Jefferies 2013 TMT Conference · − Online package tracking capabilities with e-mail notifications − Adding integrated package insurance eliminates separate operational process

Jefferies 2013 TMT Conference

Safe Harbor

This presentation contains forward-looking statements that involve risks and

uncertainties, including discussions of our products, business plans and

financial projections. Important risk factors, including the Company's ability

to complete and ship its products, maintain desirable economics for its

products and obtain or maintain regulatory approval, which could cause

actual results to differ materially from those in the forward-looking

statements, are detailed in filings with the Securities and Exchange

Commission made from time to time by Stamps.com, including its Annual

Report on Form 10-K for the fiscal year ended December 31, 2012, Quarterly

Reports on Form 10-Q, and Current Reports on Form 8-K. We encourage you

to review the risk factors disclosed in these filings.

2

• PC Postage Service Overview

• PC Postage Industry and Marketing

• PhotoStamps

• Metrics and Financials

• Appendix

Agenda

3

PC Postage Service Overview• Software-based Internet service that lets customers buy and print their own

U.S. Postal Service approved postage

− Requires only your existing PC, printer & Internet (no special hardware)

− Monthly subscription service fee (+ the cost of postage)

• Easy process to become a customer and print postage

− Customer registers account from our website and downloads our software

− Customer uses software to purchase postage for their account

− Customer prints postage and the postage amount is deducted from their pre-paid

account balance

− Customer purchases additional postage for their account as needed

• Three ways to print postage based on mailing and shipping needs

− Print your own stamps (NetStamps)

− Print directly on envelopes

− Print shipping labels

4

Print Postage via Microsoft Integration• Stamps.com has an integration

with Microsoft

− Enhances the value of our

solution for existing customers

− Is a marketing channel for

acquiring new customers

• Customers print postage from

directly within Microsoft Word

− Many small businesses use

Microsoft Word to print

addresses on their envelopes

− Can print addresses and postage

in a 1-step process

− Print from Word’s Envelopes and

Labels for single envelopes

− Print from Word’s Mail Merge for

multiple envelopes

5

Print Postage via Amazon Integration

• Stamps.com has an integration

partnership with Amazon’s

Merchant Marketplace

− Merchants who sell in Amazon’s

Marketplace and ship the packages

themselves can print postage for the

packages via Stamps.com's

integration or Amazon's in-house

solution

− Merchants utilizing Stamps.com's

integration solution print shipping

labels as part of a seamless

integrated process flow

− Merchants can opt for a transaction

based pricing model or become

Stamps.com subscription customers

6

Customer Benefits• Customer benefits based on their previous mail solution

− ~80% of customers previously used retail post office (time savings)

− ~20% of customers previously used traditional meters (cost savings)

• Customers save time so they can focus on growing their business

− Mail or ship from home or office

− Avoid trips to the post office

− Available 24 hours a day x 7 days a week

• Customers can save money by reducing their postage spend

− Discounted postal rates (domestic and international packages for First Class,

Priority and Express Mail classes)

− Discounted package tracking (Delivery and Signature Confirmation)

− Discounted package insurance compared to USPS

− Avoid costly returned mail with address verification

− Avoid wasted postage by calculating exact postage amount

− Access to cost effective mail classes (media mail, parcel post, etc.)

7

Customer Benefits• Advanced Reporting

− Technology based postage solution provides sophisticated reporting

− Customers gain greater visibility into postage activity vs. traditional solutions

− Customers can better track, control and reduce postage expenditures

• Enhanced Productivity and Image

− Produces more professional looking mail

− Two-step process becomes one-step by printing address & postage together

• Optimize Shipping Operations

− Customers utilize hidden postage feature to reduce customer contacts

− Online package tracking capabilities with e-mail notifications

− Adding integrated package insurance eliminates separate operational process

− Customers can aggregate orders and print all shipping labels at one time in an

automated batch process

− Customers can import order data into our software from across multiple

marketplaces seamlessly

8



• PhotoStamps


• Appendix

Agenda

9

Industry Overview• Large market opportunity1

− ~$46B U.S. Postage Market

− ~8M Small Businesses + 14M Home Businesses

− Growing e-commerce shipping segment

• Significant barriers to entry exist

− Long and complex U.S. Postal Service regulatory approval process

o ~2 ½ years for original approval

o Multiple years for NetStamps approval

− Last PC Postage vendor approved by the USPS was in the year 2000

− Stamps.com has a very strong patent portfolio (over 150 patents issued)

