensation expense under GAAP.
| High End of Guidance | ||||||||||||||||
|
|
Q4 2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 1,800 | $ | (1,000 | ) | $ | 800 | |||||||||
| Interest expense, net | 800 |
— |
800 | |||||||||||||
|
Other expense, net |
800 |
— |
800 | |||||||||||||
| Provision (benefit) for income taxes | 7,700 | (4,500 | ) | 3,200 | ||||||||||||
| Income (loss) from operations | 11,100 | (5,500 | ) | 5,600 | ||||||||||||
| Deferred revenue impairment(1) |
— |
300 | 300 | |||||||||||||
| Depreciation and amortization | 2,300 | 800 | 3,100 | |||||||||||||
| Share based compensation | 4,200 | 1,100 | 5,300 | |||||||||||||
| Acquisition-related compensation(2) | 600 | 900 | 1,500 | |||||||||||||
|
Pro Forma non-GAAP net adjusted EBITDA |
$ | 18,200 | $ | (2,400 | ) | $ | 15,800 | |||||||||
(1) Pro Forma non-GAAP net adjusted EBITDA includes $0, $0.3 million and
$0.3 million, respectively, to add back the estimated purchase
accounting adjustment for the impairment of deferred revenue.
(2)
Includes charges to operations for portions of merger consideration
accounted for as compensation expense under GAAP.
|
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP NET INCOME (LOSS) TO FORECAST PRO FORMA NON-GAAP NET ADJUSTED EBITDA (Unaudited and in thousands) |
||||||||||||||||
| Low End of Guidance | ||||||||||||||||
|
|
2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 2,100 | $ | (2,000 | ) | $ | 100 | |||||||||
| Interest expense, net | 2,900 |
— |
2,900 | |||||||||||||
|
Other expense, net |
5,800 | 500 | 6,300 | |||||||||||||
| Provision (benefit) for income taxes | 30,500 | (29,100 | ) | 1,400 | ||||||||||||
| Income (loss) from operations | 41,300 | (30,600 | ) | 10,700 | ||||||||||||
| Deferred revenue impairment(1) |
— |
3,300 | 3,300 | |||||||||||||
| Depreciation and amortization | 9,400 | 3,100 | 12,500 | |||||||||||||
| Share based compensation | 16,600 | 4,000 | 20,600 | |||||||||||||
| Acquisition-related compensation(2) | 2,200 | 3,500 | 5,700 | |||||||||||||
|
Pro Forma non-GAAP net adjusted EBITDA |
$ | 69,500 | $ | (16,700 | ) | $ | 52,800 | |||||||||
(1) Pro Forma non-GAAP net adjusted EBITDA includes $0, $3.3 million and
$3.3 million, respectively, to add back the estimated purchase
accounting adjustment for the impairment of deferred revenue.
(2)
Includes charges to operations for portions of merger consideration
accounted for as compensation expense under GAAP.
|
|
High End of Guidance | |||||||||||||||
|
|
2017 | |||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 2,200 | $ | (1,900 | ) | $ | 300 | |||||||||
| Interest expense, net | 2,900 |
— |
2,900 | |||||||||||||
|
Other expense, net |
5,100 |
500 |
5,600 |
|||||||||||||
| Provision (benefit) for income taxes | 33,100 | (28,200 | ) | 4,900 | ||||||||||||
| Income (loss) from operations |
43,300 |
(29,600 | ) |
13,700 |
||||||||||||
| Deferred revenue impairment(1) |
— |
3,300 | 3,300 | |||||||||||||
| Depreciation and amortization | 9,400 | 3,100 | 12,500 | |||||||||||||
| Share based compensation | 16,600 | 4,000 | 20,600 | |||||||||||||
| Acquisition-related compensation(2) | 2,200 | 3,500 | 5,700 | |||||||||||||
|
Pro Forma non-GAAP net adjusted EBITDA |
$ |
71,500 |
$ | (15,700 | ) | $ |
55,800 |
|||||||||
(1) Pro Forma non-GAAP net adjusted EBITDA includes $0, $3.3 million and
$3.3 million, respectively, to add back the estimated purchase
accounting adjustment for the impairment of deferred revenue.
(2)
Includes charges to operations for portions of merger consideration
accounted for as compensation expense under GAAP.
