Constant Contact (NASDAQ:CTCT) will announce its earnings on October 25th. The company had reported in August that its revenues in the first half of the year increased by 19% from $102 million to $122 million. In addition to its primary business of content marketing which includes email marketing, event marketing and online survey tools, the company has diversified into social media marketing with offerings like Social Campaigns and SinglePlatform, a product for small businesses it acquired in June. We expect the company to drive revenues by cross-selling the new products to its existing users and would be looking for the its growth strategy in the coming quarters. It competes with the likes of Groupon (NASDAQ:GRPN), Living Social, Eventbrite, iContact, Surveymonkey as well as Salesforce.com (NASDAQ:CRM).
User base growth
Since almost all of its revenues are generated by content marketing, the main drivers which impact its revenue are the number of users and the average revenue per user (ARPU). The company ended the last quarter with around 525,000 unique paying customers. It added 15,000 new users in the quarter which is more than the growth rate we are looking to see if that was representative of long term growth. We currently estimate it to have reached nearly 533,000 users by the end of 2012. We expect the SinglePlatform tool and Social Campaign offering (which reported that 20% of its user base were new to Constant Contact) to lead the growth in Q3.
Last quarter Constant Contact also managed to increase its monthly ARPU marginally to $39.98, from $39.56 in the first quarter. We are looking for the impact of SinglePlatform and Social Campaign tools on the ARPU as it exploits the various cross-selling opportunities across its product portfolio. We should see more details on its ARPU figures and its product strategy in the earnings release.
We have a $30 estimate for Constant Contact, which is at 80% premium to the current market price.