Stamps.com Announces Record 27% Fourth Quarter Core PC Postage Revenue Growth
LOS ANGELES, CA, Feb 09, 2012 (MARKETWIRE via COMTEX) –Stamps.com(R) /quotes/zigman/92950/quotes/nls/stmp STMP -5.37% , the leading provider of postageonline and shipping software solutions, today announced results forthe fourth quarter and fiscal year ended December 31, 2011.
Highlights for the fourth quarter:
— Core PC Postage revenue (including small business, enterprise and high volume shipping customer segments) was $24.5 million, up 27% from the fourth quarter of 2010. — Total revenue (including core PC Postage revenue and non-core revenue from PhotoStamps and the enhanced promotion channel) was $27.2 million, up 20% compared to the fourth quarter of 2010. — PC Postage gross margin was 77.7%. — GAAP net income was $13.4 million or $0.81 per fully diluted share. this includes $814 thousand in stock-based compensation expense and a non-cash income tax benefit of $8.5 million. — Excluding the stock-based compensation expense and non-cash income tax benefit, non-GAAP income from operations was $5.4 million, non-GAAP net income was $5.7 million and non-GAAP net income per fully diluted share was $0.35.
“We showed continued strength in the fourth quarter with record resultsin several areas of our business,” said Ken McBride, Stamps.com’sChairman and CEO. “We continued to see accelerating growth in ourcore PC Postage business with 14%, 23%, 25% and 27% year-over-yearrevenue growth in the first through fourth quarters of 2011,respectively. We also set new records in many of our key customermetrics including total paid customers, average revenue per customer,new customers acquired, high-volume shipping postage printed, andtotal customer postage printed. as we enter 2012, we feel that we arewell positioned in each of our core business lines.”
Fourth Quarter 2011 Detailed Results
Non-core PC Postage revenue from the enhanced promotion channel(online programs where additional promotions are provided directly bymarketing partners), was $0.8 million, down 19% versus the fourthquarter of 2010. PhotoStamps revenue was $1.9 million, down 20%versus the fourth quarter of 2010, as the Company continues to reduceits investment in this area. PhotoStamps gross margin was 30.2% andtotal gross margin was 74.4%. During the fourth quarter, cash andinvestments increased by $18 million and ended the quarter at a totalof $69 million.
Fourth quarter 2011 GAAP net income was $13.4 million. on a per sharebasis, total fourth quarter 2011 GAAP net income was $0.81 based onfully diluted shares outstanding of 16.6 million. Fourth quarter 2011GAAP net income was reduced by $0.8 million of stock-basedcompensation expense and increased by a non-cash income tax benefitof $8.5 million resulting from the reversal of a portion of theCompany’s net deferred tax asset valuation allowance. Non-GAAP andGAAP amounts are reconciled in the following table:
Fourth Quarter Fiscal 2011 Income All amounts in millions except Non-GAAP Stock-Based Tax GAAP per share or margin data: Amounts Comp. Exp. Benefit Amounts Cost of Sales $ 6.92 $ 0.06 – $ 6.98 Research & Development 2.20 0.18 – 2.38 Sales & Marketing 9.30 0.19 – 9.49 General & Administrative 3.40 0.38 – 3.79 ——– ———– ——- ——- Total Expenses 21.82 0.81 22.64 Gross Margin 74.6% (0.2%) – 74.4% Income (Loss) from Operations 5.40 (0.81) – 4.58 interest and other Income 0.13 – - 0.13 ——– ———– ——- ——- Pre-Tax Income (Loss) 5.52 (0.81) – 4.71 Income Tax Benefit 0.20 – 8.48 8.67 ——– ———– ——- ——- Net Income $ 5.72 $ (0.81) $ 8.48 $ 13.38 ======== =========== ======= ======= ——– ———– ——- ——- on a diluted per share basis $ 0.35 $ (0.05) $ 0.51 $ 0.81 ======== =========== ======= ======= Shares used in per share calculation 16.55 16.55 16.55 16.55
Excluding the stock-based compensation expense and non-cash income taxbenefit, fourth quarter 2011 non-GAAP net income was $5.7 million or$0.35 per share based on fully diluted shares outstanding of 16.6million. this compares to fourth quarter 2010 non-GAAP net income of$4.4 million and non-GAAP net income per fully diluted share of$0.30. thus, non-GAAP fourth quarter 2011 net income and dilutedearnings per share increased by 29% and 14%, respectively, comparedto the same quarter in 2010.
