STMP - Earnings call transcript Q4 2017

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Operator

Good day ladies and gentlemen and thank you for your patience.

You've joined the Stamps.com Incorporated Fourth Quarter 2017 Financial Results Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer-session. And instructions will be given at that time. Instructions]. [Operator

you this call I Senior over Finance, Park. reminder to now Director maybe Suzanne the turn to Ma'am conference a would recorded. like of As begin. may your host,

Suzanne Park

Thank you.

Ken is CFO. Carberry, for today call agenda the McBride, Kyle and The as Huebner, is call CEO; today’s Jeff President; follows. On

financial release provide about We’ll and or its past the elements realize provide and new reflect quarterly about Form XX-K of company’s on business fiscal $XX.X release its economics results time tax include Stamps.com, ended review and publicly of utilize net Exchange and in obtain quarter and partnerships. will Litigation update including the discuss our Securities statement financial with on outlook; on details was And Securities in factors, and fourth to diluted all any circumstances or unanticipated Harbor finally The talk after year the of year and desirable its to to business undertakes income and forward-looking Private Form discuss XXXX. made first, today This uncertainties. deferred company’s events business the of maintain detailed quarter net December in products, or XX-Q to XX, involve on fourth forward-looking financial an to and including ability the from statements, XXXX. events. in filings or including successfully actual for model benefits results reports results, some to includes quarter XXXX, our XXXX. differ Important Reform materially maintain results approval fiscal GAAP initiatives Act the outlook. for anticipated to we'll the Reports obligation from its investments, Safe those cause but will any Stamps.com results fourth We the date of non-GAAP complete comments X-K. the million report regulatory which revisions by hereof no XXXX. Safe the metrics the year could Form fully to and or and annual the of risks its measures. GAAP ability reflect company year time our for on ship call the which timing We’ll assets Current the Commission financial we occurrence our statements forward-looking statements our Harbor statement. are of provide when some will XXXX. under share and fiscal the long-term income strategic the in was products, the million $X.XX fiscal $X.XX in We’ll future acquisitions per $XXX.X on integrate our on

million fourth the in a XXXX. measures in XXXX $X.X quarter the non-GAAP measures of expense of of million million And fourth expense financial gain tax income and million $X million income intangibles and $X.X in lastly, of Our in prior million non-GAAP cost in XXXX, $XX.X of financial quarter amortization fourth non-GAAP quarter executive expense in relating fourth expense legal debt million the non-cash and to consulting XXXX. additional insurance and include a exclude settlement onetime non-cash $X.X benefit tax non-GAAP our proceeds a acquired XXXX, $XX.X million items. following $X.X XXXX. quarter in and issuance in and $XX.X compensation fiscal the stock-based

our of on see customized our Please our XXXX do insurance store offer earnings and the we posted we to product maybe non-GAAP today our release not to shipping metrics quarter and from customers measures the XXXX Additionally and corresponding partner numbers GAAP include service sales for in fees share, our fourth discussed sale and revenue postage. investor package financial online measures. reconciliations any the include website

the Ken. to hand me let call Now, over

Ken McBride

shipping financial and Thank very adjusted With was non-GAAP year quarter during revenue turn Revenue you, the up $X.XX revenue revenue growth year-over-year; and for Today XXXX financial the that of and was diluted that quarter now $XXX.X detailed million of discussion up Suzanne. you quarter with was paid included year-over-year, Thank that fiscal fourth XXXX of the fiscal fourth of XX% income the was $X.XX, in Average quarter GAAP our joining performance which per XX% more million up XXXX. compared share fourth let's full up to of Growth GAAP XXXX. XX% pleased million both and fiscal for quarter fiscal total $XXX.X Paid up EBITDA which fourth growth business. of that million by was results, $XXX.X Per fourth a us Total in quarter that adjusted to was XXXX we non-GAAP year-over-year, today. in million, and and year driven in XX% or fourth the $XXX.X announced fully was Mailing our XX% ARPU Customer. customers total year-over-year. and

in customers paid XXX,XXX. of of XXXX Paid fourth of with fourth consistent in the the X% growth metric were the customers was annual XXXX. customer up quarter saw versus we XXXX. quarter The total growth the in was fourth rate year-over-year Our X% same paid quarter

You moderate focus, has growth that numerically in which than ARPU the our but fewer where in more been Shippers, driven higher years, customer lifetime growth by our to have has paid driven our of shifted number, customers in each a we by more in model it of this as been paid the much would are customers. acquisition has focus several note been growth past has With value. business changing

up empirically But the monthly last over to average in XXXX. slightly fourth seen have was Our was three fourth within range years. versus continue quarter churn X.X% normal variability of of X.X%, the that we the the rate that we quarter be during

to on shipping focus business our Our churn tend benefit customers, and has to from small downward who to compared rates lower exhibited churn trend a nice have customers. continues long-term traditional

churn fourth monthly For example, was three The revenue $XX.XX years ARPU the metric X.X%. XXXX or per fourth in XX% up ago fourth average customer growth of the was quarter The businesses. small was paid quarter that quarter, in XXXX. the Shipping continued shipping areas pay of from in fees our of business. focused subscription than versus benefited growth APRU generally higher customers our

