BusinessWire

Stamps.com Reports Second Quarter Results

EL SEGUNDO, Calif.--(BUSINESS WIRE)--Stamps.com® (Nasdaq: STMP), the leading provider of postage online and shipping software, today announced results for the quarter ended June 30, 2020.


Second Quarter 2020 Financial Highlights

  • Total revenue was $206.7 million, up 49% compared to $138.8 million in the second quarter of 2019.
  • GAAP net income was $51.7 million, up 270% compared to $14.0 million in the second quarter of 2019.
  • GAAP net income per fully diluted share was $2.73, up 248% compared to $0.79 in the second quarter of 2019.
  • Non-GAAP adjusted EBITDA was $81.0 million, up 106% compared to $39.3 million in the second quarter of 2019.
  • Non-GAAP adjusted income per fully diluted share was $3.11, up 148% compared to $1.25 in the second quarter of 2019.

“In recent months, e-commerce has provided an important lifeline to many businesses and individuals in the context of the COVID-19 pandemic, and we value our ability to provide a best-in-class critical shipping technology that enables such e-commerce activity for our customers and partners during this difficult time. We are proud of our resilient employee base throughout the world and at all levels who continue to excel during these challenging circumstances to make significant strides towards our goal of being the leading worldwide multi-carrier e-commerce shipping software company,” said Ken McBride, Stamps.com’s Chairman and CEO.

Second Quarter 2020 Detailed Results

Second quarter 2020 total revenue was $206.7 million, up 49% compared to the second quarter of 2019. Second quarter 2020 Mailing and Shipping revenue (which includes service, product and insurance revenue but excludes Customized Postage) was $197.9 million, up 46% compared to the second quarter of 2019. Second quarter 2020 Customized Postage revenue was $8.8 million, up 182% compared to the second quarter of 2019.

Second quarter 2020 GAAP income from operations was $61.2 million, GAAP net income was $51.7 million, and GAAP net income per share was $2.73 based on 18.9 million fully diluted shares outstanding. This compares to second quarter 2019 GAAP income from operations of $22.4 million, GAAP net income of $14.0 million, and GAAP net income per share of $0.79 based on 17.8 million fully diluted shares outstanding. Second quarter 2020 GAAP income from operations, GAAP net income, and GAAP income per fully diluted share increased by 173%, 270%, and 248% year-over-year, respectively.

Second quarter 2020 GAAP income from operations included $13.2 million of non-cash stock-based compensation expense and $5.5 million of non-cash amortization of acquired intangibles. Second quarter 2020 GAAP net income included $93 thousand of non-cash amortization of debt issuance costs. Second quarter 2020 GAAP income tax expense was $9.0 million and non-GAAP income tax expense was $20.7 million, resulting in an $11.7 million non-GAAP tax expense adjustment. The higher non-GAAP tax expense reflects the tax impact on the non-GAAP pre-tax income at a non-GAAP effective tax rate of 26% for the second quarter. See the section later in this release entitled, “About Non-GAAP Financial Measures” for more information on how non-GAAP taxes are calculated. Excluding the non-cash stock-based compensation expense and non-cash amortization of acquired intangibles, second quarter 2020 non-GAAP income from operations was $79.9 million. Also excluding non-cash amortization of debt issuance costs and including the non-GAAP tax expense adjustment, second quarter 2020 non-GAAP adjusted income was $58.8 million or $3.11 per share based on 18.9 million fully diluted shares outstanding.

Second quarter 2019 GAAP income from operations included $9.8 million of non-cash stock-based compensation expense and $5.6 million of non-cash amortization of acquired intangibles. Second quarter 2019 GAAP net income included $93 thousand of non-cash amortization of debt issuance costs. Second quarter 2019 GAAP income tax expense was $7.7 million and non-GAAP income tax expense was $14.9 million, resulting in an $7.2 million non-GAAP tax expense adjustment. The higher non-GAAP tax expense reflected the tax impact on the non-GAAP pre-tax income at a non-GAAP effective tax rate of 40.0% for the second quarter. Excluding the non-cash stock-based compensation expense and non-cash amortization of acquired intangibles, second quarter 2019 non-GAAP income from operations was $37.8 million. Also excluding non-cash amortization of debt issuance costs and including the non-GAAP tax expense adjustment, second quarter 2019 non-GAAP adjusted income was $22.3 million or $1.25 per share based on 17.8 million fully diluted shares outstanding.

Therefore, second quarter 2020 non-GAAP income from operations, non-GAAP adjusted income, and non-GAAP adjusted income per fully diluted share increased by 111%, 164%, and 148% year-over-year, respectively.

