Monotype Imaging Holdings Inc. (TYPE) Q1 2010 Earnings Call Transcript May 4, 2010 8:30 am ET Executives Staci Mortenson – IR, ICR Doug Shaw – President and CEO Scott Landers – SVP and CFO Analysts Ralph Schackart – William Blair Steven Frankel – Brigantine Advisors Matthew Kempler – Sidoti & Company LLC Ross MacMillan – Jeffries & Company Jeff Rath – Canaccord Saket Kalia – JPMorgan Presentation Operator
The Company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in our first quarter press release or on this morning's conference call other than through the filings that will be made with the SEC concerning this reporting period.In addition, I would like to remind you that today's discussion will include references to net adjusted EBITDA, which is intended to serve as a further compliment to our results provided in accordance with generally accepted accounting principle. A reconciliation of this non-GAAP measure can be found in our press release. In addition, a link to today's call can be found under Events & Presentation in the Investor Relations section of our website at www.monotypeimaging.com. This call will be archived on our website for one year. And now I would like to turn the call over to Doug Shaw. Doug? Doug Shaw Hello and thank you for joining us this morning. Monotype Imaging delivered a solid first quarter performance reporting total revenue of $24.5 million in net adjusted EBITDA of $10.2 million both in line with our guidance. We experience revenue growth across both our OEM and Creative Professional businesses. We were encouraged by the strength in our traditional laser printer business was all in Creative Professional particularly on the web. The business environment is improved and looking forward, we are more positive on our outlook. During the first quarter, we invested in growth opportunities while generating high levels of profitability in cash flow. Our debt levels decreased while cash on the balance sheet grew. Net debt is currently $45.6 million down from $56.7 million at the end of 2009. Overall, we are pleased with our results for the first quarter. Now I'd like to provide you with highlights of our financial performance and business activities. Total revenue for the first quarter was $24.5 million, an increase of 4% year-over-year.
Our OEM performance for the first quarter was 17.6 million, an increase of 2% year-over-year. Growth was driven by higher revenue from our printed customers, and ongoing strength and our driver in color technologies.We are also encouraged by GUI trends for the second quarter, which indicates sustainable demand. In other OEM categories were pleased with the pace of new design wins as well as our increased momentum to capitalize and expanded opportunities, such as e-books and graphically user interface. Looking ahead, we remain encourage that as we emerge from the recession we will see an increase in deployments and unit shipments, and the other device category portion of our OEM business. Turning to the ISV segment of our business, we experienced some softness of seeing signs of improvement in the second quarter. During the first quarter, our Creative Professional business reported $6.8 million in revenue, an increase of 8% year-over-year. This was our best Creative Professional result since the fourth quarter of 2008. Our web business experienced double digit revenue growth. This was fueled by the improvement in traditional font sales as well as FontExplorer X, our font management solution that represents a small but growing portion of our web business. We also saw average deal sizes grow to pipelines increase and closure rates improved in our direct business. Now I would like to discuss some of the business highlights of the first quarter. We continue to focus on device categories to represent new avenues of OEM growth such as e-book readers. We signed a royalty bearing relationship with the leading e-book maker for our iType rendering technologies in addition to Latin and Asian font that are highly compressed, distinctive and style and able to display with superior quality. Read the rest of this transcript for free on seekingalpha.com