Constant Contact recently announced its financial results for the first quarter ended March 31, 2015.
“We were disappointed with the mixed results for the quarter, as revenue came in below expectations while profitability was better than expected,” said Gail Goodman, chief executive officer of Constant Contact. “In the quarter we didn’t deliver an acceleration in customer additions as expected, which resulted in missing our revenue goal. Given the current trends, we are adjusting down our revenue plans for the remainder of the fiscal year.”
“We are confident in our strategy for an integrated marketing suite for small businesses and organizations,” continued Goodman. “However, it is clear that we need to execute better. We have a framework to deliver sustainable revenue growth of greater than 20 percent, coupled with profit margins greater than 20 percent, and while disappointed by the near term setback, we are confident in our ability to deliver on this goal over time.”
First Quarter 2015 Financial Metrics
- Revenue was $90.4 million, an increase of 14.6% compared to revenue of $78.9 million for the comparable period in 2014.
- Gross margin was 73.0%, compared to 72.5% for the comparable period in 2014.
- Adjusted EBITDA was $14.7 million, compared to adjusted EBITDA of $11.0 million for the comparable period in 2014. Adjusted EBITDA margin was 16.2%, compared to 13.9% for the comparable period in 2014.
- GAAP net income was $3.6 million, or $0.11 per diluted share, compared to GAAP net income of $850 thousand, or $0.03 per diluted share, for the comparable period in 2014.
- Non-GAAP net income was $7.4 million, compared to non-GAAP net income of $5.0 million for the comparable period in 2014. Non-GAAP net income per diluted share was $0.22 per share, compared to $0.16 per share for the comparable period in 2014.
- Cash flow from operations was $20.2 million, compared to $11.1 million for the comparable period in 2014.
- Capital expenditures were $5.3 million, compared to $5.9 million for the comparable period in 2014.
- Free cash flow was $15.0 million, compared to $5.2 million for the comparable period in 2014.
- The company had $179.1 million in cash, cash equivalents and marketable securities at March 31, 2015, compared to $162.6 million at December 31, 2014.
- Added 55,000 gross new unique customers in the first quarter compared to 55,000 in the fourth quarter of 2014 and 50,000 in the first quarter of 2014. (*)
- Ended the first quarter with 645,000 unique customers, an increase from 635,000 unique customers at the end of the fourth quarter of 2014 and 605,000 unique customers at the end of the first quarter of 2014. (*)
- Average monthly revenue per unique customer (ARPU) in the first quarter was $47.09, up from $43.82 in the comparable period in 2014, and $46.59 in the fourth quarter of 2014.
- 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. (*) Unique customers are rounded to the nearest 5,000. We define unique customers as customers of all of our products and services, inclusive of both subscription and transaction-based products. Transactional customers are included in the customer count for the period if they transacted within the prior 12-month period. A customer of multiple products and services is counted as one unique customer.
“The underlying trends coming out of 2014 suggested a path to accelerating revenue growth for the year. However, during the first quarter we experienced unexpected headwinds,” said Harpreet Grewal, chief financial officer of Constant Contact. “While we are adjusting down our revenue guidance for 2015, we are raising guidance for full year profit margins as well as our full year free cash flow expectations. We are committed to getting back on the track of consistent, reliable execution, and remain committed to driving accelerating revenue growth over time, while continuing to expand margins and generate higher cash flow.” Nely Bonar