Blackboard Inc. Reports Second Quarter 2007 Results
Second Quarter Revenue Increases 36 Percent to $59.4 Million -
Company Raises Financial Guidance for 2007
WASHINGTON, July 31 /PRNewswire-FirstCall/ -- Blackboard Inc.
(Nasdaq: BBBB) today announced financial results for the second quarter ended
June 30, 2007 and updated guidance for the third quarter and the full year of
2007.
Total revenue for the quarter ended June 30, 2007 was $59.4 million, an
increase of 36 percent over the second quarter of 2006. Product revenues for
the quarter were $52.3 million, an increase of 41 percent over the second
quarter of 2006, while professional services revenues for the quarter were
$7.1 million, an increase of 8 percent over the second quarter of 2006. The
increase in revenue was driven by strong growth in Blackboard's annual
licensing of enterprise level products and ASP hosting service to global
academic institutions including clients resulting from the acquisition of
WebCT, Inc.
Net income was $3.4 million, resulting in net income per basic and diluted
share of $0.12 for the second quarter of 2007 compared to a net loss of $6.3
million and net loss per basic and diluted share of ($0.23) for the second
quarter of 2006. Non-GAAP adjusted net income for the second quarter of 2007,
which excludes the amortization of acquisition-related intangible assets, net
of taxes, was $6.8 million, resulting in non-GAAP adjusted net income per
share of $0.23 compared to non-GAAP adjusted net loss of $2.2 million and non-
GAAP adjusted net loss per share of ($0.08) for the second quarter of 2006.
"I am pleased with our results in the second quarter, where we experienced
strong revenue growth and expanded operating margins and earnings per share,"
said Michael Chasen, CEO and President of Blackboard Inc. "I am particularly
encouraged by the interest we see for our Blackboard Academic Suite,
particularly our newly launched offering, the Blackboard Outcomes System."
Highlights from the Second Quarter of 2007
* A few of Blackboard's new and expanded client relationships in the
quarter included:
- U.S. Higher Education: Arkansas State University, Bethune Cookman
College, Bowie State University, Clark College, Delgado Community
College, Fairleigh Dickinson University, John Carroll University,
Mercer University, Mott Community College, Northampton Community
College, Radford University, Stetson University College of Law,
University of Northern Iowa, Webster University, York College of
Pennsylvania and others.
- International: Auckland University of Technology, Caribbean
University, Hiroshima Kokusai Gakuin University, London South Bank
University, Macquarie University, Motherwell College, St Martin's
College, Tamagawa University, Universidad de la Rioja, University
College Cork, University of Leeds, University of Notre Dame
Australia, University of the Virgin Islands, University of Trinidad
and Tobago, Utrecht University and others.
- K-12: Arlington Public Schools (VA), Chaminade College
Prepatory (NY), Clear Creek Independent School District (TX),
Fairfax County Public Schools (VA), Jefferson County Public
Schools (CO), Mead School District (WA), North Carolina Virtual
Public School (NC), Richland School District Two (SC), St. George's
School (RI), The Lawrenceville School (NJ), The Madeira School (VA),
The Roeper School (MI), The York School (Ontario, Canada), Virtual
High School (MA), Walnut Valley Unified School District (CA) and
others.
* Blackboard's enterprise licenses (Blackboard Learning
System(TM) - Enterprise, Blackboard Community System(TM), Blackboard
Transaction System(TM), Blackboard Content System(TM), Blackboard
Portfolio System(TM) and Blackboard Outcomes System(TM)), totaled 3,756.
* The Mississippi Community College System licensed a fully-hosted
implementation of the Blackboard Academic Suite(TM), including the
Blackboard Outcomes System for its 65,000 students across the 15-college
system.
* Blackboard completed the sale of $165.0 million aggregate principal
amount of 3.25 percent Convertible Senior Notes due 2027, pursuant to a
registration statement filed with the Securities and Exchange Commission
on June 13, 2007.
* Blackboard expanded the number of directors permitted to serve on the
board to nine people and appointed Joseph L. Cowan, Thomas Kalinske and
Beth Kaplan, to the company's Board of Directors.
