10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 001-33612

MONOTYPE IMAGING HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	20-3289482
(State of incorporation)	(I.R.S. Employer Identification No.)
600 Unicorn Park Drive Woburn, Massachusetts	01801
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 970-6000

(Former Name, Former Address and Former Fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ¨    No  x

The number of shares outstanding of the registrant’s common stock as of April 23, 2015 was 40,035,469.

MONOTYPE IMAGING HOLDINGS INC.

INDEX

				Page
Part I. Financial Information					2
	Item 1.	Condensed Consolidated Financial Statements (Unaudited)			2
		•	Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014		2
		•	Condensed Consolidated Statements of Income for the three months ended March 31, 2015 and 2014		3
		•	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2015 and 2014		4
		•	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014		5
		•	Notes to Condensed Consolidated Financial Statements		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk			25
	Item 4.	Controls and Procedures			26
Part II. Other Information					26
	Item 1.	Legal Proceedings			26
	Item 1A.	Risk Factors			26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			26
	Item 3.	Defaults Upon Senior Securities			27
	Item 4.	Mine Safety Disclosures			27
	Item 5.	Other Information			27
	Item 6.	Exhibits			27
Signatures					28
Exhibit Index					29

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MONOTYPE IMAGING HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share and per share data)

	March 31, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	78,765		$	90,325
Accounts receivable, net of allowance for doubtful accounts of $129 at March 31, 2015 and $164 at December 31, 2014		10,330			9,279
Income tax refunds receivable		2,720			2,593
Deferred income taxes		3,100			2,898
Prepaid expenses and other current assets		4,366			4,361
Total current assets		99,281			109,456
Property and equipment, net		14,622			10,578
Goodwill		185,416			176,999
Intangible assets, net		74,809			73,862
Other assets		1,984			3,563
Total assets	$	376,112		$	374,458
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,671		$	1,156
Accrued expenses and other current liabilities		19,233			24,570
Accrued income taxes payable		—			640
Deferred revenue		8,196			7,107
Total current liabilities		29,100			33,473
Other long-term liabilities		3,403			2,596
Contingent acquisition consideration		4,900			—
Deferred income taxes		33,689			32,960
Reserve for income taxes, net of current portion		2,957			4,637
Accrued pension benefits		5,102			5,679
Commitments and contingencies (Note 15)
Stockholders’ equity:
Preferred stock, $0.001 par value, Authorized shares: 10,000,000; Issued and outstanding: none		—			—
Common stock, $0.001 par value, Authorized shares: 250,000,000; Shares issued: 41,557,282 at March 31, 2015 and 40,770,197 at December 31, 2014.		40			39
Additional paid-in capital		241,154			232,522
Treasury stock, at cost, 1,513,549 shares at March 31, 2015 and 1,303,737 shares at December 31, 2014		(37,984	)		(31,946	)
Retained earnings		102,031			98,672
Accumulated other comprehensive loss		(8,280	)		(4,174	)
Total stockholders’ equity		296,961			295,113
Total liabilities and stockholders’ equity	$	376,112		$	374,458

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MONOTYPE IMAGING HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited and in thousands, except share and per share data)

	Three Months Ended March 31,
	2015			2014
Revenue	$	46,046		$	46,072
Cost of revenue		7,410			6,508
Cost of revenue—amortization of acquired technology		1,133			1,145
Total cost of revenue		8,543			7,653
Gross profit		37,503			38,419
Operating expenses:
Marketing and selling		12,976			11,118
Research and development		5,799			5,753
General and administrative		6,899			6,198
Amortization of other intangible assets		702			1,432
Total operating expenses		26,376			24,501
Income from operations		11,127			13,918
Other (income) expense:
Interest expense		346			278
Interest income		(112	)		(2	)
Loss on foreign exchange		114			34
(Gain) loss on derivatives		(136	)		56
Other		(1	)		(1	)
Total other expense		211			365
Income before provision for income taxes		10,916			13,553
Provision for income taxes		3,559			5,108
Net income	$	7,357		$	8,445
Net income available to common stockholders—basic	$	7,211		$	8,317
Net income available to common stockholders—diluted	$	7,212		$	8,319
Net income per common share:
Basic	$	0.19		$	0.21
Diluted	$	0.18		$	0.21
Weighted average number of shares outstanding:
Basic		38,829,169			38,712,679
Diluted		39,522,139			39,750,280
Dividends declared per common share	$	0.10		$	0.08

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MONOTYPE IMAGING HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)

	Three Months Ended March 31,
	2015			2014
Net income	$	7,357		$	8,445
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments		(4,106	)		5
Comprehensive income	$	3,251		$	8,450

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MONOTYPE IMAGING HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

	Three Months Ended March 31,
	2015			2014
Cash flows from operating activities
Net income	$	7,357		$	8,445
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,302			2,982
Loss on retirement of fixed assets		—			9
Amortization of deferred financing costs and accretion of interest		85			127
Share based compensation		2,771			2,260
Excess tax benefit on stock options		(1,225	)		(1,369	)
Provision for doubtful accounts		20			(26	)
Deferred income taxes		1,631			1,164
Unrealized currency gain (loss) on foreign denominated intercompany transactions		(9	)		(71	)
Changes in operating assets and liabilities:
Accounts receivable		(1,073	)		431
Prepaid expenses and other assets		1,443			254
Accounts payable		566			(32	)
Accrued income taxes		(1,193	)		2,647
Accrued expenses and other liabilities		(3,080	)		(3,324	)
Deferred revenue		1,327			3,289
Net cash provided by operating activities		10,922			16,786
Cash flows from investing activities
Purchases of property and equipment		(4,173	)		(1,193	)
Acquisition of business, net of cash acquired		(14,303	)		(382	)
Net cash used in investing activities		(18,476	)		(1,575	)
Cash flows from financing activities
Excess tax benefit on stock options		1,225			1,369
Common stock dividends paid		(3,151	)		(2,357	)
Purchase of treasury stock		(6,072	)		(6,770	)
Proceeds from exercises of common stock options		4,594			2,250
Net cash used in financing activities		(3,404	)		(5,508	)
Effect of exchange rates on cash and cash equivalents		(602	)		40
(Decrease) increase in cash and cash equivalents		(11,560	)		9,743
Cash and cash equivalents at beginning of period		90,325			78,411
Cash and cash equivalents at end of period	$	78,765		$	88,154

The accompanying notes are an integral part of these condensed consolidated financial statements.

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MONOTYPE IMAGING HOLDINGS INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2015

1. Nature of the Business

Monotype Imaging Holdings Inc. (the “Company” or “we”) is a leading provider of type, technology and expertise for creative applications and consumer devices. Our end-user and embedded solutions for print, web and mobile environments enable people to create and consume dynamic content on any and every device. Our technologies and fonts enable the display and printing of high quality digital text. Our technologies and fonts have been widely deployed across, and embedded in, a range of consumer devices including laser printers, digital copiers, mobile phones, e-book readers, tablets, automotive displays, digital cameras, navigation devices, digital televisions, set-top boxes and consumer appliances, as well as in numerous software applications and operating systems. We also provide printer drivers, page description language interpreters, printer user interface technology and color imaging solutions to printer manufacturers and OEMs (original equipment manufacturers). We license our fonts and technologies to consumer device manufacturers, independent software vendors and creative and business professionals and we are headquartered in Woburn, Massachusetts. We operate in one business segment: the development, marketing and licensing of technologies and fonts. We also maintain various offices worldwide for selling and marketing, research and development and administration. We conduct our operations through four domestic operating subsidiaries, Monotype Imaging Inc., Monotype ITC Inc., MyFonts Inc. and Swyft Media Inc., and five foreign operating subsidiaries, Monotype Ltd., Monotype GmbH and its wholly-owned subsidiary, FontShop International Inc., Monotype Solutions India Pvt. Ltd., Monotype Hong Kong Ltd. and Monotype KK.

2. Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X. Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The results for interim periods are not necessarily indicative of results to be expected for the year or for any future periods.

In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2014 as reported in the Company’s Annual Report on Form 10-K.

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the condensed consolidated financial statements. As of March 31, 2015, the Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, have not changed.

3. Recently Issued Accounting Pronouncements

Interest

In April 2015, the Financial Accounting Standards Board, or FASB, issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, which provides that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability, rather than classifying the costs separately in the balance sheet as a deferred charge. The ASU aims to reduce complexity. The standard is effective for the Company on January 1, 2017. The Company is currently evaluating the impact of the adoption of ASU 2015-03 on its consolidated financial statements, but does not expect the adoption of this standard to have any impact.

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Consolidation

In February 2015, the FASB issued updated accounting guidance on consolidation requirements. This update changes the guidance with respect to the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The Company does not expect adoption of this guidance to have a material impact on our financial statements.

Going Concern

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management of a company to evaluate whether there is substantial doubt about the company’s ability to continue as a going concern. The ASU provides guidance on evaluating an entity’s ability to continue as a going concern and the content of any required footnote disclosure based on that evaluation. The assessment period is one year after the date of the financial statements are issued. The standard is effective for the Company on January 1, 2017. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15, but we do not expect the adoption of this standard to have any impact on its consolidated financial statements.

Revenue Recognition

In May 2014, the FASB and the International Accounting Standards Board jointly issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606), which provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting and interim periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective application, with early adoption not permitted. Accordingly, the standard is effective for the Company on January 1, 2017. The Company is currently evaluating the adoption method it will apply and the impact that this guidance will have on its financial statements and related disclosures.

4. Acquisitions

Swyft Media

On January 30, 2015, the Company purchased all of the outstanding stock of TextPride, Inc. operating under the name of Swyft Media, a privately-held mobile messaging company located in New York, New York. In connection with the acquisition, TextPride, Inc. was renamed Swyft Media Inc. and became a wholly-owned subsidiary of the registrant. Swyft Media’s expertise in the emerging world of branded, in-app mobile messaging content is expected to help Monotype reach new customers, with an opportunity to add value by including some of the world’s largest and most popular collections of fonts. The impact of this acquisition was not material to our condensed consolidated financial statements.

The Company acquired Swyft Media for an aggregate purchase price of approximately $17.0 million, consisting of $12.1 million in cash, plus contingent consideration of up to $15.0 million payable through 2018, which had an estimated net present value of $4.9 million. We paid approximately $11.6 million from cash on hand at the time of the acquisition, net of cash acquired. Of the purchase price, approximately $4.7 million and $13.6 million have been allocated to intangible assets and goodwill, respectively. The fair value of the assets acquired and liabilities assumed is less than the purchase price, resulting in the recognition of goodwill. The goodwill reflects the value of the synergies we expect to realize and the assembled workforce. The acquisition of Swyft Media was structured in such a manner that the goodwill is not expected to be deductible for tax purposes. The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair value as of the date of the acquisition, which remains preliminary as of March 31, 2015, and using assumptions that the Company’s management believes are reasonable given the information currently available. The final allocation of the purchase price to intangible assets, goodwill and deferred tax assets and liabilities may differ materially from the information presented in these condensed consolidated financial statements. Twelve employees joined the Company in connection with the acquisition. See Note 6 for additional information on the fair value measurements for all financial assets and liabilities, including contingent consideration, which is measured at fair value on a recurring basis.

FontShop

On July 14, 2014, the Company purchased all of the outstanding stock of FontShop International GmbH, a privately-held font distributor located in Berlin, Germany, its wholly-owned subsidiary FontShop International, Inc. based in San Francisco, California, the FontFont typeface library, FontShop AG of Berlin, the largest distributor of the FontFont library, and certain other typeface families, collectively FontShop, for an aggregate purchase price of approximately $14.6 million. We paid approximately $11.9 million from cash on hand at the time of the acquisition, and the remainder, or $2.7 million, was paid in January 2015. Of the purchase price, approximately $8.5 million and $6.3 million have been allocated to intangible assets and goodwill, respectively. Approximately $6.3 million of the goodwill is expected to be deductible for tax purposes. The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair value as of the date of the acquisition, which remains preliminary as of March 31, 2015, and using assumptions that the Company’s management believes are reasonable

7

given the information currently available. The final allocation of the purchase price to intangible assets, goodwill and deferred tax assets and liabilities may differ materially from the information presented in these consolidated financial statements. On October 9, 2014, FontShop International GmbH was merged into Monotype Germany effective August 1, 2014. Following the merger, FontShop International Inc. became a wholly-owned subsidiary of Monotype Germany. On October 28, 2014, FontShop AG was merged into Monotype Germany. Fifty employees joined the Company in connection with the acquisition.

Mark Boulton Design

On April 7, 2014, the Company purchased all of the outstanding stock of Mark Boulton Design Limited, a privately-held Web design studio located in Cardiff, Wales, United Kingdom, for $0.8 million in cash. The Company issued approximately $1.0 million in restricted stock awards in connection with the acquisition, which vest based upon continued employment over four years. The purchase price has been allocated to goodwill. None of the goodwill is expected to be deductible for tax purposes. Following the acquisition, Mark Boulton Design Limited became a wholly owned subsidiary of the Company. Seven former employees of Mark Boulton Design Limited joined the Company in connection with the acquisition.

5. Derivative Financial Instruments

We incur foreign currency exchange gains and losses related to certain customers that are invoiced in U.S. dollars, but have the contractual option to make an equivalent payment in their own functional currencies at a specified exchange rate as of a specified date. In the period from that date, until payment in the customer’s functional currency is received and converted into U.S. dollars, we can incur unrealized gains and losses. We also incur foreign currency exchange gains and losses on certain intercompany assets and liabilities denominated in foreign currencies. We are currently utilizing 30-day forward contracts to mitigate our exposure on these currency fluctuations. These contracts are generally set to expire and are settled at month end. The instruments are not designated as hedging instruments, and accordingly, the gain or loss is recognized upon cash settlement and is included in (gain) loss on derivatives in the accompanying condensed consolidated statements of income. At March 31, 2015 and December 31, 2014, we had one contract outstanding, which was entered into on those dates. See Note 6 for details regarding the fair value of these instruments.

The following table presents the (gains) losses on our derivative financial instruments which are included in (gain) loss on derivatives in our accompanying condensed consolidated statements of income (in thousands):

	Three Months Ended March 31,
	2015			2014
Currency swaps		(136	)		56
Total	$	(136	)	$	56

6. Fair Value Measurements

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the Codification establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated inputs.

