SOURCE:
Stamps.com
2008-07-23 15:30:00
Stamps.com Announces Second Quarter 2008 Results
Stamps.com Announces Second Quarter 2008 Results
Subscriber-Related Revenue up 14%; Total Revenue $21.4 Million; GAAP Net Income of $1.3 Million; Non-GAAP Diluted Earnings per Share of $0.15
LOS ANGELES, CA–(EMWNews – July 23, 2008) – Stamps.com® (
intelligent online postage alternative to a postage meter, today
announced results for the second quarter ended June 30, 2008.
For the second quarter:
-- Total revenue was $21.4 million, unchanged versus the second quarter
of 2007.
-- PC Postage® subscriber-related revenue, including service revenue,
store revenue and insurance revenue, was $18.5 million, up 14% from the
second quarter of 2007.
-- Total gross margin was 75% versus 70% in the second quarter of 2007.
PC Postage subscriber-related revenue gross margin was 82% versus 80% in
the second quarter of 2007, and PhotoStamps gross margin was 27% versus 34%
in the second quarter of 2007.
-- Total spending on small business PC Postage customer acquisition,
excluding spending on the enhanced promotion channel (which consists of
online programs where additional promotions are offered to customers), was
$5.6 million, up 37% from the same quarter last year, as Stamps.com
continued to invest in its PC Postage sales and marketing for the long-
term.
-- The Company continued its program to increase profitability in the
PhotoStamps business by reducing the overall level of sales and marketing
in this area by approximately 55% versus the second quarter of 2007; this
resulted in PhotoStamps revenue of $2.9 million, down 38% versus the second
quarter of 2007.
-- GAAP net income was $1.3 million, or $0.07 per fully diluted share,
after the effects of a $0.9 million non-cash stock-based compensation
expense, and a $0.7 million one time litigation charge related to a lawsuit
emanating from the Company's iShip operations which were divested in 2001.
-- Excluding the FASB Statement 123R expense and the litigation charge,
non-GAAP net income per fully diluted share was $0.15.
“We were encouraged to see strong performance in our PC Postage business,”
said Ken McBride, Stamps.com president and CEO. “Our PC Postage
subscriber-related revenue grew at the fastest year-over-year rate in six
quarters, and our gross customer acquisition remained strong. Excluding
the enhanced promotion channel, we increased the number of customers that
paid for our service by 16% versus the second quarter of 2007. For
PhotoStamps, we continued our program to increase profitability with a
smaller and more focused marketing plan, and as a result the profitability
for that business line was improved versus the same quarter last year.”
Second Quarter 2008 Detailed Results
Stamps.com reported 2008 second quarter GAAP net income of $1.31 million.
On a per share basis, total 2008 second quarter GAAP net income was $0.07
based on fully diluted shares outstanding of 19.7 million. Second quarter
GAAP net income was reduced by costs of $0.90 million for a FASB 123R
non-cash stock-based compensation expense, and $0.71 million for a one time
litigation charge related to a lawsuit emanating from the Company’s iShip
operations which were divested in 2001. The $0.90 million stock-based
compensation expense and the $0.71 million litigation charge were allocated
among cost of sales, sales and marketing, research and development, and
general and administrative as shown in the following table:
All amounts in millions except Non-GAAP FASB Litigation GAAP
per share or margin data: Amounts 123R Charge Amounts
-------- -------- ---------- --------
Cost of Sales $ 5.35 $ 0.07 $ - $ 5.42
Research & Development 1.96 0.15 - 2.10
Sales & Marketing 8.61 0.17 - 8.78
General & Administrative 3.23 0.52 0.71 4.46
-------- -------- ---------- --------
Total Expenses 19.15 0.90 0.71 20.76
Gross margin 75.0% -0.3% - 74.7%
-------- -------- ---------- --------
Net Income $ 2.92 $ (0.90) $ (0.71) $ 1.31
======== ======== ========== ========
-------- -------- ---------- --------
On a diluted per share basis $ 0.15 $ (0.05) $ (0.04) $ 0.07
======== ======== ========== ========
Shares used in per share
calculation 19.71 19.71 19.71 19.71
Excluding the FASB Statement 123R expense and the litigation charge, 2008
second quarter non-GAAP net income was $2.92 million or $0.15 per fully
diluted share based on fully diluted shares outstanding of 19.7 million.
This compares to 2007 second quarter non-GAAP net income per fully diluted
share excluding 123R expenses of $0.16. Thus, non-GAAP second quarter
diluted earnings per share excluding 123R-related expenses were down 6%
versus the same quarter last year.
PhotoStamps
During the second quarter, approximately 171 thousand sheets, or
approximately 3.4 million individual PhotoStamps, were shipped to
customers. Since the beginning of the second market test in May 2005, more
than 3 million sheets, or more than 60 million individual PhotoStamps, have
been shipped to customers. During the second quarter, the Company continued
its program to increase profitability in the PhotoStamps business, reducing
the overall level of sales and marketing costs in this area by
approximately 55% versus the second quarter of 2007. As a result of the
reduced level of sales and marketing activity, total second quarter
PhotoStamps revenue was $2.9 million, a decrease of 38% versus the second
quarter of 2007.
Net Operating Losses (NOL) and Protective Measures
Stamps.com currently has approximately $245M in Federal NOLs and $145M in
State NOLs, with a potential value of up to $95M 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 June 30, 2008, the Company was at
an approximately 35% level compared with the 50% level that would trigger
impairment of our NOL asset.
