As the world's largest producer of postage meters, Pitney Bowes puts it stamp on managing mail. The company, nearly a century old, makes other mailing equipment and provides shipping and weighing systems and it offers online postage services, and financing for office equipment purchases. PB also develops software to create mailers and manage shipping, transportation, and logistics for government agencies and corporations. The company gets the majority of its revenue from small and medium-sized businesses (SMB). The company counts 1.5 million customers in 100 countries, but as mail volumes fall, so have PB's sales.
Pitney Bowes operates in three business segments: Small & Medium Business Solutions; Enterprise Business Solutions; and Digital Commerce Solutions. Small & Medium Business Solutions (mail finishing, mail creation, shipping equipment and software) includes North America Mailing and International Mailing. It accounts for more than 50% of the company's sales.
Enterprise Business Solutions, 25% of sales, includes Production Mail (the sale, support, and other professional services of the company's high-speed, production mail systems, sorting and production print equipment) and Presort Services. The company's smallest business segment, Digital Commerce Solutions, more than 20% of revenue, offers Software-as-a-Service-based and on-demand applications for mailing, customer engagement, geocoding and location intelligence software.
The company's primary manufacturing and assembly facility is located in Danbury, Connecticut and its principal research and development facilities are in Danbury, and Noida and Pune, India. In 2015 the US accounted for about 75% of the company's revenue.
Sales and Marketing
Pitney Bowes sells products and services to a variety of business, governmental, institutional, and other organizations though its sales force, direct mailings, outbound telemarketing, independent dealers and distributors, and over the Internet. The company counts 90% of companies listed in the Fortune 500 as customers.
In 2015 revenue decreased 6% to about $3.6 billion from 2014. which was mainly due to 26% decline in all its segments impacted by 3% due to foreign currency translation, 2% from the sale of Imagitas and 1% from the exit of non-core product lines in Norway and the transition in certain European countries to a dealer network in the third quarter of 2014 (Divested Businesses).
Pitney Bowes had decreases in all its segments (due, in part, to currency impact) in 2015. The SMB segment's revenue fell 9% on the continuing decline in installed meters and clients' move to lower cost machines with fewer features, and declines in international mailing operations. The Enterprise business saw sales drop 3% because of reduced service revenue in production mail.
The company's net income increased 22% to $408 million from 2014. It reduced costs in some areas and benefited from proceeds from the sale of the Imagitas unit.
Cash flow was $514 million in 2015, compared to $655 million in 2014.
Amid declining mail volumes at home and abroad, Pitney Bowes is working to stabilize its legacy mailing business and grow its digital commerce solutions unit. Pitney Bowes expects that its product mix will shift, and that a greater percentage of revenue will come from sales to the enterprise market. To that end, it's emphasizing more management products and services that help large companies handle both physical and digital communications. It's also cutting costs, selling noncore businesses to generate cash, and paying down debt (it erased $100 million of debt in 2014). Other initiatives include updating its sales practices, particularly for small and midsize customers.
In 2015, the company gained $310 million from sale of its Imagitas marketing services business to a company in that business, Red Ventures.
Mergers and Acquisitions
Pitney Bowes has made several acquisitions in 2016 and 2015 meant to diversity its offerings.
In 2015 the company acquired Borderfree, a provider of cross-border e-commerce tools and services platform, for $381 million. The purchase expanded Pitney Bowes' cross-border e-commerce capabilities.
The 2015 acquisition of Zip Mail Services brought the company a provider of intermediary services between customers and the US Postal Service. The price was $6 million.
With Real Time Content, another $6 million deal, will enable clients to provide personalized interactive video communications to their customers for $6 million.
In 2016 Pitney Bowes bought Enroute Systems, a cloud-based, software-as-a-service enterprise retail and fulfillment company, for $14 million. This deal adds to the capabilities of Pitney Bowes in global e-commerce offerings for companies in the retail supply chain.