Constant Contact Announces Fourth Quarter and Full Year 2008 Financial Results
Email marketing customer base exceeds 253,400
WALTHAM, Mass., Feb 12, 2009 (BUSINESS WIRE) -- Constant Contact(R), Inc. (NasdaqGM: CTCT), a leading provider of email marketing and online surveys for small organizations, today announced its financial results for the fourth quarter and full year ended December 31, 2008.
Constant Contact reported total revenue of $25.5 million for the quarter ended December 31, 2008, an increase of 61 percent compared to revenue of $15.9 million for the comparable period in 2007. Constant Contact ended the fourth quarter of 2008 with over 253,400 email marketing customers, an increase of 54 percent compared to the end of the fourth quarter of 2007.
"Constant Contact's fourth quarter results were better than expected and represented a strong finish to a remarkable year. During the fourth quarter, a record number of new customer additions enabled Constant Contact to pass the 250,000 customer milestone. In addition, rapid growth throughout the year extended Constant Contact's leadership position and drove our annualized revenue run rate to over $100 million," said Gail Goodman, CEO of Constant Contact.
Goodman added, "Solid execution combined with Constant Contact's clear value proposition, affordable price points and intense focus on customer success are driving the company's strong financial performance in the face of a challenging economic environment. We believe these factors, combined with a large and underpenetrated market opportunity, position the company well for 2009 and beyond."
Constant Contact reported an operating loss of $1.7 million for the quarter ended December 31, 2008 as compared to an operating loss of $54,000 for the comparable period in 2007. Constant Contact reported adjusted EBITDA of $878,000 in the fourth quarter of 2008, above the Company's guidance of $550,000 to $750,000 and representing an adjusted EBITDA margin of 3.4%. Adjusted EBITDA was $993,000 for the comparable period in 2007. Adjusted EBITDA is a non-GAAP financial measure that is calculated by taking GAAP net income (loss), adding other expense, depreciation and amortization, and stock-based compensation, and then subtracting net interest income. Adjusted EBITDA margin is equal to adjusted EBITDA divided by revenue. A reconciliation of the most comparable GAAP financial measure to the non-GAAP measure used above is included at the end of this release.
Constant Contact reported a GAAP net loss attributable to common stockholders of $1.6 million for the fourth quarter of 2008 as compared to $1.1 million for the comparable period in 2007. Fourth quarter 2008 GAAP net loss attributable to common stockholders per share was $0.06 as compared to $0.04 for the comparable period in 2007.
Fourth quarter 2008 non-GAAP net loss attributable to common stockholders per share was $0.03 as compared to $0.03 for the same period in 2007. Non-GAAP net income (loss) attributable to common stockholders per share is a non-GAAP financial measure that is calculated by adding back stock-based compensation expense to GAAP net income (loss) attributable to common stockholders and dividing this total by the weighted average shares outstanding. A reconciliation of the most comparable GAAP financial measure to the non-GAAP measure used above is included at the end of this release.
"During 2008, we generated our first full year of adjusted EBITDA profitability and free cash flow," said Steven R. Wasserman, vice president and chief financial officer of Constant Contact. "We demonstrated the operating leverage inherent in our business model, gaining efficiencies in both sales and marketing and research and development, while launching a major new marketing initiative. In addition to driving net customer additions and revenue growth, we remain highly focused on further expanding our adjusted EBITDA margins in 2009."
Other Business and Operational Highlights
During the fourth quarter of 2008, Constant Contact:
- Added over 24,800 net new email marketing customers, bringing its total email marketing customer base to over 253,400.
- Maintained consistency in its key customer metrics. The average email marketing invoice remained in the $33 range, plus or minus $2. The number of customers in the $15 and $30 revenue bands remained at 80%, plus or minus 1%, and the monthly retention rate remained in its range of 97.8% plus or minus 0.5%.
- Achieved a cost of acquisition (COA) of $304 for the full year 2008, consistent with the Company's target of $300. COA is calculated by dividing the annual GAAP sales and marketing expense by annual gross customer additions.