During the second quarter 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 strongly urges that any stockholder contemplating owning more
than 775,000 shares contact the Company before doing so.
Share Repurchase
During the second quarter of 2008 the Company proposed and implemented its
NOL Protective Measures, and following that implementation the Company
updated its estimated shift in ownership under Section 382. As a result of
these activities, and as a result of market conditions, the Company did not
repurchase any shares of stock during the second quarter. The Company’s
existing share repurchase program expires on August 3, 2008.
On July 16, 2008, Stamps.com’s Board of Directors approved a new share
repurchase program authorizing the Company to purchase up to 2.0 million
shares of Stamps.com stock over the next seven months. The timing of
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 NOL 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 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.
Business Outlook
Stamps.com currently expects total 2008 revenue to be $80 to $90 million.
2008 GAAP net income per share is expected to be $0.55 to $0.65, including
approximately $3.4 million of 2008 FASB Statement 123R stock-based
compensation expense, the first quarter $0.5 million asset write-off, the
second quarter $0.7 million litigation charge, and a $3.7 million deferred
tax benefit. Excluding the FASB Statement 123R expenses, the asset
write-off, the litigation charge, and the income tax benefit, non-GAAP 2008
net income per fully diluted share is expected to be $0.60 to $0.70.
Company Customer Metrics
A complete set of the quarterly customer metrics for the past two fiscal
years and through the current quarter is available currently at
http://investor.stamps.com (under a tab on the left side called Company
Metrics, Current 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’s online postage service 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 PC Postage partnerships with Avery Dennison, Microsoft,
EarthLink, HP, Office Depot, 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. PhotoStamps is
currently available under authorization of the U.S. Postal Service for its
fourth phase market test with an authorization through May 16, 2009.
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 NFL®, Collegiate, and now the
limited edition American
Idol® collection. Since launching PhotoStamps in May 2005, more than
60 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.
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 accounting standard FASB 123R. The Company believes the
non-GAAP measures that exclude stock-based compensation, asset write-offs,
litigation charges, and income tax benefits 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.
“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, 2007, 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 Six Months ended
June 30, June 30,
2008 2007 2008 2007
--------- --------- -------- ---------
Revenues:
Subscription $ 15,577 $ 13,506 $ 30,774 $ 27,167
Product 2,583 2,457 5,066 4,815
Insurance 377 356 765 730
PhotoStamps 2,873 4,635 5,877 7,811
Other - 453 - 906
--------- --------- -------- ---------
Total revenues 21,410 21,407 42,482 41,429
Cost of revenues:
Subscription 2,262 2,411 5,004 4,754
Product 948 839 1,828 1,638
Insurance 119 111 239 226
PhotoStamps 2,092 3,058 4,219 5,141
Other - 26 - 52
--------- --------- -------- ---------
Total cost of revenues 5,421 6,445 11,290 11,811
--------- --------- -------- ---------
Gross profit 15,989 14,962 31,192 29,618
Operating expenses:
Sales and marketing 8,780 7,926 17,403 15,757
Research and development 2,102 2,077 4,045 4,222
General and administrative 4,457 3,218 8,400 5,965
--------- --------- -------- ---------
Total operating expenses 15,339 13,221 29,848 25,944
--------- --------- -------- ---------
Income from operations 650 1,741 1,344 3,674
Other income, net:
Interest income 736 1,174 1,653 2,387
Other income - - 21 -
--------- --------- -------- ---------
Total other income, net 736 1,174 1,674 2,387
--------- --------- -------- ---------
Pre-tax income 1,386 2,915 3,018 6,061
Income tax expense (benefit) 80 115 (3,486) 207
--------- --------- -------- ---------
Net income $ 1,306 $ 2,800 $ 6,504 $ 5,854
========= ========= ======== =========
Net income per share:
Basic $ 0.07 $ 0.13 $ 0.33 $ 0.27
========= ========= ======== =========
Diluted $ 0.07 $ 0.13 $ 0.33 $ 0.27
========= ========= ======== =========
Weighted average shares outstanding:
Basic 19,382 21,352 19,553 21,610
========= ========= ======== =========
Diluted 19,712 21,742 19,831 22,034
========= ========= ======== =========
CONDENSED BALANCE SHEETS
(in thousands)
June 30, December 31,
2008 2007
------------ ------------
ASSETS
Cash and investments $ 91,379 $ 90,823
Trade accounts receivable 2,954 2,519
Other accounts receivable 501 1,209
Other current assets 3,051 2,489
Property and equipment, net 3,271 3,790
Intangible assets, net 510 871
Deferred tax 3,671 -
Other assets 4,058 3,252
------------ ------------
Total assets $ 109,395 $ 104,953
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 11,067 $ 9,935
Deferred revenue 2,366 $ 2,576
------------ ------------
Total liabilities 13,433 12,511
------------ ------------
Stockholders' equity:
Common stock 47 47
Additional paid-in capital 624,802 622,781
Treasury Stock (68,237) (63,737)
Accumulated deficit (460,051) (466,555)
Unrealized loss on investments (599) (94)
------------ ------------
Total stockholders' equity 95,962 92,442
------------ ------------
Total liabilities and stockholders' equity $ 109,395 $ 104,953
============ ============
| Stamps.com Investor Contact: Stamps.com Investor Relations (310) 482-5830 http://investor.stamps.com Press Contact: |
|
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