Stamps.com 2005 Annual Report Download - page 27

The following table sets forth our results of operation as a percentage of total revenue for the periods indicated:
Revenue. Revenue was derived primarily from three sources: (1) service fees charged to customers for use of our PC Postage service; (2)
PhotoStamps revenue from the sale of PhotoStamps; and (3) product sales and other revenue, consisting of Supplies Store revenue from the
direct sale of consumables and supplies, advertising revenue from controlled access advertising to our existing customer base, insurance
revenue from our branded insurance offering, and licensing revenue. Revenue increased from $38.1 million in fiscal 2004 to $61.9 million in
fiscal 2005, an increase of 62%.
Service fee revenue increased from $27.9 million in fiscal 2004 to $42.4 million in fiscal 2005, an increase of 52%. The increase in service
fee revenue is primarily due to the growth of our customer base and the migration of our existing customers from our Simple Plan price point
of $4.49 per month to the Power/Pro Plan at $15.99 per month and the Premier Plan at higher price points, resulting in higher service fee
revenue per customer. As of December 31, 2005, Power/Pro Plan or Premier Plan customers accounted for 94% of total registered customers as
compared to 51% as of December 31, 2004. As a percentage of total revenue, service fee revenue decreased four percentage points from 73%
in fiscal 2004 to 69% in fiscal 2005. The decrease in service fee revenue as a percentage of total revenue is attributable to the increase in
revenue from our PhotoStamps product.
We expect total service fee revenue to continue to increase in future periods on an absolute basis as we
complete the migration of our Simple Plan customers to the Power/Pro Plan and as we continue to increase our customer base. As a percentage
of revenue, service fee revenue may decline over future periods if the USPS allows us to continue to sell PhotoStamps beyond the end of our
second test period.
PhotoStamps revenue increased from $2.3 million in fiscal 2004 to $8.9 million in fiscal 2005, an increase of 283%. As a percentage of
total revenue, PhotoStamps revenue increased eight percentage points from 6% in fiscal 2004 to 14% in fiscal 2005. The PhotoStamps revenue
increase, both on an absolute basis and as a percentage of total revenue is primarily due to the increase in customer orders as a result of our
marketing efforts, and from seasonal demand during the holiday period. If the USPS approves our continued sale of PhotoStamps we expect
this revenue category to increase on both an absolute basis and as a percentage of total revenue.
Product sales and other revenue increased from $7.8 million in fiscal 2004 to $10.6 million in fiscal 2005, an increase of 35%. The
increase is primarily due to the expansion of our consumable and supplies sales through our
24
Twelve Months
Ended December 31,
2005 2004
Total Revenues
Service
69
%
73
%
Photostamps
14
%
6
%
Product and other
17
%
21
%
Total revenues
100
%
100
%
Cost of revenues
Service
15
%
25
%
Photostamps
9
%
4
%
Product and other
4
%
6
%
Total cost of revenues
28
%
35
%
Gross profit
72
%
65
%
Operating expenses
Sales and marketing
32
%
33
%
Research and development
11
%
16
%
General and administrative
16
%
34
%
Total operating expenses
59
%
83
%
Income (loss) from operations
13
%
(18
)%
Other income, net
4
%
6
%
Income (loss) before income
taxes
17
%
(12
)%
Provision for income taxes
— —
Net income (loss)
17
%
(12
)%