Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 000-26427 | |
Entity Registrant Name | Stamps.com Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 77-0454966 | |
Entity Address, Address Line One | 1990 E. Grand Avenue | |
Entity Address, City or Town | El Segundo | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90245 | |
City Area Code | 310 | |
Local Phone Number | 482-5800 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | STMP | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 18,235,902 | |
Entity Central Index Key | 0001082923 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 389,618 | $ 156,307 |
Accounts receivable, net | 60,220 | 74,898 |
Current income taxes | 17,696 | 300 |
Prepaid expenses | 17,582 | 20,447 |
Other current assets | 52,695 | 22,731 |
Total current assets | 537,811 | 274,683 |
Property and equipment, net | 33,008 | 32,983 |
Goodwill | 380,708 | 384,540 |
Intangible assets, net | 126,008 | 145,063 |
Deferred income taxes, net | 27,056 | 27,056 |
Lease right-of-use assets | 60,159 | 17,697 |
Other assets | 45,636 | 20,474 |
Total assets | 1,210,386 | 902,496 |
Current liabilities: | ||
Accounts payable and other current liabilities | 190,274 | 121,853 |
Deferred revenue | 9,895 | 8,015 |
Current portion of debt, net of debt issuance costs | 0 | 50,188 |
Current portion of lease right-of-use liabilities | 5,942 | 4,612 |
Total current liabilities | 206,111 | 184,668 |
Deferred income taxes, net | 11,159 | 11,455 |
Long-term portion of lease right-of-use liabilities | 54,858 | 14,191 |
Other liabilities | 29,619 | 26,557 |
Total liabilities | 301,747 | 236,871 |
Commitments and contingencies (Note 3) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value per share; Authorized shares: 47,500 in 2020 and 2019; Issued shares: 34,507 in 2020 and 33,130 in 2019; Outstanding shares: 18,203 in 2020 and 17,029 in 2019 | 57 | 56 |
Additional paid-in capital | 1,249,420 | 1,098,426 |
Treasury stock, at cost, 16,305 shares in 2020 and 16,101 shares in 2019 | (627,360) | (593,511) |
Retained earnings | 283,132 | 150,941 |
Accumulated other comprehensive income (loss) | 3,390 | 9,713 |
Total stockholders' equity | 908,639 | 665,625 |
Total liabilities and stockholders' equity | $ 1,210,386 | $ 902,496 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 47,500 | 47,500 |
Common stock, shares issued (in shares) | 34,507 | 33,130 |
Common stock, shares outstanding (in shares) | 18,203 | 17,029 |
Treasury stock, shares (in shares) | 16,305 | 16,101 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Revenues | $ 193,917 | $ 136,172 | $ 551,993 | $ 410,948 |
Cost of revenues (exclusive of amortization of intangible assets, which is included in general and administrative expense): | ||||
Total cost of revenues | 43,952 | 38,202 | 132,093 | 110,982 |
Gross profit | 149,965 | 97,970 | 419,900 | 299,966 |
Operating expenses: | ||||
Sales and marketing | 41,748 | 33,058 | 120,636 | 99,181 |
Research and development | 24,739 | 20,281 | 68,946 | 56,725 |
General and administrative | 28,856 | 28,980 | 90,339 | 82,743 |
Total operating expenses | 95,343 | 82,319 | 279,921 | 238,649 |
Income from operations | 54,622 | 15,651 | 139,979 | 61,317 |
Foreign currency exchange gain (loss), net | (67) | (38) | (238) | (285) |
Interest expense | (96) | (589) | (1,019) | (1,948) |
Interest income and other income (loss), net | 27 | 53 | 59 | 170 |
Income before income taxes | 54,486 | 15,077 | 138,781 | 59,254 |
Income tax (benefit) expense | (9,485) | 5,929 | 6,590 | 20,359 |
Net income | $ 63,971 | $ 9,148 | $ 132,191 | $ 38,895 |
Net income per share: | ||||
Basic (in dollars per share) | $ 3.59 | $ 0.53 | $ 7.61 | $ 2.24 |
Diluted (in dollars per share) | $ 3.30 | $ 0.52 | $ 7.02 | $ 2.19 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 17,826 | 17,144 | 17,376 | 17,326 |
Diluted (in shares) | 19,406 | 17,441 | 18,842 | 17,753 |
Service | ||||
Revenues: | ||||
Revenues | $ 183,779 | $ 124,643 | $ 509,905 | $ 375,979 |
Cost of revenues (exclusive of amortization of intangible assets, which is included in general and administrative expense): | ||||
Total cost of revenues | 41,998 | 34,040 | 115,990 | 98,727 |
Product | ||||
Revenues: | ||||
Revenues | 5,816 | 5,116 | 18,599 | 15,306 |
Cost of revenues (exclusive of amortization of intangible assets, which is included in general and administrative expense): | ||||
Total cost of revenues | 1,954 | 1,602 | 6,103 | 4,824 |
Insurance | ||||
Revenues: | ||||
Revenues | 4,322 | 3,106 | 11,598 | 9,871 |
Customized postage | ||||
Revenues: | ||||
Revenues | 0 | 3,307 | 11,891 | 9,792 |
Cost of revenues (exclusive of amortization of intangible assets, which is included in general and administrative expense): | ||||
Total cost of revenues | $ 0 | $ 2,560 | $ 10,000 | $ 7,431 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 63,971 | $ 9,148 | $ 132,191 | $ 38,895 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | 8,742 | (6,886) | (6,323) | (7,806) |
Unrealized gain (loss) on investments | 0 | 0 | 0 | (4) |
Comprehensive income | $ 72,713 | $ 2,262 | $ 125,868 | $ 31,085 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Treasury Stock at Cost | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance (in shares) at Dec. 31, 2018 | 17,662 | |||||
Beginning Balance at Dec. 31, 2018 | $ 613,665 | $ 56 | $ 1,049,669 | $ (528,529) | $ 91,712 | $ 757 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 15,755 | 15,755 | ||||
Other comprehensive income (loss) | 3,962 | 3,962 | ||||
Issuance of shares for performance-based awards (in shares) | 4 | |||||
Stock-based compensation expense | 8,857 | 8,857 | ||||
Exercise of stock options (in shares) | 29 | |||||
Exercise of stock options | 2,381 | $ 0 | 2,381 | |||
Shares issued under the Employee Stock Purchase Plan (in shares) | 13 | |||||
Shares issued under the Employee Stock Purchase Plan | 2,100 | 2,100 | ||||
Stock repurchase (in shares) | (235) | |||||
Stock repurchase | (31,998) | (31,998) | ||||
Tax withholding stock repurchase (in shares) | (1) | |||||
Tax withholding stock repurchase | (93) | (93) | ||||
Ending Balance (in shares) at Mar. 31, 2019 | 17,472 | |||||
Ending Balance at Mar. 31, 2019 | 614,629 | $ 56 | 1,063,007 | (560,620) | 107,467 | 4,719 |
Beginning Balance (in shares) at Dec. 31, 2018 | 17,662 | |||||
Beginning Balance at Dec. 31, 2018 | 613,665 | $ 56 | 1,049,669 | (528,529) | 91,712 | 757 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | $ 38,895 | |||||
Stock repurchase (in shares) | (644) | |||||
Stock repurchase | $ (58,600) | |||||
Ending Balance (in shares) at Sep. 30, 2019 | 17,103 | |||||
Ending Balance at Sep. 30, 2019 | 622,246 | $ 56 | 1,085,829 | (587,193) | 130,607 | (7,053) |
Beginning Balance (in shares) at Mar. 31, 2019 | 17,472 | |||||
Beginning Balance at Mar. 31, 2019 | 614,629 | $ 56 | 1,063,007 | (560,620) | 107,467 | 4,719 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 13,992 | 13,992 | ||||
Other comprehensive income (loss) | (4,886) | (4,886) | ||||
Stock-based compensation expense | 9,808 | 9,808 | ||||
Exercise of stock options (in shares) | 12 | |||||
Exercise of stock options | 272 | $ 0 | 272 | |||
Stock repurchase (in shares) | (295) | |||||
Stock repurchase | (20,187) | (20,187) | ||||
Ending Balance (in shares) at Jun. 30, 2019 | 17,189 | |||||
Ending Balance at Jun. 30, 2019 | 613,628 | $ 56 | 1,073,087 | (580,807) | 121,459 | (167) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 9,148 | 9,148 | ||||
Other comprehensive income (loss) | (6,886) | (6,886) | ||||
Stock-based compensation expense | 11,753 | 11,753 | ||||
Exercise of stock options (in shares) | 9 | |||||
Exercise of stock options | 272 | $ 0 | 272 | |||
Shares issued under the Employee Stock Purchase Plan (in shares) | 18 | |||||
Shares issued under the Employee Stock Purchase Plan | 717 | 717 | ||||
Stock repurchase (in shares) | (113) | |||||
Stock repurchase | (6,386) | (6,386) | ||||
Ending Balance (in shares) at Sep. 30, 2019 | 17,103 | |||||
Ending Balance at Sep. 30, 2019 | $ 622,246 | $ 56 | 1,085,829 | (587,193) | 130,607 | (7,053) |
Beginning Balance (in shares) at Dec. 31, 2019 | 17,029 | 17,029 | ||||
Beginning Balance at Dec. 31, 2019 | $ 665,625 | $ 56 | 1,098,426 | (593,511) | 150,941 | 9,713 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 16,494 | 16,494 | ||||
Other comprehensive income (loss) | (14,727) | (14,727) | ||||
Stock-based compensation expense | 10,725 | 10,725 | ||||
Exercise of stock options (in shares) | 103 | |||||
Exercise of stock options | 8,818 | $ 0 | 8,818 | |||
Shares issued under the Employee Stock Purchase Plan (in shares) | 50 | |||||
Shares issued under the Employee Stock Purchase Plan | 1,950 | 1,950 | ||||
Stock repurchase (in shares) | (80) | |||||
Stock repurchase | (8,577) | (8,577) | ||||
Ending Balance (in shares) at Mar. 31, 2020 | 17,102 | |||||
Ending Balance at Mar. 31, 2020 | $ 680,308 | $ 56 | 1,119,919 | (602,088) | 167,435 | (5,014) |
Beginning Balance (in shares) at Dec. 31, 2019 | 17,029 | 17,029 | ||||
Beginning Balance at Dec. 31, 2019 | $ 665,625 | $ 56 | 1,098,426 | (593,511) | 150,941 | 9,713 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | $ 132,191 | |||||
Stock repurchase (in shares) | (203) | |||||
Stock repurchase | $ (33,800) | |||||
Ending Balance (in shares) at Sep. 30, 2020 | 18,203 | 18,203 | ||||
Ending Balance at Sep. 30, 2020 | $ 908,639 | $ 57 | 1,249,420 | (627,360) | 283,132 | 3,390 |
Beginning Balance (in shares) at Mar. 31, 2020 | 17,102 | |||||
Beginning Balance at Mar. 31, 2020 | 680,308 | $ 56 | 1,119,919 | (602,088) | 167,435 | (5,014) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 51,726 | 51,726 | ||||
Other comprehensive income (loss) | (338) | (338) | ||||
Stock-based compensation expense | 13,221 | 13,221 | ||||
Exercise of stock options (in shares) | 368 | |||||
Exercise of stock options | 29,750 | $ 0 | 29,750 | |||
Stock repurchase (in shares) | (56) | |||||
Stock repurchase | (9,397) | (9,397) | ||||
Ending Balance (in shares) at Jun. 30, 2020 | 17,414 | |||||
Ending Balance at Jun. 30, 2020 | 765,270 | $ 56 | 1,162,890 | (611,485) | 219,161 | (5,352) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 63,971 | 63,971 | ||||
Other comprehensive income (loss) | 8,742 | 8,742 | ||||
Stock-based compensation expense | 10,160 | 10,160 | ||||
Exercise of stock options (in shares) | 825 | |||||
Exercise of stock options | 74,475 | $ 1 | 74,474 | |||
Shares issued under the Employee Stock Purchase Plan (in shares) | 31 | |||||
Shares issued under the Employee Stock Purchase Plan | 1,896 | 1,896 | ||||
Stock repurchase (in shares) | (67) | |||||
Stock repurchase | $ (15,875) | (15,875) | ||||
Ending Balance (in shares) at Sep. 30, 2020 | 18,203 | 18,203 | ||||
Ending Balance at Sep. 30, 2020 | $ 908,639 | $ 57 | $ 1,249,420 | $ (627,360) | $ 283,132 | $ 3,390 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities: | ||
Net income | $ 132,191 | $ 38,895 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 19,602 | 21,149 |
Stock-based compensation expense | 34,106 | 30,418 |
Accretion of debt issuance costs | 437 | 280 |
Changes in operating assets and liabilities, net of assets and liabilities acquired: | ||
Accounts receivable | 14,513 | 17,045 |
Prepaid expenses | 2,838 | (5,668) |
Other current assets | (30,008) | (6,365) |
Current income taxes | (17,404) | 8,465 |
Lease right-of-use assets | 2,678 | 2,282 |
Other assets | (24,494) | (7,571) |
Deferred revenue | 1,917 | 590 |
Lease right-of-use liabilities | (3,153) | (2,416) |
Other liabilities | 3,008 | 1,320 |
Accounts payable and other current liabilities | 43,235 | 2,200 |
Net cash provided by operating activities | 179,466 | 100,624 |
Investing activities: | ||
Acquisition of property and equipment | (3,164) | (1,749) |
Net cash used in investing activities | (3,164) | (1,749) |
Financing activities: | ||
Net proceeds from (repayments of) short-term financing obligations | 25,229 | (8,463) |
Debt issuance costs | (762) | 0 |
Principal payments on term loan | (50,530) | (7,734) |
Proceeds from exercise of stock options | 113,043 | 2,925 |
Issuance of common stock under Employee Stock Purchase Plan | 3,846 | 2,817 |
Repurchase of common stock | (33,849) | (58,571) |
Payments related to tax withholding for stock-based compensation | 0 | (93) |
Net cash provided by (used in) financing activities | 56,977 | (69,119) |
Effect of exchange rate changes | 32 | (26) |
Net increase (decrease) in cash and cash equivalents | 233,311 | 29,730 |
Cash and cash equivalents at beginning of period | 156,307 | 113,757 |
Cash and cash equivalents at end of period | 389,618 | 143,487 |
Supplemental information: | ||
Capital expenditures accrued but not paid at period end | 0 | 123 |
Cash paid for amounts included in the measurement of lease liabilities included in cash provided by operating activities | 4,537 | 3,530 |
