##### 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 September 30, 2007
 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
(State or other jurisdiction of incorporation)
    
    04-3285398
(I.R.S. Employer
Identification No.)1601 Trapelo Road, Suite 329
Waltham, Massachusetts
(Address of principal executive offices)
    
    02451
(Zip Code)
 
 o þ
  o o þ
 o þ




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##### 



CONSTANT CONTACT, INC.
 INDEX
 PAGENUMBERPART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
    
    
    1CONDENSED BALANCE SHEETS
    
    
    1CONDENSED STATEMENTS OF OPERATIONS
    
    
    3CONDENSED STATEMENTS OF CASH FLOWS
    
    
    4NOTES TO CONDENSED FINANCIAL STATEMENTS
    
    
    6ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    18ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    25ITEM 4T. CONTROLS AND PROCEDURES
    
    
    25PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    25ITEM 1A. RISK FACTORS
    
    
    25ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    41ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    41ITEM 6. EXHIBITS
    
    

    42SIGNATURES
    
    
    43EX-31.1 Certification of Chief Executive Officer pursuant to Section 302EX-31.2 Certification of Chief Financial Officer pursuant to Section 302EX-32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Constant Contact, Inc.
 
 Condensed
Balance Sheets
 (Unaudited)
 September
    
    
    December30,
    
    
    31,(In
thousands, except share and per share data)
    
    2007
    
    
    2006AssetsCurrent assetsCash and cash equivalents
    
    $
    6,391
    
    
    $
    8,786Short-term marketable securities
    
    
    6,150
    
    
    
    4,004Accounts receivable, net of allowance for
doubtful accounts of $21 and $3 as of September
30, 2007 and December 31, 2006 , respectively
    
    
    42
    
    
    
    41Prepaid expenses and other current assets
    
    
    2,523
    
    
    
    411Total current assets
    
    
    15,106
    
    
    
    13,242Property and equipment, net
    
    
    6,014
    
    
    
    4,957Restricted cash
    
    
    358
    
    
    
    266Other assets
    
    
    16
    
    
    
    16Total assets
    
    $
    21,494
    
    
    $
    18,481Liabilities, Redeemable Convertible Preferred Stock
and Stockholders DeficitCurrent liabilitiesAccounts payable
    
    $
    3,234
    
    
    $
    2,576Accrued expenses
    
    
    3,816
    
    
    
    2,406Deferred revenue
    
    
    9,193
    
    
    
    5,476Redeemable convertible preferred stock warrant
    
    
    2,437
    
    
    
    628Current portion of notes payable
    
    
    1,371
    
    
    
    449Total current liabilities
    
    
    20,051
    
    
    
    11,535Notes payable, net of current portion
    
    
    1,347
    
    
    
    253Total liabilities
    
    
    21,398
    
    
    
    11,788Commitments and contingencies (Note 9)Redeemable convertible preferred stockSeries A redeemable convertible preferred stock,
$0.01 par value; 1,026,680 shares authorized,
issued and outstanding at September 30, 2007 and
December 31, 2006 ($17,454 liquidation value as
of December 31, 2006)
    
    
    14,744
    
    
    
    14,049
 1




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##### Table of Contents



September
    
    
    December30,
    
    
    31,(In thousands, except share and per share data)
    
    2007
    
    
    2006Series B redeemable convertible preferred stock,
$0.01 par value; 9,761,666 shares authorized;
9,641,666 shares issued and outstanding at September 30, 2007 and December 31, 2006, ($6,708
liquidation value as of December 31, 2006)
    
    
    6,447
    
    
    
    6,376Series C redeemable convertible preferred stock,
$0.01 par value; 2,521,432 shares authorized,
issued and outstanding at September 30, 2007 and
December 31, 2006 ($15,000 liquidation value as
of December 31, 2006)
    
    
    14,920
    
    
    
    14,897Total redeemable convertible preferred stock
    
    
    36,111
    
    
    
    35,322Stockholders deficitCommon stock, $0.01 par value; 40,000,000 and 20,000,000 shares
authorized at September 30, 2007 and December 31,
2006, respectively, 4,091,549
and 3,788,944 shares issued and outstanding as
of September 30, 2007 and December 31, 2006,
respectively
    
    
    41
    
    
    
    38Additional paid-in capital
    
    
    5,630
    
    
    
    5,835Accumulated
other comprehensive income
    
    
    1
    
    
    
    Accumulated deficit
    
    
    (41,687
    )
    
    
    (34,502
    )Total stockholders deficit
    
    
    (36,015
    )
    
    
    (28,629
    )Total liabilities, redeemable convertible
preferred stock and stockholders deficit
    
    $
    21,494
    
    
    $
    18,481
  2




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##### Table of Contents



Constant Contact, Inc.
 
