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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
|--------|------------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

| Delaware                                                       |   | 77-0454966                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

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|   |  Large accelerated filer  o                                                        |  Accelerated filer  þ    |
|--------|----------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|
|   |  Non-accelerated filer  o (Do not check if a smaller reporting company)       |  Smaller reporting company  o |

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TABLE OF CONTENTS

|                              |                                                                                  | Page |
|-----------------------------------|---------------------------------------------------------------------------------------|------|
| PART I - FINANCIAL INFORMATION    | 2                                                                                     |
| ITEM 1.                           | FINANCIAL STATEMENTS                                                                  | 2    |
| ITEM 2.                           | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 14   |
| ITEM 3.                           | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            | 23   |
| ITEM 4.                           | CONTROLS AND PROCEDURES                                                               | 23   |
| PART II – OTHER INFORMATION | 24                                                                                    |
| ITEM 1.                           | LEGAL PROCEEDINGS                                                                     | 24   |
| ITEM 1A.                          | RISK FACTORS                                                                          | 24   |
| ITEM 2.                           | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                           | 24   |
| ITEM 3.                           | DEFAULTS UPON SENIOR SECURITIES                                                       | 25   |
| ITEM 4.                           | RESERVED                                                                              | 25   |
| ITEM 5.                           | OTHER INFORMATION                                                                     | 25   |
| ITEM 6.                           | EXHIBITS                                                                              | 25   |

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Table of Contents

ATEMENTS

|                                                                                                                                                                                                    |   | March 31,   |     |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|----------|--------|--------------|--------|
|                                                                                                                                                                                                    |   | 2011        |     |   | 2010         |   |
|                                                                                                                                                                                                    |   | (unaudited) |     |   |         |   |
| Assets                                                                                                                                                                                                  |   |        |     |   |         |   |
| Current assets:                                                                                                                                                                                         |   |        |     |   |         |   |
| Cash and cash equivalents                                                                                                                                                                               |   | $           | 10,160   |   |         | $      | 8,071 |   |
| Short-term investments                                                                                                                                                                                  |   |        | 12,291   |   |         |   | 12,291 |   |
| Accounts receivable, net                                                                                                                                                                                |   |        | 6,180    |   |         |   | 4,868 |   |
| Other current assets                                                                                                                                                                                    |   |        | 4,367    |   |         |   | 4,015 |   |
| Total current assets                                                                                                                                                                                    |   |        | 32,998   |   |         |   | 29,245 |   |
| Property and equipment, net                                                                                                                                                                             |   |        | 1,624    |   |         |   | 1,694 |   |
| Intangible assets, net                                                                                                                                                                                  |   |        | 873      |   |         |   | 885 |   |
| Long-term investments                                                                                                                                                                                   |   |        | 13,595   |   |         |   | 14,937 |   |
| Deferred income taxes.                                                                                                                                                                                  |   |        | 7,650    |   |         |   | 7,650 |   |
| Other assets                                                                                                                                                                                            |   |        | 3,092    |   |         |   | 3,031 |   |
| Total assets                                                                                                                                                                                            |   | $           | 59,832   |   |         | $      | 57,442 |   |
|                                                                                                                                                                                                    |   |        |     |   |         |   |   |   |
| Liabilities and Stockholders’ Equity                                                                                                                                                              |   |        |     |   |         |   |   |   |
| Current liabilities:                                                                                                                                                                                    |   |        |     |   |         |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                   |   | $           | 9,447    |   |         | $      | 9,011 |   |
| Deferred revenue                                                                                                                                                                                        |   |        | 4,335    |   |         |   | 4,193 |   |
| Total current liabilities                                                                                                                                                                               |   |        | 13,782   |   |         |   | 13,204 |   |
| Commitments and contingencies                                                                                                                                                                           |   |        |     |   |         |   |   |   |
| Stockholders’ equity:                                                                                                                                                                             |   |        |     |   |         |   |   |   |
| Common stock, $.001 par value, Authorized shares: 47,500 in 2011 and 2010, Issued shares: 24,834 in 2011 and 24,757 in 2010, Outstanding shares: 14,392 in 2011 and 14,490 in 2010  |   |        | 47  |   |         |   | 47  |   |
| Additional paid-in capital                                                                                                                                                                              |   |        | 609,935  |   |         |   | 608,522 |   |
| Accumulated deficit                                                                                                                                                                                     |   |        | (443,929 | )      |         |   | (446,603 | ) |
| Treasury stock, at cost, 10,442  shares in 2011 and 10,267 shares in 2010                                                                                                                          |   |        | (120,343 | )      |         |   | (118,151 | ) |
| Accumulated other comprehensive income                                                                                                                                                                  |   |        | 340      |   |         |   | 423 |   |
| Total stockholders’ equity                                                                                                                                                                        |   |        | 46,050   |   |         |   | 44,238 |   |
| Total liabilities and stockholders’ equity                                                                                                                                                        |   | $           | 59,832   |   |         | $      | 57,442 |   |