Lease liabilities arising from obtaining right-of-use assets | $ 45,534 | $ 8,649 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation We prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (US) generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading. We recommend that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our latest annual report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 2, 2020. In our opinion, these unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly our financial position as of September 30, 2020, our results of operations for the three and nine months ended September 30, 2020, and our cash flows for the nine months ended September 30, 2020. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020. Basis of Consolidation The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of Stamps.com Inc. and the entities in which we have 100% voting and/or economic control. In August 2018, we completed our acquisition of 100% of the outstanding shares of MetaPack. Please see Note 2 - “Acquisitions” in our Notes to Consolidated Financial Statements for further description. References in this Report to "we" "us" "our" or "Company" are references to Stamps.com Inc. and its subsidiaries. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with US GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. There are significant estimates and judgments inherent in the preparation of the consolidated financial statements including those related to the fair value of intangible assets and goodwill and the allowance for credit losses. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the consolidated financial statements for the period ended September 30, 2020. As events continue to evolve and additional information becomes available, our assumptions and estimates may change materially in future periods. Accounts Receivable Our accounts receivable relate to mailing and shipping services, postage purchasing and invoicing, customized postage sales, branded insurance provided to customers prior to billing, and other receivables. We maintain an allowance for credit losses for expected uncollectible accounts which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the consolidated statements of operations. We evaluate collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known collectability issues. The evaluation is based on a combination of factors. If we become aware of a customer’s inability to meet its financial obligations, an allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer. Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible. Beginning January 1, 2020, as part of the adoption of ASU 2016-13 as described below in Accounting Guidance Adopted in 2020 , we recognize allowances for credit losses for all other customers based on either the age of the receivable or applying a loss rate method which incorporates historical experience and an evaluation of macroeconomic factors. As a result of the adoption, we recorded an immaterial increase to our allowance for credit losses which included the estimated impact of COVID-19 on the collectability of our accounts receivable. As additional information becomes available to us, our future assessment of our allowance for credit losses could materially and adversely impact our consolidated financial statements in future reporting periods. The allowance for credit losses on accounts receivable was approximately $10.5 million and $6.9 million as of September 30, 2020 and December 31, 2019, respectively. Business Combinations The acquisition method of accounting is used for business combinations. The results of operations of acquired businesses are included in our consolidated financial statements prospectively from the date of acquisition. The fair value of purchase consideration is allocated to the assets acquired and liabilities assumed from the acquired entity and is generally based on their fair value at the acquisition date. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. Acquisition-related expenses are recognized in our consolidated financial statements as incurred. Contingencies and Litigation In the ordinary course of business, we are subject to various litigation matters as a claimant and a defendant. We record any amounts recovered in these matters when received. We establish loss provisions for claims against us when the loss is both probable and can be reasonably estimated. If either or both of the criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred. If there is a reasonable possibility that a loss or additional loss may have been incurred for such proceedings, we disclose the estimate of the amount of loss or possible range of loss, or disclose that an estimate of loss cannot be made, as applicable. Deferred Revenue Our deferred revenue relates mainly to service revenue, which generally arises due to the timing of payment versus the provision of services for certain customers billed in advance. Approximately $7.8 million of revenue recognized in the nine months ended September 30, 2020 was included in the deferred revenue balance at December 31, 2019. Approximately $6.0 million of revenue recognized in the nine months ended September 30, 2019 was included in the deferred revenue balance at December 31, 2018. Fair Value of Financial Instruments Carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to their short maturities. Prior to June 30, 2020, the Company had outstanding debt held by third party financial institutions and this was carried at cost, adjusted for debt issuance costs. The Company’s debt was not publicly traded and the carrying amount typically approximated fair value for debt that accrued interest at a variable rate for companies with similar financial characteristics as the Company, which were considered Level 2 fair value inputs as defined in Note 8 in our Consolidated Financial Statements. Foreign Currency Translation The functional currency of the Company’s major foreign subsidiaries is generally the local currency. Adjustments resulting from translating foreign functional currency financial statements into US dollars are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in foreign currency exchange gain (loss), net. All assets and liabilities denominated in a foreign currency are translated into US dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in business combinations. We are required to test goodwill for impairment annually and whenever events or circumstances indicate the fair value of a reporting unit may be below its carrying value. A reporting unit is the operating segment or a business that is one level below that operating segment. Reporting units are aggregated as a single reporting unit if they have similar economic characteristics. Goodwill is reviewed for impairment annually on October 1 utilizing either a qualitative or quantitative assessment. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. When we perform the quantitative assessment, we compare the fair value of the reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, the difference is recognized as an impairment loss. As of September 30, 2020, we are not aware of any indicators of impairment that would require an impairment analysis other than our annual goodwill impairment analysis. Indefinite-lived intangible assets are reviewed for impairment annually on October 1 and whenever events or circumstances indicate that the fair value of an indefinite-lived intangible asset may be below its carrying value. In assessing other intangible assets not subject to amortization for impairment, the Company also has the option to perform a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of such an intangible asset is less than its carrying amount. If the Company determines that it is not more likely than not that the fair value of such an intangible asset is less than its carrying amount, then the Company is not required to perform any additional tests for assessing those intangible assets for impairment. However, if the Company concludes otherwise or elects not to perform the qualitative assessment, then it is required to perform a quantitative impairment test that involves a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. As of September 30, 2020, we are not aware of any indicators of impairment that would require an impairment analysis other than our annual indefinite-lived intangible assets impairment analysis. Long-Lived Assets and Finite-Lived Intangible Assets Long-lived assets including intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. We account for property and equipment at cost less accumulated depreciation and amortization. We compute depreciation using the straight-line method over the estimated useful life of the asset, generally three ten Income Taxes We are subject to income taxes in the US and foreign jurisdictions. We provide for income taxes at the current and future enacted tax rate and consistent with the laws applicable in each jurisdiction. We account for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic No. 740, Income Taxes ( Income Taxes ), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Income Taxes also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. We record a valuation allowance to reduce our gross deferred tax assets to the amount that is more likely than not (a likelihood of more than 50 percent) to be realized. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income. We evaluate the appropriateness of our deferred tax assets and related valuation allowance in accordance with Income Taxes based on all available positive and negative evidence. Leases We determine if an arrangement is a lease at inception. Right-of-use (ROU) assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. For this purpose, we consider only payments that are fixed and determinable at the time of commencement. As most of our leases do not provide an implicit rate, the interest rate used to determine the present value of future lease payments is an estimated incremental borrowing rate. Many of our leases include one or more options to renew. These options are factored into the determination of the lease term and lease payments when their exercise is considered to be reasonably certain. Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We elected the practical expedient to combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component which increases the amount of the ROU assets and liabilities. We also elected to recognize the associated lease payments for leases with an initial term of 12 months or less in the consolidated statements of operations on a straight-line basis without recognizing a ROU asset or liability. Operating leases are included in lease right-of-use assets, current portion of lease right-of-use liabilities, and long-term portion of lease right-of-use liabilities on our consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the lease term in income from operations on our consolidated statements of operations. Other Current Assets Other current assets principally consist of prepayments for postage and shipping labels and inventory. Prepayments for postage and shipping labels totaled $48.7 million at September 30, 2020 and $17.4 million at December 31, 2019. Other Liabilities Other liabilities principally consist of long-term unrecognized income tax benefits, as well as indirect tax liabilities and other liabilities. Revenue Recognition We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Our payment terms vary by the products and services offered. The term between billings and when payment is due is not significant. Revenues are presented on a disaggregated basis on the consolidated statements of operations. Service revenue is recognized over time for each month that customers have access to our platform or at a point in time when assets are transferred to the customer. We earn service revenue from our mailing and shipping operations in several different ways: (1) customers may pay us a monthly fee, based on a subscription plan which may be waived or refunded for certain customers, for which we provide them access to our platform, in which case revenue is earned over the period of time that the customers have access to the platform which is typically month-to-month; (2) we may be compensated directly by our carriers for shipping labels printed that meet certain requirements, in which case revenue is earned over time, which is typically in the same month that the relevant labels are printed; (3) we may earn revenue from customers when they purchase postage, print shipping labels or perform other transactions using our solutions, in which case revenue is earned at the point in time we transfer an asset to the customer and have a present right of payment for the asset transferred; (4) we may earn revenue that may take the form of some or all of the spread between the rate a customer pays and the rate the carrier or integration partner receives, either charged directly or paid by our partners, in which case revenue is earned at a point in time, which is typically when the customer purchases postage or prints a shipping label; and (5) we may earn other types of revenue shares or other compensation from specific customers that have access to our platform or through integration partners, in which case revenue is recognized at a point in time, which is when we have fulfilled our performance obligations. In the case of monthly fees based on subscription plans, the Company recognizes a reduction of revenue in the period for which a waiver is granted or when a refund is processed, which is typically the same period in which the associated subscription revenue is recognized or, in the case of refunds, could be a later period. Waivers and refunds were not material to the consolidated financial statements during the nine months ended September 30, 2020 or September 30, 2019. Customers may purchase delivery services from carriers through our mailing and shipping solutions. When funds are transferred directly from customers to the carrier, these funds are not recognized as revenue. We