Weekly Internet Notes: VeriSign, Constant Contact, Shutterfly

Last week VeriSign (NASDAQ:VRSN)’s .com business marked its 30th anniversary. Constant Contact (NASDAQ:CTCT) has recently forged a few important partnerships. Shutterfly‘s (NASDAQ:SFLY) shareholder Marathon Partner wants to appoint more representatives on the company’s board, owing to the latter’s wavering faith on Shutterfly management’s strategic prudence.

Below we give a quick rundown on the most notable events in the last week related to these companies.

See Our Complete Analysis for These Companies Here

VeriSign

March 15th marked the 30th year of VeriSign’s .com business. The first name registered under the .com domain was Symbolic.com. The Internet has evolved over the last three decades from being a utilitarian device for academics and researchers, to a medium for global communication, commerce, and information exchange. It is estimated that globally around 3 billion people access the Internet now and over $1.3 trillion of international e-commerce sales happen via the Internet. Predictably, the .com growth has been an impressive one.   Websites on the .com  domain are accessed trillions of times in a day. The biggest businesses have branded their business with a .com address making .com almost another name for the internet. (Read Press Release).

Recently, VeriSign announced that four million domain names were added to the Internet in Q4 2014 (1.3% growth over Q3 2014), bringing the total number of registered domain names to 288 million globally, across all top-level domains (TLDs). Worldwide registrations have witnessed 3.2% year-over-year growth to reach 16.9 million. (Read Press Release).

On March 18, VeriSign recently reached its 52 week high at $65.28. The company traded as high as $65.28 and last traded at $65.14, with a total trading volume of 477,887 shares. ^[1]

Our price estimate of $62 for VeriSign is 5% lower than the current market price. We expect the company to report revenues of approximately $1.06 billion and non-GAAP net income of $415 million for FY 2015. Our GAAP and non-GAAP diluted EPS estimates stand at $3.51 and $3.09, respectively. VeriSign’s stock witnessed around 3% growth over the last week.

Constant Contact

Constant Contact has recently partnered with EE, a leading advanced digital communications company in Britain, to include Toolkit, the company’s prominent online marketing platform, in EE’s small business cloud suite, Business Apps. Business Apps helps small businesses develop efficiency and enhance customer engagement, with best-in-class business apps and software. All the tools provided to the users are integrated on a central location, for further convenience. (Read Press Release).

Constant Contact has also been selected as a preferred email marketing vendor by International Franchise Association (IFA), the most prominent organization representing franchising globally. A longtime member and partner of the IFA, Constant Contact will be expanding the scope of the partnership as the preferred email vendor, offering email and other online marketing solutions to the IFA and its members. (Read Press Release).

On a separate note, Constant Contact’s latest analysis of over 2.1 million customer emails revealed that barring some industry-specific exceptions—emails with three or fewer images and approximately 20 lines of text result in the highest click-through rates from email subscribers. (Read Press Release).

Our price estimate of $34 for Constant Contact is at a 12% discount to the current market price. We forecast the company will report revenues of approximately $381 million and non-GAAP net income of $48 million for FY 2015. Our GAAP and non-GAAP diluted EPS estimates stand at $0.77 and $1.44, respectively. Constant Contact’s stocks witnessed around 2% growth over the week.

Shutterfly

Shutterfly’s shareholder Marathon Partners Equity Management LLC, a New York hedge fund, plans to nominate three directors on Shutterfly’s board, citing concern’s related to Shutterfly’s acquisition strategies and compensation. This is considered to be a reactionary step after Shutterfly failed to get acquired in 2014. ^[2]

In October 2014, private equity firm, Silver Lake Partners put their plan of acquiring and combining Shutterfly and Hewlett-Packard’s Snapfish on hold. However, Silver Lake is still open to talks with Shutterfly. The merger of Shutterfly and Snapfish—both companies operating in the photo storage and printing space—would have created a bigger entity, expanded the customer base, and posed a  substantial threat in the market space witnessing continuous influx of players.

Our price estimate of $49 for Shutterfly is around 1% above the current market price. We forecast the company to report revenues of approximately $1.04 billion for FY 2015. Shutterfly’s stocks witnessed around 2% growth over the last week.

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1. Verisign Hits New 12-Month High at $65.28 (VRSN), Dakota Financial News, March 19, 2015 [↩]
2. Shutterfly faces proxy fight, MarketWatch, February 26, 2015 [↩]