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|                                |   | Three Months EndedMarch 31, |   |
|-------------------------------------|--------|-----------------------------|--------|
|                                |   | 2011                        |   |   | 2010 |   |
| Revenues:                           |   |                        |   |   |   |   |
| Service                             |   | $                           | 17,237 |   |   | $ | 16,018 |   |
| Product                             |   |                        | 3,365  |   |   |   | 3,073 |   |
| Insurance                           |   |                        | 833    |   |   |   | 394 |   |
| PhotoStamps                         |   |                        | 1,381  |   |   |   | 1,501 |   |
| Other                               |   |                        | 1      |   |   |   | 3 |   |
| Total revenues                      |   |                        | 22,817 |   |   |   | 20,989 |   |
| Cost of revenues:                   |   |                        |   |   |   |   |   |   |
| Service                             |   |                        | 3,580  |   |   |   | 3,483 |   |
| Product                             |   |                        | 1,292  |   |   |   | 1,139 |   |
| Insurance                           |   |                        | 262    |   |   |   | 114 |   |
| PhotoStamps                         |   |                        | 1,090  |   |   |   | 1,078 |   |
| Total cost of revenues              |   |                        | 6,224  |   |   |   | 5,814 |   |
| Gross profit                        |   |                        | 16,593 |   |   |   | 15,175 |   |
| Operating expenses:                 |   |                        |   |   |   |   |   |   |
| Sales and marketing                 |   |                        | 8,276  |   |   |   | 7,984 |   |
| Research and development            |   |                        | 2,273  |   |   |   | 2,170 |   |
| General and administrative          |   |                        | 3,460  |   |   |   | 2,967 |   |
| Total operating expenses            |   |                        | 14,009 |   |   |   | 13,121 |   |
| Income from operations              |   |                        | 2,584  |   |   |   | 2,054 |   |
|                                |   |                        |   |   |   |   |   |   |
| Interest and other income, net      |   |                        | 156    |   |   |   | 171 |   |
| Income before income taxes          |   |                        | 2,740  |   |   |   | 2,225 |   |
| Income tax expense                  |   |                        | 65     |   |   |   | 80 |   |
| Net income                          |   | $                           | 2,675  |   |   | $ | 2,145 |   |
| Net income per share                |   |                        |   |   |   |   |   |   |
| Basic                               |   | $                           | 0.18   |   |   | $ | 0.14 |   |
| Diluted                             |   | $                           | 0.18   |   |   | $ | 0.14 |   |
| Weighted average shares outstanding |   |                        |   |   |   |   |   |   |
| Basic                               |   |                        | 14,484 |   |   |   | 15,142 |   |
| Diluted                             |   |                        | 14,613 |   |   |   | 15,272 |   |

