Exhibit 99.1
Constant Contact Announces Second Quarter 2011 Financial Results
Quarterly revenue increases 24% year-over-year
Adjusted EBITDA increases 110% year-over-year
Adjusted EBITDA increases 110% year-over-year
WALTHAM,
MA — July 28, 2011 — Constant Contact ®, Inc. (Nasdaq: CTCT), the trusted marketing
advisor to more than 450,000 small organizations worldwide, today announced its financial results
for the second quarter ended June 30, 2011.
“During the second quarter, Constant Contact delivered solid revenue growth and significantly
expanded EBITDA margins as we executed through the beginning of our slower seasonal months and a
choppy economic recovery,” said Gail Goodman, Chief Executive Officer of Constant Contact.
Goodman added, “We are increasingly optimistic about Constant Contact’s long-term market position.
Both internal and external surveys of the small business community show continuing high interest
levels for email marketing and rapidly growing demand for social media marketing solutions. We
continue to extend the capabilities of our full product suite to take advantage of these trends and
deliver the first engagement marketing platform designed for small businesses. We are excited by
the many near-term and intermediate-term growth drivers, including our event marketing solution,
expanding more aggressively into international markets and our soon to be released social media
campaigns product.”
Second Quarter 2011 Financial Metrics
| • | Revenue for the second quarter, ended June 30, 2011, was $52.5 million, an increase of 24% compared to revenue of $42.5 million for the comparable period in 2010. | ||
| • | Gross margin in the second quarter was 71.0%, compared to 70.1% for the comparable period in 2010. | ||
| • | GAAP net income was $1.3 million for the second quarter of 2011, compared to a GAAP net loss of $0.9 million for the comparable period in 2010. | ||
| • | GAAP net income per share was $0.04 for the second quarter of 2011, based on diluted weighted average shares outstanding of 30.8 million, compared to a GAAP net loss per share of $0.03 for the comparable period in 2010. | ||
| • | Adjusted EBITDA for the second quarter of 2011 was $8.0 million, an increase of 110% compared to adjusted EBITDA of $3.8 million for the comparable period in 2010. | ||
| • | Adjusted EBITDA margin for the second quarter of 2011 was 15.3%, compared to 9.0% for the comparable period in 2010. | ||
| • | Non-GAAP net income per diluted share was $0.15 for the second quarter of 2011, based on diluted weighted average shares outstanding of 30.8 million, compared to $0.04 for the comparable period in 2010. | ||
| • | Cash flow from operations was $8.4 million for the three months ended June 30, 2011, compared to $4.8 million for the comparable period in 2010; capital expenditures for the quarter were $4.5 million compared to $4.1 million for the comparable period in 2010; resulting in free cash flow of $3.9 million for the three months ended June 30, 2011 compared to $0.7 million for the comparable period in 2010. | ||
| • | The company had $120 million in cash, cash equivalents and short-term marketable securities at June 30, 2011, compared to $114 million at March 31, 2011. |
Operating Metrics
| • | Added 45,000 gross new unique paying customers in the second quarter, consistent with the second quarter of 2010. (*) |
| • | Ended the second quarter with 470,000 unique paying customers, an increase from 455,000 unique paying customers at the end of the first quarter of 2011 and 395,000 unique paying customers at the end of the second quarter of 2010. (*) | ||
| • | Average monthly revenue per unique customer, ARPU, for the second quarter was $37.86, up from $37.46 in the first quarter of 2011, and up from $36.76 in the comparable period in 2010. | ||
| • | Products per customer increased during the first six months of the year and ended the quarter at 1.73 products per customer as compared to 1.68 for the comparable period in 2010. | ||
| • | Monthly retention rate of unique paying customers remained in its historical range of 97.8%, plus or minus 0.5%, for each month during the second quarter. |
| (*) | Figures are rounded to nearest 5,000. |
Other Recent Highlights
| • | Released a survey that showed 73% of small businesses report using social media to market their business, and of those not currently using social media marketing, 62% expect to begin using social media marketing in the coming year. The survey also found that 91% of small businesses use email marketing, 95% use website marketing, 77% use print advertising, 69% use online advertising and 53% use event marketing. | ||
| • | Launched the social media Quickstarter (www.socialmediaquickstarter.com), a completely free step-by-step guide that offers short tutorials for getting up and running and improving success with the most popular social media networks. | ||