- Grew its ListenUp! Online Survey customer base to approximately 17,500. The Company adopted new pricing for this solution in January 2009 with the goals of further accelerating user adoption and gaining market share.
- Added new franchises to its growing roster of franchise customers, including i9 Sports(R) and Mad Science(R). i9 Sports is the first and fastest growing franchise of youth sports leagues, camps and programs in the United States. Mad Science provides children with fun, interactive and educational programs that instill a clear understanding of what science is really about and how it affects their world.
- Began supporting its customer base on TwitterTM, a free social networking and micro-blogging service. Constant Contact is committed to meeting our customers where they are by supporting customers through a range of communication channels, both online and offline. As the Company proactively reached out to the Twitter community to offer formalized product support and email marketing advice, the number of tweets about Constant Contact increased from approximately 10 per week, to the range of 10 to 20 per day.
Full Year 2008 Results
For the full year 2008, total revenue was $87.3 million, an increase of 73 percent as compared to revenue of $50.5 million in 2007. For the full year 2008, loss from operations was $4.5 million as compared to $5.7 million in 2007. Constant Contact reported a GAAP net loss attributable to common stockholders of $2.1 million, as compared to $9.1 million in 2007, and a GAAP net loss attributable to common stockholders per share of $0.07 as compared to $0.97 in 2007.
Adjusted EBITDA was $3.9 million for the full year 2008, representing a full year adjusted EBITDA margin of 4.5% and an increase from an adjusted EBITDA loss of $2.4 million in 2007. For the full year 2008, non-GAAP net income attributable to common stockholders per share was $0.03 as compared to a loss of $0.90 in 2007.
Business Outlook
Based on information available as of February 12, 2009, Constant Contact is issuing guidance for the first quarter and full year 2009 as follows:
First Quarter 2009: The Company expects first quarter revenue to be in the range of $27.7 million to $27.9 million, adjusted EBITDA to be in the range of $900 thousand to $1.1 million, and non-GAAP net loss attributable to common stockholders per share to be in the range of $0.02 to $0.03 based on weighted average shares outstanding (basic) of 28.1 million shares.
GAAP net loss is expected to be in the range of $1.7 million to $1.9 million, and GAAP net loss per share to be in the range of $0.06 to $0.07. GAAP net loss per share is based on weighted average shares outstanding (basic) of 28.1 million shares and includes an estimated stock-based compensation expense of $1.1 million.
Full Year 2009: The Company expects full year 2009 revenue to be in the range of $125 million to $130 million. The Company expects adjusted EBITDA to be in the range of $10.0 million to $10.4 million, representing an adjusted EBITDA margin of 8%. The Company expects full year 2009 non-GAAP net income attributable to common stockholders per share to be in the range of $0.06 to $0.07 based on weighted average shares outstanding (diluted) of 29.5 million shares.
The Company expects GAAP net loss to be in the range of $2.9 million to $3.3 million, and GAAP net loss per share to be in the range of $0.10 to $0.12. GAAP net loss per share is based on weighted average shares outstanding (basic) of 28.3 million shares and includes an estimated stock-based compensation expense of $5.0 million.
Non-GAAP Financial Measures
This press release contains five non-GAAP financial measures: adjusted EBITDA (loss), adjusted EBITDA margin, non-GAAP net income (loss) attributable to common stockholders, non-GAAP net income (loss) attributable to common stockholders per share and free cash flow. 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 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 incentive compensation, and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and in 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 from these non-GAAP financial measures.
In order to compensate for these limitations, management of the Company presents its non-GAAP financial measures in connection with its 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 earnings information, 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 measures used in this press release are included at the end of this release.