• Stamps.com is the category leader

− 3 approved PC Postage vendors (Stamps, Pitney Bowes, Endicia.com)

− Stamps.com has the largest number of PC Postage customers2

1 Source: International Data Corporation Reports and USPS 2012 Annual Report (excludes Standard Mail, Periodicals, PO Box Rent, Money Orders)2 Source: USPS PC Postage Data

10

Service OfferingsThe majority of subscription customers pay monthly service fees from

$15.99 – $39.99 depending on the features of the particular service:

• Pro

− Basic mailing and shipping features with single-user capability

• Premier

− Pro features plus multi-user functionality, automated Certified Mail forms, and

additional reference codes

• Professional Shipper

− Targeted to higher volume shippers (e.g. fulfillment houses, e-commerce merchants,

retailers, etc.)

− Features direct integration into customers’ order databases, faster label printing and

integrations with shipping management systems

• Enterprise

− Targeted to organizations with multiple geographic locations

− Features enhanced reporting and administrative controls

11

Marketing Channels• In our Core PC Postage Business1, Stamps.com utilizes a diversified set of

marketing programs to acquire customers:− Affiliate program

− Direct mail

− Direct sales

− Online media

− Shipping integrations (Online marketplaces, Shopping carts, Shipping mgmt.)

− Stamps.com web site and referral program

− Strategic partnerships (Avery, Microsoft, HP, USPS)

− Telemarketing

− Traditional media

• In our Non-Core PC Postage Business2, Stamps.com utilizes a consumer oriented

online program3 to acquire customers:

− Online program offers an incremental promotion to try our service

− Made a strategic decision in 2007 to de-emphasize this part of the business

− Significant reduction in marketing spend in this channel (2007 - 2012)

1 Core PC Postage is the portion of our PC Postage business targeted to small businesses, enterprises and high volume shippers2 Non-Core PC Postage is the portion of our PC Postage business targeted more to consumers 3 The consumer oriented online program, also referred to as the "Enhanced Promotion Channel," includes partners that advertise our service on the

Internet in which the partner typically offers an incremental promotion (in addition to any promotion offered by us) in order to get the customer to

try our service.

12

2013 PC Postage Plan• Increase our Small Business marketing investment

− Increase small business customer acquisition spend by 5 - 15% in 2013

• Optimize our business model and improve our customer experience

− Optimize our website, registration process and post-registration customer interactions

to improve the customer experience

− Improve software usability by adding new product features including new shipping

capabilities and various other features to make mailing easier

− Increase investment in our technology platform and data centers for optimal reliability

and scalability of our solutions

• Enhance our distributed enterprise solution marketing efforts

− Continue to build our sales pipeline of new accounts and increase penetration of our

existing accounts

− Continue to add new features to our software

• Enhance our high volume shipper solution and marketing efforts

− Scale our high volume shipping sales and marketing efforts

− Continue to add new features to our software and add new software integration

partners

13



• PhotoStamps


• Appendix

Agenda

14

PhotoStamps Offering• PhotoStamps allows customers to order valid US postage with customized

photos or images from www.photostamps.com (separate offering from PC

Postage)

− Customer uploads photo or graphic and customizes look & feel

− Customer places order online

− Stamps.com approves the image and prints the PhotoStamps sheets

− Customer receives PhotoStamps sheets in the mail within a few days

− Pricing is ~$5 to $18 per sheet plus the cost of postage1

1 Actual pricing depends on the number of sheets ordered and postage value per sheet (high volume discounts are available)

15



• PhotoStamps


• Appendix

Agenda

16

Financial Overview• The PC Postage business has a recurring revenue based model

− Service fees are charged on a recurring monthly subscription basis

− Supplies store and package insurance purchases are recurring with usage

• Stamps.com has an attractive financial model

− High gross margins (PC Postage = 80%) with leverageable fixed costs

− Low working capital and capital expenditure requirements

− Results in very strong free cash flow1 ($31.4M for the trailing 4 qtrs., $142M since Q2-04)

