STMP - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen and welcome to the Stamps.com Inc., Second Quarter 2018 Financial Results Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer-session and instructions will be given at that time. [Operator Instructions] As a reminder this call maybe recorded. I would now like to turn the call over to Lynn Um, Director of Finance. begin. may you Ma’am,

Lynn Um

Victor. you, Thank

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

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

of million measures litigation following million and items. amortization non-cash non-GAAP expense million exclude and the to debt of non-cash issuance and costs of the quarter second acquired $X.X expense, compensation acquisition of expenses Our MetaPack intangibles $X.X financial stock-based expense. related transaction settlement $X.X

non-GAAP Our measures additional non-GAAP also expense tax include of income $X.X quarter. second the financial in million

service and financial numbers discuss see second revenue revenue GAAP reconciliations revenue, insurance not include the and from our quarter will include mailing today release of corresponding measures. do measures earnings and Additionally, on for website the XXXX shipping investor metrics Postage. Please our and to XXXX posted revenue any our non-GAAP we product Customized

over to call Ken. the hand me let Now,

Ken McBride

million year-over-year. non-GAAP of quarter Thank non-GAAP year-over-year, joining up XX% which income Lynn. of our announced for and GAAP was fully you, adjusted included year-over-year today. EBITDA you per of adjusted was XX% million which second up financial Thank diluted we that up Today that $XXX.X us revenue share was XX% $XX.X results, $X.XX

price aggregate quarter in million. XX, performance. into very our financial Limited for cash On which to of approximately we pleased a definitive second purchase agreement are acquire is million £XXX with MetaPack $XXX entered a We July

multi supports customers integrate interface the world. able operations. founded API company seven MetaPack employees the API secure internal programming the level year. London XXX with MetaPack approximately to around leading cash XXXX countries in single utilize XXX carriers over highly packages an current parcel e-commerce software XXX functionality. carrier to in and is over their carriers core and based they MetaPack’s e-commerce then the transaction countries in of will world. that application once. is that And Their was the fund software world's last reliable XXX employees balances. than API powerful more more shipping XXX or the customers and We enterprise entirely in operate the than is software the that and provides from million features are solution the MetaPack’s any their around available, processed Metapack

very they at leading customers, delivery recurring options in volume-based world's Outfitters, the many has Face, Timberland, software-as-a-service, brands, of customers such API select on subscription Spencer, of on MetaPack The of which revenue their journey, and sophisticated including of they for preference acquisition unified significant software this retailers provides carrier as the offer fee tracking card. addition Speedo, a that Adidas, system optimization a & a as their standardized factors, parcels engine operational Fossil, multi-carrier optimization. cost Marks for provides many, L'Occitane, such carrier and individual customers carrier or transaction weight, Zulily option reporting dynamic of model e-commerce, business track the Urban Smith, London, XXX package is payments, Tracking integrates international best many the to system over the analysis Baker size, packaged service and availability, point stock In SaaS solution and a The analytics use capabilities, which interface, number the solution trade core to offers North helps that return retailers’ duty where via retailers with online an and revenue of John Lewis, the location manage customs software. cross-border as performance, majority and shipping Ted rationale multifold. and Their to which to is manages and a a delivery a shopping the charge ASICS, and more. website WH strategic fee enable delivery based shipping, their such which and an right engine a that customer is purchase declaration returns based

which to MetaPack world's largest First, the to carrier expand to over expected access business we parcel our library support accelerate XXX our for carriers. efforts provide internationally.

