Stamps.com 2014 Annual Report Download - page 72

STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Segment Information
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by
the chief operating decision maker ("CODM") for purposes of allocating resources and evaluating financial performance. The Company's
CODM reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial
performance. As such, the Company's operations constitute a single operating segment and one reportable segment. The Company offers similar
services consisting primarily of Internet-based postage solutions to substantially all of its customers, which primarily consist of individuals,
small businesses, home offices, medium-size businesses and large enterprises in the United States. Substantially all assets were held and all
revenue was generated in the United States during all periods presented.
Website Development Costs
We develop and maintain our website. Costs associated with the operation of our website consist primarily of software and hardware purchased
from third parties and administrative cost relating to the maintenance and development of the website. Costs related to the purchase of software
and hardware are capitalized based on our capitalization policy. These capitalized costs are amortized based on their estimated useful life.
Administrative costs related to the maintenance and development of our website are expensed as incurred.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09, Revenue from Contracts
with Customers ("ASU 2014-
09") an updated standard on revenue recognition. This ASU will supersede the revenue recognition requirements in
Accounting Standards Codification Topic 605, Revenue Recognition, and most industry-specific guidance. ASU 2014-09 provides
enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of
companies reporting using US GAAP and International Financial Reporting Standards. The core principle of the new standard is for companies
to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the Company
expects to be entitled in exchange for those goods or services. In doing so the Company may be required to use more judgment and make more
estimates than under current authoritative guidance. ASU 2014-09 will be effective for the Company in the first quarter of fiscal 2017 and may
be applied on a full retrospective or modified retrospective approach. The Company is currently evaluating the impact the adoption of this
standard will have on its consolidated financial statements.
ShipStation Acquisition and Contingent Consideration
On June 10, 2014, we acquired 100% of the outstanding equity of Auctane LLC, which operates ShipStation, in a cash and contingent stock
transaction. ShipStation, based in Austin, Texas, offers monthly subscription based e-commerce shipping software primarily under the brands
ShipStation and Auctane. ShipStation is a leading web-based shipping software solution that allows online retailers and e-commerce merchants
to organize, process, fulfill and ship their orders quickly and easily. ShipStation supports automatic order importing from over 50 shopping carts
and marketplaces, including eBay, Amazon, Shopify, Bigcommerce, Volusion, Squarespace and others. ShipStation offers multi-carrier
shipping options, and automation features like custom hierarchical rules and product profiles that allow customers to easily and automatically
optimize their shipping. Using ShipStation, an online retailer or e-
commerce merchant can ship their orders from wherever they sell and however
they ship.
F-15
Table of Contents
3. Acquisitions