##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-33707
 
 CONSTANT CONTACT, INC.
  Delaware
    
    04-3285398(State or other jurisdiction of incorporation)
    
    (I.R.S. Employer
Identification No.)1601 Trapelo Road, Third Floor 
Waltham, Massachusetts
    
    02451(Address of principal executive offices)
    
    (Zip Code)
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




---



##### 



CONSTANT CONTACT, INC.
 INDEX
 PAGENUMBERPART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    1CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
    
    
    1CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
    
    
    2CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
    
    
    3NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    
    
    4ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    14ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    20ITEM 4. CONTROLS AND PROCEDURES
    
    
    20PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    21ITEM 1A. RISK FACTORS
    
    
    21ITEM 6. EXHIBITS
    
    
    34SIGNATURES
    
    
    35EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2




---



##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Constant Contact, Inc.
 
 Condensed Consolidated Balance Sheets
(Unaudited)
 March 31,
    
    
    December 31,(In thousands, except share and per share data)
    
    2011
    
    
    2010AssetsCurrent assetsCash and cash equivalents
    
    $
    17,085
    
    
    $
    32,892Marketable securities
    
    
    97,174
    
    
    
    91,461Accounts receivable, net of allowance for doubtful accounts
    
    
    33
    
    
    
    44Prepaid expenses and other current assets
    
    
    6,445
    
    
    
    5,562Total current assets
    
    
    120,737
    
    
    
    129,959Property and equipment, net
    
    
    30,658
    
    
    
    29,723Restricted cash
    
    
    750
    
    
    
    750Goodwill
    
    
    18,448
    
    
    
    5,248Acquired intangible assets, net
    
    
    2,501
    
    
    
    781Other assets
    
    
    1,750
    
    
    
    1,214Total assets
    
    $
    174,844
    
    
    $
    167,675Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    6,100
    
    
    $
    7,444Accrued expenses
    
    
    10,703
    
    
    
    6,724Deferred revenue
    
    
    27,608
    
    
    
    25,103Total current liabilities
    
    
    44,411
    
    
    
    39,271Other long-term liabilities
    
    
    2,298
    
    
    
    2,282Total liabilities
    
    
    46,709
    
    
    
    41,553Commitments and contingencies (Note 8)Stockholders equityPreferred stock, $0.01 par value; 5,000,000 shares
authorized; no shares issued or outstanding at March 31,
2011 and December 31, 2010
    
    
    
    
    
    
    Common stock, $0.01 par value; 100,000,000 shares
authorized at March 31, 2011 and December 31, 2010;
29,462,241 and 29,337,333 shares issued and outstanding at
March 31, 2011 and December 31, 2010, respectively
    
    
    295
    
    
    
    293Additional paid-in capital
    
    
    172,828
    
    
    
    168,974Accumulated other comprehensive income
    
    
    13
    
    
    
    13Accumulated deficit
    
    
    (45,001
    )
    
    
    (43,158
    )Total stockholders equity
    
    
    128,135
    
    
    
    126,122Total liabilities and stockholders equity
    
    $
    174,844
    
    
    $
    167,675
  1




---



##### Table of Contents



Constant Contact, Inc.
 
 Condensed Consolidated Statements of Operations
(Unaudited)
 Three Months EndedMarch 31,(In thousands, except per share data)
    
    2011
    
    
    2010Revenue
    
    $
    50,015
    
    
    $
    39,481Cost of revenue
    
    
    14,683
    
    
    
    11,716Gross profit
    
    
    35,332
    
    
    
    27,765Operating expensesResearch and development
    
    
    7,438
    
    
    
    5,621Sales and marketing
    
    
    24,234
    
    
    
    18,704General and administrative
    
    
    5,778
    
    
    
    4,299Total operating expenses
    
    
    37,450
    
    
    
    28,624Loss from operations
    
    
    (2,118
    )
    
    
    (859
    )Interest income
    
    
    89
    
    
    
    83Loss before income taxes
    
    
    (2,029
    )
    
    
    (776
    )Benefit for income taxes
    
    
    186
    
    
    
    Net loss
    
    $
    (1,843
    )
    
    $
    (776
    )Net loss per share:Basic
    
    $
    (0.06
    )
    
    $
    (0.03
    )Diluted
    
    $
    (0.06
    )
    
    $
    (0.03
    )Weighted average shares outstanding used in computing per share amounts:Basic
    
    
    29,310
    
    
    
    28,455Diluted
    
    
    29,310
    
    
    
    28,455
  2




---



##### Table of Contents



Constant Contact, Inc.
 