| • | Launched Simple ShareTM, which gives small businesses and nonprofits the opportunity to share more of their content by creating it once and then spreading it across social networks simply, easily and effectively. | ||
| • | Announced a new SMS feature, Text-to-Join, which allows customers and prospects to sign
up for subscriber lists right from their mobile phones and enables small organizations to
capture contact info when their customers or donors are most engaged. More information on
the Text-to-Join feature is available here: http://supportconstantcontact.blogspot.com/2011/06/building-your-email-list-with-text-to.html |
||
| • | Launched a free mobile application for iPhone® and Android® mobile devices, Event Check-In, that allows event hosts to eliminate paper registration sheets and get out from behind a registration table by giving them access to up-to-date registrant information right from a smartphone. | ||
| • | Recent awards include a Stevie® Award for Best Overall Company of the year in the category of software companies with fewer than 2,500 employees and a Silver Telly, honoring the very best local, regional, and cable television commercials. |
“While our revenue for the quarter was modestly lower than our expectations, the company grew its
top line by 24% and adjusted EBITDA by 110%, including 600 basis points of margin expansion on a
year-over-year basis,” said Harpreet Grewal, CFO of Constant Contact. “Based on our current
visibility, we have adjusted our full year revenue guidance,
which is largely in-line with our original guidance of 25% growth. We will continue to execute
against our fundamental growth drivers — adding new customers, expanding average revenue per user
(ARPU), increasing usage and improving customer retention rates. In addition, we remain focused on
capitalizing on the many growth drivers for our business.”
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Business Outlook
Based on information available as of July 28, 2011, Constant Contact is issuing guidance for the
third quarter and full year 2011 as follows:
Third Quarter 2011:
| Current Guidance (7/28/2011) | ||
Total revenue
|
$54.2 m to $54.7 m | |
Adjusted EBITDA
|
$10.8 m to $11.2 m | |
Stock-based compensation expense
|
$3.1 m | |
GAAP net income
|
$3.6 m to $4.0 m | |
GAAP net income per share
|
$0.12 to $0.13 | |
Non-GAAP net income per share
|
$0.21 to $0.23 | |
Diluted weighted average shares outstanding
|
31.1 m shares |
Full Year 2011:
| Prior Guidance (4/28/2011) | Current Guidance (7/28/2011) | |||
Total revenue
|
$217 m to $219 m | $214 m to $216 m | ||
Adjusted EBITDA
|
$34.3 m to $35.7 m | $35.0 m to $35.7 m | ||
Stock-based compensation expense
|
$12.5 m | $11.9 m | ||
GAAP net income
|
$6.3 m to $7.7 m | $7.7 m to $8.4 m | ||
GAAP net income per share
|
$0.20 to $0.25 | $0.25 to $0.27 | ||
Non-GAAP net income per share
|
$0.60 to $0.65 | $0.63 to $0.65 | ||
Diluted weighted average shares outstanding
|
31.2 m shares | 31.0 m shares |
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: adjusted EBITDA, adjusted
EBITDA margin, non-GAAP net income, non-GAAP net income per share, non-GAAP net loss, non-GAAP net
loss per share and free cash flow.
Adjusted EBITDA is calculated by taking GAAP net income (loss), adding depreciation and
amortization, stock-based compensation, adjusting for taxes, then subtracting interest and other
income. Adjusted EBITDA margin is equal to adjusted EBITDA divided by revenue.
Non-GAAP net income per share is calculated by adding back stock-based compensation expense to GAAP
net income (loss) and dividing this total by the diluted weighted average shares outstanding.
Free cash flow is calculated by subtracting cash paid for the acquisition of property and equipment
from net cash provided by operating activities.
Constant Contact believes that these non-GAAP measures of financial results provide useful
information to management and investors regarding certain financial and business trends relating to
Constant Contact’s financial condition and results of operations. The company’s
Page 3
management uses these non-GAAP measures to compare the company’s
performance to that
of prior periods for trend analyses, for purposes of determining executive and senior management
incentive compensation and for budgeting and planning purposes. These measures are used in monthly
financial reports prepared for management and in monthly and quarterly financial reports presented
to the company’s board of directors. The company believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in evaluating ongoing operating results
and trends and in comparing the company’s financial measures with other software-as-a-service
companies, many of which present similar non-GAAP financial measures to investors.