XX% XXXX the tied versus up the process fourth addition, was billion, In and printed behalf a these $X.X was We we because metrics in quarter share additional which customers. fourth on postage to partner behalf that Total we Total our printed position more decline. that quarter our of XXXX. volume central note up we non-packaged volume a to versus packages of collect of see of payments transactions they show our traditional would X% that revenue was e-commerce volume, of shipping, shippers. With on was continues steady that include significant postage mail commissions total growth, moderate billion, $X.X dollar postage XXXX. process

customers collectively X shipping labels packages. over pieces printed XXXX X billion represented total and mail total for packages. Of billion over For our packages that number,

scalability. significant system has Our

than half QX priority all of are third in a over mail For XX systems. example, peak packages million more packages one U.S. pieces period first and our single package processed processed of class estimate we in that over during the the mail this through holidays all than and year, one U.S. mail We and day. our more

focusing our of shareholders. for of we financial are XXXX. Our on the discuss continued our me our we're management and success employees and that, now initiatives generated very some let proud business for to With turn

shipping First, we plan scale marketing to on our acquiring to sales and continue customers. focused a with

I grown a then just our customer a value more As in focusing on that on began focus with -- several shipping over XXX%. average increase life the in been ARPU have we seen acquire. of our intently and shipping years over the XXXX mentioned, past since we've time we has We significant

rate by significant time from While we return great of range. high to XXXX. the scale return in shippers. about past investment investment X.X% XXXX customer materially the monthly our that that in years. in decade. focus continue to lifetime marketing to now and we not the acquire. our increase towards a sales average has be acquisition our other of At total versus the from increased plan declined for A the mid-X% range Thus volume that With low investment we dramatically changed for acquisition marketing of X% that in four and over customer the our same the has the has expense e-commerce resulted sales churn cost past has significant the value on acquire and average the This typical will

that e-commerce value solutions. we propositions core party plan Second, we functionality fulfillment features tools. other number of including the marketplaces the integrations solutions and and channels, of One sales our has providers, of key third expand our support shipping to

added We finished integrations continue integrations far rapid at a with new in other new is to add any solution XXXX. integrations, more XX with out which XXX We the over there. than phase year over

the adoption with ship XX Another station great seeing that and key proving mobile the tools ended their during XXXX carriers our And interfaces. offers add We're brand. our we've we that ship market our e-commerce and solutions, of traction provide is support solution breadth five is the our platform our new own solution carriers that of with added that increasingly user proposition new that of with integrating in our API year marketplaces engine and leading which third-parties value form to are of carriers. we also the follow under seen available we the an such And supported API, customers. station value great to of ship all capabilities as into

e-commerce mobile to we channels, XXXX, to selling and our and with integrations we develop new industry continue continue will tools leading During also develop will platform. marketplaces

continue and to continue and we will new will engine ship add developing We our API to our carriers new solutions. marketing

e-commerce plan we supporting customers. new feature continue to Third, developing

launched new management built During and customer inventory XXXX and we solutions marketing. two called great

ShippingEasy early, made have further us and very sales already to and our customer base. values fees both new for great our allows charge it's this so marketing investment within seen solutions, customer service we've additional We the in in leverage the that lifetime acquire to customer. increase attraction to While solutions we

and believe that and customer drive inventory features during lower adopt and churn. solutions management plan results continue greater the customer to in stickiness marketing customers XXXX. overall that's our greater our in that solutions these from also this We value to enhance We solutions

great USPS for Global as Advantage rates. on to continue Global Program program that we're program the Advantage a tracking, shipping access The by rates, the postage customers USPS and of to through customer procedures to this international insurance, partnerships a as Program. private going the we and can free on forward. upgraded will our we Global companies that The offer such Global as program those USPS work existing as Program utilize for international portion our represents Global international a expanding we to and solutions Advantage revenue free Advantage but we're we initiative customers. Note going recently international We We package in referred to will Post, new to marketing. volumes. formally this their our called it Fourth, well pickup, the simpler receive opportunity and to monetize us, a solutions delivery as market launched that's customs new speeds, shipping new discount grow label includes program benefits. work Through our focus enhanced discounted as carrier also other benefits international share Program refer the do a

Also under developing Post, the station in program. with ship are marketing completing Post respective we and We to packages markets. our in UK, work USPS incremental in After able international those these and international solutions are the Australia Royal introduced we share earn countries. integrations our on Mail partnerships in Canada revenue area,

We from acquired the thousand customers have already several efforts.