Outlook for the Third Quarter and Full Year of 2007
Third Quarter of 2007:
* Revenue of $60.0 to $61.0 million;
* Amortization of acquired intangibles of approximately $5.5 million;
* Net income of $2.7 to $3.2 million, resulting in net income per diluted
share of $0.09 to $0.11, which is based on an estimated 30.2 million
diluted shares and an effective tax rate of 41.5 percent; and
* Non-GAAP adjusted net income, excluding the amortization of acquired
intangibles and the associated tax impact, of $6.0 to $6.5 million,
resulting in non-GAAP adjusted net income per diluted share of $0.20 to
$0.22 based on an estimated 30.2 million diluted shares and an effective
tax rate of 40.5 percent.
Full Year 2007:
* Revenue of $235.0 to $237.0 million;
* Amortization of acquired intangibles of approximately $22.0 million;
* Net income of $11.8 to $12.8 million, resulting in net income per
diluted share of $0.39 to $0.43, which is based on an estimated
30.0 million diluted shares and an effective tax rate of 41.5 percent;
and
* Non-GAAP adjusted net income excluding the amortization of acquired
intangibles and the associated tax impact, of $25.0 to $26.0 million,
resulting in non-GAAP adjusted net income per diluted share of $0.83 to
$0.87 based on an estimated 30.0 million diluted shares and an effective
tax rate of 40.5 percent.
Conference Call
Blackboard will broadcast its second quarter conference call live over the
Internet today beginning at 4:30 p.m. (Eastern). Interested parties can access
the webcast through the Investor Relations section of the Company's Web site
at http://investor.blackboard.com. Please access the Web site at least 15
minutes prior to the start of the call to register, download and install any
necessary software.
A replay of the call will be available via telephone from approximately
7:00 p.m. Eastern (4:00 p.m. Pacific) on July 31, 2007 until 11:00 p.m.
Eastern (8:00 p.m. Pacific) on August 7, 2007. To listen to the replay,
participants in the U.S. and Canada should dial 888-286-8010, and
international participants should dial +1 (617) 801-6888. The conference ID
for the replay is 85156969.
Use of Non-GAAP Financial Measures
This release includes information about the Company's non-GAAP adjusted
net (loss) income and non-GAAP adjusted net (loss) income per share which are
non-GAAP financial measures. Management believes that both measures, which
exclude amortization of acquired intangibles and the associated tax impact,
provide additional useful information to investors regarding the Company's
ongoing financial condition and results of operations and aspects of current
operating performance which can be effectively managed. Since the Company has
historically reported these non-GAAP results to the investment community,
management also believes the inclusion of these non-GAAP financial measures
provides consistency in its financial reporting and facilitates investors'
understanding of the Company's historic operating trends by providing an
additional basis for comparisons to prior periods. In addition, the Company's
internal reporting, including information provided to the Company's Audit
Committee and Board of Directors, contains non-GAAP measures. The Company has
also adopted internal compensation metrics that are determined on a basis that
excludes amortization of acquired intangibles and the associated tax impact.
A material limitation associated with the use of the above non-GAAP
financial measures is that they have no standardized measurement prescribed by
GAAP and may not be comparable with similar non-GAAP financial measures used
by other companies. The Company compensates for these limitations by
providing full disclosure of each non-GAAP financial measure and
reconciliation to the most directly comparable GAAP financial measure which
investors can use to appropriately consider each financial measure determined
under GAAP as well as on the adjusted non-GAAP basis. However, the non-GAAP
financial measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP. In
addition to the information contained in this release, investors should also
review information contained in the Company's Form 10-Q dated May 4, 2007, as
well as other filings with the Securities and Exchange Commission when
assessing the Company's financial condition and results of operations.
About Blackboard Inc.
Blackboard Inc. (Nasdaq: BBBB) is a leading provider of enterprise
software applications and related services to the education industry. Founded
in 1997, Blackboard enables educational innovations everywhere by connecting
people and technology. Millions of people use Blackboard everyday at academic
institutions around the globe, including colleges, universities, K-12 schools
and other education providers, as well as textbook publishers and student-
focused merchants that serve education providers and their students.
Blackboard is headquartered in Washington, D.C., with offices in North
America, Europe, Australia and Asia.
http://www.blackboard.com
Blackboard
Educate. Innovate. Everywhere.(TM)
Any statements in this press release about future expectations, plans and
prospects for Blackboard and other statements containing the words "believes,"
"anticipates," "plans," "expects," "will," and similar expressions, constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those
indicated by such forward-looking statements as a result of various important
factors, including the factors discussed in the "Risk Factors" section of our
Form 10-Q filed on May 4, 2007 with the SEC. In addition, the forward-looking
statements included in this press release represent the Company's views as of
July 31, 2007. The Company anticipates that subsequent events and developments
will cause the Company's views to change. However, while the Company may elect
to update these forward-looking statements at some point in the future, the
Company specifically disclaims any obligation to do so. These forward-looking
statements should not be relied upon as representing the Company's views as of
any date subsequent to July 31, 2007.
