##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2010
 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
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



CONSTANT CONTACT, INC.
 INDEX
 PAGENUMBERPART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    3CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
    
    
    3CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
    
    
    4CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
    
    
    5NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
    
    
    6ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    13ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    21ITEM 4. CONTROLS AND PROCEDURES
    
    
    21PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    22ITEM 1A. RISK FACTORS
    
    
    22ITEM 6. EXHIBITS
    
    
    35SIGNATURES
    
    
    36EXHIBITS
    
    
    37EX-10.2EX-10.3EX-10.4EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Part I. Financial Information
 
 Item 1. Financial Statements
 Constant Contact, Inc.
 
 Condensed Consolidated Balance Sheets
(Unaudited)
 September 30,
    
    
    December 31,(In thousands, except share and per share data)
    
    2010
    
    
    2009AssetsCurrent assetsCash and cash equivalents
    
    $
    57,260
    
    
    $
    59,822Marketable securities
    
    
    64,805
    
    
    
    53,280Accounts receivable, net
    
    
    48
    
    
    
    53Prepaid expenses and other current assets
    
    
    4,580
    
    
    
    3,420Total current assets
    
    
    126,693
    
    
    
    116,575Property and equipment, net
    
    
    27,525
    
    
    
    23,891Restricted cash
    
    
    750
    
    
    
    750Goodwill
    
    
    5,068
    
    
    
    Acquired intangible assets, net
    
    
    862
    
    
    
    Other assets
    
    
    326
    
    
    
    272Total assets
    
    $
    161,224
    
    
    $
    141,488Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    5,693
    
    
    $
    5,806Accrued expenses
    
    
    10,214
    
    
    
    7,211Deferred revenue
    
    
    24,450
    
    
    
    20,341Total current liabilities
    
    
    40,357
    
    
    
    33,358Long-term accrued rent
    
    
    2,335
    
    
    
    3,162Total liabilities
    
    
    42,692
    
    
    
    36,520Commitments and contingencies (Note 8)Stockholders equityPreferred stock, $0.01 par value; 5,000,000
shares authorized; no shares issued or
outstanding as of September 30, 2010 and
December 31, 2009
    
    
    
    
    
    
    Common stock, $0.01 par value; 100,000,000
shares authorized; 29,045,697 and 28,403,673
shares issued and outstanding as of September
30, 2010 and December 31, 2009, respectively
    
    
    290
    
    
    
    284Additional paid-in capital
    
    
    163,023
    
    
    
    150,716Accumulated other comprehensive income
    
    
    35
    
    
    
    40Accumulated deficit
    
    
    (44,816
    )
    
    
    (46,072
    )Total stockholders equity
    
    
    118,532
    
    
    
    104,968Total liabilities and stockholders equity
    
    $
    161,224
    
    
    $
    141,488
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##### Table of Contents



Constant Contact, Inc.
 
 Condensed Consolidated Statements of Operations


(Unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,(In thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue
    
    $
    44,828
    
    
    $
    33,533
    
    
    $
    126,764
    
    
    $
    92,606Cost of revenue
    
    
    12,694
    
    
    
    9,927
    
    
    
    37,096
    
    
    
    26,953Gross profit
    
    
    32,134
    
    
    
    23,606
    
    
    
    89,668
    
    
    
    65,653Operating expensesResearch and development
    
    
    5,890
    
    
    
    4,663
    
    
    
    17,454
    
    
    
    13,334Sales and marketing
    
    
    18,773
    
    
    
    14,169
    
    
    
    57,694
    
    
    
    42,281General and administrative
    
    
    4,551
    
    
    
    3,432
    
    
    
    13,454
    
    
    
    9,950Total operating expenses
    
    
    29,214
    
    
    
    22,264
    
    
    
    88,602
    
    
    
    65,565Income from operations
    
    
    2,920
    
    
    
    1,342
    
    
    
    1,066
    
    
    
    88Interest and other income
    
    
    81
    
    
    
    128
    
    
    
    249
    
    
    
    414Income before income taxes
    
    
    3,001
    
    
    
    1,470
    
    
    
    1,315
    
    
    
    502Provision for income taxes
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )
    
    
    Net income
    
    $
    2,942
    
    
    $
    1,470
    
    
    $
    1,256
    
    
    $
    502Net income per share:Basic
    
    $
    0.10
    
    
    $
    0.05
    
    
    $
    0.04
    
    
    $
    0.02Diluted
    
    $
    0.10
    
    
    $
    0.05
    
    
    $
    0.04
    
    
    $
    0.02Weighted average shares outstanding used in computing per share amounts:Basic
    
    
    28,887
    
    
    
    28,304
    
    
    
    28,666
    
    
    
    28,219Diluted
    
    
    29,937
    
    
    
    29,569
    
    
    
    29,820
    
    
    
    29,447
  4




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##### Table of Contents



Constant Contact, Inc.
 
