Stamps.com's Management To Present At The 14th Annual Needham Growth Conference Call Transcript

Stamps.com Inc.(STMP)

Stamps.com’s Management to Present at the 14th Annual Needham Growth Conference Call

January 12, 2012 01:30 pm ET

Executives

Kyle Huebner - CFO

Analysts

Presentation

Unidentified Analyst

Good afternoon and welcome back and we will get the afternoon session started with Kyle Huebner, CFO of Stamps.com.

Kyle Huebner

Thank you, good afternoon. Welcome to the Stamps.com company presentation. A copy of the presentation is available on our IR website and there are copies for the presentation in the back of the room as well.

So first, the Safe Harbor. This presentation may contain forward-looking statements that involve risks and uncertainties. We will refer you to our filings with the SEC for a further review of these risks. So today I am going to talk about the PC Postage business which is our core business. I will talk about the service overview, the marketing, market opportunity, talk a little bit about photo stamps and then talk about the metrics and financial trends and the business model.

So our PC Postage business which we call our core business, software-based internet service that lets customers find, print their own USPS approved postage, requires only a PC and a printer. There's no specialty hardware that would be required as you have with a more traditional meter system. Its structure is a monthly subscription service fee, plus the cost of postage that the customer would buy. Easy to get started becoming a customer, you come to our website, you register for an account, you download the software, you buy postage and a prepaid model and then print it out as you need to for your mailing and shipping.

The postage that customers buy is a passthrough to the USPS so that's not included in our revenue or financial statements. So the core functionality allows customers to buy and print their own postage, there's three ways that they can print postage, through printing their own stamps, we call net stamps, printing out envelopes or printing on shipping labels designed for packages.

So I will just touch on each of those in a little more detail. Again this is how it works for the customer. The first way to print postage is printing that stamps here, a customer buys a sheet of blank label stock from us and then they use the software to print out the postage as they need it. There is no address associated, no date associated with it as other metering solutions have. So that’s really the most flexible kind of postage a customer can use. They can buy standard labels, theme labels or they can actually upload their business image and we will print out customized label for them to use.

Secondly as a customer can print on an envelope, directly on an envelope around labels that go in on an envelope, typically a customer will print, use this way to print postage if they are already planning on printing the destination address and return address. So we consolidated a two-step process into a one-step process where they print out the postage and the address. We integrate with all the address mailing software, contact management databases. So you don’t have to maintain two different address books. And one of the benefits of this is that we will validate the destination address against the USPS database to ensure that it’s a valid, accurate deliverable address.

So customers can save money by avoiding printing postage on mail pieces that we get returned as undeliverable. The third way to print postage is, it’s a shipping label designed specifically for use with packages, customers can print it on a piece of printer paper and tape it to the package or they can print it on adhesive labels, it supports all the USPS package classes, Priority, Express, Media Mail, Parcel Post.

Another discount, a big benefit for our customer is that they can get discounted rates on Priority and Express over the rates at the retail post office and so those discounts range from about 2% to 21% discounts, even higher if you meet certain volume requirements, you can get 30% discount rates. You get discounts on package, tracking and confirmation services. And then as an electronic solution, our solution makes it easier for customers to manage their package and shipping. We can automatically send emails to customers that can automatically return an email when it’s scanned and delivered. Customers have more ability, visibility in the process. We can hide the postage values which is a popular feature with e-commerce merchants.

So that’s how our customers can print postage using our software application. In addition we have integrations, where customers use the front end integration to print postage. Couple of our key ones, ones with Microsoft on the small business side. So, we are integrated with Office. Customers can, a lot of small businesses typically print the address on the envelope using Word. So we integrate with Word and they can pull on the postage from their Stamps account and print out the postage and the address all within one step from the Word application. This is in the envelopes and labels feature as well as the Mail Merge feature which is also popular with small businesses.

On the shipping side where we are targeting shipping customers, we have an integration with Amazon into their merchant market place. So any Amazon merchant selling on Amazon’s merchant market place where they are filling the goods, when they got to process the transaction, they have an option to print out a shipping label for their package and that’s a exclusive partnership arrangement we have with Amazon to integrate and provide them the postage on the backend.

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