today Directors WooCommerce, and the Lloyd’s up of of retirement and for team during marketing support employees pursue our of Express, Michael’s long spend are to also has related our endeavors. with selling Open years has to of We the fully We’ve support integrations customers announcing Amazon Technology regret XXXX. order done our business the May as contributions complications provider we other Biswas best in Officer countries convey order our his also the related that announce been We of his in On family passed new done we deepest succeed thank integration his well. we Jonathan three more Lloyd family Board, as e-commerce the him our like almost board most Jonathan of long-term transition development our express discounted also Chief to our contributions have illness. a in carrier one this and Officer. was appreciate Broad to continue have member XXXX, the other XXXX of and DHL of UK, Magento, friends. our long over And individual we Canada, that management plan significant to management years. over board made Miller of announcing all to Technology announcements Press international since with to Biswas. members, Mattel. his invaluable retirement BigCommerce, efforts UK We the a to Today, service. support Chief of Square ship that for and Michael Technology President from a standing advice station the Officer, the to Michael our April execute has been the new and an expertise, Bourgoine launched invaluable changes We with and who Michael’s recently announced an with two last and behalf I on as served team. and in Card company. addition management and Michael XX channel in as sixteen retirement the Australia the will all condolences Today in organizational we to all to period in ramp team, also and the with wish Stamps With the Shop to Space, executive to services. well would are leading time service as earlier to countries away planning Chief year our extraordinary new Michael his for and a to he Vice Lloyd there.

join team working our a Jonathan look We of are me for the Jeff over him. call hand With that, forward to to we discussion excited financial the now and detailed very results. to let with

Jeff Carberry

much, include of our financial now review measures. very Ken. and today financial XXXX our quarter We’ll Thank you results fiscal fourth financial The discussion results. non-GAAP

and shipping business. driven Mailing shipping and mailing earlier. that grew Ken shipping derived revenue versus XX% in was and up XXXX. from total mailing year-over-year XX% approximately earnings primarily revenue XX% As as XXXX, a million financial million, and $XXX.X revenue can Suzanne and of estimate in versus year-over-year quarter $XXX.X million and non-GAAP on our Investors was increases measures in that XXXX. XX%, revenue versus paid by was in measures driven by and strong in $XXX.X XXXX, up and as was year-over-year. our website. our be to was The revenue was in was for XX% growth was customers XXXX, in described of and versus growth QX up The and that of year release QX was in a strong revenue the that Total up corresponding million fourth $XXX.X XXXX described, QX, reconciliation percentage GAAP shipping in customers We approximately that in and metrics was was the XX% ARPU, the our XXXX our growth found our

in estimate primarily and and was shipping costs gross margin percentage XXXX which sales and mailing our the grew for and our in our revenue in support revenue. total strong in QX in investments service XXXX, experienced from and server R&D attributable in shipping and the related to XX.X% innovation as also a higher of G&A XX%, of increase QX XXXX. revenue gross to our year-over-year mailing in was has business. margins in continued and of percentage of QX low was The accounted higher revenue, growth derived XX.X% the We versus in margin a XX.X% versus was mailers XX.X% and year-over-year growth marketing, Mailing single-digits. increases We to approximately a gross and shipping

for As particular of XXXX, invested the Ken were planned periods we number in there and half earlier in over discussed new many that back in initiatives XXXX.

was was per shares share share XXXX. was QX up million $X.XX versus operating XXXX versus XXXX. Fully EBITDA $XX.XX $XXX.X $X.XX XXXX. in QX Non-GAAP XXXX, in Adjusted fully and QX XX% $XX.X $XXX.X $XX.X year-over-year QX was in the QX was of income year-over-year was diluted additional of and that expense XX.X% negatively Non-GAAP a QX, R&D we was to addition to was regularly the team, elevated nexus and G&A in XXXX. tax adjusted XX% that would Endicia versus tax sales sales is EBITDA in in tax all of XX.X% up strictly national the used levels XXXX a million or in percentage through continued products $XX.X XX.X% drive of and in year-over-year XX% in XX% XXXX, versus million margin and in of services of to timing our Endicia and at catch sales sold for seen approximately [Ph]. the function the our is As product acquisition, XXXX, which sales increases XXXX representing result sales investment up timing catch and diluted which for in XXXX, $X up in the XX.X% up versus impacted periodic XXXX. in marketing, in income in Adjusted and perform. our QX million, in a up Nexus was In sell for of as was acquired per revenue. versus The XXXX expense million We we G&A XX% XXXX growth in versus was XX% began XXXX. QX, services The calculation XXXX was and our of they as $XX.X studies, EPS of where $X.XX QX and QX see by versus innovation, in XXXX XXXX million up expect

reduction $XXX estimated the was million of primarily cash effective previously of ended our flow. strong X%, driven in rate down from a of mentioned, by decrease million for to option which is tax investments cash by additional which from which by was QX and XXXX, in Ken the The and offset XX% of driven operating further QX XXXX XXXX. in with our $XX and our end QX quarter. debt tax repurchases, was rate $XXX We partially million investments, at As benefited fourth from repayments exercises an share primarily cash

resulting debt repayment optional and million. During made of the repayment $XX.X $X.X credit of costs issuance a QX excluding under million, we agreement principal required total an $XX of debt million in