 Condensed
Statements of Operations
 (Unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(In thousands, except share and per
share data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    13,517
    
    
    $
    7,239
    
    
    $
    34,628
    
    
    $
    19,068Cost of revenue
    
    
    3,423
    
    
    
    2,038
    
    
    
    9,260
    
    
    
    5,392Gross profit
    
    
    10,094
    
    
    
    5,201
    
    
    
    25,368
    
    
    
    13,676Operating expensesResearch and development
    
    
    2,536
    
    
    
    1,530
    
    
    
    7,507
    
    
    
    4,304Sales and marketing
    
    
    6,742
    
    
    
    4,664
    
    
    
    19,537
    
    
    
    11,748General and administrative
    
    
    1,597
    
    
    
    633
    
    
    
    3,968
    
    
    
    1,712Total operating expenses
    
    
    10,875
    
    
    
    6,827
    
    
    
    31,012
    
    
    
    17,764Loss from operations
    
    
    (781
    )
    
    
    (1,626
    )
    
    
    (5,644
    )
    
    
    (4,088
    )Interest income
    
    
    139
    
    
    
    185
    
    
    
    419
    
    
    
    299Interest expense
    
    
    (78
    )
    
    
    (22
    )
    
    
    (151
    )
    
    
    (75
    )Other expense
    
    
    (971
    )
    
    
    (58
    )
    
    
    (1,809
    )
    
    
    (425
    )Net loss
    
    
    (1,691
    )
    
    
    (1,521
    )
    
    
    (7,185
    )
    
    
    (4,289
    )Accretion of redeemable
convertible preferred stock
    
    
    (271
    )

    
    
    (259
    )

    
    
    (789
    )

    
    
    (3,529
    )Net loss attributable
to common stockholders
    
    $
    (1,962
    )
    
    $
    (1,780
    )
    
    $
    (7,974
    )
    
    $
    (7,818
    )Net loss attributable to
common stockholders per share: basic
and diluted
    
    $
    (0.51
    )
    
    $
    (0.51
    )
    
    $
    (2.10
    )
    
    $
    (2.31
    )Weighted average shares
outstanding used in computing
per share amounts: basic and
diluted
    
    
    3,871,935
    
    
    
    3,524,260
    
    
    
    3,803,818
    
    
    
    3,383,023Pro forma net loss per share:basic and diluted
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.25
    )
    
    $
    (0.20
    )Pro forma weighted average
common shares outstanding
    
    
    21,174,632
    
    
    
    20,780,538
    
    
    
    21,106,515
    
    
    
    19,058,856
  3




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##### Table of Contents



Constant Contact, Inc.
 
 Condensed
Statements of Cash Flows
 (Unaudited)
 Nine Months EndedSeptember 30,(In thousands)
    
    2007
    
    
    2006Cash flows from operating activitiesNet loss
    
    $
    (7,185
    )
    
    $
    (4,289
    )Adjustments to reconcile net loss to net cash
provided by operating activitiesDepreciation and amortization
    
    
    1,856
    
    
    
    1,058Amortization of discount on investments
    
    
    (114
    )
    
    
    Stock-based compensation expense
    
    
    373
    
    
    
    38Changes in fair value of redeemable convertible
preferred stock warrant
    
    
    1,809
    
    
    
    425Provision for bad debts
    
    
    17
    
    
    
    17Changes in operating assets and liabilitiesAccounts receivable
    
    
    (18
    )
    
    
    12Prepaid expenses and other current assets
    
    
    (783
    )
    
    
    (275
    )Other assets
    
    
    
    
    
    
    (16
    )Accounts payable
    
    
    658
    
    
    
    653Accrued expenses
    
    
    1,410
    
    
    
    757Deferred revenue
    
    
    3,717
    
    
    
