Stamps.com Inc. (STMP) filed Quarterly Report for the period ended 2009-09-30.
Stamps.com provides easy convenient and cost-effective Internet -based services for mailing or shipping letters packages or parcelsanywhere in the United States and at anytime. Their core mailing and shipping services are designed to allow individual consumers or employees of small businesses or larger enterprises to select a carrier print US postage or shipping labels from multiple carriers schedule a pick-up track a package and apply enterprise-wide business rules to manage and account for mailing and shipping costs. Stamps.com Inc. has a market cap of $163.7 million; its shares were traded at around $10.14 with a P/E ratio of 26.7 and P/S ratio of 1.9.
Highlight of Business Operations:
Total revenue was $20.2 million both for the third quarter of 2009 and 2008. Total revenue during the nine months ended September 30, 2009 was $60.4 million, a decrease of 3% from $62.6 million for the nine months ended September 30, 2008. PC Postage subscriber related revenue, including service revenue, product revenue and insurance revenue, in the third quarter of 2009 was $18.3 million, an increase of 1% from $18.1 million in the third quarter of 2008, and was $54.8 million in the nine months ended September 30, 2009, an increase of less than 1% from $54.7 million in the nine months ended September 30, 2008. PhotoStamps revenue in the third quarter of 2009 was $1.9 million, a decrease of 6% from $2.0 million in the third quarter of 2008, and was $5.6 million in the nine months ended September 30, 2009, a decrease of 29% from $7.9 million in the nine months ended September 30, 2008.
Primarily as a result of this decision, we estimate that subscriber related revenue for customers acquired through our non-enhanced promotion channels in the third quarter of 2009 was $16.8 million, an increase of 5% from $16.0 million in the third quarter of 2008, and $50.0 million in the nine months ended September 30, 2009, an increase of 5% from $47.7 million in the nine months ended September 30, 2008, while subscriber related revenue for customers acquired through our enhanced promotion channel in the third quarter of 2009 was $1.6 million, a decrease of 27% from $2.1 million in the third quarter of 2008, and $4.9 million in the nine months ended September 30, 2009, a decrease of 31% from $7.0 million in the nine months ended September 30, 2008.
Product revenue increased 9% to $2.5 million in the third quarter of 2009 from $2.3 million in the third quarter of 2008, and increased 5% to $7.7 million in the nine months ended September 30, 2009 from $7.4 million in the nine months ended September 30, 2008. The increase was primarily attributable to the following: (1) growth in our paid customer base; (2) marketing our Supplies Store to our existing customer base; (3) the additional SKUs we added to our Supplies Store; and (4) growth in postage printed, which helps drive sales of consumable supplies such as labels. Total postage printed by customers using our service during the third quarter of 2009 was $86 million, a 12% increase from the $77 million printed during the third quarter of 2008. As a percentage of total revenue, product revenue increased one percentage point to approximately 13% both in the third quarter of 2009 and the nine months ended September 30, 2009 from approximately 12% in the third quarter of 2008 and the nine months ended September 30, 2008.
As previously announced, we reduced our PhotoStamps sales and marketing spending in the third quarter of 2009 compared with the third quarter of 2008 and plan to continue to reduce our sales and marketing spending on PhotoStamps in future periods to improve profitability in that business. As a result of this decision, PhotoStamps revenue decreased 6% to $1.9 million in the third quarter of 2009 from $2.0 million in the third quarter of 2008 and decreased 29% to $5.6 million in the nine months ended September 30, 2009 from $7.9 million in the nine months ended September 30, 2008. As a percentage of total revenue, PhotoStamps revenue decreased approximately one percentage point to 9% in the third quarter of 2009 from 10% in the third quarter of 2008 and decreased approximately four percentage points to 9% in the nine months ended September 30, 2009 from 13% in the nine months ended September 30, 2008. Total PhotoStamps sheets shipped during the third quarter of 2009 was approximately 114,000, a 5% decrease compared to 120,000 in the third quarter of 2008. Average revenue per sheet shipped in the third quarter of 2009 was $16.70 compared to $16.77 in the third quarter of 2008.
Cost of service revenue increased 11% to $2.9 million in the third quarter of 2009 from $2.6 million in the third quarter 2008. The increase during the quarter is primarily attributable to an increase in customer service costs aimed at improving our overall customer experience. Cost of service revenue increased 15% to $8.8 million in the nine months ended September 30, 2009 from $7.6 million in the nine months ended September 30, 2008. This increase is primarily attributable to a change in our assumption of future coupon redemptions relating to our promotional expense, which provided a one-time benefit during the second quarter of 2008 of approximately $266,000. Promotional expense, which represents a material portion of total cost of service revenue, is expensed in the period in which a customer qualifies for the promotion, while the revenue associated with the acquired customer is earned over the customer's lifetime. As a result, promotional expense for newly acquired customers may exceed the revenue earned from those customers in that period. Promotional expense was $449,000 and $287,000 in the three months ended September 30, 2009 and 2008, respectively, and $1.2 million and $486,000 in the nine months ended September 30, 2009 and 2008, respectively. As a percentage of total revenue, cost of service revenue increased approximately two percentage points to 15% in the third quarter of 2009 from 13% in the third quarter of 2008 and increased approximately three percentage points to 15% in the nine months ended September 30, 2009 from 12% in the nine months ended September 30, 2008.
Cost of insurance revenue decreased 6% to $116,000 in the third quarter of 2009 from $124,000 in the third quarter of 2008 and increased less than 1% to $364,000 in the nine months ended September 30, 2009 from $363,000 in the nine months ended September 30, 2008. As a percentage of total revenue, cost of insurance revenue was unchanged at approximately 1% in the three and nine months ended September 30, 2009 and 2008.
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