Stamps.com Reports Third Quarter 2018 Results
Third Quarter 2018 Financial Highlights
Total revenue was
$143.5 million, up 25% compared to $115.1 millionin the third quarter of 2017.
GAAP net income was
$33.4 million, down 28% compared to $46.2 millionin the third quarter of 2017.
GAAP net income per fully diluted share was
$1.75, down 30% compared to $2.49in the third quarter of 2017.
Non-GAAP adjusted EBITDA was
$61.0 million, up 8% compared to $56.6 millionin the third quarter of 2017.
Non-GAAP adjusted income per fully diluted share was
$2.76, up 3% compared to $2.68in the third quarter of 2017.
“We are very pleased with our third quarter financial performance and
with the successful closing of our acquisition of MetaPack,” said
Third Quarter 2018 Detailed Results
Third quarter 2018 total revenue was
Third quarter 2018 GAAP income from operations was
Third quarter 2018 GAAP income from operations included
Third quarter 2017 GAAP income from operations included
Therefore, third quarter 2018 non-GAAP income from operations, non-GAAP adjusted income, and non-GAAP adjusted income per fully diluted share increased by 8%, 6% and 3% year-over-year, respectively.
Non-GAAP income from operations, non-GAAP adjusted income, and non-GAAP adjusted income per share are described further in the “About Non-GAAP Financial Measures” section of this press release and are reconciled to the corresponding GAAP measures in the following tables (unaudited):
Reconciliation of GAAP to Non-GAAP Financial Measures (Third Quarter 2018)
|Third Quarter Fiscal 2018|
All amounts in millions except per share data:
|Cost of Revenues||$||33.12||$||0.78||$||-||$||-||$||-||$||-||$||32.34|
|Research & Development||14.43||2.00||-||-||-||-||12.43|
|Sales & Marketing||26.74||1.82||-||-||-||-||24.93|
|General & Administrative||24.92||4.31||4.76||1.57||-||-||14.28|
|Income (Loss) from Operations||44.29||(8.91||)||(4.76||)||(1.57||)||-||-||59.53|
|Interest and Other Income (Loss)||(1.54||)||-||-||(1.03||)||(0.09||)||-||(0.41||)|
|Benefit (Expense) for Income Taxes||(9.34||)||-||-||-||-||(2.83||)||(6.50||)|
|Adjusted Income (Loss)||33.41||(8.91||)||(4.76||)||(2.60||)||(0.09||)||(2.83||)||52.61|
|On a diluted per share basis||$||1.75||$||(0.47||)||$||(0.25||)||$||(0.14||)||$||(0.00||)||$||(0.15||)||$||2.76|
|Shares used in per share calculation||19.05||19.05||19.05||19.05||19.05||19.05||19.05|
Reconciliation of GAAP to Non-GAAP Financial Measures (Third Quarter 2017)
|Third Quarter Fiscal 2017||Stock-Based
All amounts in millions except per share data:
|Cost of Revenues||$||21.53||$||0.44||$||-||$||-||$||-||$||-||$||-||$||21.09|
|Research & Development||12.04||2.34||-||-||-||-||-||9.70|
|Sales & Marketing||20.59||1.92||-||-||-||-||-||18.67|
|General & Administrative||25.24||6.64||4.00||6.00||(1.86||)||-||-||10.47|
|Income (Loss) from Operations||35.66||(11.33||)||(4.00||)||(6.00||)||1.86||-||-||55.13|
|Interest and Other Income (Loss)||(0.85||)||-||-||-||-||(0.09||)||-||(0.75||)|
|Benefit (Expense) for Income Taxes||11.41||-||-||-||-||-||16.03||(4.62||)|
|Adjusted Income (Loss)||46.23||(11.33||)||(4.00||)||(6.00||)||1.86||(0.09||)||16.03||49.76|
|On a diluted per share basis||$||2.49||$||(0.61||)||$||(0.22||)||$||(0.32||)||$||0.10||$||(0.01||)||$||0.86||$||2.68|
|Shares used in per share calculation||18.55||18.55||18.55||18.55||18.55||18.55||18.55||18.55|
Third Quarter GAAP Net Income and Non-GAAP Adjusted EBITDA
Third quarter 2018 GAAP net income was
Third quarter 2018 non-GAAP adjusted EBITDA was
Adjusted EBITDA is a non-GAAP financial measure which is described further in the “About Non-GAAP Financial Measures” section of this press release and is reconciled to GAAP net income in the following table (unaudited):
Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA
|Third Quarter||Three Months ended|
|All amounts in millions||September 30,|
|GAAP Net Income (Loss)||$33.41||$46.23|
|Depreciation and Amortization expense||$6.24||$5.43|
|Interest & Other Expense (Income), net||$1.54||$0.85|
|Income Tax Expense (Benefit), net||$9.34||($11.41)|
|Stock-based Compensation Expense||$8.91||$11.33|
|Executive Consulting Expense||$ --||$6.00|
|One-time Insurance Proceeds||$ --||($1.86)|
|Acquisition Related Expenses||$1.57||$ --|
For the third quarter of 2018, the Company reported a GAAP income tax
Share Repurchase and Debt Repayment
During the third quarter of 2018, the Company repurchased approximately
49 thousand shares at a total cost of approximately
The current Board-approved share repurchase program, which expires in
During the third quarter of 2018, the Company made a required principal
Summary of our Updated Business Outlook
For fiscal year 2018, the Company currently expects its GAAP financial outlook to be as follows:
We expect total revenue to be in a range of approximately
$550 millionto $580 million; this compares to our previous guidance of $530 million to $560 million.
