8/18/2019 Texas A&M: Short Stamp.Com

1/12

NASDAQ: STMP

Short Investment Thesis

Price at Publication: $108. !Price Tar"et: $#

A%ril &' !01(

)oshua *im' +la,e Shir,' +ran-on Shir,' an- Thomason al-o

Te/as A M niversit2

8/18/2019 Texas A&M: Short Stamp.Com

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Pitch 3i"hli"hts

• 4verheate- e/%ectations on"ro5th can onl2 -isa%%oint

• n%rece-ente- entr2 b2ne5er' more innovativecom%etitors

• Tren-in" movement to internal

services an- -irect SPS -eals• +alance sheet an- metric

removal• 4ut-ate- %lat6orm an-

horren-ous customer revie5s

Company Data7! 5ee, ran"e9nter%rise alue ;M<Av". Dail2 volume ; mo.<Divi-en- 2iel-SI as a = o6 >oatNet cash?mar,et ca%

Price at Publication: $108. !

@urrent Price: $&&.!(Price Tar"et: $# .00

hort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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4verheate- ro5th 9/%ectations illDisa%%oint• !01 an- !017 to% line

"ro5th 5as booste- b2Shi%Station' Shi% or,s'an- 9n-icia acBuisitions

• Ma/e- out C@ 5ill brin"M A s%ree to a close

• 9/%ect STMP to revert tonormal Buarterl2 "ro5thrates o6 . =

• 9n-icia brin"s hi"her@4 S?Sales an-S A?Sales' aEectin" @

hort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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Ca%i-l2 Slo5in" ro5th Mas,e- b2 M A

• *e2 Ta,ea5a2: la""in" or"anic "ro5th into a-eclinin" en- mar,et 5ill no lon"er enFo2 M A boosts

hort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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n%rece-ente- 9ntr2 b2 Slee,@om%etitionDirect @om%etition: Multi @arrier

Solutions:

Ghort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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Movement to Internal Services an-SPS Deals

• 4nline retailersincreasin"l2 usin" inhouse services toconnect -irectl2 tocarriers

• 9mer"ence o6matchma,ers' such asShi%%o' 5ith o%tionalit2in carrier choice

• Movement o6 lar"eonline retailers to5ar-s%rovi-in" their o5nshi%%in" services

hort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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+alance Sheet: *e2 Issues

• Accounts Ceceivable u% 70=

6rom H1 to H17' no5accountin" 6or 0= o6 currentassets

• Ceal increase o6 $ M' o6 5hich9n-icia accounts 6or $(.7M

• oo-5ill ; #= total assets<overstate-

• DS4 u% !00= HoH• In-icates e/%losion o6 cre-it

sales 5ith a tri%lin" o6 timereBuire- to collect

hort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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Cemoval o6 Im%ortant +usiness Metrics@hurn Cate @ustomer AcBuisitio

@ost

• +rea,-o5n o6 %ercenta"e o6 businesscomin" 6rom ne5 customers versusol-

• au"es ho5 -e%en-ent the businessis on chasin" ne5 customers

• JSmall +usiness @ustomAcBuisition S%en-K also

• ACP maintaine- 5hile vrelate- metrics remove- no5 incom%letehort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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4ut-ate- Inter6ace an- AtrociousCevie5s

• 4ut-ate- inter6ace a%%ears to be a relic o6 the &0s• 4ne star out o6 Lve on J@onsumer AEairsK an- a 1.7 star ratin" on Hel%.com• Snea,2 %romo oEerin"s an- -i cult cancellation

hort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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Industry Outlook: A Decade of Decline and Counting

• SPS Lrst class mailin" volume

has -ecline- 6rom &0.#+ in!008 to (!. + in !017

• Internet saturation in the .S.rose 6rom = in !00! to 81=in !01!

• The rise o6 online billin" an-online communication me-iumsthreaten tra-itional mail

8/18/2019 Texas A&M: Short Stamp.Com

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Potential Cis,s

• $7#M -e6erre- ta/ asset can be use- to su%%ort the bottom

line in the 6uture

• Potential that s2ner"ies are reali e- sooner an- to a "reatere/tent than antici%ate-

• Potential 6or increase- %ricin" %o5er %ost 9n-icia acBuisit

• Potential that' a"ainst the current tren-' SPS chooses tobar an2 6urther com%anies 6rom enterin" com%etitive s%a

Ta/ Asset

Pricin" Po5er

S2ner"ies

SPS

Protectionhort: STMP

8/18/2019 Texas A&M: Short Stamp.Com

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+ase @ase aluationBase Case DCF

; i"ures in thousan-s<

!017 !01( !01# !018 !01&Cevenue !07 8& !88 1! ! 1!1 (!1 1 0787! 7 871ro5th 7= 1!.1= 1!.1= 1!.1= 1!.1= 1!.1=

@4 S & 7 ( !& #108# #&((& 8&!8# 10@4 S?Sales 0.!1 0.!! 0.!! 0.!! 0.!! 0.!

ross ProLt 1#00!! !! 88 !7!0 !8! ( 1(7(7 7 #8S A &87 1 & 17&0!& 1#( 18 1&7(88 !1#

S A?Sales 0. #&( 0.70 0. & 0. & 0. 8* e2 Assum%tions• 9/clu-e Q O17 revenue Fum% an- e/tra%olate Q O17. Then a-- 9n-icia on to%• +uil- out "ro5th 6or STMP an- 9n-icia separately • 9n-icia brin"s hi"her @4 S?Sales an- S A?Sales. S2ner"ies are reali e- over the course o6

2ears' not monthsUnlevered FCF 75 5!" #$ %$& "& '%( 5$ 5$' ($ ""7 7& '%$

Total @ash lo5s Per%etuit2 ro5th #7'7& !0' 01 1'8 ( 70'708 (0' # 1'(&8'1!

9nter%rise alue Per%etuit2 ro5th 1' 0 '17&

alue %er Share $(&.70

hort: STMP