CONSTANT CONTACT, INC. (CTCT, Financial) filed Quarterly Report for the period ended 2010-09-30.
Constant Contact, Inc. has a market cap of $662 million; its shares were traded at around $23.12 with and P/S ratio of 5.1. CTCT is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management.
Sales and Marketing Expenses. Sales and marketing expenses for the nine months ended September 30, 2010 were $57.7 million, an increase of $15.4 million, or 36%, over sales and marketing expenses of $42.3 million for the nine months ended September 30, 2009. As a percentage of revenue, sales and marketing expenses were 46% for both the nine months ended September 30, 2010 and 2009. The increase in absolute dollars was primarily due to increased advertising and promotional expenditures due to continued expansion of our multi-channel marketing strategy, including our television and radio advertising campaigns and to personnel related costs as we added employees in an effort to generate sales leads and accommodate the growth in sales leads. Advertising and promotional expenditures and personnel related costs increased by $7.7 million and $5.7 million, respectively. Partner referral fees also increased by $1.3 million due to changes in our partner program and because the number of customers generated from our channel partners increased.
At September 30, 2010, our principal sources of liquidity were cash and cash equivalents and marketable securities of $122 million. From our inception through the time of our initial public offering, we financed our operations primarily through the sale of redeemable convertible preferred stock, issuance of convertible promissory notes, borrowings under credit facilities and, to a lesser extent, cash flow from operations. In October 2007, we completed our initial public offering, in which we issued and sold 6,199,845 shares of common stock at a price to the public of $16.00 per share. We raised $90.4 million in net proceeds after deducting underwriting discounts and commissions and other offering costs. We used $2.6 million of proceeds to repay our outstanding principal and interest under our term loan facility. In April 2008, we completed a secondary public offering in which we issued and sold 314,465 shares of common stock at a price to the public of $16.00 per share. We raised $4.0 million in net proceeds after deducting underwriting discounts and commissions and other offering costs. In the future, we anticipate that our primary source of liquidity will be cash generated from our operating activities.
Net cash provided by operating activities was $20.5 million for the nine months ended September 30, 2010 as compared to $16.2 million for the nine months ended September 30, 2009. Net cash provided by operating activities for the nine months ended September 30, 2010 consisted of net income of $1.3 million, contributions from working capital accounts of $5.6 million and non-cash charges of $14.4 million partially offset by a decrease in long-term accrued rent of $827,000. The contribution from working capital accounts was primarily due to an increase in deferred revenue of $4.1 million and an increase in accounts payable and accrued expense of $2.7 million partially offset by an increase in prepaid expenses and other receivables of $1.1 million. The non-cash charges consisted primarily of depreciation and amortization of $8.6 million and stock-based compensation expense of $5.8 million. Net cash provided by operating activities for the nine months ended September 30, 2009 consisted of net income of $502,000, contributions from working capital accounts of $4.9 million, non-cash charges of $9.7 million and an increase in long-term accrued rent of $1.3 million. The contribution from working capital accounts was primarily due to an increase in deferred revenue of $4.3 million, an increase in accrued expenses of $1.9 million and a decrease in prepaid expenses and other receivables of $368,000 partially offset by a decrease in accounts payable of $1.7 million. The non-cash charges consisted primarily of depreciation and amortization of $6.0 million and stock-based compensation expense of $3.6 million.
Net cash used in investing activities was $25.7 million for the nine months ended September 30, 2010 compared to $36.9 million for the nine months ended September 30, 2009. Net cash used in investing activities during the nine months ended September 30, 2010 consisted primarily of cash paid to purchase marketable securities of $84.3 million partially offset by cash received from the maturities of marketable securities of $72.7 million. Cash paid to purchase property and equipment was $11.9 million and cash used for the acquisition of NutshellMail was $2.2 million, net of cash received. Property and equipment purchases consisted of hardware and software to support our product infrastructure, capitalization of certain software development costs, computer equipment for our employees and furniture and fixtures and leasehold improvements primarily related to additional office space. Net cash used in investing activities during the nine months ended September 30, 2009 consisted of the purchase of short-term marketable securities of $54.6 million and the acquisition of property and equipment of $13.2 million as well as an increase in restricted cash of $442,000 related to a new lease we signed in May 2009 partially offset by cash received from the sale and maturities of short-term marketable securities of $31.4 million. Property and equipment purchases consisted of hardware and software to support our product
Net cash provided by financing activities was $2.7 million for the nine months ended September 30, 2010 and was due to proceeds from the issuance of our common stock pursuant to the exercise of stock options of $2.3 million as well as proceeds from the purchase of our common stock pursuant to our employee stock purchase plan of $390,000. Net cash provided by financing activities was $716,000 for the nine months ended September 30, 2009 and was due to proceeds from the issuance of our common stock pursuant to the exercise of stock options of $433,000 as well as proceeds from the purchase of our common stock pursuant to our employee stock purchase plan of $283,000.
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Constant Contact, Inc. has a market cap of $662 million; its shares were traded at around $23.12 with and P/S ratio of 5.1. CTCT is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management.