XX necessary Our a support support the only tenfold integrate in require current order about U.S., much products. so markets. we see and total of quickly be to offering Unlike markets negotiate especially large immediately in challenging number footprint a to those a carriers, of with our number a broader carrier the complete to competitive can in service solution carriers international increase we solutions European will provide and carriers in considered and it's to a markets

and provide e-commerce current to MetaPack’s solutions their market for library acceleration international and time large will We expect MetaPack our given a carrier significant expertise.

has expect efforts accelerate limited Second, able we'll U.S. be penetration MetaPack’s the in expand in U.S. the we MetaPack to currently to

know, pursue with national sales market. we the a U.S. network which you a have force that sales and solution MetaPack to As will large provide turnkey with

in expertise in significant have also We marketing U.S. the

desirable allow in parcel are customer customers position MetaPack our of list smaller will The position we our us in carriers. MetaPack the carriers. enterprises. strengthen are strong businesses, complementary believe large to that retailers for very U.S. MetaPack overlap. types very focused while Third, little also MetaPack’s serves with traditionally has businesses with Fourth, and preeminent complementing focused Europe, had business on parcel very on the Stamps.com Stamps.com has significant

a important could we product Postal will list proposition will that retail has an opportunity MetaPack under to August close for negotiating strengthen financial MetaPack is have concentrated. U.S. further are segment. an customer We valuable the branded our penetrated value in historically in in believe anticipate the year. where MetaPack help this transaction support, USPS of it believe the very share this or We customer customers, with The carriers USPS be large opportunity And to and will the gain We asset. finally, to be Service. with

we However, incorporated formally not our MetaPack into guidance. have

consolidated As projections. encourage to impact is that certain post and our perspectives signing and average the Shipping U.S. discussion conversion was $XX exceeded the provide paid time for per would which was a timing first the on driven Shipping I the of work and UK detailed to Mailing consider more With That for quarter now will or potential Growth by let closing to business. we GAAP MetaPack. and that, investors we extensive million Jeff of our revenue have in said, not how up year-over-year. in some me $XXX.X of second tax customer, financial was growth turn revenue in ARPU the Company's Mailing and XX% history. around

growth shift revenue in more lifetime Our in growth by modest where versus shift quarter numerically our which customer total has customers to the growth each more in but paid of acquisition customers consistent than on paid of were driven Paid $XXX,XXX. been paid by fewer With XXXX with customers. are been has customer value. has shippers, metric our recent the is of in in focus, this driven quarters the strategic a focusing flat was much ARPU, higher number, second

areas Our monthly rates rate per revenue the churn growth up growth the the focused XX% was of quarter subscription versus our Shipping in customer X.X%, the ARPU the quarter that seen fees during benefited the was $XX.XX pay small higher The from shipping was churn which than Average ARPU business. we've monthly mailers. second with generally quarter several is in in customers past paid line quarters. in average continued over business second or XXXX. of second

of share payments packages tied to we in process of collecting shippers. on dollar also revenue We’re our that typically the volume additional behalf commissions partner

traditional Second to quarter metric volume higher that and Total a quarter X.X versus up volume, postage see which non-packaged growth steady postage the continues X% of second includes decline. printed mail both XXXX. billion, was printed shipping was

some all continued Our and business very of now on financial management shareholders. in we XXXX. everyone of for success, update With me the to are on focus let team that, initiatives generate our and the our continuing proud we're employees

to XXXX. to of focus total average scale seen investment sales is shipping, e-commerce continue customers. several sales customer focus on our past expense that investment, shipping to years, our have With acquiring we shippers. we marketing significant a a and volume increase our other lifetime high our the A the focus versus significant great in we acquired. value the in First, and over marketing With of on a continue to we plan acquisition on with plan return XXXX and a scale of on

shipping plan core expand Second, features and solutions. our we continue functionality to to of the

the quarter, is including propositions support new of additional number solutions we channels, marketplaces and our of the during the of value added integrations. we providers, tools. And sales key that third-party e-commerce integrations fulfillment several One second

success offers e-commerce shipping capabilities tools solution ShipStation marketplaces in form that parties into third to leading the API, We as with and of such to also our market which their see available our interfaces. of ship own integrating an API our solution continue engine are all the user

tools. develop During XXXX, to selling channels, new marketplaces e-commerce continue with we'll integrations and

