Stamps.com Company Presentation May 2016

Transcription

1 Stamps.com Company Presentation May

2 Safe Harbor This presentation includes forward looking statements about anticipated results which involve risks and uncertainties. Important factors, including the Company's ability to successfully integrate and realize the benefits of its past or future strategic acquisitions or investments, including its acquisition of Endicia, complete and ship its products, maintain desirable economics for its products and obtain or maintain regulatory approval, which could cause actual results to differ materially from those in the forward looking statements, are detailed in filings with the Securities and Exchange Commission made from time to time by STAMPS.COM, including its Annual Report on Form 10 K for the year ended December 31, 2015, Quarterly Reports on Form 10 Q, and Current Reports on Form 8 K. STAMPS.COM undertakes no obligation to release publicly any revisions to any forwardlooking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 2 2

3 Agenda Service Overview Industry and Marketing Overview Financial and Metrics Overview Additional slides 3 3

4 Stamps.com s Brands and Solutions Confiden tial Stamps.com offers online mailing and shipping solutions under the following brands: Stamps.com branded solutions are USPS mailing and shipping solutions targeted at a broad range of customers including SOHO and enterprise mailers, ecommerce shippers, and high volume shippers Endicia branded solutions are USPS mailing and shipping solutions targeted primarily at ecommerce shippers and very high volume shippers (warehouses, fulfillment houses, large retailers, etc.) (acquired Q4 15) ShipStation offers web based multi carrier shipping solutions targeted at ecommerce and high volume shipping customers (acquired Q2 14) ShipWorks offers client based multi carrier shipping solutions targeted at ecommerce and high volume shippers (acquired Q3 14) 4 4

5 Stamps.com Portfolio of Solutions Confiden tial Stamps.com Branded Solutions Endicia Solutions ShipStation ShipWorks Year Launched Carriers USPS primarily USPS primarily 20 package carriers 6 package carriers Platform Software and Web Software Web Software Partners Over 80 Over 250 Over 80 Over 80 Package Type Focus Mail, Packages Mail, Packages Packages Packages Primary Target Customer SOHO & enterprise mailers, ecommerce and high volume shippers ecommerce, high volume shippers, warehouse shippers ecommerce shippers Very high volume shippers 5 5

6 Target Customer Segments Individual Mailers Single users who are primarily mailers but also send some packages Small Business and Home Office Mailers ( SOHO ) Single home office or small businesses with one or a few employees who are primarily mailers but also send some packages Enterprise Mailers Larger organizations with distributed office users who are primarily mailers but also send some packages ecommerce Shippers Individuals and businesses that sell online and send packages in medium to high volumes High Volume Shippers Large production shipping environments For example, warehouses, fulfillment houses and large retailers 6 6

7 Customer Benefits (Shippers) Save time by streamlining and simplifying shipping operations Easily access as many as 20 domestic & international carriers from a single user interface Support all of a customer s selling channels from a single user interface (multiple marketplaces, shopping carts, ecommerce tools, and multi carrier solutions available) Organize daily shipping tasks into a single unified list (search, filter, combine orders, etc.) Support operations & label printing (e.g. address verification, rate comparison, breadth of high volume scales & printers supported, convenient insurance, packing slips, etc.) Automate and simplify processing of large volumes of daily orders (batch processing, custom hierarchical rules, shipping presets, automated customer s, etc.) Save money by optimizing between carriers and access to package discounts Select the lowest cost option between carriers based on package size, weight & delivery times Customers receive an average discount of 12% or more compared to USPS.com or retail Access to cost effective mail classes & options (1C packages, media mail, parcel select, etc.) Higher volume shippers can access additional discounts on domestic & international packages 7

8 Customer Benefits (SOHO & Enterprise Mailers) Save time by eliminating trips to the post office All services of the post office available 24x7x365 from any PC Save money versus a traditional postage meter Save 50% or more versus the total cost of an entry level postage meter Also gain greater visibility into postage activity and better support for package shipping Save money with more accurate postage, discounts, and better controls Avoid costly returned mail with address verification Avoid wasted postage by calculating exact postage amount 0.5 cent discount off single piece first class letter mail ($0.465 vs $0.47) Eliminate unauthorized usage with better tracking and control Centralized visibility and control of postage spend across multiple distributed locations 8 8