Level 3: Unobservable inputs are used when little or no market data is available and requires the Company to develop its own assumptions about how market participants would price the assets or liabilities. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

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The following table presents our financial assets and liabilities that are carried at fair value, classified according to the three categories described above (in thousands):

	Fair Value Measurement at March 31, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	30,814	$	30,814	$	—	$	—
Cash equivalents—commercial paper		6,999		—		6,999		—
Cash equivalents—U.S. government and agency securities		1,500		—		1,500		—
Cash equivalents—corporate bonds		703		—		703		—
Total assets	$	40,016	$	30,814	$	9,202	$	—
Liabilities:
Contingent acquisition consideration	$	5,179	$	—	$	279	$	4,900
Total liabilities	$	5,179	$	—	$	279	$	4,900

	Fair Value Measurement at December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	34,309	$	34,309	$	—	$	—
Cash equivalents—commercial paper		3,000		—		3,000		—
Cash equivalents—U.S. government and agency securities		2,700		—		2,700		—
Total assets	$	40,009	$	34,309	$	5,700	$	—
Liabilities:
Contingent acquisition consideration	$	270	$	—	$	270	$	—
Total liabilities	$	270	$	—	$	270	$	—

The Company’s recurring fair value measures relate to short-term investments, which are classified as cash equivalents, derivative instruments and contingent consideration. The fair value of our cash equivalents are either based on quoted prices for similar assets or other observable inputs such as yield curves at commonly quoted intervals and other market corroborated inputs. The fair value of our derivative instruments is based on quoted market prices from various banking institutions or an independent third party provider for similar instruments. In determining the fair value, we consider our non-performance risk and that of our counterparties. At March 31, 2015, we had one 30-day forward contract to sell 2.1 million British pound sterling and purchase $3.1 million that together, had an immaterial fair value. At December 31, 2014, we had one 30-day forward contract to sell 2.3 million British pound sterling and purchase $3.5 million that together, had an immaterial fair value.

For the contingent acquisition consideration classified as Level 2 at March 31, 2015 and December 31, 2014, fair value approximated book value, and represented the amount to be paid based on actual achievement of the criteria.

At March 31, 2015, the Company recorded approximately $4.9 million in contingent consideration related to the January 2015 acquisition of Swyft Media. The contingent consideration is payable in cash based on the achievement of certain revenue and EBITDA margin targets for the years ending December 31, 2015 through 2016, with a catch-up period for the year ending December 31, 2017, and subject to a cap of $15.0 million. The fair value of this liability was estimated using a Monte Carlo simulation model, relying on significant inputs that are not observable in the market and thus represent a Level 3 fair value measurement. The significant inputs in the Level 3 measurement not supported by market activity included our expected revenues and EBITDA for each of the measurement periods and the estimated level of risk and volatility around the forecast. The Monte Carlo simulation was relied on to

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estimate the projected revenues, EBITDA margins, and contingent acquisition consideration payments for each measurement period. The average contingent acquisition consideration payments for the years 2015 through 2017, following 100,000 simulation trials, were discounted to present value to capture the time value of money and counterparty risk, based upon an assessment of the Company’s borrowing risk, and applying its credit rating to adjust the risk free rate.

The changes in the estimated fair value for our liabilities measured on a recurring basis using significant unobservable inputs (Level 3) are as follows (in thousands):

	Three Months Ended March 31, 2015
Fair value measurement at the beginning of period	$	—
Contingent consideration recorded upon acquisition		4,900
Fair value measurement at end of period	$	4,900

The Company’s non-financial assets and non-financial liabilities subject to non-recurring measurements include goodwill and intangible assets.

7. Property and Equipment

Property and equipment consists of the following (in thousands):

	March 31, 2015			December 31, 2014
Computer equipment and software	$	14,349		$	12,084
Furniture and fixtures		1,468			1,093
Leasehold improvements		5,264			3,498
Total cost		21,081			16,675
Less accumulated depreciation and amortization		(6,459	)		(6,097	)
Property and equipment, net	$	14,622		$	10,578

8. Intangible Assets

Intangible assets as of March 31, 2015 and December 31, 2014 were as follows (dollar amounts in thousands):

		March 31, 2015							December 31, 2014
	Weighted- Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Balance		Gross Carrying Amount		Accumulated Amortization			Net Balance
Customer relationships	10	$	59,889	$	(47,127	)	$	12,762	$	57,488	$	(47,018	)	$	10,470
Acquired technology	11		54,264		(35,496	)		18,768		55,064		(34,411	)		20,653
Non-compete agreements	4		12,926		(11,803	)		1,123		12,172		(11,862	)		310
Indefinite-lived intangible assets:
Trademarks			37,756		—			37,756		38,029		—			38,029
Domain names			4,400		—			4,400		4,400		—			4,400
Total		$	169,235	$	(94,426	)	$	74,809	$	167,153	$	(93,291	)	$	73,862

9. Debt

On July 13, 2011, the Company entered into a credit agreement (“Credit Facility”), with Wells Fargo Capital Finance, LLC, the administrative agent for a syndicate of Lenders (“Lenders”), which provides the Company with a five-year, $120.0 million secured revolving credit facility. Borrowings under the Credit Facility bear interest at a variable rate based upon, at the Company’s option, either LIBOR or the base rate (which is the highest of (i) the prime rate, (ii) 0.5% plus the overnight federal funds rate, and (iii) 1.0% in excess of the three-month LIBOR rate), plus in each case, an applicable margin. The applicable margin for LIBOR loans, based on the applicable leverage ratio, is either 1.5% or 2.0% per annum, and the applicable margin for base rate loans, based on the applicable leverage ratio, is either 0.5% or 1.0% per annum. At March 31, 2015 our rate, inclusive of applicable margins, was 3.75% for prime. At March 31, 2015, the Company had no outstanding debt under the Credit Facility. The Company is required to pay an unused line fee equal to 0.375% per annum on the undrawn portion available under the revolving credit facility and variable per annum fees in respect of outstanding letters of credit, if any.

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The Credit Facility contains two financial covenants; a leverage ratio and a fixed charge coverage ratio. Failure to comply with these covenants, or the occurrence of an event of default, could permit the Lenders under the Credit Facility to declare all amounts borrowed under the Credit Facility, together with accrued interest and fees, to be immediately due and payable. In addition, the Credit Facility is secured by substantially all of our assets and places limits on the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens and engage in sale-leaseback transactions, make loans and investments, engage in mergers, acquisitions and asset sales, transact with affiliates and alter its business. We were in compliance with all covenants under our Credit Facility as of March 31, 2015.

10. Defined Benefit Pension Plan

Our German subsidiary maintains an unfunded defined benefit pension plan which covers substantially all employees who joined the company prior to the plan’s closure to new participants in 2006. Participants are entitled to benefits in the form of retirement, disability and surviving dependent pensions. Benefits generally depend on years of service and the salary of the employees.

The components of net periodic benefit cost included in the accompanying condensed consolidated statements of income were as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Service cost	$	29	$	30
Interest cost		28		44
Amortization		19		—
Net periodic benefit cost	$	76	$	74

11. Income Taxes

A reconciliation of income taxes computed at federal statutory rates to income tax expense is as follows (dollar amounts in thousands):

	Three Months Ended March 31,
	2015					2014
Provision for income taxes at statutory rate	$	3,821		35.0	%	$	4,744		35.0	%
State and local income taxes, net of federal tax benefit		156		1.4	%		256		1.9	%
Stock compensation		32		0.3	%		87		0.6	%
Reversal of reserves		(342	)	(3.1	)%		—		—
Foreign rate differential		(87	)	(0.8	)%		92		0.7	%
Disqualifying dispositions on incentive stock options		(16	)	(0.1	)%		(17	)	(0.1	)%
Other, net		(5	)	(0.1	)%		(54	)	(0.4	)%
Reported income tax provision	$	3,559		32.6	%	$	5,108		37.7	%

As of March 31, 2015, the reserve for uncertain tax positions was approximately $6.5 million. Of this amount, $3.5 million is recorded as a reduction of deferred tax assets and $3.0 million is classified as long term liabilities. During the first quarter of 2015, the Company settled a tax audit related to its Japan subsidiary. As a result of this settlement, the Company recognized a tax benefit of $0.3 million.

12. Net Income Per Share

Basic and diluted earnings per share are computed pursuant to the two-class method. The two-class method determines earnings per share for each class of common stock and participating security according to their respective participation rights in undistributed

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earnings. Unvested restricted stock awards granted to employees are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. In accordance with ASC Topic No. 260, Earnings Per Share, diluted net income per share is calculated using the more dilutive of the following two approaches:

1. Assume exercise of stock options and vesting of restricted stock using the treasury stock method.

2. Assume exercise of stock options using the treasury stock method, but assume participating securities (unvested restricted stock) are not vested and allocate earnings to common shares and participating securities using the two-class method.

For the periods presented the two-class method was used in the computation of diluted net income per share, as the result was more dilutive. The following presents a reconciliation of the numerator and denominator used in the calculation of basic net income per share and a reconciliation of the numerator and denominator used in the calculation of diluted net income per share (in thousands, except share and per share data):

	Three Months Ended March 31,
	2015			2014
Numerator:
Net income, as reported	$	7,357		$	8,445
Less: net income attributable to participating securities		(146	)		(128	)
Net income available to common shareholders—basic	$	7,211		$	8,317
Denominator:
Basic:
Weighted-average shares of common stock outstanding		39,642,889			39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding		(813,720	)		(607,555	)
Weighted-average number of common shares used in computing basic net income per common share		38,829,169			38,712,679
Net income per share applicable to common shareholders—basic	$	0.19		$	0.21

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	Three Months Ended March 31,
	2015			2014
Numerator:
Net income available to common shareholders—basic	$	7,211		$	8,317
Add-back: undistributed earnings allocated to unvested shareholders		70			82
Less: undistributed earnings reallocated to unvested shareholders		(69	)		(80	)
Net income available to common shareholders—diluted	$	7,212		$	8,319
Denominator:
Diluted:
Weighted-average shares of common stock outstanding		39,642,889			39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding		(813,720	)		(607,555	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method		692,970			1,037,601
Weighted-average number of common shares used in computing diluted net income per common share		39,522,139			39,750,280
Net income per share applicable to common shareholders—diluted	$	0.18		$	0.21

The following common share equivalents have been excluded from the computation of diluted weighted-average shares outstanding, as their effect would have been anti-dilutive:

	Three Months Ended March 31,
	2015		2014
Options		306,940		144,707
Unvested restricted stock		90,014		73,246
Unvested restricted stock units		7,857		1,140

13. Stockholders’ Equity

Share repurchases

On October 23, 2013, the Company’s Board of Directors approved a share repurchase program of up to $50.0 million of the Company’s outstanding shares of common shares over the next two years. Intended to offset shareholder dilution, the Company expects purchases under the program will be made periodically, on the open market as business and market conditions warrant. The share repurchase program does not obligate the Company to acquire any particular amount of common stock, and the program may be suspended or discontinued at management’s and/or the Board of Directors’ discretion. During the quarter ended March 31, 2015, the Company repurchased a total of 199,900 shares of its common stock in 2015 for an aggregate purchase price of $6.0 million, including brokers’ fees.

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Share Based Compensation

We account for share based compensation in accordance with ASC Topic No. 718, Compensation – Stock Compensation, which requires the measurement of compensation costs at fair value on the date of grant and recognition of compensation expense over the service period for awards expected to vest. The following presents the impact of share based compensation expense on our condensed consolidated statements of income (in thousands):

	Three Months Ended March 31,
	2015		2014
Marketing and selling	$	1,266	$	1,046
Research and development		542		514
General and administrative		963		700
Total expensed		2,771		2,260
Property and equipment		42		23
Total share based compensation	$	2,813	$	2,283

In the first quarter of 2015 and 2014, approximately $42 thousand and $23 thousand, respectively, of share based compensation was capitalized as part of an internal software project, and this amount is included in property and equipment, net in our condensed consolidated balance sheet. As of March 31, 2015, the Company had $32.5 million of unrecognized compensation expense related to employees and directors unvested stock options and restricted stock awards that are expected to be recognized over a weighted average period of 3.2 years.

14. Segment Reporting

We view our operations and manage our business as one segment: the development, marketing and licensing of technologies and fonts. Factors used to identify our single segment include the financial information available for evaluation by our chief operating decision maker in making decisions about how to allocate resources and assess performance. While our technologies and services are sold into two principal markets, Creative Professional and OEM, expenses and assets are not formally allocated to these market segments, and operating results are assessed on an aggregate basis to make decisions about the allocation of resources. The following table presents revenue for these two major markets (in thousands):

	Three Months Ended March 31,
	2015		2014
Creative Professional	$	20,504	$	17,719
OEM		25,542		28,353
Total	$	46,046	$	46,072

Geographic segment information

The Company attributes revenue to geographic areas based on the location of our subsidiary receiving such revenue. For example, licenses may be sold to large international companies which may be headquartered in South Korea, but the sales are received and recorded by our subsidiary located in the United States, or U.S. In this example, the revenue would be reflected in the United States totals in the table below. We market our products and services through offices in the U.S., United Kingdom, Germany, China, South Korea and Japan. The following summarizes revenue by location (in thousands of dollars, except percentages):

	Three Months Ended March 31,
	2015					2014
	Revenue		% of Total			Revenue		% of Total
United States	$	24,843		54.0	%	$	23,936		52.0	%
United Kingdom		1,848		4.0			2,693		5.8
Germany		5,844		12.7			4,477		9.7
Japan		13,207		28.6			14,714		32.0
Other Asia		304		0.7			252		0.5
Total	$	46,046		100.0	%	$	46,072		100.0	%

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Long-lived assets, which include property and equipment, goodwill and intangibles, but exclude other assets, long-term investments and deferred tax assets, are attributed to geographic areas in which Company assets reside and is shown below (in thousands):

	March 31, 2015		December 31, 2014
Long-lived assets:
United States	$	210,951	$	189,927
United Kingdom		4,775		5,138
Germany		55,643		62,917
Asia (including Japan)		3,478		3,457
Total	$	274,847	$	261,439

15. Commitments and Contingencies

Legal Proceedings

From time to time, we may be a party to various claims, suits and complaints. We do not believe that there are claims or legal proceedings that, if determined adversely to us, would have a material adverse effect on our business, results of operations or financial condition.

Licensing Warranty

Under our standard license agreement with our OEM customers, we warrant that the licensed technologies are free of infringement claims of intellectual property rights and will meet the specifications as defined in the licensing agreement for a one year period. Under the licensing agreements, liability for such indemnity obligations is limited generally to a maximum of total arrangement fee; however, exceptions have been made on a case-by-case basis, increasing the maximum potential liability to agreed upon amounts at the time the contract is entered into. We have never incurred costs payable to a customer or business partner to defend lawsuits or settle claims related to these warranties, and as a result, management believes the estimated fair value of these warranties is minimal. Accordingly, there are no liabilities recorded for these warranties as of March 31, 2015 and December 31, 2014.

16. Subsequent Events

Dividend Declaration

On April 28, 2015 the Company’s Board of Directors declared a $0.10 per share quarterly cash dividend on our outstanding common stock. The record date is set for July 1, 2015 and the dividend is payable to shareholders of record on July 21, 2015. Dividends are declared at the discretion of the Company’s Board of Directors and depend on actual cash from operations, the Company’s financial condition and capital requirements and any other factors the Company’s Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by the Company’s Board of Directors on a quarterly basis.

Share Repurchase Program

The Company repurchased 35,700 shares of common stock for $1.2 million in the period of April 1 to April 23, 2015, at an average price per share of $32.84. The Company purchased these shares on the open market at prevailing market prices and in accordance with its previously announced share repurchase program (“Plan”). At April 23, 2015, $10.9 million remains for future purchase under the Plan.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements and Projections

This Quarterly Report on Form 10-Q contains forward looking statements. Forward looking statements relate to future events or our future financial performance. We generally identify forward looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. These statements are only predictions.