BLACKBOARD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
2006 2007 2006 2007
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
Product $36,987 $52,299 $70,161 $102,280
Professional services 6,593 7,105 11,127 12,404
----------- ----------- ----------- -----------
Total revenues 43,580 59,404 81,288 114,684
Operating expenses:
Cost of product
revenues, excludes
$2,800 and $2,928 for
the three months ended
June 30, 2006 and 2007,
respectively, and
$3,733 and $5,749 for
the six months ended
June 30, 2006 and 2007,
respectively, in
amortization of
acquired technology
included in
amortization of
intangibles resulting
from acquisitions shown
below (1) 10,027 11,922 17,993 23,619
Cost of professional
services revenues (1) 4,285 4,138 7,676 7,902
Research and development
(1) 7,273 6,999 12,157 13,952
Sales and marketing (1) 15,093 16,370 27,242 31,203
General and
administrative (1) 9,801 8,829 17,401 17,859
Amortization of
intangibles resulting
from acquisitions 5,377 5,493 7,214 10,892
----------- ----------- ----------- -----------
Total operating expenses 51,856 53,751 89,683 105,427
----------- ----------- ----------- -----------
(Loss) income from
operations (8,276) 5,653 (8,395) 9,257
Other income (expense):
Interest expense (1,318) (1,157) (1,896) (1,915)
Interest income 392 507 1,633 912
Other income (expense) 179 876 (147) 949
----------- ----------- ----------- -----------
(Loss) income before
benefit (provision) for
income taxes (9,023) 5,879 (8,805) 9,203
----------- ----------- ----------- -----------
Benefit (provision) for
income taxes 2,712 (2,440) 2,642 (3,820)
Net (loss) income $(6,311) $3,439 $(6,163) $5,383
=========== =========== =========== ===========
Net (loss) income per
common share:
Basic $(0.23) $0.12 $(0.22) $0.19
=========== =========== =========== ===========
Diluted $(0.23) $0.12 $(0.22) $0.18
=========== =========== =========== ===========
Weighted average number
of common shares:
Basic 27,776,658 28,706,575 27,678,634 28,525,603
=========== =========== =========== ===========
Diluted 27,776,658 29,860,118 27,678,634 29,774,861
=========== =========== =========== ===========
(1) Includes the
following amounts
related to stock-based
compensation:
Cost of product revenues $129 $120 $164 $249
Cost of professional
services revenues 251 175 369 291
Research and development 154 170 276 287
Sales and marketing 933 1,152 1,340 1,930
General and
administrative 811 1,401 1,628 2,473
Reconciliation of (loss) income before benefit (provision) for income
taxes to non-GAAP adjusted net (loss) income (2):
(Loss) income before
benefit (provision) for
income taxes $(9,023) $5,879 $(8,805) $9,203
Add: Amortization of
intangibles resulting
from acquisitions 5,377 5,493 7,214 10,892
Adjusted benefit
(provision) for income
taxes (3) 1,440 (4,610) 628 (8,122)
----------- ----------- ----------- -----------
Non-GAAP adjusted net
(loss) income $(2,206) $6,762 $(963) $11,973
=========== =========== =========== ===========
Non-GAAP adjusted net
(loss) income per common
share - diluted $(0.08) $0.23 $(0.03) $0.40
=========== =========== =========== ===========
(2) Non-GAAP adjusted net (loss) income and non-GAAP adjusted net (loss)
income per share are non-GAAP financial measures and have no standardized
measurement prescribed by GAAP. Management believes that both measures
provide additional useful information to investors regarding the
Company's ongoing financial condition and results of operations and since
the Company has historically reported these non-GAAP results they provide
an additional basis for comparisons to prior periods. The non-GAAP
financial measures may not be comparable with similar non-GAAP financial
measures used by other companies and should not be considered in
isolation from, or as a substitute for, financial information prepared in
accordance with GAAP. The Company provides the above reconciliation to
the most directly comparable GAAP financial measure to allow investors to
appropriately consider each non-GAAP financial measure.
