Stamps.com 2015 Annual Report Download - page 44
Download and view the complete annual report
Please find page 44 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.2014 2013
CostofRevenues
Service $ 19,687 $ 15,422
Product 5,516 5,694
Insurance 3,210 2,685
PhotoStamps 4,493 3,699
Totalcostofrevenues $ 32,906 $ 27,500
Costaspercentageofassociatedrevenue
Service 17% 16%
Product 33% 34%
Insurance 35% 36%
PhotoStamps 82% 79%
Totalcostasapercentageoftotalrevenues 22% 22%
TABLE OF CONTENTS
Cost of Revenue
Thefollowingtableshowscostofrevenuesandcostofrevenuesasapercentageofitsassociatedrevenuefortheperiodsindicated
(inthousandsexceptpercentage):
Costofservicerevenueprincipallyconsistsofthecostofcustomerservice,certainpromotionalexpenses,systemoperatingcosts,
creditcardprocessingfeesandcustomermisprintsthatdonotqualifyforreimbursementfromtheUSPS.Costofproductrevenue
principallyconsistsofthecostofproductssoldthroughourMailing&ShippingSuppliesStoreandtherelatedcostsofshippingand
handling.Thecostofinsurancerevenueprincipallyconsistsofparcelinsuranceofferingcosts.CostofPhotoStampsrevenue
principallyconsistsofthefacevalueofpostage,customerservice,imagereviewcosts,andprintingandfulfillmentcosts.
Costofservicerevenueincreased28%to$19.7millionin2014from$15.4millionin2013.Theincreaseincostofservice
revenuewasprimarilyattributabletohighercustomerservicecosttosupportourgrowingcustomerbase,higherpromotionalexpense
andhighervariablecostsassociatedwithourgrowthinrevenue.Promotionalexpense,whichrepresentsamaterialportionoftotalcost
ofservicerevenue,isexpensedintheperiodinwhichacustomerqualifiesforthepromotionwhiletherevenueassociatedwiththe
acquiredcustomerisearnedoverthecustomer'slifetime.Asaresult,promotionalexpensefornewlyacquiredcustomersmayexceed
therevenueearnedfromthosecustomersinthatperiod.Promotionalexpenseincreased28%to$3.1millionin2014from$2.4million
in2013.Theincreaseinpromotionexpensein2014wasprimarilyduetohighercustomeracquisitioninandanadjustmenttoour
redemptionassumptionin2013.
Costofproductrevenuedecreased3%to$5.5millionin2014from$5.7millionin2013.Costofproductrevenueasapercentage
ofproductrevenuedecreasedfrom34%in2013to33%in2014.Thedecreaseincostofproductrevenuewasprimarilyattributableto
decreasedfulfillmentcosts.
Costofinsurancerevenueincreased20%to$3.2millionin2014from$2.7millionin2013.Thepercentageincreaseincostof
insurancerevenuewasconsistentwiththepercentageincreaseininsurancerevenue.Costofinsurancerevenueasapercentageof
insurancerevenuedecreasedfrom36%in2013to35%in2014.Theincreaseincostofinsurancerevenuewasconsistentwiththe
increaseininsurancerevenue.
CostofPhotoStampsrevenueincreased21%to$4.5millionin2014from$3.7millionin2013.CostofPhotoStampsrevenueasa
percentageofPhotoStampsrevenueincreasedfrom79%in2013to82%in2014.Theincreasewasprimarilyattributabletothe
increaseinPhotoStampsrevenuefromhighvolumebusinessorders.ThedecreaseinPhotoStampsrevenueasapercentageof
PhotoStampsrevenuewasprimarilyduetohigherhighvolumebusinessorderscomparedtoPhotoStampsordersthroughourwebsite
in2014.HighvolumebusinessordershavealoweraveragerevenueperPhotoStampssheetthanwebsiteordersbuthavethesame
associatedcosts.
40