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We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, results of operations and financial condition. The outcome of the events described in these forward looking statements is subject to risks, uncertainties and other factors described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Accordingly, you should not rely upon forward looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward looking statements will be achieved or occur, and actual results could differ materially from those projected in the forward looking statements. The forward looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

Overview

We are a leading provider of type, technology and expertise for creative applications and consumer devices. Our vision is that our fonts and technology empower every word and experience. We strive to enable the best user experience and ensure brand integrity, regardless of device, platform or language. We help creative professionals, consumer device manufacturers and independent software vendors connect their brands, content, products and services to consumers and businesses everywhere, from content creation to consumption. Monotype is home to some of the world’s best known typeface collections. Along with our custom type services, our solutions enable customers to express their creativity, while our tools and technologies improve creative workflows and maximize efficiency as content is published or distributed. Our solutions provide worldwide language coverage and high-quality text, and our embedded solutions support compelling user interfaces and brand fidelity by providing for the display of content on any device or platform, as the author intended. We offer more than 25,000 typeface designs, and include some of the world’s most widely used designs, such as the Times New Roman^®, Helvetica^®, Frutiger^®, ITC Franklin Gothic™, FF Meta and Droid™ typefaces, and support more than 250 Latin and non-Latin languages. Our e-commerce websites, including myfonts.com, fonts.com, fontshop.com, linotype.com and fontfont.com, which attracted more than 77 million visits in 2014 from over 200 countries and territories, offer thousands of high-quality font products, in some cases more than 127,000, including our own fonts from the Monotype Libraries as well as fonts from third parties.

Sources of Revenue

We derive revenue from two principal sources: licensing our fonts and font related services to creative and business professionals, which we refer to as our Creative Professional revenue, and licensing our text imaging solutions to consumer device manufacturers and independent software vendors, which we refer to as our OEM revenue. We derive our Creative Professional revenue primarily from brands, agencies, publishers, corporations, enterprises, small businesses and individuals. We derive our OEM revenue primarily from consumer device manufacturers. Some of our revenue streams, particularly custom revenue where spending is largely discretionary in nature, have historically been and we expect them to continue to be in the future, susceptible to weakening economic conditions.

Geographic revenue, which is based on the location of our subsidiary receiving such revenue, is in the table below:

	Three Months Ended March 31,
	2015					2014
	Revenue		% of Total			Revenue		% of Total
	(In millions of dollars, except percentages)
United States	$	24,843		54.0	%	$	23,936		52.0	%
United Kingdom		1,848		4.0			2,693		5.8
Germany		5,844		12.7			4,477		9.7
Japan		13,207		28.6			14,714		32.0
Other Asia		304		0.7			252		0.5
Total	$	46,046		100.0	%	$	46,072		100.0	%

For the three months ended March 31, 2015 and 2014, revenue by our subsidiaries located outside the United States comprised 46.0% and 48.0%, respectively, of our total revenue. We expect that sales by our international subsidiaries will continue to represent a substantial portion of our revenue for the foreseeable future. Future international revenue will depend on the continued use and expansion of our text imaging solutions worldwide.

We derive a significant portion of our OEM revenue from a limited number of customers, in particular manufacturers of laser printers and consumer electronics. For the three months ended March 31, 2015 and 2014, our top ten licensees by revenue accounted

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for approximately 36.9% and 39.3% of our total revenue, respectively. Although no one customer accounted for more than 10% of our total revenue for the three months ended March 31, 2015 or 2014, if we are unable to maintain relationships with major customers or establish relationships with new customers, our licensing revenue will be adversely affected.

Creative Professional Revenue

Our Creative Professional revenue is derived from font licenses, font related services and from custom font design services. We license fonts directly to end-users through our e-commerce websites, via telephone, email and indirectly through third-party resellers. Font related services refer to our web font services and web design tools. We also license fonts and provide custom font design services to graphic designers, advertising agencies, media organizations and corporations. We refer to direct, indirect and custom revenue, as non-web revenue, and refer to revenue that is derived from our websites, as web revenue.

Revenue from font licenses to our e-commerce customers is recognized upon payment by the customer and the software embodying the font is shipped or made available. Revenue from font licenses to other customers is recognized upon shipment of the software embodying the font and when all other revenue recognition criteria have been met. Revenue from resellers is recognized upon notification from the reseller that our font product has been licensed and when all other revenue recognition criteria have been met. Custom font design services are generally recognized upon delivery. Font related service revenue is mainly subscription based and it may contain software as a service. The subscription revenue is recognized ratably over the subscription period. We consider web server and commercial rights to online fonts as recurring revenue and it is recognized upon invoicing and proof of font delivery, when all other revenue recognition criteria have been met. Contract accounting is used where services are deemed essential to the software.

OEM Revenue

Our OEM revenue is derived substantially from per-unit royalties received for printer imaging and printer driver, or printer products, and display imaging products. Under our licensing arrangements we typically receive a royalty for each product unit incorporating our text imaging solutions that is shipped by our OEM customers. We also receive OEM revenue from fixed fee licenses with certain of our OEM customers. Fixed fee licensing arrangements are not based on units the customer ships, but instead, customers pay us on a periodic basis for the right to embed our typefaces and technology. Although significantly less than royalties from per-unit shipments and fixed fees from OEM customers, we also receive revenue from software application and operating systems vendors, who include our typefaces and technology in their products, and for font development. Many of our per-unit royalty licenses continue for the duration that our OEM customers ship products that include our technology, unless terminated for breach. Other licenses have terms that typically range from one to five years, and usually provide for automatic or optional renewals. We recognize revenue from per-unit royalties in the period during which we receive a royalty report from a customer, typically one quarter after royalty-bearing units are shipped, as we do not have the ability to estimate the number of units shipped by our customers. Revenue from fixed fee licenses is generally recognized when it is billed to the customer, so long as the product has been delivered, the license fee is fixed and non-refundable and collection is probable. OEM revenue also includes project-related agreements for which contract accounting may be used.

Cost of Revenue

Our cost of revenue consists of font license fees that we pay on certain fonts that are owned by third parties, allocated internal engineering expense and overhead costs directly related to custom design services. License fees that we pay to third parties are typically based on a percentage of our Creative Professional and OEM revenue and do not involve minimum fees. Our cost of OEM revenue is typically lower than our cost of Creative Professional revenue because we own a higher percentage of the fonts licensed to our OEM customers, provide value-added technology and have negotiated lower royalty rates on the fonts we license from third parties because of volume. The cost of our custom design service revenue is substantially higher than the cost of our other revenue and, as a result, our gross margin varies from period-to-period depending on the level of custom design revenue recorded.

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Cost of revenue also includes amortization of acquired technology, which we amortize over 8 to 15 years. For purposes of amortizing acquired technology we estimate the remaining useful life of the technology based upon various considerations, including our knowledge of the technology and the way our customers use it. We use the straight-line method to amortize our acquired technology as there is no reliable evidence to suggest that we should expect any other pattern of amortization than an even pattern, and we believe this best reflects the expected pattern of economic usage.

Gross Profit

Our gross profit percentage is influenced by a number of factors including product mix, pricing and volume at any particular time. However, our cost of OEM revenue is typically lower than our cost of Creative Professional revenue because we own a higher percentage of the fonts licensed to our OEM customers, provide value-added technology and have negotiated lower royalty rates on the fonts we license from third parties because of volume. Within our Creative Professional business, the cost of our custom design service revenue is substantially higher than the cost of our other revenue. As a result, our gross profit varies from period-to-period depending on the mix between, and within, Creative Professional and OEM revenue.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP and our discussion and analysis of our financial condition and results of operations requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates.

There has been no material change in our critical accounting policies since December 31, 2014. Information about our critical accounting policies may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Critical Accounting Policies,” included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Results of Operations for the Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

The following table sets forth items in the unaudited condensed consolidated quarterly statements of income as a percentage of sales for the periods indicated:

	Three Months Ended March 31,
	2015			2014
Revenue:
Creative Professional		44.5	%		38.5	%
OEM		55.5			61.5
Total revenue		100.0			100.0
Cost of revenue		16.1			14.1
Cost of revenue—amortization of acquired technology		2.5			2.5
Total cost of revenue		18.6			16.6
Gross profit		81.4			83.4
Marketing and selling		28.1			24.1
Research and development		12.6			12.5
General and administrative		15.0			13.5
Amortization of other intangible assets		1.5			3.1
Total operating expenses		57.2			53.2
Income from operations		24.2			30.2
Interest expense, net		0.6			0.6
Loss on foreign exchange		0.2			0.1
(Gain) loss on derivatives		(0.3	)		0.1
Other		—			—
Total other expenses		0.5			0.8
Income before provision for income taxes		23.7			29.4
Provision for income taxes		7.7			11.1
Net income		16.0	%		18.3	%

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The following discussion compares the three months ended March 31, 2015 with the three months ended March 31, 2014.

Revenue by Market

We view our operations and manage our business as one segment: the development, marketing and licensing of technologies and fonts. Factors used to identify our single segment include the financial information available for evaluation by our chief operating decision maker in making decisions about how to allocate resources and assess performance. While our technologies and services are sold to customers in two principal markets, Creative Professional and consumer device manufacturers and independent software vendors, together OEM, expenses and assets are not formally allocated to these markets, and operating results are assessed on an aggregate basis to make decisions about the allocation of resources. The following table presents revenue for these two principal markets (in thousands):

	Three Months Ended March 31,
	2015		2014		Increase / (Decrease)
Creative Professional	$	20,504	$	17,719	$	2,785
OEM		25,542		28,353		(2,811	)
Total revenue	$	46,046	$	46,072	$	(26	)

Revenue

Revenue was $46.0 million and $46.1 million for the three months ended March 31, 2015 and 2014, respectively, a decrease of $0.1 million, or 0.1%.

Creative Professional revenue increased $2.8 million, or 15.7%, to $20.5 million for the three months ended March 31, 2015, as compared to $17.7 million for the three months ended March 31, 2014, mainly due to an increase in web and direct revenue. Web revenue increased in the three months ended March 31, 2015, as compared to the same period in 2014, mainly due to increased font license revenue, together with increased sales of our web font services. Increased non-web revenue also contributed to the overall increase in the same period, a result of an increase in sales of our license revenue to enterprise customers. A weakening Euro and British pound sterling, as compared to the U.S. dollar, partially offset these increases.

OEM revenue was $25.5 million and $28.4 million in the first quarter of 2015 and 2014, respectively, a decrease of $2.9 million, or 9.9%, mainly due to lower revenue from per unit royalty arrangements primarily with our printer based OEM customers.

Cost of Revenue and Gross Profit

Cost of revenue, excluding amortization of acquired technology, was $7.4 million and $6.5 million in the three months ended March 31, 2015 and 2014, respectively. As a percentage of sales, cost of revenue, excluding amortization of acquired technology, was 16.1% and 14.1% of total revenue in the three months ended March 31, 2015 and 2014, respectively. The increase in cost of revenue, excluding amortization of acquired technology, as a percentage of revenue was mainly due to product mix. In the first quarter of 2015, Creative Professional revenue was 44.5% of total revenue, as compared to 38.5% of total revenue in the same period in 2014. Our Creative Professional revenue typically has a higher associated cost than our OEM revenue because Creative Professional revenue contains a higher proportion of third party fonts.

The portion of cost of revenue consisting of amortization of acquired technology was unchanged at $1.1 million for the three months ended March 31, 2015 and 2014.

Gross profit decreased 2.0 percentage points to 81.4% in the three months ended March 31, 2015, as compared to 83.4% in the three months ended March 31, 2014, mainly the result of product mix. In the three months ended March 31, 2015, we had a higher percentage of Creative Professional revenue in total revenue, as compared to the same period in 2014, which typically has a higher associated cost than our OEM revenue.

Operating Expenses

Marketing and Selling. Marketing and selling expense increased $1.9 million, or 16.7%, to $13.0 million in the three months ended March 31, 2015, as compared to $11.1 million in the three months ended March 31, 2014. Personnel expenses increased $0.9 million due to additional headcount primarily from our acquisitions of Swyft Media and FontShop, and increased share based compensation. Increased targeted spending, such as website design, brand promotion and demand generation expense, together contributed $0.9 million to the increase in the first quarter of 2015, as compared to the same period in 2014.

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Research and Development. Research and development expense was consistent at $5.8 million in the three months ended March 31, 2015 and 2014, respectively.

General and Administrative. General and administrative expense increased $0.7 million, or 11.3%, to $6.9 million in the three months ended March 31, 2015, as compared to $6.2 million in the three months ended March 31, 2014. Personnel expenses increased $0.7 million in the three months ended March 31, 2015, as compared to the same period in 2014, primarily the result of increased share based compensation. Professional service expenses decreased $0.4 million in the first quarter of 2015, as compared to the same period in 2014, due to the timing of acquisition related and non-recurring expenses. Increased infrastructure expenses, primarily rent and depreciation expense, contributed $0.3 million to the increase, which is principally associated with our new corporate office.

Amortization of Other Intangible Assets. Amortization of other intangible assets was $0.7 million and $1.4 million in the three months ended March 31, 2015 and 2014, respectively, a decrease of $0.7 million, or 51.0%, primarily a result of an asset that became fully amortized in the fourth quarter of 2014.

Interest Expense, Net

Interest expense, net of interest income was $0.2 million and $0.3 million for the three months ended March 31, 2015 and 2014, respectively, a decrease of $0.1 million, or 15.2%. Interest expense primarily relates to fees associated with our unused line of credit in both periods, as there was no debt outstanding during either period.

Loss on Foreign Exchange

Loss on foreign exchange was $0.1 million and $34 thousand in the three months ended March 31, 2015 and 2014, respectively, an increase of $0.1 million. The loss in both periods was the result of currency fluctuations on our foreign denominated receivables and payables.

(Gain) Loss on Derivatives

(Gain) loss on derivatives was a gain of $0.1 million and a loss of $56 thousand in the three months ended March 31, 2015 and 2014, respectively, primarily due to market value changes in our 30-day forward currency contracts.

Provision for Income Taxes

For the three months ended March 31, 2015 and 2014, our effective tax rate was 32.6% and 37.7%, respectively. The effective tax rate for the three months ended March 31, 2015 included a benefit of 3.1% for the reversal of reserves, in connection with a settlement of the tax audit related to the Company’s Japan subsidiary. There was no similar item in the same period in 2014. In addition, the effect of foreign income and dividends resulted in a 1.5% decrease in the 2015 effective tax rate, as compared to 2014. The effective tax rate included a charge of 1.4% for state and local income taxes, net of federal benefit, as compared to a charge of 1.9% in 2014.

Recently Issued Accounting Pronouncements

Information concerning recently issued accounting pronouncements may be found in Note 3 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Liquidity and Capital Resources

Cash Flows for the Three Months Ended March 31, 2015 and 2014

Since our inception, we have financed our operations primarily through cash from operations, private and public stock sales and long-term debt arrangements, as described below. We believe our existing cash and cash equivalents, our cash flow from operating activities and available bank borrowings will be sufficient to meet our anticipated cash needs for at least the next twelve months. At March 31, 2015, our principal sources of liquidity were cash and cash equivalents totaling $78.8 million and a $120.0 million revolving credit facility, of which there were no outstanding borrowings at March 31, 2015. On October 23, 2013, our Board of Directors approved a share repurchase program of up to $50.0 million of our outstanding common stock over the following two years, and in the first quarter of 2015, we used $6.1 million of cash to repurchase shares. Our future working capital requirements will depend on many factors, including the operations of our existing business, our potential strategic expansion and future acquisitions we might undertake.

