-- Excluding the enhanced promotion channel, PC Postage revenue was $18.2
million, up 8% from the third quarter of 2009.
-- Total PC Postage revenue including the enhanced promotion channel
(which consists of online programs where additional promotions are
provided directly by marketing partners) was $19.2 million, up 5%
from the third quarter of 2009.
-- PhotoStamps revenue was $1.4 million, down 24% compared to the third
quarter of 2009.
-- Including the decline in PhotoStamps, total revenue was $20.7 million,
up 2% compared to the third quarter of 2009.
-- PC Postage gross margin was 77.3%, PhotoStamps gross margin was 21.0%
and total gross margin was 73.4%.
-- GAAP net income was $2.7 million, or $0.19 per fully diluted share.
This includes $0.8 million stock-based compensation expense.
-- Excluding the stock-based compensation expense, non-GAAP income from
operations was $3.4 million, non-GAAP net income was $3.5 million and
non-GAAP net income per fully diluted share was $0.24.
"For the quarter, our non-GAAP earnings per share was up by 44%, and this
was the highest level of quarterly non-GAAP earnings per share we have
generated in the Company's history," said Ken McBride, Stamps.com president
and CEO. "We continue to see good results across the board, including our
non-enhanced promotion SOHO business, our enterprise area, and our high
volume shipping area. As a result of the strength in our businesses, we
raised our 2010 Non-GAAP EPS guidance again today."
Third quarter 2010 Detailed Results
Stamps.com reported 2010 third quarter GAAP net income of $2.7 million. On
a per share basis, total 2010 third quarter GAAP net income was $0.19 based
on fully diluted shares outstanding of 14.5 million. Third quarter GAAP
net income was reduced by $0.8 million for stock-based compensation
expense. The $0.8 million stock-based compensation expense was allocated
among cost of sales, research and development, sales and marketing, and
general and administrative as shown in the following table:
Third Quarter Fiscal 2010
All amounts in millions except Non-GAAP Stock-Based GAAP
per share or margin data: Amounts Comp. Exp. Amounts
Cost of Sales $ 5.42 $ 0.08 $ 5.50
Research & Development 2.03 0.17 2.20
Sales & Marketing 6.78 0.20 6.98
General & Administrative 3.09 0.32 3.41
----------- ----------- -----------
Total Expenses 17.33 0.77 18.10
Gross Margin 73.8% (0.4%) 73.4%
Income (Loss) from Operations 3.36 (0.77) 2.59
Interest and Other Income 0.22 - 0.22
----------- ----------- -----------
Pre-Tax Income (Loss) 3.58 (0.77) 2.81
Provision for Income Taxes (0.08) - (0.08)
----------- ----------- -----------
Net Income $ 3.50 $ (0.77) $ 2.73
=========== =========== ===========
----------- ----------- -----------
On a diluted per share basis $ 0.24 $ (0.05) $ 0.19
=========== =========== ===========
Shares used in per share calculation 14.45 14.45 14.45
Excluding the stock-based compensation expense, 2010 third quarter non-GAAP net income was $3.5 million or $0.24 per fully diluted share based on fully diluted shares outstanding of 14.5 million. This compares to 2009 third quarter non-GAAP net income of $2.7 million and non-GAAP net income per fully diluted share of $0.17. Thus, non-GAAP third quarter diluted earnings per share increased by 44% compared to the same quarter last year. Dividend In a separate release today, the Stamps.com Board of Directors announced that it has declared a one-time special dividend of $2.00 per share payable to shareholders of record as of the close of business on November 11, 2010, to be paid on December 2, 2010. Share Repurchase Over the past four quarters, the Company has repurchased a total of 1.7 million shares for a total cost of $15.0 million. During the third quarter, the Company repurchased a total of 87 thousand shares for a total cost of $0.9 million. The Company's current repurchase plan remains in effect through February of 2011 with a remaining authorization of approximately 2 million shares. 