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|                                                                              |   | Three Months EndedMarch 31, |    |
|-----------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                              |   | 2011                        |    |   | 2010 |   |
| Operating activities:                                                             |   |                        |    |   |   |   |
| Net income                                                                        |   | $                           | 2,675   |   |   | $ | 2,145 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                        |    |   |   |   |   |   |
| Depreciation and amortization                                                     |   |                        | 231     |   |   |   | 250 |   |
| Stock-based compensation expense                                                  |   |                        | 796     |   |   |   | 705 |   |
| Changes in operating assets and liabilities:                                      |   |                        |    |   |   |   |   |   |
| Accounts receivable                                                               |   |                        | (1,312  | ) |   |   | 247 |   |
| Other current assets                                                              |   |                        | (352    | ) |   |   | 230 |   |
| Other assets                                                                      |   |                        | (61     | ) |   |   | 350 |   |
| Deferred revenue                                                                  |   |                        | 142     |   |   |   | 18 |   |
| Accounts payable and accrued expenses                                             |   |                        | 436     |   |   |   | 140 |   |
| Net cash provided by operating activities                                         |   |                        | 2,555   |   |   |   | 4,085 |   |
| Investing activities:                                                             |   |                        |    |   |   |   |   |   |
| Sale of short-term investments                                                    |   |                        | — |   |   |   | 710 |   |
| Purchase of short-term investments                                                |   |                        | — |   |   |   | (3,599 | ) |
| Sale of long-term investments                                                     |   |                        | 1,258   |   |   |   | 3,526 |   |
| Purchase of long-term investments                                                 |   |                        | — |   |   |   | (4,086 | ) |
| Release of restricted cash                                                        |   |                        | — |   |   |   | 554 |   |
|     Purchase of property and equipment                        |   |                        | (149    | ) |   |   | (150 | ) |
| Net cash used in investing activities                                             |   |                        | 1,109   |   |   |   | (3,045 | ) |
| Financing activities:                                                             |   |                        |    |   |   |   |   |   |
| Proceeds from exercise of stock options                                           |   |                        | 204     |   |   |   | 35 |   |
| Issuance of common stock under ESPP                                               |   |                        | 413     |   |   |   | 169 |   |
| Repurchase of common stock                                                        |   |                        | (2,192  | ) |   |   | (12,815 | ) |
| Net cash used in financing activities                                             |   |                        | (1,575  | ) |   |   | (12,611 | ) |
| Net increase (decrease) in cash and cash equivalents                         |   |                        | 2,089   |   |   |   | (11,571 | ) |
| Cash and cash equivalents at beginning of period                                  |   |                        | 8,071   |   |   |   | 45,011 |   |
| Cash and cash equivalents at end of period                                        |   | $                           | 10,160  |   |   | $ | 33,440 |   |

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| 1. | Summary of Significant Accounting Policies |
|----|--------------------------------------------|

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| 2. | Legal Proceedings |
|----|-------------------|

| 3. | Net Income per Share |
|----|----------------------|

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|                                       | Three Months EndedMarch 31, |   |
|--------------------------------------------|-----------------------------|--------|
|                                       | 2011                        |   | 2010 |   |
| Net income                                 | $                           | 2,675  |   | $ | 2,145 |   |
|                                       |                        |   |   |   |   |   |
| Basic - weighted average common shares     |                        | 14,484 |   |   | 15,142 |   |
| Diluted effect of common stock equivalents |                        | 129    |   |   | 130 |   |
| Diluted - weighted average common shares   |                        | 14,613 |   |   | 15,272 |   |
|                                       |                        |   |   |   |   |   |
| Earnings per share:                        |                        |   |   |   |   |   |
| Basic                                      | $                           | 0.18   |   | $ | 0.14 |   |
| Diluted                                    | $                           | 0.18   |   | $ | 0.14 |   |

|                              | Three Months EndedMarch 31, |   |
|-----------------------------------|-----------------------------|--------|
|                              | 2011                        |   | 2010 |   |
| Anti-dilutive stock option shares |                        | 1,924  |   |   | 2,433 |   |

| 4. | Stock-Based Employee Compensation |
|----|-----------------------------------|

|                                          | Three Months EndedMarch 31, |   |
|-----------------------------------------------|-----------------------------|--------|
|                                          | 2011                        |   | 2010 |   |
| Stock-based compensation expense relating to: |                        |   |   |   |
| Employee and director stock options           | $                           | 643    |   | $ | 672 |   |
| Employee stock purchases                      |                        | 153    |   |   | 33 |   |
| Total stock-based compensation expense        | $                           | 796    |   | $ | 705 |   |
|                                          |                        |   |   |   |   |   |
|                                          |                        |   |   |   |   |   |
| Stock-based compensation expense relating to: |                        |   |   |   |   |   |
| Cost of revenues                              | $                           | 67     |   | $ | 63 |   |
| Sales and marketing                           |                        | 195    |   |   | 185 |   |
| Research and development                      |                        | 188    |   |   | 151 |   |
| General and administrative                    |                        | 346    |   |   | 306 |   |
| Total stock-based compensation expense        | $                           | 796    |   | $ | 705 |   |
|                                          |                        |   |   |   |   |   |

