Stamps.com 2014 Annual Report Download - page 36

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Revenue by Product
The following table shows our components of revenue and their respective percentages of total revenue for the periods indicated (in thousands
except percentage):
Our revenue is derived primarily from five sources: (1) service and transaction revenues related to our mailing and shipping services; (2) product
revenue from the direct sale of consumables and supplies through our Supplies Store; (3) package insurance revenue from our branded insurance
offerings; (4) PhotoStamps revenue from the sale of PhotoStamps postage labels; and (5) other revenue, consisting of advertising revenue
derived from advertising programs with our existing customers.
Service revenue increased 17% to $115.7 million in 2014 from $99.0 million in 2013. The 17% increase in service revenue primarily consisted
of a 18% increase in service revenue from our Core mailing and shipping business while the service revenue from our Non-Core mailing and
shipping business decreased 27%. The 18% increase in our Core mailing and shipping service revenue consisted of a 7% increase in our annual
average paid customers and 10% increase in our annual average revenue per paid customer.
Product revenue increased 2% to $16.9 million in 2014 from $16.6 million in 2013. The increase was primarily attributable to the following: (1)
increase in label sales; (2) growth in our paid customer base; (3) the postal rate increase in January 2014, which generated incremental label sales
for the period of time around the rate increase; (4) marketing our Supplies Store to our existing customer base; and (5) growth in postage printed,
which helps drive sales of consumable supplies such as labels. Total postage printed by customers using our service in 2014 was $1.8 billion, a
13% increase from the $1.6 billion printed in 2013.
Insurance revenue increased 23% to $9.2 million in 2014 from $7.5 million in 2013. The increase in insurance revenue was primarily attributable
to increased package insurance purchases as a result of our growth in packages shipped. Growth in packages shipped was attributable to both
organic growth through Stamps.com’s mailing and shipping solutions as well as our recent acquisitions whose solutions target shipping
customers who are more likely than mailing customers to purchase insurance.
PhotoStamps revenue increased 16% to $5.4 million in 2014 from $4.7 million in 2013. The increase was primarily attributable to an increase in
high volume business orders which have become a higher percentage of PhotoStamps revenue but are less predictable and create greater
fluctuations in our PhotoStamps revenue numbers. The increase in PhotoStamps revenue was partially offset by a decrease in PhotoStamps
revenue from orders placed through our website. The decrease in revenue from website orders is primarily attributable to a reduction in our
PhotoStamps sales and marketing spending in 2014 compared with that of 2013, and we plan to continue to reduce our sales and marketing
spending on PhotoStamps in future periods to maintain or improve profitability in that business. Total PhotoStamps sheets shipped in 2014
increased 31% to 338,000 compared to 257,000 in 2013 and average revenue per PhotoStamps sheet shipped decreased 12% to $16.14 in 2014
compared to $18.30 in 2013. The increase in sheets shipped and decrease in average revenue per PhotoStamps sheet were both primarily
attributable to increased business orders which sell in larger sheet volumes but typically have a lower price per sheet. We expect PhotoStamps
revenue could decrease in 2015 compared to 2014 as it could be challenging to repeat the same level of non-recurring high volume business
orders in 2015 as we achieved in 2014.
31
Table of Contents
2014
2013
Revenues
Service
115,696
$
99,013
Product
16,883
16,580
Insurance
9,217
7,515
PhotoStamps
5,450
4,710
Other
23
1
Total revenues
147,269
$
127,819
Revenue as a percentage of total revenues
Service
79
%
77
%
Product
11
%
13
%
Insurance
6
%
6
%
PhotoStamps
4
%
4
%
Other
0
%
0
%
Total revenues
100
%
100
%