Financial Performance Overview

Pitney Bowes, a leading provider of shipping and mailing solutions, has released its financial results for the first quarter of 2025. The company’s performance shows a mix of successes and challenges as it navigates the evolving ecommerce and mailing landscapes.

Revenue and Profit Trends

Pitney Bowes reported total revenue of $493 million in the first quarter of 2025, a 5% decrease compared to the same period in the prior year. This decline was driven by lower product revenue of $21 million, lower services revenue of $4 million, and lower financing and other revenue of $3 million.

Despite the revenue decline, the company was able to improve its profitability. Income from continuing operations increased 10% to $35 million, compared to $32 million in the prior year period. This was primarily due to a 10% decrease in cost of revenue, driven by lower costs of products, services, and financing.

The company’s effective tax rate also improved, benefiting from a $2 million tax credit related to the vesting of restricted stock. In contrast, the prior year period included a $1 million tax charge for the vesting of restricted stock.

Segment Performance

Pitney Bowes operates two main business segments: SendTech Solutions and Presort Services.

SendTech Solutions The SendTech Solutions segment, which provides physical and digital shipping and mailing solutions, saw revenue decline 9% to $298 million. This was due to a 18% decrease in product revenue, a 4% decrease in services revenue, and a 3% decrease in financing and other revenue.

The decline in product revenue was primarily driven by customers opting to extend leases of their existing equipment rather than purchase new equipment. Services revenue was impacted by the declining meter population, though this was partially offset by growth in shipping subscriptions.

Despite the revenue decline, the segment’s gross margin percentage improved from 66.6% to 68.9%, driven by cost-saving initiatives such as headcount reductions. Adjusted segment EBIT (earnings before interest and taxes) increased 1% to $95 million.

Presort Services The Presort Services segment, which provides mail sortation services, performed well in the quarter. Revenue increased 5% to $178 million, driven by pricing actions despite a 2% decline in total mail volumes.

Gross margin increased 17% to $73 million, and the gross margin percentage improved from 36.8% to 41.2%. This was due to the revenue increase, as well as lower transportation and labor costs. Adjusted segment EBIT increased 36% to $55 million.

Corporate Expenses and Restructuring

Corporate expenses, which include administrative functions not directly allocated to the business segments, decreased 24% to $32 million. This was primarily due to lower salary and variable compensation expenses, as the company continued to implement cost-saving initiatives.

In August 2024, Pitney Bowes entered into a series of transactions to facilitate an orderly wind-down of the majority of its Global Ecommerce reporting segment. As a result, certain revenues and expenses for the first quarter of 2025 are reported as discontinued operations.

Liquidity and Capital Resources

Pitney Bowes maintained a strong liquidity position, with $340 million in cash, cash equivalents, and short-term investments as of March 31, 2025. The company believes this, combined with cash generated from operations and its revolving credit facility, will be sufficient to fund its cash needs for the next 12 months.

During the quarter, the company redeemed the remaining balance of its Notes due March 2028 and entered into a new senior secured credit agreement. This provided a $265 million revolving credit facility, a $160 million term loan, and a $615 million term loan, which were used to repay existing debt and for general corporate purposes.

Pitney Bowes paid $11 million in dividends during the quarter and repurchased $15 million of its common stock. The company currently expects to continue paying a quarterly dividend, subject to approval by the Board of Directors.

Strengths and Weaknesses

Strengths

• Improved profitability despite revenue decline, driven by cost-saving initiatives
• Strong performance in the Presort Services segment, with revenue and margin growth
• Solid liquidity position and access to financing to support operations and strategic initiatives

Weaknesses

• Declining revenue in the SendTech Solutions segment, particularly in product sales, due to customer preference for lease extensions over new equipment purchases
• Ongoing challenges in the ecommerce business, leading to the wind-down of the Global Ecommerce segment

Outlook and Future Prospects

Looking ahead, Pitney Bowes expects continued challenges in its SendTech Solutions segment, with mailing-related revenues expected to decline due to lower meter populations and a higher mix of lease extensions versus new equipment sales and leases. However, the company anticipates growth in its shipping offerings, particularly its SaaS (software-as-a-service) solutions, to partially offset this decline.

In the Presort Services segment, Pitney Bowes expects revenue and margin improvements from the investments it has made in automation and technology to drive increased efficiencies and productivity.

The company is also closely monitoring the potential impact of tariffs on its operations and considering various mitigating actions.

Overall, Pitney Bowes appears to be navigating a period of transition, with its core SendTech Solutions business facing headwinds, but with opportunities for growth in its Presort Services segment and in its shipping and SaaS offerings. The company’s focus on cost management and liquidity preservation should help it weather the current challenges and position it for future success.