also provide mailing and shipping services for which the cost of postage or delivery is included in the cost of the service and, therefore, is recognized as service revenue. Product revenue consists of products sold through the mailing and shipping supplies stores which are available to our customers from within some of our mailing and shipping solutions. Products sold include mailing labels, shipping labels, thermal printers, scales, and other mailing and shipping-focused office supplies. We recognize product revenue on product purchases upon shipment of orders to customers. We provide our customers with the opportunity to purchase parcel insurance directly through our solutions. Insurance revenue represents the amount we receive from customers net of the costs paid to our insurance providers. We recognize insurance revenue on insurance purchases upon the ship date of the insured package, which is the point in time when we have fulfilled our performance obligations. Customized postage revenue, which includes the face value of postage, from the sale of customized postage sheets and rolls is recognized upon transfer of control of the product to the customer, which occurs upon our delivery to the carrier. In the second quarter of 2020, we received notification from the US Postal Service (USPS) that it was eliminating its customized postage program and also revoking our authorization to offer products pursuant to that program effective June 16, 2020. As a result, we do not expect material customized postage revenue or cost of revenue after June 2020. On a limited basis, we allow third parties to offer products and promotions to our customer base. These arrangements generally provide payment in the form of a flat fee or revenue sharing arrangements where we receive payment upon customers accessing third party products and services. Total revenue from such advertising arrangements was not significant during the nine months ended September 30, 2020 or September 30, 2019, respectively. Segment Information Our operations consist of two segments: Stamps.com and MetaPack. Please see Note 10 - “Segment and Geographical Information” in our Notes to Consolidated Financial Statements for further description. Short-Term Financing Obligations We utilize short-term financing, which is separate from our debt and revolving credit facility, to fund certain Company operations. Short-term financing obligations are included in accounts payable and other current liabilities in the accompanying consolidated balance sheets. As of September 30, 2020, we had $26.2 million in short-term financing obligations and $41.9 million of unused credit. As of December 31, 2019, we had $1.0 million in short-term financing obligations and $69.5 million of unused credit. Stock-Based Compensation We account for share-based employee compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all share-based payments to employees, including grants of stock options and restricted stock units (RSUs), to be measured based on the grant date fair value of the awards, with the resulting expense generally recognized on a straight-line basis over the period during which the employee is required to perform service in exchange for the award. We account for forfeitures as they occur. We use the Black-Scholes-Merton option valuation model to estimate the fair value of option awards on the date of grant, which requires us to use a number of estimates and subjective assumptions, including stock price volatility, expected term, and risk-free interest rates. In the case of options we grant, our assumption of expected volatility is based on the historical volatility of our stock price over the term equal to the expected life of the options. We base the risk-free interest rate on US Treasury zero-coupon issues with a remaining term equal to the expected life of the options assumed at the date of grant. The estimated expected life represents the weighted average period the stock options are expected to remain outstanding, determined based on an analysis of historical exercise behavior. Trademarks, Trade Names, and Other Intangible Assets (excluding Goodwill) Acquired trademarks, trade names, and other intangibles (excluding goodwill) include both amortizable and non-amortizable assets and are included in intangible assets, net in the accompanying consolidated balance sheets. Intangible assets are carried at cost less accumulated amortization. Cost associated with internally developed intangible assets is typically expensed as incurred as research and development costs. Amortization of amortizable intangible assets is calculated on a straight-line basis, which is consistent with the expected future cash flows. Treasury Stock During the nine months ended September 30, 2020 and September 30, 2019, we repurchased approximately 203,000 shares and 644,000 shares for $33.8 million and $58.6 million, respectively. Also, in the first quarter of 2019, we withheld 1,039 shares, to satisfy income tax obligations related to performance-based inducement equity awards issued to the General Manager of ShippingEasy. Accounting Guidance Adopted in 2020 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued ASU 2018-15, a standard which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software. The service element of a hosting arrangement that is a service contract is not affected by this update, meaning service costs will continue to be expensed as incurred. The guidance became effective on a prospective basis for the Company on January 1, 2020. The adoption of the guidance did not have a material impact on the Company's consolidated financial statements. Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, a standard which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance became effective on a prospective basis for the Company on January 1, 2020. The adoption of the guidance did not have a material impact on the Company's consolidated financial statements. Fair Value Measurements In August 2018, the FASB issued ASU 2018-13, a standard which modifies the disclosure requirements on fair value measurements. The guidance became effective for the Company on January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Financial Instruments - Credit Losses In June 2016, the FASB issued ASU 2016-13, a standard that replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We are required to use a forward-looking expected credit loss model for accounts receivable, loans, and other financial instruments. The guidance became effective for the Company on January 1, 2020 using a modified retrospective approach. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Accounting Guidance Not Yet Adopted Income Taxes In December 2019, the FASB issued ASU 2019-12, a standard which eliminates certain exceptions to the general principles of ASC Topic 740 Income Taxes . The guidance is effective for reporting periods after December 15, 2020; however, early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued 2020-04, optional accounting guidance for a limited period of time to ease the potential burden in accounting for reference rate reform. The new standard provides expedients and exceptions to existing accounting requirements for contract modifications and hedge accounting related to transitioning from discontinued reference rates, such as the London Interbank Offered Rate (LIBOR), to alternative reference rates, if certain criteria are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates on our Amended Credit Agreement, as described in Note 13 - " Debt ", but do not expect a significant impact to our operating results, financial position or cash flows. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions We have accounted for all of our acquisitions under the acquisition method of accounting in accordance with the provisions of FASB ASC Topic No. 805, Business Combinations . MetaPack Acquisition On August 15, 2018, we, through our wholly owned subsidiary Pacific Shelf 1855 Limited (Pacific Shelf), completed the acquisition of MetaPack Limited, a private limited company incorporated in England and Wales, pursuant to a share purchase agreement dated July 24, 2018, as amended (the “Agreement”), by and among certain key sellers named in the Agreement (the “Key Sellers”), MetaPack, Pacific Shelf, and Stamps.com Inc. as Pacific Shelf’s guarantor. MetaPack provides multi-carrier enterprise-level solutions to many of the world’s preeminent e-commerce retailers and brands. Pursuant to the Agreement and a related agreement to purchase Minority Shares (as defined below), Pacific Shelf acquired 100% of MetaPack’s issued and to be issued share capital by purchasing (i) all of the Key Sellers’ shares of MetaPack, representing approximately 80% of the total outstanding shares and (ii) all other issued and to be issued shares of MetaPack (Minority Shares), for a final adjusted purchase price, for all such shares, of approximately £171 million, or $217.7 million using the August 15, 2018 GBP to USD exchange rate. Total cash paid for the acquisition was funded from cash and investment balances. Stamps.com granted inducement stock options for an aggregate of 320,250 shares of Stamps.com common stock to 72 new employees after completion of its acquisition of MetaPack. The stock options were granted as inducements material to the new employees entering into employment with Stamps.com, pursuant to the Stamps.com 2018 MetaPack Equity Inducement Plan, which was approved by Stamps.com’s Compensation Committee. The awards were granted without stockholder approval in accordance with Nasdaq Listing Rule 5635(c)(4). Each option vests 25% on the one year anniversary of the grant date with the remaining 75% vesting in approximately equal monthly increments over the succeeding thirty-six months, provided that the option holder is still employed by Stamps.com or one of its subsidiaries on the vesting dates. The stock options have a ten Under the acquisition method of accounting under ASC 805, the total purchase price of the acquired company is allocated to the assets acquired and the liabilities assumed based on their fair values. We have made significant estimates and assumptions in determining the allocation of the purchase price. The final purchase price of MetaPack has been allocated as follows to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values based on the August 15, 2018 GBP to USD exchange rate (in thousands, except years): Fair Value Fair Value Useful Life Weighted Cash and cash equivalents $ 9,186 Trade accounts receivable 9,767 Other current assets 2,776 Property and equipment 1,039 Goodwill 138,956 Identifiable intangible assets: Trade names $ 10,936 12 Developed technology 40,691 16 Customer relationships 49,211 16 Total identifiable intangible assets 100,838 16 Accounts payable and other current liabilities (13,519) Deferred revenue (1,145) Revolving credit facility (12,716) Deferred income tax liability (15,963) Other liabilities (1,533) Total purchase consideration $ 217,686 The fair value of the assets acquired and liabilities assumed were determined using income, cost and market participant approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820. The identified intangible assets consist of trade names, developed technology, and customer relationships. The estimated fair values of the trade names and developed technology were determined using the “relief from royalty” method. The estimated fair value of customer relationships was determined using the “excess earnings” method. The rate utilized to discount net cash flows to their present values was approximately 15% and was determined after consideration of the overall enterprise rate of return and the relative risk and importance of the assets to the generation of future cash flows. Intangible assets are being amortized on a straight-line basis over their estimated useful lives. Based on the August 15, 2018 exchange rate, we expect the amortization of acquired intangibles will be approximately $1.6 million per quarter for the remaining estimated useful lives. Goodwill represents the excess of the consideration given over the sum of the fair values assigned to identifiable assets acquired less liabilities assumed in a business combination. The goodwill balance is primarily attributable to the expanded market opportunities for the Company internationally and MetaPack in the United States and the Company's ability to generate future technology. None of the goodwill recognized is expected to be deductible for income tax purposes. The goodwill recorded as part of this acquisition is included in the MetaPack segment (see Note 6 - “Goodwill and Intangible Assets” in our Notes to Consolidated Financial Statements). Immediately following the acquisition, we repaid in full MetaPack's existing revolving credit facility balance of approximately $12.7 million. We incurred approximately $2.5 million in transaction costs included in general and administrative expense and $1.0 million of nonrecurring foreign currency exchange loss directly related to the acquisition during the year ended December 31, 2018. MetaPack revenues and net income included in the Consolidated Statements of Operations for the year ended December 31, 2018 were $20.3 million and $1.5 million, respectively, reflecting activity since the acquisition date. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings We are subject to various routine legal proceedings and claims incidental to our business, and we do not believe that these proceedings and claims would reasonably be expected to have a material adverse effect on our financial position, results of operations, or cash flows. On February 28, 2019 and March 13, 2019, two putative class action complaints were filed against us in the United States District Court for the Central District of California, Western Division. One of the two putative class actions was dismissed without prejudice, and in the other case, styled as Karinski v. Stamps.com, Inc. et al , Case 2:19-cv-01828 (the “Securities Class Action”), the Court appointed a lead plaintiff and approved lead plaintiff’s selection of lead counsel. Lead plaintiff filed a consolidated complaint in August 2019, purportedly on behalf of all those who purchased, or otherwise acquired, Stamps.com common stock between May 3, 2017 and May 8, 2019, alleging violations of the Securities Exchange Act of 1934 based on public disclosures that were purportedly rendered misleading based on certain uses of reseller rates. We filed a motion to dismiss in October 2019, and our motion to dismiss was granted in part and denied in part in January 2020. We believe that the case is without merit and intend to defend it vigorously. Due to the early stage of the case, neither the likelihood that a loss, if any, will be realized, nor an estimate of the possible loss or range of loss, if any, can be determined. On May 16, 2019 and May 21, 2019, two purported shareholder derivative suits were filed in the United States District Court for the Central District of California, Western Division, alleging breaches of fiduciary duties by officers and/or directors, unjust enrichment, abuse of control, waste of corporate assets, and violations of the Securities Exchange Act of 1934, and seeking unspecified damages, attorneys' fees and costs. The two cases have been consolidated as In re Stamps.com Stockholder Derivative Litigation , Case 2:19-cv-04272 and co-lead plaintiffs and co-lead counsel have been appointed. On July 8, 2020, the court granted our motion to transfer the consolidated suits to the United States District Court for the District of Delaware. We believe that the case is without merit and intend to defend it vigorously. Due to the early stage of the case, neither the likelihood that a loss, if any, will be realized, nor an estimate of the possible loss or range of loss, if any, can be determined. On August 19, 2019, a purported shareholder derivative suit was filed against us in a case titled City of Cambridge Retirement System v. Kenneth T. McBride, et al , Case No. 2019-0658-AGB, in the Delaware Court of Chancery, alleging breaches of fiduciary duties by officers and/or directors, insider trading, waste of corporate assets, and unjust enrichment. We filed a motion to dismiss in October 2019. We believe that the case is without merit and intend to defend this case vigorously. Due to the early stage of the case, neither the likelihood that a loss, if any, will be realized, nor an estimate of the possible loss or range of loss, if any, can be determined. On October 3, 2019, a purported shareholder derivative suit was filed against us in a case titled Harvey v. Kenneth T. McBride, et al , Case No. 1:19-cv-01861-CFC, in the United States District Court for the District of Delaware, alleging breaches of fiduciary duties by officers and/or directors, unjust enrichment, waste of corporate assets, and violations of the Securities Exchange Act of 1934. The Court has entered a stipulation to stay the derivative case pending the outcome of the derivative lawsuit pending in the Delaware Court of Chancery. We believe that the case is without merit and intend to defend this case vigorously. Due to the early stage of the case, neither the likelihood that a loss, if any, will be realized, nor an estimate of the possible loss or range of loss, if any, can be determined. The Company had not accrued any material amounts related to any of the Company’s legal proceedings as of September 30, 2020 or December 31, 2019. Although management at present believes that the ultimate outcome of the various proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations, cash flows, or overall trends, legal proceedings are subject to inherent uncertainties, and unfavorable rulings or other events could occur. An unfavorable outcome for an amount in excess of management's present expectations may result in a material adverse impact on our business, results of operations, financial position, and overall trends. Commitments Our significant contractual obligations and commercial commitments (other than debt commitments) consist of operating lease obligations as of September 30, 2020. Please see Note 11 - “Leases” for additional information. |
Net Income per Share
Net Income per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Net Income per Share The following table reconciles share amounts utilized to calculate basic and diluted net income per share (in thousands, except per share data): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net income $ 63,971 $ 9,148 $ 132,191 $ 38,895 Basic - weighted average common shares 17,826 17,144 17,376 17,326 Diluted effect of common stock equivalents 1,580 297 1,466 427 Diluted - weighted average common shares 19,406 17,441 18,842 17,753 Earnings per share: Basic $ 3.59 $ 0.53 $ 7.61 $ 2.24 Diluted $ 3.30 $ 0.52 $ 7.02 $ 2.19 The calculation of dilutive shares excludes the effect of the following options that are considered anti-dilutive (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Anti-dilutive stock options 123 2,254 776 1,905 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation In 2018, our stock-based compensation expense included performance-based inducement equity awards relating to the ShippingEasy acquisition. Starting in the third quarter of fiscal 2018, our stock-based compensation expense included inducement equity awards relating to the MetaPack acquisition as described in Note 2 - "Acquisitions." The following table sets forth the stock-based compensation expense that we recognized for the periods indicated (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Stock-based compensation expense relating to: Stock options $ 9,610 $ 11,184 $ 32,682 $ 29,128 Employee stock purchases 550 569 1,424 1,339 Total stock-based compensation expense $ 10,160 $ 11,753 $ 34,106 $ 30,467 Stock-based compensation expense relating to: Cost of revenues $ 933 $ 856 $ 2,777 $ 2,057 Sales and marketing 2,466 2,692 7,135 7,031 Research and development 3,110 2,874 8,935 7,668 General and administrative 3,651 5,331 15,259 13,711 Total stock-based compensation expense $ 10,160 $ 11,753 $ 34,106 $ 30,467 The following are the weighted average assumptions used in the Black-Scholes-Merton option valuation model for stock options granted in the periods indicated: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Expected dividend yield — % — % — % — % Risk-free interest rate 0.2 % 1.6 % 0.6 % 2.0 % Expected volatility 89.2 % 79.3 % 86.4 % 71.3 % Expected life (in years) 3.3 3.3 3.3 3.3 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes goodwill as of December 31, 2019 and September 30, 2020 (in thousands): Stamps.com Segment MetaPack Segment Total Goodwill balance at December 31, 2019 $ 239,705 $ 144,835 $ 384,540 Foreign currency translation — (3,832) (3,832) Goodwill balance at September 30, 2020 $ 239,705 $ 141,003 $ 380,708 We have amortizable and non-amortizable intangible assets consisting of trademarks, trade names, developed technology, non-compete agreements, customer relationships, and other. The gross carrying amount of amortizable and non-amortizable intangible assets was $226.8 million at September 30, 2020 and $229.4 million at December 31, 2019. Non-amortizable assets of $11.4 million as of both September 30, 2020 and December 31, 2019 consist primarily of the trade name relating to the Endicia acquisition. The following table summarizes our amortizable intangible assets as of September 30, 2020 (in thousands, except years): Gross Accumulated Net Carrying Remaining weighted average amortization period (years) Patents and Others $ 8,195 $ 8,195 $ — 0.0 Customer Relationships 110,704 56,194 54,510 6.9 Technology 81,199 30,983 50,216 8.6 Non-Compete 2,211 2,050 161 0.7 Trademarks and Trade Names 13,090 3,358 9,732 9.1 Total amortizable intangible assets at September 30, 2020 $ 215,399 $ 100,780 $ 114,619 7.8 The following table summarizes our amortizable intangible assets as of December 31, 2019 (in thousands, except years): Gross Accumulated Net Carrying Remaining weighted average amortization period (years) Patents and Others $ 8,195 $ 8,195 $ — 0.0 Customer Relationships 111,997 46,503 65,494 7.7 Technology 82,269 25,240 57,029 9.4 Non-Compete 2,211 1,889 322 1.5 Trademarks and Trade Names 13,378 2,549 10,829 9.9 Total amortizable intangible assets at December 31, 2019 $ 218,050 $ 84,376 $ 133,674 8.5 We recorded amortization of intangible assets totaling approximately $5.5 million and $16.5 million for the three and nine months ended September 30, 2020, respectively. We recorded amortization of intangible assets totaling approximately $5.5 million and $16.7 million for the three and nine months ended September 30, 2019, respectively. Amortization of intangible assets is included in general and administrative expense in the accompanying consolidated statements of operations. Our estimated amortization expense for the next five years and thereafter is as follows (in thousands): Twelve Month Period Ending September 30, Estimated 2021 $ 21,002 2022 12,185 2023 9,654 2024 9,613 2025 7,074 Thereafter 55,091 Total $ 114,619 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our income tax benefit was $9.5 million and our income tax expense was $6.6 million for the three and nine months ended September 30, 2020, respectively. Our income tax expense was $5.9 million and $20.4 million for the three and nine months ended September 30, 2019, respectively. Income taxes expected at the US federal statutory income tax rate of 21 percent differ from the reported income tax expense primarily as a result of permanent tax adjustments for non-deductible expenses, state taxes, and tax benefits from research and development tax credits and exercises of stock awards. As of September 30, 2020 and December 31, 2019, we have recorded a valuation allowance of $2.1 million and $1.7 million, respectively, against certain state research and development credits for which we believe it is more likely than not that these deferred tax assets will not be realized. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law in the US to provide certain relief as a result of the COVID-19 pandemic. The CARES Act is not expected to have a material impact on our consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Financial assets measured at fair value on a recurring basis are classified in one of the three categories described below: Level 1 - Valuations based on unadjusted quoted prices for identical assets in an active market Level 2 - Valuations based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets Level 3 - Valuations based on inputs that are unobservable and involve management judgment and our own assumptions about market participants and pricing The following tables summarize our financial assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 (in thousands): Fair Value Measurement at Reporting Date Using Description September 30, 2020 Quoted Prices in Significant Significant Cash and cash equivalents $ 389,618 $ 389,618 $ — $ — Total $ 389,618 $ 389,618 $ — $ — Fair Value Measurement at Reporting Date Using Description December 31, 2019 Quoted Prices in Significant Significant Cash and cash equivalents $ 156,307 $ 156,307 $ — $ — Total $ 156,307 $ 156,307 $ — $ — |
Cash and Cash Equivalents
Cash and Cash Equivalents | 9 Months Ended |
Sep. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents Our cash equivalents consisted of money market funds at September 30, 2020 and December 31, 2019. We consider all highly liquid investments with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. At September 30, 2020 and December 31, 2019, we had no material investments. The following tables summarize our cash and cash equivalents as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 Cost or Gross Gross Cash and cash equivalents: Cash $ 382,788 $ — $ — $ 382,788 Money market 6,830 — — 6,830 Cash and cash equivalents $ 389,618 $ — $ — $ 389,618 December 31, 2019 Cost or Gross Gross Estimated Cash and cash equivalents: Cash $ 149,508 $ — $ — $ 149,508 Money market 6,799 — — 6,799 Cash and cash equivalents $ 156,307 $ — $ — $ 156,307 |
Segment Information and Geograp