Non-GAAP income from operations, non-GAAP adjusted income, and non-GAAP adjusted income per share are described further in the “About Non-GAAP Financial Measures” section of this press release and are reconciled to the corresponding GAAP measures in the following tables (unaudited):

Reconciliation of GAAP to Non-GAAP Financial Measures (Second Quarter 2020)

Second Quarter Fiscal 2020

 

 

Stock-Based

 

Intangible

 

Debt

 

 

 

 

All amounts in millions except

GAAP

 

Compensation

 

Amortization

 

Amortization

 

Income Tax

 

Non-GAAP

per share data:

Amounts

 

Expense

 

Expense

 

Expense

 

Adjustments

 

Amounts

 
Cost of Revenues

$

47.76

 

$

0.93

 

$

-

 

$

-

 

$

-

$

46.84

 

Research & Development

 

22.88

 

 

2.95

 

 

-

 

 

-

 

 

-

 

19.94

 

Sales & Marketing

 

41.88

 

 

2.36

 

 

-

 

 

-

 

 

-

 

39.52

 

General & Administrative

 

33.02

 

 

6.99

 

 

5.51

 

 

-

 

 

-

 

20.52

 

Total Expenses

 

145.54

 

 

13.22

 

 

5.51

 

 

-

 

 

-

 

126.82

 

 
Income (Loss) from Operations

 

61.19

 

 

(13.22

)

 

(5.51

)

 

-

 

 

-

 

79.91

 

 
Interest and Other Income (Loss)

 

(0.48

)

 

-

 

 

-

 

 

(0.09

)

 

-

 

(0.39

)

 
Benefit (Expense) for Income Taxes

 

(8.98

)

 

-

 

 

-

 

 

-

 

 

11.70

 

(20.68

)

 
Adjusted Income (Loss)

 

51.73

 

 

(13.22

)

 

(5.51

)

 

(0.09

)

 

11.70

 

58.85

 

 
On a diluted per share basis

$

2.73

 

$

(0.70

)

$

(0.29

)

$

(0.00

)

$

0.62

$

3.11

 

 
Shares used in per share calculation

 

18.93

 

 

18.93

 

 

18.93

 

 

18.93

 

 

18.93

 

18.93

 

 

Reconciliation of GAAP to Non-GAAP Financial Measures (Second Quarter 2019)

Second Quarter Fiscal 2019

 

Stock-Based

Intangible

Debt

 

 

All amounts in millions except

GAAP

Compensation

Amortization

Amortization

Income Tax

Non-GAAP

per share data:

Amounts

Expense

Expense

Expense

Adjustments

Amounts

 
Cost of Revenues

$

36.44

 

$

0.56

 

$

-

 

$

-

 

$

-

$

35.89

 

Research & Development

 

19.13

 

 

2.49

 

 

-

 

 

-

 

 

-

 

16.64

 

Sales & Marketing

 

33.24

 

 

2.28

 

 

-

 

 

-

 

 

-

 

30.96

 

General & Administrative

 

27.54

 

 

4.49

 

 

5.55

 

 

-

 

 

-

 

17.49

 

Total Expenses

 

116.35

 

 

9.82

 

 

5.55

 

 

-

 

 

-

 

100.97

 

 
Income (Loss) from Operations

 

22.42

 

 

(9.82

)

 

(5.55

)

 

-

 

 

-

 

37.80

 

 
Interest and Other Income (Loss)

 

(0.75

)

 

-

 

 

-

 

 

(0.09

)

 

-

 

(0.65

)

 
Benefit (Expense) for Income Taxes

 

(7.69

)

 

-

 

 

-

 

 

-

 

 

7.17

 

(14.86

)

 
Adjusted Income (Loss)

 

13.99

 

 

(9.82

)

 

(5.55

)

 

(0.09

)

 

7.17

 

22.29

 

 
On a diluted per share basis

$

0.79

 

$

(0.55

)

$

(0.31

)

$

(0.01

)

$

0.40

$

1.25

 

 
Shares used in per share calculation

 

17.81

 

 

17.81

 

 

17.81

 

 

17.81

 

 

17.81

 

17.81

 

 

Second Quarter GAAP Net Income and Non-GAAP Adjusted EBITDA

Second quarter 2020 GAAP net income was $51.7 million, up 270% compared to $14.0 million in the second quarter of 2019.

Second quarter 2020 non-GAAP adjusted EBITDA was $81.0 million, up 106% compared to $39.3 million in the second quarter of 2019.

