Constant Contact Earnings Preview: What We’re Watching
Constant Contact (NASDAQ:CTCT) will announce its Q4 FY11 earnings on January 27. We currently have a $25 Trefis price estimate for Constant Contact, which stands nearly 5% below its market price. Its primary business is content marketing which comprises email marketing, event marketing and online survey tools. It has also ventured into social media marketing lately with offerings like Social Campaigns. It recently acquired a mobile loyalty card startup, CardStar, which it may use to roll out a new mobile marketing service. Constant Contact competes with Eventbrite, iContact and Surveymonkey as well as Salesforce.com (NASDAQ:CRM) and Microsoft (NASDAQ:MSFT) in the customer relationship management market.
Constant Contact’s various content marketing offerings generate almost all of its revenue, and account for more than 80% of its Trefis price estimate.
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Check out our complete coverage of Constant Contact
User Base Growth
Since 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). Constant Contact ended the last quarter with around 485,000 unique paying customers. We estimate it to have reached nearly 500,000 users by the end of 2011.
We expect the average number of customers to be approximately 528,000 in 2012, and continue to increase in the coming years as its social media marketing offerings gain traction. However, increased competition in the online marketing space could weigh down on its user growth.
ARPU Growth
Last quarter Constant Contact also managed to increase its monthly ARPU marginally to $37.94. We expect its monthly ARPU to grow marginally this quarter as well and reach $40 by the end of our forecast period. The company’s social media marketing tools and new mobile marketing offering could help it increase ARPU, if it can exploit 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.
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