API. engine ship our marketing and developing continue will We

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

the with for develop During quarter, and to inventory we marketing our management our continue added customers. features customer second value solutions new

ability automated For example with in the a we – customers customer customer has new that campaigns marketing, purchase not generate time. coupon a to automatically if made long added a a including

will and benefit international continue plan MetaPack’s expanding solutions management this investment to as new anticipated that long-term with inventory base. customer the both international management shipping is in MetaPack continue the of shipping begun easy looking just solutions long-term We've we're focusing customer the we see drive our customers. features our with to will We both traction continue as e-commerce going benefit solutions strategic in solutions to marketing. a on to shareholders. for well in continue existing marketing to we enhance asset markets to strategic international discussions to of Fourth, leverage within our our good those our We to part discussed. and market be already team

continue drive also shipping called will the Advantage Global other We to our initiative Program. international

Advantage program you partnerships. to us on in international develop through area, we carrier to recall allows our rates, packages. UK may partnerships integration Amazon international customers markets. order in to discounted earn the done countries channel Global in private We've through Space, As with in the e-commerce Program we WooCommerce, and this support to shipping Also well. in as solutions offer label incremental international USPS revenue access to integrations The continue including the the BigCommerce, there. selling We've and Square Shop Card customers Press multiple international support our that Open Magento, done market

UK, gain Australia throughout up in business, Canada our During we customers the in to continue and marketing the efforts those and to development continue second quarter ramp will XXXX. countries new

our its and will Jeff in countries. call financial to acquisition broad begin of the at let With results. me library, more that, we expansion With additional MetaPack for two hand discussion carrier now over look detailed the to

Jeff Carberry

XXXX quarter includes now you, measures. results. We'll financial review financial second Thank our today Ken. financial results The our discussion of non-GAAP

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

We growth from can in our as year-over-year low increases decrease our margin QX high-teens, and G&A, primarily XX.X% costs margin R&D percentage businesses. fee the our revenue the margins in have revenue in scaling of and a our including and Global to revenue We year-over-year last mailers international the related QX the was and in also investments of year. server The estimate in sales the attributable mailing QX Mailing shipping to than continued which the of that was derived XX.X% versus and experienced our in shipping innovation offerings shipping lower of total our gross was services in support in single-digits. Program Advantage to mailing gross primarily other a marketing, components. profile and and strong gross grew

the and new to international higher QX would the we particular, year. see was hiring exercises the income diluted QX, and QX XXXX. in million in QX levels and share sales $X.XX expenses Adjusted headcount Non-GAAP XX.X% in expected in initiatives last R&D of associated QX invested XXXX. anticipated Adjusted in million order gross up to a the previously fully pace EBITDA As of versus than that half year. in expenses initiatives elevated in in and our XXXX of our that versus year-over-year invest in for absolute relative $XX.X growth XX% Fully Ken $X.XX to shares per the to was offerings, reduced of tax XX% diluted rate for of our anticipated calculation was XX% taxes reduction adjusted versus from lower lower by EPS discussed up XX% was and for lower as marketing, continue versus to Non-GAAP planned was tax the XXXX. drive year-over-year associated XXXX a estimated of per that G&A QX earlier, benefited with than we of income mandatory and option EBITDA quarter to first for $XXX in estimated QX which to share XXXX. with QX QX XXXX balance this XX% to higher capital in repayments. was partially previously year-over-year margin QX. QX from our used of cash end decrease investments the $XX.X and The the cash throughout and we primarily share and driven in million EBITDA expect adjusted operating initiatives cash in and XX% at $XX.X offset investments which $XXX up driven sales number strong have from partially and We in at a $XX quarter XXXX of offset increase ended exercises, net operating be was year. QX was was by debt flow, million was year with of the million for changes expect those the repurchases which primarily up was operating dollars each cash from the of The innovation. and by QX, working in XXXX attributable full-year, with and of was XXXX margins by associated scaling option rate QX. of discussed, ongoing second the was and accrual margin was million in of In

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

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

to turning guidance. Now

Ken guidance our the from related guidance found GAAP the it expenses As mentioned, include But release. our in associated XXXX. in operating close XXXX August expected XX expected financial does and the December MetaPack from of through our acquisition excludes results

