Total Revenue Including Non-Core Areas up 20% and Non-GAAP Diluted Earnings per Share of $0.35
LOS ANGELES, CA--(Marketwire - Feb 9, 2012) - Stamps.com® (
Highlights for the fourth quarter:
"We showed continued strength in the fourth quarter with record results in several areas of our business," said Ken McBride, Stamps.com's Chairman and CEO. "We continued to see accelerating growth in our core PC Postage business with 14%, 23%, 25% and 27% year-over-year revenue growth in the first through fourth quarters of 2011, respectively. We also set new records in many of our key customer metrics including total paid customers, average revenue per customer, new customers acquired, high-volume shipping postage printed, and total customer postage printed. As we enter 2012, we feel that we are well positioned in each of our core business lines."
Fourth Quarter 2011 Detailed Results
Non-core PC Postage revenue from the enhanced promotion channel (online programs where additional promotions are provided directly by marketing partners), was $0.8 million, down 19% versus the fourth quarter of 2010. PhotoStamps revenue was $1.9 million, down 20% versus the fourth quarter of 2010, as the Company continues to reduce its investment in this area. PhotoStamps gross margin was 30.2% and total gross margin was 74.4%. During the fourth quarter, cash and investments increased by $18 million and ended the quarter at a total of $69 million.
Fourth quarter 2011 GAAP net income was $13.4 million. On a per share basis, total fourth quarter 2011 GAAP net income was $0.81 based on fully diluted shares outstanding of 16.6 million. Fourth quarter 2011 GAAP net income was reduced by $0.8 million of stock-based compensation expense and increased by a non-cash income tax benefit of $8.5 million resulting from the reversal of a portion of the Company's net deferred tax asset valuation allowance. Non-GAAP and GAAP amounts are reconciled in the following table:
| Fourth Quarter Fiscal 2011 | |||||||||||||||
| All amounts in millions except | Non-GAAP | Stock-Based | Income Tax | GAAP | |||||||||||
| per share or margin data: | Amounts | Comp. Exp. | Benefit | Amounts | |||||||||||
| Cost of Sales | $ | 6.92 | $ | 0.06 | - | $ | 6.98 | ||||||||
| Research & Development | 2.20 | 0.18 | - | 2.38 | |||||||||||
| Sales & Marketing | 9.30 | 0.19 | - | 9.49 | |||||||||||
| General & Administrative | 3.40 | 0.38 | - | 3.79 | |||||||||||
| Total Expenses | 21.82 | 0.81 | 22.64 | ||||||||||||
| Gross Margin | 74.6 | % | (0.2 | %) | - | 74.4 | % | ||||||||
| Income (Loss) from Operations | 5.40 | (0.81 | ) | - | 4.58 | ||||||||||
| Interest and Other Income | 0.13 | - | - | 0.13 | |||||||||||
| Pre-Tax Income (Loss) | 5.52 | (0.81 | ) | - | 4.71 | ||||||||||
| Income Tax Benefit | 0.20 | - | 8.48 | 8.67 | |||||||||||
| Net Income | $ | 5.72 | $ | (0.81 | ) | $ | 8.48 | $ | 13.38 | ||||||
| On a diluted per share basis | $ | 0.35 | $ | (0.05 | ) | $ | 0.51 | $ | 0.81 | ||||||
| Shares used in per share calculation | 16.55 | 16.55 | 16.55 | 16.55 | |||||||||||
Excluding the stock-based compensation expense and non-cash income tax benefit, fourth quarter 2011 non-GAAP net income was $5.7 million or $0.35 per share based on fully diluted shares outstanding of 16.6 million. This compares to fourth quarter 2010 non-GAAP net income of $4.4 million and non-GAAP net income per fully diluted share of $0.30. Thus, non-GAAP fourth quarter 2011 net income and diluted earnings per share increased by 29% and 14%, respectively, compared to the same quarter in 2010.
Fiscal 2011 Detailed Results
Total 2011 revenue was $101.6 million, an increase of 19% versus revenue of $85.5 million in 2010. Total 2011 PC Postage revenue, including service revenue, store revenue and insurance revenue, was $93.3 million, up 19% versus PC Postage revenue of $78.4 million in 2010. Excluding the enhanced promotion channel, core PC Postage revenue in 2011 was $90.2 million, up 22% versus $73.8 million in 2010. Total 2011 PhotoStamps revenue was $8.3 million, up 15% versus PhotoStamps revenue of $7.2 million in 2010.
