Quarterly revenue of $91.9 million increased 10% year-over-year
Adjusted EBITDA of $20.3 million increased 12% year-over-year
Constant
Contact®, Inc. (Nasdaq: CTCT), which helps more than
650,000 small organizations find new customers and grow relationships
with their existing customers through its online marketing suite, today
announced its financial results for the third quarter ended September
30, 2015.
In light of the agreement and plan of merger between Constant Contact
and Endurance International Group Holdings, Inc. (Nasdaq: EIGI)
previously announced on November 2, 2015, Constant Contact has cancelled
its third quarter results conference call that had been scheduled for
Thursday, November 5, 2015 at 5:00 pm ET.
“This is an exciting time for our shareholders and for small businesses
everywhere,” said Gail Goodman, chief executive officer of Constant
Contact. “Combining with Endurance, we create a new leader in the small
business marketplace with extraordinary reach and scale. With small
business success as our common core, the combined company will have more
than $1 billion in revenue, a portfolio of products including web
hosting, domains, ecommerce, emarketing, and mobile business tools, and
more than 5 million customers. Together we will serve small businesses
from inception through growth, helping them harness the full power and
potential of the web.”
Third Quarter 2015 Financial Highlights
-
Revenue was $91.9 million, an increase of 10.0% compared to revenue of
$83.5 million for the comparable period in 2014.
-
Adjusted EBITDA was $20.3 million, compared to adjusted EBITDA of
$18.1 million for the comparable period in 2014.
-
Adjusted EBITDA margin was 22.1%, compared to 21.7% for the comparable
period in 2014.
-
GAAP net income was $6.4 million, or $0.19 per diluted share, compared
to GAAP net income of $5.2 million, or $0.16 per diluted share, for
the comparable period in 2014.
Given the announcement made on November 2, 2015 regarding Constant
Contact’s entry into an agreement and plan of merger with Endurance, the
company will no longer be providing operating metrics, nor will the
company provide outlook for its fourth quarter 2015 financial results.
The company’s financial guidance for FY 2015 should no longer be
relied upon.
Non-GAAP Financial Measures and Other Financial Information
This press release contains Adjusted EBITDA and Adjusted EBITDA margin,
which are non-GAAP financial measures. Adjusted EBITDA is defined as
GAAP net income before income taxes, interest and other income
(expense), net, depreciation and amortization, stock-based compensation,
and litigation contingency accruals. Adjusted EBITDA margin is a
non-GAAP financial measure that is calculated by dividing adjusted
EBITDA by revenue.
Constant Contact believes that these non-GAAP measures of financial
results provide useful information to management and investors regarding
certain financial and business trends relating to Constant Contact’s
financial condition and results of operations. The company’s management
uses these non-GAAP measures to compare the company’s performance to
that of prior periods for trend analyses, for purposes of determining
certain components of executive and senior management incentive
compensation, and for budgeting and planning purposes. These measures
are used in monthly financial reports prepared for management and in
monthly and quarterly financial reports presented to the company’s board
of directors. The company believes that the use of these non-GAAP
financial measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing the
company’s financial measures with other software-as-a-service companies,
many of which present similar non-GAAP financial measures to investors.
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 Adjusted EBITDA and
Adjusted EBITDA margin is that these non-GAAP financial measures exclude
significant expenses and income that are required by GAAP to be recorded
in the company’s financial statements. In addition, these non-GAAP
financial measures 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 these non-GAAP financial measures in connection with GAAP
results. Constant Contact urges investors to review the reconciliation
of its non-GAAP financial measures to the comparable GAAP financial
measures, which it includes in press releases announcing quarterly
financial results, including this press release, and not to rely on any
single financial measure to evaluate the company’s business.
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.
About Constant Contact, Inc.