(3) Adjusted benefit (provision) for income taxes is applied at an
effective rate of approximately 39.5% and 40.5% for the three months
ended June 30, 2006 and 2007, respectively, and approximately 39.5% and
40.4% for the six months ended June 30, 2006 and 2007, respectively.
BLACKBOARD INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2006 2007
----------- -----------
(unaudited)
(in thousands,
except per share amounts)
ASSETS
Current assets:
Cash and cash equivalents $30,776 $169,453
Accounts receivable, net 52,394 64,656
Inventories 2,377 1,852
Prepaid expenses and
other current assets 3,514 6,369
Deferred tax asset,
current portion 7,326 8,480
Deferred cost of revenues,
current portion 7,983 7,966
----------- -----------
Total current assets 104,370 258,776
Deferred tax asset, noncurrent portion 25,431 20,805
Deferred cost of revenues,
noncurrent portion 4,253 3,783
Restricted cash 1,999 2,337
Property and equipment, net 12,761 14,751
Goodwill 101,644 105,730
Intangible assets, net 56,841 49,135
----------- -----------
Total assets $307,299 $455,317
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,238 $3,146
Accrued expenses 20,519 19,917
Term loan, current portion 246 -
Deferred rent, current portion 371 209
Deferred revenues, current portion 117,972 105,291
----------- -----------
Total current liabilities 141,346 128,563
Term loan, noncurrent portion, net of
debt discount 23,377 -
Notes payable, net of debt discount - 160,485
Deferred rent, noncurrent portion 157 358
Deferred revenues, noncurrent portion 2,298 3,457
Stockholders' equity:
Common stock, $0.01 par value 282 289
Additional paid-in capital 231,331 248,847
Accumulated deficit (91,492) (86,682)
----------- -----------
Total stockholders' equity 140,121 162,454
----------- -----------
Total liabilities and stockholders'
equity $307,299 $455,317
=========== ===========
BLACKBOARD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30
-----------------------------
2006 2007
----------- -----------
(unaudited) (unaudited)
(in thousands)
Cash flows from operating activities
Net (loss) income $(6,163) $5,383
Adjustments to reconcile net (loss)
income to net cash (used in)
provided by operating activities:
Deferred income tax benefit (3,493) (1,464)
Excess tax benefits from stock-based
compensation (173) (4,444)
Amortization of debt discount 246 806
Depreciation and amortization 4,175 5,164
Amortization of intangibles
resulting from acquisitions 7,214 10,892
Change in allowance for doubtful accounts (107) 70
Noncash stock-based compensation 3,777 5,230
Changes in operating assets and liabilities:
Accounts receivable (26,448) (12,332)
Inventories (1,045) 525
Prepaid expenses and other current assets (442) (2,855)
Deferred cost of revenues (1,187) 487
Accounts payable (128) 908
Accrued expenses (6,352) 4,488
Deferred rent (41) 39
Deferred revenues 16,296 (11,522)
----------- -----------
Net cash (used in) provided by
operating activities (13,871) 1,375
Cash flows from investing activities
Acquisition of WebCT, Inc., net of
cash acquired (154,628) -
Purchase of property and equipment (5,741) (7,089)
Payments for patent enforcement costs - (2,090)
Purchase of intangible assets - (1,530)
Sale of held-to-maturity securities 23,546 -
Sale of available-for-sale securities 39,056 -
----------- -----------
Net cash used in investing activities (97,767) (10,709)
Cash flows from financing activities
Proceeds from notes payable - 160,456
Proceeds from revolving credit facility 10,000 -
Payments on revolving credit facility (10,000) -
Proceeds from term loan 57,522 -
Payments on term loan (300) (24,400)
Release of letters of credit 1,517 -
Payments on letters of credit - (338)
Excess tax benefits from stock-based
compensation 173 4,444
Proceeds from exercise of stock options 4,451 7,849
----------- -----------
Net cash provided by financing activities 63,363 148,011
----------- -----------
Net (decrease) increase in cash and
cash equivalents (48,275) 138,677
Cash and cash equivalents
at beginning of period 75,895 30,776
----------- -----------
Cash and cash equivalents
at end of period $27,620 $169,453
=========== ===========
SOURCE Blackboard Inc.
CONTACT: Michael J. Stanton, Vice President, Investor Relations of
Blackboard Inc., +1-202-463-4860, ext. 2305/