-- Total revenue was $22.3 million, down 8% versus the fourth quarter of 2007. -- PC Postage® subscriber-related revenue, including service revenue, store revenue and insurance revenue, was $18.3 million, up 4% from the fourth quarter of 2007. Excluding the enhanced promotion channel (which consists of online programs where additional promotions are offered to customers), subscriber-related revenue was $16.2 million, up 8% from the fourth quarter of 2007. -- Total gross margin was 70.5% versus 67.7% in the fourth quarter of 2007. PC Postage subscriber-related revenue gross margin was 79.5% versus 79.8% in the fourth quarter of 2007, and PhotoStamps gross margin was 29.2% versus 35.4% in the fourth quarter of 2007. -- Total spending on small business PC Postage customer acquisition, excluding spending on the enhanced promotion channel, was $6.2 million, up 9% from the same quarter last year. -- The Company continued its program to increase profitability in the PhotoStamps business by reducing the overall level of sales and marketing costs in this area by approximately 64% versus the fourth quarter of 2007; the lower sales and marketing spending level contributed to a 39% decline in fourth quarter PhotoStamps revenue versus the fourth quarter of 2007. -- GAAP net income was $1.6 million, or $0.09 per fully diluted share. This includes a $0.8 million non-cash stock-based compensation expense, a $0.3 million adjustment to a prior litigation charge, and a $0.2 million adjustment resulting from the temporary suspension of the Company's ability to utilize its net operating losses for California income tax purposes. -- Excluding the FASB Statement 123R expense, the litigation charge and the income tax adjustment, non-GAAP income from operations was $2.4 million, up 4% versus the fourth quarter of 2007, and non-GAAP net income per fully diluted share was $0.16, flat versus the fourth quarter of 2007."In light of the tough macroeconomic environment, we were pleased to see reasonable performance in our PC Postage revenue and earnings during the fourth quarter," said Ken McBride, Stamps.com president and CEO. "In particular our PC Postage service fees, excluding the enhanced promotion channel, were up 10% during the fourth quarter while our total business operating earnings grew at 4% versus the fourth quarter of 2007. We also saw improved customer acquisition in our PC Postage business during the fourth quarter versus the third quarter of 2008. Overall, we believe that our core PC postage business is still a very stable and predictable one and we expect that this recurring revenue business will allow us to continue to produce solid earnings in tough times." Fourth Quarter 2008 Detailed Results Stamps.com reported 2008 fourth quarter GAAP net income of $1.6 million. On a per share basis, total 2008 fourth quarter GAAP net income was $0.09 based on fully diluted shares outstanding of 18.0 million. Fourth quarter GAAP net income was reduced by a non-cash cost of $0.8 million for FASB 123R stock-based compensation expense, and by $0.3 million for an adjustment to the litigation charge which was previously included in the third quarter of 2008. Fourth quarter GAAP net income was also reduced by an income tax adjustment of $0.2 million resulting from the temporary suspension of the Company's ability to utilize its net operating losses for California income tax purposes based on new legislation which was signed on September 23, 2008 and is effective for tax years 2008 and 2009. Non-GAAP and GAAP amounts are reconciled in the following table:
Fourth Quarter Fiscal 2008 All amounts in Income millions except per Non-GAAP FASB Litigation Tax GAAP share or margin data: Amounts 123R Charges Adjustment Amounts Cost of Sales $ 6.51 $ 0.06 $ - $ - $ 6.57 Research & Development 1.99 0.15 - - 2.14 Sales & Marketing 8.28 0.20 - - 8.48 General & Administrative 3.14 0.37 0.25 - 3.76 --------- --------- --------- --------- -------- Total Expenses 19.92 0.78 0.25 - 20.95 Gross margin 70.8% -0.3% - - 70.5% Income from Operations 2.36 (0.78) (0.25) - 1.33 Interest and Other Income 0.54 - - - 0.54 --------- --------- --------- --------- -------- Pre-Tax Income 2.90 (0.78) (0.25) - 1.87 Provision for Income Taxes (0.10) - - (0.17) (0.27) --------- --------- --------- --------- -------- Net Income $ 2.80 $ (0.78) $ (0.25) $ (0.17) $ 