Constant Contact Management Discusses Q2 2012 Results - Earnings Call Transcript

Constant Contact (CTCT)

Q2 2012 Earnings Call

July 26, 2012 5:00 pm ET

Executives

Jeremiah Sisitsky - Director of Investor Relations

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

Harpreet S. Grewal - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Analysts

Richard H. Davis - Canaccord Genuity, Research Division

Peter L. Goldmacher - Cowen and Company, LLC, Research Division

Brad Reback - Stifel, Nicolaus & Co., Inc., Research Division

Chaitanya Yaramada - Robert W. Baird & Co. Incorporated, Research Division

Michael Huang - Needham & Company, LLC, Research Division

Brian J. Schwartz - Oppenheimer & Co. Inc., Research Division

Michael Anderson - Crédit Suisse AG, Research Division

Brett Fodero - Lazard Capital Markets LLC, Research Division

Richard K. Baldry - Wunderlich Securities Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Constant Contact Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Jerry Sisitsky. You may begin.

Jeremiah Sisitsky

Great. Thank you, Latoya. Good afternoon, everyone and welcome to Constant Contact's investor conference call for the second quarter ended June 30, 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'll 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 represents our views only as of today, July 26, 2012. 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 to the most directly comparable GAAP financial measure is available in the press release announcing our second quarter 2012 financial results. The press release is also available on the Investor Relations section of our website at www.constantcontact.com. Also available for download is a presentation and our historical financial and operating metrics.

With that, now let me turn the call over to Gail.

Gail F. Goodman

Thanks, Jerry, and thanks to everyone joining us on the call to review our second quarter financial results. Revenue of $62.1 million and adjusted EBITDA of $8.1 million were both consistent with our expectations. We are pleased with the results of our Email Marketing business and excited by the early progress of our more recently launched offerings.

Our investments in driving ARPU and improving customer retention rates continue to yield meaningful results, and our confidence in the business is causing us to, again, raise our guidance for the year.

We have a number of exciting growth initiatives at Constant Contact. On this call, we'll highlight SinglePlatform and Social Campaigns.

Let me start with SinglePlatform. The acquisition of SinglePlatform marked another big step forward in Constant Contact's transformation to a multi-product company. One of the more significant challenges and opportunities for small businesses is being found by new customers across the myriad of search engines, websites, directories and mobile applications. Accurate rich listings, everywhere that consumers are searching are a necessity for small businesses. SinglePlatform solves this problem in a simple yet powerful way. The company allows small businesses to provide and update information in one place. SinglePlatform then distributes their Digital Storefront to more than 200 million consumers through its 100-plus publisher relationships. This network generated roughly 7 million digital storefront views for SinglePlatform listings in June alone.

We continue to meaningfully add to the SinglePlatform publisher network. While many publishers prefer not to be specifically named, New York Times, Yellow Pages, UrbanSpoon, TripAdvisor, CitySearch, Village Voice Media and The Washington Post represent just some of the over 100 publishers and review sites with whom SinglePlatform has partnerships.

The SinglePlatform Digital Storefront helps small businesses stand out by going beyond the basic listing. In addition to basic information such as the name of the business, address, contact information and hours of operation, SinglePlatform helps small businesses add consumer-engaging information like products, services, menus, pricing, photos and videos; update in one place and publish across numerous popular web destinations and mobile applications to be seen by thousands or millions of potential local customers.

We believe small businesses instinctively understand they need a solution like SinglePlatform to make them visible in today's mobile, local and review-centric environment.

The power of the Digital Storefront extends to the publishers as well by driving significant engagement on their networks. With an average consumer looking at a menu for around 4 minutes and more than 7 million projected views this month, we've added more than 28 million additional minutes of engagement for our publisher partners.

We believe SinglePlatform can serve as a powerful front door for Constant Contact to acquire new customers, as well as provide a significant cross-sell opportunity. SinglePlatform has a repeatable, phone-based outbound selling model and is rapidly scaling their sales team. In the last 2 months, they've added 30 new sales representatives and expect to have roughly 75 salespeople by year-end. A typical salesperson is trained and productive in only 2 months. With the addition of Constant Contact's brand marketing expertise and install base, there are additional opportunities for accelerated growth.

Read the rest of this transcript for free on seekingalpha.com

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