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1 Welcome to the New Monotype Investor Relations December 13, 2012

Investor Presentation

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Page 1: Investor Presentation

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Welcome to the New

Monotype

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Page 2: Investor Presentation

Forward-Looking Statements

This presentation contains forward looking statements that involve

significant risks and uncertainties, including those discussed in the

“Risk Factors” section of Monotype Imaging Holdings Inc.’s Form

10-K, as amended, and subsequent filings with the SEC. We are

providing this information as of today’s date and do not undertake

any obligation to update any forward-looking statements contained

in this document as a result of new information, future events or

otherwise. No forward-looking statement can be guaranteed and

actual results may differ materially from those that are projected.

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Page 3: Investor Presentation

Business Discussion Doug Shaw

President and CEO

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Page 4: Investor Presentation

Key Takeaways

• Serving large, growing markets undergoing dynamic change

• Offer real value – Type, Technology and Expertise

• Meaningful growth opportunities – Printer Imaging, Display Imaging and Creative Professional

• Proven and winning business model

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Page 5: Investor Presentation

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Our Vision

Our fonts and technologies empowering every word and experience.

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Page 6: Investor Presentation

Our Foundation

Heritage Dating Back 125 Years

350 Employees

10 Countries

Long-Term Customer

Relationships

$148.8M Revenue*

$64.0M naEBITDA*

Founded in 1986

* = Midpoint of guidance given on October 31, 2012

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Page 7: Investor Presentation

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Market Trends

Ubiquity of Screens

• Seamless access to content as the author intended

• Great user experience

• Immediate access to content regardless of location

• Minimal latency

• Context-specific content

Mobile

HTML5 • Create content once and distribute everywhere

• Efficient/intuitive creative workflows

• Access to all content in desired language

• Complete design flexibility regardless of language

Global

Trend Implications

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Page 8: Investor Presentation

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Source: Kleiner Perkins Caufield Byers; Pew

Research Center; DOMO; NetCraft; On Device

Research; Analysis Mason; Business Insider;

mediaIDEAS; ABI; Gartner Group

Our Connected World

Our World

200 million active websites with 571 new ones created every minute

16 billion connectable consumer

devices by 2020

150 million tablets & e-readers today, growing to

1.1 billion by 2020

43% of

Americans have read an e-book, or digital newspaper or digital magazine

90% of global 1000

companies will implement

cloud printing services

for mobile personnel

by 2014

6.1 billion mobile phones, with 1 billion smartphones

6 million internet-enabled

cars sold in 2012,

growing to 50 million in

2017

2.3 billion global internet users – growth

driven by emerging markets

46 million app downloads from

iTunes store daily

$12 billion global mobile app/ad market in 2011 (153% CAGR since

2008)

Create

Consume

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Page 9: Investor Presentation

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Create • Create once and

distribute everywhere

• Consistent experience

for every user regardless

of consumption medium

• Easy and seamless

creative workflows

Publish/Distribute • Solutions that minimize latency

Consume • Consume all kinds of content

• Present the content in the form

that the author intended

• Provide an appealing user

experience

Markets & Requirements

Brands Graphic

Designers Bloggers

Publishers Creative

Directors

News

Organizations

Advertisers Movie &

TV Studios Individuals

Computers e-Book Readers ISVs

Televisions Tablets Automobiles

Mobile Devices Printers Appliances

OE

M

CR

EA

TIV

E P

RO

FE

SS

ION

AL

Browsers Cable Providers Mobile Networks

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Page 10: Investor Presentation

Our Business

~35% Revenue

~25% Revenue

~40% Revenue

Creative

Professional

OEM Display

Imaging

OEM Printer

Imaging }

} 10-20% Growth

3-10% Growth

~35% Revenue

~25% Revenue

~40% Revenue

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Page 11: Investor Presentation

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Source: IDC reports * Management estimates

Market Insights

• Laser printer unit CAGR of 5%

(2012 – 2014)

• Emerging markets fueling

growth

• Mobile printing

Strategy

• Leverage our long term

relationships by providing

additional technology to

reduce cost or capitalize

on new printing paradigms

Growth Initiatives

• Printer drivers

• Mobile/cloud printing

• Page Description Language

technologies

• Document workflow enhancements

OEM Printer Imaging

Current Penetration* ~30%

Monotype Opportunity* $200M

Laser Printer Market* $50B

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Page 12: Investor Presentation

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Source: IDC reports

Investor Confusion

• Perception that laser printer

market is declining and so may

Monotype’s PI business

Market Dynamics

• Traditional market leaders have gone from 54% to 35% share (2008 – Q3 2012)