Fiscal 2011 Detailed Results
Total 2011 revenue was $101.6 million, an increase of 19% versusrevenue of $85.5 million in 2010. Total 2011 PC Postage revenue,including service revenue, store revenue and insurance revenue, was$93.3 million, up 19% versus PC Postage revenue of $78.4 million in2010. Excluding the enhanced promotion channel, core PC Postagerevenue in 2011 was $90.2 million, up 22% versus $73.8 million in2010. Total 2011 PhotoStamps revenue was $8.3 million, up 15% versusPhotoStamps revenue of $7.2 million in 2010.
Total 2011 GAAP net income was $26.3 million, including approximately$3.4 million of stock-based compensation expense and an $8.5 millionnon-cash tax benefit resulting from the reversal of a portion of theCompany’s net deferred tax asset valuation allowance. on a per sharebasis, total 2011 GAAP net income was $1.73 based on fully dilutedshares outstanding for the year of 15.2 million. Non-GAAP and GAAPamounts are reconciled in the following table:
Fiscal Year 2011 Income All amounts in millions except Non-GAAP Stock-Based Tax GAAP per share or margin data: Amounts Comp. Exp. Benefit Amounts Cost of Sales $ 25.93 $ 0.28 – $ 26.21 Research & Development 8.65 0.75 – 9.40 Sales & Marketing 33.80 0.76 – 34.57 General & Administrative 12.55 1.63 – 14.18 ——— ———– ——- ——- Total Expenses 80.94 3.42 – 84.36 Gross Margin 74.5% (0.3%) – 74.2% Income (Loss) from Operations 20.65 (3.42) – 17.23 interest and other Income 0.56 – - 0.56 ——— ———– ——- ——- Pre-Tax Income (Loss) 21.21 (3.42) – 17.79 Income Tax Benefit – - 8.48 8.48 ——— ———– ——- ——- Net Income $ 21.21 $ (3.42) $ 8.48 $ 26.27 ========= =========== ======= ======= ——— ———– ——- ——- on a diluted per share basis $ 1.40 $ (0.23) $ 0.56 $ 1.73 ========= =========== ======= ======= Shares used in per share calculation 15.17 15.17 15.17 15.17
Excluding the stock-based compensation expense and non-cash income taxbenefit, 2011 non-GAAP net income was $21.2 million or $1.40 pershare based on fully diluted shares outstanding of 15.2 million. Thiscompares to 2010 non-GAAP net income of $13.7 million and non-GAAPnet income per fully diluted share of $0.93. thus, non-GAAP 2011diluted earnings per share increased by 50% compared to 2010.
new Corporate Headquarters
on January 23, 2012, we completed the previously announced purchaseof two adjacent buildings in El Segundo, California that will serveas the Company’s future headquarters. We are currently engaged in arenovation and construction project on the property and expect tomove in after substantial completion of the project in 2012. TheCompany will occupy a portion of the space, with the remainingportion of the space leased to the existing tenants. The purchase ofthe property and renovations are being funded out of the Company’sexisting cash and investments.
Management Promotions
on January 13, 2012, the Board of Directors of Stamps.com elected KenMcBride to the offices of Chief Executive Officer and Chairman of theBoard of Directors of the Company, Kyle Huebner to the offices ofChief Financial Officer and Co-President of the Company, and JamesBortnak to the offices of Co-President and Corporate & BusinessDevelopment Officer. Additionally on January 13, 2012, SebastianBuerba was named Chief Marketing Officer, Michael Biswas was namedChief Technology Officer, and John Clem was named Chief Product &Strategy Officer.
During 2011 the Company repurchased a total of 426 thousand sharesfor a total cost of $5.3 million. The Company did not repurchase anyshares during the fourth quarter of 2011. on February 2, 2012, theBoard of Directors approved a new share repurchase plan effectiveupon the expiration of the current plan on February 17, 2012,authorizing the Company to repurchase up to 1.0 million shares ofStamps.com stock during the subsequent six months.
The timing of share purchases, if any, and the number of shares to bebought at any one time will depend on market conditions and also willdepend on the Company’s assessment of risk that its net operatingloss asset could be impaired if such a repurchase were undertaken.Share purchases may be made from time-to-time on the open market orin negotiated transactions at the Company’s discretion in compliancewith Rule 10b-18 of the United States Securities and ExchangeCommission. The Company’s purchase of any of its shares may besubject to limitations imposed on such purchases by applicablesecurities laws and regulations and the rules of the Nasdaq StockMarket.
