Stamps.com Announces Fourth Quarter Non-GAAP Earnings per Share of $0.47

Stamps.com Announces Fourth Quarter Non-GAAP Earnings per Share of $0.47 
Non-GAAP Operating Income up 42%; Non-GAAP Net Income up 33% 
EL SEGUNDO, CA -- (Marketwire) -- 02/13/13 --  Stamps.com(R) (NASDAQ:
STMP), the leading provider of postage online and shipping software
solutions, today announced results for the fourth quarter and fiscal
year ended December 31, 2012. 
Highlights for the fourth quarter: 


 
--  Core PC Postage revenue was $27.4 million, up 12% from the fourth
    quarter of 2011.
    
    
--  Total revenue was $30.1 million, up 10% compared to the fourth quarter
    of 2011.
    
    
--  Non-GAAP operating margin was 25.4% compared to 19.8% in the fourth
    quarter of 2011.
    
    
--  GAAP net income was $9.3 million or $0.58 per fully diluted share,
    including $0.8 million in stock-based compensation expense and a
    non-cash income tax benefit of $2.5 million.
    
    
--  On a non-GAAP basis, excluding the stock-based compensation expense
    and non-cash income tax benefit, income from operations was $7.6
    million, net income was $7.6 million and net income per fully diluted
    share was $0.47, up 42%, 33% and 36%, respectively, versus the fourth
    quarter of 2011.
    
    
--  During the fourth quarter of 201
2, the Company repurchased a total of
    499 thousand shares at a total cost of $11.9 million.

  
"We are pleased with our strong earnings this quarter," said Ken
McBride, Stamps.com Chairman and CEO. "Despite a tough economic
environment, we continue to see strength across our business lines.
In addition, during the fourth quarter we hit our highest level ever
for total paid customers, we saw our largest number of new customers
acquired, and we set a new record for total postage printed. As we
enter 2013, we feel that we are well positioned in each of our core
business lines."  
Fourth Quarter 2012 Detailed Results 
Core PC Postage revenue -- including our small business, enterprise
and high volume shipping customer segments, and excluding enhanced
promotion and PhotoStamps revenue -- was $27.4 million, up 12% versus
the fourth quarter of 2011. Non-core PC Postage revenue from the
enhanced promotion channel which includes online programs where
additional promotions are provided directly by marketing partners,
was $0.8 million and PhotoStamps revenue was $1.9 million, both down
1% versus the fourth quarter of 2011 as the Company continues to
minimize its investment in both areas. PC Postage gross margin was
78.6%, PhotoStamps gross margin was 28.7% and total gross margin was
75.5%.  
Fourth quarter GAAP net income was $9.3 million. On a per share
basis, total fourth quarter 2012 GAAP net income was $0.58 based on
16.1 million fully diluted shares outstanding. Fourth quarter 2012
GAAP net income was reduced by $0.8 million of stock-based
compensation expense and increased by a non-cash income tax benefit
of $2.5 million resulting from the reversal of a portion of the
Company's net deferred tax asset valuation allowance. Non-GAAP and
GAAP amounts are reconciled in the following table: 


 
                                                                            
Fourth Quarter Fiscal 2012                                                  
All amounts in millions except  Non-GAAP  Stock-Based   Income Tax   GAAP   
per share or margin data:        Amounts   Comp. Exp.     Benefit   Amounts 
                                                                            
Cost of Sales                   $   7.30  $      0.06   $        - $   7.36 
Research & Development              2.24         0.17            -     2.41 
Sales & Marketing                   9.78         0.18            -     9.96 
General & Administrative            3.11         0.41            -     3.52 
                                --------  -----------   ---------- -------- 
                                                                            
Total Expenses                     22.43         0.82                 23.24 
                                                                            
Gross Margin                        75.7%        (0.2%)          -     75.5%
                                                                            
Income (Loss) from Operations       7.64        (0.82)           -     6.83 
                                                                            
Operating Margin                    25.4%        (2.7%)          -     22.7%
                                                                            
Interest and Other Income           0.13            -            -     0.13 
                                --------  -----------   ---------- -------- 
                                                                            
Pre-Tax Income (Loss)               7.77        (0.82)           -     6.96 
                                                                            
Provision for Income Taxes         (0.17)           -         2.51     2.34 
                                                                            
                   
             --------  -----------   ---------- -------- 
Net Income                          7.60        (0.82)        2.51     9.30 
                                ========  ===========   ========== ======== 
                                                                            
                                --------  -----------   ---------- -------- 
On a diluted per share basis    $   0.47  $     (0.05)  $     0.16 $   0.58 
                                ========  ===========   ========== ======== 
                                                                            
Shares used in per share                                                    
 calculation                       16.13        16.13        16.13    16.13 

