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STMP
Stamps.com
conference date: April 19, 2007 @ 2 PM Pacific Time
for quarter ending: March 31, 2007 (1st quarter 2007)
Overview: Weak revenues, but still in the black.
Basic data:
Revenue was $20.0 million, down 20% sequentially and down 3% from $20.5 million in Q1 2006.
GAAP net income was $3.05 million, down 34% sequentially and down 9% from year-earlier. Non-GAAP net income was $3.5 million.
GAAP EPS was $0.13. Non-GAAP EPS was $0.16 per share, down 8% from year-earlier.
Cash and investments ended at $103.7 million. Down due to share buy back program.
Guidance:
Total 2007 revenue estimated between $87 and $97 million. GAAP net income per share $0.67 to $0.77. Excluding stock based compensation of $2.4 million, expect $0.77 to $0.87 per share.
Tax rate expected at 2 to 2.5% due to NOLs.
Conference Highlights:
Pleased with first quarter earnings. Made large Q1 marketing investment for PC Postage customers, up 21% from Q1 last year. However, pulled back on PhotoStamps marketing, hoping momentum would keep up revenues, but it did not. Re-ramped towards end of quarter and will continue into second quarter. Believes PhotoStamps growth is a tough challenge.
Stock-based compensation expense was $.5 million or about $0.02 per share.
PC Postage subscription revenue was $13.7 million, up 2% year-over-year and flat sequentially. Added 55,000 new paid customers. Lost 50,000 for net increase of 5000. Acquisition cost rose to $68 per customer. Still believes lifetime value of customers makes cost per acquisition acceptable and will continue sales spending. Multi-user product should be ready to launch in second half of year. 323,900 paid customers end of quarter. Subscriber revenue per customer was $16.80 per month.
Enterprise PC Postage area made good progress. Seats grew by 350% year-over-year on a very small base. Our total cost of ownership is much lower than a meter. Recently hired 2 more enterprise sales people.
Online store revenue was $2.4 million, down 1% year-over-year and flat sequentially.
Photostamps shipped 189 thousand sheets for $3.2 million in revenue, down 18% from year-earlier but down 60% sequentially. Less free publicity. Believes has 77% of market, down from 79% in Q4. Lack of presort discount rate still a problem. Working with larger partners to promote more. It is important to note that Photostamps revenue includes the cost of postage, which tends to exagerate it compared to the PC Postage business, which has only the monthly fees in revenue.
GAAP cost of sales was $5.4 million; R&D $2.2 million; Sales & Marketing $7.8 million; General and admin $2.75 million. Expenses totaled $18.1 million.
Gross margin was 73.2%.
Version 6.2 of PC Postage software launch was announced.
During quarter 370,000 shares were repurchased for $5.3 million. $28 million is left for share purchases.
$4.2 million free cash flow.
$5.3 million was spent on share buy backs.
Q&A:
EPS impact of Photostamps? Most of EPS change was due to increased acquisition costs. Photostamps has some impact based on revenue, but is not a material factor.
PC Postage revenues? Was in line with expectations. Will continue to ramp up direct male and enhanced promotion sales efforts.
Photostamps marketing? Does tend to have a more immediate response than direct mail for PC Postage.
Expecting net addition of customers in Q2? Result of direct mail campaign is generally a one to two quarter lag because of free trial period.
Channel partners for PC Postage? There are more partnerships in the works and continuing to work within current partnerships.
Cancelation explanation? Post office is supposed to detect PhotoStamps and not cancel the stamps because it ruins the image. But the detectors are less than perfect.
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Copyright 2007 William P. Meyers