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|                     | Three Months EndedMarch 31, |
|--------------------------|-----------------------------|
|                     | 2011                        |   | 2010 |
| Expected dividend yield  | —                     |   | N/A |
| Risk-free interest rate  | 2.1%                        |   | N/A |
| Expected volatility      | 47.2%                       |   | N/A |
| Expected life (in years) | 4.5                         |   | N/A |
| Expected forfeiture rate | 7.0%                        |   | N/A |

| 5. | Intangible Assets |
|----|-------------------|

|                                  |   | Three Months EndedMarch 31, |   |
|---------------------------------------|--------|-----------------------------|--------|
|                                  |   | 2011                        |   |   | 2010 |   |
| Net income                            |   | $                           | 2,675  |   |   | $ | 2,145 |   |
| Unrealized gain (loss) on investments |   |                        | (83    | ) |   |   | 308 |   |
| Comprehensive income                  |   | $                           | 2,592  |   |   | $ | 2,453 |   |

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| 7. | Income Taxes |
|----|--------------|

| 8. | Fair Value Measurements |
|----|-------------------------|

| Level 1 - | Valuations based on unadjusted quoted prices for identical assets in an active market |
|-----------|---------------------------------------------------------------------------------------|

| Level 2 -  | Valuations based on quoted prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with similar attributes in active markets |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Level 3 -  | Valuations based on inputs that are unobservable and involve management judgment and our own assumptions about market participants and pricing |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   |           |   |   | Fair Value Measurement at Reporting Date Using                     |   |
|------------------------------------|--------|----------------|--------|--------|--------------------------------------------------------------------|--------|
| Description                        |   | March 31, 2011 |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
|                               |   |           |   |   |                                                               |   |   |   |   |   |   |   |
| Cash equivalents                   |   | $              | 10,160 |   |                                                               | $      | 10,160 |   |   | $ | — |   |   | $ | — |   |
| Available-for-sale debt securities |   |           |   |   |                                                               |   |   |   |   |   |   |   |   |   |   |   |
| Asset-backed securities            |   |           | 1,876  |   |                                                               |   | — |   |   |   | 1,876 |   |   |   | — |   |
| Corporate bonds                    |   |           | 22,983 |   |                                                               |   |   |   |   |   | 22,983 |   |   |   |   |   |
| Government Bonds                   |   |           | 1,027  |   |                                                               |   | — |   |   |   | 1,027 |   |   |   | — |   |
| Total                              |   | $              | 36,046 |   |                                                               | $      | 10,160 |   |   | $ | 25,886 |   |   | $ | — |   |

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| 9. | Cash Equivalents and Investments |
|----|----------------------------------|

|              |   | Three Months EndedMarch 31, |    |
|-------------------|--------|-----------------------------|---------|
|              |   | 2011                        |    |   | 2010 |   |
| Realized gain     |   | $                           | 1       |   |   | $ | 2 |   |
| Realized loss     |   |                        | — |   |   |   | — |   |
| Net realized gain |   | $                           | 1       |   |   | $ | 2 |   |

|   | · | How much fair value has declined below amortized cost |
|--------|--------|-------------------------------------------------------|

|   | · | The financial condition of the issuers |
|--------|--------|----------------------------------------|

|   | · | Significant rating agency changes on the issuer |
|--------|--------|-------------------------------------------------|

|   | · | Our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

|                                        |   | March 31, 2011 |   |
|---------------------------------------------|--------|----------------|--------|
|                                        |   | Cost or        |   |   | Gross |   |   | Gross |   |   |   |   |
|                                        |   | Amortized      |   |   | Unrealized |   |   | Unrealized |   |   | Estimated |   |
|                                        |   | Cost           |   |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Cash and cash equivalents:                  |   |           |   |   |   |   |   |   |   |   |   |   |
| Cash                                        |   | $              | 8,561  |   |   | $ | - |   |   | $ | - |   |   | $ | 8,561 |   |
| Money market                                |   |           | 1,599  |   |   |   | - |   |   |   | - |   |   |   | 1,599 |   |
| Cash and cash equivalents                   |   |           | 10,160 |   |   |   | - |   |   |   | - |   |   |   | 10,160 |   |
| Short-term investments:                     |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate notes and bonds                   |   |           | 12,176 |   |   |   | 115 |   |   |   | - |   |   |   | 12,291 |   |
| Short-term investments                      |   |           | 12,176 |   |   |   | 115 |   |   |   | - |   |   |   | 12,291 |   |
| Long-term investments:                      |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds and asset backed securities |   |           | 12,357 |   |   |   | 274 |   |   |   | (63 | ) |   |   | 12,568 |   |
| U.S. government and agency securities       |   |           | 1,013  |   |   |   | 14 |   |   |   | - |   |   |   | 1,027 |   |
| Long-term investments                       |   |           | 13,370 |   |   |   | 288 |   |   |   | (63 | ) |   |   | 13,595 |   |
| Cash, cash equivalents and investments      |   | $              | 35,706 |   |   |   | 403 |   |   |   | (63 | ) |   | $ | 36,046 |   |