During the shares the $XX program XXXX of XXX,XXX XXX,XXX at total cost million. the $XX company’s cost approximately remains the approved repurchased approximately million. QX And The for shares Board in company on total approximately May XX, authorization remaining $XXX effect XXXX with approximately of $XX through company repurchase million. a by the October repurchased million of of XXXX

million Now to turning to of range be million. revenue expect guidance, in $XXX fiscal $XXX we XXXX to a

to also growth on We revenue focus growth and expect shipping to revenue our the single-digits by to XXXX server be to we year-over-year. mailer in derive driven to our revenue be shipping mid-XXs in business. expect flat would to in range range continue e-commerce our year-over-year. mailing the low from would our particular low our shipping continued We to expect driven continue to grow In

down would to our not expect that we customized than in we revenue Finally, to as we expected repeat contribution necessarily from year-over-year expect in high higher XXXX would XXXX. orders volume postage saw be

than marketing, rate the and headcount revenue R&D sales investments discussed initiatives we in continue XXXX of to earlier G&A expect growth the we to to increase and make as greater fruition. related to We bring all

normal would which basis incur. would would given total the on a given continue expense see G&A we also impacted the to discussed. XXX we would to to to XXXX. seasonality, we side common expect initiatives the as frontloaded particularly we of percent of the discussed, ramping expect see of a given We side expect basis of relative to and impact to expenses operating to common tax the expect revenue points to investments, sales these see be We On approximately increase basis

margin operating reasons, million, impact our $XXX frontloaded We be expenses, in $XXX year XXXX. be of our to XXXX to the just we’d implies the accordingly, margins I headcount our million mid-XXs, XXXX same half investment half And Similar to than expect which expense. range to EBITDA be to sales both and discussed. the from a lower we of the of EBITDA which reflecting for first adjusted full expect expect the tax adjusted in the back margin EBITDA

XXXX. We tax of expense expect non-GAAP for will approximately be XX% non-GAAP pre-tax income

XXXX current (inaudible). factors year could effective a full based level differ estimates from Our on including of number rate the tax our

million We diluted XX be XXXX. to XX.X fully in and between shares million expect

$X other finally, due me shipment million our expect our Kyle the XXXX. over capital And higher holiday reflective three quarters In the income expect additional to quarter our We $X.XX XXXX diluted long-term to comments of to initiatives. share With outlook. increased to initiatives shipping, we expect some $X.XX. and be financial to we between period usage the our during strong fully to new results per of a fiscal than for seasonally on the focus the non-GAAP to scaling let shipping be call on in exhibit adjusted to hand year. particular, be XXXX $X in With revenue customers approximately fourth the meaningfully expenditures range and seasonality that, we our and million QX expect

Kyle Huebner

company shipping, Jeff. years. significant achieved past on focus transformation in over Thanks, our we've five our and acquisitions, a increased our business the With four

shipping expect our be to be focus We to future. the on for -- foreseeable continue

on e-commerce in to high-teens. opportunities. shipping the the our capitalize has growth mid e-commerce to line to tailwind U.S. positioned well in the running very are natural provides in We and e-commerce base been Growth growth

growth several are able e-commerce above then for We to grow typical business reasons. rates

the e-commerce suite need of seller into company e-commerce solutions successful crop as our largest most cream of solutions sellers. the and which we our solutions skimming the of off for we that the are and universe largest the suitable attract effective provide sophisticated that First, the of top e-commerce the

marketing shipping and the inventory Ken new things e-commerce like mentioned of expanding traditional and are we area into of that features Second, customer we management what scope offer earlier. including outside the

countries. for both core U.S. expanding with solutions to sharing other deals outside we Third, for and solutions with outside new are to new we USPS their our our multi-carrier and international carriers. are going our revenue to business international destinations able Fourth, using platforms, relationships and our within focused domestic volume with expand traditional customers international potential ship

As revenue Jeff acquisition we shipping XX% grew organic related shipping ShippingEasy as was quarters. our QX the This in discussed, approximately growth the year-over-year. anniversary in previous of pass all acquisition,

of are overall with even our early the market. growing So e-commerce already very new initiatives, state we much the faster than

mailing Our and we target that XX% outlined, to five year be that and expect growth initiatives shipping the have we is and rate revenue through I exceed target. Ken will able

new our Our investments is priority current growth. revenue opportunities to strategic main and business in the long-term maximize increasing

New growth upfront shipping generate such revenue as to growth. expansion revenue within order and investments subsequent e-commerce international investments in expanding and to require drive opportunities initial beyond

expect We EBITDA our adjusted growth margin will strategy revenue expansion. to long-term of maximizing lead

we excited open term to expect our investments the And increased up and our the for are currently In are to shorter of levels that, we'll for summary, However, we EBITDA forward delivering questions. with look performance reflect by in results future. great it making. the adjusted we strong continued

Operator

first Liu of Kevin Thank [Operator you, question line comes from Riley. Instructions] of sir. B. Our

now line Your is open.

Kevin Liu

Hi, good afternoon.