• Stamps.com has a history of returning excess cash to shareholders

− Stamps.com has returned $291M to shareholders since 2002 ($107M via special dividends

and $184M via share repurchases with $32M in 2012)

• Stamps.com has a very strong balance sheet

− $57M in cash and investments and no debt as of March 31, 2013

− ~$205M Federal and ~$100M State NOL’s ($70M Def Tax Asset2)

• The PC Postage business generates very attractive expected returns

− Customer lifetime values in excess of two times the cost to acquire the customer

17

1 Free Cash Flow = Pro-Forma Net Inc – Net Rental Income + Business D&A – Business Capital Expenditures; Company turned FCF positive in Q2-042 ~$70M Gross DTA with a (~$40M) valuation allowance (reserve) resulting in ~$30M Net DTA on the balance sheet

Revenue and Adjusted EBITDAStrong revenue growth combined with margin expansion has led to a significant

increase in our adjusted EBITDA over the past three years

$85.5

$101.6

$115.7

$70

$80

$90

$100

$110

$120

2010 2011 2012

Total Revenue

($ Millions)

$13.8

$21.5

$29.8

$5

$10

$15

$20

$25

$30

2010 2011 2012

Adjusted EBITDA1

($ Millions)

YoY

Growth 32% 55% 38%YoY

Growth

1 Adjusted EBITDA is pro forma operating income + Business D&A

(excludes tenant related D&A)

18

4% 19% 14%

$53.7$57.5

$63.9$67.4

$73.8

$90.2

$107.0

$50

$60

$70

$80

$90

$100

$110

2006 2007 2008 2009 2010 2011 2012

Core PC Postage Revenue1

($ Millions)

Annual Revenue Breakdown

1 Core PC Postage revenue includes service fee, store and insurance revenue from the small business, enterprise and high volume shipping customer segments.2 Total Enhanced Promotion and PhotoStamps revenue in 2011 included $2.2M of one-time PhotoStamps retail breakage revenue in Q2-11. Excluding Q2-11 retail

breakage revenue, total Enhanced Promotion and PhotoStamps revenue was $9.3M (-21%)3 Non-core PC Postage revenue from service fee, store and insurance revenue for customers originally acquired through the enhanced promotion channel

$18.8 $17.9

$11.9$8.5

$7.2 $6.1 $5.7

$10.3$9.5

$9.1

$6.3$4.5

$3.2 $3.0

$2.2

$0

$5

$10

$15

$20

$25

$30

$35

2006 2007 2008 2009 2010 2011 2012

PhotoStamps Retail Breakage

Revenue

Enhanced Promotion Revenue

PhotoStamps Revenue

$8.7$11.4

PhotoStamps2 and

Enhanced Promotion Revenue3

($ Millions)

$29.1$27.4

$21.0

$14.7

Revenue trends reflect a strategic change in 2006 to shift investment from

PhotoStamps and Enhanced Promotion to our Core PC Postage Business

$11.7

YoY

Growth N/A 7% 11% 5% 10% 22% 19%YoY

ChangeN/A (6%) (23%) (30%) (21%)

(2%) /

(21%)2

(24%) /

(6%)2

19

$21.2$20.7

$22.7 $22.8

$24.5$24.9

$27.2

$28.3$28.2$29.1

$30.1

$32.1

$18

$20

$22

$24

$26

$28

$30

$32

$34

Total Company Revenue (x PS Breakage) PS Breakage

$26.6 (1)

Total Revenue 1

($ Millions)

Quarterly Revenue Trends

$18.2 $18.2

$19.3

$20.6

$22.3$22.7

$24.5

$26.2 $26.2

$27.2 $27.4

$30.3

$16

$18

$20

$22

$24

$26

$28

$30

$32

Core PC Postage Revenue

Core PC Postage Revenue 2

($ Millions)

Total Company revenue growth has been driven by accelerating

Core PC Postage revenue growth

5% 2% 5% 9%26% (1)

/ 15%20% 20% 24%

6%/

15%(1)17% 10% 13%YoY

Growth9% 8% 11% 14% 23% 25% 27% 27% 18% 20% 12% 16%YoY

Growth

2 Core PC Postage revenue includes service fee, store and insurance revenue

from the small business, enterprise and high volume shipping customer

segments.

