Stamps.com
Investor Contact:
|
Press
Contact:
|
Stamps.com
Investor Relations
|
Brew
PR
|
(310)
482-5830
|
(310)
600-7160
|
http://investor.stamps.com
|
|
STAMPS.COM
ANNOUNCES FOURTH QUARTER AND FISCAL 2007 RESULTS
Q4
Total Revenue $24.1 million
GAAP
Net Income of $2.4 million
Non-GAAP
Q4 Diluted Earnings Per Share excluding Stock-Based Compensation Expense
of
$0.16
LOS
ANGELES - February
13, 2008 -
Stamps.com® Inc. (NASDAQ: STMP) today announced results for the fourth quarter
and for the fiscal year ended December 31, 2007.
For
the
fourth quarter:
·
|
Total
revenue was $24.1 million, a decrease of 4% versus the fourth
quarter of
2006.
|
·
|
PC
Postage® subscriber-related revenue, including service revenue, store
revenue and insurance revenue, was $17.6 million, up 7% versus
subscriber-related revenue in the fourth quarter of 2006.
|
·
|
PhotoStamps
revenue was $6.5 million, down 19% versus the fourth quarter
of 2006, as
the Company reduced its overall level of consumer-focused marketing
spending by more than 40% versus the fourth quarter of 2006 as
part of its
program to increase profitability in the PhotoStamps business.
|
·
|
Total
gross margin was 68% versus 67% in the fourth quarter of 2006.
PC Postage
subscriber-related revenue gross margin was 80% versus 79% in
the fourth
quarter of 2006, and PhotoStamps gross margin was 35% versus
41% in the
fourth quarter of 2006.
|
·
|
Total
spending on PC Postage customer acquisition, excluding spending
on the
enhanced promotion channel (which consist of online programs
where
additional promotions are offered to customers, and which are
excluded in
the Company’s new customer metrics as explained below), was $5.7 million,
up 74% from the same quarter last year, as Stamps.com continued
to invest
in its PC Postage sales and marketing at a higher level than
last
year.
|
·
|
GAAP
net income was $2.4 million, or $0.12 per fully diluted share,
including
approximately $0.78 million of stock-based compensation expense
related to
the Company’s adoption of FASB Statement 123R that began in the first
quarter of 2006.
|
·
|
Excluding
the FASB Statement 123R expense, non-GAAP net income per fully
diluted
share was $0.16.
|
“As
planned, we continued to make a large investment during the fourth quarter
in
marketing our PC Postage service, and that investment continues to look
very
positive,” said Ken McBride, Stamps.com president and CEO. “Excluding the
enhanced promotion channel, during the fourth quarter we increased total
gross
registered customer acquisition by 44% versus the fourth quarter of 2006,
and we
increased the number of paid customers for our service by 35 thousand versus
the
fourth quarter of 2006. On the PhotoStamps business, we reduced our overall
level of consumer-focused marketing spending by more than 35% versus the
fourth
quarter of 2006 as part of our program to increase profitability in the
PhotoStamps business. As a result of this smaller and more focused marketing
spending, PhotoStamps gross profits for the fourth quarter exceeded estimated
total sales and marketing expenses directly related to PhotoStamps for
the first
time since we launched the second market test for PhotoStamps in May
2005.”
Fourth
Quarter and Fiscal 2007 Detailed Results
Stamps.com
reported 2007 fourth quarter GAAP net income of $2.37 million, including
approximately $0.78 million, or approximately $0.04 per fully diluted share,
of
stock-based compensation expense related to the Company’s adoption of FASB
Statement 123R that began during the first quarter of 2006. On a per share
basis, total 2007 fourth quarter GAAP net income was $0.12 based on fully
diluted shares outstanding of 20.1 million. The approximately $775 thousand
of
stock-based compensation expense was allocated among cost of sales, sales
and
marketing, research and development, and general and administrative categories,
based on individual employee or Board of Directors costs and positions,
as shown
in the following table.