1.60 ========= ========= ========= ========= ======== --------- --------- --------- --------- -------- On a diluted per share basis $ 0.16 $ (0.04) $ (0.01) $ (0.01) $ 0.09 ========= ========= ========= ========= ======== Shares used in per share calculation 17.99 17.99 17.99 17.99 17.99Excluding the FASB Statement 123R expense, litigation charge adjustment, and income tax adjustment, 2008 fourth quarter non-GAAP net income was $2.8 million or $0.16 per fully diluted share based on fully diluted shares outstanding of 18.0 million. This compares to 2007 fourth quarter non-GAAP net income per fully diluted share excluding 123R expenses of $0.16 (there were no comparable litigation charges or income tax adjustments in the 2007 period). Thus, non-GAAP fourth quarter diluted earnings per share excluding 123R-related expenses were flat versus the same quarter last year. Fiscal 2008 Detailed Results Total fiscal 2008 revenue was $84.9 million, a decrease of 1% versus revenue of $85.8 million for fiscal 2007. Total 2008 PC Postage subscriber related revenue, including service revenue, store revenue and insurance revenue, was $73.0 million, up 9% versus subscriber related revenue in 2007. Excluding the enhanced promotion channel, subscriber-related revenue in 2008 was $63.9 million, up 11% versus 2007. Total 2008 PhotoStamps revenue was $11.9 million, down 34% versus PhotoStamps revenue of $17.9 million in 2007. Total other revenue in 2008 was immaterial versus $0.9 million in 2007. Total 2008 GAAP net income was $10.2 million, including approximately $3.3 million of FASB Statement 123R stock-based compensation expense; $0.4 million of asset write-offs; $3.7 million of deferred tax benefit; $1.0 million of litigation charges related to a lawsuit emanating from the Company's iShip operations and an expected settlement in other litigation matters; and $0.5 million in additional California income tax relating to the temporary suspension of the Company's ability to utilize its net operating losses for California income tax purposes. On a per share basis, total 2008 GAAP net income was $0.53 based on fully diluted shares outstanding for the year of 19.3 million. Excluding the FASB Statement 123R expense, the asset write-offs, the deferred tax benefit, the litigation charges and the additional California income tax, 2008 non-GAAP net income was $11.8 million. On a per share basis, 2008 non-GAAP net income per fully diluted share was $0.61 based on 2008 fully diluted shares outstanding of 19.3 million. Share Repurchase During the fourth quarter of 2008 the Company repurchased 1.9 million shares for a total cost of $19.5 million under the share repurchase plan originally approved by the Board of Directors on July 16, 2008. From the third quarter 2008 through today, the Company has repurchased 2.5 million shares for a total cost of $24.8 million under the July 2008 plan. On February 5, 2009, Stamps.com's Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to 2.5 million shares of Stamps.com stock over the next six months. The timing of share 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. PhotoStamps During the fourth quarter, approximately 243 thousand sheets were shipped to customers. 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 64% versus the fourth quarter of 2007. As a result of the reduced level of sales and marketing activity, total fourth quarter PhotoStamps revenue was $4.0 million, a decrease of 39% versus the fourth quarter of 2007. Business Outlook Stamps.com currently expects total 2009 revenue to be $80 to $90 million. Fiscal 2009 GAAP net income per share is expected to be $0.20 to $0.40, including approximately $3 million of 2009 FASB Statement 123R stock-based compensation expense and $0.5 - $1.0 million of expected taxes resulting from the temporary suspension of the Company's ability to utilize its net operating losses for California income tax purposes. Excluding the FASB Statement 123R expenses and the additional California income taxes, non-GAAP 2009 net income per fully diluted share is expected to be $0.40 to $0.60. Net Operating Losses (NOL) and Protective Measures Stamps.com currently has approximately $240M in Federal NOLs and $150M 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 December 31, 2008 the Company was at an approximately 34% level compared with