Management of the company does not consider these non-GAAP measures in isolation or as an
alternative to financial measures determined in accordance with GAAP. The principal limitation of
these non-GAAP financial measures is that they exclude significant expenses and income that are
required by GAAP to be recorded in the company’s financial statements. In addition, they are
subject to inherent limitations as they reflect the exercise of judgments by management about which
expenses and income are excluded or included in determining these non-GAAP financial measures. In
order to compensate for these limitations, management presents non-GAAP financial measures in
connection with GAAP results. Constant Contact urges investors to review the reconciliation of its
non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press
releases announcing quarterly financial results, including this press release, and not to rely on
any single financial measure to evaluate the company’s business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial
measures used in this press release are included with the financial tables at the end of this
release.
Conference Call Information
What:
|
Constant Contact second quarter 2011 financial results conference call | |
When:
|
Thursday, July 28, 2011 | |
Time:
|
5:00 p.m. ET | |
Live Call:
|
(877) 334-1974, domestic | |
| (760) 666-3590, international | ||
Replay:
|
(800) 642-1687, passcode 81578976, domestic | |
| (706) 645-9291, passcode 81578976, international | ||
Webcast:
|
http://investor.constantcontact.com/(live and replay) |
The webcast will be archived on Constant Contact’s website for a period of three months.
About Constant Contact, Inc.
Constant Contact is revolutionizing the success formula for small organizations through affordable,
easy-to-use Engagement Marketing (TM) tools that help create and grow customer relationships. More
than 450,000 small businesses, nonprofits, and associations worldwide rely on Constant Contact to
drive ongoing customer dialogs through email marketing, social media marketing, event marketing,
and online surveys. All Constant Contact products come with unrivaled KnowHow, education, and free
coaching with a personal touch, including award-winning customer support.
Constant Contact and the Constant Contact Logo are registered trademarks of Constant Contact,
Inc. All Constant Contact product names and other brand names mentioned herein are trademarks or
registered trademarks of Constant Contact, Inc. All other company and product names may be
trademarks or service marks of their respective owners.
Page 4
Cautionary Language Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to,
statements regarding the overall market demand for email marketing and social media marketing
solutions and Constant Contact’s long-term market potential, plans to launch a social media
marketing product, growth drivers, international expansion, expanding average revenue per customer,
customer retention and the financial guidance for the third quarter of 2011 and full year 2011.
These forward-looking statements are made as of the date they were first issued and were based on
current expectations, estimates, forecasts and projections as well as the beliefs and assumptions
of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,”
“project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,”
variations of these terms or the negative of these terms and similar expressions are intended to
identify these forward-looking statements. Forward-looking statements are subject to a number of
risks and uncertainties, many of which involve factors or circumstances that are beyond Constant
Contact’s control. Constant Contact’s actual results could differ materially from those stated or
implied in forward-looking statements due to a number of factors, including but not limited to, the
company’s ability to attract new customers and retain existing customers, the company’s dependence
on the market for email marketing services for small organizations, adverse economic conditions in
general and adverse economic conditions specifically affecting the markets in which the company
operates, the company’s ability to successfully develop and introduce new products and add-ons or
enhancements to existing products, adverse regulatory or legal developments, the company’s ability
to continue to promote and maintain its brand in a cost-effective manner, changes in the
competitive environment, the company’s ability to compete effectively, the company’s ability to
attract and retain key personnel, the company’s ability to protect its intellectual property and
other proprietary rights, and other risks detailed in Constant Contact’s most recent Quarterly
Report on Form 10-Q filed with the Securities and Exchange Commission as well as other documents
that may be filed by the company from time to time with the Securities and Exchange Commission.
Past performance is not necessarily indicative of future results. The forward-looking statements
included in this press release represent Constant Contact’s views as of the date of this press
release. The company anticipates that subsequent events and developments will cause its views to
change. Constant Contact undertakes no intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.
These forward-looking statements should not be relied upon as representing Constant Contact’s views
as of any date subsequent to the date of this press release.
###
(CTCT-F)
Media
Contact:
Erika Dornaus
Constant Contact
(781) 482-7039
pr@constantcontact.com
Erika Dornaus
Constant Contact
(781) 482-7039
pr@constantcontact.com
Investor
Contact:
Jeremiah Sisitsky
Constant Contact
(339) 222-5740
jsisitsky@constantcontact.com
Jeremiah Sisitsky
Constant Contact
(339) 222-5740
jsisitsky@constantcontact.com
Page 5
Constant Contact, Inc.
