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Constant Contact Announces Second Quarter 2013 Financial Results

Constant Contact®, Inc. (Nasdaq: CTCT), which helps more than half a million small organizations connect with their customers through a suite of online marketing tools, today announced its financial results for the second quarter ended June 30, 2013.

“Our second quarter results marked another quarter of consistent execution, as each of our primary growth drivers — new customer additions, average monthly revenue per customer (ARPU) and retention — reflected positive year-on-year trends,” said Gail Goodman, chief executive officer of Constant Contact. “I am pleased with the performance of our core business and excited about our progress towards delivering a robust suite of integrated online marketing tools for small businesses. We are rolling out our enhanced contacts functionality to customers, a cornerstone of our multi-product suite and a significant milestone in the evolution of Constant Contact.”

Second Quarter 2013 Financial Metrics

  • Revenue was $70.2 million, an increase of 13.0%, compared to revenue of $62.1 million for the comparable period in 2012.
  • Gross margin in the second quarter was 70.7%, compared to 70.3% for the comparable period in 2012.
  • GAAP net income was $90 thousand, or $0.00 per share, compared to a GAAP net loss of $462 thousand, or ($0.02) per share, for the second quarter of 2012.
  • Adjusted EBITDA was $9.5 million compared to adjusted EBITDA of $8.1 million for the comparable period in 2012. Adjusted EBITDA margin was 13.6%, compared to 13.0% for the comparable period in 2012.
  • Non-GAAP net income was $3.7 million, compared to non-GAAP net income of $3.3 million for the second quarter of 2012. Non-GAAP net income per diluted share was $0.12 per share, compared to $0.11 per share for the second quarter of 2012.
  • Cash flow from operations was $7.4 million, compared to $5.2 million for the second quarter of 2012.
  • Capital expenditures were $4.9 million, compared to $5.2 million for the second quarter of 2012.
  • Free cash flow was $2.5 million, compared to $56 thousand for the second quarter of 2012.
  • The company had $99.3 million in cash, cash equivalents and marketable securities at June 30, 2013, compared to $97.3 million at March 31, 2013.

Operating Metrics

  • Added 50,000 gross new unique customers in the second quarter compared to 45,000 in the second quarter of 2012. (*)
  • Ended the second quarter with 575,000 unique customers, an increase from 565,000 unique customers at the end of the first quarter of 2013 and 535,000 unique customers at the end of the second quarter of 2012. (*)
  • Average monthly revenue per unique customer (ARPU) for the second quarter was $41.79, up from $41.34 in the first quarter of 2013 and up from $39.98 in the comparable period in 2012. (**)
  • 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. (**) The ARPU calculation excludes the approximately 10,000 existing SinglePlatform customers at the time of the acquisition in June 2012.

Other Recent Highlights

  • Announced a partnership between SinglePlatform and GrubHub ®, a leading online and mobile food ordering service, establishing SinglePlatform as a menu provider for GrubHub ® and integrating its online ordering platform into SinglePlatform’s menus.
  • Conducted a recent survey of the Constant Contact Small Biz Council (a research panel of U.S. small businesses recruited from the Constant Contact customer base), which found that while 59 percent of small businesses believe it is harder to run a business today than five years ago, 89 percent cited the use of online marketing tools, such as email and social media, as making it easier and less expensive to market their business.
  • Under the company’s previously announced $20 million share repurchase program, the company repurchased 100,000 shares of common stock in the second quarter for $1.6 million at an average purchase price of $16 per share.

“We are pleased with our second quarter results with revenue in line with expectations and profitability above expectations. With continued gains in ARPU and customer retention combined with sequential and year-on-year decreases in the cost to acquire a customer, we are driving meaningful improvement in customer lifetime value. These gains and the resulting positive impact on margins give us the confidence to raise our full year guidance for adjusted EBITDA for the second consecutive quarter,” said Harpreet Grewal, chief financial officer of Constant Contact. “Looking ahead to the remainder of the fiscal year, we will maintain our focus on delivering consistently good results while we carry out our longer-term vision to transform Constant Contact into a true multi-product company.”

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