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STMP
Stamps.com
Analyst Conference Summary
conference date: February 8, 2006
for quarter ending: December 31, 2005 (4th quarter)
Overview: Having almost completed its transition out of its introductory $4.99 per month pricing, Stamps.com revenue growth and EPS looks good. $6 million of revenue from Photostamps shows there is still room for revenue and earnings growth. However, in our opinion, revenues excepting Photostamps are likely to flatten in 1st half 2006 because of end of conversion (to higher monthly charges) process.
Basic data: Total revenues were 20.6 million, up from 11.7 million year earlier (and 15.3 in Q3). Made .17 GAAP EPS, up from .06 year-earlier. $6 million of revenue was from Photostamps. Sequential from 3rd quarter, total revenues less Photostamps increased from 13.5 million to 14.6 million (8.1%).
Guidance:
Company will no longer provide customer metric guidance
2006 revenue will be $75 to $90 million, largely dependent on
Photostamps
2006 GAAP EPS: .53 to .63
Conference Highlights:
85,000 new powerplan customers, compared to 56,000 new in 3rd quarter. Improved online registration process. Lowest cost per customer acquired ($51.00).
Photostamps in 7.5 months shipped 520,000 sheets. Has several partnerships to help market. Has captured 81% of market (v. 19% for two competitors). Screening of images went well; no miscategorization. Authorized by USPS until May 2006; in discussion of extending program. Will continue to invest in growth in 2006. Will allow business advertising once USPS implements new law allowing it.
2006 plan is to fill-out the new software platform. Will migrate home-grown software to commercial software; system will cover all stamps product categories and improve cross-selling. Will allow multiple-users per account, which should help with small/medium enterprise customers.
Pro (power) plan will continue at $15.99; premier plan is the upgrade. Hopes to have 5 to 10 salespeople dedicated to corporate sales by end of year.
Purged 65,000 non-payers at end of 2005; most were simple-plan ($4.99) customers. Total customers 349,000, down from 383,000 year-earlier due to purges of non-payers. PowerPlan increased 44,000. Simple plan customers conversion process will be completed this quarter. 9000 Premier customers.
Churn (trial) was 26.8%. Base churn was only 3.2%.
$53 million of postage was printed in quarter (not including Photostamps).
$11.9 million of revenue was from service payments.
Photostamps $6 million revenue includes face value of postage. So total revenue is an inconsistent mixture and year-earlier comparisons are not apples-to-apples.
$4.4 million free cash flow
$104 million ending cash & investments.
Q & A:
Photostamp margins going forward? Seasonal, but comparable to Q4.
This quarter so far? Photostamps will be down sequentially, but not to Q3 2005 levels.
Store revenues have been flat. What are expectations? Depends on when software improvements go online; probably won't see until 3rd quarter. In 2005 store revenue mirrored customer growth.
Will Premier be main pricing plan? No, not soon.
No specific plans for using cash for acquisitions. Stock repurchase program is in place.
Enterprise beta feedback? Really a feature rather than a separate product.
Photostamps partnerships with Snapfish, Apple have been great.
Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. Before making or terminating an investment you should always verify any factual basis of your decision from multiple independent sources.