WOBURN, Mass.--(BUSINESS WIRE)--Monotype Imaging Holdings Inc. (Nasdaq: TYPE), a leader in helping to empower expression and engagement through type, technology and expertise, today released results for the third quarter ended September 30, 2016.

Third Quarter 2016 Highlights

• Revenue for the quarter was $52.2 million, an increase of 6 percent, year over year. Non-GAAP pro forma revenue for the quarter, inclusive of unaudited, estimated Olapic revenue prior to the acquisition, was $54.7 million.
• Creative Professional revenue was $27.8 million, up 24 percent, year over year.
• Net income was $2.4 million. Non-GAAP net adjusted EBITDA was $15.5 million, or 30 percent of revenue. Non-GAAP pro forma net adjusted EBITDA was $16.2 million, or 30 percent of pro forma revenue.
• Cash and cash equivalents stood at $97.6 million.

"We hit a major milestone in Q3, growing our Creative Professional business to represent more than 50 percent of revenue for the first time in Monotype’s history," said Scott Landers, president and CEO at Monotype. “We’ve done this by investing out in front of emerging market opportunities and expanding our addressable markets through both our organic offerings and acquisitions like Olapic.”

CFO Transition

Monotype is also announcing that it has appointed Scott Landers, Monotype’s president and CEO, as interim chief financial officer, succeeding Joseph Hill, who has departed from his position as CFO to pursue other interests. “We appreciate Joe’s contributions to Monotype, as well as his help in ensuring a smooth transition. We wish Joe success with his future endeavors,” said Landers.

Third Quarter 2016 Operating Results

Revenue for the quarter increased six percent to $52.2 million, compared to $49.4 million for the third quarter of 2015. Creative Professional revenue was $27.8 million, a 24 percent increase from the third quarter of 2015. OEM revenue was $24.4 million, a decrease of nine percent from the same period in 2015.

GAAP net income was $2.4 million, compared to $8.0 million in the third quarter of 2015. Non-GAAP net income, which excludes the amortization of intangible assets, stock-based compensation expense and acquisition-related contingent consideration expense, net of taxes, was $7.1 million, compared to $12.1 million in the third quarter of 2015. Non-GAAP net adjusted EBITDA was $15.5 million, or 30 percent of revenue, compared to $17.7 million in the third quarter of 2015.

Earnings per diluted share were $0.06, compared to $0.20 in the prior year quarter. Non-GAAP earnings per diluted share were $0.18 compared to $0.31 in the same period in 2015.

A reconciliation of GAAP measures to non-GAAP measures for the three and nine months ended Sept. 30, 2016 and 2015 is provided in the financial tables that accompany this release.

Pro Forma Results for the Third Quarter 2016

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.

Non-GAAP pro forma revenue in the third quarter was $54.7 million and non-GAAP pro forma net adjusted EBITDA was $16.2 million.

Cash and cash flow

Monotype had cash and cash equivalents of $97.6 million as of Sept. 30, 2016, compared to $109.5 million as of June 30, 2016, and $86.3 million as of Sept. 30, 2015. In the quarter, the company used $120.3 milion to acquire Olapic, borrowed $110.0 million from its line of credit, and used $4.5 million of cash related to the company’s quarterly dividend payments.

Quarterly dividend

Monotype’s most recent dividend payment of $0.11 per share was paid on October 21, 2016, to shareholders of record as of October 3, 2016. The next dividend payment of $0.11 per share will be paid on January 20, 2017 to shareholders of record as of the close of business on January 2, 2017.

Financial Outlook for the Fourth Quarter and Full Year 2016

For the fourth quarter of 2016, Monotype expects revenue in the range of $52.7 million to $56.7 million.

For the full year 2016, Monotype now expects revenue in the range of $203.5 million to $207.5 million. This includes a purchase accounting adjustment for deferred revenue impairment of $1.0 million for Q4 and $2.4 million for the full year 2016.

Q4 GAAP net income is expected to be in the range of $1.0 million to $3.5 million. Monotype expects Q4 non-GAAP net adjusted EBITDA to be in the range of $12.1 million to $16.2 million. Full year 2016 GAAP net income is now expected to be in the range of $15.4 million to $18.0 million. Full year 2016 non-GAAP net adjusted EBITDA is now expected to be in the range of $61.2 million to $65.4 million.

The company expects earnings per diluted share to be in the range of $0.03 to $0.09 for Q4. Monotype expects non-GAAP earnings per diluted share for Q4 to be in the range of $0.18 to $0.24.

Full year 2016 GAAP earnings per diluted share is now expected to be in the range of $0.39 to $0.45. Full year 2016 non-GAAP earnings per diluted share is now expected to be in the range of $0.87 to $0.94.

Pro Forma Outlook for the Fourth Quarter and Full Year 2016

On a pro forma basis, Monotype expects non-GAAP pro forma revenue in the fourth quarter of between $53.7 million to $57.7 million, and non-GAAP pro forma net adjusted EBITDA of between $13.5 million to $17.6 million.

For the full year, non-GAAP pro forma revenue is now expected to be between $214.5 million to $218.5 million and non-GAAP pro forma net adjusted EBITDA is now expected to be in the range of between $52.9 million to $57.1 million. These pro forma expectations are based on unaudited pre-acquisition results from Olapic.

A reconciliation of GAAP measures to non-GAAP measures for the fourth quarter and full year 2016 is provided in the financial tables that accompany this release.

About Monotype

Monotype is a leading global provider of typefaces, technology and expertise that enable the best user experience and ensure brand integrity. Headquartered in Woburn, Mass., Monotype provides customers worldwide with typeface solutions for a broad range of creative applications and consumer devices. The company’s libraries and e-commerce sites are home to many of the most widely used typefaces – including the Helvetica®, Frutiger® and Univers® families – as well as the next generation of type designs. Further information is available at www.monotype.com. Follow Monotype on Twitter®,Instagram® and LinkedIn®.