Constant Contact introduced the first email marketing tool for small
businesses, nonprofits, and associations in 1998. Today, the company
helps more than 650,000 customers worldwide find marketing success
through the only all-in-one online marketing platform for small
organizations. Anchored by our world-class email marketing tool,
Constant Contact helps small businesses drive repeat business and find
new customers. It features multi-channel marketing campaigns
(newsletters/announcements, offers/promotions, online listings,
events/registration, and feedback) combined with shared content,
contacts, and reporting; free award-winning coaching and product
support; and integrations with critical business tools – all from a
single login. The company’s extensive network of educators,
consultants/resellers, technology providers, franchises, and national
associations offer further support to help small organizations succeed
and grow. Through its Innovation Loft, Constant Contact is fueling the
next generation of small business technology.
Constant Contact and the Constant Contact Logo are registered
trademarks of Constant Contact, Inc. All Constant Contact product names
and other brand names mentioned herein are trademarks or registered
trademarks of Constant Contact, Inc. All other company and product names
may be trademarks or service marks of their respective owners.
Additional Information About the Acquisition and Where to Find It
This communication is being made in respect of the proposed transaction
involving Constant Contact and Endurance. A special stockholder meeting
will be announced soon to obtain stockholder approval in connection with
the proposed merger between Constant Contact and Endurance. Constant
Contact expects to file with the SEC a proxy statement and other
relevant documents in connection with the proposed merger. The
definitive proxy statement will be sent or given to the shareholders of
Constant Contact and will contain important information about the
proposed transaction and related matters. INVESTORS OF CONSTANT CONTACT
ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT
MATERIALS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CONSTANT CONTACT,
ENDURANCE AND THE PROPOSED MERGER. Investors may obtain a free copy of
these materials (when they are available) and other documents filed by
Constant Contact with the SEC at the SEC’s website at www.sec.gov,
at Constant Contact’s website at www.constantcontact.com
or by sending a written request to Constant Contact at 1601 Trapelo
Road, Waltham, Massachusetts 02451, Attention: Investor Relations
Department.
Participants in the Solicitation
Constant Contact, Endurance, and their respective directors, executive
officers and certain other members of management and employees may be
deemed to be participants in soliciting proxies from Constant Contact’s
stockholders in connection with the proposed merger. Information
regarding Constant Contact’s and Endurance’s directors and executive
officers is set forth in their respective definitive proxy statements
for their respective 2015 Annual Meetings of Stockholders and their
respective most recent annual reports on Form 10-K. Information
regarding other persons who may, under the rules of the SEC, be
considered to be participants in the solicitation of Constant Contact’s
stockholders in connection with the proposed merger will be set forth in
Constant Contact’s definitive proxy statement for its special
stockholder meeting. Additional information regarding these individuals
and Constant Contact’s and Endurance’s respective directors and
executive officers and any direct or indirect interests they may have in
the proposed merger will be set forth in the definitive proxy statement
when and if it is filed with the SEC in connection with the proposed
merger.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains certain “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, including statements
regarding the expected timing of the completion of the transaction
described in this press release and the related financing; the expected
benefits of the transaction; the valuation of Constant Contact;
Endurance’s immediate and long-term financial expectations for the
combined business, including expected growth, free cash flow generation
and ability to achieve long-term financial targets; expectations
regarding Endurance’s and Constant Contact’s full-year fiscal 2015
results; and the future operation, direction and success of the
Endurance and Constant Contact businesses. These forward-looking
statements include, but are not limited to, plans, objectives,
expectations and intentions and other statements contained in this press
release that are not historical facts, and statements identified by
words such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“seeks,” “estimates,” “will,” “should,” “may,” “confident,” “positions,”
“look forward to,” and variations of such words or words of similar
meaning and the use of future dates. These forward-looking statements
reflect our current views about our plans, intentions, expectations,
strategies and prospects, which are based on the information currently
available to us and on assumptions we have made. Although we believe
that our plans, intentions, expectations, strategies and prospects as
reflected in or suggested by those forward-looking statements are
reasonable, we can give no assurance that these plans, intentions,