|
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO FORECAST NON-GAAP EARNINGS PER DILUTED SHARE (Unaudited and in thousands, except share and per share data) |
||||||||||||||||
| Low End of Guidance | ||||||||||||||||
| Q4 2017 | ||||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 1,300 | $ | (1,200 | ) | $ | 100 | |||||||||
| Amortization, net of tax of $1,000, $600 and $1,600, respectively | 200 | 100 | 300 | |||||||||||||
| Share based compensation, net of tax of $3,400, $900 and $4,300, respectively |
800 |
200 |
1,000 |
|||||||||||||
| Acquisition-related compensation, net of tax of $0, $0 and $0, respectively(1) |
600 |
900 |
1,500 |
|||||||||||||
| Non-GAAP net income (loss) | $ | 2,900 | $ |
— |
$ | 2,900 | ||||||||||
| GAAP earnings (loss) per diluted share | $ | 0.03 | $ | (0.03 | ) | $ |
— |
|||||||||
| Amortization, net of tax of $0.03, $0.02 and $0.05, respectively, per diluted share |
0.01 |
— |
0.01 |
|||||||||||||
| Share based compensation, net of tax of $0.09, $0.02 and $0.11, respectively, per diluted share |
0.02 |
0.01 |
0.03 |
|||||||||||||
| Acquisition-related compensation, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.02 |
0.02 |
0.04 |
|||||||||||||
| Non-GAAP earnings (loss) per diluted share | $ | 0.08 | $ |
— |
$ | 0.08 | ||||||||||
| Weighted average diluted shares used to compute earnings per share |
39,900 |
39,900 |
39,900 |
|||||||||||||
Assumes 81% effective tax rate. Please note, we anticipate the potential for increased volatility in the effective tax rate from the continuing impact of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
|
|
High End of Guidance | |||||||||||||||
| Q4 2017 | ||||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 1,800 | $ | (1,000 | ) | $ | 800 | |||||||||
|
Amortization, net of tax of $1,000, $600 and $1,600, respectively |
200 | 100 | 300 | |||||||||||||
| Share based compensation, net of tax of $3,400, $900 and $4,300, respectively |
800 |
200 |
1,000 |
|||||||||||||
| Acquisition-related compensation, net of tax of $0, $0 and $0, respectively(1) |
600 |
900 |
1,500 |
|||||||||||||
| Non-GAAP net income (loss) | $ | 3,400 | $ | 200 | $ | 3,600 | ||||||||||
| GAAP earnings (loss) per diluted share | $ | 0.05 | $ | (0.03 | ) | $ | 0.02 | |||||||||
| Amortization, net of tax of $0.03, $0.02 and $0.05, respectively, per diluted share |
0.01 |
— |
0.01 |
|||||||||||||
| Share based compensation, net of tax of $0.09, $0.02 and $0.11, respectively, per diluted share |
0.02 |
0.01 |
0.03 |
|||||||||||||
| Acquisition-related compensation, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.02 |
0.02 |
0.04 |
|||||||||||||
| Non-GAAP earnings (loss) per diluted share | $ | 0.10 | $ |
— |
0.10 | |||||||||||
| Weighted average diluted shares used to compute earnings per share |
39,900 |
39,900 |
39,900 |
|||||||||||||
Assumes 81% effective tax rate. Please note, we anticipate the potential for increased volatility in the effective tax rate from the continuing impact of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
|
MONOTYPE IMAGING HOLDINGS INC. RECONCILIATION OF FORECAST GAAP EARNINGS PER DILUTED SHARE TO FORECAST NON-GAAP EARNINGS PER DILUTED SHARE (Unaudited and in thousands, except share and per share data) |
||||||||||||||||
| Low End of Guidance | ||||||||||||||||
| 2017 | ||||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 2,100 | $ | (2,000 | ) | $ | 100 | |||||||||
| Amortization, net of tax of $4,700, $2,800 and $7,500, respectively | 300 |
150 |
450 |
|||||||||||||
| Share based compensation, net of tax of $16,000, $3,700 and $19,700, respectively |
950 |
300 |
1,250 |
|||||||||||||
|
Acquisition-related compensation, net of tax of $0, $0 and $0, respectively(1) |
2,200 |
3,500 |
5,700 |
|||||||||||||
| Non-GAAP net income (loss) | $ |
5,550 |
$ |
1,950 |
$ |
7,500 |
||||||||||
| GAAP earnings (loss) per diluted share | $ | 0.05 | $ | (0.05 | ) | $ |
— |
|||||||||
| Amortization, net of tax of $0.12, $0.07 and $0.19, respectively, per diluted share |
0.01 |
0.00 |
0.01 |
|||||||||||||
| Share based compensation, net of tax of $0.40, $0.09 and $0.49, respectively, per diluted share |
0.02 |
0.01 |
0.03 |
|||||||||||||
|
Acquisition-related compensation, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.06 |
0.09 |
0.15 |
|||||||||||||
| Non-GAAP earnings (loss) per diluted share | $ |
0.14 |
$ |
0.05 |
$ |
0.19 |
||||||||||
| Weighted average diluted shares used to compute earnings per share |
39,800 |
39,800 |
39,800 |
|||||||||||||
Assumes 94% effective tax rate. Please note, we anticipate the potential for increased volatility in the effective tax rate from the continuing impact of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
|
|
High End of Guidance | |||||||||||||||
| 2017 | ||||||||||||||||
| Monotype | Olapic | Combined | ||||||||||||||
| GAAP net income (loss) | $ | 2,200 | $ | (1,900 | ) | $ | 300 | |||||||||
| Amortization, net of tax of $4,700, $2,800 and $7,500, respectively | 300 |
150 |
450 |
|||||||||||||
| Share based compensation, net of tax of $16,000, $3,700 and $19,700, respectively |
950 |
300 |
1,250 |
|||||||||||||
|
Acquisition-related compensation, net of tax of $0, $0 and $0, respectively (1) |
2,200 |
3,500 |
5,700 |
|||||||||||||
|
Non-GAAP net income (loss) |
$ |
5,650 |
$ |
2,050 |
$ |
7,700 |
||||||||||
| GAAP earnings (loss) per diluted share | $ | 0.06 | $ | (0.05 | ) | $ | 0.01 | |||||||||
| Amortization, net of tax of $0.12, $0.07 and $0.19, respectively, per diluted share |
0.01 |
0.00 |
0.01 |
|||||||||||||
| Share based compensation, net of tax of $0.40, $0.09 and $0.49, respectively, per diluted share |
0.02 |
0.01 |
0.03 |
|||||||||||||
|
Acquisition-related compensation, net of tax of $0.00, $0.00 and $0.00, respectively, per diluted share(1) |
0.06 |
0.09 |
0.15 |
|||||||||||||
| Non-GAAP earnings (loss) per diluted share | $ |
0.15 |
$ |
0.05 |
$ |
0.20 |
||||||||||
| Weighted average diluted shares used to compute earnings per share |
39,800 |
39,800 |
39,800 |
|||||||||||||
Assumes 94% effective tax rate. Please note, we anticipate the potential for increased volatility in the effective tax rate from the continuing impact of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.
(1) Includes charges to operations for portions of merger consideration accounted for as compensation expense under GAAP.