the 50% level that would trigger impairment of our NOL asset. During the second quarter of 2008, 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 currently has 17.0 million shares outstanding and therefore ownership of 848 thousand shares or greater would currently constitute a "5% shareholder." Stamps.com strongly urges that any stockholder contemplating owning more than 675,000 shares contact the Company before doing so. Resignation of Board Member Kevin Douglas, a Company director since July 2003, provided notice to the Company of his resignation of service from the Company's Board of Directors on February 6, 2009 to be effective following the Board's next regularly scheduled meeting on March 13, 2009. Mr. Douglas resigned to focus on other activities, and his notice of resignation was not related to any disagreement with Company management, with other Board members, or with Stamps.com Inc.'s accounting or operating policies. Company Customer Metrics A complete set of the quarterly customer metrics for the past three fiscal years 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 (
STAMPS.COM INC. STATEMENTS OF OPERATIONS (in thousands, except per share data: unaudited) Three Months ended Twelve Months ended December 31, December 31, 2008 2007 2008 2007 ------------ ------------ ------------ ------------- Revenues: Subscription $ 15,347 $ 14,621 $ 61,556 $ 55,903 Product 2,515 2,525 9,906 9,636 Insurance 433 410 1,574 1,478 PhotoStamps 3,979 6,542 11,876 17,887 Other - - - 907 ------------ ------------ ------------ ------------- Total revenues 22,274 24,098 84,912 85,811 Cost of revenues: Subscription 2,735 2,536 10,365 9,659 Product 883 888 3,520 3,286 Insurance 135 124 498 455 PhotoStamps 2,817 4,228 8,525 11,854 Other - - - 52 ------------ ------------ ------------ ------------- Total cost of revenues 6,570 7,776 22,908 25,306 ------------ ------------ ------------ ------------- Gross profit 15,704 16,322 62,004 60,505 Operating expenses: Sales and marketing 8,481 9,441 33,538 33,115 Research and development 2,137 1,938 8,425 8,260 General and administrative 3,761 3,459 15,581 12,538 ------------ ------------ ------------ ------------- Total operating expenses 14,379 14,838 57,544 53,913 ------------ ------------ ------------ ------------- Income from operations 1,325 1,484 4,460 6,592 Other income, net: Interest income 542 1,012 2,892 4,461 Other income - - 26 - ------------ ------------ ------------ ------------- Total other income, net 542 1,012 2,918 4,461 ------------ ------------ ------------ ------------- Pre-tax income 1,867 2,496 7,378 11,053 Provision for income taxes 270 130 (2,786) 387 ------------ ------------ ------------ ------------- Net income $ 1,597 $ 2,366 $ 10,164 $ 10,666 ============ ============ ============ ============= Net income per share: Basic $ 0.09 $ 0.12 $ 0.53 $ 0.51 ============ ============ ============ ============= Diluted $ 0.09 $ 0.12 $ 0.53 $ 0.50 ============ ============ ============ ============= Weighted average Shares outstanding: Basic 17,820 19,805 19,081 20,815 ============ ============ ============ ============= Diluted 17,994 20,131 19,345 21,194 ============ ============ ============ ============= CONDENSED BALANCE SHEETS (in thousands) December 31, December 31, 2008 2007 ------------ ------------ ASSETS Cash and investments $ 74,059 $ 90,823 Trade accounts receivable 2,962 2,519 Other accounts receivable 1,201 1,209 Other current assets 4,426 2,489 Property and equipment, net 3,086 3,790 Intangible assets, net 505 871 Other assets 7,019 3,252 ------------ ------------ Total assets $ 93,258 $ 104,953 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 11,174 $ 9,935 Deferred revenue $ 3,743 $ 2,576 ------------ ------------ Total liabilities 14,917 12,511 ------------ ------------ Stockholders' equity: Common stock 47 47 Additional paid-in capital 626,810 622,781 Treasury Stock (90,613) (63,737) Accumulated deficit (456,391) (466,555) Unrealized loss on investments (1,512) (94) ------------ ------------ Total stockholders' equity 78,341 92,442 ------------ ------------ Total liabilities and stockholders' equity $ 93,258 $ 104,953 ============ ============
Contact Information: Stamps.com Investor Contact: Stamps.com Investor Relations (310) 482-5830 http://investor.stamps.com Press Contact: Brew PR (310) 600-7160 dena@brewpr.com