Total Revenue up 9% to $22.8 million; Core PC Postage Revenue up 14%; Non-GAAP Diluted Earnings per Share up 27% to $0.24

LOS ANGELES – April 28, 2011 –® (Nasdaq:STMP), the leading provider of postage online and shipping software solutions, today announced results for the first quarter ended March 31, 2011.

For the first quarter:

  • Core PC Postage revenue, which excludes the enhanced promotion channel, was $20.6 million, up 14% from the first quarter of 2010.
  • 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 39% versus the first quarter of 2010, as the Company continues to reduce its investment in this area.
  • PhotoStamps revenue was $1.4 million, down 8% versus the first quarter of 2010, as the Company continues to reduce its investment in this area.
  • Total revenue was $22.8 million, up 9% compared to the first quarter of 2010.
  • PC Postage gross margin was 76.0%, PhotoStamps gross margin was 21.0% and total gross margin was 72.7%.
  • GAAP net income was $2.7 million or $0.18 per fully diluted share. This includes $0.8 million in 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.

“We were pleased to see continued acceleration in our revenue growth for our core PC Postage business with revenue up 14%, our strongest quarterly growth rate since 2006, and continued strength in our earnings with non-GAAP earnings per share up 27% year-over-year,” said Ken McBride, president and CEO. “During the first quarter we also saw a reduction in average monthly churn to 3.0% and a sequential increase of 20 thousand in our paid customer metric. As a result of the strength in our business, we raised our 2011 revenue and 2011 non-GAAP EPS guidance today.”

First Quarter 2011 Detailed Results reported first quarter 2011 GAAP net income of $2.7 million. On a per share basis, total first quarter 2011 GAAP net income was $0.18 based on fully diluted shares outstanding of 14.6 million. First quarter 2011 GAAP net income included $0.8 million of stock-based compensation expense. Non-GAAP and GAAP amounts are reconciled in the following table:

Excluding the stock-based compensation expense, first quarter 2011 non-GAAP net income was $3.5 million or $0.24 per fully diluted share based on fully diluted shares outstanding of 14.6 million. This compares to first quarter 2010 non-GAAP net income of $2.9 million and non-GAAP net income per fully diluted share of $0.19. Thus, non-GAAP first quarter 2011 diluted earnings per share increased by 27% compared to the same quarter last year.

Share Repurchase

During the first quarter of 2011, the Company repurchased a total of 175 thousand shares for a total cost of $2.2 million. The Company’s current repurchase plan remains in effect through August 2011 with a remaining authorization of approximately 800 thousand shares.

The timing of share repurchases, if any, and the number of shares to be bought at any one time will depend on market conditions and the Company’s assessment of the risk that its net operating loss asset could be impaired if such repurchases 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) Update currently has approximately $225 million in Federal NOLs and $150 million in State NOLs. The Company estimates that as of March 31, 2011, its ownership shift was approximately 16% compared with the 50% level that could trigger 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.

Business Outlook currently expects total 2011 revenue to be in a range of $85 to $95 million. This compares to previous expectations for total 2011 revenue of $82.5 to $92.5 million. 2011 GAAP net income per share is expected to be in a range of $0.70 to $0.90, including approximately $3 million of stock-based compensation expense. Excluding the stock-based compensation expense, non-GAAP 2011 net income per fully diluted share is expected to be in a range of $0.90 to $1.10. This compares to previous expectations for non-GAAP 2011 net income per fully diluted share of $0.85 to $1.05.

Company Customer Metrics

A complete set of the quarterly customer metrics for the past five fiscal years and current fiscal year to date is available at (under a tab on the left side called Company Information, Metrics).

Quarterly Conference Call

The financial results conference call will be web cast today at 5:00 p.m. Eastern Time and may be accessed at 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 and PhotoStamps (Nasdaq: STMP) is a leading provider of Internet-based postage services.’s service enables small businesses, enterprises, advanced shippers, and consumers to print U.S. Postal Service-approved postage with just a PC, printer and Internet connection, right from their home or office. The Company currently has PC Postage partnerships with Avery Dennison, Microsoft, HP, the U.S. Postal Service and others.

PhotoStamps is a patented 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. 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, 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 page 2 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., the logo and PhotoStamps are trademarks or registered trademarks of Inc. All other brands and names are property of their respective owners.

Investor Contact:
Jeff Carberry Investor Relations
(310) 482-5830
[email protected]

Press Contact:
Eric Nash Public Relations
(310) 482-5942
[email protected]