Adjusted EBITDA is a non-GAAP financial measure which is described further in the “About Non-GAAP Financial Measures” section of this press release and is reconciled to GAAP net income in the following table (unaudited):

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

Second Quarter

Three Months ended

All amounts in millions

June 30,

2020

 

2019

 
GAAP Net Income (Loss)

$

51.73

 

$

13.99

 

 
Depreciation and Amortization Expense

$

6.55

 

$

7.03

 

Interest & Other Expense (Income), net

$

0.48

 

$

0.75

 

Income Tax Expense (Benefit), net

$

8.98

 

$

7.69

 

 
Stock-based Compensation Expense

$

13.22

 

$

9.82

 

 
Adjusted EBITDA

$

80.96

 

$

39.28

 

 
Adjusted EBITDA Margin

 

39.2

%

 

28.3

%

 

Taxes

For the second quarter of 2020, the Company reported a GAAP income tax expense of $9.0 million representing an effective tax rate of 14.8%. For the second quarter of 2019, the Company reported a GAAP income tax expense of $7.7 million representing an effective tax rate of 35.5%. As discussed below under the heading, “About Non-GAAP Financial Measures,” we believe our effective annual tax rate for 2020 will be approximately 28.0%. Accordingly, the second quarter 2020 effective rate of 14.8% should not be assumed to apply for 2020 as a whole, and our after tax income during the remainder of 2020 will likely reflect a materially higher rate than is reflected in our after tax results for the second quarter of 2020. Our second quarter 2020 GAAP net income should also be understood to have been positively impacted by the lower effective tax rate applicable specifically to the quarter.

Share Repurchase and Debt Repayment

During the second quarter of 2020, the Company repurchased approximately 56 thousand shares at a total cost of approximately $9.4 million.

On February 13, 2020, our Board of Directors approved a share repurchase plan which became effective on February 24, 2020 and which authorizes the Company to repurchase up to $40 million of stock over the six months following its effective date. On February 28, 2020, our Board of Directors adjusted the repurchase parameters of the plan in response to increased market volatility to repurchase an aggregate of approximately $19 million through the plan’s expiration in August 2020, and which became effective March 3, 2020.

On August 3, 2020, our Board of Directors approved a new share repurchase plan which will commence on August 11, 2020 and which authorizes the Company to repurchase up to $40 million of stock over approximately six months following its effective date. This new repurchase plan replaces our existing repurchase plan.

During the second quarter of 2020, as previously disclosed, the Company repaid the principal balance of $47.4 million under the Company’s existing credit agreement related to the Endicia acquisition. On June 29, 2020, the Company amended and restated this existing credit agreement for a new revolving credit facility of up to $130 million with a term of two years. As of June 30, 2020, total debt under the amended and restated credit agreement, excluding debt issuance costs, was $0 million.

Customized Postage

Effective June 16, 2020, the USPS terminated its customized postage program and thereby also revoked our authorization to offer products pursuant to that program. The primary product subject to termination was offered by the Company under the brand PhotoStamps. The revenue and cost of revenue associated with these products appear on our financial statements as “Customized postage.” The financial impact associated with the elimination of this product is reflected in our financial guidance.

Summary of our Business Outlook

For fiscal year 2020, the Company currently expects its GAAP financial outlook to be as follows:

  • We expect total revenue to be in a range of approximately $650 million to $725 million; this compares to previous guidance of $570 million to $600 million.
  • We expect GAAP net income to be in a range of approximately $79 million to $122 million; this compares to previous guidance of $41 million to $53 million.
  • We expect GAAP net income per fully diluted share to be in a range of approximately $3.93 to $6.70; this compares to previous guidance of $2.08 to $2.92.
  • We expect our 2020 effective tax rate to be approximately 28%; this compares to previous guidance of 40%.

The above GAAP amounts, adjusted as detailed below, result in the following non-GAAP financial outlook:

  • We expect non-GAAP adjusted EBITDA to be in a range of approximately $180 million to $240 million; this compares to previous guidance of $135 million to $155 million.
  • We expect non-GAAP adjusted income per fully diluted share to be in a range of approximately $6.25 to $9.25; this compares to previous guidance of $4.00 to $5.00.

Detailed Discussion of our Business Outlook

As noted above, for 2020, the Company currently expects total revenue to be in a range of approximately $650 million to $725 million; this compares to previous guidance of $570 million to $600 million.

Also, for 2020, the Company currently expects GAAP net income to be in a range of approximately $79 million to $122 million; this compares to previous guidance of $41 million to $53 million.