1 Q2-11 total revenue included $2.2M of one-time PhotoStamps retail

breakage revenue; Q2-11 revenue was $26.6M (+26%) including the

breakage and was $24.5M (+15% YoY) excluding the breakage.

20

PC Postage Customer Metrics

1 Unique customers successfully billed at least once during the quarter

excluding customers acquired through the enhanced promotional

channel

2 Calculated as [ (Quarterly Service Fee Revenue + Store Revenue +

Insurance Revenue) / (Current Quarter Paid Customers)] / 3 Months

excluding customers acquired through the enhanced promotion

channel

Paid Customers1

(Core PC Postage Business)(Thousands)

Average Monthly Revenue

per Paid Customer (ARPU)2

(Core PC Postage Business)

338334

340

360368

374385

413418 419

435

465

300

320

340

360

380

400

420

440

460

480

Core PC Postage revenue growth has been driven by both increasing

paid customers and increasing ARPU trends

7% 6% 6% 7% 9% 12% 13% 15% 14% 12% 13% 13% 2% 2% 4% 6% 13% 12% 12% 11% 3% 7% (1%) 3%YoY

Growth

YoY

Growth

21

$17.9$18.1

$18.9$19.1

$20.2 $20.2

$21.2 $21.2$20.9

$21.6

$21.0

$21.7

$17

$18

$19

$20

$21

$22


2 PC Postage small business sales and marketing expense

(excluding 123R expenses) plus promotional expenses / gross

new small business customers acquired

Cost per Gross New

Customer Acquired2

(Small Business Customers)

$128

$123

$109

$115

$124

$119

$108$110

$125

$115

$104$106

$80

$100

$120

$140

New customers acquired is showing year-over-year growth while

CPA’s remain in a consistent range

Gross New Customers Acquired1

(Small Business Customers)

(Thousands)

52.449.4

66.9 66.962.9 63.9

82.785.7

70.5 69.1

88.691.5

40

60

80

100

1 Gross new registered small business customers

2% 8% 2% 3% (3%) (4%) (1%) (5%) 1% (3%) (4%) (3%)(2%) (6%) 1% 4% 20% 29% 24% 28% 12% 8% 7% 7%YoY

GrowthYoY

Change

22


1 Calculated as [ (Lost Paid Customers) / (Prior Quarter Paid Customers + Current Quarter New Paid Customers) ] / 3 months

Quarterly Paid Customer Churn Rate1


3.6% 3.6%

3.4%

3.0%

3.5%

3.3%3.4%

3.0%

3.7%

3.5%

3.1%3.0%

2.5%

3.0%

3.5%

4.0%

Quarterly churn rates remain flat-to-down year-over-year with average

annual churn rates returning to pre-recession levels

3.3%

3.6%

3.9%

3.5%

3.3% 3.3%

3.0%

3.2%

3.4%

3.6%

3.8%

4.0%

2007 2008 2009 2010 2011 2012

Annual Average Paid Customer Churn Rate1


YoY

Change(0.8%) (0.2%) (0.3%) (0.4%) (0.1%) (0.3%) 0.0% 0.0% 0.2% 0.2% (0.3%) 0.0% (0.5%) 0.3% 0.3% (0.4%) (0.2%) 0.0%

YoY

Change

23

NFIB Optimism Index1

Source: Small Business Economic Trends report (Apr 2013) © NFIB Research Foundation

101.6

98.9

96.7

89.8

86.7

89.991.4

92.2

80.0

85.0

90.0

95.0

100.0

105.0

2005 2006 2007 2008 2009 2010 2011 2012

Average Annual Optimism Index

92.5

94.594.4

91.491.2

92.9 92.893.1

87.588.0

88.9

90.8

89.5

85

86

87

88

89

90

91

92

93

94

95

Monthly Optimism Index

Recessionary Level

Our Core PC Postage business metrics including acquisition and churn have been very

strong despite a challenging small business economic environment

Recessionary Level

1 The NFIB (National Federation of Independent Business) is one of the leading sources of information about small business in the United States. They

conduct monthly surveys from NFIB’s members to compile its Small Business Economic Trends report summarized through the small business

optimism index.

