Stamps.com Announces Record Non-GAAP Earnings per Share of $0.60

Stamps.com Announces Record Non-GAAP Earnings per Share of $0.60 
Core PC Postage Revenue up 15%; Non-GAAP Operating Income up 42%;
Non-GAAP Earnings per Share up 50% 
EL SEGUNDO, CA -- (Marketwired) -- 07/31/13 --  Stamps.com(R)
(NASDAQ: STMP), the leading provider of postage online and shipping
software solutions, today announced results for the second quarter
ended June 30, 2013. 
Highlights for the second quarter: 


 
--  Core PC Postage revenue was $30.1 million, up 15% from the second
    quarter of 2012.
--  Total revenue was $32.1 million, up 14% compared to the second quarter
    of 2012.
--  Non-GAAP operating margin was 30.0% compared to 24.1% in the second
    quarter of 2012.
--  GAAP net income was $8.6 million or $0.53 per fully diluted share,
    including $1.1 million in stock-based compensation expense.
--  On a non-GAAP basis, excluding the stock-based compensation expense,
    income from operations was $9.6 million, net income was $9.7 million
    and net income per fully diluted share was $0.60, up 42%, 41% and 50%,
    respectively, versus the second quarter of 2012.

  
"We are very pleased with our continued strong revenue and earnings
growth this quarter," said Ken McBride, Stamps.com Chairman and CEO.
"In addition to our overall revenue and earnings growth, during the
second quarter we achieved our highest level ever of paid customers
in our core PC Postage business, and we saw continued strong growth
in our enterprise and high volume shipping businesses. As a result of
our second quarter performance and the strength of our businesses, we
raised our 2013 guidance today." 
Second Quarter 2013 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 $30.1 million, up 15% versus
the second quarter of 2012. Non-core PC Postage revenue from the
enhanced promotion channel which includes online programs where
additional promotions are provided directly by marketing partners,
was $0.7 million which was flat versus the second quarter of 2012.
PhotoStamps revenue was $1.2 million which was down 5% versus the
second quarter of 2012 as the Company continues to minimize its
investment in this area. PC Postage gross margin was 80.3%,
PhotoStamps gross margin was 17.4% and total gross margin was 77.9%.  
Second quarter GAAP net income was $8.6 million. On a per share
basis, total second quarter 2013 GAAP net income was $0.53 based on
16.2 million fully diluted shares outstanding. Second quarter 2013
GAAP net income was reduced by $1.1 million of stock-based
compensation expense. Non-GAAP and GAAP amounts are reconciled in the
following table: 


 
                                                                            
Second Quarter Fiscal 2013                                                  
All amounts in millions except    Non-GAAP     Stock-Based         GAAP     
per share or margin data:         Amounts       Comp. Exp.       Amounts    
                                                                            
Cost of Sales                  $        7.01  $        0.08   $        7.09 
Research & Development                  2.55           0.17            2.72 
Sales & Marketing                       9.61           0.18            9.79 
General & Administrative                3.31           0.65            3.97 
                               -------------  -------------   ------------- 
                                                                            
Total Expenses                         22.48           1.08           23.56 
                                                                            
Gross Margin                            78.2%          (0.2%)          77.9%
                                                                            
Income (Loss) from Operations           9.63          (1.08)           8.55 
                                                                            
Operating Margin                        30.0%          (3.4%)          26.6%
                                                                            
Interest and Other Income               0.10              -            0.10 
                               -------------  -------------   ------------- 
Pre-Tax Income (Loss)                   9.72          (1.08)           8.64 
                                                                            
Provision for Income Taxes             (0.03)             -           (0.03)
                                                                            
                               -------------  -------------   ------------- 
Net Income                              9.69          (1.08)           8.61 
                               =============  =============   ============= 
                                                                            
                               -------------  -------------   ------------- 
On a diluted per share basis   $        0.60  $       (0.07)  $        0.53 
                               =============  =============   ============= 
                                                                            
Shares used in per share                                                    
 calculation                           16.16          16.16           16.16 