The expected GAAP net income range includes depreciation and amortization expense of approximately $26 million, stock-based compensation expense of approximately $43 million, interest and other expense, net of approximately $1 million, and income tax expense of approximately $31 million to $ 48 million. Excluding the depreciation and amortization expense, stock-based compensation expense, interest and other expense, net and income tax expense, we expect non-GAAP adjusted EBITDA to be in a range of approximately $180 million to $240 million; this compares to previous guidance of $135 million to $155 million.

The following table is provided to facilitate a reconciliation of 2020 expected non-GAAP adjusted EBITDA to expected GAAP net income:

Fiscal Year 2020 Guidance

All amounts in millions

Low End of Range

High End of Range

 
GAAP net income

$

79.3

$

122.5

 
Adjustments to reconcile adjusted EBITDA to GAAP net income:
Stock-based compensation expense

$

42.5

$

42.5

Depreciation and amortization expense

$

26.0

$

26.0

Interest and other expense (income), net

$

1.4

$

1.4

Income tax expense

$

30.8

$

47.6

Total adjustments excluded from adjusted EBITDA

$

100.7

$

117.5

 
Adjusted EBITDA

$

180.0

$

240.0

 

As noted above, for 2020, the Company currently expects GAAP net income per fully diluted share to be in a range of approximately $3.93 to $6.70; this compares to previous guidance of $2.08 to $2.92. The expected GAAP net income per fully diluted share range includes non-cash stock-based compensation expense of approximately $43 million, non-cash amortization of acquired intangibles expense of approximately $22 million, and non-cash amortization of debt issuance costs of approximately $0.4 million. Excluding the stock-based compensation expense, amortization of acquired intangibles expense, and amortization of debt issuance costs, and including higher expected non-GAAP income taxes of approximately $18 million from the expected tax effects of these adjustments at an assumed 28% effective full-year tax rate, we expect non-GAAP adjusted income per fully diluted share to be in a range of $6.25 to $9.25; this compares to previous guidance of $4.00 to $5.00.

The following table is provided to facilitate a reconciliation of 2020 expected non-GAAP adjusted income per fully diluted share to expected GAAP net income per fully diluted share:

Fiscal Year 2020 Guidance

All amounts in millions except percentages and per share data

Low End of Range

 

High End of Range

 
GAAP net income per fully diluted share

$

3.93

 

$

6.70

 

 
Adjustments to reconcile non-GAAP to GAAP:
Stock-based compensation expense

$

42.5

 

$

42.5

 

Amortization of acquired intangibles

$

22.0

 

$

22.0

 

Amortization of debt issuance costs

$

0.4

 

$

0.4

 

Total adjustments excluded from non-GAAP

$

64.9

 

$

64.9

 

Projected effective tax rate

 

28.0

%

 

28.0

%

Increased tax expense from non-GAAP adjustments

$

18.2

 

$

18.2

 

Total tax affected adjustments excluded from non-GAAP

$

46.7

 

$

46.7

 

 
Fully diluted shares

 

20.2

 

 

18.3

 

Total adjustments excluded from non-GAAP adjusted income per fully diluted share

$

2.32

 

$

2.55

 

 
Non-GAAP adjusted income per fully diluted share

$

6.25

 

$

9.25

 

 

This business outlook does not include the impact from potential future acquisitions, including acquisition costs or related financings, or unanticipated events. This business outlook also does not include the impact of foreign currency fluctuations, or other geopolitical events, such as trade negotiations or Brexit. This business outlook also does not include the impact of employee stock option exercises and any associated tax effects. This business outlook and the related assumptions are forward-looking statements subject to the safe harbor statement contained at the end of this press release, and reflect our views of current and future market conditions as of the date of this press release. Ranges reflect our business assumptions, but actual results could fall outside the ranges presented. Only a few of our assumptions underlying our guidance are disclosed above, and our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, many of which are beyond our control or ability to predict. Although we believe that the assumptions underlying our guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material, as a result of, among other things, the factors described under “Forward-Looking Statements,” below. We do not undertake any obligation to release publicly any revisions to our business outlook or other forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Company Metrics and Conference Call

2020 Company metrics, updated to include the second quarter, is available at https://investor.stamps.com (under a tab on the left side called “Company Information, Metrics”). These metrics are not incorporated into this press release.

The Stamps.com financial results conference call will be webcast today at 5:00 p.m. Eastern Time and may be accessed at https://investor.stamps.com. The Company plans to discuss its business outlook during the conference call. Following the conclusion of the webcast, a replay of the call will be available at the same website.

