Stamps.Com Announces Second Quarter 2005 Results

Q2 EPS of $0.09; Q2 Revenue of $14.2 Million, Up 74% Versus Last Year

LOS ANGELES, Calif. – July 21, 2005 – Stamps.com(R) Inc. (Nasdaq: STMP) today announced results for the second quarter ended June 30, 2005.

Second quarter results include the following:

  • Total revenue was $14.2 million, an increase of 74% versus the same quarter last year.
  • Subscription service revenue was $10.4 million and online store revenue was $1.8 million, up 57% and 49%, respectively, versus the second quarter of 2004. Insurance fees, licensing fees, and other revenue contributed an additional $0.8 million.
  • During the first six weeks of the market test that began midway through the second quarter, approximately 68 thousand sheets of PhotoStamps&trade were shipped, resulting in $1.2 million in total second quarter revenue.
  • Total second quarter gross margin was 72% versus gross margin of 63% in the same quarter last year.
  • GAAP net income was $2.1 million, or $0.09 per fully diluted share.

“We were very pleased with our strong second quarter revenue and earnings growth,” said president and CEO Ken McBride. “The second quarter represented our twelfth straight quarter of sequential revenue growth and our fourth consecutive quarter of profitability. We were also very pleased with the great start of PhotoStamps during the first six weeks of the second market test.”

Stamps.com reported net income of $2.1 million for the second quarter of 2005 compared to a net loss of $2.3 million in the second quarter of 2004 and net income of $1.6 million in the first quarter of 2005. On a per share basis, net income was $0.09 in the second quarter of 2005 based on fully diluted shares outstanding of 23.8 million. This compares to a net loss of $0.10 in the second quarter of 2004, based on shares outstanding of 22.4 million.

On May 17, 2005, Stamps.com began a second market test of PhotoStamps, the popular form of postage that allows consumers to turn digital photos, designs or images into valid U.S. postage. During the first six weeks of the second market test through the end of the second quarter, approximately 68 thousand sheets, or nearly 1.4 million individual PhotoStamps, were shipped to customers. PhotoStamps is expected to be available under authorization of the U.S. Postal Service for a year-long market test through May 2006.

For the third quarter of 2005, Stamps.com anticipates that revenue will be approximately $14.5 million. Third quarter gross margin is expected to be approximately 70%. Net income for the third quarter is anticipated to be approximately $0.08 per fully diluted share. For the entire fiscal 2005, Stamps.com anticipates that total revenue will be approximately $57 million. Total 2005 gross margin is expected to be approximately 70%. Net income per fully diluted share for fiscal 2005 is anticipated to be approximately $0.34. Guidance for 2005 net income per share, and previous Company guidance, does not reflect any impact from the new accounting pronouncement relating to the expensing of stock options, FASB Statement 123(R). Stamps.com currently expects to adopt FASB Statement 123(R) at the beginning of fiscal 2006.

The Stamps.com financial results conference call will be web cast today at 5:00 p.m. Eastern Time and may be accessed at 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 location.

About Stamps.com and PhotoStamps

Stamps.com (Nasdaq: STMP) is a leading provider of Internet-based postage services. Stamps.com enables over 380,000 customers 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 partnerships with companies including Microsoft, CompUSA, EarthLink, HP, NCR, Office Depot, Vendio and the U.S. Postal Service.

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 was extremely popular during the initial market test which was announced on August 10, 2004 and ran through September 30, 2004. During that 7 1/2 week period, more than 2.75 million individual PhotoStamps were ordered. PhotoStamps is expected to be available under authorization of the U.S. Postal Service for a second, year-long market test that began on May 17, 2005.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release includes forward-looking statements about our anticipated results and available products that involve risks and uncertainties. Important factors, including the Company’s ability to complete and ship 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 fiscal year ended December 31, 2004, 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.