expectations or strategies will be attained or achieved. Furthermore,
actual results may differ materially from those described in the
forward-looking statements and will be affected by a variety of risks
and factors that are beyond our control including, without limitation,
uncertainties as to the timing of the contemplated transaction;
uncertainties as to the approval of Constant Contact stockholders
required in connection with the contemplated transaction; the
possibility that a competing proposal will be made; the possibility that
Endurance may not receive the anticipated financing or financing on the
terms expected; the possibility that the closing conditions to the
contemplated transaction may not be satisfied or waived, including that
a governmental entity may prohibit, delay or refuse to grant a necessary
regulatory approval; the effects of disruption of Endurance’s current
plans and operations caused by the announcement of the contemplated
transaction, which may cause Endurance’s stock price to decrease or make
it more difficult to maintain relationships with employees, customers,
vendors and other business partners; the possibility that the business
of Constant Contact may suffer as a result of uncertainty surrounding
the transaction or that Constant Contact may be adversely affected by
other economic, business, legislative, regulatory and/or competitive
factors; the inability of Endurance and Constant Contact to retain key
personnel; the risk that stockholder litigation or other legal
proceeding in connection with the contemplated transaction may affect
the timing or occurrence of the contemplated transaction or result in
significant costs of defense, indemnification and liability; the
possibility of the transaction involving unexpected costs, liabilities
or delays; the possibility of any failure to realize the intended
benefits of the contemplated transaction, including the inability to
integrate Constant Contact’s and Endurance’s business and operations or
to realize the anticipated synergies in the expected amount or within
the anticipated time frames or cost expectations or at all; the
possibility that Endurance’s and Constant Contact’s estimated fiscal
2015 results may differ from expectations; other business effects,
including the effects of industry, economic or political conditions
outside of the control of the parties to the contemplated transaction;
additional expenditures of time and resources related to transaction
costs, charges and expenses; adverse impact on Endurance’s business from
increased indebtedness and the cost of servicing its debt; actual or
contingent liabilities; and other risks and uncertainties discussed in
Endurance’s and Constant Contact’s filings with the SEC, including the
“Risk Factors” sections of Endurance’s and Constant Contact’s most
recent Quarterly Reports on Form 10-Q for the period ended June 30, 2015
and most recent Annual Reports on Form 10-K for the year ended December
31, 2014. You can obtain copies of Endurance’s and Constant Contact’s
filings with the SEC for free at the SEC’s website (www.sec.gov).
If the transaction is consummated, Constant Contact’s stockholders will
cease to have any equity interest in Constant Contact and will have no
right to participate in its earnings and future growth. Neither
Endurance nor Constant Contact assume any obligation to update any
forward-looking statements contained in this document as a result of new
information, future events or otherwise.
(CTCT-F)
Constant Contact, Inc.
|
Consolidated Condensed Statements of Operations
|
(unaudited)
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
Nine Months Ended
|
|
|
|
September 30,
|
September 30,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
91,859
|
|
|
|
$
|
83,494
|
|
|
|
$
|
273,807
|
|
|
|
$
|
243,624
|
|
Cost of revenue
|
|
|
|
24,600
|
|
|
|
|
23,223
|
|
|
|
|
73,493
|
|
|
|
|
67,050
|
|
Gross profit
|
|
|
|
67,259
|
|
|
|
|
60,271
|
|
|
|
|
200,314
|
|
|
|
|
176,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
14,633
|
|
|
|
|
13,417
|
|
|
|
|
42,587
|
|
|
|
|
39,341
|
|
Sales and marketing
|
|
|
31,474
|
|
|
|
|
28,406
|
|
|
|
|
102,982
|
|
|
|
|
94,319
|
|
General and administrative
|
|
|
11,495
|
|
|
|
|
10,365
|
|
|
|
|
34,740
|
|
|
|
|
30,671
|
|
Total operating expenses
|
|
|
57,602
|
|
|
|
|
52,188
|
|
|
|
|
180,309
|
|
|
|
|
164,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
9,657
|
|
|
|
|
8,083
|
|
|
|
|
20,005
|
|
|
|
|
12,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income and other income (expense), net
|
|
|
38
|
|
|
|
|
339
|
|
|
|
|
149
|
|
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
9,695
|
|
|
|
|
8,422
|
|
|
|
|
20,154
|
|
|
|
|
12,630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
(3,299
|
)
|
|
|
|
(3,224
|
)
|
|
|
|
(6,382
|
)
|
|
|
|
(4,563
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
6,396
|
|
|
|
$
|
5,198
|
|
|
|
$
|
13,772
|
|
|
|
$
|
8,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
0.20
|
|
|
|
$
|
0.16
|
|
|
|
$
|
0.43
|
|
|
|
$
|
0.26
|
|
Diluted
|
|
|
$
|
0.19
|
|
|
|
$
|
0.16
|
|
|
|
$
|
0.41
|
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding used in computing per share
amounts:
|
|
|
Basic
|
|
|
|
32,019
|
|
|
|
|
31,893
|
|
|
|
|
32,080
|
|
|
|
|
31,557
|
|
Diluted
|
|
|
|
32,837
|
|
|
|
|
33,180
|
|
|
|
|
33,258
|
|
|
|
|
32,750
|
|
Constant Contact, Inc.
