Big business clients help drive Q4 sales up 67% at Stamps.com

As reported by B2B e-Commerce World:

Stamps.com credits the increased sales to orders from high-volume shippers and the expanded shipping services it offers through Endicia.

The trend away from conventional mail isn’t hurting Stamps.com Inc.

Sales are surging at the online seller of postage and shipping services, whose customers include online sellers to businesses and consumers. An increase in the number of returning customers and an expansion of postage and shipping services contributed to a 67% increase in revenue during the fourth quarter ended Dec. 31, 2015, to $69.88 million from $41.85 million a year earlier, the company says.

The online provider of postage and shipping services reports a record number of 633,000 paid customers in Q4, a 21% increase from about 523,000 in 2014, CEO Kevin McBride said during a Q4 earnings call with investors, according to a transcript of the call from Seeking Alpha. Stamps.com customers range in size from individuals spending a few dollars a month to large shippers spending millions of dollars on postage per year, McBride said. “We continue to attract high-volume shippers such as warehouses, fulfillment houses, e-commerce shippers, large retailers,” he said.

Executives also credit growth to the completed acquisition in Q4 of Endicia, a provider of shipping technology and services for both large and small businesses. Stamps.com paid $215 million in cash in March 2015 to former Endicia owner Newell Rubbermaid Inc., and the deal closed Nov. 18.

Endicia complements Stamps.com’s other shipping software applications, ShipStation and ShipWorks. ShipStation is cloud-based shipping software that lets shippers use a web browser to manage the printing of shipping labels in fulfillment centers for online orders, including orders received through such e-marketplaces as eBay.com and Amazon.com. It also integrates with shipping carriers including UPS Inc., FedEx Corp. and the U.S. Postal Service to produce shipping labels. ShipWorks is a similar system, but designed as PC-based software that also integrates with e-commerce platforms.

Over the next several years, Stamps.com will integrate all of Endicia’s operations into the Stamps.com business. In Q4, Stamps.com combined the Endicia and Stamps.com sales teams and marketing teams. “We’ve begun to look at ways to optimize the support that we provide to customers with our increased scale and the broader geographic diversity across the combined Stamps.com and Endicia organizations,” McBride said. “We’ve taken the first steps in the process of combining our data center operations for reduced cost and greater efficiency, and we’ve already begun to cross-utilize the expertise we have in our respected development teams to enhance our combined innovation.”

Stamps.com has also been taking other steps to acquire new customers and grow sales. The company spent $18.25 million on sales and marketing in the fourth quarter, a 50.7% increase from $12.11 million a year earlier. “We continue to focus marketing spend towards the mailing and shipping segment where the customers have a high expected lifetime value,” McBride said. “The main channels we continue to utilize are the same as we have historically, including direct mail, traditional media and radio, television and online advertising. We also continue to acquire customers through our affiliates and our partners.”

Stamps.com is built on the hybris Software e-commerce platform. It is ranked No. 178 in the new B2B E-Commerce 300, which lists companies by their annual B2B online sales.

For the fourth quarter ended Dec. 31, Stamps.com reported:

  • Service revenue of $58.18 million, up 75.9% from $33.08 million during the same period last year;
  • Product revenue of $5.08 million, up 14.4% from $4.44 million;
  • A net loss of $70,000, compared with year-earlier net income of $8.9 million. The company attributes the loss to $20.1 million in charges related to its 2014 acquisition of ShipStation, $8.1 million stock-based compensation expense, and other non-recurring charges. Without those expenses, Stamps.com said its non-GAAP net income was $28.1 million. GAAP, or generally accepted accounting principles, is the set of accounting rules used by U.S. public companies.

For the 2015 fiscal year ended Dec. 31, 2015, Stamps.com reported:

  • Total revenue of $213.96  million, up 45.3% from $147.27 million during the same period last year;
  • Service revenue of $176.67 million, up 52.7% from $115.70 million;
  • Product revenue of $18.28 million, up 8.3% from $16.88 million;
  • A net loss of $4.2 million, compared with year-earlier net income of $36.9 million.

Ken Wood is the founder of LJM Consultants. LJM helps clients negotiate “Best in Class” UPS/FedEx agreements. LJM was recently named the “best parcel auditing company in America” and was also inducted into Inc. Magazine’s Top 500/5000 fastest growing companies in America for 2013. To learn how LJM Consultants can help your company get the parcel contract you deserve, call 631-844-9500 or email kenwood@myLJM.com.