We $XXX expect the in be fiscal million of to continue to XXXX range to million. $XXX revenue

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

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

G&A in greater relative quarter expect dollars to We than of bring expect we the for to to marketing, initiatives discussed see the higher balance be the each increase operating and and expenses and in we QX sales to and year to revenue absolute rate fruition. to QX the order growth invested in XXXX in of would R&D the earlier

tax see the expect to particularly we expect would would sales to impacted continue As incur. we previously G&A discussed, expense to we given

$XXX million implies fiscal with associated tax operating be expenses expect our margin higher of EBITDA to This expenses. our headcount EBITDA our investments the a pressure margin in would adjusted QX sales expect holiday due increases the in full-year $XXX traditionally seasonal in margin both the investment combined slowness sequential quarter, XXXX million. to revenue adjusted mid-XXs, reflecting the continue EBITDA range in to headcount with with and period. to third the We in sequentially quarter to in third in shipping the and lead the with seasonal strength fourth EBITDA third quarters fourth associated We quarter

estimate which for full-year previous we compares expense income tax level in in non-GAAP expect of the of our for rate We reduction be XX% expected option pre-tax second approximately by as our XX%. XXXX was driven non-GAAP quarter XXXX the to The will the exercises discussed. of

As our in the and was non-GAAP net effective XXXX rate yielding our is XX% XX%. our in estimated XX% non-GAAP quarter, tax for XX%, rate tax rate expected first in non-GAAP QX QX rate QX and tax of a also is

effective full-year from a estimates option based number of rate XXXX our level could future. Our in tax differ including factors exercises current the the on of

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

range to million $X.XX to finally, per expect be diluted and guidance to non-GAAP to expenditures approximately XXXX $XX.XX. of previous expect income adjusted $X we $XX.XX $XX.XX We be to $X which fully share in And capital fiscal between compares in XXXX. a million

tax in we thoughts be potential some With to and fiscal potential year-end comments adjusted we would MetaPack’s closes financial approximately We remain assuming contributions quarter the million. excluded We revenue rates. Ken of MetaPack the US$XX million mid-August rates and provided is US$X MetaPack’s exchange to teens. on we contributions would the estimated recent additional quarter. acquisition we mentioned, while would the also US$XX MetaPack expect outlook. provide growth our most on for for and foreign XXXX, XX%. expect for between let year-end some between from customer US$X not expect beyond contributions While We our to and that, the the with hand rates call to over would EBITDA financial me And mid-to-low be Kyle and long-term want revenue the XX% have between in note We in formal that consistent from contribution million fourth XX% reasons guidance would contributions the current for expect had did assuming million. expectations

Kyle Huebner

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

broadened of MetaPack, e-commerce focus shipping, include that acquisition to but opportunities. deepens pending Our focus not significant on also to only global our

in trends what the to the by trends. well expect future attractive Stamps.com’s be we've capitalize greater e-commerce exhibiting but e-commerce foreseeable we We both our has with towards rates several U.S. E-commerce variability. on mid-teens greater growth been global in rates the the past e-commerce be running business seen shipping the to for to growth natural and believe are to some focus growth attractive driven our continue U.S. positioned rates regional Europe, fundamental with and we a consumption and that These believe secular shipping in Europe to over provide European in both and strong years. growth driver

mid demonstrated in year-over-year. to our revenue organic range XX% by growth second quarter the As shipping the and

an have revenue for We shown shipping reasons. ability above related to several rates grow growth e-commerce typical stamp

suitable solutions our are First, sellers. and the e-commerce sophisticated for largest most

So higher growth we companies. e-commerce generally attract

the scope monetization. expanding our offering customer Second, and increasing thereby our we are of

multi-carrier to low focused growth our mid our outside traditional USPS teens. been has to the expand us MetaPack’s core in allow business. Third, rate recent platforms

outlined in discuss. the As strategic that rationale Ken we

to realize accelerate that course enhance We their as we we MetaPack will time. growth able acquisition and of we will initiatives various be international expect over expect the rate that our synergies

