Stamps.com 2014 Annual Report Download - page 33

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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 mailing and
shipping in a software-only business model in 1999. In addition, we now offer multi-carrier shipping solutions under the brand names
ShipStation and ShipWorks as a result of our recent acquisitions.
Mailing and Shipping Business References
When we refer to our “Mailing and shipping business”, we are referring to our Mailing and Shipping Services and Integrations, Mailing &
Shipping Supplies Store, Branded Insurance offering and Multi Carrier Services. We do not include our PhotoStamps business when we refer to
our mailing and shipping business.
When we refer to our "Core mailing and shipping business", we are referring to the portion of our mailing and shipping business targeting our
small business, enterprise and high volume shipping customers acquired through our Core mailing and shipping marketing channels which
include partnerships, online advertising, direct mail, direct sales, traditional media advertising and others.
When we refer to our "Non-
Core mailing and shipping business", we are referring to the portion of our mailing and shipping 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 “Mailing and shipping revenue”, we are referring to our service, product and insurance revenue generated by all of our
mailing and shipping customers.
When we refer to our “Core mailing and shipping 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 mailing and shipping marketing channels.
When we refer to our “Non-Core mailing and shipping 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 mailing and
shipping business, we believe it is useful to discuss our Core mailing and shipping business separately from our Non-Core mailing and shipping
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 mailing and shipping businesses typically experience different
customer and financial metrics results and trends which are best discussed separately from each other.
28
Table of Contents
ITEM 7.
MANAGEMENT
’
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.