Inc. (STMP) announced stronger-than-expected third-quarter results on Wednesday after the market closed, driven by the continued outperformance of its core mailing and shipping segment. The online postage and shipping solutions specialist also raised its full-year guidance, albeit partly to include contributions from recently completed acquisitions.

With shares down more than 9% as of this writing on Thursday, let's take a closer look at what drove in this seasonally slow quarter and what investors should be watching as it heads into the lucrative holiday season.

Bird's-eye view of a stack of envelopes on top of a cardboard shipping box.

IMAGE SOURCE: GETTY IMAGES. results: The raw numbers


Q3 2018

Q3 2017

Year-Over-Year Growth


$143.5 million

$115.1 million


GAAP net income

$33.4 million

$46.2 million


GAAP net income per diluted share





What happened with this quarter?

  • Revenue growth was driven by a 28% increase in mailing and shipping revenue, to $136.5 million, which more than offset a 19% decline from the smaller customized postage segment, to $7 million.
  • On an adjusted (non-GAAP) basis -- which excludes items like stock-based compensation and acquisition costs -- net income was $52.6 million, or $2.76 per share, up 3% from $2.68 per share in the same year-ago period.
  • We don't usually pay close attention to Wall Street's demands. But for perspective, both the top and bottom lines exceeded analysts' consensus estimates for adjusted earnings of $2.38 per share on revenue of $132.3 million.
  • Adjusted EBITDA increased 8% to $61 million.
  • Paid customers declined slightly year over year to 732,000, driven primarily by the company's strategic shift toward acquiring fewer customers who each have significantly higher lifetime values. To be sure, average monthly revenue per paid customer increased 29% year over year to $62.14.
  • Average monthly churn also remained stable at roughly 3%.
  • Repurchased roughly 49,000 shares for $12 million this quarter. The company's board of directors also approved a new six-month, $90 million share repurchase plan set to take effect next week.
  • On Aug. 15, 2018, completed its previously announced acquisition of supply-chain software-as-a-service company MetaPack.

What management had to say chairman and CEO Ken McBride stated:

We are very pleased with our third-quarter financial performance and with the successful closing of our acquisition of MetaPack. We achieved strong organic performance in our financial metrics in a traditionally seasonally slower period. Our shipping business continues to drive our solid results through contributions from each of our shipping subsidiaries. We believe we are well positioned as we enter the seasonally strong fourth quarter and we remain very excited about our long-term business opportunities.

Looking forward raised its full-fiscal-year 2018 outlook to call for revenue of $550 million to $580 million (up from $530 million to $560 million previously). The company further reiterated its previous outlook for 2018 adjusted EBITDA of $245 million to $265 million but also increased its guidance for adjusted net income per share to be in the range of $10.60 to $11.60 (up from $10.15 to $11.15 before).

Keep in mind, however, that this guidance now includes contributions from MetaPack from the acquisition's Aug. 15 close through the end of the year. And most analysts watching the stock were already modeling full-year revenue near the high end of's new expected range. 

Still, there's always the chance is looking to extend its streak of underpromising and overdelivering. But even in light of its quarterly beat in this seasonally sluggish period, it's no surprise to see the stock pulling back in the meantime.