With and we’ll drivers from we bottom for strong percent that, questions. to believe it revenue be shipping. believe topline trends performance continue will up As to line and shipping with revenue the exceptional able be exceptionally with level, revenue e-commerce open shipping future directly of foreseeable drive for total platforms our and XX% its We our strong domestic portfolio to and performance and more technologies. international we current businesses as fundamental and total mid that of fundamentals a global our attractive will increases provide correlated

Operator

of [Operator comes from Craig-Hallum. from Instructions] And question line Sutton first a our George

You may begin.

George Sutton

we saw could shipping you if wondered when this the enterprise market. in I the following you the you. MetaPack Thank discuss acquisition context, entered in

accelerate looks like hindsight folks to very great acquisitions. three making really like in ShipStation – ultimately that and acquisitions You multi-carrier ShipWorks made of some

international way? acquisitions the potentially opportunity of are at we As time? this your or over beachhead you thinking of the this Is first like look same making additional

Ken McBride

and mean as market I you with efforts and but ShipStation And know, Australia, we you as at talking in look more markets, started where Europe, Canada. Well, be the look number to you about may think that we those acquisitions been address in international, you really see we I of and we've need and UK order a comment you that support FedEx really know don't as product affectively at on particularly the to U.S. to far than our the you considering, carriers dominating as the have you that UPS approaching market USPS in market and in is around those.

So market. we back can gives view that of need Metapack immediately to carriers after an in a plug and that we tenfold of increase into as and ShipStation that order API can the the number go and really us we that we

market to accelerant it So allowing advantage great see the more we first in of potential to a mover that as us really get and get to market. a

why I that's primary so the And rationale decided to the the for MetaPack. acquisition, that reason think acquire we

Kyle Huebner

would in was as carriers Europe establishing with I goal that for presence us. overt add to important customers and the getting strategically just

that position sense makes we're say a we other we fits are in MetaPack here established about feature I ShipStation we've and forward forward efforts great our and have Now there that really would to move that at of If and time execute. a know acquisitions I over synergistic the acquisitions. on dependent take to course position the will think those, good strategic from feel but being execute within without look ongoing you

George Sutton

ship cross-sell today. API real I'm example. the be network statement? opportunity, ShipStation via package have I a is with within customer is Amsterdam for now to the that capability MetaPack And to and platform want There carriers no API will I to of current on a this plug the access to correct real if clear Just a ShipStation the

Ken McBride

kind Well, there… mixing it's a couple kind – you're concepts of

George Sutton

do. I often

Ken McBride

shipping customer the many And is has Amsterdam as MetaPack in that will area a - cross being there U.S. market are talking that to resides solutions ship we're which in local were XX order great be a in may It’s we from to MetaPack you carriers need support okay. really what having to because market well. about who that go border and In Amsterdam. we already carriers package called so to capability Where and able and so already that and ShipStation negotiate those with carriers in lot if market that customer. after as would it we in to to do carriers begin and separate market then XX XX and would solution support integrations into XX MetaPack plug we built were to market go we the take it going after whereas have without we API a in can go to separate longer for take that able order to be to even that Amsterdam

George Sutton

Is offerings could in with that to impressed Last engine that you see ultimately something your the U.S.? built? has the that I very MetaPack optimization was question, Perfect. carrier applying

Ken McBride

carrier for optimize are all engine key solution, across MetaPack think customers is value the service Yes, carriers having their carriers the I optimize the they as optimization propositions serving reduce can the of they one a the at and the to of great is mix carriers having carriers. out move in in customers and a multiple different of those and different their across improve countries costs look and carriers

of in have optimization our and makes capabilities products may carrier their of be there MetaPack to them to leverage we it the existing do Shipworks existing they're ShipStations, some different shipping well, so business. allows capabilities our as So easy but in capabilities. and able We really it e-commerce optimize

George Sutton

guys. Thanks Super.

