Stamps.com 2013 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2013 Stamps.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 85

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85

The increase in paid customers is primarily driven by an increased number of new customers acquired, which was driven by our increased spend
in Core PC Postage marketing channels, while our lost customer churn rates remained at levels that were consistent with the prior year.
For our Core PC Postage Business, our average annual and monthly Core PC Postage revenue per paid customer in 2013 was $258 and $21.51
respectively, which increased by 2% compared to $254 and $21.18, respectively in 2012. The increase in average revenue per paid customer
was primarily attributable to higher service revenue per paid customer from our high volume shipping and enterprise customers and higher store
revenue per paid customer from increased sales of NetStamps labels; partially offset by a reduction in revenue per paid customer from our
Amazon partnership.
Revenue by Product
The following table shows our components of revenue and their respective percentages of total revenue for the periods indicated (in 000s except
percentage):
Our revenue is derived primarily from five sources: (1) service revenue from subscription, transaction and other fees related to our PC Postage
services and integrations; (2) product revenue from the direct sale of consumables and supplies through our Supplies Store; (3) insurance
revenue from the sale of package insurance to our customers; (4) PhotoStamps revenue from selling sheets of PhotoStamps postage; and (5)
other revenue, consisting primarily of advertising revenue derived from advertising programs with our existing customers.
Service revenue increased 12% to $99.0 million in 2013 from $88.2 million in 2012. The 12% increase in service revenue in 2013 consisted of a
13% increase in service revenue from our Core PC Postage business while the service revenue from our Non-Core PC Postage business
decreased 5%. The 12% increase in our Core PC Postage service revenue consisted of an 11% increase in our annual average paid customers and
a 2% increase in our annual average revenue per paid customer.
Product revenue increased 13% to $16.6 million in 2013 from $14.7 million in 2012. The increase was primarily attributable to the following:
(1) increase in NetStamps label sales; (2) growth in our paid customer base; (3) the postal rate increase in January 2013, which generated
incremental label sales for the period of time around the rate increase; (4) marketing our Supplies Store to our existing customer base; and (5)
growth in postage printed, which helps drive sales of consumable supplies such as labels. Total postage printed by customers using our service in
2013 was $1.6 billion, a 36% increase from the $1.1 billion printed in 2012.
Insurance revenue increased 6% to $7.5 million in 2013 from $7.1 million in 2012. This increase was primarily attributable to increased
insurance purchases by our high volume shippers, partially offset by a reduction in insurance revenue through our Amazon partnership.
We continued to reduce our PhotoStamps sales and marketing spending in 2013 compared with 2012, and plan to continue to reduce our sales
and marketing spending on PhotoStamps in future periods to maintain or improve profitability in that business, although we believe that there
may be potential opportunities to grow the business in a better economic environment. As a result of this decision PhotoStamps revenue
decreased 17% to $4.7 million in 2013 from $5.7 million in 2012. Total PhotoStamps sheets shipped in 2013 decreased 20% to 255 thousand
compared to 2012 and average revenue per PhotoStamps sheet shipped increased 4% to $18.50 in 2013 compared to 2012. The decrease in
sheets shipped was primarily attributable to our lower marketing spend and the increase in average revenue per sheet shipped was primarily
attributable to less discounting on custom negotiated pricing.
26
Table of Contents
2013
2012
Revenues
Service
$
99,013
$
88,173
Product
16,580
14,710
Insurance
7,515
7,120
PhotoStamps
4,710
5,651
Other
1
7
Total revenues
$
127,819
$
115,661
Revenue as a percentage of total revenues
Service
77
%
76
%
Product
13
%
13
%
Insurance
6
%
6
%
PhotoStamps
4
%
5
%
Other
0
%
0
%
Total revenues
100
%
100
%