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The following table presents our cash flows from operating activities, investing activities and financing activities for the periods presented (in thousands):

	Three Months Ended March 31,
	2015			2014
Net cash provided by operating activities	$	10,922		$	16,786
Net cash used in investing activities		(18,476	)		(1,575	)
Net cash used in financing activities		(3,404	)		(5,508	)
Effect of exchange rates on cash and cash equivalents		(602	)		40
Total (decrease) increase in cash and cash equivalents	$	(11,560	)	$	9,743

Operating Activities

Significant variations in operating cash flows may occur because, from time-to-time, our customers make prepayments against future royalties. Prepayments may be required under the terms of our license agreements and are occasionally made on an elective basis and often cause large fluctuations in accounts receivable and deferred revenue. The timing and extent of such prepayments significantly impacts our cash balances.

We generated $10.9 million in cash from operations during the three months ended March 31, 2015. Net income, after adjusting for depreciation and amortization, amortization of deferred financing costs, accreted interest, share based compensation, excess tax benefit on stock options, provision for doubtful accounts, deferred income taxes, and unrealized currency gain on foreign denominated intercompany transactions generated $12.9 million in cash. Decreased accrued expenses and decreased prepaid expenses and other assets, net of increased accounts payable used $1.1 million in cash, primarily a result of the payment of 2014 accrued variable compensation amounts. Increased deferred revenue net of increased accounts receivable, generated $0.3 million in cash, mainly due to timing of customer payments. Accrued income taxes used $1.2 million during the quarter ended March 31, 2015.

We generated $16.8 million in cash from operations during the three months ended March 31, 2014. Net income, after adjusting for depreciation and amortization, loss on retirement of fixed assets, amortization of deferred financing costs, share based compensation, excess tax benefit on stock options, provision for doubtful accounts, deferred income taxes, unrealized currency gain on foreign denominated intercompany transactions and accreted interest generated $13.6 million in cash. Decreased accounts receivable and increased deferred revenue generated $3.7 million in cash, mainly due to timing of customer payments. Accrued income taxes generated $2.6 million during the quarter ended March 31, 2014. Decreased accounts payable and decreased accrued expenses and other liabilities, net of increases in prepaid expenses and other assets used $3.1 million in cash, primarily a result of the payment of 2013 accrued variable compensation amounts in addition to accruals related to the increased dividends declared at March 31, 2014 compared to December 31, 2013.

Investing Activities

During the three months ended March 31, 2015 we used $18.5 million in investing activities for the purchase of $4.2 million of property and equipment and $14.3 million for the Swyft Media and FontShop acquisitions. Cash used in investing activities for the three months ended March 31, 2014 was $1.6 million. The purchase of property and equipment used $1.2 million and payments of contingent consideration, in connection with the Design by Front acquisition, used $0.4 million.

Financing Activities

Cash used in financing activities for the three months ended March 31, 2015 was $3.4 million. We received cash from exercises of stock options of $4.6 million and excess tax benefit on stock options provided $1.2 million. We paid a cash dividend of $3.1 million. We also purchased $6.1 million of treasury stock in the three months ended March 31, 2015.

Cash used in financing activities for the three months ended March 31, 2014 was $5.5 million. We received cash from exercises of stock options of $2.3 million and excess tax benefit on stock options provided $1.4 million. We paid a cash dividend of $2.4 million. We also used $6.8 million to purchase treasury stock in the three months ended March 31, 2014.

Dividends

On February 10, 2015 our Board of Directors approved a $0.10 per share, or $4.0 million, quarterly cash dividend on our outstanding common stock. The record date was April 1, 2015 and the dividend was paid to shareholders on April 21, 2015. We anticipate this to be a recurring quarterly dividend with future payments and record dates, subject to board approval. On April 28, 2015, our Board of Directors approved a $0.10 per share quarterly cash dividend on our outstanding common stock. The record date is set for July 1, 2015 and the dividend is payable to shareholders of record on July 21, 2015.

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Credit Facility

On July 13, 2011 we entered into a five-year $120.0 million revolving credit facility (the “Credit Facility”). The Credit Facility replaced the Amended and Restated Credit Agreement, which was scheduled to expire on July 30, 2012. Borrowings under the Credit Facility bear interest based on the leverage ratio at either (i) the prime rate plus 0.5%, as defined in the credit agreement, or (ii) LIBOR plus 1.5%. The Company is required to pay an unused line fee equal to 0.375% per annum on the undrawn portion available under the revolving credit facility and variable per annum fees in respect of outstanding letters of credit. As of March 31, 2015 our rate, inclusive of applicable margins, was 3.75% for prime and we had no outstanding debt under the Credit Facility. There are no required repayments. The Company, in accordance with the Credit Facility, is permitted to request that the Lenders, at their election, increase the secured credit facility to a maximum of $140.0 million.

In addition, the Credit Facility provides that we maintain a maximum leverage ratio. The leverage ratio is defined as the ratio of aggregate outstanding indebtedness to trailing twelve months Adjusted EBITDA. Adjusted EBITDA is defined as consolidated net earnings (or loss), plus net interest expense, income taxes, depreciation and amortization and share based compensation expense, plus restructuring, issuance costs, cash non-operating costs and other expenses or losses minus cash non-operating gains and other non-cash gains; provided however that the aggregate of all cash non-operating expense shall not exceed $250 thousand and all such fees, costs and expenses shall not exceed $1.5 million on a trailing twelve months basis.

Additional limits are imposed on acquisition related expenses. The Credit Facility contains financial covenants which include (i) a maximum ratio of consolidated total debt to consolidated adjusted EBITDA of 3.00:1.00, and (ii) a minimum consolidated fixed charge coverage ratio of 1.25:1.00. As of March 31, 2015, our leverage ratio was 0.00:1.00 and our fixed charge ratio was 3.75:1.00. Failure to comply with these covenants, or the occurrence of an event of default, could permit the lenders under the Credit Facility to declare all amounts borrowed under the Credit Facility, together with accrued interest and fees, to be immediately due and payable. In addition, the Credit Facility is secured by substantially all of our assets and places limits on the Company’s and its subsidiaries’ ability to incur debt or liens and engage in sale-leaseback transactions, make loans and investments, incur additional indebtedness, engage in mergers, acquisitions and asset sales, transact with affiliates and alter its business.

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The following table presents a reconciliation from net income, which is the most directly comparable GAAP operating performance measure, to EBITDA and from EBITDA to Adjusted EBITDA as defined in our credit facilities (in thousands):

	Three Months Ended March 31,
	2015		2014
Net income	$	7,357	$	8,445
Provision for income taxes		3,559		5,108
Interest expense, net		234		276
Depreciation and amortization		2,302		2,982
EBITDA	$	13,452	$	16,811
Share based compensation		2,771		2,260
Non-cash add backs		—		—
Restructuring, issuance and cash non-operating costs (2)		121		(27	)
Acquisition expenses		339		58
Adjusted EBITDA(1)	$	16,683	$	19,102

(1) Adjusted EBITDA is not a measure of operating performance under GAAP and should not be considered as an alternative or substitute for GAAP profitability measures such as income from operations and net income. Adjusted EBITDA as an operating performance measure has material limitations since it excludes the statement of income impact of depreciation and amortization expense, interest expense, net, the provision for income taxes and share based compensation and therefore does not represent an accurate measure of profitability, particularly in situations where a company is highly leveraged or has a disadvantageous tax structure. We have significant intangible assets and amortization expense is a meaningful element in our financial statements and therefore its exclusion from Adjusted EBITDA is a material limitation. In the past, we have had a significant amount of debt, and interest expense is a necessary element of our costs and therefore its exclusion from Adjusted EBITDA is a material limitation. We generally incur significant U.S. federal, state and foreign income taxes each year and the provision for income taxes is a necessary element of our costs and therefore its exclusion from Adjusted EBITDA is a material limitation. We have share based compensation and the associated expense is a meaningful element in our financial statements and therefore its exclusion from Adjusted EBITDA is a material limitation. Non-cash expenses, restructuring, issuance and cash non-operating expenses have a meaningful impact on our financial statements. Therefore, their exclusion from Adjusted EBITDA is a material limitation. As a result, Adjusted EBITDA should be evaluated in conjunction with net income for complete analysis of our profitability, as net income includes the financial statement impact of these items and is the most directly comparable GAAP operating performance measure to Adjusted EBITDA. As Adjusted EBITDA is not defined by GAAP, our definition of Adjusted EBITDA may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. Because of the limitations that Adjusted EBITDA has as an analytical tool, investors should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP.

(2) As defined in the Credit Facility, an add-back of up to $250 thousand of cash non-operating expense, which is not to exceed $1.5 million when combined together with restructuring and issuance costs.

The Credit Facility also contains provisions for an increased interest rate during periods of default. We do not believe that these covenants will affect our ability to operate our business, and we were in compliance with all covenants under our Credit Facility as of March 31, 2015.

Non-GAAP Measures

In our quarterly earnings press releases and conference calls, in addition to Adjusted EBITDA as discussed above, we discuss a key measure that is not calculated according to GAAP. This non-GAAP measure is net adjusted EBITDA, which is defined as income (loss) from operations before depreciation, amortization of acquired intangible assets and share based compensation expenses. We use net adjusted EBITDA as a principal indicator of the operating performance of our business. We use net adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our board of directors, determining bonus compensation for our employees based on operating performance and evaluating short-term and long-term operating trends in our operations. We believe that net adjusted EBITDA permits a comparative assessment of our operating performance, relative to our performance based on our GAAP results, while isolating the effects of charges that may vary from period-to-period without direct correlation to underlying operating performance. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. We believe that trends in our net adjusted EBITDA may be valuable indicators of our operating performance.

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The following table presents a reconciliation from income from operations, which is the most directly comparable GAAP operating financial measure, to net adjusted EBITDA as used by management (in thousands):

	Three Months Ended March 31,
	2015		2014
Income from operations	$	11,127	$	13,918
Depreciation and amortization		2,302		2,982
Share based compensation		2,771		2,260
Net adjusted EBITDA(1)	$	16,200	$	19,160

(1) Net adjusted EBITDA is not a measure of operating performance under GAAP and should not be considered as an alternative or substitute for GAAP profitability measures such as income (loss) from operations and net income (loss). Net adjusted EBITDA as an operating performance measure has material limitations since it excludes the statement of income impact of depreciation and amortization expense and share based compensation and therefore does not represent an accurate measure of profitability. We have significant intangible assets and amortization expense is a meaningful element in our financial statements and therefore its exclusion from net adjusted EBITDA is a material limitation. Share based compensation and the associated expense has a meaningful impact on our financial statements and therefore its exclusion from net adjusted EBITDA is a material limitation. As a result, net adjusted EBITDA should be evaluated in conjunction with income (loss) from operations for complete analysis of our profitability, as income (loss) from operations includes the financial statement impact of these items and is the most directly comparable GAAP operating performance measure to net adjusted EBITDA. As net adjusted EBITDA is not defined by GAAP, our definition of net adjusted EBITDA may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. Because of the limitations that net adjusted EBITDA has as an analytical tool, investors should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP.

In our quarterly earnings press releases and conference calls, in addition to Adjusted EBITDA and net adjusted EBITDA as discussed above, we discuss another key measure that is not calculated according to GAAP. This non-GAAP measure is non-GAAP earnings per diluted share, which is defined as earnings per diluted share before amortization of acquired intangible assets and stock-based compensation expenses. We use non-GAAP earnings per diluted share as one of our principal indicators of the operating performance of our business. We use non-GAAP earnings per diluted shares in internal forecasts, supplementing the financial results and forecasts reported to our board of directors and evaluating short-term and long-term operating trends in our operations. We believe that non-GAAP earnings per diluted share permits a comparative assessment of our operating performance, relative to our performance based on our GAAP results, while isolating the effects of charges that may vary from period-to-period without direct correlation to underlying operating performance. We believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. We believe that trends in our non-GAAP earnings per diluted share may be valuable indicators of our operating performance.

The following table presents a reconciliation from earnings per diluted share, which is the most directly comparable GAAP measure, to non-GAAP earnings per diluted share as used by management:

	Three Months Ended March 31,
	2015		2014
GAAP earnings per diluted share	$	0.18	$	0.21
Amortization, net of tax		0.03		0.04
Share based compensation, net of tax		0.05		0.04
Non-GAAP earnings per diluted share(1)	$	0.26	$	0.29

(1) Non-GAAP earnings per diluted share is not a measure of operating performance under GAAP and should not be considered as an alternative or substitute for GAAP profitability measures such as earnings per share and earnings per diluted share. Non-GAAP earnings per diluted share as an operating performance measure has material limitations since it excludes the statement of income impact of amortization expense and share based compensation, and therefore, does not represent an accurate measure of profitability. We have significant intangible assets and amortization expense is a meaningful element in our financial statements and therefore its exclusion from non-GAAP earnings per diluted share is a material limitation. Share based compensation and the associated expense has a meaningful impact on our financial statements and therefore its exclusion from non-GAAP diluted earnings per share is a material limitation. As a result, non-GAAP earnings per diluted share should be

24

evaluated in conjunction with earnings per diluted share for complete analysis of our profitability, as earnings per diluted share includes the financial statement impact of these items and is the most directly comparable GAAP operating performance measure to non-GAAP earnings per diluted share. As non-GAAP earnings per diluted share is not defined by GAAP, our definition of non-GAAP earnings per diluted share may differ from and therefore may not be comparable to similarly titled measures used by other companies, thereby limiting its usefulness as a comparative measure. Because of the limitations that non-GAAP earnings per share has as an analytical tool, investors should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to financial market risk, including interest rate risk and foreign currency exchange risk.

Concentration of Revenue and Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. Cash equivalents consist primarily of bank deposits and certain investments, such as commercial paper, corporate debt and municipal securities, with maturities less than 90 days. Deposits of cash held outside the United States totaled approximately $9.2 million and $10.3 million at March 31, 2015 and December 31, 2014, respectively.

We grant credit to customers in the ordinary course of business. Credit evaluations are performed on an ongoing basis to reduce credit risk, and no collateral is required from our customers. An allowance for uncollectible accounts is provided for those accounts receivable considered to be uncollectible based upon historical experience and credit evaluation. As of March 31, 2015, one customer individually accounted for 17.1% of our gross accounts receivable. As of December 31, 2014, one customer individually accounted for 10.1% of our gross accounts receivable. Due to the nature of our quarterly revenue streams derived from royalty revenue, it is not unusual for our accounts receivable balances to include a few customers with large balances. Historically, we have not recorded material losses due to customers’ nonpayment.

For the three months ended March 31, 2015 and 2014, no customer accounted for more than 10% of our revenue.

