Why Constant Contact Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of email marketer Constant Contact (NAS: CTCT) have plunged today by as much as 15% after the company announced an acquisition while also reducing its full-year guidance.

So what: Constant Contact has acquired privately owned SinglePlatform, a smaller company that helps small businesses get discovered through Web and mobile searches. Constant Contact paid $65 million in cash, plus another $5 million in cash and equity compensation for employee retention. If SinglePlatform hits certain revenue targets, Constant Contact will also have to pay an additional $10 million to $30 million.

Now what: Following the transaction, Constant Contact has updated its guidance. Second-quarter revenue shouldn't see any material impact, but the company will incur $1 million in acquisition-related expenses. SinglePlatform is expected to contribute about $1 million in revenue throughout the full year, and reduced its adjusted EBITDA forecast from a prior range of $45.8 million-$46.9 million to a new ballpark of $35.4 million-$36.7 million.

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At the time thisarticle was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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