|
Calculation of Adjusted EBITDA and Adjusted EBITDA Margin
(unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2015
|
|
|
2014
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
6,396
|
|
|
$
|
5,198
|
|
|
|
$
|
13,772
|
|
|
$
|
8,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
3,299
|
|
|
|
3,224
|
|
|
|
|
6,382
|
|
|
|
4,563
|
Interest income and other (income) expense, net
|
|
|
(38)
|
|
|
|
(339)
|
|
|
|
|
(149)
|
|
|
|
(387)
|
Depreciation and amortization
|
|
|
6,263
|
|
|
|
6,234
|
|
|
|
|
18,478
|
|
|
|
18,041
|
Stock-based compensation expense
|
|
|
4,373
|
|
|
|
3,810
|
|
|
|
|
13,299
|
|
|
|
12,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
20,293
|
|
|
$
|
18,127
|
|
|
|
$
|
51,782
|
|
|
$
|
42,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Divide by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
91,859
|
|
|
$
|
83,494
|
|
|
|
$
|
273,807
|
|
|
$
|
243,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
|
22.1%
|
|
|
|
21.7%
|
|
|
|
|
18.9%
|
|
|
|
17.4%
|
Constant Contact, Inc.
|
Consolidated Condensed Statements of Cash Flows (unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net income
|
|
|
|
|
|
$
|
13,772
|
|
|
|
$
|
8,067
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
Depreciation and amortization
|
|
|
|
18,478
|
|
|
|
|
18,041
|
|
Amortization of premiums on investments
|
|
|
354
|
|
|
|
|
187
|
|
Stock-based compensation expense
|
|
|
13,299
|
|
|
|
|
12,134
|
|
Provision for (recovery of) bad debts
|
|
|
48
|
|
|
|
|
(7
|
)
|
Gain on sales of marketable securities
|
|
|
-
|
|
|
|
|
(1
|
)
|
Deferred income taxes
|
|
|
|
|
|
(2,521
|
)
|
|
|
|
(512
|
)
|
Income tax benefit from the exercise of stock options
|
|
|
(5,335
|
)
|
|
|
|
(1,666
|
)
|
Taxes paid related to net share settlement of restricted stock units
|
|
|
(1,538
|
)
|
|
|
|
(2,341
|
)
|
Loss on sublease
|
|
|
|
|
|
|
-
|
|
|
|
|
259
|
|
Change in operating assets & liabilities:
|
|
|
|
Accounts receivable
|
|
|
|
|
(191
|
)
|
|
|
|
49
|
|
Prepaid expenses and other current assets
|
|
|
3,310
|
|
|
|
|
(527
|
)
|
Other assets
|
|
|
|
|
|
|
(728
|
)
|
|
|
|
54
|
|
Accounts payable
|
|
|
|
|
|
3,301
|
|
|
|
|
(250
|
)
|
Accrued expenses
|
|
|
|
|
|
3,082
|
|
|
|
|
4,287
|
|
Deferred revenue
|
|
|
|
|
|
1,927
|
|
|
|
|
2,542
|
|
Other long-term liabilities
|
|
|
|
(147
|
)
|
|
|
|
991
|
|
Net cash provided by (used by) operating activities
|
|
|
47,111
|
|
|
|
|
41,307
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchases of marketable securities
|
|
|
(34,402
|
)
|
|
|
|
(27,276
|
)
|
Proceeds from maturities of marketable securities
|
|
|
41,712
|
|
|
|
|
14,665
|
|
Proceeds from sales of marketable securities
|
|
|
-
|
|
|
|
|
633
|
|
Acquisition of property and equipment
|
|
|
(22,347
|
)
|
|
|
|
(21,013
|
)
|