    1,949Net cash provided by operating activities
    
    
    1,740
    
    
    
    329Cash flows from investing activitiesPurchases of short-term marketable securities
    
    
    (9,031
    )
    
    

    Proceeds from maturities of short-term marketable
securities
    
    
    7,000
    
    
    
    Increase in restricted cash
    
    
    (92
    )
    
    
    Purchases of property and equipment
    
    
    (2,913
    )
    
    
    (2,860
    )Net cash used in investing activities
    
    
    (5,036
    )
    
    
    (2,860
    )Cash flows from financing activitiesProceeds from notes payable
    
    
    2,788
    
    
    
    Proceeds from issuance of Series C redeemable
convertible preferred stock, net
    
    
    
    
    
    
    14,877Proceeds from issuance of common stock pursuant to
the exercise of stock options and warrants
    
    
    214
    
    
    
    192Repayments of capital lease obligations
    
    
    
    
    
    
    (10
    )Repayments of notes payable
    
    
    (772
    )
    
    
    (466
    )Payments of issuance costs for contemplated
initial public offering of common stock
    
    
    (1,329
    )
    
    
    Net cash provided by financing activities
    
    
    901
    
    
    
    14,593
 4




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##### Table of Contents



Nine Months EndedSeptember 30,(In thousands)
    
    2007
    
    
    2006Net (decrease) increase in cash and cash
equivalents
    
    
    (2,395
    )
    
    
    12,062Cash and cash equivalents, beginning of period
    
    
    8,786
    
    
    
    2,784Cash and cash equivalents, end of period
    
    $
    6,391
    
    
    $
    14,846Supplemental disclosure of cash flow informationNoncash investing and financing activities:Purchases of property and equipment included in
accrued expenses
    
    

    
    
    
    $
    500
  5




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Constant Contact, Inc.
 
 Notes to Condensed Financial Statements
  1. Nature of the Business
  2. Summary of Significant Accounting Policies
 Basis of Presentation
    Use of Estimates
  6




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Software and Web Site Development Costs
 Accounting for Website Development Costs Application of AICPA Statement of Position 97-2 to
Arrangements That Include the Right to Use Software Stored on Another
Entitys Hardware Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use
  Redeemable Convertible Preferred Stock Warrant (including Change in Accounting Principle)
 Issuers Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar
Instruments on Shares that are Redeemable Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity
 Comprehensive Income (Loss)
  Net Loss Attributable to Common Stockholders Per Share
   September 30,2007
    
    2006Options to purchase common
stock
    
    
    1,850,464
    
    
    
    1,458,095Warrants to purchase common
or redeemable convertible
preferred stock
    
    
    156,520
    
    
    
    282,224Restricted shares
    
    
    108,007
    
    
    
    192,010Redeemable convertible
preferred stock
    
    
    17,146,697
    
    
    
    17,146,697Total options, warrants,
restricted shares and
redeemable convertible
preferred stock exercisable
or convertible into common
stock
    
    
    19,261,688
    
    
    
    19,079,026
  7




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Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006NumeratorNet loss attributable to common stockholders
    
    $
    (1,962
    )
    
    $
    (1,780
    )
    
    $
    (7,974
    )
    
    $
    (7,818
    )Add: Accretion of redeemable convertible
preferred stock
    
    
    271
    
    
    
    259
    
    
    
    789
    
    
    
    3,529Add: Changes in fair value associated with
redeemable convertible preferred stock warrant
    
    
    971
    
    
    
    58
    
    
    
    1,809
    
    
    
    425Pro forma net loss
    
    $
    (720
    )
    
    $
    (1,463
    )
    
    $
    (5,376
    )
    
    $
    (3,864
    )DenominatorWeighted average shares outstanding used in
computing per share amounts: basic and diluted
    
    
    3,871,935
    
    
    
    3,524,260
    
    
    
    3,803,818
    
    
    
    3,383,023Add: Adjustments to reflect assumed weighted
effect of exercise and subsequent conversion
of warrant for redeemable convertible
preferred stock
    
    
    156,000
    
    
    
    156,000
    
    
    
    156,000
    
    
    
    156,000Add: Adjustments to reflect assumed weighted
effect of conversion of redeemable convertible
preferred stock
    