 
Excluding the stock-based compensation expense and income tax benefit,
fourth quarter 2012 non-GAAP operating income was $7.6 million and
non-GAAP net income was $7.6 million or $0.47 per share based on 16.1
million fully diluted shares outstanding. This compares to fourth
quarter 2011 non-GAAP operating income of $5.4 million and non-GAAP
net income of $5.7 million or $0.35 per share based on fully diluted
shares outstanding of 16.6 million. Thus, fourth quarter non-GAAP
operating income, non-GAAP net income and non-GAAP fully diluted
earnings per share increased by 42%, 33% and 36% year-over-year,
respectively.  
Stamps.com has approximately $210 million in Federal NOLs and $100
million in State NOLs. The Company estimates its ownership shift was
approximately 22% as of December 31, 2012, which is below the 50%
level that could trigger impairment of its NOL asset under Internal
Revenue Code Section 382 rules. As part of its ongoing program to
preserve future use of its NOL asset, the Company requests that any
shareholder contemplating becoming a 5% shareholder contact the
Company before doing so. 
2012 Detailed Results  
Total 2012 revenue was $115.7 million, an increase of 14% versus
revenue of $101.6 million in 2011. Total 2012 PC Postage revenue,
including service revenue, store revenue and insurance revenue, was
$110.0 million, up 18% versus PC Postage revenue of $93.3 million in
2011. Excluding the enhanced promotion channel, core PC Postage
revenue in 2012 was $107.0 million, up 19% versus $90.2 million in
2011. Total 2012 PhotoStamps revenue was $5.7 million, down 32%
versus PhotoStamps revenue of $8.3 million in 2011.  
Total 2012 GAAP net income was $38.6 million, including approximately
$4.0 million of stock-based compensation expense, $0.4 million for a
one-time corporate headquarters relocation expense, and $14.4 million
in non-cash tax benefit resulting from a reversal of a portion of the
Company's net deferred tax asset valuation allowance. On a per share
basis, total 2012 GAAP net income was $2.30 based on fully diluted
shares outstanding for the year of 16.8 million. Non-GAAP and GAAP
amounts are reconciled in the following table: 


 
                                                                            
Fiscal Year 2012                                                            
 All amounts in                                                             
 millions except                                                            
 per share or      Non-GAAP  Stock-Based   Relocation   Income Tax   GAAP   
 margin data:       Amounts   Comp. Exp.     Expense      Benefit   Amounts 
                                                                            
Cost of Sales      $  27.43  $      0.33   $        -   $        - $  27.76 
Research &                                                                  
 Development           9.35         0.89            -            -    10.24 
Sales & Marketing     37.88         0.87            -            -    38.75 
General &                                                                   
 Administrative       12.44         1.90         0.41            -    14.75 
                   --------  -----------   ----------   ---------- -------- 
                                                                            
Total Expenses        87.11         3.99         0.41            -    91.50 
                                                                            
Gross Margin           76.3%        (0.3%)          -            -     76.0%
                                                                            
Income (Loss) from                                                          
 Operations           28.56        (3.99)       (0.41)           -    24.16 
                                                                            
Operating Margin       24.7%        (3.5%)       (0.4%)          -     20.9%
 
                                                                            
Interest and Other                                                          
 Income                0.54            -            -            -     0.54 
                   --------  -----------   ----------   ---------- -------- 
                                                                            
Pre-Tax Income                                                              
 (Loss)               29.10        (3.99)       (0.41)           -    24.70 
                                                                            
Provision for                                                               
 Income Taxes         (0.57)           -            -        14.42    13.86 
                                                                            
                   --------  -----------   ----------   ---------- -------- 
Net Income            28.53        (3.99)       (0.41)       14.42    38.56 
                   ========  ===========   ==========   ========== ======== 
                                                                            
                   --------  -----------   ----------   ---------- -------- 
On a diluted per                                                            
 share basis       $   1.70  $     (0.24)  $    (0.02)  $     0.86 $   2.30 
                   ========  ===========   ==========   ========== ======== 
                                                                            
Shares used in per                                                          
 share calculation    16.79        16.79        16.79        16.79    16.79 

 
Excluding the stock-based compensation expense, relocation expense,
and non-cash income tax benefit, 2012 non-GAAP operating income was
$28.6 million and non-GAAP net income was $28.5 million or $1.70 per
share based on fully diluted shares outstanding of 16.8 million. This
compares to 2011 non-GAAP operating income of $20.6 million, non-GAAP
net income of $21.2 million and non-GAAP net income per fully diluted
share of $1.40. Thus, 2012 non-GAAP operating income, non-GAAP net
income and non-GAAP fully diluted earnings per share increased by
38%, 35% and 22% year-over-year, respectively.  
Share Repurchase 
During the fourth quarter of 2012, the Company repurchased a total of
499 thousand shares at a total cost of $11.9 million. On February 7,
2013, the Board of Directors approved a new share repurchase plan
that replaces all prior repurchase plans and authorizes the Company
to repurchase up to 1.0 million shares of Stamps.com stock during the
next six months.  
Business Outlook  
Stamps.com currently expects 2013 revenue to be in a range of $120 to
$130 million and 2013 GAAP net income per share to be in a range of
$1.48 to $1.68, including approximately $4.5 million of stock-based
compensation expense. Excluding the stock-based compensation expense,
non-GAAP 2013 net income per fully diluted share is expected to be in
a range of $1.75 to $1.95.  
Company Customer Metrics  
A complete set of the quarterly customer metrics for the past seven
fiscal years is available 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 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. Stamps.com currently has PhotoStamps
partnerships with HP/Snapfish and others. 
About Non-GAAP Measures and Share Repurchase Timing 
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 and non-GAAP operating margin. Reconciliation to the nearest
GAAP measures of all non-GAAP measures included in this press release
can be found in the financial tables of this earnings 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 items such as
stock-based compensation, asset write-offs, dividend-related
compensation expense, legal settlements and reserves, one-time
expenses such as those associated with the relocation of our
corporate headquarters 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. 
The timing of share repurchases, if any, and the number of shares to
be bought at any one time will depend on market conditions and the
Company's assessment of the risk that its net operating loss asset
could be impaired if such repurchases were undertaken. Share
repurchases 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. 
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: This release includes forward-looking statements
about our anticipated results 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, 2011, 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)                    
                                                                            
