Constant Contact Announces First Quarter 2012 Financial Results
Revenue of
Adjusted EBITDA increases 78% year-over-year
Company increases 2012 revenue guidance
"The first quarter was an exciting period for
"The quarter was also highlighted by total revenue exceeding the high-end of our guidance, strong year-over-year growth in profitability, continued gains in ARPU and improving customer retention rates. This is further validation of our continued commitment to deliver success by combining great products with award-winning service, support and education," continued Goodman.
First Quarter 2012 Financial Metrics
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Revenue was
$59.9 million , an increase of 20% compared to revenue of$50.0 million for the comparable period in 2011. - Gross margin of 70.6% was consistent with the comparable period in 2011.
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GAAP net income was
$0.2 million , compared to a net loss of$1.8 million for the first quarter of 2011. GAAP net income includes a benefit from income taxes of$0.6 million . -
GAAP net income per share was
$0.01 , based on diluted weighted average shares outstanding of 31.1 million, compared to a net loss of$0.06 per share for the comparable period in 2011, based on diluted weighted average shares outstanding of 29.3 million. -
Adjusted EBITDA was
$7.2 million , an increase of 78% compared to adjusted EBITDA of$4.0 million for the comparable period in 2011. - Adjusted EBITDA margin was 12.0%, compared to 8.1% for the comparable period in 2011.
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Non-GAAP net income per diluted share was
$0.09 , based on diluted weighted average shares outstanding of 31.1 million, as compared to$0.03 for the comparable period in 2011. -
Cash flow from operations was
$10.9 million , compared to$8.2 million for the first quarter of 2011. -
Capital expenditures were
$5.5 million , compared to$4.3 million for the first quarter of 2011. -
Free cash flow was
$5.4 million , compared to$3.9 million for the first quarter of 2011. -
The company had
$143 million in cash, cash equivalents and short-term marketable securities atMarch 31, 2012 , compared to$140 million atDecember 31, 2011 .
Operating Metrics
- Added 45,000 gross new unique paying customers in the first quarter, consistent with the fourth quarter of 2011. (*)
- Ended the first quarter with 510,000 unique paying customers, an increase from 500,000 unique paying customers at the end of the fourth quarter of 2011 and 455,000 unique paying customers at the end of the first quarter of 2011. (*)
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Average monthly revenue per unique customer, ARPU, for the first
quarter was
$39.56 , up from$38.94 in the fourth quarter of 2011, and up from$37.46 in the comparable period in 2011. -
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 first quarter.
(*) Figures are rounded to nearest 5,000.
Other Recent Highlights
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Launched Social Campaigns, which allows users to create, publish,
promote and run social campaigns on
Facebook ®. With Social Campaigns,Constant Contact is establishing itself as the market-leader in driving value from social media for small businesses. Social Campaigns increases engagement with existing "fans" and encourages fans to share with potentially new customers.Constant Contact is hosting a joint webinar withFacebook onMay 2 nd on building a Facebook page, and connecting and engaging fans with quality content. More information is available - http://www.constantcontact.com/landing/facebook-results/index.jsp. -
Launched SaveLocal, which helps small businesses run profitable and
effective deals. With SaveLocal,
Constant Contact seeks to disrupt the local deals marketplace. - Announced the acquisition of CardStar®, a completely free loyalty application for use on mobile devices. The CardStar application consolidates membership and rewards cards on smartphones -- letting consumers access multiple cards from within a single app. CardStar has over 2 million active users and was a top-rated and top-downloaded lifestyle app on the iTunes Store®.
-
Released the Scan-to-Join tool that helps small businesses and
non-profits grow their email lists and reach more customers, members
and donors.
Constant Contact customers can now easily create a QR code and a simple mobile sign-up form, allowing people to sign up and receive promotions, news, coupons and more from any smart phone or other mobile device. -
Announced the availability of an integration between
Constant Contact email marketing and eTapestry fundraising software designed to help non-profits target donors more effectively and efficiently by segmenting and seamlessly updating their email marketing lists. -
Launched an integration with Formstack allowing
Constant Contact users to create and insert online forms directly into their email marketing campaigns to collect more orders, donations, and customer data from their campaigns.
"We continue to execute against the primary levers of our growth
strategy — expanding our customer base, increasing product usage,
driving cross sell and improving customer retention," said
Grewal added, "Based on the strength of our first quarter results and our positive view on the remainder of the year, we have increased our full year revenue guidance. We remain well positioned to deliver an attractive combination of solid revenue growth and expanded adjusted EBITDA margins for 2012."