I competing launch network level impact at to higher some plans just kind a delivery here if question that at news if to will within hub, you that feel of increased any just how your guys out given growth Amazon platforms have competition curious integrated And a First this have there of the service. Amazon all with one market was your year? carrier you with Shipping their with plans

Ken McBride

Kevin. Sure,

now So businesses Amazon's shipping as it's our understand be and national support the packages up a currently. And warehouses carriers really Loss have services the pilot that all the Amazon, is to currently. philosophy regional with to UI them carriers, third-party consumers. going picking solution sellers already new Shipping and we this and called just they right Angeles about we XX multi-carrier like from is with our And on basically Amazon

already another customers. their Fulfilled this in getting as at we support Amazon, own of customers we customers would option, So options carrier for packages just terms Prime, as support. third-party were other those for their at another Seller -- so Fulfillment we We option we look look as our by that of hands in already support

SWA of And just use. Shipping Amazon so and that carriers the we would of add would customers part XX mix the effectively that will with to portfolio become our

I us. in is view good positive their choices terms customers that it grow good options services think to them the business their good on available reduce any is for of that enable could are customers are cost our our effect, generally are and our and that to and new for

us Shipping So, to will the extent them more beneficiary and help with sell see a and merchants enables more that'll products, be in-turn Amazon the merchants to and to growing grow. ship we'll

Kevin Liu

the to the the And of revenues respect through those subscriptions Alright. those if integrations come you would if in then with that Australia, monetize the also transaction Canada, associated within from expect there about the just have or to to you curious more some ability countries? of customers UK and international most with integrations go with you volumes so talk

Ken McBride

solution very about market for excited think for initiative really effort UK really us and we but a new to can't super Royal it, whole we we're to instance Yes, UK, that's XXXX and the integrations we're I like because wanted latter, finished just just the at customers integrations this in highlight dominant carrier. Mail early the the in more without those this literally we it’s points for and it's that

carriers subscription and started we're with really on the think to that hope this this have we the be able of overtime some we it's to like point, USPS. fees. I I so just develop And include partnerships getting think revenue at But international with just shares about

Kyle Huebner

with and we're partnerships way business that share carriers and beyond the for we solution the establishing I coming initial And in is brand not focus longer grow the the able getting just the Yes, the best that to station. with opportunities we're the up opens in monetization. successful market say the the the presence ship into building term to rev would that to customer customer have U.S. base, with extent broadly just market,

Kevin Liu

perspective? And the that? become lastly in have we’ve what historically right me, you the the so we shipping your Great. a customer should towards end. customers been at adds ramp to Does with seasonality for dynamic seeing And of on, a gross up custom shift from a for kind e-commerce add if that expect just change going customers

Ken McBride

the e-commerce Yes, just shippers, the is focus these I customers build the than business remarks are they value the and acquiring our factually speaking small made the space. I them mean, of the higher on far customers feel long-term Those I going the of but prepared that out really think company far, Kyle we've to is can the traditional really comment, there. comments was But acquired. that lifetime during Jeff are about fewer are we

think we're growth the growth in QX year I saw X% QX of with rate So, rate with we in of this which last consistent a year-over-year, year. was

down. more growth clip value able higher five So over two the continues to it’s higher our rate customers up to than in go it’s to to years and we're churn find and at for ARPU increased years like last continue we're by a business same row significant average grow because the overall a overall, still has XXX% come our able the mentioned I

have as e-commerce able to this the customers valuable positive for in that view rate quantity was they we thing and add be we are really number very overall more added customers just So, are over and growth us. customers to much the quality so X% we pleased like the

Kyle Huebner

an I most are ARPU seasonal office. the retail acquisition customers going business add the dynamics to traditional of post would different. just Kevin, and are In standpoint from the to that the small

holiday and lines are it’s solution season the fulfilling the as in the to is shipping. all-out there a pain merchants side when post so customer. into longer you and and very holiday business where running at offices It’s the the and customers adopt so shipping up more in feel get our selling get season, different easy the small e-commerce very And

adopting solutions period. not So peak they the new testing are holiday really or in

that e-commerce average and the of from about season a level gotten ARPU, So and revenue volumes in concentrated benefit the that to increase you e-commerce model and package more where season to is volumes seasonality reach are the with in so customer for by e-commerce their the holiday merchant. ARPU the where our the holiday you’ve then higher

So e-commerce. different versus there a dynamics in small business the are of for seasonality terms

Jeff Carberry

there more So, seasonal fact thing Kyle don’t add a net-net probably you I a see in basis see basis same QX you that you in business patterns would but on Kevin what is and the the in the shippers focus push exist, a a broader but the terms on there manifesting less as given Ken themselves with of business, metrics. still for will only echoing the on but muted of more small muted the see much patterns, small

Kevin Liu

and a this good on year. luck Okay, congrats And understood. quarter

Kyle Huebner

Kevin. Thanks,

Operator

you. Thank

question Craig-Hallum. next Our Sutton of a George comes from line of

open. is line Your

George Sutton

Thank you.

this. be pretty things investments some programs does think some am Your sales through that of or could guidance direct other incentives part I assumes in you significant or XXXX, wondering us give like breakdown we would if partner when

Ken McBride

George. thanks so Yes,

the fuel those hiring a well you loaded of back further discretion kind elevated of related increase XXXX see half in terms headcount investments obviously In of continue investment of is expenses, primarily to going XXXX. spending to program. of levels are then this as And in kind saw direct we additional really

I principally tax, related see all additional continuing addition kind XXXX. you the kicker with of of lines G&A expect sales in things through really are is XXXX composition seeing really what back So that you again those think half in of OpEx to in headcount of but is loaded three