We expect GAAP net income to be in a range of approximately
$153 million to $170 million; this compares to previous guidance of $150 million to $166 million.
We expect GAAP net income per fully diluted share to be in a range of
$8.03 to $9.01; this compares to previous guidance of $7.78 to $8.75.
- We expect our 2018 effective tax rate to be 15.0%; this compares to our previous guidance of 18.0%.
The above GAAP amounts, adjusted as detailed below, result in the following non-GAAP financial outlook:
We expect non-GAAP adjusted EBITDA to be in a range of approximately
$245 million to $265 million; this is unchanged from our previous guidance.
We expect non-GAAP adjusted income per fully diluted share to be in a
$10.60 to $11.60; this compares to previous guidance of $10.15 to $11.15.
Detailed Discussion of our Business Outlook
As noted above, for 2018, the Company currently expects total revenue to
be in a range of approximately
Also, for 2018, the Company currently expects GAAP net income to be in a
range of approximately
The expected GAAP net income range includes depreciation and
amortization expense of approximately
The following table is provided to facilitate a reconciliation of 2018 expected non-GAAP adjusted EBITDA to expected GAAP net income:
|Fiscal Year 2018 Guidance|
|All amounts in millions||Low End of Range||High End of Range|
|GAAP net income||$152.9||$169.9|
Adjustments to reconcile adjusted EBITDA to GAAP net income:
|Depreciation and amortization expense||$23.5||$23.5|
|Stock-based compensation expense||$35.0||$35.0|
|Acquisition related expenses and litigation settlement expense||$4.2||$4.2|
|Interest expense and other income, net||$2.4||$2.4|
Income tax expense
|Total adjustments excluded from adjusted EBITDA||$92.1||$95.1|
As noted above, for 2018, the Company currently expects GAAP net income
per fully diluted share to be in a range of approximately
The following table is provided to facilitate a reconciliation of 2018 expected non-GAAP adjusted income per fully diluted share to expected GAAP net income per fully diluted share:
|Fiscal Year 2018 Guidance|
|All amounts in millions except percentages and per share data||Low End of Range||High End of Range|
|GAAP net income per fully diluted share||$8.03||$9.01|
Adjustments to reconcile non-GAAP to GAAP:
|Stock-based compensation expense||$35.0||$35.0|
|Amortization of acquired intangibles||$18.0||$18.0|
|Amortization of debt issuance costs||$0.4||$0.4|
Acquisition related expenses and litigation settlement expense
|Total adjustments excluded from non-GAAP||$57.6||$57.6|
|Projected effective tax rate||15.0%||15.0%|
Increased tax expense from non-GAAP adjustments
|Total tax affected adjustments excluded from non-GAAP||$49.0||$49.0|
|Fully diluted shares||19.0||18.9|
|Total adjustments excluded from non-GAAP adjusted income per fully diluted share||$2.57||$2.59|
|Non-GAAP adjusted income per fully diluted share||$10.60||$11.60|
This business outlook does not include the impact from potential future acquisitions, including acquisition costs or related financings, or unanticipated events. This business outlook also does not include the impact of foreign currency fluctuations, or other geopolitical events, such as trade negotiations or Brexit. This business outlook also does not include the impact of employee stock option exercises and any associated tax effects. This business outlook and the related assumptions are forward-looking statements subject to the safe harbor statement contained at the end of this press release, and reflect our views of current and future market conditions as of the date of this press release. Ranges reflect our business assumptions, but actual results could fall outside the range presented. Only a few of our assumptions underlying our guidance are disclosed above, and our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying our guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material. We do not undertake any obligation to release publicly any revisions to our business outlook or other forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Company Metrics and Conference Call
2018 Company metrics, updated to include the third quarter, is available at http://investor.stamps.com (under a tab on the left side called “Company Information, Metrics”). These metrics are not incorporated into this press release.