Business Outlook
Based on information available as of
Second Quarter 2012:
| Current Guidance (4/26/2012) | ||
| Total revenue |
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| Adjusted EBITDA margin | 14.6% - 15.0% | |
| Adjusted EBITDA |
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| Stock-based compensation expense |
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| GAAP net (loss) / income |
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| GAAP net (loss) / income per share |
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| Non-GAAP net income per share* |
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| Diluted weighted average shares outstanding | 31.5 m |
Full Year 2012:
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Prior Guidance |
Current Guidance |
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| Total revenue |
Approximately |
Approximately |
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| Adjusted EBITDA margin | 18.3% - 18.8% | 18.2% - 18.6% | ||
| Adjusted EBITDA |
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| Stock-based compensation expense |
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| GAAP net income |
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| GAAP net income per share |
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| Non-GAAP net income per share* |
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| Diluted weighted average shares outstanding | 31.5 m | 31.6 m | ||
| Estimated effective tax rate | ~40% | ~40% | ||
| Estimated cash tax rate | ~2% | ~3% | ||
| *non-GAAP net income per share calculated using an estimated cash tax rate | ||||
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, estimated cash tax rate and free cash flow.
Adjusted EBITDA is calculated by taking GAAP net income, adding depreciation and amortization, stock-based compensation, adjusting for taxes, then subtracting interest and other income, net. Adjusted EBITDA margin is equal to adjusted EBITDA divided by revenue.
Non-GAAP net income is calculated by adding back stock-based compensation expense and then adjusting for the non-cash portion of income taxes. Non-GAAP net income per share is calculated by dividing Non-GAAP net income by the diluted weighted average shares outstanding.
Estimated cash tax rate is calculated by dividing estimated taxes to-be-paid by estimated full year income before taxes.
Free cash flow is calculated by subtracting cash paid for the acquisition of property and equipment from net cash provided by operating activities.
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.
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.
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Conference Call Information |
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| What: |
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| When: |
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| Time: |
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| Live Call: | (877) 334-1974, domestic | |
| (760) 666-3590, international | ||
| Replay: | (855) 859-2056, domestic | |
| (404) 537-3406, international | ||
| Webcast: |
http://investor.constantcontact.com/(live and replay) |
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Live and replay conference ID code: 69060575
The webcast will be archived on Constant Contact's website for a period of three months.
About
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 company's expectations for Social Campaigns and SaveLocal,
market position, growth strategy, revenue growth and expanding adjusted
EBITDA margin and the financial guidance for the second quarter of 2012
and full year 2012. 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, including the Social Campaigns and SaveLocal
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 Annual Report on Form 10-K
filed with the
(CTCT-F)
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| Consolidated Condensed Statements of Operations (unaudited) | ||||||||
| (In thousands, except per share data) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Revenue | $ | 59,938 | $ | 50,015 | ||||
| Cost of revenue | 17,599 | 14,683 | ||||||
| Gross profit | 42,339 | 35,332 | ||||||
| Operating expenses: | ||||||||
| Research and development | 9,471 | 7,438 | ||||||
| Sales and marketing | 25,718 | 24,234 | ||||||
| General and administrative | 7,564 | 5,778 | ||||||
| Total operating expenses | 42,753 | 37,450 | ||||||
| Loss from operations | (414 | ) | (2,118 | ) | ||||
| Interest and other income (expense), net | 71 | 89 | ||||||
| Loss before income taxes | (343 | ) | (2,029 | ) | ||||
| Income tax benefit | 561 | 186 | ||||||
| Net income (loss) | $ | 218 | $ | (1,843 | ) | |||
| Net income (loss) per share: | ||||||||
|
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$ | 0.01 | $ | (0.06 | ) | |||
| Diluted | $ | 0.01 | $ | (0.06 | ) | |||
| Weighted average shares outstanding used in computing per share amounts: | ||||||||
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30,171 | 29,310 | ||||||
| Diluted | 31,118 | 29,310 | ||||||
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Calculation of Adjusted EBITDA and Adjusted EBITDA Margin (unaudited) |
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| (In thousands) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Net income (loss) | $ | 218 | $ | (1,843 | ) | |||
| Subtract: | ||||||||