                                  Three Months ended    Twelve Months ended 
                                     December 31,          December 31,     
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Revenues:                                                                   
  Service                        $  22,374  $  20,153  $  88,173  $  75,535 
  Product                            3,834      3,697     14,710     13,465 
  Insurance                          1,982      1,462      7,120      4,321 
  PhotoStamps                        1,880      1,907      5,651      8,258 
  Other                                  -          1          7          6 
                                 ---------  ---------  ---------  --------- 
    Total revenues                  30,070     27,220    115,661    101,585 
Cost of revenues:                                                           
  Service                            3,932      3,819     15,720     14,720 
  Product                            1,426      1,324      5,435      4,910 
  Insurance                            664        508      2,334      1,506 
  PhotoStamps                        1,340      1,330      4,267      5,076 
                                 ---------  ---------  ---------  --------- 
    Total cost of revenues           7,362      6,981     27,756     26,212 
                                 ---------  ---------  ---------  --------- 
    Gross profit                    22,708     20,239     87,905     75,373 
Operating expenses:                                                         
  Sales and marketing                9,958      9,490     38,755     34,569 
  Research and development           2,406      2,379     10,243      9,395 
  General and administrative         3,517      3,787     14,750     14,181 
                                 ---------  ---------  ---------  --------- 
    Total operating expenses        15,881     15,656     63,748     58,145 
                                 ---------  ---------  ---------  --------- 
    Income from operations           6,827      4,583     24,157     17,228 
Interest and other income, net         132        128        541        562 
                                 ---------  ---------  ---------  --------- 
Income before taxes                  6,959      4,711     24,698     17,790 
Income tax benefit                  (2,338)    (8,674)   (13,859)    (8,475)
                                 ---------  ---------  ---------  --------- 
Net income                       $   9,297  $  13,385  $  38,557  $  26,265 
                                 =========  =========  =========  ========= 
Net income per share:                                                       
  Basic                          $    0.60  $    0.85  $    2.40  $    1.78 
                                 =========  =========  =========  ========= 
  Diluted                        $    0.58  $    0.81  $    2.30  $    1.73 
                                 =========  =========  =========  ========= 
Weighted average shares                                                     
 outstanding:                                                               
  Basic                             15,502     15,694     16,079     14,767 
                                 =========  =========  =========  ========= 
  Diluted                           16,129     16,551     16,793     15,168 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                               (in thousands)                               
                                                                            
                                                December 31,   December 31, 
                                                    2012    
       2011     
                                               -------------  ------------- 
                                                                            
ASSETS                                                                      
Cash and investments                           $      46,619  $      69,363 
Accounts receivable                                   14,432         10,466 
Other current assets                                   5,602          5,476 
Property and equipment, net                           28,631          2,165 
Intangible assets, net                                 1,262            837 
Deferred tax assets                                   30,549         16,125 
Other assets                                           3,757          3,548 
                                               -------------  ------------- 
    Total assets                               $     130,852  $     107,980 
                                               =============  ============= 
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
                                                                            
Liabilities                                                                 
  Accounts payable and accrued expenses        $      16,366  $      12,075 
  Deferred revenue                                     1,532          1,898 
                                               -------------  ------------- 
    Total liabilities                                 17,898         13,973 
                                                                            
Stockholders' equity:                                                       
  Common stock                                            50             49 
  Additional paid-in capital                         649,694        637,483 
  Treasury Stock                                    (155,260)      (123,472)
  Accumulated deficit                               (381,781)      (420,338)
  Unrealized gain on investments                         251            285 
                                               -------------  ------------- 
    Total stockholders' equity                       112,954         94,007 
                                               -------------  ------------- 
    Total liabilities and stockholders' equity $     130,852  $     107,980 
                                               =============  ============= 

  
Investor Contact:
Jeff Carberry
Stamps.com Investor Relations
(310) 482-5830
invrel@stamps.com 
Press Contact:
Eric Nash
Stamps.com Public Relations
(310) 482-5942
publicrelations@stamps.com 
 
 
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