    
    17,146,697
    
    
    
    17,100,278
    
    
    
    17,146,697
    
    
    
    15,519,833Pro forma weighted average shares outstanding
used in computing per share amounts: basic and
diluted
    
    
    21,174,632
    
    
    
    20,780,538
    
    
    
    21,106,515
    
    
    
    19,058,856Pro forma net loss per share: basic and diluted
    
    $
    (0.03
    )
    
    $
    (0.07
    )
    
    $
    (0.25
    )
    
    $
    (0.20
    )
 Accounting for Stock-Based Compensation (including Change in Accounting Principle)
 Share-Based Payment , Accounting for Stock-Based Compensation , Accounting for
Stock Issued to Employees ,
 8




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Income Taxes
  Recent Accounting Pronouncements
 The Fair Value Option for Financial Assets and
Financial Liabilities Including an amendment of FASB Statement No. 115
 Fair Value Measurements
 Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement No. 109 Accounting for Income Taxes
 9




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3. Property and Equipment
  September 30,
    
    
    December 31,2007
    
    
    2006Computer equipment
    
    $
    6,665
    
    
    $
    5,137Software
    
    
    3,480
    
    
    
    2,754Furniture and fixtures
    
    
    1,307
    
    
    
    1,015Leasehold improvements
    
    
    527
    
    
    
    160Total property and equipment
    
    
    11,979
    
    
    
    9,066Less: Accumulated depreciation and amortization
    
    
    (5,965
    )
    
    
    4,109Property and equipment, net
    
    $
    6,014
    
    
    $
    4,957
  4. Notes Payable
  September 30,
    
    

December 312007
    
    

2006Notes payable to a financial institution in monthly
installments through June 2010
    
    $
    2,718
    
    
    $
    702Less: Current portion
    
    
    (1,371
    )
    
    
    449Long-term portion
    
    $
    1,347
    
    
    $
    253
  Remainder of 2007
    
    $
    338
    
    
    $
    4492008
    
    
    1,337
    
    
    
    2532009
    
    
    938
    
    
    
    2010
    
    
    105
    
    
    
    $
    2,718
    
    
    $
    702
    10




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##### Table of Contents



5. Stockholders Deficit
 Common Stock
    11




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##### Table of Contents



Warrants
    6. Stock-Based Awards
 Stock Incentive Plans
   12




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Share Based Payment
 Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,Stock Options
    
    2007
    
    2006
    
    2007
    
    2006Dividend yield
    
    None
    
    None
    
    None
    
    NoneExpected volatility
    
    
    55.9
    %
    
    
    64.9
    %
    
    
    63.2
    %
    
    
    64.9
    %Risk-free interest rate
    
    
    4.4
    %
    
    
    4.6
    %
    
    
    4.6
    %
    
    
    4.85
    %Expected life (in years)
    
    
    6.1
    
    
    
    6.1
    
    
    
    6.1
    
    
    
    6.1Weighted-average fair value at grant date
    
    $
    5.50
    
    
    $
    1.70
    
    
    $
    3.63
    
    
    $
    1.24
  WeightedAverageWeighted
    
    RemainingAverage
    
    Contractual
    
    AggregateNumber of
    
    Exercise
    
    Term
    
    IntrinsicOptions
    
    Price
    
    (in years)
    
    ValueOutstandingBalance at December 31, 2006
    
    
    1,702,007
    
    
    $
    1.57
    
    
    
    8.4
    
    
    $
    2,505Granted
    
    
    466,896
    
    
    
    5.85Exercised
    
    
    (176,917
    )
    
    
    0.33Forfeited
    
    
    (141,522
    )
    
    
    0.73Balance at September 30, 2007
    
    
    1,850,464
    
    
    $
    2.84
    
    
    
    8.23
    
    
    $

    12,514Exercisable at December 31, 2006
    
    
    408,582
    
    
    $
    2.22
    
    
    
    6.9
    
    
    $
    338Exercisable at September 30, 2007
    
    
    573,178
    
    
    $
    2.00
    
    
    
    6.9
    
    
    $
    4,356
   Three
    
    
    ThreeMonths Ended
    
    
    Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006Cost of revenue
    
    $
    20
    
    
    $
    8Research and development
    
    
    49
    
    
    
