Stamps.com Reports Third Quarter Results

Marketing News – MarketingTools365 – Mktg News – Marketing Tools 365 – //// Business Marketing news and Mktg News : Stamps.com Reports Third Quarter Results :

EL SEGUNDO, Calif.–(BUSINESS WIRE)–Stamps.com® (Nasdaq: STMP), the leading provider of postage online and shipping software, today announced results for the quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights

  • Total revenue was $136.2 million, down 5% compared to $143.5 million in the third quarter of 2018.
  • GAAP net income was $9.1 million, down 73% compared to $33.4 million in the third quarter of 2018.
  • GAAP net income per fully diluted share was $0.52, down 70% compared to $1.75 in the third quarter of 2018.
  • Non-GAAP adjusted EBITDA was $34.5 million, down 43% compared to $61.0 million in the third quarter of 2018.
  • Non-GAAP adjusted income per fully diluted share was $1.12, down 60% compared to $2.76 in the third quarter of 2018.

“In our ongoing efforts to evolve our strategy to more fully embrace a global multi-carrier and e-commerce services focused business model, we achieved a significant milestone with the recent announcement of our new partnership with UPS,” said Ken McBride, Stamps.com’s Chairman and CEO. ”We’re excited about this new collaboration and view it as a meaningful step in our strategy to diversify our carrier relationships.”

Third Quarter 2019 Detailed Results

Third quarter 2019 total revenue was $136.2 million, down 5% compared to the third quarter of 2018. Third quarter 2019 Mailing and Shipping revenue (which includes service, product and insurance revenue but excludes Customized Postage and Other revenue) was $132.9 million, down 3% versus the third quarter of 2018. Third quarter 2019 Customized Postage revenue was $3.3 million, down 52% versus the third quarter of 2018.

Third quarter 2019 GAAP income from operations was $15.7 million, GAAP net income was $9.1 million, and GAAP net income per share was $0.52 based on 17.4 million fully diluted shares outstanding. This compares to third quarter 2018 GAAP income from operations of $44.3 million, GAAP net income of $33.4 million, and GAAP net income per share of $1.75 based on 19.0 million fully diluted shares outstanding. Third quarter 2019 GAAP income from operations, GAAP net income, and GAAP income per fully diluted share decreased by 65%, 73%, and 70% year-over-year, respectively.

Third quarter 2019 GAAP income from operations included $11.8 million of non-cash stock-based compensation expense and $5.5 million of non-cash amortization of acquired intangibles. Third quarter 2019 GAAP net income included $93 thousand of non-cash amortization of debt issuance costs. Third quarter 2019 GAAP income tax expense was $5.9 million and non-GAAP income tax expense was $13.0 million, resulting in a $7.1 million non-GAAP tax expense adjustment. The higher non-GAAP tax expense reflects the tax impact on the non-GAAP pre-tax income at a non-GAAP effective tax rate of 40.0% for the third quarter. See the section later in this release entitled, “About Non-GAAP Financial Measures” for more information on how non-GAAP taxes are calculated. Excluding the non-cash stock-based compensation expense and non-cash amortization of acquired intangibles, third quarter 2019 non-GAAP income from operations was $33.0 million. Also excluding non-cash amortization of debt issuance costs and including the non-GAAP tax expense adjustment, third quarter 2019 non-GAAP adjusted income was $19.5 million or $1.12 per share based on 17.4 million fully diluted shares outstanding.

Third quarter 2018 GAAP income from operations included $8.9 million of non-cash stock-based compensation expense, $4.8 million of non-cash amortization of acquired intangibles, and $1.6 million of transaction expenses related to the MetaPack acquisition. Third quarter 2018 GAAP net income included $93 thousand of non-cash amortization of debt issuance costs and $1.0 million of foreign currency loss related to the MetaPack acquisition. Third quarter 2018 GAAP income tax expense was $9.3 million and non-GAAP income tax expense was $6.5 million, resulting in a $2.8 million non-GAAP tax benefit adjustment. The lower non-GAAP tax expense reflected the tax impact on the non-GAAP pre-tax income at a non-GAAP effective tax rate of 11.0%. Excluding the non-cash stock-based compensation expense, non-cash amortization of acquired intangibles, and transaction expenses related to the MetaPack acquisition, third quarter 2018 non-GAAP income from operations was $59.5 million. Also excluding non-cash amortization of debt issuance costs and foreign currency loss related to the acquisition of MetaPack, and including the non-GAAP tax benefit adjustment, third quarter 2018 non-GAAP adjusted income was $52.6 million or $2.76 per share based on 19.0 million fully diluted shares outstanding.