 
Excluding the stock-based compensation expense, second quarter 2013
non-GAAP operating income was $9.6 million and non-GAAP net income
was $9.7 million or $0.60 per share based on 16.2 million fully
diluted shares outstanding. This compares to second quarter 2012
non-GAAP operating income of $6.8 million and non-GAAP net income of
$6.9 million or $0.40 per share based on fully diluted shares
outstanding of 17.2 million. Thus, second quarter non-GAAP operating
income, non-GAAP net income and non-GAAP fully diluted earnings per
share increased by 42%, 41% and 50% year-over-year, respectively.  
Stamps.com has approximately $200 million in Federal Net Operating
Losses (NOLs) and $100 million in State NOLs. The Company estimates
its ownership shift was approximately 20% as of June 30, 2013, 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. 
Share Repurchase  
During the second quarter of 2013, the Company repurchased 105
thousand shares at a total cost of $2.5 million. The Company's
current repurchase plan remains in effect through October 2013 with
an authorization of up to 1 million shares.  
Business Outlook  
Stamps.com expects 2013 total revenue to be in a range of $125 to
$135 million. GAAP net income per share for 2013 is expected to be in
a range of $1.73 to $1.93; this compares to previous guidance of
$1.68 to $1.88. GAAP net income per share includes approximately $4.5
million of stock-based compensation expense. Excluding the
stock-based compensation expense, 2013 non-GAAP net income per fully
diluted share is expected to be in a range of $2.00 to $2.20; this
compares to previous guidance of $1.95 to $2.15. 
Company Customer Metrics  
A complete set of the quarterly customer metrics for the past seven
years and current year-to-date 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, 2012, 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   Six Months ended  
                                          June 30,            June 30,      
                                       2013      2012      2013      2012   
                                    --------- --------- --------- --------- 
Revenues:                                                                   
  Service                           $  24,888 $  21,781 $  49,736 $  43,168 
  Product                               4,075     3,452     8,551     7,381 
  Insurance                             1,917     1,702     3,663     3,364 
  PhotoStamps                           1,229     1,289     2,259     2,601 
  Other                                     -         3         1         6 
                                    --------- --------- --------- --------- 
    Total revenues                     32,109    28,227    64,210    56,520 
Cost of revenues:                                                           
  Service                               4,015     3,829     8,570     8,068 
  Product                               1,382     1,278     3,007     2,738 
  Insurance                               676       562     1,317     1,097 
  PhotoStamps                           1,015       969     1,846     1,998 
                                    --------- --------- --------- --------- 
    Total cost of revenues              7,088     6,638    14,740    13,901 
                                    --------- --------- --------- --------- 
    Gross profit                       25,021    21,589    49,470    42,619 
Operating expenses:                                                         
  Sales and marketing                   9,792     9,775    20,175    19,882 
  Research and development              2,718     2,555     5,343     5,212 
  General and administrative            3,966     3,435     7,592     7,280 
                                    --------- --------- --------- --------- 
    Total operating expenses           16,476    15,765    33,110    32,374 
                                    --------- --------- --------- --------- 
    Income from operations              8,545     5,824    16,360    10,245 
                                                                            
Interest and other income, net             95       163       249       287 
                                    --------- --------- --------- --------- 
Income before income taxes              8,640     5,987    16,609    10,532 
Income tax expense (benefit)               27        64        90   (11,751)
                                    --------- --------- --------- --------- 
Net income                          $   8,613 $   5,923 $  16,519 $  22,283 
                                    ========= ========= ========= ========= 
Net income per share:                                                       
  Basic                             $    0.56 $    0.36 $    1.07 $    1.36 
                                    ========= ========= ========= ========= 
  Diluted                           $    0.53 $    0.34 $    1.03 $    1.30 
                                    ========= ========= ========= ========= 
Weighted average shares                                                     
 outstanding:                                                               
  Basic                                15,486    16,468    15,407    16,359 
                                    ========= ========= ========= ========= 
  Diluted                              16,163    17,196    16,082    17,184 
                                    ========= ========= ========= ========= 
                                                                            
                                                                            
                                                                            
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                         (in thousands, unaudited)                          
                                                                            
                                                  June 30,     December 31, 
                                                    2013           2012     
                                               -------------  ------------- 
                                                                            
                    ASSETS                                                  
Cash and investments                           $      65,916  $      46,619 
Accounts receivable                                   11,254         14,432 
Other current assets                                   6,506          5,602 
Property and equipment, net                           28,763         28,631 
Intangible assets, net                                 1,147          1,262 
Deferred tax                                          30,549         30,549 
Other assets                                           4,477          3,757 
                                               -------------  ------------- 
    Total assets                               $     148,612  $     130,852 
                                               =============  ============= 
                                                                            
     LIABILITIES AND STOCKHOLDERS' EQUITY                                   
Liabilities:                                                                
  Accounts payable and accrued expenses        $      13,665  $      16,366 
  Deferred revenue                                     1,422          1,532 
                                               -------------  ------------- 
    Total liabilities                                 15,087         17,898 
                                               -------------  ------------- 
                                                                            
Stockholders' equity:                                                       
  Common stock                                            50             50 
  Additional paid-in capital                         658,111        649,694 
  Treasury Stock                                    (159,522)      (155,260)
  Accumulated deficit                               (365,262)      (381,781)
  Unrealized gain on investments                         148            251 
                                               -------------  ------------- 
    Total stockholders' equity                       133,525        112,954 
                                               -------------  ------------- 
    Total liabilities and stockholders' equity $     148,612  $     130,852 
                                               =============  ============= 

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