 Condensed Consolidated Statements of Cash Flows
(Unaudited)
 Three Months EndedMarch 31,(In thousands)
    
    2011
    
    
    2010Cash flows from operating activitiesNet loss
    
    $
    (1,843
    )
    
    $
    (776
    )Adjustments to reconcile net loss to net cash provided by operating activitiesDepreciation and amortization
    
    
    3,540
    
    
    
    2,624Amortization of premium on investments
    
    
    168
    
    
    
    6Stock-based compensation expense
    
    
    2,609
    
    
    
    1,735Recovery of bad debts
    
    
    (1
    )
    
    
    (3
    )Deferred income taxes
    
    
    79
    
    
    
    Changes in operating assets and liabilities, net of effects from acquisition:Accounts receivable
    
    
    12
    
    
    
    1Prepaid expenses and other current assets
    
    
    (883
    )
    
    
    (1,373
    )Other assets
    
    
    (536
    )
    
    
    (77
    )Accounts payable
    
    
    (1,344
    )
    
    
    95Accrued expenses
    
    
    3,979
    
    
    
    2,037Deferred revenue
    
    
    2,505
    
    
    
    2,461Other long-term liabilities
    
    
    (63
    )
    
    
    (278
    )Net cash provided by operating activities
    
    
    8,222
    
    
    
    6,452Cash flows from investing activitiesPurchases of short-term marketable securities
    
    
    (45,025
    )
    
    
    (43,782
    )Proceeds from maturities of short-term marketable securities
    
    
    10,144
    
    
    
    14,700Proceeds from sales of short-term marketable securities
    
    
    29,000
    
    
    
    Payment for acquisition, net of cash acquired
    
    
    (15,000
    )
    
    
    Acquisition of property and equipment, including costs capitalized for
development of internal use software
    
    
    (4,288
    )
    
    
    (4,288
    )Net cash used in investing activities
    
    
    (25,169
    )
    
    
    (33,370
    )Cash flows from financing activitiesProceeds from issuance of common stock pursuant to the exercise of stock options
    
    
    1,140
    
    
    
    559Net cash provided by financing activities
    
    
    1,140
    
    
    
    559Net decrease in cash and cash equivalents
    
    
    (15,807
    )
    
    
    (26,359
    )Cash and cash equivalents, beginning of period
    
    
    32,892
    
    
    
    59,822Cash and cash equivalents, end of period
    
    $
    17,085
    
    
    $
    33,463Supplemental disclosure of noncash investing activities:Capitalization of stock-based compensation
    
    $
    107
    
    
    $
    19
  3




---



##### Table of Contents



Constant Contact, Inc.
 
 Notes to Condensed Consolidated Financial Statements
 1. Nature of the Business
  2. Summary of Significant Accounting Policies
 Basis of Presentation
    Use of Estimates
  4




---



##### Table of Contents



Revenue Recognition
   Goodwill and Acquired Intangible Assets
   Capitalization of Software and Web Site Development Costs
  Comprehensive Loss
   5




---



##### Table of Contents



Three months endedMarch 31,2011
    
    
    2010Net loss
    
    $
    (1,843
    )
    
    $
    (776
    )Other comprehensive loss:Unrealized losses on available-for-sale securities, net
    
    
    
    
    
    
    (43
    )Comprehensive loss
    
    $
    (1,843
    )
    
    $
    (819
    )
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury Bills
    
    $
    56,926
    
    
    
    23
    
    
    $
    (7
    )
    
    $
    56,942International Government Bonds
    
    
    1,014
    
    
    
    
    
    
    
    
    
    
    
    1,014Corporate and Agency Bonds
    
    
    36,222
    
    
    
    8
    
    
    
    (11
    )
    
    
    36,219Commercial Paper
    
    
    2,999
    
    
    
    
    
    
    
    
    
    
    
    2,999Total
    
    $
    97,161
    
    
    $
    31
    
    
    $
    (18
    )
    