24

PC Postage Customer Metrics Postage printed shows strong and accelerating growth as we add

SOHO, Enterprise and High Volume Shipping customers

$99 $108

$139 $145 $152$165

$211 $222 $233

$293

$401$378

$0

$100

$200

$300

$400

$500

Quarterly Postage Printed1

($ Millions)

1 Total postage printed by all customers

18% 20% 26% 39% 44% 53% 52% 52% 53% 53% 78% 71%YoY

Growth

25

$272$319

$354

$447

$672

$1,148

$200

$400

$600

$800

$1,000

$1,200

2007 2008 2009 2010 2011 2012

Annual Postage Printed1

($ Millions)

19% 17% 11% 26% 50% 71%YoY

Growth

Non-GAAP Operating Income

1 Excludes stock-based compensation, asset write-offs, litigation charges and relocation expenses (see the Company’s 8-K filings for reconciliations to GAAP)

2 Q2-11 and FY-11 included $1.7M of one-time PhotoStamps retail breakage income; excluding the retail breakage, Q2-11 Non-GAAP operating income was $4.7M

(+74% YoY) and FY-11 Non-GAAP operating income was $18.9M (+46%)

Quarterly Non-GAAP Operating

Income1,2

($ Millions)

Annual Non-GAAP Operating

Income1,2

($ Millions)

$2.7

$3.4$4.1

$3.4

$4.7

$5.4 $5.4$5.7

$6.8

$8.4

$7.6

$9.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

$10.0

Non-GAAP Op Inc (x PS Breakage) PS Breakage

Non-GAAP Operating Income has accelerated as a result of strong

Core PC Postage growth and operating leverage

30% 34% 49% 22%137%/

74%(2)62% 31% 70%

6%/

44%(2)54% 42% 56% 0% 40% 59% 38%

YoY

GrowthYoY

Growth

26

$6.4

$9.3

$13.0

$20.6

$28.6

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

2009 2010 2011 2012

Non-GAAP Op Inc (x PS Breakage)

13% 16% 18% 15%24%/

18%(2)22% 20% 20% 24% 29% 25% 28% 11% 15% 20% 25%

Op

Margin

Op

Margin

Non-GAAP EPS

1 Excludes stock-based compensation, non-cash deferred tax benefit, asset write-off, litigation charges and relocation expenses (see the Company’s 8-K filings for

reconciliations to GAAP)

2 Q2-11 and FY11 included $1.7M of one-time PhotoStamps retail breakage income; excluding the retail breakage, Q2-11 Non-GAAP EPS was $0.33 (+65% YoY) and

FY-11 Non-GAAP EPS was $1.29 (+38%)

Quarterly Non-GAAP EPS1,2

($ Millions)

Annual Non-GAAP EPS1,2

$0.62

$0.93

$1.40

$1.70

$0.00

$0.50

$1.00

$1.50

$2.00

2009 2010 2011 2012

Non-GAAP EPS

Non-GAAP EPS has accelerated with our strong operating income results

and our share repurchase activities

49% 22% 54% 42%43% 44% 69% 27%124%/

65%(2)52% 14% 41%

(11%)/

21%(2)35% 36% 68%YoY

GrowthYoY

Growth

27

$0.20$0.24

$0.30

$0.24

$0.33

$0.37$0.35 $0.34

$0.40

$0.50$0.47

$0.57

$0.00

$0.20

$0.40

$0.60

PF EPS (x PS Breakage) PS Breakage

$0.45

Key Investment Takeaways

• Large market opportunity (~$46B US postage, 22M SOHOs)

• Significant barriers to entry (USPS approval, Intellectual Property)