Conference Call Information | |||
| What: | Constant Contact fourth quarter 2008 financial results conference call | ||
| When: | Thursday, February 12, 2009 | ||
| Time: | 5:00 p.m. ET | ||
| Live Call: | (877) 856-1962, domestic | ||
| (719) 325-4770, international | |||
| Replay: | (888) 203-1112, passcode 2417232, domestic | ||
| (719) 457-0820, passcode 2417232, international | |||
| Webcast: | http://investor.constantcontact.com/ (live and replay) | ||
About Constant Contact, Inc.
Launched in 1998, Constant Contact is a leading provider of email marketing and online survey solutions for small businesses, nonprofits, and associations. To learn more, please visit www.constantcontact.com or call (781) 472-8100.
Constant Contact and the Constant Contact logo are registered trademarks of Constant Contact, Inc. All other company names may be trademarks or service marks of their respective owners.
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 anticipated growth of the Company's customer base, the Company's ability to grow during an economic downturn, the value and effectiveness of the Company's products, the Company's potential expanding leadership position, the size of the market for the Company's products, the Company's belief that its adjusted EBITDA margins will continue to expand in 2009 and the Company's financial guidance for the first quarter of 2009 and full year 2009. 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 our 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 businesses, nonprofits, and associations, adverse economic conditions and adverse economic conditions specifically affecting the markets in which the Company operates, adverse regulatory or legal developments, the Company's ability to continue to promote and maintain its brand in a cost-effective manner, the Company's ability to compete effectively, the continued growth and acceptance of email as a communications tool, the Company's ability to develop and introduce new products and add-ons or enhancements to existing products, the Company's ability to manage growth, 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)
Constant Contact, Inc. | |||||||||||||||||
Consolidated Condensed Statements of Operations (unaudited) | |||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||||
| Revenue | $ | 25,471 | $ | 15,867 | $ | 87,268 | $ | 50,495 | |||||||||
| Cost of revenue | 7,265 | 3,771 | 24,251 | 13,031 | |||||||||||||
| Gross profit | 18,206 | 12,096 | 63,017 | 37,464 | |||||||||||||
| Operating expenses: | |||||||||||||||||
| Research & development | 4,158 | 2,834 | 15,123 | 10,341 | |||||||||||||
| Sales & marketing | 13,144 | 7,839 | 42,851 | 27,376 | |||||||||||||
| General & administrative | 2,620 | 1,477 | 9,508 | 5,445 | |||||||||||||
| Total operating expenses | 19,922 | 12,150 | 67,482 | 43,162 | |||||||||||||
| Loss from operations | (1,716 | ) | (54 | ) | (4,465 | ) | (5,698 | ) | |||||||||
| Interest income, net | 110 | 1,087 | 2,409 | 1,355 | |||||||||||||
| Other expense | - | (2,102 | ) | - | (3,911 | ) | |||||||||||
| Net loss | (1,606 | ) | (1,069 | ) | (2,056 | ) | (8,254 | ) | |||||||||
Accretion of redeemable convertible preferred stock | - | (27 | ) | - | (816 | ) | |||||||||||
Net loss attributable to common stockholders | $ | (1,606 | ) | $ | (1,096 | ) | $ | (2,056 | ) | $ | (9,070 | ) | |||||
Net loss attributable to common stockholders per share: basic and diluted | $ | (0.06 | ) | $ | (0.04 | ) | $ | (0.07 | ) | $ | (0.97 | ) | |||||
Weighted average shares outstanding used in computing per share amounts: basic and diluted | 28,074 | 25,869 | 27,879 | 9,366 | |||||||||||||