Fourth
Quarter Fiscal 2007
(all
amounts in millions of dollars except per share or margin
data):
|
|
Non-GAAP
Amounts Excluding 123R
|
|
FASB
123R Related Costs
|
|
GAAP
Amounts as Reported
|
|
|
|
|
|
|
|
Cost
of Sales
|
|
$7.71
|
|
$0.07
|
|
$7.78
|
Research
& Development
|
|
$1.79
|
|
$0.15
|
|
$1.94
|
Sales
& Marketing
|
|
$9.27
|
|
$0.17
|
|
$9.44
|
General
& Administrative
|
|
$3.08
|
|
$0.38
|
|
$3.46
|
Total
Expenses
|
|
$21.84
|
|
$0.78
|
|
$22.61
|
|
|
|
|
|
|
|
Total
gross margin
|
|
68.0%
|
|
(0.3%)
|
|
67.7%
|
|
|
|
|
|
|
|
Net
Income
|
|
$3.14
|
|
($0.78)
|
|
$2.37
|
|
|
|
|
|
|
|
On
a diluted per share basis
|
|
$0.16
|
|
($0.04)
|
|
$0.12
|
|
|
|
|
|
|
|
Shares
used in per share calculation
|
|
20,131
|
|
20,131
|
|
20,131
|
Excluding
the FASB Statement 123R expense, 2007 fourth quarter non-GAAP net income
was
$3.14 million. On a per share basis, 2007 fourth quarter non-GAAP net income
per
fully diluted share was $0.16 based on fully diluted shares outstanding
of 20.1
million. This compares to 2006 fourth quarter non-GAAP net income per fully
diluted share excluding 123R expenses of $0.22.
Total
fiscal 2007 revenue was $85.8 million, an increase of 1% versus revenue
of $84.6
million for fiscal 2006. Total fiscal 2007 PC Postage subscriber related
revenue, including service revenue, store revenue and insurance revenue,
was
$67.0 million, up 5% versus subscriber related revenue in fiscal 2006.
Total
fiscal 2007 PhotoStamps revenue was $17.9 million, down 5% versus PhotoStamps
revenue of $18.8 million in fiscal 2006. Total other revenue in fiscal
2007 was
$0.9 million, down 50% versus $1.8 million in fiscal 2006.
Total
fiscal 2007 GAAP net income was $10.7 million, including approximately
$2.7
million of stock-based compensation expense related to the Company’s adoption of
FASB Statement 123R that began during the first quarter of 2006. On a per
share
basis, total fiscal 2007 GAAP net income was $0.50 based on fully diluted
shares
outstanding for the year of 21.2 million. Excluding the FASB Statement
123R
expense, fiscal 2007 non-GAAP net income was $13.4 million. On a per share
basis, fiscal 2007 non-GAAP net income per fully diluted share was $0.63
based
on fully diluted shares outstanding of 21.2 million.
PhotoStamps
During
the fourth quarter, approximately 390 thousand sheets, or more than 7.7
million
individual PhotoStamps, were shipped to customers. Since the beginning
of the
second market test in May 2005, more than 2.5 million sheets, or more than
50
million individual PhotoStamps, have been shipped to customers. Total fourth
quarter PhotoStamps revenue was $6.5 million, a decrease of 19% versus
the
fourth quarter of 2006. During the fourth quarter of 2007, the Company
reduced
its overall level of consumer-focused marketing spending by more than 35%
versus
the fourth quarter of 2006 as part of its program to increase profitability
in
the PhotoStamps business. As a result of this smaller and more focused
spending,
PhotoStamps gross profits for the fourth quarter exceeded estimated total
sales
and marketing expenses directly related to PhotoStamps.
Net
Operating Losses Shareholder Notice
Under
Internal Revenue Code Section 382 rules, a change in ownership can occur
whenever there is a shift in ownership by more than 50 percentage points
by one
or more 5% shareholders within a three-year period. When a change of ownership
is triggered, the Company’s net operating losses (NOL) asset may be impaired. We
estimate that as of December 31, 2007 the Company was at an approximately
35%
level compared with the 50% level that would trigger impairment of our
NOL
asset.
As
part
of our ongoing program to preserve future use of our NOL asset, Stamps.com
requests that any shareholder contemplating owning 850 thousand shares
or
greater contact the Company first.