George Sutton

international that previously spend, of a this TAM decide made at focus obviously what to curious am sort what I of On curious to your been operationally international kind now? is am I this looking you do are curious you relative And opportunity? a I program our not am just

Ken McBride

is carriers Royal which now Sure and well, I integration a can’t started think now we add carriers for market meaningful a that and we’ve the I of instance without the UK. point expanded added think as without company that and really the we’ve we we where undertaking hands maybe were integration Royal added after. it’s full that with the the to activity market we’ve Mail global that now UK Mail answer international the feel all was solution carriers, our to grown the market and in and the the our We’ve the where we significant domestic to domestic really really that international carriers in international to want point our go we’ve as with had

mentioned already that so customers So acquired encouraged very through right the Canada, got fairly several the once success and marketing a acquired approach I been we we in ramp our limited initial UK countries started in up our have and to those far. Australia, test three have already we mentioned market. like I with We’ve thousand we

it -- focus starting to we're bandwidth. really it is we’ve down where the think comes got on really I So that now because to

we've $XX the think in about USPS past of I three USPS $XX revenue UPS, the market, talked the as I you we total of about for the the terms billion. as in market really domestic carriers In FedEx at think add and it's about big look U.S. size being the And billion.

the expand the of it's I look you approximately worldwide, think $XXX that If at market to then billion. size

it's So about as forward. and and larger big going us really and opportunity we that so it initiative see we're XXXX in a market much excited a for

Kyle Huebner

in model And We shipping attractive you we by companies didn't before has heavy George think term with see if an multi-carrier the regulated the U.S. acquired country. been I USPS. individual the in provider regulated longer as are postage the each model business the regulation international look

merchants and carriers e-commerce a could and value integrate like multi-carrier to create you're countries. international regulated not internationally with particular through the felt have acquisitions solutions the model the for the us that ship really you was it station we where would you’re business that the we in frontend in enabled internationally really work So take and

George Sutton

acquisitions. of question. those suggest the agreements mentioned shippers I'm were able share other curious any you're would to Do history outside That's rev carriers. you with expand my yet? potentially Kyle, outstanding have final you other with And relationship USPS

Ken McBride

our we Yes, with carriers relationship of other disclosed there. some out the really haven't

And we have with the model of get with been think their Service. and share had we scale we as we the tracking of monetize shares like able our are business other shippers U.S. volume part clearly been think and very do with would attention I Postal additional And as much to package carriers. that more. customers, have a carriers volume I revenue to other we revenue more more additional and

we through really than long-term that. many feel for comments goes us the to we opportunity about solutions. the volume So other our USPS haven't optimistic But the point on at be made able monetize this other to that

George Sutton

guys. Thanks, Okay.

Ken McBride

Thank you.

Operator

you. Thank

Aftahi line Partners. comes question Capital Darren of from ROTH next the Our of

Your line open. is

Darren Aftahi

thanks Yes, my questions. taking for

Just I on first guess international expansion.

feet of office on of So And terms of base back, headcount comments pickup Jeff, XXXX. particularly less more management on volume. not you curious those bulk those is have How customers inventory your Open as a next the just are about about anything late sort that the then but penetration have you and movement, cost out how big of much understand just year I talked that do that fourth your in there. kind in sales within on hiring pushing lastly, saying. in just kind we countries? CRM installed Thanks. you would shippers? localization year. think are I'm the of street, initiatives Is churn, force about in there, we the when this, the and quarter into progressing quarters the your pickup a And need then couple call

Jeff Carberry

Yeah.

kind then hiring over to inventory churn management. for and broader take I'll it of and strategy I'll and turn So Ken

since the churn, plus minus think to you on bounce of XX I or XX year-over-year seen churn points. empirically around XXXX XX terms in you’ve to if basis look So

of a variables. So we’ve it impacted kind by seen of and lot moderate it's

keep on I trends. the of So QX expect. the end year-over-year. the And view well within result decrease term we'd parameters empirically the it's as normal in given volatility and broader I either think mind is think what longer We important given the

So I rate concerns don't churn over in real the QX. have any

So and for over inventory management. with will that, to I it Ken hand hiring strategy

Ken McBride

in Yes, after, and presence at like UK, the don't we Canada. so need of in or kind the haven't any street local really Australia the have presence markets point this that terms international developed feet we gone on of we and

They those are I at to is integration mentioned. integrations, as complicated. there think in than complicated our they other integrations I Royal point, very was of people the are significant, this cost Mail particular more some related some

work So we on developers working that that. that people have product on and are that