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|                                        |   | December 31, 2010 |   |
|---------------------------------------------|--------|-------------------|--------|
|                                        |   | Cost or           |   |   | Gross |   |   | Gross |   |   |   |   |
|                                        |   | Amortized         |   |   | Unrealized |   |   | Unrealized |   |   | Estimated |   |
|                                        |   | Cost              |   |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Cash and cash equivalents:                  |   |              |   |   |   |   |   |   |   |   |   |   |
| Cash                                        |   | $                 | 7,633  |   |   | $ | - |   |   | $ | - |   |   | $ | 7,633 |   |
| Money market                                |   |              | 438    |   |   |   | - |   |   |   | - |   |   |   | 438 |   |
| Cash and cash equivalents                   |   |              | 8,071  |   |   |   | - |   |   |   | - |   |   |   | 8,071 |   |
| Short-term investments:                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate notes and bonds                   |   |              | 12,162 |   |   |   | 136 |   |   |   | (7 | ) |   |   | 12,291 |   |
| Short-term investments                      |   |              | 12,162 |   |   |   | 136 |   |   |   | (7 | ) |   |   | 12,291 |   |
| Long-term investments:                      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate bonds and asset backed securities |   |              | 13,634 |   |   |   | 309 |   |   |   | (33 | ) |   |   | 13,910 |   |
| U.S. government and agency securities       |   |              | 1,009  |   |   |   | 18 |   |   |   | - |   |   |   | 1,027 |   |
| Long-term investments                       |   |              | 14,643 |   |   |   | 327 |   |   |   | (33 | ) |   |   | 14,937 |   |
| Cash, cash equivalents and investments      |   | $                 | 34,876 |   |   |   | 463 |   |   |   | (40 | ) |   | $ | 35,299 |   |

|                                   |   | AmortizedCost |   |   | EstimatedFair Value |   |
|----------------------------------------|--------|---------------|--------|--------|---------------------|--------|
| Due within one year                    |   | $             | 12,176 |   |                | $      | 12,291 |   |
| Due after one year through five years  |   |          | 13,340 |   |                |   | 13,569 |   |
| Due after five years through ten years |   |          | 30     |   |                |   | 26 |   |
| Total                                  |   | $             | 25,546 |   |                | $      | 25,886 |   |