    $
    97,174
   Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury Bills
    
    
    40,191
    
    
    
    21
    
    
    
    (2
    )
    
    
    40,210International Government Bond
    
    
    510
    
    
    
    
    
    
    
    (1
    )
    
    
    509Corporate and Agency Bonds
    
    
    47,304
    
    
    
    6
    
    
    
    (11
    )
    
    
    47,299Commercial Paper
    
    
    3,443
    
    
    
    
    
    
    
    
    
    
    
    3,443Total
    
    $
    91,448
    
    
    $
    27
    
    
    $
    (14
    )
    
    $
    91,461
 Fair Value of Financial Instruments
  
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
    
    Level 2  Inputs other than Level 1 that are observable, either directly or
indirectly, such as quoted prices for similar assets or liabilities; quoted
prices in markets that are not active; or other inputs that are observable or
can be corroborated by observable market data for substantially the full term
of the assets or liabilities.
    
    Level 3  Unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets or
liabilities
  6




---



##### Table of Contents



Net Loss Per Share
   Three months endedMarch 31,2011
    
    2010Options to purchase common stock
    
    
    4,547
    
    
    
    4,255Restricted shares and restricted share units
    
    
    197
    
    
    
    Warrants to purchase common stock
    
    
    1
    
    
    
    1Total options, restricted shares,
restricted share units and warrants exercisable
into common stock
    
    
    4,745
    
    
    
    4,256
 Accounting for Stock-Based Compensation
  Income Taxes
   Segment Data
  3. Acquisition of Bantam Networks, LLC
  7




---



##### Table of Contents



Purchased technology
    
    $
    1,800Goodwill
    
    
    13,200Total assets acquired
    
    $
    15,000
    Three months endedMarch 31,2011
    
    
    2010Pro forma revenue
    
    $
    50,015
    
    
    $
    39,481Pro forma net loss
    
    $
    (1,970
    )
    
    $
    (1,029
    )Pro forma loss per
share:Basic and
Diluted
    
    $
    (0.07
    )
    
    $
    (0.04
    )
  4. Goodwill and Acquired Intangible Assets
  Balance as of December 31, 2010
    
    $
    5,248Goodwill related to the acquisition of Bantam Networks
    
    $
    13,200Balance as of March 31, 2011
    
    $
    18,448
  8




---



##### Table of Contents



5. Stock-Based Awards
 Stock Incentive Plan
  Stock Purchase Plan
  Stock-Based Compensation Expense
  Three months endedMarch 31,2011
    
    
    2010Cost of revenue
    
    $
    311
    
    
    $
    237Research and development
    
    
    663
    
    
    
    401Sales and marketing
    
    
    632
    
    
    
    396General and administrative
    
    
    1,003
    
    
    
    701$
    2,609
    
    
    $
    1,735
   9




---



##### Table of Contents



6. Income Taxes
     7. Accrued Expenses
 March 31,
    
    
    December 31,2011
    
    
    2010Payroll and payroll related
    
    $
    3,366
    
    
    $
    2,638Licensed software and maintenance
    
    
    1,197
    
    
    
    1,216Marketing programs
    
    
    3,010
    
    
    
    426Other accrued expenses
    
    
    3,130
    
    
    
    2,444$
    10,703
    
    
    $
    6,724
 8. Commitments and Contingencies
 Office Leases
   10




---



##### Table of Contents



Remainder of 2011
    
    $
    3,8142012
    
    
    5,4402013
    
    
    5,4802014
    
    
    5,5882015
    
    
    4,473Thereafter
    
    
    3,162Total
    
    $
    27,957
 Datacenter Agreements
    Remainder of 2011
    
    
    3,7902012
    
    
    4,6762013
    
    
    3,3932014
    
    
    3,1202015
    
    
    3,214Thereafter
    
    
    3,753Total
    
    $
    21,946
 11




---



##### Table of Contents



Vendor Commitments
  Letters of Credit and Restricted Cash
  Indemnification Obligations
  Legal Matters
  9. 401(k) Savings Plan
   