Total 2011 GAAP net income was $26.3 million, including approximately $3.4 million of stock-based compensation expense and an $8.5 million non-cash tax benefit resulting from the reversal of a portion of the Company's net deferred tax asset valuation allowance. On a per share basis, total 2011 GAAP net income was $1.73 based on fully diluted shares outstanding for the year of 15.2 million. Non-GAAP and GAAP amounts are reconciled in the following table:
| Fiscal Year 2011 | ||||||||||||||
| All amounts in millions except | Non-GAAP | Stock-Based | Income Tax | GAAP | ||||||||||
| per share or margin data: | Amounts | Comp. Exp. | Benefit | Amounts | ||||||||||
| Cost of Sales | $ | 25.93 | $ | 0.28 | - | $ | 26.21 | |||||||
| Research & Development | 8.65 | 0.75 | - | 9.40 | ||||||||||
| Sales & Marketing | 33.80 | 0.76 | - | 34.57 | ||||||||||
| General & Administrative | 12.55 | 1.63 | - | 14.18 | ||||||||||
| Total Expenses | 80.94 | 3.42 | - | 84.36 | ||||||||||
| Gross Margin | 74.5 | % | (0.3 | %) | - | 74.2 | % | |||||||
| Income (Loss) from Operations | 20.65 | (3.42 | ) | - | 17.23 | |||||||||
| Interest and Other Income | 0.56 | - | - | 0.56 | ||||||||||
| Pre-Tax Income (Loss) | 21.21 | (3.42 | ) | - | 17.79 | |||||||||
| Income Tax Benefit | - | - | 8.48 | 8.48 | ||||||||||
| Net Income | $ | 21.21 | $ | (3.42 | ) | $ | 8.48 | $ | 26.27 | |||||
| On a diluted per share basis | $ | 1.40 | $ | (0.23 | ) | $ | 0.56 | $ | 1.73 | |||||
| Shares used in per share calculation | 15.17 | 15.17 | 15.17 | 15.17 | ||||||||||
Excluding the stock-based compensation expense and non-cash income tax benefit, 2011 non-GAAP net income was $21.2 million or $1.40 per share based on fully diluted shares outstanding of 15.2 million. This compares to 2010 non-GAAP net income of $13.7 million and non-GAAP net income per fully diluted share of $0.93. Thus, non-GAAP 2011 diluted earnings per share increased by 50% compared to 2010.
New Corporate Headquarters
On January 23, 2012, we completed the previously announced purchase of two adjacent buildings in El Segundo, California that will serve as the Company's future headquarters. We are currently engaged in a renovation and construction project on the property and expect to move in after substantial completion of the project in 2012. The Company will occupy a portion of the space, with the remaining portion of the space leased to the existing tenants. The purchase of the property and renovations are being funded out of the Company's existing cash and investments.
Management Promotions
On January 13, 2012, the Board of Directors of Stamps.com elected Ken McBride to the offices of Chief Executive Officer and Chairman of the Board of Directors of the Company, Kyle Huebner to the offices of Chief Financial Officer and Co-President of the Company, and James Bortnak to the offices of Co-President and Corporate & Business Development Officer. Additionally on January 13, 2012, Sebastian Buerba was named Chief Marketing Officer, Michael Biswas was named Chief Technology Officer, and John Clem was named Chief Product & Strategy Officer.
Share Repurchase
During 2011 the Company repurchased a total of 426 thousand shares for a total cost of $5.3 million. The Company did not repurchase any shares during the fourth quarter of 2011. On February 2, 2012, the Board of Directors approved a new share repurchase plan effective upon the expiration of the current plan on February 17, 2012, authorizing the Company to repurchase up to 1.0 million shares of Stamps.com stock during the subsequent 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 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.
Business Outlook
Stamps.com currently expects total 2012 revenue to be in a range of $105 to $115 million, and 2012 GAAP net income per share is expected to be in a range of $1.00 to $1.20, including approximately $4 million of stock-based compensation expense. Excluding the stock-based compensation expense, non-GAAP 2012 net income per fully diluted share is expected to be in a range of $1.25 to $1.45. Diluted shares for 2012 are projected to be approximately 17.5 million compared to 15.2 million diluted shares in 2011. As a result, we expect that the year-over-year growth for 2012 non-GAAP net income will be approximately 15 percentage points higher than the year-over-year growth for 2012 non-GAAP diluted earnings per share.
Additionally, 2011 financial results contained $2.2 million of revenue and $1.7 million of income related to the initial recognition of PhotoStamps retail box breakage in the second quarter of 2011 whereas 2012 revenue and income from PhotoStamps retail box breakage is not expected to be material. For purposes of comparing annual growth rates excluding the initial recognition of PhotoStamps breakage, fiscal 2011 results without the second quarter breakage item would have been total revenue of $99.4 million and non-GAAP diluted earnings per share of $1.29.
Company Customer Metrics
A complete set of the quarterly customer metrics for the past six fiscal years 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.
Net Operating Loss (NOL) Update
Stamps.com currently has approximately $230 million in Federal NOLs and $125 million in State NOLs. The Company estimates that as of December 31, 2011, its ownership shift was approximately 15% compared with the 50% level that could trigger an 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.
