Constant Contact Announces Second Quarter 2012 Financial Results
Quarterly revenue of
Raises revenue and adjusted EBITDA guidance for the year
"The second quarter marked another important step forward in our
transformation from a single product company to an engagement marketing
suite provider helping small businesses succeed. The addition of
SinglePlatform and the continued expansion of our social, local and
mobile capabilities are positioning
"The combination of new customer additions, increased revenue per customer and improvements in customer retention contributed to revenue and adjusted EBITDA consistent with our expectations. With our core email marketing product delivering solid results and multiple new product initiatives in the early stages of ramping, we believe we are setting the stage for meaningful long-term growth," continued Goodman.
Second Quarter 2012 Financial Metrics (Includes Impact of SinglePlatform Acquisition)
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Revenue was
$62.1 million , an increase of 18.2% compared to revenue of$52.5 million for the comparable period in 2011. - Gross margin in the second quarter was 70.3%, compared to 71.0% for the comparable period in 2011.
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GAAP net loss was
$500 thousand , compared to GAAP net income of$1.3 million for the second quarter of 2011. -
GAAP net loss per share was
$0.02 , based on diluted weighted average shares outstanding of 30.4 million, compared to GAAP net income of$0.04 per share for the comparable period in 2011, based on diluted weighted average shares outstanding of 30.8 million. -
Adjusted EBITDA was
$8.1 million , consistent with the comparable period in 2011. Adjusted EBITDA for the second quarter of 2012 includes approximately$900 thousand in transaction and payroll expenses associated with SinglePlatform. - Adjusted EBITDA margin was 13.0%, compared to 15.3% for the comparable period in 2011.
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Non-GAAP net income per diluted share was
$0.11 , based on diluted weighted average shares outstanding of 31.1 million, as compared to$0.15 per share for the comparable period in 2011, based on 30.8 million diluted weighted average shares outstanding. -
Cash flow from operations was
$5.2 million , compared to$8.4 million for the second quarter of 2011. -
Capital expenditures were
$5.2 million , compared to$4.5 million for the second quarter of 2011. -
Free cash flow was
$56 thousand , compared to$3.9 million for the second quarter of 2011. -
The company had
$81.1 million in cash, cash equivalents and short-term marketable securities atJune 30, 2012 , compared to$143 million atMarch 31, 2012 .Constant Contact acquired SinglePlatform for approximately$63 million in cash consideration inJune 2012 .
Operating Metrics
- Added 45,000 gross new unique paying customers in the second quarter consistent with the first quarter of 2012. This excludes SinglePlatform customers. (*)
- Ended the second quarter with 525,000 unique paying customers, an increase from 510,000 unique paying customers at the end of the first quarter of 2012 and 470,000 unique paying customers at the end of the second quarter of 2011. This excludes SinglePlatform customers. (*)
-
Including SinglePlatform customers,
Constant Contact ended the second quarter of 2012 with 535,000 unique customers. (*) -
Average monthly revenue per unique customer, ARPU, for the second
quarter was
$39.98 , up from$39.56 in the first quarter of 2012 and$37.86 in the comparable period in 2011. This excludes SinglePlatform customers. -
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. This excludes SinglePlatform customers.
(*) Figures are rounded to nearest 5,000.
Other Recent Highlights
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Announced the acquisition of SinglePlatform, a company that helps
small businesses get discovered through web and mobile searches, for
approximately
$63 million in cash consideration. By providing a single place to update relevant business information, SinglePlatform enables businesses to reach more than 200 million consumers across its extensive publishing network, which includes network sites such as Foursquare, New York Times, YP and Urban Spoon. This generated approximately seven million digital storefront views for SinglePlatform listings in June alone. - Announced the general availability of SaveLocalTM, which allows small businesses to run deals on their terms. SaveLocal is focused on disrupting the daily deals market by allowing merchants to run deals that make sense financially, attract new customers and drive repeat business.
-
Expanded Constant Contact's thought leadership with the launch of Gail
Goodman's book on Engagement Marketing, titled, Engagement
Marketing: How Small Business Wins in a
Socially Connected World . More information is available via http://engagementmarketing.com/. -
Appointed
Ken Surdan to the newly created role of senior vice president, product. Ken oversees product strategy, engineering and operations in this new role and reports directly to CEOGail Goodman . -
Announced the election of
Jay Herratti to the company's board of directors.Mr. Herratti was most recently the CEO of OpenGrid Media, which owns and operates leading local consumer brands such as UrbanSpoon,Citysearch and InsiderPages. He previously served as CEO of Evite, as well as SVP Strategic Planning at IAC and Interim CEO of IAC Advertising Solutions.
"This remains an exciting period for
"We are in the middle of the summer months, which tend to be a seasonally slow period for small businesses. However, as we look ahead, we are raising our previously increased revenue guidance and are increasing adjusted EBITDA guidance for the full year 2012," Grewal added.