-- postal the lot it’s internationally have integrations going headcount related added we at there some while market of the integrations are more more carrier need country, and the of lot shipping when a markets the there a are mailing we there's So share within market key each that market. against you it’s carriers a fragmented, to they to And carrier those is at those total costs add. when look volumes more the still look each less dominated that generally carrier. And overall in but organization by in you

really look each you when solutions beyond need to you suite like add authority integrations that customer country. postal there's a of a So at full lot in the of

isn’t are doing our the really on to really feet The related structure. there integrations a thing necessary people will that point us. So for street those costs impact -- isn’t cost at this

through solutions there really well. international marketing through so to be mostly markets marketing customers the managed the will in have We attract e-commerce cost as

so same the that customer. encouraged but of started and we've using those have methods terms own in in test used U.S. results far, the those we've to We our marketing some by been of we're traditional attracting

to to do what really the we’re the And base into -- that’s is we’ve we’re those of those we've are revenue building starting relationship to think generating I customers. calling solution we add, base. only customer area those to features. the trying related we’ve we really within those understand of looking -- adds of market ShippingEasy really cost really is the done test really solutions and solutions market we CRM smaller main the gone not because to to of trying more additional test for, that it's into effort and those those more kind And solution to solutions that and customer by what what calling what’s or that on inventory are need to the international. customer a for management customer are as go And marketing value-added solution the So, are to question management, then customers the marketing related way customer the really

we a those entire results solutions into so to the adding and to a within really are could customer to additional the that seeing of to we marketing at rolling have more base really customer taking lot of customers management try solutions it smaller are of develop need if where initial in we encouraging customer some capability But lot needs features from ShippingEasy look add. segment customers. been and is and about what base. goal beta customer base kind them to a The you the base ultimate a our inventory And really using marketing of features and out somewhat learning those as we're we ultimately as of it’s and both solutions our the the we approach those will -- you understand

Kyle Huebner

side product really Yes, development a we've really we do the side, working that our on I opportunities really lot on are require and current business. new would just add the had on to international in the that the we staffed these initiatives of incremental and the employees people those

penetration dedicate past said, existing evolving resources customer have see ShippingEasy and that in we’ve results those we rates these and dedicate and and just two inventory traded again within might been product group full to building following between what features then marketing goal. to are be have in. there But long-term are the continuing the incrementally will to just And off as the our as opportunities to plus the that new areas. and growth roadmap with we get within Ken we enough percent enough staffing on where double-digit these of group are attractive the pleased in the encouraging resources out we really solutions quarters product a to that's that development drivers So and we really

really that's and solution out the robust a perspective. where the have As is model that you when properties financial and roll Ken it leverage to from all really you said the

Darren Aftahi

Just if may. I more one

modest in year mover point? significantly is this it the for guidance sales that or contemplated pretty international needle Your at is number, this

Ken McBride

domestic a very have factor obviously we large a business. It’s

So, beyond wouldn’t really it is it certainly a factor, but I I that. think that quantify beyond

Kyle Huebner

And like as there are revenue, at now in Yes, get is with I revenue point the which three move investment we Then to from we the that the to I reach look at leading needle. investment scale. then growth think drive penetration would phase something initial inflection think to to the initial where X and you just it add, building then an a there is countries. starts to international the

saying are -- within think will inflection year that it we scale order in move it the needle. get point we on it make looking basis at have would to a the move I So, five the now next to to few investments years where the

Darren Aftahi

Great, you. thank

Ken McBride

you. Thank

Operator

Thank you.

Allen question comes next Our Klee the of from of line Sidoti.

Your line is open.

Allen Sidoti

Yes. hi.

maybe said you up the the you come what going following where be Just under bit. understanding am multi-carrier solution, I can trouble I from? a think on from revenue means but think from that work incremental the could into coming just getting delve if that revenues international, little having it I but program, share to you’re you heard say you a I packages

Ken McBride

so of in discussion Sure, concepts two I of this. kind my mixed

those like e-commerce the as first their based using it, now based subscription in acquired customers Canada, customers UK, ship its based several two that just customers about they think we’ve off station customers about talked things, is a that do already ship are additional are really in we in customers the there that So paying in us U.S. are to separate thousand fee Australia, are And packages. are customers are so that that

one to countries. customers of really marketing that our that’s other that’s in and so the solution opportunity reside And area

second the us domestic which was about thing is mentioned countries. really and going that international, more more I to The origination into going international

of So add to value this customers. we really international called Global and new our is trying we solution for are the lot program Advantage our a around

program. they we they a label is call what so with doing are work what private carrier partnership So private carrier -- have the label share offering utilizes this we we are

portion from they you get or for terms are do. portion has is a the program a And where sortation so discount it decades the you of the work several this of to a a do had that them caring portion for USPS work able that of of in

portion you not operations of your their that and for paying revenue a you combine So then that the make of that the kind operations and are can having with customer doing. solution for USPS by

so really for to participated share any and and revenue order And work have in we time way in advantage us meaningful in really USPS of ever that get the it’s opportunity are taking the first it’s we revenue. program

customer Global the from benefits order in Advantage our add overall enhance customers bringing a time bringing is to And to the is value of perspective we’re international this same the so facing to a lot they at customer. Program

pickup, free speed. upgraded So free delivery package insurance,

take get to time So very to international long destination. packages a their

tracking tracking, is So upgrading good. not for internationally really traditionally customer, delivery speeds the adding very the better

So are enhancing complicated. very forms the customs tracking,

So able to and really out being effectively that simplify fill customer a the customs for for them. forms

our trying package lot are customer a we feature packages so that And of to up are international. going domestic new the capabilities and for around

Allen Sidoti

Then engine the see ship Okay, you like is that's on also to parties about API and new where available third what talk opportunity? marketplaces. talked you you thank you. you about that a on are Could