Segment Information and Geographic Data | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information and Geographic Data | Segment Information and Geographic Data Segment Information Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (CODM) for purposes of allocating resources and evaluating financial performance. The Company's Chairman and Chief Executive Officer has been identified as the CODM as defined by guidance regarding segment disclosures. The Company’s reportable segments have been determined based on the distinct nature of their operations and customer bases, and the financial information that is evaluated regularly by the CODM. The Stamps.com segment derives revenue from external customers from offering mailing and multi-carrier shipping labels online and shipping software solutions to consumers, small businesses, e-commerce shippers, enterprise mailers, and high volume shippers. The Stamps.com reportable segment includes the results of brand names Stamps.com, Endicia, ShippingEasy, ShipEngine, ShipStation, and ShipWorks. Stamps.com's customers are primarily located in the US. The MetaPack segment consists of the operations of MetaPack which derives revenues from external customers from offering multi-carrier enterprise-level shipping software solutions to large e-commerce retailers and brands. MetaPack's customers are primarily located in Europe. Revenues, cost of revenues, and operating expenses are generally directly attributed to our segments. Inter-segment revenues are not presented separately, as these amounts are immaterial. Our CODM does not evaluate operating segments using asset information, and therefore total segment assets are not presented. The following table presents our segment information and includes a reconciliation of income from operations to income before income taxes (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Segment revenues Stamps.com $ 177,072 $ 123,494 $ 505,664 $ 372,678 MetaPack 16,845 12,678 46,329 38,270 Total revenues $ 193,917 $ 136,172 $ 551,993 $ 410,948 Segment income (loss) from operations Stamps.com $ 55,363 $ 19,000 $ 146,491 70,226 MetaPack (741) (3,349) (6,512) (8,909) Total income from operations $ 54,622 $ 15,651 $ 139,979 $ 61,317 Company's total segment income from operations $ 54,622 $ 15,651 $ 139,979 $ 61,317 Foreign currency exchange gain (loss), net (67) (38) (238) (285) Interest expense (96) (589) (1,019) (1,948) Interest income and other income (loss), net 27 53 59 170 Income before income taxes $ 54,486 $ 15,077 $ 138,781 $ 59,254 Geographic Data No sales to an individual customer or country other than the US accounted for more than 10% of revenue for the nine months ended September 30, 2020 or September 30, 2019. The following table presents our revenues by geography, based on the billing addresses of our customers (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Revenues United States $ 176,057 $ 123,247 $ 503,422 $ 371,971 International 17,860 12,925 48,571 38,977 Total revenues $ 193,917 $ 136,172 $ 551,993 $ 410,948 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company's material lease contracts are generally for corporate office space. The Company leases facilities pursuant to noncancelable operating lease agreements expiring through 2032. Operating lease cost for the three and nine months ended September 30, 2020 was approximately $1.3 million and $3.8 million, respectively. Operating lease cost for the three and nine months ended September 30, 2019 was approximately $1.2 million and $3.6 million, respectively. The following table is a schedule of maturities of operating lease liabilities as of September 30, 2020 (in thousands): Twelve Month Period Ending September 30, Operating 2021 $ (606) 2022 9,714 2023 9,486 2024 7,325 2025 7,119 Thereafter 47,348 Total undiscounted cash flows 80,386 Less amount representing interest (19,586) Present value of lease liabilities $ 60,800 The table above reflects payments for noncancelable operating leases with initial or remaining terms of one year or more, net of cash reimbursements for tenant improvements which the Company reasonably expects to receive, as of September 30, 2020. The table above does not include obligations for leases that have not yet commenced and does not include lease payments that were not fixed at commencement or modification. As of September 30, 2020, the weighted-average remaining lease term (in years) and discount rate related to the operating leases were as follows: September 30, 2020 Weighted-average remaining lease term 10 Weighted-average discount rate 4.7 % |
Accounts Payable and Other Curr
Accounts Payable and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Other Current Liabilities | Accounts Payable and Other Current Liabilities The following table summarizes our accounts payable and other current liabilities as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Accounts payable $ 53,368 $ 47,783 Customer prepayments for postage and shipping labels 78,271 40,002 Income taxes payable 3,436 7,996 Payroll and related accruals 26,935 23,029 Short-term financing obligations 26,210 982 Other accruals 2,054 2,061 Accounts payable and other current liabilities $ 190,274 $ 121,853 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt During the second quarter of 2020, the Company repaid the existing term loan balance outstanding under the Credit Agreement dated November 18, 2015. The optional prepayment satisfied the $47.5 million term loan balance, gross of debt issuance costs, in full. Revolving Credit Facility On June 29, 2020, we entered into a $130 million revolving credit facility (the “Amended Credit Agreement”) with a group of banks. Our Amended Credit Agreement matures on June 29, 2022 (the “Maturity Date”). The Amended Credit Agreement contains an option, subject to certain conditions, to arrange with existing lenders and/or new lenders to provide up to an aggregate of an additional $75 million in revolving loans. The Amended Credit Agreement is secured by substantially all of our assets. In connection with entering into the Amended Credit Agreement, we incurred approximately $762,000 in creditor and third-party fees which were recorded as deferred expense and is being amortized as interest expense over the two There were no amounts drawn on the revolving credit facility as of September 30, 2020. Because we have a letter of credit outstanding totaling approximately $60,000 relating to a facility lease, we have approximately $129.9 million of available and unused borrowings under the revolving credit facility as of September 30, 2020. Borrowings under the Amended Credit Agreement are payable on the Maturity Date. The borrowings bear interest, at our option, at the base rate, as defined, plus an applicable margin or a LIBOR plus an applicable margin, in each case such margin will be between 1.25% and 3.00% and is determined by certain financial measures. We will also pay commitment fees on the average daily unused portion of the revolving credit facility, as defined, based upon certain financial measures through the Maturity Date in addition to other fees customary to a credit facility of this size and type. We are subject to certain customary affirmative and negative covenants under our Amended Credit Agreement, including quarterly financial covenants such as a maximum Consolidated Total Leverage Ratio and a minimum Consolidated Interest Coverage Ratio, as defined therein. As of September 30, 2020, we were in compliance with the covenants of the Amended Credit Agreement. The Amended Credit Agreement also includes negative covenants, subject to exceptions, restricting or limiting our ability to among other things, incur additional indebtedness, grant liens, repurchase stock, pay dividends and engage in certain investment, acquisition and disposition transactions. The Amended Credit Agreement imposes certain requirements in order for us to make any dividend payments. As of September 30, 2020, we were in compliance with these financial covenants. Potential Impact of LIBOR Transition The Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, has announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. That announcement indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Moreover, it is possible that LIBOR will be discontinued or modified prior to 2021. Under the terms of the Company's Amended Credit Agreement, in the event of the discontinuance of the LIBOR Rate, a mutually agreed-upon alternate benchmark rate will be established to replace the LIBOR Rate. The Company and the Administrative Agent (as defined in the Amended Credit Agreement) shall, in good faith, endeavor to establish an alternate benchmark rate that gives due consideration to prevailing market convention for determining a rate of interest for similar credit arrangements in the US at such time. The Company does not anticipate that the discontinuance or modification of the LIBOR Rate will materially impact its liquidity or financial position. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsWe are not aware of any material subsequent events or transactions that have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation We prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (US) generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to make the information presented not misleading. We recommend that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and the notes thereto included in our latest annual report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 2, 2020. In our opinion, these unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly our financial position as of September 30, 2020, our results of operations for the three and nine months ended September 30, 2020, and our cash flows for the nine months ended September 30, 2020. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of Stamps.com Inc. and the entities in which we have 100% voting and/or economic control. In August 2018, we completed our acquisition of 100% of the outstanding shares of MetaPack. Please see Note 2 - “Acquisitions” in our Notes to Consolidated Financial Statements for further description. References in this Report to "we" "us" "our" or "Company" are references to Stamps.com Inc. and its subsidiaries. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. There are significant estimates and judgments inherent in the preparation of the consolidated financial statements including those related to the fair value of intangible assets and goodwill and the allowance for credit losses. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the consolidated financial statements for the period ended September 30, 2020. As events continue to evolve and additional information becomes available, our assumptions and estimates may change materially in future periods. |
Accounts Receivable | Accounts Receivable Our accounts receivable relate to mailing and shipping services, postage purchasing and invoicing, customized postage sales, branded insurance provided to customers prior to billing, and other receivables. We maintain an allowance for credit losses for expected uncollectible accounts which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the consolidated statements of operations. We evaluate collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known collectability issues. The evaluation is based on a combination of factors. If we become aware of a customer’s inability to meet its financial obligations, an allowance is recorded to reduce the net receivable to the amount reasonably believed to be collectible from the customer. Accounts receivable are written off against the allowance for uncollectible accounts when we determine amounts are no longer collectible. Beginning January 1, 2020, as part of the adoption of ASU 2016-13 as described below in Accounting Guidance Adopted in 2020 , we recognize allowances for credit losses for all other customers based on either the age of the receivable or applying a loss rate method which incorporates historical experience and an evaluation of macroeconomic factors. As a result of the adoption, we recorded an immaterial increase to our allowance for credit losses which included the estimated impact of COVID-19 on the collectability of our accounts receivable. |
Business Combinations | Business Combinations The acquisition method of accounting is used for business combinations. The results of operations of acquired businesses are included in our consolidated financial statements prospectively from the date of acquisition. The fair value of purchase consideration is allocated to the assets acquired and liabilities assumed from the acquired entity and is generally based on their fair value at the acquisition date. The excess of the fair value of purchase consideration over the fair value of the assets acquired and liabilities assumed is recorded as goodwill. Acquisition-related expenses are recognized in our consolidated financial statements as incurred. |
Contingencies and Litigation | Contingencies and Litigation In the ordinary course of business, we are subject to various litigation matters as a claimant and a defendant. We record any amounts recovered in these matters when received. We establish loss provisions for claims against us when the loss is both probable and can be reasonably estimated. If either or both of the criteria are not met, we assess whether there is at least a reasonable possibility that a loss, or additional losses, may have been incurred. If there is a reasonable possibility that a loss or additional loss may have been incurred for such proceedings, we disclose the estimate of the amount of loss or possible range of loss, or disclose that an estimate of loss cannot be made, as applicable. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate fair value due to their short maturities. Prior to June 30, 2020, the Company had outstanding debt held by third party financial institutions and this was carried at cost, adjusted for debt issuance costs. The Company’s debt was not publicly traded and the carrying amount typically approximated fair value for debt that accrued interest at a variable rate for companies with similar financial characteristics as the Company, which were considered Level 2 fair value inputs as defined in Note 8 in our Consolidated Financial Statements. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of the Company’s major foreign subsidiaries is generally the local currency. Adjustments resulting from translating foreign functional currency financial statements into US dollars are recorded in accumulated other comprehensive income as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in foreign currency exchange gain (loss), net. All assets and liabilities denominated in a foreign currency are translated into US dollars at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. |
