Stamps.com 2007 Annual Report Download - page 27

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percentage of total revenue, is primarily due to lower investment balances as we sold certain investments and used the cash
to repurchase shares of our common stock. We expect other income to decrease in future periods as a result of lower invested
cash balance and lower interest rates.
Years Ended December 31, 2006 and 2005
During 2006, we experienced continued revenue growth in our core PC postage business, PhotoStamps and Supplies Store,
with total revenue reaching approximately $85 million. We continued to see positive trends on usage of our core service during
the year as a result of the improvements we made to our PC postage software features. Total postage printed using our service
during 2006 was up 21% to approximately $229 million from approximately $189 million during 2005. We continued to attract a
significant number of new customers from online advertising and direct mail, our primary marketing channels.
The following table sets forth our results of operation as a percentage of total revenue for the periods indicated:
Twelve Months Ended
December 31,
2006
2005
Total Revenues
Service
63.6
%
68.5
%
Product
10.3
%
11.9
%
Insurance
1.7
%
2.3
%
PhotoStamps
22.2
%
14.4
%
Other
2.2
%
2.9
%
Total revenues
100.0
%
100.0
%
Cost of revenues
Service
11.7
%
14.9
%
Product
3.2
%
3.6
%
Insurance
0.5
%
0.7
%
PhotoStamps
13.7
%
8.9
%
Other
0.2
%
0.2
%
Total cost of revenues
29.3
%
28.3
%
Gross profit
70.7
%
71.7
%
Operating expenses:
Sales and marketing
32.9
%
32.0
%
Research and development
10.4
%
10.7
%
General and administrative
13.8
%
15.6
%
Total operating expenses
57.1
%
58.3
%
Income from operations
13.6
%
13.4
%
Other income, net
6.0
%
3.6
%
Income before income taxes
19.6
%
17.0
%
Provision for income taxes
0.2
%
0.4
%
Net income
19.4
%
16.6
%
25
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