Stamps.com currently expects total 2012 revenue to be in a range of$105 to $115 million, and 2012 GAAP net income per share is expectedto be in a range of $1.00 to $1.20, including approximately $4million of stock-based compensation expense. Excluding thestock-based compensation expense, non-GAAP 2012 net income per fullydiluted share is expected to be in a range of $1.25 to $1.45. Dilutedshares for 2012 are projected to be approximately 17.5 millioncompared to 15.2 million diluted shares in 2011. as a result, weexpect that the year-over-year growth for 2012 non-GAAP net incomewill be approximately 15 percentage points higher than theyear-over-year growth for 2012 non-GAAP diluted earnings per share.
Additionally, 2011 financial results contained $2.2 million ofrevenue and $1.7 million of income related to the initial recognitionof PhotoStamps retail box breakage in the second quarter of 2011whereas 2012 revenue and income from PhotoStamps retail box breakageis not expected to be material. for purposes of comparing annualgrowth rates excluding the initial recognition of PhotoStampsbreakage, fiscal 2011 results without the second quarter breakageitem would have been total revenue of $99.4 million and non-GAAPdiluted earnings per share of $1.29.
Company Customer Metrics
A complete set of the quarterly customer metrics for the past sixfiscal years is available at investor.stamps.com (under a tabon the left side called Company Information, Metrics).
Quarterly Conference Call
The Stamps.com financial results conference call will be web casttoday at 5:00 p.m. Eastern Time and may be accessed at investor.stamps.com . The Company plans to discuss its businessoutlook during the conference call. Following the conclusion of theweb cast, a replay of the call will be available at the same website.
Net Operating Loss (NOL) Update
Stamps.com currently has approximately $230 million in Federal NOLsand $125 million in State NOLs. The Company estimates that as ofDecember 31, 2011, its ownership shift was approximately 15% comparedwith the 50% level that could trigger an impairment of its NOL assetunder Internal Revenue Code Section 382 rules. as part of its ongoingprogram to preserve future use of its NOL asset, the Company requeststhat any shareholder contemplating becoming a 5% shareholder contactthe Company before doing so.
About Stamps.com and PhotoStamps
Stamps.com /quotes/zigman/92950/quotes/nls/stmp STMP -5.37% is a leading provider of Internet-basedpostage services. Stamps.com’s service enables small businesses,enterprises, advanced shippers, and consumers to print U.S. PostalService-approved postage with just a PC, printer and Internetconnection, right from their home or office. The Company currentlyhas PC Postage partnerships with Avery Dennison, Microsoft, HP, theU.S. Postal Service and others.
PhotoStamps is a patented Stamps.com product that couples thetechnology of PC Postage with the simplicity of a web-based imageupload and order process. Customers may create full customPhotoStamps with their own digital photograph, or they may choose alicensed image from one of many PhotoStamps collections such as thecollegiate collection. Stamps.com currently has PhotoStampspartnerships with Apple, Google/Picasa, HP/Snapfish, Adobe andothers.
To supplement the Company’s condensed financial statements presentedin accordance with GAAP, Stamps.com uses non-GAAP measures of certaincomponents of financial performance. these non-GAAP measures includenon-GAAP income from operations, non-GAAP pre-tax income, non-GAAPnet income, non-GAAP earnings per diluted share, and non-GAAP grossmargin. Reconciliation to the nearest GAAP measures of all non-GAAPmeasures included in this press release can be found in the financialtable on pages 2 and 3 of this press release.
Non-GAAP measures are provided to enhance investors’ overallunderstanding of the Company’s current financial performance,prospects for the future and as a means to evaluate period-to-periodcomparisons. The Company believes that these non-GAAP measuresprovide meaningful supplemental information regarding financialperformance by excluding certain expenses and benefits that may notbe indicative of recurring core business operating results. TheCompany believes the non-GAAP measures that exclude stock-basedcompensation, asset write-offs, dividend-related compensationexpense, legal settlements and reserves, and income tax adjustments,when viewed with GAAP results and the accompanying reconciliation,enhance the comparability of results against prior periods and allowfor greater transparency of financial results. The Company believesnon-GAAP measures facilitate management’s internal comparison of theCompany’s financial performance to that of prior periods as well astrend analysis for budgeting and planning purposes. The presentationof non-GAAP measures are not intended to be considered in isolationor as a substitute for, or superior to, the financial informationprepared and presented in accordance with GAAP.
