Stamps.com 2015 Annual Report Download - page 38
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Please find page 38 of the 2015 Stamps.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.2015 2014
CostofRevenues
Service $ 27,967 $ 19,687
Product 5,971 5,516
Insurance 3,984 3,210
CustomizedPostage 6,013 4,493
Totalcostofrevenues $ 43,935 $ 32,906
Costaspercentageofassociatedrevenue
Service 16% 17%
Product 33% 33%
Insurance 34% 35%
CustomizedPostage 83% 82%
Totalcostasapercentageoftotalrevenues 21% 22%
TABLE OF CONTENTS
Cost of Revenue
Thefollowingtableshowscostofrevenuesandcostofrevenuesasapercentageofitsassociatedrevenuefortheperiodsindicated
(inthousandsexceptpercentage):
Costofservicerevenueprincipallyconsistsofthecostofcustomerservice,certainpromotionalexpenses,systemoperatingcosts,
creditcardprocessingfeesandcustomermisprintsthatdonotqualifyforreimbursementfromtheUSPS.Costofproductrevenue
principallyconsistsofthecostofproductssoldthroughourSuppliesStoresandtherelatedcostsofshippingandhandling.Thecostof
insurancerevenueprincipallyconsistsofparcelinsuranceofferingcoststhroughourthirdpartyinsurancepartners.Costofcustomized
postagerevenueprincipallyconsistsofthefacevalueofpostage,customerservice,imagereviewcosts,andprintingandfulfillment
costs.
Costofservicerevenueincreased42%to$28.0millionin2015from$19.7millionin2014.Theincreasewasprimarily
attributabletohighercustomerservicecoststosupportourgrowingcustomerbase,highercreditcardprocessingfeesassociatedwith
ourhigherrevenueandhigherpromotionalexpenses.Promotionalexpenses,whichrepresentsamaterialportionoftotalcostofservice
revenue,isexpensedintheperiodinwhichacustomerqualifiesforthepromotionwhiletherevenueassociatedwiththeacquired
customerisearnedoverthecustomer'slifetime.Asaresult,promotionalexpensefornewlyacquiredcustomersmayexceedthe
revenueearnedfromthosecustomersinthatperiod.Promotionalexpenseincreased11%to$3.4millionin2015from$3.1millionin
2014.Theincreaseinourpromotionalexpensewasprimarilyduetohighercustomeracquisition.The42%increaseincostofservice
revenuewaslessthanthe53%increaseinservicerevenueoverthesametimeperiod.
Costofproductrevenueincreased8%to$6.0millionin2015from$5.5millionin2014.The8%increaseincostofproduct
revenuewasconsistentwiththe8%increaseinproductrevenueoverthesametimeperiod.
Costofinsurancerevenueincreased24%to$4.0millionin2015from$3.2millionin2014.Theincreaseincostofinsurance
revenueresultedfromgrowthinthenumberofinsurancetransactions,whichwasprimarilyattributabletoouracquisitions.The24%
increaseincostofinsurancerevenuewaslessthanthe27%increaseininsurancerevenue.
Costofcustomizedpostagerevenueincreased34%to$6.0millionin2015from$4.5millionin2014.Thecostofcustomized
postagerevenueresultedfromthegrowthinhighvolumebusinessorders.The34%increaseincostofcustomizedpostagerevenuewas
consistentwiththe33%increaseincustomizedpostagerevenueoverthesametimeperiod.
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