Derivative Financial Instruments and Interest Rate Risk

In the past, we have used interest rate derivative instruments to hedge our exposure to interest rate volatility resulting from our variable rate debt. ASC Topic No. 815, Derivatives and Hedging, or ASC 815, requires that all derivative instruments be reported on the balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships, including a requirement that all designations must be made at the inception of each instrument. As we did not make such initial designations, ASC 815 requires changes in the fair value of the derivative instrument to be recognized as current period income or expense.

The fair value of derivative instruments is estimated based on the amount that we would receive or pay to terminate the agreements at the reporting date. Our exposure to market risk associated with changes in interest rates relates primarily to our long-term debt. The interest rate on our Credit Facility fluctuates with either the prime rate or the LIBOR interest rate. At March 31, 2015 and December 31, 2014, the Company had no borrowings under our revolving Credit Facility. Historically, we have purchased interest rate swap instruments to hedge our exposure to interest rate fluctuations on our debt obligations.

Foreign Currency Exchange Rate Risk

In accordance with ASC Topic No. 830, Foreign Currency Matters, or ASC 830, all assets and liabilities of our foreign subsidiaries whose functional currency is a currency other than U.S. dollars are translated into U.S. dollars at an exchange rate as of the balance sheet date. Revenue and expenses of these subsidiaries are translated at the average monthly exchange rates. The resulting translation adjustments as calculated from the translation of our foreign subsidiaries to U.S. dollars are recorded as a separate component of stockholders’ equity. For the three months ended March 31, 2015 and 2014, sales by our subsidiaries located outside North America, particularly the U.K, Germany and Japan, comprised 46.0% and 48.0%%, respectively, of our total revenue. An effect of a 10% strengthening of the British pound sterling, the Euro or Japanese yen, relative to the U.S. dollar, would have decreased our revenues by $4.6 million, increased expenses by $3.5 million and decreased operating income by $1.1 million for the three months ended March 31, 2015. The sensitivity analysis assumes that all currencies move in the same direction at the same time and the ratio of non-U.S. dollar denominated revenue and expenses to U.S. dollar denominated revenue and expenses does not change from current levels.

We incur foreign currency exchange gains and losses related to certain customers that are invoiced in U.S. dollars, but who have the option to make an equivalent payment in their own functional currencies at a specified exchange rate as of a specified date. In

25

the period from that date until payment in the customer’s functional currency is received and converted into U.S. dollars, we can incur realized gains and losses. We also incur foreign currency exchange gains and losses on certain intercompany assets and liabilities denominated in foreign currencies. We are currently utilizing 30-day forward contracts to mitigate our exposure on these currency fluctuations. Any increase or decrease in the fair value of the forward contracts is offset by the change in the value of the hedged assets of our consolidated foreign affiliate. At March 31, 2015, we had one contract to sell 2.1 million British pounds sterling and purchase $3.1 million that together, had an immaterial fair value. At December 31, 2014 we had one 30-day contract to sell 2.3 million British pound sterling and purchase $3.5 million that together, had an immaterial fair value.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2015. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide a reasonable assurance of achieving their objectives.

Based on the evaluation of our disclosure controls and procedures as of March 31, 2015, our principal executive officer and principal financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during and as of the fiscal quarter ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be a party to various claims, suits and complaints. We do not believe that there are claims or legal proceedings that, if determined adversely to us, would have a material adverse effect on our business, results of operations or financial condition.

Item 1A. Risk Factors

There are no material changes in our risk factors from those disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities

None.

(b) Use of proceeds

Not applicable.

(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers

26

The following table provides information about purchases by the Company during the quarter ended March 31, 2015 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:

Monotype Imaging Holdings Inc. Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
January 13, 2015 to January 30, 2015(2)		100,000	$	28.32		100,000	$	15,302,367
February 2, 2015 to February 27, 2015(1) (2)		50,537		30.97		50,000		13,734,441
March 2, 2015 to March 31, 2015(1) (2)		59,275		27.51		49,900		12,101,040
Total		209,812	$	28.78		199,900	$	12,101,040

(1) The Company repurchased 9,912 shares of unvested restricted stock in accordance with the Second Amended and Restated 2007 Stock Option and Incentive Plan (the “2007 Stock Option Plan”). The price paid by the Company was determined pursuant to the terms of the 2007 Stock Option Plan and related restricted stock agreement.

(2) The Company purchased shares of common stock in accordance with its share repurchase program announced on October 31, 2013. The Company purchased shares on the open market at prevailing market prices.

The Company repurchased 35,700 shares of common stock for $1.2 million in the period of April 1 to April 23, 2015, at an average price per share of $32.84. The Company purchased these shares on the open market at prevailing market prices and in accordance with its share repurchase program (“Plan”). At April 23, 2015, $10.9 million remains for future purchase under the Plan.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits listed in the Exhibit Index immediately preceding the exhibits are filed as part of this Quarterly Report on Form 10-Q and such Exhibit Index is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MONOTYPE IMAGING HOLDINGS INC.
Date: May 1, 2015	By:	/S/    DOUGLAS J. SHAW
		Douglas J. Shaw
		President, Chief Executive Officer and Director
		(Principal Executive Officer)
Date: May 1, 2015	By:	/S/    SCOTT E. LANDERS
		Scott E. Landers
		Chief Financial Officer, Chief Operating Officer, Treasurer and Assistant Secretary (Principal Financial Officer)

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EXHIBIT INDEX

Listed and indexed below are all exhibits filed as part of this report.

Exhibit Number	Description
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer.*
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer.*
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer and Chief Financial Officer.**
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Douglas J. Shaw, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Monotype Imaging Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2015

/S/    DOUGLAS J. SHAW        

Douglas J. Shaw

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Scott E. Landers, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Monotype Imaging Holdings Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 1, 2015

/S/    SCOTT E. LANDERS        

Scott E. Landers

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Monotype Imaging Holdings Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Douglas J. Shaw, Chief Executive Officer of the Company, and Scott E. Landers, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to our knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 1, 2015

/S/    DOUGLAS J. SHAW        

Douglas J. Shaw

Chief Executive Officer

/S/    SCOTT E. LANDERS        

Scott E. Landers

Chief Financial Officer

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Fair Value Measurements - Summary of Changes in Estimated Fair Value for Liabilities Measured on a Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Contingent consideration recorded upon acquisition	$ 5,179	$ 270
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value measurement at the beginning of period	4,900
Contingent consideration recorded upon acquisition	4,900
Fair value measurement at end of period	$ 4,900

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Commitments and Contingencies - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Period of licensing agreement term	1 year
Warranty liabilities	$ 0	$ 0

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Stockholders' Equity - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Oct. 23, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock repurchase program, period in force	2 years
Number of shares repurchased under stock repurchase program	199,900
Total common stock aggregate purchase price	$ 6,000,000
Share based compensation, capitalized	42,000	23,000
Unrecognized compensation expense	32,500,000
Weighted average period, years	3 years 2 months 12 days
Maximum [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total amount authorized under repurchase program			$ 50,000,000

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Subsequent Events - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended	1 Months Ended
	Mar. 31, 2015	Apr. 23, 2015	Apr. 28, 2015
Subsequent Event [Line Items]
Dividend payable, date of record	Jul. 01, 2015
Dividend payable, date to be paid	Jul. 21, 2015
Number of shares repurchased under stock repurchase program	199,900
Value of shares repurchased	$ 6.0
Subsequent Events [Member]
Subsequent Event [Line Items]
Dividend approved, amount per share			$ 0.10
Number of shares repurchased under stock repurchase program		35,700
Value of shares repurchased		1.2
Weighted-average price per share of shares repurchased		$ 32.84
Amount remaining for future purchases under the Plan		$ 10.9

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Net Income Per Share - Schedule of Earnings Per Share, Basic and Diluted (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Numerator:
Net income, as reported	$ 7,357	$ 8,445
Less: net income attributable to participating securities	(146)	(128)
Net income available to common shareholders-basic	7,211	8,317
Basic:
Weighted-average shares of common stock outstanding	39,642,889	39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding	(813,720)	(607,555)
Weighted-average number of common shares used in computing basic net income per common share	38,829,169	38,712,679
Net income per share applicable to common shareholders-basic	$ 0.19	$ 0.21
Net income available to common shareholders-basic	7,211	8,317
Add-back: undistributed earnings allocated to unvested shareholders	70	82
Less: undistributed earnings reallocated to unvested shareholders	(69)	(80)
Net income available to common shareholders-diluted	$ 7,212	$ 8,319
Weighted-average shares of common stock outstanding	39,642,889	39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding	(813,720)	(607,555)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method	692,970	1,037,601
Weighted-average number of common shares used in computing diluted net income per common share	39,522,139	39,750,280
Net income per share applicable to common shareholders-diluted	$ 0.18	$ 0.21

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Nature of the Business - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 Subsidiary Segment
Nature Of Business [Abstract]
Number of business segments	1
Number of subsidiaries, domestic	4
Number of subsidiaries, foreign	5

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value

The following table presents our financial assets and liabilities that are carried at fair value, classified according to the three categories described above (in thousands):

	Fair Value Measurement at March 31, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	30,814	$	30,814	$	—	$	—
Cash equivalents—commercial paper		6,999		—		6,999		—
Cash equivalents—U.S. government and agency securities		1,500		—		1,500		—
Cash equivalents—corporate bonds		703		—		703		—
Total assets	$	40,016	$	30,814	$	9,202	$	—
Liabilities:
Contingent acquisition consideration	$	5,179	$	—	$	279	$	4,900
Total liabilities	$	5,179	$	—	$	279	$	4,900

	Fair Value Measurement at December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	34,309	$	34,309	$	—	$	—
Cash equivalents—commercial paper		3,000		—		3,000		—
Cash equivalents—U.S. government and agency securities		2,700		—		2,700		—
Total assets	$	40,009	$	34,309	$	5,700	$	—
Liabilities:
Contingent acquisition consideration	$	270	$	—	$	270	$	—
Total liabilities	$	270	$	—	$	270	$	—

Summary of Changes in Estimated Fair Value for Liabilities Measured on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

The changes in the estimated fair value for our liabilities measured on a recurring basis using significant unobservable inputs (Level 3) are as follows (in thousands):

	Three Months Ended March 31, 2015
Fair value measurement at the beginning of period	$	—
Contingent consideration recorded upon acquisition		4,900
Fair value measurement at end of period	$	4,900

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Segment Reporting - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2015 Markets Segment
Segment Reporting [Abstract]
Number of operating segment	1
Number of major markets, segment reporting	2

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Debt - Additional Information (Detail) (USD $)	0 Months Ended	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2015 Convenant	Jul. 13, 2011
Debt Instrument [Line Items]
New credit agreement entering date		Jul. 13, 2011
Secured revolving credit facility term, years		5 years
Secured revolving credit facility, current borrowing capacity			$ 120,000,000
Interest rate on outstanding borrowings		Borrowings under the Credit Facility bear interest at a variable rate based upon, at the Company’s option, either LIBOR or the base rate (which is the highest of (i) the prime rate, (ii) 0.5% plus the overnight federal funds rate, and (iii) 1.0% in excess of the three-month LIBOR rate), plus in each case, an applicable margin. The applicable margin for LIBOR loans, based on the applicable leverage ratio, is either 1.5% or 2.0% per annum, and the applicable margin for base rate loans, based on the applicable leverage ratio, is either 0.5% or 1.0% per annum. At September 30, 2014 our rate, inclusive of applicable margins, was 3.75% for prime
Credit facility basis spread on variable rate LIBOR		1.00%
Credit facility reference rate LIBOR		Three-month LIBOR
Outstanding debt under credit facility	$ 0	$ 0
Percentage of fee payment on unused line of credit facility	0.375%
Number of financial covenants	2	2
Federal Funds Rate [Member]
Debt Instrument [Line Items]
Interest rate on outstanding borrowings		0.5% plus the overnight federal funds rate
LIBOR Rate [Member]
Debt Instrument [Line Items]
Interest rate on outstanding borrowings		1.0% in excess of the three-month LIBOR rate
Credit facility basis spread on variable rate LIBOR		0.50%
Applicable leverage ratio, lower end		1.50%
Applicable leverage ratio, higher end		2.00%
Base Rate [Member]
Debt Instrument [Line Items]
Applicable leverage ratio, lower end		0.50%
Applicable leverage ratio, higher end		1.00%
Prime Rate [Member]
Debt Instrument [Line Items]
Variable interest rate	3.75%	3.75%

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Fair Value Measurements - Schedule of Financial Assets and Liabilities Measured at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Assets:
Total assets	$ 40,016	$ 40,009
Liabilities:
Contingent acquisition consideration	5,179	270
Total liabilities	5,179	270
Money Market Funds [Member]
Assets:
Cash equivalents	30,814	34,309
Commercial Paper [Member]
Assets:
Cash equivalents	6,999	3,000
US Government and Agency Securities [Member]
Assets:
Cash equivalents	1,500	2,700
Corporate Bonds [Member]
Assets:
Cash equivalents	703
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets:
Total assets	30,814	34,309
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Money Market Funds [Member]
Assets:
Cash equivalents	30,814	34,309
Significant Other Observable Inputs (Level 2) [Member]
Assets:
Total assets	9,202	5,700
Liabilities:
Contingent acquisition consideration	279	270
Total liabilities	279	270
Significant Other Observable Inputs (Level 2) [Member] | Commercial Paper [Member]
Assets:
Cash equivalents	6,999	3,000
Significant Other Observable Inputs (Level 2) [Member] | US Government and Agency Securities [Member]
Assets:
Cash equivalents	1,500	2,700
Significant Other Observable Inputs (Level 2) [Member] | Corporate Bonds [Member]
Assets:
Cash equivalents	703
Significant Unobservable Inputs (Level 3) [Member]
Liabilities:
Contingent acquisition consideration	4,900
Total liabilities	$ 4,900

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Segment Reporting - Schedule of Revenue by Geographic Segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Total	$ 46,046	$ 46,072
% of Total	100.00%	100.00%
United States [Member]
Segment Reporting Information [Line Items]
Total	24,843	23,936
% of Total	54.00%	52.00%
United Kingdom [Member]
Segment Reporting Information [Line Items]
Total	1,848	2,693
% of Total	4.00%	5.80%
Germany [Member]
Segment Reporting Information [Line Items]
Total	5,844	4,477
% of Total	12.70%	9.70%
Japan [Member]
Segment Reporting Information [Line Items]
Total	13,207	14,714
% of Total	28.60%	32.00%
Other Asia [Member]
Segment Reporting Information [Line Items]
Total	$ 304	$ 252
% of Total	0.70%	0.50%

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Net Income Per Share - Schedule of Anti-Dilutive Securities Excluded from Computation of Earnings Per Share (Detail)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	306,940	144,707
Unvested Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	90,014	73,246
Unvested Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	7,857	1,140

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Recently Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2015

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Pronouncements

3. Recently Issued Accounting Pronouncements

Interest

In April 2015, the Financial Accounting Standards Board, or FASB, issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, which provides that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability, rather than classifying the costs separately in the balance sheet as a deferred charge. The ASU aims to reduce complexity. The standard is effective for the Company on January 1, 2017. The Company is currently evaluating the impact of the adoption of ASU 2015-03 on its consolidated financial statements, but does not expect the adoption of this standard to have any impact.