Goodwill and Indefinite-lived Intangible Assets | Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and liabilities assumed in business combinations. We are required to test goodwill for impairment annually and whenever events or circumstances indicate the fair value of a reporting unit may be below its carrying value. A reporting unit is the operating segment or a business that is one level below that operating segment. Reporting units are aggregated as a single reporting unit if they have similar economic characteristics. Goodwill is reviewed for impairment annually on October 1 utilizing either a qualitative or quantitative assessment. We have an option to make a qualitative assessment of a reporting unit's goodwill for impairment. If we choose to perform a qualitative assessment and determine the fair value more likely than not exceeds the carrying value, no further evaluation is necessary. When we perform the quantitative assessment, we compare the fair value of the reporting unit, which we primarily determine using an income approach based on the present value of discounted cash flows, to the respective carrying value, which includes goodwill. If the fair value of the reporting unit exceeds its carrying value, the goodwill is not considered impaired. If the carrying value is higher than the fair value, the difference is recognized as an impairment loss. As of September 30, 2020, we are not aware of any indicators of impairment that would require an impairment analysis other than our annual goodwill impairment analysis. |
Long-Lived Assets and Finite-Lived Intangible Assets | Long-Lived Assets and Finite-Lived Intangible Assets Long-lived assets including intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. We account for property and equipment at cost less accumulated depreciation and amortization. We compute depreciation using the straight-line method over the estimated useful life of the asset, generally three ten |
Income Taxes | Income Taxes We are subject to income taxes in the US and foreign jurisdictions. We provide for income taxes at the current and future enacted tax rate and consistent with the laws applicable in each jurisdiction. We account for income taxes in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic No. 740, Income Taxes ( Income Taxes ), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Income Taxes also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of the net deferred tax assets will not be realized. We record a valuation allowance to reduce our gross deferred tax assets to the amount that is more likely than not (a likelihood of more than 50 percent) to be realized. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income. We evaluate the appropriateness of our deferred tax assets and related valuation allowance in accordance with Income Taxes based on all available positive and negative evidence. |
Leases | Leases We determine if an arrangement is a lease at inception. Right-of-use (ROU) assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date. For this purpose, we consider only payments that are fixed and determinable at the time of commencement. As most of our leases do not provide an implicit rate, the interest rate used to determine the present value of future lease payments is an estimated incremental borrowing rate. Many of our leases include one or more options to renew. These options are factored into the determination of the lease term and lease payments when their exercise is considered to be reasonably certain. Our lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. We elected the practical expedient to combine fixed payments for non-lease components with our lease payments and account for them together as a single lease component which increases the amount of the ROU assets and liabilities. We also elected to recognize the associated lease payments for leases with an initial term of 12 months or less in the consolidated statements of operations on a straight-line basis without recognizing a ROU asset or liability. Operating leases are included in lease right-of-use assets, current portion of lease right-of-use liabilities, and long-term portion of lease right-of-use liabilities on our consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the lease term in income from operations on our consolidated statements of operations. |
Other Current Assets | Other Current AssetsOther current assets principally consist of prepayments for postage and shipping labels and inventory. |
Other Liabilities | Other Liabilities Other liabilities principally consist of long-term unrecognized income tax benefits, as well as indirect tax liabilities and other liabilities. |
Revenue Recognition | Deferred RevenueOur deferred revenue relates mainly to service revenue, which generally arises due to the timing of payment versus the provision of services for certain customers billed in advance. Revenue Recognition We recognize revenues when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Our payment terms vary by the products and services offered. The term between billings and when payment is due is not significant. Revenues are presented on a disaggregated basis on the consolidated statements of operations. Service revenue is recognized over time for each month that customers have access to our platform or at a point in time when assets are transferred to the customer. We earn service revenue from our mailing and shipping operations in several different ways: (1) customers may pay us a monthly fee, based on a subscription plan which may be waived or refunded for certain customers, for which we provide them access to our platform, in which case revenue is earned over the period of time that the customers have access to the platform which is typically month-to-month; (2) we may be compensated directly by our carriers for shipping labels printed that meet certain requirements, in which case revenue is earned over time, which is typically in the same month that the relevant labels are printed; (3) we may earn revenue from customers when they purchase postage, print shipping labels or perform other transactions using our solutions, in which case revenue is earned at the point in time we transfer an asset to the customer and have a present right of payment for the asset transferred; (4) we may earn revenue that may take the form of some or all of the spread between the rate a customer pays and the rate the carrier or integration partner receives, either charged directly or paid by our partners, in which case revenue is earned at a point in time, which is typically when the customer purchases postage or prints a shipping label; and (5) we may earn other types of revenue shares or other compensation from specific customers that have access to our platform or through integration partners, in which case revenue is recognized at a point in time, which is when we have fulfilled our performance obligations. In the case of monthly fees based on subscription plans, the Company recognizes a reduction of revenue in the period for which a waiver is granted or when a refund is processed, which is typically the same period in which the associated subscription revenue is recognized or, in the case of refunds, could be a later period. Waivers and refunds were not material to the consolidated financial statements during the nine months ended September 30, 2020 or September 30, 2019. Customers may purchase delivery services from carriers through our mailing and shipping solutions. When funds are transferred directly from customers to the carrier, these funds are not recognized as revenue. We also provide mailing and shipping services for which the cost of postage or delivery is included in the cost of the service and, therefore, is recognized as service revenue. Product revenue consists of products sold through the mailing and shipping supplies stores which are available to our customers from within some of our mailing and shipping solutions. Products sold include mailing labels, shipping labels, thermal printers, scales, and other mailing and shipping-focused office supplies. We recognize product revenue on product purchases upon shipment of orders to customers. We provide our customers with the opportunity to purchase parcel insurance directly through our solutions. Insurance revenue represents the amount we receive from customers net of the costs paid to our insurance providers. We recognize insurance revenue on insurance purchases upon the ship date of the insured package, which is the point in time when we have fulfilled our performance obligations. Customized postage revenue, which includes the face value of postage, from the sale of customized postage sheets and rolls is recognized upon transfer of control of the product to the customer, which occurs upon our delivery to the carrier. In the second quarter of 2020, we received notification from the US Postal Service (USPS) that it was eliminating its customized postage program and also revoking our authorization to offer products pursuant to that program effective June 16, 2020. As a result, we do not expect material customized postage revenue or cost of revenue after June 2020. |
Segment Information | Segment InformationOur operations consist of two segments: Stamps.com and MetaPack. |
Short-Term Financing Obligations | Short-Term Financing ObligationsWe utilize short-term financing, which is separate from our debt and revolving credit facility, to fund certain Company operations. Short-term financing obligations are included in accounts payable and other current liabilities in the accompanying consolidated balance sheets. |
Stock-Based Compensation | Stock-Based Compensation We account for share-based employee compensation plans under the fair value recognition and measurement provisions in accordance with applicable accounting standards, which require all share-based payments to employees, including grants of stock options and restricted stock units (RSUs), to be measured based on the grant date fair value of the awards, with the resulting expense generally recognized on a straight-line basis over the period during which the employee is required to perform service in exchange for the award. We account for forfeitures as they occur. We use the Black-Scholes-Merton option valuation model to estimate the fair value of option awards on the date of grant, which requires us to use a number of estimates and subjective assumptions, including stock price volatility, expected term, and risk-free interest rates. In the case of options we grant, our assumption of expected volatility is based on the historical volatility of our stock price over the term equal to the expected life of the options. We base the risk-free interest rate on US Treasury zero-coupon issues with a remaining term equal to the expected life of the options assumed at the date of grant. The estimated expected life represents the weighted average period the stock options are expected to remain outstanding, determined based on an analysis of historical exercise behavior. |
Trademarks, Trade Names, and Other Intangible Assets (excluding Goodwill) | Trademarks, Trade Names, and Other Intangible Assets (excluding Goodwill) Acquired trademarks, trade names, and other intangibles (excluding goodwill) include both amortizable and non-amortizable assets and are included in intangible assets, net in the accompanying consolidated balance sheets. Intangible assets are carried at cost less accumulated amortization. Cost associated with internally developed intangible assets is typically expensed as incurred as research and development costs. Amortization of amortizable intangible assets is calculated on a straight-line basis, which is consistent with the expected future cash flows. |
