Stamps.com Announces Second Quarter 2010 Results

LOS ANGELES, CA--(Marketwire - July 29, 2010) - Stamps.com® (NASDAQ: STMP), the leading
provider of postage online and shipping software
solutions, today announced results for the second quarter ended June 30,
2010.

For the second quarter:

-- Excluding the enhanced promotion channel, PC Postage revenue was
$18.2 million, up 9% from the second quarter of 2009.

-- Total PC Postage revenue including the enhanced promotion channel
(which consists of online programs where additional promotions are
provided directly by marketing partners) was $19.4 million, up 7% from
the second quarter of 2009.

-- Total revenue was $21.2 million, up 5% compared to the second quarter of
2009.

-- PC Postage gross margin was 77.0%, PhotoStamps gross margin was 24.5%
and total gross margin was 72.5%.

-- GAAP net income was $0.9 million, or $0.07 per fully diluted share.
This includes $0.7 million stock-based compensation expense,
$5.2 million in legal settlements and reserves and an income tax benefit
of $4.0 million.

-- Excluding the stock-based compensation expense, legal settlements and
reserves and income tax benefit, non-GAAP income from operations was
$2.7 million, non-GAAP net income was $2.9 million and non-GAAP net
income per fully diluted share was $0.20.

"For the second quarter our non-GAAP earnings per share was up by 43%, and
was the highest level of quarterly non-GAAP earnings per share we have
generated since 2006," said Ken McBride, Stamps.com president and CEO. "We
continue to see strong results across the board, including our SOHO
business, our enterprise area, and our high volume shipping area. As a
result of our strong earnings performance to date in fiscal 2010, and based
on our positive outlook on all of our businesses, we increased our 2010
non-GAAP earnings per share guidance range by 15 cents today to a range of
$0.65 to $0.85 for the year."

Second quarter 2010 Detailed Results

Stamps.com reported 2010 second quarter GAAP net income of $0.9 million. On
a per share basis, total 2010 second quarter GAAP net income was $0.07
based on fully diluted shares outstanding of 14.5 million. Second quarter
GAAP net income was reduced by $0.7 million for stock-based compensation
expense and $5.2 million for legal settlements and reserves and increased
by a non-cash income tax benefit of $4.0 million resulting from the
reversal of a portion of the Company's net deferred tax asset valuation
allowance. The $0.7 million stock-based compensation expense, $5.2 million
of legal settlements and reserves and $4.0 million income tax benefit were
allocated among cost of sales, research and development, sales and
marketing, general and administrative, legal settlements and reserves and
provision for income taxes as shown in the following table:

Second Quarter Fiscal 2010 Stock-
All amounts in millions except Based Legal Income
per share or margin data: Non-GAAP Comp. Settlements Tax GAAP
Amounts Exp. & Reserves Benefit Amounts

Cost of Sales $ 5.77 $ 0.06 $ - $ - $ 5.82
Research & Development 2.09 0.13 - - 2.22
Sales & Marketing 7.45 0.17 - - 7.62
General & Administrative 3.16 0.36 - - 3.52
Legal Settlements & Reserves - - 5.21 - 5.21
-------- -------- -------- -------- --------
Total Expenses 18.47 0.72 5.21 - 24.40

Gross Margin 72.8% (0.3%) - - 72.5%

Income (Loss) from Operations 2.72 (0.72) (5.21) - (3.21)

Interest and Other Income 0.23 - - - 0.23
-------- -------- -------- -------- --------

Pre-Tax Income (Loss) 2.95 (0.72) (5.21) - (2.98)

Provision for Income Taxes (0.06) - - 3.98 3.92

-------- -------- -------- -------- --------
Net Income $ 2.89 $ (0.72) $ (5.21) $ 3.98 $ 0.94

-------- -------- -------- -------- --------
On a diluted per share
basis $ 0.20 $ (0.05) $ (0.36) $ 0.28 $ 0.07
======== ======== ======== ======== ========

Shares used in per share
calculation 14.45 14.45 14.45 14.45 14.45

Excluding the stock-based compensation expense, legal settlements and
reserves and income tax benefit, 2010 second quarter non-GAAP net income
was $2.9 million or $0.20 per fully diluted share based on fully diluted
shares outstanding of 14.5 million. This compares to 2009 second quarter
non-GAAP net income of $2.3 million and non-GAAP net income per fully
diluted share of $0.14. Thus, non-GAAP second quarter diluted earnings per
share increased by 43% compared to the same quarter last year.