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CONDITION AND 

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| Ÿ | PC Postage Services.   Our USPS-approved PC Postage service enables users to print “electronic stamps” directly onto envelopes, plain paper, or labels using only a standard personal computer, printer and Internet connection. Our service currently supports a variety of USPS and international mail classes. Customers can also add USPS Special Services such as Delivery Confirmation TM , Signature Confirmation TM , Registered Mail, Certified Mail, Insured Mail, Return Receipt, Collect on Delivery and Restricted Delivery to their mail pieces. After installing our software and completing the registration process, customers can purchase and print postage 24 hours a day, seven days a week. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| · | PhotoStamps ®.  In May 2009, we successfully completed the market test of our PhotoStamps product. PhotoStamps is a patented form of postage that allows consumers to turn digital photos, designs or images into valid US postage. With this product, individuals or businesses can create customized US postage using pictures of their children, pets, vacations, celebrations, business logos and more. PhotoStamps can be used as regular postage to send letters, postcards or packages. The product is available via our separately-marketed website at www.photostamps.com. Customers upload a digital photograph or image file, customize the look and feel by choosing a border color to complement the photo, select the value of postage, and place the order online. Each sheet includes 20 individual PhotoStamps, and orders arrive via US Mail in a few business days. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Mailing & Shipping Supplies Store.   Our Mailing & Shipping Supplies Store (our “Supplies Store”) is available to our customers from within our PC Postage software and sells NetStamps labels, shipping labels, other mailing labels, dedicated postage printers, scales, and other mailing and shipping-focused office supplies. Our Supplies Store features a store catalog, messaging regarding our free or discounted shipping promotions, cross-selling product recommendation during the checkout process, product search capabilities, and same day shipping of orders with expedited and rush shipping options. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Branded Insurance.  We offer Stamps.com branded insurance to our customers so that they may insure their mail or packages in a fully integrated, online process that eliminates any trips to the post office or the need to complete any special forms. Our branded insurance is provided in partnership with Parcel Insurance Plan and is underwritten by Fireman's Fund. We also offer official USPS insurance alongside our branded insurance product. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                |   | Three months ended March 31, |   |
|---------------------|--------|------------------------------|--------|
|                |   | 2011                         |   |   | 2010 |   |   | % Change |   |
| Service revenue     |   | $                            | 17,237 |   |   | $ | 16,018 |   |   |   | 8 | % |
| Product revenue     |   |                         | 3,365  |   |   |   | 3,073 |   |   |   | 10 | % |
| Insurance revenue   |   |                         | 833    |   |   |   | 394 |   |   |   | 111 | % |
| PC postage revenue  |   | $                            | 21,435 |   |   | $ | 19,485 |   |   |   | 10 | % |
|                |   |                         |   |   |   |   |   |   |   |   |   |   |
| PhotoStamps revenue |   | $                            | 1,381  |   |   | $ | 1,501 |   |   |   | (8 | %) |
| Other revenue       |   |                         | 1      |   |   |   | 3 |   |   |   | (67 | %) |
| Total revenue       |   | $                            | 22,817 |   |   | $ | 20,989 |   |   |   | 9 | % |

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|                           |   | Three months ended March 31, |   |
|--------------------------------|--------|------------------------------|--------|
|                           |   | 2011                         |   |   | 2010 |   |   | % Change |   |
| Non-enhanced promotion revenue |   | $                            | 20,630 |   |   | $ | 18,157 |   |   |   | 14 | % |
| Enhanced promotion revenue     |   |                         | 805    |   |   |   | 1,328 |   |   |   | (39 | %) |
| PC postage revenue             |   | $                            | 21,435 |   |   | $ | 19,485 |   |   |   | 10 | % |

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Three Months EndedMarch 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | 2011                        |   |   | 2010 |   |
| Total Revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                        |   |   |   |   |
|    Service                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        | 75.5   | % |   |   | 76.3 | % |
| Product                                                                                                                                                                           |   |                        | 14.7   | % |   |   | 14.6 | % |
| Insurance                                                                                                                                                                         |   |                        | 3.7    | % |   |   | 1.9 | % |
| PhotoStamps                                                                                                                                                                       |   |                        | 6.1    | % |   |   | 7.2 | % |
| Other                                                                                                                                                                             |   |                        | 0.0    | % |   |   | 0.0 | % |
| Total revenues                                                                                                                                                                                        |   |                        | 100.0  | % |   |   | 100.0 | % |
| Cost of revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                        |   |   |   |   |   |   |
|    Service                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        | 15.7   | % |   |   | 16.6 | % |
| Product                                                                                                                                                                           |   |                        | 5.7    | % |   |   | 5.4 | % |
| Insurance                                                                                                                                                                         |   |                        | 1.1    | % |   |   | 0.5 | % |
| PhotoStamps                                                                                                                                                                       |   |                        | 4.8    | % |   |   | 5.1 | % |
|         Total cost of revenues                                                                                             |   |                        | 27.3   | % |   |   | 27.7 | % |
|     Gross profit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        | 72.7   | % |   |   | 72 .3 | % |
| Operating expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        |   |   |   |   |   |   |
| Sales and marketing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                        | 36.3   | % |   |   | 38.0 | % |
| Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                        | 10.0   | % |   |   | 10.3 | % |
| General and administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                        | 15.2   | % |   |   | 14.1 | % |
| Total operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                        | 61.4   | % |   |   | 62.5 | % |
| Income from operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                        | 11.3   | % |   |   | 9.8 | % |
| Interest income and other income, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                        | 0.7    | % |   |   | 0.8 | % |
| Income before income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                        | 12.0   | % |   |   | 10.6 | % |
| Income tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                        | 0.3    | % |   |   | 0.4 | % |
| Net income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |                        | 11.7   | % |   |   | 10.2 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                        |   |   |   |   |   |   |