Business Outlook
Based on information available as of
Third Quarter 2012:
| Current Guidance (7/26/2012) | ||
| Total revenue |
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| Adjusted EBITDA margin | 15.5% - 16.0% | |
| 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 | 31.2 m |
Full Year 2012:
| Prior Guidance | Guidance Update | Current Guidance | |||||||||
| (4/26/2012) | (6/13/2012) | (7/26/2012) | |||||||||
| Total revenue |
Approximately |
Additional |
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| Adjusted EBITDA margin | 18.2% - 18.6% | 14.0% - 14.5% | 14.2% - 14.7% | ||||||||
| Adjusted EBITDA |
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| Stock-based compensation expense |
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Not Provided |
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| GAAP net income |
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Not Provided |
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| GAAP net income per share |
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Not Provided |
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| Non-GAAP net income per share* |
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Not Provided |
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| Diluted weighted average shares outstanding | 31.6 m | Not Provided | 31.3 m | ||||||||
| Estimated effective tax rate | ~40% | Not Provided | ~40% | ||||||||
| Estimated cash tax rate | ~3% | Not Provided | ~10% | ||||||||
| *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 back 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 annual profit 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: 96792658
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 evolving multi-product strategy, the value
proposition associated with the company's suite of products, the
company's long-term growth prospects, expectations associated with the
company's Social Campaigns, SaveLocal, Event Marketing and
SinglePlatform offerings, the acceleration in the company's customer
growth and revenue, and the financial guidance for the third 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
integrate SinglePlatform, the company's ability to continue to
successfully sell SinglePlatform's product offering, 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 and the SinglePlatform offering, 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
(CTCT-F)
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| Consolidated Condensed Statements of Operations (unaudited) | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
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June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenue | $ | 62,072 | $ | 52,527 | $ | 122,010 | $ | 102,542 | ||||||||
| Cost of revenue | 18,434 | 15,233 | 36,033 | $ | 29,916 | |||||||||||
| Gross profit | 43,638 | 37,294 | 85,977 | 72,626 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 9,804 | 7,549 | 19,275 | 14,987 | ||||||||||||
| Sales and marketing | 25,836 | 22,515 | 51,554 | 46,749 | ||||||||||||
| General and administrative | 8,404 | 5,918 | 15,968 | 11,696 | ||||||||||||
| Total operating expenses | 44,044 | 35,982 | 86,797 | 73,432 | ||||||||||||
| (Loss) income from operations | (406 | ) | 1,312 | (820 | ) | (806 | ) | |||||||||
| Interest income and other income (expense), net | 62 | 95 | 133 | 184 | ||||||||||||
| (Loss) income before income taxes | (344 | ) | 1,407 | (687 | ) | (622 | ) | |||||||||
| Income tax (expense) benefit | (118 | ) | (133 | ) | 443 | 53 | ||||||||||
| Net (loss) income | $ | (462 | ) | $ | 1,274 | $ | (244 | ) | $ | (569 | ) | |||||
| Net (loss) income per share: | ||||||||||||||||
| Basic | $ | (0.02 | ) | $ | 0.04 | $ | (0.01 | ) | $ | (0.02 | ) | |||||
| Diluted | $ | (0.02 | ) | $ | 0.04 | $ | (0.01 | ) | $ | (0.02 | ) | |||||
| Weighted average shares outstanding used in computing per share amounts: | ||||||||||||||||
| Basic | 30,380 | 29,497 | 30,275 | 29,404 | ||||||||||||
| Diluted | 30,380 | 30,770 | 30,275 | 29,404 | ||||||||||||
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| Calculation of Adjusted EBITDA and Adjusted EBITDA Margin (unaudited) | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
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June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net (loss) income | $ | (462 | ) | $ | 1,274 | $ | (244 | ) | $ | (569 | ) | |||||
| Subtract: | ||||||||||||||||
| Interest income and other income (expense), net | 62 | 95 | 133 | 184 | ||||||||||||
| Income tax (expense) benefit | (118 | ) | (133 | ) | 443 | 53 | ||||||||||
| Add back: | ||||||||||||||||
| Depreciation and amortization | 4,684 | 3,492 | 8,969 | 7,032 | ||||||||||||
| Stock-based compensation expense | 3,776 | 3,242 | 7,075 | 5,851 | ||||||||||||
| Adjusted EBITDA | $ | 8,054 | $ | 8,046 | $ | 15,224 | $ | 12,077 | ||||||||
| Divide by: | ||||||||||||||||
| Revenue | $ | 62,072 | $ | 52,527 | $ | 122,010 | $ | 102,542 | ||||||||
| Adjusted EBITDA margin | 13.0 | % | 15.3 | % | 12.5 | % | 11.8 | % | ||||||||
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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 | Six Months Ended | |||||||||||||||
