LOS ANGELES, CA--(Marketwire - April 29, 2010) - Stamps.com® (
NASDAQ:
STMP), the leading
provider of
postage online and
shipping software
solutions, today announced results for the first quarter ended March 31,
2010.
For the first quarter:
-- Excluding the enhanced promotion channel, PC Postage revenue was
$18.2 million, up 10% from the first quarter of 2009.
-- The Company continued to reduce its investment in the enhanced
promotion channel (which consists of online programs where additional
promotions are provided directly by marketing partners), and total
PC Postage revenue including that channel was $19.5 million, up 6%
from the first quarter of 2009.
-- The Company reduced the overall level of sales and marketing costs
for PhotoStamps by approximately 69% versus the first quarter of 2009
and as a result, total first quarter PhotoStamps revenue was
$1.5 million, a decrease of 12% versus the first quarter of 2009.
-- Total revenue was $21.0 million, up 5% compared to the first quarter
of 2009.
-- PC Postage gross margin was 75.7%, PhotoStamps gross margin was
28.2% and total gross margin was 72.3%.
-- GAAP net income was $2.1 million, or $0.14 per fully diluted share.
This includes a $0.7 million non-cash stock-based compensation
expense.
-- Excluding the stock-based compensation expense, the non-GAAP income
from operations was $2.8 million, the non-GAAP net income was
$2.9 million and the non-GAAP net income per fully diluted share
was $0.19.
"For the first quarter we generated our highest non-GAAP earnings per share
in the past three years and we returned to double-digit revenue growth
rates for our core PC Postage business which excludes the enhanced
promotion channel," said Ken McBride, Stamps.com president and CEO. "We
also saw our customer metrics for the core business improve with a
reduction in monthly churn to 3.4% and a sequential increase of over 15
thousand in our paid customer metric--the largest sequential increase since
we began tracking this number. Finally, we continued to see strong results
from our enterprise business with first quarter revenue increasing by 106%
versus the same quarter last year."
First quarter 2010 Detailed Results
Stamps.com reported 2010 first quarter GAAP net income of $2.1 million. On
a per share basis, total 2010 first quarter GAAP net income was $0.14 based
on fully diluted shares outstanding of 15.3 million. First quarter GAAP net
income was reduced by $0.7 million for stock-based compensation expense.
Non-GAAP and GAAP amounts are reconciled in the following table:
First Quarter Fiscal 2010
All amounts in millions except Non-GAAP Stock-Based GAAP
per share or margin data: Amounts Comp Exp Amounts
Cost of Sales $ 5.75 $ 0.06 $ 5.81
Research & Development 2.02 0.15 2.17
Sales & Marketing 7.80 0.19 7.98
General & Administrative 2.66 0.31 2.97
--------- --------- ---------
Total Expenses 18.23 0.71 18.93
Gross Margin 72.6% (0.3%) 72.3%
Income from Operations 2.76 (0.71) 2.05
Interest and Other Income 0.17 - 0.17
--------- --------- ---------
Pre-Tax Income 2.93 (0.71) 2.23
Provision for Income Taxes (0.08) - (0.08)
--------- --------- ---------
Net Income $ 2.85 $ (0.71) $ 2.15
========= ========= =========
--------- --------- ---------
On a diluted per share basis $ 0.19 $ (0.05) $ 0.14
========= ========= =========
Shares used in per share calculation 15.27 15.27 15.27
Excluding the stock-based compensation expense, 2010 first quarter non-GAAP
net income was $2.9 million or $0.19 per fully diluted share based on fully
diluted shares outstanding of 15.3 million. This compares to 2009 first
quarter non-GAAP net income per fully diluted share of $0.13. Thus,
non-GAAP first quarter diluted earnings per share increased by 43% compared
to the same quarter last year.
Share Repurchase
During the first quarter, the Company repurchased a total of 1.4 million
shares for a total cost of $12.8 million, including a repurchase of 1.3
million shares in a private transaction on February 27, 2010. This
repurchase transaction was authorized by our board and was independent of
our existing share repurchase plan. Our current repurchase plan remains in
effect through August of 2010 with a remaining authorization of 1.9 million
shares.
The timing of share purchases, if any, and the number of shares to be
bought at any one time will depend on market conditions and also will
depend on the Company's assessment of risk that its net operating loss
asset could be impaired if such a repurchase were undertaken. Share
purchases may be made from time-to-time on the open market or in negotiated
transactions at the Company's discretion in compliance with Rule 10b-18 of
the United States Securities and Exchange Commission. The Company's
purchase of any of its shares may be subject to limitations imposed on such
purchases by applicable securities laws and regulations and the rules of
the Nasdaq Stock Market.
Net Operating Losses (NOL) and Protective Measures
Stamps.com currently has approximately $230 million in Federal NOLs and
$150 million in State NOLs, with a potential value of up to approximately
$90 million in tax savings over the next 15 years. Under Internal Revenue
Code Section 382 rules, if a change of ownership is triggered, the
Company's NOL asset may be impaired. 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. We estimate that as
of March 31, 2010, the Company was at an approximately 34% level compared
with the 50% level that would trigger impairment of our NOL asset.
During the second quarter of 2008, the Company received shareholder
approval to amend its articles of incorporation in order to protect its NOL
asset (the "NOL Protective Measures") and those measures are now in effect.