Therefore, third quarter 2019 non-GAAP income from operations, non-GAAP adjusted income, and non-GAAP adjusted income per fully diluted share decreased by 45%, 63%, and 60% 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 2019)

Third Quarter Fiscal 2019
All amounts in millions except Stock-Based Intangible Debt
per share data: GAAP Compensation Amortization Amortization Income Tax Non-GAAP
Amounts Expense Expense Expense Adjustments Amounts
 
 
Cost of Revenues

$

38.20

 

$

0.86

 

$

 

$

 

$

$

37.34

 

Research & Development

 

20.28

 

 

2.87

 

 

 

 

 

 

 

17.41

 

Sales & Marketing

 

33.06

 

 

2.69

 

 

 

 

 

 

 

30.37

 

General & Administrative

 

28.98

 

 

5.33

 

 

5.55

 

 

 

 

 

18.10

 

Total Expenses

 

120.52

 

 

11.75

 

 

5.55

 

 

 

 

 

103.22

 

 
Income (Loss) from Operations

 

15.65

 

 

(11.75

)

 

(5.55

)

 

 

 

 

32.95

 

 
Interest and Other Income (Loss)

 

(0.57

)

 

 

 

 

 

(0.09

)

 

 

(0.48

)

 
Benefit (Expense) for Income Taxes

 

(5.93

)

 

 

 

 

 

 

 

7.06

 

(12.99

)

 
Adjusted Income (Loss)

 

9.15

 

 

(11.75

)

 

(5.55

)

 

(0.09

)

 

7.06

 

19.48

 

 
On a diluted per share basis

$

0.52

 

$

(0.67

)

$

(0.32

)

$

(0.01

)

$

0.40

$

1.12

 

 
Shares used in per share calculation

 

17.44

 

 

17.44

 

 

17.44

 

 

17.44

 

 

17.44

 

17.44

 

Reconciliation of GAAP to Non-GAAP Financial Measures (Third Quarter 2018)

Third Quarter Fiscal 2018
All amounts in millions except Stock-Based Intangible Acquisition Debt
per share data: GAAP Compensation Amortization Related Amortization Income Tax Non-GAAP
Amounts Expense Expense Expenses Expense Adjustments Amounts
 
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

 

Total Expenses

 

99.22

 

 

8.91

 

 

4.76

 

 

1.57

 

 

 

 

 

 

83.98

 

 
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

 

Third Quarter GAAP Net Income and Non-GAAP Adjusted EBITDA

Third quarter 2019 GAAP net income was $9.1 million, down 73% compared to $33.4 million in the third quarter of 2018.

Third quarter 2019 non-GAAP adjusted EBITDA was $34.5 million, down 43% compared to $61.0 million in the third quarter of 2018.

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

Three Months ended
All amounts in millions September 30,

2019

2018

 
GAAP Net Income (Loss)

$

9.15

$

33.41

 
Depreciation and Amortization Expense

$

7.08

$

6.24

Interest & Other Expense (Income), net

$

0.57

$

1.54

Income Tax Expense (Benefit), net

$

5.93

$

9.34

 
Stock-based Compensation Expense

$

11.75

$

8.91

Acquisition Related Expenses

$

$

1.57

 
Adjusted EBITDA

$

34.49

$

61.02

Taxes

For the third quarter of 2019, the Company reported a GAAP income tax expense of $5.9 million representing an effective tax rate of 39.3%. As discussed below under the heading, “About Non-GAAP Financial Measures,” we believe our effective tax rate for 2019 will be approximately 40%. Accordingly, the third quarter 2019 effective rate of 39.3% should not be assumed to apply for 2019 as a whole, and our after tax income during the remainder of 2019 will likely reflect a higher rate than is reflected in our after tax results for the third quarter of 2019. Our third quarter 2019 GAAP net income should also be understood to have been positively impacted by the lower effective tax rate applicable specifically to the quarter.

Share Repurchase and Debt Repayment

During the third quarter of 2019, the Company repurchased approximately 113 thousand shares at a total cost of approximately $6 million.