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June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net (loss) income | $ | (462 | ) | $ | 1,274 | $ | (244 | ) | $ | (569 | ) | |||||
| Adjust: | ||||||||||||||||
| Non-cash portion of income tax (expense) benefit | (10 | ) | (79 | ) | 659 | (158 | ) | |||||||||
| Add back: | ||||||||||||||||
| Stock-based compensation expense | 3,776 | 3,242 | 7,075 | 5,851 | ||||||||||||
| Non-GAAP net income | $ | 3,324 | $ | 4,595 | $ | 6,172 | $ | 5,440 | ||||||||
| Non-GAAP net income per share: diluted | $ | 0.11 | $ | 0.15 | $ | 0.20 | $ | 0.18 | ||||||||
| Weighted average shares outstanding used in computing per share amounts | 31,053 | 30,770 | 31,086 | 30,822 | ||||||||||||
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| Calculation of Free Cash Flow (unaudited) | ||||||||||||
| (In thousands) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
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June 30, | |||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| Net cash provided by operating activities | $ | 5,227 | $ | 8,424 | $ | 16,107 | $ | 16,646 | ||||
| Subtract: | ||||||||||||
| Acquisition of property and equipment | 5,171 | 4,541 | 10,644 | 8,829 | ||||||||
| Free cash flow | $ | 56 | $ | 3,883 | $ | 5,463 | $ | 7,817 | ||||
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| Consolidated Condensed Statements of Cash Flows (unaudited) | ||||||||
| (In thousands) | ||||||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (244 | ) | $ | (569 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 8,969 | 7,032 | ||||||
| Amortization of premiums on investments | 296 | 331 | ||||||
| Stock-based compensation expense | 7,075 | 5,851 | ||||||
| Recovery of bad debts | (3 | ) | - | |||||
| Gain on sales of marketable securities | - | (12 | ) | |||||
| Deferred income taxes | (644 | ) | 158 | |||||
| Taxes paid related to net share settlement of restricted stock units | (326 | ) | - | |||||
| Change in operating assets & liabilities, net of effects from acquisitions: | ||||||||
| Accounts receivable | (1 | ) | (3 | ) | ||||
| Prepaid expenses and other current assets | (2 | ) | (1,328 | ) | ||||
| Other assets | (406 | ) | (1,032 | ) | ||||
| Accounts payable | 95 | 1,851 | ||||||
| Accrued expenses | (537 | ) | 1,674 | |||||
| Deferred revenue | 1,874 | 2,812 | ||||||
| Other long-term liabilities | (39 | ) | (119 | ) | ||||
| Net cash provided by operating activities | 16,107 | 16,646 | ||||||
| Cash flows from investing activities | ||||||||
| Purchases of marketable securities | (28,357 | ) | (88,209 | ) | ||||
| Proceeds from maturities of marketable securities | 31,167 | 19,144 | ||||||
| Proceeds from sales of marketable securities | 27,600 | 66,224 | ||||||
| Payment for acquisitions, net of cash acquired | (68,487 | ) | (15,000 | ) | ||||
| Acquisition of property and equipment | (10,644 | ) | (8,829 | ) | ||||
| Net cash used in investing activities | (48,721 | ) | (26,670 | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock pursuant to exercise of stock options | 3,657 | 2,309 | ||||||
| Income tax benefit from the exercise of stock options | 148 | - | ||||||
| Proceeds from issuance of common stock pursuant to employee stock purchase plan | 536 | 435 | ||||||
| Net cash provided by financing activities | 4,341 | 2,744 | ||||||
| Net decrease in cash and cash equivalents | (28,273 | ) | (7,280 | ) | ||||
| Cash and cash equivalents, beginning of period | 49,589 | 32,892 | ||||||
| Cash and cash equivalents, end of period | $ | 21,316 | $ | 25,612 | ||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Capitalization of stock-based compensation | 443 | 271 | ||||||
| Fair value of contingent consideration in connection with acquisition included in accrued expenses and other long-term liabilities | 12,152 | - | ||||||
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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 | $ | 21,316 | $ | 49,589 | ||||||
| Marketable securities | 59,785 | 90,523 | ||||||||
| Accounts receivable, net | 110 | 58 | ||||||||
| Prepaid expenses and other current assets | 8,942 | 8,891 | ||||||||
| Total current assets | 90,153 | 149,061 | ||||||||
| Property and equipment, net | 36,851 | 34,263 | ||||||||
| Restricted cash | 750 | 750 | ||||||||
| Goodwill | 95,505 | 18,935 | ||||||||
| Acquired intangible assets, net | 7,974 | 3,046 | ||||||||
| Deferred tax assets | 14,228 | 12,960 | ||||||||
| Other assets | 2,860 | 2,363 | ||||||||
| Total assets | $ | 248,321 | $ | 221,378 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable | $ | 9,049 | $ | 8,906 | ||||||
| Accrued expenses | 17,739 | 10,515 | ||||||||
| Deferred revenue | 31,467 | 28,983 | ||||||||
| Total current liabilities | 58,255 | 48,404 | ||||||||
| Other long-term liabilities | 7,898 | 2,052 | ||||||||
| Total liabilities | 66,153 | 50,456 | ||||||||
| Common stock | 305 | 301 | ||||||||
| Additional paid-in capital | 201,568 | 190,039 | ||||||||
| Accumulated other comprehensive income | 18 | 61 | ||||||||
| Accumulated deficit | (19,723 | ) | (19,479 | ) | ||||||
| Total stockholders' equity | 182,168 | 170,922 | ||||||||
| Total liabilities and stockholders' equity | $ | 248,321 | $ | 221,378 | ||||||
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