• Superior customer benefits at prices up to 60% less than meters

• Category leader in PC Postage and Customized Postage

• Attractive expected return on PC Postage marketing spend

• PC Postage revenue growth with high gross margins

• Attractive strategic opportunities with enterprise and shipping

• Strong cash flow and balance sheet

• Demonstrated history of returning capital to shareholders

28



• PhotoStamps


• Appendix

Agenda

29

Investor Metrics

30

31

32

33

Print NetStamps• Print your own stamps

− Buy blank label stock (NetStamps)

from Stamps.com

− Use Stamps.com’s software to print

postage on the blank labels

• Increased flexibility

− Use for any stamp value

− Use for any class of postage

− No expiration date

− Not tied to an address

• Choose from a variety of images

− Standard labels

− Themed labels

− Customized labels

34

Print on Envelopes• Print postage on envelopes

− Print postage directly on envelopes or onto labels applied to the envelopes

− Supports a wide variety of envelopes including odd-shaped and flats

• Ideal for business and high volume mailings

− Typically used when a customer already needs to print the addresses

− Our software automatically verifies and corrects destination addresses

− Our software integrates with most contact management systems (e.g. Office, ACT)

avoiding the need to maintain two different address books

− Customers like the professional looking appearance of the envelope

35

Print Shipping Labels• Print postage labels for use with packages

− Print all-in-one shipping labels on either plain

printer paper or on adhesive labels

− Supports all classes of packages (e.g. Priority Mail,

Express Mail, Media Mail, Parcel Post)

• Electronic solution offers unique benefits

− Ability to hide postage amount

− E-mail tracking notifications

− Avoid 1lb package security restrictions

1 All PC Postage customers automatically receive discounts of up to 63% discount on Express Mail, up to 20% on Priority Mail, up to 10% on Express

Mail International, up to 9% on Priority Mail International, up to 18% on First Class Package Service, and up to 10% on First Class Package

International Service. In addition, “Commercial Plus” customers who meet certain higher volume requirements receive discounts of up to 63% on

Express Mail , up to 35% on Priority Mail, up to 16% on Express Mail International and up to 16% on Priority Mail International. All PC Postage

customer also receive free delivery confirmation for Priority Mail and First Class Package Service.

36

• Receive discounts on postal rates1

− Customers receive discounted rates on domestic and international packages for First

Class, Priority and Express Mail classes

− Higher package volume customers can qualify for even larger postal rate discounts

Stamps.com vs. Postage Meter

Category Entry Level Meter Stamps.com

Max. Print Speed 18 letters/minute At speed of printer

Monthly Fee

(rental plus 5 lbs. scale)

$24.99/month 1

(1-Year Auto Renew Lease)

$15.99 / month

(No Lease)

Proprietary Ink &

Labels$8 to $13 2 None

Estimated Monthly Total

Cost of Ownership~$33 to $38 $16

1 Entry level small business meter with an integrated scale2 Assumes monthly prints 60 letters and 20 packages; proprietary ink fees of $.06 - $.12 per print; proprietary label fees of $.14 per label

(source: Competitor pricing and STMP estimates).

37

• Stamps.com is up to 60% less than the total cost of an entry-level postage

meter

PhotoStamps Overview• The customized postage program is regulated by the USPS

− Only approved PC Postage vendors can provide the postage for customized

postage products

− 3 approved vendors: Stamps, Endicia, Pitney Bowes (via Zazzle)

• PhotoStamps is marketed to consumer and business segments

− Consumers typically use PhotoStamps for special occasions and as gifts

− Business orders in higher volumes for branding and marketing purposes

• Continued focus on profitability in the PhotoStamps business

− Made strategic decision in 2007 to shift investment from PhotoStamps to PC

Postage which has resulted in a smaller but more profitable business

− Pursuing PhotoStamps in a modest way during the challenging economy and

continue to look for ways to optimize the business

− Marketing channels focus on cost-effective, high ROI channels including online and

partnerships (Snapfish)

− Majority of corporate focus still on the PC Postage business

38

Jefferies 2013 TMT Conference · − Online package tracking capabilities with e-mail notifications − Adding integrated package insurance eliminates separate operational process

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