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations should
be read in conjunction with the unaudited condensed consolidated financial statements and the
related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited
consolidated financial statements and notes thereto and managements discussion and analysis of
financial condition and results of operations for the year ended December 31, 2010 included in our
Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on March 9,
2011. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These
statements are often identified by the use of words such as may, will, expect,
 12




---



##### Table of Contents



believe,
anticipate, intend, could, estimate, or continue, and similar expressions or variations.
Such forward-looking statements are subject to risks, uncertainties and other factors that could
cause actual results and the timing of certain events to differ materially from future results
expressed or implied by such forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in the section titled Risk
Factors, set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and elsewhere in this
report. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as
of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and
developments will cause our views to change. However, while we may elect to update these
forward-looking statements at some point in the future, we have no current intention of doing so
except to the extent required by applicable law. You should, therefore, not rely on these
forward-looking statements as representing our views as of any date subsequent to the date of this
Quarterly Report on Form 10-Q.
 Business Overview
     
    
    Acquired substantially all of the assets of Bantam Networks LLC, or Bantam Networks,
a pioneering contact management and social CRM provider, including the Bantam Live product
and technology. Bantam Networks provides Constant Contact a social CRM platform and
technology that will serve as the foundation for all of Constant Contacts solutions, plus an
experienced and talented team focused on developing products for small businesses.
    
    Constant Contact Event Marketing surpassed 25,000 customers in the first quarter.
    
    Trained the 1,000th Constant Contact expert during the quarter. Over
1,000 experts around the world are now trained on how to coach and teach small businesses
about the power of email marketing and social media marketing.
 13




---



##### Table of Contents



Key Financial and Operating Metrics
   
    
    adjusted EBITDA, which we define as GAAP net income (loss) plus depreciation and
amortization and stock-based compensation, minus interest and other income and
adjusted for income taxes;
    
    adjusted EBITDA margin, which we define as adjusted EBITDA divided by revenue; and
    
    free cash flow, which we define as net cash flow from operating activities less
cash paid for the acquisition of property and equipment.
  Certain Trends and Uncertainties
  
    
    We continue to closely monitor current economic conditions,
particularly as they impact small businesses, associations
and non-profits. While the overall economy appears to be
improving, we believe that small organizations continue to
experience some amount of economic hardship. If this
economic hardship continues or worsens, our financial
results could be adversely impacted.
    
    We believe that given the size of our potential market and
the relatively low barriers to entry, competition will
continue to increase. Increased competition could result
from existing competitors or new competitors that enter the
market because of the potential opportunity. We will
continue to closely monitor competitive activity and
respond accordingly. Increased competition could have an
adverse effect on our financial condition and results of
operations.
    
    We believe that as we continue to grow revenue at expected
rates, our cost of revenue and operating expenses,
including sales and marketing, research and development and
general and administrative expenses, will increase in
absolute dollar amounts. For a description of the general
trends we anticipate in various expense categories, see
Cost of Revenue and Operating Expenses below.
 14




---



##### Table of Contents



Sources of Revenue
  Cost of Revenue and Operating Expenses
  Cost of Revenue.
 Research and Development.
 Sales and Marketing.
 General and Administrative.
 15




---



##### Table of Contents



Critical Accounting Policies
  
    
    Revenue recognition;
    
    Income taxes;
    
    Goodwill and acquired intangible assets;
    
    Software and website development costs; and
    
    Stock-based compensation.
   Results of Operations
 Three Months Ended March 31, 2011 compared to Three Months Ended March 31, 2010
 Revenue
 Three Months Ended March 31,2011
    
    2010
    
    Change(Dollars in thousands)Revenue
    
    $
    50,015
    
    
    $
    39,481
    
    
    
    27
    %
  Cost of Revenue
 Three Months Ended March 31,2011
    
    2010
    
    Change(Dollars in thousands)Cost of revenue
    
    $
    14,683
    
    
    $
    11,716
    
    
    
    25
    %Percent of revenue
    
    
    29
    %
    
    
    30
    %
 16




---



##### Table of Contents



Research and Development
 Three Months Ended March 31,2011
    
    2010
    
    Change(Dollars in thousands)Research and development
    
    $
    7,438
    
    
    $
    5,621
    
    
    