Consolidation

In February 2015, the FASB issued updated accounting guidance on consolidation requirements. This update changes the guidance with respect to the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The Company does not expect adoption of this guidance to have a material impact on our financial statements.

Going Concern

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management of a company to evaluate whether there is substantial doubt about the company’s ability to continue as a going concern. The ASU provides guidance on evaluating an entity’s ability to continue as a going concern and the content of any required footnote disclosure based on that evaluation. The assessment period is one year after the date of the financial statements are issued. The standard is effective for the Company on January 1, 2017. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15, but we do not expect the adoption of this standard to have any impact on its consolidated financial statements.

Revenue Recognition

In May 2014, the FASB and the International Accounting Standards Board jointly issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606), which provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting and interim periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective application, with early adoption not permitted. Accordingly, the standard is effective for the Company on January 1, 2017. The Company is currently evaluating the adoption method it will apply and the impact that this guidance will have on its financial statements and related disclosures.

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Defined Benefit Pension Plan - Components of Net Periodic Benefit Cost (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Postemployment Benefits [Abstract]
Service cost	$ 29	$ 30
Interest cost	28	44
Amortization	19
Net periodic benefit cost	$ 76	$ 74

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Reconciliation Computed at Federal Statutory Rates to Income Tax Expense

A reconciliation of income taxes computed at federal statutory rates to income tax expense is as follows (dollar amounts in thousands):

	Three Months Ended March 31,
	2015					2014
Provision for income taxes at statutory rate	$	3,821		35.0	%	$	4,744		35.0	%
State and local income taxes, net of federal tax benefit		156		1.4	%		256		1.9	%
Stock compensation		32		0.3	%		87		0.6	%
Reversal of reserves		(342	)	(3.1	)%		—		—
Foreign rate differential		(87	)	(0.8	)%		92		0.7	%
Disqualifying dispositions on incentive stock options		(16	)	(0.1	)%		(17	)	(0.1	)%
Other, net		(5	)	(0.1	)%		(54	)	(0.4	)%
Reported income tax provision	$	3,559		32.6	%	$	5,108		37.7	%

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Defined Benefit Pension Plan (Tables)

3 Months Ended

Mar. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Components of Net Periodic Benefit Cost

The components of net periodic benefit cost included in the accompanying condensed consolidated statements of income were as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Service cost	$	29	$	30
Interest cost		28		44
Amortization		19		—
Net periodic benefit cost	$	76	$	74

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Income Taxes - Income Tax Reconciliation Computed at Federal Statutory Rates to Income Tax Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Tax Disclosure [Abstract]
Provision for income taxes at statutory rate	$ 3,821	$ 4,744
State and local income taxes, net of federal tax benefit	156	256
Stock compensation	32	87
Reversal of reserves	(342)
Foreign rate differential	(87)	92
Disqualifying dispositions on incentive stock options	(16)	(17)
Other, net	(5)	(54)
Reported income tax provision	$ 3,559	$ 5,108
Provision for income taxes at statutory rate, tax rate	35.00%	35.00%
State and local income taxes, net of federal tax benefit, tax rate	1.40%	1.90%
Stock compensation, tax rate	0.30%	0.60%
Reversal of reserves, tax rate	(3.10%)
Foreign rate differential, tax rate	(0.80%)	0.70%
Disqualifying dispositions on incentive stock options, tax rate	(0.10%)	(0.10%)
Other, net, tax rate	(0.10%)	(0.40%)
Reported income tax provision, tax rate	32.60%	37.70%

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Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following presents a reconciliation of the numerator and denominator used in the calculation of basic net income per share and a reconciliation of the numerator and denominator used in the calculation of diluted net income per share (in thousands, except share and per share data):

	Three Months Ended March 31,
	2015			2014
Numerator:
Net income, as reported	$	7,357		$	8,445
Less: net income attributable to participating securities		(146	)		(128	)
Net income available to common shareholders—basic	$	7,211		$	8,317
Denominator:
Basic:
Weighted-average shares of common stock outstanding		39,642,889			39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding		(813,720	)		(607,555	)
Weighted-average number of common shares used in computing basic net income per common share		38,829,169			38,712,679
Net income per share applicable to common shareholders—basic	$	0.19		$	0.21

	Three Months Ended March 31,
	2015			2014
Numerator:
Net income available to common shareholders—basic	$	7,211		$	8,317
Add-back: undistributed earnings allocated to unvested shareholders		70			82
Less: undistributed earnings reallocated to unvested shareholders		(69	)		(80	)
Net income available to common shareholders—diluted	$	7,212		$	8,319
Denominator:
Diluted:
Weighted-average shares of common stock outstanding		39,642,889			39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding		(813,720	)		(607,555	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method		692,970			1,037,601
Weighted-average number of common shares used in computing diluted net income per common share		39,522,139			39,750,280
Net income per share applicable to common shareholders—diluted	$	0.18		$	0.21

Schedule of Anti-Dilutive Securities Excluded from Computation of Earnings Per Share

The following common share equivalents have been excluded from the computation of diluted weighted-average shares outstanding, as their effect would have been anti-dilutive:

	Three Months Ended March 31,
	2015		2014
Options		306,940		144,707
Unvested restricted stock		90,014		73,246
Unvested restricted stock units		7,857		1,140

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share Based Compensation Expense

The following presents the impact of share based compensation expense on our condensed consolidated statements of income (in thousands):

	Three Months Ended March 31,
	2015		2014
Marketing and selling	$	1,266	$	1,046
Research and development		542		514
General and administrative		963		700
Total expensed		2,771		2,260
Property and equipment		42		23
Total share based compensation	$	2,813	$	2,283

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Basis of Presentation

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

2. Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements as of March 31, 2015 and for the three months ended March 31, 2015 and 2014 include the accounts of the Company and its wholly-owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X. Accordingly, such financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The results for interim periods are not necessarily indicative of results to be expected for the year or for any future periods.

In management’s opinion, these unaudited condensed consolidated interim financial statements contain all adjustments of a normal recurring nature necessary for a fair presentation of the financial statements for the interim periods presented.

These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2014 as reported in the Company’s Annual Report on Form 10-K.

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the condensed consolidated financial statements. As of March 31, 2015, the Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, have not changed.

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Schedule of Revenue for Major Markets

The following table presents revenue for these two major markets (in thousands):

	Three Months Ended March 31,
	2015		2014
Creative Professional	$	20,504	$	17,719
OEM		25,542		28,353
Total	$	46,046	$	46,072

Schedule of Revenue by Geographic Segments

The following summarizes revenue by location (in thousands of dollars, except percentages):

	Three Months Ended March 31,
	2015					2014
	Revenue		% of Total			Revenue		% of Total
United States	$	24,843		54.0	%	$	23,936		52.0	%
United Kingdom		1,848		4.0			2,693		5.8
Germany		5,844		12.7			4,477		9.7
Japan		13,207		28.6			14,714		32.0
Other Asia		304		0.7			252		0.5
Total	$	46,046		100.0	%	$	46,072		100.0	%

Schedule of Assets by Geographic Segments

Long-lived assets, which include property and equipment, goodwill and intangibles, but exclude other assets, long-term investments and deferred tax assets, are attributed to geographic areas in which Company assets reside and is shown below (in thousands):

	March 31, 2015		December 31, 2014
Long-lived assets:
United States	$	210,951	$	189,927
United Kingdom		4,775		5,138
Germany		55,643		62,917
Asia (including Japan)		3,478		3,457
Total	$	274,847	$	261,439

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Property and Equipment - Schedule of Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Total cost	$ 21,081	$ 16,675
Less accumulated depreciation and amortization	(6,459)	(6,097)
Property and equipment, net	14,622	10,578
Computer Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Total cost	14,349	12,084
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total cost	1,468	1,093
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total cost	$ 5,264	$ 3,498

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Segment Reporting - Schedule of Assets by Geographic Segments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Long-lived assets:
Total	$ 274,847	$ 261,439
United States [Member]
Long-lived assets:
Total	210,951	189,927
United Kingdom [Member]
Long-lived assets:
Total	4,775	5,138
Germany [Member]
Long-lived assets:
Total	55,643	62,917
Asia (Including Japan) [Member]
Long-lived assets:
Total	$ 3,478	$ 3,457

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 78,765	$ 90,325
Accounts receivable, net of allowance for doubtful accounts of $129 at March 31, 2015 and $164 at December 31, 2014	10,330	9,279
Income tax refunds receivable	2,720	2,593
Deferred income taxes	3,100	2,898
Prepaid expenses and other current assets	4,366	4,361
Total current assets	99,281	109,456
Property and equipment, net	14,622	10,578
Goodwill	185,416	176,999
Intangible assets, net	74,809	73,862
Other assets	1,984	3,563
Total assets	376,112	374,458
Current liabilities:
Accounts payable	1,671	1,156
Accrued expenses and other current liabilities	19,233	24,570
Accrued income taxes payable		640
Deferred revenue	8,196	7,107
Total current liabilities	29,100	33,473
Other long-term liabilities	3,403	2,596
Contingent acquisition consideration	4,900
Deferred income taxes	33,689	32,960
Reserve for income taxes, net of current portion	2,957	4,637
Accrued pension benefits	5,102	5,679
Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, $0.001 par value, Authorized shares: 10,000,000; Issued and outstanding: none
Common stock, $0.001 par value, Authorized shares: 250,000,000; Shares issued: 41,557,282 at March 31, 2015 and 40,770,197 at December 31, 2014	40	39
Additional paid-in capital	241,154	232,522
Treasury stock, at cost, 1,513,549 shares at March 31, 2015 and 1,303,737 shares at December 31, 2014	(37,984)	(31,946)
Retained earnings	102,031	98,672
Accumulated other comprehensive loss	(8,280)	(4,174)
Total stockholders' equity	296,961	295,113
Total liabilities and stockholders' equity	$ 376,112	$ 374,458

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Schedule Of Income Taxes [Line Items]
Reserve for uncertain tax positions	$ 6,500,000
Uncertain tax position reduction in deferred tax assets	3,500,000
Uncertain tax positions long term liabilities	3,000,000
Income tax benefit	3,559,000	5,108,000
Tax Audit [Member]
Schedule Of Income Taxes [Line Items]
Income tax benefit	$ 300,000

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities
Net income	$ 7,357	$ 8,445
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,302	2,982
Loss on retirement of fixed assets		9
Amortization of deferred financing costs and accretion of interest	85	127
Share based compensation	2,771	2,260
Excess tax benefit on stock options	(1,225)	(1,369)
Provision for doubtful accounts	20	(26)
Deferred income taxes	1,631	1,164
Unrealized currency gain (loss) on foreign denominated intercompany transactions	(9)	(71)
Changes in operating assets and liabilities:
Accounts receivable	(1,073)	431
Prepaid expenses and other assets	1,443	254
Accounts payable	566	(32)
Accrued income taxes	(1,193)	2,647
Accrued expenses and other liabilities	(3,080)	(3,324)
Deferred revenue	1,327	3,289
Net cash provided by operating activities	10,922	16,786
Cash flows from investing activities
Purchases of property and equipment	(4,173)	(1,193)
Acquisition of business, net of cash acquired	(14,303)	(382)
Net cash used in investing activities	(18,476)	(1,575)
Cash flows from financing activities
Excess tax benefit on stock options	1,225	1,369
Common stock dividends paid	(3,151)	(2,357)
Purchase of treasury stock	(6,072)	(6,770)
Proceeds from exercises of common stock options	4,594	2,250
Net cash used in financing activities	(3,404)	(5,508)
Effect of exchange rates on cash and cash equivalents	(602)	40
(Decrease) increase in cash and cash equivalents	(11,560)	9,743
Cash and cash equivalents at beginning of period	90,325	78,411
Cash and cash equivalents at end of period	$ 78,765	$ 88,154

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Derivative Financial Instruments - Additional Information (Detail) (Forward Contracts [Member])	3 Months Ended
	Mar. 31, 2015 Contract	Dec. 31, 2014 Contract
Forward Contracts [Member]
Derivative [Line Items]
Forward contract terms	30-day forward contract
Number of forward contract outstanding	1	1

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Subsequent Events

3 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

16. Subsequent Events

Dividend Declaration

On April 28, 2015 the Company’s Board of Directors declared a $0.10 per share quarterly cash dividend on our outstanding common stock. The record date is set for July 1, 2015 and the dividend is payable to shareholders of record on July 21, 2015. Dividends are declared at the discretion of the Company’s Board of Directors and depend on actual cash from operations, the Company’s financial condition and capital requirements and any other factors the Company’s Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by the Company’s Board of Directors on a quarterly basis.

Share Repurchase Program

The Company repurchased 35,700 shares of common stock for $1.2 million in the period of April 1 to April 23, 2015, at an average price per share of $32.84. The Company purchased these shares on the open market at prevailing market prices and in accordance with its previously announced share repurchase program (“Plan”). At April 23, 2015, $10.9 million remains for future purchase under the Plan.

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Derivative Financial Instruments - Losses and (Gains) on Derivative Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Derivative [Line Items]
Loss (gain) on derivatives	$ (136)	$ 56
Currency Swaps [Member]
Derivative [Line Items]
Loss (gain) on derivatives	$ (136)	$ 56

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Losses and (Gains) on Derivative Financial Instruments

The following table presents the (gains) losses on our derivative financial instruments which are included in (gain) loss on derivatives in our accompanying condensed consolidated statements of income (in thousands):

	Three Months Ended March 31,
	2015			2014
Currency swaps		(136	)		56
Total	$	(136	)	$	56

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Nature of the Business

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Nature of the Business

1. Nature of the Business

Monotype Imaging Holdings Inc. (the “Company” or “we”) is a leading provider of type, technology and expertise for creative applications and consumer devices. Our end-user and embedded solutions for print, web and mobile environments enable people to create and consume dynamic content on any and every device. Our technologies and fonts enable the display and printing of high quality digital text. Our technologies and fonts have been widely deployed across, and embedded in, a range of consumer devices including laser printers, digital copiers, mobile phones, e-book readers, tablets, automotive displays, digital cameras, navigation devices, digital televisions, set-top boxes and consumer appliances, as well as in numerous software applications and operating systems. We also provide printer drivers, page description language interpreters, printer user interface technology and color imaging solutions to printer manufacturers and OEMs (original equipment manufacturers). We license our fonts and technologies to consumer device manufacturers, independent software vendors and creative and business professionals and we are headquartered in Woburn, Massachusetts. We operate in one business segment: the development, marketing and licensing of technologies and fonts. We also maintain various offices worldwide for selling and marketing, research and development and administration. We conduct our operations through four domestic operating subsidiaries, Monotype Imaging Inc., Monotype ITC Inc., MyFonts Inc. and Swyft Media Inc., and five foreign operating subsidiaries, Monotype Ltd., Monotype GmbH and its wholly-owned subsidiary, FontShop International Inc., Monotype Solutions India Pvt. Ltd., Monotype Hong Kong Ltd. and Monotype KK.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 129	$ 164
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	41,557,282	40,770,197
Treasury stock, shares	1,513,549	1,303,737

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

A reconciliation of income taxes computed at federal statutory rates to income tax expense is as follows (dollar amounts in thousands):

	Three Months Ended March 31,
	2015					2014
Provision for income taxes at statutory rate	$	3,821		35.0	%	$	4,744		35.0	%
State and local income taxes, net of federal tax benefit		156		1.4	%		256		1.9	%
Stock compensation		32		0.3	%		87		0.6	%
Reversal of reserves		(342	)	(3.1	)%		—		—
Foreign rate differential		(87	)	(0.8	)%		92		0.7	%
Disqualifying dispositions on incentive stock options		(16	)	(0.1	)%		(17	)	(0.1	)%
Other, net		(5	)	(0.1	)%		(54	)	(0.4	)%
Reported income tax provision	$	3,559		32.6	%	$	5,108		37.7	%

As of March 31, 2015, the reserve for uncertain tax positions was approximately $6.5 million. Of this amount, $3.5 million is recorded as a reduction of deferred tax assets and $3.0 million is classified as long term liabilities. During the first quarter of 2015, the Company settled a tax audit related to its Japan subsidiary. As a result of this settlement, the Company recognized a tax benefit of $0.3 million.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 23, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	TYPE
Entity Registrant Name	MONOTYPE IMAGING HOLDINGS INC.
Entity Central Index Key	0001385292
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		40,035,469

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Net Income Per Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Net Income Per Share

12. Net Income Per Share

Basic and diluted earnings per share are computed pursuant to the two-class method. The two-class method determines earnings per share for each class of common stock and participating security according to their respective participation rights in undistributed earnings. Unvested restricted stock awards granted to employees are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. In accordance with ASC Topic No. 260, Earnings Per Share, diluted net income per share is calculated using the more dilutive of the following two approaches:

1. Assume exercise of stock options and vesting of restricted stock using the treasury stock method.

2. Assume exercise of stock options using the treasury stock method, but assume participating securities (unvested restricted stock) are not vested and allocate earnings to common shares and participating securities using the two-class method.