Highlight of Business Operations:
Cost of Revenue. Cost of revenue for the nine months ended September 30, 2010 was $37.1 million, an increase of $10.1 million, or 38%, over cost of revenue of $27.0 million for the nine months ended September 30, 2009. As a percentage of revenue, cost of revenue was 29% for both the nine months ended September 30, 2010 and 2009. The increase in absolute dollars resulted primarily from increased depreciation, hosting and maintenance costs of $4.2 million as a result of scaling and adding capacity to our hosting infrastructure to accommodate our growth, increased personnel related costs of $3.8 million and $766,000 in our customer support group and operations group, respectively, as we increased the number of employees to support our customer growth and manage our infrastructure and higher credit card fees of $502,000 due to the higher volume of billing transactions.Sales and Marketing Expenses. Sales and marketing expenses for the nine months ended September 30, 2010 were $57.7 million, an increase of $15.4 million, or 36%, over sales and marketing expenses of $42.3 million for the nine months ended September 30, 2009. As a percentage of revenue, sales and marketing expenses were 46% for both the nine months ended September 30, 2010 and 2009. The increase in absolute dollars was primarily due to increased advertising and promotional expenditures due to continued expansion of our multi-channel marketing strategy, including our television and radio advertising campaigns and to personnel related costs as we added employees in an effort to generate sales leads and accommodate the growth in sales leads. Advertising and promotional expenditures and personnel related costs increased by $7.7 million and $5.7 million, respectively. Partner referral fees also increased by $1.3 million due to changes in our partner program and because the number of customers generated from our channel partners increased.
At September 30, 2010, our principal sources of liquidity were cash and cash equivalents and marketable securities of $122 million. From our inception through the time of our initial public offering, we financed our operations primarily through the sale of redeemable convertible preferred stock, issuance of convertible promissory notes, borrowings under credit facilities and, to a lesser extent, cash flow from operations. In October 2007, we completed our initial public offering, in which we issued and sold 6,199,845 shares of common stock at a price to the public of $16.00 per share. We raised $90.4 million in net proceeds after deducting underwriting discounts and commissions and other offering costs. We used $2.6 million of proceeds to repay our outstanding principal and interest under our term loan facility. In April 2008, we completed a secondary public offering in which we issued and sold 314,465 shares of common stock at a price to the public of $16.00 per share. We raised $4.0 million in net proceeds after deducting underwriting discounts and commissions and other offering costs. In the future, we anticipate that our primary source of liquidity will be cash generated from our operating activities.
Net cash provided by operating activities was $20.5 million for the nine months ended September 30, 2010 as compared to $16.2 million for the nine months ended September 30, 2009. Net cash provided by operating activities for the nine months ended September 30, 2010 consisted of net income of $1.3 million, contributions from working capital accounts of $5.6 million and non-cash charges of $14.4 million partially offset by a decrease in long-term accrued rent of $827,000. The contribution from working capital accounts was primarily due to an increase in deferred revenue of $4.1 million and an increase in accounts payable and accrued expense of $2.7 million partially offset by an increase in prepaid expenses and other receivables of $1.1 million. The non-cash charges consisted primarily of depreciation and amortization of $8.6 million and stock-based compensation expense of $5.8 million. Net cash provided by operating activities for the nine months ended September 30, 2009 consisted of net income of $502,000, contributions from working capital accounts of $4.9 million, non-cash charges of $9.7 million and an increase in long-term accrued rent of $1.3 million. The contribution from working capital accounts was primarily due to an increase in deferred revenue of $4.3 million, an increase in accrued expenses of $1.9 million and a decrease in prepaid expenses and other receivables of $368,000 partially offset by a decrease in accounts payable of $1.7 million. The non-cash charges consisted primarily of depreciation and amortization of $6.0 million and stock-based compensation expense of $3.6 million.
Net cash used in investing activities was $25.7 million for the nine months ended September 30, 2010 compared to $36.9 million for the nine months ended September 30, 2009. Net cash used in investing activities during the nine months ended September 30, 2010 consisted primarily of cash paid to purchase marketable securities of $84.3 million partially offset by cash received from the maturities of marketable securities of $72.7 million. Cash paid to purchase property and equipment was $11.9 million and cash used for the acquisition of NutshellMail was $2.2 million, net of cash received. Property and equipment purchases consisted of hardware and software to support our product infrastructure, capitalization of certain software development costs, computer equipment for our employees and furniture and fixtures and leasehold improvements primarily related to additional office space. Net cash used in investing activities during the nine months ended September 30, 2009 consisted of the purchase of short-term marketable securities of $54.6 million and the acquisition of property and equipment of $13.2 million as well as an increase in restricted cash of $442,000 related to a new lease we signed in May 2009 partially offset by cash received from the sale and maturities of short-term marketable securities of $31.4 million. Property and equipment purchases consisted of hardware and software to support our product
Net cash provided by financing activities was $2.7 million for the nine months ended September 30, 2010 and was due to proceeds from the issuance of our common stock pursuant to the exercise of stock options of $2.3 million as well as proceeds from the purchase of our common stock pursuant to our employee stock purchase plan of $390,000. Net cash provided by financing activities was $716,000 for the nine months ended September 30, 2009 and was due to proceeds from the issuance of our common stock pursuant to the exercise of stock options of $433,000 as well as proceeds from the purchase of our common stock pursuant to our employee stock purchase plan of $283,000.
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