| Interest and other income (expense), net | 71 | 89 | ||||||
| Income tax benefit | 561 | 186 | ||||||
| Add back: | ||||||||
| Depreciation and amortization | 4,285 | 3,540 | ||||||
| Stock-based compensation expense | 3,299 | 2,609 | ||||||
| Adjusted EBITDA | $ | 7,170 | $ | 4,031 | ||||
| Divide by: | ||||||||
| Revenue | $ | 59,938 | $ | 50,015 | ||||
| Adjusted EBITDA margin | 12.0 | % | 8.1 | % | ||||
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| Calculation of Non-GAAP Net Income and Non-GAAP Net Income per Share (unaudited) | |||||||
| (In thousands, except per share data) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2012 | 2011 | ||||||
| Net income (loss) | $ | 218 | $ | (1,843 | ) | ||
| Adjust: | |||||||
| Non-cash portion of income tax benefit (expense) | 669 | (79 | ) | ||||
| Add back: | |||||||
| Stock-based compensation expense | 3,299 | 2,609 | |||||
| Non-GAAP net income | $ | 2,848 | $ | 845 | |||
| Non-GAAP net income per share: diluted | $ | 0.09 | $ | 0.03 | |||
| Weighted average shares outstanding used in computing per share amounts | 31,118 | 30,874 | |||||
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| Calculation of Free Cash Flow (unaudited) | ||||||
| (In thousands) | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2012 | 2011 | |||||
| Net cash provided by operating activities | $ | 10,880 | $ | 8,222 | ||
| Subtract: | ||||||
| Acquisition of property and equipment | 5,473 | 4,288 | ||||
| Free cash flow | $ | 5,407 | $ | 3,934 | ||
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| Consolidated Condensed Statements of Cash Flows (unaudited) | ||||||||
| (In thousands) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities | ||||||||
| Net Income (loss) | $ | 218 | $ | (1,843 | ) | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 4,285 | 3,540 | ||||||
| Amortization of premiums on investments | 154 | 168 | ||||||
| Stock-based compensation expense | 3,299 | 2,609 | ||||||
| Recovery of bad debts | (5 | ) | (1 | ) | ||||
| Deferred income taxes | (693 | ) | 79 | |||||
| Taxes paid related to net share settlement of restricted stock units | (247 | ) | - | |||||
| Change in operating assets & liabilities, net of effects from acquisition: | ||||||||
| Accounts receivable | 16 | 12 | ||||||
| Prepaid expenses and other current assets | (643 | ) | (883 | ) | ||||
| Other assets | (113 | ) | (536 | ) | ||||
| Accounts payable | 1,140 | (1,344 | ) | |||||
| Accrued expenses | 1,592 | 3,979 | ||||||
| Deferred revenue | 1,877 | 2,505 | ||||||
| Other long-term liabilities | - | (63 | ) | |||||
| Net cash provided by operating activities | 10,880 | 8,222 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of marketable securities | (14,270 | ) | (45,025 | ) | ||||
| Proceeds from maturities of marketable securities | 20,000 | 10,144 | ||||||
| Proceeds from sales of marketable securities | 23,581 | 29,000 | ||||||
| Payment for acquisitions, net of cash acquired | (5,750 | ) | (15,000 | ) | ||||
| Acquisition of property and equipment | (5,473 | ) | (4,288 | ) | ||||
| Net cash provided by (used in) investing activities | 18,088 | (25,169 | ) | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock pursuant to exercise of stock options | 3,250 | 1,140 | ||||||
| Income tax benefit from the exercise of stock options | 132 | - | ||||||
| Net cash provided by financing activities | 3,382 | 1,140 | ||||||
| Net increase (decrease) in cash and cash equivalents | 32,350 | (15,807 | ) | |||||
| Cash and cash equivalents, beginning of period | 49,589 | 32,892 | ||||||
| Cash and cash equivalents, end of period | $ | 81,939 | $ | 17,085 | ||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Capitalization of stock-based compensation | 224 | 107 | ||||||
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| Consolidated Condensed Balance Sheets (unaudited) | ||||||||
| (In thousands) | ||||||||
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December 31, | |||||||
| 2012 | 2011 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 81,939 | $ | 49,589 | ||||
| Marketable securities | 61,038 | 90,523 | ||||||
| Accounts receivable, net | 47 | 58 | ||||||
| Prepaid expenses and other current assets | 9,534 | 8,891 | ||||||
| Total current assets | 152,558 | 149,061 | ||||||
| Property and equipment, net | 35,839 | 34,263 | ||||||
| Restricted cash | 750 | 750 | ||||||
| Goodwill | 23,508 | 18,935 | ||||||
| Acquired intangible assets, net | 3,506 | 3,046 | ||||||
| Deferred tax assets | 14,206 | 12,960 | ||||||
| Other assets | 2,476 | 2,363 | ||||||
| Total assets | $ | 232,843 | $ | 221,378 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 10,046 | $ | 8,906 | ||||
| Accrued expenses | 12,107 | 10,515 | ||||||
| Deferred revenue | 30,860 | 28,983 | ||||||
| Total current liabilities | 53,013 | 48,404 | ||||||
| Other long-term liabilities | 2,052 | 2,052 | ||||||
| Total liabilities | 55,065 | 50,456 | ||||||
| Common stock | 304 | 301 | ||||||
| Additional paid-in capital | 196,694 | 190,039 | ||||||
| Accumulated other comprehensive income | 41 | 61 | ||||||
| Accumulated deficit | (19,261 | ) | (19,479 | ) | ||||
| Total stockholders' equity | 177,778 | 170,922 | ||||||
| Total liabilities and stockholders' equity | $ | 232,843 | $ | 221,378 | ||||
Media Contact:
pr@constantcontact.com
or
Investor
Contact:
jsisitsky@constantcontact.com
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