Ken McBride

We and in available market it it station, of made available API. user ship Sure. the are solution station for. leading the it of effectively form we have use most of guts that instead our what interface ship made an taken With customers

harness to own power their of the marketplace like the in or end within shipping e-commerce user and so interface a own ship what's user interface who And there another a an wants to out solution this customer. then allows provide station provide tool, functionality their to

to XX bring something that the in use. breadth And form so the got provide the carriers, party third the ship a this of is of in and really that can we've that trying integrations XXX station

wouldn't opportunity ship new customers some these that incremental the station. of are really so investment using otherwise of currently not have marketplaces is these or other because received we tools And e-commerce

Allen Sidoti

in comments great. environment? any any then Okay, competitive on And the changes seen you've

Ken McBride

the be so. most from has for continue the year think seen I or to we've No, part, last environment competitive what the

any new note. think I been of there that haven't developments really

I efforts. do. seen impact some they that company out [indiscernible] at And we're what the growing haven't really at we're direct doing entrance got on managing think about, this to those that grow the the at despite still main that We've And of really kind but new of we smaller their there kinds into still think is market in rate focused from companies I competitors. any come point. we have terms that's of

been really benign competitive a it's So environment. fairly

Allen Sidoti

much. so you thank Okay,

Operator

Thank you.

next Klasell the comes of from Our Tim Northland line question Securities. of

Your line open. is

Tim Klasell

guys. hey Yes,

quick a follow-up of couple questions. Just

give with us the years you an there? of think of an increase would us can the ShippingEasy that customers, First, with impact you idea I mentioned idea solutions over new customers what be, the ARPU you're those said. Thank trying what to the in you you. inventory management could like a But sort think the potential be maybe give beta you

Ken McBride

out right beta. mentioned there And when this was that's customers mean, I blown and product using there Sure. I are now. it full

we've double-digit customer the into penetration rates mentioned, Kyle As seen already base.

customers the we of terms meant think I in overall said XXX,XXX I when I have. really beta

as you on We that have ShippingEasy particular, is for customer customer an features you a manage areas. so really launched at when terms and a Amazon. get across you're And in channels that you're to really what feature Amazon have, advertising inventory as as item inventory and inventory and to only the this skews what channels is then you focused and work. base, as And management if what selling not more well add It's complex you set that base. look more need skews the works of multi-variant customer. on do launching and you're management learning selling doesn't very in have get and then can item starting entire you a larger products, the the don't ShippingEasy from of an we've example, and it all suited banned really actually about of on many on And you'll much hand, to really times that as an into possible these we type

business small as an have you're you're potentially when that in places, places, holding problem. it you selling to being multiple inventory when bit inventory skews in becomes multiple So that unwieldy when a able of multiple your inventory a monitor

really the fulfillment need you and management what helps or optimizations provide monitor so is that it. the And one like it the solution to ShippingEasy figure when in reorder of actually by customer to of out stock And inventory to the how inventory they levels, stock out when the out you Amazon. terms in mix shipping figuring then does within something have really is already automatically so the of do ship automatically solutions is you're a carriers of one typically advertising

you of own packages fulfillment So out have some shipping your that warehouse maybe some by and packages Amazon.

And means both the so places. you that have inventory

an we're call depending example sees providing nice extra. extract as packages of feature, from as anywhere the charging of inventory that you type we’re able to $X.XX add. on that's that that So, a $X.XX running we And to system, through the a value are of customers extra look at it we're what management charging volume for

how an really are. extra on it's you large So fee depending

you the this another in and is a And spreadsheets switching is to your cost tracking extent, painful solution. ways high. one I back going other to very, and this The set is get of the to to that's benefit side switching benefit. the solution So or process running are it mentioned stickiness, up of what the this all other so very extent or

those of reducing churn benefit core the side the just a has of for ShippingEasy. feature of it So customers

And really so it's benefit. a double

Tim Klasell

was the for price Thank maybe harder maybe Okay, shipping it’s were of great, or the in higher maybe it a on jumped just we volumes prior quick this sequentially clearly sort packages then follow-up, anticipating. one ARPU quarter packages than clarification. QX, little those your than that normally side, of it And bit drove Thank years? and just you bit what does, or -- on that Can a jumped in it as great. of it the but you you.

Ken McBride

to point to I there able impact what way is, terms in is on monetize the seasonal of think are clearly I postage. that a Yes, we

those massive impact result have growth you to have can level an on So that different our extent the in packages. seasonality of on rates that monetization

variability essentially with the kind that's seasonality. So that's why see of some you

Tim Klasell

you. thank Okay,

Ken McBride

Tim. Thanks,

Operator

to this would you. Thank call Ken turn back time, Sir? remarks. to and At CEO, any McBride over the for Chairman like I Mr. further

Ken McBride

you if us questions Investor you have hot call also And today. investor follow-up or us line you much. always as joining you our through can XXX-XXX-XXXX. website, Appreciate investors.stamps.com contact Thanks our so any can is

Operator

and you and That gentlemen. conference. conclude Thank your thank does you sir, ladies

have day. wonderful And at this a You may time. disconnect

Stamps.com (STMP) 21 Feb 182017 Q4 Earnings call transcript