For the periods presented the two-class method was used in the computation of diluted net income per share, as the result was more dilutive. The following presents a reconciliation of the numerator and denominator used in the calculation of basic net income per share and a reconciliation of the numerator and denominator used in the calculation of diluted net income per share (in thousands, except share and per share data):

	Three Months Ended March 31,
	2015			2014
Numerator:
Net income, as reported	$	7,357		$	8,445
Less: net income attributable to participating securities		(146	)		(128	)
Net income available to common shareholders—basic	$	7,211		$	8,317
Denominator:
Basic:
Weighted-average shares of common stock outstanding		39,642,889			39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding		(813,720	)		(607,555	)
Weighted-average number of common shares used in computing basic net income per common share		38,829,169			38,712,679
Net income per share applicable to common shareholders—basic	$	0.19		$	0.21

	Three Months Ended March 31,
	2015			2014
Numerator:
Net income available to common shareholders—basic	$	7,211		$	8,317
Add-back: undistributed earnings allocated to unvested shareholders		70			82
Less: undistributed earnings reallocated to unvested shareholders		(69	)		(80	)
Net income available to common shareholders—diluted	$	7,212		$	8,319
Denominator:
Diluted:
Weighted-average shares of common stock outstanding		39,642,889			39,320,234
Less: weighted-average shares of unvested restricted common stock outstanding		(813,720	)		(607,555	)
Weighted-average number of common shares issuable upon exercise of outstanding stock options, based on the treasury stock method		692,970			1,037,601
Weighted-average number of common shares used in computing diluted net income per common share		39,522,139			39,750,280
Net income per share applicable to common shareholders—diluted	$	0.18		$	0.21

The following common share equivalents have been excluded from the computation of diluted weighted-average shares outstanding, as their effect would have been anti-dilutive:

	Three Months Ended March 31,
	2015		2014
Options		306,940		144,707
Unvested restricted stock		90,014		73,246
Unvested restricted stock units		7,857		1,140

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Revenue	$ 46,046	$ 46,072
Cost of revenue	7,410	6,508
Cost of revenue-amortization of acquired technology	1,133	1,145
Total cost of revenue	8,543	7,653
Gross profit	37,503	38,419
Operating expenses:
Marketing and selling	12,976	11,118
Research and development	5,799	5,753
General and administrative	6,899	6,198
Amortization of other intangible assets	702	1,432
Total operating expenses	26,376	24,501
Income from operations	11,127	13,918
Other (income) expense:
Interest expense	346	278
Interest income	(112)	(2)
Loss on foreign exchange	114	34
(Gain) loss on derivatives	(136)	56
Other	(1)	(1)
Total other expense	211	365
Income before provision for income taxes	10,916	13,553
Provision for income taxes	3,559	5,108
Net income	7,357	8,445
Net income available to common stockholders-basic	7,211	8,317
Net income available to common stockholders-diluted	$ 7,212	$ 8,319
Net income per common share:
Basic	$ 0.19	$ 0.21
Diluted	$ 0.18	$ 0.21
Weighted average number of shares outstanding:
Basic	38,829,169	38,712,679
Diluted	39,522,139	39,750,280
Dividends declared per common share	$ 0.10	$ 0.08

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Fair Value Measurements

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. Fair Value Measurements

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the Codification establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated inputs.

Level 3: Unobservable inputs are used when little or no market data is available and requires the Company to develop its own assumptions about how market participants would price the assets or liabilities. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

The following table presents our financial assets and liabilities that are carried at fair value, classified according to the three categories described above (in thousands):

	Fair Value Measurement at March 31, 2015
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	30,814	$	30,814	$	—	$	—
Cash equivalents—commercial paper		6,999		—		6,999		—
Cash equivalents—U.S. government and agency securities		1,500		—		1,500		—
Cash equivalents—corporate bonds		703		—		703		—
Total assets	$	40,016	$	30,814	$	9,202	$	—
Liabilities:
Contingent acquisition consideration	$	5,179	$	—	$	279	$	4,900
Total liabilities	$	5,179	$	—	$	279	$	4,900

	Fair Value Measurement at December 31, 2014
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents—money market funds	$	34,309	$	34,309	$	—	$	—
Cash equivalents—commercial paper		3,000		—		3,000		—
Cash equivalents—U.S. government and agency securities		2,700		—		2,700		—
Total assets	$	40,009	$	34,309	$	5,700	$	—
Liabilities:
Contingent acquisition consideration	$	270	$	—	$	270	$	—
Total liabilities	$	270	$	—	$	270	$	—

The Company’s recurring fair value measures relate to short-term investments, which are classified as cash equivalents, derivative instruments and contingent consideration. The fair value of our cash equivalents are either based on quoted prices for similar assets or other observable inputs such as yield curves at commonly quoted intervals and other market corroborated inputs. The fair value of our derivative instruments is based on quoted market prices from various banking institutions or an independent third party provider for similar instruments. In determining the fair value, we consider our non-performance risk and that of our counterparties. At March 31, 2015, we had one 30-day forward contract to sell 2.1 million British pound sterling and purchase $3.1 million that together, had an immaterial fair value. At December 31, 2014, we had one 30-day forward contract to sell 2.3 million British pound sterling and purchase $3.5 million that together, had an immaterial fair value.

For the contingent acquisition consideration classified as Level 2 at March 31, 2015 and December 31, 2014, fair value approximated book value, and represented the amount to be paid based on actual achievement of the criteria.

At March 31, 2015, the Company recorded approximately $4.9 million in contingent consideration related to the January 2015 acquisition of Swyft Media. The contingent consideration is payable in cash based on the achievement of certain revenue and EBITDA margin targets for the years ending December 31, 2015 through 2016, with a catch-up period for the year ending December 31, 2017, and subject to a cap of $15.0 million. The fair value of this liability was estimated using a Monte Carlo simulation model, relying on significant inputs that are not observable in the market and thus represent a Level 3 fair value measurement. The significant inputs in the Level 3 measurement not supported by market activity included our expected revenues and EBITDA for each of the measurement periods and the estimated level of risk and volatility around the forecast. The Monte Carlo simulation was relied on to estimate the projected revenues, EBITDA margins, and contingent acquisition consideration payments for each measurement period. The average contingent acquisition consideration payments for the years 2015 through 2017, following 100,000 simulation trials, were discounted to present value to capture the time value of money and counterparty risk, based upon an assessment of the Company’s borrowing risk, and applying its credit rating to adjust the risk free rate.

The changes in the estimated fair value for our liabilities measured on a recurring basis using significant unobservable inputs (Level 3) are as follows (in thousands):

	Three Months Ended March 31, 2015
Fair value measurement at the beginning of period	$	—
Contingent consideration recorded upon acquisition		4,900
Fair value measurement at end of period	$	4,900

The Company’s non-financial assets and non-financial liabilities subject to non-recurring measurements include goodwill and intangible assets.   

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

5. Derivative Financial Instruments

We incur foreign currency exchange gains and losses related to certain customers that are invoiced in U.S. dollars, but have the contractual option to make an equivalent payment in their own functional currencies at a specified exchange rate as of a specified date. In the period from that date, until payment in the customer’s functional currency is received and converted into U.S. dollars, we can incur unrealized gains and losses. We also incur foreign currency exchange gains and losses on certain intercompany assets and liabilities denominated in foreign currencies. We are currently utilizing 30-day forward contracts to mitigate our exposure on these currency fluctuations. These contracts are generally set to expire and are settled at month end. The instruments are not designated as hedging instruments, and accordingly, the gain or loss is recognized upon cash settlement and is included in (gain) loss on derivatives in the accompanying condensed consolidated statements of income. At March 31, 2015 and December 31, 2014, we had one contract outstanding, which was entered into on those dates. See Note 6 for details regarding the fair value of these instruments.

The following table presents the (gains) losses on our derivative financial instruments which are included in (gain) loss on derivatives in our accompanying condensed consolidated statements of income (in thousands):

	Three Months Ended March 31,
	2015			2014
Currency swaps		(136	)		56
Total	$	(136	)	$	56

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Recently Issued Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Changes and Error Corrections [Abstract]

Interest

Interest

In April 2015, the Financial Accounting Standards Board, or FASB, issued ASU 2015-03, Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs, which provides that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability, rather than classifying the costs separately in the balance sheet as a deferred charge. The ASU aims to reduce complexity. The standard is effective for the Company on January 1, 2017. The Company is currently evaluating the impact of the adoption of ASU 2015-03 on its consolidated financial statements, but does not expect the adoption of this standard to have any impact.

Consolidation

Consolidation

In February 2015, the FASB issued updated accounting guidance on consolidation requirements. This update changes the guidance with respect to the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The Company does not expect adoption of this guidance to have a material impact on our financial statements.

Going Concern

Going Concern

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management of a company to evaluate whether there is substantial doubt about the company’s ability to continue as a going concern. The ASU provides guidance on evaluating an entity’s ability to continue as a going concern and the content of any required footnote disclosure based on that evaluation. The assessment period is one year after the date of the financial statements are issued. The standard is effective for the Company on January 1, 2017. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2014-15, but we do not expect the adoption of this standard to have any impact on its consolidated financial statements

Revenue Recognition

Revenue Recognition

In May 2014, the FASB and the International Accounting Standards Board jointly issued ASU 2014-9, Revenue from Contracts with Customers (Topic 606), which provides a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange for those goods or services. This guidance is effective for annual reporting and interim periods beginning after December 15, 2016 and allows for either full retrospective or modified retrospective application, with early adoption not permitted. Accordingly, the standard is effective for the Company on January 1, 2017. The Company is currently evaluating the adoption method it will apply and the impact that this guidance will have on its financial statements and related disclosures.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stockholders' Equity

 Stockholders’ Equity

Share repurchases

On October 23, 2013, the Company’s Board of Directors approved a share repurchase program of up to $50.0 million of the Company’s outstanding shares of common shares over the next two years. Intended to offset shareholder dilution, the Company expects purchases under the program will be made periodically, on the open market as business and market conditions warrant. The share repurchase program does not obligate the Company to acquire any particular amount of common stock, and the program may be suspended or discontinued at management’s and/or the Board of Directors’ discretion. During the quarter ended March 31, 2015, the Company repurchased a total of 199,900 shares of its common stock in 2015 for an aggregate purchase price of $6.0 million, including brokers’ fees.

Share Based Compensation

We account for share based compensation in accordance with ASC Topic No. 718, Compensation – Stock Compensation, which requires the measurement of compensation costs at fair value on the date of grant and recognition of compensation expense over the service period for awards expected to vest. The following presents the impact of share based compensation expense on our condensed consolidated statements of income (in thousands):

	Three Months Ended March 31,
	2015		2014
Marketing and selling	$	1,266	$	1,046
Research and development		542		514
General and administrative		963		700
Total expensed		2,771		2,260
Property and equipment		42		23
Total share based compensation	$	2,813	$	2,283

In the first quarter of 2015 and 2014, approximately $42 thousand and $23 thousand, respectively, of share based compensation was capitalized as part of an internal software project, and this amount is included in property and equipment, net in our condensed consolidated balance sheet. As of March 31, 2015, the Company had $32.5 million of unrecognized compensation expense related to employees and directors unvested stock options and restricted stock awards that are expected to be recognized over a weighted average period of 3.2 years.

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Debt

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Debt

9. Debt

On July 13, 2011, the Company entered into a credit agreement (“Credit Facility”), with Wells Fargo Capital Finance, LLC, the administrative agent for a syndicate of Lenders (“Lenders”), which provides the Company with a five-year, $120.0 million secured revolving credit facility. Borrowings under the Credit Facility bear interest at a variable rate based upon, at the Company’s option, either LIBOR or the base rate (which is the highest of (i) the prime rate, (ii) 0.5% plus the overnight federal funds rate, and (iii) 1.0% in excess of the three-month LIBOR rate), plus in each case, an applicable margin. The applicable margin for LIBOR loans, based on the applicable leverage ratio, is either 1.5% or 2.0% per annum, and the applicable margin for base rate loans, based on the applicable leverage ratio, is either 0.5% or 1.0% per annum. At March 31, 2015 our rate, inclusive of applicable margins, was 3.75% for prime. At March 31, 2015, the Company had no outstanding debt under the Credit Facility. The Company is required to pay an unused line fee equal to 0.375% per annum on the undrawn portion available under the revolving credit facility and variable per annum fees in respect of outstanding letters of credit, if any.

The Credit Facility contains two financial covenants; a leverage ratio and a fixed charge coverage ratio. Failure to comply with these covenants, or the occurrence of an event of default, could permit the Lenders under the Credit Facility to declare all amounts borrowed under the Credit Facility, together with accrued interest and fees, to be immediately due and payable. In addition, the Credit Facility is secured by substantially all of our assets and places limits on the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens and engage in sale-leaseback transactions, make loans and investments, engage in mergers, acquisitions and asset sales, transact with affiliates and alter its business. We were in compliance with all covenants under our Credit Facility as of March 31, 2015.