9 Agenda Service Overview Industry and Marketing Overview Financial and Metrics Overview Additional slides 9 9

10 We Represent Only 2% of Top 4 Carriers Revenue 1 Source: Publicly available data for all mailing & shipping revenue in top 4 carriers 1 Combined postage printed in past12 months by Stamps.com, Endicia, ShipStation and ShipWorks 10 10

11 Over 20 million Potential Customers 16,000,000 14,000,000 12,000,000 8,000,000 5,700,000 4,000,000 1,000, ,000 0 Home Businesses Small Businesses Enterprise Mailers Stamps.com Source: International Data Corporation, Small Business Administration, Statistics of U.S. Business, Colography, USPS, and Company Estimates 11 11

12 Competitive Landscape In the SOHO and Enterprise mailing & shipping segment we compete against: Retail post offices Traditional postage meters, pbsmartpostage Low volume shipping solutions (Click N Ship, UPS.com, Fedex.com) In the ecommerce and high volume shipping segment we compete against: Single carrier solutions (e.g. UPS WorldShip, FedEx Ship Manager, etc.) Other PC Postage Solutions (e.g. Pitney Bowes SendPro) Other multi carrier solutions USPS also provides alternative access formats for postage payment These are basic building blocks that must be productized by a 3 rd party evs for high volume bulk packages (50 packages/day minimum) epostage for marketplaces (e.g. Amazon & Etsy) The primary customer value is created through a complete solution (rich features, deep integrations, etc.) built around the USPS payment solution 12 12

13 Stamps.com vs. Competitor Shipping Solutions All Stamps.com Solutions Pitney Bowes SendPro USPS evs, epostage Batch label printing Yes No No Major high volume features 1 Over Parcel carriers supported USPS mail classes supported USPS mailpiece types supported Number of unique integrations with marketplaces, shopping carts, ecommerce tools, shipping software 5 Monthly cost $15.99 and up $15 and up Free Upfront cost 6 $0 $0 Significant 1 For example, SCAN forms, pre filled customs forms, mobile app, shipping automation (picking class, carrier, adding insurance, etc.), automatically download and upload of order information from/to online marketplaces, search engines and filters to organize information, etc.. SendPro has only basic single label printing. epostage includes no native features (user must build them all). 2 Carriers are USPS, UPS, FedEx, DHL, Newgistics, OnTrac, Asendia, Globegistics, APC Postal, Access Worldwide, Canada Post, DCL Corp, FedEx Canada, First Mile, InXpress, Lone Star Overnight, Preferred Shippings, Unishippers, UPC Canada, and Webgistix. PB SendPro supports USPS, UPS and FedEx. epostage is a USPS only solution. 3 Stamps.com, PB and epostage support First Class, Priority Mail, Priority Mail Express, First Class International, Priority Mail International, Express International, Parcel Select, and Media Mail. PB and Stamps.com also support Library Mail. Stamps.com also supports PMOD, PMEOD, scan based returns, matter for the blind, MBAG, GXG, epacket, ISAL, IPA. 4 Stamps.com supports letters, standard flats, packages, flat rate boxes, flat rate envelopes, postcards, certified mail forms, NetStamps, and customs forms. PB SendPro and epostage/evs support only packages, standard flats, flat rate envelopes, flat rate packages, and customs forms. 5 Sample integrations include Amazon, ebay, Yahoo!, PayPal, Google, Etsy, NetSuite, BigCommerce, Shopify, Magento, Volusion, Squarespace, Zen Cart, X Cart, ChannelAdvisor and others. 6 Stamps.com and PB Sendpro both have user interfaces. epostage requires significant upfront costs to build a user interface and supporting servers to provide the basic functionality listed in the chart here, including address cleansing, label generation, account management, payment processing, label manifesting, tracking generation, customs form generation, carrier pickup, and others

14 Sales and Marketing National salesforce Direct mail Radio Television Search engine marketing Search engine optimization Online media Affiliate programs Lead generation programs Shipping integrations (Online marketplaces, Shopping carts, Shipping mgmt.) Strategic partnerships Telemarketing Tradeshows 14 14

15 Collectively Over 400 Unique Partnerships and Integrations 15

16 2016 Mailing & Shipping Plan Increase and optimize our marketing spend Continue investing through our historical channels including direct mail, traditional media, radio, television and other channels Enhance our distributed enterprise solution marketing efforts Continue increasing, optimizing and refining our lead generation and sales and marketing efforts Enhance our shipping solutions and optimize our marketing efforts Leverage our expanded sales force, continue enhancing our technology and software, continue introducing shipping related features and functionality, and continue adding new integrations Enhance and capitalize on our multi carrier solutions Continue improving the upgrade/drop down path between our traditional Stamps.com and Endicia single carrier solutions and our ShipStation and ShipWorks multi carrier solutions 16 16

