Stamps.com 2014 Annual Report Download - page 24

The USPS could decide that PhotoStamps should no longer be an approved product for such reasons as the belief that PhotoStamps presents an
unacceptable risk to USPS revenues, exposes the USPS or its customers to legal liability, or causes public or political embarrassment or harm to
the USPS in any way. If the USPS were to discontinue PhotoStamps, our revenues and operating results will suffer.
In addition, USPS regulations may require that our personnel with access to postal information or resources receive security clearance prior to
doing relevant work. We may experience delays or disruptions if our personnel cannot receive necessary security clearances in a timely manner,
if at all. The regulations may limit our ability to hire qualified personnel. For example, sensitive clearance may only be provided to US citizens
or aliens who are specifically approved to work on USPS projects.
Finally, any approved USPS market test or new service that benefits us could also ultimately be suspended or cancelled by the USPS, causing
disruptions to our business.
The USPS could modify or terminate agreements and other financial compensation arrangements.
The USPS could decide to amend, renegotiate or terminate agreements or financial compensation arrangements that exist now or in the future.
For instance, if the USPS decides to amend, renegotiate or terminate our credit card cost sharing agreement, which is an agreement that governs
the allocation of credit card fees paid by the USPS and us, our revenues and operating results could suffer. In addition, if the USPS decides to
amend or renegotiate our arrangement under which we are compensated directly by the USPS for customers or integration partners who print a
certain amount of Priority or Priority Mail Express postage, our revenue and operating results may be negatively impacted. If the USPS decides
to terminate our agreement under which we are compensated directly by the USPS for customers or integration partners who print a certain
amount of Priority or Priority Mail Express postage, our revenue and operating results will suffer.
The USPS could modify or terminate discounts our customers receive.
The USPS could decide to amend or terminate the discounts our customers and integration partners receive. Customers using our services
receive discounted postage rates, either from Stamps.com or from integration partners that provide discounted rates, compared to USPS retail
rates on certain mail pieces such as First Class letters, domestic and international Priority Mail and Priority Mail Express packages, and other
discounts available to high-
volume shipping customers. If the USPS decides to withdraw certain discounts or even remove the discounts entirely,
our revenue and operating results will suffer. If the Postal Regulatory Commission decides the discounts are unlawful and requires the USPS to
cancel or change them, then our revenue and operating results will suffer.
If we are unable to compete successfully against alternative methods of accessing relevant mailing and shipping services, our revenues
and operating results will suffer.
We compete with all of the alternate ways that consumers and businesses may access mailing and shipping services from the USPS, including
the following: online services available at USPS.com; USPS retail locations; USPS kiosks; multi-carrier solutions; integrated web shipping
solutions such as eBay/PayPal or Amazon.com; traditional postage meters; other USPS approved PC Postage vendors; USPS permit manifesting
solutions; and commercial retail locations that sell postage or shipping services (for example grocery stores, discount warehouses, small business
mailing and shipping centers, office supply chains, and others). Some of these alternative means of accessing USPS services are available with
no additional markup over the face value of postage and some are available with discounted postage rates that are better than the discounts that
we are able to provide to our customers. With our 2014 acquisitions of ShipStation and ShipWorks, we also now compete with multi-carrier
solutions providers. We also compete with the technology solutions available from private carriers that allow customers to access those private
carriers, and which are typically provided to the customers for no additional fees.
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