Stamps.com 2008 Annual Report Download - page 27

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TABLE OF CONTENTS
Expectations for 2009
We expect the following trends for 2009 compared with 2008.
Our results are subject to macro economic factors and a continued, prolonged recession, among other factors, could cause
these trends to be worse than our current expectations.
Years Ended December 31, 2007 and 2006
Total revenue for 2007 increased 1% to $85.8 million from $84.6 million in 2006. PC Postage subscriber related revenue,
including service revenue, product revenue and insurance revenue, in 2007 was $67.0 million, an increase of 5% compared to
$64.0 million in 2006. PhotoStamps revenue in 2007 was $17.9 million, a decrease of 5% compared to $18.8 million in 2006.
We estimate that subscriber related revenue for customer acquired through our enhanced promotion channel for 2007 was
$9.5 million, a decrease of 8% from $10.3 million in 2006. We estimate that subscriber related revenue for customers acquired
through our non-enhanced promotion channels for 2007 was $57 million, an increase of 7% from $53.7 million in 2006. The
decrease in enhanced promotion subscriber revenue and increase in non-enhanced promotion subscriber revenue was attributable
to the decrease in our marketing investment in the enhanced promotion channel and our increase in marketing investments in
other marketing channels.
The following table sets forth the total number of paid customers originally acquired through our non-enhanced promotion
channels on a quarterly basis (in thousands):
• We expect to increase our PC postage marketing spending on customers acquired through our non-enhanced promotion
channels and expect that subscriber related revenue for customers acquired through these channels will increase slightly.
We expect to reduce spending on our PC Postage marketing for customers acquired through the enhanced promotion
channel and expect that subscriber related revenue for customers acquired through this channel will decrease. We expect
that both our spending on PhotoStamps marketing and revenue from PhotoStamps will decrease.
• We expect PC Postage gross margins to be similar to 2008 and expect PhotoStamps gross margins to decrease compared
with 2008 due to lower expected PhotoStamps revenue.
• We expect Other Income, net to decrease due to lower invested cash balances and lower interest rates.
We believe that the increase in paid customers in 2007 was attributable to our increased customer acquisition spending. For
customers originally acquired through our non-enhanced promotion channels, our average subscriber related monthly revenue
per paid customer in 2007 was $17.26 compared to $17.23 in 2006.
Year
First Quarter
Paid Customers
(000)
Second Quarter Paid
Customers (000)
Third Quarter
Paid Customers
(000)
Fourth Quarter
Paid Customers
(000)
2007
267
270
281
293
2006
268
261
251
258
26
TABLE OF CONTENTS
The following table sets forth our results of operations as a percentage of total revenue for the periods indicated:
Twelve Months Ended
December 31,
2007
2006
Total Revenues:
Service
65.2 %
63.6 %
Product
11.2 %
10.3 %
Insurance
1.7 %
1.7 %
PhotoStamps
20.8 %
22.2 %