 Condensed Consolidated Statements of Cash Flows

(Unaudited)
 Nine months endedSeptember 30,(In thousands)
    
    2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    1,256
    
    
    $
    502Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization
    
    
    8,595
    
    
    
    6,045Accretion of discount on investments
    
    
    36
    
    
    
    16Stock-based compensation expense
    
    
    5,810
    
    
    
    3,613Recovery of bad debts
    
    
    (1
    )
    
    
    (7
    )Gain on sales of marketable securities
    
    
    
    
    
    
    (5
    )Changes in operating assets and liabilities, net of effects from acquisitionAccounts receivable
    
    
    6
    
    
    
    (36
    )Prepaid expenses and other current assets
    
    
    (1,148
    )
    
    
    368Other assets
    
    
    (54
    )
    
    
    (101
    )Accounts payable
    
    
    (113
    )
    
    
    (1,721
    )Accrued expenses
    
    
    2,781
    
    
    
    1,918Deferred revenue
    
    
    4,109
    
    
    
    4,341Long-term accrued rent
    
    
    (827
    )
    
    
    1,308Net cash provided by operating activities
    
    
    20,450
    
    
    
    16,241Cash flows from investing activitiesPurchases of marketable securities
    
    
    (84,261
    )
    
    
    (54,600
    )Proceeds from maturities of marketable securities
    
    
    72,695
    
    
    
    19,400Proceeds from sales of marketable securities
    
    
    
    
    
    
    11,999Increase in restricted cash
    
    
    
    
    
    
    (442
    )Payment for acquisition of Nutshell Mail, Inc., net of cash acquired
    
    
    (2,225
    )
    
    
    Acquisition of property and equipment, including costs capitalized for
development of internal use software
    
    
    (11,917
    )
    
    
    (13,210
    )Net cash used in investing activities
    
    
    (25,708
    )
    
    
    (36,853
    )Cash flows from financing activitiesProceeds from issuance of common stock pursuant to exercise of stock options
    
    
    2,306
    
    
    
    433Proceeds from issuance of common stock pursuant to employee stock purchase plan
    
    
    390
    
    
    
    283Net cash provided by financing activities
    
    
    2,696
    
    
    
    716Net decrease in cash and cash equivalents
    
    
    (2,562
    )
    
    
    (19,896
    )Cash and cash equivalents, beginning of period
    
    
    59,822
    
    
    
    73,243Cash and cash equivalents, end of period
    
    $
    57,260
    
    
    $
    53,347Supplemental disclosure of non-cash investing and financing activities:Issuance of common stock in connection with the acquisition of Nutshell Mail, Inc.
    
    $
    3,603
    
    
    $
    
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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
  6




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Revenue Recognition
  Goodwill and Acquired Intangible Assets
   Software and Web Site Development Costs
  Comprehensive Income
   Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    2,942
    
    
    $
    1,470
    
    
    $
    1,256
    
    
    $
    502Other comprehensive income (loss):Unrealized gains (losses) on available-for-sale securities, net
    
    
    9
    
    
    
    (3
    )
    
    
    (5
    )
    
    
    (28
    )Reclassification adjustment for realized gains on
available-for-sale securities included in net income
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Comprehensive income
    
    $
    2,951
    
    
    $
    1,462
    
    
    $
    1,251
    
    
    $
    469
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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
   Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury Bills
    
    $
    19,977
    
    
    
    13
    
    
    $
    
    
    
    $
    19,990U.S. Treasury Notes
    
    
    15,080
    
    
    
    17
    
    
    
    
    
    
    
    15,097Corporate and Agency Bonds
    
    
    29,269
    
    
    
    8
    
    
    
    (3
    )
    
    
    29,274Commercial Paper
    
    
    444
    
    
    
    
    
    
    
    
    
    
    