Net cash used in investing activities
|
|
|
(15,037
|
)
|
|
|
|
(32,991
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Exercise of stock options and warrants
|
|
|
11,828
|
|
|
|
|
16,016
|
|
Income tax benefit from the exercise of stock options
|
|
|
5,335
|
|
|
|
|
1,666
|
|
Proceeds from issuance of common stock pursuant to employee stock
purchase plan
|
|
|
1,063
|
|
|
|
|
831
|
|
Repurchase of common stock
|
|
|
(24,767
|
)
|
|
|
|
(7,360
|
)
|
Net cash provided by financing activities
|
|
|
(6,541
|
)
|
|
|
|
11,153
|
|
Effects of exchange rates on cash and cash equivalents
|
|
|
(3
|
)
|
|
|
|
(4
|
)
|
Net increase in cash and cash equivalents
|
|
|
25,530
|
|
|
|
|
19,465
|
|
Cash and cash equivalents, beginning of period
|
|
|
104,301
|
|
|
|
|
82,478
|
|
Cash and cash equivalents, end of period
|
|
$
|
129,831
|
|
|
|
$
|
101,943
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing
activities
|
|
|
Capitalization of stock-based compensation
|
|
$
|
205
|
|
|
|
$
|
148
|
|
Acquisition of property and equipment included in accounts payable
and accrued expenses
|
|
|
181
|
|
|
|
|
-
|
|
Constant Contact, Inc.
|
Consolidated Condensed Balance Sheets (unaudited)
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
129,831
|
|
|
$
|
104,301
|
|
Marketable securities
|
|
|
|
50,683
|
|
|
|
58,321
|
|
Accounts receivable, net
|
|
|
|
408
|
|
|
|
265
|
|
Prepaid expenses and other current assets
|
|
|
12,637
|
|
|
|
10,723
|
|
Total current assets
|
|
|
|
193,559
|
|
|
|
173,610
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
47,337
|
|
|
|
43,739
|
|
Restricted cash
|
|
|
|
|
|
1,300
|
|
|
|
1,300
|
|
Goodwill
|
|
|
|
|
|
95,505
|
|
|
|
95,505
|
|
Acquired intangible assets, net
|
|
|
894
|
|
|
|
2,160
|
|
Deferred tax assets
|
|
|
|
|
7,215
|
|
|
|
4,658
|
|
Other assets
|
|
|
|
|
|
2,621
|
|
|
|
1,893
|
|
Total assets
|
|
|
|
|
$
|
348,431
|
|
|
$
|
322,865
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
7,073
|
|
|
$
|
4,703
|
|
Accrued expenses
|
|
|
|
|
14,501
|
|
|
|
12,230
|
|
Deferred revenue
|
|
|
|
|
|
39,765
|
|
|
|
37,838
|
|
Total current liabilities
|
|
|
61,339
|
|
|
|
54,771
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
3,636
|
|
|
|
3,783
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
64,975
|
|
|
|
58,554
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
318
|
|
|
|
319
|
|
Additional paid-in capital
|
|
|
254,962
|
|
|
|
249,599
|
|
Accumulated other comprehensive income (loss)
|
|
|
1
|
|
|
|
(10
|
)
|
Retained earnings
|
|
|
|
|
28,175
|
|
|
|
14,403
|
|
Total stockholders' equity
|
|
|
283,456
|
|
|
|
264,311
|
|
Total liabilities and stockholders' equity
|
|
$
|
348,431
|
|
|
$
|
322,865
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20151105006761/en/
Copyright Business Wire 2015