Constant Contact Q3 Preview: User Base & Spending in Focus
Constant Contact (NASDAQ:CTCT) is set to announce its Q3 FY11 earnings on Thursday. We currently have a $25 Trefis price estimate for Constant Contact, which implies an upside of more than 30% to the current stock price. Its primary business is content marketing consisting of email marketing, event marketing and online server tools. It has also ventured into social media marketing lately. It competes with Eventbrite, iContact and Surveymonkey as well as Salesforce.com (NASDAQ:CRM) and Microsoft (NASDAQ:MSFT) in the customer relationship management market.
Content Marketing is its primary revenue engine and accounts for more than 80% of its Trefis price estimate.
Check out our complete coverage of Constant Contact
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- Constant Contact Earnings: Results Were Good Year-On-Year But Fell Short Of Guidance
- Constant Contact Pre-Earnings: Improved Marketing Strategies, Continued Alliances And ‘Galileo’ Could Drive Revenues
- Constant Contact: What Lies Ahead
- Constant Contact Performed Better Than The Previous Quarter, Though Customer Growth Yet To Recover
- Constant Contact Q2 Earnings Preview: Recovery Expected Post The Change In Brand Positioning
What We’re Looking At: Growth in User Base and ARPU
Since almost all its revenues are generated by its content marketing business, the main drivers which would impact earnings are its number of users and the average revenue it generates per user. Those are the two metrics we will be watching closely.
Constant Contact ended the last quarter with around 470,000 unique paying customers, and we expect the number to increase steadily during the forecast period, although the rate of growth is likely to slow down considering the current economic environment and the increased competition in the online marketing space.
In the last quarter, Constant Contact also managed to increase its monthly ARPU (average revenue per user) marginally to $37.90 We expect its monthly ARPUs to grow marginally this quarter, and expect it to reach $40 by the end of the forecast period.
Constant Contact now offers a complete package of online marketing tools, consisting of email, social media, and event marketing, giving it a lot of cross-selling opportunities. Its existing customer base, as well as its new customers, have been displaying a trend of buying more products which could lead to increased ARPU numbers.
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