Stamps.com 2013 Annual Report Download - page 28

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Item 6. “Selected
Financial Data
” of this Report and our financial statements and the related notes thereto included in this Report. 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 Item 1A. “Risk Factors” of this Report. See the discussion of forward-looking statements on page
1 of Part I of this Report.
Overview
Stamps.com is the leading provider of Internet-based postage solutions. Our customers use our service to mail and ship a variety of mail
pieces, including postcards, envelopes, flats and packages, using a wide range of United States Postal Service (“USPS”) mail classes, including
First Class Mail®, Priority Mail®, Priority Mail Express®, Media Mail®, Parcel Select®, and others. Customers using our service receive
discounted postage rates compared to USPS retail rates on certain mail pieces such as First Class letters and domestic and international Priority
Mail and Priority Mail Express packages. Our customers include individuals, small businesses, home offices, medium-size businesses and large
enterprises, and within these segments 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.
PC Postage Business References
When we refer to our “PC Postage business”, we are referring to our PC Postage Service and Integrations, Mailing & Shipping Supplies Store
and Branded Insurance offering. We do not include our PhotoStamps business when we refer to our PC Postage business.
When we refer to our "Core PC Postage business", we are referring to the portion of our PC Postage business targeting our small business,
enterprise and high volume shipping customers acquired through our Core PC Postage marketing channels which include partnerships, online
advertising, direct mail, direct sales, traditional media advertising and others.
When we refer to our "Non-Core PC Postage business", we are referring to the portion of our PC Postage business that targets a more consumer
oriented customer through the online enhanced promotion marketing channel. In the online enhanced promotion marketing channel, we work
with various companies to advertise our service in a variety of sites on the Internet. These companies typically offer an additional promotion
(beyond what we typically offer) directly to the customer in order to get the customer to try our service and we find that this channel attracts
more consumer oriented customers.
When we refer to our “PC Postage Revenue”, we are referring to our service, product and insurance revenue generated by all of our PC Postage
customers.
When we refer to our “Core PC Postage Revenue”, we are referring to the portion of the service, product and insurance revenue that was
generated by customers who were acquired through our Core PC Postage marketing channels.
When we refer to our “Non-Core PC Postage Revenue”, we are referring to the portion of the service, product and insurance revenue that was
generated by customers who were acquired through our online enhanced promotion marketing channel. Within our PC Postage business, we
believe it is useful to discuss our Core PC Postage business separately from our Non-Core PC Postage business because each business targets
and typically serves different customer segments and utilizes different marketing channels to acquire those customers. As a result of these
differences, the Core and Non-
Core PC Postage businesses typically experience different customer and financial metrics results and trends which
are best discussed separately from each other.
24
Table of Contents
ITEM 7.
MANAGEMENT
’
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.