Constant Contact Revenues Up 20% in Q3, Supports $25 Fair Value

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CTCT
Constant Contact

Constant Contact posted its Q3 2011 earnings today, with revenues up 20% year-over-year. Constant Contact generates all its revenues from Content Marketing, which is comprised of email marketing, event marketing, online survey tools as well as social media marketing. It competes with Eventbrite, iContact and Surveymonkey as well as Salesforce.com (NASDAQ:CRM) and Microsoft (NASDAQ:MSFT) in the customer relationship management market.

The results have been largely in line with our expectations, and we have revised the Trefis price estimate for Constant Contact to $25, which stands nearly 25% above the current market price.

Check out our complete coverage of Constant Contact

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Going forward, these are the major factors which will drive Constant Contact’s revenue growth.

Customer Growth

Constant Contact added nearly 40,000 new customers this quarter, bring the total unique paying customers up to 485,000 – a net addition of 15,000 customers. We expect it to continue adding new customers at this rate, reaching nearly 500,000 customers by the end of the year.

The average unique paying customers in 2011 will be close to 470,000 according to our estimates. We estimate that Constant Contact’s average paying customers will reach 800,000 by the end of the forecast period. Tweak this graph to see how any change in the number of customers will impact Constant Contact’s Trefis price estimate.

Average Monthly Revenue Per User

Constant Contact’s monthly ARPU has increased marginally in the past quarters, and this quarter is no exception. Its monthly ARPU was up to $37.94, a slight increase over the past quarters. As Constant Contact adds to its mix of marketing offerings, we expect the ARPU to increase steadily.

We estimate the average monthly ARPU for 2011 to be slightly less than $38, and expect it to increase to $39.7 by the end of the forecast period. Check out this chart to see how Constant Contact’s monthly ARPUs affect its Trefis price estimate.

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