Prospectus Summary
This summary highlights information contained elsewhere in this prospectus. You should read the following summary together with the more detailed information appearing in this prospectus, including our financial statements and related notes, and the risk factors beginning on page 7, before deciding whether to purchase shares of our common stock. Unless the context otherwise requires, we use the terms “Constant Contact,” “our company,” “we,” “us” and “our” in this prospectus to refer to Constant Contact, Inc. and our wholly-owned subsidiary.
Constant Contact
Overview
Constant Contact is a leading provider of on-demand email marketing and online survey solutions for small organizations, including small businesses, associations and non-profits. As of December 31, 2007, we had over 164,000 email marketing customers. Our customers use our email marketing product to more effectively and efficiently create, send and track professional and affordable permission-based email marketing campaigns. With these campaigns, our customers can build stronger relationships with their customers, clients and members, increase sales and expand membership. Our email marketing product incorporates a wide range of customizable templates to assist in campaign creation, user-friendly tools to import and manage contact lists and intuitive reporting to track campaign effectiveness. In June 2007, we introduced an online survey product that complements our email marketing product and enables small organizations to easily create and send surveys and effectively analyze responses. As of December 31, 2007, we had over 8,000 survey customers, substantially all of which were also email marketing customers. We are committed to providing our customers with a high level of support, which we deliver via phone, chat, email and our website.
Our email marketing customer base has grown steadily from approximately 25,000 at the end of 2004 to over 164,000 as of December 31, 2007. We estimate that approximately two-thirds of our customers have fewer than ten employees and in 2007 our top 80 email marketing customers accounted for approximately 1% of our total email marketing revenue. Our email marketing customers pay a monthly subscription fee that generally ranges between $15 per month and $150 per month based on the size of their contact lists and, in some cases, volume of mailings. For the year ended December 31, 2007, the average monthly amount that we charged a customer for our email marketing solution alone was approximately $33. In addition, in 2007, the average monthly total revenue per email marketing customer, including all sources of revenue, was $33.63. We believe that the simplicity of on-demand deployment combined with our affordable subscription fees and functionality facilitate adoption of our solutions by our target customers while generating significant recurring revenue. From January 2005 through December 2007, at least 97.4% of our customers in a given month have continued to utilize our email marketing product in the following month. Since the first quarter of 2002, we have achieved 24 consecutive quarters of growth in customers and revenue.
We acquire our customers through a variety of sources including online advertising, channel partnerships, regional initiatives, referrals and general brand awareness. Our online advertising includes search engine marketing and advertising on networks and other sites. Our channel partnerships are contractual relationships with over 2,300 active partners, which include national small business service providers such as Network Solutions, LLC, American Express Company and Career Builder, LLC as well as local small business service providers, such as web developers and marketing agencies, who refer customers to us through links on their websites and outbound promotions to their customers. Our regional initiatives include local seminars and local advertising including print, online and radio. Referral customers come from word-of-mouth from those among our satisfied, growing customer base and the inclusion of a link to our website in the footer of the more than 700 million emails currently sent by our customers each month. Finally, we believe our general brand awareness, press and thought leadership initiatives and visibility drive prospects to us. During 2007, approximately 33% of our new email marketing customers were generated through our online marketing efforts and approximately 14% of our new email marketing customers were generated through our channel partners. We believe the remaining 53% came from the combination of regional initiatives, referrals and general brand awareness.
We were founded in 1995 and our on-demand email marketing product was first offered commercially in 2000. In 2007, our revenue was $50.5 million and our net loss was $8.3 million.
End box 1 END PAGE WIDTH PAGEBREAK BEGIN PAGE WIDTH Begin box 1Industry Background
We believe that small organizations represent a large market for email marketing. Based on statistics compiled by the U.S. Small Business Administration, one of the selling stockholders in this offering, and others, we believe that our email marketing product could potentially address the needs of more than 28 million small organizations in the United States. We believe that all small organizations could benefit by communicating regularly with their constituents and, further, that email marketing with our product is an effective and affordable method to facilitate this type of communication. As of December 2007, we had customers in at least 871 of the 1,005 4-digit standard industrial classification, or SIC, codes, which is a method the U.S. government uses to classify industries in the U.S.