Kara Technology Litigation Settlement

On July 27, 2010, the Company entered into binding terms of a settlement
agreement with Kara Technology to resolve all outstanding litigation
between the parties. Under the terms of the agreement, Stamps.com will make
a $5.1 million payment for settlement of all claims asserted in the
litigation, will purchase the patents asserted in the litigation for $0.4
million, and will grant Salim Kara options on 35,000 shares of Stamps.com
stock. An accrual for the $5.1 million settlement expense is included in
the second quarter 2010 financial results, and the purchase of the patents
will be amortized over the remaining useful life of the patents. Mr. Kara
also agreed to cooperate with the Company in the prosecution and
enforcement of any patents on which he is named as an inventor, including
the patents asserted in the Stamps.com vs. Endicia litigation matters.

Share Repurchase

Over the past four quarters the Company has repurchased a total of 2.0
million shares for a total cost of $18.0 million. During the second quarter
of 2010, the Company repurchased a total of 8 thousand shares for a total
cost of $80 thousand. On July 22, 2010, the Board of Directors approved a
new share repurchase plan effective upon the expiration of the current plan
in August 2010, authorizing the Company to repurchase up to 2.0 million
shares of Stamps.com stock from August 2010 to February 2011.

The timing of share purchases, if any, and the number of shares to be
bought at any one time will depend on market conditions and also will
depend on the Company's assessment of risk that its net operating loss
asset could be impaired if such a repurchase were undertaken. Share
purchases may be made from time-to-time on the open market or in negotiated
transactions at the Company's discretion in compliance with Rule 10b-18 of
the United States Securities and Exchange Commission. The Company's
purchase of any of its shares may be subject to limitations imposed on such
purchases by applicable securities laws and regulations and the rules of
the Nasdaq Stock Market.

Net Operating Loss (NOL) Protective Measures Suspension

Stamps.com currently has approximately $230 million in Federal NOLs and
$150 million in State NOLs, with a potential value of up to approximately
$90 million in tax savings over the next 15 years. On July 22, 2010, the
Board of Directors suspended the NOL Protective Measures by approving a
waiver from the NOL Protective Measures to all persons and entities,
including companies and investment firms. As a result, the shareholders of
the Company are now allowed to become 5% shareholders and existing 5%
shareholders are allowed to make additional purchases of the Company's
stock each without having to comply with the restrictions contained in the
NOL Protective Measures. For complete details about this waiver from the
NOL Protective Measures, please see our 8-K filed on July 28, 2010.

Business Outlook

Stamps.com currently expects total 2010 revenue to be $80 to $90 million.
2010 GAAP net income per share is expected to be $0.35 to $0.55, including
approximately $3.0 million of stock-based compensation expense, $5.2
million of legal settlements and reserves and $4.0 million non-cash tax
benefit. Excluding the stock-based compensation expense, legal settlements
and reserves and tax benefits, non-GAAP 2010 net income per fully diluted
share is expected to be $0.65 to $0.85. This compares to previous
expectations for non-GAAP 2010 net income per fully diluted share of $0.50
to $0.70.

Company Customer Metrics

A complete set of the quarterly customer metrics for the past four fiscal
years and current fiscal year to date is available currently at
http://investor.stamps.com (under a tab on the left side called Company
Information, Metrics).

Quarterly Conference Call

The Stamps.com financial results conference call will be web cast today at
5:00 p.m. Eastern Time and may be accessed at http://investor.stamps.com.
The Company plans to discuss its business outlook during the conference
call. Following the conclusion of the web cast, a replay of the call will
be available at the same website.

About Stamps.com and PhotoStamps

Stamps.com
(NASDAQ: STMP) is a leading provider of Internet-based postage services.
Stamps.com's service enables small businesses, enterprises, advanced
shippers, and consumers to print U.S. Postal Service-approved postage with
just a PC, printer and Internet connection, right from their home or
office. The Company currently has PC Postage partnerships with Avery
Dennison, Microsoft, HP, Office Depot, the U.S. Postal Service and others.

PhotoStamps is a patented
Stamps.com product that couples the technology of PC Postage with the
simplicity of a web-based image upload and order process. Customers may
create full custom PhotoStamps with their own digital photograph, or they
may choose a licensed image from one of many PhotoStamps collections such
as the collegiate collection. Since launching PhotoStamps in May 2005, more
than 82 million individual PhotoStamps have been shipped to customers.
Stamps.com currently has PhotoStamps partnerships with Apple,
Google/Picassa, HP/Snapfish, Adobe and others.

Non-GAAP Measures

To supplement the Company's condensed financial statements presented in
accordance with GAAP, Stamps.com uses non-GAAP measures of certain
components of financial performance. These non-GAAP measures include
non-GAAP income from operations, non-GAAP pre-tax income, non-GAAP net
income, non-GAAP earnings per diluted share, and non-GAAP gross margin.
Reconciliation to the nearest GAAP measures of all non-GAAP measures
included in this press release can be found in the financial tables on page
2 and page 3 of this press release.