    6Sales and marketing
    
    
    36
    
    
    
    8General and administrative
    
    
    65
    
    
    
    2$
    170
    
    
    $
    24
 13




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##### Table of Contents



Nine
    
    
    NineMonths Ended
    
    
    Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006Cost of revenue
    
    $
    46
    
    
    $
    11Research and development
    
    
    99
    
    
    
    10Sales and marketing
    
    
    71
    
    
    
    14General and administrative
    
    
    157
    
    
    
    3$
    373
    
    
    $
    38
  Stock Purchase Plan
  Restricted Stock
  7. Income Taxes
  Accounting for Income
Taxes,
 14




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8. Accrued Expenses
 September 30,
    
    
    December 31,2007
    
    
    2006Payroll and payroll related
    
    $
    1,026
    
    
    $
    694Licensed software and maintenance
    
    
    619
    
    
    
    562Marketing programs
    
    
    865
    
    
    
    509Other accrued expenses
    
    
    1,306
    
    
    
    641$
    3,816
    
    
    $
    2,406
 9. Commitments and Contingencies
 Operating Leases
   Remainder of 2007
    
    $
    3032008
    
    
    1,2812009
    
    
    1,3242010
    
    
    999$
    3,907
 15




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##### Table of Contents



Hosting Services
   Letters of Credit
  Indemnification Obligations
  10. Related Party
   11. Subsequent Events
 Initial Public Offering
  16




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17




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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 financial statements and the related notes
thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial
statements and notes thereto and managements discussion and analysis of financial condition and
results of operations for the year ended December 31, 2006 included in the final prospectus for our
initial public offering dated October 2, 2007, filed with the Securities and Exchange Commission,
or SEC, on October 3, 2007. 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.
These statements are often identified by the use of words such as may, will, expect,
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 identified below, and those
discussed in the section titled Risk Factors, set forth in Part II, Item 1A of this Quarterly
Report on Form 10-Q. 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.
 Overview
     18




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Sources of Revenue
   Cost of Revenue and Operating Expenses
  Cost of Revenue.
  Research and Development.
 Sales and Marketing.
 General and Administrative.
 19




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##### Table of Contents



Critical Accounting Policies
  
    
    Revenue recognition
    
    Income Taxes
    
    Software and website development costs
    
    Stock-based compensation
   Results of Operations
 Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006
 Revenue
 Cost of Revenue
 20




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##### Table of Contents



Research and Development Expenses
 Sales and Marketing Expenses.
 General and Administrative Expenses.
 Interest and Other Income (Expense), Net.
 Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006
 Revenue
 Cost of Revenue
 21




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##### Table of Contents



Research and Development Expenses
 Sales and Marketing Expenses.
 General and Administrative Expenses.
 Interest and Other Income (Expense), Net.
 Liquidity and Capital Resources
   22




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Cash Provided By Operating Activities
  Cash Used in Investing Activities
  Cash Provided by Financing Activities
  Contractual Obligations
  Payments Due InLess Than
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    1 Year
    
    1 - 3 Years
    
    3 - 5 Years
    

5 Years(In thousands)Notes payable(1)
    
    
    2,718
    
    
    
    1,371
    
    
    
    1,347
    
    
    
    0
    
    
    
    0Operating lease obligations
    
    
    3,907
    
    
    
    1,254
    
    
    
    2,653
    
    
    
    0
    
    
    
    0Contractual commitments
    
    
    4,851
    
    
    
    965
    
    
    
    2,906
    
    
    
    980
    
    
    
    0
 
 (1)
    
    In October 2007, we used proceeds from our initial public offering
to repay the outstanding principle and interest under our term loan of
approximately $2.6 million. 23




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Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 The Fair Value Option for Financial Assets and
Financial Liabilities Including an amendment of FASB Statement No. 115
 Fair Value Measurements
 Accounting for Uncertainty in Income
Taxes, an Interpretation of FASB Statement No. 109 Accounting for Income Taxes
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Exchange Risk.
 Interest Rate Sensitivity.
 