is a leading brand for high volume shipping technologies and services
is a leading web-based shipping solution that helps e-commerce retailers
import, organize, process, package, and ship their orders quickly and
easily from any web browser. ShipStation features the most integrations
of any e-commerce web-based solution with more than 175 shopping carts,
marketplaces, package carriers, and fulfillment services. Integration
is a leading brand for client-based shipping solutions that help high
volume shippers import, organize, process, fulfill, and ship their
orders quickly and easily from any standard PC. With integrations to
more than 100 shopping carts, marketplaces, package carriers, and
fulfillment services, ShipWorks has the most integrations of any
high-volume client shipping solution. Package carriers include USPS,
ShippingEasy 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. ShippingEasy integrates with leading marketplaces, shopping carts, and e-commerce platforms to allow order fulfillment and tracking data to populate in real time across all systems. The ShippingEasy software downloads orders from selling channels and automatically maps custom shipping preferences, rates and delivery options across all supported carriers.
MetaPackhelps e-commerce and delivery professionals to meet with the consumer’s growing expectations of delivery, while maintaining and optimizing operational efficiency. MetaPack’s SaaS solution offers a wide range of personalized delivery services, from global order tracking to simplified return procedures, through a catalog of more than 450 carriers and 5,000 services available that span every country in the world.
About Non-GAAP Financial Measures
To supplement the Company’s condensed consolidated balance sheet and consolidated statement of income presented in accordance with GAAP, the Company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP income from operations, non-GAAP adjusted income, non-GAAP adjusted income per fully diluted share and adjusted EBITDA.
Non-GAAP financial measures are provided to enhance investors’ overall understanding of the Company’s financial performance and prospects for the future and as a means to evaluate period-to-period comparisons. The Company believes the non-GAAP measures that: (1) exclude certain non-cash items including stock-based compensation expense, amortization of acquired intangibles, amortization of debt issuance costs, contingent consideration charges; (2) exclude certain expenses and gains such as acquisition related expenses, litigation settlement expenses, executive consulting expenses, insurance proceeds; and (3) includes income tax adjustments provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be reflective of our underlying operating performance.
Non-GAAP adjusted income is calculated as GAAP net income plus the cumulative impact of the adjustments outlined in the paragraph immediately above.
Non-GAAP adjusted income per fully diluted share is calculated as non-GAAP adjusted income divided by fully diluted shares. Prior to the third quarter 2016, the Company referred to non-GAAP adjusted income as non-GAAP net income.
Non-GAAP income tax expense for the first, second and third quarters of our fiscal year are calculated by multiplying the projected annual effective tax rate in that quarter by the non-GAAP adjusted income before taxes for the quarter. The projected annual effective tax rate does not reflect potential future employee option exercises in the remaining quarters of the fiscal year due to the inherent difficulty in forecasting employee option exercises. The projected annual effective tax rate also considers other factors including the Company’s tax structure and its tax positions in various jurisdictions where the Company operates. The actual annual effective tax rate realized for the fiscal year could differ materially from our projected annual effective tax rate used in the first, second and third quarters.
Non-GAAP income tax expense for the fourth quarter of the fiscal year is calculated by multiplying the actual effective tax rate for the fiscal year by the non-GAAP adjusted income before taxes for the fiscal year and subtracting the non-GAAP income tax expense or benefit reported in the first, second and third quarters. As a result, the fourth quarter reflects the tax impact of reconciling the first, second and third quarter projected annual effective rates to the actual effective tax rate for the fiscal year.
