Stamps.com 2014 Annual Report Download - page 41

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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 an increased number of new customers acquired, which was driven by our increased spend
in Core mailing and shipping marketing channels, while our lost 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 2013 was
$258 and $21.51 respectively, which increased by 2% compared to $254 and $21.18, respectively in 2012. The increase in average revenue per
paid customer was primarily attributable to higher service revenue per paid customer from our high volume shipping and enterprise customers
and higher store revenue per paid customer from increased sales of NetStamps labels; partially offset by a reduction in revenue per paid
customer from our Amazon partnership.
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 revenue from subscription, transaction and other fees related to our mailing and
shipping services and integrations; (2) product revenue from the direct sale of consumables and supplies through our Supplies Store; (3)
insurance revenue from the sale of package insurance to our customers; (4) PhotoStamps revenue from selling sheets of PhotoStamps postage;
and (5) other revenue, consisting primarily of advertising revenue derived from advertising programs with our existing customers.
Service revenue increased 12% to $99.0 million in 2013 from $88.2 million in 2012. The 12% increase in service revenue in 2013 consisted of a
12% increase in service revenue from our Core mailing and shipping business while the service revenue from our Non-Core mailing and
shipping business decreased 5%. The 12% increase in our Core mailing and shipping service revenue consisted of an 11% increase in our annual
average paid customers and a 2% increase in our annual average revenue per paid customer.
36
Table of Contents
Year
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Annual
Average
2013
465
467
464
468
466
2012
413
418
419
435
421
2013
2012
% Change
Average paid customers for the year
466
421
11
%
Average annual revenue per paid customer
$
258
$
254
2
%
Core Mailing and Shipping Revenue
$
120,232
$
106,979
12
%
2013
2012
Revenues
Service
99,013
$
88,173
Product
16,580
14,710
Insurance
7,515
7,120
PhotoStamps
4,710
5,651
Other
1
7
Total revenues
127,819
$
115,661
Revenue as a percentage of total revenues
Service
77
%
76
%
Product
13
%
13
%
Insurance
6
%
6
%
PhotoStamps
4
%
5
%
Other
0
%
0
%
Total revenues
100
%
100
%