Accounting Guidance Adopted in 2020 and Guidance Not Yet Adopted | Accounting Guidance Adopted in 2020 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In August 2018, the FASB issued ASU 2018-15, a standard which aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software. The service element of a hosting arrangement that is a service contract is not affected by this update, meaning service costs will continue to be expensed as incurred. The guidance became effective on a prospective basis for the Company on January 1, 2020. The adoption of the guidance did not have a material impact on the Company's consolidated financial statements. Goodwill Impairment In January 2017, the FASB issued ASU 2017-04, a standard which simplifies the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance became effective on a prospective basis for the Company on January 1, 2020. The adoption of the guidance did not have a material impact on the Company's consolidated financial statements. Fair Value Measurements In August 2018, the FASB issued ASU 2018-13, a standard which modifies the disclosure requirements on fair value measurements. The guidance became effective for the Company on January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Financial Instruments - Credit Losses In June 2016, the FASB issued ASU 2016-13, a standard that replaces the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. We are required to use a forward-looking expected credit loss model for accounts receivable, loans, and other financial instruments. The guidance became effective for the Company on January 1, 2020 using a modified retrospective approach. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Accounting Guidance Not Yet Adopted Income Taxes In December 2019, the FASB issued ASU 2019-12, a standard which eliminates certain exceptions to the general principles of ASC Topic 740 Income Taxes . The guidance is effective for reporting periods after December 15, 2020; however, early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements. Reference Rate Reform In March 2020, the FASB issued 2020-04, optional accounting guidance for a limited period of time to ease the potential burden in accounting for reference rate reform. The new standard provides expedients and exceptions to existing accounting requirements for contract modifications and hedge accounting related to transitioning from discontinued reference rates, such as the London Interbank Offered Rate (LIBOR), to alternative reference rates, if certain criteria are met. The new standard was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact of the transition from LIBOR to alternative reference interest rates on our Amended Credit Agreement, as described in Note 13 - " Debt ", but do not expect a significant impact to our operating results, financial position or cash flows. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | The final purchase price of MetaPack has been allocated as follows to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values based on the August 15, 2018 GBP to USD exchange rate (in thousands, except years): Fair Value Fair Value Useful Life Weighted Cash and cash equivalents $ 9,186 Trade accounts receivable 9,767 Other current assets 2,776 Property and equipment 1,039 Goodwill 138,956 Identifiable intangible assets: Trade names $ 10,936 12 Developed technology 40,691 16 Customer relationships 49,211 16 Total identifiable intangible assets 100,838 16 Accounts payable and other current liabilities (13,519) Deferred revenue (1,145) Revolving credit facility (12,716) Deferred income tax liability (15,963) Other liabilities (1,533) Total purchase consideration $ 217,686 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Net Income Per Share | The following table reconciles share amounts utilized to calculate basic and diluted net income per share (in thousands, except per share data): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Net income $ 63,971 $ 9,148 $ 132,191 $ 38,895 Basic - weighted average common shares 17,826 17,144 17,376 17,326 Diluted effect of common stock equivalents 1,580 297 1,466 427 Diluted - weighted average common shares 19,406 17,441 18,842 17,753 Earnings per share: Basic $ 3.59 $ 0.53 $ 7.61 $ 2.24 Diluted $ 3.30 $ 0.52 $ 7.02 $ 2.19 |
Anti-dilutive Securities Excluded from Computation of Earnings Per Share | The calculation of dilutive shares excludes the effect of the following options that are considered anti-dilutive (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Anti-dilutive stock options 123 2,254 776 1,905 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation Expense | The following table sets forth the stock-based compensation expense that we recognized for the periods indicated (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Stock-based compensation expense relating to: Stock options $ 9,610 $ 11,184 $ 32,682 $ 29,128 Employee stock purchases 550 569 1,424 1,339 Total stock-based compensation expense $ 10,160 $ 11,753 $ 34,106 $ 30,467 Stock-based compensation expense relating to: Cost of revenues $ 933 $ 856 $ 2,777 $ 2,057 Sales and marketing 2,466 2,692 7,135 7,031 Research and development 3,110 2,874 8,935 7,668 General and administrative 3,651 5,331 15,259 13,711 Total stock-based compensation expense $ 10,160 $ 11,753 $ 34,106 $ 30,467 |
Weighted Average Assumptions Used in Black-Scholes-Merton Option Valuation Model | The following are the weighted average assumptions used in the Black-Scholes-Merton option valuation model for stock options granted in the periods indicated: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Expected dividend yield — % — % — % — % Risk-free interest rate 0.2 % 1.6 % 0.6 % 2.0 % Expected volatility 89.2 % 79.3 % 86.4 % 71.3 % Expected life (in years) 3.3 3.3 3.3 3.3 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table summarizes goodwill as of December 31, 2019 and September 30, 2020 (in thousands): Stamps.com Segment MetaPack Segment Total Goodwill balance at December 31, 2019 $ 239,705 $ 144,835 $ 384,540 Foreign currency translation — (3,832) (3,832) Goodwill balance at September 30, 2020 $ 239,705 $ 141,003 $ 380,708 |
Schedule of Acquired Intangible Assets | The following table summarizes our amortizable intangible assets as of September 30, 2020 (in thousands, except years): Gross Accumulated Net Carrying Remaining weighted average amortization period (years) Patents and Others $ 8,195 $ 8,195 $ — 0.0 Customer Relationships 110,704 56,194 54,510 6.9 Technology 81,199 30,983 50,216 8.6 Non-Compete 2,211 2,050 161 0.7 Trademarks and Trade Names 13,090 3,358 9,732 9.1 Total amortizable intangible assets at September 30, 2020 $ 215,399 $ 100,780 $ 114,619 7.8 The following table summarizes our amortizable intangible assets as of December 31, 2019 (in thousands, except years): Gross Accumulated Net Carrying Remaining weighted average amortization period (years) Patents and Others $ 8,195 $ 8,195 $ — 0.0 Customer Relationships 111,997 46,503 65,494 7.7 Technology 82,269 25,240 57,029 9.4 Non-Compete 2,211 1,889 322 1.5 Trademarks and Trade Names 13,378 2,549 10,829 9.9 Total amortizable intangible assets at December 31, 2019 $ 218,050 $ 84,376 $ 133,674 8.5 |
Schedule of Future Amortization Expense | Our estimated amortization expense for the next five years and thereafter is as follows (in thousands): Twelve Month Period Ending September 30, Estimated 2021 $ 21,002 2022 12,185 2023 9,654 2024 9,613 2025 7,074 Thereafter 55,091 Total $ 114,619 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Assets Measured at Fair Value on a Recurring Basis | The following tables summarize our financial assets measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 (in thousands): Fair Value Measurement at Reporting Date Using Description September 30, 2020 Quoted Prices in Significant Significant Cash and cash equivalents $ 389,618 $ 389,618 $ — $ — Total $ 389,618 $ 389,618 $ — $ — Fair Value Measurement at Reporting Date Using Description December 31, 2019 Quoted Prices in Significant Significant Cash and cash equivalents $ 156,307 $ 156,307 $ — $ — Total $ 156,307 $ 156,307 $ — $ — |
Cash and Cash Equivalents (Tabl
Cash and Cash Equivalents (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Summary of Cash and Cash Equivalents | The following tables summarize our cash and cash equivalents as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 Cost or Gross Gross Cash and cash equivalents: Cash $ 382,788 $ — $ — $ 382,788 Money market 6,830 — — 6,830 Cash and cash equivalents $ 389,618 $ — $ — $ 389,618 December 31, 2019 Cost or Gross Gross Estimated Cash and cash equivalents: Cash $ 149,508 $ — $ — $ 149,508 Money market 6,799 — — 6,799 Cash and cash equivalents $ 156,307 $ — $ — $ 156,307 |
Segment Information and Geogr_2
Segment Information and Geographic Data (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table presents our segment information and includes a reconciliation of income from operations to income before income taxes (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Segment revenues Stamps.com $ 177,072 $ 123,494 $ 505,664 $ 372,678 MetaPack 16,845 12,678 46,329 38,270 Total revenues $ 193,917 $ 136,172 $ 551,993 $ 410,948 Segment income (loss) from operations Stamps.com $ 55,363 $ 19,000 $ 146,491 70,226 MetaPack (741) (3,349) (6,512) (8,909) Total income from operations $ 54,622 $ 15,651 $ 139,979 $ 61,317 Company's total segment income from operations $ 54,622 $ 15,651 $ 139,979 $ 61,317 Foreign currency exchange gain (loss), net (67) (38) (238) (285) Interest expense (96) (589) (1,019) (1,948) Interest income and other income (loss), net 27 53 59 170 Income before income taxes $ 54,486 $ 15,077 $ 138,781 $ 59,254 |
Revenue from External Customers by Geographic Areas | The following table presents our revenues by geography, based on the billing addresses of our customers (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Revenues United States $ 176,057 $ 123,247 $ 503,422 $ 371,971 International 17,860 12,925 48,571 38,977 Total revenues $ 193,917 $ 136,172 $ 551,993 $ 410,948 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Lessee, Operating Lease, Liability, Maturity | The following table is a schedule of maturities of operating lease liabilities as of September 30, 2020 (in thousands): Twelve Month Period Ending September 30, Operating 2021 $ (606) 2022 9,714 2023 9,486 2024 7,325 2025 7,119 Thereafter 47,348 Total undiscounted cash flows 80,386 Less amount representing interest (19,586) Present value of lease liabilities $ 60,800 |
Lessee, Operating Lease, Liability, Term And Discount Rate | As of September 30, 2020, the weighted-average remaining lease term (in years) and discount rate related to the operating leases were as follows: September 30, 2020 Weighted-average remaining lease term 10 Weighted-average discount rate 4.7 % |
Accounts Payable and Other Cu_2
Accounts Payable and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of Accounts Payable and Accrued Liabilities | The following table summarizes our accounts payable and other current liabilities as of September 30, 2020 and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Accounts payable $ 53,368 $ 47,783 Customer prepayments for postage and shipping labels 78,271 40,002 Income taxes payable 3,436 7,996 Payroll and related accruals 26,935 23,029 Short-term financing obligations 26,210 982 Other accruals 2,054 2,061 Accounts payable and other current liabilities $ 190,274 $ 121,853 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Basis of Consolidation (Details) | Aug. 31, 2018 | Aug. 15, 2018 |
MetaPack | ||
Principles of Consolidation [Abstract] | ||
Percentage of outstanding equity purchased | 100.00% | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Allowance for credit losses | $ 10.5 | $ 6.9 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Deferred Revenue (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||
Deferred revenue recognized in the period | $ 7.8 | $ 6 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Furniture, Fixtures and Equipment | Minimum | |
Property, Plant and Equipment [Abstract] | |
Estimated useful life | 3 years |
Furniture, Fixtures and Equipment | Maximum | |
Property, Plant and Equipment [Abstract] | |
Estimated useful life | 5 years |
Building and Building Improvements | Minimum | |
Property, Plant and Equipment [Abstract] | |
Estimated useful life | 10 years |
Building and Building Improvements | Maximum | |
Property, Plant and Equipment [Abstract] | |
Estimated useful life | 40 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Other Current Assets (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Prepayments for postage and shipping labels | $ 48.7 | $ 17.4 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Segment Information (Details) | 9 Months Ended |
Sep. 30, 2020segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 2 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Short Term Obligations (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Short-term financing obligation | $ 26,210 | $ 982 |
Unused credit | $ 41,900 | $ 69,500 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Treasury Stock (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Equity, Class of Treasury Stock [Line Items] | ||||||||
Treasury stock, shares, acquired (in shares) | 203,000 | 644,000 | ||||||
Treasury stock, value, acquired, cost method | $ 15,875 | $ 9,397 | $ 8,577 | $ 6,386 | $ 20,187 | $ 31,998 | $ 33,800 | $ 58,600 |
ShippingEasy | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Shares withheld to satisfy income tax obligations (in shares) | 1,039 |
Acquisitions - MetaPack Acquisi
Acquisitions - MetaPack Acquisition Details (Details) £ in Millions | Aug. 16, 2018USD ($) | Aug. 15, 2018GBP (£)employeeshares | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Aug. 31, 2018 | Aug. 15, 2018USD ($) |
Business Acquisition [Line Items] | |||||||
Discount net cash flows to present value, rate | 15.00% | ||||||
Amortization of intangible assets, expected quarterly amount | $ 1,600,000 | ||||||
MetaPack | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of outstanding equity purchased | 100.00% | 100.00% | |||||
Business acquisition, percentage of key sellers shares of voting interest acquired | 80.00% | ||||||
Business combination, consideration transferred | £ | £ 171 | ||||||
Total purchase consideration | $ 217,686,000 | ||||||
Number of options granted (in shares) | shares | 320,250 | ||||||
Shares granted for number of new employees | employee | 72 | ||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, term | 10 years | ||||||