    32
    %Percent of revenue
    
    
    15
    %
    
    
    14
    %
  Sales and Marketing
 Three Months Ended March 31,2011
    
    2010
    
    Change(Dollars in thousands)Sales and marketing
    
    $
    24,234
    
    
    $
    18,704
    
    
    
    30
    %Percent of revenue
    
    
    48
    %
    
    
    47
    %
  General and Administrative
 Three Months Ended March 31,2011
    
    2010
    
    Change(Dollars in thousands)General and administrative
    
    $
    5,778
    
    
    $
    4,299
    
    
    
    34
    %Percent of revenue
    
    
    12
    %
    
    
    11
    %
  17




---



##### Table of Contents



Interest and other income
 Three Months Ended March 31,2011
    
    2010
    
    Change(Dollars in thousands)Interest and other income
    
    $
    89
    
    
    $
    83
    
    
    
    7
    %
  Benefit from Income Taxes
   Liquidity and Capital Resources
     18




---



##### Table of Contents



Contractual Obligations
     Payments Due InLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    
    1 Year
    
    
    1 - 3 Years
    
    
    3 - 5 Years
    
    
    5 Years(In thousands)Office lease obligations
    
    $
    27,957
    
    
    $
    5,130
    
    
    $
    10,992
    
    
    $
    8,902
    
    
    $
    2,933Hosting facility agreements
    
    
    21,946
    
    
    
    4,953
    
    
    
    7,680
    
    
    
    6,381
    
    
    
    2,932Vendor commitments
    
    
    11,499
    
    
    
    11,499
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    61,402
    
    
    $
    21,582
    
    
    $
    18,672
    
    
    $
    15,283
    
    
    $
    5,865
   19




---



##### Table of Contents



Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Exchange Risk.
 Interest Rate Sensitivity.
 
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures.
  (b)
    
    Changes in Internal Control over Financial Reporting.
  20




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 Our business is subject to numerous risks. We caution you that the following important factors,
among others, could cause our actual results to differ materially from those expressed in
forward-looking statements made by us or on our behalf in filings with the SEC, press releases,
communications with investors and oral statements. Any or all of our forward-looking statements in
this Quarterly Report on Form 10-Q and in any other public statements we make may turn out to be
wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks
and uncertainties. Many factors mentioned in the discussion below will be important in determining
future results. Consequently, no forward-looking statement can be guaranteed. Actual future results
may vary materially from those anticipated in forward-looking statements. We undertake no
obligation to update any forward-looking statements, whether as a result of new information, future
events or otherwise. You are advised, however, to consult any further disclosure we make in our
reports filed with the SEC.
 RISKS RELATED TO OUR BUSINESS AND INDUSTRY
 If we are unable to attract new customers and retain existing customers on a cost-effective
basis, our business and results of operations will be affected adversely.
  Our business is substantially dependent on the market for email marketing services for small
organizations.
  21




---



##### Table of Contents



In the event we are unable to retain existing customers or to grow our customer base by adding
new customers, our operating results will be adversely affected.
  Current economic conditions may further negatively affect the small business sector, which may
cause our customers to terminate existing accounts with us or cause potential customers to fail to
purchase our products, resulting in a decrease in our revenue and impairing our ability to operate
profitably.
  U.S. federal legislation imposes certain obligations on the senders of commercial emails,
which could minimize the effectiveness of our products, particularly our email marketing product,
and establishes financial penalties for non-compliance, which could increase the costs of our
business.
  22




---



##### Table of Contents



If the security of our customers confidential information stored in our systems is breached
or otherwise subjected to unauthorized access, our reputation may be severely harmed, we may be
exposed to liability and we may lose the ability to offer our customers a credit card payment
option.
   As Internet commerce develops, federal, state and foreign governments may adopt new laws to
regulate Internet commerce, which may negatively affect our business.
  The market in which we participate is highly competitive and, if we do not compete
effectively, our operating results could be harmed.
  ® tm
 23




---



##### Table of Contents



® tm
  Any significant disruption in service on our website or in our computer systems, or in our customer
support services, could reduce the attractiveness of our products and result in a loss of
customers.
  24




---



##### Table of Contents



Our growth strategy requires us to expand our product offerings beyond email marketing and
this expansion may not be successful.
  If the delivery of our customers emails is limited or blocked, the fees we may be able to charge
for our email marketing product may not be accepted by the market and customers may cancel their
accounts.
  If we fail to promote and maintain our brand in a cost-effective manner, we may lose market
share and our revenue may decrease.
  25