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Property and Equipment

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

7. Property and Equipment

Property and equipment consists of the following (in thousands):

	March 31, 2015			December 31, 2014
Computer equipment and software	$	14,349		$	12,084
Furniture and fixtures		1,468			1,093
Leasehold improvements		5,264			3,498
Total cost		21,081			16,675
Less accumulated depreciation and amortization		(6,459	)		(6,097	)
Property and equipment, net	$	14,622		$	10,578

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Intangible Assets

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

8. Intangible Assets

Intangible assets as of March 31, 2015 and December 31, 2014 were as follows (dollar amounts in thousands):

		March 31, 2015							December 31, 2014
	Weighted- Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Balance		Gross Carrying Amount		Accumulated Amortization			Net Balance
Customer relationships	10	$	59,889	$	(47,127	)	$	12,762	$	57,488	$	(47,018	)	$	10,470
Acquired technology	11		54,264		(35,496	)		18,768		55,064		(34,411	)		20,653
Non-compete agreements	4		12,926		(11,803	)		1,123		12,172		(11,862	)		310
Indefinite-lived intangible assets:
Trademarks			37,756		—			37,756		38,029		—			38,029
Domain names			4,400		—			4,400		4,400		—			4,400
Total		$	169,235	$	(94,426	)	$	74,809	$	167,153	$	(93,291	)	$	73,862

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Defined Benefit Pension Plan

3 Months Ended

Mar. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Defined Benefit Pension Plan

10. Defined Benefit Pension Plan

Our German subsidiary maintains an unfunded defined benefit pension plan which covers substantially all employees who joined the company prior to the plan’s closure to new participants in 2006. Participants are entitled to benefits in the form of retirement, disability and surviving dependent pensions. Benefits generally depend on years of service and the salary of the employees.

The components of net periodic benefit cost included in the accompanying condensed consolidated statements of income were as follows (in thousands):

	Three Months Ended March 31,
	2015		2014
Service cost	$	29	$	30
Interest cost		28		44
Amortization		19		—
Net periodic benefit cost	$	76	$	74

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Acquisitions - Additional Information (Detail) (USD $)	3 Months Ended		0 Months Ended		1 Months Ended	0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Apr. 07, 2014 Employees	Jul. 14, 2014 Employees	Jan. 31, 2015	Jan. 30, 2015 Employees	Dec. 31, 2014
Business Acquisition [Line Items]
Contingent consideration	$ 5,179,000						$ 270,000
Business acquisition, cash paid net of cash acquired	14,303,000	382,000
Mark Boulton Design [Member]
Business Acquisition [Line Items]
Business acquisition, cash paid			800,000
Number of employees joined in connection with the acquisition			7
Expected tax deductible amount on goodwill			0.0
Restricted stock awards issued in connection with acquisition			1,000,000
Restricted stock vesting period			4 years
FontShop [Member]
Business Acquisition [Line Items]
Total purchase price				14,600,000
Business acquisition, cash paid				11,900,000	2,700,000
Goodwill acquired				6,300,000
Number of employees joined in connection with the acquisition				50
Intangible assets acquired				8,500,000
Expected tax deductible amount on goodwill				6,300,000
Date of acquisition				Oct. 28, 2014
Swyft Media [Member]
Business Acquisition [Line Items]
Total purchase price						17,000,000
Business acquisition, cash paid						12,100,000
Contingent consideration						15,000,000
Contingent consideration, net present value						4,700,000
Goodwill acquired						13,600,000
Business acquisition, cash paid net of cash acquired						11,600,000
Intangible assets acquired						$ 4,900,000
Number of employees joined in connection with the acquisition						12

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Segment Reporting - Schedule of Revenue for Major Markets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Total	$ 46,046	$ 46,072
Creative Professional [Member]
Segment Reporting Information [Line Items]
Total	20,504	17,719
OEM [Member]
Segment Reporting Information [Line Items]
Total	$ 25,542	$ 28,353

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

Legal Proceedings

From time to time, we may be a party to various claims, suits and complaints. We do not believe that there are claims or legal proceedings that, if determined adversely to us, would have a material adverse effect on our business, results of operations or financial condition.

Licensing Warranty

Under our standard license agreement with our OEM customers, we warrant that the licensed technologies are free of infringement claims of intellectual property rights and will meet the specifications as defined in the licensing agreement for a one year period. Under the licensing agreements, liability for such indemnity obligations is limited generally to a maximum of total arrangement fee; however, exceptions have been made on a case-by-case basis, increasing the maximum potential liability to agreed upon amounts at the time the contract is entered into. We have never incurred costs payable to a customer or business partner to defend lawsuits or settle claims related to these warranties, and as a result, management believes the estimated fair value of these warranties is minimal. Accordingly, there are no liabilities recorded for these warranties as of March 31, 2015 and December 31, 2014.

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Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consists of the following (in thousands):

	March 31, 2015			December 31, 2014
Computer equipment and software	$	14,349		$	12,084
Furniture and fixtures		1,468			1,093
Leasehold improvements		5,264			3,498
Total cost		21,081			16,675
Less accumulated depreciation and amortization		(6,459	)		(6,097	)
Property and equipment, net	$	14,622		$	10,578

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Stockholders' Equity - Schedule of Share Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based compensation, Total expensed	$ 2,771	$ 2,260
Property and equipment	42	23
Total share based compensation	2,813	2,283
Marketing and Selling [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based compensation, Total expensed	1,266	1,046
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based compensation, Total expensed	542	514
General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share based compensation, Total expensed	$ 963	$ 700

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Intangible Assets - Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Customer relationships, Gross Carrying Amount	$ 59,889	$ 57,488
Non-compete agreements, Gross Carrying Amount	12,926	12,172
Indefinite-lived intangible assets:
Gross Carrying Amount	169,235	167,153
Accumulated Amortization	(94,426)	(93,291)
Indefinite-lived intangible assets:
Net Balance	74,809	73,862
Trademarks [Member]
Indefinite-lived intangible assets:
Net Balance, Indefinite-Lived Intangible Assets	37,756	38,029
Net Balance, Indefinite-Lived Intangible Assets	37,756	38,029
Indefinite-lived intangible assets:
Net Balance, Indefinite-Lived Intangible Assets	37,756	38,029
Net Balance, Indefinite-Lived Intangible Assets	37,756	38,029
Domain Names [Member]
Indefinite-lived intangible assets:
Net Balance, Indefinite-Lived Intangible Assets	4,400	4,400
Net Balance, Indefinite-Lived Intangible Assets	4,400	4,400
Indefinite-lived intangible assets:
Net Balance, Indefinite-Lived Intangible Assets	4,400	4,400
Net Balance, Indefinite-Lived Intangible Assets	4,400	4,400
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Weighted-Average Amortization Period (Years)	10 years
Indefinite-lived intangible assets:
Accumulated Amortization	(47,127)	(47,018)
Net Balance, Finite-Lived Intangible Assets	12,762	10,470
Acquired Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Weighted-Average Amortization Period (Years)	11 years
Acquired technology, Gross Carrying Amount	54,264	55,064
Indefinite-lived intangible assets:
Accumulated Amortization	(35,496)	(34,411)
Net Balance, Finite-Lived Intangible Assets	18,768	20,653
Non-compete Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, Weighted-Average Amortization Period (Years)	4 years
Indefinite-lived intangible assets:
Accumulated Amortization	(11,803)	(11,862)
Net Balance, Finite-Lived Intangible Assets	$ 1,123	$ 310

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 7,357	$ 8,445
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(4,106)	5
Comprehensive income	$ 3,251	$ 8,450

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Acquisitions

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Acquisitions

4. Acquisitions

Swyft Media

On January 30, 2015, the Company purchased all of the outstanding stock of TextPride, Inc. operating under the name of Swyft Media, a privately-held mobile messaging company located in New York, New York. In connection with the acquisition, TextPride, Inc. was renamed Swyft Media Inc. and became a wholly-owned subsidiary of the registrant. Swyft Media’s expertise in the emerging world of branded, in-app mobile messaging content is expected to help Monotype reach new customers, with an opportunity to add value by including some of the world’s largest and most popular collections of fonts. The impact of this acquisition was not material to our condensed consolidated financial statements.

The Company acquired Swyft Media for an aggregate purchase price of approximately $17.0 million, consisting of $12.1 million in cash, plus contingent consideration of up to $15.0 million payable through 2018, which had an estimated net present value of $4.9 million. We paid approximately $11.6 million from cash on hand at the time of the acquisition, net of cash acquired. Of the purchase price, approximately $4.7 million and $13.6 million have been allocated to intangible assets and goodwill, respectively. The fair value of the assets acquired and liabilities assumed is less than the purchase price, resulting in the recognition of goodwill. The goodwill reflects the value of the synergies we expect to realize and the assembled workforce. The acquisition of Swyft Media was structured in such a manner that the goodwill is not expected to be deductible for tax purposes. The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair value as of the date of the acquisition, which remains preliminary as of March 31, 2015, and using assumptions that the Company’s management believes are reasonable given the information currently available. The final allocation of the purchase price to intangible assets, goodwill and deferred tax assets and liabilities may differ materially from the information presented in these condensed consolidated financial statements. Twelve employees joined the Company in connection with the acquisition. See Note 6 for additional information on the fair value measurements for all financial assets and liabilities, including contingent consideration, which is measured at fair value on a recurring basis.

FontShop

On July 14, 2014, the Company purchased all of the outstanding stock of FontShop International GmbH, a privately-held font distributor located in Berlin, Germany, its wholly-owned subsidiary FontShop International, Inc. based in San Francisco, California, the FontFont typeface library, FontShop AG of Berlin, the largest distributor of the FontFont library, and certain other typeface families, collectively FontShop, for an aggregate purchase price of approximately $14.6 million. We paid approximately $11.9 million from cash on hand at the time of the acquisition, and the remainder, or $2.7 million, was paid in January 2015. Of the purchase price, approximately $8.5 million and $6.3 million have been allocated to intangible assets and goodwill, respectively. Approximately $6.3 million of the goodwill is expected to be deductible for tax purposes. The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based upon the respective estimates of fair value as of the date of the acquisition, which remains preliminary as of March 31, 2015, and using assumptions that the Company’s management believes are reasonable given the information currently available. The final allocation of the purchase price to intangible assets, goodwill and deferred tax assets and liabilities may differ materially from the information presented in these consolidated financial statements. On October 9, 2014, FontShop International GmbH was merged into Monotype Germany effective August 1, 2014. Following the merger, FontShop International Inc. became a wholly-owned subsidiary of Monotype Germany. On October 28, 2014, FontShop AG was merged into Monotype Germany. Fifty employees joined the Company in connection with the acquisition.

Mark Boulton Design

On April 7, 2014, the Company purchased all of the outstanding stock of Mark Boulton Design Limited, a privately-held Web design studio located in Cardiff, Wales, United Kingdom, for $0.8 million in cash. The Company issued approximately $1.0 million in restricted stock awards in connection with the acquisition, which vest based upon continued employment over four years. The purchase price has been allocated to goodwill. None of the goodwill is expected to be deductible for tax purposes. Following the acquisition, Mark Boulton Design Limited became a wholly owned subsidiary of the Company. Seven former employees of Mark Boulton Design Limited joined the Company in connection with the acquisition.

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets as of March 31, 2015 and December 31, 2014 were as follows (dollar amounts in thousands):

		March 31, 2015							December 31, 2014
	Weighted- Average Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Balance		Gross Carrying Amount		Accumulated Amortization			Net Balance
Customer relationships	10	$	59,889	$	(47,127	)	$	12,762	$	57,488	$	(47,018	)	$	10,470
Acquired technology	11		54,264		(35,496	)		18,768		55,064		(34,411	)		20,653
Non-compete agreements	4		12,926		(11,803	)		1,123		12,172		(11,862	)		310
Indefinite-lived intangible assets:
Trademarks			37,756		—			37,756		38,029		—			38,029
Domain names			4,400		—			4,400		4,400		—			4,400
Total		$	169,235	$	(94,426	)	$	74,809	$	167,153	$	(93,291	)	$	73,862

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Fair Value Measurements - Additional Information (Detail)		3 Months Ended	0 Months Ended		3 Months Ended					3 Months Ended
	Mar. 31, 2015 USD ($)	Mar. 31, 2015 Monte Carlo Simulation [Member] Simulations	Jan. 30, 2015 Swyft Media [Member] USD ($)	Mar. 31, 2015 Swyft Media [Member] USD ($)	Mar. 31, 2015 Swyft Media [Member] Maximum [Member] USD ($)	Mar. 31, 2015 Forward Contract to Sell [Member] GBP (£) Contract	Dec. 31, 2014 Forward Contract to Sell [Member] GBP (£) Contract	Mar. 31, 2015 Forward Contract to Purchase [Member] USD ($) Contract	Dec. 31, 2014 Forward Contract to Purchase [Member] USD ($) Contract	Mar. 31, 2015 Forward Contracts [Member] Contract	Dec. 31, 2014 Forward Contracts [Member] Contract
Derivative [Line Items]
30-day forward contract outstanding						£ 2,100,000	£ 2,300,000	$ 3,100,000	$ 3,500,000
Number of forward contract outstanding						1	1	1	1	1	1
Forward contract terms										30-day forward contract
Contingent acquisition consideration	4,900,000			4,900,000
Business acquisition contingent consideration			$ 17,000,000		$ 15,000,000
Number of simulation trials		100,000

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Segment Reporting

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Reporting

14. Segment Reporting

We view our operations and manage our business as one segment: the development, marketing and licensing of technologies and fonts. Factors used to identify our single segment include the financial information available for evaluation by our chief operating decision maker in making decisions about how to allocate resources and assess performance. While our technologies and services are sold into two principal markets, Creative Professional and OEM, expenses and assets are not formally allocated to these market segments, and operating results are assessed on an aggregate basis to make decisions about the allocation of resources. The following table presents revenue for these two major markets (in thousands):

	Three Months Ended March 31,
	2015		2014
Creative Professional	$	20,504	$	17,719
OEM		25,542		28,353
Total	$	46,046	$	46,072

Geographic segment information

The Company attributes revenue to geographic areas based on the location of our subsidiary receiving such revenue. For example, licenses may be sold to large international companies which may be headquartered in South Korea, but the sales are received and recorded by our subsidiary located in the United States, or U.S. In this example, the revenue would be reflected in the United States totals in the table below. We market our products and services through offices in the U.S., United Kingdom, Germany, China, South Korea and Japan. The following summarizes revenue by location (in thousands of dollars, except percentages):

	Three Months Ended March 31,
	2015					2014
	Revenue		% of Total			Revenue		% of Total
United States	$	24,843		54.0	%	$	23,936		52.0	%
United Kingdom		1,848		4.0			2,693		5.8
Germany		5,844		12.7			4,477		9.7
Japan		13,207		28.6			14,714		32.0
Other Asia		304		0.7			252		0.5
Total	$	46,046		100.0	%	$	46,072		100.0	%

Long-lived assets, which include property and equipment, goodwill and intangibles, but exclude other assets, long-term investments and deferred tax assets, are attributed to geographic areas in which Company assets reside and is shown below (in thousands):

	March 31, 2015		December 31, 2014
Long-lived assets:
United States	$	210,951	$	189,927
United Kingdom		4,775		5,138
Germany		55,643		62,917
Asia (including Japan)		3,478		3,457
Total	$	274,847	$	261,439