    444Total
    
    $
    64,770
    
    
    $
    38
    
    
    $
    (3
    )
    
    $
    64,805
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueU.S. Treasury Bills
    
    $
    31,928
    
    
    
    22
    
    
    $
    (3
    )
    
    $
    31,947Corporate and Agency Bonds
    
    
    17,712
    
    
    
    21
    
    
    
    
    
    
    
    17,733Certificates of Deposit
    
    
    3,600
    
    
    
    
    
    
    
    
    
    
    
    3,600Total
    
    $
    53,240
    
    
    $
    43
    
    
    $
    (3
    )
    
    $
    53,280
  8




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Net Income Per Share
   (in thousands)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Weighted average shares used in calculating basic net income per share
    
    
    28,887
    
    
    
    28,304
    
    
    
    28,666
    
    
    
    28,219Stock options
    
    
    1,047
    
    
    
    1,243
    
    
    
    1,152
    
    
    
    1,194Warrant
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Restricted shares
    
    
    2
    
    
    
    21
    
    
    
    1
    
    
    
    33Shares used in computing diluted net income per share
    
    
    29,937
    
    
    
    29,569
    
    
    
    29,820
    
    
    
    29,447
   (in thousands)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Options exercisable into common stock
    
    
    2,021
    
    
    
    942
    
    
    
    1,837
    
    
    
    1,485
 Accounting for Stock-Based Compensation
  Income Taxes
   9




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Segment Data
  New Accounting Guidance
  3. Acquisition of NutshellMail
   Current assets, including cash of $144
    
    $
    156Purchased technology
    
    
    970Goodwill
    
    
    5,068Total assets acquired
    
    
    6,194Fair value of liabilities assumed
    
    
    222Net assets acquired
    
    $
    5,972
   4. Goodwill and Acquired Intangible Assets
  10




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5. Stock-Based Awards
 Stock Incentive Plan
  Stock Purchase Plan
  Stock-Based Compensation Expense
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Cost of revenue
    
    $
    281
    
    
    $
    178
    
    
    $
    804
    
    
    $
    499Research and
development
    
    
    586
    
    
    
    299
    
    
    
    1,559
    
    
    
    805Sales and marketing
    
    
    473
    
    
    
    287
    
    
    
    1,347
    
    
    
    804General and
administrative
    
    
    754
    
    
    
    537
    
    
    
    2,100
    
    
    
    1,505Total
    
    $
    2,094
    
    
    $
    1,301
    
    
    $
    5,810
    
    
    $
    3,613
  6. Income Taxes
  11




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##### Table of Contents



7. Accrued Expenses
 September 30,
    
    
    December 31,2010
    
    
    2009Payroll and payroll related
    
    $
    3,263
    
    
    $
    1,984Licensed software and maintenance
    
    
    1,178
    
    
    
    1,106Marketing programs
    
    
    2,912
    
    
    
    2,014Other accrued expenses
    
    
    2,861
    
    
    
    2,107$
    10,214
    
    
    $
    7,211
 8. Commitments and Contingencies
 Operating Leases
      Remainder of 2010
    
    $
    1,2252011
    
    
    5,0752012
    
    
    5,4402013
    
    
    5,4802014 and thereafter
    
    
    13,223Total
    
    $
    30,443
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##### Table of Contents



Hosting Services
  Remainder of 2010
    
    $
    8132011
    
    
    1,9002012
    
    
    1,6612013
    
    
    774Total
    
    $
    5,148
 Vendor Commitments
  Letters of Credit and Restricted Cash
  Indemnification Obligations
  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, 2009 included in our
Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on March 10,
2010. 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, believe,
anticipate, intend, could, estimate, or continue, and similar expressions or variations.
Such forward-looking statements are subject to
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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
     Key Financial and Operating Metrics
   
    
    adjusted EBITDA, which we define as GAAP net income (loss) plus depreciation
and amortization, stock-based compensation and income tax expense and minus net interest
income;
 
    
    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
acquisition of property and equipment.
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Certain Trends and Uncertainties
 Risk Factors
 
    
    We continue to closely monitor current adverse economic conditions, particularly
as they impact small businesses, associations and non-profits. We believe that small
businesses, in particular, continue to be greatly impacted by the slow economy. We are
unable to predict the likely duration and severity of the current adverse economic
conditions in the U.S. and other countries, but the longer the duration the greater
risks we face in operating our business.
 
