Stamps.com 2009 Annual Report Download - page 27

TABLE OF CONTENTS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with
the “Selected Financial Data” and our financial statements and the related notes thereto. This discussion contains forward-
looking statements that involve risks and uncertainties that could cause actual results to differ materially from historical results
or anticipated results including those set forth in the “Risk Factors” section of this report.
Overview
Stamps.com® is the leading provider of Internet-based postage solutions. Customers use our service to mail and ship a
variety of mail pieces, including postcards, envelopes, flats and packages, using a wide range of USPS mail classes including
First Class Mail®, Priority Mail®, Express Mail®, Media Mail®, Parcel Post®, and others. Our customers include individuals,
small businesses, home offices, medium-size businesses and large enterprises, and within these categories we target both mailers
and shippers. We were the first ever USPS-licensed vendor to offer PC Postage® in a software-only business model in 1999. In
May 2009, we successfully completed the market test for PhotoStamps®, a new form of postage that allows consumers to turn
digital photos, designs or images into valid US postage. Any reference in this document to the PC Postage business excludes our
PhotoStamps business.
Section 382 Update
We currently have federal and state net operating loss (“NOL”) carry-forwards of approximately $230 million and $150
million, respectively, with potential value of up to $94 million in tax savings over the next 15 years. Under Internal Revenue
Code Section 382 rules, if a “change of ownership” is triggered, our NOL asset may be impaired. A change in ownership can
occur whenever there is a shift in ownership by more than 50 percentage points by one or more “5% shareholders” within a
three-year period. We estimate that as of December 31, 2009 we were at approximately a 26% level compared with the 50%
level that would trigger impairment of our NOL asset.
Under our certificate of incorporation, any person, company or investment firm that wishes to become a “5%
shareholder” (as defined in our certificate of incorporation) must first obtain a waiver from our board of directors. In addition
any person, company or investment firm that is already a “5% shareholder” of ours cannot make any additional purchases of our
stock without a waiver from our board of directors. These NOL Protective Measures are more particularly discussed in our
Definitive Proxy Statement filed with the Securities and Exchange Commission on April 2, 2008.
As of February 28, 2010, we had 14,287,786 shares outstanding, and therefore ownership of approximately 715,000 shares or
more would currently constitute a “5% shareholder”. We strongly urge that any stockholder contemplating owning more
than 600,000 shares contact us before doing so.
Results of Operations
Years Ended December 31, 2009 and 2008
Total revenue in 2009 was $82.1 million, a decrease of 3% from $84.9 million in 2008. PC Postage revenue, including
service revenue, product revenue and insurance revenue in 2009 was $73.6 million, an increase of 1% compared to $73.0 million
in 2008. PhotoStamps revenue in 2009 was $8.5 million, a decrease of 29% compared to $11.9 million in 2008. The following
table sets forth the breakdown of revenue for 2008 and 2009 and the resulting percent change (revenue in $000s):
Total Revenue 2009 2008 % Change
Service Revenue
$
61,372
$
61,556
less than 1
%
Product Revenue
$
10,653
$
9,906
8
%
Insurance Revenue
$
1,598
$
1,574
2
%
PC Postage Revenue
$
73,623
$
73,036
1%
PhotoStamps Revenue
$
8,485
$
11,876
-
29
%
Other Revenue
$
16
$
0
N/A
Total Revenue
$
82,124
$
84,912
-
3%
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