Constant Contact, Inc. (CTCT)

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Constant Contact, Inc. (CTCT)

Q4 2012 Earnings Call

January 31, 2012 5:00 pm ET


Jeremiah Sisitsky – Director of Investor Relations

Gail F. Goodman – Chairman, President, and Chief Executive Officer

Harpreet S. Grewal – Chief Financial Officer, Executive Vice President and Treasurer


Richard Hugh Davis – Canaccord Genuity, Inc.

Steven Ashley – Robert W. Baird & Co.

Daniel Salmon – BMO Capital Markets

Carter Malloy – Stevens, Inc.

Michael Nemeroff – Credit Suisse

Richard Fetyko – Janney Capital

Peter Goldmacher – Cowen and Company

Brian Schwartz – Oppenheimer & Co.

Arvind Rajamohan – Stifel, Nicolaus & Co.

Jeffrey Houston – Barrington Research

Richard Baldry – Wunderlich Securities, Inc.



Good day, ladies and gentlemen, and welcome to the Constant Contact Fourth Quarter 2012 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time (Operator Instructions).

I would now like to turn the call over to Jerry Sisitsky, Director of Investor Relations. Please go ahead sir.

Jeremiah Sisitsky

Great. Thank you, Jamie. Good afternoon, everyone, and welcome to Constant Contact’s investor conference call for the fourth quarter and fiscal year ended December 31, 2012. With me on the call today is Gail Goodman, Chairman, President and CEO; and Harpreet Grewal, Chief Financial Officer.

During the course of this conference call, we will make various remarks about the company’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the risk factors section of our most recent Form 10-K and 10-Q on file with the SEC. In addition, any forward-looking statements represent our views only as of today January 31, 2013. While we may elect to update these forward-looking statements at some point in the future, we disclaim any obligation to do so even if our views change.

During this call, we will refer to certain non-GAAP financial measures. These financial measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure is available in the press release announcing our fourth quarter year-end 2012 financial results.

This press release is available on the Investor Relations section of our website at www.constantcontact.com, also available for download on our IR website is a presentation and our historical financial and operating metrics.

With that, I’ll now turn the call over to Gail.

Gail F. Goodman

Thanks, Jerry. Fourth quarter revenue totaled $66.3 million, representing year-over-year growth of more than 15% and above the range of guidance we provided. We also delivered profitability for the quarter that was in line with our expectations, with adjusted EBITDA of $10.2 million and adjusted EBITDA margin of 15.3%. For the full year revenue increased approximately 18% to over $252 million. Adjusted EBITDA totaled $37 million and adjusted EBITDA margin was 14.5% for the full year, in line with recent guidance.

The fourth quarter was a good finish to the year with positive momentum in our fundamental metrics. The fourth quarter included the addition of 45,000 new and 15,000 net new customer additions, a meaningful improvement over the prior quarter. We’re pleased that the changes we made in the business began to drive improved execution in the quarter, which Harp will discuss in more detail a bit later.

Overall, 2012 was a year of significant investment towards our multi-product engagement marketing strategy. In 2012, we significantly expanded the Constant Contact products suite, from three products to six. We now have a robust collection of online marketing tools for small businesses and non-profits, including Email Marketing, EventSpot, Online Survey, SinglePlatform, Social Campaigns and SaveLocal. Email marketing remains the largest part of our business and we remain focused on driving increased revenue and customer growth in email and believe we can do both.

In 2012, we secured about a 155,000 new paying email marketing customers. We drove email ARPU to record levels and improved email retention rates. Our customers continue to rely on email. They sent out more than 45 billion email s in 2012 to better engage their donors, prospects and customers. They experienced continued strong open rates and our average customer grew their list to over 2,800 contacts.

On Cyber Monday, we set a record for email s sent in a single day of 235 million, translating to more than 500,000 per minute at peak volume. We saw an increased number of prospects sign up for email marketing trials as we move through the year, validating ongoing demand for email marketing. Email marketing is a proven marketing channel for small businesses and one of their strongest ROI channels, and the opportunity remains for Constant Contact to accelerate email marketing revenue and customer growth.

Our event marketing product, EventSpot, continue to mature and scale delivering approximately 100% growth in revenue in 2012. We completed a re-branding of the product in August and interest in demand continues to grow. More than 315,000 events were managed by EventSpot in 2012 with more than five million registrants and well in excess of 100 million in fees were collected on behalf of our small business and non-profit customers.

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