    
    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.
 
    
    As of September 30, 2010, we had cash and cash equivalents and short-term
marketable securities of $122 million. Due to the low interest rates generally
available, we expect only a nominal amount of investment income in 2010.
 Sources of Revenue
   Cost of Revenue and Operating Expenses
  Cost of Revenue.
 15




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##### Table of Contents



Research and Development.
 Sales and Marketing.
 General and Administrative.
 Critical Accounting Policies
  
    
    Revenue recognition;
 
    
    Income taxes;
 
    
    Goodwill and acquired intangible assets (see description below);
 
    
    Software and website development costs; and
 
    
    Stock-based compensation.
  16




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Goodwill and Acquired Intangible Assets
    Results of Operations
 Three Months Ended September 30, 2010 compared to Three Months Ended September 30, 2009
 Revenue
 Cost of Revenue
 Research and Development Expenses
 Sales and Marketing Expenses.
 17




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General and Administrative Expenses.
 Interest and other income.
 Provision for Income Taxes
 Nine Months Ended September 30, 2010 compared to Nine Months Ended September 30, 2009
 Revenue
 Cost of Revenue
 Research and Development Expenses
 Sales and Marketing Expenses.
 General and Administrative Expenses.
 18




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Interest and other income.
 Provision for Income Taxes
 Liquidity and Capital Resources
  Cash Provided By Operating Activities
  Cash Used In Investing Activities
  19




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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)Operating lease obligations
    
    $
    30,443
    
    
    $
    5,014
    
    
    $
    10,820
    
    
    $
    11,219
    
    
    $
    3,390Hosting commitments
    
    
    5,148
    
    
    
    2,308
    
    
    
    2,647
    
    
    
    193
    
    
    
    Vendor commitments
    
    
    15,345
    
    
    
    15,345
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    50,936
    
    
    $
    22,667
    
    
    $
    13,467
    
    
    $
    11,412
    
    
    $
    3,390
   20




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##### Table of Contents



Off-Balance Sheet Arrangements
  New Accounting Guidance
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Exchange Risk.
 Interest Rate Sensitivity.
 
 Item 4. Controls and Procedures
   21




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
 A restated description of the risk factors associated with our business is set forth below. This
description supersedes in its entirety the risk factors associated with our business previously
disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31,
2009.
 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 differ 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.
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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.
  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 products, particularly our email marketing product, and
establishes financial penalties for non-compliance, which could increase the costs of our business.
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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.
  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.
   Evolving regulations concerning data privacy may restrict our customers ability to solicit,
collect, process and use data necessary to use our products or may increase their costs, which
could harm our business.
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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
 tm
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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.
   Our efforts to expand our product offerings beyond email marketing may not succeed.
  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.
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If we fail to promote and maintain our brand in a cost-effective manner, we may lose market share
and our revenue may decrease.
  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.
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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 channel 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.
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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 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.
  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.
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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.
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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.
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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;
    
    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.
  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;
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
    
    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.
  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 customer additions;
    
    changes in estimates of our financial results or recommendations by securities analysts;
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
    
    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; and
    
    investors general perception of us.
  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.
  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;
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
    
    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
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SIGNATURES
  CONSTANT CONTACT, INC.Date: November 3, 2010
    By:
    /s/ Gail F. GoodmanGail F. GoodmanPresident and Chief Executive
Officer
(Principal Executive Officer)Date: November 3, 2010
    By:
    /s/ Harpreet S. GrewalHarpreet S. GrewalExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 36




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EXHIBIT INDEX
  Exhibit No.
    
    Description10.1 (1)
    
    Letter Agreement, dated as of May 25, 2010, between the Company and Harpreet S. Grewal.10.2*
    
    Form of Executive Restricted Stock Unit Agreement (Time-Based Vesting) under the 2007 Stock Incentive Plan.10.3*
    
    Restricted Stock Agreement (Performance-Based Vesting) dated September 1, 2010 between the Company and
Harpreet S. Grewal.10.4*
    
    Second Amendment to Lease dated as of September 13, 2010 by and between BP Reservoir Place LLC (as
successor-in-interest to Boston Properties Limited Partnership) and the Company.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.
 
 (1)
    
    Incorporated by reference from the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 1, 2010.*
    
    Filed herewith.#
    
    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 they be
deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934. 37