Stamps.com 2013 Annual Report Download - page 36

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Revenue by Product
The following table shows our revenue and revenue as a percentage of total revenue for the periods indicated (in $000s except percentage):
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 $88.2 million in 2012 from $75.5 million in 2011. The 17% increase in service revenue in 2012 consisted of
an 18% increase in service revenue from our Core PC Postage business and a 5% decrease in service revenue from our Non-Core PC Postage
business. The increase in our Core PC Postage service revenue is primarily attributable to the following (1) a 13% increase in paid customers
driven by increased marketing spend to acquire new Core PC Postage customers and (2) a 4% increase in average service revenue per paid
customer driven by higher service revenue per paid customer from our high volume shipping and enterprise customer segments. The decrease in
our Non-Core PC Postage service revenue is primarily attributable to continued low levels of marketing spend resulting in a decline in Non-
Core
PC Postage paid customers.
Product revenue increased 9% to $14.7 million in 2012 from $13.5 million in 2011. The increase is primarily attributable to the following: (1)
growth in our paid customer base; (2) the postal rate increase in January 2012 which generated incremental label sales for the period of time
around the rate increase; (3) marketing our Supplies Store to our existing customer base; and (4) growth in postage printed, which helps drive
sales of consumable supplies such as labels. Total postage printed by customers using our service in 2012 was $1.1 billion, a 71% increase from
the $672 million printed in 2011.
Insurance revenue increased 65% to $7.1 million in 2012 from $4.3 million in 2011. This increase is primarily attributable to: (1) the expansion
of our existing package insurance offering to cover packages being shipped to international destinations; (2) insurance purchases resulting from
our partnership with Amazon.com; and (3) increased insurance purchases by high volume shippers. Postage printed by our high volume
shipping customers was up 66% in 2012 compared to 2011.
PhotoStamps revenue decreased 32% to $5.7 million in 2012 from $8.3 million in 2011. The decrease is primarily attributable to: (1) we
continued to reduce our PhotoStamps sales and marketing spending in 2012 compared with 2011 to maintain or improve profitability in that
business and (2) during the second quarter of 2011, we first applied breakage accounting to our PhotoStamps boxes sold through retail channels
which resulted in an incremental $2.2 million of PhotoStamps revenue in 2011 which did not repeat in 2012. Please see Note 2 “Summary of
Significant Accounting Policies—PhotoStamps Retail Boxes” in our Notes to Consolidated Financial Statements for further discussion .
PhotoStamps sheets shipped decreased 5% to 319,000 in 2012 from 335,000 in 2011 primarily as a result of the reduced marketing spending.
Average revenue per PhotoStamps sheet shipped decreased 3% to $17.71 in 2012 from $18.21 in 2011 as a result of an increase in high volume
business orders which are typically sold at discounted price compared to consumer website orders.
Other revenue consisting of commissions from the advertising or sale of products by third party vendors to our customer increased 9% to $7,000
in 2012 from $6,000 in 2011. Commission revenue from the advertising or sale of products by third party vendors is currently not material to our
consolidated financial statements.
32
Table of Contents
2012
2011
Revenues
Service
$
88,173
$
75,535
Product
14,710
13,465
Insurance
7,120
4,321
PhotoStamps
5,651
8,258
Other
7
6
Total revenues
$
115,661
$
101,585
Revenue as a percentage of total revenues
Service
76
%
74
%
Product
13
%
13
%
Insurance
6
%
4
%
PhotoStamps
5
%
8
%
Other
0
%
0
%
Total revenues
100
%
100
%