Consolidated Condensed Statements of Operations (unaudited)
(In thousands, except per share data)
Consolidated Condensed Statements of Operations (unaudited)
(In thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenue |
$ | 52,527 | $ | 42,455 | $ | 102,542 | $ | 81,936 | ||||||||
Cost of revenue |
15,233 | 12,686 | 29,916 | 24,402 | ||||||||||||
Gross profit |
37,294 | 29,769 | 72,626 | 57,534 | ||||||||||||
Operating expenses: |
||||||||||||||||
Research and development |
7,549 | 5,943 | 14,987 | 11,564 | ||||||||||||
Sales and marketing |
22,515 | 20,217 | 46,749 | 38,921 | ||||||||||||
General and administrative |
5,918 | 4,604 | 11,696 | 8,903 | ||||||||||||
Total operating expenses |
35,982 | 30,764 | 73,432 | 59,388 | ||||||||||||
Income (loss) from operations |
1,312 | (995 | ) | (806 | ) | (1,854 | ) | |||||||||
Interest and other income |
95 | 85 | 184 | 168 | ||||||||||||
Income (loss) before income taxes |
1,407 | (910 | ) | (622 | ) | (1,686 | ) | |||||||||
(Expense) benefit for income taxes |
(133 | ) | — | 53 | — | |||||||||||
Net income (loss) |
$ | 1,274 | $ | (910 | ) | $ | (569 | ) | $ | (1,686 | ) | |||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | 0.04 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.06 | ) | |||||
Diluted |
$ | 0.04 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.06 | ) | |||||
Weighted average shares
outstanding used in computing per
share amounts: |
||||||||||||||||
Basic |
29,497 | 28,652 | 29,404 | 28,554 | ||||||||||||
Diluted |
30,770 | 28,652 | 29,404 | 28,554 | ||||||||||||
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Constant Contact, Inc.
Calculation of Adjusted EBITDA and Adjusted EBITDA Margin (unaudited)
(In thousands)
Calculation of Adjusted EBITDA and Adjusted EBITDA Margin (unaudited)
(In thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) |
$ | 1,274 | $ | (910 | ) | $ | (569 | ) | $ | (1,686 | ) | |||||
Subtract: |
||||||||||||||||
Interest and other income |
95 | 85 | 184 | 168 | ||||||||||||
(Expense) benefit for income taxes |
(133 | ) | — | 53 | — | |||||||||||
Add back: |
||||||||||||||||
Depreciation and amortization |
3,492 | 2,840 | 7,032 | 5,464 | ||||||||||||
Stock-based compensation expense |
3,242 | 1,981 | 5,851 | 3,716 | ||||||||||||
Adjusted EBITDA |
$ | 8,046 | $ | 3,826 | $ | 12,077 | $ | 7,326 | ||||||||
Divide by: |
||||||||||||||||
Revenue |
$ | 52,527 | $ | 42,455 | $ | 102,542 | $ | 81,936 | ||||||||
Adjusted EBITDA margin |
15.3 | % | 9.0 | % | 11.8 | % | 8.9 | % | ||||||||
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Constant Contact, Inc.
Calculation of Non-GAAP Net Income and Non -GAAP Net Income per Share (unaudited)
(In thousands, except per share data)
Calculation of Non-GAAP Net Income and Non -GAAP Net Income per Share (unaudited)
(In thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income (loss) |
$ | 1,274 | $ | (910 | ) | $ | (569 | ) | $ | (1,686 | ) | |||||
Add back: |
||||||||||||||||
Stock-based compensation expense |
3,242 | 1,981 | 5,851 | 3,716 | ||||||||||||
Non-GAAP net income |
$ | 4,516 | $ | 1,071 | $ | 5,282 | $ | 2,030 | ||||||||
Non-GAAP net income per share: diluted |
$ | 0.15 | $ | 0.04 | $ | 0.17 | $ | 0.07 | ||||||||
Weighted average shares outstanding used in
computing per share amounts |
30,770 | 29,935 | 30,822 | 29,761 | ||||||||||||
Constant Contact, Inc.
Calculation of Free Cash Flow (unaudited)
(In thousands)
Calculation of Free Cash Flow (unaudited)
(In thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net cash provided by operating activities |
$ | 8,424 | $ | 4,781 | $ | 16,646 | $ | 11,233 | ||||||||
Subtract: |
||||||||||||||||
Acquisition of property and equipment |
4,541 | 4,062 | 8,829 | 8,350 | ||||||||||||
Free cash flow |
$ | 3,883 | $ | 719 | $ | 7,817 | $ | 2,883 | ||||||||
Page 8
Constant Contact, Inc.