Ken McBride

George. Thanks

Operator

FBR. And our next question B. Kevin comes from from of Liu the line Riley

begin. may You

Kevin Liu

afternoon. good Hi,

to their leverage the of able is to economics implementing? MetaPack carrier respect types business talked having their you on And with the that access, be that once one the about direct relationships Just transaction do and same latter they they have would by pay customers it's ShipStation the volumes follow-up if or feel have. you by that API

Ken McBride

So their fee transaction a fees. a business subscription model is to volume charge their and based customers

to customer So through monetized are being transactions carriers. there base $XXX their not their million

Kevin Liu

the if if guys with would you sort Task it. coming? conversations helpful. Trump in from wondering Got wouldn't maybe any kind those three ecosystem is future. conversations heard of and USPS last That’s postal release point month a Force bit such the near partner the in Task the changes suggest either significant participated Was little on with the are the on you Switching there gears sometime so Force or OIGs anything report any that USPS of

Ken McBride

Yes, interviews with the formed it’s doing Force the and there. out lots constituents Task so was all of various

that Task to August is issued the We have members but you conversations in think private this to partnerships will know come specific the know be the like XX. our spoken report you Force out favor times had We don't USPS the their between of expected of and the USPS. when the several report, in strongly know you with we've the partnerships on report final based industry

comes to XX. August So see interested we'll be what on on out the report

Kevin Liu

at actually to longer side, to then on least within about Any are give lastly, to down? the shipping to and – kind talked and as between looks trickle the do And you drive you single-digit of update that just customer steadily just SOHO a paid terms mix trends SOHO you should can think we to relates customer growth side it of able the what And bit over low your little it there? in you things. customers to expect be today? the you Or Would over kind the and the overall about just like Okay. base the us investing that's account of shifting continue growth how shipping of in how term? expect

Jeff Carberry

Yes.

we to the And and of shipping especially of Because other implies we revenue. of monthly do still low a mid-XX% be When think many is given with mailing well. the kind and mentioned the as monetization range Kevin, more terms don't projecting no breakdown customer flat our opposed flat there as look to about from than we volume by attribution, customers I There's of to as projections, many, shipping. contribution basically mailers. SOHO growth we're focus historical revenue subscription in fee SOHO breakdown years single-digit you in the in but saying for customers, business. of for we on SOHO flat the customer customers, a don't size single-digits. customers revenue or revenue give give given for That to low at customers forecasting customers small many, monetize

a the not market us. for propositions shipping we're you where us still for customers. financial in market, much is our certainly those see really very SOHO more attractive So But pivoting attractive abandoning focus to there

So continue trend future. I'd foreseeable the expect for this to

Kevin Liu

for Thanks the taking Understood. question.

Jeff Carberry

Kevin. Thanks

Operator

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

may You begin.

Tim Klasell

quarter. around Congrats Hey on My the is guys. good also question MetaPack.

services over their and that. about bringing mentioned the to them here integrating You U.S. and

over Going and Thank after in to shippers you. standpoint? bring some that maybe the the you get there that and that and smaller is in over some UK would like maybe sets Europe, mid leverage interesting that products from

Ken McBride

think reasons that's mean started. the UK I into which why the one at I as already the Yes. key looking of of we've market, ShipStation acquisition. We're you the we did expansion know

gone at in really that have we've that a combined the in market, the order already have support UK there markets solution thousand several and international when carriers look dozens that We in to you complete dozens need market. to you But of there are after. customers

of ShipStation designed small to for more product goal ShipStation able the business one of and support integrate for that really the be to more with So those carriers MetaPack much then quickly with users. e-commerce to was is goals of MetaPack – a that

So strategic did that of value MetaPack propositions was and probably the one reasons why acquisition. key the we

Kyle Huebner

just I add Yes. would that.

after traditionally MetaPack complimentary is after merchant. see customers, we substation U.S. small whereas mid-sized e-commerce larger and think in has gone very the I them the that in is going

to we sweet as go larger enabled after Europe, ahead substation to customers after and and being we going the to companies go very want between a are two complimentary the spot e-commerce the synergy see the So look of merchant.