Under the NOL Protective Measures there is no change to the way that
existing Stamps.com shares are held or traded, but any person, company or
investment firm which wishes to become a "5% shareholder" of Stamps.com
must first obtain a waiver from the Company's board of directors. In
addition, any person, company or investment firm which is already a "5%
shareholder" of Stamps.com cannot make any additional purchases of
Stamps.com stock without a waiver from the Company's board of directors.
Stamps.com currently has 14.3 million shares outstanding and therefore
ownership of approximately 714 thousand shares or greater would currently
constitute a "5% shareholder". Stamps.com strongly urges that any
stockholder contemplating owning more than 570 thousand shares contact the
Company before doing so.
Business Outlook
Stamps.com currently expects total 2010 revenue to be $80 to $90 million.
2010 GAAP net income per share is expected to be $0.50 to $0.70, including
approximately $3.5 million of 2010 stock-based compensation expense and
$3.7 million of non-cash tax benefit resulting from the potential
additional partial release of the valuation allowance against our deferred
tax asset. Excluding the stock-based compensation expense and the non-cash
tax benefit, non-GAAP 2010 net income per fully diluted share is expected
to be $0.50 to $0.70.
Company Customer Metrics
A complete set of the quarterly customer metrics for the past four fiscal
years is available currently at
http://investor.stamps.com (under a tab on
the left side called Company Information, 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's service enables small businesses, enterprises, advanced
shippers, 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 currently has PC Postage partnerships with Avery
Dennison, Microsoft, HP, the U.S. Postal Service, Interapptive, TrueShip,
Auctane, Atandra, Webgility and others.
PhotoStamps 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. Customers may
create full custom PhotoStamps with their own digital photograph, or they
may choose a licensed image from one of many PhotoStamps collections such
as the collegiate collection. Since launching PhotoStamps in May 2005, more
than 79 million individual PhotoStamps have been shipped to customers.
Stamps.com currently has PhotoStamps partnerships with Apple,
Google/Picassa, HP/Snapfish, Adobe and others.
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 income from operations, non-GAAP pre-tax income, non-GAAP net
income, non-GAAP earnings per diluted share, and non-GAAP gross margin.
Reconciliation to the nearest GAAP measures of all non-GAAP measures
included in this press release can be found in the financial tables on page
2 and page 3 of this press release.
Non-GAAP measures are provided to enhance investors' overall understanding
of the Company's current financial performance, prospects for the future
and as a means to evaluate period-to-period comparisons. The Company
believes that these non-GAAP measures provide meaningful supplemental
information regarding financial performance by excluding certain expenses
and benefits that may not be indicative of recurring core business
operating results. The Company believes the non-GAAP measures that exclude
stock-based compensation, asset write-downs, litigation charges and income
tax adjustments, when viewed with GAAP results and the accompanying
reconciliation, enhance the comparability of results against prior periods
and allow for greater transparency of financial results. The Company
believes non-GAAP measures facilitate management's internal comparison of
the Company's financial performance to that of prior periods as well as
trend analysis for budgeting and planning purposes. The presentation of
non-GAAP measures are not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP.
"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 year ended December 31, 2009, 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. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data: unaudited)
Three Months ended
March 31,
2010 2009
----------- -----------
Revenues:
Service $ 16,018 $ 15,314
Product 3,073 2,617
Insurance 394 404
PhotoStamps 1,501 1,713
Other 3 -
----------- -----------
Total revenues 20,989 20,048
Cost of revenues:
Service 3,483 3,008
Product 1,139 945
Insurance 114 125
PhotoStamps 1,078 1,300
----------- -----------
Total cost of revenues 5,814 5,378
----------- -----------
Gross profit 15,175 14,670
Operating expenses:
Sales and marketing 7,984 8,064
Research and development 2,170 2,227
General and administrative 2,967 3,264
----------- -----------
Total operating expenses 13,121 13,555
----------- -----------
Income from operations 2,054 1,115
Interest and other income, net 171 357
----------- -----------
Income before income taxes 2,225 1,472
Income tax expense 80 250
----------- -----------
Net income $ 2,145 $ 1,222
=========== ===========
Net income per share:
Basic $ 0.14 $ 0.07
=========== ===========
Diluted $ 0.14 $ 0.07
=========== ===========
Weighted average shares outstanding:
Basic 15,142 16,864
=========== ===========
Diluted 15,272 16,992
=========== ===========
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2010 2009
---------- ----------
ASSETS
Cash and investments $ 63,377 $ 71,745
Accounts receivable 4,120 4,367
Other current assets 3,058 3,288
Property and equipment, net 2,002 2,102
Intangible assets, net 498 498
Deferred tax 3,671 3,671
Other assets 3,237 3,587
---------- ----------
Total assets $ 79,963 $ 89,258
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 9,723 $ 9,583
Deferred revenue $ 4,088 $ 4,070
---------- ----------
Total liabilities 13,811 13,653
---------- ----------
Stockholders' equity:
Common stock 47 47
Additional paid-in capital 631,231 630,322
Treasury Stock (117,159) (104,344)
Accumulated deficit (448,069) (450,214)
Unrealized loss on investments 102 (206)
---------- ----------
Total stockholders' equity 66,152 75,605
---------- ----------
Total liabilities and stockholders' equity $ 79,963 $ 89,258
========== ==========