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/
Constant ContactMedia Contact:Erika Tower,
781-482-7039pr@constantcontact.comorInvestor
Contact:Jeremiah Sisitsky,
339-222-5740ir@constantcontact.com
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