The calculations described above reflect the methodology used for calculating non-GAAP income tax expenses in reported results for 2017 and 2018. For 2016 reported results, the Company used a different methodology for calculating non-GAAP income tax expense that reflected the Company’s ability to use its remaining tax assets such as net operating losses and other tax credits. The reason for the change in methodology was that the Company had utilized substantially all of its net operating losses and other tax credits by the end of 2016. In order to help investors better understand the impact of the change in methodology, the Company previously provided recast non-GAAP income tax expense for 2016 showing what the non-GAAP income tax expense would have been under the 2017 methodology. The Company expects that the non-GAAP income tax expense methodology for 2018 will be consistent with the 2017 methodology. As a result, the Company believes it is no longer necessary to provide recast non-GAAP income tax expenses.
The projected non-GAAP full-year tax rate for 2018 is 15.0%.
Adjusted EBITDA as calculated in this press release represents earnings before interest and other expense, net, interest and other income, net, income tax expense or benefit, depreciation and amortization and excludes certain items, such as stock-based compensation expense.
The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. These non-GAAP financial measures may differ from similarly titled measures used by other companies. Reconciliation of non-GAAP financial measures included in this press release to the corresponding GAAP measures can be found in the financial tables of this press release.
The Company believes that non-GAAP financial measures, when viewed with GAAP results and the accompanying reconciliation, enhance the comparability of operating results against prior periods and allow for greater transparency of operating results. Management uses non-GAAP financial measures in making financial, operating, compensation and planning decisions. The Company believes non-GAAP financial measures facilitate management and investors in comparing the Company’s financial performance to that of prior periods as well as in performing trend analysis over time.
Share Repurchase Timing
The timing of share repurchases, if any, and the number of shares to be
bought at any one time will depend on factors including market
conditions and the Company’s compliance with the covenants in its Credit
Agreement. Share repurchases may be made from time to time on the open
market or in negotiated transactions at the Company's discretion in
compliance with Rule 10b-18 of the
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995
This release includes “forward-looking statements” within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.Forward-looking
statements are statements that are not historical facts, and may relate
to future events or the company’s anticipated results, business
strategies or capital requirements, among other things, all of which
involve risks and uncertainties. You can identify many (but not all)
such forward-looking statements by looking for words such as “assumes,”
“approximates,” “believes,” “expects,” “anticipates,” “estimates,”
“projects,” “seeks,” “intends,” “plans,” “could,” “would,” “may” or
other similar expressions.Important factors which could cause
actual results to differ materially from those in the forward-looking
statements, include (i) the Company's ability to successfully integrate
and realize the benefits of its past or future strategic acquisitions or
investments, (ii) the impact of foreign exchange fluctuations and
geopolitical risks, and (iii) other important factors that are detailed
in filings with the
|STAMPS.COM INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF INCOME|
|(in thousands, except per share data: unaudited)|
|Three Months ended September 30,||Nine Months ended September 30,|
|Cost of revenues:|
|Total cost of revenues||33,124||21,534||88,093||58,361|
|Sales and marketing||26,743||20,588||78,280||66,018|
|Research and development||14,432||12,037||38,845||34,187|
|General and administrative||24,916||25,243||71,119||65,676|
|Total operating expenses||66,091||57,868||188,244||165,881|
|Income from operations||44,292||35,660||140,362||112,000|
|Foreign currency exchange loss, net||(957||)||-||(957||)||-|
|Interest income and other income, net||83||120||175||309|
|Income before income taxes||42,750||34,813||137,672||109,530|
|Income tax expense (benefit)||9,337||(11,412||)||11,691||(873||)|
|Net income per share:|
|Weighted average shares outstanding:|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(in thousands, unaudited)|
|September 30,||December 31,|
|Cash and cash equivalents||$||78,264||$||153,903|
|Accounts receivable, net||95,850||80,797|
|Current income taxes||23,717||22,344|
|Other current assets||34,499||14,449|
|Property and equipment, net||36,801||37,507|
|Goodwill and intangible assets, net||550,620||320,695|
|Deferred income taxes, net||16,752||43,148|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Accounts payable, accrued expenses, and other liabilities||$||123,600||$||108,386|
|Debt, net of debt issuance costs||63,127||69,034|
|Additional paid-in capital||1,037,955||962,227|
|Retained earnings (accumulated deficit)||49,051||(76,930||)|
|Accumulated other comprehensive income||5,549||6|
|Total stockholders' equity||652,642||497,813|
|Total liabilities and stockholders' equity||844,063||$||679,104|