Stamps.com Inc. (NASDAQ:STMP) announced strong first-quarter 2018 results on Thursday after the market closed, sending shares up nearly 4% on Friday in response. To be sure, Stamps.com's focus on its thriving shipping business continues to yield fruit, helped by a steadily growing base of loyal customers. The internet-based mailing and shipping services specialist also increased its full-year earnings outlook.

Let's have a closer look, then, at how Stamps.com started the year, and at what investors should expect from the company going forward.

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Image source: Getty Images.

Stamps.com results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Growth

Revenue

$133.6

$105.0

27.2%

GAAP net income

$47.0

$33.1

29.6%

GAAP net income per share

$2.54

$1.82

39.6%

Data source: Stamps.com. 

What happened with Stamps.com this quarter?

  • Revenue growth included a 28% increase in mailing and shipping revenue, comprised of service, product, and insurance revenue, to $131 million. Within that, the core service business enjoyed the most pronounced gain, with revenue climbing 30.8% to $120.9 million.
  • Customized postage revenue grew 6% to $2.6 million.
  • On an adjusted (non-GAAP) basis -- which excludes items like stock-based compensation and one-time tax adjustments -- net income still would have climbed 39% to $2.54 per share.
  • Stamps.com doesn't provide specific quarterly guidance. So for perspective -- and though we don't usually pay close attention to Wall Street's demands -- consensus estimates predicted earnings of only $1.90 per share on revenue of $123 million.
  • Adjusted EBITDA increased 21% year over year to $62.1 million. 
  • Paid customers increased 3% year over year to 740 million, while average revenue per paying user increased 24% to $58.96.
  • Average monthly churn remained stable at roughly 3%.
  • Stamps.com repurchased roughly 120,000 shares of stock at a cost of roughly $23.2 million.
  • Following the end of the quarter on April 25, 2018, the company's board approved a new $90 million, six-month purchase plan that will take effect when the current plan expires on May 11, 2018.

What management had to say 

Stamps.com chairman and CEO Ken McBride stated:

We were very pleased with our first quarter performance. We achieved strong growth driven by continued success in the shipping area of our business. We are continuing to execute on our 2018 strategic plans and we remain excited about our long-term business opportunities.

Looking forward

During the subsequent conference call, McBride elaborated on a number of strategic initiatives the company has planned for 2018, including a continued scale-up in sales and marketing with a focus on acquiring shipping customers, and expanding the core features and functionality of its shipping solutions. Stamps.com also plans to develop and launch new features in support of e-commerce customers, including inventory management and customer marketing tools. And finally, the company will hone its focus on expanding international solutions through international marketing.

In the meantime, Stamps.com reiterated its guidance for the full year of 2018 for revenue of $530 million to $560 million -- assuming growth in the shipping business in the low- to mid-20% range -- and for adjusted EBITDA of roughly $245 million to $265 million. But it also increased its outlook for non-GAAP net income per share to be in the range of $9.60 to $10.60, up from $8.80 to $9.80 previously and well above investors' expectations for earnings of $9.17 per share.

All things considered, this was a relatively straightforward beat-and-raise scenario from Stamps.com. And it was no surprise to see that the stock set a fresh all-time high on Friday in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Stamps.com. The Motley Fool has a disclosure policy.