Inc. Earnings Soar as Shippers Flock to Its Platform

By Joe (NASDAQ: STMP) on May 3 reported robust growth in revenue and profits in the first quarter, prompting the provider of online postage and shipping software to raise its earnings guidance for the year ahead.

Continue Reading Below results: The raw numbers


Q1 2017

Q1 2016

Year-Over-Year Change


$105.040 million

$81.837 million


Net income

$33.138 million

$13.238 million


Earnings per share




Data source: Q1 2017 earnings release.

More From

What happened with this quarter?

Total revenue jumped 28% year over year to $105 million, driven by a 30% rise in mailing and shipping revenue, to $102.3 million.

These results were fueled by an 11% year-over-year increase in paid customers to 722,000 and a 17% jump in monthly average revenue per unit (ARPU) to $47.36. Additionally, the average monthly churn rate improved to 2.4%, down from 2.7% in the first quarter of 2016.

Large shippers are increasingly turning to Image source: Getty Images.

During a conference call with analysts, CEO Ken McBride said that was particularly successful in acquiring new shipping customers, who drove a large portion of the ARPU increase. "For the shipping area, we're able to increase ARPU above the baseline monthly service fee with partnership ... agreements that allow us to monetize the customer's package volume," McBride explained. That's in contrast to traditional small-business office users, who typically do a minimal amount of shipping and therefore are less likely to pay significantly more than the monthly service fee.

McBride also noted that a higher proportion of shippers are helping to improve's overall customer retention metrics. "They tend to have lower churn versus traditional small business office users because shippers use our product more in their core operations," McBride said.

In turn, higher ARPU and lower churn are helping to improve's profitability. Earnings before interest, taxes, depreciation, and amortization (EBITDA) -- adjusted to exclude stock-based compensation expense, acquisition-related charges, and certain other items -- leapt 47% to $51.2 million, with adjusted EBITDA margin rising to 48.8% from 42.5% in the prior-year quarter.

All told, adjusted net income soared 57% year over year to $33.2 million, and non-GAAP EPS -- which was boosted by share buybacks -- surged 62% to $1.83.

Looking forward

These results prompted to raise its 2007 full-year outlook, including:

  • Total revenue of $405 millionto$430 million, compared to previous estimates of $400 millionto$425 million.
  • Adjusted EBITDA of$205 millionto$225 million, up from $200 millionto$220 million.
  • GAAP EPS of $4.78to$5.69, versus $4.20 to $5.10.
  • Non-GAAP adjusted EPS of$7.00to$8.00, versus $6.00to$7.00.

Looking even further ahead, management remains confident that can grow sales at a 20% annualized pace, as explained by executive Jeff Carberry during the company's earnings call:

Additionally, Carberry said that investors should expect adjusted EBITDA margins to remain relatively stable compared to today's levels, as intends to focus on "investing for revenue growth as opposed to expanding margins at the expense of that growth" in the years ahead.

10 stocks we like better than Stamps.comWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of May 1, 2017

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool recommends The Motley Fool has a disclosure policy.