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 net operating loss 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 may be subject to limitations imposed on such purchases by applicable securities laws and regulations and the rules of the Nasdaq Stock Market. Net Operating Loss (NOL) Protective Measures Are Suspended Stamps.com currently has approximately $220 million in Federal NOLs and $140 million in State NOLs. The Company estimates that as of September 30, 2010, its ownership shift was approximately 22% compared with the 50% level that could trigger impairment of its NOL asset under Internal Revenue Code Section 382 rules. As a result of the decline in the ownership shift, the Board of Directors suspended the NOL Protective Measures by approving a waiver, effective July 22, 2010, from the NOL Protective Measures to all persons and entities, including companies and investment firms. As a result, shareholders of the Company are allowed to become 5% shareholders and existing 5% shareholders are allowed to make additional purchases of the Company's stock. Business Outlook Stamps.com currently expects total 2010 revenue to be $80 to $90 million. 2010 GAAP net income per share is expected to be $0.20 to $0.40, including approximately $3.0 million of stock-based compensation expense, $5.2 million of legal settlements and reserves, $4.0 million non-cash tax benefit and approximately $3.0 million of expenses associated with the special dividend and its impact on employee stock options. Excluding the stock-based compensation expense, legal settlements and reserves, tax benefits and expenses associated with the special dividend, non-GAAP 2010 net income per fully diluted share is expected to be $0.70 to $0.90. This compares to previous expectations for non-GAAP 2010 net income per fully diluted share of $0.65 to $0.85 and original guidance given in February 2010 of $0.50 to $0.70. Company Customer Metrics A complete set of the quarterly customer metrics for the past four fiscal years and current fiscal year to date is available currently 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 (
STAMPS.COM INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data: unaudited)
Three Months ended Nine Months ended
September 30, September 30,
2010 2009 2010 2009
--------- --------- -------- ---------
Revenues:
Service $ 15,989 $ 15,401 $ 48,179 $ 45,922
Product 2,736 2,536 8,618 7,733
Insurance 496 377 1,282 1,176
PhotoStamps 1,449 1,901 4,766 5,609
Other 19 1 22 6
--------- --------- -------- ---------
Total revenues 20,689 20,216 62,867 60,446
Cost of revenues:
Service 3,208 2,926 9,944 8,806
Product 993 940 3,213 2,915
Insurance 158 116 390 364
PhotoStamps 1,145 1,542 3,595 4,363
--------- --------- -------- ---------
Total cost of revenues 5,504 5,524 17,142 16,448
--------- --------- -------- ---------
Gross profit 15,185 14,692 45,725 43,998
Operating expenses:
Sales and marketing 6,978 7,359 22,584 23,650
Research and development 2,205 2,198 6,594 6,624
General and administrative 3,410 3,391 9,901 9,961
Legal Settlements and Reserves - - 5,211 -
--------- --------- -------- ---------
Total operating expenses 12,593 12,948 44,290 40,235
--------- --------- -------- ---------
Income from operations 2,592 1,744 1,435 3,763
Interest and other income, net 219 208 620 797
--------- --------- -------- ---------
Income before income taxes 2,811 1,952 2,055 4,560
Income tax (benefit) expense 82 221 (3,760) 555
--------- --------- -------- ---------
Net income $ 2,729 $ 1,731 $ 5,815 $ 4,005
========= ========= ======== =========
Net income per share:
Basic $ 0.19 $ 0.11 $ 0.40 $ 0.24
========= ========= ======== =========
Diluted $ 0.19 $ 0.11 $ 0.39 $ 0.24
========= ========= ======== =========
Weighted average shares
outstanding:
Basic 14,280 16,035 14,567 16,397
========= ========= ======== =========
Diluted 14,452 16,162 14,725 16,527
--------- --------- -------- ---------
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, September 30, 2010 unaudited)
September 30, December 31,
2010 2009
------------- -------------
ASSETS
Cash and investments $ 68,328 $ 71,745
Accounts receivable 4,190 4,367
Other current assets 3,779 3,288
Property and equipment, net 2,404 2,102
Intangible assets, net 897 498
Deferred tax 7,650 3,671
Other assets 2,933 3,587
------------- -------------
Total assets $ 90,181 $ 89,258
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 14,399 $ 9,583
Deferred revenue 4,292 4,070
------------- -------------
Total liabilities 18,691 13,653
Stockholders' equity:
Common stock 47 47
Additional paid-in capital 633,302 630,322
Treasury Stock (118,151) (104,344)
Accumulated deficit (444,399) (450,214)
Unrealized gain (loss) on investments 691 (206)
------------- -------------
Total stockholders' equity 71,490 75,605
------------- -------------
Total liabilities and stockholders'
equity $ 90,181 $ 89,258
------------- -------------