To date, however, small organizations have been slower than large organizations to adopt email marketing. Many small organizations lack familiarity with the benefits of email marketing and an understanding of how to prepare, execute and measure a campaign. Similarly, they often do not have the technical expertise necessary to implement email marketing software or the financial resources to hire in-house staff or retain an outside agency to support the effort. We believe that existing alternatives, primarily the use of general email applications, are poorly suited to meeting the email marketing needs of small organizations. General email applications and services, such as Microsoft Outlook®, America Online® or Microsoft Hotmail®, are generally designed for one-on-one emails and do not have the formatting, graphics or links needed to produce effective email marketing campaigns. The other major alternative is enterprise email marketing providers that offer sophisticated services for large organizations with sizeable marketing budgets and deliver services at a price and scale far beyond the scope of most small organizations. As a result, we believe there is a significant opportunity for an email marketing product tailored to the needs of small organizations.
Our Products and Services
We provide small organizations with a convenient, effective and affordable way to communicate with their constituents. Our email marketing product provides customers with the following features:
In addition, we offer our customers an online survey product to enable them to survey their customers, clients or members and analyze the responses. Our survey product provides customers with a survey creation wizard, over 40 different preformatted and customizable survey templates, list management capabilities and live customer support.
End box 1 END PAGE WIDTH PAGEBREAK BEGIN PAGE WIDTH Begin box 1Business Strengths
We believe that the following business strengths differentiate us from our competitors and are key to our success:
Growth Strategy
Our objective is to grow our market leadership through the following strategies:
Corporate Information
We were incorporated in Massachusetts in August 1995 under the name Roving Software Incorporated. We reincorporated in Delaware in July 2000 and changed our name to Constant Contact, Inc. in December 2006. Our principal executive offices are located at Reservoir Place, 1601 Trapelo Road, Suite 329, Waltham, Massachusetts 02451, and our telephone number is (781) 472-8100. Our website address is www.constantcontact.com. Information contained on our website or that may be accessed through links on our website is not incorporated by reference into this prospectus, and you should not consider information contained on our website to be part of this prospectus or in deciding whether to purchase shares of our common stock.
Constant Contact®, Do-It-Yourself Email Marketing®, SafeUnsubscribe®, Email Marketing 101®, Email Marketing Hints & Tips® and other trademarks or service marks of Constant Contact appearing in this prospectus are the property of Constant Contact. This prospectus contains additional trade names, trademarks and service marks of other companies.
End box 1 END PAGE WIDTH PAGEBREAK BEGIN PAGE WIDTH Begin box 1The Offering
The number of shares of our common stock to be outstanding after this offering is based on (i) 27,617,014 shares of common stock outstanding as of December 31, 2007 and (ii) an additional 1,159 shares of common stock to be issued to certain selling stockholders in connection with this offering upon the exercise of stock options, and excludes:
Except as otherwise noted, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option.
End box 1 END PAGE WIDTH PAGEBREAK BEGIN PAGE WIDTH Begin box 1Summary Financial Information
The following tables present our summary statements of operations data for the three years ended December 31, 2007, and our summary historical and as adjusted balance sheet data as of December 31, 2007. The summary statements of operations data for the three years ended December 31, 2007 and the summary balance sheet data as of December 31, 2007 are derived from our audited consolidated financial statements for the three years ended December 31, 2007 included elsewhere in this prospectus. Our historical results for prior periods are not necessarily indicative of results to be expected for any future period. You should read this data together with our financial statements and related notes included elsewhere in this prospectus and the information under “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
callerid=999 iwidth=455 length=108 End box 1 END PAGE WIDTH PAGEBREAK BEGIN PAGE WIDTH Begin box 1The following table summarizes our balance sheet data as of December 31, 2007:
End box 1 END PAGE WIDTH PAGEBREAK BEGIN PAGE WIDTH