Stamps.com 2012 Annual Report Download - page 35

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The following table sets forth our results of operations as a percentage of total revenue for the periods indicated:
Revenue
Our revenue is derived primarily from five sources: (1) service and transaction fees related to our PC Postage service; (2) product revenue from
the direct sale of consumables and supplies through our Supplies Store; (3) insurance revenue from our branded insurance offering; (4)
PhotoStamps revenue from our PhotoStamps business; and (5) other revenue, consisting of advertising revenue derived from advertising
programs with our existing customers.
Service revenue increased 17% to $75.5 million in 2011 from $64.6 million in 2010. The increase in service revenue consisted of a 20% increase
in service revenue from customers acquired through our non-
enhanced promotion channels, which more than offset the 31% decrease in service
revenue from customers acquired through our enhanced promotion channel. The 20% increase in service revenue from customers acquired
through the non-
enhanced promotion channels consisted of 10% increase in successfully billed customers and 9% increase in average service
revenue per customer. As a percentage of total revenue, service revenue decreased to 74% in 2011 from 76% in 2010, primarily as a result of the
increase in revenue from our insurance offering.
Product revenue increased 15% to $13.5 million in 2011 from $11.7 million in 2010. The increase in product revenue was primarily attributable
to the following: (1) growth in our paid customer base; (2) marketing our Supplies Store to our existing customer base; (3) additional SKUs we
added to our Supplies Store; and (4) growth in postage printed, which helps drive sales of consumable supplies such as labels. Total postage
printed by customers using our service during 2011 was $672 million, a 50% increase from $447 million in 2010. Store orders increased by 14%
in 2011 compared to 2010, while the average revenue per store order increased by 1% in 2011 compared to 2010. As a percentage of total
revenue, product revenue decreased slightly to 13% in 2011 from 14% in 2010, primarily as a result of the increase in revenue from our
insurance offering.
Table of Contents
Twelve months ended
December 31,
2011
2010
Total Revenues:
Service
74.4
%
75.5
%
Product
13.3
%
13.7
%
Insurance
4.3
%
2.4
%
PhotoStamps
8.1
%
8.4
%
Other
0.0
%
0.0
%
Total revenues
100.0
%
100.0
%
Cost of revenues:
Service
14.5
%
15.5
%
Product
4.8
%
5.1
%
Insurance
1.5
%
0.7
%
PhotoStamps
5.0
%
6.3
%
Total cost of revenues
25.8
%
27.7
%
Gross profit
74.2
%
72.3
%
Operating expenses:
Sales and marketing
34.0
%
36.4
%
Research and development
9.2
%
11.0
%
General and administrative
14.0
%
17.1
%
Legal settlements
0.0
%
6.1
%
Total operating expenses
57.2
%
70.6
%
Income from operations
17.0
%
1.7
%
Asset write
-
off
0.0
%
-
0.7
%
Interest and other income, net
0.6
%
0.9
%
Income before income taxes
17.5
%
1.9
%
Income tax benefit
-
8.3
%
-
4.6
%
Net income
25.9
%
6.5
%
31