• Market share gains by Asian vendors which represent +80% of our PI revenue (Ricoh, Kyocera, Konica Minolta, Samsung…)

• Unit growth coming from color multifunction devices, China and ROW

• 90% of global 1000 companies will implement mobile printing (2014)

2012 PI Highlights

• 7 out of 10 OEMs experienced unit

growth…3 OEMs: +20%

• Monotype realized single digit revenue

growth each quarter

• Closed first PDL deal with growing

pipeline

• Gaining traction in mobile printing

• Identified new opportunity to enhance

document workflow

OEM Printer Imaging In

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Page 13: Investor Presentation

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Source: IDC, Castellan, Display Search reports * Management estimates

Market Insights

• Digital displays growing rapidly

• Emerging devices

• e-Readers/Tablets: 200M units

(2015)

• Automotive: 80M units (2014)

• Mobile: 2.3B units (2016)

• TVs: 290M units (2014)

Strategy

• Develop innovative solutions to

optimize the use of text on all

digital displays

Growth Initiatives

• New design wins

• Expand within existing accounts

– New models and increased

royalties

• Focus on emerging devices

OEM Display Imaging

Current Penetration* < 10%

Monotype Opportunity* $500M

Display Market*

> $500B

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Page 14: Investor Presentation

Printer

Imaging Display

Imaging

Customers

Business Model

Channels

Partners

Marketing

Market Leaders

~ 100 customers

Per Unit Royalties

Global Sales Force

System Integrators

ODMs

Adobe

Industry Standards

Intimate Customer Relationships

Market Leaders

~ 1,000 customers

Per Unit Royalties

Recurring Term Licenses

Perpetual Licenses

Global Sales Force

System Integrators

Microsoft

Thought Leadership (MIT)

Intimate Customer Relationships

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Go to Market Strategy - OEM In

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Page 15: Investor Presentation

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Source: Forrester, Netcraft reports * Management estimates

Market Insights

• Digital publishing evolving

rapidly

• Number of active websites:

644M

• Mobile advertising spend: $8B

(2016) growing at 38%

Strategy

• Our largest business in 2013

• Build a bridge for the creative

professional as publishing

needs shift from print to mobile,

web and applications

Growth Initiatives

• Web font services

• Web publishing

• Mobile advertising

• Personalized and dynamic

content

Creative Professional

Current Penetration* ~20%

Monotype Opportunity* $250M

Publishing Market* > $200B

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Page 16: Investor Presentation

Web Font Services

Typographic Freedom for the Web

• Searchable, scalable text

• 20,000+ fonts for Web design

• Helvetica®, Frutiger®, other exclusives

• Over 40 languages supported

• Instant display of Web pages

• Patent pending technology

• SaaS, recurring revenue

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Page 17: Investor Presentation

Enterprise e-Commerce

Customers

Business Model

Channels

Partners

Marketing

Publishers, Agencies, Corporate

Thousands of Customers

Perpetual Licenses

Recurring Term Licenses

Global Sales Force

Agencies

Thought Leadership (Brand Perfect, Pencils to Pixels)

Professional and Casual Creatives

Millions of Customers

Perpetual Licenses

SaaS Subscriptions

MyFonts, Fonts.com, Linotype.com

Adobe

Google

Affiliates

Crowdsourcing

Community

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Go to Market Strategy - CP In

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Page 18: Investor Presentation

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Typefaces

Technology

& Expertise

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Page 19: Investor Presentation

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• Gill Sans

• Soho

• Harmonia

Sans

• ITC Avant

Garde Gothic

• ITC Conduit

• ITC Charter

• Droid Sans

• Kootenay

• Miramonte

• Arrus

• Aphasia

• Nuptial

• Helvetica

• DIN Next

• Akko

Monotype Libraries

Monotype Linotype ITC Ascender Bitstream

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Page 20: Investor Presentation

Proprietary Technology Provides a Robust Solution Set

Technology

20

Type

HTML5 CSS3

JavaScript

Dynamic Subsetting

Desktop,

Mobile,

Web

Android & Linux

PDLs

Edge Rendering

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Page 21: Investor Presentation

Expertise

Global Team of Consultative Experts Application of our Technologies Custom Type Design Global Language Scripts W3C and ISO Standards Web Typography Primary Research

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Page 22: Investor Presentation

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• Fonts

• Web Fonts

• Custom

Design

• UFST

• PDLs

• Printer Drivers

• FontExplorer

• Fontwise

• Web Font

Services

• Typecast

• SkyFonts

• iType

• WorldType

• iType

Connects

Fonts & Design Services Screen Imaging Print Imaging Font Management Creative Tools

Products & Services

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Page 23: Investor Presentation

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Automotive Document Workflow