Non-GAAP measures are provided to enhance investors' overall understanding
of the Company's current financial performance, prospects for the future
and as a means to evaluate period-to-period comparisons. The Company
believes that these non-GAAP measures provide meaningful supplemental
information regarding financial performance by excluding certain expenses
and benefits that may not be indicative of recurring core business
operating results. The Company believes the non-GAAP measures that exclude
stock-based compensation, asset write-downs, legal charges and income tax
adjustments, when viewed with GAAP results and the accompanying
reconciliation, enhance the comparability of results against prior periods
and allow for greater transparency of financial results. The Company
believes non-GAAP measures facilitate management's internal comparison of
the Company's financial performance to that of prior periods as well as
trend analysis for budgeting and planning purposes. The presentation of
non-GAAP measures are not intended to be considered in isolation or as a
substitute for, or superior to, the financial information prepared and
presented in accordance with GAAP.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: This release includes forward-looking statements about our
anticipated results and our PhotoStamps spend that involve risks and
uncertainties. Important 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 year ended December 31, 2009, Quarterly Reports
on Form 10-Q, and Current Reports on Form 8-K. STAMPS.COM undertakes no
obligation to release publicly any revisions to any forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

Stamps.com, the Stamps.com logo and PhotoStamps are trademarks or
registered trademarks of Stamps.com Inc. All other brands and names are
property of their respective owners.

STAMPS.COM INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data: unaudited)

Three Months ended Six Months ended
June 30, June 30,
2010 2009 2010 2009
-------- -------- -------- ---------
Revenues:
Service $ 16,172 $ 15,207 $ 32,190 $ 30,521
Product 2,809 2,580 5,882 5,197
Insurance 392 395 786 799
PhotoStamps 1,816 1,995 3,317 3,708
Other - 5 3 5
-------- -------- -------- ---------
Total revenues 21,189 20,182 42,178 40,230
Cost of revenues:
Service 3,253 2,872 6,736 5,880
Product 1,081 1,030 2,220 1,975
Insurance 118 123 232 248
PhotoStamps 1,372 1,521 2,450 2,821
-------- -------- -------- ---------
Total cost of revenues 5,824 5,546 11,638 10,924
-------- -------- -------- ---------
Gross profit 15,365 14,636 30,540 29,306
Operating expenses:
Sales and marketing 7,622 8,227 15,606 16,291
Research and development 2,219 2,199 4,389 4,426
General and administrative 3,524 3,306 6,491 6,570
Legal Settlements and Reserves 5,211 - 5,211 -
-------- -------- -------- ---------
Total operating expenses 18,576 13,732 31,697 27,287
-------- -------- -------- ---------
Income (loss) from operations (3,211) 904 (1,157) 2,019

Interest and other income, net 230 232 401 589
-------- -------- -------- ---------
Income (loss) before income taxes (2,981) 1,136 (756) 2,608
Income tax (benefit) expense (3,922) 84 (3,842) 334
-------- -------- -------- ---------
Net income $ 941 $ 1,052 $ 3,086 $ 2,274
======== ======== ======== =========
Net income per share:
Basic $ 0.07 $ 0.06 $ 0.21 $ 0.14
======== ======== ======== =========
Diluted $ 0.07 $ 0.06 $ 0.21 $ 0.14
======== ======== ======== =========
Weighted average shares
outstanding:
Basic 14,290 16,301 14,713 16,581
======== ======== ======== =========
Diluted 14,450 16,427 14,861 16,709
======== ======== ======== =========

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

June 30, December 31,
2010 2009
-------- --------
ASSETS
Cash and investments $ 64,694 $ 71,745
Accounts receivable 4,058 4,367
Other current assets 3,772 3,288
Property and equipment, net 2,361 2,102
Intangible assets, net 897 498
Deferred tax 7,650 3,671
Other assets 3,620 3,587
-------- --------
Total assets $ 87,052 $ 89,258
======== ========

LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Accounts payable and accrued
expenses $ 14,741 $ 9,583
Deferred revenue $ 4,202 $ 4,070
-------- --------
Total liabilities 18,943 13,653
-------- --------

Stockholders' equity:
Common stock 47 47
Additional paid-in capital 632,015 630,322
Treasury Stock (117,240) (104,344)
Accumulated deficit (447,128) (450,214)
Unrealized loss on investments 415 (206)
-------- --------
Total stockholders' equity 68,109 75,605
-------- --------
Total liabilities and
stockholders' equity $ 87,052 $ 89,258
======== ========