Constant Contact IPO Closer (CTCT, MS)

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Constant Contact is now closer to coming public as it has an amended S-1 filing with the SEC, and it has the proposed ticker of "CTCT" on NASDAQ (NASDAQ:CTCT).  The company originally filed in early July to come public.  The joint book-runners are CIBC World Markets and Thomas Weisel Partners; co-managers are listed as William Blair, Cowen & Co., and Needham & Co.   

Constant Contact helps small to large companies run email campaigns:  As of July 31, 2007, it had over 130,000 customers (up from 25,000 at the end of 2004) for permission-based email marketing campaigns.  In June 2007, it introduced an online survey product to complement email marketing.  "CC’s" top 50 email marketing customers accounted for approximately 1% of gross email marketing revenue. 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 first half of 2007, its average monthly revenue per email marketing customer was approximately $33.  Retention rates look strong as it noted that from January 2005 through July 2007, 97.4% of its customers in a given month have continued to utilize our email marketing product in the following month. Since the first quarter of 2002, "CC" achieved 22 consecutive quarters of growth in customers and revenue.

In fiscal 2006, revenue was $27.6 million and its net loss was $7.8 million.  In the six months ended June 30, 2007 revenue was $21.1 million and its net loss was $5.5 million.

This is not large enough to be a ‘Backdoor Play’ into Morgan Stanley (NYSE:MS) nor is it enough to create a "Special Situation" opportunity, but entities affiliated with Morgan Stanley Dean Witter Venture Partners own over 4.65 million shares (almost 22% of the company).

Jon C. Ogg
September 5, 2007

Jon Ogg can be reached at; he produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.