Consolidated Condensed Balance Sheets (unaudited)
(In thousands)
Consolidated Condensed Balance Sheets (unaudited)
(In thousands)
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 25,612 | $ | 32,892 | ||||
Marketable securities |
94,018 | 91,461 | ||||||
Accounts receivable, net |
47 | 44 | ||||||
Prepaid expenses and other current assets |
6,890 | 5,562 | ||||||
Total current assets |
126,567 | 129,959 | ||||||
Property and equipment, net |
31,952 | 29,723 | ||||||
Restricted cash |
750 | 750 | ||||||
Goodwill |
18,448 | 5,248 | ||||||
Acquired intangible assets, net |
2,420 | 781 | ||||||
Other assets |
2,246 | 1,214 | ||||||
Total assets |
$ | 182,383 | $ | 167,675 | ||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 9,295 | $ | 7,444 | ||||
Accrued expenses |
8,398 | 6,724 | ||||||
Deferred revenue |
27,915 | 25,103 | ||||||
Total current liabilities |
45,608 | 39,271 | ||||||
Other long-term liabilities |
2,321 | 2,282 | ||||||
Total liabilities |
47,929 | 41,553 | ||||||
Common stock |
297 | 293 | ||||||
Additional paid-in capital |
177,836 | 168,974 | ||||||
Accumulated other comprehensive income |
48 | 13 | ||||||
Accumulated deficit |
(43,727 | ) | (43,158 | ) | ||||
Total stockholders’ equity |
134,454 | 126,122 | ||||||
Total liabilities and stockholders’ equity |
$ | 182,383 | $ | 167,675 | ||||
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Constant Contact, Inc.
Consolidated Condensed Statements of Cash Flows (unaudited)
(In thousands)
Consolidated Condensed Statements of Cash Flows (unaudited)
(In thousands)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2011 | 2010 | |||||||
Cash flows from operating activities |
||||||||
Net loss |
$ | (569 | ) | $ | (1,686 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
7,032 | 5,464 | ||||||
Amortization of premiums on investments |
331 | 11 | ||||||
Stock-based compensation expense |
5,851 | 3,716 | ||||||
Recovery of bad debts |
— | (4 | ) | |||||
Gain on sales of marketable securities |
(12 | ) | — | |||||
Deferred income taxes |
158 | — | ||||||
Change in operating assets and liabilities, net of effects from acquisition: |
||||||||
Accounts receivable |
(3 | ) | (2 | ) | ||||
Prepaid expenses and other current assets |
(1,328 | ) | (1,262 | ) | ||||
Other assets |
(1,032 | ) | — | |||||
Accounts payable |
1,851 | 2,022 | ||||||
Accrued expenses |
1,674 | 95 | ||||||
Deferred revenue |
2,812 | 3,283 | ||||||
Other long-term liabilities |
(119 | ) | (404 | ) | ||||
Net cash provided by operating activities |
16,646 | 11,233 | ||||||
Cash flows from investing activities |
||||||||
Purchases of marketable securities |
(88,209 | ) | (63,746 | ) | ||||
Proceeds from maturities of marketable securities |
19,144 | 34,295 | ||||||
Proceeds from sales of marketable securities |
66,224 | — | ||||||
Payment for acquisition, net of cash acquired |
(15,000 | ) | (2,225 | ) | ||||
Acquisition of property and equipment |
(8,829 | ) | (8,350 | ) | ||||
Net cash used in investing activities |
(26,670 | ) | (40,026 | ) | ||||
Cash flows from financing activities |
||||||||
Proceeds from issuance of common stock pursuant to exercise of stock options |
2,309 | 1,860 | ||||||
Proceeds from issuance of common stock pursuant to employee stock purchase plan |
435 | 390 | ||||||
Net cash provided by financing activities |
2,744 | 2,250 | ||||||
Net decrease in cash and cash equivalents |
(7,280 | ) | (26,543 | ) | ||||
Cash and cash equivalents, beginning of period |
32,892 | 59,822 | ||||||
Cash and cash equivalents, end of period |
$ | 25,612 | $ | 33,279 | ||||
Supplemental disclosure of non-cash investing and financing activities |
||||||||
Issuance of common stock in connection with the acquisition of NutshellMail |
$ | — | $ | 3,603 | ||||
Capitalization of stock-based compensation |
271 | 65 | ||||||
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