Net
Operating Losses Protective Measures
Owing
to
the large value of the NOL asset and the risk of possible impairment through
a
change of ownership under Internal Revenue Code Section 382 rules, the
Company
is currently planning to seek shareholder approval during its 2008 annual
meeting for additional measures to protect its NOL asset (the “NOL Protective
Measures”).
The
NOL
Protective Measures would include an amendment to the Company’s articles of
incorporation which would restrict transfers that would create new 5%
shareholders. Investors wishing to become a 5% shareholder could request
a
waiver of the restriction from the Company, and the Stamps.com Board of
Directors may grant a waiver if it is deemed to be in the best interest
of
shareholders. If the NOL Protective Measures are approved by shareholders
at the
Company’s 2008 annual meeting, the Company would enforce the restrictions to
preserve future use of its NOL asset immediately thereafter. The Company
would
expect to suspend enforcement of the NOL Protective Measures in 2010, when
its
382 ownership shift level is expected to materially decrease.
Share
Repurchase
During
fiscal 2007, the Company repurchased a combined total of 2.5 million shares
for
a total cost of $33 million, and over the past six quarters the Company
has
repurchased a combined total of 4.1 million shares for a total cost of
$60
million. No shares were repurchased during the fourth quarter of fiscal
2007 as
the Company was studying additional measures to protect its net operating
loss
asset.
On
February 7, 2008, following the decision to seek approval for the NOL Protective
Measures, Stamps.com Inc.'s Board of Directors approved an additional share
repurchase program authorizing the Company to purchase up to 1.2 million
shares
of Stamps.com stock over the next six months as market and business conditions
warrant.
Share
purchases may be made from time to time on the open market or in negotiated
transactions in compliance with Rule 10b-18 of the United States Securities
and
Exchange Commission. The Company's purchase of any of its shares is subject
to
limitations that may be imposed on such purchases by applicable securities
laws
and regulations and the rules of the Nasdaq Stock Market. Purchases may
be made
in the open market, or in privately negotiated transactions from time to
time at
the Company's discretion. The timing of purchases, if any, and the number
of
shares to be bought at any one time will depend on market conditions.
New
Products
Stamps.com
today announced the recent launch of version 7.0 of its PC Postage software.
The
new software, which is available at no charge to all existing and new Stamps.com
customers as part of their regular service cost, includes a dramatically
overhauled and improved user interface, improved support for windowed envelopes,
support for printing on envelopes without postage, improved USB scale support,
enhanced automated integration with leading address books, and several
additional improvements. In conjunction with the release of version 7.0,
Stamps.com also released multi-user support for small business and enterprise
customers, and a multi-user plan is now available to all Stamps.com customers.
Business
Outlook
Stamps.com
currently expects total fiscal 2008 revenue to be $80 to $90 million. Fiscal
2008 GAAP net income per share is expected to be $0.60 to $0.70, including
approximately $3.8 million of stock-based compensation expense related
to the
Company’s adoption of FASB Statement 123R that began in fiscal 2006, and also
including approximately $3.8 million of an expected fiscal 2008 deferred
tax
benefit. Excluding the FASB Statement 123R expenses and the deferred tax
benefit, non-GAAP fiscal 2008 net income per fully diluted share is expected
to
be $0.60 to $0.70.
Company
Customer Metrics
Today,
Stamps.com announced that it plans to modify its publicly available PC
Postage
customer metrics starting with today’s earnings release and continuing forward
into fiscal 2008. The new customer metrics will be identical to the old
metrics
but will now exclude customers from the enhanced promotion channel so as
to give
a more meaningful view of the underlying long term business trends for
all other
marketing channels. A complete set of the old and new quarterly customer
metrics
over the past two fiscal years is available currently at http://investor.stamps.com
(under a
tab on the left side called Company Metrics).
Quarterly
Conference Call
The
Stamps.com financial results conference call will be web cast today at
5:00 p.m.
Eastern Time and may be accessed at http://investor.stamps.com.
The
Company plans to discuss its business outlook during the conference call.
Following the conclusion of the web cast, a replay of the call will be
available
at the same website.
About
Stamps.com and PhotoStamps
Stamps.com
(NASDAQ: STMP) is a leading provider of Internet-based postage services.
