Stamps.com Plummets After Announcing Discontinuation Of USPS Partnership

The company also provided a weaker than expected forecast for 2019

Shares of Stamps.com (STMP) plunged in morning trading after the company gave a much weaker-than-expected forecast for 2019 along with an announcement that it had ended its exclusive partnership with the U.S. Postal Service.

EARNINGS AND GUIDANCE: On Thursday after the market close, Stamps.com reported fourth quarter adjusted earnings per share of $3.73 on revenue of $170.2M, above analysts' estimates calling for EPS of $2.90 and revenue of $160M. Adjusted EBITDA for the quarter was $71.3M, up 11% from last year. In a statement, chairman and Chief Executive Officer Ken McBride said, "We achieved strong financial results driven by exceptional execution in our shipping business and we completed our strategic acquisition of MetaPack which has positioned Stamps.com as the leading global e-commerce shipping software company. We are well positioned to successfully compete on a global scale with a focus on driving long-term value for our customers, partners and shareholders."

Looking ahead, Stamps.com issued weak guidance for fiscal 2019, calling for EPS of $5.15-$6.15, compared to the $10.79 consensus. The company also forecast FY19 adjusted EBITDA of $145M-$165M.

DISCONTINUATION OF USPS PARTNERSHIP: Stamps.com announced on its quarterly earnings call that it will discontinue its partnership with the U.S. Postal Service. "We will no longer be exclusive to the USPS and that's non-negotiable," CEO McBride said. He added that "The USPS has not agreed to accept these terms or any other terms of our partnership proposal. So at this point we've decided to discontinue our shipping partnership with the USPS so that we can fully embrace partnerships with other carriers who we think will be well-positioned to win in the shipping business in the next five years." McBride also noted that the short-term financial impact Stamps.com will experience as it forgoes its shipping revenue share with the USPS will represent some "short-term pain" over the next two years.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.