Tim Klasell

good. Okay,

So around something for you think we’re for sort the our of modeling? going have XX% remains this Should that XX% the year, tax is valid years? we forward rate, in modeling is that out

Ken McBride

subject it's and to I tax for assume variability mean, rates I years, around stable. federal the the rates out remain think would tax obviously which country hopefully would and I

obviously is in us for consolidated only incorporate associated deal MetaPack variable taxes basis closes. other to that after The the for the

consolidated rate. that. be tax It’s be driver So is revisit a we'll our on primary rate of going consolidated to the the of kind what of likely to forecast impact to tax MetaPack have

a So Metapack probably you, to of the have amount tax fair isolation, work is reasonable on rates to fair a and projections, acquisitions. with in the be XX% we baseline. given consolidated do But tax

on I'd that. on any off hold out the guidance So material the changes rates for some to we years until give

Tim Klasell

goes expenses wonder with that, us is you. you obvious that the or the you you little Okay. of after sort us quickly, go shippers, value your sense. time give can the up to color, mentioned the what better happens But give recover the And value maybe any model makes think to Thank what your lifetime then shippers? a thing if as metrics around business but that bit you follow-up one lifetime customers marketing of that to

Jeff Carberry

of in excess acquisition to customer think when [indiscernible] twice value We But ARPUs more acquisition. small of value relative also acquire. of to customers base customers attractive. towards I a cost to customers. was the of And our really very, are are of certainly Yes, related our relative the we kind values lifetime cost value of expensive is lifetime in business ROIs, an homogeneous metrics and the were terms Shipping the – very those lifetime gave of that.

kind color So but given to say of are haven't are very we've values it's business attractive. of around. fair small we say think Those what very, and ROIs the would in I given values, the past I – excess specific of numerical the in quantifications and lifetime commentary we obviously certainly

customers businesses we also so as of metrics, because are of well. that the shipping shifting and specific give In shifting, mailers portion mix don't fact relative SOHO shippers, the is – specific the we given as quantifications, versus a especially terms the of

think I and fundamentally lifetime attractive of mailers floor at So value that in a more basis. look light and understanding basis, I'd SOHO of at that on are ROI kind the

Ken McBride

tighter to the much really which getting you're as values just shippers The customer Jeff side. range a and you or monetization the get whereas mentioned, with than tend lifetime in lifetime big a other predictable the mailing wider fee fees the on very be party lifetime is much of to shipping small the you for thing values, would business is, that outcomes, I do add based $XX.XX or subscription a because transaction volume of range value the

an – are exercise there business. of but it a So value lot higher a orders a more could more, lifetime a magnitude becomes of shipping customer small than might cost

acquiring to the easy volume opposed individual down into acquiring. it's to an so as It's really shipper. you’re And the really shippers the you're customers, get

Tim Klasell

you. Thank helpful. That’s very Okay.

Operator

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

You may begin.

Darren Aftahi

taking my questions. for Thanks

of the as you acquisition, Just few on the how Metapack, do prioritizing an you upstream you amongst like share? strategically retailers and things a the I'm I'm more within the initiatives and just in associated expanding – kind think versus the about curious closing side of just large the about U.S. domestically talk how enterprise potentially with rank kind kind when of you retailer go international to going to costs then are go curious that market you

Ken McBride

at we in you pursuing mean I all parallel. our going the that mentioned priorities. synergies to be think I look so Yes, as We're of

will their They’ve and we will happen time the I very realized long immediately synergies for are Canada immediately of presence and expertise as can think something markets markets that there be in utilize will more in the been go UK, others already more working that we're international those the to to ,Australia. time. that in I think take general be some after

think that their take in So I Metapack synergies at take the integrating that’s some our be so solutions of expertise ShipStation you that's going like to development we'll some look utilize going e-commerce be time. some to longer. to immediately of to API, terms and other work carrier There's if and able going

look force to for in these types across the come past. would in of been already I we the be U.S., we've sales you MetaPack. those when unable at leads But that think the in suitable we think retailers large I address

along clearly immediately, at but path So lead. to a their sales when relatively you be able it across as out is we We'll know long. MetaPack cycle come you to look