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| · | We expect to continue to increase customer acquisition spending on our PC Postage non-enhanced promotion channels by 10% - 15% in 2011 compared to 2010.  We will continue to monitor our customer metrics and the state of the economy throughout the year and adjust our level of spending accordingly. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We expect to see double digit revenue growth in PC Postage revenue excluding the enhanced promotion channel for 2011 compared to 2010. We expect this growth to be driven by both increases in the number of paying customers and increases in average revenue per customer. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We expect to continue to reduce PC Postage marketing spending in the enhanced promotion channel and as a result expect that PC Postage revenue for customers acquired through this channel will continue to decrease in 2011 compared to 2010 and consistent with the declining trends we saw in 2010 and in the first quarter of 2011. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | We believe that the small business economic environment has improved over the past year but it still continues to negatively impact our business and metrics relative to pre-recession historical levels. We believe the improvements in our customer metrics in the fourth quarter of 2010 and the first quarter of 2011 are partially attributable to improvements in the economy. We are currently expecting a neutral to improving small business economic environment in 2011; however, any unexpected deterioration from current levels could negatively impact our results, including our PC Postage customer metrics and revenue. |
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| · | We expect PhotoStamps revenue and marketing spending to decrease in 2011 compared with 2010, although this will depend on many factors, including our assessment of the state of the economy in the fourth quarter (which is traditionally our seasonally strongest quarter) of 2011. We believe macro-economic factors are still negatively impacting our PhotoStamps revenue through reduced customer purchases of our product. |
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| · | We expect research and development expenses to be modestly higher in 2011 primarily related to expected increased headcount costs. |
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| · | We expect General and Administrative expenses to be higher in 2011 driven by higher legal costs primarily resulting from our litigation with Endicia, which continues to be a material expense for us.  However, the amount and timing of our legal expenses are volatile, so our ability to predict the resulting increase or decrease in general administrative expense is limited. |
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| · | We expect interest income and other income, net to decrease due to lower invested cash balances and continued lower interest rates. |
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|---------|------------------------------------------------------------|

| ITEM 4. | CONTROLS AND PROCEDURES |
|---------|-------------------------|

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| ITEM 1. | LEGAL PROCEEDINGS |
|---------|-------------------|

| ITEM 1A. | RISK FACTORS |
|----------|--------------|

| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
|---------|-------------------------------------------------------------|

| Period                                                        | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (in 000’s) |
|---------------------------------------------------------------|----------------------------------|------------------------------|----------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|
|   January 1, 2011 –    January 31, 2011  | 25,023                           | $11.02                       | 25,023 (1)                                                                       | $20,252                                                                                                   |
|   February 1, 2011 –   February 28, 2011 | —                          | —                      | —                                                                          | $11,750                                                                                                   |
|   March 1, 2011 –   March 31, 2011       | 150,320                          | $12.77                       | 150,320 (1)                                                                      | $9,800                                                                                                    |

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| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
|---------|---------------------------------|

| ITEM 4. | RESERVED |
|---------|----------|

| ITEM 5. | OTHER INFORMATION |
|---------|-------------------|

| ITEM 6. | EXHIBITS |
|---------|----------|

| 31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|--------------------------------------------------------------------------|

| 31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------|--------------------------------------------------------------------------|

| 32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
|------|-------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. |
|------|-------------------------------------------------------------------------------------------------------------------------|

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|         | STAMPS.COM INC.    |                    |
|--------------|--------------------|-------------------------|
|         |  (Registrant) |                    |
|         |               |                    |   |
| May 10, 2011 | By:                | /s/KEN MCBRIDE          |   |
|         |               | Ken McBride             |   |
|         |               | Chief Executive Officer |   |
|         |               |                    |   |

| May 10, 2011 | By:    | /s/ KYLE HUEBNER   |   |
|--------------|--------|-------------------------|--------|
|         |   | Kyle Huebner            |   |
|         |   | Chief Financial Officer |   |
|         |   |                    |   |

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