Stamps.com 2008 Annual Report Download - page 28

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Revenue
Service revenue increased 4% from $53.8 million in 2006 to $55.9 million in 2007. The increase in service revenue is
primarily due to the increase in our successfully billed customers as a result of the growth in our customer base. As a percentage
of total revenue, service revenue increased one percentage point to 65% in 2007 from 64% in 2006, primarily as a result of the
decrease in revenue from our PhotoStamps product.
Product revenue increased 11% from $8.7 million in 2006 to $9.6 million in 2007. The increase was primarily attributable to
the following: (1) our launch of a new supplies store interface in September 2006 from which we derived the benefit during all
of 2007; (2) growth in our paid customer base; (3) marketing the supplies store to our existing customer base; (4) the additional
SKUs we added to our store; and (5) growth in postage printed, which helps drive sales of consumable supplies such as labels.
Total postage printed by customers using our service during 2007 was $272 million, a 19% increase from the $229 million
printed during 2006. As a percentage of total revenue, product revenue increased one percentage point to 11% in 2007 from 10%
in 2006.
Insurance revenue increased 2% from $1.4 million in 2006 to $1.5 million in 2007, primarily as a result of an increase in the
average of dollar value insured per transaction. As a percentage of total revenue, insurance revenue was 2% in each of 2007 and
2006.
PhotoStamps revenue decreased 5% from $18.8 million in 2006 to $17.9 million in 2007. As a percentage of total revenue,
PhotoStamps revenue decreased one percentage point to 21% in 2007 from 22% in 2006. The decrease, both on an absolute basis
and as a percentage of total revenue, is primarily due to a decrease in
Total revenues
100.0 %
100.0 %
Cost of revenues:
Service
11.3 %
11.7 %
Product
3.8 %
3.2 %
Insurance
0.5 %
0.5 %
PhotoStamps
13.8 %
13.7 %
Other
0.1 %
0.2 %
Total cost of revenues
29.5 %
29.3 %
Gross profit
70.5 %
70.7 %
Operating expenses:
Sales and marketing
38.6 %
32.9 %
Research and development
9.6 %
10.4 %
General and administrative
14.6 %
13.8 %
Total operating expenses
62.8 %
57.1 %
Income from operations
7.7 %
13.6 %
Other income, net
5.2 %
6.0 %
Income before income taxes
12.9 %
19.6 %
Provision for income taxes
0.5 %
0.2 %
Net income
12.4 %
19.4 %
27
TABLE OF CONTENTS
the average revenue per sheet shipped. Total PhotoStamps sheets shipped during 2007 was approximately 1.1 million, a 3%
increase compared to 1.0 million in 2006. Average revenue per sheet shipped for 2007 was $16.34, an 8% decrease compared to
$17.74 for 2006. Both the increase in sheets shipped and decrease in average revenue per PhotoStamps sheet shipped were
primarily attributable to a higher mix of high volume business PhotoStamps orders, which carry a lower per sheet price. In