About Stamps.com, Endicia, ShipStation, ShipWorks, ShippingEasy, ShipEngine and MetaPack

Stamps.com (Nasdaq: STMP) is the leading provider of postage online and shipping software solutions to customers, including consumers, small businesses, e-commerce shippers, enterprises, and high volume shippers. Stamps.com offers solutions that help businesses run their shipping operations more smoothly and function more successfully under the brand names Stamps.com, Endicia, ShipStation, ShipWorks, ShippingEasy, ShipEngine and MetaPack. Stamps.com’s family of brands provides seamless access to mailing and shipping services through integrations with more than 500 unique partner applications.

Endicia is a leading brand for high volume shipping technologies and services for U.S. Postal Service shipping. Under this brand we offer solutions that help businesses run their shipping operations more smoothly and function more successfully. Our Endicia branded solutions also provide seamless access to USPS shipping services through integrations with partner applications.

ShipStation is a leading web-based shipping solution that helps e-commerce retailers import, organize, process, package, and ship their orders quickly and easily from any web browser. ShipStation features the most integrations of any e-commerce web-based solution with more than 350 shopping carts, marketplaces, package carriers, and fulfillment services. Integration partners include eBay, PayPal, Amazon, Etsy, Square, Shopify, BigCommerce, Volusion, Magento, Squarespace, and carriers such as USPS, UPS, FedEx and DHL. ShipStation has sophisticated automation features such as automated order importing, custom hierarchical rules, product profiles, and fulfillment solutions that enable its customers to complete their orders, wherever they sell, and however they ship.

ShipWorks is a leading brand for client-based shipping solutions that help high volume shippers import, organize, process, fulfill, and ship their orders quickly and easily from any standard PC. With integrations to more than 100 shopping carts, marketplaces, package carriers, and fulfillment services, ShipWorks has the most integrations of any high-volume client shipping solution. Package carriers include USPS, UPS, FedEx, DHL, OnTrac and many more. Marketplace and shopping cart integrations include eBay, PayPal, Amazon, Etsy, Shopify, BigCommerce, Volusion, ChannelAdvisor, Magento, and many more. ShipWorks has sophisticated automation features such as a custom rules engine, automated order importing, automatic product profile detection, and fulfillment automation, which enable high volume shippers to complete their orders quickly and efficiently.

ShippingEasy provides a single platform for e-commerce merchants to automate order imports and shipping, manage inventory, and increase sales through customer email marketing and online reviews. Powerful integrations with leading online channels such as Amazon, eBay, Etsy, Walmart, Shopify, Magento, WooCommerce and many others allow merchants to manage orders from everywhere they sell all in one place. The inclusion of email marketing and inventory management solutions plus award-winning support from real humans via phone, email, and chat lets online merchants streamline their businesses and increase orders through a single integrated platform that provides more than best-in-class shipping solutions.

ShipEngine offers a multi-carrier shipping platform for e-commerce stores, logistics and warehouse providers, systems integrators, e-commerce application integrators, and new application developers. ShipEngine APIs enable developers to build custom workflows within their own platforms and streamline the e-commerce fulfillment process with real-time label generation, rate quoting, parcel tracking, and address validation. ShipEngine supports more than 30 different carriers and includes integrations with leading e-commerce service providers, shopping carts, and marketplaces.

MetaPack helps e-commerce and delivery professionals to meet with the consumer’s growing expectations of delivery, while maintaining and optimizing operational efficiency. MetaPack’s SaaS solution offers a wide range of personalized delivery services, from global order tracking to simplified return procedures, through a catalog of more than 450 carriers and 5,000 services available that span every country in the world.

About Non-GAAP Financial Measures

To supplement the Company’s condensed consolidated balance sheets and consolidated statements of income presented in accordance with GAAP, the Company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP income from operations, non-GAAP adjusted income, non-GAAP adjusted income per fully diluted share and adjusted EBITDA.

Non-GAAP financial measures are provided to enhance investors’ overall understanding of the Company’s financial performance and prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes the non-GAAP measures, which: (1) exclude certain non-cash items including stock-based compensation expense, amortization of acquired intangibles, amortization of debt issuance costs, and contingent consideration charges; (2) exclude certain expenses and gains such as acquisition related expenses, litigation settlement expenses, executive consulting expenses, and insurance proceeds; and (3) include income tax adjustments, provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be reflective of our underlying operating performance.


Contacts

Investor Contact:
Suzanne Park
Stamps.com Investor Relations
(310) 482-5830
invrel@stamps.com

Press Contact:
Eric Nash
Stamps.com Public Relations
(310) 482-5942
enash@stamps.com


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