17 Agenda Product Overview Industry and Marketing Overview Financial and Metrics Overview Additional slides 17 17

18 Financial Overview The Mailing & Shipping business has a recurring revenue based model Service revenue is earned from different subscription and transaction based models Supplies store and package insurance revenue are recurring with usage Stamps.com has an attractive financial model Adjusted EBITDA margin of 41% (LTM as of Q1 16) Low capital expenditure requirements Results in very strong free cash flow 1 ($98.7M for LTM as of Q1 16) Stamps.com has a history of returning excess cash to shareholders Stamps.com has returned $310M to shareholders since 2002 $107M via special dividends and over $203M via share repurchases Stamps.com has a strong balance sheet $121M in cash and investments and $162M in debt as of March 31, 2016 $50M deferred tax asset (no valuation allowance) The Mailing & Shipping business generates very attractive expected returns Customer lifetime values significantly higher than the cost to acquire the customer 1 Free Cash Flow = Pro Forma Net Inc Net Rental Income + Business D&A Business Capital Expenditures; Company turned FCF positive in Q

19 Total Revenue Q1 16 total revenue was up +86% YoY; Organic revenue (ex Endicia) was up over 40% YoY $90 $80 $70 $60 $50 $40 $30 Quarterly Total Revenue ($ Millions) $33.3 $34.3 $37.8 $41.9 $44.1 $48.4 $51.7 $69.9 $81.8 $300 $250 $200 $150 $100 $85.5 Annual Total Revenue ($ Millions) $101.6 $115.7 $127.8 $147.3 $214.0 $251.7 $20 $10 $50 $0 $ T4Q¹ YoY Growth 4% 7% 21% 29% 32% 41% 37% 67% 86% YoY Growth 4% 19% 14% 11% 15% 45% 59%² 1 Trailing four quarter period Q2 15 through Q Q2 14 through Q1 15 to Q2 15 through Q

20 Paid Customers Quarterly Paid Customers 1 (Mailing & Shipping Business) (Thousands) Annual Paid Customers 1 (Mailing & Shipping Business) (Thousands) T4Q² YoY Growth 4% 4% 6% 9% 10% 12% 11% 21% 17% YoY Growth 1% 8% 13% 10% 6% 14% 15%³ 1 Mailing and Shipping paid customers for the quarter is defined as the number of unique Mailing and Shipping customers that the Company earned revenue from during that quarter. Paid customers for the year is calculated as the average of the paid customers for the four quarters during that year. Paid customers include ShipStation customers as of Q3 14, ShipWorks customers as of Q4 14 and Endicia customers as of Q Trailing four quarter period Q2 15 through Q1 16 3Q2 14 through Q1 15 to Q2 15 through Q

21 Customer Churn Rates Q1 16 Monthly Paid Customer Churn was 2.7%, down 0.3% versus Q % 3.5% 3.0% 2.5% 2.0% 3.3% Quarterly Paid Customer Churn Rate 1,2 (Mailing & Shipping Business) 3.7% 3.4% 3.2% 3.0% 3.6% 3.4% 3.4% 2.7% 4.0% 3.9% 3.8% 3.7% 3.6% 3.5% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9% Annual Average Paid Customer Churn Rate 1,2 (Mailing & Shipping Business) 3.9% 3.5% 3.5% 3.5% 3.4% 3.3% 3.3% T4Q³ YoY Change 0.1% (0.2%) (0.2%) (0.2%) (0.3%) (0.1%) 0.0% 0.2% (0.3%) YoY Change N/A (0.4%) 0.0% 0.0% (0.1%) (0.1%) 0.0%⁴ 1 Calculated as [ (Lost Paid Customers) / (Prior Quarter Paid Customers + Current Quarter New Paid Customers) ] / 3 months 2 Includes all mailing and shipping paid customers using any of Stamps.com s solutions. Paid customers include ShipStation customers as of Q3 14, ShipWorks customers as of Q4 14 and Endicia customers as of Q Trailing four quarter period Q2 15 through Q Q2 14 through Q1 15 to Q2 15 through Q