Expected tax deductible goodwill | $ 0 | ||||||
Transaction costs | $ 2,500,000 | ||||||
Foreign currency exchange loss | 1,000,000 | ||||||
Business combination, pro forma information, revenue of acquiree since acquisition date, actual | 20,300,000 | ||||||
Business combination, pro forma information, earnings or loss of acquiree since acquisition date, actual | $ 1,500,000 | ||||||
Decrease in goodwill | $ 2,500,000 | ||||||
Revolving Credit Facility | Line of Credit | MetaPack | |||||||
Business Acquisition [Line Items] | |||||||
Repayments of line of credit | $ 12,700,000 | ||||||
One year anniversary | MetaPack | |||||||
Business Acquisition [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 25.00% | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 1 year | ||||||
Over the succeeding thirty-six months | MetaPack | |||||||
Business Acquisition [Line Items] | |||||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 75.00% | ||||||
Share-based compensation arrangement by share-based payment award, award vesting period | 36 months |
Acquisitions - MetaPack Acqui_2
Acquisitions - MetaPack Acquisition - Allocation Of Purchase Price (Details) - USD ($) $ in Thousands | Aug. 15, 2018 | Sep. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 380,708 | $ 384,540 | |
MetaPack | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 9,186 | ||
Trade accounts receivable | 9,767 | ||
Other current assets | 2,776 | ||
Property and equipment | 1,039 | ||
Goodwill | 138,956 | ||
Business combination, recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 100,838 | ||
Acquired finite-lived intangible assets, weighted average useful life | 16 years | ||
Accounts payable and other current liabilities | $ (13,519) | ||
Deferred revenue | (1,145) | ||
Revolving credit facility | (12,716) | ||
Deferred income tax liability | (15,963) | ||
Other liabilities | (1,533) | ||
Total purchase consideration | 217,686 | ||
Trade Names | MetaPack | |||
Business Acquisition [Line Items] | |||
Business combination, recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 10,936 | ||
Acquired finite-lived intangible assets, weighted average useful life | 12 years | ||
Developed Technology Rights | MetaPack | |||
Business Acquisition [Line Items] | |||
Business combination, recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 40,691 | ||
Acquired finite-lived intangible assets, weighted average useful life | 16 years | ||
Customer Relationships | MetaPack | |||
Business Acquisition [Line Items] | |||
Business combination, recognized identifiable assets acquired and liabilities assumed, finite-lived intangibles | $ 49,211 | ||
Acquired finite-lived intangible assets, weighted average useful life | 16 years |
Commitments and Contingencies (
Commitments and Contingencies (Details) | May 19, 2019claim | Mar. 13, 2019claim | Sep. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Loss Contingencies [Line Items] | ||||
Loss contingency accrual | $ | $ 0 | $ 0 | ||
Karinski v. Stamps.com, Inc. et al, Case 2:19-cv-01828 | Pending Litigation | ||||
Loss Contingencies [Line Items] | ||||
Number of complaints or suits filed | 2 | |||
Putative Class Action Complaint | ||||
Loss Contingencies [Line Items] | ||||
Number of claims dismissed | 1 | |||
In Re Stamps.com Stockholder Derivative Litigation, Case 2:19-cv-04272 | Pending Litigation | ||||
Loss Contingencies [Line Items] | ||||
Number of complaints or suits filed | 2 |
Net Income per Share (Details)
Net Income per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||||||
Net income | $ 63,971 | $ 51,726 | $ 16,494 | $ 9,148 | $ 13,992 | $ 15,755 | $ 132,191 | $ 38,895 |
Basic - weighted average common shares (in shares) | 17,826 | 17,144 | 17,376 | 17,326 | ||||
Diluted effect of common stock equivalents (in shares) | 1,580 | 297 | 1,466 | 427 | ||||
Diluted - weighted average common shares (in shares) | 19,406 | 17,441 | 18,842 | 17,753 | ||||
Earnings per share: | ||||||||
Basic (in dollars per share) | $ 3.59 | $ 0.53 | $ 7.61 | $ 2.24 | ||||
Diluted (in dollars per share) | $ 3.30 | $ 0.52 | $ 7.02 | $ 2.19 | ||||
Employee stock option | ||||||||
Antidilutive Securities Excluded from Computation of Diluted Shares [Line Items] | ||||||||
Anti-dilutive stock options (in shares) | 123 | 2,254 | 776 | 1,905 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 10,160 | $ 11,753 | $ 34,106 | $ 30,467 |
Weighted Average Assumptions used in Black-Scholes-Merton Option Valuation Model [Abstract] | ||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Risk-free interest rate | 0.20% | 1.60% | 0.60% | 2.00% |
Expected volatility | 89.20% | 79.30% | 86.40% | 71.30% |
Expected life (in years) | 3 years 3 months 18 days | 3 years 3 months 18 days | 3 years 3 months 18 days | 3 years 3 months 18 days |
Cost of revenues | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 933 | $ 856 | $ 2,777 | $ 2,057 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 2,466 | 2,692 | 7,135 | 7,031 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 3,110 | 2,874 | 8,935 | 7,668 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 3,651 | 5,331 | 15,259 | 13,711 |
Stock options | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 9,610 | 11,184 | 32,682 | 29,128 |
Employee stock purchases | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 550 | $ 569 | $ 1,424 | $ 1,339 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Goodwill [Roll Forward] | |
Goodwill | $ 384,540 |
Foreign currency translation | (3,832) |
Goodwill | 380,708 |
Stamps.com | |
Goodwill [Roll Forward] | |
Goodwill | 239,705 |
Foreign currency translation | 0 |
Goodwill | 239,705 |
MetaPack | |
Goodwill [Roll Forward] | |
Goodwill | 144,835 |
Foreign currency translation | (3,832) |
Goodwill | $ 141,003 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Goodwill and Intangible Assets [Line Items] | ||||
Amortizable and non-amortizable intangible assets gross carrying amount | $ 226,800 | $ 226,800 | $ 229,400 | |
Non-amortizable assets | 11,400 | 11,400 | 11,400 | |
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Gross Carrying Amount | 215,399 | 215,399 | 218,050 | |
Accumulated Amortization | 100,780 | 100,780 | 84,376 | |
Net Carrying Amount | 114,619 | $ 114,619 | 133,674 | |
Remaining weighted average amortization period (years) | 7 years 9 months 18 days | 8 years 6 months | ||
Amortization of intangible assets | 5,500 | $ 16,500 | $ 16,700 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
2021 | 21,002 | 21,002 | ||
2022 | 12,185 | 12,185 | ||
2023 | 9,654 | 9,654 | ||
2024 | 9,613 | 9,613 | ||
2025 | 7,074 | 7,074 | ||
Thereafter | 55,091 | 55,091 | ||
Net Carrying Amount | 114,619 | 114,619 | 133,674 | |
Patents and Others | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Gross Carrying Amount | 8,195 | 8,195 | 8,195 | |
Accumulated Amortization | 8,195 | 8,195 | 8,195 | |
Net Carrying Amount | 0 | $ 0 | 0 | |
Remaining weighted average amortization period (years) | 0 years | 0 years | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Net Carrying Amount | 0 | $ 0 | 0 | |
Customer Relationships | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Gross Carrying Amount | 110,704 | 110,704 | 111,997 | |
Accumulated Amortization | 56,194 | 56,194 | 46,503 | |
Net Carrying Amount | 54,510 | $ 54,510 | 65,494 | |
Remaining weighted average amortization period (years) | 6 years 10 months 24 days | 7 years 8 months 12 days | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Net Carrying Amount | 54,510 | $ 54,510 | 65,494 | |
Technology | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Gross Carrying Amount | 81,199 | 81,199 | 82,269 | |
Accumulated Amortization | 30,983 | 30,983 | 25,240 | |
Net Carrying Amount | 50,216 | $ 50,216 | 57,029 | |
Remaining weighted average amortization period (years) | 8 years 7 months 6 days | 9 years 4 months 24 days | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Net Carrying Amount | 50,216 | $ 50,216 | 57,029 | |
Non-Compete | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Gross Carrying Amount | 2,211 | 2,211 | 2,211 | |
Accumulated Amortization | 2,050 | 2,050 | 1,889 | |
Net Carrying Amount | 161 | $ 161 | 322 | |
Remaining weighted average amortization period (years) | 8 months 12 days | 1 year 6 months | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Net Carrying Amount | 161 | $ 161 | 322 | |
Trademarks and Trade Names | ||||
Finite-Lived Intangible Assets, Net [Abstract] | ||||
Gross Carrying Amount | 13,090 | 13,090 | 13,378 | |
Accumulated Amortization | 3,358 | 3,358 | 2,549 | |
Net Carrying Amount | 9,732 | $ 9,732 | 10,829 | |
Remaining weighted average amortization period (years) | 9 years 1 month 6 days | 9 years 10 months 24 days | ||
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||||
Net Carrying Amount | $ 9,732 | $ 9,732 | $ 10,829 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Tax Credit Carryforward [Line Items] | |||||
Income tax expense (benefit) | $ (9,485) | $ 5,929 | $ 6,590 | $ 20,359 | |
State and Local Jurisdiction | Research Tax Credit Carryforward | |||||
Tax Credit Carryforward [Line Items] | |||||
Valuation allowance | $ 2,100 | $ 2,100 | $ 1,700 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 389,618 | $ 156,307 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 389,618 | 156,307 |
Total | 389,618 | 156,307 |
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 389,618 | 156,307 |
Total | 389,618 | 156,307 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Total | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Total | $ 0 | $ 0 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Cash and cash equivalents [Abstract] | ||
Cost or Amortized Cost | $ 389,618 | $ 156,307 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 389,618 | 156,307 |
Cash | ||
Cash and cash equivalents [Abstract] | ||
Cost or Amortized Cost | 382,788 | 149,508 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 382,788 | 149,508 |
Money market | ||
Cash and cash equivalents [Abstract] | ||
Cost or Amortized Cost | 6,830 | 6,799 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 6,830 | $ 6,799 |
Segment Information and Geogr_3
Segment Information and Geographic Data (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 193,917 | $ 136,172 | $ 551,993 | $ 410,948 |
Income from operations | 54,622 | 15,651 | 139,979 | 61,317 |
Foreign currency exchange gain (loss), net | (67) | (38) | (238) | (285) |
Interest expense | (96) | (589) | (1,019) | (1,948) |
Interest income and other income (loss), net | 27 | 53 | 59 | 170 |
Income before income taxes | 54,486 | 15,077 | 138,781 | 59,254 |
Stamps.com | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 177,072 | 123,494 | 505,664 | 372,678 |
Income from operations | 55,363 | 19,000 | 146,491 | 70,226 |
MetaPack | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 16,845 | 12,678 | 46,329 | 38,270 |
Income from operations | $ (741) | $ (3,349) | $ (6,512) | $ (8,909) |
Segment Information and Geogr_4
Segment Information and Geographic Data - Schedule of Revenue by Geographical Data (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 193,917 | $ 136,172 | $ 551,993 | $ 410,948 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 176,057 | 123,247 | 503,422 | 371,971 |
International | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 17,860 | $ 12,925 | $ 48,571 | $ 38,977 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 1,300 | $ 1,200 | $ 3,800 | $ 3,600 |
2021 | (606) | (606) | ||
2022 | 9,714 | 9,714 | ||
2023 | 9,486 | 9,486 | ||
2024 | 7,325 | 7,325 | ||
2025 | 7,119 | 7,119 | ||
Thereafter | 47,348 | 47,348 | ||
Total undiscounted cash flows | 80,386 | 80,386 | ||
Less amount representing interest | (19,586) | (19,586) | ||
Present value of lease liabilities | $ 60,800 | $ 60,800 | ||
Weighted-average remaining lease term | 10 years | 10 years | ||
Weighted-average discount rate | 4.70% | 4.70% |
Accounts Payable and Other Cu_3
Accounts Payable and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accounts payable | $ 53,368 | $ 47,783 |
Customer prepayments for postage and shipping labels | 78,271 | 40,002 |
Income taxes payable | 3,436 | 7,996 |
Payroll and related accruals | 26,935 | 23,029 |
Short-term financing obligations | 26,210 | 982 |
Other accruals | 2,054 | 2,061 |
Accounts payable and other current liabilities | $ 190,274 | $ 121,853 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | Jun. 29, 2020 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Line of Credit Facility [Line Items] | ||||
Repayments of debt | $ 50,530,000 | $ 7,734,000 | ||
Term Loan | ||||
Line of Credit Facility [Line Items] | ||||
Repayments of debt | $ 47,500,000 | |||
Letter of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Total debt | 60,000 | 60,000 | ||
Amended Credit Agreement | Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 130,000,000 | |||
Additional borrowing capacity | 75,000,000 | |||
Debt issuance costs | $ 762,000 | |||
Draws on revolving credit facility | 0 | |||
Debt issuance costs, amortization period | 2 years | |||
Unused borrowing capacity | $ 129,900,000 | $ 129,900,000 | ||
Amended Credit Agreement | Revolving Credit Facility | London Interbank Offered Rate | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 1.25% | |||
Amended Credit Agreement | Revolving Credit Facility | London Interbank Offered Rate | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument, basis spread on variable rate (percent) | 3.00% |