---



##### Table of Contents



We depend on search engines to attract a significant percentage of our customers, and if those
search engines change their listings or our relationship with them deteriorates or terminates, we
may be unable to attract new customers, which would adversely affect our business and results of
operations.
 tm
 The success of our business depends on the continued growth and acceptance of email as a
communications tool and the related expansion and reliability of the Internet infrastructure. If
consumers do not continue to use email or alternative communications tools gain popularity, demand
for our email marketing products may decline.
  Various private spam blacklists have in the past interfered with, and may in the future
interfere with, the effectiveness of our products and our ability to conduct business.
   26




---



##### Table of Contents



Our customers use of our products and website to transmit negative messages or website links
to harmful applications could damage our reputation, and we may face liability for unauthorized,
inaccurate or fraudulent information distributed via our products.
  Our business may be negatively impacted by seasonal trends.
  If we fail to enhance our existing products or develop new products, our products may become
obsolete or less competitive and we could lose customers.
  Our relationships with our partners may be terminated or may not continue to be beneficial in
generating new customers, which could adversely affect our ability to increase our customer base.
  27




---



##### Table of Contents



Competition for employees in our industry is intense, and we may not be able to attract and
retain the highly skilled employees whom we need to support our business.
   Our anticipated growth could strain our personnel resources and infrastructure, and if we are
unable to implement appropriate controls and procedures to manage our anticipated growth, we may
not be able to implement our business plan successfully.
  If we fail to retain our key personnel, we may not be able to achieve our anticipated level of
growth and our business could suffer.
  We rely on third-party computer hardware and software that may be difficult to replace or that
could cause errors or failures of our service and that requires us to closely monitor our usage to
ensure that we remain in compliance with any applicable licensing requirements.
  28




---



##### Table of Contents



If we are unable to protect the confidentiality of our unpatented proprietary information,
processes and know-how and trade secrets, the value of our technology and products could be
adversely affected.
  Our use of open source software could impose limitations on our ability to commercialize our
products.
  If a third party asserts that we are infringing its intellectual property, whether successful
or not, it could subject us to costly and time-consuming litigation or require us to obtain
expensive licenses, and our business may be adversely affected.
  
    
    divert managements attention;
    
    result in costly and time-consuming litigation;
    
    require us to enter into royalty or licensing agreements, which may
not be available on acceptable terms, or at all;
    
    in the case of open source software-related claims, require us to
release our software code under the terms of an open source license;
or
    
    require us to redesign our software and services to avoid infringement.
  29




---



##### Table of Contents



Providing our products to customers outside the United States exposes us to risks inherent in
international business.
  
    
    localization of our products, including translation into foreign languages and associated expenses;
    
    laws and business practices favoring local competitors;
    
    compliance with multiple, conflicting and changing governmental laws and regulations, including
tax, email marketing, privacy and data protection laws and regulations;
    
    foreign currency fluctuations;
    
    different pricing environments;
    
    difficulties in staffing and maintaining foreign operations; and
    
    regional economic and political conditions.
 We have incurred net losses in the past and may incur net losses in the future.
  We are incurring significant costs as a result of operating as a public company, and our
management has been, and will continue to be, required to devote substantial time to compliance
initiatives.
   30




---



##### Table of Contents



Our ability to use net operating loss carry-forwards in the United States may be limited.
  Our quarterly results may fluctuate and if we fail to meet the expectations of analysts or
investors, our stock price could decline substantially.
  
    
    our ability to retain existing customers, attract new customers and satisfy our customers requirements;
    
    general economic conditions;
    
    changes in our pricing policies;
    
    our ability to expand our business;
    
    the effectiveness of our personnel;
    
    new product and service introductions;
    
    technical difficulties or interruptions in our services as a result of our actions or those of third parties;
    
    the timing of additional investments in our hardware and software systems;
    
    the seasonal trends in our business;
    
    regulatory compliance costs;
    
    costs associated with future acquisitions of technologies and businesses; and
    
    extraordinary expenses such as litigation or other dispute-related settlement payments.
  31