Stamps.com (www.stamps.com)
enables
small businesses, enterprises, and consumers to print U.S. Postal
Service-approved postage with just a PC, printer and Internet connection,
right
from their home or office. The Company targets its services to small businesses
and home offices, and currently has partnerships with companies including
Microsoft, CompUSA, EarthLink, HP, NCR, Office Depot, Vendio and the U.S.
Postal
Service.
PhotoStamps
(www.photostamps.com)
is a
patented Stamps.com product that couples the technology of PC Postage with
the
simplicity of a web-based image upload and order process. Since launching
PhotoStamps for the third market test in May 2005, more than 50 million
individual PhotoStamps have been shipped to customers. PhotoStamps is currently
available under authorization of the U.S. Postal Service for its fourth
phase
market test with an authorization through May 16, 2008.
Non-GAAP
Measures
To
supplement the Company’s condensed financial statements presented in accordance
with GAAP, Stamps.com uses non-GAAP measures of certain components of financial
performance. These non-GAAP measures include non-GAAP net income, non-GAAP
earnings per diluted share, and non-GAAP gross margin. These non-GAAP measures
are provided to enhance investors’ overall understanding of the Company’s
current financial performance and the Company’s prospects for the future and
provide further information about the impact of the adoption of the new
accounting standard FAS 123R. The Company believes the non-GAAP measures
that
exclude stock-based compensation enhance the comparability of results against
prior periods. These measures should be considered in addition to results
prepared in accordance with generally accepted accounting principles, but
should
not be considered a substitute for, or superior to, GAAP results. Reconciliation
to the nearest GAAP measure of all non-GAAP measures included in this press
release can be found in the financial tables included on page 2 of this
press
release.
Not
a Proxy Statement
This
press release is not a proxy statement or a solicitation of proxies from
the
stockholders of Stamps.com and does not constitute an offer of any securities
of
Stamps.com for sale. Any solicitation of proxies will be made only by a
definitive proxy statement mailed by Stamps.com to all of its stockholders
of
record on the record date for its stockholders' meeting and filed with
the
Securities and Exchange Commission. STAMPS.COM STOCKHOLDERS ARE URGED TO
READ
THE PRELIMINARY AND THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT STAMPS.COM AND THE
NET
OPERATING LOSS PROPOSAL. The proxy statement and other relevant materials
(when
they become available), as well as any other documents filed by Stamps.com
with
the SEC, may be obtained free of charge at the Company's web site at
http://investor.stamps.com/edgar.cfm
.
"Safe
Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
This release includes forward-looking statements about our anticipated
results
and our PhotoStamps spend that involve risks and uncertainties. Important
factors, including the Company's ability to complete and ship its products,
maintain desirable economics for its products and obtain or maintain regulatory
approval, which could cause actual results to differ materially from those
in
the forward-looking statements, are detailed in filings with the Securities
and
Exchange Commission made from time to time by STAMPS.COM, including its
Annual
Report on Form 10-K for the fiscal year ended December 31, 2006, Quarterly
Reports on Form 10-Q, and Current Reports on Form 8-K. STAMPS.COM undertakes
no
obligation to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date hereof or to reflect
the
occurrence of unanticipated events.
Stamps.com,
the Stamps.com logo and PhotoStamps are trademarks or registered trademarks
of
Stamps.com Inc. All other brands and names are property of their respective
owners.
#
#
#
STAMPS.COM
INC.