On March 8, 2019, our Board of Directors approved a $60 million share repurchase plan which was scheduled to expire in September 2019. On May 1, 2019, the Board of Directors adjusted the repurchase parameters of the plan, and on July 29, 2019, the Board of Directors approved an extension of the plan through February 2020 from its prior expiration in September 2019. On October 31, 2019, the Board of Directors approved an additional extension of the current plan to run into May 2020 from its previously scheduled expiration in February 2020.

During the third quarter of 2019, the Company made a required principal repayment of $2.6 million against the borrowings under the Company’s existing credit agreement related to the Endicia acquisition. As of September 30, 2019, total debt under the credit agreement, excluding debt issuance costs, was $53.6 million.

Summary of our Updated Business Outlook

For fiscal year 2019, the Company currently expects its GAAP financial outlook to be as follows:

  • We expect total revenue to be in a range of approximately $535 million to $565 million; this compares to previous guidance of $520 million to $560 million.
  • We expect GAAP net income to be in a range of approximately $34 million to $46 million; this compares to previous guidance of $27 million to $45 million.
  • We expect GAAP net income per fully diluted share to be in a range of approximately $1.76 to $2.58; this compares to previous guidance of $1.44 to $2.55.
  • We expect our 2019 effective tax rate to be 40.0%; no change from our previous guidance.

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 $132 million to $152 million; this compares to previous guidance of $120 million to $150 million.
  • We expect non-GAAP adjusted income per fully diluted share to be in a range of $3.85 to $4.85; this compares to previous guidance of $3.60 to $4.85.

Detailed Discussion of our Business Outlook

As noted above, for 2019, the Company currently expects total revenue to be in a range of approximately $535 million to $565 million; this compares to previous guidance of $520 million to $560 million.

Also, for 2019, the Company currently expects GAAP net income to be in a range of approximately $34 million to $46 million; this compares to previous guidance of $27 million to $45 million.

The expected GAAP net income range includes depreciation and amortization expense of approximately $28 million, stock-based compensation expense of approximately $45 million, interest and other expense, net of approximately $3 million, and income tax expense of approximately $23 million to $31 million. Excluding the depreciation and amortization expense, stock-based compensation expense, interest and other expense, net and income tax expense, we expect non-GAAP adjusted EBITDA to be in a range of approximately $132 million to $152 million; this compares to previous guidance of $120 million to $150 million.

The following table is provided to facilitate a reconciliation of 2019 expected non-GAAP adjusted EBITDA to expected GAAP net income:

  Fiscal Year 2019 Guidance
All amounts in millions   Low End of Range   High End of Range
     
GAAP net income  

$

34.1

 

$

46.1

     
Adjustments to reconcile adjusted EBITDA to GAAP net income:    
Stock-based compensation expense  

$

45.0

 

$

45.0

Depreciation and amortization expense  

$

27.6

 

$

27.6

Interest and other expense (income), net  

$

2.6

 

$

2.6

Income tax expense  

$

22.7

 

$

30.7

Total adjustments excluded from adjusted EBITDA  

$

97.9

 

$

105.9

     
Adjusted EBITDA  

$

132.0

 

$

152.0

As noted above, for 2019, the Company currently expects GAAP net income per fully diluted share to be in a range of approximately $1.76 to $2.58; this compares to previous guidance of $1.44 to $2.55. The expected GAAP net income per fully diluted share range includes non-cash stock-based compensation expense of approximately $45 million, non-cash amortization of acquired intangibles expense of approximately $22 million, and non-cash amortization of debt issuance costs of approximately $0.4 million. Excluding the stock-based compensation expense, amortization of acquired intangibles expense, and amortization of debt issuance costs, and including higher expected non-GAAP income taxes of approximately $27 million from the expected tax effects of these adjustments at an assumed 40% effective full-year tax rate, non-GAAP adjusted income per fully diluted share is expected to be in a range of $3.85 to $4.85; this compares to previous guidance of $3.60 to $4.85.