---



##### Table of Contents



We may need additional capital in the future, which may not be available to us on favorable
terms, or at all, and may dilute the ownership of our existing stockholders.
  
    
    fund our operations;
    
    respond to competitive pressures;
    
    take advantage of strategic opportunities, including more
rapid expansion of our business or the acquisition of
complementary products, technologies or businesses; and
    
    develop new products or enhancements to existing products.
  We may engage in future acquisitions that could disrupt our business, dilute stockholder value and
harm our business, operating results or financial condition.
  
    
    an inability to locate a suitable acquisition candidate or technology or acquire a desirable candidate
or technology on favorable terms;
    
    difficulties in integrating personnel and operations from the acquired business or acquired technology
with our existing technology and products and in retaining and motivating key personnel from the
business;
    
    disruptions in our ongoing operations and the diversion of our managements attention from their
day-to-day responsibilities associated with operating our business;
    
    increases in our expenses that adversely impact our business, operating results and financial condition;
    
    potential write-offs of acquired assets and increased amortization expense related to identifiable
assets acquired; and
    
    potentially dilutive issuances of equity securities or the incurrence of debt.
  32




---



##### Table of Contents



RISKS RELATED TO THE OWNERSHIP OF OUR COMMON STOCK
 The market price of our common stock has been and may continue to be volatile.
  
    
    fluctuations in our quarterly financial results or the quarterly financial results of companies
perceived to be similar to us;
    
    quarterly unique customer additions;
    
    changes in estimates of our financial results or recommendations by securities analysts;
    
    changes in general economic, industry and market conditions;
    
    failure of any of our products to achieve or maintain market acceptance;
    
    changes in market valuations of similar companies;
    
    success of competitive products;
    
    changes in our capital structure, such as future issuances of securities or the incurrence of debt;
    
    announcements by us or our competitors of significant products, contracts, acquisitions or
strategic alliances;
    
    regulatory developments in the United States, foreign countries or both;
    
    litigation involving our company, our general industry or both;
    
    additions or departures of key personnel;
    
    investors general perception of us; and
    
    the total number of shares of our common stock that have been sold short
  If securities or industry analysts do not continue to publish research or publish inaccurate
or unfavorable research about our business, our stock price and trading volume could decline.
  33




---



##### Table of Contents



Anti-takeover provisions in our charter documents and Delaware law could discourage, delay or
prevent a change of control of our company and may affect the trading price of our common stock.
  
    
    authorize the issuance of blank check preferred stock
that could be issued by our board of directors to impede or
delay a takeover attempt;
    
    establish a classified board of directors, as a result of
which the successors to the directors whose terms have
expired will be elected to serve from the time of election
and qualification until the third annual meeting following
their election;
    
    require that directors only be removed from office for
cause and only upon a supermajority stockholder vote;
    
    provide that vacancies on our board of directors, including
newly created directorships, may be filled only by a
majority vote of directors then in office;
    
    limit who may call special meetings of stockholders;
    
    prohibit stockholder action by written consent, requiring
all actions to be taken at a meeting of the stockholders;
and
    
    require supermajority stockholder voting to effect certain
amendments to our restated certificate of incorporation and
second amended and restated bylaws.
 We do not currently intend to pay dividends on our common stock and, consequently, the ability
to achieve a return on an investment in our common stock will depend on appreciation in the price
of our common stock.
  
 Item 6. Exhibits
  34




---



##### Table of Contents



SIGNATURES
  CONSTANT CONTACT, INC.Date: May 2, 2011
    By:
    /s/ Gail F. GoodmanGail F. GoodmanPresident and Chief Executive Officer
(Principal Executive Officer)Date: May 2, 2011
    By:
    /s/ Harpreet S. GrewalHarpreet S. GrewalExecutive Vice President and
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer) 35




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit No.
    
    Description10.1#
    
    First Amendment to Turn Key
Datacenter Lease dated as of March 31, 2011 between the Company and
Digital Alfred, LLC.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1 *
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, by Chief Executive Officer.32.2 *
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, by Chief Financial Officer.
 
 *
    
    This certification shall not be deemed filed for purposes of Section 18 of the Securities
Exchange Act of 1934, or otherwise subject to the liability of that Section, nor shall it be
deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934. 36