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Thursday, February 21, 2019 (STMP) reported earnings on Thur 21 Feb 2019 (a/h)

** charts before earnings **


** charts after earnings ** beats by $0.83, beats on revs; guides FY19 EPS below consensus, revs below consensus
  • Reports Q4 (Dec) earnings of $3.73 per share, excluding non-recurring items, $0.83 better than the S&P Capital IQ Consensus of $2.90; revenues rose 28.5% year/year to $170.23 mln vs the $160.0 mln S&P Capital IQ Consensus.
  • Co issues downside guidance for FY19, sees EPS of $5.15-6.15, excluding non-recurring items, vs. $10.79 S&P Capital IQ Consensus; sees FY19 revs of $540-570 mln vs. $689.1 mln S&P Capital IQ Consensus. Earnings Preview (STMP), a provider of Internet-based postage services, is set to report Q4 results today after the close (last quarter they released at 16:30 ET, or 30 minutes after the close) with a conference call to follow at 5pm ET.
  • The CapitalIQ consensus estimate for Q4 non-GAAP EPS is $2.90. The revenue consensus estimate is $160 mln. STMP typically also guides for full year EPS and revenue in the press release.
  • While the company's historical focus has been selling to individuals and small businesses, in recent years, STMP has focused intently on the more lucrative high-volume shippers (warehouses, fulfillment houses, and large volume retailers) and enterprise markets, which are more attractive in terms of margins, ARPU, and churn rates. To achieve this, STMP has been active on the M&A front. STMP now has five brands: Endicia, ShipStation, ShipWorks, ShippingEasy, and MetaPack. STMP's continued evolution and any possible M&A deals on the horizon will be important to listen for on the call.
  • In terms of key operating metrics, investors look for growth in Mailing and Shipping revenue. Also, ARPU and churn levels are closely watched. Total paid customers is another key metric. However, keep in mind that growth has slowed here. However, this is consistent with STMP's strategic shift to focus more on high volume shippers, which are numerically fewer in number, but where each customer has a much higher lifetime value. With this shift in focus, revenue has been more driven by growth in ARPU than by paid customers. Shipping customers generally pay higher subscription fees than small business mailers.
  • The thing with STMP is that it typically blows out consensus EPS and revenue analyst estimates. In the last 12 quarters, its smallest EPS beat was $0.36. The revenue upside tends to be more modest but STMP consistently beats. We are unsure as to why analysts keep their estimates so low with STMP. You would think analysts had learned that STMP consistently blows out their EPS estimates.
  • With that said, despite the big beats, the stock performance has been more choppy. The stock price went from $280 in early August to a low of $141.38 in December. It has since bounced nicely since then with the overall market.
  • However, investors should understand that this stock can be volatile around earnings. It may pop on the big upside and hold that, but sometimes the stock may trade lower in a day or two. Or it can even trade lower on a beat. Our sense is that investors have gotten used to the big beats from STMP, so they may not get the sustained pop that another company might get.

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