Constant Contact, Inc. | |||||||||||||||||
Calculation of Adjusted EBITDA (Loss) and Adjusted EBITDA Margin (unaudited) | |||||||||||||||||
(In thousands) | |||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||||
| Net loss | $ | (1,606 | ) | $ | (1,069 | ) | $ | (2,056 | ) | $ | (8,254 | ) | |||||
| Subtract: | |||||||||||||||||
| Interest income, net | (110 | ) | (1,087 | ) | (2,409 | ) | (1,355 | ) | |||||||||
| Add back: | |||||||||||||||||
| Other expense | - | 2,102 | - | 3,911 | |||||||||||||
| Loss from operations | (1,716 | ) | (54 | ) | (4,465 | ) | (5,698 | ) | |||||||||
| Add back: | |||||||||||||||||
| Depreciation and amortization | 1,699 | 775 | 5,558 | 2,631 | |||||||||||||
| Stock-based compensation expense | 895 | 272 | 2,856 | 645 | |||||||||||||
| Adjusted EBITDA (loss) | $ | 878 | $ | 993 | $ | 3,949 | $ | (2,422 | ) | ||||||||
| Divide by: | |||||||||||||||||
| Revenue | $ | 25,471 | $ | 15,867 | $ | 87,268 | $ | 50,495 | |||||||||
| Adjusted EBITDA margin | 3.4 | % | 6.3 | % | 4.5 | % | (4.8 | %) | |||||||||
Constant Contact, Inc. | |||||||||||||||||
Calculation of Non-GAAP Net Income (Loss) Attributable to Common Stockholders and Non-GAAP Net Income (Loss) Attributable to Common Stockholders per Share (unaudited) | |||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||
| December 31 | December 31 | ||||||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||||
| Net loss attributable to common stockholders | $ | (1,606 | ) | $ | (1,096 | ) | $ | (2,056 | ) | $ | (9,070 | ) | |||||
| Add back: | |||||||||||||||||
| Stock-based compensation expense | 895 | 272 | 2,856 | 645 | |||||||||||||
Non-GAAP net income (loss) attributable to common stockholders | $ | (711 | ) | $ | (824 | ) | $ | 800 | $ | (8,425 | ) | ||||||
Non-GAAP net income (loss) attributable to common stockholders per share: basic | $ | (0.03 | ) | $ | (0.03 | ) | $ | 0.03 | $ | (0.90 | ) | ||||||
Non-GAAP net income (loss) attributable to common stockholders per share: diluted | $ | (0.03 | ) | $ | (0.03 | ) | $ | 0.03 | $ | (0.90 | ) | ||||||
Weighted average shares outstanding used in computing per share amounts: basic | 28,074 | 25,869 | 27,879 | 9,366 | |||||||||||||
Weighted average shares outstanding used in computing per share amounts: diluted | 28,074 | 25,869 | 29,251 | 9,366 | |||||||||||||
Constant Contact, Inc. | ||||||||||||||
Calculation of Free Cash Flow (unaudited) | ||||||||||||||
(In thousands, except per share data) | ||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||
| December 31 | December 31 | |||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||
| Net cash provided by operating activities | $ | 3,346 | $ | 2,528 | $ | 14,129 | $ | 4,268 | ||||||
| Subtract: | ||||||||||||||
| Acquisition of property plant and equipment | 2,343 | 2,753 | 13,371 | 5,666 | ||||||||||
| Free cash flow | $ | 1,003 | $ | (225 | ) | $ | 758 | $ | (1,398 | ) | ||||
Constant Contact, Inc. | |||||||||
Consolidated Condensed Balance Sheets (unaudited) | |||||||||
(In thousands) | |||||||||
| December 31, | December 31, | ||||||||
| 2008 | 2007 | ||||||||
| Assets | |||||||||
| Current assets | |||||||||
| Cash & cash equivalents | $ | 73,243 | $ | 97,051 | |||||
| Short-term marketable securities | 33,932 | 4,484 | |||||||
| Accounts receivable, net | 40 | 62 | |||||||
| Prepaid expenses and other current assets | 3,670 | 1,701 | |||||||
| Total current assets | 110,885 | 103,298 | |||||||
| Property and equipment, net | 15,799 | 7,986 | |||||||
| Restricted cash | 308 | 308 | |||||||
| Other non-current assets | 150 | 253 | |||||||