The following table is provided to facilitate a reconciliation of 2019 expected non-GAAP adjusted income per fully diluted share to expected GAAP net income per fully diluted share:

  Fiscal Year 2019 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  

$

1.76

 

 

$

2.58

 

     
Adjustments to reconcile non-GAAP to GAAP:    
Stock-based compensation expense  

$

45.0

 

 

$

45.0

 

Amortization of acquired intangibles  

$

22.0

 

 

$

22.0

 

Amortization of debt issuance costs  

$

0.4

 

 

$

0.4

 

Total adjustments excluded from non-GAAP  

$

67.4

 

 

$

67.4

 

Projected effective tax rate  

 

40.0

%

 

 

40.0

%

Increased tax expense from non-GAAP adjustments  

$

27.0

 

 

$

27.0

 

Total tax affected adjustments excluded from non-GAAP  

$

40.4

 

 

$

40.4

 

     
Fully diluted shares  

 

19.4

 

 

 

17.8

 

Total adjustments excluded from non-GAAP adjusted income per fully diluted share  

$

2.09

 

 

$

2.27

 

     
Non-GAAP adjusted income per fully diluted share  

$

3.85

 

 

$

4.85

 

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

2019 Company metrics, updated to include the third quarter, is available at https://investor.stamps.com (under a tab on the left side called “Company Information, Metrics”). These metrics are not incorporated into this press release.

The Stamps.com financial results conference call will be webcast today at 5:00 p.m. Eastern Time and may be accessed at https://investor.stamps.com. The Company plans to discuss its business outlook during the conference call. Following the conclusion of the webcast, a replay of the call will be available at the same website.

About Stamps.com, Endicia, ShipStation, ShipWorks, ShippingEasy, and MetaPack

Stamps.com (Nasdaq: STMP) is the leading provider of postage online and shipping software solutions to customers, including consumers, small businesses, e-commerce shippers, enterprises, and high volume shippers. Stamps.com offers solutions that help businesses run their shipping operations more smoothly and function more successfully under the brand names Stamps.com, Endicia, ShipStation, ShipWorks, ShippingEasy, and MetaPack. Stamps.com’s family of brands provides seamless access to mailing and shipping services through integrations with more than 500 unique partner applications.

Endicia is a leading brand for high volume shipping technologies and services for U.S. Postal Service shipping. Under this brand we offer solutions that help businesses run their shipping operations more smoothly and function more successfully. Our Endicia branded solutions also provide seamless access to USPS shipping services through integrations with partner applications.

ShipStation 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 325 shopping carts, marketplaces, package carriers, and fulfillment services. Integration partners include eBay, PayPal, Amazon, Etsy, Square, Shopify, BigCommerce, Volusion, Magento, Squarespace, and carriers such as USPS, UPS, FedEx and DHL. ShipStation has sophisticated automation features such as automated order importing, custom hierarchical rules, product profiles, and fulfillment solutions that enable its customers to complete their orders, wherever they sell, and however they ship.

ShipWorks 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, UPS, FedEx, DHL, OnTrac and many more. Marketplace and shopping cart integrations include eBay, PayPal, Amazon, Etsy, Shopify, BigCommerce, Volusion, ChannelAdvisor, Magento, and many more. ShipWorks has sophisticated automation features such as a custom rules engine, automated order importing, automatic product profile detection, and fulfillment automation, which enable high volume shippers to complete their orders quickly and efficiently.

ShippingEasy provides a single platform for e-commerce merchants to automate order imports and shipping, manage inventory, and increase sales through customer email marketing and online reviews. Powerful integrations with leading online channels such as Amazon, eBay, Etsy, Walmart, Shopify, Magento, WooCommerce and many others allow merchants to manage orders from everywhere they sell all in one place. The inclusion of email marketing and inventory management solutions plus award-winning support from real humans via phone, email, and chat lets online merchants streamline their businesses and increase orders through a single integrated platform that provides more than best-in-class shipping solutions.

MetaPack helps 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 sheets and consolidated statements 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, which: (1) exclude certain non-cash items including stock-based compensation expense, amortization of acquired intangibles, amortization of debt issuance costs, and contingent consideration charges; (2) exclude certain expenses and gains such as acquisition related expenses, litigation settlement expenses, executive consulting expenses, and insurance proceeds; and (3) include 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.

Contacts

Investor Contact:
Suzanne Park

Stamps.com Investor Relations

(310) 482-5830

invrel@stamps.com

Press Contact:
Eric Nash

Stamps.com Public Relations

(310) 482-5942

enash@stamps.com

Read full story here . From Business Wire – Marketingtools365(COMM) – ATOM https://ift.tt/2qwsVCL Source : Stamps.com Reports Third Quarter Results – https://ift.tt/2qwsVCL