STAMPS.COM INC. This Quarterly Report on Form 10-Q (this "Report") contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). You can find many (but not all) of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "projects," "seeks," "intends," "plans," "could," "would," "may" or other similar expressions in this Report. Our forward-looking statements relate to future events or our future performance and include, but are not limited to, any statements that refer to future responses to and effects of COVID-19, statements concerning our business strategy, future commercial revenues, market growth, capital requirements, new product introductions, expansion plans and the adequacy of our funding. Other statements contained in this Report that are not historical facts are also forward-looking statements.
We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements presented in this Report, or that we may make orally or in writing from time to time, are based on beliefs and assumptions made by us and information available to us at the time made. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements to anticipate future results or trends.
Please refer to the risk factors under "Item 1A. Risk Factors" of our Form 10-K
for the year ended
Our registered trademarks include
Overview
Stamps.com® is a leading provider of Internet-based mailing and shipping
solutions in
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Segment Information and Geographic Data Our operations consist of two segments:Stamps.com andMetaPack . TheStamps.com segment includes the results of brand namesStamps.com , Endicia, ShippingEasy, ShipEngine, ShipStation and ShipWorks.Stamps.com's customers are primarily located in the US. TheMetaPack segment offers multi-carrier enterprise-level shipping software solutions to large e-commerce retailers and brandswho are primarily located inEurope . Mailing and Shipping Business References
When we refer to our "mailing and shipping business," we are referring to our
mailing and shipping products and services including our
Mailing and Shipping Business
We offer the following mailing and shipping services to our customers under the
Mailing Solutions As part of our mailing and shipping business, we offer ourUSPS -approved solutions to mail and ship a variety of domestic and international mail pieces and packages through theUSPS . OurUSPS mailing solutions enable our customers to print "electronic postage" using only a personal computing device, printer and Internet connection. Our solutions support a variety ofUSPS mail classes including First Class Mail®, Media Mail®, Parcel Select®, Priority Mail®, Priority Mail Express, and others. Customers can also add USPS Special Services to their mail pieces, such as Certified Mail®, Collect on Delivery, Insured Mail, Registered Mail®, Restricted Delivery, Return Receipt, Signature Confirmation™ and USPS Tracking®. Our customers can print postage on (1) NetStamps® labels, which can be used just like regular stamps, (2) envelopes and postcards or on labels in a single step process that saves time and provides a professional look, (3) plain 8.5" x 11" paper, (4) special labels for packages, and (5) integrated customs forms for international mail and packages. OurUSPS mailing solutions also provide our customers with access to discounted postage rates on certain mail classes. Multi-Carrier Shipping Solutions As part of our mailing and shipping business, we offer our industry leading domestic and international multi-carrier e-commerce shipping solutions. Our multi-carrier solutions collectively enable our customers to print approved shipping labels for more than 450 regional, national and international carriers and integrate with more than 300 partners including shopping carts, marketplaces, e-commerce tools and various other software products. Our multi-carrier solutions also provide our customers with access to discounted carrier rates includingUSPS andUPS . Consolidation Services As part of our mailing and shipping business, we offer domestic and international shipping services through our consolidator partners,who group packages by destination and ship the packages directly or through partners. These services seek to take advantage of economies of scale, with the goal of yielding lower shipping costs for our customers. 26
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Back-End Integrations As part of our mailing and shipping services, we offer our back-end integration solutions where we provide the electronic postage for transactions to partnerswho manage the front-end users. Our solutions integrate directly into the most popular e-commerce platforms, allowing web store managers to completely automate their order fulfillment process by processing, managing and shipping orders from virtually any e-commerce source through a single interface without manual data entry. Managers can retrieve order data and print complete shipping labels for all types of packages. We have integration partnerships with theUSPS where we provide electronic postage for mailing and shipping transactions generated by certainUSPS -branded programs. For example, we provide the electronic postage for Click-N-Ship®, a web-based service available at USPS.com that allowsUSPS customers to purchase and print shipping labels for certain domestic and international mail classes or packages at no additional mark-up over the cost of postage. Mailing & Shipping Supplies As part of our mailing and shipping services, we offer mailing and shipping-focused office supplies to our customers through our online supplies stores. Our supplies stores are available within our mailing and shipping solutions and sell a variety of products including NetStamps labels, shipping labels, mailing labels, postage printers and scales.Branded Insurance As part of our mailing and shipping services, we offer branded insurance for packages to our customers so that they may insure their mail or packages in a fully integrated, online process that eliminates any trips to retail carrier locations or the need to complete any special forms. Our branded insurance is offered by certain brands includingStamps.com , Endicia, ShippingEasy, ShipStation, and ShipWorks as part of their solutions. Our branded insurance is provided by our insurance providers. Customized Postage We offered customized postage under the PhotoStamps® brand name. Customized postage is a patented form ofUSPS postage that allowed consumers to turn digital photos, designs or images into validUSPS -approved postage. With this product, individuals or businesses could create customizedUSPS -approved postage using pictures of their children, pets, vacations, celebrations, business logos and more. Customized postage can be used as regular postage to send letters, postcards or packages. PhotoStamps were available from our www.photostamps.com website. TheUSPS eliminated its customized postage program and also revoked our authorization to offer products pursuant to that program effectiveJune 16, 2020 . See "Business Outlook and Forward-Looking Statements," below in this Item 2. COVID-19 InMarch 2020 , theWorld Health Organization declared the outbreak of a novel strain of the coronavirus ("COVID-19") to be a pandemic. The pandemic is having widespread, rapidly evolving impacts on economies, financial markets, and business practices. We are closely monitoring the impact of COVID-19 on all aspects of our business. Since the first quarter of 2020, we have taken a number of precautionary measures to help minimize the risk of exposure to our employees, including significantly revising travel policies and implementing temporary office closures as all employees are advised to work remotely where possible. We experienced a net financial benefit in the second quarter resulting from increased domestic shipping volume which we believe is related to shelter in place orders and an increase in requirements to work from home. We cannot predict how long these circumstances will continue, and it should not be assumed that they will yield any net financial benefit to us beyond the second quarter of 2020. Further, it is not possible to determine the duration and scope of the pandemic, including any recurrence, the actions taken in response to the pandemic, the scale and rate of economic change from the pandemic, any ongoing effects on consumer demand and spending patterns, or other impacts of the pandemic, and whether these or other currently unanticipated consequences of the pandemic are reasonably likely to materially affect our results of operations. See "Item 1A. Risk Factors" within "Part II - Other Information" in our Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2020 , filed with theSEC onMay 8, 2020 , for additional discussion of the risks posed, among other things, by the COVID-19 pandemic, and uncertainties we, our customers, business partners, and the national and global economies face as a result. 27
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Table of Contents AcquisitionsMetaPack
On
Results of Operations
Three and Six Months Ended
Total revenue increased 49% to
Revenue by Segment
The following table sets forth the revenue by segment for the three and six
months ended
Three Months Ended June 30,
2020 2019 % Change
Segment revenues
Stamps.com $ 191,047 $ 126,280 51.3 %
MetaPack 15,683 12,493 25.5 %
Total revenues $ 206,730 $ 138,773 49.0 %
Six Months Ended June 30,
2020 2019 % Change
$ 328,592 $ 249,184 31.9 %
29,484 25,592 15.2 %
$ 358,076 $ 274,776 30.3 %
The majority of the 49% increase in total revenue is due to a 51% increase in
total revenue from the
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