22 Avg Monthly Revenue Per Paid Customer (ARPU) $50 Quarterly Average Monthly Revenue per Paid Customer (ARPU) 1 (Mailing & Shipping Business) $40 Annual Average Monthly Revenue per Paid Customer (ARPU) 1 (Mailing & Shipping Business) $40 $35.35 $40.65 $35 $30 $29.64 $33.49 $30 $20 $21.25 $21.74 $27.88 $28.81 $23.65 $25.60 $25.78 $25 $20 $23.08 $19.92 $20.86 $21.21 $18.01 $15 $10 $ T4Q² YoY Growth (1%) 2% 13% 20% 21% 28% 22% 38% 58% YoY Growth 5% 11% 5% 2% 9% 28% 38%³ 1 Calculated as [ Mailing and Shipping revenue for the quarter] / [Mailing and Shipping paid customers for the quarter] / 3 months. Monthly ARPU for the year is calculated as [Mailing and Shipping revenue for the year] / [Mailing and Shipping paid customers for the year] / 12 months. 2 Trailing four quarter period Q2 15 through Q Q2 14 through Q1 15 to Q2 15 through Q

23 Total Postage Printed $1,400 $1,200 Quarterly Postage Printed 1 ($ Millions) $4,000 $1,229 $3,500 Annual Postage Printed 1 ($ Millions) $3,352 $1,000 $1,027 $3,000 $2,677 $800 $600 $400 $200 $392 $371 $394 $613 $554 $548 $547 $2,500 $2,000 $1,500 $1,000 $500 $447 $672 $1,148 $1,565 $1,770 $0 $ T4Q² YoY Growth 4% 0% 8% 37% 41% 48% 39% 67% 122% YoY Growth 26% 50% 71% 36% 13% 51% 73%³ 1 Mailing and shipping postage printed includes postage printed by the Company s mailing and shipping customers using its solutions. Includes ShipStation as of Q3 14, ShipWorks as of Q4 14 and Endicia as of the acquisition closing date. 2 Trailing four quarter period Q2 15 through Q Q2 14 through Q1 15 to Q2 15 through Q

24 Adjusted EBITDA $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 $10.0 $5.0 $9.1 $9.8 Quarterly Adjusted EBITDA 1 ($ Millions) $12.5 $12.8 $13.3 $17.7 $21.4 $30.2 $34.8 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $13.8 Annual Adjusted EBITDA 1 ($ Millions) $21.5 $29.8 $40.8 $44.2 $82.6 $104.0 $0.0 $ T4Q² YoY Growth Adj EBITDA Margin (3%) (3%) 17% 21% 46% 80% 71% 136% 161% YoY 32% 55% 38% 37% 8% 87% 115%³ Growth Adj EBITDA 27% 29% 33% 31% 30% 37% 41% 43% 42% 16% 21% 26% 32% 30% 39% 41%² Margin 1 Adjusted EBITDA is calculated as Non GAAP Operating Income plus operating depreciation and amortization contained in cost of sales and operating expenses (see Company s 8 K filings for reconciliation of non GAAP to GAAP). 2 Trailing four quarter period Q2 15 through Q Q2 14 through Q1 15 to Q2 15 through Q

25 Non GAAP EPS $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.50 $0.55 Quarterly Non GAAP EPS 1 ($ Millions) $0.71 $0.72 $0.72 $0.97 $1.14 $1.57 $1.72 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.93 Annual Non GAAP EPS $4.43 $2.39 $2.47 $1.70 $1.40 $5.40 $0.00 $ T4Q² YoY Growth (11%) (8%) 15% 18% 43% 76% 62% 119% 139% YoY Growth 51% 50% 22% 41% 4% 79% 101%³ 1 Excludes certain non cash items (such as stock based compensation expense, non cash tax expense or benefit, amortization of acquired intangibles and contingent consideration charges) and certain non recurring expenses, (such as litigation settlements and acquisition and corporate development expenses); see the Company s 8 K filings for reconciliations of Non GAAP to GAAP. 2 Trailing four quarter period Q2 15 through Q Q2 14 through Q1 15 to Q2 15 through Q

26 Key Investment Takeaways Large addressable opportunity Significant customer benefits Attractive expected return on Mailing & Shipping marketing spend Mailing & Shipping recurring revenue growth with high margins Attractive strategic opportunities within the shipping business Strong cash flow and balance sheet Demonstrated history of returning capital to shareholders 26 26

27 Agenda Product Overview Industry and Marketing Overview Financial and Metrics Overview Additional slides 27 27

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