 Item 4T. Controls and Procedures
  
 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
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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.
  U.S. federal legislation entitled Controlling the Assault of Non-Solicited Pornography and
Marketing Act of 2003 imposes certain obligations on the senders of commercial emails, which could
minimize the effectiveness of our email marketing product, and establishes financial penalties for
non-compliance, which could increase the costs of our business.
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Evolving regulations concerning data privacy may restrict our customers ability to solicit,
collect, process and use data necessary to conduct email marketing campaigns or to send surveys and
analyze the results or may increase their costs, which could harm our business.
  As Internet commerce develops, federal, state and foreign governments may draft and propose new
laws to regulate Internet commerce, which may negatively affect our business.
  In the event we are unable to minimize our loss of existing customers or to grow our customer base
by adding new customers, our operating results will be adversely affected.
  As we expand our customer base through our marketing efforts, our new customers may use our
products differently than our existing customers and, accordingly, our business model may not be as
efficient at attracting and retaining new customers.
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The market in which we participate is competitive and, if we do not compete effectively, our
operating results could be harmed.
  ®
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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 economic or other factors negatively affect the small business sector, our customers may become
unwilling or unable to maintain accounts with us, which could cause our revenue to decline and
impair our ability to operate profitably.
  Competition for our employees is intense, and we may not be able to attract and retain the highly
skilled employees whom we need to support our business.
   If we fail to promote and maintain our brand in a cost-effective manner, we may lose market share
and our revenue may decrease.
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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.
  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, 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.
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Any efforts we may make in the future to promote our services to market segments other than small
organizations or to expand our product offerings beyond email marketing may not succeed.
  Our customers use of our products 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.
    If we fail to enhance our existing products or develop new features, our products may become
obsolete or less competitive and we could lose customers.
  Our relationships with our channel partners may be terminated or may not continue to be beneficial
in generating new email marketing customers, which could adversely affect our ability to increase
our customer base.
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Our growth could strain our personnel resources and infrastructure, and if we are unable to
implement appropriate controls and procedures to manage our growth, we may not be able to
successfully implement our business plan.
   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.
  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.
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If the security of our customers confidential information stored in our systems is breached or
otherwise subjected to unauthorized access, our reputation may be harmed, we may be exposed to
liability and we may lose the ability to offer our customers a credit card payment option.
   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.
  If we are unable to protect the confidentiality of our unpatented proprietary information,
processes and know-how and our trade secrets, the value of our technology and products could be
adversely affected.
  Our use of open source could impose limitations on our ability to commercialize our products.
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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.
  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;
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
    
    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 expect to incur net losses in the future.
  We will incur significant increased costs as a result of operating as a public company, and our
management will be required to devote substantial time to new compliance initiatives.
   We do not have significant experience with our new accounting system and any errors in using the
system or delays in preparing our quarterly or annual financial statements may result in our
inability to accurately or timely prepare and file financial reports.
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Our ability to use net operating loss carryforwards 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;
    
    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;
    
    general economic conditions;
    
    the timing of additional investments in our hardware and software systems;
    
    regulatory compliance costs;
    
    costs associated with future acquisitions of technologies and businesses; and
    
    extraordinary expenses such as litigation or other dispute-related settlement payments.
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We may need additional capital in the future, which may not be available to us on favorable terms,
or at all, and may dilute your ownership of our common stock.
  
    
    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, if at all;
    
    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.
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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;
    
    changes in estimates of our financial results or recommendations by securities analysts;
    
    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 additional 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
    
    changes in general economic, industry and market conditions.
  If securities or industry analysts do not publish research or publish inaccurate or unfavorable
research about our business, our stock price and trading volume could decline.
  Future
sales of shares by certain of our stockholders could cause our stock price to decline.
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Insiders have substantial control over us and will be able to influence corporate matters.
  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 thwart 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.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
       
 Item 4. Submission of Matters to a Vote of Security Holders
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Item 6. Exhibits
  42




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SIGNATURES
  CONSTANT CONTACT, INC.Date:
November 15, 2007
    
    By:
    
    /s/ Gail F. GoodmanGail F. GoodmanPresident and Chief Executive Officer(Principal Executive Officer)Date:
November 15, 2007
    
    By:
    
    /s/ Steven R. WassermanSteven R. WassermanVice President, Chief Financial Officer(Principal Financial Officer)
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EXHIBIT INDEX
  Exhibit No.
    
    Description31.1
    
    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 by Chief
Executive Officer.31.2
    
    Certification Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.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 and 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. 44