Stamps.com 2014 Annual Report Download - page 35

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The following table sets forth the breakdown of mailing and shipping revenue, which includes Core mailing and shipping revenue and Non-
Core
mailing and shipping revenue for 2014 and 2013 and the resulting percent change (revenue in thousands):
The increase in Core mailing and shipping revenue was driven by both an increase in annual average paid customers and an increase in annual
average revenue per paid customer. Annual average paid customers increased 7% to 500,000 in 2014 from 466,000 in 2013. Annual average
revenue per paid customer increased 8% to $280 in 2014 from $258 in 2013. The decrease in Non-
Core mailing and shipping revenue was
primarily attributable to lower marketing spend in the online enhanced promotion channel. We expect Non-
Core mailing and shipping revenue
will continue to be down in 2015 compared to 2014 as we expect to continue to minimize investments in these areas of our business.
We define paid customers for the quarter as ones from whom we successfully collected service fees at least once during that quarter, and we
define average paid customers for the year as the average of the paid customers for each of the four quarters during the year.
The following table sets forth the number of paid customers in the period for our Core mailing and shipping business (in thousands):
The following table sets forth the growth in paid customers and average annual revenue per paid customer for our Core mailing and shipping
business (in thousands except average annual revenue per paid customer):
The increase in paid customers is primarily driven by (1) a higher number of Stamps.com new paid customers compared to the prior year as a
result of our increased spending in Core mailing and shipping marketing channels, (2) the addition of new paid customers from ShipStation and
ShipWorks as a result of our acquisitions in 2014, and (3) our customer churn rates remained at levels that were consistent with the prior year.
For our Core Mailing and Shipping Business, our average annual and monthly Core mailing and shipping revenue per paid customer in 2014 was
$280 and $23.27, respectively, which increased by 8% compared to $258 and $21.51, respectively, in 2013. The increase in average revenue per
paid customer (“ARPU”)
was primarily the result of the addition of new paid customers from our acquisitions of ShipStation and ShipWorks
where the ARPU for those newly acquired paid customers is higher as compared to the ARPU from the existing Stamps.com small business
customers as well as growth in Stamps.com’s high volume shipping business.
30
Table of Contents
2014
2013
% Change
Core Mailing and Shipping Revenue
$
139,672
$
120,232
16
%
Non
-Core Mailing and Shipping Revenue
2,124
2,876
(26
%)
Mailing and Shipping Revenue
141,796
123,108
15
%
Year
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Annual
Average
2014
492
492
500
514
500
2013
465
467
464
468
466
2014
2013
% Change
Average paid customers for the year
500
466
7
%
Average annual revenue per paid customer
$
280
$
258
8
%
Core Mailing and Shipping Revenue
$
139,672
$
120,232
16
%