P&L. take to through some So the flow leads those time revenue from will our in

but all they'll So think pursue synergies immediately, of various the I of terms financial different impact of them business. all actual answers the impacts have across is in the will the

Darren Aftahi

That’s then helpful. two XXX side a competitive was I from then what's sales employees process? said Thanks. think their force acquisition during the MetaPack and more, And you one,

Ken McBride

Yes.

a they customers customer large sales very customer. of universe the relatively need because very, after small force to So their is that go after the going of number they're

with is manageable their of more universe much of customers in the sales a market smaller team. So addressable terms

conversations in years had we know started it like other companies the standalone In for duty to with really for was felt we think terms the of combination they go around was process being better the out the company and would many for I deal us combination MetaPack business of potential I be and and and all think buyers. once Board Directors contemplated fiduciary their look

of competition acquisition. in So the have we terms did

Darren Aftahi

Great. Thanks.

Operator

our from And Group. Maxim Allen of line Thank from the question comes next Klee you.

Your may begin.

Allen Klee

so trying synergies and potential XX% from? come new maybe you’ve gross what happen about I operating the disclosed had you, it’s a below around margins market it's kind for be expense or know and could historically to I'm MetaPack, extent think to could high you Hi, could of that XX%. think that about how Yes. on margin with you where that

Jeff Carberry

Allen. Hi

So when time obviously the of we're business, you business. at at going looking a the to look spend fair amount

that I a look about synergies lot contemplate. leverage could there's I think the asset. what some there Ken the we of be terms when done at of with that business, of – in And you of future that think talked that

forward. those some nice is it's business of synergies leverage there potentially some certainly clear pretty – that think in going the I

virtue directly, results close we deal and about that is are to we improve. of for lot I synergies the kind very wouldn’t think a – that don't learn with we can contemplated running to strong By I the we margins so together within that we be as manage business we see the of drive There well. So deal. you, businesses company. The to have finish DHL. expect that the business see honest

reductions think driving in be the to different opposed to honest really with is I you. potential expenses toplines to

the in deal. cost about synergies it's as to synergies topline really opposed I So think

Kyle Huebner

ShipStation The have develop They office, on side carrier opened I to not would London done is that add avoided had would we internationally. relation. people expense is think expand the other thing would synergy that expenses I that hire this in future incurred have

degree incur having know operating let’s and say us international without to I that of expenses to So those to are their think you some some MetaPack in acquiring already. ShipStation allows go structure

Allen Klee

of how it Okay, on and that how potentially play Force. Task on Trump vision out lastly do following then, can in you business? a you terms question or think the that Do up your can impact

Ken McBride

Congress interested end an and in to many there day, I change just think the XXXX. it's or USPS Congress the recommends. making report to postal I structure for changes Task to the years. be last real some wanted see ago through changes to the I most operation has to the Well, think mean way reform needs be act have With XX really major to and going publish general, the of Force actual at in to in for results what we’ll mandate, its been years was be really in

had I these given it of have act been So the Congress actual of limited that for requires an fact be to will more material types order actually historically report Task in while changes. think interesting Force the

Allen Klee

very thank much. Okay, End Q&A of you

Operator

back to And Chief call Mr. the I'm closing Officer further showing remarks. at like I'd no Executive Ken for questions now turn this time. to McBride

Ken McBride

and at us website follow-up Thanks contact investor.stamps.com us for or at at our our hotline very much. call can questions, XXX-XXX-XXXX. joining for you investor you Thank

Operator

participating Ladies conference. and program. does for conclude gentlemen, today's in thank This the you

all day. You may disconnect. a have Everyone great

Stamps.com (STMP) 1 Aug 182018 Q2 Earnings call transcript