About Stamps.com and PhotoStamps
Stamps.com (
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 Apple, Google/Picasa, 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. Reconciliation to the nearest GAAP measures of all non-GAAP measures included in this press release can be found in the financial table on pages 2 and 3 of this press 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 stock-based compensation, asset write-offs, dividend-related compensation expense, legal settlements and reserves, 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.
"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, 2010, 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) | |||||||||||||||||||
| Three Months ended December 31, |
Twelve Months ended December 31, |
||||||||||||||||||
| Unaudited | Unaudited | Unaudited | Audited | ||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
| Revenues: | |||||||||||||||||||
| Service | $ | 20,153 | $ | 16,428 | $ | 75,535 | $ | 64,607 | |||||||||||
| Product | 3,697 | 3,107 | 13,465 | 11,725 | |||||||||||||||
| Insurance | 1,462 | 741 | 4,321 | 2,023 | |||||||||||||||
| PhotoStamps | 1,907 | 2,396 | 8,258 | 7,162 | |||||||||||||||
| Other | 1 | 5 | 6 | 27 | |||||||||||||||
| Total revenues | 27,220 | 22,677 | 101,585 | 85,544 | |||||||||||||||
| Cost of revenues: | |||||||||||||||||||
| Service | 3,819 | 3,338 | 14,720 | 13,282 | |||||||||||||||
| Product | 1,324 | 1,124 | 4,910 | 4,337 | |||||||||||||||
| Insurance | 508 | 251 | 1,506 | 641 | |||||||||||||||
| PhotoStamps | 1,330 | 1,829 | 5,076 | 5,424 | |||||||||||||||
| Total cost of revenues | 6,981 | 6,542 | 26,212 | 23,684 | |||||||||||||||
| Gross profit | 20,239 | 16,135 | 75,373 | 61,860 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||
| Sales and marketing | 9,490 | 8,590 | 34,569 | 31,174 | |||||||||||||||
| Research and development | 2,379 | 2,826 | 9,395 | 9,420 | |||||||||||||||
| General and administrative | 3,787 | 4,689 | 14,181 | 14,590 | |||||||||||||||
| Legal settlements and reserves | - | - | - | 5,211 | |||||||||||||||
| Total operating expenses | 15,656 | 16,105 | 58,145 | 60,395 | |||||||||||||||
| Income from operations | 4,583 | 30 | 17,228 | 1,465 | |||||||||||||||
| Non-operating asset write-off | - | (634 | ) | - | (634 | ) | |||||||||||||
| Interest and other income, net | 128 | 136 | 562 | 756 | |||||||||||||||
| Income (loss) before taxes | 4,711 | (468 | ) | 17,790 | 1,587 | ||||||||||||||
| Income tax benefit | (8,674 | ) | (185 | ) | (8,475 | ) | (3,945 | ) | |||||||||||
| Net income (loss) | $ | 13,385 | $ | (283 | ) | $ | 26,265 | $ | 5,532 | ||||||||||
| Net income (loss) per share: | |||||||||||||||||||
| Basic | $ | 0.85 | $ | (0.02 | ) | $ | 1.78 | $ | 0.38 | ||||||||||
| Diluted | $ | 0.81 | $ | (0.02 | ) | $ | 1.73 | $ | 0.38 | ||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||
| Basic | 15,694 | 14,417 | 14,767 | 14,529 | |||||||||||||||
| Diluted | 16,551 | 14,417 | * | 15,168 | 14,685 | ||||||||||||||
| * Common equivalent shares are excluded from the diluted earnings per share calculation as their effect is anti-dilutive | |||||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (in thousands) | ||||||||||
| Unaudited | Audited | |||||||||
| December 31, | December 31, | |||||||||
| 2011 | 2010 | |||||||||
| ASSETS | ||||||||||
| Cash and investments | $ | 69,363 | $ | 35,299 | ||||||
| Accounts receivable | 10,466 | 4,868 | ||||||||
| Other current assets | 5,476 | 4,015 | ||||||||
| Property and equipment, net | 2,165 | 1,694 | ||||||||
| Intangible assets, net | 837 | 885 | ||||||||
| Deferred tax assets | 16,125 | 7,650 | ||||||||
| Other assets | 3,548 | 3,031 | ||||||||
| Total assets | $ | 107,980 | $ | 57,442 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Liabilities | ||||||||||
| Accounts payable and accrued expenses | $ | 12,075 | $ | 9,011 | ||||||
| Deferred revenue | 1,898 | 4,193 | ||||||||
| Total liabilities | 13,973 | 13,204 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 49 | 47 | ||||||||
| Additional paid-in capital | 637,483 | 608,522 | ||||||||
| Treasury Stock | (123,472 | ) | (118,151 | ) | ||||||
| Accumulated deficit | (420,338 | ) | (446,603 | ) | ||||||
| Unrealized gain on investments | 285 | 423 | ||||||||
| Total stockholders' equity | 94,007 | 44,238 | ||||||||
| Total liabilities and stockholders' equity | $ | 107,980 | $ | 57,442 | ||||||