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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Table of ContentsUnited States Postal Service (USPS) and United Parcel Service (UPS). Our solutions also offer customers improved operational efficiency and financial savings. Our customers primarily include small businesses, home offices, medium-size businesses, large enterprises, e-commerce merchants, large retailers and high volume shippers including warehouses, fulfillment houses and omni-channel retailers. 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 USPS® and multi-carrier mailing and shipping solutions, consolidation services, mailing and shipping integrations, mailing and shipping supplies stores and branded insurance offerings. We do not include our historical customized postage business when we refer to our mailing and shipping business. When we refer to our "mailing and shipping revenue," we are referring to our service, product and insurance revenue generated by our mailing and shipping customers. We do not include our customized postage revenue generated by our customized postage business in our "mailing and shipping revenue." Services and Products
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) on 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 350 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, including withUSPS and UPS®. 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 by accessing lower carrier rates that apply to larger volume freight and are not otherwise accessible to smaller shipments, with the goal of yielding lower shipping costs for our customers. 24
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Table of Contents 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 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 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 in an integrated, online process that eliminates any trips to retail carrier locations or the need to complete any special forms. Our branded insurance, which is provided by third party insurance providers with which we contract, is offered by certain brands includingStamps.com , Endicia, ShippingEasy, ShipEngine, ShipStation, and ShipWorks as part of their solutions. Customized Postage Prior to the third quarter of 2020, 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 was available from our www.photostamps.com website. As previously disclosed, in the second quarter of 2020, we received notification from theUS Postal Service (USPS) that it was eliminating its customized postage program and also revoking our authorization to offer products pursuant to that program effectiveJune 16, 2020 . 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 first quarter of 2021 resulting from continued increased shipping volume and newly acquired customer subscription fees compared to prior years which we believe is related to shelter in place orders. 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 first quarter of 2021. 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 "Risk Factors - Risks Related to COVID-19" within Item 1A in our Annual Report on Form 10-K, filed with theSEC onFebruary 26, 2021 , for a discussion of some of the risks posed by the COVID-19 pandemic, and uncertainties we, our customers, business partners, and the national and global economies face as a result. 25
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Table of Contents Results of Operations
Three Months Ended
Total revenue increased 25% to
Revenue by Segment
The following table sets forth the revenue by segment for the three months endedMarch 31, 2021 andMarch 31, 2020 and the resulting percentage change (revenue in thousands): Three Months Ended March 31, 2021 2020 % Change Segment revenues Stamps.com$ 172,610 $ 137,545 25.5 % Metapack 16,480 13,801 19.4 % Total revenues$ 189,090 $ 151,346 24.9 %
The majority of the 25% increase in total revenue is due to a 25% increase in
total revenue from the
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