“Safe Harbor” Statement under the Private Securities LitigationReform Act of 1995: this release includes forward-looking statementsabout our anticipated results that involve risks and uncertainties.important factors, including the Company’s ability to complete andship its products, maintain desirable economics for its products andobtain or maintain regulatory approval, which could cause actualresults to differ materially from those in the forward-lookingstatements, are detailed in filings with the Securities and ExchangeCommission made from time to time by STAMPS.COM, including its AnnualReport on Form 10-K for the year ended December 31, 2010, QuarterlyReports on Form 10-Q, and Current Reports on Form 8-K. STAMPS.COMundertakes no obligation to release publicly any revisions to anyforward-looking statements to reflect events or circumstances afterthe date hereof or to reflect the occurrence of unanticipated events.
Stamps.com, the Stamps.com logo and PhotoStamps are trademarks orregistered trademarks of Stamps.com inc. All other brands and namesare property of their respective owners.
STAMPS.COM INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) three Months ended Twelve Months ended December 31, December 31, Unaudited Unaudited Unaudited Audited 2011 2010 2011 2010 ——— ——— ——— ——— Revenues: Service $ 20,153 $ 16,428 $ 75,535 $ 64,607 Product 3,697 3,107 13,465 11,725 Insurance 1,462 741 4,321 2,023 PhotoStamps 1,907 2,396 8,258 7,162 other 1 5 6 27 ——— ——— ——— ——— Total revenues 27,220 22,677 101,585 85,544 Cost of revenues: Service 3,819 3,338 14,720 13,282 Product 1,324 1,124 4,910 4,337 Insurance 508 251 1,506 641 PhotoStamps 1,330 1,829 5,076 5,424 ——— ——— ——— ——— Total cost of revenues 6,981 6,542 26,212 23,684 ——— ——— ——— ——— Gross profit 20,239 16,135 75,373 61,860 Operating expenses: Sales and marketing 9,490 8,590 34,569 31,174 Research and development 2,379 2,826 9,395 9,420 General and administrative 3,787 4,689 14,181 14,590 Legal settlements and reserves – - – 5,211 ——— ——— ——— ——— Total operating expenses 15,656 16,105 58,145 60,395 ——— ——— ——— ——— Income from operations 4,583 30 17,228 1,465 Non-operating asset write-off – (634) – (634) interest and other income, net 128 136 562 756 ——— ——— ——— ——— Income (loss) before taxes 4,711 (468) 17,790 1,587 Income tax benefit (8,674) (185) (8,475) (3,945) ——— ——— ——— ——— Net income (loss) $ 13,385 $ (283) $ 26,265 $ 5,532 ========= ========= ========= ========= Net income (loss) per share: Basic $ 0.85 $ (0.02) $ 1.78 $ 0.38 ========= ========= ========= ========= Diluted $ 0.81 $ (0.02) $ 1.73 $ 0.38 ========= ========= ========= ========= Weighted average shares outstanding: Basic 15,694 14,417 14,767 14,529 ========= ========= ========= ========= Diluted 16,551 14,417 * 15,168 14,685 ========= ========= ========= ========= * Common equivalent shares are excluded from the diluted earnings per share calculation as their effect is anti-dilutive CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) Unaudited Audited December 31, December 31, 2011 2010 ———— ———— ASSETS Cash and investments $ 69,363 $ 35,299 Accounts receivable 10,466 4,868 other current assets 5,476 4,015 Property and equipment, net 2,165 1,694 Intangible assets, net 837 885 Deferred tax assets 16,125 7,650 other assets 3,548 3,031 ———— ———— Total assets $ 107,980 $ 57,442 ============ ============ LIABILITIES AND STOCKHOLDERS’ EQUITY Liabilities Accounts payable and accrued expenses $ 12,075 $ 9,011 Deferred revenue 1,898 4,193 ———— ———— Total liabilities 13,973 13,204 Stockholders’ equity: Common stock 49 47 Additional paid-in capital 637,483 608,522 Treasury Stock (123,472) (118,151) Accumulated deficit (420,338) (446,603) Unrealized gain on investments 285 423 ———— ———— Total stockholders’ equity 94,007 44,238 ———— ———— Total liabilities and stockholders’ equity $ 107,980 $ 57,442 ============ ============
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