|
|
STATEMENTS
OF OPERATIONS
|
(in
thousands, except per share data: unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months ended December 31,
|
|
Twelve
Months ended December 31,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Subscription
|
|
$
|
14,621
|
|
$
|
13,685
|
|
$
|
55,903
|
|
$
|
53,827
|
|
Product
|
|
|
2,525
|
|
|
2,399
|
|
|
9,636
|
|
|
8,696
|
|
Insurance
|
|
|
410
|
|
|
392
|
|
|
1,478
|
|
|
1,442
|
|
PhotoStamps
|
|
|
6,542
|
|
|
8,045
|
|
|
17,887
|
|
|
18,801
|
|
Other
|
|
|
-
|
|
|
454
|
|
|
907
|
|
|
1,820
|
|
Total
revenues
|
|
|
24,098
|
|
|
24,975
|
|
|
85,811
|
|
|
84,586
|
|
Cost
of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription
|
|
|
2,536
|
|
|
2,609
|
|
|
9,659
|
|
|
9,882
|
|
Product
|
|
|
888
|
|
|
756
|
|
|
3,286
|
|
|
2,690
|
|
Insurance
|
|
|
124
|
|
|
117
|
|
|
455
|
|
|
442
|
|
PhotoStamps
|
|
|
4,228
|
|
|
4,734
|
|
|
11,854
|
|
|
11,618
|
|
Other
|
|
|
-
|
|
|
26
|
|
|
52
|
|
|
165
|
|
Total
cost of revenues
|
|
|
7,776
|
|
|
8,242
|
|
|
25,306
|
|
|
24,797
|
|
Gross
profit
|
|
|
16,322
|
|
|
16,733
|
|
|
60,505
|
|
|
59,789
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
and marketing
|
|
|
9,441
|
|
|
8,552
|
|
|
33,115
|
|
|
27,793
|
|
Research
and development
|
|
|
1,938
|
|
|
2,080
|
|
|
8,260
|
|
|
8,817
|
|
General
and administrative
|
|
|
3,459
|
|
|
2,652
|
|
|
12,538
|
|
|
11,649
|
|
Total
operating expenses
|
|
|
14,838
|
|
|
13,284
|
|
|
53,913
|
|
|
48,259
|
|
Income
from operations
|
|
|
1,484
|
|
|
3,449
|
|
|
6,592
|
|
|
11,530
|
|
Other
income, net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
1,012
|
|
|
1,279
|
|
|
4,461
|
|
|
5,096
|
|
Total
other income, net
|
|
|
1,012
|
|
|
1,279
|
|
|
4,461
|
|
|
5,096
|
|
Pre-tax
income
|
|
|
2,496
|
|
|
4,728
|
|
|
11,053
|
|
|
16,626
|
|
Provision
for income taxes
|
|
|
130
|
|
|
45
|
|
|
387
|
|
|
164
|
|
Net
income
|
|
$
|
2,366
|
|
$
|
4,683
|
|
$
|
10,666
|
|
$
|
16,462
|
|
Net
income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.12
|
|
$
|
0.21
|
|
$
|
0.51
|
|
$
|
0.71
|
|
Diluted
|
|
$
|
0.12
|
|
$
|
0.20
|
|
$
|
0.50
|
|
$
|
0.69
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,805
|
|
|
22,609
|
|
|
20,815
|
|
|
23,233
|
|
Diluted
|
|
|
20,131
|
|
|
23,090
|
|
|
21,194
|
|
|
24,032
|
|
CONDENSED
BALANCE SHEETS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Cash
and investments
|
|
$
|
90,823
|
|
$
|
106,074
|
|
Trade
accounts receivable
|
|
|
2,519
|
|
|
2,365
|
|
Other
accounts receivable
|
|
|
1,209
|
|
|
671
|
|
Other
current assets
|
|
|
2,489
|
|
|
2,095
|
|
Property
and equipment, net
|
|
|
3,790
|
|
|
5,084
|
|
Intangible
assets, net
|
|
|
871
|
|
|
1,956
|
|
Other
assets
|
|
|
3,252
|
|
|
3,305
|
|
Total
assets
|
|
$
|
104,953
|
|
$
|
121,550
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
9,935
|
|
$
|
10,459
|
|
Deferred
revenue
|
|
$
|
2,576
|
|
$
|
556
|
|
Total
liabilities
|
|
|
12,511
|
|
|
11,015
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Common
stock
|
|
|
47
|
|
|
47
|
|
Additional
paid-in capital
|
|
|
622,781
|
|
|
618,664
|
|
Treasury
Stock
|
|
|
(63,737
|
)
|
|
(30,429
|
)
|
Accumulated
deficit
|
|
|
(466,555
|
)
|
|
(477,221
|
)
|
Unrealized
loss on investments
|
|
|
(94
|
)
|
|
(526
|
)
|
Total
stockholders' equity
|
|
|
92,442
|
|
|
110,535
|
|
Total
liabilities and stockholders' equity
|
|
$
|
104,953
|
|
$
|
121,550
|
|