| Total assets | $ | 127,142 | $ | 111,845 | |||||
| Liabilities and Stockholders' Equity | |||||||||
| Current liabilities | |||||||||
| Accounts payable | $ | 4,786 | $ | 3,858 | |||||
| Accrued expenses | 5,461 | 2,928 | |||||||
| Deferred revenue | 15,052 | 10,354 | |||||||
| Total current liabilities | 25,299 | 17,140 | |||||||
| Other long-term liabilities | 1,853 | 351 | |||||||
| Total liabilities | 27,152 | 17,491 | |||||||
| Stockholders' equity | |||||||||
| Common stock | 282 | 276 | |||||||
| Additional paid in capital | 144,414 | 136,832 | |||||||
| Accumulated other comprehensive income | 106 | 2 | |||||||
| Accumulated deficit | (44,812 | ) | (42,756 | ) | |||||
| Total stockholders' equity | 99,990 | 94,354 | |||||||
| Total liabilities and stockholders' equity | $ | 127,142 | $ | 111,845 | |||||
Constant Contact, Inc. | |||||||||
Consolidated Condensed Statements of Cash Flows (unaudited) | |||||||||
(In thousands) | |||||||||
| Year Ended December 31, | |||||||||
| 2008 | 2007 | ||||||||
| Cash flows from operating activities | |||||||||
| Net loss | $ | (2,056 | ) | $ | (8,254 | ) | |||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | 5,558 | 2,631 | |||||||
| Accretion of discount on investments | (46 | ) | (151 | ) | |||||
| Stock-based compensation expense | 2,856 | 645 | |||||||
| Changes in fair value of redeemable convertible preferred stock warrant | - | 3,918 | |||||||
| Provision for bad debts | 6 | 8 | |||||||
| Gain on sale of equipment | - | (6 | ) | ||||||
| Change in operating assets & liabilities: | |||||||||
| Accounts receivable | 16 | (29 | ) | ||||||
| Prepaid expenses and other current assets | (1,969 | ) | (1,290 | ) | |||||
| Other assets | 103 | (237 | ) | ||||||
| Accounts payable | 928 | 1,282 | |||||||
| Accrued expenses | 2,533 | 873 | |||||||
| Deferred revenue | 4,698 | 4,878 | |||||||
| Other long-term liabilities | 1,502 | - | |||||||
| Net cash provided by operating activities | 14,129 | 4,268 | |||||||
| Cash flows from investing activities | |||||||||
| Purchases of short-term marketable securities | (33,798 | ) | (9,327 | ) | |||||
| Proceeds from maturities of short-term marketable securities | 4,500 | 9,000 | |||||||
| Proceeds from sale of equipment | - | 12 | |||||||
| Increase in restricted cash | - | (42 | ) | ||||||
| Acquisition of property and equipment | (13,371 | ) | (5,666 | ) | |||||
| Net cash used in investing activities | (42,669 | ) | (6,023 | ) | |||||
| Cash flows from financing activities | |||||||||
| Proceeds from notes payable | - | 2,788 | |||||||
| Proceeds from issuance of common stock pursuant to exercise of stock options and warrants | 236 | 227 | |||||||
| Proceeds from issuance of common stock pursuant to employee stock purchase plan | 497 | - | |||||||
Proceeds from issuance of common stock in connection with public offering, net of issuance costs | 3,999 | 90,436 | |||||||
| Repayments of notes payable | - | (3,490 | ) | ||||||
| Proceeds from issuance of Series C preferred stock | - | 59 | |||||||
| Net cash provided by financing activities | 4,732 | 90,020 | |||||||
| Net (decrease) increase in cash and cash equivalents | (23,808 | ) | 88,265 | ||||||
| Cash and cash equivalents, beginning of period | 97,051 | 8,786 | |||||||
| Cash and cash equivalents, end of period | $ | 73,243 | $ | 97,051 | |||||
SOURCE: Constant Contact, Inc.
Media Contact:
Constant Contact
Christopher Nahil, 781-472-8134
cnahil@constantcontact.com
or
Investor Contact:
Constant Contact
Jeremiah Sisitsky, 339-222-5740
jsisitsky@constantcontact.com
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