Tablets & e-Readers

Branding & Design Agencies

ISVs White Goods Mobile

Solutions

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Page 24: Investor Presentation

Business Model and Financials

Scott Landers SVP and CFO

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Page 25: Investor Presentation

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G = Midpoint of guidance given on October 31, 2012 E = Management estimate as of December 5, 2012

Financial

RevenueG

• $148.8M ↑21%

naEBITDAG • $64.0M ↑17%, 43% mgn

ngEPSG • $1.03 ↑17%

CFFOE • ~$48M

2012 Highlights

Business Creative Professional • > 60% growth • MyFonts • Web Fonts ~ $5M

Display Imaging • ~25% of revenue • Doubled since 2010 • e-Readers, Automotive Printer Imaging • 3-5% unit growth • 7 of 10 OEMs experiencing

unit growth • First PDL win

Other Acquisitions • Bitstream • Design By Front Engineering • India presence Cash Flow • Paid for Bitstream

in first year

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Page 26: Investor Presentation

Business Model

Defensible Profitable

Diversified

Recurring

and

Predictable

Growing

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Page 27: Investor Presentation

Defensible

• More than 16,000 fonts • Global library • Trademarks are perpetual

• Proprietary technology • 40% employees are engineers

• Customized solutions Expertise

Technology

Typefaces

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Page 28: Investor Presentation

Diversified Revenue

Streams

~35% Revenue

~25% Revenue

~40% Revenue

Creative

Professional

OEM Display

Imaging

OEM Printer

Imaging }

} 10-20% Growth

3-10% Growth

~35% Revenue

~25% Revenue

~40% Revenue

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Page 29: Investor Presentation

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Diversified Customer Base

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Page 30: Investor Presentation

Recurring 65 - 70%

Predictable 15 - 20%

Non-Recurring 10 - 15%

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Recurring and Predictable Revenue

Per unit royalties

Renewable term licenses

Maintenance

Web font services

High volume web

transactions

Services run rate

Perpetual licenses

Non-recurring services

~85% Recurring/Predictable

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Page 31: Investor Presentation

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Revenue

G = Midpoint of guidance given on October 31, 2012

’09 – ’13

15%

CAGR

’05 – ’08

15%

CAGR

$105.2 $110.9

$94.0

$106.7

$123.2

$148.8

$165.2

$50

$70

$90

$110

$130

$150

$170

2007 2008 2009 2010 2011 2012G 2013G

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Page 32: Investor Presentation

$48.1 $48.9

$41.0

$47.8

$54.6

$64.0

$70.2

$30

$35

$40

$45

$50

$55

$60

$65

$70

$75

2007 2008 2009 2010 2011 2012G 2013G

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naEBITDA

G = Midpoint of guidance given on October 31, 2012

Note: Reconciliations of all non-GAAP measures are available at Monotype.com

’09 – ’13

14%

CAGR

’05 – ’08

10%

CAGR

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Page 33: Investor Presentation

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Net Income and ngEPS

G = Midpoint of guidance given on October 31, 2012

* = 2007 ngEPS based on post IPO shares outstanding

26% Net Income CAGR

$9.1

$15.4

$13.4

$18.4

$22.7

$28.5

$0.53

$1.03

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20

$0

$5

$10

$15

$20

$25

$30

2007* 2008 2009 2010 2011 2012G

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Page 34: Investor Presentation

$27.3 $30.5

$28.1

$43.7

$39.3

$48.0

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2007 2008 2009 2010 2011 2012E

34

Cash Flow from Operations

E = Management estimate as of November 20, 2012

Up to 25%

Cash available

for dividends or

share

repurchase

75%+

Cash for M&A,

debt reduction

and cash

replenishment

70% Increase since 2008

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Page 35: Investor Presentation

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Dividend Program

• Confidence in our business model and strategic plan

• Current quarterly rate of $0.04 per share of common stock or $0.16 annually

• Capital allocation strategy supports growth and M&A, while providing an additional source of equity return

• Goal to increase dividend over time

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Page 36: Investor Presentation

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Goals and Outlook Long Term Goals

• Double digit organic

revenue growth

• Tuck-in acquisitions

• Net adjusted EBITDA =

40%+

• Margin expansion with

revenue growth > 10%

• Recurring revenue

• Strong cash flow

generation

• Increased dividend

~35% Revenue

~25% Revenue

~40% Revenue

CP

DI

PI

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Page 37: Investor Presentation

Key Takeaways

• Serving large, growing markets undergoing dynamic change

• Offer real value – Type, Technology and Expertise

• Meaningful growth opportunities – Printer Imaging, Display Imaging and Creative Professional

• Proven and winning business model

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